Document:

MASTER MODIFICATION AGREEMENT

                  THIS MASTER MODIFICATION  AGREEMENT ("this Agreement") is made
as of the 22nd day of  December,  2000,  among  BUCKEYE  FACTORY  SHOPS  LIMITED
PARTNERSHIP,  a Delaware limited  partnership  ("Buckeye  Borrower"),  THE PRIME
OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership ("Calhoun
Borrower"),  CAROLINA  FACTORY SHOPS  LIMITED  PARTNERSHIP,  a Delaware  limited
partnership ("Carolina Borrower"),  LATHAM FACTORY STORES LIMITED PARTNERSHIP, a
Delaware  limited  partnership  ("Latham  Borrower"),  THE PRIME  OUTLETS AT LEE
LIMITED PARTNERSHIP, a Delaware limited partnership ("Lee Borrower"), and SHASTA
OUTLET CENTER  LIMITED  PARTNERSHIP,  a Delaware  limited  partnership  ("Shasta
Borrower;"  Buckeye  Borrower,  Calhoun  Borrower,   Carolina  Borrower,  Latham
Borrower,  Lee Borrower and Shasta Borrower are hereinafter  sometimes  referred
to,  jointly  and  severally,  as  "Borrowers"),  each of  Borrowers  having its
principal  office c/o Prime Retail,  L.P.,  100 East Pratt  Street,  19th Floor,
Baltimore,  Maryland 21202, PRIME RETAIL,  L.P., a Delaware limited  partnership
("Existing  Guarantor"),  having its principal  office at 100 East Pratt Street,
19th Floor,  Baltimore,  Maryland  21202,  and PRIME  RETAIL,  INC.,  a Maryland
corporation ("Special Guarantor"), having its principal office c/o Prime Retail,
L.P., 100 East Pratt Street,  19th Floor,  Baltimore,  Maryland 21202  (Existing
Guarantor and Special Guarantor are hereinafter  sometimes  referred to, jointly
and  severally,  as  "Guarantors"),  and NOMURA  ASSET  CAPITAL  CORPORATION,  a
Delaware corporation  ("Lender"),  having an office at 2 World Financial Center,
Building B, New York, New York 10281.

                              W I T N E S S E T H :

                  WHEREAS,  Lender  has  previously  made a loan (the  "Existing
Loan") in the principal sum of up to $112,000,000  to Borrowers,  which Existing
Loan is (i) made and advanced  pursuant to the "Existing Loan  Agreement,"  (ii)
evidenced by the "Existing Notes" and (iii) secured by, among other things,  the
"Existing Mortgages" (as such quoted terms are defined in the Master Schedule of
Existing Loan Documents (the "Master Schedule") attached hereto and incorporated
herein;  the Existing Loan, as the same is modified as contemplated  hereby, and
as the same may be further  modified or amended  from time to time,  hereinafter
referred to as the "Loan;" the Existing Loan Agreement,  as the same is modified
as contemplated  hereby, and as the same may be further modified or amended from
time to time,  hereinafter  referred to as the "Loan  Agreement;"  the  Existing
Notes, as the same are modified as contemplated  hereby,  and as the same may be
further  modified  or  amended  from  time to  time,  hereinafter  referred  to,
individually and collectively,  as the "Notes;" and the Existing  Mortgages,  as
the same are  modified as  contemplated  hereby,  and as the same may be further
modified or amended from time to time, hereinafter referred to, individually and
collectively, as the "Mortgages");

                  WHEREAS, each of Borrowers is the respective fee owner of each
of the  Properties,  other than in the case of the "Carolina  Property" (as such
quoted term is defined in the Master  Schedule),  as to which Carolina  Borrower
holds a leasehold interest;

                  WHEREAS,  each  of  the  Mortgages  encumbers,   respectively,
Borrowers' respective interests in the Properties,  as aforesaid,  together with
the improvements and other property more  particularly  described in each of the
Mortgages (individually and collectively, the "Mortgaged Properties");

                  WHEREAS,  pursuant to the "Existing  Guaranty" (as such quoted
term is defined in the Master Schedule),  Existing  Guarantor has guaranteed the
repayment of the Loan on the terms set forth therein (the Existing Guaranty,  as
the same is modified and reaffirmed,  as contemplated hereby,  together with the
Special Guaranty, as hereinafter defined, and as the any of the foregoing may be
further  modified  or  amended  from  time to  time,  hereinafter  referred  to,
individually and collectively, as the "Guaranty");

                  WHEREAS,  pursuant to that certain Special Limited Guaranty of
Payment dated the date hereof (the "Special Guaranty") from Special Guarantor to
Lender,  Special Guarantor has guaranteed the repayment of a portion of the Loan
on the terms, and under the circumstances, set forth therein;

                  WHEREAS,  Lender  had  assigned  all of its  right,  title and
interest  in and to the  Existing  Loan to Short  Term  Asset  Receivable  Trust
("START");

                  WHEREAS,  START had  reassigned  all of its  right,  title and
interest in and to the Existing Loan to Lender,  who is now the owner and holder
of the Existing  Loan and the existing  loan  documents  set forth on the Master
Schedule (individually and collectively, the "Existing Loan Documents");

                  WHEREAS,  the maturity date under the Existing Loan  Agreement
and the Existing Notes occurs on June 11, 2001;

                  WHEREAS,  Borrowers  have  requested  that Lender (i) grant an
extension of the maturity date, (ii) permit Existing  Guarantor (in its capacity
as managing  general  partner of each of  Borrowers)  to enter into the Fortress
Loan (as hereinafter  defined) and (iii) agree to certain other modifications to
the Existing  Loan and the Existing  Loan  Documents,  all as  hereinafter  more
particularly set forth; and

                  WHEREAS,  Lender is willing,  on the terms and  conditions set
forth herein,  to agree to  Borrowers'  requests,  as aforesaid,  subject to the
terms and provisions of this Agreement and subject to the satisfaction of all of
Lender's conditions thereto,  including,  without limitation, (i) the payment to
Lender, in immediately available funds,  contemporaneously with the execution of
this  Agreement,  of an  extension  fee (the  "Extension  Fee") in the amount of
$1,120,000,  (ii) the execution and delivery of the Special  Guaranty by Special
Guarantor to Lender,  (iii) the execution and delivery into escrow,  pursuant to
that certain  Transfer and Escrow Agreement dated the date hereof (the "Transfer
Agreement")  among  Borrowers,  Lender and Chicago Title Insurance  Company,  as
escrow agent ("Escrow Agent"), of the "Transfer  Documents" (as such quoted term
is defined in the Transfer Agreement), which Transfer Documents include, without
limitation, deeds (or an assignment of ground lease, in the case of the Carolina
Property),  with  covenants  against  grantor's  acts,  and all  other  transfer
documents required by Lender in connection therewith,  pursuant to which each of
Borrowers shall convey to Lender, its assignee(s), designee(s) or nominee(s), on
an uncontested  basis, upon the conditions,  and subject to the terms, set forth
in this Agreement,  Borrowers' respective interests in the Mortgaged Properties,
(iv) the reaffirmation by the Existing  Guarantor of the Existing  Guaranty,  as
hereinafter set forth, and (v) the repayment in full to Lender's affiliate,  The
Capital  Company of  America,  LLC, a Delaware  limited  liability  company,  in
immediately  available  funds,  contemporaneously  with  the  execution  of this
Agreement,  out of the proceeds of the Fortress Loan, of that certain  unsecured
revolving line of credit in the original principal amount of $40,000,000 made to
Existing  Guarantor,  including all  principal  outstanding  thereunder  and all
interest,  fees and other sums accrued thereon or in connection  therewith which
remain unpaid;

                  NOW,  THEREFORE,  to induce Lender to so extend and modify the
Existing Loan and the Existing Loan  Documents,  and for other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Borrowers  and  Guarantors  hereby  covenant and agree with,  and  represent and
warrant to, Lender as follows:

1.  Definitions.  Any defined terms used in this Agreement,  if not specifically
defined in this Agreement, shall have the --------------------  meaning given to
such terms in the Existing Loan Agreement.

1.  Extension  of Maturity  Date.  The date "June 11,  2001" that appears in the
definition of "Stated  Maturity  Date" in the Existing Loan Agreement and in the
Existing  Notes is hereby deleted and replaced with the date "December 31, 2003"
and the Maturity  Date of the Note is hereby  extended to December 31, 2003;  in
connection  therewith,  the Existing Loan  Agreement,  the Existing  Notes,  the
Existing  Mortgages and the other Existing Loan Documents,  and the defined term
"Maturity  Date," to the extent  set forth  therein,  shall be, and are  hereby,
modified to reflect the foregoing.

1. Modification of Interest Rate and Default Rate; Principal Balance. Commencing
on the next Payment Date after the date hereof  (hereinafter,  the "Next Payment
Date"),  interest  on the  outstanding  principal  balance  of the  Loan and the
Existing Notes shall accrue,  prior to default,  at a fixed rate per annum equal
to thirteen (13.0%) percent, calculated for the actual number of days elapsed on
the basis of a 360-day year from and including the  commencement  date aforesaid
to,  but not  including,  the date of  repayment  of the  Loan;  such  interest,
calculated as aforesaid, shall continue to be payable in arrears on each Payment
Date; all references in the Existing Loan  Agreement,  the Existing  Notes,  the
Existing  Mortgages and the other Existing Loan Documents to, and all provisions
therein containing the defined term,  "LIBOR," to the extent that the same would
render such provisions inconsistent with the foregoing, shall be disregarded; in
connection with the foregoing,  the Existing Loan Agreement,  the Existing Notes
(including  the  respective  provisions of Section 3(A)  thereof),  the Existing
Mortgages and the other Existing Loan Documents,  and the defined term "Interest
Rate," to the extent set forth  therein,  shall be, and are hereby,  modified to
reflect the foregoing. Consistent with the foregoing modifications,  the defined
term "Default Rate," to the extent set forth in the Existing Loan Agreement, the
Existing  Notes,  the Existing  Mortgages and the other Existing Loan Documents,
shall be, and is hereby,  modified to mean, with respect to the Loan, a rate per
annum equal to the lesser of (a) the maximum rate  permitted by applicable  law,
or  (b)  eighteen   (18.0%)   percent.   Also   consistent  with  the  foregoing
modifications,  the defined term "Debt Service  Coverage Ratio" set forth in the
Existing Loan Agreement,  and to the extent set forth in the Existing Notes, the
Existing  Mortgages  and the other  Existing  Loan  Documents,  shall be, and is
hereby,  modified to delete the reference  therein  appearing in the fifth (5th)
line thereof to "a debt service  constant of 10.09" and to replace the same with
"an interest rate of thirteen (13.0%) percent per annum."

The  parties  hereto  acknowledge  that as of the date  hereof  the  outstanding
principal balance of the Loan is
$112,000,000.

4. Required  Amortization of Principal  Balance.  Commencing on the Payment Date
which  succeeds  the Next Payment  Date,  Lender  shall  require that  Borrowers
amortize,  on a monthly basis,  the outstanding  principal  balance of the Loan.
Accordingly,  Section  2.2.1(b) of the Existing Loan Agreement  shall be, and is
hereby, amended and restated in its entirety as follows:

                  On  January  11,  2001,   interest  only  on  the  outstanding
                  principal  balance of the Loan at the  Interest  Rate shall be
                  payable.  Commencing  on February  11,  2001,  and on each and
                  every Payment Date thereafter  (hereinafter,  an "Amortization
                  Payment  Date"),  through and  including  the  Maturity  Date,
                  Borrowers shall pay an amount (said amount,  the "Monthly Debt
                  Service Payment Amount"),  equal to the sum of (x) interest at
                  the Interest Rate on the outstanding  principal balance of the
                  Loan,  plus (y) the  "Monthly  Amortization  Amount"  (as such
                  quoted term is hereinafter defined),  provided,  however, that
                  such Monthly  Amortization  Amount shall be paid in accordance
                  with  the  payment  schedule   described  in  the  penultimate
                  sentence of this  Section  2.2.1(b).  The Monthly Debt Service
                  Payment  Amount  due on any  Payment  Date shall be applied by
                  Lender,  first,  to the payment of interest  accrued  from the
                  eleventh  (11th)  day of the  calendar  month  preceding  such
                  Payment  Date  through  the tenth  (10th) day of the  calendar
                  month in which such Payment Date occurs,  notwithstanding that
                  such Payment Date may have been  deferred to the next Business
                  Day because the eleventh  (11th) day of such calendar month is
                  not a  Business  Day,  second,  to any other sums then due and
                  payable  in  connection  with  the  Loan,  and  third,  to the
                  outstanding principal balance of the Loan, provided,  however,
                  that,  so long as any Event of Default  exists,  Lender  shall
                  apply the Monthly Debt Service Payment Amount to such items in
                  connection  with  the  Loan,  including,  without  limitation,
                  reduction  of  outstanding  principal  and  accrued and unpaid
                  interest  and  other  sums  thereon,  and in  such  order  and
                  proportion,  as Lender,  in its sole discretion,  shall elect.
                  For purposes hereof,  the term "Monthly  Amortization  Amount"
                  shall  mean  the   greater  of  (i)  $50,000   (the   "Minimum
                  Amortization Amount") and (ii) that sum which equals (A) prior
                  to the repayment of the Fortress Loan, 50% of the "Excess Cash
                  Flow" (as such  quoted  term is  hereinafter  defined)  or (B)
                  following  the  repayment  of the Fortress  Loan,  100% of the
                  Excess Cash Flow. For purposes  hereof,  the term "Excess Cash
                  Flow" shall mean,  as of any Payment  Date,  the excess of (A)
                  all Rents in  respect  of the  Properties  over the  preceding
                  calendar month,  as determined by Lender,  over (B) the sum of
                  all deposits,  payments and expenditures required or permitted
                  to be made with  respect to such  calendar  month  pursuant to
                  Section 2.2.3 of the Loan Agreement,  as modified  hereby,  as
                  reasonably  determined by Lender  (together  with any Approved
                  Operating  Expenses,  Approved  Capital  Expenses and Approved
                  Leasing  Expenses  which,  while not actually made during such
                  calendar month, are properly allocable to such calendar month,
                  to the extent reasonably approved by Lender), except that, for
                  purposes  of  calculating  Excess  Cash  Flow  hereunder,  the
                  deposit of the Monthly Debt Service Payment Amount required to
                  be made  pursuant  to Section  2.2.3(b)  shall not include the
                  Monthly Amortization Amount. Notwithstanding the foregoing, or
                  anything  else to the  contrary  contained  in any of the Loan
                  Documents,  including,  without  limitation,  Section 2.2.3 or
                  Section  2.6 of the Loan  Agreement,  so long as any  Event of
                  Default exists, all Rents may be used and applied by Lender to
                  such items in  connection  with the Loan,  including,  without
                  limitation, reduction of outstanding principal and accrued and
                  unpaid  interest  and other  sums  thereon,  in such order and
                  proportion, as Lender, in its sole discretion, shall elect. On
                  each Amortization  Payment Date, Borrowers shall pay a Monthly
                  Amortization  Amount  which is at least  equal to the  Minimum
                  Amortization  Amount due on such Payment Date and shall pay an
                  additional sum in respect of the Monthly  Amortization  Amount
                  which  would have been due in  respect  of the prior  calendar
                  month based on Borrowers'  good-faith  estimate of Excess Cash
                  Flow, if any, in such prior calendar month, provided, however,
                  that,  on or before the twentieth  (20th) of the  then-current
                  calendar   month,   Borrowers  shall  provide  Lender  with  a
                  calculation  of Excess  Cash  Flow in  respect  of such  prior
                  calendar month;  based thereon,  in the event that the Monthly
                  Amortization  Amount paid by Borrowers in respect of the prior
                  calendar month was (a)  insufficient,  Borrowers shall pay the
                  shortfall to Lender on the next  succeeding  Payment  Date, in
                  addition to any other sums which would be due on such  Payment
                  Date,  or (b) in excess of amounts that would  otherwise  have
                  been due,  Borrowers shall receive a credit in amount equal to
                  such  excess  against  any  sums  which  are  due on the  next
                  succeeding  Payment Date. In  connection  with the  foregoing,
                  Lender shall have received from Borrowers such  information as
                  Lender may require in order to calculate  the Excess Cash Flow
                  in respect of any month,  all in form acceptable to Lender and
                  at Borrowers'  sole cost and expense,  and  accompanied  by an
                  Officer's  Certificate  stating that all such  information  is
                  true, correct and complete.

     5. Future  Advances.  Lender shall have no further  funding  obligations in
respect of the Loan.  Accordingly,  Section 2.1.1 of the Existing Loan Agreement
shall be, and is hereby,  amended such that the "Facility  Termination  Date" is
deemed to have occurred on the date hereof,  anything to the contrary  contained
elsewhere in the Existing Loan Agreement,  including,  without  limitation,  the
definition  of  "Facility  Termination  Date" set forth in Section 1.1  thereof,
notwithstanding,   and  Lender  shall  have  no  further  obligation  under  any
circumstances to make any Advances to Borrowers.  Further,  Section 2.1.2 of the
Existing Loan  Agreement  shall be, and is hereby,  amended such that  Borrowers
shall no longer be entitled to reborrow Advances under the Loan Agreement.

     6. Release of Properties.  The release price and other conditions precedent
to Lender's  obligation to release any Property from the Lien of the Mortgage on
such  Property  shall be modified as  hereinafter  set forth and, in  connection
therewith,  Section  2.4.1(a) of the Existing Loan  Agreement,  shall be, and is
hereby, amended as follows:

     (a) subsection (i) thereof shall be, and is hereby, amended and restated in
its entirety as follows:

                  (i) Borrower shall have paid to Lender the "Release Price" (as
                  such quoted term is hereinafter defined). For purposes hereof,
                  the  term  "Release  Price"  shall  mean  the  greater  of the
                  following  amounts,  as determined by Lender:  (a) 125% of the
                  Allocated Amount for the Property proposed to be released,  as
                  set forth in the Schedule of Allocated Amounts attached hereto
                  and  incorporated  herein,  and (b) 100% of the "Net Proceeds"
                  (as such quoted term is hereinafter  defined) for the Property
                  proposed to be released.  For purposes  hereof,  the term "Net
                  Proceeds"  shall  mean  (a) in the  case of the  sale or other
                  transfer,  direct or indirect,  of the Property proposed to be
                  released,  provided  that  such  sale or  transfer  is for the
                  entirety  of the  Property,  the  greater  of (x) the  Release
                  Amount  for such  Property,  as set forth in the  Schedule  of
                  Release Amounts attached hereto and  incorporated  herein (the
                  "Release Amount Schedule"), and (y) 100% of the gross proceeds
                  of such  sale  or  transfer,  less  reasonable  and  customary
                  expenses  actually  incurred  by the  applicable  Borrower  in
                  connection with such sale or transfer, said expenses, however,
                  in no  event  to  exceed  four  (4%)  percent  of  said  gross
                  proceeds,  or (b) in the case of the  refinancing,  direct  or
                  indirect,  of the Property  proposed to be released,  provided
                  that such refinancing is for the entirety of the Property, the
                  greater of (x) the Release  Amount for such  Property,  as set
                  forth  in the  Release  Amount  Schedule,  and (y) 100% of the
                  gross  proceeds  of  such  refinancing,  less  reasonable  and
                  customary   expenses   actually  incurred  by  the  applicable
                  Borrower in connection with such  refinancing,  said expenses,
                  however,  in no event to exceed one (1%) percent of said gross
                  proceeds. In connection with the foregoing,  Lender shall have
                  received from Borrowers such information as Lender may require
                  in order to calculate the  appropriate  Release Price,  all in
                  form  acceptable  to Lender  and at  Borrowers'  sole cost and
                  expense,  and accompanied by an Officer's  Certificate stating
                  that all such information is true, correct and complete;

     (b) the following new clause (v) shall be, and is hereby,  added to Section
2.4.1(a) of the Existing Loan
Agreement:

                  (v)  Lender  shall  have  determined  that  the  Debt  Service
                  Coverage  Ratio in  respect  of the  Properties  remaining  as
                  collateral for the Loan following  such proposed  release,  if
                  measured  over the twelve  (12)-month  period  preceding  such
                  proposed  release,  is equal to or greater than 1.25:1.00 (the
                  "DSCR  Requirement"),  provided,  however,  that, in the event
                  that Lender  determines that the DSCR Requirement would not be
                  met in  connection  with such proposed  release,  Lender shall
                  permit  Borrowers to make an  additional  principal  reduction
                  payment (hereinafter  referred to as an "Additional  Principal
                  Payment") as a condition  to such release in an amount  which,
                  when  applied to reduce the  principal  amount of the Loan (in
                  addition to the application of the Release Price in connection
                  therewith),  would  cause the DSCR  Requirement  to be met, as
                  determined by Lender. Such Additional  Principal Payment shall
                  be paid to Lender,  in immediately  available funds,  together
                  with Borrowers' payment to Lender of the Release Price.

     7. Cash Management. Irrespective of the non-existence on the date hereof of
any Cash Trap Event, commencing on the date hereof,  Borrowers shall deposit any
Rents received by Borrowers,  and shall instruct the Collection  Account Bank to
transfer  all  property  receipts  that are cleared on a daily basis to the Cash
Collateral  Account  Bank for  deposit,  into the Cash  Collateral  Account and,
commencing  on the  Next  Payment  Date  and  continuing  on each  Payment  Date
thereafter,  any Rents deposited into the Cash Collateral  Account (or otherwise
received by Borrowers) during the immediately  preceding calendar month shall be
applied as set forth in Section  2.2.3 of the Existing Loan  Agreement,  as said
Section is hereinafter  modified.  Consistent with the foregoing,  Section 2.2.3
and  Section  2.6 of the  Existing  Loan  Agreement  shall be,  and are  hereby,
modified to delete therefrom,  as a condition  precedent to the effectiveness of
the operation  thereof,  the occurrence  and existence of a Cash Trap Event.  In
addition,  said  Section  2.2.3  shall be, and is hereby,  further  modified  to
provide  that any sums  which  remain  after  application  as set  forth in said
Section 2.2.3 shall, so long as no Cash Trap Event exists and is continuing,  be
remitted to Borrowers  (hereinafter,  the  "Borrowers'  Remittance"),  provided,
however,  that,  during the existence of any Cash Trap Event, said sums shall be
remitted  to Lender and applied by Lender to such items in  connection  with the
Loan,  including,  without  limitation,  reduction of outstanding  principal and
accrued  and  unpaid  interest  and  other  sums  thereon,  in  such  order  and
proportion, as Lender, in its sole discretion,  shall elect. Notwithstanding the
foregoing,  on each  Payment  Date that  Borrowers  are  entitled to receive the
Borrowers'  Remittance  hereunder,  Borrowers  and the General  Partners  hereby
authorize  and direct  Lender and the Cash  Collateral  Account Bank directly to
transfer such Borrowers'  Remittance to an account, such account to be specified
by "Mezzanine Lender" (as such quoted term is hereinafter  defined) in a written
notice  delivered by Mezzanine  Lender to the Cash  Collateral  Account Bank and
Lender not less than two (2) Business Days prior to the applicable  Payment Date
(said transfer herein referred to as a "Mezzanine Loan Payment").  Borrowers and
the General  Partners  hereby  acknowledge  and agree that each  Mezzanine  Loan
Payment is intended to be, and shall be, an amount paid by  Borrowers  on behalf
of the General  Partners  out of the  proceeds of an equity  distribution  which
otherwise would be made directly to the General Partners in like amount.

                  Borrowers hereby represent, warrant and confirm to Lender that
(a) all tenants of all the Properties have been irrevocably directed to send all
Rents directly to the  Collection  Account Bank for deposit into the "A" Account
and (b) all such directions remain in full force and effect.

8.       Ongoing Reserves.
-------------------------

                  (a) The amount  required to be deposited by Borrowers  monthly
into the Capital  Reserve Fund shall be modified in respect of Capital  Expenses
and shall be increased to account for Approved  Leasing  Expenses.  Accordingly,
Section 7.4.1 of the Existing Loan  Agreement  shall be, and is hereby,  amended
and restated in its entirety as follows:

                  7.4.1 Capital Reserve Fund;  Leasing  Reserve Fund.  Borrowers
                  shall  pay to  Lender  on the  Next  Payment  Date and on each
                  Payment  Date  thereafter  an  amount  with  respect  to  each
                  Property equal to one-twelfth (1/12th) of the product obtained
                  by  multiplying  (i)  $0.35 by (ii) the  aggregate  amount  of
                  square feet of rentable  space in such Property  (said amounts
                  hereinafter  called the "Capital Reserve Fund").  In addition,
                  Borrowers  shall pay to Lender on the Next Payment Date and on
                  each  Payment Date  thereafter,  as a  sub-account  under (but
                  otherwise,  for purposes of this  Agreement and the Other Loan
                  Documents, to be considered part of) the Capital Reserve Fund,
                  an amount with respect to each Property  equal to  one-twelfth
                  (1/12th) of the product  obtained by multiplying  (i) $1.00 by
                  (ii) the aggregate  amount of square feet of rentable space in
                  such Property (said amounts required to be deposited  pursuant
                  to this  sentence  hereinafter  called  the  "Leasing  Reserve
                  Fund").  Notwithstanding  anything to the  contrary  contained
                  elsewhere in this  Agreement,  Borrowers'  failure to make the
                  payments on account of the Leasing  Reserve  Fund, as required
                  hereby,  shall  constitute  an Event  of  Default  under  this
                  Agreement.

                  (b) The  conditions  precedent set forth in Section 7.5 of the
Existing Loan Agreement for the  disbursement  of funds from the Capital Reserve
Fund and the Leasing  Reserve Fund in respect of Approved  Capital  Expenses and
Approved Leasing Expenses shall be, and are hereby,  modified to add thereto the
additional  requirement  that Borrowers shall have delivered to Lender copies of
invoices and contracts,  to be reasonably  approved by Lender, in respect of all
work for which such disbursement is requested.

     9.  Cross  Default;  Additional  Bankruptcy  Defaults.  The  Loan  shall be
cross-defaulted  with the  Fortress  Loan to the  extent  that  there  occurs an
acceleration (for any reason) of, the Fortress Loan. In addition, any bankruptcy
event  which  occurs  with  respect to any of  Guarantors  or any of the general
partners of any of  Borrowers  shall  constitute  an Event of Default  under the
Loan.  Accordingly,  the  following  respective  subclauses  (xiii) and (xiv) of
Section 8.1(a) of the Existing Loan Agreement shall be, and are hereby, added to
said Section:

                  (xiii)  notwithstanding any contrary  provisions  contained in
                  the  "Pledge  Consent  Agreement"  (as  such  quoted  term  is
                  hereinafter  defined),  if there shall occur an  acceleration,
                  for any reason whatsoever, of the Fortress Loan; or

                  (xiv) if any of the events specified in clauses (vi), (vii) or
                  (viii) of this section 8.1(a) shall happen with respect to any
                  of Guarantors  or any of the  respective  general  partners of
                  Borrowers.

10.      Accelerated Procedures.

                  (a)      [Intentionally deleted].

                  (b)   Borrowers   shall,   and  do  hereby,   absolutely   and
unconditionally agree, on the terms and conditions hereinafter set forth, to the
peaceful and  non-contested  transfer of Borrowers'  respective fee or leasehold
interests,  as  the  case  may  be,  to the  Properties  and  all of  Borrowers'
respective other right, title and interest in and to the Mortgaged Properties to
Lender,  its assignee(s),  designee(s) or nominee(s),  to be effected by, at the
election  of  Lender,   (i)  a   non-contested   foreclosure  of  the  Mortgages
(hereinafter,  a "Friendly  Foreclosure"),  in which case, Borrowers shall fully
cooperate  with  Lender  and shall  deliver  such  documentation  in  connection
therewith as Lender shall require, or (ii) delivery, in lieu of foreclosure,  of
the  Transfer  Documents,  in  either  case on the  earlier  to occur of (a) the
Maturity  Date, and (b) the date Lender shall declare the Loan to be immediately
due and payable as the result of the  occurrence of an Event of Default  arising
out of  Borrowers'  failure to make any  scheduled  payment of  interest  and/or
principal on the Loan. In connection  therewith,  each of Borrowers has executed
and delivered the Transfer  Documents to Escrow  Agent.  The Transfer  Documents
shall be held by Escrow  Agent and shall not be  released  to Lender  unless and
until the following conditions (the "Transfer  Conditions") have occurred: (i) a
demand for payment in full of the Loan (hereinafter, a "Payment Demand") is made
upon Borrowers in connection with either (x) the occurrence of the Maturity Date
of the Loan or (y) Lender's  declaration of the Loan to be  immediately  due and
payable as the result of the  occurrence  of an Event of Default  arising out of
Borrowers' failure to make any scheduled payment of interest and/or principal on
the Loan and (ii)  Borrowers  have failed to make such  payment and such failure
has  continued  for  three  (3)  days.  Upon  the  occurrence  of  the  Transfer
Conditions, Lender shall be, and is hereby, authorized, at Lender's election, in
its sole  discretion,  either to (a)  initiate  a  Friendly  Foreclosure  of the
Mortgages, as aforesaid, or (b) authorize and direct Escrow Agent to release the
Transfer  Documents to Lender for recordation  and/or filing, at Borrowers' sole
cost and expense,  in the  appropriate  jurisdictions.  In  connection  with the
exercise by Lender of any of its rights or remedies under this Section 10(b) and
the transfer of the Properties pursuant either to a Friendly  Foreclosure or the
Transfer  Documents,  Lender  agrees that it shall  comply  with the  procedures
outlined  on the  Schedule  of  Terms  of Sale  Procedures  annexed  hereto  and
incorporated  herein.  Upon the release of the Transfer  Documents in respect of
any Mortgaged Property and the actual transfer of such Mortgaged Property either
pursuant to such  Transfer  Documents  or  pursuant  to a Friendly  Foreclosure,
Borrowers  shall  receive a credit  against the "Total  Payoff  Amount" (as such
quoted term is defined in the  aforesaid  Schedule of Terms of Sale  Procedures)
equal to the "Agreed Value" (as such quoted term is hereinafter defined) of such
Mortgaged Property;  for purposes of this Section 10(b), the term "Agreed Value"
shall mean the "fair  market  value" of the  Mortgaged  Property in question (as
such quoted term is defined in EXHIBIT A attached hereto), as of the date of the
Payment  Demand,  as determined by the mutual  agreement of Lender and Borrowers
within 20 days of Lender's  delivery of the Payment Demand (the last day of said
time period  herein  referred to as the  "Appraisal  Trigger  Date"),  provided,
however,  that, in the event that Lender and Borrowers are unable,  on or before
the Appraisal Trigger Date, to agree upon the fair market value of the Mortgaged
Property in  question,  then such fair market value shall be  determined  in the
manner set forth on, EXHIBIT A attached hereto.

                  The rights,  powers and  remedies of Lender under this Section
10 shall be cumulative  with, and not exclusive of, any other,  right,  power or
remedy which Lender may have against Borrowers, Guarantors, or any other obligor
in respect of the Loan,  whether pursuant to the Loan Agreement,  the Mortgages,
the Guaranty, or any of the other Loan Documents,  existing at law or in equity,
or otherwise, including, without limitation, the remedy of foreclosure, judicial
or non-judicial,  under the Mortgages,  all of which rights, powers and remedies
may be pursued singly, concurrently or otherwise, at such time and in such order
as Lender may determine in Lender's sole discretion. In addition, without in any
way limiting the generality of the foregoing,  nothing contained in this Section
10 shall (x) restrict Lender from commencing,  at Lender's election,  any action
which Lender would otherwise be entitled to commence  against  Guarantors  under
the Guaranty  concurrently with Lender's exercise of remedies under this Section
10, including, without limitation, irrespective of whether the Fair Market Value
of any of the Mortgaged  Properties has been established for purposes hereof, or
(y) obligate  Lender to abide by the procedures and limitations set forth herein
based on the Fair Market Value of the Mortgaged  Properties  in connection  with
the  exercise  by Lender of any of its rights or  remedies,  including,  without
limitation,  foreclosure of the Mortgaged Properties, outside of those set forth
in this Section 10(b).

     11. Property  Management.  Unless  otherwise  consented to by Lender in its
sole and absolute  discretion,  each of the Properties shall at all times during
the term of the Loan be leased,  managed and marketed by the Existing Guarantor.
Without Lender's prior written consent, no fees shall be payable to the Existing
Guarantor  in  connection  with such  leasing,  managing  and  marketing  of the
Properties. The Existing Guarantor shall operate or cause to be operated each of
the  Properties  in a first class manner and  otherwise in  accordance  with the
standard of operation of other factory outlet centers  similarly  situated.  The
Borrowers  acknowledge  and agree  (i) that the  Existing  Guarantor's  right to
manage  the  Properties  shall be  construed  as on the  basis  of a  Management
Agreement  with a thirty (30) day term and providing for automatic  renewal on a
month-to-month  basis,  renewable  by each  Borrower,  and (ii)  that  each such
renewal  shall be subject to the  approval  of Lender;  provided,  however,  the
Lender shall be deemed to have  approved such renewal so long as (x) no Event of
Default has occurred and is continuing and (y) on each DSCR  Determination  Date
the Debt Service  Coverage Ratio for the Properties for the calendar  quarter in
question is not less than  1.00:1.00.  Should any Event of Default  occur or the
Debt Service  Coverage Ratio  aforesaid be less than 1.00:1.00,  Lender,  in its
sole discretion,  may require  Borrowers to terminate the Management  Agreements
that are deemed to be in place and enter  into new  Management  Agreements  with
managers,  and on terms  and  conditions,  acceptable  to Lender in its sole and
absolute  discretion.  Each of such  managers  shall  enter into and  deliver to
Lender a subordination of management  agreement on Lender's form with respect to
each Management Agreement required to be delivered pursuant to this paragraph.

     12. No Subordinate  Debt other than Fortress  Debt;  Other Debt of Existing
Guarantor; Modification of Existing Guaranty.

                  (a)  Lender  has   agreed  to  permit   the   Fortress   Loan.
Accordingly,  the second (2nd)  sentence of Section  6.1(i) of the Existing Loan
Agreement shall be, and is hereby, modified to permit the pledge of interests as
security for the Fortress  Loan, as such pledge is  hereinafter  described.  The
term  "Fortress  Loan"  shall  mean a  mezzanine  loan to be  made  by  Fortress
Investment Group LLC, or an affiliate  thereof,  and Greenwich Capital Financial
Products,  Inc., or an affiliate thereof (collectively,  "Mezzanine Lender"), to
Existing  Guarantor,  which  mezzanine  loan shall be in the original  principal
amount of  $90,000,000,  shall have a stated maturity date of December 31, 2003,
and  shall be at an  interest  rate,  and  otherwise  on terms  and  conditions,
acceptable to Lender in all  respects,  as the same may be modified from time to
time without Lender's consent,  to the extent permitted under the Pledge Consent
Agreement.  The Mezzanine Loan may be secured by a pledge by Existing  Guarantor
of its respective partnership interests, as managing general partner, in each of
Borrowers, but otherwise shall not be secured by any of the Mortgaged Properties
or  Borrowers'  respective  interests  therein;  as a condition  to such pledge,
Mezzanine  Lender and Lender shall have entered into a pledge consent  agreement
on terms and conditions acceptable to Lender in its sole and absolute discretion
(the "Pledge  Consent  Agreement"),  which terms and  conditions  shall include,
inter  alia,  Mezzanine  Lender's  agreement  that it will not  foreshorten  the
aforesaid  maturity date of the Mezzanine  Loan without  Lender's  prior written
consent.

                  (b) In addition,  each of the Existing Loan  Agreement and the
Existing  Guaranty  shall  be,  and is  hereby,  modified  to add the  following
negative covenant with respect to Existing Guarantor:

                  Other than the  Fortress  Loan  (including  as the same may be
                  increased  or  supplemented  from  time  to  time),   Existing
                  Guarantor  shall not incur or permit  (a) any new debt  (other
                  than  first-mortgage  lien debt),  that (x) does not repay, in
                  full,   a  like   amount  of   existing   debt   (other   than
                  first-mortgage  lien  debt) or repay,  dollar-for-dollar,  the
                  Loan,  or (y) has a maturity  on or before the  Maturity  Date
                  under the Existing Loan Agreement,  as modified hereby, or (b)
                  any new  guaranties  or other  obligations  in the nature of a
                  guaranty  with  respect  to any  other  debt  that  (i) do not
                  replace,  in full, a like amount of existing guaranties of, or
                  other similar liabilities with respect to, other debt, or (ii)
                  mature on or before the Maturity  Date under the Existing Loan
                  Agreement, as modified hereby.

                  (c) The  Existing  Guaranty  shall be, and is hereby,  further
modified by deleting from Section 14(a)  thereof the  requirement  that the REIT
shall   at  all   times   cause   its   common   stock   to  be   listed   on  a
nationally-recognized  stock exchange,  provided, however, that, the substantive
financial and other reporting  requirements  imposed on Existing Guarantor under
the Existing  Guaranty which derive from such listing shall remain unaffected by
the foregoing modification; that is to say, Existing Guarantor shall continue at
all times to comply with such reporting requirements, on a substantive basis, as
if the REIT at all times remained a public company.

     13.  Defeasance.  Notwithstanding  anything to the contrary in the Existing
Loan Agreement or any of the other Existing Loan Documents,  Borrower shall have
no rights either to (x)  substitute  any of the Properties as collateral for the
Loan or (y) defease the Loan. In connection  with the foregoing,  Sections 2.4.3
through 2.4.5,  inclusive, of the Existing Loan Agreement shall be of no further
force or effect.

     14. Exit Fee.  Section 2.7(b) of the Existing Loan Agreement  shall be, and
is hereby, amended and restated in its entirety as follows:

                  (b) Borrowers shall pay to Lender an exit fee (the "Exit Fee")
                  in the  event  that the Loan is  repaid,  in whole or in part,
                  other than with proceeds of permanent  financing obtained from
                  Lender.  The  Exit Fee  shall be equal to 1% of the  principal
                  amount of the Loan so repaid,  not  including  that portion of
                  the  principal  amount of the Loan so repaid with the proceeds
                  of permanent financing obtained from Lender.

     15. Notices to Lender and Mezzanine Lender.  The provisions of Section 10.6
of the Existing Loan Agreement shall be, and are hereby, modified as follows:

     (a) The  address  for  Lender  set forth  therein  shall be, and is hereby,
changed to the following:

                           Nomura Asset Capital Corporation
                           Two World Financial Center
                           Building B, 18th Floor
                           New York, New York  10281
                           Attention:  General Counsel

                  with a copy to (in  addition to the other copy  addresses  for
Lender set forth in the Existing Loan Agreement):

                           Paul, Hastings, Janofsky & Walker LLP
                           75 E. 55th Street
                           New York, New York  10022
                           Attention:  Steven Koch, Esq.

                  (b) Copies of any notices  delivered  to Borrowers or Existing
Guarantor shall also be delivered to Mezzanine  Lender at the following  address
and in the manner required by Section 10.6 of the Existing Loan Agreement:

                           FRIT PRT Lending LLC
                           c/o Fortress Registered Investment Trust
                           1301 Avenue of the Americas, 42nd Floor
                           New York, New York  10019
                           Attention:  William E. Doniger

                  with a copy to:

                           Greenwich Capital Financial Products, Inc.
                           311 S. Wacker Drive, Suite 325
                           Chicago, Illinois  60603
                           Attention:  David Murdoch and John Burke

                  and:

                           Greenwich Capital Financial Products, Inc.
                           600 Steamboat Road
                           Greenwich, Connecticut  06830

     16.  Additional  Modification of Mortgage  encumbering the Latham Property.
The  Mortgage   encumbering  the  Latham   Property,   which  Mortgage  is  more
particularly described in the Master Schedule, shall be, and is hereby, modified
to add the following provision thereto:

                  Upon the  occurrence of an Event of Default,  Mortgagee  shall
                  have the right and power to sell the  Mortgaged  Property in a
                  non-judicial proceeding pursuant to applicable law.

     17. Costs and Expenses.  Borrowers shall pay all recording and filing fees,
transfer  taxes,  title  insurance  premiums,  escrow  and other  title  company
charges,  reasonable attorneys' fees (including the reasonable fees and expenses
of local  counsels  for Lender) and all other  out-of-pocket  costs and expenses
incurred by Lender in connection with this Agreement and the modification of the
Loan.

     18. References. All references in the Existing Loan Documents or any of the
Loan  Documents  executed in connection  with this Agreement to the "Loan" or to
any of the "Loan  Documents,"  shall be deemed to refer to the Existing  Loan or
the applicable Existing Loan Document, as the case may be, as modified,  amended
and supplemented  pursuant to the provisions of this Agreement,  and as the same
may from time to time be  further  amended,  modified,  extended,  supplemented,
renewed, replaced or restated.

     19. No Offsets,  Defenses,  Etc. Borrowers acknowledge and agree that as of
the date hereof there are no offsets,  defenses or  counterclaims  of any nature
whatsoever with respect (i) to the Existing Loan Documents, as modified, amended
and  supplemented  pursuant to the provisions of this Agreement,  or (ii) to the
payment  of  the  indebtedness  evidenced  and  secured  by  the  Existing  Loan
Documents,  as  modified,  amended  and  supplemented  pursuant to the terms and
provisions of this Agreement.

     20. Full Force and Effect. Borrowers agree that all of the terms, covenants
and  conditions of the Existing Loan  Documents,  except as expressly  modified,
amended and supplemented pursuant to the provisions of this Agreement, remain in
full force and effect. In the event of any inconsistencies between the terms and
provisions of the Existing Loan  Documents and the terms and  provisions of this
Agreement,  the terms and provisions of this Agreement shall govern and control.
Borrowers hereby confirm that (i) the covenants,  representations and warranties
in the Existing Loan  Agreement,  the Existing  Mortgages and the other Existing
Loan  Documents are hereby  reconfirmed as of the date hereof and (ii) as of the
date hereof  there has not been any change in  circumstances  which would render
the representations and warranties contained in the Existing Loan Agreement, the
Existing Mortgages or the other Existing Loan Documents  incorrect or false in a
manner which would have a materially  adverse effect on the ability of Borrowers
to meet their  respective  obligations  under the Existing  Loan  Documents  (as
amended, modified and supplemented pursuant to this Agreement).

     21.  Entire  Agreement.   Borrowers  acknowledge  that  the  Existing  Loan
Documents,  as modified,  amended and supplemented pursuant to the provisions of
this Agreement,  set forth the entire agreement and  understanding of Lender and
Borrowers,  and Borrowers absolutely,  unconditionally and irrevocably waive any
and all  right to  assert  any  defense  (other  than  defenses  of  payment  or
performance),  setoff,  counterclaim  or  crossclaim  (other than a mandatory or
compulsory  counterclaim)  against  Lender with respect to (i) the Existing Loan
Documents,  as modified,  amended and supplemented pursuant to the provisions of
this  Agreement,  or (ii) the  respective  obligations  of  Borrowers  under the
Existing Loan Documents,  as modified,  amended and supplemented pursuant to the
provisions of this Agreement,  or (iii) the respective  obligations of any other
person or party relating to the Existing Loan  Documents,  as modified,  amended
and  supplemented  pursuant to the  provisions  of this  Agreement,  or (iv) the
respective  obligations of Borrowers  hereunder or otherwise with respect to the
Existing  Loan in any action or  proceeding  brought  by Lender to  collect  the
indebtedness evidenced and secured by the Existing Loan Documents,  as modified,
amended and supplemented pursuant to this Agreement,  or any portion thereof, or
to enforce,  foreclose and realize upon the liens and security interests created
by the Existing Loan Documents,  as modified,  amended and supplemented pursuant
to the provisions of this Agreement.  Borrowers and Lender agree that no oral or
other  agreements,  understandings,  representations  or  warranties  exist with
respect to the Existing Loan Documents,  as modified,  amended and  supplemented
pursuant to the provisions of this Agreement,  or with respect to the respective
obligations  of  Borrowers  under the  Existing  Loan  Documents,  except  those
specifically set forth in the Existing Loan Documents, as modified,  amended and
supplemented pursuant to the provisions of this Agreement.

     22. Lift of Stay.  In  consideration  of the recitals and mutual  covenants
contained herein, and for other good and valuable  consideration  (including the
agreement  of  Lender to extend  the  Maturity  Date  under  the  Existing  Loan
Agreement and the Existing  Notes pursuant to this  Agreement),  the receipt and
sufficiency of which are hereby  acknowledged,  in the event Borrowers or any of
their  respective  general  partners shall (i) file with any bankruptcy court of
competent  jurisdiction  or be the subject of any petition under Title 11 of the
United  States  Code,  as  amended,  (ii) be the subject of any order for relief
issued under such Title 11 of the United States Code, as amended,  (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 state act or law relating to bankruptcy, insolvency
or other relief for debtors,  (iv) have sought or consented to or  acquiesced in
the  appointment  of any trustee,  receiver or liquidator  for itself or for any
substantial portion of its assets, (v) be the subject of any order,  judgment or
decree entered by any court of competent jurisdiction approving a petition filed
against   such   party  for  any   reorganization,   arrangement,   composition,
readjustment,  liquidation,  dissolution  or similar relief under any present or
future federal or state act or law relating to bankruptcy,  insolvency or relief
for  debtors,  and as a result  thereof  Lender's  ability to complete a sale at
foreclosure or other  conveyance of the Properties or to exercise or enforce any
of Lender's  other rights or remedies  under the Existing  Loan  Agreement,  the
Existing Notes, the Existing  Mortgages,  the Existing  Guaranty,  or any of the
other  Existing  Loan  Documents  (all as  modified,  amended  and  supplemented
pursuant to this Agreement), or under this Agreement or the Special Guaranty, at
law or in equity, is interfered with, impeded or otherwise impaired because of a
stay of such sale, conveyance,  exercise or enforcement in such proceeding, then
in any such event Borrowers  agrees that any such action described in clause (i)
through (v) above shall have been filed in bad faith and in  abrogation  of this
Agreement and should be deemed by the applicable  bankruptcy  court to have been
so filed,  and Lender shall thereupon be  automatically  entitled to relief from
any automatic  stay imposed by Section 362 of Title 11 of the United States Code
(or any successor or similar statute),  as amended, or otherwise,  on or against
the  exercise  of the  rights  and  remedies  otherwise  available  to Lender as
provided in the  Existing  Loan  Agreement,  the  Existing  Notes,  the Existing
Mortgages,  the Existing  Guaranty,  or any of the other Existing Loan Documents
(all as modified, amended and supplemented pursuant to this Agreement), or under
this Agreement or the Special Guaranty,  or as otherwise provided by law and, in
the event of the  occurrence  of any of the  events  described  in  clauses  (i)
through  (v)  above,  neither  Borrowers  nor any of  their  respective  general
partners will take any action to impede,  restrain or restrict  Lender's  rights
and remedies  under this  Agreement or otherwise,  whether under Sections 105 or
362 of Title 11 of the United States Code (or any successor or similar statute),
as amended or otherwise.  In addition,  Borrowers  waive the right to extend the
one hundred  twenty  (120) day period  under which the debtor has the  exclusive
right to file a plan of reorganization in any case involving Borrowers as debtor
under Title 11 of the United States Code, as amended.

     23.  Confirmation of Existing  Guarantor;  Modification of the Defined Term
"Guarantor".  Existing  Guarantor  hereby  joins in this  Agreement  in order to
induce Lender to extend and modify the Existing Loan, and hereby:

                           (a)  acknowledges  the  continuing  validity  of  the
                  Existing   Guaranty,   as  modified  hereby,  and  represents,
                  warrants and confirms the  non-existence as of the date hereof
                  of  any  offsets,   defenses  or   counterclaims  to  Existing
                  Guarantor's  obligations   thereunder,   and  waives  Existing
                  Guarantor's  right to assert against Lender any defense (other
                  than   defenses   of  payment   and   performance),   set-off,
                  counterclaim   or  crossclaim   (other  than  a  mandatory  or
                  compulsory  counterclaim) of any nature  whatsoever  hereafter
                  arising in any litigation  relating to the Existing  Guaranty,
                  or Borrowers'  respective  obligations under the Existing Loan
                  Agreement,  the Existing Notes, the Existing Mortgages, or any
                  of the other Existing Loan Documents (all as modified, amended
                  and  supplemented  pursuant to this  Agreement),  or otherwise
                  with respect to the Loan;

                           (b) reacknowledges and reaffirms all of the terms and
                  obligations  contained in the Existing  Guaranty to the extent
                  not  expressly  modified  herein,  which shall  remain in full
                  force and  effect and  acknowledges,  agrees,  represents  and
                  warrants that,  except as set forth in the Existing  Guaranty,
                  as   modified   herein,   no   oral   or   other   agreements,
                  understandings,   representations  or  warranties  exist  with
                  respect  to the  Existing  Guaranty  or  with  respect  to the
                  obligations of Existing Guarantor thereunder.

                  Consistent   with   the   transactions    and    modifications
contemplated  by this Agreement,  the defined term  "Guarantor" set forth in the
Existing Loan Agreement,  and to the extent set forth in the Existing Notes, the
Existing  Mortgages  and the other  Existing  Loan  Documents,  shall be, and is
hereby,  modified to include and refer to Special  Guarantor,  individually  and
collectively with Existing Guarantor.

     24.  Modifications.   This  Agreement  may  not  be  modified,  amended  or
terminated, except by an agreement in writing signed by the parties hereto.

     25. Successors and Assigns.  This Agreement shall be binding upon and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns.

     26.  Counterparts.  (a)  This  Agreement  may be  executed  in one or  more
counterparts  by some or all of the parties hereto,  each of which  counterparts
shall  be an  original  and all of  which  together  shall  constitute  a single
agreement.  The failure of any party listed below to execute this Agreement,  or
any  counterpart  hereof,  shall not  relieve the other  signatories  from their
obligations  hereunder  as long as each party  hereto has  executed at least one
counterpart of this Agreement.

                  (b) This Agreement may be executed and delivered by facsimile,
and each party  shall be bound by this  Agreement  to the same extent as if such
party had  delivered an original  executed  copy hereof to the other party,  and
agrees that a facsimile  copy of this Agreement  shall be competent,  admissible
evidence in any action,  trial,  arbitration or mediation of any dispute arising
under or relating to this Agreement.  Notwithstanding  the foregoing,  any party
that executes this Agreement by facsimile shall ensure that an original executed
copy hereof is delivered promptly to the other party.

     27. Authority.  Each of Borrowers and Guarantors represents that it has the
full  power and  authority  and the legal  right to  execute  and  deliver  this
Agreement and that this Agreement constitutes its valid, binding and enforceable
obligation  (except  as  such   enforceability  may  be  limited  by  applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or  similar  laws  and by
general equitable  principles,  whether  enforcement is sought by proceedings in
equity or at law).

     28.  Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Illinois,  without regard to principles
of conflict of law.

     29.  Paragraph  Headings.  The  headings,  titles and  captions  of various
paragraphs of this  Agreement are for  convenience of reference only and are not
to be construed as defining or limiting,  in any way, the scope or intent of the
provisions hereof.

     30.  Invalid  Provisions.  If any provision of this Agreement is held to be
illegal,  invalid or unenforceable  under present or future laws, such provision
shall be fully  severable and this Agreement  shall be construed and enforced as
if such illegal,  invalid or unenforceable  provision had never comprised a part
of this Agreement,  and the remaining  provisions of this Agreement shall remain
in full force and effect and shall not be  affected by the  illegal,  invalid or
unenforceable  provision or by its severance  from this  Agreement,  unless such
continued effectiveness of this Agreement, as modified, would be contrary to the
basic understandings and intentions of the parties as expressed herein.

     31. Waiver of Right to Trial by Jury.  THE PARTIES  HERETO HEREBY AGREE NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE  TRIABLE  OF RIGHT BY JURY,  AND WAIVE ANY
RIGHT TO TRIAL BY JURY  FULLY TO THE  EXTENT  THAT ANY SUCH  RIGHT  SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO ANY OF THE EXISTING LOAN DOCUMENTS,  AS MODIFIED,
AMENDED AND SUPPLEMENTED PURSUANT TO THIS AGREEMENT,  OR THIS AGREEMENT,  OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN  KNOWINGLY  AND  VOLUNTARILY  BY THE  PARTIES
HERETO,  AND IS INTENDED TO ENCOMPASS  INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD  OTHERWISE  ACCRUE.  THE  PARTIES
HERETO ARE HEREBY  AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

                        [END OF PAGE; SIGNATURES FOLLOW.]

<PAGE>

                  IN WITNESS WHEREOF, each of Borrowers,  each of Guarantors and
Lender  have duly  executed  this  Agreement  as of the day and year first above
written.

                         BORROWERS:

                         BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP,
                          a Delaware limited partnership

                         By: Prime Retail, L.P., a Delaware limited partnership,
                              its Managing General Partner

                         By: Prime Retail, Inc., a Maryland corporation,
                              its general partner

                                               By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

                         THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP,
                          a Delaware limited partnership

                         By: Prime Retail, L.P., a Delaware limited partnership,
                              its Managing General Partner

                         By: Prime Retail, Inc., a Maryland corporation,
                              its general partner

                                               By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

<PAGE>

CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                              By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

<PAGE>

SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

GUARANTORS:

PRIME RETAIL, L.P., a Delaware limited partnership

By: Prime Retail, Inc., a Maryland corporation, its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

PRIME RETAIL, INC., a Maryland corporation

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

<PAGE>

                               LENDER:

                               NOMURA ASSET CAPITAL CORPORATION,
                                a Delaware corporation

                                            By:  /s/ Stuart Simon
                                                 ----------------
                                               Name:  Stuart Simon
                                               Title: Managing DirectorEXECUTION COPY

                            L O A N A G R E E M E N T

THIS LOAN AGREEMENT (together with the exhibits,  annexes and schedules attached
hereto,  this  "Agreement") made as of the 22nd day of December,  2000,  between
FRIT PRT LENDING LLC, a Delaware limited liability company,  having an office at
1301 Avenue of the Americas,  42nd Floor,  New York, New York 10019  ("Lender"),
and PRIME RETAIL, L.P., a Delaware limited partnership,  having an office at 100
East Pratt Street, 19th Floor, Baltimore, Maryland 21202 ("Borrower").

                              W I T N E S S E T H

WHEREAS,  Prime Retail, Inc., a Maryland corporation  ("Holdings"),  is the sole
general partner and owner of 80.1% of the outstanding common units of Borrower;

WHEREAS,  Borrower,  Holdings and the  entities  listed on Exhibit C hereto (the
"Subsidiary Guarantors"), own directly and/or indirectly the ownership interests
in the  entities  holding  fee title in certain  properties  listed on, and more
particularly   described  in,  Exhibit  A  hereto  (each,   a  "Property",   and
collectively,  the  "Properties"),  and the Guarantors have  guaranteed  certain
obligations pursuant to the Guaranty (as defined herein);

WHEREAS,  at the  request of  Borrower,  Lender has agreed to fund to Borrower a
term loan of Ninety Million Dollars ($90,000,000.00) (the "Loan");

NOW,  THEREFORE,  in  consideration  of ten  dollars  ($10) and  other  good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto hereby covenant and agree as follows:

                                   ARTICLE I
                                 LOAN PROVISIONS

1.1  Capitalized  Terms.  All  capitalized  terms used herein and not  otherwise
     defined herein shall have the meanings set forth in Exhibit B hereto.

1.2  Accounting Principles;  Subsidiaries.  Except as otherwise provided in this
     Agreement,   all  computations  and  determinations  as  to  accounting  or
     financial matters and all financial  statements to be delivered pursuant to
     this  Agreement  shall  be  made  and  prepared  in  accordance  with  GAAP
     (including  principles of consolidation  where  appropriate),  consistently
     applied,  and all  accounting  or  financial  terms shall have the meanings
     ascribed  to such  terms  by  GAAP.  If at any  time a Loan  Party  has any
     Subsidiaries,  all accounting and financial terms herein shall be deemed to
     include  references to  consolidation  and  consolidating  principles,  and
     covenants,  representations  and  agreements  relating  to  accounting  and
     financial  matters  with  respect  to a Loan Party and its  properties  and
     activities shall be deemed to refer to such Loan Party and its consolidated
     Subsidiaries  collectively.  For  purposes of Section  8.11,  GAAP shall be
     determined  on the  basis of such  principles  in effect on the date of the
     most recent annual audited financial  statements  provided hereunder (or if
     prior to  delivery of the first such annual  audited  financial  statements
     hereunder, then on a basis consistent with the audited financial statements
     delivered to Lender prior to the date hereof;  provided,  however,  that if
     due to a  change  in  application  of GAAP or the  rules  promulgated  with
     respect  thereto,  the Lender shall object to  determination  of compliance
     with the financial  covenants in Section 8.11 on such basis,  within thirty
     (30)  days  after  delivery  of  such  financial   statements,   then  such
     calculations  shall be made on a basis  consistent  with  the  most  recent
     financial  statements  delivered as to which no such  objection  shall have
     been made.

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

1.4  Uniform  Commercial Code Terms.  Except as otherwise  provided or amplified
     (but not limited) herein,  terms used in this Agreement that are defined in
     the Uniform Commercial Code shall have the same meanings herein.

1.5  General  Construction;  Captions.  All  definitions and other terms used in
     this Agreement and the other Loan Documents shall be equally  applicable to
     the singular and plural forms  thereof,  and all  references  to any gender
     shall include all other genders. The words "hereof," "hereto," "herein" and
     "hereunder"  and words of similar import when used in this Agreement  shall
     refer  to this  Agreement  as a whole  and not to any  particular  Article,
     Section  or  clause in this  Agreement.  References  herein to an  Exhibit,
     Schedule,  Article,  Section or clause  refer to the  appropriate  Exhibit,
     Schedule,  Article,  Section or clause in this Agreement  unless  otherwise
     specified.  The word "including" shall have the meaning  represented by the
     phrase "including,  without limitation." The captions and table of contents
     in this  Agreement and the other Loan Documents are for  convenience  only,
     and in no way limit or amplify the provisions hereof.

1.6  References to Documents and Laws.  All defined terms and references in this
     Agreement  or any of the  other  Loan  Documents  to any  agreement,  note,
     instrument,  certificate  or other document shall be deemed to refer to all
     amendments,    modifications,     renewals,    extensions,    replacements,
     restatements,  substitutions and supplements thereof and to all appendices,
     exhibits or schedules thereto, in each case as the same may be in effect at
     any and all times such reference becomes  operative.  All references herein
     and in any of the other Loan  Documents to any Applicable Law shall include
     all amendments  thereof and any successor statute and regulations under any
     of the foregoing.

                                   ARTICLE II
                           AMOUNT AND TERMS OF CREDIT

2.1  Term Loan Commitment.

(a)  On the terms and subject to the  conditions  hereof,  the Lender  agrees to
     loan to Borrower on the Closing Date the  principal  sum of Ninety  Million
     Dollars ($90,000,000.00) (the "Loan Amount"). Amounts repaid or prepaid may
     not be reborrowed under this Agreement.

(b)  Borrower  shall on the date  hereof  pay to  Lender,  in  consideration  of
     advancing  the Loan,  the Loan Fee (as defined in Section  2.14(a)),  which
     shall be deemed fully and  irrevocably  earned and shall be paid in full on
     the  Closing  Date from the  proceeds  of the Loan  advances on the Closing
     Date.  That  portion of the Loan Fee which is in excess of two percent (2%)
     of the  initial  Loan  Amount  is  acknowledged  and  agreed  to be paid in
     connection  with the sale of the  Purchase  Properties  under the  Purchase
     Agreement,  insofar as it is acknowledged  and agreed that if the purchaser
     under the Purchase Agreement (which is an affiliate of the Lender) were not
     willing to enter into the  Purchase  Agreement  and  purchase  the Purchase
     Properties pursuant thereto, the Loan would not have been made.

2.2  Note.  The Borrower  shall  execute and deliver to each Lender and Assignee
     one or more notes to evidence the  obligation  of the Borrower to repay the
     Loan Amount together with interest thereon as described herein. The note or
     notes shall be in principal amounts  aggregating to the Loan Amount,  dated
     the Closing Date, and in the form of Exhibit E (collectively, together with
     any Amendments thereto, the "Note").

2.3  Reliance on Notices.  The Lender shall be entitled to rely upon,  and shall
     be fully  protected  in  relying  upon,  any  certificate,  notice or other
     writing  believed by the Lender to be  genuine.  The Lender may assume that
     each Person  executing and delivering such certificate or other writing was
     duly authorized,  unless the responsible  individual acting thereon for the
     Lender has actual knowledge to the contrary.

2.4  Use of Proceeds. Borrower shall use the Loan Amount solely for the purposes
     and uses and in the amounts set forth in the Sources and Uses Statement.

2.5  Loan Interest and Amortization.

(a)  Borrower  shall pay in advance on the Closing  Date an amount  equal to the
     interest  accruing on the Loan from the Closing Date until January 1, 2001.
     Commencing on February 1, 2001 (the "First Payment  Date"),  and continuing
     on the first  Business  Day of each and  every  successive  calendar  month
     thereafter  (each,  including  the First  Payment  Date, a "Payment  Date")
     through and  including the Payment Date  immediately  prior to the Maturity
     Date,  Borrower shall pay to Lender monthly payments of accrued interest at
     the Applicable Interest Rate.

(b)  On each Payment Date, the Borrower shall pay to Lender, (i) for application
     in  reduction of the  principal  balance of the Note,  the Minimum  Monthly
     Amortization Amount and (ii) the Additional Fee applicable thereto.

(c)  Within thirty (30) days following each Quarterly Payment Date, the Borrower
     shall pay to  Lender,  for  application  pro rata (i) in  reduction  of the
     principal balance of the Note and (ii) to the payment of the Additional Fee
     associated with such reduction,  the Available  Consolidated  Cash Flow for
     the immediately  preceding  Fiscal Quarter.  Borrower  covenants and agrees
     with Lender that Available Consolidated Cash Flow applicable to each Fiscal
     Quarter  shall  be  available  solely  for the  application  to the Loan as
     required  hereunder.  Notwithstanding  the  thirty  (30) day  grace  period
     specified  hereunder,  Borrower  acknowledges  and agrees  that it may only
     apply  Available  Consolidated  Cash Flow with  respect to the  immediately
     preceding  Fiscal Quarter to the payment required under this Section 2.5(c)
     and shall not apply Revenues  attributable  to periods after the applicable
     Quarterly Payment Date for such payment.

2.6  Maturity.  The entire outstanding  principal balance of the Note,  together
     with accrued and unpaid interest,  any Additional Fee and any other amounts
     due under the Note and the other Loan Documents shall be due and payable on
     December  31,  2003  (the  "Maturity  Date"),  if not  sooner  paid in full
     pursuant to Section 2.7.

2.7  Prepayments; Commitment Reductions.

(a)  Voluntary Prepayment.  Except for required principal  amortization pursuant
     to Section 2.5,  Borrower  may not prepay all or any part of the  principal
     balance of the Loan until January 1, 2002; provided,  that prior to January
     1, 2002 the  entire  then-remaining  balance  of the Loan may be prepaid in
     whole,  but not in part,  upon not less than ten (10) days prior  notice in
     the event, but only in the event, that  substantially all of the assets of,
     or  stock  and  partnership  interests  in,  Holdings  and  (directly,   or
     indirectly through the transfer of ownership of Holdings) Borrower are sold
     to a Person (or affiliated group of Persons) not currently  affiliated with
     Holdings  and  Borrower in a single,  bona fide,  arms-length  transaction,
     provided  that such  prepayment  is  accompanied  by the payment of (1) all
     interest  accrued but unpaid on the Loan, (2) all Breakage  Costs,  if any,
     with  respect  to  such  prepayment,  as  determined  by  Lender,  (3)  the
     Additional  Fee and all other  sums due  hereunder  or under the other Loan
     Documents through the date of such prepayment,  and (4) an additional yield
     maintenance  payment in an amount  equal to the  interest  which would have
     accrued  and  become  payable  on the Loan (had the Loan not been  prepaid)
     covering  the  period  commencing  on the date of such  prepayment  through
     January 1, 2002  (assuming all Monthly  Amortization  Amounts had been paid
     when  due  during  the  course  of  such  period,  but  assuming  no  other
     prepayments  of the  Loan  occurred)  at a rate of  interest  equal  to the
     weighted average  Applicable  Interest Rate from the initial funding of the
     Loan to the date of such prepayment.  On or after January 1, 2002, provided
     no  Event of  Default  exists,  the  principal  balance  of the Note may be
     prepaid in whole or in part,  provided that (i) written  irrevocable notice
     of such  prepayment  specifying the intended date of prepayment is received
     by  Lender  not more than  sixty  (60) days and not less than ten (10) days
     prior  to the  date  of  such  prepayment,  (ii)  such  prepayment  must be
     accompanied  by all  interest  accrued  but unpaid on the Loan,  (iii) such
     prepayment  must also be  accompanied by all Breakage  Costs,  if any, with
     respect  to such  prepayment,  as  determined  by  Lender,  and  (iv)  such
     prepayment  must also be  accompanied  by the  Additional Fee and all other
     sums due  hereunder or under the other Loan  Documents  through the date of
     such prepayment.  Notwithstanding anything to the contrary herein or in the
     Note,  any notice of  prepayment  pursuant to this Section  2.7(a) shall be
     irrevocable and the principal  balance of the Note specified for prepayment
     in such notice shall be absolutely and  unconditionally  due and payable on
     the date specified in such notice,  unless (i) Borrower revokes such notice
     of  prepayment  in  writing  at  least  five  (5)  days  prior  to the date
     designated as the prepayment  date in such notice of  prepayment,  and (ii)
     pays  all  of  Lender's  costs  and  expenses   incurred  related  to  such
     prospective prepayment.

(b)  Mandatory Prepayment.

(i)  Asset Dispositions. In the event of receipt by any Borrower Group Member of
     Asset Disposition Net Proceeds,  the Borrower shall prepay the Loan and the
     Additional Fee associated with such prepayment on the Business Day on which
     such Asset Disposition Net Proceeds are received.

(ii) Casualty.  In the event of receipt by any Borrower Group Member of any Loss
     Proceeds,  the  Borrower  shall  prepay the Loan to the extent  required by
     Section 7.3 hereof.

(iii)Issuance of Debt.  Subject to Section 7.20,  Borrower shall obtain Lender's
     prior written approval prior to the issuance of any Indebtedness other than
     Permitted  Debt,  which  approval may be withheld by Lender in its sole and
     absolute discretion. If any Indebtedness shall be issued or incurred by any
     Borrower  Group  Member,  other than Trade  Payables  included as Permitted
     Debt,  Borrower shall cause an amount equal to 100% of the proceeds of such
     Indebtedness, net of reasonable loan expenses approved by Lender in writing
     in its sole  discretion,  to be  applied  on the date of such  issuance  or
     incurrence  toward  the  prepayment  of the  Loan  and the  Additional  Fee
     associated  with  such  prepayment;  provided,  that  the  proceeds  of the
     refinancing  of the Birch Run  Property,  including  but not limited to any
     portion  of such  proceeds  which are used to repay the Prime Note made and
     given by Birch Run Outlets, L.L.C., shall not immediately be used to prepay
     the Loan but instead shall be deposited into the Other Deposit  Account for
     application  as provided in Article XII of this  Agreement  (i.e.,  for the
     funding  of the debt  service  and  reserves,  and  disbursements  into the
     Borrower's  Operating Account for application for purposes set forth in the
     Approved  Operating  Budget),  provided that any unexpended portion of such
     proceeds  at the end of a given  month  shall not be  included  in the ACCF
     Set-Aside until the end of the calendar quarter in which the refinancing of
     the Birch Run  Property  occurs,  at which  time any  remaining  unexpended
     proceeds shall be included in the ACCF Set-Aside and applied as provided in
     Article  XII to (i) the  prepayment  of the  Loan  and the  payment  of the
     Additional  Fee  associated  with  such  prepayment,  as part of  Available
     Consolidated  Cash Flow, and (ii) the  replenishment of the Working Capital
     Reserve as provided in Article XII.

(iv) Puerto  Rico  Loan  Advance.  Borrower  shall use  commercially  reasonable
     efforts to qualify  and to cause the  relevant  Borrower  Group  Members to
     qualify for the advance of up to an additional $5,000,000 (the "Puerto Rico
     Loan  Advance")  under the  Puerto  Rico  Mortgage  and the loan  documents
     associated therewith,  and upon such qualification to draw upon the maximum
     available amount of the Puerto Rico Loan Advance, whereupon the proceeds of
     such  advance  shall be  applied  on the date of such  advance  toward  the
     prepayment  of the  Loan  and  the  Additional  Fee  associated  with  such
     prepayment.

(v)  Schedule V Covenants.  Borrower shall observe and perform the covenants and
     agreements  set forth in Schedule V attached  hereto and made a part hereof
     (the "Schedule V Covenants").

(c)  Application of Payments.  Each prepayment  pursuant to Section 2.7(b) shall
     be  applied  to the  installments  due under the Loan in  inverse  order of
     maturity and in accordance with Section 2.10.

(d)  Breakage Costs. Borrower agrees to indemnify, defend and protect Lender and
     to hold Lender  harmless  from and against any loss or expense which Lender
     sustains  or  incurs  as a  consequence  of  (i)  any  prepayment  (whether
     voluntary or  mandatory) of the Loan (A) on a day which is the Payment Date
     if  Borrower  did not give the  prior  written  notice  of such  prepayment
     required  pursuant to the terms of this Agreement or (B) on any day that is
     not the Payment Date, including,  without limitation,  such loss or expense
     arising  from  interest  or fees  payable  by  Lender to  lenders  of funds
     obtained  by it based on the  LIBOR  Rate (or  similar  rate)  and (ii) the
     conversion (for any reason whatsoever, whether voluntary or involuntary) of
     the Applicable  Interest Rate to the Adjusted Treasury Rate with respect to
     any portion of the outstanding principal amount of the Loan on a date other
     than a Payment Date, including,  without limitation,  such loss or expenses
     arising  from  interest  or fees  payable  by  Lender to  lenders  of funds
     obtained  by it  based on the  LIBOR  Rate (or  similar  rate)(the  amounts
     referred to in clauses (i) and (ii) are herein  referred to collectively as
     the "Breakage Costs").

(e)  Silverthorne/Lebanon Transaction. Lender hereby consents to the addition of
     that  certain  property  known as Prime  Outlets at Lebanon  (the  "Lebanon
     Property") as collateral under the Senior Megadeal Loan in exchange for the
     release of that certain  property  known as Prime  Outlets at  Silverthorne
     (the  "Silverthorne  Property") as collateral from the Senior Megadeal Loan
     and  the  subsequent  sale  of  such  property  (the  "Silverthorne/Lebanon
     Transaction")  only so long as all of the  following  conditions  have been
     satisfied:  (i) the Senior Megadeal Lender has approved the substitution of
     the Lebanon  Property for the Silverthorne  Property;  (ii) the sale of the
     Silverthorne  Property  is  conducted  in  accordance  with the  terms  and
     conditions of that certain Real Estate Sale Agreement for  Commercial  Real
     Property  dated as of November 3, 2000 by and between The Prime  Outlets at
     Silverthorne  Limited  Partnership  and Denman  Investment  Corporation and
     Former TCE LLC (the "Siverthorne  Contract");  (iii) the loan from Key Bank
     encumbering  the Lebanon  Property is paid off with the  proceeds  from the
     sale of the  Silverthorne  Property and any excess proceeds are used to pay
     down this Loan; and (iv) the net disposition  proceeds from the sale of the
     Silverthorne Property following the pay down of the Lebanon Property are at
     least $12,000,000, such that at least $12,000,000 are available and used to
     repay the Loan and Additional Fees associated with such repayment.

2.8  Interest and Applicable Margin.

(a)  The  Borrower  shall  pay  accrued  interest  on the Loan to the  Lender in
     accordance  with Section  2.5(a)  based on the  Applicable  Interest  Rate.
     Adjustments to the Applicable  Interest Rate in connection  with changes in
     the LIBOR Rate shall be made on the LIBOR Adjustment Date.

(b)  If any  payment on the Loan  becomes  due and payable on a day other than a
     Business  Day,  such  payment  shall be due on the  immediately  succeeding
     Business Day.

(c)  All  computations  of  fees  calculated  on a per  annum  basis  and of the
     Applicable  Interest Rate shall be made by the Lender on the basis of a 360
     day year for the actual number of days elapsed.  Each  determination by the
     Lender  of the  Applicable  Interest  Rate  and  fees  hereunder  shall  be
     conclusive, absent manifest error.

(d)  If an  Event  of  Default  shall  have  occurred  and  be  continuing,  the
     Applicable  Interest Rate shall be increased by five percent (5%) per annum
     above the Applicable  Interest Rate (the "Default  Rate").  Interest at the
     Default Rate shall automatically accrue from the initial date of such Event
     of Default  until all  Events of  Default  are cured or waived and shall be
     payable  upon  demand.  Interest at the Default  Rate shall be added to the
     Loan Amount,  and shall be deemed secured by the Security Documents and the
     other Loan Documents.  This Section 2.8(d), however, shall not be construed
     as an agreement or privilege to extend any Payment Date, nor as a waiver of
     any other right or remedy accruing to Lender by reason of the occurrence of
     any Event of Default.
(e) If any sum payable under this Agreement, the Note or any other Loan Document
is not paid on or before  the fifth  (5th) day  after  such  amount is due,  the
Borrower  shall pay to the Lender upon  demand an amount  equal to the lesser of
five  percent  (5.0%) of such  unpaid sum or, if  Section  2.8(f)  applies,  the
maximum amount permitted under such section,  to defray the expenses incurred by
Lender in handling and  processing  such  delinquent  payment and to  compensate
Lender for the loss of the use of such delinquent  payment and such amount shall
be secured by the Security Documents and the other Loan Documents.

(f)  Notwithstanding  anything to the contrary set forth in this Section 2.8, if
the rate of interest  payable  hereunder  exceeds  the highest  rate of interest
permissible  under law (the "Maximum Lawful Rate"),  then so long as the Maximum
Lawful Rate would be so exceeded,  the rate of interest payable  hereunder shall
be equal to the Maximum  Lawful  Rate;  provided,  however,  that if at any time
thereafter  the rate of  interest  payable  hereunder  is less than the  Maximum
Lawful  Rate,  the  Borrower  shall  continue to pay  interest  hereunder at the
Maximum Lawful Rate until such time as the total interest received by the Lender
is equal to the total  interest  which would have been received had the interest
rate  payable  hereunder  been (but for the  operation  of this  paragraph)  the
interest  rate  payable  since the date  hereof as  otherwise  provided  in this
Agreement.  Thereafter,  interest  hereunder  shall  be paid at the  rate(s)  of
interest and in the manner  provided in Sections 2.8(a) through (e) above unless
and until the rate of interest  again  exceeds the Maximum  Lawful Rate,  and at
that time this paragraph shall again apply. In no event shall the total interest
received by the Lender  pursuant to the terms hereof exceed the amount which the
Lender  could  lawfully  have  received  had the  interest  due  hereunder  been
calculated  for the full term hereof at the Maximum  Lawful Rate. If the Maximum
Lawful Rate is calculated  pursuant to this  paragraph,  such interest  shall be
calculated  at a daily  rate equal to the  Maximum  Lawful  Rate  divided by the
number  of  days  in  the  year  in  which  such   calculation   is  made.   If,
notwithstanding  the  provisions  of this Section  2.8(f),  a court of competent
jurisdiction  shall  finally  determine  that the Lender has  received  interest
hereunder in excess of the Maximum Lawful Rate, the Lender shall,  to the extent
permitted by applicable  law,  promptly apply such excess in the order specified
in Section 2.10 and  thereafter  shall refund any excess to the Borrower or as a
court of competent jurisdiction may otherwise order.

2.9 Payments.  All payments and  prepayments to be made in respect of principal,
interest or other  amounts due from the  Borrower  hereunder  or under any other
Loan Document shall be payable on or before 3:00 p.m., New York time, on the day
when due,  without  presentment,  demand,  protest or notice of any kind, all of
which are hereby  expressly  waived,  and an action  therefor shall  immediately
accrue.  Such payments shall be made to the Lender in funds settled  through the
New York Clearing  House  Interbank  Payment  System or other funds  immediately
available to Lender on the date such  payment is due, at the Lender's  office in
New York City, New York or such other location in the United States specified in
writing by the Lender,  without set off, recoupment,  counterclaims or any other
deduction of any nature.  Payments  received  after 3:00 p.m., New York time, on
any Business Day shall be deemed to have been received on the following Business
Day.

2.10     Application and Allocation of Payments.

(a) As long as no  Default  or Event  of  Default  shall  have  occurred  and be
continuing, all payments shall be applied in the following order: (i) to pay the
Lender's  reasonable  fees  and  expenses  (including  late  fees  and  costs of
collection and amounts expended in connection with the sale or administration of
the Collateral and protective  advances  pursuant to this Agreement or the other
Loan  Documents),  (ii) then to accrued  but unpaid  interest  and (iii) then to
reduction of the outstanding principal balance of the Loan (in the inverse order
of maturity, whether or not then due). As to all payments made when a Default or
an Event of Default shall have occurred and be continuing,  the Borrower  hereby
irrevocably  waives the right to direct the  application of any and all payments
received from or on behalf of the Borrower,  and the Borrower hereby irrevocably
agrees that the Lender shall have the  continuing  exclusive  right to apply any
and all such payments  against the  Obligations  in such order and manner as the
Lender may deem  advisable  notwithstanding  any previous entry by the Lender in
any books or records.

