Document:

Exhibit
10.34

NON-QUALIFIED STOCK
OPTION AWARD AGREEMENT

FOR SENIOR EXECUTIVE OFFICERS

[Physicians Formula Holdings, Inc. Letterhead]

February 6,
2007

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

Re:          Grant
of Non-Qualified Stock Option

Dear                   :

Physicians Formula Holdings, Inc. (the “Company”)
is pleased to advise you that, pursuant to the Company’s 2006 Equity Incentive
Plan (the “Plan”), the Committee has granted to you an option (the “Option”)
to acquire shares of Common Stock, as set forth below, subject to the terms and
conditions set forth herein:

	
  Number of Option Shares:

  	
  
   

  

  
	
  Date of Grant:

  	
  
  February 6, 2007

  

  
	
  Exercise Price per Option Share:

  	
  
  $20.75

  

  
	
  Vesting of Option Shares:

  	
  
  Monthly vesting in fourty-eight (48) equal
  installments on each monthly anniversary of February 6, 2007, beginning on
  March 6, 2007

  

  
	
  Expiration Date of All Option Shares:

  	
  
  February 6, 2017

  

  

 

The Option is not intended to be an “incentive
stock option” within the meaning of Section 422 of the Code.

Any capitalized terms used herein and not defined
herein have the meaning set forth in the Plan.

1.             Option.

(a)           Term.  Subject to the terms and conditions set forth
herein, the Company hereby grants to you (or such other persons as permitted by
paragraph 5) an Option to purchase the Option Shares at the exercise price
per Option Share set forth above in the introductory paragraph of this letter
agreement (the “Exercise Price”), payable upon exercise as set forth in
paragraph 1(b) below.  The Option shall
expire at the close of business on the date set forth 

   
 

above in the
introductory paragraph of this letter agreement (the “Expiration Date”),
which is the tenth anniversary of the date of grant set forth above in the
introductory paragraph of this letter agreement (the “Grant Date”),
subject to earlier expiration as provided under the Plan should your employment
or service with the Company or a Subsidiary terminate.  The Exercise Price and the number and kind of
shares of Common Stock or other property for which the Option may be exercised
shall be subject to adjustment as provided under the Plan.  For purposes of this letter agreement, “Option
Shares” mean (i) all shares of Common Stock issued or issuable upon the
exercise of the Option and (ii) all shares of Common Stock issued with respect
to the Common Stock referred to in clause (i) above by way of stock dividend or
stock split or in connection with any conversion, merger, consolidation or
recapitalization or other reorganization affecting the Common Stock.

(b)           Payment of Option
Price.  Subject to paragraph 2 below,
the Option may be exercised in whole or in part upon payment of an amount (the “Option
Price”) equal to the product of (i) the Exercise Price and
(ii) the number of Option Shares to be acquired.  Payment of the Option Price shall be made as
provided under the Plan.

2.             Exercisability/Vesting and Expiration.

(a)           Normal Vesting.  The Option granted hereunder may be exercised
only to the extent it has become vested. 
The Option shall vest in as indicated by the vesting dates of Option
Shares set forth in the introductory paragraph of this letter agreement.

(b)           Normal Expiration.  In no event shall any part of the Option be
exercisable after the Expiration Date.

(c)           Effect on Vesting
and Expiration of Employment Termination. 
Notwithstanding paragraphs 2(a) and (b) above, the special vesting and
expiration rules set forth in the Plan shall apply if your employment or
service with the Company or a Subsidiary terminates prior to the Option
becoming fully vested and/or prior to the Expiration Date.

(d)           Change in Control.  If you have been continuously employed by the
Company from the Grant Date, the Option granted hereunder shall become fully
vested and exercisable automatically upon a Change in Control, whether or not
your employment or service with the Company or a Subsidiary subsequently
terminates.

3.             Procedure for Exercise.  You may exercise all or any portion of the
Option, to the extent it has vested and is outstanding, at any time and from
time to time prior to the Expiration Date, by delivering written notice to the
Company in the form attached hereto as Exhibit A, together with payment
of the Option Price in accordance with the provisions set forth in the
Plan.  The Option may not be exercised
for a fraction of an Option Share.

4.             Withholding of Taxes.

(a)           Participant
Election.  Unless otherwise
determined by the Committee, you may elect to deliver shares of Common Stock
(or have the Company withhold Option Shares acquired upon exercise of the
Option) to satisfy, in whole or in part, the amount the Company is 

 2
 

required to
withhold for taxes in connection with the exercise of the Option.  Such election must be made on or before the
date the amount of tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined.

(b)           Company
Requirement.  The Company, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to you, an amount
equal to any federal, state or local taxes of any kind required by law to be
withheld with respect to the delivery of Option Shares under this letter
agreement.

5.             Transferability of Option.  You may transfer the Option granted hereunder
only by will or the laws of descent and distribution or to any of your Family
Members by gift or a qualified domestic relations order as defined by the Code.  Unless the context requires otherwise,
references herein to you are deemed to include any permitted transferee under
this paragraph 5.  The Option may be
exercised only by you; by your Family Member if such person has acquired the
Option by gift or qualified domestic relations order; by the executor or
administrator of the estate of any of the foregoing or any person to whom the
Option is transferred by will or the laws of descent and distribution; or by
the guardian or representative of any of the foregoing; provided that Incentive
Stock Options may be exercised by any guardian or legal representative only if
permitted by the Code and any regulations thereunder.

6.             Conformity with Plan.  The Option is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan (which
is incorporated herein by reference). 
Inconsistencies between this letter agreement and the Plan shall be
resolved in accordance with the terms of the Plan.  By executing and returning the enclosed copy
of this letter agreement, you acknowledge your receipt of this letter agreement
and the Plan and agree to be bound by all of the terms of this letter agreement
and the Plan.

7.             Rights of Participants.  Nothing in this letter agreement shall
interfere with or limit in any way the right of the Company to terminate your
employment or other performance of services at any time (with or without
Cause), nor confer upon you any right to continue in the employ or as a
director or officer of, or in the performance of other services for, the
Company or a Subsidiary for any period of time, or to continue your present (or
any other) rate of compensation or level of responsibility.  Nothing in this letter agreement shall confer
upon you any right to be selected again as a Plan participant.

8.             Amendment or Substitution of Option.  The terms of the Option may be amended from
time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of the Option);  provided that no such
amendment shall adversely affect in a material manner any of your rights under
the award without your written consent.

9.             Successors and Assigns.  Except as otherwise expressly provided
herein, all covenants and agreements contained in this letter agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto whether
so expressed or not.

 3
 

10.           Severability.  Whenever possible, each provision of this
letter agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this letter agreement is
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this letter agreement.

11.           Counterparts.  This letter agreement may be executed
simultaneously in two or more counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
letter agreement.

12.           Descriptive Headings.  The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

13.           Governing Law.  THE VALIDITY, CONSTRUCTION, INTERPRETATION,
ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND
RIGHTS RELATING TO THE PLAN AND TO THIS LETTER AGREEMENT, SHALL BE GOVERNED BY
THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF
DELAWARE.

14.           Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this letter
agreement shall be in writing and shall be deemed to have been given when (i)
delivered personally, (ii) mailed by certified or registered mail, return
receipt requested and postage prepaid, (iii) sent by facsimile or (iv) sent by
reputable overnight courier, to the recipient. 
Such notices, demands and other communications shall be sent to you at
the address specified in this letter agreement and to the Company at 1055 West
8th Street, Azusa, California 91702, Attn: Chief
Financial Officer, or to such other address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party.

15.           Entire Agreement.  This letter agreement and the terms of the
Plan constitute the entire understanding between you and the Company, and
supersede all other agreements, whether written or oral, with respect to your
acquisition of the Option Shares.

*****

 

 4

Signature
Page to Stock Option Award Agreement

Please execute the extra copy of this letter agreement
in the space below and return it to the Company to confirm your understanding
and acceptance of the agreements contained in this letter agreement.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  PHYSICIANS FORMULA HOLDINGS, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Enclosures:                                  Extra copy of this
letter agreement

Copy of the Plan

The undersigned hereby acknowledges having read this
letter agreement and the Plan and hereby agrees to be bound by all provisions
set forth herein and in the Plan.

	
  

  	
  OPTIONEE

  
	
   

  	
   

  

 

	
  Dated as of:

  	
   

  	
   

  

EXHIBIT
A

Form
of Letter to be Used to Exercise Stock Option

 

	
  

  	
  

  	
   

  
	
   

  	
  Date

  	
   

  

 

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  Attention:

  	
   

  	
   

  

 

I wish to exercise the stock option granted on                     
and evidenced by a Stock Option Award Agreement dated as of
               ,
to acquire             
shares of Common Stock of             ,
at an option price of $          per share.  In accordance with the provisions of
paragraph 1 of the Stock Option Award Agreement, I wish to make payment of the
exercise price (please check all that apply):

	
   

  	
  o

  	
  in cash

  
	
   

  	
  o

  	
  by delivery of shares of Common Stock held by me

  
	
   

  	
  o

  	
  by simultaneous sale through a broker

  

 

Please issue a certificate for these shares in the
following name:

 

	
  

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  

 

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Typed or Printed Name

  
	
   

  	
   

  
	
   

  	
  Social Security NumberExhibit
10.31

LOAN AGREEMENT

Dated as of October 2,
2006

Between

GMH COMMUNITIES, LP, as
Borrower

and

WACHOVIA BANK, NATIONAL
ASSOCIATION, as Lender

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS; PRINCIPLES
  OF CONSTRUCTION

  	
   

  	
  1

  
	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.2

  	
   

  	
  Principles of Construction

  	
   

  	
  19

  
	
  ARTICLE II

  	
   

  	
  GENERAL TERMS

  	
   

  	
  20

  
	
  Section 2.1

  	
   

  	
  Loan Commitment;
  Disbursement to Borrower

  	
   

  	
  20

  
	
  Section 2.2

  	
   

  	
  Interest; Extension Options; Loan Payments; Late
  Payment Charge

  	
   

  	
  21

  
	
  Section 2.3

  	
   

  	
  Prepayments

  	
   

  	
  28

  
	
  Section 2.4

  	
   

  	
  Prohibition on Sale of Individual Property(ies)

  	
   

  	
  30

  
	
  Section 2.5

  	
   

  	
  Prohibition on Sale of Mezzanine Assets

  	
   

  	
  31

  
	
  Section 2.6

  	
   

  	
  No Offsets

  	
   

  	
  32

  
	
  ARTICLE III

  	
   

  	
  RESERVED

  	
   

  	
  33

  
	
  ARTICLE IV

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  33

  
	
  Section 4.1

  	
   

  	
  Borrower
  Representations

  	
   

  	
  33

  
	
  Section 4.2

  	
   

  	
  Survival of Representations

  	
   

  	
  44

  
	
  ARTICLE V

  	
   

  	
  BORROWER COVENANTS

  	
   

  	
  45

  
	
  Section 5.1

  	
   

  	
  Affirmative Covenants

  	
   

  	
  45

  
	
  Section 5.2

  	
   

  	
  Negative Covenants

  	
   

  	
  57

  
	
  Section 5.3

  	
   

  	
  Financial and REIT Status Covenants

  	
   

  	
  61

  
	
  Section 5.4

  	
   

  	
  Limitation on Indebtedness

  	
   

  	
  62

  
	
  ARTICLE VI

  	
   

  	
  INSURANCE; CASUALTY;
  CONDEMNATION; REQUIRED REPAIRS

  	
   

  	
  63

  
	
  Section 6.1

  	
   

  	
  Insurance

  	
   

  	
  63

  
	
  Section 6.2

  	
   

  	
  Casualty

  	
   

  	
  67

  
	
  Section 6.3

  	
   

  	
  Condemnation

  	
   

  	
  67

  
	
  Section 6.4

  	
   

  	
  Restoration

  	
   

  	
  68

  

 

 i
 

 

	
  ARTICLE VII

  	
   

  	
  [RESERVED]

  	
   

  	
  72

  
	
  ARTICLE VIII

  	
   

  	
  DEFAULTS

  	
   

  	
  72

  
	
  Section 8.1

  	
   

  	
  Event of Default

  	
   

  	
  72

  
	
  Section 8.2

  	
   

  	
  Remedies

  	
   

  	
  76

  
	
  Section 8.3

  	
   

  	
  Remedies Cumulative; Waivers

  	
   

  	
  77

  
	
  ARTICLE IX

  	
   

  	
  SPECIAL PROVISIONS

  	
   

  	
  78

  
	
  Section 9.1

  	
   

  	
  Sale of Notes and
  Securitization

  	
   

  	
  78

  
	
  Section 9.2

  	
   

  	
  Securitization Indemnification

  	
   

  	
  80

  
	
  Section 9.3

  	
   

  	
  Servicer

  	
   

  	
  80

  
	
  Section 9.4

  	
   

  	
  Recourse

  	
   

  	
  80

  
	
  Section 9.5

  	
   

  	
  Waivers

  	
   

  	
  80

  
	
  Section 9.6

  	
   

  	
  Intercreditor Agreements

  	
   

  	
  82

  
	
  Section 9.7

  	
   

  	
  UCC Plus/Eagle 9 UCC Insurance Policies

  	
   

  	
  82

  
	
  ARTICLE X

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  82

  
	
  Section 10.1

  	
   

  	
  Survival

  	
   

  	
  82

  
	
  Section 10.2

  	
   

  	
  Lender’s Discretion

  	
   

  	
  82

  
	
  Section 10.3

  	
   

  	
  Governing Law

  	
   

  	
  83

  
	
  Section 10.4

  	
   

  	
  Modification, Waiver in Writing

  	
   

  	
  83

  
	
  Section 10.5

  	
   

  	
  Delay Not a Waiver

  	
   

  	
  84

  
	
  Section 10.6

  	
   

  	
  Notices

  	
   

  	
  84

  
	
  Section 10.7

  	
   

  	
  Trial by Jury

  	
   

  	
  85

  
	
  Section 10.8

  	
   

  	
  Headings

  	
   

  	
  85

  
	
  Section 10.9

  	
   

  	
  Severability

  	
   

  	
  85

  
	
  Section 10.10

  	
   

  	
  Preferences

  	
   

  	
  85

  
	
  Section 10.11

  	
   

  	
  Waiver of Notice

  	
   

  	
  85

  
	
  Section 10.12

  	
   

  	
  Remedies of Borrower

  	
   

  	
  86

  
	
  Section 10.13

  	
   

  	
  Expenses; Indemnity

  	
   

  	
  86

  
	
  Section 10.14

  	
   

  	
  Schedules and Exhibits Incorporated

  	
   

  	
  87

  
	
  Section 10.15

  	
   

  	
  Offsets, Counterclaims and Defenses

  	
   

  	
  87

  
	
  Section 10.16

  	
   

  	
  No Joint Venture or Partnership; No Third-party
  Beneficiaries

  	
   

  	
  88

  
	
  Section 10.17

  	
   

  	
  Publicity

  	
   

  	
  88

  
	
  Section 10.18

  	
   

  	
  Cross-Default; Cross-Collateralization;
  Waiver of Marshalling of Assets

  	
   

  	
  88

  
	
  Section 10.19

  	
   

  	
  Waiver of Counterclaim

  	
   

  	
  89

  
	
  Section 10.20

  	
   

  	
  Conflict; Construction of Documents; Reliance

  	
   

  	
  89

  
	
  Section 10.21

  	
   

  	
  Brokers and Financial Advisors

  	
   

  	
  90

  
	
  Section 10.22

  	
   

  	
  Prior Agreements

  	
   

  	
  90

  
	
  Section 10.23

  	
   

  	
  Assignment; Participation

  	
   

  	
  90

  
	
  Section 10.24

  	
   

  	
  Treatment of Certain Information; Confidentiality

  	
   

  	
  91

  

 

 ii
 

 

	
  EXHIBIT A

  	
  -

  	
  FORM OF CERTIFICATE OF
  COMPLIANCE

  
	
  EXHIBIT B

  	
  -

  	
  FORM OF NOTICE OF
  BORROWING

  
	
  SCHEDULE A

  	
  -

  	
  Individual Properties
  and Allocated Values

  
	
  SCHEDULE B

  	
  -

  	
  Mezzanine Asset Owners,
  Mezzanine Assets, Mezzanine Allocated Loan Amounts and Allocated Values

  
	
  SCHEDULE C

  	
  -

  	
  Encumbered Properties

  
	
  SCHEDULE D

  	
  -

  	
  O&M Programs

  
	
  SCHEDULE E

  	
  -

  	
  Sources & Uses

  

 

 iii

LOAN
AGREEMENT

THIS
LOAN AGREEMENT, dated as of October 2, 2006 (as amended,
restated, replaced, supplemented or otherwise modified pursuant to a written
agreement signed by the parties hereto from time to time, this Agreement”), between
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, having an
office at 301 South College Street, Charlotte, North Carolina 28288 (“Lender”) and GMH
COMMUNITIES, LP, a Delaware limited partnership, having an address at 10 Campus
Boulevard, Newtown Square, Pennsylvania 19073 (“Borrower”).

W I T N
E S S E T H:

WHEREAS,
Borrower desires to obtain the Loan (as hereinafter defined) from Lender; and

WHEREAS,
Lender is willing to make the Loan to Borrower, subject to and in accordance
with the terms of this Agreement and the other Loan Documents (as hereinafter
defined).

NOW
THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:

ARTICLE I

DEFINITIONS; PRINCIPLES
OF CONSTRUCTION

Section 1.1             Definitions.

For all purposes of this
Agreement, except as otherwise expressly required or unless the context clearly
indicates a contrary intent:

“Acquiror”
shall have the meaning set forth in Section 2.2.1(b)(i).

“Acquisition
Transaction” shall have the meaning set forth in Section 2.2.1(b)(i).

“Additional
Advance” shall have the meaning set forth in Section 2.1.5.

“Adjusted
Management EBITDA” shall mean the sum of (i) EBITDA received from the
management of Student Housing Projects owned by a Person other than Borrower or
its subsidiary for the three (3)-month period ending on the last day of the
fiscal quarter ending on the date of determination, and (ii) EBITDA received
from management fees, development fees, construction and renovation fees, and
returns in respect of Equity Interests in respect of operating 

Military Housing Projects for the three (3)-month period ending on the
last day of the fiscal quarter ending on the date of determination, all as
calculated in accordance with GAAP.

“Adjusted Prime Rate”
shall mean an interest rate per annum equal to the Prime Rate in effect from
time to time plus the difference (expressed as the number of basis points)
between (a) the Eurodollar Rate on the date LIBOR was last applicable to the
Loan and (b) the Prime Rate on the date that LIBOR was last applicable to the
Loan; provided, however, in no event shall such difference be a
negative number.

“Affiliate” shall mean,
as to any Person, any other Person that, directly or indirectly, is in control
of, is controlled by or is under common control with such Person.

“Allocated Loan
Amount” shall mean, for an Individual Property, the amount set forth on Schedule
A attached hereto.

“Allocated
Value” shall mean, for an Individual Property, the amount set forth on Schedule
A attached hereto.

“ALTA” shall mean
American Land Title Association, or any successor thereto.

“Applicable Laws” shall
mean all existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations and court orders that are applicable to the
applicable Individual Property, the situation or the Person, as the case may
be.

“Applicable Interest Rate”
shall mean for each Interest Period through and including the date on which the
Debt is paid in full, an interest rate per annum equal to (I) the Eurodollar
Rate or (II) the Adjusted Prime Rate if the Loan begins bearing interest at the
Adjusted Prime Rate in accordance with the provisions of Section ‎2.2.3
hereof.

“Appraisal” shall mean
an appraisal prepared in accordance with the requirements of FIRREA, prepared
by an independent third-party appraiser holding an MAI designation, who is
State licensed or State certified if required under the laws of the State where
the applicable Individual Property is located, who meets the requirements of
FIRREA and who is otherwise reasonably satisfactory to Lender.

“Assignment of
Agreements” those certain first priority assignment of agreements to
trusts, liens, and permits, as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time.

“Assignment of Management Agreement”
shall mean, with respect to each Individual Property, that certain Conditional
Assignment of Management Agreement dated the date hereof among Lender, Property
Guarantor and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified pursuant to a written agreement signed by
the parties thereto from time to time.

“Award” shall mean any
compensation paid by any Governmental Authority in connection with a
Condemnation in respect of all or any part of any Individual Property.

 2
 

“Bankruptcy Code” shall
mean Title 11 U.S.C. § 101 et seq.,
and the regulations adopted and promulgated pursuant thereto (as the same may
be amended from time to time).

“Basic Carrying Costs”
shall mean, with respect to each Individual Property, the sum of the following
costs associated with such Individual Property for the relevant Fiscal Year or
payment period:  (i) Taxes, and (ii)
Insurance Premiums.

“Borrower” shall have
the meaning set forth in the introductory paragraph hereto, together with its
respective successors and assigns.

“Breakage Costs” shall
have the meaning set forth in Section ‎2.2.3(d) hereof.

“Business Day” a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to remain closed, except  that,
when used in connection with a Eurodollar Loan, such day shall also be a day on
which dealing between banks are carried on in U.S. dollar deposits in London,
England.

“Capital Event”
shall mean, after the Closing Date, (i) the sale, exchange, transfer,
assignment or other disposition of (a) an Encumbered Property by an Encumbered
Property Subsidiary, or any portion thereof or direct or indirect interest
therein, or (b) any Mezzanine Asset by a Mezzanine Subsidiary (or a direct or
indirect subsidiary of same) or any portion thereof or direct or indirect
interest therein, in each case including, but not limited to, master leases and
ground leases for all or substantially all of an Individual Property, Mezzanine
Asset or Encumbered Property, but excluding Leases for space in a Mezzanine
Asset or Encumbered Property, (ii) any financing by the Borrower, any Material
Subsidiary or any Encumbered Property Subsidiary (or a direct or indirect
Affiliate or subsidiary of the same) secured by an Individual Property,
Mezzanine Asset or Encumbered Property or any portion thereof or a direct or
indirect interest therein, or any refinancing of any indebtedness of Borrower,
any Material Subsidiary or any Encumbered Property Subsidiary (or a direct or
indirect Affiliate or subsidiary of the same) secured by an Individual
Property, Mezzanine Asset or Encumbered Property (collectively, a “Refinancing”),
(iii) the condemnation or deed in lieu of condemnation of an Individual
Property, Mezzanine Asset or Encumbered Property or any portion thereof, (iv)
any casualty with respect to an Individual Property, Mezzanine Asset or
Encumbered Property, or (v) any other similar transaction involving Borrower,
any Material Subsidiary or any Encumbered Property Subsidiary or any Affiliate
thereof which is, in accordance with GAAP, treated as a capital or financing
transaction.

“Capital Expenditures”
shall mean, for any period, the amount expended for items capitalized under
GAAP (including expenditures for building improvements or major repairs,
leasing commissions and tenant improvements).

“Capital Proceeds”
shall mean the Net Profit received by the Borrower, Mezzanine Subsidiary,
Mezzanine Asset Owner or Encumbered Property Subsidiary from a Capital Event,
less the sum of (a) the principal and interest on any indebtedness of the
Encumbered Property Subsidiary secured in whole or in part by the related
Encumbered Property or a portion thereof which is then required to be and is
paid, in whole or part, with such proceeds, and (b) without duplication, all
reasonable and ordinary costs and expenses (including any 

 3
 

defeasance and/or “make-whole”
amounts) incurred in connection therewith which shall first be approved by
Lender, which approval shall not be unreasonably withheld, conditioned or
delayed.

“Capital Stock” shall
mean any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all similar
ownership interests in a Person (other than a corporation) and any and all
warrants, rights or options to purchase any of the foregoing.

“Cash” shall mean coin
or currency of the United States of America or immediately available federal
funds, including such funds delivered by wire transfer.

“Cash Flow
Collateral” shall mean the collateral pledged to Lender pursuant to the
Security Agreement.

“Casualty” shall have
the meaning set forth in ‎Section 6.2 hereof.

“Casualty Consultant”
shall have the meaning set forth in ‎Section 6.4(b)(iii) hereof.

“Casualty Retainage”
shall have the meaning set forth in ‎Section 6.4(b)(iv) hereof.

“Closing Date” shall
mean the date of the funding of the Loan.

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

“Collateral” shall mean
the Properties, the Mezzanine Collateral, the Guaranty, the Personal Property,
the Rents, the Cash Flow Collateral, and all other real or personal property of
Borrower or any Guarantor that is at any time pledged, mortgaged or otherwise
given as security to Lender for the payment of the Debt under the Security
Instruments, this Agreement, the Note or any other Loan Document.

“Compliance
Certificate” shall mean a certification signed by a Responsible Officer of
Borrower in the form attached hereto as Exhibit A and approved by Lender in its
sole discretion.

“Condemnation” shall
mean a temporary or permanent taking by any Governmental Authority as the
result or in lieu or in anticipation of the exercise of the right of
condemnation or eminent domain, of all or any part of any Individual Property,
or any interest therein or right accruing thereto, including any right of
access thereto or any change of grade affecting such Individual Property or any
part thereof.

“Condemnation Proceeds”
shall have the meaning set forth in Section 6.4(b) hereof.

 4
 

“Consolidated
Interest Charges” shall mean, for any Person for any period, the sum of (a)
all interest, premium payments, debt discount, fees, charges and related
expenses of such Person in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of such Person with respect to such period
under capital leases that is treated as interest in accordance with GAAP.

“Consolidated
Tangible Net Worth” shall mean, as of any date of determination for the
Borrower and its Subsidiaries on a consolidated basis (except that the minority
Equity Interests in Borrower shall be included for purposes of this
calculation), (a) Shareholders’ Equity of Borrower and its Subsidiaries on
that date minus (b) the Intangible Assets of
Borrower and its Subsidiaries on that date; plus (c) all
accumulated depreciation and amortization determined in accordance with GAAP of
the Borrower and its Subsidiaries on that date.

“Control” (and the
correlative terms “controlled by” and “controlling”) shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of the business and affairs of the entity in question
by reason of the ownership of beneficial interests, by contract or otherwise.

“Credit
Agreement” shall have the meaning set forth in ‎Section 2.1.4
hereof.

“Creditors Rights Laws”
shall mean with respect to any Person, any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to its debts or debtors.

“Debt” shall mean the
outstanding principal amount set forth in, and evidenced by, this Agreement and
the Note together with all interest accrued and unpaid thereon and all other
sums due to Lender in respect of the Loan under the Note, this Agreement, the
Security Instruments, the Guaranty or any other Loan Document.

“Default” shall mean
the occurrence of any event hereunder or under any other Loan Document which,
but for the giving of notice or passage of time, or both, would constitute an
Event of Default.