(b) Except with respect to the  Indebtedness  listed on Schedule  10.5 (and then
only if the Section 10.5 Conditions are satisfied), the Lender is authorized to,
and at Lender's sole  election may,  charge to the Loan balance on behalf of the
Borrower and cause to be paid (W) all fees, expenses,  charges, costs (including
insurance  premiums in  accordance  with Section 7.2) and  interest,  other than
principal of the Loan,  owing by the Borrower under this Agreement or any of the
other Loan Documents if and to the extent the Borrower fails to promptly pay any
such amounts as and when due,  even if such  charges  would cause the balance of
the Loan to exceed the Loan Amount,  (X) any  Indebtedness of any Borrower Group
Member which is in default,  is past due or the non-payment of which would allow
the holder of such  Indebtedness to retain,  seize or foreclose on the obligor's
or any other Borrower Group Member's cash or other assets,  (Y) any Indebtedness
as to which the holder has become  entitled to retain or apply  excess cash flow
otherwise to be made  available to any Borrower  Group Member,  whether due to a
failure to satisfy a financial covenant or test or otherwise,  and (Z) any other
obligation or  Indebtedness  of any Borrower Group Member  pursuant to which any
Borrower  Group  Member has  received a notice of default and is not  contesting
such  default in good  faith and with  reasonable  diligence  or as to which the
creditor has obtained a judgment.  If Lender makes any payments set forth in the
preceding sentence,  Lender shall be subrogated to the rights of any creditor so
paid. At the Lender's option and to the extent permitted by law, any advances so
made shall constitute part of the Loan hereunder, and shall bear interest at the
lesser of (such  rate  being  the  "Payoff  Rate")  (a) 20% per annum or (b) the
Maximum Lawful Rate, and Borrower shall  additionally  pay to Lender on the date
of any such advance a fee of 3.5% of the amount of any such  advance  under this
Section  2.10(b)  (collectively,  the "Protective  Advance  Default Rate").  The
circumstances  described in (W),  (X),  (Y) and/or (Z) above being  collectively
referred to as the "Payoff Events").

2.11 Loan Account and Accounting.  The Lender shall maintain a loan account (the
"Loan  Account") on Lender's  books in which Loan Account Lender will record all
payments made by the  Borrower,  and all other debits and credits as provided in
this  Agreement  with respect to the Loan or any of the other  Obligations.  All
entries  in the Loan  Account  shall  be made in  accordance  with the  Lender's
customary  accounting  practices as in effect from time to time.  The balance in
the Loan  Account,  as recorded on the  Lender's  most recent  printout or other
written  statement,  shall be final,  binding and conclusive  upon the Borrower,
absent manifest error;  provided,  however, that any failure to so record or any
error in so recording shall not limit or otherwise affect the Borrower's duty to
pay the  Obligations.  Notwithstanding  any  provision  herein  contained to the
contrary,  the Lender may elect (which election may be revoked) to dispense with
the  issuance  of a Note and may rely on the Loan  Account  as  evidence  of the
amount of Obligations from time to time owing to it.

2.12     Taxes.

(a) Any and all  payments  by the  Borrower  hereunder  or under any other  Loan
Document shall be made, in accordance  with this Section 2.12, free and clear of
and  without  deduction  or  withholding  for or on the  account  of any and all
present or future Taxes.  If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum  payable  hereunder  or under any other Loan
Document (i) the sum payable shall be increased as much as shall be necessary so
that after making all required deductions  (including  deductions  applicable to
additional  sums payable under this Section 2.12) the Lender  receives an amount
equal to the sum Lender would have  received had no such  deductions  been made,
(ii) the Borrower shall make such  deductions,  and (iii) the Borrower shall pay
the full amount deducted to the relevant taxing or other authority in accordance
with  Applicable  Law. As promptly as possible,  but in any case within  fifteen
(15) days  after the date of any  payment  of such  Taxes,  the  Borrower  shall
furnish to the Lender the original or a certified  copy of a receipt  evidencing
payment  thereof or, if such receipt is not  available,  other  evidence of such
payment reasonably satisfactory to the Lender.

(b) Borrower and  Guarantors  shall jointly and severally  indemnify and pay the
Lender  for the full  amount  of  Taxes  (including  any  Taxes  imposed  by any
jurisdiction  on amounts payable under this Section 2.12) paid by the Lender and
any liability (including,  without limitation,  penalties,  interest,  additions
thereto and expenses) arising therefrom or with respect thereto.  The agreements
in this Section 2.12 shall  survive the  termination  of this  Agreement and the
repayment of the Loan and all other amounts payable  hereunder and shall survive
until the statute of limitations with respect to any such Taxes.

2.13     Capital Adequacy; Increased Costs; Illegality.

(a) If the Lender shall have determined that any law,  treaty,  governmental (or
quasi-governmental)  rule,  regulation,  guideline  or order  regarding  capital
adequacy,  reserve  requirements  or similar  requirements  or compliance by the
Lender  with any  request  or  directive  regarding  capital  adequacy,  reserve
requirements or similar  requirements  (whether or not having the force of law),
in each case,  adopted  after the date  hereof,  from any central  bank or other
Governmental  Authority  increases  or would have the effect of  increasing  the
amount of  capital,  reserves or other funds  required to be  maintained  by the
Lender and  thereby  reducing  the rate of return on the  Lender's  capital as a
consequence of its obligations  hereunder,  then the Borrower shall from time to
time upon demand by the Lender pay to the Lender additional  amounts  sufficient
to compensate the Lender for such  reduction.  A certificate as to the amount of
that  reduction  and showing in reasonable  detail the basis of the  computation
thereof submitted by the Lender to the Borrower shall, absent manifest error, be
final,  conclusive and binding for all purposes.  If the Lender becomes entitled
to claim any additional  amounts pursuant to this Section 2.13, it shall provide
written notice thereof,  as soon as reasonably  practicable,  to Borrower of the
event by reason of which it has become so entitled.

(b) If,  due to  either  (i) the  introduction  of or any  change  in any law or
regulation (or any change in the interpretation  thereof) or (ii) the compliance
with any  guideline  or  request  from any  central  bank or other  Governmental
Authority  (whether or not having the force of law),  in each case adopted after
the date  hereof,  there  shall be any  increase  in the cost to the  Lender  of
agreeing to make or making,  funding or maintaining  any Loan, then the Borrower
shall  from  time to  time,  upon  demand  by  such  Lender,  pay to the  Lender
additional  amounts sufficient to compensate the Lender for such increased cost.
A  certificate  as to the amount of such  increased  cost showing in  reasonable
detail the computation thereof submitted to the Borrower by the Lender, shall be
conclusive and binding on the Borrower for all purposes,  absent manifest error.
If the Lender becomes entitled to claim any additional  amounts pursuant to this
Section,  it  shall  provide  written  notice  thereof,  as soon  as  reasonably
practicable,  to  Borrower  of the  event by  reason  of which it has  become so
entitled.

(c) Anything herein to the contrary notwithstanding, if (i) on any date on which
the LIBOR Rate would  otherwise  be set,  Lender shall have  determined  in good
faith (which  determination  shall be  conclusive  absent  manifest  error) that
adequate and reasonable  means do not exist for  ascertaining the LIBOR Rate, or
(ii) at any time Lender shall have determined in good faith (which determination
shall be  conclusive  absent  manifest  error) that the making,  maintenance  or
funding  of any  part  of the  Loan  based  on the  LIBOR  Rate  has  been  made
impracticable  or unlawful by compliance by Lender in good faith with any law or
guideline  or  interpretation  or  administration  thereof  by any  Governmental
Authority charged with the interpretation or administration  thereof or with any
request or directive of any such Governmental  Authority  (whether or not having
the force of law);  then and in any such  event,  Lender may notify  Borrower of
such determination (any such notice being referred to herein as a "Treasury Rate
Notice").  Upon such date as shall be  specified  in such  Treasury  Rate Notice
(which  shall not be earlier than the date such  Treasury  Rate Notice is given)
the obligation of Lender to charge  interest to Borrower at the LIBOR Rate shall
be  suspended  until  Lender  shall have later  notified  Borrower  of  Lender's
determination  in good faith (which  determination  shall be  conclusive  absent
manifest   error)  that  the   circumstances   giving  rise  to  such   previous
determination  no longer exist. If Lender gives Borrower a Treasury Rate Notice,
the LIBOR Rate shall  automatically be converted to the sum of the Treasury Rate
plus the LIBOR To Treasury Spread (such sum being the "Adjusted Treasury Rate"),
and the Loan shall bear  interest at a rate of  interest  per annum equal to the
greater of (i) the Adjusted  Treasury  Rate from time to time as  determined  by
Lender plus 9.5%,  and (ii) the  Applicable  Interest Rate in effect at the time
Lender  delivers  the  Treasury  Rate  Notice (in  either  case  rounded  up, if
necessary,  to the nearest one-eighth percent (.125%)).  The Loan shall continue
to bear  interest at the rate of interest  set forth in the  preceding  sentence
until Lender  determines  that the  Applicable  Interest  Rate can be determined
based on the LIBOR Rate in accordance with the provisions of this Agreement.

2.14     Fees.

(a) In  consideration  of Lender agreeing to make the Loan to the Borrower,  the
Borrower shall pay to the Lender on the Closing Date pursuant to Section 2.1(b),
a fee equal to $5,100,000.00 (the "Loan Fee").

(b) Borrower  acknowledges and agrees that at the option of Lender, the Loan may
be serviced by a servicer/trustee (the "Servicer") selected by Lender and Lender
may  delegate  all  or any  portion  of  Lender's  responsibilities  under  this
Agreement and the other Loan  Documents to the Servicer  pursuant to a servicing
agreement ("Servicing Agreement") between Lender and Servicer. Borrower shall be
responsible  for the payment of the servicing  fees of any Servicers  engaged by
Lender,  payable in equal monthly  installments  on the first day of each month.
Such servicing fees shall not exceed  $150,000 per annum,  but Borrower shall be
responsible  for the same  regardless  of whether they exceed such  amount.  Any
action taken or inaction by the Servicer pursuant to this Agreement and the Loan
Documents  shall be  binding  to the same  extent  as if  taken by  Lender,  and
Borrower  shall be  entitled  to rely on all  actions  and  directions  given by
Servicer  with  respect to all matters  concerning  the Loan and Loan  Documents
unless  and until  Borrower  receives  contrary  written  instructions  from the
Lender.

(c) As a material  inducement  to Lender to make the Loan to  Borrower  upon the
terms set forth herein,  the Borrower  shall pay to the Lender an additional fee
(the "Additional  Fee") equal to four percent (4%) of the Loan Amount (exclusive
of advances  under  Section  2.10(b)),  which fee shall be earned in full on the
Closing  Date,  but shall be payable on the earlier of (i) the Maturity  Date or
such  earlier  date as the  Loan  shall  become  due  and  payable,  whether  by
acceleration  or  otherwise,  or (ii)  payment  in full or in part of the  Loan,
whether by prepayment or otherwise.  Any prepayment or required  payment of Loan
principal  hereunder,  including  without  limitation any mandatory  payments or
prepayments under Section 2.5 hereof, shall be accompanied by a pro rata portion
of the Additional Fee on the amount prepaid. The Additional Fee is deemed earned
in full on the Closing Date  notwithstanding  the timing of its required payment
as herein provided above.  Borrower acknowledges that Lender would not otherwise
be willing to make the Loan upon the terms set forth herein,  but for Borrower's
covenant to pay the Additional Fee.

(d) Borrower shall also pay any Schedule V Fees set forth on Schedule V attached
hereto and made a part hereof as and when the same shall become due and owing.

2.15 Working  Capital  Reserve.  Borrower  shall at all times maintain a reserve
account (which shall be a Sub-Account  of the Operating  Account) in which there
shall at all times be deposited no less than $4,000,000.00 (the "Working Capital
Reserve"); provided, however, that such amount may be reduced during each Fiscal
Quarter by any permitted  expenditures  from such  account,  as set forth in the
Approved Operating Budget, so long as the Working Capital Reserve is replenished
to no less than $4,000,000.00  within thirty (30) days following the end of such
Fiscal  Quarter in  accordance  with this  Section  and  Section  12.3.  Without
Lender's prior written consent, Borrower shall not use funds held in the Working
Capital  Reserve  for any  expenses  other  than  expenses  provided  for in the
Approved  Operating  Budget.  Within  thirty (30) days of the end of each Fiscal
Quarter,  Borrower  shall provide Lender with a detailed  report,  together with
receipts,  invoices and other evidence  satisfactory  to Lender,  specifying the
application of any funds  withdrawn from the Working Capital Reserve during such
Fiscal  Quarter.  Lender shall also have the right to audit  Borrower's  records
with respect to such expenditures in accordance with the terms of Section 7.9.

2.16 Marketing  Reserve.  Borrower shall at all times maintain a reserve account
with the Depository (the "Marketing  Reserve Deposit Account") in which Borrower
shall deposit or cause to be deposited pursuant to Section 12.3, all payments or
other  contributions  by tenants and others made for the purpose of promotion or
marketing for the Expanded  Properties,  or for any similar  purpose,  howsoever
described  in the  Leases  or  otherwise  (the  "Marketing  Reserve  Payments").
Borrower  shall at all  times  maintain  or cause to be  maintained  one or more
segregated  accounts  to hold  all  disbursements  of funds  from the  Marketing
Reserve  Deposit  Account   (collectively,   the  "Marketing  Reserve  Operating
Account").  Borrower shall cause all Marketing  Reserve Payments with respect to
any Expanded  Property to be used solely for marketing and promotional  purposes
consistent with their intended  purpose as set forth in the Leases and the other
Material  Agreements  governing the same.  Within thirty (30) days of the end of
each Fiscal  Quarter,  Borrower  shall  provide  Lender with a detailed  report,
together with  receipts,  invoices and other  evidence  satisfactory  to Lender,
specifying  the  application of any funds  withdrawn from the Marketing  Reserve
Operating Account.  Lender shall also have the right to audit Borrower's records
with respect to such expenditures in accordance with the terms of Section 7.9.

2.17 Current Trade Payables  Reserve.  Borrower  shall  establish and maintain a
reserve  account  with the  Depository  (the  "Trade  Payables  Reserve  Deposit
Account")  in which  Borrower  shall  deposit  or cause to be  deposited  on the
Closing Date an amount equal to those trade payables  currently  outstanding and
set forth in the attached Exhibit L (the "Unpaid Trade Payables"). Borrower will
cause the Unpaid Trade  Payables to be paid in full and satisfied  within thirty
(30) days after the Closing  Date.  Promptly  upon  Borrower's  written  request
accompanied by payment  information and other supporting  evidence as Lender may
reasonably  require,  and otherwise without such request by Borrower at Lender's
discretion,  funds  in the  Trade  Payables  Reserve  Deposit  Account  shall be
disbursed  directly  to the  Persons  owed such Unpaid  Trade  Payables,  or, at
Lender's  sole  option,  to  Borrower or by joint  payment to Borrower  and such
Person  owed the  Unpaid  Trade  Payable,  in each case for the sole  purpose of
paying such Person owed the Unpaid Trade Payable. Within thirty (30) days of the
end of each  Fiscal  Quarter,  Borrower  shall  provide  Lender  with a detailed
report,  together with  receipts,  invoices and other evidence  satisfactory  to
Lender,  specifying  the  application  of any  funds  withdrawn  from the  Trade
Payables  Reserve  Deposit  Account.  Lender  shall also have the right to audit
Borrower's  records with respect to such  expenditures  in  accordance  with the
terms of Section 7.9.

                                  ARTICLE III
                        COLLATERAL AND SECURITY DOCUMENTS

3.1  Security  Interest.  The Loan shall be evidenced by the Note and secured by
     the following, all dated and delivered as of the Closing Date

(a) that certain  pledge  agreement  given by Borrower to Lender  constituting a
perfected pledge and assignment of all of Borrower's (i) membership interests in
Prime Retail Capital I, L.L.C.  ("Capital I") and Prime  Bellport  Land,  L.L.C.
("Bellport LLC") and (ii) partnership interests (whether as a general partner or
as a limited  partner  or in both  capacities)  in the  following  partnerships:
Outlet Village of Hagerstown Limited Partnership,  Buckeye Factory Shops Limited
Partnership,  Shasta Outlet Center  Limited  Partnership,  Latham Factory Stores
Limited Partnership, The Prime Outlets at Calhoun Limited Partnership,  Carolina
Factory Shops Limited Partnership, The Prime Outlets at Lee Limited Partnership,
Sun Coast Factory  Shops  Limited  Partnership,  Prime  Northgate  Plaza Limited
Partnership,  Melrose  Place,  Ltd.,  Prime  Warehouse Row Limited  Partnership,
Outlet  Village of Puerto Rico  Limited  Partnership  S.E.  ("Puerto  Rico LP"),
Outlet Village of Lebanon Limited  Partnership,  Chesapeake  Development Limited
Partnership  and Prime Outlets at San Marcos II Limited  Partnership;  (together
with any Amendments thereto, collectively, the "Borrower Pledge Agreement");

     (b) that certain  Stock Pledge  Agreement  (the "Stock  Pledge  Agreement")
given by Holdings to Lender  constituting  a perfected  pledge and assignment of
all of Holdings'  stock of Prime Retail  Finance IV, Inc.  ("Prime  IV"),  Prime
Retail Finance IX, Inc. and Prime Retail Finance XI, Inc.;

(c) that certain  pledge  agreement  given by Holdings to Lender  constituting a
perfected  pledge  and  assignment  of all of  Holdings'  partnership  interests
(whether as a general partner or as a limited partner or in both  capacities) in
The Prime Outlets at Edinburgh Limited Partnership, Outlet Village of Hagerstown
Limited  Partnership,  Sun  Coast  Factory  Shops  Limited  Partnership,   Prime
Northgate Plaza Limited  Partnership,  Melrose Place,  Ltd., Prime Warehouse Row
Limited Partnership,  Outlet Village of Lebanon Limited Partnership,  Chesapeake
Development  Limited  Partnership  and Prime  Outlets  at San  Marcos II Limited
Partnership (together with any Amendments thereto,  collectively,  the "Holdings
Pledge Agreement");

(d) that certain pledge  agreement  given by Capital I to Lender  constituting a
perfected pledge and assignment of all of its limited  partnership  interests in
Coral Isle Factory Shops Limited  Partnership,  Gulf Coast Factory Shops Limited
Partnership,  San Marcos Factory Stores,  Ltd.,  Triangle Factory Stores Limited
Partnership, Florida Keys Factory Shops Limited Partnership, Gainesville Factory
Shops  Limited   Partnership,   The  Prime  Outlets  at   Silverthorne   Limited
Partnership,  Kansas City Factory Shops  Limited  Partnership,  Huntley  Factory
Shops Limited  Partnership,  Magnolia  Bluff Factory Shops Limited  Partnership,
Loveland  Factory Shops Limited  Partnership and Gulfport  Factory Shops Limited
Partnership (together with any Amendments thereto,  collectively, the "Capital I
Pledge Agreement");

(e) that certain pledge agreement given by Outlet Village of Hagerstown  Limited
Partnership  ("Hagerstown  LP") to Lender  constituting  a perfected  pledge and
assignment  of all of  Hagerstown  LP's  membership  interests  in Prime  Retail
Finance VI, L.L.C.  (together with any  Amendments  thereto,  collectively,  the
"Finance VI Pledge Agreement");

(f) that certain pledge agreement given by Bellport LLC to Lender constituting a
perfected pledge and assignment of all of Bellport LLC's  partnership  interests
in MG Long Island Limited  Partnership  (together  with any Amendments  thereto,
collectively, the "Bellport Pledge Agreement");

(g) that certain  pledge  agreement  given by Prime  Warehouse  Row Limited
Partnership  ("Warehouse  LP") to Lender  constituting  a  perfected  pledge and
assignment of all of Warehouse LP's partnership interests in Market Street, Ltd.
and Warehouse  Row,  Ltd.,  as  applicable,  to be delivered in accordance  with
Section 7.19 hereof  (together with any Amendments  thereto,  collectively,  the
"Warehouse Row Pledge Agreement");

(h) that  certain  pledge  agreement  given by  Chesapeake  Development  Limited
Partnership  ("Chesapeake")  to  Lender  constituting  a  perfected  pledge  and
assignment  of all of  Chesapeake's  limited  partnership  interests  in  Outlet
Village of Lebanon Limited  Partnership  (together with any Amendments  thereto,
collectively, the "Chesapeake Pledge Agreement");

(i) that certain Indemnity Deed of Trust,  Security  Agreement and Assignment of
Leases and Rents given by Hagerstown  LP  encumbering  that certain  property in
Hagerstown,  Maryland  commonly  known as Prime Outlets at Hagerstown  (together
with any Amendments thereto, collectively, the "Hagerstown Third Mortgage");

(j) that certain Negative Pledge  Agreement given by Prime Retail Finance,  Inc.
("Prime  Retail  Finance")  to Lender  with  respect to Prime  Retail  Finance's
general partnership  interest in the San Marcos Factory Stores, Ltd., Gulf Coast
Factory Shops Limited  Partnership,  Ohio Factory  Shops  Partnership,  Triangle
Factory  Stores  Limited  Partnership  and  Coral  Isle  Factory  Shops  Limited
Partnership  (together with any  Amendments  thereto,  collectively,  the "Prime
Retail Finance Negative Pledge Agreement");

(k) that certain  Negative  Pledge  Agreement  given by Prime Retail Finance II,
Inc.  ("Prime  II") to Lender  with  respect to Prime II's  general  partnership
interest in the Grove City Factory Shops Partnership,  Castle Rock Factory Shops
Partnership,  Loveland Factory Shops Limited  Partnership,  The Prime Outlets at
Silverthorne   Limited   Partnership,   Magnolia  Bluff  Factory  Shops  Limited
Partnership,  Gulfport Factory Shops Limited Partnership,  Huntley Factory Shops
Limited Partnership, Kansas City Factory Shops Limited Partnership,  Gainesville
Factory  Shops  Limited  Partnership  and Florida  Keys  Factory  Shops  Limited
Partnership (together with any Amendments thereto,  collectively,  the "Prime II
Negative Pledge Agreement");

(l) that  certain  Negative  Pledge  Agreement  given by Borrower to Lender with
respect to Borrower's  general  partnership  interests in the San Marcos Factory
Stores,  Ltd., Gulf Coast Factory Shops Limited  Partnership,  Loveland  Factory
Shops  Limited   Partnership,   The  Prime  Outlets  at   Silverthorne   Limited
Partnership,  Magnolia Bluff Factory Shops Limited Partnership, Gulfport Factory
Shops Limited  Partnership,  Huntley Factory Shops Limited  Partnership,  Kansas
City  Factory  Shops  Limited   Partnership,   Triangle  Factory  Shops  Limited
Partnership,  Coral Isle Factory Shops Limited Partnership,  Gainesville Factory
Shops Limited  Partnership  and Florida Keys Factory  Shops Limited  Partnership
(together  with any  Amendments  thereto,  collectively,  the "Prime LP Negative
Pledge Agreement");

(m) UCC-1 financing statements executed by each of Borrower,  Holdings,  Capital
I,  Bellport LLC,  Warehouse LP,  Chesapeake  and  Hagerstown LP covering  their
respective stock,  partnership  and/or membership  interests pledged pursuant to
their respective  Pledge  Agreements,  UCC-1 financing  statement fixture filing
executed by  Hagerstown  LP with respect to the  Hagerstown  Third  Mortgage and
UCC-1  financing  statements  executed by each of  Borrower,  Prime II and Prime
Retail Finance with respect to the Negative Pledge  Agreements  (dated and filed
of record prior to the Closing Date, the "Financing Statements");

(n) that  certain  Operating  Account  Agreement  executed by Borrower to Lender
substantially  in the form of  Exhibit  P  attached  hereto  (together  with any
Amendments thereto, collectively, the "Operating Account Agreement");

(o) that  certain  Marketing  Reserve  Agreement  executed by Borrower to Lender
substantially  in the form of  Exhibit  P  attached  hereto  (together  with any
Amendments thereto, collectively, the "Marketing Reserve Agreement");

(p) that  certain  Omnibus  Cash Flow Pledge  Agreement  executed by each of the
Borrower Group Members to Lender substantially in the form of Exhibit Q attached
hereto (together with any Amendments  thereto,  collectively,  the "Omnibus Cash
Flow Pledge Agreement");

(q) that  certain  Omnibus  Negative  Pledge  Agreement  executed by each of the
Borrower Group Members  substantially  in the form of Exhibit S attached  hereto
(together  with any  Amendments  thereto,  collectively,  the "Omnibus  Negative
Pledge Agreement");

(r) the Lockbox Agreement;

(s) the Organizational Document Amendments;

(t) such  other  collateral  and  security  from the Loan  Parties as Lender may
require,  including any collateral  from time to time granted to Lender pursuant
to Section 7.20 hereof.

         The Pledge Agreements,  the Negative Pledge  Agreements,  the Financing
Statements,  the Hagerstown Third Mortgage and the Lockbox  Agreement,  together
with any and all other assignments,  pledges,  documents,  and agreements now or
hereafter  executed in connection  herewith and  evidencing or securing the Loan
and any  Amendments to any of the foregoing are referred to herein  collectively
as the "Security Documents". The property assigned, pledged,  transferred and/or
encumbered by the Security  Documents  together with any and all other  property
securing  payment  and/or  performance by one or more of the Loan Parties of the
Obligations is referred to herein collectively as the "Collateral".

3.2 Obligations  Secured.  The Security  Documents and the grants,  assignments,
pledges, encumbrances and transfers made thereunder are given for the purpose of
securing  payment of the Debt and for the purpose of securing the following (the
"Other Obligations"):

(a)  the  performance  of all other  obligations  of the Loan Parties  contained
     herein or in the other Loan Documents;

(b) the performance of each  obligation of the Borrower Group Members  contained
in any other  agreement  given by any  Borrower  Group  Member to Lender for the
purpose of further securing the obligations evidenced or secured hereby, and any
Amendments thereto; and

(c)  the performance of each  obligation of any Borrower Group Member  contained
     in any Amendment of all or any part of the Loan Documents.

                  The Debt  and the  Other  Obligations  shall  be  referred  to
collectively herein as the "Obligations."

3.3 Advances to Protect  Collateral.  All insurance expenses and all expenses of
protecting,  storing, warehousing,  insuring, handling, maintaining and shipping
the  Collateral  (including all rent payable by any Borrower Group Member to any
landlord of any premises where any of the Collateral may be located) and any and
all Taxes shall be borne and paid by such Loan Party.  The Lender may (but shall
not be obligated  to) make  advances to  preserve,  protect or obtain any of the
Collateral,  including  advances to cure defaults for which such Borrower  Group
Member has received written notice and is not contesting in good faith under any
of the Material Agreements or advances to pay Taxes,  insurance and the like and
all such  advances  shall  become  part of the  Obligations  owing to the Lender
hereunder and all such  advances to cure such  defaults  shall be payable to the
Lender on demand, with interest thereon from the date of such advance until paid
at the Protective Advance Default Rate.  Notwithstanding  the foregoing,  or any
other  provision of this  Agreement to the  contrary,  if (i) Borrower  requires
funding  of  payments  due in  respect  of the  Senior  Loan for the  Bellport I
Property,  and requests  that Lender  advance such payments to Borrower for such
purpose, and (ii) Lender, while not obligated to make any such advances,  elects
in its sole and absolute  discretion to do so, then (iii) such advances shall be
treated as additional  advances of principal under the Loan,  shall increase the
principal  balance of the Loan  accordingly,  and shall  accrue  interest at the
Applicable Interest Rate, rather than at the Protective Advance Default Rate.

3.4  Benefit of the Liens.  All Liens  contemplated  hereby or by the other Loan
Documents  shall be for the benefit of the Lender,  and all proceeds or payments
realized  from the  Collateral in  accordance  herewith  shall be applied to the
Obligations in accordance with the terms provided herein.

                                   ARTICLE IV
                              CONDITIONS PRECEDENT

                  As a material  inducement to Lender to make the Loan, Borrower
hereby  represents and warrants to Lender that Borrower has satisfied (except to
the extent  specifically  waived in writing  by  Lender)  all of the  conditions
precedent  set forth in this Article IV, and Borrower  acknowledges  that Lender
would not fund the Loan unless all of such  conditions  precedent were satisfied
by the  Closing  Date or  otherwise  waived in writing by Lender on the  Closing
Date.

4.1      Loan Documents.  Lender shall have received:

(a)      this Agreement duly executed by all parties hereto;

(b)      the Note duly executed by Borrower and made payable to the Lender;

(c)      the Lockbox Agreement duly executed by all parties thereto;

(d)  the Environmental Indemnity Agreement duly executed by all parties thereto;

(e)      the Pledge Agreements duly executed by all parties thereto;

(f)  the Guaranty duly executed by Holdings,  Capital I and the other Subsidiary
     Guarantors;

(g)      the Warrant duly executed by all parties thereto;

(h)      the Hagerstown Third Mortgage duly executed by all parties thereto;

(i)      the Financing Statements;

(j)  the  Collateral  Assignment  of Interest  Rate  Protection  Agreement  duly
     executed by all parties thereto; and

(k)      such other documents as the Lender may reasonably request.

4.2      Other Closing Requirements.

(a)  Appraisals,  Title and Survey.  Lender  shall have  received  copies,  with
respect to each of the  Properties  specified by Lender,  of (i)  appraisals (in
form and substance satisfactory to Lender) of each such Property conducted by an
appraiser  satisfactory  to Lender,  (ii) title  commitments or title  insurance
policies with respect to each of the Properties  satisfactory to Lender and (ii)
surveys with respect to each of the Properties satisfactory to Lender.

(b)  Tenant  Estoppel   Certificates.   Lender  shall  have  received   estoppel
certificates,  in form and substance  satisfactory to Lender,  from (i) the four
largest tenants at each of the Properties and (ii) any tenant  occupying 7500 or
more square feet at any  Property,  in each case,  as shown on the Current  Rent
Roll.

(c) UCC Financing Statements;  UCC Lien Searches. Lender shall have received (i)
initial  reports  for  UCC-1  financing  statement  and  continuation  statement
searches  in  relation  to each of the Loan  Parties,  conducted  in each of the
locations  where such entities were organized or formed and where the Properties
are located and as may be otherwise  designated by Lender in Lender's reasonable
discretion,  with an effective  date not more than thirty (30) days prior to the
Closing  Date,  in  substance  satisfactory  to  Lender,  and  showing  no UCC-1
financing statements or continuation statements in the public records evidencing
any liens on the Properties  (other than Permitted Liens) and the Collateral and
(ii) updated reports for the searches  described in subsection (i) above with an
effective  date  not more  than  five (5) days  prior to the  Closing  Date,  in
substance  satisfactory  to Lender,  and showing no Liens  other than  Permitted
Liens with respect to the Properties or the Collateral and showing the Permitted
Liens with respect to the  Collateral as the only filings in the public  records
evidencing a lien or security interest in the Collateral.

(d) Other Lien  Searches.  Lender  shall have  received  reports for federal tax
lien,  bankruptcy,  state tax lien,  judgment and pending litigation searches in
relation  to each of the Loan  Parties  in form and  substance  satisfactory  to
Lender.  Such searches shall have been conducted in each of the locations  where
such entities were  organized or formed and where the Properties are located and
as may be otherwise  designated by Lender in Lender's reasonable  discretion and
shall be dated not more than thirty (30) days prior to the Closing Date, and, by
executing  this  Agreement,  Borrower  shall be deemed to have certified that no
events that would  otherwise be disclosed in such reports have occurred  between
the date of the reports and the Closing Date.

(e) Delivery of Organizational Documents.  Borrower shall deliver or cause to be
delivered to Lender copies, certified by the Secretary or Assistant Secretary of
each of the  respective  Loan Parties or their  respective  general  partners or
administrative  members,  of all  Organizational  Documents  of each Loan  Party
and/or  documentation  with  respect  to each Loan Party  evidencing  formation,
structure,  existence,  good standing and/or  qualification  to do business,  as
Lender may request,  including good standing certificates,  qualifications to do
business in the appropriate jurisdictions,  resolutions authorizing the entering
into of the Loan and approving the Loan Documents and  incumbency  certificates,
all in form and substance satisfactory to Lender.

(f) Opinions of Counsel to Borrower and Holdings.  Borrower  shall  provide,  at
Borrower's   expense,  an  opinion  of  legal  counsel  in  form  and  substance
satisfactory to Lender to the effect that: (a) the Loan Documents have been duly
authorized,  validly  executed and delivered by each of the respective  Borrower
Group  Members party  thereto,  and each of the Loan  Documents  shall be legal,
valid and  binding  instruments,  enforceable  against  the  makers  thereof  in
accordance with their  respective  terms; (b) each of the Borrower Group Members
party to the Loan Documents has been duly formed and has all requisite authority
to enter  into  the Loan  Documents,  and has  taken  all  requisite  action  to
authorize the execution,  delivery and performance of each of the Loan Documents
to which it is a party;  (c) each of the Pledge  Agreement  creates the liens it
purports  to create on the  Collateral  described  therein and the rights of the
Lender thereto is subject to no prior liens other than those expressly consented
to in writing by Lender; (d) the Lockbox Agreement creates a valid and perfected
first priority lien upon the Account  Collateral;  (e) the Financing  Statements
create  a  valid  and  perfected   security  interest  prior  in  right  to  all
subsequently filed security interests in the Collateral  described therein;  (f)
the interest  rate terms of the Loan do not violate any  applicable  usury laws;
(g) the terms and  provisions  of the Loan  Documents do not  conflict  with the
terms  and  provisions  of any of the  Material  Agreements;  (h) the  terms and
provisions of the Loan  Documents  shall be governed by and construed  under the
laws of the State of New York; (i) the  authorized  capital stock of Holdings is
as set forth in Section 5.3 below and Holdings has reserved from its  authorized
and unissued shares of Common Stock a sufficient  number of shares to permit the
Warrants to be  exercised in full,  which shares have not been  reserved for any
other purpose (such opinion is based on a certificate  from Holdings's  transfer
agent  as to  the  number  of  shares  of  Common  Stock  outstanding  and  on a
certificate of the corporate  secretary of Holdings as to the board  resolutions
under which Common  Stock has been  reserved  for  issuance);  (j) the shares of
Common Stock issued upon exercise of the Warrant, when issued in accordance with
the  terms and  conditions  of the  Warrant,  will be duly  authorized,  validly
issued,  fully  paid  and  non-assessable  and will  have  been  issued  without
violation of any preemptive rights; (k) neither the issuance of the Warrant, nor
the issuance of the shares of Common Stock  issuable upon the exercise  thereof,
will be required to be registered  under the  Securities  Act or the  securities
laws of any state;  and (l) such other  matters,  incident  to the  transactions
contemplated  hereby, as Lender may reasonably  request.  Furthermore,  Borrower
covenants to provide to Lender, at Borrower's expense, within one month from the
Closing  Date,  an opinion of local legal  counsel from the states of Tennessee,
Texas, Colorado,  Maryland,  Arizona,  Virginia and Pennsylvania,  respectively,
with  respect to such  matters  not  covered in the legal  opinion  rendered  by
Borrower's  counsel as of the Closing  Date with  respect to the  aforementioned
matters.

(g)  Lender's Expenses;  Loan Fee. Lender shall have received  reimbursement for
     all Lender's Expenses and Borrower shall have paid to Lender the Loan Fee.

(h) Unsecured  Loans.  (i) All  Indebtedness of the Borrower Group Members other
than the Permitted Debt (including  those owing to any of (a) Greenwich  Capital
Financial  Products,  Inc.,  (b)  Capital  Company of America  (other  than with
respect  to the  Bridge  Loan),  (c) FBR Asset  Investment  Corporation  and (d)
Mercantile-Safe  Deposit & Trust Company (except with respect to the Hagerstown,
Maryland loan included in the description of the Senior Loans)) shall be paid in
full  and  the  commitments  to  lend  thereunder  terminated.  Lender  and  the
respective  obligor (and any guarantors) under each such Indebtedness shall have
received a  complete  release  from the  relevant  lender in form and  substance
satisfactory  to Lender and (ii) after giving effect to the  application  of the
Loan Amount,  the Borrower Group Members shall not have any Indebtedness  (other
than Permitted Debt).

(i)  Senior  Loans.  Lender  shall  have  received  from each  Senior  Lender an
     estoppel certificate substantially in the form of Exhibit O.

(j)      Intentionally deleted.

(k) No  Cross-Defaults.  Except as set forth on Schedule  4.2(k),  each existing
default or event of default under any Material  Agreement  shall have been cured
or waived to Lender's satisfaction, and, after giving effect to the transactions
contemplated  by this  Agreement,  no  default  or event of  default  under  any
Material Agreement shall have occurred.

(l)  No  Material  Adverse  Effect.  No event or  series of  events  shall  have
     occurred which has had or is reasonably  likely to have a Material  Adverse
     Effect.

(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  Lender's
     judgment  would  enjoin,  prohibit or restrain,  or impose or result in any
     Material Adverse Effect.

(n)  No  Casualty or  Condemnation.  No casualty  has  occurred or  condemnation
     proceeding has been  initiated,  which in Lender's sole  discretion,  would
     have a Material Adverse Effect.

(o)  Purchase  Agreement.  The  closing of the sale of the  Purchase  Properties
     under the Purchase Agreement shall be completed.

4.3  Additional  Deliveries.  Lender shall have received,  reviewed and approved
     the items listed on Schedule II attached hereto, each in form and substance
     satisfactory to Lender (the "Required Items").

4.4      Intentionally Omitted.

4.5 Details,  Proceedings  and Documents.  All legal details and  proceedings in
connection  with the  transactions  contemplated by this Agreement and the other
Loan  Documents  shall be reasonably  satisfactory  to the Lender and the Lender
shall have received all such counterpart  originals or certified or other copies
of such documents and proceedings in connection with such transactions,  in form
and substance reasonably satisfactory to the Lender, as the Lender may from time
to time request.

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

                  Borrower  represents  and  warrants  to the  Lender  that  the
statements  set forth in this Article V, after  giving  effect to the closing of
the transactions  contemplated hereby, shall be true, correct and complete as of
the Closing Date.

5.1      Organization and Qualification.

(a) Each Borrower Group Member is duly organized or formed, validly existing and
in good standing under the laws of its state of organization or formation.  Each
Borrower  Group Member is duly  qualified to do business and in good standing in
each  jurisdiction in which the character of its properties or the nature of its
business requires such  qualification  other than such jurisdiction in which the
failure to  receive or  maintain  such  qualification  would not have a Material
Adverse Effect.

(b) Each  Borrower  Group Member has  delivered  true and correct  copies of all
Organizational  Documents and  Amendments  thereto of each such  Borrower  Group
Member to Lender.

(c) Each  Borrower  Group  Member  has  provided  to  Lender a true and  correct
description  of  each  Borrower  Group  Member's  ownership  structure  and  the
ownership  structure of the Expanded Property Owners, a true and correct copy of
which is attached hereto as 5.1(c), setting forth all Borrower Group Members and
all Persons who own, directly or indirectly, ownership interests in any Borrower
Group Member (other than Holdings and, in the case of Borrower,  Schedule 5.1(c)
lists record owners only).

5.2 Authority and  Authorization.  Each Borrower  Group Member has all requisite
right,  power,  authority  and legal right to carry on its  business,  to own or
lease its  properties  and to execute and  deliver  and perform its  obligations
under this Agreement and the other Loan Documents to which it is a party, in the
case of the  Borrower  to request the  borrowings  provided  for herein,  and to
execute  and  deliver  and to  perform  its  obligations  under the  other  Loan
Documents  to which it is a  party.  Each  Borrower  Group  Member's  execution,
delivery and  performance of the Loan Documents to which it is a party have been
duly and validly  authorized by all necessary  corporate or other proceedings on
the part of such Borrower Group Member.

5.3 Execution and Binding  Effect.  This  Agreement and all other Loan Documents
have been or, when executed and delivered, will be duly and validly executed and
delivered by each Borrower Group Member a party thereto, and constitute or, when
executed  and  delivered,   will  constitute,   the  legal,  valid  and  binding
obligations of such Borrower Group Member  enforceable in accordance  with their
respective terms,  except as such  enforceability  may be limited by bankruptcy,
insolvency,  reorganization,  receivership,  moratorium or other laws  affecting
creditors' rights generally and by general principles of equity.

5.4 Governmental Authorizations.  Except for the consents identified on Schedule
5.4 (the "Required Consents"),  no authorization,  consent,  approval,  license,
exemption or other action by, and no registration,  qualification,  designation,
declaration or filing with, any Person or any Governmental Authority (other than
the filing of financing  statements and  continuation  statements) is or will be
necessary in connection with the execution and delivery of this Agreement or any
other Loan Documents by each Borrower Group Member a party thereto, consummation
by each  Borrower  Group Member a party  thereto of the  transactions  herein or
therein   contemplated,   including  the  Borrower's  obtaining  the  Loan,  the
Guarantors' guaranty of the Obligations and the Borrower Group Members' granting
security for the  Obligations,  performance  of or  compliance  by each Borrower
Group Member a party thereto with the terms and conditions  hereof or thereof or
the legality, validity and enforceability hereof or thereof.

5.5 Agreements and Other Documents.  As of the Closing Date, each Loan Party has
provided, or has caused each Property Owner to provide, to the Lender,  accurate
and complete  copies of all of the  following  agreements  or documents to which
such  Loan  Party  or  any  such  Property  Owner  (and,  with  respect  to  the
representations  in clauses (b), (d),(e),  (g) and (h) below, any other Borrower
Group  Member) is subject and each of which is listed on Schedule  5.5:  (a) all
Major Leases; (b) all Management  Agreements and Brokerage  Agreements;  (c) all
Permits which are occupancy permits or municipal  assistant program permits held
by such Loan Party or Property  Owner;  (d) all Senior Loan  Documents;  (e) all
instruments  and agreements  evidencing  the issuance of any equity  securities,
warrants,  rights or options to purchase equity securities of any Borrower Group
Members;  (f) all Organizational  Documents of the Loan Parties and the Property
Owners;  (g) all Unsecured Loan  Documents;  and (h) all contracts or options to
sell all or any part of any of the Expanded Properties.  All such agreements are
in full force and effect and are not subject to  termination  because of default
by a Loan  Party or a  Property  Owner  or, to the best  knowledge  of each Loan
Party, otherwise.  Except as set forth on Schedule 5.5, no contract to which any
Loan Party is a party  contains any  provision  which  provides that a change of
control of any Loan Party  constitutes  an  unauthorized  assignment  thereof or
gives the other party a right of termination or other right.

5.6 Absence of Conflicts.  The execution and delivery of this  Agreement and the
other Loan Documents,  the  consummation of the  transactions  herein or therein
contemplated  and the performance of or compliance with the terms and conditions
hereof or thereof by each Loan Party a party  thereto or by the  Borrower  Group
Members  bound  hereby or thereby will not (a) violate any  Applicable  Law; (b)
conflict  with or result in a breach  of or a default  under the  Organizational
Documents of any Borrower  Group Member or any Material  Agreement or instrument
to which any Borrower  Group Member is a party or by which such  Borrower  Group
Member or their  respective  properties are bound; (c) result in the creation or
imposition  of any Lien  upon any  material  property  (now  owned or  hereafter
acquired) of such Borrower Group Member except as otherwise contemplated by this
Agreement and the other Loan  Documents;  or (d) require any consent or approval
other than those already obtained.

5.7 No  Restrictions.  No Borrower Group Member is a party or subject to (i) any
restriction in its Organizational  Documents that adversely affects its business
or the use or ownership of any of its properties or operation of its business as
contemplated in the Business Plan or (ii) any contract, agreement or restriction
that  materially  and adversely  effects its business or the use or ownership of
any of its  properties  or  operation  of its  business as  contemplated  in the
Business  Plan.  No Loan  Party or  Property  Owner is a party or subject to any
contract  or  agreement   which   restricts   its  right  or  ability  to  incur
Indebtedness,  other than certain of the Organizational Documents and the Senior
Loan  Documents,   none  of  which  prohibits  any  Loan  Party's  execution  or
performance of its obligations under this Agreement or other Loan Documents, the
Borrower's  obtaining the Loan, the Guarantor's  guaranty of the Obligations and
the Loan Parties'  providing security for the Obligations as provided herein. No
Borrower  Group  Member has agreed or consented to cause or permit in the future
(upon the  happening  of a  contingency  or  otherwise)  any of the  Collateral,
whether now owned or hereafter  acquired,  to be subject to a Lien that is not a
Permitted Lien.

5.8  Financial  Statements;  Business  Plan.  The Borrower has  furnished to the
Lender the most recent  annual and quarterly  financial  statements of Holdings,
certified by a Chief  Financial  Officer of Holdings,  and of those Loan Parties
described on Schedule 5.8, all as described on such Schedule 5.8. Such financial
statements  (including  the  notes  thereto)  present  fairly,  in all  material
respects,  the  financial  condition  of such  entities  on a  consolidated  and
consolidating basis as of the end of such fiscal period and the results of their
operations  and the changes in their  financial  position for the fiscal  period
then ended,  all in conformity with GAAP applied on a basis consistent with that
of the  preceding  fiscal  period,  except  (i) as  disclosed  therein  and (ii)
subject,  in the case of  unaudited  financial  statements,  to the  absence  of
footnotes and customary year-end audit  adjustments.  As of the Closing Date, no
Borrower  Group Member has any  obligation or liability  (absolute,  contingent,
liquidated or  unliquidated)  of a nature  required to be reflected on a balance
sheet  prepared in  conformity  with GAAP,  except Trade  Payables  constituting
Permitted  Debt or those  reflected  in the  financial  statements  described on
Schedule 5.8.  Since the Closing Date, no Borrower Group Member has incurred any
such obligation or liability  except to the extent  permitted by this Agreement.
The Projections delivered by the Borrower to the Lender, as part of the Business
Plan, as described on Schedule 5.8, a copy of which has been delivered  prior to
the Closing Date, were prepared in good faith,  based on reasonable  assumptions
(as of the  Closing  Date in the case of  Projections  delivered  on the Closing
Date, and as of the date delivered, in the case of all other Projections).

5.9 Financial Accounting Practices. Each Borrower Group Member has made and kept
books,  records and accounts which, in reasonable detail,  accurately and fairly
reflect in all material respects its respective transactions and dispositions of
its assets. Each Borrower Group Member maintains a system of internal accounting
controls  sufficient to provide reasonable  assurances that (a) transactions are
executed in accordance with management's general or specific authorization,  (b)
transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in conformity  with GAAP and to maintain  accountability  for assets,
(c) access to assets is permitted only in accordance with  management's  general
or specific  authorization  and (d) the  recorded  accountability  for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

5.10 Deposit and Disbursement Accounts.  Schedule 5.10 lists all banks and other
financial  institutions  at which any Borrower Group Member  maintains  deposits
and/or  other  accounts  as of the  Closing  Date,  including  any  disbursement
accounts, and such Schedule correctly identifies the name, address and telephone
number  of each  such  depository,  the name in which  the  account  is held,  a
description of the purpose of the account and the complete account number.

5.11 Insurance.  Borrower has obtained,  or has caused to be obtained,  Policies
satisfying the insurance coverages,  amounts and other requirements set forth in
this Agreement.  In addition,  Borrower has obtained,  or caused to be obtained,
Policies satisfying the insurance coverages,  amounts and other requirements set
forth in the Senior Loan Documents. All premiums on such Policies required to be
paid as of the  Closing  Date  have  been paid for the  current  policy  period.
Neither Borrower,  nor to Borrower's  knowledge,  any other Person, has done, by
act or omission anything which would impair the coverage of any such Policy.

5.12 Accurate and Complete Disclosure.  No representation or warranty made by or
on behalf of any Loan Party or Expanded  Property Owner in this Agreement or any
other Loan  Document and no statement  made by or on behalf of any Loan Party or
Expanded Property Owner in any financial statement, certificate, report, exhibit
or  document  furnished  by such Loan Party or  Expanded  Property  Owner to the
Lender pursuant to or in connection with this Agreement  contains as of the date
of such representation,  warranty,  statement,  certificate,  report, exhibit or
document any untrue  statement  of a material  fact or omits to state a material
fact  necessary  to  make  the  statements   contained  herein  or  therein  not
misleading.  There are no facts  known (or which  should  upon the  exercise  of
reasonable  diligence  be known) to any Loan Party or  Expanded  Property  Owner
that, individually or in the aggregate,  would have any reasonable likelihood of
resulting in or causing a Material  Adverse Change which have not been set forth
in the financial statements referred to in Section 5.8 or otherwise disclosed in
writing to the Lender prior to the Closing Date.

5.13 No Event of Default;  Compliance  with  Material  Agreements.  No event has
occurred and is continuing and no condition  exists which  constitutes a Default
or an  Event  of  Default.  No Loan  Party  or  Expanded  Property  Owner  is in
violation,  in any material  respect,  of any term of any Material  Agreement or
instrument  to which it is a party or by which it or its  properties  are  bound
except as set forth on Schedule 4.2(k).

5.14 Labor Matters.  (a) No strikes or other material labor disputes against any
Loan  Party or  Expanded  Property  Owner are  pending  or, to any Loan  Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Loan Party or Expanded  Property Owner comply in all material  respects with the
Fair Labor  Standards Act and each other  federal,  state,  local or foreign law
applicable to such matter;  (c) all material payments due from any Loan Party or
Expanded Property Owner for employee health and welfare insurance have been paid
or accrued as a liability  on the books of such Loan Party or Expanded  Property
Owner;  (d) except as set forth in Schedule  5.14(d),  no Loan Party or Expanded
Property  Owner is a party to or bound by any collective  bargaining  agreement,
management agreement, consulting agreement or any employment agreement (and true
and complete  copies of any agreements  described on Schedule  5.14(d) have been
delivered to the Lender); (e) there is no organizing activity involving any Loan
Party or Expanded  Property  Owner  pending or, to any Loan  Party's  knowledge,
threatened  by  any  labor  union  or  group  of  employees;  (f)  there  are no
representation proceedings pending or, to any Loan Party's knowledge, threatened
with the National Labor Relations Board,  and no labor  organization or group of
employees of any Loan Party or Expanded Property Owner has made a pending demand
for  recognition;  (g)  except as set forth in  Schedule  5.14(g),  there are no
complaints or charges against any Loan Party or Expanded  Property Owner pending
or, to any Loan Party's knowledge,  threatened to be filed with any Governmental
Authority  or  arbitrator  based on,  arising  out of, in  connection  with,  or
otherwise  relating to the  employment or  termination of employment by any Loan
Party  or  Expanded  Property  Owner  of  any  individual  which,  if  adversely
determined, could reasonably be expected to cause a Material Adverse Effect; and
(h) except as set forth on  Schedule  5.14(h)  at  December  1,  2000,  the Loan
Parties (other than Holdings and Borrower) and the Expanded Property Owners have
no employees.

5.15 Litigation.  Except as set forth in Schedule 5.15, there is no action, suit
or proceeding by or before any  Governmental  Authority or  arbitration  that is
pending,  or to the  knowledge  of any Loan  Party  is  threatened,  against  or
affecting (i) any of the Loan Documents or any of the transactions  contemplated
hereby or thereby, or (ii) any Borrower Group Members or any of their respective
properties (including the Expanded Properties), rights or licenses.

5.16 Rights to Property.  The Expanded  Property Owners have title in fee simple
to, or a valid leasehold interest in, all of the Expanded  Properties,  and good
title to, or a valid leasehold interest in, all their other properties purported
to be owned by them and all  properties  reflected  in the most  recent  balance
sheet referred to in Section 5.8 (except as sold or otherwise disposed of in the
ordinary course of business or as no longer used or useful in the conduct of the
business)  free and clear of all Liens except  Permitted  Liens.  Schedule  5.16
lists or  describes  all real  property  other  than that set forth on Exhibit A
owned or  leased by each  Borrower  Group  Member.  The  Permitted  Liens do not
materially and adversely affect the value of any of the Expanded Properties, the
use of the Expanded  Properties for the use being made thereof as of the date of
this  Agreement,  the  operation of the Expanded  Properties  or the  Borrower's
ability to repay the Loan in full.

5.17 Taxes.  Each Loan Party's and Property  Owner's federal tax  identification
number is set forth on Schedule 5.17. All federal,  state, local and foreign tax
returns,  reports  and  statements  required  to be filed by each Loan Party and
Expanded Property Owner have been properly  prepared,  executed,  and filed with
the appropriate  governmental agencies in all jurisdictions in which tax returns
are  required  to be filed,  and all Taxes  upon  such  Loan  Party or  Expanded
Property  Owner  or upon  any of  their  respective  properties  (including  the
Expanded Properties), incomes, sales or franchises which are shown to be due and
payable on such Tax returns  have been paid prior to the date on which any fine,
penalty,  interest,  late  charge or loss may be added  thereto  for  nonpayment
thereof,  other than Taxes or  assessments  the validity or amount of which such
Loan Party or Expanded  Property Owner is contesting in good faith in accordance
with the standards set forth in Section 7.11.  Proper and accurate  amounts have
been  withheld  by each Loan  Party  and  Expanded  Property  Owner  from  their
respective  employees for all periods in full and complete  compliance  with the
tax,  social  security and  unemployment  withholding  provisions  of applicable
federal,  state,  local and foreign law and such  withholdings  have been timely
paid to the respective Governmental Authorities.

5.18 No Material  Adverse  Change.  Except as set forth in Schedule 5.18,  since
     December 31, 1999 there has been no Material Adverse Change.

5.19 Solvency. Both before and after giving effect to (a) the Loan to be made or
extended on the Closing Date, (b) the  disbursement of the proceeds of such Loan
and (c) the payment and accrual of all transaction  costs in connection with the
foregoing,  each of the Loan  Parties and the Expanded  Property  Owners and the
Loan Parties and the Expanded Property Owners, taken as a whole, are Solvent.

5.20 No Bankruptcy Filing.  Except as listed on Schedule 5.20, no Borrower Group
Member  is a debtor in any  outstanding  action or  proceeding  pursuant  to any
Bankruptcy  Law.  Except as listed on Schedule 5.20, or as set forth in Schedule
10.5 (but only upon  satisfaction of the Section 10.5  Conditions),  no Borrower
Group  Member is  contemplating  either the filing of a petition by it under any
Bankruptcy  Law or the  liquidation  of all or a major  portion of its assets or
property. No Loan Party has any knowledge of any Person contemplating the filing
of any such petition  against any Borrower  Group Member.  No Loan Party has any
knowledge of any tenant  contemplating  the filing of a petition by it under any
Bankruptcy  Law or the  liquidation  of all or a major  portion of its assets or
property.  The  entering  into the Loan  Documents  to which  any Loan  Party or
Expanded  Property Owner is a party does not constitute a fraudulent  conveyance
by any Person, and, except as listed on Schedule 5.20, no petition in bankruptcy
has been filed by or against  any  Borrower  Group  Member in the last seven (7)
years (and,  except as listed on Schedule  5.20, no Borrower Group Member or any
principal,  any general partner or member  thereof,  in the last seven (7) years
has ever made any assignment for the benefit of creditors or taken  advantage of
any applicable  Bankruptcy  Laws). No Loan Party or Expanded  Property Owner has
entered  into the Loan or any Loan  Document  with the actual  intent to hinder,
delay, or defraud any creditor,  and each Loan Party and Expanded Property Owner
has received  reasonably  equivalent value in exchange for its obligations under
the Loan Documents.  Giving effect to the transactions  contemplated by the Loan
Documents  and  Senior  Loan  Documents,  the fair  saleable  value of each Loan
Party's  assets  exceeds  and will,  immediately  following  the  execution  and
delivery of the Loan Documents and the Senior Loan  Documents,  exceed such Loan
Party's total liabilities,  including  subordinated,  unliquidated,  disputed or
contingent  liabilities.  The fair saleable value of each Loan Party's assets is
and will immediately  following the execution and delivery of the Loan Documents
and  Senior  Loan  Documents,   be  greater  than  such  Loan  Party's  probable
liabilities,  including the maximum amount of its contingent  liabilities or its
debts as such debts become absolute and matured. Each Loan Party's assets do not
and, immediately  following the execution and delivery of the Loan Documents and
the Senior Loan Documents  will not,  constitute  unreasonably  small capital to
carry out its  business as  conducted  or as proposed to be  conducted.  No Loan
Party intends or believes that it will,  incur debts and liabilities  (including
contingent  liabilities  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 its obligations).

5.21 Trade  Relations.  There exists no actual or, to the  knowledge of any Loan
Party or  Expanded  Property  Owner,  threatened  termination,  cancellation  or
limitation  of, or any  modification  or change  in, the  business  relationship
between any Loan Party or Expanded  Property  Owner and any customer or supplier
that would prevent the Loan Parties or Expanded  Property Owners from conducting
their  business after the  consummation  of the financing  contemplated  by this
Agreement in  substantially  the same manner as is  contemplated in the Business
Plan.

5.22 No Brokerage Fees. Except as set forth on Schedule 15.21, no Loan Party has
agreed to pay any  brokerage or other fee,  commission  or  compensation  to any
Person  in  connection  with the Loan to be made  hereunder  except  the fees as
contemplated herein.

5.23 Margin  Stock;  Regulation U. No Loan Party or Expanded  Property  Owner is
engaged principally,  or as one of its important activities,  in the business of
extending  credit for the purpose of purchasing or carrying  margin stock within
the meaning of Regulations T, U, and X of the Federal Reserve System. The making
of the Advances and the use of the proceeds thereof will not violate Regulations
T, U or X of the Board of Governors of the Federal Reserve System.

5.24  Investment  Company;  Public  Utility  Holding  Company.  No Loan Party or
Expanded Property Owner is an "investment  company" or a "company  controlled by
an  investment  company" or an  "affiliated  person" or "promoter" or "principal
underwriter" for, an "investment  company," within the meaning of the Investment
Company  Act of 1940,  as  amended,  or a "holding  company,"  or a  "subsidiary
company" of a "holding  company," or an "affiliate" of a "holding company" or of
a "subsidiary  company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

5.25 Personal  Holding  Company.  No Loan Party or Expanded  Property Owner is a
     "personal holding company" as defined in Section 542 of the Code.

5.26 Foreign  Person.  No Loan Party or  Expanded  Property  Owner is a "foreign
     person" within the meaning ofss.1445(f)(3) of the Internal Revenue Code.

5.27  Securities  Act, Etc. The issuance,  offer and sale of (i) the Note to the
Lender  (ii) the  Warrant to the  Lender  and (iii) the  shares of Common  Stock
issuable upon exercise of the Warrant to the holder  thereof are not required to
be  registered  under the  Securities  Act or under the  securities  laws of any
state;  provided,  that the  foregoing  representation  is  predicated  upon the
assumption that the Lender is not acquiring the Note, the Warrant or such shares
of Common Stock with a view to the  "distribution"  (as such term is used in the
Securities  Act) of any part  thereof  which would  result in a violation of the
Securities Act.

5.28     ERISA.

(a) No Other Plans.  Except as set forth on Schedule 5.28:  Neither any Borrower
Group Member nor any ERISA  Affiliate  maintains or  contributes  to, or has any
obligation (including a contingent obligation) under, any Employee Benefit Plans
providing for payment of retirement income benefits. No Borrower Group Member or
ERISA  Affiliate  maintains or contributes to any employee  welfare benefit plan
(as defined in Section 3(1) of ERISA) which provides benefits to employees after
termination of employment other than as specifically required by Part 6 of Title
I of  ERISA.  No  Borrower  Group  Member  or ERISA  Affiliate  has  during  the
immediately preceding six years maintained, been required to contribute to, been
required to pay any amount or had any obligation  (whether actual or contingent)
with respect to any Pension Plan or Multiemployer Plan. No Borrower Group Member
or ERISA  Affiliate is the grantor of a grantor  trust  established  pursuant to
Subpart E of Subchapter J of the Code.

(b) ERISA and Code Compliance and Liability.  Each Employee Benefit Plan (i) has
been  administered  in accordance  with its terms and (ii) complies in form, and
has been maintained and operated in accordance,  with the  requirements of ERISA
and, where applicable, the Code, except where failure to comply would not result
in a material  liability  to any such Person and except for the failure to adopt
any required  amendments for which the remedial  amendment  period as defined in
Section 401(b) of the Code has not yet expired.  Each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been determined
by the  Internal  Revenue  Service  ("IRS")  to be so  qualified  and each trust
related to such plan has been  determined to be exempt under  Section  501(a) of
the Code. No material  liability has been incurred by any Borrower  Group Member
or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any  Employee  Benefit  Plan.  Each  Borrower  Group Member and ERISA
Affiliate has complied in all material respects with the applicable requirements
of Part 6 of Title I of ERISA.

(c) Funding.  No Pension Plan has been  terminated in a termination  which would
result in a material  liability  to the  Borrowers  or any ERISA  affiliate.  No
accumulated  funding deficiency (as defined in Section 412 of the Code) has been
incurred  (without  regard to any waiver granted under Section 412 of the Code),
nor has any funding  waiver from the IRS been received or requested with respect
to any Pension Plan,  nor has any Borrower  Group Member or any ERISA  Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section  412 of the Code,  Section  302 of ERISA or the terms of any  Pension
Plan prior to the due dates of such contributions  under Section 412 of the Code
or Section 302 of ERISA,  nor has there been any event  requiring any disclosure
under  Section  4041(c)(3)(C),  4063(a) or 4068(f) of ERISA with  respect to any
Pension Plan.

(d) Prohibited Transactions and Payments.  Neither any Borrower Group Member nor
any  ERISA  Affiliate  has  (1)  engaged  in  a  material  nonexempt  prohibited
transaction  described in Section 406 of ERISA or Section 4975 of the Code;  (2)
incurred any  liability  to the PBGC which  remains  outstanding  other than the
payment of premiums and there are no premium  payments which are due and unpaid;
(3) failed to make a required  contribution or payment to a Multiemployer  Plan;
or (4) failed to make a required  installment  or other  required  payment under
Section 412 of the Code.

(e)  No Termination Event. No material Termination Event has occurred within the
     last six years or is reasonably expected to occur.

(f)  ERISA   Litigation.   No  material   proceeding,   claim,   lawsuit  and/or
investigation  is existing or, to the  knowledge of any Borrower  Group  Member,
threatened  concerning  or involving any (1) employee  welfare  benefit plan (as
defined in Section 3(1) of ERISA) currently  maintained or contributed to by any
Borrower  Group  Member  or  any  ERISA  Affiliate,  (2)  Pension  Plan  or  (3)
Multiemployer Plan.

5.29 Intellectual Property.  Each Loan Party and Expanded Property Owner owns or
possesses the right to use all patents, trademarks,  service marks, trade names,
copyrights,  know-how, franchises, software and software licenses (collectively,
the  "Intellectual  Property")  necessary  and material for the operation of its
business.  All such material  rights are described on Schedule 5.29. No material
claim has been asserted and is pending by any Person  challenging or questioning
the use of any such  Intellectual  Property or the validity of any  Intellectual
Property (nor does any Loan Party or Expanded  Property  Owner know of any valid
basis  for such  claim)  and (b) the use of  Intellectual  Property  by the Loan
Parties and the Expanded Property Owners does not infringe on the rights of, and
no Intellectual  Property of the Loan Parties or the Expanded Property Owners is
being infringed upon by, any Person in any material respect.

5.30  Environmental  Matters.  Except  as set  forth  in  Schedule  5.30  or the
Environmental Reports, to the best knowledge of each of the Loan Parties and the
Expanded  Property  Owners,  each Loan Party and Expanded  Property  Owner is in
compliance with all Environmental  Requirements applicable to such Loan Party or
Expanded  Property  Owner or its  business or to the real or  personal  property
owned,  leased  or  operated  by such  Loan  Party or  Expanded  Property  Owner
(including the Expanded  Properties).  No Loan Party or Expanded  Property Owner
has received  notice of, or has knowledge of, any material  violation or alleged
violation,   or  any  material  liability  or  asserted  liability,   under  any
Environmental Requirements, with respect to such Loan Party or Expanded Property
Owner or its business or its premises.  Except as disclosed in the Environmental
Reports,  no Hazardous  Material is currently located at, on, in, under or about
any Expanded Property or Improvements.  The only premises  presently occupied by
any Loan Party or Expanded Property Owner are the Expanded Properties and office
spaces in commercial office buildings. Schedule 5.30 lists all the Environmental
Reports.

5.31 Security Interests.  The provisions of the Security Documents are effective
to  create in favor of the  Lender a legal,  valid  and  enforceable  Lien on or
security interest in all of the Collateral, and, when the recordings and filings
described on Schedule  5.31 have been effected in the public  offices  listed on
Schedule  5.31,  the Pledge  Agreements  will create a perfected  first priority
security  interest in all right,  title,  estate and  interest of each  Borrower
Group Member party thereto in the  Collateral  which may be perfected by filing,
subject to no Liens. The recordings,  filings and actions shown on Schedule 5.31
are all the actions  necessary  in order to  establish,  protect and perfect the
interest of the Lender in the  Collateral.  Other than the Financing  Statements
and any UCC-1 financing  statements made by the Senior Loan Obligors in favor of
the Senior  Lenders,  no Loan Party or Expanded  Property Owner has executed any
UCC-1 financing statements in favor of any other Person.

5.32  Place of  Business.  The chief  executive  office  of each Loan  Party and
Expanded  Property Owner is identified on Schedule  5.32.  Each Loan Party's and
Expanded  Property Owner's place of business in the state(s) where a Property is
located is identified on Schedule 5.32. Each Loan Party's records concerning the
Collateral,  and each Expanded Property Owner's records concerning its Property,
are kept at one or all of these addresses.

5.33  Location  of  Collateral.  The  Collateral  is (a)  currently  kept at the
locations  identified by Loan Party and type of Collateral on Schedule  5.33(a),
and (b) will be kept at the  locations  identified by the Loan Party and type of
Collateral on Schedule 5.33(b).

5.34 No Defaults Under Material Agreements. Except as listed on Schedule 4.2(k),
with respect to each Material  Agreement,  no material default by any Loan Party
or  Expanded  Property  Owner or event  which  with the  giving of notice or the
passage of time would be a material  default has occurred  and, to the knowledge
of the Loan Parties and the Expanded Property Owners, the other party or parties
thereto are not in material default thereunder, and each Loan Party and Expanded
Property Owner, as applicable,  has fully and timely  performed all its material
obligations  thereunder.  The right,  title and  interest  of such Loan Party or
Expanded Property Owner thereunder is not subject to any set off or counterclaim
or, to the best knowledge of the Loan Parties and the Expanded  Property Owners,
any defense or claim,  and none of the  foregoing  have been asserted or alleged
against such Loan Party or Expanded  Property Owner.  The amount  represented by
each Loan  Party,  on behalf of itself  and on behalf of the  Expanded  Property
Owners,  to the Lender,  from time to time as owing with respect to any Material
Agreement  will at such  time be the  correct  amount in all  material  respects
actually owing by such account debtors thereunder.

5.35  Corporate  Structure.  The  Borrower  is a  Subsidiary  of  Holdings.  The
Guarantors,  other than Holdings, are wholly-owned,  directly or indirectly,  by
the  Borrower or  Holdings,  or by one or more other  Guarantors.  Except as set
forth in Schedule 5.35, none of the Loan Parties nor any Subsidiary  thereof has
issued any securities  convertible into shares of its equity to any Person,  and
the  outstanding  stock and  securities (or other evidence of ownership) of such
Subsidiaries owned by the Loan Parties are so owned free and clear of all Liens,
warrants, options or rights of others of any kind.

5.36  Assumed  Names.  Except as set forth on  Schedule  5.36,  no Loan Party or
Expanded  Property  Owner  conducts  business  under any assumed  names or trade
names, or has conducted  business under any other names, or any assumed names or
trade names, at any time prior to the Closing Date.

5.37  Transactions  with Affiliates.  No Affiliate and no officer or director of
any Loan Party or Expanded  Property Owner or any  individual  related by blood,
marriage,  adoption or otherwise to any such Affiliate,  officer or director, or
any Person in which any such Affiliate,  officer, director or individual related
thereto  owns any material  beneficial  interest,  is a party to any  agreement,
contract,  commitment or  transaction  with any Loan Party or Expanded  Property
Owner or has any  interest  in any  property  used by any Loan Party or Expanded
Property Owner, except as set forth on Schedule 5.37 or Schedule 5.47.

5.38 Other Indebtedness. Other than the Loan and the Permitted Debt, no Borrower
     Group Member has outstanding Indebtedness.

5.39     Leases; Management Agreements.

(a)  Each  Expanded  Property  Owner is the owner and  holder of the  landlord's
     interest under all of the Leases.

(b) The rent roll attached  hereto as Schedule  5.39(b) to this  Agreement  (the
"Current  Rent Roll") is true and correct  and  discloses  all tenants and other
Persons that have any rights to occupy any portion of the Properties.  Except as
indicated on the Current Rent Roll or Schedule 5.39(b),  (i) no tenant of any of
the Properties has any extension or renewal options,  (ii) no Security  Deposits
respecting  any Leases of the  Properties  are being held by any Borrower  Group
Member,  (iii) except as set forth in the tenant estoppel  letters  delivered to
Lender on or before the Closing  Date,  all work to be performed by the landlord
under the Leases  respecting  the  Expanded  Properties  has been  substantially
performed,  all  contributions  to be  made  by  the  landlord  to  the  tenants
thereunder  have  been  made and all  other  conditions  precedent  to each such
tenant's obligations  thereunder have been satisfied and (iv) no tenant or other
party has any option,  right of first refusal or similar  preferential  right to
purchase all or any portion of the Expanded  Properties.  The Properties are not
subject to any Leases other than the Leases  described in the Current Rent Roll,
and true,  correct and  complete  copies of all Major Leases with respect to the
Properties  have been  delivered  to Lender.  Except as disclosed in the Current
Rent Roll or on Schedule 5.39(b),  (a) the premises demised under the Leases for
the Expanded  Properties  have been  completed and the tenants have accepted the
same and have  taken  possession  and have  commenced  paying  rent;  (b) to the
Borrower's  knowledge  there  exist no offsets or defenses to the payment of any
portion  of the  rents;  (c) there are no  adjustments  or  changes  to the rent
payable by any tenant under any Lease at any of the Expanded Properties;  (d) no
Borrower Group Member has received any written notice  challenging  the validity
or enforceability of any Lease at any of the Expanded Properties;  (e) there are
no  agreements  with tenants other than as set forth in the Leases at any of the
Expanded Properties, including any revisions, amendments or modifications of the
Leases;  (f) there are no brokerage  commissions or finder's fees due or payable
with  respect  to any  Leases  at any of the  Expanded  Properties;  and  (g) to
Borrower's  knowledge  the Major Leases of the Expanded  Properties  are in full
force and effect and there are no material  defaults  thereunder by any Borrower
Group Member or any tenant,  and there are no conditions  that, with the passage
of time or the giving of notice,  or both,  would constitute  material  defaults
thereunder,  and no Borrower Group Member or other Expanded Property Owner is in
default under any other Lease.

(c) No person has any possessory interest in the Expanded Properties or right to
occupy the same except  under and pursuant to the  provisions  of the Leases and
the Permitted Liens.

(d) No fixed rent has been paid more than thirty (30) days in advance of its due
date and no payments of rent are more than thirty (30) days  delinquent,  except
as set forth on the Current Rent Roll and the accounts  receivable  aging report
included in the financial statements heretofore provided to Lender.

(e) The Management Agreements listed on Schedule 5.39(e) are the only Management
Agreements in effect with respect to the Properties. Borrower has delivered true
and  correct  copies  of the  Management  Agreements  together  with any and all
amendments  thereto to Lender.  The  Management  Agreements  for the  respective
Expanded  Properties  are in full  force  and  effect  and  there is no  default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or the giving of notice would constitute a default thereunder.

5.40 Security  Deposits.  Each Loan Party and each Expanded Property Owner is in
     compliance  in all  material  respects  with all  Legal  Requirements  with
     respect to the Security Deposits.

5.41 No Receipt of Loan Proceeds. All of the Senior Loan proceeds that have been
advanced  to each  Senior Loan  Obligor  have been used solely for the  purposes
provided in the Senior Loan Documents.

5.42  Violations of Law. No Loan Party or Expanded  Property Owner has knowledge
of any notices of violations of any  Applicable  Law in effect as of the Closing
Date by any Loan Party or Expanded Property Owner, or affecting or pertaining to
any of the Properties or other Expanded Properties.

5.43 No Event  of  Default.  No Event of  Default  has  occurred  or will  occur
immediately following the making of the Loan, and no Default presently exists or
will exist immediately following the making of the Loan, and there is no default
or event of  acceleration  under any of the Senior Loan Documents  which has not
been  cured or  irrevocably  waived in  writing  and no Loan  Party  has  actual
knowledge of any default or any event or  circumstance  which with the giving of
notice or the passage of time,  or both,  would  constitute a default  under any
Senior Loan Documents except as noted on Schedule 5.43.

5.44 No Set-Off.  The Loan Documents are not subject to any right of rescission,
set-off,  counterclaim  or defense by any Borrower  Group Member,  including the
defense of usury,  nor would the  exercise  of any of the terms of the  Security
Documents,  or the exercise of any right  thereunder,  render the Loan Documents
unenforceable,   and  no  Borrower  Group  Member  has  asserted  any  right  of
rescission, set-off, counterclaim or defense with respect thereto.

5.45     Intentionally Omitted.

5.46     Representations and Warranties with Respect to the Expanded Properties.

(a) Compliance with Legal Requirements.  To Borrower's knowledge, the use of the
Expanded   Properties   complies  in  all  material   respects  with  all  Legal
Requirements,  including all  applicable  zoning  resolutions,  building  codes,
Environmental  Laws and other Applicable Law. Each Expanded  Property is a legal
parcel  lawfully  created in full  compliance in all material  respects with all
subdivision laws and ordinances.

(b) Assessments.  Except as contemplated in the Approved Operating Budget, there
are no  pending  or, to the  knowledge  of any Loan Party or  Expanded  Property
Owner,  proposed  special  or  other  assessments  for  public  improvements  or
otherwise  affecting  any  Expanded  Property,  nor are there  any  contemplated
improvements  to the Expanded  Property that may result in such special or other
assessments.

(c) Flood Zone. To the extent that any part of any Expanded  Property is located
in an area  identified  by the Federal  Emergency  Management  Agency as an area
federally designated a "100-year flood plain," such Expanded Property is covered
by flood insurance meeting the requirements set forth in Section 7.2.

(d) Parking.  Parking spaces  adequate for compliance of each Expanded  Property
with  applicable  zoning  requirements  and other  Legal  Requirements  (and for
compliance with all obligations of landlord under the Leases) are located on the
applicable Expanded Property.

(e) Utilities and Public  Access.  The following  statements are accurate in all
material  respects  with respect to each  Expanded  Property:  (i) such Expanded
Property  has adequate  rights of access to dedicated  public ways (and makes no
material  use of any means of access,  ingress or egress that is not pursuant to
such dedicated public ways or recorded  irrevocable  rights-of-way or easements)
and is  served by  water,  electric,  sewer,  sanitary  sewer  and  storm  drain
facilities;  (ii) all utility services necessary for the proper operation of the
Improvements for their intended purpose are available at the applicable Expanded
Property,  including  water supply,  storm and sanitary  sewer  facilities,  gas
and/or  electricity  and  telephone  facilities;   (iii)  all  public  utilities
necessary  to the  continued  use and  enjoyment  of such  Expanded  Property as
presently used and enjoyed or as contemplated to be used and enjoyed are located
in  the  public  right-of-way  abutting  such  Expanded  Property  or  in  areas
("Easement  Areas")  that  are the  subject  of  recorded  irrevocable  easement
agreements which benefit such Expanded Property and which are listed in Schedule
A of any existing title insurance policy covering the Expanded Property so as to
be included in the coverage thereof; (iv) all such utilities are connected so as
to serve such Expanded  Property  without passing over other property other than
Easement  Areas;  and (v) all  roads  and other  access  necessary  for the full
utilization of the Improvements for their intended  purposes have been completed
or the  necessary  rights of way  therefor  have either been  acquired  from the
appropriate  Governmental  Authorities  or have been dedicated to the public use
and accepted by such Governmental  Authorities and all necessary steps have been
taken by each Expanded Property Owner for any such  Governmental  Authorities to
assure the complete construction and installation thereof.

(f) No  Encroachments.  With  respect  to  each  Expanded  Property,  all of the
Improvements,  except as shown on any  existing  survey,  lie wholly  within the
boundaries  and building  restriction  lines of such Expanded  Property,  and no
improvements on adjoining  properties encroach upon such Expanded Property,  and
no easements or other encumbrances upon such Expanded Property encroach upon any
of the Improvements, so as, in either case, to have a Material Adverse Effect.

(g)  Compliance  with Law. Each Expanded  Property and the use thereof comply in
all material respects with all applicable  insurance  requirements.  No Expanded
Property  is a  non-conforming  use,  or legal  non-conforming  use which  could
reasonably be expected to cause a Material Adverse Change. No Loan Party nor any
Expanded  Property  Owner  is in  default  or  violation  of  any  order,  writ,
injunction,  decree or demand of any  Governmental  Authority,  the violation of
which could have or could  reasonably  be  expected to cause a Material  Adverse
Change.  There has not been  committed  by or on behalf of any Loan Party or any
Expanded  Property Owner or, to the best of such Person's  knowledge,  any other
Person in  occupancy  of or involved  with the  operation or use of any Expanded
Property,  any act or omission affording any Governmental Authority the right of
forfeiture as against (i) such Expanded Property or (ii) any part thereof or any
monies  paid in  performance  of the  Obligations.  No portion  of any  Expanded
Property has been purchased with the proceeds of any illegal activity.

(h)  Damage.  The  Improvements  are not  damaged  or injured as a result of any
     fire, explosion, accident, flood or other casualty.

(i) No  Condemnation.  Except as set forth in Schedule 5.46, no  condemnation or
eminent domain  proceeding has been  commenced,  or to the knowledge of any Loan
Party,  is about to be  commenced,  against  any  Expanded  Property  or for the
relocation of roadways providing access to such Expanded Property.

(j) Payment of Taxes;  Assessments.  All Real Property  Taxes and Other Property
Charges  relating to the Expanded  Properties  which are due and owing have been
paid,  or an escrow of funds in an amount  sufficient to cover such payments has
been established, and no extension of time for assessment or payment by any Loan
Party or any  Expanded  Property  Owner of any Real  Property  Taxes  and  Other
Property Charges is in effect.

(k)  Separate Tax Lot. Each Expanded  Property consists of a separate tax lot or
     lots and said lot or lots do not include any property  not included  within
     such Expanded Property.

(l)  Environmental  Reports.  No Loan Party or Expanded  Property  Owner has any
knowledge of any material and adverse  environmental  condition or  circumstance
affecting  any Expanded  Property  that was not  disclosed in the  Environmental
Reports  delivered to Lender.  Borrower hereby represents and warrants to Lender
that the representations and warranties contained in the Environmental Indemnity
are true and  correct.  Except  for any  specific  limitation  contained  in the
Environmental  Indemnity,  this  representation  and warranty  shall survive any
termination,  satisfaction,  or assignment of this Agreement and the exercise by
Lender of any of its rights or remedies hereunder.

(m)  Americans With  Disabilities Act Compliance.  With respect to each Expanded
     Property,  the Improvements comply in all material respects with all of the
     requirements of the ADA.

(n) Physical Condition. The Expanded Properties,  including the Improvements and
all portions  thereof,  are in good condition,  order and repair in all material
respects. There exists no structural or other material defects or damages in the
Expanded Properties,  whether latent or otherwise, and no Loan Party or Expanded
Property Owner has received notice from any insurance  company,  bonding company
or any other Person of any defects or inadequacies  in the Expanded  Properties,
or any part thereof,  which would cause the imposition of extraordinary premiums
or charges  thereon  or of any  termination  or  threatened  termination  of any
Policies  or bonds.  All costs and  expenses  of any and all  labor,  materials,
supplies and equipment used in the  construction of the  Improvements  which are
due and owing have been paid in full.

5.47 Affiliate  Agreements.  The Loan Parties and Expanded  Property Owners have
not entered into and will not enter into any Affiliate  Agreements  (hereinafter
defined) without the prior written consent of Lender and in any event upon terms
and conditions that are intrinsically  fair and  substantially  similar to those
that would be available on an  arms-length  basis with third  parties other than
any such  Affiliate.  Except as set forth on  Schedule  5.47,  no Loan  Party or
Expanded Property Owner has entered into any Affiliate Agreements,  and Schedule
5.47 sets forth all fees,  compensation  and any other  remuneration  payable to
each Loan Party and  Expanded  Property  Owner on account of any such  Affiliate
Agreements.

5.48  Survival  of  Representations.  Each  Loan  Party  agrees  that all of the
representations and warranties made by any of the Loan Parties set forth in this
Article V or elsewhere in the Loan  Documents  shall  survive for so long as any
amount remains owing to Lender under the Loan Documents by any Loan Party.

5.49  Senior Loan  Documents.  All of the Senior  Loan  Documents  are listed in
Schedule  5.49.  Except  as set  forth in  Schedule  5.49,  there  have  been no
modifications  of the Senior Loan  Documents  evidencing  or securing the Senior
Loans,  and there are no other  agreements  of any kind between the Loan Parties
and the Senior  Lenders or any other Person or entity with respect to the Senior
Loans except as set forth in Schedule 5.49.  Borrower represents and warrants to
Lender  the truth and  accuracy  of all of the  representations  and  warranties
contained in the Senior Loan Documents,  and such representations and warranties
are hereby expressly incorporated by reference as if fully set forth herein.

5.50 Purchase Contracts.  Other than the Silverthorne  Contract and the Purchase
Agreements,  no Borrower Group Member is party to any binding  agreement to sell
any of the Expanded Properties or such Borrower Group Member's interest therein,
excepting  such  agreements  as may be cancelled or  terminated  by the Borrower
Group Member without penalty or fee.

5.51 Unencumbered  Assets.  Except as set forth in Schedule  5.51, no Loan Party
     owns (directly or indirectly) any interest in any Unencumbered Assets.

5.52 Status.  Except as disclosed in Schedule  5.52,  Holdings is a  corporation
listed and in good  standing  on the New York Stock  Exchange  and is  currently
qualified as a real estate investment trust under the Code.

5.53 Filing and Recording  Taxes.  All transfer  taxes,  recording  taxes,  deed
stamps,  intangible  taxes or other  amounts in the nature of transfer  taxes or
recording  taxes,  charges or fees or similar charges required to be paid by any
Person under  applicable  Legal  Requirements  currently in effect in connection
with the making of the Loan or the  transactions  contemplated by this Agreement
have been paid. All mortgage,  mortgage  recording,  stamp,  intangible or other
similar  taxes  required  to be  paid  by  any  Person  under  applicable  Legal
Requirements  currently in effect in connection  with the  execution,  delivery,
recordation, filing, registration,  perfection or enforcement of any of the Loan
Documents, including the Security Documents, have been paid.

5.54 Representations and Warranties of Holdings. Each of the representations and
warranties  made by any Loan Party with  respect to any  Borrower  Group  Member
shall be deemed to have been made by Borrower  and by Holdings  with  respect to
each Borrower Group Member, to the same extent such  representation and warranty
is made by the Loan Party.

5.55 Acquisition  Documents.  Borrower has delivered to Lender true and complete
copies of all  Material  Agreements  under which any  Borrower  Group Member has
remaining  rights or obligations in respect to the  acquisition of any property,
together  with a true and complete  copy of the related  purchase  agreement and
signed  closing  statement/settlement  sheets.  Except as set forth on  Schedule
5.55, to Borrower's  knowledge,  each seller under such purchase  agreements has
complied with all of its covenants and obligations under the purchase agreement,
and  Borrower  Group  Member has not waived any rights or  remedies  against the
seller or any other party except as  previously  disclosed to Lender in writing,
and expressly approved by Lender in writing.

5.56 Additional  Pledges.  The Borrower Group Members have no right to pledge or
encumber any other assets owned or held by such Borrower  Group  Members  (other
than the  Collateral)  because such Borrower Group Members are  prohibited  from
pledging or  encumbering  any assets other than the  Collateral by the terms and
provisions of the Senior Loan Documents.

5.57 No Plan Assets. No Loan Party is or will be (i) an employee benefit plan as
defined in  Section  3(3) of ERISA  which is  subject  to ERISA,  (ii) a plan as
defined in Section  4975(e)(1)  of the Code which is subject to Section  4975 of
the Code, or (iii) an entity whose underlying assets constitute "plan assets" of
any  such  employee  benefit  plan or plan for  purposes  of Title I of ERISA of
Section 4975 of the Code.

5.58 Governmental Plan. No Loan Party is or will be a "governmental plan" within
the  meaning of  Section  3(32) of ERISA and  transactions  by or with such Loan
Party are not and will not be subject to state statutes  applicable to such Loan
Party regulating  investments of and fiduciary obligations with obligations with
respect to governmental plans.

5.59     Capitalization.

(a) Holdings'  authorized  capital stock consists of: (i) 150,000,000  shares of
Common  Stock,  of which  43,577,916  shares  are  issued  and  outstanding  and
1,000,000  shares are reserved for issuance upon  exercise of the Warrant,  (ii)
24,315,000 of Preferred  Stock, of which (A) 2,300,000  shares of 10.5% Series A
Cumulative  Preferred Stock,  $0.01 par value,  are issued and outstanding,  (B)
7,828,125 shares of 8.5% Series B Cumulative Participating Convertible Preferred
Stock, $0.01 par value, are issued and outstanding,  and (C) no shares of Series
C Cumulative Convertible Redeemable Preferred Stock, have been validly issued or
reserved for issuance,  and (iii) 88,500,000  shares of excess stock,  $0.01 par
value, of which 76,342,500 shares are designated Excess Common Stock,  1,150,000
shares are  designated  Excess Series A Preferred  Stock,  3,595,400  shares are
designated  Excess Series B Preferred Stock and 7,412,100  shares are designated
Excess  Preferred  Stock.  All of the  outstanding  shares of  capital  stock of
Holdings  have been duly  authorized  and  validly  issued,  are fully  paid and
nonassessable,  free of  preemptive  rights  and have been  offered  and  issued
without  violation of the Securities Act or any applicable  state  securities or
blue sky law or any  preemptive  rights  of any  person.  Schedule  5.59  hereto
accurately  sets  forth,  as of the  date  hereof,  the  number  of  issued  and
outstanding  shares of Common Stock held by each person known by Holdings to own
beneficially or of record 5% or more of the  outstanding  shares of any class of
Holdings' capital stock.

(b) Except as  disclosed  on Schedule  5.59  hereto:  (i) there are no issued or
outstanding  securities that are convertible  into or exchangeable for shares of
Holdings' capital stock ("Convertible Securities");  (ii) there are no issued or
outstanding  subscriptions,  options,  warrants  or other  rights to purchase or
acquire  any  shares  of the  capital  stock  of  Holdings  or  any  Convertible
Securities  ("Option  Rights")  other than the Warrant;  (iii) Holdings is not a
party to any  agreement  or  understanding  pursuant to which it is obligated to
purchase or redeem any shares of its capital stock or any Convertible Securities
or Option Rights and is not otherwise under any obligation to repurchase, redeem
or  otherwise  acquire  any  shares  of its  capital  stock  or any  Convertible
Securities  or Option  Rights;  (iv) Holdings is not a party to any agreement or
understanding  pursuant to which it is  obligated  to register any shares of its
capital  stock  or  other  securities  under  the  Securities  Act or any  state
securities laws; and (v) to the best knowledge of Holdings, no securities holder
of Holdings is a party to any voting agreement,  voting trust, irrevocable proxy
or other  agreement  affecting  the  voting  rights of any  shares of  Holdings'
capital  stock or any agreement  providing for any call or put option,  right of
first  refusal  or offer or other  right to  acquire or dispose of any shares of
Holdings' capital stock or any Convertible  Securities or Option Rights.  Except
for the shares of Common  Stock  reserved  for  issuance  upon  exercise  of the
Warrants,  no shares  of Common  Stock are  issuable  upon the  exercise  of any
outstanding   Convertible  Securities  or  Option  Rights  of  Holdings  and  no
additional  shares of Common Stock will become  issuable  upon  exercise of such
Convertible  Securities  or Option  Rights on  account  of the  issuance  of the
Warrants.

5.60     Valid Issuance of Warrant and Warrant Shares.

(a) The Warrant has been duly executed and delivered by Holdings,  has been duly
authorized  and  validly  issued  free  and  clear of all  liens,  encumbrances,
equities and claims.

(b) The shares of Common Stock  issuable  upon exercise of the Warrant have been
duly  authorized  and reserved for issuance and, when issued in accordance  with
the terms of the Warrant, will be validly issued, fully paid and non-assessable,
free and clear of all liens,  encumbrances,  equities  and  claims  and  without
violation of any preemptive rights.

ARTICLE VI
                      FINANCIAL STATEMENTS AND INFORMATION

                  So long as the Obligations are outstanding, Borrower covenants
and agrees that Borrower shall deliver to Lender :

6.1 Monthly  Financial  Statements.  Within 20 days after the end of each of the
first two fiscal  months of each  Fiscal  Quarter,  (i) a copy of the  unaudited
consolidated  balance  sheet of Holdings and its  Subsidiaries  as at the end of
such  fiscal  month,   accompanied  by  related   consolidated  (as  applicable)
statements  of income and  retained  earnings  for such fiscal month and for the
elapsed  portion of the fiscal year ended with the last day of such fiscal month
and accompanied by a certificate of the Chief Financial Officer of Holdings,  in
its  capacity  as the  general  partner  of  Borrower,  that all such  financial
statements are complete and correct and present  fairly in accordance  with GAAP
the consolidated  financial position, the consolidated results of operations and
the changes in consolidated  financial position of Holdings and its Subsidiaries
(subject to normal year-end audit adjustments and the absence of footnotes).

6.2 Quarterly Financial Statements.  Within 30 days after the end of each Fiscal
Quarter,  (i) a copy of the unaudited  consolidated  and  consolidating  balance
sheets of Holdings and its  Subsidiaries  as of the close of such Fiscal Quarter
and the related consolidated and consolidating  statements of income and changes
in financial  position for that portion of the current year,  (ii) a copy of the
unaudited  consolidated and  consolidating  statements of income of Holdings and
its  Subsidiaries  for such  quarter and (iii) a copy of the  unaudited  balance
sheet and related  statement of income for each Expanded  Property,  or group of
Expanded  Properties for which such statements are otherwise required under such
Senior Loan  Documents,  as at the close of such quarter and for that portion of
the current year, and setting forth the corresponding  budgeted figures for such
fiscal quarter as set forth in the budget delivered pursuant to Section 6.6, and
accompanied by a certificate of the Chief Financial Officer of Holdings,  in its
capacity as the general partner of Borrower,  that all such financial statements
are  complete  and correct and present  fairly in  accordance  with GAAP (y) the
consolidated  and  consolidating   financial  position,   the  consolidated  and
consolidating  results  of  operations  and  the  changes  in  consolidated  and
consolidating  financial  position of Holdings and its  Subsidiaries and (z) the
financial  position,  the results of  operations  and the  changes in  financial
position of each  Expanded  Property,  in each case as at the end of such Fiscal
Quarter  and for the  period  then  ended  (subject  to  normal  year-end  audit
adjustments and the absence of footnotes).

6.3 Annual Financial  Statements.  Copies of (i) the annual audited consolidated
and   unaudited   consolidating   financial   statements  of  Holdings  and  its
Subsidiaries  consisting of consolidated  and  consolidating  balance sheets and
consolidated and  consolidating  statements of income and retained  earnings and
changes in financial  condition,  setting forth in comparative form in each case
the consolidated  and  consolidating  figures for the previous  calendar year as
well as the corresponding  budgeted figures for such fiscal year as set forth in
the budget delivered  pursuant to Section 6.6, in each case within 90 days after
the  close  of each  calendar  year,  and  (ii)  the  annual  audited  financial
statements of each Expanded Property,  or group of Expanded Properties for which
such  statements  are  otherwise  required  under such  Senior  Loan  Documents,
consisting  of a balance  sheet,  statement of income and retained  earnings and
changes in financial  condition,  setting forth in comparative  form the figures
for the previous calendar year as well as the corresponding budgeted figures for
such fiscal year as set forth in the budget  delivered  pursuant to Section 6.6,
in each case  within the  earlier  of 120 days after the close of each  calendar
year or such earlier time period as is required under the applicable Senior Loan
Documents  for  deliveries  of financial  statements  to the  applicable  Senior
Lenders.  All such  financial  statements  shall be prepared in accordance  with
GAAP,  certified  (except  as to  consolidating  financial  statements)  without
qualification  by an Approved  Accounting Firm, and accompanied by a certificate
from the Chief  Financial  Officer of  Holdings,  in its capacity as the general
partner of Borrower, that all such financial statements are complete and correct
and  present  fairly  in  accordance   with  GAAP  (y)  the   consolidated   and
consolidating  financial position, the consolidated and consolidating results of
operations and the changes in consolidated and consolidating  financial position
of Holdings and its Subsidiaries and (z) the financial position,  the results of
operations and the changes in financial position of each Expanded  Property,  in
each case, as at the end of such year and for the period then ended.

6.4      Additional Information.

(a) Environmental  Notices.  As soon as possible and in any event within 30 days
after receipt by the Borrower,  any Loan Party or any Expanded Property Owner, a
copy of (a) any notice or claim to the effect that the Borrower,  any Loan Party
or any Expanded  Property Owner, or any of their  respective  Subsidiaries is or
may be liable to any Person as a result of the release by such entity, or any of
its  Subsidiaries,  or any  other  Person  of any  toxic or  hazardous  waste or
substance into the environment, and (b) any notice alleging any violation of any
federal, state or local environmental, health or safety law or regulation by the
Borrower,  any  Loan  Party  or any  Expanded  Property  Owner,  or any of their
respective  Subsidiaries,  which, in either case, could be reasonably  likely to
have a Material Adverse Effect.

(b)  Press Releases.  Promptly upon the distribution thereof to the press or the
     public, copies of all press releases of any Loan Party.

(c) Notices Regarding ERISA Events. With reasonable promptness, and in any event
within 15 days, the Loan Parties will give Lender notice  (together with copies,
if applicable) of: (1) the  establishment  of any new Employee Benefit Plan that
provides  retiree  welfare  benefits,  Pension Plan or  Multiemployer  Plan, the
commencement of contributions to any Employee Benefit Plan that provides retiree
welfare benefits,  Pension Plan or Multiemployer  Plan to which any of its ERISA
Affiliates  was not  previously  contributing  or any  material  increase in the
benefits of any existing  Employee  Benefit Plan that provides  retiree  welfare
benefits,  Pension Plan or  Multiemployer  Plan; (2) each funding waiver request
filed with respect to any Pension Plan and all  communications  received or sent
by any ERISA  Affiliate  with  respect to such  request;  (3) the failure of any
ERISA  Affiliate to make a required  installment or payment under Section 302 of
ERISA  or  Section  412 of the  Code  by  the  due  date;  (4)  any  unfavorable
determination  letter from the IRS  regarding the  qualification  of an Employee
Benefit Plan under Section 401(a) of the Code;  (5) all notices  received by any
Loan Party or any ERISA  Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee  appointed to administer  any Pension  Plan;  (6) each
schedule  (Actuarial  Information) to the annual report (Form 5500 Series) filed
by any Loan  Party or any  ERISA  Affiliate  with the IRS with  respect  to each
Pension Plan; (7) all notices  received by any Loan Party or any ERISA Affiliate
from a  Multiemployer  Plan  sponsor  concerning  the  imposition  or  amount of
withdrawal liability pursuant to Section 4202 of ERISA, or the imposition of any
other liability under ERISA;  (8) each funding waiver request filed with the IRS
with respect to any Pension Plan; and (9) notification of any material increases
in the  benefits of any Pension  Plan or the  contributions  required  under any
Multiemployer  Plan.  For  purposes  of this  Section,  each Loan Party shall be
deemed to know all facts known by the administrator of any Employee Benefit Plan
of which any Loan Party or any ERISA  Affiliate  is the plan  sponsor.  The Loan
Parties  will notify  Lender in writing  within five  Business  Days of any Loan
Party  obtaining  knowledge or reason to know that any Loan Parties or any ERISA
Affiliate  has filed or  intends  to file a notice of  intent to  terminate  any
Pension Plan under a distress  termination within the meaning of Section 4041(c)
of ERISA.

(d)  Termination  Events.  Promptly  and in any event within 15 days of becoming
aware of the  occurrence of or  forthcoming  occurrence  of any (1)  Termination
Event or (2)  material  "prohibited  transaction",  as such term is  defined  in
Section 406 of ERISA or Section 4975 of the Code, in connection with any Pension
Plan or any trust created thereunder,  the Loan Parties will deliver to Lender a
notice  specifying the nature  thereof,  what action the  applicable  Person has
taken, is taking or proposes to take with respect  thereto and, when known,  any
action taken or threatened by the IRS, the  Department of Labor or the PBGC with
respect thereto.

(e) Monthly Meetings. At Lender's request Borrower and its senior management and
headquarters  operating  personnel shall meet monthly,  at reasonable  times and
upon  reasonable  notice  designated  by Lender,  to fully discuss and report to
Lender on the operations,  asset sales, capital events and other material events
and leasing  activities  concerning  the Borrower Group Members and the Expanded
Properties.

6.5      Compliance Certificates.

(a) At the time of the  delivery of the  financial  statements  provided  for in
Section  6.1,  a  compliance  certificate  from the Chief  Financial  Officer of
Holdings,  in its capacity as the general  partner of Borrower,  certifying,  on
behalf of Borrower,  that to such  officer's  knowledge  after due  inquiry,  no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default  has  occurred  and is  continuing,  specifying  the nature and
extent thereof, and setting forth in reasonable detail the calculations required
to establish  whether the Loan Parties were in  compliance  with the  applicable
provisions of Section 8.11, at the end of such fiscal month.

(b) At the time of the  delivery of the  financial  statements  provided  for in
Sections 6.2 and 6.3, a compliance  certificate from the Chief Financial Officer
of Holdings, in its capacity as the general partner of Borrower,  certifying, on
behalf of Borrower,  that to such  officer's  knowledge  after due  inquiry,  no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default  has  occurred  and is  continuing,  specifying  the nature and
extent thereof, and setting forth in reasonable detail the calculations required
to establish  whether the Loan Parties were in compliance with the provisions of
Section 8.11, at the end of such fiscal quarter or year, as applicable.

6.6 Annual  Operating  Budget.  Borrower  shall  prepare  and deliver to Lender,
within  forty-five  (45) days prior to the beginning of each  calendar  year, an
annual  expenditure  budget for (A) Holdings and its Subsidiaries,  (B) Borrower
and its Subsidiaries and (C) each Expanded  Property,  and in each case showing,
on  a  month-by-month  basis,  in  reasonable  detail  (i)  each  line  item  of
anticipated  income  and  operating  expenses,  including  amounts  required  to
establish,  maintain,  and/or  increase  reserves,  and (ii)  each  line item of
anticipated  Capital  Expenditures  ("Operating  Budget").  The Operating Budget
shall also  include a business  plan  ("Business  Plan") for  Holdings'  and its
Subsidiaries'  proposed  operations  during the  forthcoming  calendar year. The
Operating Budget shall be prepared and submitted in a form reasonably acceptable
to Lender and shall set forth in reasonable detail budgeted  capital,  operating
and other  expenses,  including  without  limitation  the salaries and potential
bonuses and other compensation of directors,  officers and employees of Holdings
and its Subsidiaries. The Operating Budget through December 31, 2001 is attached
hereto as Exhibit G.  Lender  shall  have the right to  approve  each  Operating
Budget in  Lender's  sole and  absolute  discretion.  In the event  that  Lender
objects to the proposed  Operating  Budget  submitted by Borrower,  Lender shall
advise  Borrower of such  objections  within  fifteen (15)  Business  Days after
receipt  thereof (and deliver to Borrower a reasonably  detailed  description of
such  objection) and Borrower shall  promptly  revise such Operating  Budget and
resubmit the same to Lender.  Lender shall advise  Borrower of any objections to
such revised Operating Budget, in Lender's sole and absolute discretion,  within
ten (10)  Business  Days  after  receipt  thereof  (and  deliver  to  Borrower a
reasonably  detailed  description of such objection) and Borrower shall promptly
revise the same in accordance with the process  described in this sentence until
Lender approves an Operating Budget,  in Lender's sole and absolute  discretion.
Each such Operating  Budget  approved by Lender in accordance  with terms hereof
shall hereinafter be referred to as an "Approved Operating Budget."

6.7      Other Deliveries.

(a) within fifteen (15) Business Days after the end of each calendar  month,  an
updated rent roll for the previous  calendar  month with respect to the Expanded
Properties,  certified by a duly authorized officer of Holdings, in its capacity
as the general  partner of  Borrower,  as being  true,  complete  and  accurate,
together with a written report on all rent arrearages and tenants in arrears and
the most current tenant sales  information  for each of the Expanded  Properties
for the most current  reported (by the tenants)  calendar  month and quarter for
each of the tenants at the Expanded Properties;

(b) within  fifteen (15) Business Days after  written  request from Lender,  any
information  requested by Lender  regarding any Leases and/or  tenants under any
Leases;

(c)  concurrently,  copies of all tax returns filed with respect to the Expanded
     Properties and each Borrower Group Member; and

(d)  within  ten  (10)  Business  Days  after  request,  such  further  detailed
information  covering the operation of the Expanded Properties and the financial
affairs of any Borrower Group Member as may be requested by Lender.

6.8 Notices:  Borrower  shall,  immediately  upon  receiving  written  notice or
obtaining actual  knowledge of the same, and in all events promptly,  provide to
Lender written notice of any of the following:

(a) the  occurrence  of any  Default  or Event of  Default,  the  nature of such
Default  or Event of  Default,  and the  action  Borrower  proposes  to take (or
proposes to cause the relevant Person to take) with respect thereto;

(b)  any  litigation,   arbitration  or  governmental   proceedings  pending  or
     threatened  against any  Borrower  Group  Member or any  Expanded  Property
     claiming damages in excess of $100,000;

(c)      any claim or Lien filed against any of the Expanded Properties;

(d)      any notice alleging any default under any Senior Loan Document;

(e) any event or circumstance  which could have a Material  Adverse Effect,  the
nature of such Material Adverse Effect and the action Borrower  proposes to take
(or proposes to cause the relevant Person to take) with respect thereto; or

(f) any  voluntary or  involuntary  bankruptcy,  reorganization,  insolvency  or
similar proceeding under any Bankruptcy Law against any Loan Party, any Expanded
Property Owner or any tenant under a Major Lease.

6.9  Communication  with  Accountants.  Each  Loan  Party  authorizes  Lender to
communicate  directly with its  independent  certified  public  accountants  and
authorizes  those  accountants  to  disclose  to  Lender  any and all  financial
statements  and other  supporting  financial  documents and schedules  including
copies  of  any  management  letter  with  respect  to the  business,  financial
condition  and other  affairs of such Loan Party and any Borrower  Group Member.
Promptly  upon  request  of  Lender,  each  Loan  Party  shall  deliver a letter
addressed to such accountants  instructing them to comply with the provisions of
this Section 6.9.

ARTICLE VII
                              AFFIRMATIVE COVENANTS

                  Borrower  and each of the  Guarantors  covenant and agree that
unless  Lender shall  otherwise  consent in writing,  from and after the Closing
Date and until the Loan is irrevocably repaid in full:

7.1  Payment  of the  Debt.  Borrower  will pay the Debt at the times and in the
     manner provided in the Note and the other Loan Documents.

7.2      Insurance.

(a)  Borrower,  at its sole cost and expense,  will, or will cause each Expanded
Property Owner to, keep each Expanded Property insured during the entire term of
this Agreement,  for the mutual benefit of Borrower and Lender,  against loss or
damage by fire and against loss or damage by other risks and hazards  covered by
an "all risk" or "special form" coverage  insurance  policy  including,  without
limitation,  riot and civil commotion,  vandalism,  malicious mischief, burglary
and theft.  The insurance  policy shall contain  optional perils and income loss
endorsements and if any of the Improvements or the use of such Expanded Property
shall at any time constitute legal non-conforming  structures or uses, a law and
ordinance  endorsement.  Such insurance  shall be in an amount:  (1) equal to at
least the then full replacement cost of the Improvements,  without deduction for
physical depreciation;  and (2) such that the insurer would not deem Borrower or
Lender a  co-insurer  under such  policies.  The  deductible  in respect of such
insurance shall not exceed the lesser of: (A) $10,000;  and (B) one percent (1%)
of the face value of such policy,  unless a higher deductible is required by law
or is  typically  employed  by  insurance  companies  with  respect  to  certain
sublimits  approved  by  Lender.  The  premiums  for the  insurance  carried  in
accordance  with this  Section  shall be paid  annually in advance.  Each policy
shall contain the "Replacement  Cost  Endorsement" with a waiver of depreciation
and a co-insurance  waiver,  in each case in form and substance  satisfactory to
Lender.

(b) For each  property  upon  which  the  construction  of any  Improvements  is
ongoing,  Borrower,  at its sole  cost and  expense,  will,  or will  cause  the
Expanded  Property  Owner to, (i)  obtain a  builder's  all risk form  insurance
policy on a completed value,  non-reporting  form, in an amount equal to 100% of
the anticipated  completed cost of the  Improvements,  insuring the Improvements
against all risks of any kind or character  except those  permitted by Lender in
writing to be  excluded  from  coverage  thereunder,  and an all risk  policy of
insurance covering loss of future earnings and/or rents from the Improvements in
the event the  Improvements  are not ready or available for use or occupancy due
to casualty,  damage or destruction required to be covered by such builder's all
risk insurance policy,  (ii) require policies of insurance to be carried by each
contractor  retained by Borrower or Expanded  Property Owner  performing work in
connection with the  Improvements  covering  worker's  compensation,  employers'
liability,  commercial general liability and comprehensive automobile liability,
including a broad form of umbrella/excess  liability insurance policy, and (iii)
require  policies  of  professional  liability  insurance  to be carried by each
design  professional  and  surveyor  performing  work  in  connection  with  the
Improvements  covering  each such  party  against  claims  for actual or alleged
errors,  omissions  or negligent  acts in the  performance  of their  respective
services rendered in respect of the Improvements.

(c) Borrower shall, or shall cause each Expanded  Property Owner to, also obtain
and  maintain  during the entire  term of this  Agreement,  at its sole cost and
expense,  for the mutual benefit of Borrower and Lender,  the following policies
of insurance:

(i) Flood insurance (to the extent such Expanded  Property is located in an area
as  identified  by the  Federal  Emergency  Management  Agency  or  the  Federal
Insurance  Administration as (y) an area having special flood hazards (Zone A or
Zone V), or (z) an area  designated a "100-year flood plain") in an amount equal
to the then full replacement  cost of the  Improvements,  without  deduction for
physical depreciation;

(ii)  Comprehensive  public liability  insurance,  including broad form property
damage,  blanket  contractual and personal  injuries  (including death resulting
therefrom)  coverages,  and  containing  underlying  coverage of $1,000,000  per
occurrence,  $2,000,000 in the aggregate and an additional  $10,000,000 umbrella
naming Lender and its successors and/or assigns as additional insureds;

(iii)  Insurance,  in an  amount  equal  to the  lesser  of  $2,000,000,  or the
insurable value of the Improvements,  against loss or damage from (A) leakage of
sprinkler  systems;  and  (B)  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;

(iv) Worker's  compensation  insurance with respect to any employees of Borrower
or each Expanded  Property  Owner as required by any  Governmental  Authority or
Applicable Law;

(v)  Motor  vehicle  liability  coverage for all owned and  non-owned  vehicles,
     including  rented  and  leased  vehicles,  containing  minimum  limits  per
     occurrence of $5,000,000;

(vi) A blanket  fidelity  insurance  coverage  insuring against losses resulting
from dishonest or fraudulent  acts  committed by: (A) personnel of Manager,  any
Expanded  Property Owner and the Loan Parties (B) any employees of outside firms
that provided appraisal,  legal, data processing, or other services for Manager,
the Expanded  Property  Owner or the Loan Parties;  and (C)  temporary  contract
employees or student interns;

(vii) Earthquake insurance (if required by Lender) with a total insured coverage
equal to the sum of (A)  business  interruption  and loss of rents in an  amount
equal to one  hundred  percent  (100%) of the  projected  gross  income for such
Property  for a  period  of  eighteen  (18)  months,  plus  (B)  the  then  full
replacement   cost  of  the   Improvements,   without   deduction  for  physical
depreciation,  which insurance shall be subject to a deductible of not more than
five percent (5%) or $100,000, whichever is greater. The amount of such business
interruption or loss of rents insurance shall be determined prior to the Closing
Date and at least annually  thereafter based on Borrower's (or Expanded Property
Owner's)  reasonable  estimate  (as approved by Lender) of the gross income from
such Expanded Property for the succeeding eighteen (18) month period;

(viii)  Business  interruption  or loss of rents  insurance  (i)  with  proceeds
payable to Lender,  subject,  however, to the rights of the Senior Lenders; (ii)
covering all risks required to be covered by the insurance  provided for in this
Section;  (iii)  containing an extended  period of indemnity  endorsement  which
provides  that after the  physical  loss to the  Improvements  and all  Personal
Property has been  repaired,  the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration  of eighteen (18) months from the date of the loss,  whichever  first
occurs, and notwithstanding  that the policy may expire prior to the end of such
period;  and  (iv) in an  amount  equal to one  hundred  (100%)  percent  of the
projected gross income from such Expanded Property for a period of eighteen (18)
months.  The amount of such  business  interruption  or loss of rents  insurance
shall be determined  prior to the Closing Date and at least annually  thereafter
based on  Borrower's  reasonable  estimate  (as approved by Lender) of the gross
income from such Property for the  succeeding  eighteen  (18) month period.  All
insurance proceeds payable to Lender pursuant to this paragraph shall be treated
as Rent by Lender  and,  unless  otherwise  paid to and  retained  by the Senior
Lenders,  deposited  under the Lockbox  Agreement  for  application  as provided
therein;  provided,  however,  that nothing herein  contained shall be deemed to
relieve Borrower of its obligations to pay the Obligations  secured hereunder on
the  respective  dates of payment  provided for in the Note except to the extent
such amounts are  actually and timely paid out of the proceeds of such  business
income insurance and applied to such Obligations;

(ix) Coverage to compensate for the cost of demolition and the increased cost of
     construction  for such  Expanded  Property  in an  amount  satisfactory  to
     Lender;

(x) To the extent not  covered in clauses (i)  through  (ix)  above,  such other
insurance as may from time to time be reasonably  required by Lender in order to
protect such Expanded Property and Lender's interests in the Collateral; and

(xi) To the  extent  not  already  required  by  Lender in  accordance  with the
foregoing,  Borrower  shall,  or shall cause each  Expanded  Property  Owner to,
obtain any additional coverage required by the Senior Lenders in accordance with
the Senior Loan Documents.

(d) For each Expanded  Property or other property upon which the construction of
any Improvements is ongoing,  Borrower,  at its sole cost and expense,  will, or
will cause the Expanded  Property Owner to, (i) obtain a builder's all risk form
insurance policy on a completed value, non-reporting form, in an amount equal to
100%  of the  anticipated  completed  cost  of the  Improvements,  insuring  the
Improvements  against all risks of any kind or character  except those permitted
by Lender in writing to be excluded  from coverage  thereunder,  and an all risk
policy of  insurance  covering  loss of future  earnings  and/or  rents from the
Improvements in the event the Improvements are not ready or available for use or
occupancy due to casualty,  damage or destruction required to be covered by such
builder's all risk insurance  policy,  (ii) require  policies of insurance to be
carried by each  contractor  retained by Borrower  or  Expanded  Property  Owner
performing  work  in  connection  with  the   Improvements   covering   worker's
compensation,   employers'   liability,   commercial   general   liability   and
comprehensive  automobile  liability,  including a broad form of umbrella/excess
liability insurance policy, and (iii) require policies of professional liability
insurance to be carried by each design professional and surveyor performing work
in connection with the Improvements  covering each such party against claims for
actual or alleged  errors,  omissions or negligent  acts in the  performance  of
their respective services rendered in respect of the Improvements.

(e) Borrower shall, or shall cause each Expanded Property Owner to, increase the
amount of insurance required to be provided hereunder at the time that each such
policy is renewed (but, in any event,  not less frequently than once during each
12-month  period) by using the F.W. Dodge  Building  Index to determine  whether
there has been an increase in the replacement cost of the Improvements since the
most  recent  adjustment  of any such  policy  and,  if there  has been any such
increase,  the amount of insurance  required to be provided  hereunder  shall be
adjusted  accordingly.  All  policies  of  insurance  required  pursuant to this
Section  (collectively,  the  "Policies")  shall:  (i) be issued  by an  insurer
having,  at all times relevant  hereto, a claims paying ability of not less than
"AA" by S&P's and an  investment  grade  rating by Moody's and any other  Rating
Agency rating such insurer (ii) as to the casualty  insurance,  name Lender as a
"loss payee" and the person to which all payments made by such insurance company
shall be paid subject,  however,  to the rights of the Senior Lenders;  (iii) be
maintained  throughout the term of the Loan without cost to Lender; (iv) include
a waiver of subrogation  against Lender; (v) be assigned and delivered to Lender
subject,  however, to the rights of Senior Lenders; (vi) contain such provisions
as Lender  deems  reasonably  necessary or  appropriate  to protect its interest
including,  without  limitation,  a waiver of  subrogation  against  Lender  and
endorsements  providing that none of Borrower,  the relevant  Expanded  Property
Owner,  Lender or any other party  shall be a  co-insurer  thereunder,  and that
Lender  shall  receive at least  thirty  (30) days prior  written  notice of any
modification,  reduction or cancellation thereof;  (vii) be issued by an insurer
that is fully  authorized  to do business  in the State in which the  applicable
Expanded Property is located; (viii) shall contain an endorsement providing that
no unexpected or unintended act or negligence of Manager,  any Expanded Property
Owner or any Loan  Party or of a tenant  or  other  occupant  shall  affect  the
validity or enforceability of the insurance insofar as Lender is concerned;  and
(ix) be satisfactory in form and substance to Lender,  and be approved by Lender
as to amounts, risk coverage,  deductible,  loss payees and insureds.  Not later
than  thirty  (30) days prior to the  expiration  date of each of the  Policies,
Borrower will, or will cause each Expanded  Property Owner to, deliver to Lender
satisfactory  evidence of the renewal of each  Policy.  Borrower  shall not, nor
shall it permit any Expanded  Property Owner to, obtain any blanket liability or
casualty  policy  unless,  in each case,  such  policy is approved in advance in
writing by Lender.  In the event such approval is granted and  Borrower,  or the
relevant  Expanded Property Owner,  obtains a blanket policy,  such policy shall
specifically allocate to the applicable Expanded Property the amount of coverage
from time to time  required  hereunder  and  shall  otherwise  provide  the same
protection as would a separate policy insuring only such Expanded Property.  (f)
Borrower  shall not, nor shall it permit any Expanded  Property  Owner to, carry
separate  insurance,  concurrent in kind or form or contributing in the event of
loss,  with any  insurance  required  under this  Section.  Notwithstanding  the
foregoing,  Borrower,  or any Expanded  Property Owner,  may carry insurance not
required  under  this  Agreement,  provided  any such  insurance  affecting  the
Expanded Properties shall be permitted by the terms of the Senior Loan Documents
and shall be for the mutual  benefit of Borrower,  the relevant  Borrower  Group
Member and Lender and, to the extent required by the Senior Lenders,  the Senior
Lenders,  as their respective  interests may appear, and shall be subject to all
other  provisions  of this  Section,  and  provided  that the  existence of such
additional  insurance  coverage  does not  limit,  impair,  reduce or modify the
insurance required to be carried under this Section.

(g) On an annual  basis,  Lender  shall have the right to appoint a third  party
chosen by Lender to conduct an  insurance  audit of the  Policies at  Borrower's
expense to verify that  Borrower (or the  relevant  Borrower  Group  Member) has
satisfied the  requirements  of this Section,  the Senior Loan Documents and the
Leases (a  "Compliance  Audit").  Upon the  occurrence  of an Event of  Default,
Lender  shall  have the  right at any time and from  time to time to  require  a
Compliance Audit at Borrower's expense.  Borrower hereby covenants to pay Lender
on demand all of Lender's costs and expenses for each Compliance  Audit required
by Lender in accordance with this subsection.

(h) If Borrower  fails to provide  Lender with  satisfactory  evidence  that the
requirements  of this Section have been timely  satisfied the Lender may, at its
discretion and without notice to any of the Borrower Group Members,  procure any
required  insurance.  Any premiums  paid for such  insurance,  or the  allocable
portion  of any  premium  paid by the  Lender  under a blanket  policy  for such
insurance,  shall be a demand  obligation  of the Borrower and shall be added to
the Obligations, and any unearned premiums under such insurance shall comprise a
portion of the Collateral.

7.3      Casualty; Condemnation and Application of Proceeds.

(a) If any Expanded Property shall be damaged or destroyed, in whole or in part,
by fire or other  casualty,  Borrower  shall give prompt  written notice of such
damage to Lender and shall, or shall cause the relevant  Expanded Property Owner
to,  promptly  commence  and  diligently  prosecute,   commence  and  diligently
prosecute, the completion of the repair, replacement, rebuilding and restoration
of such Expanded  Property as nearly as possible to the condition  such Expanded
Property  was in  immediately  prior to such fire or other  casualty,  with such
alterations  as may be approved by Lender (the  "Restoration")  and otherwise in
accordance  with this  Section.  Borrower  shall,  or shall  cause the  relevant
Expanded  Property  Owner to, pay all costs of such  Restoration  whether or not
such costs are covered by  insurance.  Lender may, but shall not be obligated to
make proof of loss if not made  promptly by Borrower  or the  relevant  Expanded
Property Owner.

(b) Borrower  shall,  or shall cause the relevant  Expanded  Property  Owner to,
promptly give Lender written notice of the actual or threatened  commencement of
any condemnation or eminent domain proceeding and shall deliver to Lender copies
of any and all papers  served or received in connection  with such  proceedings.
Lender  may  participate  in  any  such  proceedings  related  to  the  Expanded
Properties at Borrower's  sole cost and expense,  and Borrower  shall,  or shall
cause the  relevant  Expanded  Property  Owner to, from time to time  deliver to
Lender all instruments  requested by it to permit such  participation.  Borrower
shall, or shall cause the relevant  Expanded  Property Owner to, at its expense,
diligently  prosecute any such proceedings,  and shall consult with Lender,  its
attorneys and experts,  and cooperate with them in the carrying on or defense of
any such proceedings.  Notwithstanding  any taking by any public or quasi-public
authority through eminent domain or otherwise  (including but not limited to any
transfer  made in lieu of or in  anticipation  of the exercise of such  taking),
Borrower shall  continue to pay the Debt at the time and in the manner  provided
for its  payment  in the Note and in this  Agreement  and the Debt  shall not be
reduced until any award or payment  therefor  shall have been actually  received
and applied by Lender,  after the  deduction of expenses of  collection,  to the
reduction or discharge of the Debt.  Lender shall not be limited to the interest
paid on the award by the  condemning  authority but shall be entitled to receive
out of the award interest at the rate or rates  provided  herein or in the Note.
If any  Expanded  Property  or any  portion  thereof  are taken by a  condemning
authority,  Borrower shall, or shall cause the relevant  Expanded Property Owner
to, promptly  commence and diligently  prosecute the Restoration of the Expanded
Property and otherwise comply with the provisions of this Section.  The expenses
incurred by Lender in the settlement of any condemnation award shall become part
of the Debt, shall be secured by this Agreement and the other Security Documents
and shall be reimbursed by Borrower to Lender on demand.

(c) Upon the  occurrence  of any casualty at or of any Expanded  Property or any
part  thereof  where a Senior  Lender  does not have the right,  in its sole and
absolute discretion,  to settle, adjust or compromise any claim under any policy
of insurance,  or in the event such Senior Lender has such right but shall waive
or otherwise  fail to exercise such right,  then it shall be an Event of Default
hereunder  if any such  claim is settled  or  compromised  on terms that are not
approved in writing by Lender in its sole and absolute discretion. It shall also
be an Event of Default  hereunder if Borrower or the relevant  Expanded Property
Owner shall submit any proposed  settlement  of such claim to such Senior Lender
for its  approval  under the Senior  Loan  Documents  before  Lender  shall have
approved such proposed  settlement in writing.  Notwithstanding  the  foregoing,
prior to the  occurrence  of an  Event  of  Default,  Borrower  or the  relevant
Expanded Property Owner may settle, adjust or compromise any such claim which is
less than  fifty  thousand  dollars  ($50,000.00)  without  Lender's  consent or
approval;  provided  that within  fifteen  (15) days  following  the  settlement
Borrower delivers, or causes the relevant Expanded Property Owner to deliver, to
Lender written notice of the settlement,  together with a memorandum summarizing
the relevant and material  terms of the  settlement.  Upon the  occurrence of an
Event of Default, Lender shall be authorized to, in its sole discretion,  settle
and adjust any claim or proceeding  regardless of amount  without any obligation
to consult with Borrower or the relevant  Expanded  Property Owner in connection
therewith.  The expenses  incurred by Lender in the adjustment and collection of
insurance  proceeds  shall  become  part of the Debt,  shall be  secured by this
Agreement and the other  Security  Documents and shall be reimbursed by Borrower
to Lender on demand.

(d) If there occurs any insured damage to or destruction of, or any condemnation
proceeding  with respect to any Expanded  Property or any part thereof,  and any
Senior  Lender  elects  to  apply  insurance   proceeds  or  condemnation  award
(collectively,  the "Loss Proceeds") to its Senior Loan, then the balance of any
Loss  Proceeds  not so  applied  to such  Senior  Loan  shall be  applied to the
Obligations. In the event any Senior Lender makes the Loss Proceeds available to
Borrower or the relevant  Expanded  Property Owner for  Restoration,  any excess
Loss Proceeds remaining after completion of Restoration and released to Borrower
or the relevant Expanded Property Owner shall be paid to Lender to be applied to
the Obligations.

(e) Except as provided  above,  the Loss Proceeds shall, at the option of Lender
in its sole discretion,  be applied to the payment of the Obligations or applied
to reimburse  Borrower or the relevant  Expanded Property Owner, for the cost of
restoring, repairing, replacing or rebuilding such Expanded Property or the part
thereof affected by such casualty or condemnation or eminent domain  proceeding,
in the manner set forth below. Any such application to the Obligations shall not
be  considered  a  voluntary  prepayment  requiring  payment  of the  prepayment
consideration provided for in this Agreement, except that if an Event of Default
shall have occurred,  then such  application  shall be subject to the prepayment
consideration  computed in accordance  with this  Agreement,  if any. In no case
shall any such application  reduce or postpone any payments  otherwise  required
pursuant  to this  Agreement  or the Note,  other than the final  payment on the
Note.

(f)  Whether or not Loss  Proceeds  shall be made  available  to Borrower or the
relevant  Expanded  Property Owner for the  Restoration  following a casualty or
condemnation,  Borrower hereby  covenants to, or to cause the relevant  Expanded
Property Owner to, restore, repair, replace or rebuild such Expanded Property to
be of at least equal value and of  substantially  the same character as prior to
such casualty or condemnation,  all to be effected in accordance with Applicable
Law and plans and  specifications  approved  in  advance  by  Lender;  provided,
however,  that Borrower or the relevant  Expanded  Property  Owner shall pay all
costs (and if required by Lender,  Borrower  shall,  or shall cause the relevant
Expanded Property Owner to, deposit the total thereof with Lender in advance) of
Restoration in excess of the Loss Proceeds made available  pursuant to the terms
hereof.

(g) In the event Borrower or the relevant Expanded Property Owner is entitled to
reimbursement  out of Loss  Proceeds  held by  Lender,  such  proceeds  shall be
disbursed  from time to time upon Lender  being  furnished  with:  (1)  evidence
satisfactory to it of the estimated cost of completion of the  Restoration;  (2)
funds, or, at Lender's option, assurances satisfactory to Lender that such funds
are  available,  sufficient  in  addition to the Loss  Proceeds to complete  the
proposed Restoration; and (3) such architect's certificates, waivers of lien for
work  previously  performed  or  contemporaneously  funded,  contractor's  sworn
statements, title insurance endorsements,  bonds, plats of survey and such other
evidences of cost,  payment and performance as Lender may reasonably require and
approve.  Pending  any such  disbursement,  Borrower  shall,  or shall cause the
relevant  Expanded  Property  Owner to, deliver all Loss Proceeds and additional
funds to the  Depository,  which proceeds  shall be held in an  interest-bearing
deposit account,  and Borrower hereby grants to Lender,  as further security for
the  Obligations,  a  security  interest  in such  deposit  account,  all  funds
deposited therein and all interest and other proceeds  thereof.  All withdrawals
from such deposit account shall require Lender's authorization.  All interest or
other earnings with respect to the funds deposited in such deposit account shall
be disbursed in accordance with the terms of this paragraph.  Lender may, in any
event,  require  that all  plans and  specifications  for such  Restoration,  be
submitted  to and  approved  by  Lender  prior to  commencement  of work  (which
approval shall not be unreasonably withheld). No payment made prior to the final
completion of the Restoration  shall exceed ninety percent (90%) of the value of
the work performed  from time to time.  Funds other than the Loss Proceeds shall
be disbursed prior to  disbursement of such Loss Proceeds,  and at all times the
undisbursed  balance of the Loss  Proceeds  remaining  in  Lender's  possession,
together with funds  deposited for that purpose or irrevocably  committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall be at
least  sufficient  in the  reasonable  judgment of Lender to pay for the cost of
completion of the  Restoration,  free and clear of all liens and claims of lien.
Any surplus which may remain out of Loss Proceeds and  additional  funds held by
Lender  pursuant to this Section 7.3 after payment of such costs of  Restoration
shall be applied by Lender in reduction of the Debt.

(h) If Loss  Proceeds are paid to any Senior Lender for  disbursement,  Borrower
shall, or shall cause the relevant Expanded Property Owner to, deliver to Lender
copies of all written correspondence  delivered to and received from such Senior
Lender that relates to such Loss Proceeds.

(i) The  provisions  of this Section 7.3 shall not be deemed  violated if and to
the  extent the Senior  Lenders  require,  pursuant  to their  rights  under the
applicable  Senior Loan  Documents,  use and  application  of Loss Proceeds in a
manner inconsistent with this Section 7.3.

7.4      Real Property Taxes.

(a) Borrower shall, or shall cause each Expanded Property Owner to, promptly pay
all taxes, assessments,  water rates, sewer rents, governmental impositions, and
other charges,  including without  limitation vault charges and license fees for
the use of vaults,  chutes and similar areas adjoining the Expanded  Properties,
now or hereafter  levied or assessed or imposed against the Expanded  Properties
or any part thereof (the "Real Property Taxes"),  all ground rents,  maintenance
charges  and similar  charges,  now or  hereafter  levied or assessed or imposed
against  the  Expanded  Properties  or any part  thereof  (the  "Other  Property
Charges"),  and all  charges  for  utility  services  provided  to the  Expanded
Properties  as same become due and  payable.  Borrower  will  deliver to Lender,
promptly upon Lender's  request,  evidence  satisfactory to Lender that the Real
Property Taxes,  Other Property Charges and utility service charges have been so
paid or are not then  delinquent.  Borrower  shall not  suffer  (or  permit  any
Expanded  Property  Owner to  suffer)  and shall  promptly  cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or charge
against any Expanded  Property.  Except to the extent sums sufficient to pay all
Real  Property  Taxes and Other  Property  Charges have been  deposited (i) with
Lender in accordance with the terms of this Agreement or the Lockbox  Agreement,
or (ii) with a Senior  Lender  pursuant to the Senior Loan  Documents,  Borrower
shall furnish to Lender paid receipts for the payment of the Real Property Taxes
and Other Property Charges prior to the date the same shall become delinquent.

(b) After prior written  notice to Lender,  any Loan Party or Expanded  Property
Owner, at its own expense, may contest by appropriate legal proceeding, promptly
initiated  and  conducted  in good faith and with due  diligence,  the amount or
validity or application  in whole or in part of any of the Real Property  Taxes;
provided  that (1) no Event of  Default  has  occurred,  (2) such Loan  Party or
Expanded  Property  Owner is  permitted  to do so under  the  provisions  of any
mortgage,  deed of trust or deed to secure debt affecting the relevant  Property
including those securing any Senior Loan, (3) such proceeding  shall suspend the
collection  of the Real  Property  Taxes from such Loan  Party or such  Expanded
Property Owner and from such Expanded  Property,  or such Loan Party or Expanded
Property Owner shall have paid all of the Real Property Taxes under protest, (4)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which such Loan Party or Expanded Property
Owner is subject and shall not constitute a default thereunder,  (5) neither the
applicable  Expanded  Property nor any part thereof or interest  therein will in
the  opinion  of  Lender  be in danger  of being  sold,  forfeited,  terminated,
cancelled or lost, (6) Borrower  shall have deposited with Lender  adequate cash
reserves for the payment of the Real Property Taxes,  together with all interest
and penalties  thereon,  unless such Loan Party or Expanded  Property  Owner has
paid all of the Real  Property  Taxes  under  protest,  (7) such  Loan  Party or
Expanded  Property Owner shall have furnished such security as may be reasonably
required  in the  proceeding,  or as may be  requested  by Lender to insure  the
payment of any  contested  Real Property  Taxes,  together with all interest and
penalties  thereon,  and (8) such Loan Party or  Expanded  Property  Owner shall
promptly, upon final determination thereof, pay the amount of any such contested
Real Property Taxes,  together with all costs,  interest and penalties which may
be payable in connection therewith.  In addition, if the contested Real Property
Taxes  are not paid in full  when such Loan  Party or  Expanded  Property  Owner
commences  such contest,  then such  proceeding  shall suspend the collection of
Real Property Taxes from the affected Expanded Property.  In addition,  Borrower
shall pay to  Lender  upon  demand,  any costs  incurred  by Lender in  ensuring
compliance by such Loan Party or Expanded  Property Owner with this Section 7.4,
including  attorney's  fees,  monitoring  and  evaluating  expenses  and any tax
service fees.

(c) Subject to the penultimate  sentence of this Section 7.4, Borrower shall pay
to  Lender,  on the  first  (1st)  day  of  each  calendar  month,  without  any
requirement  of notice or written  demand from Lender,  (i)  one-twelfth  of the
amount  required  to pay in full the Real  Property  Taxes  and  Other  Property
Charges that will become due and payable during the following twelve (12) months
with respect to the  Properties,  and (ii)  one-twelfth of an amount required to
pay in full the insurance  premiums due with respect to the  Properties  for the
renewal of the coverage  afforded by the Policies  upon the  expiration  thereof
(the amounts in (i) and (ii) above shall be called the "Escrow Fund").  Borrower
agrees  to, or shall  cause  the  relevant  Property  Owner  to,  notify  Lender
immediately  of any  changes to the  amounts,  schedules  and  instructions  for
payment of any Real Property Taxes, Other Property Charges or insurance premiums
of which they have or obtain knowledge and hereby authorizes Lender or its agent
to obtain the bills for Real Property Taxes and Other Property  Charges directly
from the  appropriate  taxing  authority.  Lender  will apply the Escrow Fund to
payments of Real Property Taxes,  Other Property Charges and insurance  premiums
with  respect to the  Properties  required  to be made by  Borrower  pursuant to
Sections 7.2 and 7.4 hereof pursuant to the terms of the Lockbox  Agreement.  If
the amount of the Escrow Fund shall  exceed the  amounts  due for Real  Property
Taxes,  Other  Property  Charges  and  insurance  premiums  with  respect to the
Properties  pursuant  to  Sections  7.2 and 7.4  hereof,  Lender  shall,  in its
discretion,  return any  excess to the  Lockbox or credit  such  excess  against
future  payments to be made to the Escrow  Fund.  If Lender  estimates  that the
Escrow Fund is not  sufficient to pay the items set forth above,  Borrower shall
promptly  pay to Lender,  upon ten (10) days  written  demand,  an amount  which
Lender shall estimate as sufficient to make up the  deficiency.  Notwithstanding
the  foregoing,  it  remains  Borrower's  responsibility  to,  or to cause  each
Expanded  Property Owner to, timely pay all Real Property Taxes,  Other Property
Charges  and  insurance  premiums  with  respect  to  the  Expanded  Properties.
Accordingly,  in the event  that  Borrower's  payments  to the  Escrow  Fund are
insufficient  to pay  all  Real  Property  Taxes,  Other  Property  Charges  and
insurance  premiums  with respect to the  Properties in full as they become due,
Borrower  shall pay,  without  any  requirement  of prior  demand or notice from
Lender,  the full amount of any  deficiency  into the Escrow Fund not later than
the Payment Date  occurring in the  calendar  month in which such Real  Property
Taxes,  Other  Property  Charges and/or  insurance  premiums with respect to the
Properties,  as applicable,  would, if not timely paid,  become due, payable and
delinquent.  The  Escrow  Fund  shall  not  constitute  a trust  fund and may be
commingled  with other  monies  held by Lender.  No  earnings or interest on the
Escrow  Fund  shall  be  payable  to  Borrower.  Notwithstanding  the  foregoing
provisions of this  paragraph,  to the extent Senior Lender for any Property for
which the Senior  Lender is escrowing for Real Property  Taxes,  Other  Property
Charges and/or insurance premiums pursuant to the Senior Loan Documents for such
Property, Lender will not unreasonably withhold or delay consent to a request by
Borrower to waive the  requirements  of this Section 7.4(c) to the extent of the
escrow  established  pursuant to such Senior Loan  Documents.  For  example,  if
Senior  Lender is only  requiring  that Real Property  Taxes and Other  Property
Charges to be  escrowed,  Borrower  shall be  required  hereunder  to escrow for
insurance premiums with respect to such Property.

7.5      Leases and Revenues.

(a) As more  particularly  set forth in the Lockbox  Agreement,  each Loan Party
shall,  or shall cause each  Borrower  Group Member to, cause all Revenues to be
deposited in the  Lockbox,  except for amounts paid to and applied by any Senior
Lender  under the Senior Loan  Documents  and  escrowed in  accordance  with any
Senior Loan Documents.

(b) Borrower shall, or shall cause each Expanded Property Owner to, use its best
efforts to maintain all leaseable space in the Expanded  Properties leased at no
less than fair market rental rates.  Upon written  request,  Borrower  shall, or
shall cause each Expanded  Property Owner to, furnish to Lender  executed copies
of all Leases, together with an Officer's Certificate stating that same does not
require Lender's  consent pursuant to this Agreement  (unless such consent shall
have been  provided by Lender in  writing).  Subject to the  provisions  of this
Section,  all proposed  Leases shall be subject to the prior  approval of Lender
and shall include estoppel provisions in favor of Lender satisfactory to Lender.
Borrower shall, or shall cause each Expanded  Property Owner to, (i) observe and
perform all the obligations  imposed upon the lessor under the Leases and not do
or permit to be done  anything  to impair the value of any of the  Leases;  (ii)
promptly  send copies to Lender of all notices of default  which such Loan Party
or the relevant Expanded Property Owner or its agents or  representatives  shall
send or  receive  thereunder;  (iii)  enforce  all of the terms,  covenants  and
conditions  contained in the Leases upon the part of the lessee thereunder to be
observed or performed,  to the same extent as a reasonable and prudent  landlord
would;  (iv) not collect any of the Revenues more than one (1) month in advance;
(v) not  execute any other  assignment  of the  lessor's  interest in any of the
Leases or the Revenues,  except under the Senior Loan Documents or  Indebtedness
documents  entered into in accordance with Section 7.20; (vi) not alter,  modify
or change the terms of any Leases other than pursuant to the Leasing  Guidelines
without the prior written  consent of Lender,  or cancel or terminate any Leases
or  accept a  surrender  thereof  or convey  or  transfer  or suffer or permit a
conveyance or transfer of any Expanded 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; (vii) not alter, modify or change the
terms of any guaranty,  letter of credit or other credit support with respect to
the Leases (the "Lease  Guaranty") or cancel or terminate  such Lease  Guaranty,
other than pursuant to the Leasing Guidelines,  and (viii) except as provided in
the Leasing Guidelines, not consent to any assignment of or subletting under any
Lease in respect of which the consent of landlord is required  without the prior
written consent of Lender. Notwithstanding the foregoing, each Expanded Property
Owner may enter into or amend,  modify,  sublet,  cancel or terminate  Leases in
accordance with the Leasing Guidelines.  Lender shall have the right,  following
ten (10) days prior written notice to the applicable Loan Party (or without such
notice if an Event of Default exists) at the Borrower's  expense,  but shall not
be obligated,  to cure any default by the applicable  Loan Party and/or Expanded
Property  Owner under any of the Leases which the  applicable  Loan Party and/or
Expanded Property Owner is not proceeding diligently to cure, and this provision
shall be deemed to be a written  authorization and each tenant shall be entitled
to rely thereon. Such curing by Lender of a default by the applicable Loan Party
and/or  Expanded  Property  Owner under any of the Leases  shall not release the
applicable Loan Party and/or  Expanded  Property Owner in any way from liability
to Lender for the  applicable  Loan Party's  and/or  Expanded  Property  Owner's
failure to discharge  the  applicable  Loan  Party's  and/or  Expanded  Property
Owner's duty to so cure that  default.  Any and all sums expended by Lender with
respect to any such cure,  together  with  interest  thereon at the Default Rate
from the date paid by Lender until repaid by Borrower,  shall immediately be due
and  payable  to Lender by  Borrower  on demand and shall be secured by the Loan
Documents.  Lender, Servicer and any Person designated by Lender or Servicer are
hereby  authorized  by Borrower  on behalf of each  Expanded  Property  Owner to
directly communicate with any of the tenants or the Manager at any time and from
time to time regarding such matters as Lender deems appropriate, and Borrower on
behalf of each Expanded Property Owner hereby  acknowledges and agrees that each
Loan Party and  Expanded  Property  Owner shall have no claim or cause of action
against Lender arising out of such communications.

(c) Borrower  shall,  or shall cause each Expanded  Property  Owner to,  provide
Lender upon request, a certified status report concerning rental activity in the
Expanded  Properties,  which report shall  specifically list the portions of the
Expanded  Properties which are committed,  under negotiation or have been leased
under executed and delivered Leases as of the date of the report, and such other
information as may be requested by Lender.

(d)  Notwithstanding any provisions herein to the contrary,  no warrants,  stock
options or similar rights in any tenant or any Affiliate  thereof,  any licensee
or any other Person  providing any services related to or for the benefit of any
Expanded  Property may be granted to any Borrower Group Member without  Lender's
prior  written  consent,   which  consent  may  be  withheld  in  Lender's  sole
discretion,  and which  consent may be  conditioned  upon,  among other  things,
Lender's  receipt of a  perfected  security  interest  in such  warrants,  stock
options or similar rights as security for the Debt.

(e)  With  respect  to  all  monies,   letters  of  credit  and  other  security
representing security deposits under the Leases ("Security Deposits"),  Borrower
shall,  or shall cause the relevant  Expanded  Property  Owner to,  deposit with
and/or deliver to the relevant  Senior Lender all such Security  Deposits if the
same are required to be deposited  and/or delivered to such Senior Lender or its
agents under the  relevant  Senior Loan  Documents to be held and/or  applied by
such  Senior  Lender  in  accordance  with the  terms  thereof.  At any time the
Security  Deposits are no longer required to be so deposited,  delivered  and/or
held by any Senior Lender or its agents  (except in connection  with the payment
of Security Deposits to tenants entitled to the return thereof), Borrower shall,
or shall cause the relevant  Expanded  Property  Owner to,  deposit all Security
Deposits in one or more separate,  segregated accounts,  to be held, applied and
disbursed as provided in the Leases.

7.6  Maintenance  of  Properties.  Borrower  shall,  or shall cause the Expanded
Property  Owners  to,  maintain  the  Expanded  Properties  in a good  and  safe
condition  and  repair.  The  Improvements,   materials,  equipment,  furniture,
fixtures and other articles of personal property located therein and thereon not
owned by lessees under Leases (the  "Personal  Property")  shall not be removed,
demolished or materially  altered (except for normal replacement of the Personal
Property)  without the prior written consent of Lender,  which consent shall not
be unreasonably  withheld.  Borrower shall not, nor shall it permit any Expanded
Property Owner to, initiate,  join in, acquiesce 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 the  Expanded
Properties  or any part  thereof  without the prior  written  consent of Lender,
which consent shall not be unreasonably  withheld.  If under  applicable  zoning
provisions  the use of all or any portion of any  Expanded  Property is or shall
become a  nonconforming  use,  Borrower will not, nor will it allow any Expanded
Property Owner to intentionally  or knowingly cause or permit the  nonconforming
use to be  discontinued  or  abandoned  without the express  written  consent of
Lender, which consent shall not be unreasonably withheld.

7.7 Waste.  Borrower shall not, nor shall it permit any Expanded  Property Owner
to,  (a)  commit or suffer  any waste of the  Expanded  Properties,  (b) make or
permit to be made any change in the use of the Expanded Properties which will in
any way materially  increase the risk of fire or other hazard arising out of the
operation  of the  Expanded  Properties,  or (c) take or  cause to be taken  any
action that might invalidate or give cause for cancellation of any Policy.

7.8      Compliance With Laws.

(a) Borrower  shall,  and shall cause each Expanded  Property Owner to, promptly
comply with all Applicable  Laws.  Particularly,  Borrower shall, or shall cause
each  Property  Owner and each  Expanded  Property  Owner to, cause the Expanded
Properties to at all times  strictly  comply to the extent  applicable  with the
requirements  of the  Americans  with  Disabilities  Act of  1990,  Pub.  L. No.
101-336,  104 Stat. 327, 42 U.S.C. ss. 12191, et seq., as hereafter amended, all
state and local laws and ordinances related to handicapped access and all rules,
regulations,  and orders issued  pursuant  thereto  including the Americans with
Disabilities  Act  Accessibility  Guidelines  for Buildings and  Facilities,  as
amended,  and to pay all costs associated with such compliance.  Each Loan Party
shall, and shall cause each Expanded  Property Owner to, from time to time, upon
Lender's request,  provide Lender with evidence  satisfactory to Lender that the
Expanded  Properties  comply in all material respects with all Applicable Law or
are exempt from compliance with Applicable Law.  Notwithstanding  any provisions
set forth herein,  Borrower shall not, nor shall it permit any Expanded Property
Owner to,  alter any  Expanded  Property in any manner  which  would  materially
increase any Loan Party's or such Expanded Property Owner's responsibilities for
compliance with Applicable Law without the prior written approval of Lender, not
to be unreasonably withheld. Lender's approval of the plans, specifications,  or
working  drawings for  alterations  of the Expanded  Properties  shall create no
responsibility or liability on behalf of Lender for their completeness,  design,
sufficiency or their  compliance  with  Applicable Law. Lender may condition any
such approval upon receipt of a certificate  of compliance  with  Applicable Law
from an independent  architect,  engineer, or other person reasonably acceptable
to Lender.  Borrower shall, or shall cause each Expanded Property Owner to, give
prompt  notice to Lender of the receipt by Borrower  or such  Expanded  Property
Owner of any notice  related to a  violation  of any  Applicable  Law and of the
commencement  of any  proceedings or  investigations  which relate to compliance
with Applicable Law.

(b) After  prior  written  notice to Lender,  any Loan  Party,  or the  relevant
Expanded Property Owner, may, at its sole cost and expense, by appropriate legal
proceeding,  promptly  initiated  and  conducted  in good  faith  and  with  due
diligence,  contest  the  validity  or  application  in  whole or in part of any
Applicable  Law;  provided  that (i) no Event of  Default  has  occurred  and is
continuing; (ii) such proceeding shall suspend the enforcement or prosecution of
such  Applicable  Law against such Loan Party,  such Expanded  Property Owner or
such Expanded Property, as applicable;  (iii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
or agreement  affecting such Expanded  Property to which such Loan Party or such
Expanded Property Owner is subject  (including  without  limitation,  the Senior
Loan Documents) and shall not constitute a default thereunder; (iv) neither such
Expanded  Property nor any part thereof or interest therein will be in danger of
being sold,  forfeited,  terminated,  cancelled or lost; and (v) each Loan Party
shall  have,  or shall  cause  the  relevant  Expanded  Property  Owner to have,
deposited with Lender,  if reasonably  required by Lender,  adequate reserves or
other security as Lender may reasonably require for the payment of any potential
fines or penalties in connection with the enforcement of such Applicable Law.

7.9      Books and Records.

(a) Borrower  will,  and will cause each Loan Party and Expanded  Property Owner
to, keep and maintain,  on a Fiscal Year basis, in accordance with GAAP,  proper
and accurate books, records and accounts reflecting all of the financial affairs
of such Loan  Party or  Expanded  Property  Owner  and all  items of income  and
expense in connection  with the operation of the Expanded  Properties.  Borrower
shall  cause  Lender  to have the right  from  time to time at all times  during
normal business hours to examine such books,  records and accounts at the office
of such Loan Party or Expanded  Property Owner or other Person  maintaining such
books,  records and  accounts  and to make copies or extracts  thereof as Lender
shall desire.  After the  occurrence of an Event of Default,  the Borrower shall
pay any costs and expenses incurred by Lender to examine such accounting records
as Lender shall  determine to be necessary or  appropriate  in the protection of
Lender's interest. The Borrower shall, or cause the Expanded Property Owners to,
furnish or make available to Lender and its agents convenient facilities for the
examination and audit of any of the applicable books and records.

(b) Pursuant to and in accordance with the reporting  requirements  set forth in
Article VI of this Agreement, Borrower shall, or shall cause each Loan Party and
Expanded  Property  Owner  to,  concurrently  furnish  to Lender  all  financial
statements,  operating statements, balance sheets, budgets, rent rolls, notices,
consents,  requests,  reports, and all other financial or written communications
related to the Expanded Properties delivered to any Senior Lender, issued by any
Manager, and/or received by any Loan Party or Expanded Property Owner.

7.10 Change in Fiscal Year.  Borrower shall, and shall cause each Loan Party and
     Property Owner to, maintain December 31 as its fiscal year end.

7.11 Payment of Taxes, Charges, Claims and Current Liabilities.  Borrower shall,
     and shall  cause each Loan  Party and  Expanded  Property  Owner to, pay or
     discharge:

(a) on or prior to the date on which penalties thereon accrue, all federal,  all
state and all other material Taxes,  assessments and other government charges or
levies imposed upon it or any of its properties or income (including such as may
arise under Section 4062,  Section 4063 or Section 4064 of ERISA, or any similar
provision of Law);

(b) on or prior  to the  date  when  due,  all  lawful  claims  of  materialmen,
mechanics,  carriers,  warehousemen  and  other  like  Persons  which  result in
creation of a Lien upon any  property  of such Loan Party or  Expanded  Property
Owner (including the Expanded Properties);

(c) Except with respect to the Expanded  Properties  disclosed on Schedule  10.5
(but only if the Section 10.5 Conditions are satisfied), on or prior to the date
when due, all other lawful claims which, if unpaid, might result in the creation
of a Lien upon any of the property of such Loan Party or Expanded Property Owner
(including the Expanded  Properties)  (other than Permitted  Liens) or which, if
unpaid,  might give rise to a claim entitled to priority over general  creditors
of such Loan Party or  Expanded  Property  Owner in a case under the  Bankruptcy
Code, or in any insolvency  proceeding or  dissolution  or winding-up  involving
such Loan Party or Expanded Property Owner; and

(d)  all other current liabilities so that none is overdue more than thirty (30)
     days.
                  Notwithstanding  the foregoing,  after prior written notice to
Lender,  any Loan Party or Expanded  Property  Owner,  at its own  expense,  may
contest by appropriate  legal  proceeding,  promptly  initiated and conducted in
good faith and with due  diligence,  the amount or  validity or  application  in
whole or in part of any Applicable Law or Governmental  Authority or the payment
of any asserted Taxes,  assessments,  charges,  levies,  claims,  liabilities or
judgments  entered against such Loan Party or Expanded Property Owner, or any of
their assets (including the Expanded  Properties)  (collectively in this Section
7.11,  the  "requirements");  provided that (1) no Event of Default has occurred
except with respect to the Expanded  Properties  disclosed on Schedule 10.5 (but
only if the  Section  10.5  Conditions  are  satisfied),  (2) such Loan Party or
Expanded  Property  Owner is  permitted  to do so under  the  provisions  of any
mortgage,  deed of trust or deed to secure  debt  affecting  such Loan  Party or
Expanded  Property  Owner  (or any of its  properties,  including  the  Expanded
Properties)  including those securing any Senior Loan, (3) such proceeding shall
suspend the  requirements as to such Loan Party or such Expanded  Property Owner
and from such Expanded  Property,  or such Loan Party or Expanded Property Owner
shall have paid or performed all of the  requirements  under  protest,  (4) such
proceeding  shall be permitted  under and be conducted  in  accordance  with the
provisions of any other instrument to which such Loan Party or Expanded Property
Owner is subject and shall not constitute a default thereunder,  (5) neither the
applicable  Expanded  Property nor any part thereof or interest  therein will in
the  opinion  of  Lender  be in danger  of being  sold,  forfeited,  terminated,
cancelled or lost, (6) Borrower  shall have deposited with Lender  adequate cash
reserves for the payment or performance of the  requirements,  together with all
interest  and  penalties  thereon,  unless such Loan Party or Expanded  Property
Owner has paid or performed all of the requirements under protest, (7) such Loan
Party or Expanded  Property  Owner shall have  furnished such security as may be
reasonably  required  in the  proceeding,  or as may be  requested  by Lender to
insure the payment or performance of any contested  requirements,  together with
all interest and penalties thereon.

7.12 Performance of Other Agreements.  Borrower shall, and shall cause each Loan
Party and Expanded Property Owner to, observe and perform each and every term to
be observed or performed by such Person  pursuant to the terms of any  agreement
or recorded  instrument  affecting  or  pertaining  to the  Expanded  Properties
(including,  without limitation,  the Material  Agreements),  and any Amendments
thereto, or given by any Loan Party or Expanded Property Owner to Lender for the
purpose of further securing any Obligation.

7.13  Right of Entry.  Borrower  shall,  and  shall  cause  each Loan  Party and
Expanded  Property  Owner to,  provide to Lender and its agents  access to their
respective  executive  or other  offices  or any part  thereof  or any  Expanded
Property  for  the  purpose  of  making  inspections  at all  reasonable  times,
including, without limitation, for the purpose of curing any default that occurs
or that is asserted by any Senior Lender under the Senior Loan Documents.

7.14 Existence;  Compliance with Legal  Requirements.  Borrower shall, and shall
cause each Loan Party and Expanded Property Owner to, do or cause to be done all
things  necessary  to  preserve,  renew and keep in full  force and  effect  its
existence  and  qualifications,  and  material  rights,  licenses,  permits  and
franchises  and  comply  in all  material  respects  with  all  requirements  of
Governmental  Authorities applicable to it. Borrower shall, and shall cause each
Expanded  Property  Owner to, at all times  maintain,  preserve  and protect all
franchises and trade names and preserve all of their respective property used or
useful in the  conduct of its  respective  business.  Borrower  shall cause each
Expanded  Property  Owner to qualify to do business and remain in good  standing
under the laws of the state in which the applicable Expanded Property is located
and in each  jurisdiction  as and to the  extent  the same is  required  for the
ownership,  maintenance,  management  and operation of the  applicable  Expanded
Property.

7.15 Title to Property.  Borrower shall, and shall cause each Expanded  Property
Owner to, (i) warrant and defend (A) the title to the  Collateral and every part
thereof, and (B) the validity and priority of the liens of the Pledge Agreements
against the claims of all persons and entities  whatsoever  and (ii) warrant and
defend the title of the Expanded Property Owners to the Expanded  Properties and
every part  thereof,  other than as set forth on Schedule 10.5 (but then only if
the Section 10.5 Conditions are satisfied).  Borrower shall reimburse Lender for
any losses, costs, damages or expenses (including Professional Fees) incurred by
Lender if an interest in any Expanded Property or the Collateral,  other than as
permitted hereunder, is claimed by another Person.

7.16     ERISA.

(a)      Compliance with ERISA.  The Loan Parties shall not:

(i)  permit the  occurrence  of any  Termination  Event which would  result in a
     liability to any Loan Party or any ERISA Affiliate in excess of $100,000;

(ii) permit the present value of all benefit liabilities under all Pension Plans
to exceed the current  value of the assets of such  Pension  Plans  allocable to
such benefit liabilities by more than $100,000;

(iii)  permit any  accumulated  funding  deficiency  in excess of  $100,000  (as
defined in Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived;

(iv) fail to make any  contribution or payment to any  Multiemployer  Plan which
any Loan  Party  or any  ERISA  Affiliate  may be  required  to make  under  any
agreement  relating to such  Multiemployer  Plan, or any law pertaining  thereto
which  results in or is likely to result in a liability  in excess of  $100,000;
(v)  engage  or  permit  any  ERISA  Affiliate  to  engage,  in  any  prohibited
transaction  under  Section 406 of ERISA or Section 4975 of the Code for which a
civil penalty  pursuant to Section  502(i) of ERISA or a tax pursuant to Section
4975 of the Code in excess of $100,000 is imposed;

(vi)  permit  the   establishment   of  any  Employee   Benefit  Plan  providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which  establishment  or amendment  could result in liability to any Borrower or
any ERISA  Affiliate or increase the  obligation  of any Loan Party or any ERISA
Affiliate to a Multiemployer  Plan which liability or increase,  individually or
together  with all  similar  liabilities  and  increases  would  have a Material
Adverse Effect; or

(vii) fail, or permit any ERISA  Affiliate to fail,  to establish,  maintain and
operate each Employee  Benefit Plan in compliance in all material  respects with
the  provisions  of  ERISA,  the  Code  and all  other  applicable  laws and the
regulations and interpretations thereof.

(b) No Prohibited Transaction.  Borrower covenants and agrees that it shall not,
and shall not permit any Loan Party or Expanded Property Owner to, engage in any
transaction  which would cause any  obligation,  or action taken or to be taken,
hereunder  (or the  exercise  by  Lender  of any of its  rights  under  the Loan
Documents)  to be a  non-exempt  (under  a  statutory  or  administrative  class
exemption) prohibited transaction under ERISA.

(c) No Plan Assets.  The Loan  Parties  shall not at any time during the term of
this  Agreement  become (1) an employee  benefit plan defined in Section 3(3) of
ERISA which is subject to ERISA, (2) a plan as defined in Section  4975(e)(1) of
the Code which is subject to Section 4975 of the Code, (3) a "governmental plan"
within  the  meaning  of  Section  3(32) of ERISA or (4) an entity  any of whose
underlying  assets  constitute  "plan assets" of any such employee benefit plan,
plan or governmental plan for purposes of Title I or ERISA,  Section 4975 of the
Code or any state statutes applicable to the Borrowers regulating investments of
governmental plans.

(d) Delivery of Certifications. Borrower further covenants and agrees to deliver
to Lender and to cause each Loan Party and Expanded Property Owner to deliver to
Lender,  such  certifications or other evidence from time to time throughout the
term of this Agreement,  as required by Lender in its sole discretion,  that the
covenant set forth in paragraph (c) of this Section 7.16 is true at such time.

7.17     Environmental Matters.

(a) Borrower shall and shall cause each Borrower Group Member to (i) comply with
any Environmental Requirements,  including, without limitation, any such laws or
regulations  relating to contamination from any substance or material identified
to be  toxic or  hazardous  pursuant  to such  laws or  regulations,  including,
without limitation, any asbestos, pcb, radioactive substances, methane, volatile
hydrocarbons,  (ii)  notify  Lender  promptly  upon  learning  of any  spill  or
hazardous  substance  upon any premises  owned or occupied by any such  Borrower
Group Member where such spill or hazardous  substance would be reasonably likely
to cause  contamination,  and  (iii)  promptly  forward  to Lender a copy of any
order,  notice,  permit,  application  or any other  communication  or report in
connection  with any such  spill or  hazardous  substance  or any  other  matter
relating to the Environmental Requirements as they may affect such premises.