“Default Rate” shall
mean, with respect to the Loan, a rate per annum equal to the lesser of (a) the
Maximum Legal Rate, or (b) four percent (4%) above the Applicable Interest
Rate.

“Disclosure Document”
shall have the meaning set forth in ‎Section 9.2(a) hereof.

“EBITDA”
shall mean for any period, for any Person, an amount equal to the net income
for such period plus (a) the following to the extent deducted in calculating
such net income: (i) Consolidated Interest Charges for such period; (ii) the
provision for federal, state, local and foreign income taxes payable by such
Person for such period; (iii) depreciation and amortization expense for such
period; and (iv) other non-recurring expenses of the Person reducing such net
income which do not represent a cash item in such period or any future period
minus (b) the following to the extent included in calculating such net income:
(i) federal, state,

 5
 

local and foreign income
tax credits of the Person for such period; and (ii) all non-cash items
increasing net income for such period.

“Eligible Account”
shall mean a separate and identifiable account from all other funds held by the
holding institution that is either (a) an account or accounts maintained with a
federal or State-chartered depository institution or trust company or (b)
a segregated trust account or accounts maintained with a federal or State-chartered
depository institution or trust company acting in its fiduciary capacity which,
in the case of a State-chartered depository institution or trust company,
is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having
in either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and State authority.  An Eligible Account will not be evidenced by
a certificate of deposit, passbook or other instrument.

“Embargoed Person”
shall have the meaning set forth in Section 4.1.27 hereof.

“Encumbered
Property” or “Encumbered Properties” shall mean individually, a
property listed on Schedule C attached hereto, and collectively, the
properties listed on Schedule C attached hereto.

“Encumbered
Property Allocated Value” shall mean, for each Encumbered Property, (a) if
the Capital Event with respect to such Encumbered Property is a sale of such
Encumbered Property, 100% of the value of such Encumbered Property determined
at the time of the sale based on an MAI appraisal prepared by an independent
third party appraiser and (b) if the Capital Event with respect to such
Encumbered Property is a Refinancing of such Encumbered Property, the greater
of (i) 80% of the value of such Encumbered Property determined at the time of
the sale based on an MAI appraisal prepared by an independent third party
appraiser or (ii) the loan-to-value ratio of the new loan being obtained to
effectuate such Refinancing.

“Encumbered
Property Subsidiary” shall mean each Subsidiary of Borrower that owns an
Encumbered Property.

“Environmental Indemnity”
shall mean that certain Environmental Indemnity Agreement executed by Borrower
and Guarantor in connection with the Loan for the benefit of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified
pursuant to a written agreement signed by the parties thereto from time to
time.

“Environmental Law”
shall mean any federal, State and local laws, statutes, ordinances, rules,
regulations, standards, policies and other government directives or
requirements, as well as common law, that, at any time, apply to Borrower,
Guarantor or any Individual Property, Mezzanine Asset or Encumbered Property
and related to Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act.

“Environmental Liens”
shall have the meaning set forth in Section 5.1.18 hereof.

“Equity
Interests” shall mean, with respect to any Person, all of the shares of
capital stock of (or other ownership of profit interests in) such Person, all
of the warrants, options 

 6
 

or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.

“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as the same may be amended
from time to time.

“Eurodollar Rate” shall
mean, with respect to any Interest Period, an interest rate per annum equal to
LIBOR plus the LIBOR Margin.

“Event of Default”
shall have the meaning set forth in Section 8.1(a) hereof.

“Exchange Act” shall
have the meaning set forth in Section 9.2 hereof.

“Exchange Act Filing”
shall have the meaning set forth in ‎Section 9.2 hereof.

“Extended Maturity Date”
shall have the meaning set forth in Section 2.2.1(b) hereof.

“Extension Option One”
shall have the meaning set forth in Section 2.2.1(b) hereof.

“Extension Option One Maturity Date”
shall have the meaning set forth in Section 2.2.1(b) hereof.

“Extension Option Two”
shall have the meaning set forth in Section 2.2.1(b) hereof.

“Financing Lease”:
shall mean any lease of property, real or personal, the obligations of the
lessee in respect of which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.

“FIRREA” means the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as the
same may be amended from time to time.

“Fiscal Year” shall
mean each twelve (12) month period commencing on January 1 and ending on
December 31 during the term of the Loan.

“Fitch” shall mean
Fitch, Inc.

“Flood Insurance Act”
shall have the meaning set forth in ‎Section 6.1(a)(vii) hereof.

 7
 

“Force Majeure” shall
mean any delay due solely to acts of god, governmental restriction, stays,
judgments, orders or decrees of any court or other Governmental Authority,
enemy actions, civil commotion, domestic or foreign terrorist action, strike,
work stoppage, shortage of labor or materials or any or other cause or causes
beyond the reasonable control of Borrower, but lack of funds (in and of itself)
shall not be deemed to constitute a cause beyond the reasonable control of
Borrower.

“GAAP” shall mean
generally accepted accounting principles in the United States of America as of
the date of the applicable financial report.

“Governmental Authority”
shall mean any court, board, agency, commission, office, central bank or other
authority of any nature whatsoever for any governmental unit (federal, State,
county, district, municipal, city, country or otherwise) or quasi-governmental
unit whether now or hereafter in existence.

“Guarantor” shall mean,
collectively, Property Guarantor, Trust and Material Subsidiary or such
replacement Guarantor that assumes all the obligations of Guarantor under the
Loan Documents in accordance with the terms hereof.

“Guaranty” shall mean,
collectively, the Property Guaranty, Trust Guaranty, the Mezzanine Property
Guaranty and the Material Subsidiary Guaranty, as each of the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time by written agreement signed by the parties thereto.

“Hazardous Materials”
shall mean petroleum and petroleum products and compounds containing them,
including gasoline, diesel fuel and oil; explosives; flammable materials;
radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and
lead-based paint; asbestos or asbestos-containing materials in any form that is
or could become friable; underground or above-ground storage tanks, whether
empty or containing any substance; toxic mold; any substance the presence of
which on any Individual Property, Mezzanine Asset or Encumbered Property is
prohibited by any federal, State or local authority; any substance that
requires special handling; and any other material or substance now or in the
future defined as a “hazardous substance,” “hazardous material,” “hazardous
waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or
other words of similar import within the meaning of any Environmental Law.

“Improvements” shall
have the meaning set forth in Article 1 of the related Security
Instrument with respect to each Individual Property.

“Indebtedness”: shall
mean of any Person at any date, without duplication, (a) all indebtedness of
such Person for borrowed money (whether by loan or the issuance and sale of
debt securities) or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Financing Leases or
Synthetic Leases, (d) all obligations of such Person in respect of letters of
credit, acceptances or similar instruments issued or created for the account of
such Person, (e) all liabilities secured by 

 8
 

(or for which the holder
of such obligations has an existing right, contingent or otherwise, to be
secured by) any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof
(other than ad valorem taxes not yet due), and (f) all Guarantee Obligations of
such Person in respect of obligations of the kind referred to in clauses (a)
through (e) above.  The amount of any Indebtedness
under clause (e) shall be equal to the lesser of (A) the stated amount of the
relevant obligations and (B) the fair market value of the property subject to
the relevant Lien.

“Indemnified Liabilities”
shall have the meaning set forth in Section 10.13(b) hereof.

“Indemnified Parties”
shall mean Lender, any Affiliate of Lender who is or will have been involved in
the origination of the Loan, any Person who is or will have been involved in
the servicing of the Loan, any Person in whose name the encumbrance created by
the Security Instruments or Pledge Agreement is or will have been recorded,
Persons who may hold or acquire or will have held a full or partial interest in
the Loan, the holders of any Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan
for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, members, employees, agents, servants,
representatives, contractors, subcontractors, Affiliates, subsidiaries, participants,
successors and assigns of any and all of the foregoing (including but not
limited to any other Person who holds or acquires or will have held a
participation or other full or partial interest in the Loan or any Individual
Property or Mezzanine Collateral, whether during the term of the Loan or as a
part of or following a foreclosure of the Loan and including, but not limited
to, any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender’s assets and business).

“Indemnified Taxes”
shall mean any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority.

“Individual Property”
shall mean each parcel of real property, the Improvements thereon and all
Personal Property owned by Property Guarantor and encumbered by a Security
Instrument, together with all rights pertaining to such Property and
Improvements, as more particularly described in Article 1 of each
Security Instrument and referred to therein as the “Property” and as listed on Schedule
A attached hereto.

“Initial
Advance” shall have the meaning set forth in Section 2.1.4 hereof.

“Initial
Maturity Date” shall mean April 2, 2007.

“Initial Term”
shall mean the period commencing on the date hereof and ending on the Initial
Maturity Date.

“Insurance Premiums”
shall have the meaning set forth in ‎Section 6.1(b) hereof.

“Insurance Proceeds”
shall have the meaning set forth in ‎Section 6.4(b) hereof.

 9
 

“Intangible
Assets” shall mean assets that are considered to be intangible assets under
GAAP, including customer lists, goodwill, computer software, copyrights, trade
names, trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount and capitalized research and development costs.

“Interest
Period” shall mean (a) initially, the period commencing on the date of this
Agreement and ending one (1), two (2) or three (3) months thereafter, as
selected by Borrower in its Rate Request given to Lender with respect thereto;
and (b) thereafter, each period commencing on the last day of the then expiring
Interest Period applicable to the Loan and ending one (1), two (2) or three (3)
months thereafter, as selected by the Borrower in its Rate Request given to
Lender; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following: (i) if any Interest Period pertaining to
the Loan would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day; (ii) any Interest
Period pertaining to the Loan that would otherwise extend beyond the then
current Maturity Date shall end on the then current Maturity Date; and (iii)
any Interest Period pertaining to the Loan that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the last calendar month of such Interest
Period.

“Key Entity”
and “Key Entities” individually or collectively, as the context may
require, Borrower, each Property Guarantor, each Mezzanine Subsidiary, each
Mezzanine Asset Owner and GMH Communities GP Trust.

“Leases” shall mean any
lease, sublease, letting, license, concession or other agreement (whether
written or oral and whether now or hereafter in effect) 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 an Individual Property or Mezzanine Asset, and
every modification, amendment or other agreement relating to such lease or
other agreement entered into in connection with such lease or other agreement
and every guarantee of the performance and observance of the covenants,
conditions and agreements to be performed and observed by the other party
thereto.

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

“Lender” shall have the
meaning set forth in the introductory paragraph hereto, together with its successors
and assigns.

 10
 

“LIBOR” shall mean the
rate of interest per annum for the first day of the Interest Period (the “Reset
Date”) for deposits in U.S. Dollars for a period equal to the number of
months contained in the Interest Period which appears on Dow Jones Page 3750
(or such other display page on the Dow Jones System or otherwise as may replace
said Page 3750) as of 11:00 a.m. (London time) on the day that is two (2)
Business Days prior to that Reset Date for a period, and in an amount,
comparable to such Interest Period and the principal balance of the Loan
outstanding during such Interest Period; provided, however, that if such rate
does not appear on Dow Jones Page 3750 (or such replacement page), LIBOR shall
be the rate on interest per annum quoted by Lender at approximately 11:00 a.m.
New York time two (2) Business Days prior to the beginning of such Interest
Period for the offering to leading banks in the London interbank market of U.S.
Dollar deposits in immediately available funds for delivery on the first day of
such Interest Period for a period equal to such Interest Period and the
principal balance of the Loan outstanding during such Interest Period.  Lender shall determine LIBOR for each
Interest Period and the determination of LIBOR by Lender shall be binding upon
Borrower absent manifest error.

“LIBOR Margin” shall
mean (a) 2.00% per annum during the Initial Term and after the Initial Term
through the Extended Maturity Date if the Initial Term is extended due to
Borrower’s exercise of Extension Option One and (b) 4.50% per annum for the
period from and after the Initial Term through the Extended Maturity Date if
the Initial Term is extended due to Borrower’s exercise of Extension Option
Two.

“Lien” shall mean, with
respect to each Individual Property, any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting Borrower, Property Guarantor, the related
Individual Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic’s, materialmen’s
and other similar liens and encumbrances but excluding Permitted Encumbrances
(but not excluding liens that may arise after the date hereof under or pursuant
to such Permitted Encumbrances).

“Loan” shall mean the
loan, in the maximum aggregate principal amount of Two Hundred Fifty Million
and 00/100 Dollars ($250,000,000.00), made by Lender to Borrower pursuant to
this Agreement and the other Loan Documents as the same may be amended or split
pursuant to the terms hereof.

“Loan Documents” shall
mean, collectively, this Agreement, the Note, the Security Instruments, the
Assignment of Agreements, the Environmental Indemnity, the Assignments of
Management Agreement, the Guaranty, the Security Agreement, the Pledge
Agreement and all other documents executed and/or delivered in connection with
the Loan.

“Losses” shall mean any
and all claims, suits, liabilities (including, without limitation, strict
liabilities, but excluding consequential damages), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement of
whatever kind or nature (including but not limited to reasonable attorneys’
fees and other costs of defense).

 11
 

“Management Agreement”
shall mean, with respect to any Individual Property, the management agreement
entered into by and between Property Guarantor and Manager, pursuant to which
the Manager is to provide management and other services with respect to such
Individual Property, or, if the context requires, the Replacement Management
Agreement executed in accordance with the terms and provisions of this
Agreement.

“Manager” shall mean
College Park Management, LLC, a Florida limited liability company, or, if the
context requires, a Qualified Manager who is managing the Properties or any
Individual Property in accordance with the terms and provisions of this
Agreement.

“Material
Adverse Effect” shall mean any event or condition that has a material
adverse effect on (a) the financial condition or business of Borrower or its
ability to perform its obligations under the Loan Documents, (b) the financial
condition or business of the Encumbered Property Subsidiaries as a whole or
their ability to perform their obligations under their existing loan documents
or other contractual obligations as a whole, (c) the use, occupancy, operation
or value of (including the net operating income) the Encumbered Properties as a
whole, (d) the validity or enforceability of any Loan Document, (e) the
validity, enforceability or priority of Lender’s security interest in the
Collateral.

“Material
Subsidiary” shall mean a subsidiary of Borrower or the Trust that has a
significant amount of assets or equity or is important to the operations of
Borrower to the extent not legally or contractually prohibited to guaranty the
loan, including, but not limited to each Mezzanine Subsidiary, College Park
Investments LLC, College Park Management, LLC, College Park Management TRS,
Inc., GMH Military Housing, LLC and GMH Military Housing Investments, LLC, GMH
Communities TRS, Inc., GMH Communities GP Trust and GMH Communities Services,
Inc.

“Material
Subsidiary Guaranty” shall mean that certain payment and performance
guaranty executed and delivered by Material Subsidiary to Lender in connection
with the Loan.

“Maturity Date” shall
mean the Initial Maturity Date, as such date may be extended pursuant to Section
2.2.1(b) hereof, or such other date on which the final payment of the
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.

“Maximum Legal Rate”
shall mean the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or received
on the indebtedness evidenced by the Note and as provided for herein or in the
other Loan Documents, under the laws of such State or States whose laws are
held by any court of competent jurisdiction to govern the interest rate provisions
of the Loan.

“Mezzanine
Allocated Loan Amount” shall mean, for the Mezzanine Collateral, the amount
set forth on Schedule B attached hereto.

“Mezzanine
Asset Owner” shall mean the single member limited liability company that
owns a Mezzanine Asset and each of which is 100% owned by the related Mezzanine
Subsidiary, as each Mezzanine Asset Owner is listed on Schedule B
attached hereto.

 12
 

“Mezzanine
Assets” shall mean the properties, listed on Schedule B hereto, each
which is indirectly owned by a Mezzanine Subsidiary.

“Mezzanine
Collateral” shall have the meaning set forth in Section 2.5(a).

“Mezzanine
Collateral Release Price” shall mean, as to any applicable Individual
Property, 100% of the Mezzanine Value for such Mezzanine Collateral.

“Mezzanine
Property Guarantor” shall mean individually or collectively, as the context
may require, Savoy Village Associates Intermediate, LLC, Croyden Avenue
Associates Intermediate, LLC, Monks Road Associates Intermediate, LLC, South
Carolina Associates Intermediate, LLC, Reno Associates Intermediate, LLC,
Denton Associates Intermediate, LLC and Lankford Drive Associates Intermediate,
LLC.

“Mezzanine
Property Guaranty” shall mean, that certain payment and performance
guaranty executed and delivered by the Mezzanine Property Guarantor to Lender
in connection with the Loan.

“Mezzanine
Subsidiary” or “Mezzanine Subsidiaries” shall mean individually or
collectively, as the context may require, Clarizz Boulevard Associates
Intermediate, LLC, Lakeside Associates Intermediate, LLC, Urbana Associates
Intermediate, LLC, Red Mile Road Associates Intermediate, LLC, Burbank Drive
Associates Intermediate III, LLC, Commons Drive Associates Intermediate, LLC,
Abbott Road Associates Intermediate, LLC, Campus View Drive Associates Intermediate,
LLC, Alexander Road Associates Intermediate, LLC, Brown Road Associates
Intermediate, LLC, Keller Boulevard Associates Intermediate, LLC.

“Mezzanine
Value” shall mean for the Mezzanine Collateral, the value for the Mezzanine
Collateral as it relates to each Mezzanine Asset as set forth on Schedule B
attached hereto.

“Military
Housing Projects” shall mean privatized military housing projects in the
United States owned and/or operated by Borrower or Subsidiary of Borrower, with
an average remaining ground lease term for all Military Housing Projects, taken
as a whole, being forty (40) years or greater, and “Military Housing Project”
means any one of the Military Housing Projects.

“Monthly Debt Service Payment Amount”
shall mean a monthly payment of interest only calculated in accordance with the
terms hereof.

“Moody’s” shall mean Moody’s
Investors Service, Inc.

“Net Proceeds” shall
have the meaning set forth in ‎Section 6.4(b) hereof.

“Net Proceeds Deficiency”
shall have the meaning set forth in ‎Section 6.4(b)(vi) hereof.

“Net Profit”
shall mean, in connection with any Capital Event, (a) if relating to a Casualty
or Condemnation, Net Proceeds less the amount of Net Proceeds utilized and/or
made available by Lender (or the applicable mortgage lender) to Borrower,
Property Guarantor, 

 13
 

Mezzanine Asset Owner or
Encumbered Property Subsidiary to restore the applicable Individual Property,
Mezzanine Asset or Encumbered Property, as the case may be, and (b) for all
other Capital Events, an amount equal to the gross proceeds received by
Borrower, Mezzanine Subsidiary or Encumbered Property Subsidiary or any
Affiliate thereof in connection therewith, less all reasonable and customary
costs and expenses incurred in connection therewith.

“Non-U.S. Entity” shall
have the meaning set forth in Section 2.2.8 hereof.

“Note” shall mean that
certain promissory note of even date herewith in the original principal amount
of Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00), made by
Borrower in favor of Lender, as the same may be amended, restated, replaced,
extended, renewed, supplemented, severed, split, or otherwise modified pursuant
to a written agreement signed by the parties thereto from time to time.

“Notice of
Borrowing” shall mean a notice signed by a Responsible Officer of Borrower
in the form attached hereto as Exhibit B.

“O&M Program” shall
mean, with respect to each Individual Property, Mezzanine Asset or Encumbered
Property listed on Schedule D hereof, if any, that certain operations
and maintenance program developed by Borrower or Property Guarantor and
approved by Lender, as the same may be amended, replaced, supplemented or
otherwise modified from time to time pursuant to an agreement executed by the
parties thereto from time to time.

“Obligations” shall
mean Borrower’s obligation to pay the Debt and perform its obligations under
the Note, this Agreement and the other Loan Documents.

“Officer’s Certificate”
shall mean a certificate delivered to Lender by Borrower which is signed on
behalf of Borrower by a Responsible Officer.

“Other Charges” shall
mean all maintenance charges, impositions other than Taxes, and any other
charges, including, without limitation, vault charges and license fees for the
use of vaults, chutes and similar areas adjoining any Individual Property, now
or hereafter levied or assessed or imposed against such Individual Property or
any part thereof.

“Payment Date” shall
mean the first (1st ) day of each calendar month during the term
of the Loan or, if such day is not a Business Day, the immediately preceding
Business Day.

“Permitted Encumbrances”
shall mean, with respect to an Individual Property, collectively, (a) the Liens
and security interests created by the Loan Documents, (b) all Liens,
encumbrances and other matters (i) disclosed in the Title Insurance Policy
relating to such Individual Property or any part thereof or (ii) shown on the
Survey, (c) Liens, if any, for Taxes imposed by any Governmental Authority not
yet delinquent, (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender’s reasonable discretion, and (e)
easements, restrictions, covenants, reservations and rights consented to by
Lender pursuant to 5.2.10(f) hereof.

“Person” shall mean any
individual, corporation, partnership, joint venture, limited liability company,
estate, trust, unincorporated association, any federal, State, county or

 14
 

municipal government or
any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.

“Personal Property”
shall have the meaning set forth in Article 1 of the Security Instrument
with respect to each Individual Property.

“Physical Conditions Report”
shall mean, with respect to each Individual Property, a structural engineering
report prepared by a company satisfactory to Lender regarding the physical
condition of such Individual Property, satisfactory in form and substance to
Lender in its sole discretion.

“Plan” shall mean an
employee benefit plan (as defined in section 3(3) of ERISA) whether or not
subject to ERISA or a plan or other arrangement within the meaning of section
4975 of the Code.

“Plan Assets” shall
mean assets of a Plan within the meaning of section 29 C.F.R. section
2510.3-101 or similar law.

“Pledge Agreement”
shall mean the Pledge Agreement dated the date hereof made by Borrower and each
of the pledgors named therein, as the same may be amended, supplemented or
otherwise modified from time to time.

“Policies” shall have
the meaning set forth in ‎Section 6.1(b) hereof.

“Prepayment Date” shall
have the meaning set forth in Section ‎2.3.1(a) hereof.

“Prime Rate” shall
mean, on a particular date, a rate per annum equal to the rate of interest
published in The Wall Street Journal
as the “prime rate”, as in effect on such day, with any change in the prime
rate resulting from a change in said prime rate to be effective as of the date
of the relevant change in said prime rate; provided, however,
that if more than one prime rate is published in The Wall Street Journal for a day, the average of the prime
rates shall be used; provided, further, however, that the
Prime Rate (or the average of the prime rates) will be rounded to the nearest
1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of
1%.  In the event that The Wall Street Journal should cease or
temporarily interrupt publication, then the Prime Rate shall mean the daily
average prime rate published in another business newspaper, or business section
of a newspaper, of national standing chosen by Lender.  If The
Wall Street Journal resumes publication, the substitute index will
immediately be replaced by the prime rate published in The Wall Street Journal.  In the event that a prime rate is no longer
generally published or is limited, regulated or administered by a governmental
or quasi-governmental body, then Lender shall select a comparable interest rate
index which is readily available to Borrower and verifiable by Borrower but is
beyond the control of Lender, provided, however, that such
comparable index is used by Lender for borrowers similarly situated to
Borrower.  Lender shall give Borrower
prompt written notice of its choice of a substitute index and when the change
became effective.  Such substitute index
will also be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%. 
The determination of the Prime Rate by Lender shall be conclusive and
binding absent manifest error.

“Prohibited Person”
shall mean any Person:

 15
 

(a)           listed in the Annex to, or otherwise
subject to the provisions of, the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (the “Executive Order”);

(b)           that is owned or controlled by, or
acting for or on behalf of, any person or entity that is listed to the Annex
to, or is otherwise subject to the provisions of, the Executive Order;

(c)           with whom Lender is prohibited from
dealing or otherwise engaging in any transaction by any terrorism or money
laundering law, including the Executive Order;

(d)           who commits, threatens or conspires
to commit or supports “terrorism” as defined in the Executive Order;

(e)           that is named as a “specially
designated national and blocked person” on the most current list published by
the U.S. Treasury Department Office of Foreign Assets Control at its official
website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or other
replacement official publication of such list; or

(f)            who is an Affiliate of or affiliated
with a Person listed above.

“Properties” shall
mean, collectively, each and every Individual Property which is subject to the
terms of this Agreement.

“Property” shall mean,
as the context may require, the Properties or an Individual Property.

“Property
Guarantor” shall mean individually and collectively Savoy Village
Associates, LLC, Croyden Avenue Associates, LLC, Monks Road Associates, LLC,
South Carolina Associates, LLC, Reno Associates, LLC, Denton Associates, LLC
and Lankford Drive Associates, LLC, the owners of the Properties.

“Property Guaranty”
shall mean, that certain payment and performance guaranty, dated as of the date
hereof, executed and delivered by Property Guarantor to Lender in connection
with the Loan.

“Provided Information”
shall have the meaning set forth in Section 9.1(a) hereof.

“Qualified
Manager” shall mean a (A) reputable and experienced professional management
organization (a) which manages student housing of quality and similar size to
the Properties (exclusive of the Properties) and (b) prior to whose employment
as manager of any Individual Property or Mezzanine Asset such employment shall
have been approved by Lender, which approval shall not be unreasonably withheld
or delayed and (c) such other management organization reasonably acceptable to
Lender.  Notwithstanding the foregoing,
any Manager replaced at the direction of the Lender pursuant to the terms
hereof shall no longer be deemed a Qualified Manager.

 16

“Rating
Agencies” shall mean each of S&P, Moody’s, and Fitch, and
any other nationally-recognized statistical rating agency which has rated
the Securities.

“Refinancing”
shall have the meaning set forth in the definition of “Capital Event”.

“Related Party”
shall mean any Guarantor and any of their respective Affiliates.

“Release” of any
Hazardous Materials shall mean any release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.

“Release Price”
shall mean, as to any applicable Individual Property, 100% of the Allocated
Value for such Individual Property.

“Rents” shall have the
meaning set forth in Article 1 of the Security Instrument with respect
to each Individual Property.

“Replacement Management Agreement”
shall mean, collectively, (a) either (i) a management agreement with a
Qualified Manager substantially in the same form and substance as the
Management Agreement, or (ii) a management agreement with a Qualified Manager,
which management agreement shall be reasonably acceptable to Lender in form and
substance; and (b) a conditional assignment of management agreement
substantially in the form of the Assignment of Management Agreement (or such
other form reasonably acceptable to Lender), executed and delivered to Lender
by Borrower and such Qualified Manager at Borrower’s expense.

“Responsible Officer”
means with respect to a Person, any duly authorized officer, member, partner,
shareholder or other equity owner of such Person.

“Restoration” shall
mean the repair and restoration of an Individual Property after a Casualty or
Condemnation as nearly as possible to the condition the Individual Property was
in immediately prior to such Casualty or Condemnation, with such alterations as
may be reasonably approved by Lender.

“Restricted Party”
shall mean Borrower, Trust, each Material Subsidiary, each Property Guarantor,
each Mezzanine Property Guarantor, each Mezzanine Asset Owner or any shareholder,
partner, member or non-member manager, or any direct or indirect legal or
beneficial owner of, any of the foregoing, but excluding any limited partner in
Borrower and the holder of any interest in the Trust.

“S&P” shall mean
Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

“Sale or Pledge” shall
mean a voluntary or involuntary sale, conveyance, transfer or pledge of a
direct or indirect legal or beneficial interest.

“Securities Act” shall
have the meaning set forth in ‎Section 9.2(a) hereof.

 17
 

“Security
Agreement” shall mean that certain Security Agreement dated as of the date
hereof executed and delivered by College Park Management TRS, Inc., a Delaware
corporation, GMH Military Housing, LLC, a Delaware limited liability company,
GMH Communities TRS, Inc., a Delaware corporation, GMH Military Housing
Investments LLC, a Delaware limited liability company, College Park Investments
LLC, a Delaware limited liability company and College Park Management, LLC, a
Florida limited liability company, collectively as pledgors, to and for the
benefit of Lender, as secured party, and relating to the Cash Flow Collateral.

“Security Instrument”
shall mean, with respect to each Individual Property, that certain first
priority Mortgage (or Deed of Trust or Deed to Secure Debt, as applicable) and
Security Agreement, executed and delivered by Property Guarantor as security
for the Guaranty and encumbering such Individual Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified pursuant to a
written instrument signed by the parties thereto from time to time.

“Servicer” shall have
the meaning set forth in Section 9.3 hereof.

“Servicing Agreement”
shall have the meaning set forth in Section 9.3 hereof.

“Severed Loan Documents”
shall have the meaning set forth in Section 8.2(c) hereof.

“Shareholders’
Equity” shall mean as of any date of determination for any Person,
consolidated shareholders’ equity of such Person as that date determined in
accordance with GAAP.

“Special Purpose
Entity” shall mean, (a) as to each Property Guarantor, an entity that
satisfies the requirements of Section 3.6 of the related Security Instrument,
(b) as to each Mezzanine Subsidiary, an entity that satisfies the requirements
of Section 19 of the Pledge Agreement, (c) as to each Mezzanine Asset Owner and
Mezzanine Property Guarantor, an entity that satisfies the requirements of
Section 6.1 of the Loan Agreement to which such entity is a party to with Bank
of America, N.A. on the date hereof and (d) as to each Encumbered Property
Subsidiary, an entity that satisfies criteria similar to that which is set
forth in Section 3.6 of each Security Instrument and which is included in each
such Encumbered Property Subsidiary’s loan documents encumbering the related
Encumbered Property.

“State” shall mean, with respect to an Individual
Property, the State or Commonwealth in which such Individual Property or any
part thereof is located.

“Student Housing
Projects” shall mean real estate properties operated as student housing in
the United States owned by Borrower or a Subsidiary of Borrower, and “Student
Housing Project” means any one of the Student Housing Projects.

“Subsidiary” shall
mean as to any Person, a corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such 

 18
 

corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.

“Survey” shall mean,
with respect to an Individual Property, a survey prepared by a surveyor
licensed in the State where such Individual Property is located and reasonably
satisfactory to Lender and the company or companies issuing the Title Insurance
Policies, and containing a certification of such surveyor reasonably
satisfactory to Lender.

“Synthetic Lease” shall
mean as to any Person, the monetary obligation under any synthetic, off-balance
sheet, tax retention or tax leveraged lease.

“Taxes” shall mean all
real estate and personal property taxes, assessments, water rates or sewer
rents or similar charges, now or hereafter levied or assessed or imposed
against any Individual Property or part thereof.

“Tenant” shall mean any
Person leasing, subleasing or otherwise occupying any portion of the Property
under a Lease or other occupancy agreement with Borrower.

“Title Insurance Policy”
shall mean, with respect to each Individual Property, an ALTA mortgagee title
insurance policy in a form reasonably acceptable to Lender (or, if an
Individual Property is located in a State which does not permit the issuance of
such ALTA policy, such form as shall be permitted in such State and acceptable
to Lender) issued with respect to such Individual Property and insuring the
lien of the Security Instrument encumbering such Individual Property.

“Transfer” shall have
the meaning set forth in Section 5.2.10(a) hereof.

“Trust”
shall mean GMH Communities Trust, a Maryland real estate investment trust.

“Trust Guaranty”
shall mean that certain payment and performance guaranty executed and delivered
by Trust to Lender in connection with the Loan.

“UCC” or “Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect in the
State in which an Individual Property is located.

Section 1.2             Principles
of Construction.

All references to
sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified.  All uses of
the word “including” shall mean “including, without limitation” unless the
context shall indicate otherwise.  Unless
otherwise specified, the words “hereof,” “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 provision of this Agreement.  Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined.

 19
 

ARTICLE
II

GENERAL TERMS

Section 2.1             Loan
Commitment; Disbursement to Borrower.

2.1.1          Agreement
to Lend and Borrow.

Subject to and upon the
terms and conditions set forth herein, Lender hereby agrees to make and Borrower
hereby agrees to accept the Initial Advance on the Closing Date.

2.1.2          Revolving
Loan.

Subject to the terms and
conditions set forth herein, the Lender agrees to make the Loan available to
the Borrower in the aggregate principal amount of up to Two Hundred Fifty
Million Dollars ($250,000,000).  The
Borrower may borrow such amounts in cash, at any time or from time to time in
accordance with the terms of this Agreement, but only until the earliest to
occur of (a) ten (10) days before the Maturity Date or (b) such earlier date
that the Loan may be accelerated as provided in Section 8.2 hereof.
Amounts repaid may be reborrowed upon satisfaction of the requirements of Section
2.1.5 hereof.

2.1.3          The
Note, Security Instruments and Loan Documents.

The Loan shall be
evidenced by the Note and secured by the Pledge Agreement, the Guaranty and the
other Loan Documents.

2.1.4          Use
of Proceeds.

The proceeds of an
initial advance of
$                 
(“Initial Advance”) will be used by Borrower as follows: (i) to repay
any existing indebtedness of Borrower including, without limitation the Credit
Agreement dated November 8, 2004 as amended (the “Credit Agreement”) and
all costs and expenses necessary to repay all obligations under the Credit
Agreement in full, (ii) to acquire, or cause two of the Mezzanine Asset Owners
to acquire the Mezzanine Assets being acquired on the date hereof and (iii) to
pay costs and expenses incurred in connection with the closing of the Loan.
Borrower shall deliver a Notice of Borrowing to Lender in connection with the
Initial Advance.

2.1.5          Additional
Advances.

Subsequent to the date of
this Agreement and during the term of the Loan, Borrower may request one or
more additional advances for the payment of (a) general working capital costs
of the Borrower pursuant to the Sources and Uses Statement attached as Schedule
E or otherwise approved by Lender in its sole discretion, (b) 4th quarter dividends for 2006 in an aggregate
amount not to exceed $17,500,000.00 and (c) to pay 3rd quarter dividends for 2006 in an aggregate
amount not to exceed $17,500,000.00, in each case as approved by Lender in its
sole and absolute discretion (each such advance, an “Additional Advance”).  Such Additional Advances may be requested by
Borrower and shall be made, upon three (3) Business Days’ notice provided that
Borrower has satisfied the following conditions: (i) no Event of Default or 

 20
 

Default exists as of the
date of the request or the date the Additional Advance is funded, (ii) Borrower
has submitted to Lender a Notice of Borrowing and (iii) Borrower shall have
delivered an Officer’s Certificate certifying that Borrower is in compliance
with each of the covenants in Section 5.3 as of the date that the
Additional Advance is funded, that no Default or Event of Default exists and
that the Additional Advance is being made for the purposes set forth in clauses
(a) – (c) of Section 2.1.5 of this Agreement.

2.1.6          Minimum
Amounts of Additional Advances and Maximum Number of Tranches.  

With regard to the Loan
as a whole, Lender may require that all Additional Advances shall be in a
minimum amount of $1,000,000.00. 
Borrower shall not have the right to have more than five (5) distinct
Interest Periods, in the aggregate, in respect of the Loan (including all
Additional Advances to date) in effect at any one time.

2.1.7          Loan
Allocations.

Borrower and Lender agree
that the amount of the Loan allocated to the Mezzanine Collateral being pledged
with respect to each Mezzanine Asset Owner is the Mezzanine Allocated Loan
Amount set forth on Schedule B attached hereto.  Borrower and Lender agree that the amount of
the Loan allocated to each Individual Property is the Allocated Value set forth
on Schedule A attached hereto.

2.1.8          Contributions
to Certain Subsidiaries.

Borrower hereby
represents, warrants and covenants to and for the benefit of the Lender that it
will contribute (a) directly or indirectly to the  applicable Property Guarantor, a portion of
the proceeds of the Loan in the amount of the Allocated Value for the Individual
Property that such Property Guarantor owns, and such Property Owner shall be
permitted to distribute such funds as permitted under its operating agreement
and as may be directed by the Mezzanine Property Guarantor as the managing
member of the Property Guarantor, including the distribution of funds back to
the Borrower's main deposit account for which funds from all properties owned
and operated by the Borrower are held, and (b) directly or indirectly to the
applicable Mezzanine Asset Owner a portion of the proceeds of the Loan in the
amount of the Allocated Loan Amount for the Mezzanine Asset that such Mezzanine
Asset Owner is acquiring at the direction of the Mezzanine Subsidiary as its
sole member.

Section 2.2             Interest;
Extension Options; Loan Payments; Late Payment Charge.

2.2.1          Payments.

(a)           Interest.  Interest on the outstanding principal balance
of the Loan shall accrue from the Closing Date through but excluding the
Maturity Date at the Applicable Interest Rate. 
Interest shall be payable monthly in arrears on each Payment Date.  Any change in the Prime Rate shall be
automatically effective as of the day on which such change in rate occurs.  Each determination of an interest rate by
Lender pursuant to any provision of this Agreement shall be conclusive and
binding on Borrower in the absence of manifest error.

 21
 

(b)           Extension of the Initial Maturity
Date.  Borrower shall have the option
to extend the term of the Loan beyond the Initial Maturity Date for either (x)
a term of three (3) months (“Extension Option One”) to a date which is
the earlier of (1) July 2, 2007 and (2) the date specified in writing by
Borrower which shall not be later than the date that is three (3) months from
the Initial Maturity Date (such date in (1) or (2) is the “Option One Maturity
Date”) or (y) for a term of six (6) months (“Extension Option Two”)
to October 2, 2007 (each such date, the “Extended Maturity Date” and the
period from the Initial Maturity Date through the Extended Maturity Date is the
“Extension Term”). Borrower may exercise Extension Option One, upon
satisfaction of the following terms and conditions:

(i)            Borrower shall have entered into a
definitive purchase and sale agreement, asset purchase agreement or merger
agreement (or similar agreement for the direct or indirect acquisition of the
assets (or a substantial portion thereof) of Borrower) with an unaffiliated
third party (except that investors in such third party may include existing
limited partners in the Borrower and shareholders in the Trust) (the “Acquiror”)
pursuant to which the Acquiror has committed to the purchase and acquisition of
Borrower or all or substantially all of Borrower’s assets or the equity
interests in Borrower (any of the foregoing, an “Acquisition Transaction”);

(ii)           the Acquisition Transaction shall
have been approved by the Board of Trustees of the Trust;

(iii)          the Acquisition Transaction shall not
be subject to any financial contingencies or the ability of the Acquiror to
obtain financing;

(iv)          the Acquisition Transaction shall only
be subject to shareholder, governmental and regulatory approval, to the extent
applicable to such Acquisition Transaction;

(v)           Borrower shall have made an
announcement to the general public of the Acquisition Transaction;

(vi)          Lender shall have determined in its
sole discretion based on a sources and uses statement for the Acquisition
Transaction, that (a) if the Acquisition Transaction is in the form of a sale
of assets in exchange for cash, the proceeds of the Acquisition Transaction
shall be sufficient to pay the Obligations in full or (b) if the Acquisition
Transaction is to be consummated by the delivery of some other form of
consideration other than cash (i.e., a stock-for-stock or cash-for-stock
merger), Lender receives confirmation acceptable to Lender that upon
consummation of the Acquisition Transaction the Loan will be repaid in full;

(vii)         no Event of Default shall have occurred
and be continuing at the time Extension Option One is exercised nor on the date
that the Extension Term commences;

 22
 

(viii)        Borrower shall notify Lender of its
election to extend the Initial Maturity Date as aforesaid not earlier than
ninety (90) days and no later than fifteen (15) days prior to the Initial
Maturity Date;

(ix)           Borrower shall have delivered to
Lender an Officer’s Certificate in form reasonably acceptable to the Lender
certifying that no Event of Default exists, such Officer’s Certificate to be
delivered not later than five (5) Business Days from the date that conditions (i)-(vi)
above are satisfied;

(x)            Borrower and Lender shall execute
and deliver to each other any documents reasonably required to evidence the
Extension Term, together with any opinions reasonably required by Lender in
connection therewith (which opinions shall be in substantially the same form as
the opinions delivered in connection with the closing of the Loan), documents
to be delivered not later than five (5) Business Days from the date that
conditions (i)-(vi) above are satisfied; and

(xi)           each of the representations and
warranties set forth in the Loan Documents shall be true and correct as of the
first day of the Extension Term and shall be deemed remade as of the first day
of the Extension Term.

In the event (y) that Extension Option One is not
exercised or the requirements set forth in clauses (i)-(xi) above are not
satisfied on or prior to the Initial Maturity Date or (z) that Extension Option
One has been exercised by Borrower and the Acquisition Transaction has not been
consummated, Borrower may exercise Extension Option Two, upon satisfaction of
the following terms and conditions, provided, that, Extension Option Two shall
have a term of three (3) months if Extension Option Two is being exercised
pursuant to clause (z) immediately preceding:

(A)          No Event of Default shall have
occurred and be continuing at the time Extension Option Two is exercised nor on
the date that the Extension Term commences;

(B)           Borrower shall notify Lender of its
election to extend the Maturity Date as aforesaid not earlier than ninety (90)
days and no later than fifteen (15) days prior to the later of the Initial
Maturity Date or the Option One Maturity Date, as the case may be;

(C)           Borrower shall have delivered to
Lender an Officer’s Certificate in form reasonably acceptable to the Lender
certifying that no Event of Default exists;

(D)          Borrower and Lender shall execute and
deliver to each other any documents reasonably required to evidence the
Extension Term, together with any opinions reasonably required by Lender in
connection therewith (which opinions shall be in substantially the same form as
the opinions delivered in connection with the closing of the Loan);

 23
 

(E)           Borrower shall have paid to Lender a
fee in an amount equal to 2.00% of the outstanding principal balance of the
Loan as of the Initial Maturity Date or the Option One Maturity Date, as the
case may be;

(F)           each of the representations and
warranties set forth in the Loan Documents shall be true and correct as of the
first day of the Extension Term and shall be deemed remade as of the first day
of the Extension Term; and

(G)           Borrower shall enter into definitive
documentation with Lender setting up a lockbox and cash management system
acceptable to Lender in its sole and absolute discretion subject, however, to
existing cash management arrangements that the Encumbered Property Subsidiaries
and Mezzanine Asset Owners are subject to at such time pursuant to their
respective mortgage loan documents.

Notwithstanding any notice given from Borrower to
extend the Initial Maturity Date as provided for herein, Borrower may at any
time prior to the later of the Initial Maturity Date or the Option One Maturity
Date, as the case may be, terminate the applicable extension notice without
penalty or premium by delivering written notice to Lender, provided,
that Borrower shall pay to Lender all of Lender’s reasonable out-of-pocket
costs and expenses associated with the anticipated extension.

All references in this
Agreement and in the other Loan Documents to the Maturity Date shall mean the
applicable Extended Maturity Date in the event that either Extension Option One
or Extension Option Two Option is exercised.

In no event shall the
Extended Maturity Date be later than October 2, 2007.

2.2.2          Interest
Calculation.

Interest on the
outstanding principal balance of the Loan shall be calculated by multiplying
(a) the actual number of days elapsed in the period for which the calculation
is being made by (b) a daily rate equal to the Applicable Interest Rate divided
by three hundred sixty (360) by (c) the outstanding principal balance. 

2.2.3          Eurodollar
Rate Unascertainable; Illegality; Increased Costs.

(a)           (i) 
In the event that Lender shall have determined (which determination
shall be conclusive and binding upon Borrower absent manifest error) that by
reason of circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining LIBOR, then Lender shall
forthwith give, as soon as reasonably practicable, notice by telephone of such
determination, to Borrower at least five (5) Business Days prior to the last
day of the related Interest Period, with a written confirmation of such
determination promptly thereafter.  If
such timely notice is given, the Loan shall bear interest at the Adjusted Prime
Rate beginning on the first day of the next succeeding Interest Period. (ii)
If, pursuant to the terms of this Section ‎2.2.3(a),  the Loan is bearing interest at the Adjusted
Prime Rate and Lender shall determine (which determination shall be conclusive
and binding upon Borrower absent manifest error) 

 24
 

that the event(s) or circumstance(s) which resulted in
such conversion shall no longer be applicable, Lender shall give notice thereof
to Borrower by telephone of such determination, confirmed in writing, to
Borrower as soon as reasonably practical, but in no event later than five (5)
Business Days prior to the last day of the then current Interest Period.  If such timely notice is given, the Loan
shall bear interest at the Eurodollar Rate beginning on the first day of the
next succeeding Interest Period. 
Notwithstanding any provision of this Agreement to the contrary, in no
event shall Borrower have the right to elect to have the Loan bear interest at
either the Eurodollar Rate or the Adjusted Prime Rate.

(b)           If any requirement of law or any change
therein or in the interpretation or application thereof, shall hereafter make
it unlawful for Lender in good faith to make or maintain the portion of the
Loan bearing interest at the Eurodollar Rate, (I) the obligation of Lender
hereunder to make the Loan bearing interest at the Eurodollar Rate shall be
canceled forthwith and (II) the Loan shall automatically bear interest at the
Adjusted Prime Rate on the next succeeding Payment Date or within such earlier
period as required by Applicable Law. 
Borrower hereby agrees promptly to pay Lender (within ten (10) Business
Days of Lender’s written demand therefor), any additional amounts necessary to
compensate Lender for any reasonable costs incurred by Lender in making any
conversion in accordance with this Agreement, including, without limitation,
any interest or fees payable by Lender to lenders of funds obtained by it in
order to make or maintain the Loan hereunder. 
Upon written demand from Borrower, Lender shall demonstrate in
reasonable detail the circumstances giving rise to Lender’s determination and
the calculation substantiating the Adjusted Prime Rate and any additional
third-party costs incurred by Lender in making the conversion.  Lender’s written notice of such costs, as
certified to Borrower, shall be conclusive absent manifest error.

(c)           In the event that any change in any
requirement of any Applicable Law or in the interpretation or application
thereof, or compliance in good faith by Lender with any request or directive
(whether or not having the force of law) hereafter issued from any Governmental
Authority which is generally applicable to all Lenders subject to such
Governmental Authority’s jurisdiction:

(i)            shall hereafter impose, modify or
hold applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of Lender which is not otherwise included
in the determination of LIBOR hereunder;

(ii)           shall, if the Loan is then bearing
interest at the Eurodollar Rate, hereafter have the effect of reducing the rate
of return on Lender’s capital as a consequence of its obligations hereunder to
a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender’s policies with respect
to capital adequacy) by any amount deemed by Lender to be material; or

 25
 

(iii)          shall, if the Loan is then bearing
interest at the Eurodollar Rate, hereafter impose on Lender any other
condition, the result of which is to increase the cost to Lender of making,
renewing or maintaining loans or extensions of credit or to reduce any amount
receivable hereunder;

then, in any such case,
Borrower shall promptly pay Lender (within ten (10) days of Lender’s written
demand therefor), any additional amounts necessary to compensate Lender for
such additional cost or reduced amount receivable which Lender deems to be
material.  If Lender becomes entitled to
claim any additional amounts pursuant to this Section ‎2.2.3(c),
Lender shall provide Borrower with written notice specifying in reasonable
detail the event or circumstance by reason of which it has become so entitled
and the additional amount required to fully compensate Lender for such
additional cost or reduced amount.  A
certificate as to any additional costs or amounts payable pursuant to the
foregoing sentence submitted by Lender to Borrower shall be conclusive absent
manifest error.  This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Borrower under the Note, this Agreement and the other Loan Documents.

(d)           Borrower agrees to indemnify Lender
and to hold Lender harmless from any actual third-party out-of-pocket loss or
expense which Lender sustains or incurs as a consequence of (I) any default by
Borrower in payment of the principal of or interest on the Loan while bearing
interest at the Eurodollar Rate, including, without limitation, any such loss
or expense arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain the Eurodollar Rate, (II) any prepayment
(whether voluntary or mandatory) of the Loan on a day that is not the day
immediately following the last day of an Interest Period with respect thereto and
(III) the conversion (for any reason whatsoever, whether voluntary or
involuntary) of the Applicable Interest Rate from the Eurodollar Rate to the
Adjusted Prime Rate with respect to any portion of the outstanding principal
amount of the Loan then bearing interest at the Eurodollar Rate on a date other
than the day immediately following the last day of an Interest Period (the
amounts referred to in clauses (I), (II) and (III) are herein referred to
collectively as the “Breakage Costs”). 
This provision shall survive payment of the Note and the satisfaction of
all other obligations of Borrower under this Agreement and the other Loan
Documents.

2.2.4          Payment
on Maturity Date.

Borrower shall pay to
Lender on the Maturity Date the outstanding principal balance, all accrued and
unpaid interest thereon, and all other amounts due hereunder and under the
Note, the Security Instruments and the other Loan Documents. 

2.2.5          Payments
after Default.

Upon the occurrence and
during the continuance of an Event of Default, (a) interest on the outstanding
principal balance of the Loan and, to the extent permitted by Applicable Law,
overdue interest and other amounts due in respect of the Loan, shall accrue at
the Default Rate, calculated from the date such payment was due without regard
to any grace or cure periods contained herein and (b) interest at the Default
Rate shall be computed from the 

 26
 

occurrence of the default
until the actual receipt and collection of the Debt (or that portion thereof
that is then due).  To the extent
permitted by Applicable Law, interest at the Default Rate shall be added to the
Debt, shall itself accrue interest at the same rate as the Loan and shall be
secured by the Pledge Agreement and the Guaranty.  This paragraph shall not be construed as an
agreement or privilege to extend the date of the payment of the Debt, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.

2.2.6          Late
Payment Charge.

If any principal,
interest or any other sums due under the Loan Documents (other than the payment
of principal due on the Maturity Date) is not paid by Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand an amount equal to
the lesser of four percent (4%) of such unpaid sum or the maximum amount
permitted by Applicable Law in order to defray the expense incurred by Lender
in handling and processing such delinquent payment and to compensate Lender for
the loss of the use of such delinquent payment. 
Any such amount shall be secured by the Pledge Agreement, the Guaranty
and the other Loan Documents to the extent permitted by Applicable Law.

2.2.7          Usury
Savings.

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 of the Loan at a
rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal
Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of
the interest due hereunder.  All sums
paid or agreed to be paid to Lender for the use, forbearance, or detention of
the sums due under the Loan, shall, to the extent permitted by Applicable Law,
be amortized, prorated, allocated, and spread throughout the full stated term
of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Legal Rate of interest from
time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.

2.2.8          Indemnified
Taxes.

(a)           All payments made by Borrower
hereunder shall be made free and clear of, and without reduction for or on
account of, Indemnified Taxes, excluding (i) Indemnified Taxes measured by
Lender’s net income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which Lender is resident or organized, or any political
subdivision thereof, (ii) taxes measured by Lender’s overall net income, and
franchise taxes imposed on it, by the jurisdiction of Lender’s applicable
lending office or any political subdivision thereof or in which Lender is
resident or engaged in business, and (iii) withholding taxes imposed by the
United States of America, any state, commonwealth, protectorate territory or
any political subdivision or taxing authority 

 27
 

thereof or therein as a result of the failure of Lender
which is a Non-U.S. Entity to comply with the terms of paragraph (b)
below.  If any non excluded Indemnified
Taxes are required to be withheld from any amounts payable to Lender hereunder,
the amounts so payable to Lender shall be increased to the extent necessary to
yield to Lender (after payment of all non excluded Indemnified Taxes) interest
or any such other amounts payable hereunder at the rate or in the amounts
specified hereunder.  Whenever any non
excluded Indemnified Tax is payable pursuant to Applicable Law by Borrower,
Borrower shall send to Lender an original official receipt showing payment of
such non excluded Indemnified Tax or other evidence of payment reasonably
satisfactory to Lender.  Borrower hereby
indemnifies Lender for any incremental taxes, interest or penalties that may
become payable by Lender which may result from any failure by Borrower to pay
any such non excluded Indemnified Tax when due to the appropriate taxing
authority or any failure by Borrower to remit to Lender the required receipts
or other required documentary evidence.

(b)           In the event that Lender or any
successor and/or assign of Lender is not incorporated under the laws of the
United States of America or a state thereof (a “Non-U.S. Entity”) Lender
agrees that, prior to the first date on which any payment is due such entity
hereunder, it will deliver to Borrower two duly completed copies of United
States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable
form, as the case may be, certifying in each case that such entity is entitled
to receive payments under the Note, without deduction or withholding of any
United States federal income taxes.  Each
entity required to deliver to Borrower a Form W-8BEN or W-8ECI pursuant to the
preceding sentence further undertakes to deliver to Borrower two further copies
of such forms, or successor applicable forms, or other manner of certification,
as the case may be, on or before the date that any such form expires (which, in
the case of the Form W-8ECI, is the last day of each U.S. taxable year of the
Non-U.S. Entity) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to
Borrower, and such other extensions or renewals thereof as may reasonably be
requested by Borrower, certifying in the case of a Form W-8BEN or W-8ECI that
such entity is entitled to receive payments under the Note without deduction or
withholding of any United States federal income taxes, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such entity from duly completing and delivering any such form with
respect to it and such entity advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States
federal income tax.

Section 2.3             Prepayments.

2.3.1          Voluntary
Prepayments.

Except as otherwise
expressly provided herein, Borrower shall have the right to prepay the Loan in
whole or in part at any time provided that:

 28
 

(a)           Borrower shall provide prior written
notice to Lender specifying the date (the “Prepayment Date”) upon which
the prepayment is to be made, which notice shall be delivered to Lender not
less than five (5) days prior to such payment; and

(b)           Borrower shall pay to Lender,
simultaneously with such prepayment, (i) all accrued and unpaid interest
calculated at the Applicable Interest Rate on the amount of principal being
prepaid through and including the Prepayment Date (or if the Prepayment Date is
a Payment Date, excluding the Prepayment Date if such payment is made in
accordance with Section 2.3.4 hereof), (ii) Breakage Costs, if any,
without duplication of any sums paid pursuant to the preceding clause (i); and
(iii) upon repayment of the Loan as a whole, all other sums then due under this
Agreement, the Note or the other Loan Documents.