(b) Borrower will defend,  indemnify,  and hold harmless Lender,  each Co-Lender
and Assignee and their respective employees, agents, officers, and directors, in
their capacities as Lender, Co-Lender and Assignee hereunder, as applicable, and
also as successor in interest to any Loan Party or any Borrower  Group Member as
owner or lessee of any premises by virtue of  foreclosure  or acceptance in lieu
of foreclosure,  from and against any and all claims, demands, penalties, causes
of action,  fines,  liabilities,  settlements,  damages,  costs,  or expenses of
whatever kind or nature, known or unknown, foreseen or unforeseen, contingent or
otherwise  (including,  without  limitation,  counsel  and  consultant  fees and
expenses,  investigation  and  laboratory  fees and expenses,  court costs,  and
litigation expenses) arising out of, or in any way related to, (i) any breach by
Borrower of any of the  provisions  of this  Section 7.17 or Article XIV hereof,
(ii) the presence, disposal, spillage, discharge, emission, leakage, release, or
threatened release of any Hazardous Material which is at, in, on, under,  about,
from or  affecting  any of the  Expanded  Property or  Improvements,  including,
without  limitation,  any  damage or injury  resulting  from any such  Hazardous
Material to or affecting  any of the Expanded  Property or  Improvements  or the
soil, water, air, vegetation,  buildings,  personal property, persons or animals
located on such Expanded  Property or on any other property or otherwise,  (iii)
any  personal  injury  (including  wrongful  death) or property  damage (real or
personal)  arising out of or related to any such  Hazardous  Material,  (iv) any
lawsuit brought or threatened,  settlement  reached, or order or directive of or
by any  Governmental  Authority  relating to such  Hazardous  Material,  (v) any
violation  of any  Environmental  Requirement,  or (vi)  otherwise  under  or on
account of the Environmental  Requirements,  including the assertion of any Lien
against any Expanded Property or Improvements;  provided, however, that Borrower
shall not be obligated to indemnify  Lender for any loss,  liability,  damage or
expense suffered or incurred subsequent to Lender's  foreclosure,  or acceptance
in  lieu  of  foreclosure,  of any of the  collateral  so  long  as  such  loss,
liability,  damage or expense results solely from circumstances or conditions in
effect or occurring subsequent to the date of such foreclosure or acceptance and
in no way proximately  relate to circumstances  or conditions  existing prior to
such date. The aforesaid indemnification shall,  notwithstanding any exculpatory
or other  provision  of any nature  whatsoever  to the contrary set forth in the
Note,  this  Agreement  or any other  document or  instrument  now or  hereafter
executed and  delivered in  connection  with the Loan,  constitute  the personal
recourse undertakings,  obligations and liabilities of Borrower. The Obligations
and  liabilities of Borrower under this paragraph  shall survive and continue in
full force and effect and shall not be  terminated,  discharged or released,  in
whole or in part,  irrespective  of  whether  the Debt has been paid in full and
irrespective of any foreclosure of the Pledge Agreement,  sale of the Collateral
pursuant to the provisions of the Pledge Agreement or acceptance by Lender,  its
nominee or  wholly-owned  subsidiary of an assignment in lieu of  foreclosure or
sale.

(c) In the event of any spill or  hazardous  substance  affecting  any  premises
owned  or  occupied  by any  Borrower  Group  Member,  whether  or not the  same
originates or emanates from such premises or any contiguous real estate,  and/or
if any Borrower Group Member shall fail to comply with any of the  Environmental
Requirements  applicable  to the spill or hazardous  substance,  Lender may, but
shall not be obligated  to, give such notices or cause such work to be performed
or take any and all  actions as, in each case,  are  legally  required to remedy
such spill or hazardous substance or cure such failure to comply and any amounts
paid as a result  thereof,  together with interest  thereon at the Default Rate,
shall be immediately due and payable by Borrower and, until paid, shall be added
to the Obligations.

7.18  Subdivision  Maps.  Prior to recording  any final map,  plat,  parcel map,
condominium  plats,  lot line  adjustment or other  subdivision  map of any kind
covering any portion of any Expanded Property (collectively, "Subdivision Map"),
Borrower shall, or shall cause the relevant  Expanded  Property Owner to, submit
such Subdivision Map to Lender for Lender's review and approval,  which approval
shall not be unreasonably withheld.

7.19 Pledge of all Assets. Subject to terms of the Senior Loan Documents,  it is
the  intention of the Loan Parties and the Expanded  Property  Owners and Lender
that all  properties,  rights and assets of the Loan  Parties  and the  Expanded
Property Owners, whether real or personal,  tangible or intangible, or otherwise
shall at all times be pledged to Lender as "Collateral"  and as security for the
Loan,  except to the extent  prohibited by Material  Agreements in effect on the
Closing Date and which have been disclosed in writing to Lender (the  "Effective
Material  Agreements").  Accordingly,  to the extent any Loan Party or  Expanded
Property Owner acquires any  properties,  rights or assets at any time after the
Closing  Date for  which a Lien in  favor of  Lender  is not  prohibited  by the
Effective  Material  Agreements or if the Effective  Material  Agreements at any
time cease to prohibit such Lien,  then Borrower  shall  immediately  (i) notify
Lender  thereof in  writing,  and (ii) pledge or cause the same to be pledged to
Lender as  additional  "Collateral"  and as  security  for the Debt  pursuant to
mortgages,  deeds of trust,  pledge agreements or other documents  acceptable to
Lender.  Furthermore,  Borrower  covenants to work  diligently  to obtaining the
consent necessary from Lumbermens and KILICO,  respectively,  in order to pledge
the  equity  interests  held by  Prime  Warehouse  Row  Limited  Partnership  in
Warehouse Row, Ltd. and Market Street, Ltd., respectively,  to Lender within six
months from the date hereof.

7.20  Refinancing  of Senior Loan  Documents.  The Loan Parties  shall use their
commercially reasonable efforts in connection with any refinancing of any Senior
Loans to obtain  Amendments to the Senior Loan  Documents to permit the Expanded
Property  Owners to become  "Loan  Parties"  and grant a pledge of the direct or
indirect equity interests of the Borrower Group Members in the relevant Expanded
Property  Owner;   provided  (A)  that,  other  than  the   Silverthorne/Lebanon
Transaction,  any such  refinancing  shall be subject to Lender's  prior written
approval,  such approval not to be unreasonably withheld if such refinancing (i)
is for no more than the  then-outstanding  principal  balance of the  refinanced
loan plus  reasonable  refinancing  costs  approved by Lender in its  reasonable
discretion,  or, if more,  the  proceeds  of such  refinancing  in excess of the
principal  balance  being  refinanced  (and such  reasonable  refinancing  costs
approved by Lender) are applied to amortize  the  principal  balance of the Loan
and to pay the Additional Fee associated with any such amortization (proceeds of
refinancings  shall  under no  circumstance  be  applied  to the  payment of the
Minimum Monthly  Amortization  Amount or to any amortization  payments  required
under the Schedule V Covenants or under Section  2.7(b)(i),  (ii) or (iv)), (ii)
is for an interest  rate that does not exceed the greater of LIBOR plus 3.5% per
annum or 10% per annum, (iii) is otherwise on commercially  reasonable terms for
first mortgages as reasonably  determined by Lender, and (iv) allows a pledge in
favor of Lender of 49% of the equity  interests  in the  applicable  Senior Loan
Obligor (which need not include  managing  interests if the holder of the Senior
Loan does not allow such pledge of managing  interests);  and further  provided,
(B) that the  obligations  of the Loan  Parties  under this Section 7.20 as they
relate to any  refinancing  of the Senior Loans  applicable to any of the Lothar
Properties,  Fru-Con Properties and Bellport II & III Property, shall be limited
to  matters  within  the  control  of  the  Borrower  Group  Members,  it  being
acknowledged  that Borrower Group Members do not own all of the equity interests
in the Expanded Property Owners which own such Expanded Properties,  and thus do
not  possess  sole  control  over  the  Expanded   Property  Owners.   Upon  the
consummation of any refinancing described in proviso (A) above and to the extent
applicable  (and  subject to  proviso  (B)  above),  (a) the  relevant  Expanded
Property Owner shall promptly  provide Lender with such  information or security
documents  regarding the relevant  Expanded  Property as Lender shall reasonably
request,  (b) the  Borrower  Group  Member  pledging  an equity  interest in the
Expanded  Property  Owner shall become a Guarantor  under the Loan Documents and
(c) the  Borrower  Group  Member  holding the equity  interests  in the relevant
Expanded Property Owner,  direct or indirect,  which has not theretofore pledged
such equity interests to Lender pursuant to the Pledge  Agreements shall execute
an Amendment  to its relevant  Pledge  Agreement  (or a new pledge  agreement in
Lender's form) so that a security interest in 49% of the equity interests (which
need not include  managing  interests  if the holder of the Senior Loan does not
allow such pledge of managing interests),  direct or indirect,  of such Expanded
Property Owner has been granted to Lender as security for the Obligations.

7.21  Estoppel  Statements.  Within  ten (10) days  after  request  by Lender to
Borrower,  Borrower shall furnish to Lender a statement,  duly  acknowledged and
certified and setting forth (A) the original  principal  amount of the Note, (B)
the unpaid principal amount of the Note, (C) the Applicable Interest Rate of the
Note,  (D) the date on which  installments  of interest and principal  were last
paid,  (E) the terms of  payment,  (F) any offsets or defenses to the payment of
the Loan, if any, (G) that the Note, this Agreement and the other Loan Documents
are valid, legal and binding obligations of the Loan Parties,  and have not been
Amended or, if Amended, giving particulars of such Amendment (H) that, except as
provided  in such  statement,  there are no  defaults  or events  which with the
passage of time or the giving of notice or both,  would  constitute  an event of
default under the Loan  Documents,  (I) whether or not, to the best knowledge of
the Loan Parties and  applicable  Expanded  Property  Owner,  any of the tenants
under the Leases are in default under the Leases, and, if any of the tenants are
in default,  setting forth the specific nature of all such defaults,  and (J) as
to any other matters reasonably requested by Lender.

                  Upon Lender's  request,  Borrower  shall cause the  applicable
Expanded Property Owner to (to the extent the applicable Expanded Property Owner
has the right to obtain the same under the Leases)  promptly request within five
(5)  Business  Days,  and  thereafter  use   commercially   reasonable   efforts
(including, without limitation, the expenditure of any money reasonably required
to  enforce  tenants'   obligations  under  all  Leases)  to  obtain,   estoppel
certificates from any one or more tenants identified by Lender attesting to such
facts  regarding the Lease as required by the applicable  Lease or if no form is
required by the applicable Lease, attesting to such facts regarding the Lease as
may be reasonably requested by Lender.

7.22  Further  Assurances.  Borrower  shall and shall cause each of the Borrower
Group  Members  to, do and execute all and such  further  lawful and  reasonable
acts, conveyances and assurances as are required or desirable,  as determined by
Lender,  to carry out the intents and purposes of this  Agreement  and the other
Loan  Documents.  To the extent not prohibited  under the Senior Loan Documents,
Borrower  shall cause each of the Borrower  Group Members to execute and deliver
on  demand  one  or  more  financing  statements,  chattel  mortgages  or  other
instruments,  to evidence or perfect more  effectively the security  interest of
Lender in the  Collateral in which such Borrower Group Members have an interest,
and if any of the Borrower Group Members fails to execute and deliver any of the
foregoing within five (5) days after such request by Lender, Borrower on its own
behalf and on behalf of each  Borrower  Group Member  hereby grants to Lender an
irrevocable  power of  attorney  coupled  with an  interest  for the  purpose of
exercising and  perfecting  any and all rights and remedies  available to Lender
pursuant to this Section 7.22,  and hereby  authorizes  Lender to execute in the
name of such  Borrower  Group Member or without the  signature of such  Borrower
Group  Member to the  extent  Lender  may  lawfully  do so,  any such  financing
statements, chattel mortgages or other instruments.

7.23 Hedging Transactions.  Borrower shall enter into such interest rate hedging
     transactions as directed by Lender, each in form and substance satisfactory
     to Lender.

7.24  Cooperate  in Legal  Proceedings.  Borrower  shall,  and  shall  cause the
Expanded  Property  Owners to,  cooperate  fully with Lender with respect to any
proceedings before any court, board or other Governmental  Authority,  which may
in any way affect  the rights of Lender  hereunder,  or any rights  obtained  by
Lender  under any of the other Loan  Documents  and,  in  connection  therewith,
permit Lender, at its election, to participate in any such proceedings.

7.25  Contracts.  Borrower  shall and shall cause each of the Expanded  Property
Owners to,  deliver or cause to be  delivered  to Lender  copies of all material
contracts or other material  agreements  (and all amendments,  modifications  or
supplements thereto),  whether now existing or hereafter entered into, affecting
any Loan Party or Expanded Property Owner or the use, maintenance, management or
operation of any of the Expanded Properties,  and any contracts regarding a sale
of any of the  Expanded  Properties  or an  interest  therein.  No Loan Party or
Expanded  Property Owner shall enter into any material  service,  maintenance or
other contracts affecting the Expanded Properties that are not terminable on two
month's  notice or less  without  cause and  without  penalty  or  premium.  All
service,  maintenance or other contracts affecting the Expanded Properties shall
be  arms-length  transactions  with Persons who are not  Affiliates  of any Loan
Party or Expanded  Property Owner, in the ordinary course of the applicable Loan
Party's  and/or  Expanded  Property  Owner's  business and shall provide for the
payment  of fees in  amounts  and upon  terms not in excess of  existing  market
rates.

7.26 Purchase  Options.  Borrower shall cause the Expanded  Property  Owners to,
deliver to Lender true and correct copies of any purchase agreement,  any option
agreement  and any rights of first offer or rights of first  refusal to purchase
any of the Expanded  Properties  or any portion  thereof,  or any other  similar
agreement for Lender's approval prior to any Expanded Property Owner's execution
thereof.

7.27 Service  Rights.  Except as set forth on Schedule  7.27, no Service  Rights
have been  granted to any Person by or from any Loan Party or Expanded  Property
Owner. To the extent Service Rights have been granted to any Person as set forth
on Schedule 7.27, either a Loan Party or the applicable  Expanded Property Owner
(and no other  Person) is  entitled  to receive  any and all  compensation  with
respect to the Service Rights.

7.28 Payment and  Distribution  Direction  Letters.  Borrower  shall  deliver or
caused to be delivered,  with respect to each Senior Loan which  utilizes a lock
box arrangement, a "Payment Direction Letter," in form and substance approved by
Lender,  countersigned by each Senior Lender (or, if acceptable to Lender in its
discretion,   the  financial  institution(s)  responsible  for  maintaining  the
accounts  required  under the cash  management  provisions  of the  Senior  Loan
Documents  (each a "Senior  Depository"))  to  evidence  its  acknowledgment  of
receipt  of,  and  agreement  to the terms set forth in, the  Payment  Direction
Letter.   The  Payment  Direction  Letter  shall  expressly  state  that  it  is
irrevocable without the written agreement of Lender and shall direct each Senior
Lender (or Senior Depository, as applicable) that, until further written notice,
countersigned  by  Lender,   is  received  by  such  Senior  Lender  (or  Senior
Depository,  as  applicable)  from  Borrower  (on its behalf or on behalf of its
Affiliate or Subsidiary who is the primary  obligor on the relevant  Senior Loan
Documents,  a "Senior Loan  Obligor"),  any and all amounts payable from time to
time  pursuant  to the Senior  Loan  Documents  to  Borrower or such Senior Loan
Obligor  or allowed to be paid or  received  by  Borrower  or such  Senior  Loan
Obligor shall be paid by wire transfer (on each date payment would  otherwise be
payable  to  Borrower  or  such  Senior  Loan  Obligor)  to the  Lockbox  at the
Depository,  to be held and applied in  accordance  with the  provisions  of the
Lockbox Agreement. To the extent Borrower or any Senior Loan Obligor is required
to request of a Senior  Lender  under the  relevant  Senior Loan  Documents  the
release to Borrower or such Senior Loan Obligor of monies,  then Borrower shall,
or in the case of any Senior Loan  Obligor,  will cause such Senior Loan Obligor
to,  in all  cases  sufficiently  prior to the  intended  release  date so as to
constitute an effective  request under the Senior Loan  Documents,  send written
notice to Senior  Lender  requesting  Senior  Lender to transfer  such monies to
Lender.  Further,  Borrower shall deliver a "Distribution  Direction Letter," in
form and substance approved by Lender, signed by each of Borrower,  Holdings and
the other  Guarantors and each Senior Loan Obligor to evidence their  respective
acknowledgment  of  receipt  of,  and  agreement  to the terms set forth in, the
relevant Distribution  Direction Letter. The Distribution Direction Letter shall
expressly state that it is irrevocable  without the written  agreement of Lender
and shall direct each of Borrower,  Holdings and the other  Guarantors  and such
Senior Loan Obligor that, until further written notice, countersigned by Lender,
is received by such Senior Loan Obligor,  any and all  Distributions  payable or
distributable from time to time any of Borrower, Holdings or any other Guarantor
or such  Senior  Loan  Obligor  shall  be paid or  distributed  by check or wire
transfer  (on  each  date  such  Distribution  would  otherwise  be  payable  or
distributable to such Person) delivered to the Lockbox at the Depository,  to be
held and applied in accordance with the provisions of the Lockbox Agreement.

ARTICLE VIII
                               NEGATIVE COVENANTS

                  Borrower covenants and agrees that, from and after the Closing
Date and until the Maturity Date:

8.1 Fundamental Changes; No New Subsidiaries. Except asset sales permitted under
either or both Section 8.5 and Section  10.5,  no Borrower  Group Member  shall,
directly  or  indirectly,  by  operation  of  law  or  otherwise,   merge  into,
consolidate  with, or sell all or substantially all of their assets or ownership
interests or  otherwise  combine  with,  any Person or form any  Subsidiary.  No
Borrower  Group Member shall engage in any  business  activities  or  operations
other  than the direct or  indirect  ownership  and  operation  of the  Expanded
Properties,  except such new factory outlet center developments,  if any, as are
contemplated  under the Business Plan.  Borrower shall not allow (i) Holdings to
own less than fifty-one  percent (51%) of the partnership  interests in Borrower
(ii) the Borrower to be  controlled by a Person other than Holdings or (iii) any
pledge of, other encumbrance on, or conversion to limited partnership  interests
of, any of the general partnership interests in the Borrower.

8.2  Investments;  Loans and  Advances.  Except as provided in Section  12.7, no
Borrower Group Member shall commit any funds or resources, undertake any project
or venture, make any investment in, or make or accrue loans or advances of money
to any Person or make any  expenditure,  directly or  indirectly,  other than in
accordance with the Approved Operating Budget, without the prior written consent
of Lender, which may be withheld in Lender's sole and absolute discretion.

8.3 Indebtedness.  Except with respect to Section 7.20, no Borrower Group Member
shall  create,  incur,  assume  or permit  to exist  any  Indebtedness,  whether
recourse or  nonrecourse,  whether  superior  or junior and  whether  secured or
unsecured,  except the  Permitted  Debt,  without the prior  written  consent of
Lender, which may be withheld in Lender's sole and absolute discretion.

8.4  Liens.  No Borrower  Group Member shall create or permit any Lien on any of
     its properties or assets except Permitted Liens.

8.5 Sales of Assets. Except as listed on Schedule 8.5 (subject to the provisions
set  forth  below) or on  Schedule  10.5  (and  then  only if the  Section  10.5
Conditions are satisfied) or the Silverthorne/Lebanon  Transaction,  no Borrower
Group Member shall sell, transfer,  convey or otherwise dispose of any assets or
properties  (including  any  interest  in  the  Expanded  Properties  or  equity
interests,  direct or indirect,  in the Expanded  Property  Owners)  without the
prior  written  consent  of Lender.  So long as no Event of  Default  shall have
occurred and be continuing, Lender shall upon prior written notice from Borrower
grant a consent to the sale of any asset listed on Schedule 8.5 at the time such
sale closes so long as (a) the Asset  Disposition Net Proceeds,  the calculation
of which shall be subject to Lender's reasonable approval,  are in excess of the
minimum  amount set forth for such asset on  Schedule  8.5,  and are  applied to
repay the Note and the Additional Fee as set forth in Section 2.7(b)(i), (b) the
sale contract and other sale  documents do not create any material  liabilities,
direct or indirect,  on the part of any Borrower Group Member, other than on the
part  of  the  selling  entity,  and  then  only  to  the  extent  the  Borrower
demonstrates to the Lender's reasonable satisfaction that such liabilities shall
be capable of satisfaction  without giving rise to any need for funding from any
other Borrower  Group  Members,  and (c) in the case of the proposed sale of any
outlot or other sale of less than an entire  parcel of property,  that  Borrower
demonstrates to Lender's reasonable  satisfaction that all appropriate  easement
and other  rights are  retained  by the  remaining  parcel  over the asset to be
conveyed, that no Leases or contracts binding upon any Borrower Group Members at
the  remaining  parcel  require  any control of the conduct of business or other
occurrences upon the parcel being conveyed,  that all necessary  subdivision and
zoning  approvals  for the separate  conveyance,  ownership and operation of the
parcels have been  obtained and that the  remaining  parcel shall  continue as a
conforming use and structure in compliance with all Legal Requirements, and that
such conveyance shall not render the remaining parcel a legal non-conforming use
or structure or result in the  continuing  compliance of such  remaining  parcel
with Legal Requirements being dependent upon the existence or development of any
parking or other improvements or any landscaping,  open space, wetlands or other
conditions upon the parcel being conveyed.

8.6  Acquisition  of Assets.  No Borrower  Group Member shall  purchase,  lease,
sublease,  license,  sublicense  or otherwise  acquire any assets or  properties
without the prior written consent of Lender.

8.7  Distributions.  No  Borrower  Group  Member  shall  permit the  purchase or
redemption  of any of their equity  interests or the equity  interests of any of
their Affiliates or  Subsidiaries,  except for trading in the shares of Holdings
as permitted by Section 11.1. Except as expressly permitted in this Section 8.7,
(i) the  declaration  or payment of any dividends by any Borrower  Group Member,
(ii) the making of any distribution to any partners,  members or shareholders of
any of the Borrower  Group  Members or (iii) the setting  aside of any funds for
any such purpose, shall be prohibited (each of the foregoing,  collectively, the
"Distributions").  Any  Distributions,  with the  exception  of  Permitted  REIT
Distributions,  shall  become  part  of  Lender's  Collateral.  Whether  or  not
permitted or prohibited in accordance  with the foregoing,  if any  Distribution
shall be received by any Borrower  Group Member or any Person other than Lender,
Borrower  shall cause such Person to hold the same,  in trust for the benefit of
Lender and to forthwith  deliver same to Lender.  No Borrower Group Member shall
pay, or permit the payment of  management  fees to any Borrower  Group Member or
any direct or  indirect  partners,  members,  shareholders  or  Subsidiaries  or
Affiliates thereof, or request  disbursement of funds from any Senior Lender for
such  purpose  without  the  consent of Lender.  Any such fees paid  without the
consent of Lender  shall be treated as a  Distribution  made in violation of the
terms of this paragraph. Notwithstanding the foregoing, (1) cash deposited by or
on behalf of  Borrower  Group  Members  into the  Lockbox  shall be deemed to be
distributed to or (in the case of Holdings)  contributed to Borrower directly or
indirectly by or through the applicable Borrower Group Members, provided that in
all cases such shall  remain in the  Lockbox and be applied in  accordance  with
this Agreement and the Lockbox  Agreement,  and (2) provided no Event of Default
exists, Permitted REIT Distributions shall be permitted.

8.8  Transactions  with  Affiliates.  Except as  disclosed  on Schedule  8.8, no
contracts (other than employment  agreements and property management  agreements
approved  in  writing  by  Lender)  between  or  among  any Loan  Party  and its
Subsidiaries and/or Affiliates (including the Expanded Property Owners) or their
respective  direct or indirect  partners,  members,  shareholders  or Affiliates
("Affiliate Agreements") shall be made except on an arm's-length basis and shall
be subject to the prior  written  approval  of Lender;  and the  parties to each
Affiliate   Agreement  shall  acknowledge  and  agree  that  such  agreement  is
terminable  upon notice,  without  penalty,  premium or liability  for future or
accrued  liabilities  or  obligation  if an Event of Default shall have occurred
under  the  Loan  Documents.  Following  an  Event  of  Default  under  the Loan
Documents,  if requested by Lender in writing,  each Loan Party shall,  or shall
cause its Subsidiaries and Affiliates  (including the Expanded  Property Owners)
to, terminate any Affiliate  Agreements specified by Lender within five (5) days
after delivery of Lender's request.

8.9  Modifications  and  Waivers.  Unless  otherwise  consented to in writing by
     Lender, no Loan Party shall, nor shall it permit any of its Subsidiaries or
     Affiliates (including the Expanded Property Owners) to, :

(a)  amend, modify or terminate any of its Organizational Documents,  except for
     non-material amendments;

(b)  amend, modify, surrender or waive any material rights or remedies under, or
     enter into or terminate, any Material Agreement;

(c)  modify or attempt to modify the terms of the  Payment  Direction  Letter or
     any Disbursement Direction Letter;

(d) modify or attempt to modify the  Sources and Uses  Statement;  and cancel or
otherwise  forgive or release any  material  claim or material  debt owed to any
Loan  Party or  Expanded  Property  Owner by any  Person,  except  for  adequate
consideration and in the ordinary course of business.

8.10 Limitations on Expenditures.  Borrower shall not incur additional liability
for  nor  make  any  capital  expenditures,   marketing  expenditures,   leasing
expenditures  or  other  discretionary  expenditures  (other  than  expenditures
necessary for the continued  compliance by Borrower  Group Members with existing
Leases and  Senior  Loan  Documents)  if and to the  extent  such  discretionary
expenditures  result in a  failure  of the  Borrower  Group  Members'  operating
revenues to be  sufficient  to pay their  expenses and principal and interest on
the Loan as and when the same  become  due.  In the event  Borrower  defers  any
capital  expenditures in order to comply with this Section 8.10,  Borrower shall
so notify  Lender in writing of the  amount of the  deferral  and the period for
which the deferral is to occur (any such deferred capital  expenditure for which
notice is timely  given to Lender is herein  referred to as a "Deferred  Capital
Expenditure").

8.11 Financial Covenants. The parties acknowledge and agree for purposes of this
Section 8.11 that any Schedule V Fees that Borrower is required to pay shall not
be given effect for purposes of  calculating  the following  ratios.  Also,  the
following  ratios  shall  not be  deemed  violated  for a given  period  if such
non-compliance  for a given period is due solely to  expenditures  being made in
such period for Deferred Capital Expenditures from a prior period.

(a)      Holdings shall not permit:

(i) the ratio of its Consolidated  Total Debt to its Gross Asset Value as at the
end of any fiscal  quarter  set forth  below to be  greater  than the amount set
forth opposite such fiscal quarter below:

------------------------------------------------------- ------------------------
Fiscal Quarter Ending:                                  Amount:
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 31, 2001                                          0.975
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2001                                           0.958
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2001                                      0.923
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2001                                       0.898
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 30, 2002                                          0.960
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2002                                           0.930
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2002                                      0.895
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2002                                       0.869
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 31, 2003                                          0.927
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2003                                           0.895
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2003                                      0.859
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2003                                       0.830
------------------------------------------------------- ------------------------
(ii) the ratio of its Consolidated  EBITDA to Consolidated  Interest Expense for
any fiscal  quarter to be less than the  amount  set forth  opposite  the fiscal
quarter set forth below:

------------------------------------------------------- ------------------------
Fiscal Quarter Ending:                                  Amount:
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 31, 2001                                          1.14
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2001                                           1.14
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2001                                      1.14
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2001                                       1.17
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 30, 2002                                          1.17
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2002                                           1.18
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2002                                      1.21
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2002                                       1.26
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
March 31, 2003                                          1.22
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
June 30, 2003                                           1.26
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
September 30, 2003                                      1.30
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------
December 31, 2003                                       1.30
------------------------------------------------------- ------------------------
------------------------------------------------------- ------------------------

------------------------------------------------------- ------------------------
(iii)    Intentionally omitted.

(iv) its  Consolidated  Capital  Expenditures  for any fiscal year to exceed the
amount budgeted therefor in the Approved Operating Budget.

(b)      Borrower shall not permit any Expanded Property Owner to:

(i)  at any time have Total Debt  greater than the amounts set forth in Schedule
     8.11(b)(i) for each Expanded Property; and

(ii) make Capital  Expenditures for any fiscal year in excess of the amounts set
forth for each Expanded Property in Schedule 8.11(b)(ii).

8.12  Misapplication  of Funds.  No  Borrower  Group  Member  shall  permit  any
distribution  of any Revenues or Loss Proceeds in violation of the provisions of
this Agreement, any misappropriation of any Security Deposit or portion thereof,
or any Distributions in violation of the provisions of this Agreement.

8.13 Change in Business. Other than Holdings, Borrower, Prime Retail E-Commerce,
Inc. and  E-Outlets  Resolution  Corp.,  no Borrower  Group Member shall conduct
business  in any state other than the state in which each  Expanded  Property is
located.  No Borrower  Group Member shall make any change in the scope or nature
of its business  objectives,  purposes or operations,  or in the location of its
"place of  business"  or "chief  executive  office"  (as such  terms are used in
Uniform  Commercial  Code), or undertake or participate in activities other than
the continuance of its present  business without Lender's prior written consent,
which Lender may condition or withhold in its sole and absolute  discretion.  If
any Loan Party or Expanded  Property Owner requests  Lender's  consent to change
the  location  of its "place of  business"  or "chief  executive  office," or to
conduct  business in another state,  Borrower shall deliver a written request to
Lender at least  thirty  (30) days in  advance,  together  with  executed  UCC-1
financing  statements  for filing in the  jurisdiction(s)  in which such  Person
desires to conduct business or change the location of its "place of business" or
"chief executive  office," together with a legal opinion that the filing of such
financing  statement(s)  in such  jurisdiction(s)  will maintain the priority of
Lender's perfected security interest in the Collateral. Borrower shall not allow
any  Expanded  Property  Owner to  permit  any  change  in the use of any of the
Expanded Properties without Lender's prior written consent.

8.14 Regulation  U.  Borrower  shall  not  use or  permit  the use of any of the
     proceeds  of the Loan in a manner  which would cause the Loan to be treated
     as a "Purpose Credit."

8.15 Prime Notes. Borrower shall not suffer or permit any Amendment of either of
     the Prime Notes.

8.16 Negative Pledge.  Borrower agrees that throughout the term of this Loan, no
"negative  pledge" on or with  respect to any  interest  in any  Borrower  Group
Member or any Expanded  Property or any  Unencumbered  Assets which restricts or
prohibits the sale or  encumbrance  of any interest in any Borrower Group Member
or Expanded Property or Unencumbered Asset shall be granted or allowed to exist,
other than those negative pledges granted pursuant to this Agreement in favor of
and for the benefit of Lender.

ARTICLE IX
                                   MANAGEMENT

9.1  Management; Termination of Manager. Borrower warrants and covenants that:
(a) Unless otherwise consented to by Lender in its sole and absolute discretion,
to the  extent  not  prohibited  by the  terms  of any  applicable  Senior  Loan
Documents, each Expanded Property shall at all times during the term of the Loan
be leased,  managed and marketed by Borrower.  Without  Lender's  prior  written
consent,  no fees shall be payable to Borrower in connection  with such leasing,
managing and  marketing of the Expanded  Properties.  Borrower  shall operate or
cause  to be  operated  each  Expanded  Property  in a first  class  manner  and
otherwise in accordance  with the standard of operation of other factory  outlet
centers similarly situated (the "Management Standard"). No Loan Party shall, nor
shall it permit any of the Borrower  Group Members to (including  permitting any
Expanded  Property  Owners  to) to,  terminate  or  replace  its  Manager or its
successor or assign,  or enter into any Management  Agreement,  without Lender's
prior written consent.  Borrower shall cause all Expanded Property Owners to (i)
diligently perform and observe all of the terms, covenants and conditions of any
Management Agreement on the part of the applicable Expanded Property Owner to be
performed and observed by the  applicable  Expanded  Property  Owner so that the
rights of the applicable Expanded Property Owner under the Management  Agreement
remain  unimpaired;  and (ii) promptly notify Lender of the giving of any notice
by the  Manager to an  Expanded  Property  Owner of any  default by an  Expanded
Property Owner in the  performance or observance of any of the terms,  covenants
or conditions of the  Management  Agreement on the part of an Expanded  Property
Owner and  deliver  to Lender a true copy of each such  notice.  The  applicable
Expanded Property Owner shall promptly enforce the performance and observance of
all of the covenants required to be observed and performed by the Manager.

(b) The Borrower  acknowledges and agrees (i) that to the extent the Borrower or
any of the Borrower Group Members is currently managing any Expanded  Properties
such right to manage such Expanded Properties shall be construed as on the basis
of a Management  Agreement for a thirty (30) day term, with automatic renewal on
a  month-to-month  basis  unless the owner  elects not to renew such  Management
Agreement,   and  (ii)  that  the  relevant  Loan  Party,  its  Subsidiaries  or
Affiliates,  including  the  Expanded  Property  Owners  shall have the right to
terminate said Management Agreement with or without cause on no more than thirty
(30) days prior written notice. The parties hereto acknowledge and agree that in
the event the  effectiveness of this Section with respect to the Borrower or any
Expanded Property Owner is subject to the consent of any Senior Lender under the
Senior Loan Documents relating to the Expanded Property,  this Section shall not
be deemed effective with respect to the Borrower or such Expanded Property Owner
until such consents are obtained.  The parties  hereto further  acknowledge  and
agree that to the extent  this  Section  conflicts  with the terms of any Senior
Loan Document, the Senior Loan Document shall govern.

9.2 Brokerage  Agreements;  Termination  and Replacement  Provisions.  Except as
listed on Schedule  9.2 or  Schedule  15.21,  any  Brokerage  Agreement  made or
existing  during the term of the Loan shall be  subject  to the  Lender's  prior
written approval.  The Brokerage  Agreements shall each provide (i) for a thirty
(30) day term, with automatic renewal on a month-to-month basis unless the owner
elects not to renew such  Brokerage  Agreement,  and (ii) that the relevant Loan
Party,  its Subsidiaries or Affiliates,  including the Expanded  Property Owners
(for  purposes of this Section 9.2, the  "Relevant  Signatory"),  shall have the
right to terminate  said  Brokerage  Agreement  with or without cause on no more
than thirty (30) days prior written notice. If requested by Lender in writing (a
"Lender  Termination  Request") at any time after and during the continuation of
an Event of Default,  the  Relevant  Signatory  shall issue within five (5) days
after  delivery of the Lender  Termination  Request,  a notice of termination to
terminate  (i) any  Management  Agreement  (or any  Borrower  Group  Member as a
property manager without any agreement) (a "Manager  Termination Notice") and/or
(ii) any Brokerage  Agreement (a "Broker Termination  Notice").  Notwithstanding
the  foregoing,  if the  broker  or  Manager  is an  Affiliate  of the  Relevant
Signatory,  Lender's delivery to the Relevant  Signatory of a Lender Termination
Request shall automatically  terminate the Management Agreement and/or Brokerage
Agreement,  as specified in the Lender Termination Request,  effective as of the
date specified in the Lender  Termination  Request.  If the broker or Manager is
not an Affiliate of the Relevant Signatory, the Relevant Signatory shall appoint
a replacement  broker or Manager,  as  applicable,  pursuant to a new Management
Agreement or Brokerage  Agreement within thirty (30) days after delivery of such
Lender Termination Request. If the Relevant Signatory fails to issue the Manager
Termination Notice or Broker Termination Notice within said five (5) day period,
then Lender shall have the right, and the Relevant  Signatory hereby irrevocably
authorizes  Lender and irrevocably  appoints Lender as the Relevant  Signatory's
attorney-in-fact  coupled with an interest,  at Lender's sole option, to issue a
Manager  Termination Notice or Broker Termination Notice on behalf of and in the
name of the Relevant  Signatory,  and the Relevant Signatory hereby releases and
waives any claims  against  Lender  arising  out of  Lender's  exercise  of such
authority.  Any replacement Management Agreement or Brokerage Agreement shall be
subject to the Lender's  written  approval and shall by its terms  commence upon
the day the prior agreement  terminates (but not later than the thirtieth (30th)
day after delivery of the corresponding  Lender  Termination  Request) and shall
have as its scheduled expiration date a date not earlier than the Maturity Date.

                                   ARTICLE X
                                   SENIOR LOAN

10.1 Compliance with Senior Loan Documents;  Lender Cure. Except with respect to
the Senior Loans and Expanded  Properties listed on Schedule 10.5 (but then only
if the  Section  10.5  Conditions  are  satisfied),  Borrower  shall  cause each
applicable  Senior Loan Party to (i) pay all principal,  interest and other sums
required  to be paid by it under and  pursuant to the  provisions  of the Senior
Loan Documents to which it is a party,  (ii) diligently  perform and observe all
of the terms,  covenants and conditions of the Senior Loan Documents on the part
of such Senior Loan Party to be performed and observed,  unless such performance
or observance  shall be waived or not required in writing by the relevant Senior
Lender,  and (iii)  promptly  notify  Lender of the  giving of any notice by the
applicable Senior Lender to such Senior Loan Party of any default by such Senior
Loan Party in the  performance  or observance of any of the terms,  covenants or
conditions of the Senior Loan Documents on the part of such Senior Loan Party to
be  performed or observed and deliver to Lender a true copy of each such notice,
together  with  any  other   consents,   notices,   requests  or  other  written
correspondence  between  such  Senior  Loan  Party and  Senior  Lender.  Without
limiting the generality of the other  provisions of this Agreement,  and without
waiving or releasing  any Loan Party from any of its  Obligations  hereunder and
under the other Loan  Documents,  if there  shall  occur any  default  under the
Senior Loan Documents or if any Senior Lender asserts that any Senior Loan Party
has  defaulted  in the  performance  or  observance  of any  term,  covenant  or
condition  of any  Senior  Loan  Documents  (whether  or not the same shall have
continued  beyond any applicable  notice or grace  periods,  whether or not such
Senior Lender shall have delivered  proper notice to the applicable  Senior Loan
Party and without regard to any other defenses or offset rights such Senior Loan
Party may have against Senior  Lender),  Borrower hereby  expressly  agrees that
Lender shall have the immediate right, without notice to or demand, but shall be
under no  obligation,  (A) to pay all or any part of the Senior Loan (other than
those loans listed on Schedule 10.5, if and only if,  however,  the Section 10.5
Conditions are satisfied) that is then due and payable and any other sums and to
perform any act or take any action,  on behalf of such Senior Loan  Obligor,  as
may be  appropriate  to cause all of the terms,  covenants and conditions of the
Senior Loan Documents on the part of such Senior Loan Obligor to be performed or
observed  thereunder  to be promptly  performed or observed,  and (B) to pay any
other  amounts  and take any other  action as Lender,  in its sole and  absolute
discretion, shall deem advisable to protect or preserve the rights and interests
of Lender in the Loan and/or the Collateral.  All sums so paid and the costs and
expenses  incurred  by Lender in  exercising  rights  under  this  Section  10.1
(including  Professional  Fees), with interest at the Payoff Rate for the period
from the date that such costs or expenses  were  incurred to the date of payment
to  Lender,  shall  constitute  a portion  of the Debt,  shall be secured by the
Security  Documents and shall be due and payable to Lender upon demand therefor.
Any sums so paid and costs so  incurred  by Lender  shall bear  interest  at the
Payoff Rate until paid to Lender by Borrower. Borrower hereby indemnifies Lender
from and against  all  liabilities,  obligations,  losses,  damages,  penalties,
assessments,  actions, or causes of action,  judgments,  suits, claims, demands,
costs, expenses (including, without limitation, Professional Fees whether or not
suit is brought and settlement  costs) and  disbursements  of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Lender as a
result of the  foregoing  actions.  Lender shall have no  obligation to any Loan
Party,  any Senior  Loan Party or any other  Person to make any such  payment or
performance.  Borrower  shall not, nor shall it permit any Senior Loan Party to,
impede,  interfere  with,  hinder or delay  any  effort or action on the part of
Lender to cure any  default or asserted  default  under any Senior  Loan,  or to
otherwise protect or preserve Lender's  interests in the Loan and the Collateral
following a default or asserted  default  under any Senior Loan.  Any default or
breach by any Senior Loan Party under the Senior Loan Documents to which it is a
party which is not cured prior to the expiry of any applicable grace,  notice or
cure period  afforded to such Senior Loan Party under such Senior Loan Documents
shall constitute an Event of Default under this Agreement, without regard to any
subsequent  payment or performance of any such obligations by Lender.  Each Loan
Party hereby grants,  and shall cause each Senior Loan Party to grant to, Lender
and any  Person  designated  by  Lender  the  right to enter  upon any  Expanded
Property at any time following the  occurrence of any default,  or the assertion
by any  Senior  Lender  that a  default  has  occurred,  under any  Senior  Loan
Documents,  for the purpose of taking any such action or to appear in, defend or
bring any action or  proceeding  to protect  such  Senior  Loan  Party's  and/or
Lender's  interest.  Lender  shall have no  obligation  to complete  any cure or
attempted  cure  undertaken or commenced by Lender.  If any Senior Lender or any
Loan Party  shall  deliver  to Lender a copy of any notice of default  under any
Senior Loan  Documents  sent by any Senior  Lender to a Senior Loan Party,  such
notice  shall  constitute  full  protection  to Lender for any  action  taken or
omitted to be taken by Lender, in good faith, in reliance thereon. As a material
inducement to Lender's making the Loan,  Borrower  hereby,  and shall cause each
Senior Loan Party to,  absolutely  and  unconditionally  releases and waives all
claims  against  Lender  arising  out of  Lender's  exercise  of its  rights and
remedies provided in this Section. In the event that Lender makes any payment in
respect of any Senior Loan,  Lender shall be  subrogated to all of the rights of
such Senior  Lender under such Senior Loan  Documents,  in addition to all other
rights Lender may have under the Loan Documents.

10.2  Estoppels.  Borrower shall, or shall cause each Senior Loan Party to, from
time to time,  obtain from its Senior Lender such  certificates of estoppel with
respect to  compliance  by such  Senior  Loan Party with the terms of its Senior
Loan  Documents as may be requested by Lender in form and  substance  reasonably
acceptable to Lender.  Borrower hereby  indemnifies  Lender,  each Co-Lender and
Assignee  from  and  against  all  liabilities,  obligations,  losses,  damages,
penalties,  assessments, actions, or causes of action, judgments, suits, claims,
demands,  costs,  expenses  (including,  without  limitation,  Professional Fees
whether or not suit is brought and settlement  costs) and  disbursements  of any
kind or nature  whatsoever  which may be imposed  on,  incurred  by, or asserted
against  Lender or any Co-Lender or Assignee  based in whole or in part upon any
fact, event,  condition,  or circumstances relating to any Senior Loan which was
misrepresented  in,  or which  warrants  disclosure  and was  omitted  from such
estoppel executed by such Loan Party or such Senior Loan Party.

10.3 No Amendment.  Except as listed on Schedule 5.5(d), Borrower shall not, nor
shall it permit any Senior Loan Party to,  without  obtaining  the prior written
consent of Lender, enter into any Amendment of any of the Senior Loan Documents.
Borrower  shall  provide  Lender with a fully  executed and complete copy of any
Amendment to the Senior Loan Documents  within five (5) days after the execution
thereof.  Without limiting the generality of the foregoing,  any increase in the
principal amount,  interest rate,  monthly debt service payments,  fees or other
amounts  payable,  or to be reserved or  escrowed,  under or with respect to any
Senior Loan Documents,  any change in the maturity date of any Senior Loan, cash
management  procedures,  or any  change to the  provisions  of the  Senior  Loan
Documents relating to the release of collateral or security or the release price
therefor,  without  the  express  prior  written  consent  of  Lender,  shall be
prohibited pursuant to this paragraph.

10.4  Acquisition  of the Senior Loan.  Borrower  shall not and shall cause each
Borrower Group Member to not acquire or agree to acquire any Senior Loan, or any
portion  thereof or any interest  therein,  or any direct or indirect  ownership
interest in the holder of any Senior Loan, via purchase,  transfer,  exchange or
otherwise, and any breach or attempted breach of this provision shall constitute
an immediate Event of Default  hereunder.  If, solely by operation of applicable
subrogation  law any such Person shall have failed to comply with the foregoing,
then Borrower (i) shall  immediately  notify Lender of such failure,  (ii) shall
cause  any and all such  Persons  acquiring  any  interest  in the  Senior  Loan
Documents  (A) not to  enforce  such  Senior  Loan  Documents,  and (B) upon the
request of Lender,  to the extent any of such  Persons  has or have the power or
authority to do so, to promptly  (1) cancel such Senior  Note,  (2) reconvey and
release  any  Senior  Lien and any  other  collateral  under  such  Senior  Loan
Documents, and (3) discontinue and terminate any enforcement proceeding(s) under
such Senior Loan Documents. Borrower hereby expressly covenants and agrees that,
in the event that Lender  acquires  the Senior Loan at any time when an Event of
Default shall have  occurred,  then, at Lender's  option,  exercised in Lender's
sole and absolute  discretion,  Lender may elect (x) to declare that such Senior
Loan is in default (which  default shall not be subject to any grace,  notice or
cure periods), and (y) to accelerate such Senior Loan indebtedness.

10.5 Deed-in-Lieu. Except as set forth on Schedule 10.5, Borrower shall not, nor
shall it permit  any  Senior  Loan  Party to,  enter  into any  deed-in-lieu  or
consensual  foreclosure  with or for the benefit of any Senior  Lender or any of
its Affiliates.  Without the express prior written  consent of Lender,  Borrower
shall  not,  nor shall it permit  any  Senior  Loan  Party  to,  enter  into any
consensual  sale or other  transaction in connection  with any Senior Loan which
could diminish, modify, terminate or otherwise adversely affect the interests of
Lender or such Senior Loan Party in the Collateral or any portion thereof or any
interest  therein or of such Senior Loan Party in any  Expanded  Property or any
portion  thereof  or  any  interest  therein.  No  foreclosure  or  deed-in-lieu
transaction shall be permitted with respect to the Expanded Properties indicated
on Schedule 10.5 unless Borrower  demonstrates to Lender's satisfaction that the
Senior  Loan and other  obligations  owed or to become  due and owing  under the
related Senior Loan Documents are not (or are no longer) recourse obligations of
either  Holdings  or Borrower or to any of their  respective  assets,  or to any
other property not set forth in Schedule 10.5,  either  directly or by virtue of
any general  partnership or other relationship or affiliation with any Person or
otherwise (the foregoing conditions to a foreclosure or deed-in-lieu thereof are
herein  referred to as the "Section  10.5  Conditions").  Under no  circumstance
shall Borrower suffer or permit any bankruptcy filing by or against any Borrower
Group  Member in  connection  with any  proposed  relinquishment  of an Expanded
Property pursuant to this Section 10.5.

10.6  Refinancing;   Prepayment.   Except  as  specifically  permitted  by  this
Agreement, Borrower shall be required to obtain the consent of Lender, which may
be  withheld  in  Lender's  sole  discretion,  before any  Senior  Loan Party is
permitted  to make any partial or full  prepayments  of amounts  owing under any
Senior Loan.  Except as otherwise  permitted by this  Agreement,  Borrower shall
not,  nor shall it permit any Senior  Loan Party to,  refinance  any Senior Loan
prior to the payment to Lender of all amounts  owing to Lender  evidenced by the
Note.

10.7  Acquisition of Senior Loan.  Borrower,  on its own behalf and on behalf of
each Loan Party and Expanded Property Owner hereby  acknowledges and agrees that
Lender shall have the right to purchase or otherwise  acquire any Senior Loan at
any time and further  hereby  expressly  covenants and agrees that, in the event
that Lender  acquires any Senior Loan at any time when an Event of Default shall
have occurred, then, at Lender's option, exercised in Lender's sole and absolute
discretion,  Lender may elect (x) to declare that such Senior Loan is in default
(which default shall not be subject to any grace,  notice or cure periods),  and
(y) to  accelerate  such  Senior  Loan  indebtedness.  Additionally,  if  Lender
acquires a Senior Loan after a Payoff  Event has  occurred  with respect to such
Senior Loan,  Borrower shall pay to Lender as additional interest on the Loan an
amount  equal to the product of (a) the  difference  between the Payoff Rate and
the  actual  interest  rate  received  by  Lender in cash on such  Senior  Loan,
multiplied by (b) the outstanding balance from time to time of such Senior Loan.

ARTICLE XI
                             TRANSFERS OF INTERESTS

11.1 Transfer or Encumbrance.  Borrower shall not, nor shall Borrower permit any
Borrower Group Member to, whether in one or a series of transactions,  (i) issue
or agree to issue any direct or indirect interest (including preferred equity or
securities   convertible   into  preferred  or  common  equity)  of  any  nature
whatsoever, whether partnership, stock , membership, equity, beneficial, profit,
loss or otherwise (collectively and in the singular, as the context may require,
the  "Ownership  Interests") in such Person or (ii) allow or permit the Transfer
of any Ownership Interest in any other Loan Party or any Expanded Property Owner
directly or indirectly,  by operation of law or otherwise, or (iii) the Transfer
of a  controlling  interest of any Person  having a direct or indirect  legal or
beneficial  Ownership  Interest  in any Loan Party or Expanded  Property  Owner,
including any legal or beneficial interest in any constituent member, partner or
owner of such Person; or (iv) the change, removal,  resignation or addition of a
partner,  joint venturer or member in any Loan Party or Expanded Property Owner,
in each case, without the prior written consent of Lender,  which consent in any
and all  circumstances  may be conditioned or denied for any reason or no reason
in  the  sole  and   absolute   discretion   of   Lender;   provided,   however,
notwithstanding  anything to the  contrary  in the  foregoing,  common  stock or
preferred  stock in Holdings and  partnership  units of the Borrower (other than
those held by Holdings) may be Transferred  without the prior consent of Lender,
provided that after such Transfer,  no person or group of persons as a result of
such Transfer (as such term is used in Section 13(d) of the Securities  Exchange
Act of 1934, as amended), shall beneficially own (as defined in Rule 13d-3 under
the  Securities  Exchange  Act of 1934,  as  amended)  more than the  Applicable
Ownership  Limit of any class of securities of Holdings.  The  provisions of the
foregoing  sentence of this paragraph shall apply to each and every such further
Transfer,  regardless  of whether or not Lender has  consented to, or waived its
rights hereunder with respect to, any such previous  Transfer,  and irrespective
of whether such further Transfer is voluntary,  by reason of operation of law or
is otherwise made. If Lender in its sole and absolute  discretion  consents to a
Transfer, the transferee of any Ownership Interest shall pay all of Lender's out
of pocket  expenses  relating to any Transfer  (including,  without  limitation,
Professional Fees and customary fees of the securitization  trustee, if any, and
the  Servicer)  and  shall  enter  into such  pledge  and  security  agreements,
financing  statements and other  instruments,  to evidence  Lender's  continuing
security  interest in the  Collateral  as Lender may  require,  and deliver such
opinions of counsel,  Rating Agency Confirmations,  and other further assurances
as Lender may require. Lender may release, regardless of consideration, any part
of the  security  held for the  Obligations  secured  by the  Pledge  Agreements
without, as to the remainder of the security,  in any way impairing or affecting
the lien of the Pledge Agreements or its priority over any subordinate lien.

11.2 Transfers of the Properties. Except as disclosed on Schedule 10.5 (and then
only if Section 10.5 Conditions are satisfied) or permitted under the provisions
of  Section  7.20  (as  to  mortgage  refinancings),   the  Silverthorne/Lebanon
Transaction  or Section 8.5 (as to asset sales),  Borrower  shall not, and shall
not permit any Expanded  Property Owner to, sell,  convey,  transfer,  encumber,
pledge, hypothecate or assign all or any portion of any Expanded Property, other
than as required by the Senior Loan  Documents or the Loan  Documents (and aside
from  immaterial  personal  property  and utility  easements  necessary  for the
efficient operation of the Expanded Properties),  without Lender's prior written
consent,  which such consent may be conditioned or delayed for any reason or for
no reason, in Lender's sole discretion.

11.3 Interests of Holdings.  Holdings  shall at all times be and remain the sole
     general  partner  and  owner  of 75% of the  outstanding  common  units  of
     Borrower.

                                  ARTICLE XII
                                 CASH MANAGEMENT

12.1     Establishment of Deposit Accounts and Ancillary Accounts.

(a) On or  before  the  Closing  Date,  pursuant  to the  terms  of the  Lockbox
Agreement,  Borrower  shall  establish  and maintain six Eligible  Accounts,  as
described in Section  12.2,  each in Lender's  name as secured party to serve as
the  "Deposit  Accounts"  for  the  purposes  described  in this  Article  (said
accounts,  and any account  replacing the same in accordance with this Agreement
and  the  Lockbox  Agreement,  shall  be  referred  to  herein  as the  "Deposit
Accounts"; and Mercantile Safe Deposit & Trust Company, Baltimore,  Maryland, or
such  other  depository  institution  selected  by Lender  in which the  Deposit
Accounts  may  hereafter  be  maintained  shall be  referred  to  herein  as the
"Depository").  Borrower  shall also  establish  the Marketing  Reserve  Deposit
Account and the Trade Payables Reserve Deposit Account with the Depository on or
before the Closing Date. In addition,  Lender is authorized from time to time to
establish  such  additional  Eligible  Accounts as Lender may  determine  and to
deposit therein funds from the Deposit  Accounts (or funds which otherwise would
be held in the Deposit Accounts),  to hold reserves, to facilitate  investments,
or otherwise for the  convenience  of Lender in  administering  such funds (said
accounts,  together with the  Marketing  Reserve  Deposit  Account and the Trade
Payables  Reserve  Deposit  Account,  may  be  referred  to  as  the  "Ancillary
Accounts").

(b) The Deposit  Accounts  and the  Ancillary  Accounts  shall be under the sole
dominion and control of Lender  (which  dominion and control may be exercised by
the  Servicer);  and except as  expressly  provided  in Section  12.7,  the Loan
Parties  shall have no rights to control or direct the  investment or payment of
funds therein. Lender may elect to change any financial institution in which the
Deposit Accounts or the Ancillary Accounts shall be maintained, and Lender shall
give the Borrower written notice of any such change.

(c) On or before the Closing Date, Borrower shall establish an operating account
with the  Depository  ("Operating  Account")  which  Operating  Account shall be
pledged to Lender in accordance  with the terms of this  Agreement.  The Working
Capital Reserve shall be a sub-account of the Operating Account.

12.2     Deposit of Excess Cash Flow and Revenues into Deposit Accounts.

(a) The Loan Parties and the Property  Owners listed on Schedule  12.2A ("Senior
Megadeal  Property  Owners")  shall (i) deliver to the  Depository,  on the date
hereof,  irrevocable  instructions to  automatically  transfer in each month all
funds which would  otherwise be remitted or transferred  by the Depository  from
the Property Collection Account,  the Cash Collateral Account or any Sub-Account
(each,  as  defined  in the  Senior  Megadeal  Mortgages),  or any and all other
lockbox,  cash  collateral or other  accounts  maintained  at the  Depository in
connection with the Senior  Megadeal Loan  (collectively,  the "Senior  Megadeal
Loan Lockbox  Accounts")  pursuant to any lockbox agreement or similar agreement
among the  Borrower  and/or  the Senior  Megadeal  Property  Owners,  the Senior
Megadeal  Lender  and the  Depository  governing  receipt  and  disbursement  of
Revenues  from  the  properties  securing  the  Senior  Megadeal  Loan  (whether
contained  within  the  provisions  of the  Senior  Megadeal  Mortgages  or in a
separate  agreement or  agreements)  (collectively,  the "Senior  Megadeal  Loan
Lockbox  Agreement"),  to any Senior Megadeal  Mortgage  Property Owner,  Senior
Megadeal SPC or other  Borrower  Group Member after  delivery of an "Excess Rent
Notice" under Article V of the Senior Megadeal  Mortgages or otherwise under the
Senior  Megadeal Loan Documents  directly into the PRC Funds Deposit Account and
the OP Funds Deposit Account (as hereinafter  defined and collectively  referred
to as  the  "Mezzanine  Megadeal  Deposit  Accounts")  in  accordance  with  the
allocation  percentages  specified  by Lender and (ii) cause all other  Revenues
received by any Senior  Megadeal  Property  Owner,  Senior Megadeal SPC or other
Borrower Group Member and not payable to the Senior Megadeal Lender or otherwise
required to be  deposited  into any reserve  account  under the Senior  Megadeal
Mortgages  to be  deposited  into the  Mezzanine  Megadeal  Deposit  Accounts in
accordance  with the allocation  percentages  specified by Lender not later than
one (1) Business Day after the same are paid (all funds required to be deposited
into the Mezzanine  Megadeal Deposit Accounts  pursuant to this Section 12.2 are
herein collectively  referred to as "Excess Cash Flow"). From and after the date
hereof and until Lender shall  otherwise  instruct the  Depository  and the Loan
Parties,  all Excess Cash Flow  deposited  into the Mezzanine  Megadeal  Deposit
Accounts shall be allocated to the Mezzanine  Megadeal  Deposit  Accounts in the
following percentages (the "Deposit Percentages"):  (a) 49.9% of all Excess Cash
Flow in each month shall be  transferred  by the Depository to the first Deposit
Account (the "PRC Funds Deposit  Account") on account of Excess Cash Flow due to
Capital I as a 49.9%  limited  partner in the Senior  Megadeal  Property  Owners
which are  limited  partnerships  and (b) 50.1% of the Excess  Cash Flow in such
month shall be transferred to the second Deposit  Account (the "OP Funds Deposit
Account")  representing  Excess  Cash Flow due to the  Borrower  and the  Senior
Megadeal SPCs with respect to their partnership interests in the Senior Megadeal
Property Owners.  Lender may, from time to time, change the foregoing allocation
percentages  between  the PRC Funds  Deposit  Account  and the OP Funds  Deposit
Account  upon notice to the  Depository  and the Loan  Parties and may make such
reallocations  and  adjustments of Excess Cash Flow as Lender may deem necessary
to reflect  the  results of  operations  of the  Properties  and the  respective
interests of Capital I, Borrower and the Senior Megadeal SPCs therein.

(b) In  addition  to the PRC  Funds  Deposit  Account  and the OP Funds  Deposit
Account relating to the Properties owned by the Senior Megadeal Property Owners,
the Loan Parties shall establish the following four Deposit Accounts:

                  The  "Core  Deposit  Account"  shall  be  established  for the
purpose of receiving  the transfer of Revenues as described in more detail below
from the Expanded  Properties owned by the Property Owners described in Schedule
12.2B ("Core Property Owners").

                  The  "Other  Deposit  Account"  shall be  established  for the
purpose of receiving  the transfer of Revenues as described in more detail below
from the Expanded  Properties  owned by the Expanded  Property Owners other than
the Senior Megadeal Property Owners, Puerto Rico LP and the Core Property Owners
("Other Property  Owners"),  as well as all other Revenues of the Borrower Group
Members not  included  in the  Revenues to be  deposited  into the Core  Deposit
Account, the PRC Funds Deposit Account, the OP Funds Deposit Account, the Puerto
Rico Pledged Deposit Account or the Other Puerto Rico Deposit Account.

                  The "Puerto Rico Pledged Deposit Account" shall be established
for the purpose of receiving  the transfer of 49.9% of the Revenues as described
in more detail below from the Puerto Rico Property owned by Puerto Rico LP.

                  The "Other Puerto Rico Deposit  Account"  shall be established
for the purpose of receiving  the transfer of 50.1% of the Revenues as described
in more detail below from the Puerto Rico Property  owned by Puerto Rico LP. The
Other Puerto Rico Deposit  Account and the Pledged  Puerto Rico Deposit  Account
are referred to collectively herein as the "Puerto Rico Deposit Accounts."

                  Subject to the rights of the Senior  Lenders  under the Senior
Loan  Documents,  all  payments of Revenues  shall be promptly  delivered by all
tenants or other payors or  recipients  thereof  directly  into the Core Deposit
Account with respect to  Properties  owned by the Core  Property  Owners and the
Other  Deposit  Account with respect to Expanded  Properties  owned by the Other
Property  Owners or with respect to Revenues  not to be  deposited  into the PRC
Funds Deposit Account,  the OP Funds Deposit Account,  the Core Deposit Account,
the Puerto  Rico  Pledged  Deposit  Account  or the Other  Puerto  Rico  Deposit
Account, in each case by check or wire transfer.

                  Subject to the rights of the  applicable  Senior  Lender under
the Senior Loan Documents,  all payments of Revenues  attributable to the Puerto
Rico  Property  ("Puerto  Rico  Revenues")  shall be promptly  delivered  by all
tenants or other payors or recipients  thereof  directly to the  Depository  for
allocation as  hereinafter  set forth.  From and after the date hereof and until
Lender shall otherwise instruct the Depository and the Loan Parties,  all Puerto
Rico Revenues deposited into the Puerto Rico Deposit Accounts shall be allocated
to the Puerto Rico Deposit Accounts in the following  percentages:  (a) 49.9% of
all Puerto Rico Revenues in each month shall be transferred by the Depository to
the first Puerto Rico Pledged Deposit Account, representing the equity interests
in Puerto Rico LP that have been pledged to Lender of even date herewith and (b)
50.1% of the Puerto  Rico  Revenues in such month  shall be  transferred  to the
Other Puerto Rico Deposit Account  representing  the equity  interests in Puerto
Rico LP that have not been pledged to Lender.

                  Additionally  Borrower  shall cause each Core Property  Owner,
Other Property Owner,  Puerto Rico LP and each applicable  Borrower Group Member
and Senior  Loan Party to (i) make such  payments,  deposits  and  Distributions
directly into the Lockbox as are required under the terms of the Loan Documents,
and (ii)  cause  each  applicable  Senior  Lender  to  deliver  directly  to the
Depository for deposit into the  appropriate  Deposit Account in the Lockbox any
and all Revenues which such Senior Lender would,  in accordance  with the Senior
Loan Documents,  deliver, disburse, release or distribute to any of the Borrower
Group Members or the applicable Senior Loan Party from any Senior Lender lockbox
or any  other  accounts  established  under  the  Senior  Loan  Documents.  Such
direction  to the Senior  Lenders  shall be  irrevocable  and shall  provide for
automatic transfers of funds by the institutions acting as depositories for such
Senior  Lenders.  Lender may  establish  the  Lockbox in the name of Lender,  as
secured party, or as Lender may otherwise designate.  The Lockbox shall be under
the sole dominion and control of Lender. No Loan Party nor any Senior Loan Party
shall have any right of withdrawal in respect of the Lockbox.

                  The Borrower  acknowledges and agrees,  and shall instruct the
Depository,  that in the event  that at any time  after the date  hereof (x) the
Senior Megadeal Loan shall have been indefeasibly paid in full or (y) any Senior
Megadeal  Loan  Lockbox  Agreements  shall no longer be in effect while the Loan
shall  remain  outstanding,  all  Revenues  from the  Properties  for the Senior
Megadeal Loan shall  continue to be paid directly into the Senior  Megadeal Loan
Lockbox  Accounts;  provided,  however,  that,  notwithstanding  anything to the
contrary  contained herein or in the Senior Megadeal Loan Lockbox  Agreement all
funds thereafter received in such accounts shall,  subject in the case of clause
(y) above to the terms and  conditions of the Senior  Megadeal Loan Documents to
the extent then in effect,  be  transferred  by the  Depository to the PRC Funds
Deposit Account and the OP Funds Deposit Account  immediately upon receipt to be
held and disbursed in accordance  with the terms and  conditions of this Article
XII and the Lockbox Agreement.  In addition,  in such event, subject in the case
of clause  (y) above to the terms and  conditions  of the Senior  Megadeal  Loan
Documents  to the extent then in effect,  (i) each of the Senior  Megadeal  Loan
Lockbox Accounts shall be deemed an Account hereunder, (ii) the Depository shall
cause the name of the Senior  Megadeal  Loan  Lockbox  Accounts to be changed in
accordance  with the direction of Lender,  and (iii) the funds and assets in the
Senior Megadeal Loan Lockbox Accounts shall be deemed  Collateral  hereunder and
shall be distributed in accordance  with the terms hereof.  Notwithstanding  the
foregoing provisions of this paragraph, in the event the Senior Megadeal Loan is
refinanced  with the Lender's  approval  pursuant to Section 7.20,  the terms of
such refinancing shall control over the provisions of this paragraph.

                  To the extent any other  Senior  Loan  (other  than the Senior
Megadeal Loan) shall have been  indefeasibly paid in full and such Senior Lender
maintains its lockbox,  cash  collateral or other accounts with the  Depository,
then the  provisions  of the foregoing  paragraph  shall also apply and Borrower
shall  similarly  direct  the  Depository  with  respect  to  such  accounts  in
connection with such Senior Loan as set forth in the prior paragraph.

12.3 Application of Funds in the Deposit Accounts.  Except as otherwise provided
herein,  and subject to Section 12.4 below,  funds in the Deposit Accounts shall
be allocated (or paid, as the case may be) as follows:

(a)      First,  to the payment of accrued and unpaid interest then due upon the
         Loan and any other amounts due under the Loan Documents  (other than as
         described in clause (b) below).

(b)      Second,  to the  payment  of any  accrued  and unpaid  Minimum  Monthly
         Amortization   Amount  then  due  hereunder  plus  the  Additional  Fee
         applicable thereto.

(c)      Third, (provided,  in the aggregate,  there are sufficient funds in the
         six Deposit  Accounts to reserve for the payment of all interest on the
         Note  coming due on the next  Payment  Date and for the  payment of the
         Minimum Monthly  Amortization Amount plus the Additional Fee applicable
         thereto coming due on the next Payment Date  (collectively  referred to
         as the  "Aggregate  Deposit  Requirement")  to fund into the  Marketing
         Reserve Deposit Account an amount  requested in writing by Borrower and
         demonstrated  by  Borrower to Lender's  reasonable  satisfaction  to be
         equal  to the  Marketing  Reserve  Payment  allocable  to  such  month,
         provided that only funds in excess of the sum of the Aggregate  Deposit
         Requirement  plus any ACCF  Set-Aside  Balance shall be permitted to be
         disbursed for such purpose.

(d)      Fourth,  (provided  that Borrower shall have  demonstrated  to Lender's
         reasonable  satisfaction  that all Marketing Reserve Payments have been
         deposited  into the Marketing  Reserve  Deposit  Account) to Borrower's
         Operating  Account,  on a monthly basis, the Approved Operating Expense
         Amount for such month as set forth in the Approved  Operating Budget or
         in the event  there is not an  Approved  Operating  Budget,  then in an
         amount otherwise approved by Lender, provided that only funds in excess
         of the sum of the Aggregate Deposit Requirement plus any ACCF Set-Aside
         Balance shall be permitted to be disbursed for such purpose.

                  The  remaining  balance of the funds in the  Deposit  Accounts
(excluding any balance in the Marketing  Reserve  Deposit  Account and the Trade
Payables  Reserve  Deposit  Account,  which shall not be  considered as "Deposit
Accounts" hereunder, but are rather reserve Accounts) in excess of the Aggregate
Deposit  Requirement  at the end of any given month shall  constitute  the "ACCF
Set-Aside" for such month. The "ACCF Set-Aside  Balance" at any given time shall
be equal to the aggregate sum of all ACCF  Set-Asides for all preceding  months,
less the portion  thereof  disbursed on a quarterly basis to fund the payment of
Available  Consolidated Cash Flow and the funding of the Working Capital Reserve
as provided in the following paragraph.

                  Lender shall provide notice to the Depository as to the amount
of the payment of  Available  Consolidated  Cash Flow which shall be paid Lender
within thirty (30) days  following  each  Quarterly  Payment Date,  which amount
shall be  applied  in  reduction  of the  principal  balance  of the Note and in
payment of the  Additional  Fee  associated  with such  reduction.  Concurrently
therewith,  the Working  Capital  Reserve  sub-account of the Operating  Account
shall be replenished to an amount not to exceed $4,000,000, provided that in the
aggregate there were sufficient funds in the Deposit Accounts as of the last day
of the Fiscal Quarter to meet the Aggregate Deposit  Requirement for the current
month.  All payments  under this  paragraph  shall reduce the amount of the ACCF
Set-Aside  Balance on a dollar for dollar basis.  For purposes of  illustration,
if, for example, the Available Consolidated Cash Flow for the Fiscal Quarter was
$5,000,000 and the balance of the Working Capital  Reserve was  $2,000,000,  and
the ACCF  Set-Aside  Balance at the end of such Fiscal  Quarter was  $7,000,000,
$5,000,000  would be applied to reduce the principal  balance of the Note and in
payment of the Additional Fee associated with such reduction,  $2,000,000  would
be disbursed to replenish  the Working  Capital  Reserve (so long as the Deposit
Accounts will,  after such  disbursement,  continue to hold sufficient  funds to
meet the  Aggregate  Deposit  Requirement  for the  current  month) and the ACCF
Set-Aside Balance would be reduced by $7,000,000.

                  Except as otherwise  provided  herein,  and subject to Section
12.4 below, funds in the Marketing Reserve Deposit Account shall be disbursed to
the  Marketing  Reserve  Operating  Account on a monthly  basis on each  monthly
Payment Date in the amount of the  Approved  Marketing  Expense  Amount for such
month as set forth in the Approved  Operating  Budget,  or in the event there is
not an  Approved  Operating  Budget,  then in an amount  otherwise  approved  by
Lender.

                  Borrower shall not use the Approved  Operating  Expense Amount
or Approved  Marketing Expense Amount for any purpose other than as permitted by
the Approved Operating Budget. Within thirty (30) days of the end of each Fiscal
Quarter,  Borrower  shall provide Lender with a detailed  report,  together with
receipts,  invoices and other  evidence  satisfactory  to Lender  specifying the
application of the Approved  Marketing Expense Amount and the Approved Operating
Expense  Amount.  Lender shall have the right to audit  Borrower's  records with
respect to such expenditures in accordance with the terms of Section 7.9.

                  Each  disbursement  from the six Deposit Accounts as set forth
in Section  12.3 (a) through (d) above shall be done in the  following  order of
priority.  First from the Other Deposit  Account  until zero funds remain,  then
from the Other Puerto Rico Deposit  Account until zero funds  remain,  then from
the OP Funds Deposit  Account  until zero funds remain,  then from the PRC Funds
Deposit  Account  until zero funds  remain,  then from the Puerto  Rico  Pledged
Deposit  Account  until zero funds  remain,  and finally  from the Core  Deposit
Account.  This priority of disbursement shall be followed each time a payment is
made from the Lockbox.

                  On each day that any payment of interest or  principal  is due
under the Loan,  or at any time  thereafter,  Lender  may at its option pay such
amount from the Deposit  Accounts  without any prior written consent or approval
of any Loan Party or other Person, and Borrower and each other Loan Party hereby
irrevocably  authorizes  Lender to so make any such payment at Lender's election
from time to time.

12.4 Defaults; Cash Restriction  Conditions.  If any Event of Default or uncured
Default  shall occur and be  continuing,  then  notwithstanding  anything to the
contrary  in this  Section or  elsewhere,  Lender  shall have no  obligation  to
transfer funds pursuant to Section  12.3(d) nor shall Lender have any obligation
to replenish the Working  Capital  Reserve  sub-account  as set forth in Section
12.3(e)  above.  If any Event of Default  shall  occur and be  continuing,  then
notwithstanding  anything to the contrary in this Section or  elsewhere,  Lender
shall have all rights and remedies  available under applicable law and under the
Loan Documents and,  notwithstanding  anything to the contrary contained herein,
Lender may apply any and all funds in the  Deposit  Accounts  and any  Ancillary
Account against all or any portion of any of the Obligations, in any order.

12.5     Security Interest in Deposit Account Collateral.

(a) The  Borrower  hereby  assigns and pledges to Lender,  and hereby  grants to
Lender,  as additional  security for the Obligations,  a first priority security
interest in and to all right,  title and  interest of the Borrower in and to all
of the following,  in each case,  whether now owned or hereafter acquired by the
Borrower,  wherever  located,  and whether now or hereafter  existing or arising
(collectively, the "Deposit Account Collateral"):

(i) the  Accounts,  all Financial  Assets (as defined in the Lockbox  Agreement)
from time to time credited to the Accounts (including,  without limitations, all
cash equivalents), all funds held therein, and all certificates and instruments,
if any, from time to time  representing or evidencing the Accounts and assets of
the Accounts;

(ii) all  Permitted  Investments  from  time to time  and all  certificates  and
     instruments,  if any,  from time to time  representing  or  evidencing  the
     Permitted Investments;

(iii)  all  notes,   securities   (including   any   Securities),   instruments,
certificates of deposit, deposit amounts and other investments from time to time
hereafter  delivered to or otherwise possessed by the Depository for the benefit
of Lender in substitution  for or in addition to any or all of the then existing
Deposit Account Collateral;

(iv) all interests,  dividends, cash, Securities,  Instruments (each, as defined
in the  Lockbox  Agreement)  and  other  property  from  time to time  received,
receivable or otherwise  distributed in respect of or in exchange for any or all
of the then existing Deposit Account Collateral;

(v)  all earnings and  investments  held in any Account in  accordance  with the
     Lockbox Agreement or hereunder; and

(vi) all proceeds (including without  limitation,  cash proceeds) of any and all
of the foregoing, including without limitation proceeds that constitute property
of the types described in clause (i) above.

This Agreement and the pledge,  assignment  and grant of security  interest made
hereby shall secure payment of all Obligations payable by the Borrower to Lender
under the Note and the other Loan Documents.  The Borrower acknowledges that the
Servicer and the Depository are acting as the agent of, and at the direction of,
Lender in connection with the subject matter of this  Agreement.  This Agreement
shall  be  deemed  a  security  agreement  within  the  meaning  of the  Uniform
Commercial Code.

(b) The Borrower agrees to promptly execute,  acknowledge,  deliver, file or do,
at its sole cost and expense,  all acts,  assignments,  notices,  agreements  or
other  instruments  as Lender may  reasonably  require  in order to  effectuate,
assure,  convey,  secure,  assign,  transfer  and convey  unto Lender any of the
rights  granted by this  Agreement  and to more fully  perfect  and  protect any
assignment,  pledge,  lien and  security  interest  confirmed or purported to be
created  hereby,  or to enable  Lender to  exercise  and  enforce its rights and
remedies hereunder,  in respect of the Deposit Account  Collateral.  If Borrower
fails,  after the giving of required  notices,  if any,  and the  expiration  of
applicable  grace  periods,  if any,  to perform  any  agreement  or  obligation
contained herein,  Lender may perform or cause the performance of such agreement
or  obligation,  and the  reasonable  expenses of Lender  incurred in connection
therewith shall be payable to Lender by the Borrower.

(c) Nothing  contained  herein shall impair or  otherwise  limit the  Borrower's
obligation to timely make the payments (including, without limitation,  interest
and  principal)  required  by the Note and the other  Loan  Documents,  it being
understood  that such payments  shall be so timely made in  accordance  with the
Loan Documents, regardless of the amounts on deposit in the Deposit Accounts.

(d) The Borrower  irrevocably  instructs and  authorizes  the Depository to take
from  time to time the  actions  specified  in any  instructions  received  from
Lender, and to exercise the obligations imposed on the Depository hereunder.

12.6     Certain Additional Matters.

(a) At Lender's option,  the Lender shall have the right to cause the Depository
to entitle the Deposit Accounts and any Ancillary  Accounts with any designation
Lender  may  select  in its sole  discretion.  The name of the  accounts  may be
changed in connection with an assignment of the Loan by Lender,  to reflect such
assignment.

(b) The Deposit  Accounts  and any  Ancillary  Accounts  shall be  assigned  the
federal tax  identification  numbers of the Borrower,  which number the Borrower
represents is  52-1844882.  Prior to  application  in accordance  with the terms
hereof,  all amounts in the Deposit  Accounts and any Ancillary  Accounts  shall
remain assets of the Borrower, subject to the pledge, lien and security interest
granted to Lender  hereunder,  and subject to all of the terms and conditions of
this Agreement and the other Loan Documents.

(c)  In  order  to  further  secure  the  performance  by  the  Borrower  of the
Obligations  and full  performance  by the  Borrower of all of its  obligations,
covenants and agreements under this Agreement and the other Loan Documents,  and
as a  material  inducement  for Lender to make the Loan in  accordance  with the
terms of the Loan  Documents,  the Borrower hereby (i) requests that the Deposit
Accounts  and any  Ancillary  Accounts  be  established  on their  behalf at the
Depository and (ii)  acknowledges  and agrees that (x) the Deposit  Accounts and
any  Ancillary  Accounts  will be  subject  to the sole  dominion,  control  and
discretion of Lender (which may be exercised  through the Servicer),  subject to
the terms, covenants and conditions of this Agreement, (y) Lender shall have the
sole right to make  withdrawals or transfers of funds from the Deposit  Accounts
and any  Ancillary  Accounts  subject  to the terms of this  Agreement,  and (z)
neither the Borrower  nor any other Person  claiming on behalf of or through the
Borrower  shall have any right or  authority,  whether  express or  implied,  or
withdraw any funds,  investments or other  properties from, the Deposit Accounts
or any  Ancillary  Accounts,  or to give any  instructions  with  respect to the
Deposit Accounts or any Ancillary Accounts.

(d) The Borrower agrees to pay the fees of the Depository in accordance with the
customary fees charged by the Depository for the services  described  herein, as
such fees are established  from time to time.  Lender shall cause the Depository
to include its fees in an account analysis statement.

(e) Lender may replace the Depository  with a new bank upon five days' notice to
the Borrower.  Borrower hereby agrees to take all action necessary to facilitate
the  transfer  of the  respective  obligations,  duties  and  rights of any such
Depository to the successor thereof selected by Lender in its sole discretion.

(f)  Lender  shall  terminate  this  Agreement  upon  payment  in  full  of  the
Obligations and shall return to the Borrower all monies then held in the Deposit
Accounts and any Ancillary Accounts after liquidating all Permitted Investments.

(g) Lender may exercise in respect of the Deposit Account  Collateral all rights
and remedies available to Lender hereunder or under the other Loan Documents, or
otherwise  available  at law or in equity.  Upon the  occurrence  of an Event of
Default,  Lender may exercise in respect of the Deposit Account  Collateral,  in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured  party upon default under the
Uniform Commercial Code then in effect in the applicable jurisdiction.

(h) Without  limiting the generality of the foregoing or any other provisions of
this Agreement,  the Borrower  acknowledges and agrees that, upon the occurrence
and during the continuance of an Event of Default, it will have no further right
to  request or  otherwise  require  Lender to  disburse  funds from the  Deposit
Accounts  and any  Ancillary  Accounts  in  accordance  with  the  terms of this
Agreement, it being agreed that Lender may, at its option, do any one or more of
the following or (i) direct the  Depository to continue to hold the funds in the
Deposit  Accounts and any Ancillary  Accounts,  or (ii) direct the Depository to
disburse  all or any portion of the funds held in the Deposit  Accounts  and any
Ancillary Accounts then or thereafter held by the Depository to Lender, in which
event Lender may apply said funds to the  Obligations,  in any order and in such
manner as Lender may determine in its sole discretion.

(i)  Upon the  occurrence  and during the  continuance  of any Event of Default,
     Lender may, at any time or from time to time:

(i) collect,  appropriate,  redeem, realize upon or otherwise enforce its rights
with respect to the Deposit  Account  Collateral,  or any part thereof,  without
notice to the Borrower and without the need to institute any legal action,  make
demand to or upon the Borrower or any other Person,  exhaust any other  remedies
or otherwise proceed to enforce its rights;

(ii) execute (in the name,  place and stead of the Borrower)  any  endorsements,
assignments  or other  instruments  of conveyance  which may be required for the
withdrawal and negotiation of the Deposit Account Collateral; and/or

(iii)  exercise  all  other  rights  and  remedies  available  to  Lender  under
applicable law, hereunder, or under any of the other Loan Documents.