If a notice of prepayment
is given by Borrower to Lender pursuant to this Section 2.3.1, the
amount designated for prepayment and all other sums required under this Section
2.3.1 shall be due and payable on the Prepayment Date.  Notwithstanding any notice of prepayment
given by Borrower, Borrower may at any time prior to the Prepayment Date
terminate the applicable prepayment notice without penalty or premium by
delivering written notice to Lender, provided, that Borrower shall pay
to Lender all of Lender’s reasonable out-of-pocket costs and expenses
associated with the anticipated prepayment. 

2.3.2          Mandatory
Prepayments.

(a)           On each date on which Borrower
actually receives any Net Proceeds, if Lender is not obligated and elects not
to make such Net Proceeds available to Borrower for the restoration of the
Property pursuant to Section 6.4, Borrower shall prepay the outstanding
principal balance of the Note in an amount equal to one hundred percent (100%)
of such Net Proceeds not made available by Lender for restoration and Lender
shall apply such Net Proceeds to the reduction of the Debt when received.  To the extent Net Proceeds not made available
by Lender for restorations with respect to an Individual Property are less than
the Allocated Value for such Individual Property, any amount so applied against
the Debt shall be deemed credited against the Allocated Value for such
Individual Property. 

(b)           On each date on which Borrower, any
Mezzanine Subsidiary, Mezzanine Asset Owner or Encumbered Property Subsidiary
actually receives any Capital Proceeds (other than Capital Proceeds received
with respect to the Refinancing of (i) the Encumbered Property referred to as
“University Crossings” located in Philadelphia, Pennsylvania and (ii) the
Mezzanine Assets referred to as Orchard Trails and The Enclave II and located
in Orono, Maine and Bowling Green, Ohio, respectively), Borrower shall, without
limiting the provisions of Sections 2.4 and 2.5 hereof, prepay
the outstanding principal balance of the Note in an amount equal to one hundred
percent (100%) of such Capital Proceeds, provided, that, with respect to
Capital Proceeds received in connection with a sale or Refinance of an
Encumbered Property, such Capital Proceeds shall not be less than, and Borrower
shall prepay the Loan in the minimum amount of, the applicable Encumbered
Property Allocated Value.  Lender shall
apply all such Capital Proceeds to the reduction of the Debt on the date
received if 

 29
 

received prior to 2:00 p.m., Charlotte, North Carolina
time, or on the first (1st) Business Day following the date of its receipt
thereof if received after 2:00 p.m., Charlotte, North Carolina time.

(c)           On the closing date of an Acquisition
Transaction, the Debt shall be repaid in full notwithstanding that the Maturity
Date may not yet have occurred.

2.3.3          Making
of Payments.

Each payment by Borrower
hereunder or under the Note shall be made in funds settled through the New York
Clearing House Interbank Payments System or other funds immediately available
to Lender by 2:00 p.m., Charlotte, North Carolina time, on or prior to the date
such payment is due, to Lender by deposit to such account as Lender may
designate by written notice to Borrower, which notice shall include wire
transfer instructions and shall be delivered to Borrower at least five (5) Business
Days prior to any change becoming effective. 
Whenever any payment hereunder or under the Note shall be stated to be
due on a day which is not a Business Day, such payment shall be made on the
first Business Day preceding such scheduled due date.

2.3.4          Application
of Prepayments.

All prepayments received
pursuant to ‎Section 2.3 shall be applied first, to interest on
the outstanding principal balance being prepaid that accrued through and
including the Prepayment Date, and second, to the payments of principal due
under the Loan in the inverse order of maturity.

Section 2.4             Prohibition
on Sale of Individual Property(ies). 

Borrower shall not permit
any Property Guarantor to sell the Individual Property that it owns unless and
until each of the following conditions are satisfied:

(a)           Borrower and the related Property Guarantor
shall provide Lender with at least twenty (20) days but no more than sixty (60)
days prior written notice of its request to obtain a release of the Individual
Property.  Notwithstanding any notice
given from Borrower and the related Property Guarantor to request a release of
an Individual Property, Borrower may at any time prior to the actual release of
such Individual Property terminate the applicable request notice without
penalty or premium by delivering written notice to Lender, provided, that Borrower
shall pay to Lender all of Lender’s reasonable actual out-of-pocket costs and
expenses associated with the anticipated release;

(b)           Lender shall have received a wire
transfer of immediately available federal funds in an amount equal to the
greater of (x) the applicable Release Price and (y) Capital Proceeds with
respect to such Individual Property, less any proceeds of casualty or
condemnation retained by Lender for the applicable Individual Property,
together with (i) all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid through and including
the Prepayment Date, (ii) Breakage Costs, if any, without duplication of any
sums paid pursuant to the 

 30
 

preceding clause (i); and (iii) all other sums due
under this Agreement, the Note or the other Loan Documents in connection with a
partial prepayment;

(c)           Borrower shall submit to Lender, not
less than five (5) Business Days prior to the date of such release, a release
of Lien of the applicable Security Instrument 
for such Individual Property for execution by Lender.  Such release shall be in a form appropriate
in each State in which the Individual Property is located and shall contain
standard provisions, if any, protecting the rights of the releasing
lender.  In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in order to evidence compliance with the requirements set forth in
this Section 2.4.  In the event
that Borrower fails to provide Lender such release of Lien, Lender shall, upon
satisfaction of all the other requirements set forth in this subsection (c),
deliver to Borrower such release in such form reasonably acceptable to Lender;

(d)           In the event that the applicable
Mezzanine Property Guarantor owning an interest in the applicable Property
Guarantor obtaining a release of the Lien of the related Security Instrument
shall continue to own an interest in any other Property Guarantor owning any
Individual Property still encumbered by a Security Instrument (after giving
effect to such release), such Mezzanine Property Guarantor shall transfer any
interest it owns in the applicable Borrower obtaining such release to a Person
other than Borrower or Mezzanine Property Guarantor;

(e)           Lender shall have received payment of
all Lender’s reasonable third-party costs and expenses and reasonable counsel
fees and disbursements incurred in connection with the release of the
Individual Property from the lien of the related Security Instrument and the
review and approval of the documents and information required to be delivered
in connection therewith; and

(f)            In the event the Individual Property
is being released in connection with a Refinancing of such Individual Property,
Borrower shall have paid to Lender a fee in the amount of one percent (1%) of
the principal amount of the Loan being repaid if such Refinancing is not funded
or placed by Lender or an Affiliate of Lender. 

Section 2.5             Prohibition
on Sale of Mezzanine Assets.  

Borrower shall not permit
any Mezzanine Subsidiary to cause or permit the applicable Mezzanine Asset
Owner to sell such Mezzanine Asset unless and until each of the following
conditions are satisfied:

(a)           Borrower and the related Mezzanine
Subsidiary shall provide Lender with at least twenty (20) days but no more than
sixty (60) days prior written notice of its request to obtain a release of the
pledge of the direct or indirect equity interests in any Mezzanine Subsidiary,
Mezzanine Property Guarantor or Mezzanine Asset Owner (any such collateral, the
“Mezzanine Collateral”) related to a Mezzanine Asset that is the subject
of a Capital Event.  Notwithstanding any
notice given from Borrower and a Mezzanine Subsidiary to request a release of
Mezzanine Collateral, Borrower may at 

 31
 

any time prior to the actual release of such Mezzanine
Collateral terminate the applicable request notice without penalty or premium
by delivering written notice to Lender, provided, that Borrower shall pay to
Lender all of Lender’s reasonable actual out-of-pocket costs and expenses
associated with the anticipated release of the Mezzanine Collateral;

(b)           Lender shall have received a wire
transfer of immediately available federal funds in an amount equal to the
greater of (x) the applicable Mezzanine Collateral Release Price and (y) the
Capital Proceeds with respect to such Mezzanine Asset, together with (i) all
accrued and unpaid interest calculated at the Applicable Interest Rate on the
amount of principal being prepaid through and including the Prepayment Date,
(ii) Breakage Costs, if any, without duplication of any sums paid pursuant to
the preceding clause (i); and (iii) all other sums due under this Agreement,
the Note or the other Loan Documents in connection with a partial prepayment;

(c)           Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in order
to evidence compliance with the requirements set forth in this Section 2.5.  Lender shall, upon satisfaction of all the
other requirements set forth in this Section 2.5, deliver to Borrower a
release of the Mezzanine Collateral, such release to be in form reasonably
acceptable to Lender; and

(d)           Lender shall have received payment of
all Lender’s reasonable third-party costs and expenses and reasonable counsel
fees and disbursements incurred in connection with the release of the
Individual Property from the lien of the related Security Instrument and the
review and approval of the documents and information required to be delivered
in connection therewith.

Section 2.6             No
Offsets.  

The Borrower hereby
waives the right to assert a counterclaim in any action or proceeding brought
against it by Lender or their agents or otherwise to offset any obligations to
make the payments required by the Loan Documents.  No failure by Lender to perform any of its
obligations hereunder shall be a valid defense to, or result in any offset
against, any payments which Borrower is obligated to make under any of the Loan
Documents.  The Obligations of Borrower
under this Agreement and the other Loan Documents shall not be reduced,
discharged or released because or by reason of any existing or future offset,
claim or defense of Borrower, or any other party, against the Lender by reason
of the Lender's failure to perform its obligations under this Agreement,
including, without limitation, the failure of the Lender to fund any Additional
Advance.  The Borrower hereby acknowledges
the Borrower shall have no claim against any subsequent holder of the funded
portion of the Loan for any Additional Advance not funded by the Lender.  

 32

ARTICLE
III

RESERVED

ARTICLE
IV

REPRESENTATIONS AND
WARRANTIES

Section 4.1             Borrower
Representations.

Borrower for itself and
for each Key Entity (where applicable in this Article IV) represents and
warrants that:

4.1.1        Organization.

Each of the Key Entities
and the Encumbered Property Subsidiaries is duly organized and is validly
existing and in good standing in the jurisdiction in which it is organized,
with requisite power and authority to transact the businesses in which it is
now engaged.  Each Key Entity possesses
all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to transact the businesses in which it is now
engaged.  Each Encumbered Property
Subsidiary possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to transact the businesses
in which it is now engaged, except to the extent such failure is not reasonably
likely to have a Material Adverse Effect. 
Attached hereto as Schedule 4.1.1 is a true, correct and complete
organizational chart of Borrower, each of the Key Entities, and each of the
Encumbered Property Subsidiaries.

4.1.2        Proceedings.

Each of the Key Entities
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents to the extent such
Key Entity is a party thereto.  This
Agreement and the other Loan Documents have been duly executed and delivered by
or on behalf of each of the Key Entities, to the extent such Key Entity is a
party thereto.

4.1.3        No
Conflicts.

The execution, delivery
and performance of this Agreement and the other Loan Documents by Borrower and
the Key Entities that are a party thereto will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any Lien, charge or encumbrance (other
than pursuant to the Loan Documents) upon any of the property or assets of such
Key Entity pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement, partnership agreement, management agreement, or other agreement
or instrument to which such Key Entity is a party or by which any of such Key
Entity’s property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over a Key Entity
or any of the Properties or Mezzanine Assets or any of any Key Entity’s other
assets, or any license or other approval required to operate the

 33
 

Properties or Mezzanine
Assets, and any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution,
delivery and performance by each Key Entity (to the extent a party thereto) of
this Agreement or any other Loan Documents have been obtained and is in full
force and effect.

4.1.4        Litigation.

As of the date hereof,
except as set forth on Schedule 4.1.4 attached hereto, there are no actions,
suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened in writing against or
affecting (i) any Key Entity or any Individual Property or Mezzanine Asset
which are, individually or in the aggregate, 
reasonably likely to materially adversely affect the financial condition
or business of any Key Entity or the condition or ownership of any Individual
Property, Mezzanine Asset or Encumbered Property, and (ii) any of the
Encumbered Property Subsidiaries or Encumbered Properties which are,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the financial condition or business of the Encumbered Property
Subsidiaries or the condition or ownership of the Encumbered Properties.

4.1.5        Agreements.

No Key Entity is in
default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
or instrument to which it is a party or by which such Key Entity or any of the
Properties or Mezzanine Assets is bound which might materially and adversely
affect any Key Entity or any Individual Property or Mezzanine Asset.  No Encumbered Property Subsidiary is in
default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
or instrument to which it is a party or by which such Encumbered Property
Subsidiary or Encumbered Property is bound which might have a Material Adverse
Effect  on the Encumbered Property
Subsidiaries or the Encumbered Properties. 
Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which
Borrower is a party or by which Borrower or any Property Guarantor, Mezzanine
Asset Owner, Individual Property or Mezzanine Asset is otherwise bound, other
than (a) obligations incurred in the ordinary course of the operation of such
Individual Property or Mezzanine Asset, (b) obligations set forth in the
Permitted Encumbrances and (c) obligations under the Loan Documents.  No Key Entity has any material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Key Entity is a party or by which
such Key Entity or any Mezzanine Asset is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of such Individual
Property or Mezzanine Asset and (b) obligations of such Key Entity under the
Loan Documents or the loan documents with respect to the related Mezzanine
Asset which have been disclosed to Lender prior to the date hereof.  No Encumbered Property Subsidiary has any
material financial obligation under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which such Encumbered
Property Subsidiary is a party or by which such Encumbered Property Subsidiary
or any related Encumbered Property is otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of such Encumbered Property
and (b) obligations of such Encumbered Property Subsidiary under the loan
documents with respect to the related Encumbered Property 

 34
 

which have been disclosed
to Lender prior to the date hereof, and except to the extent would not have a
Material Adverse Effect.

4.1.6        Solvency.

Borrower (a) has not
entered into the transaction or executed the Note, this Agreement or any other
Loan Documents with the actual intent to hinder, delay or defraud any creditor
and (b) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. 
Giving effect to the Loan, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the making of the Loan, exceed Borrower’s
total liabilities, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities. 
Borrower’s assets do not and, immediately following the making of the
Loan will not, constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. 
Borrower does not intend to incur debt and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debt and liabilities as they mature (taking into account the timing and amounts
of cash to be received by Borrower and the amounts to be payable on or in
respect of obligations of Borrower).  No
petition under the Bankruptcy Code or similar state bankruptcy or insolvency
law has been filed against Borrower or any constituent Person in the last seven
(7) years, and neither Borrower nor any constituent Person in the last seven
(7) years has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors.  Borrower is not contemplating either the
filing of a petition by it under the Bankruptcy Code or similar state
bankruptcy or insolvency law or the liquidation of all or a major portion of
Borrower’s assets or property, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it.

4.1.7        OFAC.

Borrower represents and
warrants that no Key Entity, no Encumbered Property Subsidiary nor any
Guarantor nor any of their respective Affiliates is a Prohibited Person, and
each Key Entity, Encumbered Property Subsidiary and Guarantor and their
respective Affiliates are in full compliance with all applicable orders, rules,
regulations and recommendations of The Office of Foreign Assets Control of the
U.S. Department of the Treasury.

4.1.8        No
Plan Assets.

Borrower is not a Plan,
and none of the assets of Borrower constitute or will constitute “Plan Assets”
of one or more Plans.  In addition, (a)
Borrower is not a “governmental plan” within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to State
statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.

4.1.9        Compliance.

Each Key Entity and each
of the Properties and the Mezzanine Assets and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without
limitation, all Environmental Laws, building and zoning ordinances and codes.
Each

 35
 

Encumbered Property
Subsidiary and each Encumbered Property and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without
limitation, all Environmental Laws, building and zoning ordinances and codes
except to the extent and such non-compliance would not have a Material Adverse
Effect. No Key Entity is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority which could have a
material adverse affect on any Key Entity or any of the Properties or the
Mezzanine Assets.  None of the Encumbered
Property Subsidiaries are in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority which is reasonably
likely to have a Material Adverse Effect. 
There has not been committed by any Key Entity or to Borrower’s
knowledge, any other Person in occupancy of or involved with the operation or
use of the Properties or the Mezzanine Assets any act or omission affording the
federal government or any other Governmental Authority the right of forfeiture
as against any of the Individual Properties or the Mezzanine Assets or any part
thereof or any monies paid in performance of Borrower’s obligations under any
of the Loan Documents.  There has not
been committed by any Encumbered Property Subsidiary any act or omission
affording the federal government or any other Governmental Authority the right
of forfeiture as against any of the Encumbered Properties or any part thereof
or any monies paid in performance of Borrower’s obligations under any of the
Loan Documents, except to the extent would not have a Material Adverse Effect.

4.1.10      Financial
Information.

All financial data,
including, without limitation, the consolidated statements of cash flow and
consolidated income and operating expense, that have been delivered to Lender
in respect of any of the Key Entities and any of the Encumbered Property
Subsidiaries (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the applicable Key Entities or
Encumbered Property Subsidiaries, as applicable, as of the date of such
reports, and (iii) have, if applicable, been prepared in accordance with GAAP
(subject, as to any interim statements, to year-end adjustments and the absence
of footnotes)  throughout the periods covered,
except as disclosed therein.  Except for
Permitted Encumbrances, (i) no Key Entity has any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Borrower and reasonably likely to have a materially adverse effect on
any Individual Property or Mezzanine Asset or the operation thereof as
residential buildings containing other appurtenant and related uses, and (ii)
none of the Encumbered Property Subsidiaries has any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Borrower and, individually or in the aggregate, are reasonably likely
to have a materially adverse effect on the Encumbered Properties, taken as a
whole, or the operation thereof as residential buildings containing other
appurtenant and related uses, except as referred to or reflected in said
financial statements.  Since the date of
such financial statements, there has been no material adverse change in the
financial condition, operations or business of any Key Entity from that set
forth in such entity’s financial statements, and there has been no material
adverse change in the financial condition, operations or business of the
Encumbered Property Subsidiaries, taken as a whole, from that set forth in such
entities’ financial statements.

 36
 

4.1.11      Condemnation.

No Condemnation or other
similar proceeding has been commenced or, is threatened or contemplated in
writing with respect to all or any portion of any Individual Property,
Mezzanine Asset or Encumbered Property or for the relocation of roadways
providing access to any Individual Property, Mezzanine Asset or Encumbered
Property.

4.1.12      Federal
Reserve Regulations.

No part of the proceeds
of the Loan will be used for the purpose of purchasing or acquiring any “margin
stock” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements or by the terms and
conditions of this Agreement or the other Loan Documents.

4.1.13      Utilities
and Public Access.

(a)           Each tenant-occupied Individual
Property and Mezzanine Asset has rights of access to public ways and is served
by public water, sewer, sanitary sewer and storm drain facilities adequate to
service such Individual Property or Mezzanine Asset, as the case may be, for
its respective intended uses.  All public
utilities necessary or convenient to the full use and enjoyment of each
Individual Property and Mezzanine Asset are located either in the public right-of-way
abutting each Individual Property or  Mezzanine
Asset (which are connected so as to serve each Individual Property or  Mezzanine Asset, as the case may be, without
passing over other property) or in recorded easements serving each Individual
Property or Mezzanine Asset.  All roads
necessary for the use of each Individual Property, Mezzanine Asset and
Encumbered Property for their current respective purposes have been completed,
are physically open and are dedicated to public use and have been accepted by
all Governmental Authorities.

(b)           Each tenant-occupied Encumbered
Property has rights of access to public ways and is served by public water,
sewer, sanitary sewer and storm drain facilities adequate to service such
Encumbered Property for its intended uses except to the extent any failure to have
such rights and service would not have a Material Adverse Effect.  All public utilities necessary or convenient
to the full use and enjoyment of each Encumbered Property are located either in
the public right of way abutting each Encumbered Property (which are connected
so as to serve each Encumbered Property without passing over other property) or
in recorded easements serving each Encumbered Property except to the extent
that such failure for such utilities to be so located would not have a Material
Adverse Effect.

4.1.14      Not
a Foreign Person.

Borrower is not a “foreign
person” within the meaning of §1445(f)(3) of the Code.

 37
 

4.1.15      Separate Lots.

Each Individual Property
is comprised of one (1) or more parcels which constitute a separate tax lot or
lots and does not constitute a portion of any other tax lot not a part of such
Individual Property.

4.1.16      Assessments.

As of the date hereof, to
the best of Borrower’s knowledge, there are no pending or proposed special or
other assessments for public improvements or otherwise affecting any Individual
Property, nor are there any contemplated improvements to any Individual
Property that may result in such special or other assessments.

4.1.17      Enforceability.

The Loan Documents are
not subject to any right of rescission, set-off, counterclaim or defense
by any Key Entity that is a party thereto, including the defense of usury, and
no Key Entity has asserted any right of rescission, set-off, counterclaim
or defense with respect thereto.

4.1.18      No
Prior Assignment.

There are no prior
assignments of the Leases or any portion of the Rents due and payable or to
become due and payable which are presently outstanding.

4.1.19      Insurance.

Borrower has obtained and
has delivered to Lender insurance abstracts and certificates of insurance
reasonably acceptable to Lender, reflecting the insurance coverages, amounts
and other requirements set forth in this Agreement.  Borrower, and to the best of Borrower’s
knowledge, no other Person, has done, by act or omission, anything which would
materially impair the coverage of any such policy.

4.1.20      Use
of Property.

Each Individual Property
is substantially used exclusively for student housing. Each Mezzanine Asset is
substantially used exclusively for student housing.

4.1.21      Certificate
of Occupancy; Licenses.

Each Key Entity, to the
extent the owner of a property, has obtained and shall keep and maintain all
material certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of each Individual Property, Mezzanine Asset
and Encumbered Property  by the
applicable Key Entity as student housing and other appurtenant and related
uses.

 38
 

4.1.22      Flood Zone.

Either (a) none of the
Improvements on any Individual Property or Mezzanine Asset are located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards or (b) the flood insurance required pursuant to ‎Section
6.1(a)(vii) is in full force and effect with respect to each such
Individual Property or Mezzanine Asset. To Borrower’s knowledge, either (a)
none of the Improvements on any Encumbered Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special
flood hazards or (b) the flood insurance required by the related Encumbered
Property Subsidiary’s mortgage loan documents is in full force and effect.

4.1.23      Physical
Condition.

(a)           Each Individual Property and
Mezzanine Asset, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment,
elevators, exterior sidings and doors, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in all material
respects.  There exists no structural or
other material defects or damages in any Individual Property or Mezzanine
Asset, whether latent or otherwise and neither Borrower nor any Mezzanine Asset
Owner has received written notice from any insurance company or bonding company
of any defects or inadequacies, whether latent or otherwise, in any Individual
Property or Mezzanine Asset, or any part thereof, which would materially
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond. 
Each Individual Property and Mezzanine Asset is free from damage covered
by fire or other casualty insurance.  No
substantial construction is currently being performed at any Individual
Property or Mezzanine Asset other than routine maintenance and repairs.

(b)           Each Encumbered Property, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects except where such failure
would not have a Material Adverse Effect. 
There exists no structural or other material defects or damages in any
Encumbered Property which would be reasonably likely to have a Material Adverse
Effect, whether latent or otherwise and no Borrower nor any Encumbered Property
Subsidiary has received written notice from any insurance company or bonding
company of any defects or inadequacies, whether latent or otherwise, in the
Encumbered Properties taken as a whole which would be reasonably likely to have
a Material Adverse Effect, materially and adversely the insurability of the
same as a whole or cause the imposition of extraordinary premiums or charges
thereon or of any termination or threatened termination of any policy of
insurance or bond related to the Encumbered Properties taken as a whole.  Each Encumbered Property is free from damage
covered by fire or other casualty insurance except any such damage that is not
reasonably likely to have a Material Adverse Effect.

 39
 

No substantial
construction is currently being performed at any Encumbered Property other than
routine maintenance and repairs except to the extent such construction is not
reasonably likely to have a Material Adverse Effect.

4.1.24         Boundaries.

All of the material
improvements which were included in determining the appraised value of each
Individual Property, Mezzanine Asset and Encumbered Property lie wholly within
the boundaries and building restriction lines of such Individual Property,
Mezzanine Asset or Encumbered Property, (b) no improvements on adjoining
properties encroach upon such Individual Property, Mezzanine Asset or
Encumbered Property, and (c) no easements or other encumbrances upon the
applicable Individual Property, Mezzanine Asset or Encumbered Property encroach
upon any of the improvements located thereon, in each case that is reasonably
likely to have a Material Adverse Effect.

4.1.25         Leases.

(a)           Mezzanine Asset Owner and Property
Guarantor are the owners and lessors of landlord’s interest in the Leases.  No Person has any possessory interest in any
Individual Property or Mezzanine Asset or right to occupy the same except under
and pursuant to the provisions of the Leases or the Permitted
Encumbrances.  As of the date hereof, the
current Leases are in full force and effect and there are no material defaults
by Mezzanine Asset Owner and Property Guarantor or, to Borrower’s knowledge any
tenant under any Lease, and, there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute a material default
under any Lease.  Not more than 10% of
the Rents at any Individual Property have been paid more than four (4) months
in advance of its due date.  As of the
date hereof, there are no offsets or defenses to the payment of any portion of
the Rents.  As of the date hereof, all
work required (if any) to be performed by Mezzanine Asset Owner or Property
Guarantor under each Lease as of the date hereof has been performed in all
material respects as required and has been accepted by the applicable tenant,
and any payments, free rent, partial rent, rebate of rent or other payments,
credits, allowances or abatements required to be given by Mezzanine Asset Owner
or Property Guarantor to any tenant has already been received by such tenant
except to the extent the failure of the foregoing representation to be true is
not reasonably likely to have a Material Adverse Effect.  As of the date hereof, there has been no
prior sale, transfer or assignment, hypothecation or pledge of Mezzanine Asset
Owner’s or Property Guarantor’s interest in any Lease or of the Rents received
therein which is still in effect.  No
tenant under any Lease has a currently effective option (or an option that will
take effect in the future) pursuant to such Lease or otherwise to purchase all
or any part of the leased premises or the building of which the leased premises
are a part.  No tenant under any Lease
has a currently effective right (or a right that will take effect in the
future) of first offer or refusal to purchase all or any part of the leased
premises or the building of which the leased premises are a part.  To the best of Borrower’s knowledge, no
Hazardous Materials have been disposed, stored or treated by any tenant under
any Lease on or about the leased premises in violation of Environmental Law nor
does Mezzanine Asset Owner or Property Guarantor have any knowledge of any
tenant’s intention to use its leased premises for

 40
 

any activity
which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any Hazardous Materials, except those
that are both (i) in compliance with current Environmental Laws and with
permits issued pursuant thereto (if such permits are required), and (ii) either
(A) in amounts not in excess of that necessary to operate, clean, repair and
maintain the applicable Individual Property or Mezzanine Asset or each tenant’s
respective business at such Individual Property or Mezzanine Asset as set forth
in their respective Leases, (B) held by a tenant for sale to the public in its
ordinary course of business, or (C) fully disclosed to and approved by Lender
in writing pursuant to the environmental reports delivered to Lender in
connection with the Loan.