Lender shall provide to the Borrower, in writing, an accounting of all monies so
applied promptly following written request after any such application.

(j)  Notwithstanding anything to the contrary contained herein:

(i)  The Borrower shall remain liable under the Loan Documents to the extent set
     forth therein to perform all of their respective obligations thereunder;

(ii) The exercise by Lender of any of its rights hereunder shall not release the
Borrower  from its  obligations  under any of the Loan  Documents,  nor shall it
constitute an election of remedies by Lender or a waiver by Lender of any of its
rights and remedies under the Loan Documents;

(iii)  Except as  expressly  set forth in this  Agreement or in any of the other
Loan  Documents,  Lender shall not have any obligation or liability by reason of
this Agreement,  nor shall Lender be obligated to perform any of the obligations
or duties of the  Borrower  hereunder  or to take any action,  in each case,  to
collect or enforce any claim for payment assigned hereunder; and

(iv)  Lender  shall not have to resort to using the Deposit  Account  Collateral
before making demand upon or bringing an action against  Borrower under any Loan
Document or against any guarantor  under any guaranty  given in connection  with
the Loan (unless and only to the extent otherwise expressly provided in any such
guaranty).

(k) No failure on the part of Lender to  exercise,  and no delay in  exercising,
any right under this Agreement shall operate as a waiver thereof;  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof or the exercise of any other right under this Agreement or the
other Loan Documents.  The remedies provided in this Agreement, the Note and the
other Loan Documents are  cumulative and not exclusive of any remedies  provided
at law or in equity.

12.7     Investment of Funds in Deposit Accounts and Ancillary Accounts.

(a) Lender is  authorized  to invest all or any part of the funds in or from the
Deposit   Accounts  and  any  Ancillary   Accounts  in  one  or  more  Permitted
Investments.  Lender  may invest all of such funds held by Lender in or from the
Deposit  Accounts and any Ancillary  Accounts in Permitted  Investments,  except
that  Lender  shall have no  obligation  to invest or pay any  interest or other
return on (i) account balances of $25,000 or less, (ii) funds held or to be held
for 45 days or less,  or (iii)  any  funds  after  an Event of  Default.  Unless
otherwise  specified by the Borrower in written notice  delivered both to Lender
and Servicer,  funds may be held in short-term  money market  investments  or in
so-called  money  market or market  rate  accounts.  Any  instructions  from the
Borrower to invest otherwise shall be subject to reasonable approval by Lender.

(b) All funds from the  Deposit  Accounts  or any  Ancillary  Accounts  that are
invested in a Permitted Investment are deemed to be held in the Deposit Accounts
and  Ancillary  Accounts for all purposes of this  Agreement  and the other Loan
Documents.  All earnings on Permitted  Investments  in the Deposit  Accounts and
Ancillary  Accounts  shall  be for the  benefit  of the  Borrower  and  shall be
credited to the Deposit  Accounts and  Ancillary  Accounts.  The Borrower  shall
provide Lender or the applicable bank, at any time upon request of Lender,  with
a Form W-8 or W-9 to  evidence  that the  Borrower is not subject to any back-up
withholding under the IRC.

(c) Notwithstanding  Paragraph (A) above, neither Lender nor Servicer shall have
any liability  for the failure to invest any funds (unless such failure  results
from gross  negligence or willful  misconduct,  and then only the party at fault
shall be liable) or for any loss in  investments  of funds that are  invested in
Permitted  Investments,  and no such loss shall affect Borrower's obligations to
make all payments and  deposits  required to be made by Borrower  under the Loan
Documents.  Neither Lender nor Servicer  shall be responsible  for obtaining any
specific  level or  percentage  of earnings  on any  Permitted  Investment.  The
Servicer's  receipt  of any such  earnings  shall not in any manner be deemed on
account of any monies owed to Lender under the Note or any other Obligations.

12.8 Representations  and  Warranties.  In  addition to any  representations  or
     warranties  contained  in this  Agreement,  each  Borrower  represents  and
     warrants as follows:

(a) Borrower is and at all times shall be the legal and beneficial  owner of the
Deposit  Account  Collateral,  free and  clear of any lien,  security  interest,
option  or other  charge or  encumbrance,  except  for the  liens  and  security
interests  in favor of Lender  created  by this  Agreement  and the  other  Loan
Documents.

(b) Upon execution by the Borrower of this Agreement,  the pledge and assignment
of the  Deposit  Account  Collateral  pursuant to this  Agreement  will create a
valid,  first priority pledge and assignment of the Deposit Account  Collateral,
securing the payment and performance of the Obligations.

12.9  Covenants.  Except as otherwise  permitted in this Agreement or any of the
other Loan  Documents,  Borrower  covenants with Lender that, from and after the
Closing  Date,  it will comply  with,  or shall cause to be complied  with,  the
covenants set forth below:

(a) It will not,  without  the prior  consent  of Lender,  (i) sell,  assign (by
operation of law or  otherwise),  or  otherwise  dispose of, or grant any option
with  respect  to, any of the  Revenues or any  interest in the Deposit  Account
Collateral  or (ii)  create or permit to exist any  assignment,  lien,  security
interest,  option or other charge or encumbrance  upon or with respect to any of
the  Revenues  or any  Deposit  Account  Collateral,  except  for the  liens and
security  interests in favor of Lender under this  Agreement  and the other Loan
Documents.

(b) It will give Lender not less than 30 days prior written notice of any change
in the address of its chief executive office or its principal office.

(c) All records of Borrower with respect to the Deposit Account  Collateral will
be kept at the  principal  offices of Borrower and will not be removed from such
addresses without the prior written consent of Lender.

(d) It shall not,  without  the prior  written  consent of Lender,  which may be
withheld in Lender's sole discretion,  make or consent to any amendment or other
modification or waiver with respect to any Deposit Account Collateral,  or enter
into any  agreement,  or permit to exist any  restriction,  with  respect to any
Deposit   Account   Collateral,   other  than  as  required  by  any  applicable
governmental authority.

(e) It will, at its expense,  defend Lender's right, title and security interest
in and to the Deposit Account Collateral against the claims of any Person.

(f) It shall not take,  or fail to take,  any action  which  would in any manner
impair the  enforceability  of this Agreement or the security  interests created
hereby.

(g) Each Account  established  by the Borrower shall be at all times an Eligible
Account.  If at any time any  Account  ceases to be an  Eligible  Account,  then
Borrower shall do all things required by Lender to transfer the applicable funds
to an Eligible Account satisfying the requirements of this Agreement.

(h) At the request of Lender,  such Borrower shall execute and deliver from time
to time,  such  documents as may be necessary or  appropriate,  in Lender's sole
judgment,  to assure  Lender  that they have a first  priority  pledge  of,  and
perfected security interest in and lien on, all Deposit Account Collateral.

12.10    Attorney-In-Fact.

(a)  Borrower   hereby   irrevocably   appoints   Lender  and  Servicer  as  its
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of such Borrower,  and in the name of Borrower or otherwise,  from time to
time after the occurrence of and during the  continuation of an Event of Default
in the  discretion  of Lender or the  Servicer,  as the case may be, to take any
action and to execute any instrument which Lender or Servicer may deem necessary
or  advisable  to  accomplish  the purpose of this  Agreement  or any other Loan
Document,  including,  without  limitation,  the following:  (i) to ask, demand,
collect, sue for, recover, compromise, receive and give acquittance and receipts
for monies due and to become  due under or in respect of the  Marketing  Reserve
Deposit Account, Accounts and/or any of the Deposit Account Collateral;  (ii) to
receive, endorse, and collect (A) any Revenues, (B) any instruments made payable
to  Borrower  representing  any  dividend,   payment  of  principal,   interest,
redemption price,  purchase price or other distribution or payment in respect of
any Deposit  Account  Collateral,  or (C) any other  instruments,  documents and
chattel  paper  received in  connection  with this  Agreement  or any other Loan
Document;  (iii) to file  any  claims,  or take  any  action  or  institute  any
proceedings  which Lender or Servicer  shall deem necessary or desirable for the
collection  of any Revenues in the event that  Borrower  shall fail to do so, or
otherwise to enforce the rights of Lender with respect to this  Agreement;  (iv)
to  execute  and/or  file,  without  the  signature  of  Borrower,  any  Uniform
Commercial Code financing statements,  continuation statements, or other filing,
and any amendment thereof,  relating to the Deposit Account  Collateral;  (v) to
give  notice to any third  parties  which may be  required  to perfect  Lender's
security interest in the Deposit Account Collateral; (vi) to register, purchase,
sell,  assign,  transfer,  pledge or take any other  action with  respect to any
Deposit  Account  Collateral in  accordance  with this  Agreement;  and (vii) to
register,  purchase,  sell, assign,  transfer,  pledge, or take any other action
with  respect  to,  any  Deposit  Account  Collateral  in  accordance  with this
Agreement or, to the extent applicable, any other Loan Document.

(b) Lender may, from time to time, at its sole option, perform any act which the
Borrower  agrees  hereunder  to  perform  and which the  Borrower  shall fail to
perform,  and Lender may from time to time take any other  action  which  Lender
deems reasonably  necessary for the  maintenance,  preservation or protection of
any of the rights granted to Lender hereunder.

(c) The powers conferred on Lender  hereunder,  other than accounting for monies
actually  received  by  Lender  or  Servicer  hereunder,   and  other  than  the
obligations expressly set forth in this Agreement,  shall not impose upon Lender
or Servicer any duty as to the Accounts or the other Deposit Account Collateral,
or any  responsibility for (i) ascertaining or taking action with respect to any
matters  relative  to the  Accounts  or the other  Deposit  Account  Collateral,
whether or not Lender or Servicer  have or are deemed to have  knowledge of such
matters or (ii) taking any  necessary  steps to preserve  rights  against  prior
parties or any other  rights  pertaining  to the  Accounts or the other  Deposit
Account Collateral.

12.11    Indemnity and Expenses.

(a) The Borrower shall  indemnify,  defend and hold harmless Lender and Servicer
and their successors and assigns and  participants  from and against any and all
claim,  loss or  liability  (including  reasonable  attorney's  fees and  costs)
arising  out of or  resulting  from any of the  Accounts,  the  Deposit  Account
Collateral and/or this Agreement, including, without limitation,  enforcement of
any right  under and in  accordance  with this  Agreement,  except to the extent
arising from the Lender's or Servicer's gross negligence or willful  misconduct.
In  addition,  the  Borrower  shall  indemnify  Lender  in  accordance  with the
provisions of this Agreement.

(b) The  Borrower  agrees to pay upon demand to Lender or the  Servicer,  as the
case  may  be,  the  amount  of any and all  out-of-pocket  expenses,  including
reasonable  attorneys' fees and expenses,  which Lender and/or Servicer actually
incurs in connection with (i) the administration of this Agreement or any of the
other Loan Documents,  (ii) the custody,  preservation,  use or operation of, or
the sale of,  collection  from, or other  realization  upon, any Deposit Account
Collateral in accordance  herewith,  (iii) the exercise or enforcement of any of
the rights of Lender  hereunder or under the other Loan  Documents,  or (iv) the
failure by Borrower to perform or observe any of the provisions hereof or of the
other Loan Documents.

(c)  The  indemnities  contained in this Section shall survive the expiration or
     earlier termination of this Agreement.

12.12    Limitation on Liability.

(a) Lender and Servicer shall not be liable for any acts,  omissions,  errors in
judgment  or  mistakes  of fact or law,  including,  without  limitation,  acts,
omissions,  errors or mistakes with respect to the Deposit  Account  Collateral,
except for those arising as a result of Lender's or Servicer's  gross negligence
or willful misconduct.  Without limiting the generality of the foregoing, except
as otherwise  expressly  provided for herein or as required by  applicable  law,
Lender shall have no duty (i) as to any Deposit Account  Collateral,  (ii) as to
ascertaining  or taking  action with respect to calls,  conversions,  exchanges,
maturities, tenders or other matters relative to any Deposit Account Collateral,
whether or not Lender has or is deemed to have  knowledge  of such  matters,  or
(iii) as to the taking of any  necessary  steps to preserve  rights  against any
parties or any other right pertaining to any Deposit Account Collateral.  Lender
is hereby authorized by the Borrower to act on any written instruction  believed
by Lender in good faith to have been given or sent by Borrower.

(b) The Borrower  agrees that,  except as otherwise  expressly set forth in this
Agreement or any other Loan  Document,  under no  circumstances  shall Lender be
responsible to Borrower for any loss or damage  resulting from Lender's  failure
to enforce any rights of Borrower with respect to the Accounts and/or any of the
Deposit Account Collateral, or to collect all or any part of the monies or other
proceeds due thereunder or resulting from any other action herein authorized and
taken or not taken by Lender, nor shall Lender have any duty to act with respect
to any of the foregoing. The Borrower hereby agrees to hold Lender harmless from
any penalty, loss or damage, including attorneys' fees, which Lender may sustain
as a result of the conversion of the Accounts in accordance with this Agreement,
except for those  arising as a result of Lender's  gross  negligence  or willful
misconduct.  The  Borrower  agrees  that  Lender  may deduct  from the  proceeds
available  to Lender  after sale or  conversion  of any of the  Deposit  Account
Collateral any reasonable  expense,  fees or charges resulting from such sale or
conversion.  The  provisions  of this Section  shall  survive the  expiration or
earlier termination of this Agreement.

ARTICLE XIII
                               DEFAULTS; REMEDIES

13.1 Events of Default.  The term  "Event of Default" as used in this  Agreement
     shall mean the occurrence of any one or more of the following events:

(a)  If Borrower  shall fail to make any principal or interest or Additional Fee
     payment when due under the Note;

(b) If any of the Real Property Taxes or Other Property Charges is not paid when
within  fifteen  (15) days after the date the same is due and payable  except to
the extent the  provisions  of Section  7.4(b) with respect to  contesting  such
payments have been complied with in all respects.

(c) If any of the following occur: (1) any Loan Party or Expanded Property Owner
grants,  provides or  otherwise  creates or causes to exist any Lien (other than
the Lien of the Loan Documents or the Senior Liens or Permitted Liens) on any of
its assets without the prior written  consent of the Lender;  (2) any Lien other
than as described in the foregoing  clause  (1)(other  than the Lien of the Loan
Documents or the Senior Liens or  Permitted  Liens) is filed or created  against
any Expanded  Property or the Improvements and such other Lien described in this
clause (2) continues  for thirty (30) days without  discharge,  satisfaction  or
provision for payment being made by Borrower in a manner satisfactory to Lender;
or (3) there  shall occur any  sequestration  or  attachment  of, or any levy or
execution  upon  any of the  Expanded  Properties  or  Improvements,  any  other
Collateral  provided  by any Loan  Party  under any of the Loan  Documents,  any
Account  Collateral,  or any substantial portion of the other assets of any Loan
Party,  which  sequestration,  attachment,  levy or execution  is not  released,
expunged  or  dismissed  prior to the earlier of thirty (30) days or the sale of
the assets affected thereby;

(d)  The  failure of the  Pledge  Agreements  at any time to be valid  perfected
     first priority Liens upon all of the Collateral described therein;

(e) The discovery of any significant  Hazardous Materials in, on or about any of
the Expanded Properties or Improvements subsequent to the Closing Date. Any such
Hazardous  Materials shall be  "significant"  for this purpose if said Hazardous
Materials, in Lender's sole discretion,  have a materially adverse impact on the
value of the relevant Expanded Property;

(f) If  any  representation  or  warranty  of  any  Loan  Party  or  any  Person
guaranteeing  payment of the Debt or any portion  thereof or  performance by any
Loan Party of any of the terms of the Loan Documents or any owner,  principal or
beneficial  owner of any of the foregoing,  made herein or in any Loan Document,
or in any  certificate,  report,  financial  statement  or other  instrument  or
document furnished to Lender shall have been false or misleading in any material
respect when made;

(g) If (i) any Loan Party,  Expanded  Property Owner or any Person  guaranteeing
the payment of the  Obligations  shall  commence any case,  proceeding  or other
action (A) under any  Bankruptcy Law seeking to have an order for relief entered
with  respect to it, or seeking to  adjudicate  it a bankrupt or  insolvent,  or
seeking  reorganization,   arrangement,   adjustment,  winding-up,  liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking  appointment  of a receiver,  trustee,  custodian,  conservator or other
similar official for it or for all or any substantial part of its assets, or any
Loan Party,  Expanded  Property Owner or any Person  guaranteeing the payment of
the  Obligations  shall  make  a  general  assignment  for  the  benefit  of its
creditors;  or (ii) there shall be  commenced  against any Loan Party,  Expanded
Property Owner or any Person  guaranteeing  the payment of the  Obligations  any
case,  proceeding  or other  action of a nature  referred to in clause (i) above
which (y)  results in the entry of an order for relief or any such  adjudication
or  appointment,  or (z) remains  undismissed,  undischarged  or unbonded  for a
period of sixty (60) days;  or (iii) there shall be  commenced  against any Loan
Party,  Expanded  Property Owner or any Person  guaranteeing  the payment of the
Obligations any case,  proceeding or other action seeking  issuance of a warrant
of  attachment,  execution,  distraint  or similar  process  against  all or any
substantial  part of its assets which  results in the entry of any order for any
such relief which shall not have been vacated,  discharged,  or stayed or bonded
pending appeal within sixty (60) days from the entry  thereof;  or (iv) any Loan
Party,  Expanded  Property Owner or any Person  guaranteeing  the payment of the
Obligations  shall take any action in furtherance  of, or indicating its consent
to,  approval of, or  acquiescence  in, any of the acts set forth in clause (i),
(ii),  or (iii) above;  or (v) any Loan Party,  Expanded  Property  Owner or any
Person guaranteeing the payment of the Obligations shall generally not, or shall
be unable to, or shall admit in writing its  inability to, pay its debts as they
become due;

(h) If any Loan Party or Expanded  Property Owner fails to cure promptly (and in
any event  within  thirty (30) days of  receiving  notice from any  Governmental
Authority  of, or otherwise  becoming  aware of) (1) any  material  violation of
Applicable  Law,  or (2) any  failure to obtain or maintain  all  necessary  and
material Permits,  certificates,  licenses and other approvals  required for the
operation of the Expanded Properties;

(i) Except  with  respect to any  Expanded  Property  and Senior  Loan  relating
thereto  which is disclosed on Schedule  10.5 (but then only if the Section 10.5
Conditions  are  satisfied),  if any Senior Loan Obligor shall default under the
Senior Loan Documents beyond any applicable grace or cure period (without regard
to whether Lender  subsequently  effectuates a cure of such default),  or if any
Senior Loan Obligor shall agree to any Amendment of the Senior Loan Documents or
shall  enter  into or agree to be bound by any  Senior  Loan  Documents  without
obtaining the prior consent of Lender to the extent required herein, or if there
shall be any other  breach of the  provisions  set forth in Article XI hereof by
Borrower,  any other Loan Party,  any  Expanded  Property  Owner or any of their
respective Affiliates or Subsidiaries (including the Senior Loan Obligors);

(j) If, at any time at which any portion of the Debt  remains  outstanding,  any
Loan  Party  or  Expanded   Property  Owner  shall  pay  any   Distributions  in
contravention of the terms of this Agreement;

(k) if any Loan Party or Expanded Property Owner shall agree to any Amendment of
any Major  Lease  without  obtaining  the  prior  consent  of  Lender  except as
otherwise permitted herein;

(l) If any Loan Party or Expanded  Property Owner  voluntarily or  involuntarily
transfers,  assigns,  conveys, sells, pledges,  hypothecates or encumbers all or
any  portion of any  Expanded  Property  in  contravention  of the terms of this
Agreement,  or if any Loan Party or Expanded Property Owner purports to make any
Transfer  of  any  Ownership  Interests  in  violation  of  the  provisions  and
procedures set forth in Article X of this Agreement;

(m) If Lender provides a Lender  Termination  Request to the Relevant  Signatory
pursuant  to Article IX hereof and either (i) the  Relevant  Signatory  fails to
send a Manager  Termination  Notice within five (5) days after Lender's  request
(if  delivery  of a Manager  Termination  Notice is required  to  terminate  the
Management Agreement), or (ii) the Management Agreement is not terminated on the
date specified in the Lender  Termination  Notice (if Manager is an Affiliate of
the Relevant  Signatory),  or within  thirty (30) days of such request by Lender
(if Manager is not an Affiliate of the Relevant Signatory);

(n) If  there  shall be an  attempt  on the  part of any  Loan  Party,  Expanded
Property  Owner,  or Senior  Loan  Obligor  to modify  the terms of the  Payment
Direction Letter or any Disbursement  Direction Letter without the express prior
written consent of Lender;

(o) If any Loan Party,  Expanded  Property Owner, or any Subsidiary or Affiliate
of any of the foregoing shall interfere with any right to cure granted to Lender
in any of the Loan Documents (including,  without limitation, the rights granted
to Lender in Article X of this Agreement);

(p) If Borrower  shall fail to reimburse  Lender within two (2) Business Days of
written  demand from Lender for any payments made by Lender under the provisions
of Article X (without  regard to any cure or grace periods granted to any Senior
Loan Obligor in the Senior Loan Documents);

(q)  If any default  shall exist,  beyond  applicable  notice and cure  periods,
     pursuant to the terms of the Lockbox Agreement;

(r) If any Loan Party,  Expanded  Property  Owner, or Subsidiary or Affiliate of
any of the foregoing shall incur any Indebtedness, other than Permitted Debt and
any other  unsecured  indebtedness  approved  by Lender in  writing  in its sole
discretion;

(s) Except  with  respect to any  Expanded  Property  and Senior  Loan  relating
thereto  which is disclosed on Schedule  10.5 (but then only if the Section 10.5
Conditions are  satisfied),  if one or more final  judgments or decrees shall be
entered against any Borrower Group Member of any of the foregoing, and shall not
be satisfied in full by application of proceeds from the Policies, and shall not
have been vacated,  discharged, paid, stayed or bonded pending appeal within the
time permitted to appeal therefrom;

(t) If any Loan Party, Expanded Property Owner or Subsidiary or Affiliate of any
of the foregoing applies any amounts disbursed under this Agreement for purposes
other than those approved by Lender in writing,  or if any Loan Party,  Expanded
Property  Owner or Subsidiary  or Affiliate of any of the  foregoing  other than
Borrower  receives any of the proceeds of the Loan, or if any of the Senior Loan
Obligors  applies any amounts  disbursed  under the Senior  Loan  Documents  for
purposes other than those approved by any Senior Lender,  or if any Person other
than a Senior Loan Obligor receives any of the proceeds of a Senior Loan;

(u) If any Loan Party,  Expanded  Property  Owner, or Subsidiary or Affiliate of
any of the foregoing  retains,  misappropriates,  misapplies or converts (i) any
Loss Proceeds (ii) any Revenues,  or (iii) any deposits,  sale proceeds or other
funds or income  arising  with  respect  to the  Expanded  Property  or any part
thereof;

(v)  If an event occurs which, under the terms of any Loan Document, constitutes
     an "Event of Default" under such Loan Document;

(w)      If Holdings shall no longer be the sole general partner of Borrower;

(x) Except as set forth on Schedule 13.1(x),  any monetary default occurs (after
giving effect to any applicable cure period) under any other Indebtedness of any
Borrower Group Member, singly or in the aggregate, in excess of $100,000);

(y) If Borrower  or any Loan party  becomes  (1) an  employee  benefit  plan (as
defined in Section 3(3) of ERISA) which is subject to ERISA,  (2) a plan (within
the meaning of Section 4975 of the Code) which is subject to Section 4975 of the
Code, (3) a governmental  plan (within the meaning of Section 3(32) of ERISA) or
(4) an entity any of whose  assets  constitute  "plan  assets"  of any  employee
benefit  plan,  plan or  governmental  plan for  purposes  of Title I of  ERISA,
Section 4975 of the Code or any state statutes applicable to the Borrower or any
Loan Party regulating investment of governmental plans;

(z) If any  Loan  Party,  any  Expanded  Property  Owner  or any  Subsidiary  or
Affiliate thereof shall breach,  violate or fail to comply with any provision of
any of Section 2.7(b)(i)-(iv), Section 2.15, Section 2.16, Section 2.17, Article
V, Article VI, Section 7.20, Section 7.28 or Article VIII hereof, or there shall
occur any  failure  to pay the  Schedule V Fees if, as and when the same are due
each month;

(aa) If any Loan Party shall  default  under,  or breach any  representation  or
     warranty of any Loan Party in, the Purchase Agreement;

(bb) If any Loan Party,  any Expanded  Property Owner or Subsidiary or Affiliate
thereof shall be in default under or breach any of the  provisions of any of the
Loan Documents  (other than those  specifically  set forth above in this Section
13.1) and shall fail to fully cure such default or breach within the  applicable
grace, notice or cure period provided for in the Loan Documents, or, if the Loan
Documents do not provide for a grace,  notice or cure  period,  then within five
(5) days after notice from Lender in the case of any default or breach which can
be cured by the payment of a sum of money,  or for thirty (30) days after notice
from Lender in the case of any other  default or breach,  provided  that if such
default or breach cannot  reasonably be cured within such thirty (30) day period
and such Person shall have  commenced to cure such default or breach 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 so long as it
shall  require such Person in the exercise of due diligence to cure such default
or breach, it being agreed,  however,  that no such extension shall result in or
provide for a total cure period in excess of ninety (90) days in the  aggregate,
or if such default or breach also  constitutes  a default  under the Senior Loan
Documents,  such lesser period of time as is afforded to any Senior Loan Obligor
to cure such default under the Senior Loan Documents.

13.2     Remedies.

(a) The occurrence of an Event of Default under this Agreement shall  constitute
an Event of Default under all of the Loan Documents.  Upon the occurrence of any
Event of  Default,  each Loan Party  agrees  that  Lender may (but  without  any
obligation  to do so) take such action,  without  notice or demand,  as it deems
advisable  to protect and enforce  its rights  against  such Loan Party or other
Borrower Group Member and in and to the Collateral,  including,  but not limited
to,  the  following  actions,  each of  which  may be  pursued  concurrently  or
otherwise,  at such time and in such order as Lender may determine,  in its sole
discretion,  without  impairing  or  otherwise  affecting  the other  rights and
remedies of Lender:

(i)      declare the entire unpaid Debt to be immediately due and payable;

(ii) institute  proceedings,  judicial or otherwise,  for the enforcement of its
rights  under the Loan  Documents  or under  any  applicable  provision  of law,
including,  without limitation,  to dispose of all or any part of the Collateral
in satisfaction of the Debt;

(iii)exercise  any  of  the  rights  or  remedies   specified  in  the  Security
     Documents;

(iv) institute  an  action,  suit or  proceeding  in  equity  for  the  specific
     performance of any covenant,  condition or agreement  contained in the Loan
     Documents;
(v)  recover judgment on the Note either before, during or after any proceedings
     for the enforcement of the Loan Documents;

(vi) exercise  any and all rights and remedies  granted to a secured  party upon
     default under the Uniform Commercial Code;

(vii)  exercise all or any one or more of the rights,  powers and other remedies
available  to Lender  against any of the Loan  Parties or other  Borrower  Group
Members under the Loan Documents, at law or in equity, at any time and from time
to time,  whether or not all or any portion of the Obligations shall be declared
due and payable,  and whether or not Lender shall have commenced any foreclosure
proceedings or other action for the enforcement of its rights and remedies under
any of the Security Documents with respect to the Collateral;

(viii) subject to the requirements of the Senior Loan Documents,  apply any sums
then deposited in the Accounts and any other sums held in escrow or otherwise by
Lender in  accordance  with the terms the Loan  Documents  to the payment of the
Debt in such  order  of  payment  as  Lender  shall  in its  sole  and  absolute
discretion elect;

(ix)  perform,  or cause the  performance  of  (provided  Lender  shall  have no
obligation  to do so) such  covenant or  obligation,  and the expenses of Lender
incurred in connection therewith (including  Professional Fees) shall be payable
by Borrower to Lender upon demand; and

(x)  pursue such other  remedies as Lender may have under  Applicable  Law or at
     equity.

(b) Notwithstanding the provisions of this Section to the contrary, if any Event
of Default as described in Section 13.l(g) above shall occur,  the entire unpaid
Debt shall be automatically due and payable,  without any further notice, demand
or other action by Lender.

(c) The proceeds of any disposition of the Collateral,  or any part thereof,  or
any other  sums  collected  by Lender  pursuant  to the Loan  Documents,  may be
applied by Lender to the payment of the Debt in such priority and proportions as
Lender in its sole discretion shall deem proper.

(d) Upon the  occurrence  of any Event of Default,  Lender may,  but without any
obligation to do so and without notice to or demand on any Borrower Group Member
and without  releasing any Borrower Group Member from any obligation  hereunder,
make or do the  same in such  manner  and to such  extent  as  Lender  may  deem
necessary  to protect  the  security  hereof  and/or take any action to cure any
Event of  Default.  Each Loan  Party,  for  itself  and on behalf of each of the
Borrower  Group  Members,  agrees  that Lender is  authorized  to enter upon any
Expanded Property for such purposes, or appear in, defend, or bring an action or
proceeding to protect its  beneficial  interest in such Expanded  Property or to
collect the Debt, and the cost and expense thereof (including  Professional Fees
to the extent permitted by law), with interest as provided in this Section 13.2,
shall  constitute  a portion of the Debt and shall be due and  payable to Lender
upon demand.  All such costs and expenses  incurred by Lender in remedying  such
Event of Default or such failed payment or act or in appearing in, defending, or
bringing any such action or proceeding  shall bear interest at the Default Rate,
for the period  after  notice from Lender that such cost or expense was incurred
to the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by the Loan  Documents and shall
be immediately due and payable upon demand by Lender therefor. Lender's exercise
of any right or remedy  which has the  effect of  remedying  an Event of Default
shall not  constitute  a cure of such Event of Default  unless all sums then due
and payable to Lender under the Loan Documents are repaid and Borrower has cured
all other Events of Default.  Lender's remedies under this Section 13.2 shall be
in addition to Lender's  rights  relating to the Senior Loan Documents set forth
in Article XI of this Agreement.

(e) The failure of Lender to insist upon strict  performance  of any term hereof
shall not be deemed to be a waiver of any term of this Agreement.  No Loan Party
shall be relieved of its  Obligations  hereunder  or under any of the other Loan
Documents  by reason of (i) the  failure of Lender to comply with any request of
any Loan Party to take any action to enforce any of the provisions  hereof or of
the Note or the Loan Documents,  (ii) the release,  regardless of consideration,
of the whole or any part of the Collateral, or of any person liable for the Debt
or any  portion  thereof,  or (iii)  any  agreement  or  stipulation  by  Lender
extending the time of payment or otherwise  modifying or supplementing the terms
of the Loan  Documents.  Lender may  resort  for the  payment of the Debt to any
security held by Lender in such order and manner as Lender,  in its  discretion,
may elect.  Lender may take action to recover the Debt, or any portion  thereof,
or to enforce  any  covenant  hereof  without  prejudice  to the right of Lender
thereafter  to recover  against the  Collateral  under the Loan  Documents.  The
rights of Lender under this Agreement shall be separate, distinct and cumulative
and none shall be given effect to the exclusion of the others.  No act of Lender
shall be construed as an election to proceed under any one  provision  herein to
the exclusion of any other provision. Lender shall not be limited exclusively to
the rights and remedies  herein  stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.

ARTICLE XIV
                            ENVIRONMENTAL PROVISIONS

14.1 Environmental Provisions. Each Loan Party shall comply, and shall cause all
Expanded  Property Owners,  tenants or other occupants of all or any part of any
of the Expanded  Properties and the Improvements to comply, in all respects with
all Environmental  Requirements,  and will not generate, store, handle, process,
dispose of or  otherwise  use,  and no Loan Party  will,  nor will it permit any
Expanded  Property  Owner,  tenant  or  other  occupant  of any of the  Expanded
Property and Improvements to generate,  store,  handle,  process,  dispose of or
otherwise  use,  Hazardous  Materials  at, in, on,  under or about any  Expanded
Property or Improvements in a manner that could lead or potentially  lead to the
imposition on any Loan Party,  Expanded  Property Owner,  Lender or the Expanded
Properties  of  any  liability  or  lien  of any  nature  whatsoever  under  any
Environmental Requirement. Borrower shall notify Lender promptly in the event of
any spill or other release of any Hazardous  Material at, in, on, under or about
any  Expanded  Property  or  Improvements  which is required to be reported to a
Governmental  Authority  under  any  Environmental  Requirement,  will  promptly
forward to Lender  copies of any notices  received by any Loan Party or Expanded
Property Owner relating to alleged  violations of any Environmental  Requirement
and will promptly pay when due any fine or assessment  against Lender,  any Loan
Party or  Expanded  Property  Owner or such  Expanded  Property  relating to any
Environmental Requirement. If at any time it is determined that the operation or
use of any Expanded Property violates any applicable  Environmental  Requirement
or that there are Hazardous  Materials  located at, in, on or under any Expanded
Property or Improvements  which,  under any Environmental  Requirement,  require
special  handling in collection,  storage,  treatment or disposal,  or any other
form of cleanup or corrective  action,  Borrower  shall, or shall cause any Loan
Party or Expanded  Property Owner to take, within thirty (30) days after receipt
of notice thereof from any  Governmental  Authority or from Lender,  at its sole
cost and  expense,  such  actions as may be  necessary  to fully comply with all
Environmental  Requirements,  provided,  however, that if such compliance cannot
reasonably  be  completed  within such thirty (30) day period,  then such Person
shall  commence  such  necessary  action  within such thirty (30) day period and
shall  thereafter  diligently  and  expeditiously  proceed to fully  comply in a
timely  fashion  with all  Environmental  Requirements.  If such Person fails to
timely take, or to diligently and expeditiously  proceed to complete in a timely
fashion, any such action, Lender, may, in its sole and absolute discretion, make
advances or payments  towards the  performance or  satisfaction of the same, but
shall in no event be under any obligation to do so. All sums so advanced or paid
by Lender  (including,  without  limitation,  counsel  and  consultant  fees and
expenses,  investigation  and laboratory  fees and expenses,  and fines or other
penalty  payments) and all sums advanced or paid in connection with any judicial
or   administrative   investigation  or  proceeding   relating   thereto,   will
immediately,  upon demand,  become due and payable from  Borrower and shall bear
interest at the Default Rate from the date any such sums are so advanced or paid
by Lender  until  the date any such  sums are  repaid  by  Borrower  to  Lender.
Borrower will execute and deliver,  promptly upon request,  such  instruments as
Lender may reasonably deem useful or necessary to permit Lender to take any such
action,  and  Borrower  shall  execute and  deliver  such  additional  notes and
security  instruments,  as Lender may  reasonably  require to secure all sums so
advanced or paid by Lender.  If a lien is filed against any Expanded Property by
any Governmental  Authority related to Environmental  Requirements and resulting
from the need to expend or the actual expending of monies arising from an action
or omission,  whether  intentional  or  unintentional,  of Borrower or for which
Borrower is  responsible,  then Borrower will,  within thirty (30) days from the
date that Borrower is first given notice that such lien has been placed  against
any Expanded Property (or within such shorter period of time as may be specified
by  Lender  if such  Governmental  Authority  has  commenced  steps to cause the
Expanded Property to be sold pursuant to such lien) either (a) pay the claim and
remove the lien,  or (b) furnish a cash deposit,  bond,  or such other  security
with  respect  thereto  as is  satisfactory  in all  respects  to Lender  and is
sufficient  to  effect  a  complete  discharge  of such  lien  on such  Expanded
Property.  Lender may, at its option, at intervals of not less than one year, or
more frequently if Lender reasonably suspects that a Hazardous Material or other
environmental  condition  may violate or  threaten to violate any  Environmental
Requirement,  and also  upon the  occurrence  of an Event of  Default,  cause an
environmental  audit  of the  relevant  Expanded  Property  or  Improvements  or
portions  thereof to be  conducted  to confirm  Borrower's  compliance  with the
provisions of this  paragraph,  and Borrower  shall  cooperate in all reasonable
ways with Lender in connection  with any such audit,  and Borrower shall provide
to Lender and its representatives access to such Expanded Property to permit and
facilitate the conduct of such audit.  If such audit  discloses that a violation
of an Environmental  Requirement  exists, or if such audit is conducted upon the
occurrence  of an Event of  Default,  then  Borrower  shall  pay all  costs  and
expenses  incurred  in  connection  with such  audit,  otherwise,  the costs and
expenses of such audit shall, notwithstanding anything to the contrary set forth
in this paragraph, be paid by Lender. If Lender acquires the Collateral pursuant
to an  exercise  of  Lender's  remedies  under the Pledge  Agreement,  or if the
Collateral is sold pursuant to the  provisions  of the Pledge  Agreement,  or if
Borrower  tenders an assignment in lieu of foreclosure  or sale,  Borrower shall
deliver the foreclosed,  sold or assigned Ownership  Interests free and clear of
any  liabilities  to the  purchaser  at  foreclosure  or sale or to Lender,  its
nominee,  or  wholly-owned  subsidiary,  as the  case may be,  arising  from any
failure to comply with all Environmental Requirements.
ARTICLE XV
                                  MISCELLANEOUS

15.1     Further Assurances.

(a)  Borrower  shall  and shall  cause  each Loan  Party to  forthwith  upon the
execution  and  delivery  of this  Agreement  and the other Loan  Documents  and
thereafter,  from time to time, at Lender's  request,  cause any of the Security
Documents  (including without limitation any additional  financing statements or
continuation  statements) to be filed, registered or recorded in such manner and
in such  places as may be  required  by any  Applicable  Law in order to publish
notice of and fully to protect,  perfect or continue the  perfection of any lien
or  security  interest  in favor of Lender,  and the  interest of Lender in, the
Collateral. Borrower will pay all taxes, filing, registration or recording fees,
and all expenses incident to the preparation,  execution,  acknowledgment and/or
recording  of the Loan  Documents,  any note or  other  agreements  supplemental
thereto,  any  security  instrument  with  respect  to the  Collateral  and  any
instrument of further assurance,  and any Amendment of the foregoing  documents,
and all federal, state, county and municipal taxes, duties, imposts, assessments
and charges  arising out of or in connection  with the execution and delivery of
this  Agreement,  any security  instrument with respect to the Collateral or any
instrument  of further  assurance,  and  Amendment of the  foregoing  documents,
except where prohibited by law so to do.

(b) Borrower  will, and will cause each Borrower Group Member to, at the cost of
Borrower,  and  without  expense to Lender,  (i) do,  execute,  acknowledge  and
deliver or cause to be done, executed,  acknowledged and delivered all and every
such  further  acts,  deeds,  conveyances,   mortgages,  assignments,  financing
statements,  continuation  statements,  notices of  assignments,  transfers  and
assurances as Lender shall, from time to time, require, for the better assuring,
carrying  out,  conveying,  assigning,  transferring,  pledging,  hypothecating,
perfecting, preserving and confirming unto Lender the security interests, liens,
property and rights granted,  bargained,  sold,  conveyed,  confirmed,  pledged,
assigned,  warranted and transferred or intended now or hereafter so to be under
the Loan  Documents,  or which any Borrower Group Member may be or may hereafter
become bound to convey, assign,  transfer,  pledge, or hypothecate to Lender, or
for carrying out the intention or  facilitating  the performance of the terms of
this  Agreement  and the other Loan  Documents  and (ii)  furnish or cause to be
furnished to Lender all instruments, documents, 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 by (y) each Borrower Group Member pursuant to the terms
of the Loan Documents or reasonably requested by Lender in connection therewith,
or (z) any  Senior  Loan  Obligor  pursuant  to the  terms  of the  Senior  Loan
Documents. Borrower, on demand, will execute and deliver or cause to be executed
and delivered and hereby authorizes Lender to execute and deliver in the name of
Borrower or any Loan Party or without the  signature of Borrower or any Borrower
Group  Member to the extent  Lender may  lawfully  do so, one or more  financing
statements,  or other  instruments,  to evidence more  effectively  the security
interest of Lender in the Collateral.  Borrower and each Guarantor hereby grants
to Lender an  irrevocable  power of attorney  coupled  with an interest  for the
purpose of exercising and perfecting,  after an Event of Default hereunder,  any
and all rights and remedies available to Lender at law and in equity,  including
without limitation such rights and remedies available to Lender pursuant to this
Section 15.1.

15.2 Bankruptcy.  Borrower and each Guarantor and Lender hereby  acknowledge and
agree that upon the filing of a  bankruptcy  petition by or against any Borrower
Group Member under any Bankruptcy  Law, the Account  Collateral and the Revenues
(whether then already in the Accounts,  or then due or becoming due  thereafter)
shall be deemed not to be property of the bankrupt  Person's  bankruptcy  estate
within the meaning of Section 541 of the Bankruptcy Code. In the event, however,
that a court of competent  jurisdiction  determines  that,  notwithstanding  the
foregoing  characterization of the Account Collateral and the Account Collateral
and Revenues by each such Person and Lender,  the Account  Collateral and/or the
Revenues do constitute  property of such Person's  bankruptcy estate,  then each
such  Person  and  Lender  hereby  further  acknowledge  and agree that all such
Revenues,  whether due and payable  before or after the filing of the  petition,
are and shall be cash collateral of Lender.  Each such Person  acknowledges that
Lender does not consent to such Person's use of such cash  collateral  and that,
in the event Lender elects (in its sole  discretion) to give such consent,  such
consent shall only be effective if given in writing signed by Lender.  Except as
provided in the immediately  preceding  sentence,  no such Person shall have the
right to use or apply or require the use or application of such cash  collateral
unless (i) such Person shall have received a court order  authorizing the use of
the same,  and (ii) such Person shall have provided such adequate  protection to
Lender as shall be  required  by the  bankruptcy  court in  accordance  with the
Bankruptcy Code.

15.3 Releases.  Borrower,  Holdings, and the Guarantors, on their own behalf and
on  behalf  of  their   Affiliates  and   Subsidiaries,   and  their  respective
predecessors,  successors and assigns, and their respective partners,  managers,
members,  directors,  officers,  shareholders and employees  (collectively,  the
"Releasing  Parties"),  do hereby fully release,  remise,  forever discharge and
covenant  not  to sue  each  of  Lender,  each  Co-Lender  and  Assignee,  their
respective Affiliates,  their respective present and former managers,  officers,
directors, Affiliates, predecessors,  successors and assigns and each and all of
their  respective  officers,  agents,  representatives,   employees,  attorneys,
officers,  directors,  partners,  members  and  shareholders,  past and  present
(collectively,  the "Released Parties") of and from any and all claims, demands,
debts, liabilities, obligations, judgments, damages, costs, expenses (including,
without  limitation,  claims for litigation costs and attorneys' fees,  expenses
and  disbursements),  actions and causes of action of whatsoever kind or nature,
whether  known or unknown,  suspected  or  unsuspected,  in contract or in tort,
without limitation of any sort whatsoever, based on or in any way related to all
claims, demands, and causes of action of any nature, in law or in equity whether
known or unknown, that have been asserted,  could have been asserted or could in
the future be asserted by any of the Releasing Parties.

15.4 Lost Documents.  Upon receipt of a loss of document affidavit of Lender and
Lender's  indemnity  of Borrower  (or, as  applicable,  another Loan Party) with
respect to all claims and losses  arising from the loss,  theft,  destruction or
mutilation of any of the Loan Documents which are not of public record,  and, in
the  case of any  such  mutilation,  upon  surrender  and  cancellation  of such
mutilated Loan Document, Borrower will issue, or cause to be issued (in the case
of documents issued by other Loan Parties),  in lieu thereof, a replacement Loan
Document,  dated the date of such lost,  stolen,  destroyed  or  mutilated  Loan
Document in the same principal amount thereof and otherwise of like tenor.

15.5  Section  Headings.  The  titles and  headings  of the  paragraphs  of this
Agreement  have been  inserted for  convenience  of  reference  only and are not
intended  to  summarize  or  otherwise  describe  the  subject  matter  of  such
paragraphs and shall not be given any  consideration in the construction of this
Agreement.

15.6 Parties Bound Etc. The provisions of this  Agreement  shall be binding upon
and inure to the benefit of Borrower, Lender and their respective successors and
assigns (except as otherwise  prohibited by this  Agreement).  Without the prior
written consent of Lender,  Borrower shall not assign Borrower's  interest under
any of the Loan Documents, or in any monies due or to become due thereunder, and
any  assignment  without such consent  shall be void.  In this regard,  Borrower
acknowledges  that  Lender  would  not make  this Loan  except  in  reliance  on
Borrower's expertise,  reputation, prior experience in managing,  developing and
constructing  commercial  real  property,  Lender's  knowledge  of Borrower  and
Lender's understanding that this Agreement is more in the nature of an agreement
involving  personal  services  than a standard  loan where  Lender would rely on
security which already exists.

15.7 Waivers. Lender may at any time and from time to time waive any one or more
of the conditions,  requirements or obligations  contained herein,  but any such
waiver  shall be deemed to be made in pursuance  hereof and not in  modification
thereof,   and  any  such  waiver  in  any  instance  or  under  any  particular
circumstance  shall  not  be  effective  unless  in  writing  and  shall  not be
considered  a waiver  of such  condition  in any  other  instance  or any  other
circumstance.

15.8     Governing Law.

(a) This  agreement was  negotiated  in the State of New York,  and the Loan was
made by Lender  and  accepted  by  Borrower  in the  State of New York,  and the
proceeds of the Note delivered  pursuant hereto were disbursed from the State of
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 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 made
and performed in such state (excluding  application of any principle of conflict
of laws which would direct the application of the law of any other jurisdiction)
and any  applicable  law of the United States of America.  To the fullest extent
permitted by law, each Loan Party hereby  unconditionally and irrevocably waives
any  claim  to  assert  that  the law of any  other  jurisdiction  governs  this
Agreement,  the Note, and the Security Documents,  and this Agreement,  the Note
and the Security Documents shall be governed by and construed in accordance with
the laws of the state of New York  pursuant to ss.5-1401 of the New York General
Obligations Law.

(b) ANY LEGAL SUIT,  ACTION OR PROCEEDING  AGAINST ANY LOAN PARTY ARISING OUT OF
OR RELATING TO THIS AGREEMENT,  THE NOTE OR ANY OF THE OTHER SECURITY  DOCUMENTS
SHALL BE  INSTITUTED  IN ANY  FEDERAL  OR STATE  COURT IN NEW  YORK,  NEW  YORK.
BORROWER AND EACH GUARANTOR HEREBY (i) IRREVOCABLY  WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE  LAW, ANY OBJECTION WHICH THEY 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.  BORROWER
AND EACH GUARANTOR DO HEREBY  DESIGNATE AND APPOINT CT CORPORATION  SYSTEM,  AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER AND SUCH  GUARANTORS
WHO IRREVOCABLE  AGREE IN WRITING TO SERVE AS BORROWER'S AND  GUARANTORS'  AGENT
FOR SUCH PURPOSE,  AS THEIR  AUTHORIZED  AGENT TO ACCEPT AND  ACKNOWLEDGE ON ITS
BEHALF  SERVICE  OF ANY AND ALL  PROCESS  WHICH MAY BE SERVED IN ANY SUCH  SUIT,
ACTION OR  PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,  NEW YORK,  AND
AGREES  THAT  SERVICE OF PROCESS  UPON SAID AGENT AT SAID  ADDRESS  AND  WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED IN
SECTION 15.10 SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
SUCH LOAN PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.
BORROWER  AND EACH  GUARANTOR  (I)  SHALL  GIVE  PROMPT  NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM
TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK,
NEW YORK (WHICH  SUBSTITUTE  AGENT AND OFFICE SHALL BE  DESIGNATED AS THE PERSON
AND ADDRESS FOR SERVICE OF PROCESS),  AND (III) SHALL PROMPTLY  DESIGNATE SUCH A
SUBSTITUTE  IF ITS  AUTHORIZED  AGENT CEASES TO HAVE AN OFFICE IN NEW YORK,  NEW
YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

15.9 Severability. If any term, covenant or provision of this Agreement shall be
held to be invalid,  illegal or unenforceable in any respect,  this remainder of
this  Agreement  shall  remain in full force and  effect and shall be  construed
without such term, covenant or provision.

15.10 Notices. Any notice, request, demand, statement, authorization,  approval,
consent or  acceptance  made  hereunder  shall be in  writing  and shall be hand
delivered or sent by Federal Express or other reputable  courier service,  or by
registered or certified mail, postage prepaid with return receipt requested, and
shall be deemed given (i) upon  delivery,  if delivered in person,  (ii) one (1)
Business Day after being  deposited with Federal  Express or any other reputable
overnight  courier  service,  or  (ii)  three  (3)  Business  Days  after  being
postmarked  and addressed as follows if sent by  registered  or certified  mail,
return receipt requested, addressed as follows:

                  If to Lender:

                           1301 Avenue of the Americas, 42nd Floor
                           New York, NY 10019
                           Attention:  William B. Doniger

                  With a copy to:

                           Sidley & Austin
                           10 S. Dearborn
                           Chicago, IL  60603
                           Attn:  Charles E. Schrank, Esq.

                  If to Borrower or any Loan Party:

                           100 East Pratt Street
                           19th Floor
                           Baltimore, Maryland  21202
                           Attention: President and Chief Executive Officer

                  With a copy to:

                           100 East Pratt Street
                           19th Floor
                           Baltimore, Maryland  21202
                           Attention: General Counsel

                  With a copy to:

                           Winston & Strawn
                           35 West Wacker Drive
                           Chicago, IL  60601-9703
                           Attention: Steven J. Gavin
                           Facsimile: 312/558-5700

Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.

15.11 Modification.  This Agreement may not be Amended except by an agreement in
writing executed by the parties hereto.  Borrower and each Guarantor acknowledge
that the Loan Documents set forth the entire agreement and  understanding of the
parties  with  respect  to the  Loan  and  that  no oral  or  other  agreements,
understandings,  representations  or  warranties  exist with respect to the Loan
other than those set forth in the Loan Documents.  All prior agreements among or
between such parties,  whether oral or written,  are  superceded by the terms of
the Loan Documents.

15.12  Usury  Laws.  This  Agreement  and the Note are  subject  to the  express
condition  that at no time  shall  Borrower  be  obligated  or  required  to pay
interest  on the  principal  balance  due under the Note at a rate  which  could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum  interest rate which  Borrower is permitted by
law to contract or agree to pay. If by the terms of this  Agreement or the Note,
Borrower is at any time  required or obligated to pay interest on the  principal
balance due under the Note at a rate in excess of such maximum rate, the rate of
interest  under  the Note  shall be  deemed to be  immediately  reduced  to such
maximum rate and the interest payable shall be computed at such maximum rate and
all prior interest  payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of the  principal  balance of
the Note.

15.13 Sole Discretion of Lender.  Whenever  pursuant to this Agreement or any of
the Loan Documents,  Lender may approve or disapprove any act (or any action) or
any document,  delivery or other item, or where Lender's  consent or approval is
required in any respect or where any document or other item must be satisfactory
to Lender,  except in those  specific  instances  where Lender has  specifically
agreed not to unreasonably  withhold  Lender's  consent pursuant to the terms of
this Agreement or any of the Loan  Documents,  the decision of Lender to approve
or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory or to grant or withhold consent shall be in the sole,  absolute and
unfettered  discretion of Lender,  without any express or implied  obligation of
reasonableness  or good  faith  whatsoever  and shall be final  and  conclusive.
Borrower acknowledges and agrees that in no circumstance shall Borrower have any
claim or cause of action, in contract or in tort,  against Lender as a result of
the granting or  withholding  of any such consent or approval.  The inclusion of
references to Lender's sole or absolute discretion in any particular  provisions
of this  Agreement  or any of the Loan  Documents  shall not limit or affect the
applicability  of this Section to all provisions of this Agreement or any of the
Loan  Documents,  including  those  provisions  wherein a specific  reference to
Lender's  sole  and  absolute  discretion  is not  made.  Without  limiting  the
preceding  provisions of this Section, in the event that a claim or adjudication
is made that  Lender or its agents  have acted  unreasonably  or in bad faith or
unreasonably  delayed acting in any case where,  by Applicable Law or under this
Agreement or the other Loan Documents, Lender or such agent, as the case may be,
has an  obligation  to act  reasonably  or in good faith or  promptly,  Borrower
agrees that neither  Lender,  Servicer  nor their  agents or employees  shall be
liable  for any  monetary  damages  (including  any  special,  consequential  or
punitive damages whatsoever),  whether in contract,  tort (including  negligence
and strict liability) or any other legal or equitable principles, and Borrower's
sole remedies shall be limited to commencing an action seeking injunctive relief
or declaratory judgment.  The parties hereto agree that any action or proceeding
to  determine  whether  Lender has acted  reasonably  or in good faith  shall be
determined by an action seeking declaratory judgment.

15.14 Reasonableness. If at any time Borrower believes that Lender has not acted
reasonably  in granting or  withholding  any approval or consent  under the Loan
Documents or any other  document or  instrument  now or  hereafter  executed and
delivered in connection  therewith or otherwise  with respect to the Loan, as to
which approval or consent either Lender has expressly  agreed to act reasonably,
or absent such agreement,  a court of law having  jurisdiction  over the subject
matter would require Lender to act reasonably, then Borrower's sole remedy shall
be to seek injunctive relief or specific  performance and no action for monetary
damages or  punitive  damages  shall in any event or under any  circumstance  be
maintained by Borrower or any other Loan Party against Lender.

15.15  Absolute  and  Unconditional   Obligation.   Borrower  acknowledges  that
Borrower's  obligation to pay the Debt in accordance  with the provisions of the
Note and this  Agreement  is and shall at all times  continue to be absolute and
unconditional  in all respects,  and shall at all times be valid and enforceable
irrespective of any other agreements or  circumstances of any nature  whatsoever
which might otherwise  constitute a defense to the Note or this Agreement or the
obligation  of Borrower  thereunder  to pay the Debt or the  obligations  of any
other Person relating to the Loan Documents or the Obligations of Borrower under
the  Loan  Documents  or  otherwise  with  respect  to the  Loan,  and  Borrower
absolutely,  unconditionally  and irrevocably waives any and all right to assert
any defense,  setoff,  counterclaim or cross-claim of any nature whatsoever with
respect to the  obligation  of Borrower to pay the Debt in  accordance  with the
provisions of the Note and this Agreement or the obligations of any other Person
relating  to the Loan  Documents  or  Obligations  of  Borrower  under  the Loan
Documents  or  otherwise  with  respect to the Loan in any action or  proceeding
brought by Lender to collect the Debt,  or any portion  thereof,  or to enforce,
foreclose  and  realize  upon the lien and  security  interest  created  by this
Agreement or any other document or instrument securing repayment of the Debt, in
whole or in part.

15.16  Waiver  of Right to Trial By Jury.  BORROWER  AND EACH  GUARANTOR  HEREBY
EXPRESSLY  WAIVE ANY  RIGHT TO TRIAL BY JURY FOR ANY  CLAIM,  DEMAND,  ACTION OR
CAUSE OF  ACTION  (a)  ARISING  UNDER  THE LOAN  DOCUMENTS,  INCLUDING,  WITHOUT
LIMITATION,  THE EXERCISE OF ANY CURE RIGHTS AND ANY AMENDMENT THERETO OR (b) IN
ANY WAY  RELATING TO THE LOAN  DOCUMENTS  OR ANY OTHER  INSTRUMENT,  DOCUMENT OR
AGREEMENT  EXECUTED OR DELIVERED IN  CONNECTION  HEREWITH,  OR THE  TRANSACTIONS
RELATED HERETO OR THERETO,  IN EACH CASE WHETHER SUCH CLAIM,  DEMAND,  ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER  SOUNDING IN
CONTRACT OR TORT OR OTHERWISE;  AND EACH OF THEM HEREBY AGREES AND CONSENTS THAT
ANY PARTY TO THIS  AGREEMENT MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.

15.17 Waiver of Statutory Rights.  Borrower shall not, nor shall Borrower permit
any Loan Party or Expanded  Property Owner to, avail itself of any appraisement,
valuation,  stay,  extension or exemption laws, or any similar laws now existing
or hereafter enacted,  in order to prevent or hinder the enforcement of the Loan
Documents  or  foreclosure  of the  Security  Documents,  but hereby  waives the
benefit  of such  laws to the  full  extent  that  such  Person  may do so under
Applicable  Law.  Borrower for itself and all who may claim  through or under it
(including,  but not limited  to, the Loan  Parties  and the  Expanded  Property
Owners ) waives any and all right to have the  property  and estates  comprising
the  Collateral  marshaled  upon any  realization  of the  lien of any  Security
Document  and agrees that any court  having  jurisdiction  over any  exercise of
Lender's  remedies may order the  Collateral  sold as an entirety or in separate
parts.  Borrower hereby waives for itself and all who may claim through or under
it  (including,  but not  limited  to,  the Loan  Parties  and the  Senior  Loan
Obligors),  and to the full extent Borrower may do so under  applicable law, any
and all rights of redemption  from sale under any order or decree of foreclosure
of any Security  Document or granted under any statute now existing or hereafter
enacted.

15.18 Relationship. The relationship of Lender to Borrower hereunder is strictly
and  solely  that of lender  and  borrower  and  nothing  contained  in the Loan
Documents or any other  document or  instrument  now or  hereafter  executed and
delivered in connection  therewith or otherwise in  connection  with the Loan is
intended to create, or shall in any event or under any circumstance be construed
as creating, a partnership, joint venture,  tenancy-in-common,  joint tenancy or
other  relationship of any nature  whatsoever  between Lender and Borrower other
than  as  lender  and  borrower.  Lender  neither  undertakes  nor  assumes  any
responsibility  or duty to  Borrower,  to any other Loan  Party or any  Expanded
Property  Owner or to any third party with respect to any of the  Properties  or
the Expanded Properties,  except as expressly provided in this Agreement and the
Loan Documents.

15.19  Securitization.  Borrower  acknowledges and agrees that Lender shall have
the  absolute and  unconditional  right at any time after the date hereof and at
any time during the term of the Loan without  requiring  any consent or approval
from Borrower,  any Loan Party or any other person  guaranteeing  the payment of
the Debt or any other person,  party or entity associated with or connected with
the Loan or the  Collateral to sell,  assign,  pledge,  hypothecate or otherwise
transfer  Lender's  interest in the Loan in whole or in part, or to place one or
more participation interests therein in one or more separate transactions, or to
effect a syndication or  securitization  of the Loan in one or more transactions
(a "Securitization"), in each case to or with such persons, parties, entities or
investors (including,  without limitation,  domestic or foreign banks, insurance
companies,  pension funds,  trusts,  other  institutional  lenders or investors,
natural persons,  grantor trusts,  owner trusts,  special purpose  corporations,
REMICs,  FASITs,  real estate  investment  trusts or other similar or comparable
investment  vehicles)  (collectively  or  individually,  "Investor") and on such
terms and  conditions as Lender shall deem to be  appropriate in the exercise of
its sole and absolute discretion;  provided that Lender shall not participate or
sell the Loan to any Persons listed on Schedule 15.19 hereto. Neither Lender nor
any Investor  shall  acquire the stock of Holdings in any manner  prohibited  by
Applicable  Law. In connection  with any such sale,  assignment,  participation,
syndication or securitization,  Lender shall have the absolute and unconditional
right  without  obtaining the prior consent or approval of any Loan Party or any
other Person guaranteeing the payment of the Debt or any other Person associated
or connected  with the Loan or the  Collateral  (including  the  Borrower  Group
Members) to disclose, deliver and to share with any prospective purchaser of the
Loan or of any  securities or of any  participation  or other  interest  therein
(including any such interest to be acquired in connection  with a syndication or
securitization  of the Loan),  or with any prospective  Rating Agency,  or their
respective   counsel  or   representatives,   such  information   (financial  or
otherwise),  documents  and  instruments  pertaining  to the  Loan or any  other
person,  party or entity associated or connected with the Loan or the Collateral
(including the Expanded Property Owners) (collectively, the "Disclosure Material
and  Information") as Lender shall deem to be appropriate in the exercise of its
sole and absolute  discretion.  Borrower shall  cooperate,  and shall cause each
Loan Party and each other Person,  associated or connected  with the Loan or the
Collateral  (including  the  Expanded  Property  Owners)  to  cooperate,  in all
reasonable  respects  with  Lender  in  connection  with any  sale,  assignment,
participation, syndication or securitization of the Loan or any interest therein
by Lender  pursuant to the provisions of this  paragraph.  Without in any manner
implying the necessity therefor, Borrower grants to Lender, and shall cause each
Loan Party and each other Person  associated  or connected  with the Loan or the
Collateral to specifically  grant to Lender, the right to distribute any and all
of the  Disclosure  Material  and  Information  in  connection  with  any  sale,
assignment,  participation,  syndication or securitization of the Loan or of any
interest  therein  by  Lender  pursuant  to the  provisions  of this  paragraph.
Borrower  shall  execute and  deliver,  and shall cause each Loan Party and each
other Person  associated or connected with the Loan or the Collateral to execute
and deliver,  such documents and  instruments as may be reasonably  necessary to
(a) split the Loan into two or more loans  evidenced by and pursuant to separate
sets of notes and other related loan  documents,  or (b) to modify the terms and
provisions of the Loan  Documents,  in each case to the full extent  required by
Lender  to   facilitate   any   sale,   assignment,   pledging,   hypothecation,
participation, syndication or securitization of the Loan or any interest therein
by Lender pursuant to the provisions of this paragraph, it being agreed that (i)
any such  splitting or  modification  of the Loan will not  adversely  affect or
diminish  the  rights  of any Loan  Party  as  presently  set  forth in the Loan
Documents  and will not increase the  obligations  and  liabilities  of any Loan
Party  under the Loan  Documents,  and (ii) if the Loan is split,  the  retained
interest of Lender,  if any, in the Loan shall be  allocated  to or among one or
more of such  separate  loans in a manner  specified  by  Lender in its sole and
absolute  discretion.  If  Borrower  shall  default  in the  performance  of its
obligation  as set forth in this  paragraph,  and if such  default  shall not be
remedied by Borrower  within  fifteen (15) days after  notice by Lender,  Lender
shall  have the  absolute  and  unconditional  right  in its  sole and  absolute
discretion  to declare  such default an Event of Default  under this  Agreement.
Lender  shall  endeavor to provide  notice to  Borrower of any such  assignment,
sale,  participation,  syndication or securitization of the Loan in a reasonably
timely manner, but any failure by Lender to provide notice to Borrower shall not
give rise to any claim or  defense  on the part of any of the Loan  Parties,  or
limit the rights of Lender under this Section 15.19 or the Loan Documents. Until
otherwise  directed in writing by Lender  following  the  occurrence of any such
assignment, sale, participation,  syndication or securitization,  Borrower shall
continue  to  deliver  all  payments  and  deposits  as  required  prior to such
occurrence.

15.20  Syndications;  Participations.  (a)  Without  in  any  way  limiting  the
provisions of Section 15.19, Lender shall have the right, without the consent of
Borrower, to syndicate the Loan and/or assign, transfer, sell, negotiate, pledge
or  otherwise  hypothecate  this  Agreement  and any of its rights and  security
hereunder,  to or with any other Person (an  "Assignee");  provided  that Lender
shall not  participate  or sell the Loan to any Persons listed on Schedule 15.19
hereto.  Borrower hereby agrees that all of the rights and remedies of Lender in
connection  with the  interest so assigned or  syndicated  shall be  enforceable
against  Borrower by an Assignee  with the same force and effect and to the same
extent as the same would have been enforceable by Lender but for such assignment
or syndication.  After the effective date of any such assignment or syndication:
(i) the Assignee  shall be a party hereto and, to the extent that the rights and
obligations under this Agreement and the other Loan Documents have been assigned
to it,  shall  have  the  rights  and  obligations  of a  Lender  hereunder  and
thereunder,  and (ii) each  Lender  shall,  to the  extent  that its  rights and
obligations hereunder have been assigned by it, be released from its obligations
hereunder and under the Loan Documents.  The liabilities of each Lender shall be
several and not joint and the  Lender's  obligation  to the  Borrower  hereunder
shall be  reduced  by the  amount of each  portion  of the Loan  assigned  to or
syndicated with an Assignee.

(b) Each  Assignee  shall be  entitled,  at its  option,  to a separate  Note to
evidence  the interest in the Loan held by it, and  Borrower  shall  execute and
deliver to each Lender and Assignee a separate Note  evidencing  the  respective
interests in the Loan of each upon the request of Lender or such Assignee at any
time during the term of the Loan; provided,  however, that the non-issuance of a
separate Note shall in no way affect such Assignee's  respective interest in the
Loan.

(c) The parties  acknowledge  and agree that (i) the Loan is being funded on the
Closing  Date  50% by FRIT PRT  Lending  LLC  ("FRIT"),  as the  initial  Lender
hereunder,  and 50% by Greenwich Capital Financial Products,  Inc. ("Greenwich")
as the initial  Assignee  (FRIT and  Greenwich,  together with their  respective
successors,  transferees and assigns,  are herein referred to as  "Co-Lenders"),
and (ii) each of the Co-Lenders shall own an undivided 50% interest in the Loan,
the Obligations and the Loan  Documents,  and in and to all of the right,  title
and interest of the "Lender"  hereunder and under the Loan Documents.  Greenwich
joins in the execution  and delivery of this  Agreement in order to evidence its
right, title and interest as a Co-Lender and Assignee as set forth herein.

(d) Lender and any  Assignees  may enter into one or more  co-lender  or similar
agreements  in their  discretion.  Borrower  acknowledges  and agrees  that such
agreements,  as the same may from time to time be amended, modified or restated,
may govern the exercise of the powers and discretionary  authority of the Lender
hereunder and under the other Loan Documents,  but Borrower shall be entitled to
rely upon any  actions  taken by Lender or the  designated  agent for Lender and
each Assignee (which shall  initially be FRIT),  whether or not within the scope
of its power and authority under such other agreements.

(e) The Co-Lenders may at any time sell to one or more Persons  ("Participants")
participating  interests in the Loan; provided that Lender shall not participate
or sell the Loan to any Persons listed on Schedule 15.19 hereto. In the event of
any such sale by any Co-Lender of participating interests to a Participant,  the
Lender's rights under the Loan Documents shall remain unchanged.

15.21 Brokers and  Financial  Advisors.  Except as set forth in Schedule  15.21,
Borrower hereby represents to Lender that no Loan Party has dealt with financial
advisors,  brokers,  underwriters,   placement  agents,  agents  or  finders  in
connection with the transactions contemplated by this Agreement, or with respect
to any  Senior  Loan.  The  commissions  and fees of any  Persons  set  forth in
Schedule  15.21  shall  be paid by  Borrower  pursuant  to one or more  separate
agreements.  Borrower  agrees to indemnify and hold the Lender harmless from and
against any and all claims,  liabilities,  costs and expenses of any kind in any
way  relating to or arising from a claim by any Person that such Person acted on
behalf  of any Loan  Party in  connection  with  the  transactions  contemplated
herein.  The  provisions of this Section 15.21 shall survive the  expiration and
termination of this Agreement and the repayment of the Debt.

15.22 Offsets,  Counterclaims  and Defenses.  Borrower hereby waives,  and shall
cause each Loan Party and Expanded  Property Owner to waive, the right to assert
a counterclaim, other than a mandatory or compulsory counterclaim, in any action
or  proceeding  brought  against  it by  Lender  arising  out of or in  any  way
connected  with the Loan  Documents,  the Senior  Loan  Documents,  or the Debt.
Without  limiting in any manner the rights of any assignee of Lender's  interest
at law or in equity,  any  assignee of Lender's  interest in the Loan shall take
the same free and clear of all  offsets,  counterclaims  or  defenses  which are
unrelated to the Loan.

15.23  Payment of Expenses.  Borrower  covenants and agrees to  immediately  pay
Lender  or  Servicer  on  demand  all  costs  and  expenses  including,  without
limitation, Professional Fees, incurred by Lender (i) in connection with (A) the
Loan  Parties'  ongoing  performance  of and  compliance  with their  respective
agreements  and  covenants  contained in the Loan  Documents on their part to be
performed  or  complied  with  after  the  Closing  Date,  including  confirming
compliance with environmental and insurance  requirements;  (B) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers  or  other  modifications  to  the  Intercreditor  Agreement,  the  Loan
Documents  and any other  documents  or matters  requested  by any Loan Party or
Expanded  Property  Owner,  by Lender,  or by any Senior Lender;  (C) filing and
recording  fees  and  expenses,   title   insurance  and  reasonable   fees  and
disbursements  of counsel for providing to Lender all required  legal  opinions,
and other  similar  expenses  incurred in creating and  perfecting  the Liens in
favor of Lender pursuant to the Loan Documents;  (D) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action  or  proceeding  or other  litigation,  in each  case  against,  under or
affecting any Expanded  Property,  any Borrower Group Member, the Loan Documents
or any other security given for the Loan or any Expanded  Property;  and (E) the
collection  of the Debt,  enforcement  of  rights  and  remedies  under the Loan
Documents,  the  enforcement  of liens  and  security  interests  under the Loan
Documents,  and/or in curing any defaults under the Loan Documents or the Senior
Loan Documents with interest  thereon at the Default Rate or the Payoff Rate, as
applicable or (ii) as a consequence of any Default or Event of Default under the
Loan  Documents.  The  foregoing  shall be payable by Borrower to Lender with or
without the filing of any legal action or proceeding, and shall include, without
limitation, any fees and expenses (including,  without limitation,  Professional
Fees)  incurred in any  bankruptcy  proceeding  of any Loan Party.  In addition,
Borrower shall pay to the Depository on a monthly basis the fees and expenses of
Depository.

15.24 Intercreditor Agreement.  Borrower hereby acknowledges and agrees that any
agreement between Lender and Senior Lender (each an  "Intercreditor  Agreement")
is  intended  solely  for the  benefit of Lender and such  Senior  Lender,  that
Borrower is not an intended  third party  beneficiary  of any of the  provisions
therein,  and shall not be entitled to rely on any of the  provisions  contained
therein,  and Lender and any Senior  Lender shall have no obligation to disclose
to Borrower the contents of any Intercreditor  Agreement. The Obligations of the
Loan Parties to Lender shall remain  unmodified  by the terms and  provisions of
the Intercreditor Agreement.

15.25 Right of Set-Off. In addition to any rights now or hereafter granted under
Applicable  Law or  otherwise,  and not by way of  limitation of any such rights
upon the  occurrence  of an  Event of  Default,  Lender  may from  time to time,
without presentment,  demand,  protest or other notice of any kind (all of which
rights being hereby expressly waived by each of the Loan Parties that is a party
to this  Agreement  on their own  behalf  and on behalf  of the  Borrower  Group
Members),  set-off and  appropriate  and apply any and all deposits  (general or
special)  and any  other  indebtedness  at any  time  held or  owing  by  Lender
(including,  without  limitation,  branches,  agencies or  Affiliates  of Lender
wherever  located) to or for the credit or the  account of Borrower  against the
Obligations of Borrower under the Loan Documents or otherwise,  irrespective  of
whether  Lender  shall  have  made  any  demand   hereunder  and  although  such
Obligations,  may be  contingent  or  unmatured,  and any such set-off  shall be
deemed to have been made  immediately upon the occurrence of an Event of Default
even  though  such  charge is made or entered on the books of Lender  subsequent
thereto.

15.26  Servicer;  Servicer Fees.  Without any requirement of notice to Borrower,
Lender may delegate any and all rights and  obligations  of Lender  hereunder to
the  Servicer,  and  any  notice  or  consent  from  the  Servicer  to  Borrower
(including,  without  limitation,  any demand letter or notice of  acceleration)
shall have the same force and effect as a notice or consent, as the case may be,
from Lender.  Borrower  hereby  acknowledges  and consents to Lender's  right to
delegate any and all rights and obligations of Lender hereunder to the Servicer.
In addition to the Servicer's  servicing  fees (which shall not exceed  $150,000
per  annum),  Borrower  shall  pay to  Lender  on a  monthly  basis  any and all
out-of-pocket  costs and expenses  incurred by Servicer in  connection  with any
Defaults or in the course of evaluating  Borrower  requests,  including  without
limitation  all  expenses of Servicer  incurred  in  connection  with its or any
construction   consultant's   review  of  construction   draws,  change  orders,
construction  progress reports,  leases,  property  inspections,  or casualty or
condemnation  matters,  and  payment of such  amounts as shall be secured by the
Security Documents.

15.27 Rescission of Payments. If at any time all or any part of any payment made
by  Borrower  under this  Agreement  is  rescinded  or  returned  for any reason
whatsoever  (including,  but not  limited  to,  the  insolvency,  bankruptcy  or
reorganization  of Borrower),  then the  Obligations of Borrower  shall,  to the
extent of the payment  rescinded  or  returned,  be deemed to have  continued in
existence notwithstanding such previous payment, and the obligations of Borrower
hereunder  shall continue to be effective or be reinstated,  as the case may be,
as to such payment, all as though such previous payment had never been made.

15.28 Borrower Group Members. To the extent that any provision in this Agreement
requires expressly or implicitly,  performance,  observance or compliance by any
Borrower  Group  Member,   such  provision  shall  be  construed  as  Borrower's
obligation  to cause such  Borrower  Group Member to perform,  observe or comply
with such provision, and, accordingly, the failure by such Borrower Group Member
to perform,  observe or comply with such provision  shall be considered a breach
by Borrower of its obligations under this Agreement.

15.29 No Third  Parties  Actions.  No person  other than Lender and Borrower and
their permitted  successors and assigns shall have any right of action under any
of the Loan Documents.

15.30 Attorney-In-Fact.  Borrower and each Guarantor hereby irrevocably appoints
and  authorizes  Lender,  as such  Person's  attorney-in-fact,  which  agency is
coupled with an interest,  to execute and/or record in Lender's or such Person's
name any notices,  instruments  or documents  that Lender deems  appropriate  to
protect Lender's interest under any of the Loan Documents.

15.31 Counterparts. To facilitate execution, this document may be executed in as
many  counterparts  as may be convenient or required.  It shall not be necessary
that the signature of, or on behalf of, each party, or that the signature of all
persons required to bind any party, appear on each counterpart. All counterparts
shall  collectively  constitute a single document.  It shall not be necessary in
making  proof of this  document  to produce  or  account  for more than a single
counterpart  containing the  respective  signatures of, or on behalf of, each of
the parties  hereto.  Any signature page to any counterpart may be detached from
such counterpart  without  impairing the legal effect of the signatures  thereon
and thereafter attached to another  counterpart  identical thereto except having
attached to it additional signature pages.

15.32 Time.  Time is of the essence of each and every term of this Agreement and
the Loan Documents,  except and only to the extent specifically waived by Lender
in writing.

15.33 Indemnity.  BORROWER HEREBY AGREES TO DEFEND,  INDEMNIFY AND HOLD HARMLESS
LENDER,  EACH  CO-LENDER AND ASSIGNEE,  THEIR  RESPECTIVE  DIRECTORS,  OFFICERS,
EMPLOYEES,  AGENTS,  SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES,
DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER
EXPENSES  (INCLUDING,  WITHOUT LIMITATION,  PROFESSIONAL FEES) WHICH LENDER, ANY
CO-LENDER OR ASSIGNEE MAY INCUR AS A DIRECT OR INDIRECT  CONSEQUENCE OF: (A) THE
PURPOSE TO WHICH BORROWER APPLIES THE LOAN PROCEEDS; (B) THE FAILURE OF BORROWER
TO PERFORM, OR TO CAUSE ANY BORROWER GROUP MEMBER TO PERFORM, ANY OBLIGATIONS AS
AND WHEN REQUIRED BY ANY OF THE LOAN  DOCUMENTS;  (C) ANY FAILURE AT ANY TIME OF
ANY OF LOAN PARTY'S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT; OR (D)
ANY ACT OR OMISSION BY ANY BORROWER  GROUP MEMBER OR OTHER PERSON OR ENTITY WITH
RESPECT TO ANY OF THE EXPANDED  PROPERTIES.  BORROWER SHALL  IMMEDIATELY  PAY TO
LENDER  UPON  DEMAND ANY  AMOUNTS  OWING  UNDER THIS  INDEMNITY,  TOGETHER  WITH
INTEREST  FROM  THE  DATE  THE  INDEBTEDNESS  ARISES  UNTIL  PAID AT THE RATE OF
INTEREST  APPLICABLE TO THE PRINCIPAL  BALANCE OF THE NOTE.  BORROWER'S DUTY AND
OBLIGATIONS  TO  DEFEND,  INDEMNIFY  AND  HOLD  HARMLESS  LENDER  SHALL  SURVIVE
CANCELLATION  OF THE NOTE AND THE RELEASE,  OR REASSIGNMENT OF ANY COLLATERAL OR
OF THE PLEDGE AGREEMENT.

15.34 Tax  Treatment  of  Warrant.  Holdings,  Borrower  and the  Lender  hereby
acknowledge that for the purposes of Section 1273(c)(2) of the Code, the Warrant
is a part of an  investment  unit  with the Loan  being  made by the  Lender  to
Borrower  under this  Agreement,  and that the allocated  purchase  price of the
Warrant for such purposes is $260,000.  Holdings and the Lender agree to use the
foregoing  allocated purchase price as the purchase price of the Warrant for all
income tax purposes.

<PAGE>

CH1  2065901v19
IN WITNESS  WHEREOF,  Lender  and each Loan Party have duly  executed  this
Agreement  the day and year first  above written.

                 LENDER:

                 FRIT PRT LENDING LLC,
                 a Delaware limited liability company

                 By:
                 Name:
                 Title: Authorized Signatory

                 ASSIGNEE AND CO-LENDER:

                 GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
                 a Delaware corporation

                 By:
                 Name:
                 Title: Authorized Signatory

                 BORROWER:

                 PRIME RETAIL, L.P.,
                 a Delaware limited partnership

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive Vice President

                 GUARANTORS:

                 PRIME RETAIL, INC.,
                 a Maryland corporation

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive Vice President

<PAGE>

                 PRIME RETAIL CAPITAL I, L.L.C.,
                 a Delaware limited liability company

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its managing member

                 By:      PRIME RETAIL INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name:  C. Alan Schroeder
                 Title:    Executive Vice President

                 OUTLET VILLAGE OF HAGERSTOWN LIMITED PARTNERSHIP,
                 a Delaware limited partnership

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its general partner

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive V.P.

                 PRIME BELLPORT LAND, L.L.C.,
                 a Delaware limited liability company

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its managing member

                 By:      PRIME RETAIL INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name:  C. Alan Schroeder
                 Title:    Executive Vice President

<PAGE>

                 PRIME WAREHOUSE ROW LIMITED PARTNERSHIP,
                 an Illinois limited partnership

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its general partner

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive V.P.

                 SUN COAST FACTORY SHOPS LIMITED PARTNERSHIP,
                 a Delaware limited partnership

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its general partner

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive V.P.

                 PRIME OUTLETS AT SAN MARCOS II LIMITED PARTNERSHIP,
                 a Delaware limited partnership

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its general partner

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive V.P.

                 CHESAPEAKE DEVELOPMENT LIMITED PARTNERSHIP,
                 a Delaware limited partnership

                 By:      PRIME RETAIL, L.P.,
                 a Delaware limited partnership,
                 its general partner

                 By:      PRIME RETAIL, INC.,
                 a Maryland corporation,
                 its general partner

                 By:
                 Name: C. Alan Schroeder
                 Title: Executive V.P.

<PAGE>

CH1  2065901v19
                                    EXHIBIT A

                         (Description of the Properties)

<PAGE>

                                    EXHIBIT B

                          (Definition of Certain Terms)

         "ACCF  Set-Aside"  shall have the  meaning  set forth in  Section  12.3
hereof.

         "ACCF  Set-Aside  Balance"  shall have the meaning set forth in Section
12.3 hereof.

         "Accounts" means,  collectively,  the Deposit  Accounts,  the Ancillary
Accounts,  any Collateral Accounts, the Operating Account, the Marketing Reserve
Operating  Account  and any other  accounts  required  by or  pledged  to Lender
pursuant to this Agreement or the Loan Documents.

         "Account Collateral" means, collectively,  the Accounts and all sums at
any time held,  deposited  or invested  therein,  together  with any interest or
other earnings thereon and all proceeds thereof (including,  without limitation,
proceeds  of  sales  and  other   dispositions),   whether   accounts,   general
intangibles,   chattel  paper,  deposit  accounts,  instruments,   documents  or
securities.

"ADA"means the Americans with Disabilities  Act, 42 U.S.C.ss.ss.  12101, et seq.
     As now or hereafter amended or modified.

         "Additional  Fee" shall have the meaning  provided  in Section  2.14(c)
hereof.

         "Adjusted  Treasury  Rate"  shall have the meaning set forth in Section
2.13(c).

         "Affiliate" shall mean as to any specified Person,  (i) any Person that
directly  or  indirectly  through  one or  more  intermediaries  controls  or is
controlled  by or is under  common  control  with such  Person,  (ii) any Person
owning or controlling  10% or more of the  outstanding  voting  securities of or
other ownership interests in such Person, (iii) any officer, director,  partner,
employee or member (direct or indirect and no matter how remote) of such Person,
(iv) if the such  Person is an  individual,  any entity  for which  such  Person
directly  or  indirectly  acts as an  officer,  director,  partner,  employee or
member, or (v) any entity in which such Person (together with the members of his
family if the Person in question is an individual) owns,  directly or indirectly
through one or more  intermediaries  an interest in any class of stock (or other
beneficial  interest  in such  entity)  of 10% or more.  Any  reference  in this
Agreement to a "Person and an Affiliate" shall be deemed to refer to such Person
and an  Affiliate  of such  Person and any  references  in this  Agreement  to a
"Person or an Affiliate" shall be deemed to refer to such Person or an Affiliate
of such  Person.  As used  in this  Agreement,  the  term  "control"  means  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the  management  and policy  and/or  policies of a Person,  whether
through ownership of voting securities or other ownership interests, by contract
or otherwise.

         "Affiliate  Agreements"  shall have the meaning provided in Section 8.8
hereof.

         "Aggregate  Deposit  Requirement"  shall have the  meaning set forth in
Section 12.3 hereof.

         "Agreement"  shall  have  the  meaning  provided  in  the  introductory
paragraph to this Agreement.

         "Amendments"   shall  mean  any  and  all  amendments,   modifications,
extensions,  waivers,  replacements,   terminations,   renewals,  substitutions,
consolidations,  restatements,  or supplements made from time to time. "Amended"
shall have a correlative meaning.

         "Ancillary Accounts" shall have the meaning provided in Section 12.1.

         "Applicable Law" shall mean all existing and future federal,  state and
local laws,  orders,  ordinances,  governmental  rules and  regulations or court
orders.

         "Applicable  Interest Rate" shall mean the rate which is the LIBOR Rate
plus 950 basis  points  (9.50%) per annum,  which sum shall be rounded up to the
nearest one-eighth of one percent (0.125%),  and which shall be adjusted on each
LIBOR Adjustment Date.

         "Applicable  Ownership  Limit"  shall mean,  as to any class of capital
stock of Holdings,  the ownership limits specified in Holdings's  Organizational
Documents for such class of capital stock.

         "Approved   Accounting   Firm"  means   independent   certified  public
accountants of recognized  national standing and constituting one of the largest
five auditing firms in the United States.

         "Approved Operating Budget" shall have the meaning set forth in Section
6.6 of this Agreement.

         "Approved  Marketing Expense Amount" for any given month shall mean the
amount identified as such for such month in the Approved Operating Budget.

         "Approved  Operating Expense Amount" for any given month shall mean the
amount identified as such for such month in the Approved  Operating Budget,  but
shall in all events exclude the Approved Marketing Expense Amount.

         "Asset  Disposition  Net  Proceeds"  shall  mean,  with  respect to any
Expanded  Property or any direct or indirect  partnership,  membership  or other
direct or indirect  interest in any owner of any direct or indirect  interest in
any Expanded Property,  the proceeds of the sale,  transfer or other disposition
of such  Expanded  Property  or  interest,  consisting  of the total sales price
thereof and any other  receipts,  compensation  or other  consideration  paid or
arising from such sale,  transfer or  disposition  (including  any  post-closing
funds  paid  under  post-closing  adjustments),  less  reasonable  and bona fide
third-party  costs of closing paid by the Borrower Group Member which is selling
such  Expanded  Property  or interest  which are  approved in writing by Lender;
provided, that in no event shall any closing costs be paid to any Borrower Group
Member or their Affiliates.

         "Assignee" shall have the meaning set forth in Section 15.19.

         "Available Consolidated Cash Flow" as of any Quarterly Payment Date for
any period  shall mean the sum of (i) all  Revenues  of any kind  generated  by,
received by or paid to the Borrower Group Members,  or any of them,  during such
immediately  preceding  Fiscal Quarter,  plus (ii) all cash,  cash  equivalents,
marketable  securities and other liquid assets of Borrower Group Members, or any
of them, as of the end of such immediately preceding Fiscal Quarter not included
in the foregoing  clause  (i)(including  without  limitation  all amounts in all
Accounts), less the sum of the following deduction amounts:

                  (a) the amount paid in cash during such immediately  preceding
         Fiscal Quarter for operating expenses for the Expanded  Properties,  to
         the extent but only to the extent,  such  expenses are  permitted to be
         paid pursuant to this  Agreement and are within the Approved  Operating
         Budget  (excluding debt service  included  within the following  clause
         (b); plus

                  (b) actual cash payments to pay regular scheduled installments
         of principal  and  interest on the Loan and the Senior  Loans  required
         hereunder (other than the payment of Available  Consolidated Cash Flow)
         and under the Senior Loan Documents during such  immediately  preceding
         Fiscal  Quarter  and to fund  reserves  with  respect  to the  Expanded
         Properties  required  to be funded  during such  immediately  preceding
         Fiscal Quarter under the Senior Loan Documents; plus

(c)  Permitted REIT Cash Distributions  during the immediately  preceding Fiscal
     Quarter, if any; plus

(d)  $4,000,000, representing the maximum amount of the Working Capital Reserve.

"Bankruptcy Claims" means all of Borrower's  claims and rights to the payment of
     damages  arising  from any  rejection  by a lessee of any  Lease  under the
     Bankruptcy code, 11 U.S.C.ss. 101 et seq., as amended from time to time.

"Bankruptcy  Code"  means  the  Bankruptcy  Reform  Act of  1978  (11  U.S.C.ss.
     101-1330) as now or hereafter amended or recodified.

         "Bankruptcy  Law" means the  Bankruptcy  Code or any existing or future
law  of  any  jurisdiction,   domestic  or  foreign,   relating  to  bankruptcy,
insolvency,  reorganization,  conservatorship or similar law, rule or regulation
for the relief of debtors.

         "Bellport I Property" shall mean the Bellport Phase I property owned be
MG Patchogue Limited Partnership.

         "Bellport II & III Property"  shall mean the Bellport  Phase II and III
property owned by MG Patchogue II Limited Partnership.

         "Bellport LLC" shall have the meaning set forth in Section 3.1(a).

         "Bellport Pledge Agreement" shall have the meaning set forth in Section
3.1(f).

         "Birch Run Property" shall mean the property known as the Prime Outlets
at Birch Run, owned by Birch Run Outlets, L.L.C.

         "Borrower"   shall  have  the  meaning  provided  in  the  introductory
paragraph to this Agreement.

         "Borrower  Group  Member(s)"  shall  mean (i)  individually,  each Loan
Party,  each  Expanded  Property  Owner,  each  Subsidiary of a Loan Party or an
Expanded  Property Owner, and each Subsidiary of any such Subsidiary (and any of
its  Subsidiaries  and so on through  any chain of  ownership  through  multiple
subsidiary chains), and each Affiliate of any Loan Party which owns, directly or
indirectly, any interest in any Expanded Property, and (ii) collectively, all of
the Persons set forth in clause (i); provided,  that the following Persons shall
not constitute Borrower Group Members merely as a result of their status as such
Persons:  (a) shareholders of Holdings,  (b) limited partners of Borrower (other
than Holdings),  (c) Oxnard Factory Outlet  Partners,  (d) Arizona Factory Shops
Partnership, (e) Triple Outlet World Joint Venture, (f) Harborboat Realty, Inc.,
(g) the Contessa Nadia de Navarro Farber, (h) European Outlet Associates LLC and
(i) Fine Furniture Direct, Inc.

         "Borrower Pledge Agreement" shall have the meaning set forth in Section
3.1(a) hereof.

         "Breakage  Costs"  shall  have the  meaning  set forth in  Section  2.7
hereof.

         "Bridge  Loan" means the Senior Loan made pursuant to that certain Loan
Agreement dated June 15, 1998 between Nomura Asset Capital Corporation,  Buckeye
Factory Shops Limited  Partnership,  Latham Factory Stores Limited  Partnership,
Carolina  Factory  Shops  Limited  Partnership,  Shasta  Outlet  Centre  Limited
Partnership,  The Prime  Outlets of Calhoun  Limited  Partnership  and the Prime
Outlets of Lee Limited Partnership.

         "Brokerage  Agreement"  shall mean any agreement or contract with third
parties for the sale or lease of any portion of the Improvements.

         "Business Day" means any day other than (i) a Saturday and a Sunday and
(ii) a day on which federally  insured  depository  institutions in the State of
New York or the state in which the offices of Lender or its Servicer are located
(as  notified  to  Borrower  from time to time in  writing)  are  authorized  or
obligated by law, governmental decree or executive order to be closed.

         "Business Plan" shall have the meaning set forth in Section 6.6 of this
Agreement,  and shall include an annual  management  and marketing plan for each
Fiscal Year, in a form  approved by Lender,  which will serve as a basis for the
management and administration of the Expanded Properties for the upcoming Fiscal
Year,  and which  will  include  (i) the  operating  strategy  for the  Expanded
Properties,  (ii) a leasing and rental growth plan, including Leasing Guidelines
and (iii) a Capital Expenditure budget for the Expanded Properties.

         "Capital I" shall have the meaning set forth in Section 3.1(a) hereof.

         "Capital  I Pledge  Agreement"  shall  have the  meaning  set  forth in
Section 3.1(d) hereof.

         "Capital  Expenditure"  shall mean,  with  respect to any  Person,  all
expenditures  by such Person  which should be shown as capital  expenditures  in
accordance with GAAP and, without  duplication,  the amount of Capitalized Lease
Obligations incurred by such Person.

         "Capitalized  Lease Obligations" of any Person means the obligations of
such  Person  to pay  rent  or  other  amounts  under  any  lease  of (or  other
arrangement  conveying  the  right  to use)  real  or  personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as capital  leases on a balance  sheet of such Person under GAAP,
and the  amount of such  obligations  shall be the  capitalized  amount  thereof
determined in accordance with GAAP.

         "Chesapeake" shall have the meaning set forth in Section 3.1(h).

         "Chesapeake  Pledge  Agreement"  shall  have the  meaning  set forth in
Section 3.1(h).

         "Closing Date" shall mean the date upon which Lender funds the Loan.

         "Code"  means  the  Internal  Revenue  Code of  1986,  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.

         "Co-Lender" shall have the meaning set forth in Section 15.20.

         "Collateral" shall have the meaning provided in Section 3.1 hereof.

         "Collateral  Accounts" means,  collectively and in the singular, as the
context may require, each of the accounts and subaccounts  established under the
Lockbox Agreement.

         "Commission" shall mean the Securities and Exchange Commission,  or any
other federal agency then administering the Securities Act.

         "Common  Stock" shall mean the common stock,  par value $.01 per share,
of Holdings.

         "Compliance  Audit" shall have the meaning  provided in Section  7.2(e)
hereof.

         "Consolidated"  when used with  respect to any Person,  shall mean such
Person and any other Subsidiaries or Persons which are required under GAAP to be
consolidated with such Person for financial reporting purposes.

         "Consolidated  Capital  Expenditures"  shall mean for any period,  with
respect  to any  Person,  the  Capital  Expenditures  of  such  Person  and  its
Subsidiaries  for such period  determined on a consolidated  basis in accordance
with GAAP.

         "Consolidated  EBITDA"  shall  mean with  respect to any Person for any
period,  EBITDA for such Person computed on a consolidated  basis (in accordance
with GAAP) for such Person and its Subsidiaries.

         "Consolidated  Interest  Expense" shall mean with respect to any Person
for any period the  Interest  Expense  for such Person and its  Subsidiaries  as
determined on a consolidated basis in accordance with GAAP.

         "Consolidated  Net  Operating  Income"  shall mean with  respect to any
Person  for  any  period  the Net  Operating  Income  for  such  Person  and its
Subsidiaries as determined on a consolidated basis in accordance with GAAP.

         "Consolidated  Total Debt" shall mean,  with respect to any Person,  at
any date, the  consolidated (in accordance with GAAP) Total Debt such Person and
its Subsidiaries at such date.
         "Controlled   Group"  means  all  members  of  a  controlled  group  of
corporations and all trades or businesses  (whether or not  incorporated)  under
common  control  which,  together  with the  Borrower,  are  treated as a single
employer under Sections 414(b) or 414(c) of the Code.

         "Core Deposit Account" shall have the meaning set forth in Section 12.2
hereof.

         "Core Property Owners" shall have the meaning set forth in Section 12.2
hereof.

         "Current Rent Roll" shall have the meaning  provided in Section 5.39(b)
hereof.

         "Debt"  shall  mean  all  loans,  Advances,   debts,   liabilities  and
obligations  for the  performance  of  covenants  or  duties or for  payment  of
monetary   amounts  (whether  or  not  such  performance  is  then  required  or
contingent,  or such  amounts  are  liquidated  or  determinable)  owing  by the
Borrower to the Lender, and all covenants and duties regarding such amounts,  of
any kind or nature,  present or future,  whether or not  evidenced  by any note,
agreement or other instrument,  in each case arising under this Agreement or any
of the  other  Loan  Documents.  This  term  includes  all  principal,  interest
(including  all interest  which  accrues after the  commencement  of any case or
proceeding in bankruptcy after the insolvency of, or for the  reorganization of,
any Loan  Party or  Expanded  Property  Owner,  whether  or not  allowed in such
proceeding), fees, expenses, attorneys' fees and any other sum chargeable to any
Loan  Party  under this  Agreement  or any of the other  Loan  Documents  or any
Expanded Property Owner.

         "Deposit Accounts" shall have the meaning provided in Section 12.1.

         "Default" means an event, condition or circumstance,  the occurrence or
existence of which shall,  upon the giving of notice or the passage of time,  or
both, constitute an Event of Default.

         "Default  Rate"  shall have the  meaning  provided  in  Section  2.8(d)
hereof.

         "Deposit  Account  Collateral"  shall  have the  meaning  set  forth in
Section 12.5 hereof.

         "Depository" shall have the meaning provided in Section 12.1.

         "Deposit  Percentages" shall have the meaning set forth in Section 12.2
hereof.

         "Disclosure  Material and Information"  shall have the meaning provided
in Section 15.19 hereof.

         "Distribution  Direction  Letter"  shall have the  meaning  provided in
Section 7.28 hereof.

         "Distributions" shall have the meaning provided in Section 8.7 hereof.

         "Easement  Areas"  shall have the meaning  provided in Section  5.46(e)
hereof.

         "EBITDA" shall mean, for the most recently  ended Fiscal  Quarter,  the
Consolidated Net Operating  Income of any Person and its  Subsidiaries  plus all
other income (excluding equity earnings of unconsolidated  Subsidiaries) of such
Person and its  Subsidiaries  which in accordance with GAAP would be required to
be included in the relevant  Person's  annual  financial  statements  as income.
EBITDA shall not include:  (i) extraordinary items in accordance with GAAP, (ii)
gains or losses from debt  restructuring and dispositions of properties or other
material  assets,  and (iii)  allocations to preferred  shareholders or minority
interests  EBITDA  shall  also  include  the  pro-rata  share of EBITDA  for all
unconsolidated Subsidiaries other than equity earnings.

         "Effective  Material  Agreements"  shall have the  meaning set forth in
Section 7.19.

         "Eligible Account" shall means a separate and identifiable account from
all other funds held by the holding institution,  which account is either (i) an
account  maintained  with an Eligible  Bank or (ii) a Trust  Account.  "Eligible
Bank" shall mean a bank that (i) satisfies the Rating  Criteria and (ii) insures
the deposits hereunder through the Federal Deposit Insurance Corporation. "Trust
Account" shall mean a segregated  trust account  maintained by a corporate trust
department of a federal depository  institution or a state chartered  depository
institution subject to regulations  regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations ss. 9.10(B),  which has corporate
trust powers and is acting in its fiduciary  capacity.  "Rating  Criteria"  with
respect  to any  Person,  shall  mean  that (i) the  short-term  unsecured  debt
obligations  of such  Person  are rated at least  "A-1" by S&P and,  if rated by
another Rating Agency, are rated in an equivalent  category by such other Rating
Agency,  if deposits  are held by such person for a period of less than 30 days,
or (ii) the long-term  unsecured  debt  obligations  of such Person are rated at
least  "AA-" by S&P and,  if rated by  another  Rating  Agency,  are rated in an
equivalent  category by such other Rating  Agency,  if deposits are held by such
person for a period of 30 days or more.

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

         "Environmental   Indemnity"  shall  mean  that  certain   Environmental
Indemnity Agreement dated as of the Closing Date made by Borrower,  Holdings and
the other Guarantors to Lender, together with any Amendments thereto.

         "Environmental  Laws" has the  meaning  set forth in the  Environmental
Indemnity.

         "Environmental  Report" means a "Phase I Environmental Site Assessment"
as  referred to in the ASTM  Standards  on  Environmental  Site  Assessment  for
Commercial  Real  Estate,  E  1527-94  (and,  if  recommended  in  such  Phase I
environmental  report,  a "Phase II Environmental  Assessment"),  prepared by an
environmental  auditor reasonably approved by Lender and delivered to Lender and
any amendments or supplements thereto delivered to Lender and shall also include
any other  environmental  reports delivered to Lender pursuant to this Agreement
and the Environmental  Indemnity,  and accompanied by a reliance letter, in form
and substance acceptable to Lender, permitting Lender to rely on the report.

         "Environmental  Requirement"  shall  collectively  mean all  applicable
present and future  laws,  statutes,  ordinances,  rules,  regulations,  orders,
codes,  licenses,  permits,  decrees  or  judgments  of or by  any  Governmental
Authority and relating to or addressing  the  protection of the  environment  or
human health.

         "ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with Holdings or any Subsidiary  thereof,  would be deemed
to be a member of the same  "controlled  group"  within  the  meaning of Section
414(b), (c), (m) and (o) of the Code.

         "Escrow Fund" shall have the meaning provided in Section 7.4(c) hereof.

         "Event of  Default"  shall have the meaning  provided  in Section  13.1
hereof.

         "Excess  Cash Flow" shall have the  meaning  set forth in Section  12.2
hereof.

         "Expanded  Properties"  shall  mean each  Property  and each other real
property  owned or leased on a long term  basis by any  Borrower  Group  Member,
including without  limitation,  the real property set forth on Schedule 5.16 and
"Expanded Property" shall mean any one of them.

         "Expanded  Property  Owners"  shall  mean the owner in fee simple or as
ground lessee of any Expanded Property and "Expanded  Property Owner" shall mean
any one of them.

         "Finance  VI Pledge  Agreement"  shall  have the  meaning  set forth in
Section 3.1(e).

         "Financing"  shall mean any loan or indebtedness  obtained by Borrower,
any  Loan  Party,  any  Expanded  Property  Owner  or  any of  their  respective
Subsidiaries or Affiliates (whether construction,  permanent, mezzanine, bridge,
takeout or otherwise) other than unsecured Trade Payables.

         "Financing  Statements"  shall  have the  meaning  provided  in Section
3.1(m) hereof.

         "First Payment Date" shall have the meaning  provided in Section 2.5(a)
hereof.

         "Fiscal Quarter" means the three-month  period ending on March 31, June
30, September 30, and December 31 of each year.

         "Fiscal  Year" means the 12-month  period ending on December 31 of each
year.

         "FRIT" shall have the meaning set forth in Section 15.20.

         "Fru-Con  Properties"  shall mean the Oxnard the New River  outlet mall
properties  owned by Oxnard  Factory Outlet  Partners and Arizona  Factory Shops
Partnership, respectively.

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

         "Governmental  Authority"  shall mean the  Federal  government,  or any
state or other political  subdivision  thereof, or any agency,  court or body of
the  Federal  government,  any  state or other  political  subdivision  thereof,
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions.

         "Greenwich" shall have the meaning set forth in Section 15.20.

         "Gross Asset Value" shall mean the Lender's estimate of market value of
Holdings' direct and indirect interests in the Expanded  Properties,  determined
by Lender on the basis of the following capitalization rates:

         Property Type                               Capitalization Rate

         properties with less than       lesser of 20.0% and $40 per square foot
         $200 per square foot sales

         properties with between                     15.0%
         $200-224 per square foot sales

         properties with between                     13.0%
         $225-249 per square foot sales

         properties with between                     12.0%
         $250-299 per square foot sales

         properties with $300                        10.5%
         or greater per square foot sales

         community centers                           10.0%

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation;  provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Guarantor(s)" shall mean Holdings,  the Subsidiary  Guarantors and any
other person or entity who, or which, in any manner,  is or becomes obligated to
Lender under any guaranty now or hereafter  executed in connection  with respect
to the Loan  (collectively  or severally  as the context  thereof may suggest or
require).

         "Guaranty"  shall mean that  certain  Guaranty  dated as of the Closing
Date made by the  Guarantors in favor of Lender,  together  with any  Amendments
thereto.

         "Hagerstown LP" shall have the meaning set forth in Section 3.1(e).

         "Hagerstown Third Mortgage" shall have the meaning set forth in Section
3.1(i) hereof.

         "Hazardous  Materials"  shall  mean any  material  or  substance  that,
whether by its nature or use, is now or hereafter  defined as a hazardous waste,
hazardous   substance,   pollutant  or  contaminant   under  any   Environmental
Requirement, or which is toxic, explosive, infectious, radioactive, carcinogenic
or  otherwise  hazardous  and  which is now or  hereafter  regulated  under  any
Environmental Requirement,  or which is or contains petroleum,  gasoline, diesel
fuel or another petroleum hydrocarbon product.

         "Holdings"  shall have the  meaning  provided  in the  recitals to this
Agreement.

         "Holdings Pledge  Agreement" shall have the meaning provided in Section
3.1(c) hereof.

         "Improvements"  as to  any  Expanded  Property,  means  all  buildings,
structures,   fixtures,   Tenant   Improvements   and  other   improvements  and
appurtenances now or hereafter located on such Expanded Property,  including all
parking areas, water, sanitary and storm sewers, elevators, escalators, heating,
ventilating  and  air   conditioning   system  and  components,   septic  system
components,  signage, drainage,  electrical equipment,  plumbing,  sprinkler and
other  fire  safety  equipment,  satellite  dishes  or  other  telecommunication
equipment, and all additions to, modifications of and replacements thereof.

         "Indebtedness"  of any  Person  means,  without  duplication,  (a)  all
obligations  of such Person for  borrowed  money,  (b) all  obligations  of such
Person evidenced by bonds,  debentures,  notes or similar  instruments,  (c) all
obligations  of such Person  under  conditional  sale or other  title  retention
agreements  relating to property acquired by such Person, (d) all obligations of
such Person in respect of the  deferred  purchase  price of property or services
(excluding   current  accounts  payable  incurred  in  the  ordinary  course  of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right,  contingent or otherwise, to be secured
by) any Lien on property  owned or acquired by such  Person,  whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations,  contingent or otherwise, of such Person as an account party in
respect of letters of credit and  letters of guaranty  and (i) all  obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.  The
Indebtedness  of any Person shall include the  Indebtedness  of any other entity
(including  any  partnership  in which such Person is a general  partner) to the
extent such Person is liable  therefor  as a result of such  Person's  ownership
interest in or other  relationship  with such  entity,  except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

         "Interest  Accrual Period" shall mean a calendar  month;  provided that
the first Interest  Accrual Period shall commence on the Closing Date and end on
the last day of the calendar month in which the Closing Date occurs.

         "Intellectual  Property"  shall have the  meaning  set forth in Section
5.29 hereof.

         "Intercreditor  Agreement"  shall  have  the  meaning  provided  in the
Recitals to this Agreement.

         "Interest  Expense" shall mean, for the most recently  completed Fiscal
Quarter,   for  any  Person,  all  interest  expense  of  such  Person  and  its
Subsidiaries  in  accordance  with  GAAP,  plus  (without  duplication)  (i) the
pro-rata  share  of  interest  expense  in  unconsolidated  Subsidiaries,   (ii)
capitalized  interest and (iii) all accrued,  or paid  interest  incurred on any
obligation  for  which  such  Person  and any of its  Subsidiaries  is wholly or
partially liable under repayment,  interest carry, or performance guarantees, or
other relevant liabilities.  Interest Expense shall not include (i) amortization
of deferred  financing costs and interest rate protection  agreements,  (ii) the
valuation  adjustments  attributable  to changes in the market value of interest
rate  protection   agreements,   (iii)  the  Additional  Fee,  (iv)  pre-payment
penalties,  (v) the  amortization  of the  fair  value of the  Warrant  and (vi)
Schedule V Fees.

         "Investor" shall have the meaning set forth in Section 15.19 hereof.

         "Involuntary  Bankruptcy  Event" shall mean the commencement of a case,
proceeding  or other  action  under any  Bankruptcy  Law (not brought by Lender)
against any Loan Party or Expanded  Property Owner which is not dismissed within
sixty (60) days of filing.

         "Lease"  means  any  lease,  license,  letting,  concession,  occupancy
agreement  or  other  agreement  (whether  written  or oral and  whether  now or
hereafter in effect),  existing as of the date hereof or hereafter  entered into
by any  Borrower  Group  Member,  pursuant  to which  any  Person  is  granted a
possessory  interest  in, or right to use or occupy  all or any  portion  of any
space in any Expanded Property,  and every Amendment or other agreement relating
to such lease or other  agreement  entered into, in accordance with the terms of
the Loan  Documents,  in connection  with such lease or other  agreement and all
agreements  related  thereto,   and  every  guarantee  of  the  performance  and
observance  of the  covenants,  conditions  and  agreements  to be performed and
observed by the other party  thereto.  The term  "Lease"  shall also include any
sublease under a Lease if any Borrower Group Member has the right to approve the
sublease or if a Borrower Group Member is the sublessor thereunder.

         "Lease Guaranties" means all of Borrower's right, title and interest in
and claims under any and all lease  guaranties,  letters of credit and any other
credit support given to any Borrower Group Member by any guarantor in connection
with any Lease.

         "Leasing Guidelines" means

         (i) neither  Borrower nor any Expanded  Property Owner shall enter into
any new Major  Lease or enter into an  Amendment  with  respect to any  existing
Lease without the prior written consent of Lender; and

         (ii) Leases other than Major Leases shall not require the prior written
consent of Lender so long as such Lease is (a) on market  terms and  conditions,
(b) at market  rents and other  economic  terms,  including  tenant  improvement
allowances, and (c) in conformance with Borrower's approved Operating Budget.

         "Lebanon Property" has the meaning set forth in Section 2.7(e).

         "Legal Requirements" means

         (i) all existing and future governmental statutes, laws, rules, orders,
         regulations,   this  Agreement,   ordinances,   judgment   decrees  and
         injunctions of Governmental Authorities (including, without limitation,
         Environmental Laws) affecting any Borrower Group Member or the Expanded
         Properties,  or any part thereof, or the construction,  ownership, use,
         alteration or operation  thereof,  or any part thereof  (whether now or
         hereafter enacted and in force);

          (ii) all permits, licenses and authorizations and regulations relating
               thereto; and

         (iii) all  covenants,  conditions  and  restrictions  contained  in any
         recorded  instruments (other than Leases) at any time in force (whether
         or not  involving  Governmental  Authorities)  affecting  the  Expanded
         Properties or any part thereof which, in the case of this clause (iii),
         require  repairs,  modifications  or  alterations in or to the Expanded
         Properties  or any  part  thereof,  or in any  material  way  limit  or
         restrict the existing use and enjoyment thereof.

         "Lender" shall have the meaning provided in the introductory  paragraph
to this Agreement.

         "Lender's  Expenses" means all  out-of-pocket  fees, costs and expenses
and disbursements of Lender including, without limitation, all Professional Fees
incurred  by  Lender,  in  connection  with  (i) the  negotiation,  preparation,
execution and delivery of the Loan Documents and any Intercreditor Agreement and
the documents and instruments referred to therein (ii) the Amendment of any Loan
Document and (iii) the creation,  perfection or protection of Lender's  Liens in
the Collateral (including,  without limitation,  fees and expenses for title and
lien searches and filing and recording fees, intangible taxes, personal property
taxes,  due  diligence   expenses,   travel   expenses,   costs  of  appraisals,
Environmental Reports, surveys and engineering reports).

         "Lender Termination Request" shall have the meaning provided in Section
9.1(b).

         "LIBOR  Adjustment  Date"  shall  mean the first  day of each  calendar
month.

         "LIBOR  Business Day" shall mean any day on which  commercial  banks in
the  City of  London,  England  are  open  for  interbank  or  foreign  exchange
transactions.

         "LIBOR Rate" means with respect to each Interest  Accrual  Period,  the
30-day  London  Interbank  Market  offered  rates as reported by The Wall Street
Journal  (rounded  upward,  if necessary,  to the nearest  one-sixteenth  of one
percent (1/16%)) for the LIBOR Business Day which is two (2) Business Days prior
to the relevant LIBOR  Adjustment  Date (or in the event that Lender  determines
that the  LIBOR  Rate is not  ascertainable  from The Wall  Street  Journal,  as
reported on Telerate page 3750  (provided that at least two offered rates appear
on Telerate  page 3750)) as of 10:00 a.m.,  New York time,  on the date which is
two (2) Business Days prior to the relevant LIBOR  Adjustment Date. For purposes
of this Agreement,  in no event will the LIBOR Rate be deemed to fall below five
percent (5%).

         "LIBOR To Treasury Spread" means the difference,  if positive,  between
the LIBOR Rate and the Treasury Rate on the date of any Treasury Rate Notice. If
such difference is negative,  the LIBOR To Treasury Spread shall be deemed to be
equal to zero.

         "Lien"  means,  with respect to any asset,  (a) any  mortgage,  deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such  asset,  (b) the  interest  of a  vendor  or a  lessor  under  any
conditional sale agreement,  capital lease or title retention  agreement (or any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing)  relating  to such  asset  and (c) in the  case  of  securities,  any
purchase  option,  call or similar  right of a third party with  respect to such
securities.

         "Loan"  shall  have  the  meaning  provided  in the  recitals  to  this
Agreement, together with any Amendments thereto.

         "Loan  Amount"  shall have the meaning  provided in Section 2.1 of this
Agreement.

         "Loan  Documents"   means  this  Agreement,   the  Note,  the  Security
Documents,  the  Warrant  and any  and  all  other  documents,  instruments  and
agreements  now  existing or hereafter  entered  into,  evidencing,  securing or
otherwise relating to the Loan, together with any Amendments thereto.

         "Loan Fee" shall have the meaning set forth in Section 2.14(a) hereof.

         "Loan Parties" means,  collectively,  the Borrower, the Guarantors, the
Property  Owners and each other Person who is becomes or is required to become a
Loan Party pursuant to this Agreement, and each of them shall constitute a "Loan
Party".

         "Lockbox" shall have the meaning provided in the Lockbox Agreement.

         "Lockbox  Agreement"  means that certain Lockbox  Agreement dated as of
the Closing Date by and among the Depository,  Loan Parties and Lender, together
with any Amendments thereto.

         "Loss  Proceeds"  shall have the  meaning  provided  in Section  7.3(d)
hereof.

         "Lothar" shall have the meaning set forth in Exhibit M.

         "Lothar  Joint Venture  Agreement"  shall have the meaning set forth in
Exhibit M.

         "Lothar  Properties"  shall  mean the  properties  known  as the  Prime
Outlets of Williamsburg,  Virginia and the Prime Outlets of Birch Run, Michigan,
each as more particularly described on Exhibit M attached hereto.

         "Major  Lease" shall mean any Lease for space in excess of 7,500 square
feet,  and  Lease at any  Expanded  Property  which is among  the  largest  four
tenancies at such Expanded Property, measured by relative square footage leased,
and, for purposes of Section 6.8 and Section  13.1,  any  combination  of Leases
with any tenant or group of affiliated tenants which demises,  in the aggregate,
more than 25,000 square feet within the Expanded Properties as a whole.

         "Management   Agreements"   means  any   agreements  for  the  leasing,
management, operation or marketing of any Expanded Property.

         "Management  Standard"  shall  have the  meaning  provided  in  Section
9.1(a).

         "Manager"  shall mean the  manager  of any  Expanded  Property  under a
Management Agreement,  or Borrower if and to the extent the Expanded Property is
being managed by Borrower without a Management Agreement.

         "Manager Termination Notice" shall have the meaning provided in Section
9.2 hereof.

         "Marketing Reserve Deposit Account" shall have the meaning set forth in
Section 2.16.

         "Marketing  Reserve Operating Account" shall have the meaning set forth
in Section 2.16.

         "Marketing  Reserve  Agreement"  shall  have the  meaning  set forth in
Section 3.1(o).

         "Marketing  Reserve  Payments"  shall  have the  meaning  set  forth in
Section 2.16.

         "Material Adverse Change" or "Material Adverse Effect" means a material
adverse effect upon (i) the business operations,  assets or condition (financial
or  otherwise)  of any Loan Party or  Expanded  Property  Owner  (provided  that
foreclosures occurring or deed-in-lieu of foreclosure  transactions entered into
in  accordance  with the  provisions  of Schedule  10.5 with  respect to certain
Expanded  Properties  identified  in  Schedule  10.5 shall not be  considered  a
Material Adverse Change or to have a Material Adverse Effect),  (ii) the ability
of any Loan Party to perform, or of Lender to enforce, any material provision of
the Loan  Documents,  (iii) the  value or use of any  Expanded  Property  or the
operation  thereof  (provided that  foreclosures  occurring or  deed-in-lieu  of
foreclosure  transactions  entered into in  accordance  with the  provisions  of
Schedule 10.5 with respect to certain Expanded Properties identified in Schedule
10.5 shall not be  considered  a Material  Adverse  Change or to have a Material
Adverse Effect), (iv) the validity, priority or enforceability of this Agreement
or any other Loan Document,  the ability of Lender to enforce its legal remedies
pursuant to this Agreement or any other Loan Documents, or (v) the Loan.

         "Material Agreements" means, with respect to any Loan Party or Expanded
Property Owner, (x) each contract and agreement entered into by such Person or a
predecessor in interest to such Person  relating to the  ownership,  management,
development, use, operation, leasing, maintenance,  repair or improvement of any
Expanded Property, or otherwise imposing obligations on such Person, under which
such Person  would have the  obligation  to pay more than  $100,000 per annum or
which cannot be terminated by such Person  without cause upon 30 days' notice or
less, (y) each contract and agreement which is not included in (i) but which, to
such Person's knowledge, is reasonably likely to materially and adversely affect
such Person or any Expanded Property and (z) the Senior Loan Documents.

         "Maturity  Date" means the Scheduled  Maturity Date, as the same may be
accelerated  pursuant  to the  provisions  of the  Note,  Section  13.2  of this
Agreement, or applicable law.

         "Maximum Lawful Rate" shall have the meaning provided in Section 2.8(f)
hereof.

         "Mezzanine  Megadeal Deposit  Accounts" shall have the meaning provided
in Section 12.2 hereof.

         "Minimum Monthly Amortization Amount" shall mean $1,000,000.00 for each
of the first twelve (12) monthly  Payment Dates,  $1,667,000.00  for each of the
next twelve (12)  monthly  Payment  Dates,  and  $2,333,000.00  for each monthly
Payment Date thereafter.

         "Moody's" means Moody's Investors Service, Inc.

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

         "Negative Pledge Agreements" shall mean the collective reference to the
Prime II Negative  Pledge  Agreement,  the Prime Retail Finance  Negative Pledge
Agreement,  the Prime LP Negative Pledge Agreement,  the Omnibus Negative Pledge
Agreement, and any other negative agreement entered into by any Loan Party after
the Closing Date, together with any Amendments to any of the foregoing.

         "Net  Operating  Income"  means,  for  any  Person  for the  period  in
question,  an amount  equal to the  Operating  Income  for such  period  for the
Expanded  Property(ies)  owned by such Person, less the sum of (i) the amount of
all Operating Expenses for such period for the Expanded  Property(ies)  owned by
such Person, and (ii) all general and administrative expenses, including without
limitation office and  administrative  overhead,  and all other ongoing expenses
which in  accordance  with GAAP would be required  to be or are  included in the
relevant Person's annual financial statements as expenses.

         "Net Worth" shall mean,  for any Person,  the  Shareholders'  Equity of
such Person as the same would be shown on a combined  consolidated balance sheet
of such Person as of such date, prepared in accordance with GAAP.

         "Note" shall have the meaning provided in Section 1.2.

         "Obligations" shall have the meaning provided in Section 3.2 hereof.

         "Officer's  Certificate" means written  certification with respect to a
particular  matter  made by an  individual  authorized  to act on  behalf of any
Person delivering the certificate and, to the extent applicable, any constituent
Person with  respect to such Person.  Without  limiting  the  foregoing,  if the
individual signing the certificate is doing so on behalf of a corporation,  then
such  individual  shall hold the office of President,  Executive Vice President,
Senior  Vice  President,  Vice  President,  Chief  Financial  Officer  or  Chief
Accounting  Officer (or the equivalent)  with respect to such  corporation.  Any
such  certificate  may be based,  insofar  as it  relates  to legal  accounting,
architectural  or  engineering  matters  or  matters  customarily  dealt with by
experts, upon the written advice of counsel, an accountant,  architect, engineer
or such expert, as applicable,  provided the individual  signing the certificate
believes in good faith that such reliance is justified.
         "Omnibus Cash Flow Pledge  Agreement"  shall have the meaning set forth
in Section 3.1(p).

         "Omnibus Negative Pledge Agreement" shall have the meaning set forth in
Section 3.1(q).

         "OP Funds Deposit  Account" shall have the meaning set forth in Section
12.2 hereof.

         "Operating Account" shall have the meaning provided in Section 12.1(c).

         "Operating  Account  Agreement"  shall  have the  meaning  provided  in
Section 3.1(n).

         "Operating Budget" has the meaning set forth in Section 6.6 hereof.

         "Operating  Expenses" means with respect to any Expanded Property,  for
any period,  all  expenditures  by Manager,  any Expanded  Property Owner or any
Borrower  Group Member as and to the extent  required to be expensed  under GAAP
during such period in connection  with the  ownership,  operation,  maintenance,
repair  or  leasing  of  such  Property  and  Improvements,  including,  without
limitation or duplication:

          (a)  expenses  in  connection  with  cleaning,  repair,   replacement,
               painting and maintenance;

(b) wages,  benefits,  payroll taxes,  uniforms,  insurance  costs and all other
related  expenses for employees of Manager,  any Expanded  Property Owner or any
Loan Party engaged in repair,  operation,  maintenance of the Expanded Property,
or service to tenants, patrons or guests thereof;

(c)      any management fees and expenses;

(d)  the cost of all electricity, oil, gas, water, steam, heat, ventilation, air
     conditioning  and any other  energy,  utility or similar  item and overtime
     services;
(e)      the cost of cleaning supplies;

(f) Real Property Taxes and Other Property  Charges that are actually paid (from
a source  other than  reserved  funds) or reserved for or by or on behalf of any
Loan Party or Expanded Property Owner;

(g) business interruption,  liability, casualty and fidelity insurance premiums,
provided,  however,  if any insurance is maintained as part of a blanket  policy
covering  such Expanded  Property and other  properties,  the insurance  premium
included in this  subparagraph  shall be the premium  fairly  allocable  to such
Expanded Property;

(h)  Professional  Fees incurred in connection  with the  ownership,  leasing or
     operation  of  the  Expanded  Property,   including,   without  limitation,
     collection  costs and  expenses;  (i) costs and  expenses of  security  and
     security systems;

(j)      trash removal and exterminating costs and expenses;

(k)      advertising and marketing costs;

(l) costs of environmental audits and monitoring,  environmental  investigation,
remediation  or other  response  actions  or any other  expenses  incurred  with
respect to compliance with Environmental Laws; and

(m) all other ongoing  expenses which in accordance with GAAP are required to be
or  are  included  in the  relevant  Person's  annual  financial  statements  as
operating expenses of such Expanded Property.

Notwithstanding  the  foregoing,  Operating  Expenses  shall not include (x) any
taxes imposed on such Person's net income,  (y)  depreciation or amortization or
(z) payments in connection with the Loan or the Senior Notes.

         "Operating Income" means with respect to any Expanded Property, for any
period,  all regular ongoing income of any Loan Party or Expanded Property Owner
during such period from the  operation  of such  Expanded  Property,  including,
without limitation:

         (i) all amounts payable as rents (other than Security Deposits) and all
         other  amounts  payable  under  Leases or other third party  agreements
         relating  to the  ownership  and  operation  of the  Expanded  Property
         (including, without limitation, all reimbursements by tenants, lessees,
         licensees  and other  users of the  Expanded  Property),  discounts  or
         credits to such Person,  income,  interest and other monies directly or
         indirectly  received by or on behalf of or credited to such Person from
         any person with respect to such Person's ownership,  use,  development,
         operation, leasing, franchising, marketing or licensing of the Expanded
         Property, and interest income;

         (ii)     business interruption insurance proceeds; and

         (iii) all other amounts  which in accordance  with GAAP are required to
         be or are included in such  Person's  annual  financial  statements  as
         operating income of such Expanded Property.

         "Organizational  Documents"  means  shall  mean (i) with  respect  to a
corporation,  such Person's  certificate of incorporation  and by-laws,  and any
shareholder agreement,  voting trust or similar arrangement applicable to any of
such  Person's  authorized  shares of  capital  stock,  (ii) with  respect  to a
partnership,  such  Person's  certificate  of limited  partnership,  partnership
agreement,  voting  trusts  or  similar  arrangements  applicable  to any of its
partnership  interests,  (iii) with respect to a limited liability company, such
Person's certificate of formation,  limited liability company agreement or other
document affecting the rights of holders of limited liability company interests,
and (iv) any and all  agreements  between  any  constituent  member,  partner or
shareholder   of  any  Person,   including   any   contribution   agreement   or
indemnification  agreements.  In each  case,  "Organizational  Documents"  shall
include any indemnity,  contribution,  shareholders or other agreement among any
of the owners of the entity in question.

         "Organizational   Document   Amendments"   means  the   amendments   to
Organizational Documents set forth on Exhibit U.

         "Other  Deposit  Account"  shall have the  meaning set forth in Section
12.2 hereof.

         "Other  Obligations"  shall have the  meaning  provided  in Section 3.2
hereof.

         "Other  Property  Charges"  shall have the meaning  provided in Section
7.4(a) hereof.

         "Other  Property  Owners"  shall have the  meaning set forth in Section
12.2 hereof.

         "Other Puerto Rico Deposit Account" shall have the meaning set forth in
Section 12.2.

         "Ownership  Interests"  shall have the meaning provided in Section 11.1
hereof.

         "Participant" shall have the meaning set forth in Section 15.20.

         "Payoff Event" shall have the meaning set forth in Section 2.10(b).

         "Payoff Rate" shall have the meaning set forth in Section 2.10(b).

         "Payment  Date"  shall have the  meaning  provided  in  Section  2.5(a)
hereof.

         "Payment  Direction  Letter" shall have the meaning provided in Section
7.28 hereof.

"PBGC":  the  Pension  Benefit  Guaranty  Corporation  established  pursuant  to
     Subtitle A of Title IV of ERISA (or any successor).

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

         "Permits" means all licenses,  permits and certificates  used or useful
in connection with the design and  construction,  ownership,  operation,  use or
occupancy of the Improvements  and/or any Expanded  Property,  including without
limitation,  building permits,  business licenses,  licenses to conduct business
and all such other  permits,  licenses and rights,  obtained from any Government
Authority.

         "Permitted Debt" means the Debt (including the Guaranty), and:

(i)      the Senior Loans and refinancings thereof permitted under Section 7.20;

(ii) Trade Payables in an aggregate amount for all Borrower Group Members not to
     exceed  $5,000,000  at any one time  outstanding,  and with  respect to any
     Expanded  Property  Owner  not to the  amount  of the  limitation,  if any,
     applicable  thereto  under the  Senior  Loan  Documents  pertaining  to the
     Expanded  Property in which such Expanded  Property Owner owns an interest,
     in each case which are customarily paid by the obligor thereunder within 60
     days of incurrence  and in fact not more than 60 days  outstanding  (unless
     obligor is  properly  and in good faith  contesting  such Trade  Payable by
     appropriate  proceedings  promptly  instituted and diligently  conducted in
     accordance  with the  provisions  of this  Agreement  and such  contest  is
     completed  on or before the date on which the Trade  Payables  are 120 days
     outstanding),  which are incurred in the ordinary  course of such  Person's
     ownership and operation of the Expanded Property, in amounts reasonable and
     customary for similar properties;

(iii)the Puerto Rico  Mortgage and the  Indebtedness  of Holdings,  Borrower and
     any other Loan Party listed on Exhibit F; and

(iv) if required by Lender,  Indebtedness  pursuant  to  interest  rate  hedging
agreements which have been approved by Lender.

         "Permitted  Liens"  means,  collectively:  (a) the Liens created by the
Loan  Documents  and the Senior  Loan  Documents,  Liens  securing  Indebtedness
incurred pursuant to Section 7.20, or otherwise  disclosed on Exhibit F, (b) all
easements, encumbrances and other matters (other than Liens, which in all events
must be disclosed on Exhibit F or in clauses (a), (d) or (e) hereof)  pertaining
to the  Properties  which  are  disclosed  in the  title  insurance  commitments
delivered to Lender  prior to Closing and listed in Schedule IV attached  hereto
and which do not in any event have a Material Adverse Effect, (c) all easements,
encumbrances  and other matters  (other than Liens,  which in all events must be
disclosed on Exhibit F or in clauses (a), (d) or (e) hereof) with respect to the
Expanded  Properties  other  than the  Properties  which  are shown on the title
insurance  policies  issued to the Senior Lenders in connection  with closing of
their  respective  Senior Loans with respect to such  Expanded  Properties,  and
which constitute permitted encumbrances under the terms of the applicable Senior
Loan  Documents  presently  in  effect,  and  which do not in any  event  have a
Material  Adverse  Effect,   (d)  Liens,  if  any,  for  taxes  imposed  by  any
Governmental  Authority not yet due or delinquent,  and (e) statutory  Liens for
labor or materials securing sums not yet due and payable.

         "Permitted REIT Distributions" shall mean stock dividends and Permitted
REIT Cash  Distributions  by the Borrower to its partners and by Holdings to its
stockholders in the minimum amount necessary under the Code in order to maintain
Holdings's  status  as a real  estate  investment  trust  under  the  Code,  and
expressly  provided for under a plan of stock and minimal (or non-existent) cash
distributions  approved  by  Lender  in its  discretion;  provided,  that  it is
presumed  that  there  shall  be  no  cash  distributions  absent  extraordinary
unforeseen circumstances.

         "Permitted   REIT   Cash   Distributions"   shall   mean   those   cash
distributions,  if any, by Holdings to its  stockholders  in the minimum  amount
necessary under the Code in order to maintain Holdings's status as a real estate
investment trust under the Code, to the extent expressly  provided for under the
plan of stock and  minimal  (or  non-existent)  cash  distributions  approved by
Lender in its discretion;  provided,  that it is presumed that there shall be no
cash distributions absent extraordinary unforeseen circumstances.

         "Person" means any individual, sole proprietorship, corporation general
partnership,  limited  partnership,  limited  liability  company or partnership,
joint  venture,   association,   joint-  stock  company,  bank,  trust,  estate,
association,   joint  stock  company,   bank,  trust,   estate,   unincorporated
organization,  any federal, state, county or municipal government (or any agency
or political subdivision thereof), endowment fund or any other form of entity.

         "Personal  Property"  shall have the  meaning  provided  in Section 7.6
hereof.

         "Pledge Agreements" shall mean the collective reference to the Negative
Pledge  Agreements,  the Borrower Pledge Agreement,  the Stock Pledge Agreement,
the Holdings Pledge Agreement,  the Capital I Pledge  Agreement,  the Finance VI
Pledge  Agreement,   the  Chesapeake  Pledge  Agreement,   the  Bellport  Pledge
Agreement,  the  Warehouse  Row Pledge  Agreement,  the Omnibus Cash Flow Pledge
Agreement,  the Operating Account Agreement, the Marketing Reserve Agreement and
any other pledge  agreement  entered into by any Borrower Group Member after the
Closing Date, together with any Amendments to any of the foregoing.

         "Policies" shall have the meaning provided in Section 7.2(c) hereof.

         "PRC Funds Deposit Account" shall have the meaning set forth in Section
12.2 hereof.

          "PRC Member"   means  Prime  Retail   Finance  IX,  Inc.,  a  Maryland
               corporation which is a member of Capital I. "Prime IV" shall have
               the meaning set forth in Section 3.1(b) hereof.

         "Prime LP Negative Pledge  Agreement"  shall have the meaning set forth
in Section 3.1(l) hereof.

         "Prime  Retail  Finance"  shall have the  meaning  set forth in Section
3.1(j) hereof.

         "Prime  Retail  Finance  Pledge  Agreement"  shall have the meaning set
forth in Section 3.1(j) hereof.

         "Prime II Negative Pledge  Agreement"  shall have the meaning set forth
in Section 3.1(k) hereof.

         "Prime Notes" shall mean the promissory notes payable to Borrower Group
Members as more particularly described in Exhibit M.

         "Prime  Williamsburg  Note"  shall  mean  one of the  two  Prime  Notes
identified as the Prime Williamsburg Note in Exhibit M.

         "Professional  Fees" means all fees,  costs and  expenses of  attorneys
(including fees billed for law clerks, paralegals and others not admitted to the
bar but performing services under the supervision of an attorney and customarily
billed  to  clients  and  for  witness  fees  and  court  costs),   accountants,
appraisers,  advisors  and  consultants  and, in each case,  including  document
reproduction expenses,  cost of exhibit preparation,  courier charges and postal
and  communication  expenses and their other  out-of-pocket  expenses.  The term
includes  fees  and  expenses  incurred  after  the  filing  of a  voluntary  or
involuntary petition in bankruptcy.

         "Property" and "Properties"  have the meaning set forth in the recitals
to this Agreement,  and, as the context  requires,  includes any Improvements or
Personal Property located thereon.

         "Property Owner" shall mean each of the entities set forth on Exhibit D
attached hereto.

         "Protective  Advance  Default Rate" shall have the meaning  provided in
Section 2.10(b) hereof.

         "Puerto  Rico  Deposit  Accounts"  shall have the  meaning set forth in
Section 12.2.

         "Puerto Rico Loan Advance"  shall have the meaning set forth in Section
2.7(b).

         "Puerto Rico LP" shall have the meaning set forth in Section 3.1(a).

         "Puerto  Rico  Mortgage"  shall mean that certain  first lien  mortgage
encumbering the Puerto Rico Property, as described in Exhibit F.

         "Puerto Rico Pledged Deposit  Account" shall have the meaning set forth
in Section 12.2.

         "Puerto Rico Property"  shall mean the  properties  known as the Outlet
Village of Puerto Rico located in Barceloneta, Puerto Rico, as more particularly
described on Exhibit N attached hereto.

         "Puerto  Rico  Revenues"  shall have the  meaning  set forth in Section
12.2.

         "Purchase Agreement" shall mean that certain Agreement for Purchase and
Sale dated as of the date hereof by and between Borrower, as Seller, and Lender,
as Buyer, pertaining to the purchase of the Purchase Properties.

         "Purchase Properties" shall mean the properties described on Schedule I
(which  properties  shall  not  constitute  Properties  or  Expanded  Properties
hereunder).

         "Quarterly Payment Date" shall mean each January 1, April 1, July 1 and
October 1 prior to the  Maturity  Date,  provided  that if any such day is not a
Business Day, the Quarterly  Payment Date shall mean the immediately  succeeding
Business Day.

          "Rating Agency"  means S&P,  Moody's,  Duff & Phelps Credit Rating Co.
               and Fitch Investors Service,  L.P. or any successor thereto,  and
               any other nationally  recognized  statistical rating organization
               to the  extent  that any of the  foregoing  have  been or will be
               engaged  by  Lender or its  designers  in  connection  with or in
               anticipation of a securitization.

         "Rating Agency  Confirmation" means written  confirmation from a Rating
Agency that has rated the securities relating to the Loan that a proposed action
will not result in a  withdrawal,  qualification,  or downgrade of the rating of
such securities by such Rating Agency.

         "Real Property Taxes" shall have the meaning provided in Section 6.4(a)
hereof.

         "Relevant  Signatory"  shall  have the  meaning  given to such  term in
Section 9.1(b) hereof.

         "REMIC" means a "real estate  mortgage  investment  conduit" within the
meaning of Section 860D of the Code.

         "Required  Consents"  shall have the  meaning  provided  in Section 5.4
hereof.

         "Required Items" shall have the meaning provided in Section 4.3 hereof.

         "Restoration" shall have the meaning provided in Section 7.3(a) hereof.

         "Revenues"  means  all  income,   rents,  issues,   profits,   revenues
(including all oil and gas or other mineral royalties and bonuses), deposits and
other benefits received by any Borrower Group Member from any source whatsoever,
including without  limitation from any Expanded  Property or revenues  otherwise
generated from or by the  operations,  activities or other  transactions  on the
part  of  any  Borrower  Group  Member,  including,   without  limitation,   all
receivables,  customer  obligations,  installment  payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the possession, use
or occupancy of all or any portion of any Expanded  Property or  Improvements or
Personal Property located thereon,  or the rendering of services by any Borrower
Group Member or an operator or manager of any Expanded Property or acquired from
others  including,  without  limitation,  from the rental of any  retail  space,
commercial  space,  or other space,  stores or offices,  including  any deposits
securing  reservations  of such  space,  exhibit or sales  space of every  kind,
license,  lease,  subleases and concession  fees and rentals,  service  charges,
vending machine sales and proceeds,  if any, from business interruption or other
loss of income  insurance  relating to the use,  enjoyment  or occupancy of such
Expanded  Property,  all Bankruptcy Claims,  Lease Guaranties,  and all proceeds
from  the  sale or  other  disposition  of the  Leases,  the  rents,  the  Lease
Guaranties and the Bankruptcy Claims.

         "Scheduled Maturity Date" means December 31, 2003.

         "Schedule  V  Covenants"  shall have the  meaning  provided  in Section
2.7(b)(v)  hereof,  and are set forth in  Schedule V attached  hereto and made a
part hereof.

         "Schedule V Fees"  shall have the  meaning set forth in the  Schedule V
Covenants set forth in Schedule V attached hereto and made a part hereof.

         "Section 10.5  Conditions"  shall have the meaning  provided in Section
10.5 hereof.

         "Securities Act" shall mean the Securities Act of 1933, as amended,  or
any similar  Federal  statute,  and the rules and  regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.

         "Securitization"  shall have the  meaning  set forth in  Section  15.19
hereof.

         "Security  Deposits" shall have the meaning  provided in Section 7.4(i)
hereof.

         "Senior  Depository"  shall have the  meaning  assigned to such term in
Section 7.28 hereof.

         "Security  Documents"  shall have the  meaning  provided in Section 3.1
hereof.

         "Senior  Lien"  shall  mean  the  liens  created  by  the  Senior  Loan
Documents,  securing  payment of the Senior Notes,  together with any Amendments
thereto which have been approved by Lender.

         "Senior  Lenders" shall mean,  collectively,  the Persons  described in
Schedule  III to this  Agreement,  and shall also  include  the  successors  and
assigns of such Persons to the extent the same are permitted  transferees  under
an Intercreditor Agreement or are otherwise acknowledged by Lender in writing as
the party to whom the reference hereunder to "Senior Lender" is applicable.

         "Senior  Loans"  shall mean,  collectively,  each loan by and between a
Senior Loan Obligor and a Senior  Lender under which the Senior  Lender has made
advances to such Senior Loan  Obligor,  pursuant to the terms and  conditions of
the Senior Loan Documents.

         "Senior Loan Agreement" shall mean each agreement between a Senior Loan
Obligor and a Senior  Lender  described  on Schedule III hereto,  together  with
Amendments thereto which have been approved in writing by Lender.

         "Senior  Loan  Documents"  means the  Senior  Notes,  the  Senior  Loan
Agreements,  and all  documents,  instruments  and  agreements  now  existing or
hereafter  arising which  evidence or secure any Senior Loan,  together with any
Amendments thereto which have been approved in writing by Lender.

         "Senior Loan Obligor"  shall have the meaning  assigned to such term in
Section 7.28 hereof.

         "Senior Loan Party" shall mean any Person obligated on any Senior Loan.

         "Senior  Megadeal  Loan"  means  that  certain  loan  in  the  original
principal  amount of $359,000,000  from the Senior Megadeal Lender to the Senior
Megadeal  Property Owners (other than the San Marcos Expansion Owner) secured by
the Senior Megadeal Mortgages.

         "Senior  Megadeal Loan Documents"  means the Senior Megadeal  Mortgages
and any and all other  documents and agreements  evidencing  and/or securing the
Senior Megadeal Loan, as same may be amended, modified or restated.

         "Senior  Megadeal  Loan  Lockbox  Accounts"  shall have the meaning set
forth in Section 12.2 hereof.

         "Senior  Megadeal  Loan Lockbox  Agreement"  shall have the meaning set
forth in Section 12.2 hereof.

         "Senior Megadeal  Mortgages" means those certain mortgages and deeds of
trust, dated as of October 31, 1996, from the Senior Megadeal Property Owners to
or for the benefit of the Senior Megadeal  Lender,  constituting  liens on those
Properties  (other than the San Marcos  Expansion)  which are collateral for the
Senior  Megadeal  Loan,  as  same  may be  amended,  modified,  consolidated  or
restated.

          "Senior Megadeal  SPCs" means Prime  Retail  Finance,  Inc.  and Prime
               Retail Finance II, Inc., each a Maryland corporation, and the PRC
               Member.

         "Senior  Megadeal  Property  Owners" shall have the meaning provided in
Section 12.2.

         "Senior Note(s)" means  collectively,  the promissory notes executed by
the  Senior  Loan  Obligors  in favor of the Senior  Lenders  and  described  on
Schedule III hereto, and, individually, each of them.

         "Servicer" has the meaning set forth in Section 2.14(b).

         "Servicing Agreement" has the meaning set forth in Section 2.14(b).

         "Service Rights" shall mean any agreements, contracts, rights, licenses
or other interests of any type (whether  exclusive or non-exclusive)  granted or
given to any  Person to  provide  any  products  or  services  to or for or with
respect to the Expanded Properties,  any tenant or any occupants of the Expanded
Properties,  including any of the same related to  telecommunications,  internet
products or services,  including, but not limited to, personal computer hardware
and  software,   internet  hardware  and  software,  internet  access  services,
printers,   video  display  systems,   audio  sound  systems  and  communication
telephonic devices,  as well as related and complementary  products and services
and any substitutes for, and items that are a technological evolution of, any of
the foregoing products.

         "Silverthorne/Lebanon Transaction" has the meaning set forth in Section
2.7(e).

         "Silverthorne Property" has the meaning set forth in Section 2.7(e).

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc.

         "Solvent" means,  with respect to any Person on a particular date, that
on such date (a) the fair value of the  property of such Person is greater  than
the total  amount of  liabilities,  including  contingent  liabilities,  of such
Person;  (b) the present fair salable  value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become  absolute and  matured;  (c) such Person does
not intend to, and does not believe  that it will,  incur  debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature;  and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or  transaction,  for which such  Person's  property  would
constitute an unreasonably small capital.  The amount of contingent  liabilities
(such as litigation,  guarantees and pension plan liabilities) at any time shall
be computed  as the amount  which,  in light of all the facts and  circumstances
existing at the time,  represents the amount which can reasonably be expected to
become an actual or matured liability.

         "Sources and Uses Statement" means a complete description of Borrower's
sources and uses of the proceeds of the Loan, in form and substance satisfactory
to Lender and expressly approved by Lender in writing,  containing no line items
or provisions for payment of any acquisition fees,  financing fees,  development
fees,  other  fees of any type,  brokers'  commissions  or  related  or  similar
expenses to any Loan Party,  Expanded  Property Owner or any Affiliate of any of
the foregoing and which is attached hereto as Exhibit K.

         "Stock  Pledge  Agreement"  shall have the meaning set forth in Section
3.1(b).

         "Subdivision  Map"  shall have the  meaning  provided  in Section  7.19
hereof.

         "Subsidiary"  shall mean, as to any Person,  (i) any  corporation  more
than 50% of whose  stock of any class or  classes  having  by the terms  thereof
ordinary  voting power to elect a majority of the directors of such  corporation
(irrespective  of  whether  or not at the time  stock of any class or classes of
such  corporation  shall  have or  might  have  voting  power by  reason  of the
happening of any  contingency) is at the time owned by such Person and/or one or
more  Subsidiaries of such Person and (ii) any  partnership,  limited  liability
company, association,  joint venture or other entity in which such Person and/or
one or more  Subsidiaries  of such Person has more than a 50% equity interest at
the time.

         "Subsidiary Guarantors" shall have the meaning provided in the recitals
to this Agreement.

         "Taxes" shall mean any taxes, levies, imposts,  deductions,  charges or
withholdings,  and all  liabilities  with respect thereto  (including  interest,
penalties or additions  thereto),  excluding taxes imposed on or measured by the
net income of the Lender (including  franchise tax,  alternative minimum tax, or
other tax to the extent such taxes are principally measured on net income) by or
within the United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of the  Borrower  (except for such net income or
other taxes  which would not be imposed but for the nexus of the Lender  arising
as a result of the  transactions  contemplated  by this  Agreement) or under the
laws of which the Lender is organized or from which it makes the Advances or any
political subdivision of any thereof.

         "Tenant  Improvements"  means with  respect to any  Expanded  Property,
collectively,  (i) tenant  improvements to be undertaken for any tenant required
to be  completed  by any  Borrower  Group  Member  pursuant to the terms of such
tenant's  Lease  and (ii)  allowances  to be paid to a tenant  pursuant  to such
tenant's  Lease in  connection  with such  tenant's  construction  of its tenant
improvements  at such Expanded  Property,  but  specifically  excluding any rent
concessions granted to a tenant by any Borrower Group Member.

         "Termination  Event"  means:  (A) a  "Reportable  Event"  described  in
Section 4043 of ERISA and the regulations  issued thereunder with respect to any
Pension Plan,  except such an event with respect to which notice has been waived
by regulation;  (B) the withdrawal of a Loan Party or any ERISA Affiliate from a
Pension  Plan  during a plan year in which it was a  "substantial  employer"  as
defined in Section  4001(a)(2)  or 4068(f) of ERISA;  (C) the  termination  of a
Pension  Plan,  the filing of a notice of intent to  terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; (D) the institution of proceedings to terminate,  or the appointment of a
trustee with  respect to, any Pension  Plan by the PBGC;  (E) any other event or
condition which would constitute  grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(F) the partial or complete  withdrawal  of a Loan Party or any ERISA  Affiliate
from a Multiemployer  Plan; (G) the imposition of a Lien pursuant to Section 412
of the Code or Section 302 of ERISA; (H) any event or condition which results in
the  reorganization or insolvency of a Multiemployer Plan under Sections 4241 or
4245 of ERISA; or (I) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

         "Title Insurance Policy" means, with respect to any Expanded  Property,
a title insurance policy issued by a title insurance company to any Person.
         "Total Debt" shall, as to any Person,  mean the sum of all Indebtedness
of such Person.

         "Trade Payables" means unsecured amounts payable by or on behalf of any
Person for or in respect of the  operation  of the Expanded  Properties  (or for
administrative  expenses for  operations on the part of Borrower or Holdings) in
the  ordinary  course,   including   amounts  payable  to  suppliers,   vendors,
contractors,  mechanics,  materialmen  or other  Persons  providing  property or
services to the Expanded Properties or such Person.

         "Trade  Payables  Reserve  Deposit  Account" shall have the meaning set
forth in Section 2.17.

         "Transfer"  shall mean any sale,  assignment,  conveyance,  alienation,
mortgage,  encumbrance,  pledge,  hypothecation or other transfer, including any
swap,  derivative  or other  transaction  shifting  the  risks  and  rewards  of
ownership, whether voluntary or involuntary.

         "Treasury  Rate" means with respect to each LIBOR  Adjustment  Date the
weekly average yield on United States Treasury Securities adjusted to a constant
maturity of six months last published by the Federal Reserve Board prior to such
LIBOR Adjustment Date.

         "Treasury Rate Notice" has the meaning set forth in Section 2.13(c).

         "Unencumbered   Asset"  means  any  asset  which  as  of  any  date  of
determination,  (a) is not  subject  to any  Liens,  (b) is not  subject  to any
agreement  (including  any  Material  Agreement)  which  prohibits or limits the
ability of any Loan Party to create,  incur,  assume or suffer to exist any Lien
upon any assets of such Loan  Party,  and (c) is not  subject  to any  agreement
(including any Material  Agreement)  which entitles any Person to the benefit of
any Lien.

         "Uniform  Commercial  Code" shall mean the collective  reference to the
Uniform  Commercial  Code as  enacted  in the State of New York and the state in
which any Property is located.

         "Unpaid  Trade  Payables"  shall have the  meaning set forth in Section
2.17.

         "Unsecured Loan  Documents"  shall mean each of the loan agreements and
promissory  notes  evidencing  any  unsecured  Indebtedness  (other  than  Trade
Payables) outstanding on the Closing Date.

         "Voluntary  Bankruptcy  Event" means the taking of any of the following
actions by any Borrower  Group Member with  respect to any  Bankruptcy  Law: (A)
commencing or joining in the commencement of a voluntary case, (B) commencing or
joining in the  commencement  of an involuntary  case against any other Borrower
Group Member,  (C)  consenting to the entry of an order for relief against it in
an involuntary  case, (D) seeking or consenting to the  appointment of or taking
possession by a receiver,  liquidator,  assignee, trustee, custodian,  examiner,
magistrate,  arbitrator,  sequestrator  (or  other  similar  official)  of  such
Borrower Group Member or of any substantial  part of its property,  (E) making a
general  assignment for the benefit of its creditors,  (F) colluding directly or
indirectly  with one or more  creditors of it or any other Borrower Group Member
to cause any third party to commence an  involuntary  case  against any Borrower
Group Member,  or to seek the appointment of or taking possession by a receiver,
liquidator,  assignee, trustee, custodian,  examiner,  magistrate,  conservator,
arbitrator,  sequestrator  (or other  similar  official) of any  Borrower  Group
Member or any  substantial  part of its  property,  (G) admitting in writing its
inability to pay its debts as they become due, or (H) the filing of, joinder in,
or  filing  or  filing a motion  in  support  of, a motion  for the  substantive
consolidation of any Borrower Group Member with the estate of any other Borrower
Group Member or any other Person.

         "Warehouse LP" shall have the meaning set forth in Section 3.1(g).

         "Warehouse  Row Pledge  Agreement"  shall have the meaning set forth in
Section 3.1(g).

         "Warrant"  shall mean the warrant for the purchase of 1,000,000  shares
of stock in  Holdings  for $1.00 per share,  in the form of Exhibit T,  together
with any Amendments thereto.

         "Williamsburg  Cash Sweep"  shall have the meaning set forth in Exhibit
M.

         "Williamsburg  Prudential  Loan"  shall have the  meaning  set forth in
Exhibit M.

         "Working  Capital  Reserve" shall have the meaning set forth in Section
2.15.

<PAGE>

                                    Exhibit C

                              Subsidiary Guarantors

Prime Retail Capital I, L.L.C.

Outlet Village of Hagerstown Limited Partnership

Prime Bellport Land L.L.C.

Prime Warehouse Row Limited Partnership

Sun Coast Factory Shops Limited Partnership

Prime Outlets at San Marcos II Limited Partnership

Chesapeake Development Limited Partnership

<PAGE>

                                   Schedule II

                                 Required Items

         Pursuant  to  Section  4.3,  Lender  shall have  received  or waived in
writing each of the following Required Items on or before the Closing Date:

(a)  Environmental   Reports.  An  existing   environmental   questionnaire  and
Environmental Report in respect of each of the Properties and Improvements, with
an effective date less than six months before the Closing Date, accompanied by a
reliance  letter,  if necessary,  in form and substance  satisfactory  to Lender
permitting  Lender to rely on such report and all reports  pertaining to storage
tank removal and related site clean-up (including closure letter).

(n) Engineering Report. A current engineering report and engineering certificate
with respect of each of the Properties and Improvements,  with an effective date
less than six months before the Closing Date, a soils report and current seismic
reports with respect to the Property and  Improvements,  with an effective  date
less than six months before the Closing Date, accompanied by reliance letters in
form and  substance  satisfactory  to Lender  permitting  Lender to rely on such
reports.

(o)  Insurance.  Valid  certificates  of insurance for the policies of insurance
required under Section 7.2 hereof,  and evidence that the premiums in respect of
such insurance  policies are fully paid. Such  certificates  shall indicate that
the  Lender is named as an  additional  insured  on each  policy,  and that each
casualty policy and rental  interruption  policy contain a payee  endorsement in
favor of Lender.

(p) Zoning.  With respect to each of the Properties and Improvements  (including
the construction  thereof), at Lender's option, (i) a zoning opinion in form and
substance  satisfactory to Lender,  or (ii) a zoning letter from the appropriate
Governmental  Authority evidencing  compliance of such Property and Improvements
with  applicable  zoning  requirements,  (iii) a copy of all  applicable  zoning
regulations,  (iv) copies of all required zoning,  subdivision and environmental
permits  or (v) such  other  evidence  of zoning  compliance  acceptable  to the
Lender.

(q)  Permits; Certificates of Occupancy. Copies of all permits necessary for the
     use and operation of each Property and the  certificate(s) of occupancy for
     each of the Properties and Improvements.

(r)  Leases;  Material  Agreements.  True,  complete  and correct  copies of all
     Leases, subleases under Leases and all Material Agreements.

(s) Sources and Uses  Statement.  A Sources and Uses Statement  which  evidences
that none of the proceeds of the Loan are used to pay acquisition fees, brokers'
commissions or related or similar expenses to any Loan Party,  Property Owner or
Affiliate of any of the foregoing.

(t)  Disbursement  Instructions.  Lender (or escrow agent) shall have received a
disbursement   instruction   or  escrow   letter,   signed   by  an   authorized
representative of Borrower,  irrevocably instructing Lender to fund the proceeds
of the Loan being  advanced on the Closing  Date,  to pay (x) costs  incurred by
Borrower  reflected in the Sources and Uses  Statement,  and (y) all of Lender's
Closing  Expenses,  incurred and unpaid as of the Closing  Date,  together  with
Professional  Fees  reasonably  estimated  by  Lender's  counsel to be  incurred
following the Closing Date in the preparation of the closing binders,  follow up
for any items  required  to be  delivered  in  connection  with the  closing and
preparation of Disclosure Material and Information  specifically relating to the
Loan and the Properties.

(u)  Consents,  Licenses and  Approvals.  Copies of all  consents,  licenses and
approvals,  if any,  required in  connection  with the  execution,  delivery and
performance by any Loan Party, and the validity and enforceability,  of the Loan
Documents,  and which  consents,  licenses and  approvals  are in full force and
effect.

(v)  Financial   Information.   Such  financial   information  relating  to  the
     Properties,  any  Property  Owner  and  the  Loan  Parties  as  Lender  may
     reasonably request.

(w) Business Plan and Budgets. A Business Plan,  including the Operating Budget,
for  the  Properties,   and  a  detailed  budget  of  tenant  improvement  costs
anticipated to be expected with respect to the Properties during the term of the
Loan.

(x)  Certified  Ownership  Structure  Chart.  A chart  detailing  the  ownership
     structure of each of the Loan Parties and the Property Owners,  accompanied
     by an Officer's Certificate by an authorized officer of Borrower.

(y)  Market  Study/Appraisal.  A  market  study/appraisal  with  respect  to the
Properties  (i) prepared by a firm approved by Lender and (ii) prepared based on
a scope of work determined by Lender.

(z)  Tax Lot. Evidence  satisfactory to Lender that each Property  constitutes a
     separate  tax lot or lots for  conveyance  and real  estate tax  assessment
     purposes.

(aa)  Evidence of Payment.  Evidence  of payment of all taxes,  assessments  and
impact fees applicable to each Property in form  satisfactory to the Lender,  in
Lender's sole discretion.

(bb) Additional Matters.  Such other  certificates,  reports on the condition of
each  Property,  policies,  forms  of  evidence  or other  materials,  opinions,
documents  and  instruments  relating  to the Loan or the Loan  Parties  and the
Property  Owners as may have been  requested by Lender.  All corporate and other
documents and all legal matters in connection  with the Loan shall be reasonably
satisfactory, in form and substance, to Lender.

<PAGE>

                                   SCHEDULE V

         The  following  covenants  and  agreements of the Borrower set forth in
this  Schedule V shall be and hereby are  incorporated  by reference as if fully
set forth in the body of the  Agreement,  and shall  constitute  the  Schedule V
Covenants as defined and referred to in the Agreement:

         1. Borrower  shall use  commercially  reasonable  efforts to obtain the
repayment  in full of the Prime Notes as soon as possible by using  commercially
reasonable  efforts to satisfy the relevant  conditions to the earliest possible
maturity of the Prime Notes that are within the  control of any  Borrower  Group
Member,  and by using  commercially  reasonable efforts to induce Lothar to make
such  contributions  as are  necessary to fund the repayment of the Prime Notes.
Upon any payment  upon either of the Prime  Notes,  the proceeds of such payment
shall be applied on the date of such payment  toward the  prepayment of the Loan
and the Additional Fee associated with such prepayment.

         2.  On or  prior  to  December  31,  2001,  Borrower  shall  cause  the
Williamsburg Cash Sweep to be irrevocably discontinued and either (a) obtain the
repayment in full of the Prime  Williamsburg Note and apply to the prepayment of
the Loan and the Additional Fee  associated  with such  prepayment not less than
$6,500,000,  or such  greater  amount  that  consisted  of that  portion  of the
repayment of the Prime  Williamsburg  Note which is paid from sources other than
Borrower Group Members (payments by Borrower Group Members shall be made only in
the form of an agreed offset, rather than a cash payment;  payments on the Prime
Williamsburg Note by Lothar must be at least equal to $6,500,000),  or (b) cause
the sale of Expanded Properties giving rise to not less than $6,500,000 in Asset
Disposition  Net Proceeds,  which shall be applied to the prepayment of the Loan
and the Additional Fee associated with such prepayment (such prepayment pursuant
to either of clauses (a) or (b) above, which shall be in addition to any and all
other payments and  prepayments  of the Loan required  under the  Agreement,  is
herein  referred  to as the  "Paragraph  2  Prepayment").  Failure  to make  the
Paragraph 2 Prepayment  by December 31, 2001 shall not in and of itself cause an
Event of Default to occur. If, however,  the Paragraph 2 Prepayment shall not be
made by December 31, 2001,  Borrower shall pay to Lender on January 1, 2002, and
on the  first  day of each  calendar  month  thereafter  until  such time as the
Paragraph 2 Prepayment is made, a monthly  supplemental  fee equal to $1,000,000
per month, which fee shall be in addition to any and all other fees and payments
due under the Agreement or the other Loan  Documents  (the  "Paragraph 2 Monthly
Supplemental Fee"). Any failure to pay the Paragraph 2 Monthly  Supplemental Fee
if, as and when the same shall become due and owing shall constitute an Event of
Default.

         3. On or prior to June  30,  2002,  Borrower  shall  cause  the sale of
Expanded   Properties  giving  rise  to  not  less  than  $28,300,000  in  Asset
Disposition  Net  Proceeds  (exclusive  of any Asset  Disposition  Net  Proceeds
applied  toward the  Paragraph  2  Prepayment)  , which  shall be applied to the
prepayment of the Loan and the Additional Fee  associated  with such  prepayment
(such prepayment pursuant to this Paragraph 3, which shall be in addition to any
and all other payments and  prepayments  of the Loan required under  Paragraph 2
above or otherwise under the Agreement,  is herein referred to as the "Paragraph
3  Prepayment").  Failure to make the  Paragraph 3  Prepayment  by June 30, 2002
shall not in and of itself cause an Event of Default to occur. If, however,  the
Paragraph 3 Prepayment shall not be made by June 30, 2002, Borrower shall pay to
Lender on July 1, 2002, and on the first day of each calendar  month  thereafter
until such time as the  Paragraph 3 Prepayment  is made, a monthly  supplemental
fee (the  "Paragraph 3 Monthly  Supplemental  Fee") equal to one percent (1%) of
the  outstanding  principal  balance  of the  Loan as of the  first  day of each
calendar month in which such Paragraph 3 Monthly  Supplemental Fee is due, which
Paragraph 3 Monthly  Supplemental  Fee shall be in addition to any and all other
fees and  payments  due under the  Agreement  or the other Loan  Documents.  Any
failure to pay the Paragraph 3 Monthly Supplemental Fee if, as and when the same
shall become due and owing shall constitute an Event of Default. The Paragraph 2
Monthly  Supplemental Fee and the Paragraph 3 Monthly  Supplemental Fee shall be
referred to in the Agreement as the "Schedule V Fees".