4.1.26      Survey.

To the best of Borrower’s
knowledge, the Survey for each Individual Property delivered to Lender in
connection with this Agreement does not fail to reflect any material matter
affecting such Individual Property or the title thereto.

4.1.27      Embargoed
Person.

As of the date hereof and
at all times throughout the term of the Loan, including after giving effect to
any Transfers permitted pursuant to the Loan Documents, (a) none of the funds
or other assets of any Key Entity, Encumbered Property Subsidiary or Guarantor
constitute property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law, including
but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and
any Executive Orders or regulations promulgated thereunder with the result that
the investment in Borrower, any Key Entity, Encumbered Property Subsidiary or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Loan made by the Lender is in violation of law (“Embargoed Person”);
(b) no Embargoed Person has any interest of any nature whatsoever in any Key
Entity, Encumbered Property Subsidiary or Guarantor or any Affiliate thereof,
as applicable, with the result that the investment in any Key Entity,
Encumbered Property Subsidiary or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Key Entity, Encumbered Property Subsidiary or
Guarantor, as applicable, have been derived from any unlawful activity with the
result that the investment in any Key Entity or Guarantor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

4.1.28      Filing
and Recording Taxes.

All mortgage, mortgage
recording, stamp, intangible or other similar tax 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, without limitation, the
Security Instruments, have been paid.

4.1.29      Covenant
Compliance.

On  the date hereof Borrower has delivered to
Lender an Officer’s Certificate pursuant to which Borrower certified to Lender
Borrower’s compliance with each of the

 41
 

covenants set forth in Sections
5.3 and 5.4 hereof calculated on a proforma basis for the year
ending December 31, 2006 and which was accompanied by all applicable financial
calculations (the “Compliance Statement”).  Borrower represents and warrants to Lender
that all information and certifications set forth in the Compliance Statement
are complete, true and correct as of the date hereof.  In connection with any Compliance Certificate
required to be delivered pursuant to this Agreement, such Compliance
Certificate may exclude any updates of representations and warranties as to
proforma calculations of financial covenant compliance.

4.1.30      Management
Agreement.

The Management Agreements
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.

4.1.31      Illegal
Activity.

No portion of any
Individual Property or any Mezzanine Asset has been purchased with proceeds of
any illegal activity.

4.1.32      No
Change in Facts or Circumstances; Disclosure.

All information submitted
by Borrower or any other Key Entity to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof are, as of the date
hereof, accurate, complete and correct in all material respects.  No statement of fact made by Borrower or any
Key Entity in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading in any
material respect.  There has been no
material adverse change in any condition, fact, circumstance or event that
would make any such information inaccurate, incomplete or otherwise misleading
in any material respect or that otherwise materially and adversely affects or
might materially and adversely affect the use, operation or value of the
Properties, the Mezzanine Assets or the Encumbered Properties or the business
operations or the financial condition of Borrower or any Guarantor.  Borrower has not failed to disclose any
material fact that is reasonably likely to have a material adverse effect on
the financial condition of Borrower or any Key Entity or the condition or
ownership of any Individual Property, Mezzanine Asset or Encumbered Property.

4.1.33      Investment
Company Act.

Borrower is not (a) an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended; or (b) subject to
any other federal or State law or regulation which purports to restrict or
regulate its ability to borrow money.

 42
 

4.1.34      Principal Place of Business; State of
Organization.

Borrower’s principal
place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement. 
Borrower’s organizational identification number is 3806640.

4.1.35      Special
Purpose Entities.

Borrower shall cause each
Property Guarantor, each Mezzanine Property Guarantor, each Mezzanine
Subsidiary, each Mezzanine Asset Owner and each Encumbered Property Subsidiary
to be, at all times, a Special Purpose Entity.

4.1.36      Business
Purposes.

The Loan is solely for
the general business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.

4.1.37      Taxes.

Each Key Entity has filed
all material federal, State, county, municipal, and city income and other tax
returns required to have been filed by it and has paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it.  As of the
date hereof, Borrower knows of no basis for any additional assessment in respect
of any such taxes and related liabilities for prior years.

4.1.38      Forfeiture.

No Key Entity nor to the
best of Borrower’s knowledge any other Person in occupancy of or involved with
the operation or use any of the Properties, Mezzanine Assets or Encumbered
Properties has committed any act or omission affording the federal government
or any State or local government the right of forfeiture as against any of the
Properties, Mezzanine Assets or Encumbered Properties or any part thereof or
any monies paid in performance of Borrower’s obligations under the Note, this
Agreement or the other Loan Documents. 
Borrower hereby covenants and agrees not to commit, permit or suffer to
exist any act or omission affording such right of forfeiture.

4.1.39      Environmental
Representations and Warranties.

Borrower represents and
warrants, that: (a) there are no Hazardous Materials or underground storage
tanks in, on, or under any of the Properties or Mezzanine Assets except those
that are both (i) in compliance with current Environmental Laws and with
permits issued pursuant thereto (if such permits are required), and (ii) either
(A) in amounts not in excess of that necessary to operate, clean, repair and
maintain the applicable Individual Property or Mezzanine Asset or each tenant’s
respective business at such Individual Property or Mezzanine Asset as set forth
in their respective Leases, or (B) held by a tenant for sale to the public in
its ordinary course of business, (b) there are no past, present or threatened
Releases of Hazardous Materials in violation of any Environmental Law and which
would require remediation by a Governmental Authority in, on, under or from any
of the Properties or Mezzanine Assets (except to the extent

 43
 

such remediation has been
approved by the applicable Governmental Authority); (c) to Borrower’s knowledge
there is no threat of any Release of Hazardous Materials migrating to any of
the Properties or Mezzanine Assets; (d) there is no past or present
non-compliance with current Environmental Laws, or with permits issued pursuant
thereto, in connection with any of the Properties or Mezzanine Assets;
(e) neither Borrower, nor any other Key Entity knows of, nor has received,
any written notice from any Person (including but not limited to a Governmental
Authority) relating to Hazardous Materials in, on, under or from any of the
Properties or Mezzanine Assets in violation of Environmental Laws; and (f) each
Key Entity has truthfully and fully provided to Lender, in writing, any and all
information of which it is aware relating to environmental conditions in, on,
under or from any of the Properties or Mezzanine Assets known to any Key Entity
or contained in any Key Entity’s files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from any of the Properties, Mezzanine Assets or Encumbered Properties and/or to
the environmental condition of the Properties or Mezzanine Assets.  Borrower represents and warrants that each of
the representations and warranties set forth in clause (a)-(f) above are true
with respect to the Encumbered Properties except to the extent that the failure
of such representation or warranty to be true is not reasonably likely to have
a Material Adverse Effect.

4.1.40      Taxpayer
Identification Number.

Borrower’s United States
taxpayer identification number is 20-1162699.

4.1.41      Military
Contracts.

Borrower hereby
represents and warrants to Lender that none of the contracts related to the
ownership, equity, management, development or construction that Borrower or a
Subsidiary of Borrower (including without limitation, GMH Military Housing
Development LLC, GMH Military Housing Construction LLC, GMH Military Housing
Management LLC and GMH Military Housing Investments LLC) is a party to, or has
an interest in, with respect to Military Housing Projects can be assigned by
such party to Lender as direct or indirect collateral for the Loan without the
consent or approval of third parties, which consent or approval has not been
obtained.

4.1.42      Representations
and Warranties with respect to Encumbered Property Subsidiaries.

Borrower hereby
represents and warrants to Lender that each of the representations and
warranties set forth in this Section 4.1 are true and correct as to each
Encumbered Property Subsidiary as if such representations and warranties were
specifically made as to each Encumbered Property Subsidiary except to the
extent that any such failure of the representation or warranty to be true as to
the Encumbered Property Subsidiaries would not have a Material Adverse Effect.

Section 4.2             Survival
of Representations.

Borrower agrees that all
of the representations and warranties set forth in ‎Section 4.1
and elsewhere in this Agreement, the Pledge Agreement, the Security Instruments
and in the other Loan Documents shall survive for so long as any amount remains
owing to Lender under

 44
 

this Agreement or any of
the other Loan Documents by Borrower or any Guarantor.  All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents by
Borrower or any Key Entity shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

ARTICLE V

BORROWER COVENANTS

Section 5.1             Affirmative
Covenants.

From the date hereof and
until payment and performance in full of all Obligations of Borrower under the
Loan Documents, Borrower for itself and for each Key Entity hereby covenants
and agrees with Lender that:

5.1.1        Existence;
Compliance with Legal Requirements.

(a)           Borrower shall cause each Key Entity
to do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises,
and comply, in all material respects, with all Legal Requirements applicable to
it and the Properties, the Mezzanine Assets and Encumbered Properties except to
the extent the failure to do so would not reasonably be expected to have a
material adverse affect on the financial condition or business of any Key
Entity or the condition or ownership of any Individual Property, Mezzanine
Asset or Encumbered Property.  There
shall never be committed by any Key Entity or any Affiliate of any Key Entity
in occupancy of or involved with the operation or use of any Individual
Property, Mezzanine Asset or Encumbered Property any act or omission affording
the federal government or any State or local government the right of forfeiture
against any Individual Property, Mezzanine Asset or Encumbered Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents.  Each Key
Entity shall use its best efforts to cause no other Person in occupancy of or
involved with the operation or use of the Properties, the Mezzanine Assets and
Encumbered Properties to perform any act or omission affording the federal
government or any State or local government the right of forfeiture against any
Individual Property, Mezzanine Asset or Encumbered Property or any part thereof
or any monies paid in performance of Borrower’s obligations under any of the
Loan Documents.  Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. Each Key Entity shall keep the
Properties, the Mezzanine Assets and Encumbered Properties in good working
order and repair (ordinary wear and tear excepted), and from time to time make,
or cause to be made, all commercially reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto.  Borrower shall cause each Key Entity to
operate any Individual Property, Mezzanine Asset or Encumbered Property that is
the subject of any O&M Program in accordance with the terms and provisions
thereof in all material respects.

 45
 

(b)           After prior written notice to Lender,
Borrower or Property Guarantor, at its own expense, may contest by appropriate
legal proceeding promptly initiated and conducted in good faith and with due
diligence, the validity of any Legal Requirement, the applicability of any
Legal Requirement to Borrower or Property Guarantor or any Individual Property
or any alleged violation of any Legal Requirement, provided that (i) no
Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower or Property Guarantor is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all Applicable Laws; (iii) no Individual Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (iv) Borrower or Property Guarantor shall
promptly upon final determination thereof comply with any such Legal
Requirement determined to be valid or applicable or cure any violation of any
Legal Requirement; (v) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower or Property Guarantor or any
Individual Property; and (vi) Borrower or Property Guarantor shall furnish
such security as may be required in the proceeding, or as may be reasonably
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith.  Lender may apply any such security or part
thereof, as necessary to cause compliance with such Legal Requirement at any
time when, in the reasonable judgment of Lender, the validity, applicability or
violation of such Legal Requirement is finally established or any Individual
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.

(c)           Borrower shall not cause or permit
any Mezzanine Subsidiary or Mezzanine Asset Owner to contest any Legal
Requirement unless such contest is conducted in accordance with, and subject to
the provisions of, clause (b) above.

5.1.2        Taxes
and Other Charges.

(a)           Borrower shall pay or cause Property
Guarantor to pay all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Properties or any part thereof as the same
become due and payable.  Borrower or
Property Guarantor shall furnish to Lender evidence for the payment of all material
Taxes and the Other Charges prior to the date the same shall become delinquent
and shall promptly deliver to Lender receipts evidencing such payment as soon
as they become available.  Neither
Borrower nor Property Guarantor shall 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 the Properties, and shall promptly pay for all utility
services provided to the Properties for which Borrower is liable.  After prior written notice to Lender,
Borrower or Property Guarantor, 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
Taxes or Other Charges, provided that (i) no Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower or Property Guarantor is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all

 46
 

Applicable
Laws; (iii) no Individual Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv)
Borrower or Property Guarantor shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other
Charges from the applicable Individual Property; and (vi) Borrower or Property
Guarantor shall furnish such security as may be required in the proceeding, or
as may be reasonably requested by Lender (including, without limitation, the
posting of a bond acceptable to Lender), to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon.  Lender may apply such security or part thereof
held by Lender at any time when, in the reasonable judgment of Lender, the
validity or applicability of such Taxes or Other Charges are established or any
Individual Property (or part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated, cancelled or lost or there shall be any
danger of the Lien of any Security Instrument being primed by any related Lien.

(b)           Borrower shall not suffer, nor permit
any Mezzanine Subsidiary or Mezzanine Asset 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 Mezzanine Asset, and shall promptly pay for
all utility services provided to the Mezzanine Assets for which any Mezzanine
Subsidiary or Mezzanine Asset Owner is liable. 
Borrower shall not cause or permit any Mezzanine Subsidiary or Mezzanine
Asset Owner to contest any Taxes or Other Charges unless such contest is
conducted in accordance with, and subject to the provisions of, clause (a)
above.

5.1.3        Litigation.

After written receipt
thereof by Borrower or any Key Entity, Borrower shall give prompt written
notice to Lender of any litigation or governmental proceedings pending or
threatened against any Key Entity or any Guarantor which might materially
adversely affect (the financial) condition or business of any Key Entity or any
Guarantor or the condition or ownership of any Individual Property, Mezzanine
Asset or Encumbered Property.

5.1.4        Access
to Properties.

Borrower shall permit,
and shall cause each applicable Key Entity to permit, agents, representatives
and employees of Lender to inspect the Properties, Mezzanine Assets and
Encumbered Properties, as the case may be, or any part thereof at reasonable
hours upon reasonable advance notice accompanied by a representative of Borrower
(if so elected by Borrower), subject to the rights of tenants and parties under
any applicable reciprocal easement agreement.

5.1.5        Notice
of Default.

Borrower shall promptly
advise Lender of any material adverse change in any Key Entity’s condition, financial
or otherwise.

 47
 

5.1.6        Cooperate in Legal Proceedings.

Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way materially adversely 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.

5.1.7        Award
and Insurance Benefits.

Upon Lender’s reasonable
request, Borrower shall cooperate, and cause each Property Guarantor to
cooperate, with Lender in obtaining for Lender the benefits of any Awards or
Insurance Proceeds lawfully or equitably payable in connection with any
Individual Property, and Lender shall be reimbursed for any out-of-pocket
expenses incurred in connection therewith (including reasonable attorneys’ fees
and disbursements, and the payment by Borrower or Property Guarantor of the
expense of an appraisal on behalf of Lender in case of Casualty or Condemnation
affecting any Individual Property or any part thereof) out of such Award or
Insurance Proceeds.

5.1.8        Further
Assurances.

Borrower shall, and shall
cause each Property Guarantor and Mezzanine Subsidiary, at Borrower’s sole cost
and expense, to:

(a)           furnish to Lender all instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement and
instrument required to be furnished by Borrower or Property Guarantor pursuant
to the terms of the Loan Documents;

(b)           execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect
the collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents, as Lender may reasonably require including,
without limitation, the authorization of Lender to execute or file and/or the
execution or filing by Borrower, Mezzanine Subsidiary or Property Guarantor of
UCC financing statements and the execution and delivery of all such writings
necessary to transfer any liquor licenses into the name of Lender or its
designee after the occurrence and during the continuance of any Event of
Default; and

(c)           do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents, as Lender shall reasonably require from time to time
provided the same is consistent with the intent of the Loan Documents and
creates no new obligations on, or liability to, Borrower or Property Guarantor
or Mezzanine Subsidiary other than as intended pursuant to the Loan Documents
or otherwise to a de minimis extent.

 48
 

5.1.9        Mortgage and Intangible Taxes.

Borrower shall pay or
cause to be paid all State, county and municipal recording, mortgage, intangible,
and all other taxes imposed upon the execution and recordation of the Security
Instruments and/or upon the execution and delivery of the Note, the Guaranty
and the Pledge Agreement.

5.1.10      Financial
Reporting.

So long as the Debt shall
remain unpaid or unsatisfied, Borrower shall:

(a)      deliver to Lender, in form and detail
satisfactory to Lender:

(i)       as soon as available,
but in any event within ninety (90) days after the end of each fiscal year of
the Trust, a consolidated balance sheet of the Trust as at the end of such
fiscal year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be audited and accompanied by a report and opinion of an
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Lender, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit and such consolidating
statements to be certified by a Responsible Officer of the Trust to the effect
that such consolidated statements are fairly stated in all material respects
when considered in relation to the consolidated financial statements of the
Trust;

(ii)      as soon as available,
but in any event within forty-five (45) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of the Trust, a consolidated
balance sheet of the Trust as at the end of such fiscal quarter, and the related
consolidated statements of income or operations and cash flows for such fiscal
quarter and for the portion of the Trust’s fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such consolidated statements to
be certified by a Responsible Officer of the Trust as fairly presenting the
financial condition, results of operations and cash flows of the companies in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes and such consolidating statements to be certified by a
Responsible Officer of the Trust to the effect that such statements are fairly
stated in all material respects when considered in relation to the consolidated
financial statements of the Trust; and

(iii)     Borrower will furnish,
or cause to be furnished, to Lender on or before forty-five (45) days after the
end of each calendar quarter the following

 49
 

items,
accompanied by an Officer’s Certificate stating that such items are true,
correct, accurate, and complete and fairly present results of the operations of
Property Guarantors and Mezzanine Asset Owners and the Individual Properties
and the Mezzanine Assets (subject to normal year-end adjustments): (i) a rent
roll and sales reports from retail tenants for the subject quarter, as
applicable, accompanied by an Officer’s Certificate with respect thereto and
(ii) quarterly and year-to-date operating statements prepared for each calendar
quarter noting net operating income, gross income from operations, and
operating expenses, and other information requested by Lender and necessary and
sufficient to fairly represent the results of operation of the Properties
during such calendar quarter and containing a comparison of budgeted income and
expenses and the actual income and expenses, all in form reasonably
satisfactory to Lender.

(iv)    Borrower will furnish, or
cause to be furnished, to Lender on or before forty-five (45) days after the
end of each calendar quarter a listing of all properties directly or indirectly
owned by Borrower, any Key Entity and any Encumbered Property Subsidiary
certified by a Responsible Officer of Borrower.

(b)           concurrently with the delivery of the
financial statements referred to in clause (a)(i), a certificate of its
independent certified public accountants certifying such financial statements
and stating that in making the examination necessary therefor no knowledge was
obtained of any Default under the financial covenants set forth herein or, if
any such Default shall exist, stating the nature and status of such event;

(c)           concurrently with the delivery of the
financial statements referred to in clause (a), a duly completed
Compliance Certificate certifying Borrower’s compliance with the covenants set
forth in Sections 5.3 and 5.4 accompanied by all calculations
necessary to make such compliance certifications;

(d)           promptly after any request by Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of the Trust by independent accountants in connection with the
accounts or books of the companies, or any audit of any of them;

(e)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of the Trust or Borrower, and
copies of all annual, regular, periodic and special reports and registration
statements which the Trust or Borrower may file or be required to file with the
SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934; and

(f)            promptly, such additional
information regarding the business, financial or corporate affairs of the
companies, or compliance with the terms of the Loan Documents, as Lender may
from time to time reasonably request.

5.1.11      Business
and Operations.

Borrower and Key Entity
will continue in all material respects to engage in the businesses presently
conducted by it as and to the extent the same are necessary for the

 50
 

ownership, maintenance,
management and operation of the Properties, the Mezzanine Assets and the
Encumbered Properties.  Borrower shall
cause each Key Entity to remain in good standing under the laws of each
jurisdiction to the extent required to continue to conduct its business as the
same is conducted on the date hereof, except to the extent the failure to do so
would not reasonably be expected to have a material adverse affect on the
financial condition or business of such Key Entity or the condition or
ownership of any Individual Property, Mezzanine Asset or Encumbered
Property.  Borrower shall cause each
Individual Property and Mezzanine Asset to be in compliance with Applicable
Laws except to the extent the failure to do so would not be reasonably likely
to have a Material Adverse Effect.

5.1.12      Costs
of Enforcement.

In the event (a) that the
Security Instrument encumbering the Property is foreclosed in whole or in part
or that the Security Instrument is, following the occurrence of an Event of
Default, put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
the Security Instrument encumbering the Property in which proceeding Lender is
made a party, (c) that the Pledge Agreement encumbering the Mezzanine
Collateral is foreclosed in whole or in part or the subject of a UCC Sale or
that the Pledge Agreement is, following the occurrence of an Event of Default,
put into the hands of an attorney for collection, suit, action or foreclosure
or (d) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of any Key Entity or an assignment by a Key Entity for
the benefit of its creditors, Borrower, its successors or assigns, shall be
chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys’ fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with any appellate proceeding or post
judgment action involved therein, together with all required service or use
taxes.

5.1.13      Estoppel
Statement.

(a)           After request by Lender, Borrower
shall within ten (10) Business Days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) to the best of Borrower’s knowledge, any
offsets or defenses to the payment of the Debt, and (vi) that the Note, this
Agreement, the Security Instruments and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification.

(b)           After request by Borrower, Lender
shall within ten (10) Business Days furnish Borrower with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments of
interest and/or principal were last paid and (iv) that the Note, this
Agreement, the Security Instrument have not been modified or if modified,
giving particulars of such modification.

 51

5.1.14      Loan Proceeds.

Borrower shall use the
proceeds of the Loan received by it on the Closing Date only for the purposes
set forth in Section ‎2.1.4 and Section 2.1.5.

5.1.15      Performance by Borrower.

Borrower shall in a
timely manner observe, perform and fulfill each and every covenant, term and
provision of each Loan Document executed and delivered by, or applicable to,
Borrower.

5.1.16      Leasing Matters.

(a)           Prior
to execution of any Leases of space in the Improvements after the date hereof,
Borrower shall submit to Lender, for Lender’s prior approval, which approval
shall not be unreasonably withheld, a copy of the form Lease each Property
Guarantor plans to use in leasing space in the Improvements or at any
Individual Property.  All such Leases of
space in the Improvements or at any Individual Property shall be on terms
consistent with the terms for similar leases in the market area of the
Property, shall provide for market rents then prevailing in the market area of
the applicable Individual Property or Mezzanine Asset and with respect to a
substantial portion of such Leases, shall be for a term of not less than six
(6) months or greater than one (1) year. 
Borrower shall also submit to Lender for Lender’s approval, which
approval shall not be unreasonably withheld, prior to the execution thereof,
any proposed Lease of the Improvements or any portion thereof that differs
materially and adversely from the aforementioned form Lease.  Borrower shall not permit and Property
Guarantor nor any Mezzanine Asset Owner to execute any Lease for all or a
substantial portion of any Individual Property or Mezzanine Asset, except for
an actual occupancy by the tenant, lessee or licensee thereunder, and shall at
all times promptly and faithfully perform, or cause to be performed, all of the
covenants, conditions and agreements contained in all Leases with respect to
any Individual Property or Mezzanine Asset, now or hereafter existing, on the
part of the landlord, lessor or licensor thereunder to be kept and performed.  Borrower shall furnish to Lender, within ten
(10) days after a request by Lender to do so, but in any event by January 1 of
each year, a current Rent Roll, certified by the applicable Property Guarantor
or Mezzanine Asset Owner as being true and correct, containing the names of all
Tenants with respect to each Individual Property and Mezzanine Asset,
respectively, the terms of their respective Leases, the spaces occupied and the
rentals or fees payable thereunder and the amount of each Tenant’s security
deposit.  Upon the request of Lender,
Borrower shall cause each Property Guarantor and Mezzanine Asset Owner to
deliver to Lender a copy of each such Lease. 
Borrower shall not do or suffer to be done, nor permit any Property
Guarantor or Mezzanine Asset owner to do or suffer to be done, any act, or omit
to take any action, that might result in a default by the landlord, lessor or
licensor under any such Lease or allow the tenant thereunder to withhold
payment of rent or cancel or terminate same and shall not further assign any
such Lease or any such Rents.  Borrower
shall cause each Property Guarantor and Mezzanine Asset Owner, at no cost or
expense to Lender, shall enforce, short of termination, the performance and
observance of each and every 

 52
 

material condition and covenant of each of the parties under such
Leases and no Property Guarantor nor Mezzanine Asset Owner shall anticipate,
discount, release, waive, compromise or otherwise discharge any rent payable
under any of the Leases except in the normal course of business in a manner
which is consistent with sound and customary leasing and management practices
for similar properties in the community in which the applicable Individual
Property or Mezzanine Asset is located. 
Notwithstanding the foregoing, at any time and from time to time, Lender
shall be entitled to, and Borrower shall cause each Property Guarantor and
Mezzanine Asset Owner to grant the Lender the right to, undertake any and all
action as may be required (in the sole discretion of Lender) to cure any
default, or event which with the passage of time following any notice and cure
period shall constitute a default by Property Guarantor or Mezzanine Asset
Owner, as the case may be, under such Leases. 
No Property Guarantor or Mezzanine Asset Owner shall, without the prior
written consent of Lender, modify any of the Leases, terminate or accept the
surrender of any Leases, waive or release any other party from the performance
or observance of any obligation or condition under such Leases except in the normal
course of business in a manner which is consistent with sound and customary
leasing and management practices for similar properties in the community in
which the applicable Individual Property or Mezzanine Asset is located.

5.1.17      Management Agreement.

(a)           The
Properties and Mezzanine Assets are operated under the terms and conditions of
the Management Agreements.  In no event
shall the management fees under any Management Agreement (but excluding
construction, leasing and ancillary fees) exceed 4% of the gross income derived
from the applicable Individual Property or Mezzanine Asset.  Borrower shall cause each Property Guarantor
and each Mezzanine Asset Owner to (i) diligently perform and observe all
of the material terms, covenants and conditions of the Management Agreements,
on the part of Property Guarantor or Mezzanine Asset Owner, as the case may be,
to be performed and observed to the end that all things shall be done which are
necessary to keep unimpaired the rights of Property Guarantor or Mezzanine
Asset Owner, under the Management Agreements and (ii) promptly notify Lender of
the giving of any notice by Manager to Property Guarantor or any Mezzanine
Asset Owner of any default beyond any applicable notice and cure period by
Borrower in the performance or observance of any of the terms, covenants or
conditions of any Management Agreement on the part of Property Guarantor or
Mezzanine Asset Owner to be performed and observed and deliver to Lender a true
copy of each such notice.  No Property
Guarantor nor Mezzanine Asset Owner shall surrender any Management Agreement,
consent to the assignment by the Manager of its interest under the applicable
Management Agreement, or terminate or cancel any Management Agreement, or
modify, change, supplement, alter or amend any Management Agreement, in any
material respect, either orally or in writing. 
If Property Guarantor or any Mezzanine Asset Owner shall default in the
performance or observance of any material term, covenant or condition of any
Management Agreement on the part of Property Guarantor or such Mezzanine Asset
Owner to be performed or observed, then, without limiting the generality of the
other provisions of this Agreement, Lender shall have the right, but shall be
under no obligation, to pay any 

 53
 

sums and to perform any act or take any action as may be appropriate to
cause all the terms, covenants and conditions of any Management Agreement on
the part of Property Guarantor or Mezzanine Asset Owner to be performed or
observed to be promptly performed or observed on behalf of Property Guarantor
or Mezzanine Asset Owner, as the case may be, to the end that the rights of
Property Guarantor or Mezzanine Asset Owner, as the case may be, in, to and
under the Management Agreements shall be kept unimpaired and free from
default.  Lender and any Person
designated by Lender shall have, and are hereby granted, upon reasonable prior
notice to Property Guarantor and Mezzanine Asset Owner and subject to the
rights of tenants, the right to enter upon the applicable Individual Property
or Mezzanine Asset at any time and from time to time for the purpose of taking
any such action.  If the Manager shall
deliver to Lender a copy of any notice sent to Property Guarantor or Mezzanine
Asset Owner of default under any Management Agreement, 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.  Except as expressly provided in the
Management Agreements, neither Property Guarantor nor Mezzanine Asset Owner
shall, and shall not permit the Manager to, sub-contract any or all of its
management responsibilities under any Management Agreement to a third-party
without the prior written consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed. 
Borrower shall cause Property Guarantor and Mezzanine Asset Owner to,
from time to time, obtain from the Manager such certificates of estoppel with
respect to compliance by Property Guarantor and Mezzanine Asset Owner with the
terms of the applicable Management Agreement as may be reasonably requested by
Lender.  Any sums expended by Lender
pursuant to this paragraph (i) shall bear interest at the Default Rate from the
date such cost is incurred to the date of payment to Lender, (ii) shall be
deemed to constitute a portion of the Debt, (iii) shall be secured by the lien
of the Pledge Agreement and Security Instruments and the other Loan Documents
and (iv) shall be immediately due and payable upon demand by Lender therefor.

(b)           Without
limitation of the foregoing, Borrower shall cause Property Guarantor and
Mezzanine Asset Owner, upon the request of Lender, to terminate any or all of
the Management Agreements and replace the Manager, without penalty or fee, if
at any time during the Loan: (a) any Manager shall become insolvent or a debtor
in any bankruptcy or insolvency proceeding, (b) there exists an uncured Event
of Default or (c) there exists a material event of default beyond any
applicable notice and cure period by Manager under any Management
Agreement.  At such time as the Manager
may be removed, a Qualified Manager shall assume management of the applicable
Individual Property pursuant to a Replacement Management Agreement.

(c)           Notwithstanding
the foregoing, Borrower may permit Property Guarantor and Mezzanine Asset Owner
to terminate any Management Agreement in accordance with its terms and appoint
a successor Manager upon thirty (30) days prior written notice to Lender,
provided (i) that the successor Manager is a Qualified Manager and (ii)
Property Guarantor or Mezzanine Asset Owner, as the case may be, and the
successor Manager enter into a Replacement Management Agreement.

 54
 

5.1.18      Environmental Covenants.

(a)           Borrower
covenants and agrees that so long as the Loan is outstanding (i) all uses and
operations on or of the Properties, whether by any Key Entity or any other
Person, shall be in compliance in all material respects with all Environmental
Laws and permits issued pursuant thereto; (ii) there shall be no Releases of
Hazardous Materials in, on, under or from any of the Properties, Mezzanine
Assets or Encumbered Properties except in compliance in all respects with all
Environmental Laws; (iii) there shall be no Hazardous Materials in, on, or
under any of the Properties, Mezzanine Assets or Encumbered Properties, except
those that are both (A) in compliance with all Environmental Laws and with
permits issued pursuant thereto, if and to the extent required, and (B) (1) in
amounts not in excess of that necessary to operate, clean, repair or maintain
the applicable Individual Property, Mezzanine Asset or Encumbered Property or
(2) used in the conduct of business of a tenant or a product sold to the public
pursuant to the operations of such tenant’s business; (iv) Borrower shall keep,
or cause to be kept, the Properties, Mezzanine Assets or Encumbered Properties
free and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of any Key Entity or any
other Person (the “Environmental
Liens”); (v) Borrower shall, and shall cause each Key Entity
to, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to paragraph (b) below, including but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (vi) Borrower shall, and shall cause each Key Entity to, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Properties,
Mezzanine Assets or Encumbered Properties, pursuant to any reasonable written
request of Lender, upon Lender’s reasonable belief that an Individual Property,
Mezzanine Asset or Encumbered Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results
thereof, and Lender and other Indemnified Parties shall be entitled to rely on
such reports and other results thereof; (vii) Borrower shall, and shall cause
each Key Entity to, at its sole cost and expense, comply with all reasonable
written requests of Lender to (A) reasonably effectuate remediation of any
Hazardous Materials in, on, under or from any Individual Property, Mezzanine
Asset or Encumbered Property; for which remediation is required pursuant to
Environmental Law and (B) comply with any Environmental Law; (viii) neither
Borrower nor any Key Entity shall allow any tenant or other user of any of the
Properties, Mezzanine Assets or Encumbered Properties to violate any Environmental
Law; and (ix) Borrower shall, and shall cause each Key Entity to, immediately
notify Lender in writing after it has become aware of (A) any presence or
Release or threatened Releases of Hazardous Materials in, on, under, from or
migrating towards any of the Properties, Mezzanine Assets or Encumbered
Properties; (B) any non compliance with any applicable Environmental Laws
related in any way to any of the Properties, Mezzanine Assets or Encumbered
Properties; (C) any actual or potential Environmental Lien; (D) any required or
proposed remediation of environmental conditions relating to any of the
Properties, Mezzanine Assets or Encumbered Properties; and (E) any written or
oral notice or other communication of which Borrower or any Key Entity becomes
aware from any source whatsoever (including but 

 55
 

not limited to a Governmental Authority) relating in any way to
Hazardous Materials in connection with the Properties, Mezzanine Assets or
Encumbered Properties.

(b)           Upon
Lender’s reasonable belief that any Individual Property, Mezzanine Asset or
Encumbered Property does not comply with Environmental Laws, Lender and any
other Person designated by Lender, including but not limited to any
representative of a Governmental Authority, and any environmental consultant,
and any receiver appointed by any court of competent jurisdiction, shall have
the right, but not the obligation, to enter upon any Properties, Mezzanine
Assets or Encumbered Properties at all reasonable times and after reasonable
notice to Borrower or the applicable Key Entity, subject to the rights of
tenants, to assess any and all aspects of the environmental condition of any
Individual Property, Mezzanine Asset or Encumbered Property and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender’s sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing.  Borrower shall cooperate, and shall cause
each Key Entity to cooperate, with and provide access to Lender and any such
Person designated by Lender.

5.1.19      Alterations.

Borrower shall cause
Property Guarantor and Mezzanine Asset Owner to obtain Lender’s prior written
consent to any alterations to any improvements at any Individual Property or
Mezzanine Asset, which consent shall not be unreasonably withheld, conditioned
or delayed except with respect to alterations that may have a material adverse
effect on Borrower’s, Property Guarantor’s or Mezzanine Asset Owner’s
consolidated financial condition or the value of the related Individual
Property or Mezzanine Asset. 
Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with any alterations for any Individual Property or Mezzanine Asset
that (A) (i) do not adversely affect the base building, core, shell or the
structural integrity of any improvements thereon, or (ii) would not have a
material adverse effect on the Individual Property or Mezzanine Asset or (iii)
cost less than $50,000 or (B) relate to the performance of tenant improvements
on the Property required pursuant to the terms of any Lease otherwise approved
by Lender.

5.1.20      OFAC.

At all times throughout
the term of the Loan, Borrower, Guarantor and their respective Affiliates shall
be in full compliance with all applicable orders, rules, regulations and
recommendations of The Office of Foreign Assets Control of the U.S. Department
of the Treasury.

5.1.21      O&M Program.

Borrower shall cause each
Property Guarantor and Mezzanine Asset Owner to covenant and agree to implement
and follow the terms and conditions of any O&M Program for each applicable
Individual Property or Mezzanine Asset during the term of the Loan, including
any extension or renewal thereof.  Lender’s
requirement that Borrower shall cause Property 

 56
 

Guarantor and Mezzanine
Asset Owner to comply with the O&M Program shall not be deemed to
constitute a waiver or modification of any of Borrower’s covenants and
agreements with respect to Hazardous Materials or Environmental Laws.

5.1.22      Covenants with Respect to Encumbered Properties and
Encumbered Property Subsidiaries.

Borrower hereby covenants
for the benefit of Lender to cause each Encumbered Property and each Encumbered
Property Subsidiary, as the case may be, to comply with the covenants set forth
in this Section 5.1 as if such covenants were specified to apply to each
Encumbered Property and/or Encumbered Property Subsidiary, as the case may be,
except to the extent that any such failure of the Borrower to cause such
covenant compliance by an Encumbered Property and/or Encumbered Property
Subsidiary would not have a Material Adverse Effect.

Section 5.2             Negative Covenants.

From the date hereof
until payment and performance in full of all Obligations of Borrower under the
Loan Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:

5.2.1        Liens.

Subject to Borrower’s
right to contest such Liens in the same manner relating to Taxes set forth in Section
5.1.2, Borrower shall not create, incur, assume or suffer to exist any Lien
on any portion of any Individual Property or any Mezzanine Asset or permit any
such action to be taken, except for Permitted Encumbrances.

5.2.2        Dissolution.

Borrower shall not (a)
engage in any dissolution, liquidation or consolidation or merger with or into
any other business entity, (b) transfer, lease or sell, in one transaction or
any combination of transactions, the assets or all or substantially all of the
assets of Borrower, (c) except as expressly permitted under the Loan Documents,
modify, amend, waive or terminate its organizational documents or its
qualification and good standing in any jurisdiction in any material respect or
(d) cause any Key Entity to (i) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which the Key Entity would be
dissolved, wound up or liquidated in whole or in part, or (ii) except as
expressly permitted under the Loan Documents, amend, modify, waive or terminate
the certificate of incorporation, bylaws or similar organizational documents of
the Key Entity, in each case, without obtaining the prior written consent of
Lender.

5.2.3        Change In Business.

Borrower shall not enter
into any line of business other than its current business (including providing
services in connection therewith), or make any material change in the scope or
nature of its business objectives, purposes or operations or undertake or
participate in activities other than the continuance of its present business to
the extent it would reasonably be 

 57
 

expected to have a
material adverse affect on the financial condition or business of
Borrower.  Borrower shall not permit any
Key Entity  to enter into any line of
business other than its current business (including providing services in
connection therewith), or make any material change in the scope or nature of
its business objectives, purposes or operations or undertake or participate in
activities other than the continuance of its present business to the extent it
would reasonably be expected to have a material adverse affect on the financial
condition or business of such Key Entity or the condition or ownership of any
Individual Property or Mezzanine Asset.

5.2.4        Debt Cancellation.

Borrower shall not cancel
or otherwise forgive or release any material claim or debt (other than
termination of Leases in accordance herewith or the settlement of a dispute
with a provider of materials or services in the ordinary course of Borrower’s
business) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower’s business. 
Borrower shall not permit any Key Entity to cancel or otherwise forgive
or release any material claim or debt (other than termination of Leases in
accordance herewith or the settlement of a dispute with a provider of materials
or services in the ordinary course of such Key Entity’s business) owed to such
Key Entity by any Person, except for adequate consideration and in the ordinary
course of such Key Entity’s business.

5.2.5        Zoning.

No Key Entity shall
initiate or consent to any zoning reclassification of any portion of any
Individual Property or Mezzanine Asset or seek any variance under any existing
zoning ordinance or use or permit the use of any portion of any Individual
Property or Mezzanine Asset in any manner that could reasonably be expected to
result in the current use becoming a non conforming use under any applicable
zoning ordinance or any other Applicable Law without the prior written consent
of Lender, which consent shall not be unreasonably withheld, conditioned or
delayed.

5.2.6        No Joint Assessment.

Borrower shall not, nor
permit any Property Guarantor or Mezzanine Asset Owner to, suffer, permit or
initiate the joint assessment of any Individual Property or Mezzanine Asset
with (a) any other real property constituting a tax lot separate from such
Individual Property or Mezzanine Asset, or (b) any portion of such Individual
Property or Mezzanine Asset which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
such Individual Property or Mezzanine Asset.

5.2.7        Name, Identity, Structure, or Principal Place of Business.

Borrower shall not change
its name, identity (including its trade name or names), or  principal place of business set forth in the
introductory paragraph of this Agreement, without, in each case, first giving
Lender thirty (30) days prior written notice. 
Borrower shall not permit any Property Guarantor or Mezzanine Subsidiary
to change its name, identity (including its trade name or names), or  principal place of business from that which
exists on the date hereof, without, in each case, first giving Lender thirty
(30) days prior written notice.  Borrower
shall 

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not change its corporate,
partnership or other structure (except as expressly permitted in Section
5.2.10), or the place of its organization as set forth in Section ‎4.1.34,
without, in each case, the consent of Lender. 
Borrower shall not permit any Property Guarantor or Mezzanine Subsidiary
or Mezzanine Asset Owner to change its corporate, partnership or other
structure, or the place of its organization, without, in each case, the consent
of Lender. Upon Lender’s request, Borrower shall execute and deliver, and cause
each Property Guarantor and Mezzanine Subsidiary to deliver, additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender’s security interest in the
Property or Mezzanine Collateral as a result of such change of principal place
of business or place of organization.

5.2.8        ERISA.

(a)           During
the term of the Loan or of any obligation or right hereunder, Borrower shall
not be a Plan and none of the assets of Borrower shall constitute Plan Assets.

(b)           Borrower
further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as reasonably
requested by Lender represents and covenants that (A) Borrower is not and does
not maintain an “employee benefit plan” as defined in Section 3(3) of ERISA,
which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject to State
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is true:

(i)       Equity
interests in Borrower are publicly offered securities, within the meaning of 29
C.F.R. §2510.3 101(b)(2);

(ii)      Less
than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning
of 29 C.F.R. §2510.3 101(f)(2); or

(iii)     Borrower
qualifies as an “operating company” or a “real estate operating company” within
the meaning of 29 C.F.R. §2510.3 101(c) or (e).

5.2.9        Affiliate Transactions.

Borrower shall not enter
into, or be a party to, any transaction with an Affiliate of Borrower except in
the ordinary course of business and on terms which are fully disclosed to
Lender in advance and are no less favorable to Borrower or such Affiliate than
would be obtained in a comparable arm’s-length transaction with an
unrelated third-party.

5.2.10      Transfers.

(a)           Borrower
shall not (i) cause or permit Property Guarantor nor any Mezzanine Asset Owner
to sell, convey, mortgage, grant, bargain, encumber, pledge, assign, grant
options with respect to, or otherwise transfer or dispose of (directly or 

 59
 

indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) any Individual
Property or any Mezzanine Asset or any part thereof or any legal or beneficial
interest therein or (ii) cause or permit a Sale or Pledge of an interest in any
Restricted Party other than interest in the Trust (collectively, a “Transfer”), other than
pursuant to Leases of space in the Improvements to tenants in accordance with
the provisions of Section ‎5.1.16 hereof.

(b)           A
Transfer shall include, but not be limited to: (i) an installment sales
agreement wherein Property Guarantor or any Mezzanine Asset Owner agrees to
sell one or more Individual Properties or Mezzanine Assets or any part thereof
for a price to be paid in installments; (ii) an agreement by any Property
Guarantor or any Mezzanine Asset Owner leasing all or a substantial part of any
Individual Property or Mezzanine Asset for other than actual occupancy by a
tenant thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Property Guarantor’s or Mezzanine Asset Owner’s right,
title and interest in and to any Leases or any Rents; (iii) if a Restricted
Party is a corporation, any merger, consolidation or Sale or Pledge of such
corporation’s stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any
general partner or limited partner or any profits or proceeds relating to such
partnership interest, or the Sale or Pledge of limited partnership interests or
any profits or proceeds relating to such limited partnership interests or the
creation or issuance of new limited partnership interests; (v) if a Restricted
Party is a limited liability company, any merger or consolidation or the
change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of a managing member (or if no managing member, any member)
or any profits or proceeds relating to such membership interest, or the Sale or
Pledge of non-managing membership interests or the creation or issuance
of new non-managing membership interests; (vi) if a Restricted Party is a
trust or nominee trust (other than the Trust), any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of the Manager (including, without limitation, an Affiliated
Manager) other than in accordance with Section ‎5.1.17 hereof.

(c)           Lender
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Transfer in violation of this Section
5.2.10.  This provision shall apply
to every Transfer (other than a taking by eminent domain) regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
Transfer.

(d)           Borrower
may permit Property Guarantor or Mezzanine Asset Owner, with Lender’s consent,
which consent shall not be unreasonably withheld, grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, telephone and telegraph lines,
electric lines or other utilities or for other similar purposes or other
purposes (which may 

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include amendments to existing reciprocal easement agreements)
reasonably approved by Lender, provided that no such encumbrance or
amendment set forth in this clause (d) shall materially impair the utility,
operation and use of the applicable Individual Property or Mezzanine Asset or
otherwise have a material adverse effect on the applicable Individual Property
or Mezzanine Asset.  In connection with
any such grant permitted pursuant to this Section 5.2.10(d), Lender
shall execute and deliver any instrument reasonably necessary or appropriate to
subordinate the Lien of the Security Instrument to such easements,
restrictions, covenants, reservations and rights of way or other similar grants
upon receipt by Lender of: (a) fifteen (15) days prior written notice thereof;
(b) a copy of the instrument or instruments of such grant; (c) an Officer’s
Certificate stating that such grant does not materially impair the utility,
operation and use of the Individual Property or Mezzanine Asset or have a
material adverse effect on the consolidated financial condition or business of
Borrower or Property Guarantor’s or Mezzanine Asset Owner’s or the condition or
ownership of the Individual Property or Mezzanine Asset, as the case may be;
and (d) reimbursement of all of Lender’s reasonable out-of-pocket costs and
expenses incurred in connection with such grant.

5.2.11      Limitation on Distributions.

From and after the
occurrence of an Event of Default specified in Section 8.1(a)(i), (a)(vi)
or (a)(vii), Borrower shall not make any distributions of any nature.

5.2.12      Negative Covenants with Respect to Encumbered Properties and
Encumbered Property Subsidiaries.

Borrower hereby covenants
for the benefit of Lender to cause each Encumbered Property and each Encumbered
Property Subsidiary, as the case may be, to comply with the covenants set forth
in this Section 5.2 as if such covenants were specified to apply to each
Encumbered Property and/or Encumbered Property Subsidiary, as the case may be,
except to the extent that any such failure of the Borrower to cause such
covenant compliance by an Encumbered Property and/or Encumbered Property
Subsidiary would not have a Material Adverse Effect.

Section 5.3             Financial and REIT Status
Covenants.

(a)           Borrower
shall maintain at all times a Fixed Charge Coverage Ratio of not less than 1.25
to 1.00.  The Fixed Charge Coverage Ratio
shall be calculated as the quotient of (i) the trailing twelve-month
net operating income at owned Student Housing Projects net of a management fee
representing 3% of aggregate student housing revenue and a turnover expense of
the greater of (A) $125 per bed or (B) actual turnover expenses incurred per
bed, less a capital reserve of $125 per bed in aggregate, and (ii) the sum of
Consolidated Interest Charges  (excluding
unamortized upfront fees that shall be recorded in respect to the Credit
Agreement and upfront fees that shall be recorded pertaining to the Loan),
principal amortization and preferred dividends of the Borrower and any of its
Subsidiary entities, as calculated over the same time period. For any property
owned less than one (1) year the turnover expenses and capital reserve 

 61
 

calculation will be prorated for the number of days the property has
been owned by the Borrower or its Subsidiary.

(b)           Borrower
shall not permit Consolidated Tangible Net Worth to be less than $455,000,000.

(c)           Borrower
shall maintain a quarterly minimum aggregate Adjusted Management EBITDA of
$5,000,000.

(d)           At
all times, the Trust (including its organization and method of operations and
those of its subsidiaries) shall qualify as a REIT.

All calculations of
financial covenants shall be in accordance with GAAP and shall be reported
quarterly.

Section 5.4             Limitation on Indebtedness.
Borrower and its Subsidiaries shall not create, incur, assume or suffer to
exist any Indebtedness or issue any shares or interests of preferred Capital
Stock, except:

(a)           Indebtedness
of the Borrower and the Guarantors under this Agreement and the other Loan
Documents;

(b)           Indebtedness
of any Guarantor to the Borrower;

(c)           Indebtedness
of an entity which becomes a Subsidiary after the date hereof, provided that
(i) such Indebtedness existed at the time such entity became a Subsidiary and
was not created in anticipation thereof and (ii) immediately after giving
effect to the acquisition of such corporation by the Borrower no Default or
Event of Default shall have occurred and be continuing;

(d)           Indebtedness
relating to future property acquisitions or refinancings or equity commitments
as may be budgeted on a Lender approved basis;

(e)           Indebtedness
relating to financings or refinancings relating to Military Housing Projects
that are non-recourse to Borrower or its Subsidiaries and subject only to
customary “bad acts” guarantees provided in connection with such projects;

(f)            Indebtedness
existing as of the date hereof relating to Student Housing Projects;

(g)           Indebtedness
relating to existing equity commitments related to Military Housing Projects
none of which will become payable prior to payment in full of the Obligations;
and

(h)           Indebtedness
relating to acquisitions and financings 
(including amounts) and equity commitments (including amounts) specified
on  the Sources and Uses attached hereto
as Schedule E.

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ARTICLE
VI

INSURANCE;
CASUALTY; CONDEMNATION; REQUIRED REPAIRS

Section 6.1             Insurance.

(a)          Borrower
shall obtain and maintain, or cause to be maintained, Policies for Borrower,
each Property Guarantor and each Individual Property (individually or
collectively, as the context requires, an “Insured Asset”) providing at
least the following coverages:

(i)            comprehensive
all risk insurance on the Improvements and the Personal Property, in each case
(A) in an amount equal to 100% of the “Full Replacement Cost,” which for
purposes of this Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and footings) with a
waiver of depreciation, (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $50,000; and (D)
providing coverage for contingent liability from Operation of Building Laws,
Demolition Costs and Increased Cost of Construction Endorsements together with
an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the
Improvements or the use of each Insured Asset shall at any time constitute
legal non-conforming structures or uses;

(ii)           commercial
general liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about each Insured Asset, such
insurance (A) to be on the so-called “occurrence” form with a general
aggregate limit of not less than $2,000,000 and a per occurrence limit of not
less than $1,000,000; (B) to continue at not less than the aforesaid limit; and
(C) to cover at least the following hazards: (1) premises and operations; (2)
products and completed operations on an “if any” basis; (3) independent
contractors; (4) blanket contractual liability for all written and oral
contracts; and (5) contractual liability covering the indemnities contained in Article
10 of the Security Instruments to the extent the same is available;

(iii)          business
interruption/loss of rents insurance (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in ‎Section
6.1(a)(i); (C) in an amount equal to 100% of the projected gross income
from each Insured Asset (on an actual loss sustained basis) for a period
continuing until the Restoration of the Insured Asset is completed; the amount
of such business interruption/loss of rents insurance shall be determined prior
to the Closing Date and at least once each year thereafter based on Borrower’s,
Property Guarantor’s or Mezzanine Asset Owner’s, as the case may be, reasonable
estimate of the gross income from each Insured Asset for the full calendar year
prior to the date the amount of such insurance is being determined, in each
case for the succeeding eighteen (18) month period and (D) containing an
extended period of indemnity endorsement which provides that after the physical
loss to the 

 63
 

improvements and the 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 six (6) months from the
date that the applicable Insured Asset is repaired or replaced and operations
are resumed, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period; subject to the rights of any mortgage
lender on a Mezzanine Asset, all insurance proceeds payable to Lender pursuant
to this ‎Section 6.1(a)(iii) shall be held by Lender and shall be
applied to the obligations secured hereunder from time to time due and payable
hereunder and under the Note and this Agreement.  Nothing herein contained, however, 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 and this
Agreement except to the extent such amounts are actually paid out of the
proceeds of such business interruption/loss of rents insurance.

(iv)          at
all times during which structural construction, repairs or alterations are
being made with respect to the improvements: (A) owner’s contingent or
protective liability insurance covering claims not covered by or under the
terms or provisions of the insurance provided for in ‎Section
6.1(c)(ii); and (B) the insurance provided for in ‎Section
6.1(a)(i) shall be written in a so-called builder’s risk completed
value form (1) on a non-reporting basis, (2) against all risks insured
against pursuant to ‎Section 6.1(a)(i), (3) shall include
permission to occupy each Insured Asset, and (4) shall contain an agreed amount
endorsement waiving co-insurance provisions;

(v)           workers’
compensation, subject to the statutory limits of the State in which each
Insured Asset is located, and employer’s liability insurance with a limit of at
least $1,000,000.00 per accident and per disease per employee, and
$1,000,000.00 for disease aggregate in respect of any work or operations on or
about each Insured Asset, or in connection with such Insured Asset or its
operation (if applicable);

(vi)          comprehensive
boiler and machinery insurance, if applicable, in amounts as shall be
reasonably required by Lender on terms consistent with the commercial property
insurance policy required under ‎Section 6.1(a)(i);

(vii)         if
any portion of the improvements is at any time located in an area identified by
the Secretary of Housing and Urban Development or any successor thereto as an
area having special flood hazards pursuant to the National Flood Insurance Act
of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended, or any successor law (the
“Flood Insurance Acts”),
flood hazard insurance of the following types and in the following amounts (A)
coverage under Policies issued pursuant to the Flood Insurance Acts (the “Flood Insurance Policies”)
in an amount equal to the maximum limit of coverage available for the
applicable Insured Asset under the Flood Insurance Acts, subject only to
customary deductibles under such Policies and (B) coverage under supplemental
private Policies in an amount, which when 

 64
 

added to the coverage provided under the Flood Act Policies with
respect to an Insured Asset, is not less than the Allocated Value for such
Insured Asset;

(viii)        if
required by Lender, earthquake, sinkhole and mine subsidence insurance in
amounts equal to the probable maximum loss of each Insured Asset as determined
by Lender in its sole discretion and in form and substance reasonably
satisfactory to Lender, provided that the insurance pursuant to this ‎Section
6.1(a)(viii) hereof shall be on terms consistent with the all risk
insurance policy required under ‎Section 6.1(a)(i) hereof;

(ix)          umbrella
liability insurance in an amount not less than Seventy-Five Million and
00/100 Dollars ($75,000,000.00) per occurrence on terms consistent with the
commercial general liability insurance policy required under ‎Section
6.1(a)(ii) hereof;

(x)           insurance
against damage resulting from acts of terrorism on terms consistent with the
commercial property insurance policy required under subsection (i) above
and on terms consistent with the commercial general liability insurance required
under subsection (ii) above;

(xi)          such
other insurance and in such amounts as Lender from time to time may reasonably
request against such other insurable hazards which at the time are commonly
insured against for property similar to each Insured Asset located in or around
the region in which the each Insured Asset is located.