<PAGE>

                                 Schedule 12.2A

                         Senior Megadeal Property Owners

Ohio Factory Shops Partnership Coral Isle Factory Shops Limited Partnership Gulf
Coast Factory Shops Limited Partnership San Marcos Factory Stores, Ltd. Triangle
Factory   Stores  Limited   Partnership   Florida  Keys  Factory  Shops  Limited
Partnership  Gainesville  Factory Shops Limited Partnership The Prime Outlets at
Silverthorne  Limited  Partnership Kansas City Factory Shops Limited Partnership
Huntley Factory Shops Limited  Partnership  Magnolia Bluff Factory Shops Limited
Partnership  Loveland Factory Shops Limited  Partnership  Gulfport Factory Shops
Limited  Partnership  Castle Rock Factory Shops  Partnership  Grove City Factory
Shops Partnership

<PAGE>

                                 Schedule 12.2B

                              Core Property Owners

Sun Coast Factory Shops Limited Partnership Outlet Village of Hagerstown Limited
Partnership  Outlet Village of Lebanon Limited  Partnership  Prime Warehouse Row
Limited  Partnership  Prime Northgate Plaza Limited  Partnership  Melrose Place,
Ltd.
Buckeye  Factory  Shops  Limited   Partnership   Shasta  Outlet  Center  Limited
Partnership  Latham  Factory  Stores  Limited  Partnership  The Prime Outlets at
Calhoun Limited Partnership Carolina Factory Shops Limited Partnership The Prime
Outlets  at Lee  Limited  Partnership  Prime  Outlets  at San  Marcos II Limited
Partnership Prime Bellport Land, L.L.C.

<PAGE>

                   LOAN AGREEMENT

                   Between

                   PRIME RETAIL, L.P.,

                   as Borrower

                   and

                   FRIT PRT LENDING LLC,

                   as Lender

                   Dated: As of December 22, 2000

<PAGE>

                                                          i
CH1  2065901v19
                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I LOAN PROVISIONS......................................................1
1.1 Capitalized  Terms.  All  capitalized  terms used herein and not  otherwise
    defined   herein   shall  have  the   meanings   set  forth  in  Exhibit  B
    hereto.....................................................................1
1.2 Accounting Principles;  Subsidiaries.  Except as otherwise provided in this
    Agreement, all computations and  determinations  as to accounting or
    financial matters and all  financial  statements to be delivered  pursuant
    to this  Agreement shall be made and prepared in accordance with GAAP
    (including principles of consolidation where appropriate),  consistently
    applied, and all accounting or financial terms shall have the meanings
    ascribed to such terms by GAAP.  If at any time a Loan Party has  any......1
1.2 Subsidiaries, all  accounting  and  financial  terms  herein  shall be
    deemed to  include references to consolidation and consolidating principles,
    and covenants, representations and agreements relating to accounting and
    financial matters with respect to a Loan Party and its  properties  and
    activities  shall be deemed  to refer  to such  Loan  Party  and its
    consolidated  Subsidiaries collectively. For purposes of Section 8.11, GAAP
    shall be determined on the basis of such  principles  in effect on the date
    of the most recent annual audited financial statements provided hereunder
    (or if prior to delivery of the first such annual audited  financial
    statements hereunder, then on a basis consistent with the audited financial
    statements delivered to Lender prior to the date hereof; provided, however,
    that if due to a change in application  of GAAP or the rules  promulgated
    with respect  thereto,  the Lender shall  object to  determination  of
    compliance  with the  financial covenants  in Section  8.11 on such  basis,
    within  thirty (30) days after delivery of such financial statements, then
    such calculations shall be made on a basis consistent with the most recent
    financial  statements  delivered as to which no such  objection  shall have
    been made..................................................................1
1.3 Computation  of Time Periods.  In this  Agreement,  in the  computation  of
    periods of time from a specified date to a later  specified  date, the word
    "from" means "from and  including" and the words "to" and "until" each mean
    "to but excluding" and  the word "through" means "to and including"........2
1.4  Uniform  Commercial Code Terms.  Except as otherwise  provided or amplified
     (but not limited) herein,  terms used in this Agreement that are defined in
     the   Uniform    Commercial    Code   shall   have   the   same    meanings
     herein....................................................................2
1.5 General Construction;  Captions.  All
    definitions  and  other  terms  used in this Agreement and the other Loan
    Documents  shall be equally  applicable to the singular and plural forms
    thereof,  and all references to any gender shall include all other  genders.
    The words "hereof," "hereto," "herein" and "hereunder"  and words of similar
    import when used in this Agreement  shall refer  to this  Agreement  as a
    whole  and not to any  particular  Article, Section  or  clause in this
    Agreement.  References  herein to an  Exhibit, Schedule,  Article,  Section
    or clause  refer to the  appropriate  Exhibit, Schedule,  Article,  Section
    or clause in this Agreement  unless  otherwise specified.  The word
    "including" shall have the meaning  represented by the phrase "including,
    without limitation." The captions and table of contents in this  Agreement
    and the other Loan Documents are for  convenience  only, and in no way limit
    or amplify the provisions  hereof..........................................2
1.6  References to Documents and Laws.  All defined terms and references in this
     Agreement  or any of the  other  Loan  Documents  to any  agreement,  note,
     instrument,  certificate  or other document shall be deemed to refer to all
     amendments,    modifications,     renewals,    extensions,    replacements,
     restatements,  substitutions and supplements thereof and to all appendices,
     exhibits or schedules thereto, in each case as the same may be in effect at
     any and all times such reference becomes  operative.  All references herein
     and in any of the other Loan  Documents to any Applicable Law shall include
     all amendments  thereof and any successor statute and regulations under any
     of the foregoing..........................................................2

ARTICLE II AMOUNT AND TERMS OF CREDIT..........................................2
2.1  Term Loan Commitment......................................................3
2.2  Note.  The Borrower  shall  execute and deliver to each Lender and Assignee
     one or more notes to evidence the  obligation  of the Borrower to repay the
     Loan Amount together with interest thereon as described  herein.  The notes
     shall be in principal  amounts  aggregating  to the Loan Amount,  dated the
     Closing Date, and in the form of Exhibit E (collectively, together with any
     Amendments thereto, the "Note")...........................................3
2.3  Reliance on Notices.  The Lender shall be entitled to rely upon,  and shall
     be fully  protected  in  relying  upon,  any  certificate,  notice or other
     writing  believed by the Lender to be  genuine.  The Lender may assume that
     each Person  executing and delivering such certificate or other writing was
     duly authorized,  unless the responsible  individual acting thereon for the
     Lender has actual  knowledge to the contrary..............................3
2.4  Use of Proceeds. Borrower shall use the Loan Amount solely for the purposes
     and  uses  and  in  the   amounts   set  forth  in  the  Sources  and  Uses
     Statement.................................................................3
2.5  Loan Interest and Amortization............................................3
2.6  Maturity.  The entire outstanding  principal balance of the Note,  together
     with accrued and unpaid interest,  any Additional Fee and any other amounts
     due under the Note and the other Loan Documents shall be due and payable on
     December  31,  2003  (the  "Maturity  Date"),  if not  sooner  paid in full
     pursuant to Section 2.7. .................................................4
2.7  Prepayments; Commitment Reductions........................................4
2.8  Interest and Applicable Margin............................................6
2.9  Payments.  All payments and prepayments to be made in respect of principal,
     interest or other  amounts  due from the  Borrower  hereunder  or under any
     other Loan Document shall be payable on or before 3:00 p.m., New York time,
     on the day when due, without presentment,  demand, protest or notice of any
     kind,  all of which are hereby  expressly  waived,  and an action  therefor
     shall  immediately  accrue.  Such  payments  shall be made to the Lender in
     funds settled through the New York Clearing House Interbank  Payment System
     or other funds immediately  available to Lender on the date such payment is
     due,  at the  Lender's  office  in New York  City,  New York or such  other
     location in the United States  specified in writing by the Lender,  without
     set off,  recoupment,  counterclaims  or any other deduction of any nature.
     Payments received after 3:00 p.m., New York time, on any Business Day shall
     be deemed to have been received on the following Business Day. ...........8
2.10 Application and Allocation of Payments....................................8
2.11 Loan Account and  Accounting.  The Lender  shall  maintain a loan account
     (the "Loan  Account")  on  Lender's  books in which Loan Account Lender
     will record all payments made by the Borrower, and all other debits and
     credits as provided in this  Agreement  with respect to the Loan or any of
     the other Obligations.  All entries in the Loan Account shall be made in
     accordance with the Lender's customary  accounting  practices  as in effect
     from time to time.  The balance in the Loan Account, as recorded on the
     Lender's most recent  printout  or other  written  statement,  shall be
     final, binding and conclusive upon the Borrower,  absent manifest error;
     provided,  however, that any failure to so record or any error in so
     recording  shall not limit or otherwise  affect the Borrower's duty to pay
     the Obligations. Notwithstanding any provision herein contained to the
     contrary,  the Lender may elect (which  election may be revoked) to
     dispense  with the  issuance of a Note and may rely on the Loan Account as
     evidence of the amount of Obligations from time to time owing to it.......9
2.12 Taxes.....................................................................9
2.13 Capital Adequacy; Increased Costs; Illegality............................10
2.14 Fees.....................................................................11
2.15 Working Capital  Reserve.  Borrower  shall at all  times  maintain  a
     reserve  account  (which  shall  be a  Sub-Account  of  the  Operating
     Account) in which there shall at all times be  deposited  no less than
     $4,000,000.00 (the "Working Capital Reserve"); provided, however, that
     such amount may be reduced during each Fiscal Quarter by any permitted
     expenditures from such account, as set forth in the Approved Operating
     Budget,  so long as the Working  Capital  Reserve is replenished to no
     less than  $4,000,000.00  within thirty (30) days following the end of
     such Fiscal Quarter in accordance  with this Section and Section 12.3.
     Without Lender's prior written  consent,  Borrower shall not use funds
     held in the  Working  Capital  Reserve  for any  expenses  other  than
     expenses provided for in the Approved Operating Budget.  Within thirty
     (30) days of the end of each Fiscal  Quarter,  Borrower  shall provide
     Lender with a detailed  report,  together with receipts,  invoices and
     other evidence  satisfactory to Lender,  specifying the application of
     any funds  withdrawn  from the  Working  Capital  Reserve  during such
     Fiscal Quarter.  Lender shall also have the right to audit  Borrower's
     records with respect to such expenditures in accordance with the terms
     of Section 7.9. .........................................................12
2.16 Marketing  Reserve.  Borrower  shall at all times  maintain  a reserve
     account with the Depository (the "Marketing  Reserve Deposit Account")
     in which Borrower  shall deposit or cause to be deposited  pursuant to
     Section  12.3,  all  payments  or other  contributions  by tenants and
     others made for the purpose of promotion or marketing for the Expanded
     Properties,  or for any similar  purpose,  howsoever  described in the
     Leases or otherwise (the "Marketing Reserve Payments"). Borrower shall
     at all times maintain or cause to be maintained one or more segregated
     accounts to hold all disbursements of funds from the Marketing Reserve
     Deposit Account (collectively, the "Marketing.......................12
2.16 Reserve  Operating  Account").  Borrower  shall  cause  all  Marketing
     Reserve  Payments  with  respect to any  Expanded  Property to be used
     solely for marketing and  promotional  purposes  consistent with their
     intended  purpose as set forth in the  Leases  and the other  Material
     Agreements  governing the same.  Within thirty (30) days of the end of
     each Fiscal  Quarter,  Borrower  shall provide  Lender with a detailed
     report,   together  with   receipts,   invoices  and  other   evidence
     satisfactory  to  Lender,  specifying  the  application  of any  funds
     withdrawn from the Marketing Reserve Operating  Account.  Lender shall
     also have the right to audit  Borrower's  records with respect to such
     expenditures in accordance with the terms of Section 7.9............13
2.17 Current Trade Payables Reserve.  Borrower shall establish and maintain
     a reserve  account with the Depository  (the "Trade  Payables  Reserve
     Deposit  Account")  in which  Borrower  shall  deposit  or cause to be
     deposited on the Closing Date an amount equal to those trade  payables
     currently  outstanding  and set forth in the  attached  Exhibit L (the
     "Unpaid  Trade  Payables").  Borrower  will  cause  the  Unpaid  Trade
     Payables  to be paid in full and  satisfied  within  thirty  (30) days
     after the Closing  Date.  Promptly  upon  Borrower's  written  request
     accompanied by payment  information and other  supporting  evidence as
     Lender may reasonably  require,  and otherwise without such request by
     Borrower at Lender's  discretion,  funds in the Trade Payables Reserve
     Deposit  Account shall be disbursed  directly to the Persons owed such
     Unpaid Trade Payables,  or, at Lender's sole option, to Borrower or by
     joint  payment to  Borrower  and such  Person  owed the  Unpaid  Trade
     Payable,  in each case for the sole purpose of paying such Person owed
     the Unpaid Trade  Payable.  Within thirty (30) days of the end of each
     Fiscal Quarter,  Borrower shall provide Lender with a detailed report,
     together with receipts,  invoices and other evidence  satisfactory  to
     Lender,  specifying the  application  of any funds  withdrawn from the
     Trade Payables  Reserve  Deposit  Account.  Lender shall also have the
     right to audit Borrower's records with respect to such expenditures in
     accordance with the terms of Section 7.9.................................13

ARTICLE III COLLATERAL AND SECURITY DOCUMENTS.................................13
3.1  Security Interest. The Loan shall be evidenced by the Note and secured
     by  the  following,   all  dated  and  delivered  as  of  the  Closing
     Date.....................................................................13
3.2  Obligations   Secured.   The  Security   Documents   and  the  grants,
     assignments,  pledges,  encumbrances and transfers made thereunder are
     given for the  purpose  of  securing  payment  of the Debt and for the
     purpose     of     securing     the     following      (the     "Other
     Obligations"):...........................................................16
3.3  Advances  to  Protect  Collateral.  All  insurance  expenses  and  all
     expenses of  protecting,  storing,  warehousing,  insuring,  handling,
     maintaining and shipping the Collateral (including all rent payable by
     any Borrower Group Member to any landlord of any premises where any of
     the  Collateral  may be located)  and any and all Taxes shall be borne
     and  paid by such  Loan  Party.  The  Lender  may  (but  shall  not be
     obligated to) make advances to preserve,  protect or obtain any of the
     Collateral,  including  advances  to  cure  defaults  for  which  such
     Borrower  Group  Member  has  received   written  notice  and  is  not
     contesting  in good  faith  under any of the  Material  Agreements  or
     advances to pay Taxes,  insurance  and the like and all such  advances
     shall become part of the Obligations owing to the Lender hereunder and
     all such advances to cure such defaults shall be payable to the Lender
     on demand,  with interest  thereon from the date of such advance until
     paid at the  Protective  Advance  Default  Rate.  Notwithstanding  the
     foregoing,  or any other  provision of this Agreement to the contrary,
     if (i)  Borrower  requires  funding of payments  due in respect of the
     Senior Loan for the  Bellport I  Property,  and  requests  that Lender
     advance such payments to Borrower for such  purpose,  and (ii) Lender,
     while not obligated to make any such advances,  elects in its sole and
     absolute  discretion  to do so,  then  (iii)  such  advances  shall be
     treated as  additional  advances of  principal  under the Loan,  shall
     increase  the  principal  balance of the Loan  accordingly,  and shall
     accrue  interest at the Applicable  Interest Rate,  rather than at the
     Protective Advance Default Rate..........................................17
3.4  Benefit of the Liens.  All Liens  contemplated  hereby or by the other
     Loan  Documents  shall  be for  the  benefit  of the  Lender,  and all
     proceeds  or  payments  realized  from the  Collateral  in  accordance
     herewith shall be applied to the  Obligations  in accordance  with the
     terms provided herein.. .................................................17

ARTICLE IV CONDITIONS PRECEDENT...............................................17
4.1  Loan Documents.  Lender shall have received:.............................18
4.2  Other Closing Requirements...............................................18
4.3  Additional  Deliveries.  Lender  shall  have  received,  reviewed  and
     approved the items listed on Schedule II attached hereto, each in form
     and substance satisfactory to Lender (the "Required Items")..............21
4.4  Intentionally Omitted....................................................21
4.5  Details,  Proceedings and Documents. All legal details and proceedings
     in connection with the transactions contemplated by this Agreement and
     the other  Loan  Documents  shall be  reasonably  satisfactory  to the
     Lender  and the  Lender  shall  have  received  all  such  counterpart
     originals  or  certified  or  other  copies  of  such   documents  and
     proceedings  in  connection  with  such  transactions,   in  form  and
     substance  reasonably  satisfactory  to the Lender,  as the Lender may
     from time to time request................................................21

ARTICLE V REPRESENTATIONS AND WARRANTIES......................................21
5.1  Organization and Qualification...........................................21
5.2  Authority  and  Authorization.  Each  Borrower  Group  Member  has all
     requisite  right,  power,  authority  and legal  right to carry on its
     business,  to own or lease its  properties  and to execute and deliver
     and perform its  obligations  under this  Agreement and the other Loan
     Documents  to  which it is a party,  in the  case of the  Borrower  to
     request the borrowings provided for herein, and to execute and deliver
     and to perform its obligations under the other Loan Documents to which
     it is a party.  Each Borrower Group Member's  execution,  delivery and
     performance  of the Loan  Documents  to which it is a party  have been
     duly  and  validly  authorized  by all  necessary  corporate  or other
     proceedings on the part of such Borrower Group Member....................22
5.3  Execution  and  Binding  Effect.  This  Agreement  and all other  Loan
     Documents have been or, when executed and delivered,  will be duly and
     validly  executed and delivered by each Borrower  Group Member a party
     thereto,  and  constitute  or,  when  executed  and  delivered,   will
     constitute,  the legal, valid and binding obligations of such Borrower
     Group Member  enforceable in accordance with their  respective  terms,
     except  as  such   enforceability   may  be  limited  by   bankruptcy,
     insolvency,  reorganization,  receivership,  moratorium  or other laws
     affecting  creditors'  rights  generally and by general  principles of
     equity...................................................................22
5.4  Governmental  Authorizations.  Except for the consents  identified  on
     Schedule 5.4 (the "Required  Consents"),  no  authorization,  consent,
     approval,  license, exemption or other action by, and no registration,
     qualification,  designation, declaration or filing with, any Person or
     any  Governmental  Authority  (other  than  the  filing  of  financing
     statements  and  continuation  statements)  is or will be necessary in
     connection  with the execution  and delivery of this  Agreement or any
     other Loan  Documents by each Borrower  Group Member a party  thereto,
     consummation  by each  Borrower  Group  Member a party  thereto of the
     transactions herein or therein contemplated,  including the Borrower's
     obtaining the Loan, the  Guarantors'  guaranty of the  Obligations and
     the Borrower Group  Members'  granting  security for the  Obligations,
     performance  of or compliance  by each  Borrower  Group Member a party
     thereto  with the  terms  and  conditions  hereof  or  thereof  or the
     legality,      validity     and      enforceability      hereof     or
     thereof..................................................................22
5.5  Agreements and Other Documents. As of the Closing Date, each Loan Party has
     provided,  or has caused each  Property  Owner to  provide,  to the Lender,
     accurate  and  complete  copies  of  all  of the  following  agreements  or
     documents to which.......................................................22
5.5  such Loan  Party or any such  Property  Owner  (and,  with  respect  to the
     representations  in clauses  (b),  (d),(e),  (g) and (h)  below,  any other
     Borrower  Group  Member) is subject and each of which is listed on Schedule
     5.5: (a) all Major  Leases;  (b) all  Management  Agreements  and Brokerage
     Agreements;  (c) all  Permits  which are  occupancy  permits  or  municipal
     assistant  program permits held by such Loan Party or Property  Owner;  (d)
     all Senior Loan Documents;  (e) all  instruments and agreements  evidencing
     the  issuance  of any  equity  securities,  warrants,  rights or options to
     purchase  equity  securities  of  any  Borrower  Group  Members;   (f)  all
     Organizational  Documents of the Loan Parties and the Property Owners;  (g)
     all Unsecured Loan Documents;  and (h) all contracts or options to sell all
     or any part of any of the Expanded  Properties.  All such agreements are in
     full force and effect and are not subject to termination because of default
     by a Loan Party or a Property  Owner or, to the best knowledge of each Loan
     Party, otherwise. Except as set forth on Schedule 5.5, no contract to which
     any Loan Party is a party  contains any  provision  which  provides  that a
     change of control of any Loan Party constitutes an unauthorized  assignment
     thereof  or  gives  the  other  party  a  right  of  termination  or  other
     right....................................................................23
5.6  Absence of Conflicts.  The execution and delivery of this Agreement and the
     other  Loan  Documents,  the  consummation  of the  transactions  herein or
     therein  contemplated  and the  performance of or compliance with the terms
     and  conditions  hereof or thereof by each Loan Party a party thereto or by
     the Borrower Group Members bound hereby or thereby will not (a) violate any
     Applicable  Law;  (b)  conflict  with or result in a breach of or a default
     under the  Organizational  Documents  of any  Borrower  Group Member or any
     Material  Agreement or instrument  to which any Borrower  Group Member is a
     party or by which such Borrower Group Member or their respective properties
     are bound;  (c) result in the creation or  imposition  of any Lien upon any
     material property (now owned or hereafter  acquired) of such Borrower Group
     Member  except as otherwise  contemplated  by this  Agreement and the other
     Loan  Documents;  or (d) require  any consent or approval  other than those
     already obtained.........................................................23
5.7  No Restrictions.  No Borrower Group Member is a party or subject to (i) any
     restriction in its  Organizational  Documents  that  adversely  affects its
     business or the use or ownership of any of its  properties  or operation of
     its business as  contemplated  in the Business  Plan or (ii) any  contract,
     agreement or restriction that materially and adversely effects its business
     or the  use or  ownership  of any of its  properties  or  operation  of its
     business as  contemplated  in the Business  Plan. No Loan Party or Property
     Owner is a party or subject to any  contract or agreement  which  restricts
     its right or  ability  to incur  Indebtedness,  other  than  certain of the
     Organizational  Documents  and the  Senior  Loan  Documents,  none of which
     prohibits  any Loan Party's  execution or  performance  of its  obligations
     under this Agreement or other Loan Documents,  the Borrower's obtaining the
     Loan, the  Guarantor's  guaranty of the  Obligations  and the Loan Parties'
     providing  security for the  Obligations  as provided  herein.  No Borrower
     Group Member has agreed or consented to cause or permit in the future (upon
     the happening of a contingency or otherwise) any of the Collateral, whether
     now owned or  hereafter  acquired,  to be  subject  to a Lien that is not a
     Permitted Lien...........................................................23
5.8  Financial  Statements;  Business  Plan.  The Borrower has  furnished to the
     Lender  the most  recent  annual  and  quarterly  financial  statements  of
     Holdings,  certified by a Chief Financial Officer of Holdings, and of those
     Loan Parties  described on Schedule  5.8, all as described on such Schedule
     5.8.  Such  financial  statements  (including  the notes  thereto)  present
     fairly, in all material respects,  the financial condition of such entities
     on a  consolidated  and  consolidating  basis as of the end of such  fiscal
     period  and the  results  of  their  operations  and the  changes  in their
     financial position for the fiscal period then ended, all in conformity with
     GAAP  applied  on a basis  consistent  with  that of the  preceding  fiscal
     period,  except (i) as disclosed  therein and (ii) subject,  in the case of
     unaudited financial  statements,  to the absence of footnotes and customary
     year-end  audit  adjustments.  As of the Closing  Date,  no Borrower  Group
     Member has any obligation or liability (absolute, contingent, liquidated or
     unliquidated)  of a nature  required  to be  reflected  on a balance  sheet
     prepared  in  conformity  with GAAP,  except  Trade  Payables  constituting
     Permitted Debt or those reflected in the financial  statements described on
     Schedule 5.8. Since the Closing Date, no Borrower Group Member has incurred
     any such  obligation  or liability  except to the extent  permitted by this
     Agreement. The Projections delivered by the Borrower to the Lender, as part
     of the Business  Plan,  as  described on Schedule  5.8, a copy of which has
     been  delivered  prior to the Closing  Date,  were  prepared in good faith,
     based on  reasonable  assumptions  (as of the  Closing  Date in the case of
     Projections delivered on the Closing Date, and as of the date delivered, in
     the case of all other Projections).......................................24
5.9  Financial  Accounting  Practices.  Each Borrower  Group Member has made and
     kept books,  records and accounts which, in reasonable  detail,  accurately
     and fairly reflect in all material respects its respective transactions and
     dispositions of its assets.  Each Borrower Group Member  maintains a system
     of internal accounting controls sufficient to provide reasonable assurances
     that (a) transactions are executed in accordance with management's  general
     or specific  authorization,  (b)  transactions are recorded as necessary to
     permit  preparation of financial  statements in conformity with GAAP and to
     maintain  accountability for assets, (c) access to assets is permitted only
     in accordance with management's  general or specific  authorization and (d)
     the recorded accountability for assets is compared with the existing assets
     at reasonable intervals and appropriate action is taken with respect to any
     differences..............................................................24
5.10 Deposit and Disbursement Accounts.  Schedule 5.10 lists all banks and other
     financial  institutions  at  which  any  Borrower  Group  Member  maintains
     deposits  and/or  other  accounts as of the  Closing  Date,  including  any
     disbursement  accounts,  and such Schedule  correctly  identifies the name,
     address and telephone number of each such depository, the name in which the
     account  is held,  a  description  of the  purpose of the  account  and the
     complete account number..................................................24
5.11 Insurance.  Borrower has obtained,  or has caused to be obtained,  Policies
     satisfying  the insurance  coverages,  amounts and other  requirements  set
     forth in this Agreement.  In addition,  Borrower has obtained, or caused to
     be obtained, Policies satisfying the insurance coverages, amounts and other
     requirements  set forth in the Senior Loan Documents.  All premiums on such
     Policies  required to be paid as of the Closing Date have been paid for the
     current     policy      period.      Neither      Borrower,      nor     to
     Borrower's...............................................................24
5.11 knowledge,  any other Person,  has done, by act or omission  anything which
     would impair the coverage of any such Policy.............................25
5.12 Accurate and Complete Disclosure.  No representation or warranty made by or
     on behalf of any Loan Party or Expanded Property Owner in this Agreement or
     any other Loan  Document and no statement  made by or on behalf of any Loan
     Party or Expanded Property Owner in any financial  statement,  certificate,
     report,  exhibit  or  document  furnished  by such Loan  Party or  Expanded
     Property  Owner  to the  Lender  pursuant  to or in  connection  with  this
     Agreement  contains  as of  the  date  of  such  representation,  warranty,
     statement, certificate, report, exhibit or document any untrue statement of
     a material  fact or omits to state a material  fact  necessary  to make the
     statements  contained herein or therein not misleading.  There are no facts
     known (or which should upon the exercise of reasonable  diligence be known)
     to any Loan Party or Expanded  Property Owner that,  individually or in the
     aggregate,  would have any reasonable likelihood of resulting in or causing
     a Material  Adverse  Change which have not been set forth in the  financial
     statements  referred to in Section 5.8 or otherwise disclosed in writing to
     the Lender prior to the Closing Date.....................................25
5.13 No Event of Default;  Compliance  with  Material  Agreements.  No event has
     occurred and is  continuing  and no condition  exists which  constitutes  a
     Default or an Event of Default. No Loan Party or Expanded Property Owner is
     in  violation,  in any  material  respect,  of  any  term  of any  Material
     Agreement  or  instrument  to  which  it is a party  or by  which it or its
     properties are bound except as set forth on Schedule 4.2(k)..............25
5.14 Labor Matters.  (a) No strikes or other material labor disputes against any
     Loan Party or Expanded  Property  Owner are pending or, to any Loan Party's
     knowledge, threatened; (b) hours worked by and payment made to employees of
     each Loan Party or Expanded  Property Owner comply in all material respects
     with the Fair Labor Standards Act and each other federal,  state,  local or
     foreign law applicable to such matter;  (c) all material  payments due from
     any Loan Party or Expanded  Property Owner for employee  health and welfare
     insurance  have been paid or  accrued as a  liability  on the books of such
     Loan Party or Expanded  Property Owner; (d) except as set forth in Schedule
     5.14(d), no Loan Party or Expanded Property Owner is a party to or bound by
     any  collective  bargaining  agreement,  management  agreement,  consulting
     agreement or any employment  agreement (and true and complete copies of any
     agreements  described  on  Schedule  5.14(d)  have  been  delivered  to the
     Lender);  (e) there is no organizing  activity  involving any Loan Party or
     Expanded  Property  Owner  pending  or,  to  any  Loan  Party's  knowledge,
     threatened  by any  labor  union or group of  employees;  (f)  there are no
     representation  proceedings  pending  or,  to any Loan  Party's  knowledge,
     threatened  with  the  National  Labor  Relations   Board,   and  no  labor
     organization  or group of employees of any Loan Party or Expanded  Property
     Owner has made a pending demand for recognition; (g) except as set forth in
     Schedule 5.14(g), there are no complaints or charges against any Loan Party
     or  Expanded  Property  Owner  pending or, to any Loan  Party's  knowledge,
     threatened to be filed with any Governmental  Authority or arbitrator based
     on,  arising  out of, in  connection  with,  or  otherwise  relating to the
     employment  or  termination  of  employment  by any Loan Party or  Expanded
     Property  Owner of any individual  which,  if adversely  determined,  could
     reasonably     be     expected     to    cause    a    Material     Adverse
     Effect;..................................................................25
5.14 and (h) except as set forth on Schedule  5.14(h) at  December 1, 2000,  the
     Loan Parties  (other than Holdings and Borrower) and the Expanded  Property
     Owners have no employees.................................................26
5.15 Litigation.  Except as set forth in Schedule 5.15, there is no action, suit
     or proceeding by or before any  Governmental  Authority or arbitration that
     is pending, or to the knowledge of any Loan Party is threatened, against or
     affecting  (i)  any  of the  Loan  Documents  or  any  of the  transactions
     contemplated  hereby or thereby,  or (ii) any Borrower Group Members or any
     of their respective properties (including the Expanded Properties),  rights
     or licenses..............................................................26
5.16 Rights to Property.  The Expanded  Property Owners have title in fee simple
     to, or a valid leasehold interest in, all of the Expanded  Properties,  and
     good title to, or a valid leasehold interest in, all their other properties
     purported  to be  owned by them and all  properties  reflected  in the most
     recent  balance  sheet  referred  to in  Section  5.8  (except  as  sold or
     otherwise  disposed of in the  ordinary  course of business or as no longer
     used or useful in the conduct of the business)  free and clear of all Liens
     except Permitted Liens.  Schedule 5.16 lists or describes all real property
     other  than  that set forth on  Exhibit A owned or leased by each  Borrower
     Group Member.  The Permitted  Liens do not materially and adversely  affect
     the  value  of any of the  Expanded  Properties,  the  use of the  Expanded
     Properties for the use being made thereof as of the date of this Agreement,
     the operation of the Expanded Properties or the Borrower's ability to repay
     the Loan in full.........................................................26
5.17 Taxes.  Each Loan Party's and Property  Owner's federal tax  identification
     number is set forth on Schedule 5.17. All federal, state, local and foreign
     tax returns, reports and statements required to be filed by each Loan Party
     and Expanded  Property  Owner have been properly  prepared,  executed,  and
     filed with the appropriate  governmental  agencies in all  jurisdictions in
     which tax  returns are  required to be filed,  and all Taxes upon such Loan
     Party or Expanded Property Owner or upon any of their respective properties
     (including the Expanded Properties), incomes, sales or franchises which are
     shown to be due and payable on such Tax returns have been paid prior to the
     date on which any fine, penalty, interest, late charge or loss may be added
     thereto  for  nonpayment  thereof,  other  than  Taxes or  assessments  the
     validity or amount of which such Loan Party or Expanded  Property  Owner is
     contesting  in good faith in  accordance  with the  standards  set forth in
     Section 7.11.  Proper and accurate  amounts have been withheld by each Loan
     Party and Expanded  Property Owner from their respective  employees for all
     periods in full and complete  compliance  with the tax, social security and
     unemployment withholding provisions of applicable federal, state, local and
     foreign law and such  withholdings  have been timely paid to the respective
     Governmental Authorities.................................................26
5.18 No Material  Adverse  Change.  Except as set forth in Schedule 5.18,  since
     December    31,    1999    there    has    been   no    Material    Adverse
     Change...................................................................26
5.19 Solvency. Both before and after giving effect to (a) the Loan to be made or
     extended on the Closing Date, (b) the  disbursement of the proceeds of such
     Loan and.................................................................26
5.19 (c) the payment and accrual of all transaction costs in connection with the
     foregoing,  each of the Loan Parties and the Expanded  Property  Owners and
     the Loan Parties and the Expanded  Property  Owners,  taken as a whole, are
     Solvent..................................................................27
5.20 No Bankruptcy Filing.  Except as listed on Schedule 5.20, no Borrower Group
     Member is a debtor in any outstanding action or proceeding  pursuant to any
     Bankruptcy  Law.  Except  as listed on  Schedule  5.20,  or as set forth in
     Schedule 10.5 (but only upon  satisfaction of the Section 10.5 Conditions),
     no Borrower Group Member is  contemplating  either the filing of a petition
     by it under any Bankruptcy Law or the liquidation of all or a major portion
     of its assets or  property.  No Loan Party has any  knowledge of any Person
     contemplating  the filing of any such petition  against any Borrower  Group
     Member.  No Loan Party has any  knowledge of any tenant  contemplating  the
     filing of a petition by it under any Bankruptcy  Law or the  liquidation of
     all or a major  portion of its assets or property.  The  entering  into the
     Loan  Documents  to which any Loan Party or  Expanded  Property  Owner is a
     party does not  constitute  a  fraudulent  conveyance  by any Person,  and,
     except as listed on Schedule 5.20, no petition in bankruptcy has been filed
     by or against any  Borrower  Group Member in the last seven (7) years (and,
     except  as  listed  on  Schedule  5.20,  no  Borrower  Group  Member or any
     principal,  any general  partner or member  thereof,  in the last seven (7)
     years has ever made any  assignment  for the benefit of  creditors or taken
     advantage of any  applicable  Bankruptcy  Laws).  No Loan Party or Expanded
     Property  Owner has  entered  into the Loan or any Loan  Document  with the
     actual  intent to hinder,  delay,  or defraud any  creditor,  and each Loan
     Party and Expanded Property Owner has received reasonably  equivalent value
     in exchange for its obligations under the Loan Documents.  Giving effect to
     the  transactions  contemplated  by the  Loan  Documents  and  Senior  Loan
     Documents,  the fair saleable value of each Loan Party's assets exceeds and
     will,  immediately  following  the  execution  and  delivery  of  the  Loan
     Documents  and the Senior Loan  Documents,  exceed such Loan Party's  total
     liabilities, including subordinated,  unliquidated,  disputed or contingent
     liabilities.  The fair  saleable  value of each Loan Party's  assets is and
     will immediately following the execution and delivery of the Loan Documents
     and Senior  Loan  Documents,  be greater  than such Loan  Party's  probable
     liabilities,  including the maximum amount of its contingent liabilities or
     its debts as such debts  become  absolute  and  matured.  Each Loan Party's
     assets do not and, immediately  following the execution and delivery of the
     Loan  Documents  and  the  Senior  Loan  Documents  will  not,   constitute
     unreasonably  small  capital to carry out its  business as  conducted or as
     proposed to be  conducted.  No Loan Party intends or believes that it will,
     incur debts and  liabilities  (including  contingent  liabilities 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 its
     obligations).............................................................27
5.21 Trade  Relations.  There exists no actual or, to the  knowledge of any Loan
     Party or Expanded Property Owner, threatened  termination,  cancellation or
     limitation of, or any modification or change in, the business  relationship
     between  any Loan Party or  Expanded  Property  Owner and any  customer  or
     supplier  that would prevent the Loan Parties or Expanded  Property  Owners
     from  conducting  their  business after the  consummation  of the financing
     contemplated  by this  Agreement  in  substantially  the same  manner as is
     contemplated in the Business Plan........................................27
5.22 No Brokerage Fees. Except as set forth on Schedule 15.21, no Loan Party has
     agreed to pay any brokerage or other fee, commission or compensation to any
     Person in connection with the Loan to be made hereunder  except the fees as
     contemplated herein......................................................28
5.23 Margin  Stock;  Regulation U. No Loan Party or Expanded  Property  Owner is
     engaged principally, or as one of its important activities, in the business
     of extending  credit for the purpose of purchasing or carrying margin stock
     within  the  meaning  of  Regulations  T, U, and X of the  Federal  Reserve
     System. The making of the Advances and the use of the proceeds thereof will
     not violate  Regulations T, U or X of the Board of Governors of the Federal
     Reserve System...........................................................28
5.24 Investment  Company;  Public  Utility  Holding  Company.  No Loan  Party or
     Expanded Property Owner is an "investment company" or a "company controlled
     by an  investment  company"  or an  "affiliated  person" or  "promoter"  or
     "principal underwriter" for, an "investment company," within the meaning of
     the Investment Company Act of 1940, as amended,  or a "holding company," or
     a  "subsidiary  company" of a "holding  company,"  or an  "affiliate"  of a
     "holding  company" or of a  "subsidiary  company"  of a "holding  company,"
     within the meaning of the Public  Utility  Holding  Company Act of 1935, as
     amended..................................................................28
5.25 Personal  Holding  Company.  No Loan Party or Expanded  Property Owner is a
     "personal   holding   company"   as   defined   in   Section   542  of  the
     Code.....................................................................28
5.26 Foreign  Person.  No Loan Party or  Expanded  Property  Owner is a "foreign
     person"  within  the  meaning  ofss.  1445(f)(3)  of the  Internal  Revenue
     Code.....................................................................28
5.27 Securities  Act, Etc. The  issuance,  offer and sale of (i) the Note to the
     Lender (ii) the Warrant to the Lender and (iii) the shares of Common  Stock
     issuable  upon  exercise  of the  Warrant  to the  holder  thereof  are not
     required to be registered  under the Securities Act or under the securities
     laws  of  any  state;  provided,  that  the  foregoing   representation  is
     predicated  upon the assumption  that the Lender is not acquiring the Note,
     the  Warrant  or  such   shares  of  Common   Stock  with  a  view  to  the
     "distribution"  (as such  term is used in the  Securities  Act) of any part
     thereof   which   would   result   in  a   violation   of  the   Securities
     Act......................................................................28
5.28 ERISA....................................................................28
5.29 Intellectual Property.  Each Loan Party and Expanded Property Owner owns or
     possesses the right to use all patents,  trademarks,  service marks,  trade
     names,  copyrights,  know-how,  franchises,  software and software licenses
     (collectively,  the "Intellectual Property") necessary and material for the
     operation  of its  business.  All such  material  rights are  described  on
     Schedule  5.29.  No material  claim has been asserted and is pending by any
     Person challenging or questioning the use of any such Intellectual Property
     or the validity of any  Intellectual  Property  (nor does any Loan Party or
     Expanded Property Owner know of any valid basis for such claim) and (b) the
     use of Intellectual  Property by the Loan Parties and the Expanded Property
     Owners does not infringe on the rights of, and no Intellectual  Property of
     the Loan Parties or the Expanded  Property  Owners is being  infringed upon
     by, any Person in any material respect...................................30
5.30 Environmental  Matters.  Except  as  set  forth  in  Schedule  5.30  or the
     Environmental  Reports,  to the best  knowledge of each of the Loan Parties
     and the Expanded  Property  Owners,  each Loan Party and Expanded  Property
     Owner is in compliance with all  Environmental  Requirements  applicable to
     such Loan Party or Expanded  Property  Owner or its business or to the real
     or  personal  property  owned,  leased or  operated  by such Loan  Party or
     Expanded Property Owner (including the Expanded Properties).  No Loan Party
     or Expanded Property Owner has received notice of, or has knowledge of, any
     material  violation  or alleged  violation,  or any  material  liability or
     asserted liability, under any Environmental  Requirements,  with respect to
     such Loan Party or Expanded Property Owner or its business or its premises.
     Except as disclosed in the Environmental  Reports, no Hazardous Material is
     currently  located  at, on, in,  under or about any  Expanded  Property  or
     Improvements.  The only  premises  presently  occupied by any Loan Party or
     Expanded  Property  Owner are the Expanded  Properties and office spaces in
     commercial  office  buildings.  Schedule  5.30 lists all the  Environmental
     Reports..................................................................30
5.31 Security Interests.  The provisions of the Security Documents are effective
     to create in favor of the Lender a legal,  valid and enforceable Lien on or
     security  interest in all of the  Collateral,  and, when the recordings and
     filings described on Schedule 5.31 have been effected in the public offices
     listed on  Schedule  5.31,  the Pledge  Agreements  will create a perfected
     first priority security interest in all right,  title,  estate and interest
     of each Borrower Group Member party thereto in the Collateral  which may be
     perfected  by filing,  subject to no Liens.  The  recordings,  filings  and
     actions  shown on Schedule  5.31 are all the actions  necessary in order to
     establish,   protect  and  perfect  the  interest  of  the  Lender  in  the
     Collateral.  Other than the Financing  Statements  and any UCC-1  financing
     statements made by the Senior Loan Obligors in favor of the Senior Lenders,
     no Loan Party or Expanded  Property Owner has executed any UCC-1  financing
     statements in favor of any other Person..................................30
5.32 Place of  Business.  The chief  executive  office  of each  Loan  Party and
     Expanded  Property Owner is identified on Schedule 5.32.  Each Loan Party's
     and Expanded  Property  Owner's  place of business in the state(s)  where a
     Property is located is  identified  on  Schedule  5.32.  Each Loan  Party's
     records  concerning  the  Collateral,  and each Expanded  Property  Owner's
     records  concerning  its  Property,  are  kept  at  one  or  all  of  these
     addresses................................................................30
5.33 Location  of  Collateral.  The  Collateral  is (a)  currently  kept  at the
     locations  identified  by Loan  Party and type of  Collateral  on  Schedule
     5.33(a), and (b) will be kept at the locations identified by the Loan Party
     and type of Collateral on Schedule 5.33(b)...............................31
5.34 No Defaults Under Material Agreements. Except as listed on Schedule 4.2(k),
     with respect to each Material  Agreement,  no material  default by any Loan
     Party or Expanded  Property  Owner or event which with the giving of notice
     or the passage of time would be a material default has occurred and, to the
     knowledge of the Loan Parties and the Expanded  Property Owners,  the other
     party or parties thereto are not in material default  thereunder,  and each
     Loan Party and Expanded Property Owner, as applicable, has fully and timely
     performed all its material  obligations  thereunder.  The right,  title and
     interest of such Loan Party or Expanded  Property  Owner  thereunder is not
     subject to any set off or  counterclaim  or, to the best  knowledge  of the
     Loan Parties and the Expanded  Property  Owners,  any defense or claim, and
     none of the foregoing have been asserted or alleged against such Loan Party
     or Expanded  Property Owner. The amount  represented by each Loan Party, on
     behalf of itself  and on behalf of the  Expanded  Property  Owners,  to the
     Lender,  from time to time as owing with respect to any Material  Agreement
     will at such time be the correct amount in all material  respects  actually
     owing by such account debtors thereunder.................................31
5.35 Corporate  Structure.  The  Borrower  is  a  Subsidiary  of  Holdings.  The
     Guarantors, other than Holdings, are wholly-owned,  directly or indirectly,
     by the Borrower or Holdings, or by one or more other Guarantors.  Except as
     set forth in Schedule  5.35,  none of the Loan  Parties nor any  Subsidiary
     thereof has issued any securities  convertible into shares of its equity to
     any Person,  and the outstanding stock and securities (or other evidence of
     ownership) of such Subsidiaries owned by the Loan Parties are so owned free
     and  clear of all  Liens,  warrants,  options  or  rights  of others of any
     kind.....................................................................31
5.36 Assumed  Names.  Except as set forth on  Schedule  5.36,  no Loan  Party or
     Expanded  Property Owner conducts business under any assumed names or trade
     names,  or has  conducted  business  under any other names,  or any assumed
     names   or   trade   names,    at   any   time   prior   to   the   Closing
     Date.....................................................................31
5.37 Transactions  with  Affiliates.  No Affiliate and no officer or director of
     any Loan Party or  Expanded  Property  Owner or any  individual  related by
     blood,  marriage,  adoption or otherwise to any such Affiliate,  officer or
     director, or any Person in which any such Affiliate,  officer,  director or
     individual  related  thereto owns any material  beneficial  interest,  is a
     party to any agreement,  contract,  commitment or transaction with any Loan
     Party or Expanded  Property  Owner or has any interest in any property used
     by any Loan  Party or  Expanded  Property  Owner,  except  as set  forth on
     Schedule 5.37 or Schedule 5.47...........................................31
5.38 Other Indebtedness. Other than the Loan and the Permitted Debt, no Borrower
     Group Member has outstanding Indebtedness................................31
5.39 Leases; Management Agreements............................................31
5.40 Security  Deposits.  Each Loan Party and each Expanded Property Owner is in
     compliance  in all  material  respects  with all  Legal  Requirements  with
     respect to the Security Deposits.........................................33
5.41 No Receipt of Loan Proceeds. All of the Senior Loan proceeds that have been
     advanced to each Senior Loan Obligor have been used solely for the purposes
     provided in the Senior Loan  Documents..33  5.42 Violations of Law. No Loan
     Party or Expanded Property Owner has knowledge of any notices of violations
     of any Applicable Law in effect as of the Closing Date by any Loan Party or
     Expanded  Property  Owner,  or  affecting  or  pertaining  to  any  of  the
     Properties or other Expanded Properties..................................33
5.43 No Event  of  Default.  No Event of  Default  has  occurred  or will  occur
     immediately  following  the making of the Loan,  and no  Default  presently
     exists or will exist  immediately  following  the  making of the Loan,  and
     there is no default or event of  acceleration  under any of the Senior Loan
     Documents which has not been cured or irrevocably  waived in writing and no
     Loan Party has actual knowledge of any default or any event or circumstance
     which with the  giving of notice or the  passage  of time,  or both,  would
     constitute  a default  under any Senior Loan  Documents  except as noted on
     Schedule 5.43............................................................33
5.44 No Set-Off.  The Loan Documents are not subject to any right of rescission,
     set-off,  counterclaim  or defense by any Borrower Group Member,  including
     the  defense of usury,  nor would the  exercise  of any of the terms of the
     Security  Documents,  or the exercise of any right  thereunder,  render the
     Loan Documents unenforceable, and no Borrower Group Member has asserted any
     right  of  rescission,   set-off,   counterclaim  or  defens  with  respect
     thereto..................................................................33
5.45 Intentionally Omitted................................. ..................33
5.46 Representations and Warranties with Respect to the Expanded Properties...33
5.47 Affiliate  Agreements.  The Loan Parties and Expanded  Property Owners have
     not  entered  into  and  will  not  enter  into  any  Affiliate  Agreements
     (hereinafter  defined)  without the prior written  consent of Lender and in
     any  event  upon  terms  and  conditions  that are  intrinsically  fair and
     substantially  similar to those that would be available  on an  arms-length
     basis with third parties other than any such Affiliate. Except as set forth
     on Schedule 5.47, no Loan Party or Expanded Property Owner has entered into
     any  Affiliate   Agreements,   and  Schedule  5.47  sets  forth  all  fees,
     compensation  and any other  remuneration  payable  to each Loan  Party and
     Expanded    Property    Owner   on   account   of   any   such    Affiliate
     Agreements...............................................................36
5.48 Survival  of  Representations.  Each  Loan  Party  agrees  that  all of the
     representations and warranties made by any of the Loan Parties set forth in
     this Article V or elsewhere in the Loan Documents shall survive for so long
     as any amount  remains owing to Lender under the Loan Documents by any Loan
     Party....................................................................36
5.49 Senior  Loan  Documents.  All of the Senior  Loan  Documents  are listed in
     Schedule  5.49.  Except as set forth in Schedule  5.49,  there have been no
     modifications  of the Senior Loan  Documents  evidencing  or  securing  the
     Senior  Loans,  and there are no other  agreements  of any kind between the
     Loan  Parties  and the Senior  Lenders or any other  Person or entity  with
     respect to the Senior Loans except as set forth in Schedule 5.49.  Borrower
     represents  and  warrants  to Lender the truth and  accuracy  of all of the
     representations and warranties contained in the Senior Loan Documents,  and
     such  representations  and warranties are hereby expressly  incorporated by
     reference as if fully setforth herein....................................36
5.50 Purchase Contracts.  Other than the Silverthorne  Contract and the Purchase
     Agreements,  no Borrower Group Member is party to any binding  agreement to
     sell  any of the  Expanded  Properties  or  such  Borrower  Group  Member's
     interest  therein,  excepting  such  agreements  as  may  be  cancelled  or
     terminated   by   the   Borrower   Group   Member   without    penalty   or
     fee......................................................................36
5.51 Unencumbered  Assets.  Except as set forth in Schedule  5.51, no Loan Party
     owns(directly or indirectly) any interest in any Unencumbered Assets.....36
5.52 Status.  Except as disclosed in Schedule  5.52,  Holdings is a  corporation
     listed and in good standing on the New York Stock Exchange and is currently
     qualified as a real estate investment trust under the Code...............36
5.53 Filing and Recording  Taxes.  All transfer  taxes,  recording  taxes,  deed
     stamps,  intangible  taxes or other amounts in the nature of transfer taxes
     or recording taxes,  charges or fees or similar charges required to be paid
     by any Person under  applicable Legal  Requirements  currently in effect in
     connection with the making of the Loan or the transactions  contemplated by
     this  Agreement have been paid. All mortgage,  mortgage  recording,  stamp,
     intangible or other  similar taxes  required to be paid by any Person under
     applicable  Legal  Requirements  currently in effect in connection with the
     execution,  delivery,  recordation,  filing,  registration,  perfection  or
     enforcement of any of the Loan Documents, including the Security Documents,
     have been paid...........................................................37
5.54 Representations and Warranties of Holdings. Each of the representations and
     warranties made by any Loan Party with respect to any Borrower Group Member
     shall be deemed to have been made by Borrower and by Holdings  with respect
     to each Borrower Group Member, to the same extent such  representation  and
     warranty is made by the Loan Party.......................................37
5.55 Acquisition  Documents.  Borrower has delivered to Lender true and complete
     copies of all Material Agreements under which any Borrower Group Member has
     remaining  rights or  obligations  in  respect  to the  acquisition  of any
     property,  together with a true and complete  copy of the related  purchase
     agreement and signed  closing  statement/settlement  sheets.  Except as set
     forth on Schedule  5.55,  to Borrower's  knowledge,  each seller under such
     purchase  agreements has complied with all of its covenants and obligations
     under the purchase agreement,  and Borrower Group Member has not waived any
     rights  or  remedies  against  the  seller  or any  other  party  except as
     previously disclosed to Lender in writing, and expressly approved by Lender
     in writing...............................................................37
5.56 Additional  Pledges.  The Borrower Group Members have no right to pledge or
     encumber  any other  assets owned or held by such  Borrower  Group  Members
     (other  than the  Collateral)  because  such  Borrower  Group  Members  are
     prohibited   from  pledging  or  encumbering  any  assets  other  than  the
     Collateral   by   the   terms   and   provisions   of   the   Senior   Loan
     Documents................................................................37
5.57 No Plan Assets. No Loan Party is or will be (i) an employee benefit plan as
     defined in Section 3(3) of ERISAwhich  is subject to ERISA,  (ii) a plan as
     defined in Section  4975(e)(1) of the Code which is subject to Section 4975
     of the Code, or (iii) an entity whose  underlying  assets  constitute "plan
     assets" of any such  employee  benefit plan or plan for purposes of Title I
     of ERISA of Section 4975 of the Code.....................................37
5.58 Governmental Plan. No Loan Party is or will be a "governmental plan" within
     the meaning of Section 3(32) of ERISA and transactions by or with such Loan
     Party are not and will not be subject to state statutes  applicable to such
     Loan  Party  regulating  investments  of  and  fiduciary  obligations  with
     obligations with respect to governmental plans...........................37
5.59 Capitalization...........................................................37
5.60 Valid Issuance of Warrant and Warrant Shares.............................38

ARTICLE VI FINANCIAL STATEMENTS AND INFORMATION...............................39
6.1  Monthly Financial  Statements.  Within 20 days after the end of each of the
     first two fiscal months of each Fiscal Quarter, (i) a copy of the unaudited
     consolidated  balance sheet of Holdings and its  Subsidiaries as at the end
     of such fiscal month,  accompanied by related  consolidated (as applicable)
     statements  of income and  retained  earnings for such fiscal month and for
     the  elapsed  portion  of the  fiscal  year ended with the last day of such
     fiscal  month and  accompanied  by a  certificate  of the  Chief  Financial
     Officer of Holdings,  in its  capacity as the general  partner of Borrower,
     that all such  financial  statements  are  complete and correct and present
     fairly in accordance with GAAP the  consolidated  financial  position,  the
     consolidated   results  of  operations  and  the  changes  in  consolidated
     financial  position of  Holdings  and its  Subsidiaries  (subject to normal
     year-end audit adjustments and the absence of footnotes).................39
6.2  Quarterly Financial Statements. Within 30 days after the end of each Fiscal
     Quarter, (i) a copy of the unaudited consolidated and consolidating balance
     sheets of  Holdings  and its  Subsidiaries  as of the close of such  Fiscal
     Quarter and the related consolidated and consolidating statements of income
     and changes in financial  position  for that  portion of the current  year,
     (ii) a copy of the unaudited  consolidated and consolidating  statements of
     income of Holdings and its  Subsidiaries  for such quarter and (iii) a copy
     of the  unaudited  balance  sheet and related  statement of income for each
     Expanded  Property,   or  group  of  Expanded  Properties  for  which  such
     statements are otherwise  required under such Senior Loan Documents,  as at
     the close of such  quarter and for that  portion of the current  year,  and
     setting forth the corresponding budgeted figures for such fiscal quarter as
     set forth in the budget delivered  pursuant to Section 6.6, and accompanied
     by a  certificate  of the  Chief  Financial  Officer  of  Holdings,  in its
     capacity  as the  general  partner  of  Borrower,  that all such  financial
     statements are complete and correct and present  fairly in accordance  with
     GAAP  (y)  the  consolidated  and  consolidating  financial  position,  the
     consolidated  and  consolidating  results of operations  and the changes in
     consolidated  and  consolidating  financial  position of  Holdings  and its
     Subsidiaries and (z) the financial position,  the results of operations and
     the changes in financial position of each Expanded  Property,  in each case
     as at the end of.........................................................39
6.2  such Fiscal  Quarter and for the period then ended  (subject to normal
     year-end audit adjustments and the absence of footnotes).................40
6.3  Annual  Financial  Statements.   Copies  of  (i)  the  annual  audited
     consolidated  and  unaudited  consolidating  financial  statements  of
     Holdings  and  its   Subsidiaries   consisting  of  consolidated   and
     consolidating   balance  sheets  and  consolidated  and  consolidating
     statements  of income and  retained  earnings and changes in financial
     condition,  setting  forth  in  comparative  form  in  each  case  the
     consolidated and consolidating  figures for the previous calendar year
     as well as the corresponding  budgeted figures for such fiscal year as
     set forth in the budget  delivered  pursuant  to Section  6.6, in each
     case within 90 days after the close of each  calendar  year,  and (ii)
     the annual audited financial statements of each Expanded Property,  or
     group of Expanded  Properties for which such  statements are otherwise
     required  under such Senior Loan  Documents,  consisting  of a balance
     sheet,  statement  of income  and  retained  earnings  and  changes in
     financial condition, setting forth in comparative form the figures for
     the  previous  calendar  year as well  as the  corresponding  budgeted
     figures  for such  fiscal  year as set forth in the  budget  delivered
     pursuant  to Section  6.6, in each case within the earlier of 120 days
     after the close of each  calendar  year or such earlier time period as
     is required under the applicable  Senior Loan Documents for deliveries
     of financial  statements to the applicable  Senior  Lenders.  All such
     financial  statements  shall be  prepared  in  accordance  with  GAAP,
     certified (except as to consolidating  financial  statements)  without
     qualification  by an Approved  Accounting  Firm, and  accompanied by a
     certificate  from the Chief  Financial  Officer  of  Holdings,  in its
     capacity as the general  partner of Borrower,  that all such financial
     statements  are complete and correct and present  fairly in accordance
     with GAAP (y) the consolidated and consolidating  financial  position,
     the  consolidated  and  consolidating  results of  operations  and the
     changes  in  consolidated  and  consolidating  financial  position  of
     Holdings and its  Subsidiaries  and (z) the  financial  position,  the
     results of  operations  and the changes in financial  position of each
     Expanded  Property,  in each case,  as at the end of such year and for
     the period then ended....................................................40
6.4  Additional Information...................................................40
6.5  Compliance Certificates..................................................41
6.6  Annual Operating Budget. Borrower shall prepare and deliver to Lender,
     within  forty-five  (45) days prior to the  beginning of each calendar
     year,  an  annual   expenditure   budget  for  (A)  Holdings  and  its
     Subsidiaries,  (B) Borrower and its Subsidiaries and (C) each Expanded
     Property,  and in each case showing,  on a  month-by-month  basis,  in
     reasonable  detail  (i)  each  line  item of  anticipated  income  and
     operating expenses, including amounts required to establish, maintain,
     and/or  increase  reserves,  and (ii) each  line  item of  anticipated
     Capital Expenditures  ("Operating Budget"). The Operating Budget shall
     also include a business plan  ("Business  Plan") for Holdings' and its
     Subsidiaries'  proposed  operations  during the  forthcoming  calendar
     year.  The Operating  Budget shall be prepared and submitted in a form
     reasonably  acceptable  to Lender  and  shall set forth in  reasonable
     detail  budgeted  capital,  operating  and other  expenses,  including
     without  limitation  the  salaries  and  potential  bonuses  and other
     compensation of directors,  officers and employees of Holdings and its
     Subsidiaries.  The  Operating  Budget  through  December  31,  2001 is
     attached  hereto as Exhibit G. Lender  shall have the right to approve
     each Operating Budget in Lender's sole and absolute discretion. In the
     event that Lender objects to the proposed  Operating  Budget submitted
     by Borrower,  Lender shall advise Borrower of such  objections  within
     fifteen  (15)  Business  Days after  receipt  thereof  (and deliver to
     Borrower a reasonably  detailed  description  of such  objection)  and
     Borrower shall promptly revise such Operating  Budget and resubmit the
     same to Lender. Lender shall advise Borrower of any objections to such
     revised Operating  Budget,  in Lender's sole and absolute  discretion,
     within ten (10) Business  Days after  receipt  thereof (and deliver to
     Borrower a reasonably  detailed  description  of such  objection)  and
     Borrower shall promptly revise the same in accordance with the process
     described in this sentence until Lender approves an Operating  Budget,
     in Lender's sole and absolute  discretion.  Each such Operating Budget
     approved by Lender in accordance  with terms hereof shall  hereinafter
     be referred to as an "Approved Operating Budget."........................42
6.7  Other Deliveries.........................................................43
6.8  Notices:  Borrower shall, immediately upon receiving written notice or
     obtaining  actual  knowledge of the same, and in all events  promptly,
     provide to Lender written notice of any of the following:................43
6.9  Communication  with Accountants.  Each Loan Party authorizes Lender to
     communicate directly with its independent certified public accountants
     and  authorizes  those  accountants  to disclose to Lender any and all
     financial statements and other...........................................43
6.9  supporting  financial  documents and schedules including copies of any
     management  letter with respect to the business,  financial  condition
     and other  affairs of such Loan Party and any Borrower  Group  Member.
     Promptly  upon  request of Lender,  each Loan  Party  shall  deliver a
     letter addressed to such  accountants  instructing them to comply with
     the provisions of this Section 6.9.......................................44

ARTICLE VII AFFIRMATIVE COVENANTS.............................................44
7.1  Payment  of the Debt.  Borrower  will pay the Debt at the times and in
          the manner provided in the Note and the other Loan Documents........44
7.2  Insurance................................................................44
7.3  Casualty; Condemnation and Application of Proceeds.......................48
7.4  Real Property Taxes......................................................52
7.5  Leases and Revenues......................................................54
7.6  Maintenance of Properties. Borrower shall, or shall cause the Expanded
     Property  Owners to,  maintain the Expanded  Properties  in a good and
     safe condition and repair.  The  Improvements,  materials,  equipment,
     furniture,  fixtures and other articles of personal  property  located
     therein and thereon not owned by lessees  under Leases (the  "Personal
     Property")  shall not be removed,  demolished  or  materially  altered
     (except for normal  replacement of the Personal  Property) without the
     prior  written   consent  of  Lender,   which  consent  shall  not  be
     unreasonably  withheld.  Borrower  shall not,  nor shall it permit any
     Expanded  Property  Owner  to,  initiate,  join in,  acquiesce  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 the  Expanded  Properties  or any  part  thereof
     without the prior written  consent of Lender,  which consent shall not
     be unreasonably  withheld.  If under applicable  zoning provisions the
     use of all or any portion of any Expanded  Property is or shall become
     a nonconforming use, Borrower will not, nor will it allow any Expanded
     Property  Owner to  intentionally  or  knowingly  cause or permit  the
     nonconforming  use to be discontinued or abandoned without the express
     written  consent of Lender,  which consent  shall not be  unreasonably
     withheld.................................................................56
7.7  Waste.  Borrower shall not, nor shall it permit any Expanded  Property
     Owner to, (a) commit or suffer any waste of the  Expanded  Properties,
     (b) make or  permit to be made any  change in the use of the  Expanded
     Properties which will in any way materially  increase the risk of fire
     or  other  hazard  arising  out  of  the  operation  of  the  Expanded
     Properties,  or (c) take or cause to be taken any  action  that  might
     invalidate or give cause for cancellation of any Policy..................56
7.8  Compliance With Laws.....................................................56
7.9  Books and Records........................................................57
7.10 Change in Fiscal Year. Borrower shall, and shall cause each Loan Party
     and Property Owner to, maintain December 31 as its fiscal year end.......58
7.11 Payment of Taxes,  Charges,  Claims and Current Liabilities.  Borrower
     shall, and shall cause each Loan Party and Expanded Property Owner to,
     pay or discharge:........................................................58
7.12 Performance of Other Agreements.  Borrower shall, and shall cause each
     Loan Party and Expanded  Property  Owner to,  observe and perform each
     and every term to be observed or performed by such Person  pursuant to
     the  terms  of any  agreement  or  recorded  instrument  affecting  or
     pertaining to the Expanded Properties (including,  without limitation,
     the Material Agreements),  and any Amendments thereto, or given by any
     Loan Party or  Expanded  Property  Owner to Lender for the  purpose of
     further securing any Obligation..........................................59
7.13 Right of Entry.  Borrower  shall,  and shall cause each Loan Party and
     Expanded Property Owner to, provide to Lender and its agents access to
     their respective executive or other offices or any part thereof or any
     Expanded  Property  for  the  purpose  of  making  inspections  at all
     reasonable times,  including,  without limitation,  for the purpose of
     curing  any  default  that  occurs or that is  asserted  by any Senior
     Lender under the Senior Loan Documents...................................59
7.14 Existence;  Compliance with Legal  Requirements.  Borrower shall,  and
     shall  cause each Loan  Party and  Expanded  Property  Owner to, do or
     cause to be done all things  necessary to preserve,  renew and keep in
     full force and effect its existence and  qualifications,  and material
     rights,  licenses,  permits and  franchises and comply in all material
     respects with all requirements of Governmental  Authorities applicable
     to it.  Borrower shall,  and shall cause each Expanded  Property Owner
     to, at all times  maintain,  preserve and protect all  franchises  and
     trade names and  preserve  all of their  respective  property  used or
     useful in the conduct of its respective business. Borrower shall cause
     each Expanded  Property  Owner to qualify to do business and remain in
     good  standing  under the laws of the  state in which  the  applicable
     Expanded  Property is located and in each  jurisdiction  as and to the
     extent the same is required for the ownership, maintenance, management
     and operation of the applicable Expanded Property........................59
7.15 Title to  Property.  Borrower  shall,  and shall  cause each  Expanded
     Property  Owner  to,  (i)  warrant  and  defend  (A) the  title to the
     Collateral  and every part thereof,  and (B) the validity and priority
     of the  liens of the  Pledge  Agreements  against  the  claims  of all
     persons and entities  whatsoever and (ii) warrant and defend the title
     of the Expanded  Property Owners to the Expanded  Properties and every
     part thereof,  other than as set forth on Schedule 10.5 (but then only
     if  the  Section  10.5  Conditions  are  satisfied).   Borrower  shall
     reimburse Lender for any losses, costs, damages or expenses (including
     Professional  Fees)  incurred by Lender if an interest in any Expanded
     Property or the  Collateral,  other than as  permitted  hereunder,  is
     claimed by another Person................................................60
7.16 ERISA....................................................................60
7.17 Environmental Matters....................................................61
7.18 Subdivision  Maps. Prior to recording any final map, plat, parcel map,
     condominium plats, lot line adjustment or other subdivision map of any
     kind  covering  any portion of any  Expanded  Property  (collectively,
     "Subdivision  Map"),  Borrower  shall,  or shall  cause  the  relevant
     Expanded  Property Owner to, submit such Subdivision Map to Lender for
     Lender's review and approval, which approval shall not be unreasonably
     withheld.................................................................62
7.19 Pledge of all Assets.  Subject to terms of the Senior Loan  Documents,
     it is the  intention  of the Loan  Parties and the  Expanded  Property
     Owners and Lender that all  properties,  rights and assets of the Loan
     Parties and the Expanded  Property  Owners,  whether real or personal,
     tangible or intangible,  or otherwise shall at all times be pledged to
     Lender as  "Collateral"  and as security  for the Loan,  except to the
     extent prohibited by Material Agreements in effect on the Closing Date
     and which have been  disclosed  in writing to Lender  (the  "Effective
     Material  Agreements").  Accordingly,  to the extent any Loan Party or
     Expanded  Property Owner acquires any properties,  rights or assets at
     any time after the Closing Date for which a Lien in favor of Lender is
     not  prohibited  by  the  Effective  Material  Agreements  or  if  the
     Effective Material Agreements at any time cease to prohibit such Lien,
     then Borrower shall  immediately (i) notify Lender thereof in writing,
     and  (ii)  pledge  or  cause  the  same to be  pledged  to  Lender  as
     additional  "Collateral"  and as  security  for the Debt  pursuant  to
     mortgages,  deeds of  trust,  pledge  agreements  or  other  documents
     acceptable  to  Lender.   Furthermore,   Borrower  covenants  to  work
     diligently  to obtaining the consent  necessary  from  Lumbermens  and
     KILICO, respectively,  in order to pledge the equity interests held by
     Prime  Warehouse Row Limited  Partnership  in Warehouse  Row, Ltd. and
     Market Street,  Ltd.,  respectively,  to Lender within six months from
     the date hereof..........................................................63
7.20 Refinancing of Senior Loan Documents.  The Loan Parties shall use their
     commercially  reasonable  efforts in  connection  with any refinancing of
     any  Senior  Loans to  obtain  Amendments  to the Senior Loan Documents to
     permit the Expanded  Property  Owners to become  "Loan  Parties" and grant
     a pledge of the direct or indirect  equity  interests of the Borrower
     Group Members in the relevant Expanded  Property Owner;  provided (A) that,
     other than the Silverthorne/Lebanon Transaction, any such refinancing shall
     be subject to Lender's prior written approval,  such approval not to be
     unreasonably  withheld if such  refinancing  (i) is for no more  than  the
     then-outstanding   principal   balance  of  the refinanced  loan plus
     reasonable  refinancing  costs approved by Lender in its reasonable
     discretion, or, if more, the proceeds of such  refinancing  in  excess  of
     the  principal  balance  being refinanced  (and such  reasonable
     refinancing  costs approved by Lender) are applied to amortize the
     principal balance of the Loan and  to  pay  the  Additional Fee associated
     with any such amortization (proceeds  of  refinancings  shall   under   no
     circumstance  be applied to the  payment of the  Minimum  Monthly
     Amortization  Amount  or to any  amortization  payments required under the
     Schedule V Covenants or under Section  2.7(b)(i),  (ii) or (iv)),  (ii) is
     for an interest  rate that does not exceed the greater of LIBOR  plus 3.5%
     per annum or 10% per annum,  (iii) is otherwise on commercially reasonable
     terms for first mortgages as reasonably  determined  by  Lender,  and (iv)
     allows a pledge in favor of Lender of 49% of the equity  interests in the
     applicable Senior Loan Obligor (which need not include managing interests
     if the  holder of the  Senior  Loan does not  allow  such  pledge of
     managing   interests); and further provided, (B) that the obligations of
     the Loan Parties under this Section 7.20 as they relate to any  refinancing
     of the Senior Loans  applicable to any of the Lothar  Properties,  Fru-Con
     Properties and Bellport II & III Property,  shall be limited to matters
     within the control of the Borrower Group Members,  it being  acknowledged
     that Borrower Group  Members do not own all of the equity interests in the
     Expanded Property Owners which own such Expanded Properties, and thus do
     not possess sole control over the Expanded Property Owners.  Upon the
     consummation of any  refinancing  described in proviso (A)...............63
7.20 above and to the extent applicable (and subject to proviso (B) above),
     (a) the relevant Expanded Property Owner shall promptly provide Lender with
     such  information  or security  documents  regarding the relevant Expanded
     Property as Lender shall reasonably request, (b) the Borrower Group  Member
     pledging an equity  interest in the  Expanded  Property Owner shall become
     a Guarantor  under the Loan  Documents  and (c) the Borrower  Group  Member
     holding the equity interests in the relevant Expanded Property Owner,
     direct or indirect, which has not theretofore pledged  such  equity
     interests  to  Lender  pursuant  to the  Pledge Agreements shall execute an
     Amendment to its relevant Pledge Agreement (or a new  pledge  agreement  in
     Lender's form) so that a security interest  in 49% of the equity interests
     (which  need  not  include managing  interests  if the holder of the Senior
     Loan does not allow such pledge of managing interests), direct or indirect,
     of such Expanded Property Owner has been granted to Lender as security for
     the Obligations..........................................................64
7.21 Estoppel  Statements.  Within ten (10) days after request by Lender to
     Borrower,   Borrower  shall  furnish  to  Lender  a  statement,   duly
     acknowledged   and  certified  and  setting  forth  (A)  the  original
     principal  amount of the Note, (B) the unpaid  principal amount of the
     Note,  (C) the  Applicable  Interest Rate of the Note, (D) the date on
     which  installments  of interest and principal were last paid, (E) the
     terms of  payment,  (F) any  offsets or defenses to the payment of the
     Loan,  if any, (G) that the Note,  this  Agreement  and the other Loan
     Documents  are  valid,  legal  and  binding  obligations  of the  Loan
     Parties, and have not been Amended or, if Amended,  giving particulars
     of such  Amendment  (H) that,  except as provided  in such  statement,
     there are no defaults or events  which with the passage of time or the
     giving of notice or both,  would  constitute an event of default under
     the Loan  Documents,  (I) whether or not, to the best knowledge of the
     Loan  Parties  and  applicable  Expanded  Property  Owner,  any of the
     tenants under the Leases are in default under the Leases,  and, if any
     of the tenants are in default,  setting  forth the specific  nature of
     all  such  defaults,  and  (J)  as to  any  other  matters  reasonably
     requested by Lender......................................................64
7.22 Further  Assurances.  Borrower  shall  and  shall  cause  each  of the
     Borrower  Group Members to, do and execute all and such further lawful
     and  reasonable  acts,  conveyances  and assurances as are required or
     desirable,  as  determined  by Lender,  to carry out the  intents  and
     purposes of this Agreement and the other Loan Documents. To the extent
     not prohibited  under the Senior Loan Documents,  Borrower shall cause
     each of the  Borrower  Group  Members to execute and deliver on demand
     one  or  more  financing   statements,   chattel  mortgages  or  other
     instruments, to evidence or perfect more.................................64
7.22 effectively the security interest of Lender in the Collateral in which
     such  Borrower  Group  Members  have  an  interest,  and if any of the
     Borrower  Group  Members  fails  to  execute  and  deliver  any of the
     foregoing within five (5) days after such request by Lender,  Borrower
     on its own behalf and on behalf of each  Borrower  Group Member hereby
     grants to Lender an  irrevocable  power of  attorney  coupled  with an
     interest  for the purpose of  exercising  and  perfecting  any and all
     rights and remedies available to Lender pursuant to this Section 7.22,
     and hereby  authorizes  Lender to execute in the name of such Borrower
     Group Member or without the signature of such Borrower Group Member to
     the extent Lender may lawfully do so, any such  financing  statements,
     chattel mortgages or other instruments..............................65
7.23 Hedging  Transactions.  Borrower  shall enter into such  interest rate
     hedging transactions as directed by Lender, each in form and substance
     satisfactory to Lender..............................................65
7.24 Cooperate in Legal  Proceedings.  Borrower shall,  and shall cause the
     Expanded  Property Owners to, cooperate fully with Lender with respect
     to any  proceedings  before  any  court,  board or other  Governmental
     Authority, which may in any way affect the rights of Lender hereunder,
     or any rights obtained by Lender under any of the other Loan Documents
     and, in connection  therewith,  permit  Lender,  at its  election,  to
     participate in any such proceedings......................................65
7.25 Contracts.  Borrower  shall  and  shall  cause  each  of the  Expanded
     Property  Owners to, deliver or cause to be delivered to Lender copies
     of all  material  contracts  or  other  material  agreements  (and all
     amendments,   modifications  or  supplements  thereto),   whether  now
     existing  or  hereafter  entered  into,  affecting  any Loan  Party or
     Expanded  Property  Owner  or  the  use,  maintenance,  management  or
     operation  of  any of  the  Expanded  Properties,  and  any  contracts
     regarding  a sale of any of the  Expanded  Properties  or an  interest
     therein. No Loan Party or Expanded Property Owner shall enter into any
     material  service,   maintenance  or  other  contracts  affecting  the
     Expanded  Properties  that are not terminable on two month's notice or
     less  without  cause and  without  penalty or  premium.  All  service,
     maintenance or other contracts affecting the Expanded Properties shall
     be arms-length transactions with Persons who are not Affiliates of any
     Loan Party or Expanded  Property  Owner, in the ordinary course of the
     applicable Loan Party's and/or Expanded  Property Owner's business and
     shall provide for the payment of fees in amounts and upon terms not in
     excess of existing market rates..........................................65
7.26 Purchase  Options.  Borrower shall cause the Expanded  Property  Owners to,
     deliver to Lender true and correct  copies of any purchase  agreement,  any
     option  agreement  and any rights of first offer or rights of first refusal
     to purchase any of the Expanded  Properties or any portion thereof,  or any
     other  similar  agreement  for  Lender's  approval  prior  to any  Expanded
     Property Owner's execution thereof.......................................65
7.27 Service  Rights.  Except as set forth on  Schedule  7.27,  no  Service
     Rights  have been  granted  to any Person by or from any Loan Party or
     Expanded  Property  Owner.  To the  extent  Service  Rights  have been
     granted to any  Person as set forth on  Schedule  7.27,  either a Loan
     Party or the applicable Expanded Property Owner (and no ............65
7.27 other  Person) is entitled to receive  any and all  compensation  with
     respect to the Service Rights............................................66
7.28 Payment and Distribution Direction Letters.  Borrower shall deliver or
     caused  to be  delivered,  with  respect  to each  Senior  Loan  which
     utilizes a lock box arrangement, a "Payment Direction Letter," in form
     and substance approved by Lender,  countersigned by each Senior Lender
     (or,  if  acceptable  to  Lender  in  its  discretion,  the  financial
     institution(s) responsible for maintaining the accounts required under
     the cash  management  provisions of the Senior Loan Documents  (each a
     "Senior  Depository")) to evidence its  acknowledgment  of receipt of,
     and agreement to the terms set forth in, the Payment Direction Letter.
     The  Payment  Direction  Letter  shall  expressly  state  that  it  is
     irrevocable  without the written  agreement of Lender and shall direct
     each Senior Lender (or Senior  Depository,  as applicable) that, until
     further written notice,  countersigned by Lender,  is received by such
     Senior Lender (or Senior Depository,  as applicable) from Borrower (on
     its  behalf or on behalf of its  Affiliate  or  Subsidiary  who is the
     primary obligor on the relevant Senior Loan Documents,  a "Senior Loan
     Obligor"),  any and all amounts  payable from time to time pursuant to
     the Senior Loan  Documents  to Borrower or such Senior Loan Obligor or
     allowed to be paid or received by Borrower or such Senior Loan Obligor
     shall be paid by wire transfer (on each date payment  would  otherwise
     be payable to Borrower or such Senior Loan  Obligor) to the Lockbox at
     the  Depository,  to be  held  and  applied  in  accordance  with  the
     provisions  of the Lockbox  Agreement.  To the extent  Borrower or any
     Senior Loan  Obligor is required to request of a Senior  Lender  under
     the  relevant  Senior Loan  Documents  the release to Borrower or such
     Senior Loan Obligor of monies,  then Borrower shall, or in the case of
     any Senior Loan  Obligor,  will cause such Senior Loan  Obligor to, in
     all cases  sufficiently  prior to the  intended  release date so as to
     constitute an effective request under the Senior Loan Documents,  send
     written notice to Senior Lender  requesting  Senior Lender to transfer
     such monies to Lender. Further, Borrower shall deliver a "Distribution
     Direction Letter," in form and substance approved by Lender, signed by
     each of Borrower,  Holdings and the other  Guarantors  and each Senior
     Loan Obligor to evidence their  respective  acknowledgment  of receipt
     of, and agreement to the terms set forth in, the relevant Distribution
     Direction  Letter.  The Distribution  Direction Letter shall expressly
     state that it is irrevocable  without the written  agreement of Lender
     and shall direct each of Borrower,  Holdings and the other  Guarantors
     and such Senior Loan  Obligor  that,  until  further  written  notice,
     countersigned by Lender, is received by such Senior Loan Obligor,  any
     and all Distributions  payable or distributable  from time to time any
     of  Borrower,  Holdings  or any other  Guarantor  or such  Senior Loan
     Obligor  shall be paid or  distributed  by check or wire  transfer (on
     each  date  such   Distribution   would   otherwise   be   payable  or
     distributable  to  such  Person)  delivered  to  the  Lockbox  at  the
     Depository,  to be held and applied in accordance  with the provisions
     of the Lockbox Agreement.................................................66

ARTICLE VIII NEGATIVE COVENANTS...............................................66
8.1  Fundamental  Changes;  No New  Subsidiaries.  Except asset sales  permitted
     under either or both Section 8.5 and Section 10.5, no Borrower Group Member
     shall,  directly or  indirectly,  by operation of law or  otherwise,  merge
     into, consolidate with, or sell all or substantially all of their assets or
     ownership  interests  or  otherwise  combine  with,  any Person or form any
     Subsidiary.   No  Borrower  Group  Member  shall  engage  in  any  business
     activities  or operations  other than the direct or indirect  ownership and
     operation of the Expanded Properties, except such new factory outlet center
     developments, if any, as are contemplated under the Business Plan. Borrower
     shall not allow (i) Holdings to own less than  fifty-one  percent  (51%) of
     the partnership interests in Borrower (ii) the Borrower to be controlled by
     a Person other than Holdings or (iii) any pledge of, other  encumbrance on,
     or  conversion  to limited  partnership  interests  of, any of the  general
     partnership interests in the Borrower...................................67
8.2  Investments;  Loans and  Advances.  Except as provided in Section  12.7, no
     Borrower  Group Member shall commit any funds or  resources,  undertake any
     project or  venture,  make any  investment  in, or make or accrue  loans or
     advances  of  money to any  Person  or make any  expenditure,  directly  or
     indirectly,  other than in accordance with the Approved  Operating  Budget,
     without  the prior  written  consent of Lender,  which may be  withheld  in
     Lender's sole and absolute discretion....................................67
8.3  Indebtedness. Except with respect to Section 7.20, no Borrower Group Member
     shall create,  incur,  assume or permit to exist any Indebtedness,  whether
     recourse or nonrecourse,  whether superior or junior and whether secured or
     unsecured,  except the Permitted Debt, without the prior written consent of
     Lender,   which   may  be   withheld   in   Lender's   sole  and   absolute
     discretion...............................................................67
8.4  Liens.  No Borrower  Group
     Member shall create or permit any Lien on any of its  properties  or assets
     except Permitted Liens...................................................67
8.5  Sales  of  Assets.  Except  as  listed  on  Schedule  8.5  (subject  to the
     provisions  set  forth  below)  or on  Schedule  10.5 (and then only if the
     Section  10.5   Conditions  are  satisfied)  or  the   Silverthorne/Lebanon
     Transaction,  no Borrower  Group  Member  shall sell,  transfer,  convey or
     otherwise  dispose of any assets or properties  (including  any interest in
     the Expanded  Properties or equity  interests,  direct or indirect,  in the
     Expanded  Property Owners) without the prior written consent of Lender.  So
     long as no Event of Default shall have occurred and be  continuing,  Lender
     shall upon prior written  notice from Borrower  grant a consent to the sale
     of any asset listed on Schedule 8.5 at the time such sale closes so long as
     (a) the Asset  Disposition Net Proceeds,  the calculation of which shall be
     subject  to  Lender's  reasonable  approval,  are in excess of the  minimum
     amount set forth for such asset on Schedule  8.5,  and are applied to repay
     the Note and the Additional Fee as set forth in Section 2.7(b)(i),  (b) the
     sale  contract  and  other  sale  documents  do  not  create  any  material
     liabilities,  direct or indirect, on the part of any Borrower Group Member,
     other than on the part of the selling  entity,  and then only to the extent
     the Borrower demonstrates to the Lender's reasonable satisfaction that such
     liabilities  shall be capable of  satisfaction  without  giving rise to any
     need for funding from any other Borrower Group Members, and (c) in the case
     of the  proposed  sale of any  outlot or other  sale of less than an entire
     parcel  of  property, that Borrower demonstrates.........................67
8.5  to Lender's reasonable satisfaction that all appropriate easement and other
     rights are retained by the remaining  parcel over the asset to be conveyed,
     that no Leases or contracts  binding upon any Borrower Group Members at the
     remaining  parcel  require  any control of the conduct of business or other
     occurrences upon the parcel being conveyed,  that all necessary subdivision
     and zoning approvals for the separate  conveyance,  ownership and operation
     of the parcels  have been  obtained  and that the  remaining  parcel  shall
     continue as a conforming  use and  structure in  compliance  with all Legal
     Requirements,  and that such  conveyance  shall not  render  the  remaining
     parcel a legal  non-conforming use or structure or result in the continuing
     compliance of such remaining parcel with Legal Requirements being dependent
     upon the existence or development of any parking or other  improvements  or
     any landscaping,  open space,  wetlands or other conditions upon the parcel
     being conveyed...........................................................68
8.6  Acquisition  of Assets.  No Borrower  Group Member shall  purchase,  lease,
     sublease, license, sublicense or otherwise acquire any assets or properties
     without the prior written consent of Lender..............................68
8.7  Distributions.  No  Borrower  Group  Member  shall  permit the  purchase or
     redemption of any of their equity  interests or the equity interests of any
     of their  Affiliates or  Subsidiaries,  except for trading in the shares of
     Holdings as permitted  by Section  11.1.  Except as expressly  permitted in
     this Section  8.7,(i) the  declaration  or payment of any  dividends by any
     Borrower Group Member, (ii) the making of any distribution to any partners,
     members or  shareholders  of any of the Borrower Group Members or (iii) the
     setting aside of any funds for any such purpose,  shall be prohibited (each
     of the foregoing,  collectively,  the "Distributions").  Any Distributions,
     with the exception of Permitted  REIT  Distributions,  shall become part of
     Lender's  Collateral.  Whether or not permitted or prohibited in accordance
     with the foregoing,  if any Distribution  shall be received by any Borrower
     Group  Member or any Person other than  Lender,  Borrower  shall cause such
     Person  to hold the  same,  in  trust  for the  benefit  of  Lender  and to
     forthwith  deliver same to Lender.  No Borrower  Group Member shall pay, or
     permit the payment of management  fees to any Borrower  Group Member or any
     direct or indirect  partners,  members,  shareholders  or  Subsidiaries  or
     Affiliates thereof, or request disbursement of funds from any Senior Lender
     for such purpose without the consent of Lender.  Any such fees paid without
     the consent of Lender shall be treated as a Distribution  made in violation
     of the terms of this  paragraph.  Notwithstanding  the foregoing,  (1) cash
     deposited by or on behalf of Borrower  Group Members into the Lockbox shall
     be deemed to be distributed to or (in the case of Holdings)  contributed to
     Borrower directly or indirectly by or through the applicable Borrower Group
     Members, provided that in all cases such shall remain in the Lockbox and be
     applied in accordance  with this Agreement and the Lockbox  Agreement,  and
     (2) provided no Event of Default exists, Permitted REIT Distributions shall
     be  permitted............................................................68
8.8  Transactions  with  Affiliates.  Except as  disclosed  on Schedule  8.8, no
     contracts  (other  than  employment   agreements  and  property  management
     agreements  approved in writing by Lender)  between or among any Loan Party
     and its Subsidiaries  and/or  Affiliates  (including the Expanded  Property
     Owners)  or  their  respective  direct  or  indirect   partners,   members,
     shareholders or Affiliates ("Affiliate Agreements") shall be.............68
8.8  made  except on an  arm's-length  basis and shall be  subject  to the prior
     written  approval of Lender;  and the parties to each  Affiliate  Agreement
     shall  acknowledge and agree that such agreement is terminable upon notice,
     without penalty,  premium or liability for future or accrued liabilities or
     obligation  if an Event of  Default  shall  have  occurred  under  the Loan
     Documents.  Following  an Event of  Default  under the Loan  Documents,  if
     requested by Lender in writing,  each Loan Party shall,  or shall cause its
     Subsidiaries  and Affiliates  (including the Expanded  Property Owners) to,
     terminate any Affiliate Agreements specified by Lender within five (5) days
     after delivery of Lender's request.......................................69
8.9  Modifications  and  Waivers.  Unless  otherwise  consented to in writing by
     Lender, no Loan Party shall, nor shall it permit any of its Subsidiaries or
     Affiliates (including the Expanded Property Owners) to, :................69
8.10 Limitations on Expenditures.  Borrower shall not incur additional liability
     for nor make any  capital  expenditures,  marketing  expenditures,  leasing
     expenditures or other  discretionary  expenditures (other than expenditures
     necessary  for the  continued  compliance  by Borrower  Group  Members with
     existing  Leases  and Senior  Loan  Documents)  if and to the  extent  such
     discretionary  expenditures  result  in a  failure  of the  Borrower  Group
     Members'  operating  revenues to be  sufficient  to pay their  expenses and
     principal  and interest on the Loan as and when the same become due. In the
     event Borrower defers any capital expenditures in order to comply with this
     Section 8.10,  Borrower  shall so notify Lender in writing of the amount of
     the  deferral  and the period for which the  deferral is to occur (any such
     deferred capital  expenditure for which notice is timely given to Lender is
     herein referred to as a "Deferred Capital Expenditure")..................69
8.11 Financial Covenants. The parties acknowledge and agree for purposes of this
     Section  8.11 that any  Schedule V Fees that  Borrower  is  required to pay
     shall not be given effect for purposes of calculating the following ratios.
     Also, the following  ratios shall not be deemed violated for a given period
     if such  non-compliance  for a given  period is due solely to  expenditures
     being made in such period for Deferred  Capital  Expenditures  from a prior
     period...................................................................69
8.12 Misapplication  of  Funds.  No  Borrower  Group  Member  shall  permit  any
     distribution  of  any  Revenues  or  Loss  Proceeds  in  violation  of  the
     provisions of this Agreement,  any misappropriation of any Security Deposit
     or portion thereof,  or any Distributions in violation of the provisions of
     this Agreement...........................................................71
8.13 Change in Business. Other than Holdings, Borrower, Prime Retail E-Commerce,
     Inc. and E-Outlets Resolution Corp., no Borrower Group Member shall conduct
     business in any state other than the state in which each Expanded  Property
     is located.  No Borrower Group Member shall make any change in the scope or
     nature  of its  business  objectives,  purposes  or  operations,  or in the
     location of its "place of  business" or "chief  executive  office" (as such
     terms are used in Uniform  Commercial Code), or undertake or participate in
     activities  other than the  continuance  of its  present  business  without
     Lender's prior written  consent,  which Lender may condition or withhold in
     its sole and absolute  discretion.  If any Loan Party or Expanded  Property
     Owner  requests  Lender's  consent to change the  location of its "place of
     business" or "chief  executive  office," or to conduct  business in another
     state,  Borrower shall deliver a written  request to Lender at least thirty
     (30) days in advance, together with executed UCC-1 financing statements for
     filing in the  jurisdiction(s)  in which  such  Person  desires  to conduct
     business  or change  the  location  of its  "place of  business"  or "chief
     executive  office,"  together  with a legal opinion that the filing of such
     financing  statement(s) in such  jurisdiction(s) will maintain the priority
     of Lender's perfected  security interest in the Collateral.  Borrower shall
     not allow any  Expanded  Property  Owner to permit any change in the use of
     any  of  the   Expanded   Properties   without   Lender's   prior   written
     consent..................................................................71
8.14 Regulation  U.  Borrower  shall  not  use or  permit  the use of any of the
     proceeds  of the Loan in a manner  which would cause the Loan to be treated
     as a "Purpose Credit."...................................................71
8.15 Prime Notes. Borrower shall not suffer or permit any Amendment of either of
     the Prime Notes..........................................................71
8.16 Negative Pledge.  Borrower agrees that throughout the term of this Loan, no
     "negative  pledge" on or with respect to any interest in any Borrower Group
     Member or any Expanded Property or any Unencumbered  Assets which restricts
     or prohibits the sale or  encumbrance of any interest in any Borrower Group
     Member or  Expanded  Property  or  Unencumbered  Asset  shall be granted or
     allowed to exist,  other than those negative  pledges  granted  pursuant to
     this Agreement in favor of and for the benefit of Lender.................71

ARTICLE IX MANAGEMENT.........................................................71
9.1  Management;   Termination  of  Manager.  Borrower  warrants  and  covenants
     that:....................................................................71
9.2  Brokerage  Agreements;  Termination and Replacement  Provisions.  Except as
     listed on Schedule 9.2 or Schedule 15.21,  any Brokerage  Agreement made or
     existing during the term of the Loan shall be subject to the Lender's prior
     written  approval.  The Brokerage  Agreements  shall each provide (i) for a
     thirty (30) day term,  with  automatic  renewal on a  month-to-month  basis
     unless the owner  elects not to renew such  Brokerage  Agreement,  and (ii)
     that the relevant Loan Party, its Subsidiaries or Affiliates, including the
     Expanded  Property  Owners (for purposes of this Section 9.2, the "Relevant
     Signatory"),  shall have the right to terminate  said  Brokerage  Agreement
     with or  without  cause on no more  than  thirty  (30) days  prior  written
     notice. If requested by Lender in writing (a "Lender Termination  Request")
     at any time after and during the  continuation of an Event of Default,  the
     Relevant  Signatory  shall issue within five (5) days after delivery of the
     Lender  Termination  Request,  a notice of termination to terminate (i) any
     Management  Agreement (or any Borrower  Group Member as a property  manager
     without any  agreement) (a "Manager  Termination  Notice")  and/or (ii) any
     Brokerage  Agreement (a "Broker Termination  Notice").  Notwithstanding the
     foregoing,  if the  broker  or  Manager  is an  Affiliate  of the  Relevant
     Signatory,  Lender's  delivery  to  the  Relevant  Signatory  of  a  Lender
     Termination Request shall automatically  terminate the Management Agreement
     and/or Brokerage Agreement, as specified in the Lender Termination Request,
     effective as of the date specified in the Lender  Termination  Request.  If
     the broker or Manager is not an Affiliate of the  Relevant  Signatory,  the
     Relevant  Signatory  shall  appoint a  replacement  broker or  Manager,  as
     applicable,  pursuant to a new Management  Agreement or Brokerage Agreement
     within thirty (30) days after delivery of such Lender Termination  Request.
     If the Relevant Signatory fails to issue the Manager  Termination Notice or
     Broker  Termination  Notice  within said five (5) day  period,  then Lender
     shall  have  the  right,  and the  Relevant  Signatory  hereby  irrevocably
     authorizes   Lender  and  irrevocably   appoints  Lender  as  the  Relevant
     Signatory's  attorney-in-fact  coupled with an interest,  at Lender's  sole
     option, to issue a Manager  Termination Notice or Broker Termination Notice
     on behalf of and in the name of the  Relevant  Signatory,  and the Relevant
     Signatory  hereby releases and waives any claims against Lender arising out
     of  Lender's  exercise  of  such  authority.   Any  replacement  Management
     Agreement or Brokerage  Agreement shall be subject to the Lender's  written
     approval and shall by its terms  commence upon the day the prior  agreement
     terminates  (but not later than the thirtieth  (30th) day after delivery of
     the......................................................................72
9.2  corresponding  Lender Termination  Request) and shall have as its scheduled
     expiration    date   a    date    not    earlier    than    the    Maturity
     Date.....................................................................73

ARTICLE X SENIOR LOAN.........................................................73
10.1 Compliance with Senior Loan Documents;  Lender Cure. Except with respect to
     the Senior Loans and Expanded  Properties listed on Schedule 10.5 (but then
     only if the Section 10.5  Conditions are  satisfied),  Borrower shall cause
     each  applicable  Senior Loan Party to (i) pay all principal,  interest and
     other sums  required to be paid by it under and pursuant to the  provisions
     of the  Senior  Loan  Documents  to which it is a  party,  (ii)  diligently
     perform and  observe  all of the terms,  covenants  and  conditions  of the
     Senior Loan Documents on the part of such Senior Loan Party to be performed
     and observed,  unless such performance or observance shall be waived or not
     required  in writing by the  relevant  Senior  Lender,  and (iii)  promptly
     notify Lender of the giving of any notice by the  applicable  Senior Lender
     to such  Senior  Loan Party of any default by such Senior Loan Party in the
     performance  or observance of any of the terms,  covenants or conditions of
     the  Senior  Loan  Documents  on the part of such  Senior  Loan Party to be
     performed  or  observed  and  deliver  to  Lender a true  copy of each such
     notice,  together  with any  other  consents,  notices,  requests  or other
     written  correspondence  between such Senior Loan Party and Senior  Lender.
     Without  limiting the generality of the other provisions of this Agreement,
     and without waiving or releasing any Loan Party from any of its Obligations
     hereunder  and under the other Loan  Documents,  if there  shall  occur any
     default  under the Senior Loan  Documents or if any Senior  Lender  asserts
     that any Senior Loan Party has defaulted in the  performance  or observance
     of any term, covenant or condition of any Senior Loan Documents (whether or
     not the same shall have  continued  beyond any  applicable  notice or grace
     periods,  whether or not such Senior  Lender  shall have  delivered  proper
     notice to the applicable  Senior Loan Party and without regard to any other
     defenses or offset  rights such Senior Loan Party may have  against  Senior
     Lender),  Borrower  hereby  expressly  agrees  that  Lender  shall have the
     immediate  right,  without  notice  to or  demand,  but  shall  be under no
     obligation, (A) to pay all or any part of the Senior Loan (other than those
     loans listed on Schedule  10.5, if and only if,  however,  the Section 10.5
     Conditions are  satisfied)  that is then due and payable and any other sums
     and to perform  any act or take any  action,  on behalf of such Senior Loan
     Obligor,  as may be  appropriate  to cause all of the terms,  covenants and
     conditions  of the Senior  Loan  Documents  on the part of such Senior Loan
     Obligor to be performed or observed  thereunder to be promptly performed or
     observed,  and (B) to pay any other  amounts  and take any other  action as
     Lender,  in its sole and  absolute  discretion,  shall  deem  advisable  to
     protect or preserve  the rights and  interests of Lender in the Loan and/or
     the  Collateral.  All sums so paid and the costs and  expenses  incurred by
     Lender in exercising rights under this Section 10.1 (including Professional
     Fees),  with  interest at the Payoff Rate for the period from the date that
     such  costs or  expenses  were  incurred  to the date of payment to Lender,
     shall  constitute  a portion of the Debt,  shall be secured by the Security
     Documents and shall be due and payable to Lender upon demand therefor.  Any
     sums so paid and costs so  incurred  by Lender  shall bear  interest at the
     Payoff Rate until paid to Lender by Borrower.  Borrower hereby  indemnifies
     Lender from and  against all  liabilities,  obligations,  losses,  damages,
     penalties, assessments, actions, or causes of ...........................73
10.1 action,  judgments,  suits, claims,  demands,  costs,  expenses (including,
     without  limitation,  Professional  Fees whether or not suit is brought and
     settlement  costs) and disbursements of any kind or nature whatsoever which
     may be imposed on,  incurred by, or asserted  against Lender as a result of
     the foregoing  actions.  Lender shall have no obligation to any Loan Party,
     any  Senior  Loan  Party or any other  Person to make any such  payment  or
     performance.  Borrower shall not, nor shall it permit any Senior Loan Party
     to,  impede,  interfere  with,  hinder or delay any effort or action on the
     part of Lender to cure any  default or  asserted  default  under any Senior
     Loan, or to otherwise  protect or preserve  Lender's  interests in the Loan
     and the Collateral following a default or asserted default under any Senior
     Loan.  Any default or breach by any Senior Loan Party under the Senior Loan
     Documents  to which it is a party which is not cured prior to the expiry of
     any applicable  grace,  notice or cure period  afforded to such Senior Loan
     Party under such Senior Loan Documents shall constitute an Event of Default
     under  this  Agreement,   without  regard  to  any  subsequent  payment  or
     performance  of any such  obligations  by Lender.  Each Loan  Party  hereby
     grants,  and shall cause each Senior Loan Party to grant to, Lender and any
     Person  designated by Lender the right to enter upon any Expanded  Property
     at any time  following the  occurrence of any default,  or the assertion by
     any Senior  Lender  that a default  has  occurred,  under any  Senior  Loan
     Documents,  for the  purpose  of taking  any such  action or to appear  in,
     defend or bring any  action or  proceeding  to  protect  such  Senior  Loan
     Party's  and/or  Lender's  interest.  Lender  shall have no  obligation  to
     complete any cure or attempted cure  undertaken or commenced by Lender.  If
     any Senior  Lender or any Loan Party shall  deliver to Lender a copy of any
     notice of default under any Senior Loan Documents sent by any Senior Lender
     to a Senior Loan Party,  such notice shall  constitute  full  protection to
     Lender  for any action  taken or  omitted  to be taken by  Lender,  in good
     faith, in reliance thereon. As a material inducement to Lender's making the
     Loan,  Borrower  hereby,  and  shall  cause  each  Senior  Loan  Party  to,
     absolutely  and  unconditionally  releases  and waives  all claims  against
     Lender arising out of Lender's exercise of its rights and remedies provided
     in this  Section.  In the event that Lender makes any payment in respect of
     any Senior Loan,  Lender shall be  subrogated  to all of the rights of such
     Senior  Lender under such Senior Loan  Documents,  in addition to all other
     rights        Lender        may       have       under       the       Loan
     Documents................................................................74
10.2 Estoppels.  Borrower  shall, or shall cause each Senior Loan Party to, from
     time to time,  obtain from its Senior Lender such  certificates of estoppel
     with respect to  compliance by such Senior Loan Party with the terms of its
     Senior Loan  Documents as may be requested by Lender in form and  substance
     reasonably  acceptable to Lender.  Borrower hereby indemnifies Lender, each
     Co-Lender  and  Assignee  from and  against all  liabilities,  obligations,
     losses,  damages,  penalties,  assessments,  actions,  or causes of action,
     judgments,  suits, claims,  demands,  costs,  expenses (including,  without
     limitation, Professional Fees whether or not suit is brought and settlement
     costs)  and  disbursements  of any kind or nature  whatsoever  which may be
     imposed on,  incurred by, or asserted  against  Lender or any  Co-Lender or
     Assignee  based in whole or in part upon any  fact,  event,  condition,  or
     circumstances  relating to any Senior Loan which was  misrepresented in, or
     which warrants  disclosure  and was omitted from such estoppel  executed by
     such Loan Party or such Senior Loan Party................................75
10.3 No Amendment.  Except as listed on Schedule 5.5(d), Borrower shall not, nor
     shall it permit  any  Senior  Loan Party to,  without  obtaining  the prior
     written  consent of Lender,  enter into any  Amendment of any of the Senior
     Loan  Documents.  Borrower  shall provide  Lender with a fully executed and
     complete copy of any Amendment to the Senior Loan Documents within five (5)
     days after the execution  thereof.  Without  limiting the generality of the
     foregoing,  any increase in the principal  amount,  interest rate,  monthly
     debt service payments,  fees or other amounts payable, or to be reserved or
     escrowed, under or with respect to any Senior Loan Documents, any change in
     the maturity date of any Senior Loan,  cash management  procedures,  or any
     change to the  provisions  of the Senior  Loan  Documents  relating  to the
     release of collateral or security or the release  price  therefor,  without
     the express prior written consent of Lender,  shall be prohibited  pursuant
     to this paragraph........................................................75
10.4 Acquisition  of the Senior  Loan.  Borrower  shall not and shall cause each
     Borrower  Group  Member to not acquire or agree to acquire any Senior Loan,
     or any portion thereof or any interest  therein,  or any direct or indirect
     ownership  interest  in  the  holder  of any  Senior  Loan,  via  purchase,
     transfer, exchange or otherwise, and any breach or attempted breach of this
     provision  shall  constitute an immediate Event of Default  hereunder.  If,
     solely by operation  of  applicable  subrogation  law any such Person shall
     have  failed  to  comply  with  the  foregoing,  then  Borrower  (i)  shall
     immediately  notify  Lender of such  failure,  (ii) shall cause any and all
     such Persons acquiring any interest in the Senior Loan Documents (A) not to
     enforce such Senior Loan Documents,  and (B) upon the request of Lender, to
     the extent any of such Persons has or have the power or authority to do so,
     to promptly  (1) cancel  such Senior  Note,  (2)  reconvey  and release any
     Senior Lien and any other collateral under such Senior Loan Documents,  and
     (3)  discontinue  and terminate any  enforcement  proceeding(s)  under such
     Senior Loan Documents. Borrower hereby expressly covenants and agrees that,
     in the event that Lender acquires the Senior Loan at any time when an Event
     of Default  shall have  occurred,  then, at Lender's  option,  exercised in
     Lender's sole and absolute discretion, Lender may elect (x) to declare that
     such Senior Loan is in default  (which  default shall not be subject to any
     grace,  notice or cure  periods),  and (y) to  accelerate  such Senior Loan
     indebtedness.............................................................75
10.5 Deed-in-Lieu. Except as set forth on Schedule 10.5, Borrower shall not, nor
     shall it permit any Senior Loan Party to,  enter into any  deed-in-lieu  or
     consensual  foreclosure with or for the benefit of any Senior Lender or any
     of its  Affiliates.  Without the express prior  written  consent of Lender,
     Borrower  shall not,  nor shall it permit any Senior  Loan Party to,  enter
     into any consensual sale or other transaction in connection with any Senior
     Loan which could diminish,  modify, terminate or otherwise adversely affect
     the interests of Lender or such Senior Loan Party in the  Collateral or any
     portion thereof or any interest therein or of such Senior Loan Party in any
     Expanded  Property  or any  portion  thereof or any  interest  therein.  No
     foreclosure or deed-in-lieu  transaction shall be permitted with respect to
     the  Expanded  Properties   indicated  on  Schedule  10.5  unless  Borrower
     demonstrates  to  Lender's  satisfaction  that the  Senior  Loan and  other
     obligations  owed or to become due and owing under the related  Senior Loan
     Documents  are  not (or  are no  longer)  recourse  obligations  of  either
     Holdings or Borrower or to any of their respective  assets, or to any other
     property not set forth in Schedule 10.5, either..........................76
10.5 directly or by virtue of any general  partnership or other  relationship or
     affiliation  with any Person or otherwise  (the  foregoing  conditions to a
     foreclosure or deed-in-lieu  thereof are herein referred to as the "Section
     10.5  Conditions").  Under no circumstance  shall Borrower suffer or permit
     any bankruptcy filing by or against any Borrower Group Member in connection
     with any proposed  relinquishment  of an Expanded Property pursuant to this
     Section 10.5.............................................................76
10.6 Refinancing;   Prepayment.   Except  as  specifically   permitted  by  this
     Agreement,  Borrower  shall be  required  to obtain the  consent of Lender,
     which may be withheld in Lender's sole  discretion,  before any Senior Loan
     Party is permitted to make any partial or full prepayments of amounts owing
     under any Senior  Loan.  Except as otherwise  permitted by this  Agreement,
     Borrower shall not, nor shall it permit any Senior Loan Party to, refinance
     any Senior  Loan prior to the  payment  to Lender of all  amounts  owing to
     Lender evidenced by the Note.............................................76
10.7 Acquisition  of Senior Loan.  Borrower,  on its own behalf and on behalf of
     each Loan Party and Expanded Property Owner hereby  acknowledges and agrees
     that  Lender  shall have the right to  purchase  or  otherwise  acquire any
     Senior Loan at any time and further hereby  expressly  covenants and agrees
     that, in the event that Lender acquires any Senior Loan at any time when an
     Event of Default shall have occurred,  then, at Lender's option,  exercised
     in Lender's sole and absolute  discretion,  Lender may elect (x) to declare
     that such Senior Loan is in default  (which default shall not be subject to
     any grace, notice or cure periods),  and (y) to accelerate such Senior Loan
     indebtedness. Additionally, if Lender acquires a Senior Loan after a Payoff
     Event has occurred with respect to such Senior Loan,  Borrower shall pay to
     Lender as additional interest on the Loan an amount equal to the product of
     (a) the  difference  between the Payoff Rate and the actual  interest  rate
     received  by  Lender in cash on such  Senior  Loan,  multiplied  by (b) the
     outstanding balance from time to time of such Senior Loan................76

ARTICLE XI TRANSFERS OF INTERESTS.............................................77
11.1 Transfer or Encumbrance.  Borrower shall not, nor shall Borrower permit any
     Borrower Group Member to, whether in one or a series of  transactions,  (i)
     issue  or agree  to  issue  any  direct  or  indirect  interest  (including
     preferred equity or securities convertible into preferred or common equity)
     of any nature whatsoever,  whether partnership, stock , membership, equity,
     beneficial, profit, loss or otherwise (collectively and in the singular, as
     the context may require, the "Ownership  Interests") in such Person or (ii)
     allow or permit the  Transfer of any  Ownership  Interest in any other Loan
     Party or any Expanded  Property Owner directly or indirectly,  by operation
     of law or otherwise, or (iii) the Transfer of a controlling interest of any
     Person having a direct or indirect legal or beneficial  Ownership  Interest
     in any Loan  Party or  Expanded  Property  Owner,  including  any  legal or
     beneficial  interest in any  constituent  member,  partner or owner of such
     Person; or (iv) the change, removal,  resignation or addition of a partner,
     joint venturer or member in any Loan Party or Expanded  Property  Owner, in
     each case,  without the prior written  consent of Lender,  which consent in
     any and all circumstances may be conditioned or denied for any reason or no
     reason in the sole and absolute discretion of............................77
11.1 Lender; provided, however,  notwithstanding anything to the contrary in the
     foregoing,  common  stock or preferred  stock in Holdings  and  partnership
     units  of  the  Borrower  (other  than  those  held  by  Holdings)  may  be
     Transferred  without the prior consent of Lender,  provided that after such
     Transfer,  no person or group of persons as a result of such  Transfer  (as
     such term is used in Section 13(d) of the Securities  Exchange Act of 1934,
     as  amended),  shall  beneficially  own (as defined in Rule 13d-3 under the
     Securities  Exchange  Act of 1934,  as  amended)  more than the  Applicable
     Ownership  Limit of any class of securities of Holdings.  The provisions of
     the foregoing sentence of this paragraph shall apply to each and every such
     further Transfer,  regardless of whether or not Lender has consented to, or
     waived its rights  hereunder  with respect to, any such previous  Transfer,
     and irrespective of whether such further  Transfer is voluntary,  by reason
     of  operation  of law or is  otherwise  made.  If  Lender  in its  sole and
     absolute discretion consents to a Transfer, the transferee of any Ownership
     Interest shall pay all of Lender's out of pocket  expenses  relating to any
     Transfer  (including,  without limitation,  Professional Fees and customary
     fees of the  securitization  trustee,  if any, and the  Servicer) and shall
     enter into such pledge and security  agreements,  financing  statements and
     other instruments, to evidence Lender's continuing security interest in the
     Collateral  as Lender may require,  and deliver  such  opinions of counsel,
     Rating Agency  Confirmations,  and other  further  assurances as Lender may
     require. Lender may release,  regardless of consideration,  any part of the
     security held for the Obligations secured by the Pledge Agreements without,
     as to the remainder of the security,  in any way impairing or affecting the
     lien of the Pledge Agreements or its priority over any subordinate lien..77
11.2 Transfers of the Properties. Except as disclosed on Schedule 10.5 (and then
     only if Section 10.5  Conditions  are  satisfied)  or  permitted  under the
     provisions   of   Section   7.20  (as  to   mortgage   refinancings),   the
     Silverthorne/Lebanon  Transaction  or  Section  8.5  (as to  asset  sales),
     Borrower  shall not, and shall not permit any Expanded  Property  Owner to,
     sell, convey, transfer,  encumber, pledge, hypothecate or assign all or any
     portion of any Expanded Property, other than as required by the Senior Loan
     Documents  or the  Loan  Documents  (and  aside  from  immaterial  personal
     property and utility easements necessary for the efficient operation of the
     Expanded  Properties),  without Lender's prior written consent,  which such
     consent may be conditioned  or delayed for any reason or for no reason,  in
     Lender's sole discretion.................................................78
11.3 Interests of Holdings.  Holdings  shall at all times be and remain the sole
     general  partner  and  owner  of 75% of the  outstanding  common  units  of
     Borrower.................................................................78

ARTICLE XII CASH MANAGEMENT...................................................78
12.1 Establishment of Deposit Accounts and Ancillary Accounts.................78
12.2 Deposit of Excess Cash Flow and Revenues into Deposit Accounts...........79
12.3 Application of Funds in the Deposit Accounts.  Except as otherwise provided
     herein,  and subject to Section 12.4 below,  funds in the Deposit  Accounts
     shall be allocated (or paid, as the case may be) as follows: ............82
12.4 Defaults; Cash Restriction  Conditions.  If any Event of Default or uncured
     Default shall occur and be continuing, then notwithstanding anything to the
     contrary in this Section or  elsewhere,  Lender shall have no obligation to
     transfer  funds  pursuant  to Section  12.3(d)  nor shall  Lender  have any
     obligation  to replenish the Working  Capital  Reserve  sub-account  as set
     forth in Section  12.3(e) above. If any Event of Default shall occur and be
     continuing,  then notwithstanding  anything to the contrary in this Section
     or  elsewhere,  Lender shall have all rights and remedies  available  under
     applicable law and under the Loan Documents and,  notwithstanding  anything
     to the contrary contained herein, Lender may apply any and all funds in the
     Deposit  Accounts and any Ancillary  Account  against all or any portion of
     any of the Obligations, in any order.....................................84
12.5 Security Interest in Deposit Account Collateral..........................84
12.6 Certain Additional Matters...............................................85
12.7 Investment of Funds in Deposit Accounts and Ancillary Accounts...........88
12.8 Representations  and  Warranties.  In  addition to any  representations  or
     warranties  contained  in this  Agreement,  each  Borrower  represents  and
     warrants as follows:.....................................................89
12.9 Covenants.  Except as otherwise  permitted in this  Agreement or any of the
     other Loan Documents,  Borrower  covenants with Lender that, from and after
     the Closing Date, it will comply with, or shall cause to be complied  with,
     the covenants set forth below:...........................................89
12.10Attorney-In-Fact.........................................................90
12.11Indemnity and Expenses...................................................91
12.12Limitation on Liability..................................................91

ARTICLE XIII DEFAULTS; REMEDIES...............................................92
13.1 Events of Default.  The term  "Event of Default" as used in this  Agreement
     shall mean the occurrence of any one or more of the following events:....92
13.2 Remedies.................................................................96

ARTICLE XIV ENVIRONMENTAL PROVISIONS..........................................99
14.1 Environmental Provisions. Each Loan Party shall comply, and shall cause all
     Expanded Property Owners,  tenants or other occupants of all or any part of
     any of the  Expanded  Properties  and the  Improvements  to comply,  in all
     respects with all Environmental Requirements, and will not generate, store,
     handle,  process,  dispose of or otherwise use, and no Loan Party will, nor
     will it permit any Expanded Property Owner, tenant or other occupant of any
     of the Expanded  Property and  Improvements  to  generate,  store,  handle,
     process, dispose of or otherwise use, Hazardous Materials at, in, on, under
     or about any Expanded  Property or Improvements in a manner that could lead
     or potentially lead to the imposition on any Loan Party,  Expanded Property
     Owner,  Lender or the Expanded  Properties  of any liability or lien of any
     nature  whatsoever  under any  Environmental  Requirement.  Borrower  shall
     notify  Lender  promptly in the event of any spill or other  release of any
     Hazardous  Material  at, in, on,  under or about any  Expanded  Property or
     Improvements  which is required to be reported to a Governmental  Authority
     under any Environmental Requirement, will promptly forward to Lender copies
     of any  notices  received  by any Loan  Party or  Expanded  Property  Owner
     relating to alleged  violations of any  Environmental  Requirement and will
     promptly pay when due any fine or assessment against Lender, any Loan Party
     or  Expanded  Property  Owner or such  Expanded  Property  relating  to any
     Environmental  Requirement.  If at  any  time  it is  determined  that  the
     operation  or  use  of  any  Expanded   Property  violates  any  applicable
     Environmental Requirement or that there are Hazardous Materials located at,
     in, on or under any  Expanded  Property or  Improvements  which,  under any
     Environmental Requirement, require special handling in collection, storage,
     treatment or disposal,  or any other form of cleanup or corrective  action,
     Borrower shall, or shall cause any Loan Party or Expanded Property Owner to
     take, within thirty (30) days after receipt of notice....................99
14.1 thereof from any  Governmental  Authority or from Lender,  at its sole cost
     and  expense,  such  actions as may be  necessary  to fully comply with all
     Environmental  Requirements,  provided,  however,  that if such  compliance
     cannot  reasonably  be completed  within such thirty (30) day period,  then
     such Person shall  commence such  necessary  action within such thirty (30)
     day period and shall  thereafter  diligently and  expeditiously  proceed to
     fully comply in a timely fashion with all  Environmental  Requirements.  If
     such  Person  fails to timely  take,  or to  diligently  and  expeditiously
     proceed to complete in a timely fashion,  any such action,  Lender, may, in
     its sole and absolute  discretion,  make  advances or payments  towards the
     performance or satisfaction of the same, but shall in no event be under any
     obligation  to do so. All sums so  advanced  or paid by Lender  (including,
     without limitation, counsel and consultant fees and expenses, investigation
     and laboratory fees and expenses,  and fines or other penalty payments) and
     all sums advanced or paid in connection with any judicial or administrative
     investigation  or  proceeding  relating  thereto,  will  immediately,  upon
     demand, become due and payable from Borrower and shall bear interest at the
     Default  Rate from the date any such sums are so advanced or paid by Lender
     until the date any such sums are repaid by  Borrower  to  Lender.  Borrower
     will execute and deliver, promptly upon request, such instruments as Lender
     may  reasonably  deem useful or necessary to permit Lender to take any such
     action,  and Borrower shall execute and deliver such  additional  notes and
     security  instruments,  as Lender may reasonably require to secure all sums
     so advanced  or paid by Lender.  If a lien is filed  against  any  Expanded
     Property   by  any   Governmental   Authority   related  to   Environmental
     Requirements  and resulting from the need to expend or the actual expending
     of monies  arising  from an  action or  omission,  whether  intentional  or
     unintentional,  of Borrower  or for which  Borrower  is  responsible,  then
     Borrower will, within thirty (30) days from the date that Borrower is first
     given notice that such lien has been placed  against any Expanded  Property
     (or within such  shorter  period of time as may be  specified  by Lender if
     such  Governmental  Authority  has  commenced  steps to cause the  Expanded
     Property  to be sold  pursuant  to such lien)  either (a) pay the claim and
     remove  the  lien,  or (b)  furnish a cash  deposit,  bond,  or such  other
     security with respect  thereto as is satisfactory in all respects to Lender
     and is  sufficient  to  effect a  complete  discharge  of such lien on such
     Expanded Property. Lender may, at its option, at intervals of not less than
     one year, or more frequently if Lender reasonably suspects that a Hazardous
     Material  or other  environmental  condition  may  violate or  threaten  to
     violate any Environmental  Requirement,  and also upon the occurrence of an
     Event of Default,  cause an  environmental  audit of the relevant  Expanded
     Property or  Improvements  or portions  thereof to be  conducted to confirm
     Borrower's  compliance with the provisions of this paragraph,  and Borrower
     shall  cooperate in all reasonable  ways with Lender in connection with any
     such audit,  and Borrower  shall provide to Lender and its  representatives
     access to such Expanded  Property to permit and  facilitate  the conduct of
     such audit.  If such audit  discloses that a violation of an  Environmental
     Requirement exists, or if such audit is conducted upon the occurrence of an
     Event of Default,  then Borrower shall pay all costs and expenses  incurred
     in connection  with such audit,  otherwise,  the costs and expenses of such
     audit  shall,  notwithstanding  anything to the  contrary set forth in this
     paragraph, be paid by Lender. If Lender acquires the Collateral pursuant to
     an exercise  of Lender's  remedies  under the Pledge  Agreement,  or if the
     Collateral is sold pursuant to the provisions of the Pledge  Agreement,  or
     if Borrower..............................................................99
14.1 tenders  an  assignment  in lieu of  foreclosure  or sale,  Borrower  shall
     deliver the foreclosed, sold or assigned Ownership Interests free and clear
     of any  liabilities  to the purchaser at  foreclosure or sale or to Lender,
     its nominee, or wholly-owned  subsidiary,  as the case may be, arising from
     any failure to comply with all Environmental Requirements...............100

ARTICLE XV MISCELLANEOUS.....................................................100
15.1 Further Assurances......................................................100
15.2 Bankruptcy.  Borrower and each Guarantor and Lender hereby  acknowledge and
     agree  that upon the filing of a  bankruptcy  petition  by or  against  any
     Borrower Group Member under any Bankruptcy Law, the Account  Collateral and
     the Revenues (whether then already in the Accounts, or then due or becoming
     due thereafter) shall be deemed not to be property of the bankrupt Person's
     bankruptcy estate within the meaning of Section 541 of the Bankruptcy Code.
     In the event,  however, that a court of competent  jurisdiction  determines
     that,   notwithstanding  the  foregoing  characterization  of  the  Account
     Collateral and the Account  Collateral and Revenues by each such Person and
     Lender, the Account  Collateral and/or the Revenues do constitute  property
     of such Person's bankruptcy estate, then each such Person and Lender hereby
     further  acknowledge  and agree  that all such  Revenues,  whether  due and
     payable  before or after the filing of the petition,  are and shall be cash
     collateral of Lender.  Each such Person  acknowledges  that Lender does not
     consent to such Person's use of such cash collateral and that, in the event
     Lender elects (in its sole  discretion) to give such consent,  such consent
     shall only be  effective  if given in writing  signed by Lender.  Except as
     provided in the immediately  preceding sentence,  no such Person shall have
     the right to use or apply or require  the use or  application  of such cash
     collateral  unless  (i) such  Person  shall  have  received  a court  order
     authorizing  the use of the same,  and (ii) such Person shall have provided
     such adequate  protection to Lender as shall be required by the  bankruptcy
     court in accordance with the Bankruptcy Code............................101
15.3 Releases.  Borrower,  Holdings, and the Guarantors, on their own behalf and
     on behalf  of their  Affiliates  and  Subsidiaries,  and  their  respective
     predecessors,  successors  and  assigns,  and  their  respective  partners,
     managers,   members,  directors,   officers,   shareholders  and  employees
     (collectively,  the "Releasing Parties"), do hereby fully release,  remise,
     forever  discharge and covenant not to sue each of Lender,  each  Co-Lender
     and Assignee,  their respective  Affiliates,  their respective  present and
     former managers, officers, directors, Affiliates, predecessors,  successors
     and  assigns  and  each  and  all of  their  respective  officers,  agents,
     representatives,   employees,  attorneys,  officers,  directors,  partners,
     members and  shareholders,  past and present  (collectively,  the "Released
     Parties")  of and from any and all  claims,  demands,  debts,  liabilities,
     obligations,   judgments,  damages,  costs,  expenses  (including,  without
     limitation,  claims for litigation costs and attorneys' fees,  expenses and
     disbursements),  actions and causes of action of whatsoever kind or nature,
     whether known or unknown, suspected or unsuspected, in contract or in tort,
     without  limitation of any sort whatsoever,  based on or in any way related
     to all claims,  demands,  and causes of action of any nature,  in law or in
     equity whether known or unknown,  that have been asserted,  could have been
     asserted  or  could  in the  future  be  asserted  by any of the  Releasing
     Parties. ...............................................................102
15.4 Lost Documents.  Upon receipt of a loss of document affidavit of Lender and
     Lender's indemnity of Borrower (or, as applicable, another Loan Party) with
     respect to all claims and losses arising from the loss, theft,  destruction
     or mutilation of any of the Loan Documents  which are not of public record,
     and, in the case of any such mutilation, upon surrender and cancellation of
     such mutilated Loan  Document,  Borrower will issue,  or cause to be issued
     (in the case of documents issued by other Loan Parties), in lieu thereof, a
     replacement Loan Document,  dated the date of such lost, stolen,  destroyed
     or  mutilated  Loan  Document  in the same  principal  amount  thereof  and
     otherwise of like tenor.................................................102
15.5 Section  Headings.  The  titles  and  headings  of the  paragraphs  of this
     Agreement have been inserted for  convenience of reference only and are not
     intended to  summarize or  otherwise  describe  the subject  matter of such
     paragraphs and shall not be given any  consideration in the construction of
     this Agreement. ........................................................102
15.6 Parties Bound Etc. The provisions of this  Agreement  shall be binding upon
     and  inure  to  the  benefit  of  Borrower,  Lender  and  their  respective
     successors and assigns (except as otherwise  prohibited by this Agreement).
     Without  the prior  written  consent of Lender,  Borrower  shall not assign
     Borrower's  interest under any of the Loan Documents,  or in any monies due
     or to become due thereunder,  and any assignment without such consent shall
     be void. In this regard,  Borrower  acknowledges that Lender would not make
     this Loan except in reliance on  Borrower's  expertise,  reputation,  prior
     experience  in  managing,   developing  and  constructing  commercial  real
     property,  Lender's  knowledge of Borrower and Lender's  understanding that
     this  Agreement  is more in the nature of an agreement  involving  personal
     services  than a standard  loan where Lender  would rely on security  which
     already exists..........................................................103
15.7 Waivers. Lender may at any time and from time to time waive any one or more
     of the conditions,  requirements or obligations  contained herein,  but any
     such  waiver  shall be deemed  to be made in  pursuance  hereof  and not in
     modification  thereof,  and any such  waiver in any  instance  or under any
     particular  circumstance shall not be effective unless in writing and shall
     not be considered a waiver of such  condition in any other  instance or any
     other circumstance......................................................103
15.8 Governing Law...........................................................103
15.9 Severability. If any term, covenant or provision of this Agreement shall be
     held to be invalid, illegal or unenforceable in any respect, this remainder
     of this  Agreement  shall  remain  in full  force and  effect  and shall be
     construed without such term, covenant or provision......................104
15.10Notices. Any notice, request, demand, statement,  authorization,  approval,
     consent or acceptance  made hereunder shall be in writing and shall be hand
     delivered or............................................................104
15.10sent  by  Federal  Express  or  other  reputable  courier  service,  or  by
     registered  or  certified   mail,   postage  prepaid  with  return  receipt
     requested,  and shall be deemed  given (i) upon  delivery,  if delivered in
     person,  (ii) one (1)  Business  Day after  being  deposited  with  Federal
     Express or any other reputable overnight courier service, or (ii) three (3)
     Business  Days after being  postmarked  and addressed as follows if sent by
     registered  or  certified  mail,  return  receipt  requested,  addressed as
     follows:................................................................104
15.11Modification.  This  Agreement may not be Amended except by an agreement in
     writing    executed   by   the   parties   hereto.    Borrower   and   each
     Guarantor...............................................................105
15.11acknowledge  that the Loan  Documents  set forth the entire  agreement  and
     understanding  of the parties  with respect to the Loan and that no oral or
     other agreements, understandings,  representations or warranties exist with
     respect to the Loan other than those set forth in the Loan  Documents.  All
     prior  agreements  among or between such parties,  whether oral or written,
     are superceded by the terms of the Loan Documents.......................105
15.12Usury  Laws.  This  Agreement  and the  Note  are  subject  to the  express
     condition  that at no time shall  Borrower be  obligated or required to pay
     interest on the principal  balance due under the Note at a rate which could
     subject the holder of the Note to either  civil or criminal  liability as a
     result of being in excess of the maximum  interest  rate which  Borrower is
     permitted  by law to  contract  or  agree to pay.  If by the  terms of this
     Agreement or the Note, Borrower is at any time required or obligated to pay
     interest on the principal balance due under the Note at a rate in excess of
     such maximum rate,  the rate of interest  under the Note shall be deemed to
     be immediately  reduced to such maximum rate and the interest payable shall
     be computed at such maximum rate and all prior interest  payments in excess
     of such  maximum  rate  shall be  applied  and shall be deemed to have been
     payments in reduction of the principal balance of the Note..............105
15.13Sole  Discretion of Lender.  Whenever  pursuant to this Agreement or any of
     the Loan  Documents,  Lender  may  approve  or  disapprove  any act (or any
     action) or any document,  delivery or other item, or where Lender's consent
     or approval is required in any respect or where any  document or other item
     must be  satisfactory to Lender,  except in those specific  instances where
     Lender  has  specifically  agreed  not to  unreasonably  withhold  Lender's
     consent  pursuant  to the  terms  of  this  Agreement  or  any of the  Loan
     Documents,  the  decision of Lender to approve or  disapprove  or to decide
     whether  arrangements or terms are  satisfactory or not  satisfactory or to
     grant or withhold  consent  shall be in the sole,  absolute and  unfettered
     discretion  of  Lender,  without  any  express  or  implied  obligation  of
     reasonableness  or good faith whatsoever and shall be final and conclusive.
     Borrower  acknowledges  and agrees that in no  circumstance  shall Borrower
     have any claim or cause of action,  in contract or in tort,  against Lender
     as a result of the granting or withholding of any such consent or approval.
     The inclusion of references to Lender's sole or absolute  discretion in any
     particular  provisions of this Agreement or any of the Loan Documents shall
     not limit or affect the  applicability of this Section to all provisions of
     this Agreement or any of the Loan  Documents,  including  those  provisions
     wherein a specific  reference to Lender's  sole and absolute  discretion is
     not made. Without limiting the preceding provisions of this Section, in the
     event that a claim or  adjudication  is made that Lender or its agents have
     acted  unreasonably or in bad faith or  unreasonably  delayed acting in any
     case where,  by  Applicable  Law or under this  Agreement or the other Loan
     Documents,  Lender or such agent,  as the case may be, has an obligation to
     act reasonably or in good faith or promptly,  Borrower  agrees that neither
     Lender,  Servicer  nor their  agents or  employees  shall be liable for any
     monetary damages (including any special,  consequential or punitive damages
     whatsoever),  whether in contract,  tort  (including  negligence and strict
     liability) or any other legal or equitable principles,  and Borrower's sole
     remedies shall be limited to commencing an action seeking injunctive relief
     or  declaratory  judgment.  The  parties  hereto  agree  that any action or
     proceeding  to determine  whether  Lender has acted  reasonably  or in good
     faith   shall   be   determined   by   an   action   seeking    declaratory
     judgment................................................................106
15.14Reasonableness.  If at any time Borrower believes that Lender has not acted
     reasonably  in granting or  withholding  any approval or consent  under the
     Loan  Documents  or any  other  document  or  instrument  now or  hereafter
     executed and delivered in connection therewith or otherwise with respect to
     the Loan,  as to which  approval  or consent  either  Lender has  expressly
     agreed to act reasonably,  or absent such agreement,  a court of law having
     jurisdiction   over  the  subject   matter  would  require  Lender  to  act
     reasonably,  then Borrower's sole remedy shall be to seek injunctive relief
     or  specific  performance  and no action for  monetary  damages or punitive
     damages  shall in any  event or under any  circumstance  be  maintained  by
     Borrower       or      any       other       Loan       Party       against
     Lender..................................................................106
15.15Absolute  and   Unconditional   Obligation.   Borrower   acknowledges  that
     Borrower's  obligation to pay the Debt in accordance with the provisions of
     the Note and this  Agreement  is and  shall  at all  times  continue  to be
     absolute and unconditional in all respects, and shall at all times be valid
     and enforceable  irrespective of any other  agreements or  circumstances of
     any nature  whatsoever  which might  otherwise  constitute a defense to the
     Note or this Agreement or the obligation of Borrower  thereunder to pay the
     Debt or the  obligations of any other Person relating to the Loan Documents
     or the  Obligations  of Borrower under the Loan Documents or otherwise with
     respect  to  the  Loan,  and  Borrower   absolutely,   unconditionally  and
     irrevocably  waives  any and all  right  to  assert  any  defense,  setoff,
     counterclaim  or cross-claim of any nature  whatsoever  with respect to the
     obligation of Borrower to pay the Debt in accordance with the provisions of
     the Note and this Agreement or the obligations of any other Person relating
     to the Loan  Documents or  Obligations of Borrower under the Loan Documents
     or otherwise  with respect to the Loan in any action or proceeding  brought
     by Lender to collect  the Debt,  or any  portion  thereof,  or to  enforce,
     foreclose and realize upon the lien and security  interest  created by this
     Agreement or any other  document or  instrument  securing  repayment of the
     Debt,               in               whole               or              in
     part....................................................................107
15.16Waiver  of  Right to Trial By  Jury.  BORROWER  AND EACH  GUARANTOR  HEREBY
     EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY FOR ANY CLAIM, DEMAND, ACTION OR
     CAUSE OF ACTION (a) ARISING UNDER THE LOAN  DOCUMENTS,  INCLUDING,  WITHOUT
     LIMITATION,  THE EXERCISE OF ANY CURE RIGHTS AND ANY  AMENDMENT  THERETO OR
     (b) IN ANY WAY  RELATING  TO THE LOAN  DOCUMENTS  OR ANY OTHER  INSTRUMENT,
     DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,  OR THE
     TRANSACTIONS  RELATED  HERETO OR THERETO,  IN EACH CASE WHETHER SUCH CLAIM,
     DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND
     WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE;  AND EACH OF THEM HEREBY
     AGREES AND CONSENTS  THAT ANY PARTY TO THIS  AGREEMENT MAY FILE AN ORIGINAL
     COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
     THE  CONSENT  OF THE  PARTIES  HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT
     OTHERWISE HAVE TO TRIAL BY JURY.........................................107
15.17Waiver of Statutory  Rights.  Borrower shall not, nor shall Borrower permit
     any  Loan  Party  or  Expanded  Property  Owner  to,  avail  itself  of any
     appraisement,  valuation, stay, extension or exemption laws, or any similar
     laws now existing or hereafter  enacted,  in order to prevent or hinder the
     enforcement of the Loan Documents or foreclosure of the Security Documents,
     but hereby  waives the  benefit of such laws to the full  extent  that such
     Person may do so under Applicable Law.  Borrower for itself and all who may
     claim through or under it (including,  but not limited to, the Loan Parties
     and the  Expanded  Property  Owners ) waives  any and all right to have the
     property  and  estates   comprising  the  Collateral   marshaled  upon  any
     realization of the lien of any Security  Document and agrees that any court
     having  jurisdiction  over any exercise of Lender's  remedies may order the
     Collateral sold as an entirety or in separate parts. Borrower hereby waives
     for itself and all who may claim  through or under it  (including,  but not
     limited to, the Loan Parties and the Senior Loan Obligors), and to the full
     extent  Borrower  may do so under  applicable  law,  any and all  rights of
     redemption  from sale  under any  order or  decree  of  foreclosure  of any
     Security  Document or granted  under any statute now  existing or hereafter
     enacted.................................................................107
15.18Relationship.  The relationship of Lender to Borrower hereunder is strictly
     and solely that of lender and  borrower  and nothing  contained in the Loan
     Documents or any other document or instrument now or hereafter executed and
     delivered in connection  therewith or otherwise in connection with the Loan
     is intended to create,  or shall in any event or under any  circumstance be
     construed as creating,  a partnership,  joint  venture,  tenancy-in-common,
     joint tenancy or other relationship of any nature whatsoever between Lender
     and Borrower other than as lender and borrower.  Lender neither  undertakes
     nor assumes any responsibility or duty to Borrower, to any other Loan Party
     or any Expanded Property Owner or to any third party with respect to any of
     the Properties or the Expanded Properties,  except as expressly provided in
     this Agreement and the Loan Documents...................................108
15.19Securitization.  Borrower  acknowledges  and agrees that Lender  shall have
     the absolute and unconditional  right at any time after the date hereof and
     at any time during the term of the Loan  without  requiring  any consent or
     approval from Borrower, any Loan Party or any other person guaranteeing the
     payment of the Debt or any other person, party or entity associated with or
     connected  with  the  Loan  or the  Collateral  to  sell,  assign,  pledge,
     hypothecate or otherwise transfer Lender's interest in the Loan in whole or
     in part, or to place one or more participation  interests therein in one or
     more separate transactions, or to effect a syndication or securitization of
     the Loan in one or more transactions (a "Securitization"),  in each case to
     or with such persons,  parties,  entities or investors (including,  without
     limitation,  domestic or foreign banks, insurance companies, pension funds,
     trusts, other institutional lenders or investors,  natural persons, grantor
     trusts, owner trusts,  special purpose corporations,  REMICs,  FASITs, real
     estate  investment  trusts  or  other  similar  or  comparable   investment
     vehicles) (collectively or individually,  "Investor") and on such terms and
     conditions  as Lender shall deem to be  appropriate  in the exercise of its
     sole and absolute discretion; provided that Lender shall not participate or
     sell the Loan to any  Persons  listed on  Schedule  15.19  hereto.  Neither
     Lender nor any Investor  shall  acquire the stock of Holdings in any manner
     prohibited by Applicable Law. In connection with any such sale, assignment,
     participation, syndication .............................................108
15.19or securitization,  Lender shall have the absolute and unconditional  right
     without  obtaining  the prior  consent or approval of any Loan Party or any
     other  Person  guaranteeing  the  payment  of the Debt or any other  Person
     associated  or connected  with the Loan or the  Collateral  (including  the
     Borrower  Group  Members)  to  disclose,  deliver  and to  share  with  any
     prospective  purchaser  of  the  Loan  or  of  any  securities  or  of  any
     participation or other interest therein  (including any such interest to be
     acquired in connection with a syndication or  securitization  of the Loan),
     or with any  prospective  Rating  Agency,  or their  respective  counsel or
     representatives,  such information (financial or otherwise),  documents and
     instruments  pertaining  to the Loan or any other  person,  party or entity
     associated  or connected  with the Loan or the  Collateral  (including  the
     Expanded  Property  Owners)  (collectively,  the  "Disclosure  Material and
     Information") as Lender shall deem to be appropriate in the exercise of its
     sole and absolute  discretion.  Borrower shall  cooperate,  and shall cause
     each Loan Party and each other  Person,  associated  or connected  with the
     Loan  or  the  Collateral  (including  the  Expanded  Property  Owners)  to
     cooperate,  in all reasonable  respects with Lender in connection  with any
     sale, assignment, participation,  syndication or securitization of the Loan
     or any  interest  therein  by Lender  pursuant  to the  provisions  of this
     paragraph.  Without in any manner implying the necessity therefor, Borrower
     grants to Lender,  and shall  cause  each Loan Party and each other  Person
     associated or connected  with the Loan or the  Collateral  to  specifically
     grant to  Lender,  the right to  distribute  any and all of the  Disclosure
     Material  and  Information  in  connection   with  any  sale,   assignment,
     participation, syndication or securitization of the Loan or of any interest
     therein by Lender  pursuant to the provisions of this  paragraph.  Borrower
     shall  execute and deliver,  and shall cause each Loan Party and each other
     Person  associated or connected  with the Loan or the Collateral to execute
     and deliver,  such documents and instruments as may be reasonably necessary
     to (a) split the Loan into two or more loans  evidenced  by and pursuant to
     separate sets of notes and other related loan  documents,  or (b) to modify
     the terms and  provisions of the Loan  Documents,  in each case to the full
     extent  required by Lender to facilitate  any sale,  assignment,  pledging,
     hypothecation,  participation, syndication or securitization of the Loan or
     any  interest  therein  by  Lender  pursuant  to  the  provisions  of  this
     paragraph,  it being agreed that (i) any such splitting or  modification of
     the Loan will not adversely affect or diminish the rights of any Loan Party
     as  presently  set forth in the Loan  Documents  and will not  increase the
     obligations and liabilities of any Loan Party under the Loan Documents, and
     (ii) if the Loan is split, the retained  interest of Lender, if any, in the
     Loan shall be allocated to or among one or more of such separate loans in a
     manner specified by Lender in its sole and absolute discretion. If Borrower
     shall  default in the  performance  of its  obligation as set forth in this
     paragraph,  and if such  default  shall not be remedied by Borrower  within
     fifteen  (15) days after  notice by Lender,  Lender shall have the absolute
     and unconditional right in its sole and absolute discretion to declare such
     default an Event of Default under this Agreement.  Lender shall endeavor to
     provide  notice to Borrower of any such  assignment,  sale,  participation,
     syndication or  securitization  of the Loan in a reasonably  timely manner,
     but any failure by Lender to provide notice to Borrower shall not give rise
     to any claim or  defense on the part of any of the Loan  Parties,  or limit
     the rights of Lender under this Section 15.19 or the Loan Documents.  Until
     otherwise   directed  in  writing  by  Lender   following  the   occurrence
     of......................................................................108
15.19any such assignment,  sale,  participation,  syndication or securitization,
     Borrower  shall  continue to deliver all  payments and deposits as required
     prior to such occurrence................................................109
15.20Syndications;   Participations.   (a)  Without  in  any  way  limiting  the
     provisions  of Section  15.19,  Lender  shall have the right,  without  the
     consent of Borrower, to syndicate the Loan and/or assign,  transfer,  sell,
     negotiate,  pledge or otherwise  hypothecate  this Agreement and any of its
     rights and security hereunder, to or with any other Person (an "Assignee");
     provided that Lender shall not  participate or sell the Loan to any Persons
     listed on Schedule  15.19  hereto.  Borrower  hereby agrees that all of the
     rights and remedies of Lender in  connection  with the interest so assigned
     or syndicated shall be enforceable against Borrower by an Assignee with the
     same force and  effect  and to the same  extent as the same would have been
     enforceable  by Lender but for such  assignment or  syndication.  After the
     effective  date of any such  assignment  or  syndication:  (i) the Assignee
     shall be a party hereto and, to the extent that the rights and  obligations
     under this Agreement and the other Loan Documents have been assigned to it,
     shall have the rights and obligations of a Lender hereunder and thereunder,
     and (ii) each Lender shall,  to the extent that its rights and  obligations
     hereunder  have been  assigned  by it,  be  released  from its  obligations
     hereunder  and under the Loan  Documents.  The  liabilities  of each Lender
     shall be several and not joint and the Lender's  obligation to the Borrower
     hereunder  shall be  reduced  by the  amount  of each  portion  of the Loan
     assigned to or syndicated with an Assignee..............................109
15.21Brokers and  Financial  Advisors.  Except as set forth in  Schedule  15.21,
     Borrower  hereby  represents  to Lender  that no Loan  Party has dealt with
     financial  advisors,  brokers,  underwriters,  placement agents,  agents or
     finders in connection with the transactions contemplated by this Agreement,
     or with respect to any Senior Loan. The commissions and fees of any Persons
     set forth in Schedule  15.21  shall be paid by Borrower  pursuant to one or
     more separate agreements.  Borrower agrees to indemnify and hold the Lender
     harmless  from and  against  any and all  claims,  liabilities,  costs  and
     expenses of any kind in any way  relating to or arising from a claim by any
     Person  that such  Person  acted on behalf of any Loan Party in  connection
     with the transactions  contemplated  herein. The provisions of this Section
     15.21 shall survive the  expiration  and  termination of this Agreement and
     the repayment of the Debt...............................................110
15.22Offsets,  Counterclaims  and Defenses.  Borrower  hereby waives,  and shall
     cause each Loan Party and Expanded  Property  Owner to waive,  the right to
     assert a counterclaim,  other than a mandatory or compulsory  counterclaim,
     in any action or proceeding  brought against it by Lender arising out of or
     in any way connected with the Loan Documents, the Senior Loan Documents, or
     the Debt.  Without  limiting  in any manner the rights of any  assignee  of
     Lender's interest at law or in equity, any assignee of Lender's interest in
     the Loan shall take the same free and clear of all  offsets,  counterclaims
     or defenses which are unrelated to the Loan.............................111
15.23Payment of  Expenses.  Borrower  covenants  and agrees to  immediately  pay
     Lender or  Servicer  on demand all costs and  expenses  including,  without
     limitation,  Professional  Fees,  incurred by Lender (i) in connection with
     (A) the Loan Parties'  ongoing  performance  of and  compliance  with their
     respective  agreements  and  covenants  contained in the Loan  Documents on
     their  part to be  performed  or  complied  with  after the  Closing  Date,
     including   confirming   compliance   with   environmental   and  insurance
     requirements;  (B) the negotiation,  preparation,  execution,  delivery and
     administration of any consents,  amendments, waivers or other modifications
     to the Intercreditor  Agreement, the Loan Documents and any other documents
     or matters  requested  by any Loan Party or  Expanded  Property  Owner,  by
     Lender,  or by any  Senior  Lender;  (C)  filing  and  recording  fees  and
     expenses,  title insurance and reasonable fees and disbursements of counsel
     for  providing to Lender all required  legal  opinions,  and other  similar
     expenses  incurred in creating and  perfecting the Liens in favor of Lender
     pursuant to the Loan Documents;  (D) enforcing or preserving any rights, in
     response to third  party  claims or the  prosecuting  or  defending  of any
     action or proceeding or other  litigation,  in each case against,  under or
     affecting  any Expanded  Property,  any  Borrower  Group  Member,  the Loan
     Documents  or any  other  security  given  for  the  Loan  or any  Expanded
     Property;  and (E) the  collection of the Debt,  enforcement  of rights and
     remedies under the Loan  Documents,  the  enforcement of liens and security
     interests under the Loan Documents, and/or in curing any defaults under the
     Loan Documents or the Senior Loan Documents.............................111
15.23with  interest  thereon  at  the  Default  Rate  or  the  Payoff  Rate,  as
     applicable  or (ii) as a  consequence  of any  Default  or Event of Default
     under the Loan  Documents.  The  foregoing  shall be payable by Borrower to
     Lender with or without the filing of any legal  action or  proceeding,  and
     shall  include,  without  limitation,  any  fees and  expenses  (including,
     without   limitation,   Professional   Fees)  incurred  in  any  bankruptcy
     proceeding  of any Loan  Party.  In  addition,  Borrower  shall  pay to the
     Depository    on   a   monthly    basis   the   fees   and    expenses   of
     Depository..............................................................111
15.24Intercreditor  Agreement.  Borrower hereby acknowledges and agrees that any
     agreement   between  Lender  and  Senior  Lender  (each  an  "Intercreditor
     Agreement")  is  intended  solely for the benefit of Lender and such Senior
     Lender,  that Borrower is not an intended third party beneficiary of any of
     the  provisions  therein,  and shall not be  entitled to rely on any of the
     provisions  contained therein,  and Lender and any Senior Lender shall have
     no  obligation  to disclose to Borrower the  contents of any  Intercreditor
     Agreement.  The  Obligations  of the Loan  Parties to Lender  shall  remain
     unmodified   by   the   terms   and   provisions   of   the   Intercreditor
     Agreement...............................................................111
15.25Right of Set-Off.  In addition to any rights now or hereafter granted under
     Applicable  Law or  otherwise,  and not by way of  limitation  of any  such
     rights upon the occurrence of an Event of Default,  Lender may from time to
     time, without presentment, demand, protest or other notice of any kind (all
     of which rights being hereby  expressly  waived by each of the Loan Parties
     that is a party to this  Agreement on their own behalf and on behalf of the
     Borrower  Group  Members),  set-off and  appropriate  and apply any and all
     deposits  (general or special) and any other  indebtedness at any time held
     or owing by Lender (including,  without limitation,  branches,  agencies or
     Affiliates of Lender wherever  located) to or for the credit or the account
     of Borrower against the Obligations of Borrower under the Loan Documents or
     otherwise,  irrespective  of  whether  Lender  shall  have made any  demand
     hereunder  and although such  Obligations,  may be contingent or unmatured,
     and any such set-off shall be deemed to have been made immediately upon the
     occurrence  of an Event of  Default  even  though  such  charge  is made or
     entered on the books of Lender subsequent thereto.......................112
15.26Servicer;  Servicer  Fees.  Without any  requirement of notice to Borrower,
     Lender may delegate any and all rights and obligations of Lender  hereunder
     to the  Servicer,  and any notice or consent  from the Servicer to Borrower
     (including,   without   limitation,   any   demand   letter  or  notice  of
     acceleration)  shall have the same force and effect as a notice or consent,
     as the case may be, from Lender.  Borrower hereby acknowledges and consents
     to Lender's right to delegate any and all rights and  obligations of Lender
     hereunder to the Servicer.  In addition to the  Servicer's  servicing  fees
     (which shall not exceed  $150,000 per annum),  Borrower shall pay to Lender
     on a monthly basis any and all out-of-pocket costs and expenses incurred by
     Servicer in  connection  with any  Defaults or in the course of  evaluating
     Borrower  requests,  including without  limitation all expenses of Servicer
     incurred in connection with its or any construction  consultant's review of
     construction draws, change orders,  construction progress reports,  leases,
     property  inspections,  or casualty or condemnation matters, and payment of
     such amounts as shall be secured by the Security Documents..............112
15.27Rescission of Payments.  If at any time all or any part of any payment made
     by Borrower  under this  Agreement  is rescinded or returned for any reason
     whatsoever  (including,  but not limited to, the insolvency,  bankruptcy or
     reorganization of Borrower), then the Obligations of Borrower shall, to the
     extent of the payment rescinded or returned, be deemed to have continued in
     existence  notwithstanding  such previous  payment,  and the obligations of
     Borrower hereunder shall continue to be effective or be reinstated,  as the
     case may be, as to such payment,  all as though such  previous  payment had
     never been made. .......................................................112
15.28Borrower Group Members.  To the extent that any provision in this Agreement
     requires expressly or implicitly,  performance, observance or compliance by
     any Borrower Group Member,  such provision shall be construed as Borrower's
     obligation  to cause such  Borrower  Group  Member to  perform,  observe or
     comply with such provision, and, accordingly,  the failure by such Borrower
     Group  Member to perform,  observe or comply with such  provision  shall be
     considered a breach by Borrower of its  obligations  under this  Agreement.
    .........................................................................112
15.29No Third  Parties  Actions.  No person  other than Lender and  Borrower and
     their permitted successors and assigns shall have any right of action under
     any of the Loan Documents...............................................113
15.30Attorney-In-Fact.  Borrower and each Guarantor hereby irrevocably  appoints
     and authorizes Lender, as such Person's  attorney-in-fact,  which agency is
     coupled  with an  interest,  to execute  and/or  record in Lender's or such
     Person's  name any  notices,  instruments  or  documents  that Lender deems
     appropriate   to  protect   Lender's   interest   under  any  of  the  Loan
     Documents...............................................................113
15.31Counterparts.  To facilitate execution, this document may be executed in as
     many  counterparts  as may be  convenient  or  required.  It  shall  not be
     necessary  that the signature of, or on behalf of, each party,  or that the
     signature  of all  persons  required  to bind  any  party,  appear  on each
     counterpart.  All  counterparts  shall  collectively  constitute  a  single
     document.  It shall not be necessary  in making  proof of this  document to
     produce  or  account  for more  than a single  counterpart  containing  the
     respective  signatures of, or on behalf of, each of the parties hereto. Any
     signature  page to any  counterpart  may be detached from such  counterpart
     without impairing the legal effect of the signatures thereon and thereafter
     attached to another counterpart identical thereto except having attached to
     it additional signature pages...........................................113
15.32Time.  Time is of the essence of each and every term of this  Agreement and
     the Loan Documents,  except and only to the extent  specifically  waived by
     Lender in writing.......................................................113
15.33Indemnity.  BORROWER  HEREBY AGREES TO DEFEND,  INDEMNIFY AND HOLD HARMLESS
     LENDER, EACH CO-LENDER AND ASSIGNEE, THEIR RESPECTIVE DIRECTORS,  OFFICERS,
     EMPLOYEES,  AGENTS,  SUCCESSORS  AND  ASSIGNS  FROM AND AGAINST ANY AND ALL
     LOSSES,    DAMAGES,     LIABILITIES,     CLAIMS,    ACTIONS,     JUDGMENTS,
     COURT...................................................................113
15.33COSTS  AND  LEGAL  OR  OTHER  EXPENSES   (INCLUDING,   WITHOUT  LIMITATION,
     PROFESSIONAL  FEES) WHICH LENDER,  ANY CO-LENDER OR ASSIGNEE MAY INCUR AS A
     DIRECT OR  INDIRECT  CONSEQUENCE  OF:  (A) THE  PURPOSE  TO WHICH  BORROWER
     APPLIES THE LOAN  PROCEEDS;  (B) THE FAILURE OF BORROWER TO PERFORM,  OR TO
     CAUSE ANY BORROWER  GROUP MEMBER TO PERFORM,  ANY  OBLIGATIONS  AS AND WHEN
     REQUIRED BY ANY OF THE LOAN  DOCUMENTS;  (C) ANY FAILURE AT ANY TIME OF ANY
     OF LOAN PARTY'S  REPRESENTATIONS  OR WARRANTIES TO BE TRUE AND CORRECT;  OR
     (D) ANY ACT OR OMISSION BY ANY  BORROWER  GROUP  MEMBER OR OTHER  PERSON OR
     ENTITY  WITH  RESPECT TO ANY OF THE  EXPANDED  PROPERTIES.  BORROWER  SHALL
     IMMEDIATELY  PAY TO  LENDER  UPON  DEMAND  ANY  AMOUNTS  OWING  UNDER  THIS
     INDEMNITY,  TOGETHER WITH INTEREST  FROM THE DATE THE  INDEBTEDNESS  ARISES
     UNTIL PAID AT THE RATE OF INTEREST  APPLICABLE TO THE PRINCIPAL  BALANCE OF
     THE NOTE.  BORROWER'S  DUTY AND  OBLIGATIONS TO DEFEND,  INDEMNIFY AND HOLD
     HARMLESS LENDER SHALL SURVIVE  CANCELLATION OF THE NOTE AND THE RELEASE, OR
     REASSIGNMENT     OF     ANY     COLLATERAL     OR     OF     THE     PLEDGE
     AGREEMENT...............................................................113
15.34Tax  Treatment  of  Warrant.  Holdings,  Borrower  and  the  Lender  hereby
     acknowledge  that for the purposes of Section  1273(c)(2) of the Code,  the
     Warrant  is a part of an  investment  unit with the Loan  being made by the
     Lender to Borrower under this  Agreement,  and that the allocated  purchase
     price of the Warrant for such purposes is $260,000. Holdings and the Lender
     agree to use the foregoing  allocated  purchase price as the purchase price
     of the Warrant for all income tax purposes..............................114

<PAGE>

                         LIST OF SCHEDULES AND EXHIBITS

                                    SCHEDULES

Schedule I............Purchase Properties
Schedule II...........Required Items
Schedule III..........Senior Lenders
Schedule IV...........Title Commitments for the Properties
Schedule V............Schedule V Covenants
Schedule 4.2(k).......Un-Cured and Non-Waived Defaults
Schedule 5.1(c).......Ownership Structure
Schedule 5.4..........Required Consents
Schedule 5.5..........Agreements (Schedule in Subparts (a)-(h))
Schedule 5.8..........Financial Statements and Business Plan
Schedule 5.10.........Financial Institutions
Schedule 5.14(d)......Employment Related Agreements
Schedule 5.14(g)......Employment Related Complaints
Schedule 5.14(h)......Employees
Schedule 5.15.........Pending Litigation
Schedule 5.16.........Expanded Properties (other than as listed on Exhibit A)
Schedule 5.17.........Federal Tax ID Numbers
Schedule 5.18.........Material Adverse Changes
Schedule 5.20.........Bankruptcy Issues
Schedule 5.28.........Accrued Plan Benefits Greater than $100,000
Schedule 5.29.........Intellectual Property
Schedule 5.30.........Environmental Reports; Other Environmental Disclosure
Schedule 5.31.........Recordings and Filings
Schedule 5.32.........Chief Executive Offices and Places of Business
Schedule 5.33(a)......Current Locations of Collateral
Schedule 5.33(b)......Final Locations of Collateral
Schedule 5.35.........Convertible Securities
Schedule 5.36.........Assumed Names
Schedule 5.37.........Transactions with Affiliates
Schedule 5.39(b)......Rent Roll
Schedule 5.39(e)......Management Agreements
Schedule 5.43.........Existing Defaults
Schedule 5.46.........Existing Condemnation Proceedings
Schedule 5.47.........Affiliate Agreements and Compensation
Schedule 5.49.........Senior Loan Documents
Schedule 5.51.........Certain Unencumbered Assets
Schedule 5.52.........Issues Regarding Holdings's Corporate Status
Schedule 5.55.........Issues Regarding Purchase Contracts
Schedule 5.59.........Convertible Securities; Option Rights
Schedule 7.27.........Service Rights
Schedule 8.5..........Permitted Asset Sales
Schedule 8.8..........Certain Affiliate Transactions
Schedule 8.11(b)(i)...Expanded Property Owner Debt
Schedule 8.11(b)(ii)..Expanded Property Owner Capital Expenditures
Schedule 9.2..........Existing Brokerage Agreements
Schedule 10.5.........Properties Subject to Permitted Foreclosure or Deed in
         .............Lieu of Foreclosure, and Provisions Pursuant to Which Such
         .............Foreclosure or Deed-In-Lieu of Foreclosure may be Allowed
Schedule 12.2A........Senior Megadeal Property Owners
Schedule 12.2B........Core Property Owners
Schedule 13.1(x)......ERISA Defaults
Schedule 15.19........Excluded Persons
Schedule 15.21........Brokers and Financial Advisors

                                    EXHIBITS

Exhibit A.............Properties
Exhibit B.............Definitions
Exhibit C.............Subsidiary Guarantors
Exhibit D.............Property Owners
Exhibit E.............Form of Note
Exhibit F.............Description of Puerto Rico Mortgage
         .............and Certain Other Permitted Debt
Exhibit G.............Operating Budget
Exhibit H.............[RESERVED]
Exhibit I.............[RESERVED]
Exhibit J.............[RESERVED]
Exhibit K.............Sources and Uses Statement
Exhibit L.............Unpaid Trade Payables
Exhibit M.............Issues Pertaining to Lothar
Exhibit N.............Puerto Rico Property
Exhibit O.............Senior Lender Estoppel Certificate
Exhibit P.............Operating Account Agreement
Exhibit Q.............Omnibus Cash Flow Pledge Agreement
Exhibit R.............[RESERVED]
Exhibit S.............Form of Omnibus Negative Pledge Agreement
Exhibit T.............Form of Warrant
Exhibit U.............Organizational Document Amendments

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