(b)           All
insurance provided for in Section 6.1(a) hereof shall be obtained under
valid and enforceable policies (the “Policies” or in the singular, the “Policy”),
in such forms as may be reasonably satisfactory to Lender, issued by
financially sound and responsible insurance companies authorized to do business
in the State in which the Insured Asset is located and approved by Lender.  The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the
State and having a claims paying ability rating of “BBB” or better by S&P
and its equivalent from each of the other Rating Agencies and/or a general
policy rating of “A” or better and a financial class of VIII or better by A.M.
Best Company, Inc.  The Policies
described in Section 6.1(a) shall designate Lender and its
successors and assigns as additional insureds, mortgagees and/or loss payee as
deemed appropriate by Lender. To the extent such Policies are not available as
of the Closing Date, Borrower shall deliver to Lender prior to the Closing Date
an Accord 28 or similar certificate of insurance evidencing the coverages and
amounts required hereunder and, upon request of Lender as soon as available
after the Closing Date, certified copies of all Policies.  Borrower shall deliver to Lender within
thirty (30) days of the Closing Date, the final Policies required to be
maintained pursuant to this Article 8. 
Not less than ten (10) days prior to the expiration dates of any
insurance coverage in place with respect to the Insured Asset, Borrower shall
deliver to Lender an Accord 28 or similar certificate, accompanied by evidence
satisfactory to Lender of payment of the premiums due in connection therewith
(the “Insurance Premiums”),
and as soon as available thereafter, certified copies of all renewal Policies.

 65
 

(c)           All
Policies provided for in ‎Section 6.1(a) hereof shall contain
clauses or endorsements to the effect that:

(i)       no
act or negligence of Borrower or anyone acting for Borrower, including Property
Guarantor or Mezzanine Asset Owner or failure to comply with the provisions of
any Policy which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;

(ii)      the
Policies shall not be materially changed (other than to increase the coverage
provided thereby) or cancelled without at least 30 days’ written notice to
Lender and any other party named therein as an insured;

(iii)     each
Policy shall provide that the issuers thereof shall give written notice to
Lender if the Policy has not been renewed thirty (30) days prior to its
expiration; and

(iv)    Lender
shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.

(d)           Borrower
shall furnish or cause to be furnished to Lender, on or before thirty (30) days
after the close of each of Borrower’s fiscal years, a statement certified by
Borrower or a subsidiary of Borrower or a duly authorized officer of Borrower
of the amounts of insurance maintained in compliance herewith, of the risks
covered by such insurance and of the insurance company or companies which carry
such insurance and, if requested by Lender, verification of the adequacy of
such insurance by an independent insurance broker or appraiser acceptable to
Lender.

(e)           If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right
(subject to the rights of the mortgage lender with respect to the Mezzanine
Assets), without notice to Borrower, Property Guarantor or  Mezzanine Asset Owner to obtain such
insurance as required pursuant to this Agreement, and all expenses incurred by
Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and until
paid shall be secured by the Pledge Agreement and Security Instruments and
shall bear interest at the Default Rate. 
Lender agrees to use commercially reasonable efforts to notify Borrower,
Property Guarantor or Mezzanine Asset Owner, as the case may be, if it is
exercising any rights it may have under this subsection (e), provided, however,
any failure to deliver such notice shall in no way affect or impair any rights
Lender may have hereunder.

(f)            In
the event of a foreclosure of any of the Security Instruments, or other
transfer of title to any Insured Asset in extinguishment in whole or in part of
the Debt all right, title and interest of Borrower or Property Guarantor in and
to the Policies then in force and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.

 66

(g)           Borrower
shall cause each Mezzanine Asset Owner and Encumbered Property Subsidiary to
maintain the insurance required pursuant to the mortgage loan documents
encumbering the related Mezzanine Asset and Encumbered Property.

Section 6.2             Casualty.

If an Insured Asset shall
be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower
shall give prompt notice or cause prompt notice to be given of such damage to
Lender and shall, taking into account the time necessary to adjust the loss,
obtain permits and enter into restoration contracts, promptly commence and
diligently prosecute the completion of the Restoration of the Insured Asset as
nearly as possible to the condition the Insured Asset was in immediately prior
to such Casualty, with such alterations as may be reasonably approved by Lender
and otherwise in accordance with Section 6.4.  Subject to the Net Proceeds being made
available by Lender (or any mortgage lender with respect to the Mezzanine
Assets), Borrower shall pay, or cause Property Guarantor or Mezzanine Asset
Owner to pay, all costs of such Restoration whether or not such costs are
covered by insurance, provided, however, regardless of whether
Net Proceeds available for Restoration, Borrower shall cause Property Guarantor
and Mezzanine Asset Owner to promptly commence and diligently prosecute the
removal and disposal of any debris, refuse or hazards resulting from the
Casualty and insure that the applicable Insured Asset is in a safe condition.  Lender may, but shall not be obligated to
make proof of loss (subject to the rights of any mortgage lender with respect
to the Mezzanine Assets) if not made promptly by Borrower or Property Guarantor
or Mezzanine Asset Owner, as the case may be.

Section 6.3             Condemnation.

Borrower shall promptly
give Lender notice of the actual or threatened commencement of any proceeding
for the Condemnation of all or any part of any Insured Asset and shall deliver
to Lender copies of any and all papers served in connection with such proceedings.  Lender may participate in any such
proceedings, and Borrower, Property Guarantor or Mezzanine Asset Owner, as the
case may be, shall from time to time deliver to Lender all instruments
reasonably requested by it to permit such participation.  Borrower, Property Guarantor or Mezzanine
Asset Owner, as the case may be, shall, 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 Condemnation 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 due to Property
Guarantor or Mezzanine Asset Owner shall have been actually received and
applied by Lender, after the deduction of reasonable out-of-pocket 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 Insured Asset or any
portion thereof is taken by a condemning authority, Borrower shall cause
Property Guarantor and Mezzanine Asset Owner, as the case may be, to, promptly
commence and diligently prosecute the Restoration of the applicable Insured
Asset and otherwise comply with the provisions of 

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‎Section 6.4.  If any Insured Asset is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall
have the right, whether or not a deficiency judgment on the Note or under the
Guaranty shall have been sought, recovered or denied, to receive the Award, or
a portion thereof sufficient to pay the Debt.

Section 6.4             Restoration.

The following provisions
shall apply in connection with the Restoration of any Insured Asset:

(a)           If
the Net Proceeds shall be less than $100,000 and the costs of completing the
Restoration shall be less than $100,000, the Net Proceeds will be disbursed by
Lender to Borrower or Property Guarantor upon receipt, provided that all
of the conditions set forth in Section 6.4(b)(i) are met and Borrower
delivers to Lender a written undertaking to expeditiously commence and to
complete the Restoration in accordance with the terms of this Agreement.

(b)           If
the Net Proceeds are equal to or greater than $100,000 or the costs of
completing the Restoration is equal to or greater than $100,000 Lender shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 6.4. 
The term “Net Proceeds”
shall mean:  (i) the net amount of all
insurance proceeds received by Lender pursuant to Section 6.1(a)(i), (iv),
(vi), (vii), (viii) and (x) as a result of such
damage or destruction, after deduction of the reasonable out-of-pocket costs
and expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting same (“Insurance
Proceeds”), or (ii) the net amount of the Award, after
deduction of its reasonable out-of-pocket costs and expenses (including, but
not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”),
whichever the case may be.

(i)       The Net Proceeds shall be made available
to Borrower or to Property Guarantor for Restoration provided that each
of the following conditions are met:

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

(B)          (1)
in the event the Net Proceeds are Insurance Proceeds, less than thirty-five
percent (35%) of the total floor area of the Improvements on the Individual Property
has been damaged, destroyed or rendered unusable as a result of such Casualty
or (2) in the event the Net Proceeds are Condemnation Proceeds, less than
fifteen percent (15%) of the land constituting the Individual Property is
taken, and such land is located along the perimeter or periphery of the
Individual Property, and less than ten percent (10%) of the floor area of the
Improvements is the subject of the Condemnation;

(C)          Leases
covering in the aggregate at least seventy-five percent (75%) of the total
rentable space in the Property which has been demised under executed and
delivered Leases in effect as of the date of the 

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occurrence of such Casualty or Condemnation, whichever
the case may be, is in effect as of such date shall remain in full force and
effect during and after the completion of the Restoration without abatement of
rent beyond the time required for Restoration;

(D)          Borrower
shall cause Property Guarantor to commence the Restoration as soon as
reasonably practicable (but in no event later than sixty (60) days after such
Casualty or Condemnation, whichever the case may be, occurs) and shall
diligently pursue the same to satisfactory completion in compliance with all
Applicable Laws, including, without limitation, all applicable Environmental
Laws.  For purposes of this subsection
(D), the filing for an application for a building permit for such Restoration
shall be deemed commencement of such Restoration;

(E)           Lender
shall be reasonably satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Individual Property as a result of the occurrence
of any such Casualty or Condemnation, whichever the case may be, will be
covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section
6.1(a)(iii), if applicable, or (3) by other funds of Borrower;

(F)           Lender
shall be reasonably satisfied that the Restoration will be completed on or
before the earliest to occur of (1) the earliest date required for such
completion under the terms of any Leases which are required in accordance with
the provisions of this Section 6.4(b) to remain in effect subsequent to
the occurrence of such Casualty or Condemnation and the completion of the Restoration,
or (2) such time as may be required under Applicable Law in order to repair and
restore the Property to the condition it was in immediately prior to such
Casualty or Condemnation or (3) the expiration of the insurance coverage
referred to in Section 6.1(a)(iii), unless Borrower has posted
reasonably acceptable additional collateral with Lender;

(G)           the
Individual Property and the use thereof after the Restoration will be in
compliance with and permitted under all Applicable Laws;

(H)          such
Casualty or Condemnation, as applicable, does not result in the total permanent
loss of access to the Individual Property or the related Improvements;

(I)            Borrower
shall deliver, or cause to be delivered, to Lender a signed detailed budget
approved in writing by Borrower’s architect or engineer stating the entire cost
of completing the Restoration, which budget shall show that the Restoration can
be completed from Net 

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Proceeds and Cash or Cash equivalents deposited by Borrower with
Lender;

(J)            the
Net Proceeds together with any Cash or Cash equivalent deposited by Borrower
with Lender are sufficient in Lender’s reasonable discretion to cover the cost
of the Restoration; and

(K)          the
Management Agreement in effect as of the date of the occurrence of such
Casualty or Condemnation, whichever the case may be, shall (1) remain in full
force and effect during the Restoration and shall not otherwise terminate as a
result of the Casualty or Condemnation or the Restoration or (2) if terminated,
shall have been replaced with a Replacement Management Agreement with a
Qualified Manager, prior to the opening or reopening of the applicable
Individual Property or any portion thereof for business with the public.

(ii)      The
Net Proceeds shall be held by Lender in an interest-bearing account (with
interest accruing for the benefit of Borrower) and, until disbursed in
accordance with the provisions of this ‎Section 6.4(b) shall
constitute additional security for the Debt and other obligations under the
Loan Documents.  The Net Proceeds shall
be disbursed by Lender to, or as directed by, Borrower or Property Guarantor
from time to time during the course of the Restoration, upon receipt of
evidence reasonably satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to be paid for out
of the requested disbursement) to the date of the request in connection with
the Restoration have been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of
intention to file same, or any other Liens or encumbrances of any nature
whatsoever on the Individual Property which have not either been fully bonded
to the reasonable satisfaction of Lender and discharged of record or in the alternative
fully insured to the reasonable satisfaction of Lender by the title company
issuing the Title Insurance Policy.

(iii)     All
plans and specifications required in connection with the Restoration, shall be
subject to prior review and acceptance in all respects by Lender and by an
independent consulting engineer selected by Lender (the “Casualty Consultant”),
such review and acceptance shall not be unreasonably withheld, conditioned or
delayed.  Lender shall have the use of
the plans and specifications and the benefit of all permits, licenses and
approvals required or obtained in connection with the Restoration.  The identity of the contractors,
subcontractors and materialmen engaged in the Restoration as well as the
contracts under which they have been engaged, shall be subject to prior review
and acceptance by Lender and the Casualty Consultant, such review and
acceptance shall not be unreasonably withheld, conditioned or delayed.  All reasonable costs and expenses incurred by
Lender in connection with making the Net Proceeds available for the Restoration
including, without limitation, 

 70
 

reasonable counsel fees and disbursements and the Casualty Consultant’s
fees, shall be paid by Borrower or Property Guarantor.

(iv)    In
no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for
work in place as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. 
The term “Casualty Retainage” shall mean an amount equal to ten
percent (10%), of the hard costs actually incurred for work in place as part of
the Restoration, as certified by the Casualty Consultant, until the Restoration
has been completed.  The Casualty
Retainage shall be reduced to five percent (5%) of the hard costs incurred upon
receipt by Lender of satisfactory reasonably evidence that fifty percent (50%)
of the Restoration has been completed. 
The Casualty Retainage shall in no event, and notwithstanding anything
to the contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower or Property Guarantor from contractors,
subcontractors and materialmen engaged in the Restoration.  The Casualty Retainage shall not be released
until the Casualty Consultant certifies to Lender that the Restoration has been
substantially completed in accordance with the provisions of this ‎Section
6.4(b) and Lender receives evidence satisfactory to Lender that the costs
of the Restoration have been paid in full or will be paid in full out of the
Casualty Retainage; provided, however, that Lender will release
the portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the
date upon which the Casualty Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily and substantially
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers (or similar
releases) and evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or by the
title company issuing the Title Insurance Policy for the related Individual
Property, and Lender receives an endorsement to such Title Insurance Policy
insuring the continued priority of the Lien of the related Security Instrument
and evidence of payment of any premium payable for such endorsement.  If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

(v)     Lender
shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.

(vi)    If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of Lender in consultation with the Casualty Consultant,
if any, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”)
with Lender before any further disbursement of the Net 

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Proceeds shall be made.  The Net
Proceeds Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until
so disbursed pursuant to this ‎Section 6.4(b) shall constitute
additional security for the Debt and other obligations under the Loan
Documents.

(vii)   The
excess, if any, of the Net Proceeds and the remaining balance, if any, of the
Net Proceeds Deficiency deposited with Lender after the Casualty Consultant
certifies to Lender that the Restoration has been substantially completed in
accordance with the provisions of this ‎Section 6.4(b), and the
receipt by Lender of evidence reasonably satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall be
remitted by Lender to Borrower, provided no Event of Default shall have occurred
and shall be continuing under the Note, this Agreement or any of the other Loan
Documents.

(c)           All
Net Proceeds not required (i) to be made available for the Restoration or (ii)
to be returned to Borrower as excess Net Proceeds pursuant to ‎Section
6.4(b)(vii) may be retained and applied by Lender toward the payment of the
Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall approve, in its discretion.  If Lender shall receive and retain Net
Proceeds, the Lien of the Security Instruments shall be reduced only by the
amount thereof received and retained by Lender and actually applied by Lender
in reduction of the Debt in accordance with Section 2.3.2 hereof.

(d)           Borrower
shall cause each Mezzanine Asset Owner and Encumbered Property Subsidiary to
comply with the restoration requirements set forth in the mortgage loan
documents encumbering the related Mezzanine Asset and Encumbered Property.

ARTICLE
VII

[RESERVED]

ARTICLE
VIII

DEFAULTS

Section 8.1             Event of Default.

(a)           Each
of the following events shall constitute an event of default hereunder (an “Event of Default”):

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(i)       if
(A) any regularly scheduled payment of interest or principal (including the
principal and interest due on the Maturity Date) or any deposit to any reserve
account described herein is not paid within three (3) Business Days after the
date the same is due and payable or (B) any other portion of the Debt is not
paid within five (5) Business Days after demand therefore (or such longer
period of time expressly provided for in the Loan Documents);

(ii)      if
any of the Taxes are not paid on or before the date the same become delinquent
unless Lender determines, in its sole discretion, that such failure to pay
Taxes is not likely to have a Material Adverse Effect;

(iii)     if
the Policies are not kept in full force and effect or if certified copies of
the Policies are not delivered to Lender on request;

(iv)    if
any Key Entity or Mezzanine Property Guarantor or any other Person transfers or
encumbers any portion of any Individual Property or any Mezzanine Collateral or
the direct or indirect interests in any Key Entity, Mezzanine Property
Guarantor, Material Subsidiary or Encumbered Property Subsidiary in violation
of the provisions of Section ‎5.2.10 hereof;

(v)     if
any representation or warranty made by Borrower herein or in any other Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or
warranty was made; provided, however, as to any such false or
misleading representation or warranty which was unintentionally submitted to
Lender and which can be made true and correct by action of Borrower, Borrower
shall have a period of ten (10) Business Days following written notice thereof for
Borrower to undertake and complete all action necessary to make such
representation, warranty, acknowledgement or statement true and correct as and
when made;

(vi)    if
any Key Entity or any Guarantor shall make an assignment for the benefit of
creditors;

(vii)   if
a receiver, liquidator or trustee shall be appointed for any Key Entity or any
Guarantor or if any Key Entity or any Guarantor shall be adjudicated a bankrupt
or insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to the Bankruptcy Code, or any similar federal or State law, shall be
filed by or against, consented to, or acquiesced in by, any Key Entity or any
Guarantor or if any proceeding for the dissolution or liquidation of any Key
Entity or any Guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and
not consented to by any Key Entity or any Guarantor upon the same not being
discharged, stayed or dismissed within sixty (60) days;

 73
 

(viii)  if
Borrower attempts to assign its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;

(ix)     if
Borrower breaches any of its respective negative covenants contained in ‎Section
5.2;

(x)      if
Borrower violates or does not comply with any of the provisions of Section
5.1.18 hereof;

(xi)     if
a default by Borrower or Property Guarantor or Mezzanine Asset Owner has
occurred and continues beyond any applicable cure period under any Management
Agreement (or any Replacement Management Agreement) and the Manager thereunder
duly terminates or cancels such Management Agreement (or any related
Replacement Management Agreement);

(xii)    if
any Property Guarantor or Mezzanine Subsidiary is not a Special Purpose Entity
unless Lender determines, in its sole discretion, that such failure to be a
Special Purpose Entity is not likely to have a Material Adverse Effect;

(xiii)   if
any Individual Property or Mezzanine Asset becomes subject to any mechanic’s, materialman’s
or other Lien other than a Lien for local real estate taxes and assessments not
then due and payable and the Lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of sixty (60) days after Borrower,
Property Guarantor, Mezzanine Asset Owner or Mezzanine Subsidiary obtains
notice thereof; provided, however, if any action is brought to
enforce such Lien, it shall be an Event of Default if such Lien remains
undischarged of record (by payment, bonding or otherwise) for a period of five
(5) Business Days after the commencement of such action;

(xiv)   if
any federal tax Lien or state or local income tax Lien is filed against any Key
Entity or any Guarantor or any Individual Property or Mezzanine Asset and same
is not discharged of record (by payment, bonding or otherwise) within sixty
(60) days after Borrower obtains notice thereof; provided, however,
if any action is brought to enforce such Lien, it shall be an Event of Default
if such Lien remains undischarged of record (by payment, bonding or otherwise)
for a period of five (5) Business Days after the commencement of such action;

(xv)    (A)
Borrower fails to provide Lender with the written certification and evidence
required pursuant to Section ‎5.2.8 hereof, (B) Borrower is a Plan
or its assets constitute Plan Assets; or (C) Borrower consummates a transaction
which would cause the Security Instruments or Lender’s exercise of its rights
under the Security Instruments, the Pledge Agreement, the Note, this Agreement
or the other Loan Documents to constitute a nonexempt prohibited transaction
under ERISA or result in a violation of a State statute regulating governmental
plans, subjecting Lender to liability for a violation of ERISA, the Code, a State
statute or other similar law;

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(xvi)   if
any default occurs under any guaranty or indemnity executed in connection
herewith (including, without limitation, the Guaranty and the Environmental
Indemnity) and such default continues after the expiration of applicable notice
and grace periods, if any;

(xvii)  if
any Key Entity shall be in default beyond applicable notice and grace periods
under any other mortgage, deed of trust, deed to secure debt or other security
agreement covering any part of any Individual Property or any Mezzanine Asset;

(xviii) if
there shall occur a default, beyond any applicable notice and cure period,
under any Indebtedness of Borrower or its Subsidiaries in excess of $5,000,000;

(xix)   if
there shall be default under the Security Instruments, the Pledge Agreement,
any Guaranty or any of the other Loan Documents beyond any applicable notice
and cure periods contained in such documents;

(xx)    Borrower
fails to perform, satisfy or observe any covenant or agreement contained in Section
5.3 or Section 5.4 of this Agreement;

(xxi)   if
the Trust (including its organization and method of operations and those of its
subsidiaries) shall fail to qualify as a REIT;

(xxii)  if
the Trust at any time fails to maintain its current listing on the New York Stock
Exchange; or

(xxiii) if
Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to
(xx), for ten (10) Business Days after notice to Borrower from Lender, in the case
of any Default 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; provided,
however, that if such non-monetary Default is susceptible of cure
but cannot reasonably be cured within such 30-day period and provided further
that Borrower shall have commenced to cure such Default within such thirty (30)
day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed ninety (90) days.

(b)           Upon
the occurrence and during the continuance of an Event of Default (other than an
Event of Default described in clauses (vi) or (vii) above), in addition to any
other rights or remedies available to it pursuant to this Agreement and the
other Loan Documents or at law or in equity, Lender may take such action,
without notice or demand (except as expressly set forth in this Agreement ,
that Lender deems advisable to protect and enforce its rights against Borrower
and in and to all or any Individual Property or Mezzanine Collateral,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights 

 75
 

or remedies provided in the Loan Documents against Borrower and any or
all of the Properties, including, without limitation, all rights or remedies
available at law or in equity; and upon any Event of Default described in
clauses (vi) or (vii) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.

Section 8.2             Remedies.

(a)           If
an Event of Default shall occur and be continuing or shall exist, the Lender
shall be under no further obligation to make Additional Advances hereunder and
may declare the unpaid principal amount of the Note, interest accrued thereon
and all other amounts owing by the Borrower or any Guarantor hereunder or under
the Note, the Guaranty or the other Loan Documents to be immediately due and
payable without presentment, demand, protest or further notice of any
kind.  Upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights, powers,
privileges and other remedies available to Lender against Borrower under this
Agreement or any of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at
any time and from time to time, whether or not all or any of the Debt shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding, UCC sale or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to all or any
Individual Property, Mezzanine Collateral or any other Collateral.  Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly, successively,
together or otherwise, at such time and in such order as Lender may determine
in its sole discretion, to the fullest extent permitted by Applicable Law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by Applicable Law, equity or contract or as set forth herein
or in the other Loan Documents.  Without
limiting the generality of the foregoing, Borrower agrees that if an Event of
Default is continuing (i) Lender is not subject to any “one action” or “election
of remedies” law or rule, and (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until
Lender has exhausted all of its remedies against the Properties and the other
Collateral and each Security Instrument and the Pledge Agreement has been
foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or
the Debt has been paid in full.

(b)           With
respect to Borrower and the Properties, nothing contained herein or in any
other Loan Document shall be construed as requiring Lender to resort to any
Individual Property or Collateral for the satisfaction of any of the Debt in
preference or priority to any other Individual Property or Collateral, and
Lender may seek satisfaction out of all of the Properties or any other Collateral
or any part thereof, in its absolute discretion in respect of the Debt.  In addition, Lender shall have the right from
time to time to partially foreclose the Security Instruments in any manner and
for any amounts secured by the Security Instruments then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances:  (i) in the 

 76
 

event Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose one or more of the Security Instruments to recover such delinquent
payments, or (ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose one or more of
the Security Instruments to recover so much of the principal balance of the
Loan as Lender may accelerate and such other sums secured by one or more of the
Security Instruments as Lender may elect. 
Notwithstanding one or more partial foreclosures, the Properties shall
remain subject to the Security Instruments to secure payment of sums secured by
the Security Instruments and not previously recovered.

(c)           Lender
shall have the right, from time to time, to sever the Note and the other Loan
Documents into one or more separate notes, Security Instruments and other
security documents (the “Severed
Loan Documents”) in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies provided hereunder. 
Borrower shall execute and deliver to Lender from time to time, promptly
after the request of Lender, a severance agreement and such other documents as
Lender shall request in order to effect the severance described in the
preceding sentence, all in form and substance reasonably satisfactory to
Lender.  Borrower and on behalf of
Property Guarantor hereby absolutely and irrevocably appoints Lender as its
true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect the aforesaid
severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; provided, however, Lender shall not make or execute any
such documents under such power until ten (10) Business Days after notice has
been given to Borrower by Lender of Lender’s intent to exercise its rights
under such power.  The Severed Loan
Documents shall not contain any representations, warranties or covenants not
contained in the Loan Documents and any such representations and warranties
contained in the Severed Loan Documents will be given by Borrower only as of
the Closing Date.

(d)           In
addition to (and without limitation of) any right of setoff, bankers’ lien or
counterclaim Lender may otherwise have, Lender shall be entitled, at its
option, to offset balances (general or special, time or demand, provisional or
final) held by it for the account of Borrower at any of Lender’s offices
against any amount payable by Borrower to Lender hereunder or under any other
Loan Document which is not paid when due (regardless of whether such balances
are then due to Borrower), in which case it shall promptly notify Borrower;
provided, however, that Lender’s failure to give such notice shall not affect
the validity thereof and further, provided, that the rights of Lender hereunder
shall not apply to Excluded Assets (as defined in the Security Agreement).

Section 8.3             Remedies Cumulative; Waivers.

To the extent permitted
by Applicable Law, the rights, powers and remedies of Lender under this
Agreement shall be cumulative and not exclusive of any other right, power or
remedy which Lender may have against Borrower pursuant to this Agreement or the
other Loan Documents, or existing at law or in equity or otherwise.  Lender’s rights, powers and remedies may be
pursued singularly, concurrently or otherwise, at such time and in such order
as Lender 

 77
 

may determine in Lender’s
sole discretion.  No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. 
A waiver of one or more Defaults or Events of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.

ARTICLE
IX

SPECIAL
PROVISIONS

Section 9.1             Sale of Notes and Securitization.  

Lender may, at any time,
sell, transfer or assign (in each case, in whole or in part) the Note, this
Agreement, the Security Instruments and the other Loan Documents, and any or
all servicing rights with respect thereto, or grant participations therein or
issue mortgage pass-through certificates or other securities (the “Securities”)
evidencing a beneficial interest in a rated or unrated public offering or
private placement (including any sale or participations, a “Securitization”).  At the request of the holder of the Note and,
to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall satisfy the market standards which may be reasonably
required in the marketplace or by the Rating Agencies in connection with a
Securitization or the sale of the Note or the participations or Securities,
including, without limitation, to:

(a)           (i)          provide such financial and other
information with respect to the Properties, Borrower, Guarantor and the
Manager, (ii) provide budgets relating to the Properties and (iii) upon
reasonable prior written notice and at reasonable times, to perform or cause to
be performed such site inspection, appraisals, market studies, environmental
reviews and reports (Phase I’s and, if appropriate, Phase II’s), engineering
reports and other due diligence investigations of the Properties, as may be
reasonably requested by the holder of the Note or the Rating Agencies or as may
be necessary or appropriate in connection with the Securitization (the “Provided Information”),
together, if customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys reasonably acceptable to Lender and the Rating Agencies;

(b)           if
reasonably required by the Rating Agencies, deliver (i) a nonconsolidation
opinion, (ii) revised opinions of counsel as to due execution and
enforceability with respect to the Properties, Borrower, Indemnitor, Guarantor,
Principal, and their respective Affiliates and the Loan Documents, and (iii)
revised organizational documents for Borrower, Guarantor and Principal
(including, without limitation, such revisions as are necessary to cause such
entity to be a Special Purpose Entity to the extent required hereunder), which
counsel, opinions and organizational documents shall be reasonably satisfactory
to Lender and the Rating Agencies;

 78
 

(c)           if
reasonably required by the Rating Agencies, use commercially reasonable efforts
to deliver estoppel letters from parties to agreements that affect the
Properties, which estoppel letters, subordination agreements or other
agreements shall be reasonably satisfactory to Lender and the Rating Agencies.

(d)           execute
such amendments to the Loan Documents and organizational documents as may be
reasonably requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (except for modifications and amendments
required to be made pursuant to Sections (e) and (f) below) (i)
change the interest rate, the stated maturity or the amortization of principal
set forth in the Note, or (ii) modify or amend any other economic term of the
Loan or (iii) increase the liability or decrease the rights of Borrower under
any of the Loan Documents other than to a de minimis extent.

(e)           if
Lender elects, in its sole discretion, prior to or upon a Securitization, to
split the Loan into two or more parts, or the Note into multiple component
notes or tranches which may have different interest rates, amortization
payments, principal amounts and maturities, Borrower agrees to reasonably
cooperate and cause each Mezzanine Subsidiary to cooperate with Lender in
connection with the foregoing and to execute the required modifications and
amendments to the Note, this Agreement and the Loan Documents and to provide
opinions necessary to effectuate the same. 
Such Notes or components may be assigned different interest rates, so
long as the initial weighted average of such interest rates does not exceed the
Applicable Interest Rate and the other terms and conditions of such component
notes are substantially similar to the terms and conditions of the Note, provided
that Borrower’s liability or rights under the Loan Documents shall not be
increased or decreased, respectively, other than to a de minimis extent;

(f)            upon
reasonable prior written notice, execute modifications to the Loan Documents
changing the interest rate for the Loan, provided that the initial
weighted average of the interest rate spreads for the Loan after such
modification shall not exceed the weighted average of the interest rate spreads
for the Loan immediately prior to such modification.  The Borrower shall also provide opinions and
title insurance reasonably necessary to effectuate the same;

(g)           update
the representations and warranties contained in the Loan Documents as of the
closing date of the Securitization and make any such representation and
warranties with respect to the Property, Borrower, Guarantor and the Loan
Documents as are customarily provided in securitization transactions and as may
be reasonably requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and warranties as
they exist on the date thereof, including the representations and warranties
made in the Loan Documents; and

(h)           supply
to Lender, at Lender’s sole cost and expense, such documentation, financial
statements and reports in form and substance reasonably required for Lender to
comply with Regulation S-X of the federal securities law, if applicable.

 79
 

Notwithstanding anything
to the contrary contained in this Agreement or the other Loan Documents, Lender
shall reimburse Borrower for all of the Borrower’s reasonable costs and
expenses incurred in connection with Borrower’s complying with requests made
under this Section 9.1 and Section 9.2.

Section 9.1             Securitization Indemnification.  Borrower understands that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus supplement,
private placement memorandum, offering circular or other offering document (each
a “Disclosure Document”) and may also be included in filings (an “Exchange
Act Filing”) with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), or the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization.  In the event that the
Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Provided Information by providing all current information reasonably necessary
to keep the Provided Information accurate and complete in all material
respects.

Section 9.3             Servicer.  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 its responsibilities under this Agreement and
the other Loan Documents to the Servicer pursuant to a servicing agreement (the
“Servicing Agreement”)
between Lender and Servicer. Borrower may rely upon the written instructions,
approvals, acceptances, waivers and decisions given to Borrower by Servicer as
if made by Lender and Lender agrees to bound thereby.

Section 9.4             Recourse.

The Debt shall be fully
recourse to Borrower.

Section 9.5             Waivers.

(a)           Borrower
waives:

(A)          any
right to require Lender to proceed against any other person or to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender’s power before proceeding against Borrower;

(B)           any
defense based upon any legal disability or other defense of, any guarantor of
any other person or by reason of the cessation or limitation of the liability
of any guarantor from any cause other than full payment of all sums payable
under the Note, this Agreement and any of the other Loan Documents;

(C)           any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in any other respects more
burdensome than that of a principal;

 80
 

(D)          any
defense based upon any failure by Lender to obtain collateral for the
indebtedness or failure by Lender to perfect a lien on any collateral;

(E)           presentment,
demand, protest and notice of any kind except as set forth in this Agreement;

(F)           any
defense based upon any failure of Lender to give notice of sale or other
disposition of any collateral to any other person or entity or any defect in
any notice that may be given in connection with any sale or disposition of any
collateral;

(G)           any
defense based upon any election by Lender, in any bankruptcy proceeding, of the
application or non-application of Section 1111(6)(2) of the Bankruptcy Code or
any successor statute;

(H)          any
defense based upon any use of cash collateral under Section 363 of the
Bankruptcy Code;

(I)            any
defense based upon any agreement or stipulation entered into by Lender with
respect to the provision of adequate protection in any bankruptcy proceeding;

(J)            any
defense based upon any borrowing or any grant of a security interest under
Section 364 of the Bankruptcy Code;

(K)          any
defense based upon the avoidance of any security interest in favor of Lender
for any reason;

(L)           any
defense based upon any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding, including any
discharge of, or bar or stay against collecting, all or any of the obligations
evidenced by the Note or owing under any of the Loan Documents; and

(M)         any
defense or benefit based upon Borrower’s, or any other party’s, resignation of
the portion of any obligation secured by the applicable Security Instruments to
be satisfied by any payment from any such party.

(N)          any
claim or other right which Borrower might now have or hereafter acquire against
any other person that arises from the existence or performance of any
obligations under the Note, this Agreement, the Security Instruments or the
other Loan Documents, including, without limitation, any of the following: (i)
any right of subrogation, reimbursement, exoneration, contribution, or
indemnification; or (ii) any right to participate in any claim or remedy of
Lender against any collateral 

 81
 

security therefor, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law; and

Section 9.6             Intercreditor Agreements.

Lender, in one or more
capacities, is party to a certain intercreditor agreement dated on or around
the date hereof (the “Intercreditor Agreement”), memorializing its
rights and obligations with respect to the Loan, Borrower, Mezzanine
Subsidiaries and the Mezzanine Assets. 
Borrower hereby acknowledges and agrees that (i) such Intercreditor
Agreement is intended solely for the benefit of Lender and (ii) 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.  Lender shall have no obligation to disclose
to Borrower the contents of the Intercreditor Agreement.  Borrower’s obligations hereunder are
independent of such Intercreditor Agreement and remain unmodified by the terms
and provisions thereof.

Section 9.7             UCC Plus/Eagle 9 UCC Insurance
Policies.

Borrower hereby covenants
that upon request of Lender, Borrower shall promptly cooperate with Lender in
obtaining UCC-Plus or Eagle 9 UCC insurance policies with respect to the
collateral pledged to Lender pursuant to the Pledge Agreement and, if
available, the Security Agreement.  Such
cooperation may include, without limitation, delivery of organizational
documents, authority documents and supplemental UCC filings.  Borrower shall pay all costs and expenses
incurred by Lender in obtaining such UCC-Plus or Eagle 9 UCC insurance
policies, including the premium therefor.

ARTICLE X

MISCELLANEOUS

Section 10.1           Survival.

This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Debt is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents.  Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the legal representatives, successors and assigns of such
party.  All covenants, promises and
agreements in this Agreement, by or on behalf of Borrower, shall inure to the
benefit of the legal representatives, successors and assigns of Lender.

Section 10.2           Lender’s Discretion.

Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or 

 82
 

not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.

Section 10.3           Governing Law.

(a)           THIS
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF
THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS), PROVIDED HOWEVER, THAT WITH RESPECT
TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIENS AND SECURITY
INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THE OTHER
LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF THE
STATE WHERE EACH INDIVIDUAL PROPERTY IS LOCATED SHALL APPLY.

(b)           WITH
RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS AGREEMENT, THE
NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER AND LENDER EACH (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING IN THIS AGREEMENT, THE NOTE OR THE
OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING
AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.

Section 10.4           Modification, Waiver in Writing.

No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the
same shall be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. 
Except as otherwise expressly provided in this Agreement or in any of
the other Loan Documents, no notice to, or demand on Borrower, shall entitle
Borrower to any other or future notice or demand in the same, similar or other
circumstances.

 

 83

Section 10.5           Delay
Not a Waiver.

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

Section 10.6           Notices.

All notices or other
written communications hereunder shall be deemed to have been properly given
upon receipt or rejection if sent either by (i) overnight delivery with any
reputable overnight courier service, charges prepaid, return receipt requested
or (ii)  registered or certified mail,
postage prepaid, return receipt requested, in either event, addressed as
follows:

	
  If to Borrower:

  	
   

  	
  GMH Communities, LP

  
	
   

  	
   

  	
  10 Campus Boulevard

  
	
   

  	
   

  	
  Newtown Square, PA 19073

  
	
   

  	
   

  	
  Attention: Joseph Macchione

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Morgan, Lewis & Bockius LLP

  
	
   

  	
   

  	
  1701 Market Street

  
	
   

  	
   

  	
  Philadelphia, PA 19103

  
	
   

  	
   

  	
  Attention: Michael J. Pedrick, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  Wachovia Bank, National Association

  
	
   

  	
   

  	
  One Wachovia Center

  
	
   

  	
   

  	
  301 South College Street, NC0172

  
	
   

  	
   

  	
  Charlotte, NC 28288

  
	
   

  	
   

  	
  Attention: Rex Rudy

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Cadwalader, Wickersham & Taft LLP

  
	
   

  	
   

  	
  227 West Trade Street, Suite 2400

  
	
   

  	
   

  	
  Charlotte, NC 28202

  
	
   

  	
   

  	
  Attention: Richard Madden, Esq.

  

or addressed as such
party may from time to time designate by written notice to the other parties.

Either party by notice to
the other may designate additional or different addresses for subsequent
notices or communications.

 84
 

Section 10.7           Trial
by Jury.

BORROWER AND LENDER
HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, 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 BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. 
LENDER AND BORROWER ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER
OR LENDER, AS APPLICABLE.

Section 10.8           Headings.

The Article and/or
Section headings and the Table of Contents in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

Section 10.9           Severability.

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

Section 10.10         Preferences.

Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower
hereunder.  To the extent Borrower makes
a payment or payments to Lender, which payment or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, State or federal law, common law or equitable cause, then,
to the extent of such payment or proceeds received, the obligations hereunder
or part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

Section 10.11         Waiver
of Notice.

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

 85
 

any notice from Lender
with respect to any matter for which this Agreement or the other Loan Documents
do not specifically and expressly provide for the giving of notice by Lender to
Borrower.

Section 10.12         Remedies
of Borrower.

In the event that a claim
or adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, 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 shall be determined by an action seeking declaratory judgment.

Section 10.13         Expenses;
Indemnity.

(a)           Borrower covenants and agrees to pay
or, if Borrower fails to pay, to reimburse, Lender within five (5) days of
receipt of written notice from Lender for all reasonable out-of-pocket costs
and expenses (including reasonable attorneys’ fees and disbursements) incurred
by Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of
furnishing all opinions by counsel for Borrower (including without limitation
any opinions requested by Lender as to any legal matters arising under this
Agreement or the other Loan Documents with respect to the Properties or the
Collateral; (ii) Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by
Borrower; (iv) securing Borrower’s compliance with any requests made pursuant
to the provisions of this Agreement; (v) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses 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
this Agreement and the other Loan Documents; (vi) 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 Borrower, this Agreement, the other Loan Documents, the Properties,
the Collateral or any other security given for the Loan; and (vii) enforcing
any obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work out” or of any
insolvency or bankruptcy proceedings; provided, however, that
Borrower shall not be liable for the payment of any such costs and expenses to
the extent the same arise by reason of the gross negligence, illegal acts,
fraud or willful misconduct of Lender.

 86
 

(b)           Borrower shall indemnify, defend and
hold harmless Lender from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for Lender
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be designated a party
thereto), that may be imposed on, incurred by, or asserted against Lender in
any manner relating to or arising out of (i) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in,
this Agreement or the other Loan Documents, or (ii) the use or intended use of
the proceeds of the Loan (collectively, the “Indemnified Liabilities”); provided, however,
that Borrower shall not have any obligation to Lender hereunder to the extent
that such Indemnified Liabilities arise from the gross negligence, illegal
acts, fraud or willful misconduct of Lender. 
To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that
it is permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.

(c)           Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless Lender and the
Indemnified Parties from and against any and all losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any
individual prohibited transaction exemption under ERISA, the Code, any State
statute or other similar law that may be required, in Lender’s sole discretion)
that Lender may incur, directly or indirectly, as a result of a default under Sections
‎4.1.8 or ‎5.2.8 hereof.

(d)           Borrower covenants and agrees to pay
for any consent, approval, waiver or confirmation obtained from such Rating
Agency pursuant to the terms and conditions of the Loan Documents as a result
of a request or action of Borrower and Lender shall be entitled to require
payment of such fees and expenses as a condition precedent to the obtaining of
any such consent, approval, waiver or confirmation.

Section 10.14         Schedules
and Exhibits Incorporated.

The Schedules and
Exhibits annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.

Section 10.15         Offsets,
Counterclaims and Defenses.

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

 87
 

Section 10.16         No
Joint Venture or Partnership; No Third-party Beneficiaries.

(a)           Borrower and Lender intend that the
relationships created hereunder and under the other Loan Documents be solely
that of borrower and lender.  Nothing
herein or therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between Borrower and Lender nor to grant Lender
any interest in the Properties other than that of mortgagee, beneficiary or
lender.

(b)           This Agreement and the other Loan
Documents are solely for the benefit of Lender and Borrower and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or
to enforce the performance or observance of any of the obligations contained
herein or therein.  All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing
to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

Section 10.17         Publicity.

All news releases,
publicity or advertising by Borrower, Lender or their respective Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Borrower, Lender
or any of their respective Affiliates shall be subject to the prior written
approval of Lender and Borrower as applicable, which shall not be unreasonably
withheld.  Borrower shall request such
approval from Lender as it relates to the Related Parties.  Notwithstanding the foregoing, disclosure
required by Applicable Laws (as reasonably determined by Borrower, Lender or
the Related Parties, as applicable) shall not be subject to the prior written
approval of Lender or Borrower, as applicable. 
Further notwithstanding the foregoing, nothing in this Section 10.17
shall limit (i) Lender’s rights set forth in Sections 9.1, 9.2 or
10.23 or (ii) Lender’s discretion with respect to the contents contained
in any Disclosure Document.

Section 10.18         Cross-Default;
Cross-Collateralization; Waiver of Marshalling of Assets.

(a)           Property Guarantor acknowledges that
Lender has made the Loan to Borrower upon the security of Property Guarantor’s
collective interest in the Properties and in reliance upon the aggregate of the
Properties taken together being of greater value as collateral security than
the sum of each Individual Property taken separately.  Property Guarantor agree that the Security
Instruments are and will be cross-collateralized and cross-defaulted
with each other so that subject to the release or substitution of any
Individual Property as provided herein (i) an Event of Default under any of the
Security Instruments shall constitute an Event of Default under each of the
other Security Instruments which secure the Property Guaranty; (ii) an Event of
Default under the Property Guaranty or this Agreement shall constitute an Event
of Default 

 88
 

under each
Security Instrument; (iii) each Security Instrument shall constitute security
for the Guaranty as if a single blanket lien were placed on all of the
Properties as security for the Note; and (iv) such cross collateralization
shall in no event be deemed to constitute a fraudulent conveyance.

(b)           To the fullest extent permitted by
Applicable Law, Borrower, for itself and its successors and assigns, and on
behalf of Property Guarantor waives all rights to a marshalling of the assets
of Borrower, Borrower’s partners and others with interests in Borrower, and of
the Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Security Instruments, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of
the Properties in preference to every other claimant whatsoever.  In addition, Borrower, for itself and its
successors and assigns and Property Guarantor, waives in the event of
foreclosure of any or all of the Security Instruments, any equitable right
otherwise available to Borrower or Property Guarantor which would require the
separate sale of the Properties or require Lender to exhaust its remedies
against any Individual Property or any combination of the Properties before
proceeding against any other Individual Property or combination of Properties;
and further in the event of such foreclosure Borrower does hereby expressly
consents to and authorizes, at the option of Lender, the foreclosure and sale
either separately or together of any combination of the Properties.

Section 10.19         Waiver
of Counterclaim.

Borrower hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in
any action or proceeding brought against it by Lender or its agents.

Section 10.20         Conflict;
Construction of Documents; Reliance.

In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same.  Borrower acknowledges
that, with respect to the Loan, Borrower shall rely solely on its own judgment
and advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. 
Lender shall not be subject to any limitation whatsoever in the exercise
of any rights or remedies available to it under any of the Loan Documents or
any other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or Affiliate of Lender of any equity
interest any of them may acquire in Borrower, and Borrower hereby irrevocably
waives the right to raise any defense or take any action on the basis of the
foregoing with respect to Lender’s exercise of any such rights or
remedies.  Borrower 

 89
 

acknowledges that Lender
engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

Section 10.21         Brokers
and Financial Advisors.

Each of Borrower and
Lender hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. 
Each of Borrower and Lender shall indemnify, defend and hold the other
harmless from and against any and all claims, liabilities, costs and expenses
of any kind (including Lender’s reasonable attorneys’ fees and expenses) in any
way relating to a breach of the representation in the preceding sentence.  The provisions of this ‎Section
10.21 shall survive the expiration and termination of this Agreement and
the payment of the Debt.

Section 10.22         Prior
Agreements.

This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written,
between Borrower and/or its Affiliates and Lender are superseded by the terms
of this Agreement and the other Loan Documents.

Section 10.23         Assignment;
Participation.   Lender may at any
time, at no cost to Borrower, grant to one or more banks or other institutions
(each a “Participant”)
participating interests in the Loan (each a “Participation”). 
In the event of any such grant by Lender of a Participation to a
Participant (whether or not Borrower was given notice thereof), Lender shall
remain responsible for the performance of its obligations hereunder, and
Borrower shall continue to deal solely and directly with Lender in connection
with all rights and obligations hereunder. 
Such participation agreement may provide that such Lender will not agree
to any modification, amendment or waiver, without the consent of the
Participants, which would effect any of the following:  (a) reduce the principal of, or interest on,
the Note or any fees due hereunder or any other amount due hereunder or under
any other Loan Document; (b) postpone any date fixed for any payment of
principal of, or interest on, the Note or any fees due hereunder or under any
other Loan Document; (c) release any material portion of the Properties or
other Collateral for the Loan other than in accordance with the Loan Documents;
(d) release any Guarantor, in whole or in part, other than in accordance with
the Loan Documents; or (e) increase the Loan amount.  Each Participant shall have the right to
effect a Securitization with respect to its Participation interest. Borrower
agrees to provide all assistance reasonably requested by Lender to enable
Lender to sell Participations as aforesaid, or make assignments of its interest
in the Loan as hereinafter provided in this Section.  Borrower and Lender shall execute such
modifications to the Loan Documents as shall, in the reasonable judgment of
Lender, be necessary or desirable in connection with assignments in accordance
with the foregoing provisions of this Section; provided, however,
that no such modifications shall increase Borrower’s liability or obligations,
or decrease its rights, in respect of the Loan. 
Lender and any Participant may at any time freely assign all or any
portion of its rights under this Agreement and the Note.  Notwithstanding anything in this Agreement to
the contrary, Borrower recognizes that in connection with 

 90
 

Lender’s selling of Participations or making of assignments, any or all
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to Borrower, any Guarantor, any Collateral or the Loan may be
exhibited to and retained by any such Participant or assignee or prospective
Participant or assignee.  Lender’s
delivery of any financial statements and appraisals to any such Participant or
assignee or prospective Participant or assignee shall be accompanied by Lender’s
standard confidentiality statement indicating that the same are delivered on a
confidential basis.

Section 10.24         Treatment
of Certain Information; Confidentiality.

Lender agrees to maintain
the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information
and instructed to keep such Information confidential), (b) to the extent
requested by any regulatory authority purporting to have jurisdiction over it
(including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement , (g) with the consent of the Trust and the  Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach
of this Section or (y) becomes available to Lender or any of  its Affiliates on a nonconfidential basis
from a source other than the Trust or Borrower.

For purposes of this
Section, “Information”
means all information received from the Borrower or any of its Affiliates
relating to the Borrower or its businesses, other than any such information
that is available to Lender on a nonconfidential basis prior to disclosure by
the  Borrower, provided that, in the case
of information received from the 
Borrower or any of its Affiliates after the date hereof, such
information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

[SIGNATURE PAGES
IMMEDIATELY FOLLOW]

 

 91

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

	
  

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GMH COMMUNITIES, LP, a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GMH Communities GP Trust, a

  Delaware statutory trust, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph M. Macchione

  
	
   

  	
   

  	
   

  	
  Name: Joseph M.
  Macchione

  
	
   

  	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WACHOVIA BANK, NATIONAL 

  ASSOCIATION, a national banking association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rex E. Rudy

  
	
   

  	
   

  	
   

  	
  Name: Rex E. Rudy

  
	
   

  	
   

  	
   

  	
  Title: Managing Director

  

 

EXHIBIT A

FORM OF COMPLIANCE
CERTIFICATE

                      ,
200    

Wachovia Bank, National
Association

One Wachovia Center

301 South College Street

Mail Code:  NC0172

Charlotte, North Carolina  28288-0166

Ladies and Gentlemen:

Reference is made to that
certain Loan Agreement dated as of October 2, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”),
by and among GMH Communities, LP (the “Borrower”) and Lender.  Capitalized terms used herein, and not otherwise
defined herein, have their respective meanings given them in the Loan
Agreement.

Pursuant to
Section 5.1.10 of the Loan Agreement, the undersigned hereby certifies to
the Lender as follows:

(1)           The undersigned is the                                
of the Borrower.

(2)           The undersigned has examined the
books and records of the Borrower and has conducted such other examinations and
investigations as are reasonably necessary to provide this Compliance
Certificate.

(3)           No Default or Event of Default exists [if such is not the case, specify such Default or Event of Default and
its nature, when it occurred and whether it is continuing and the steps being
taken by the Borrower with respect to such event, condition or failure].

(4)           The representations and warranties
made or deemed made by the Borrower and any Key Entity in the Loan Documents to
which any is a party, are true and correct in all material respects on and as
of the date hereof except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct on and as of
such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents.

(5)           Attached hereto as Schedule 1
are reasonably detailed calculations establishing whether or not the Borrower
and its Subsidiaries were in compliance with the covenants contained in
Sections 5.3 and 5.4 of the Credit Agreement.

IN WITNESS WHEREOF, the
undersigned has executed this certificate as of the date first above written.

 

	
  

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

NOTICE OF BORROWING

                         ,
200   

Wachovia Bank, National
Association

One Wachovia Center

301 South College Street

Mail Code:  NC0172

Charlotte, North Carolina  28288-0166

Ladies and Gentlemen:

Reference is made to that
certain Loan Agreement dated as of October 2, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”),
by and among GMH Communities, LP (the “Borrower”) and Lender.  Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the Loan
Agreement. Capitalized terms used herein, and not otherwise defined herein,
have their respective meanings given them in the Loan Agreement.

Pursuant to Section 2.1.5
of the Loan Agreement, Borrower hereby requests that the Lender make an
Additional Advance on the date hereof to the Borrower as follows:

	
  First, Amount of Additional Advance:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Second, Interest Period for
  Additional Advance:

  	
   

  	
   

  
	
   

  	
  o

  	
  30 days

  
	
   

  	
  o

  	
  60 days

  
	
   

  	
  o

  	
  90 days

  

 

The proceeds of this
Additional Advance will be used for the following purposes:                                             .[INSERT
DESCRIPTION]

Borrower hereby
represents and warrants to Lender that no Default or Event of Default exists
[if such is not the case, specify such Default or Event of Default and its
nature, when it occurred and whether it is continuing and the steps being taken
by the Borrower with respect to such event, condition or failure].

The representations and
warranties made or deemed made by the Borrower and any Key Entity in the Loan
Documents to which any is a party, are true and correct in all material respects
on and as of the date hereof except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct on and as of
such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents.

Sincerely,

 

SCHEDULE A

INDIVIDUAL PROPERTIES,
PROPERTY GUARANTORS, ALLOCATED LOAN 

AMOUNTS AND ALLOCATED VALUES

 

	
  Individual
  Property

  	
   

  	
  Property Guarantor

  	
   

  	
  Allocated Value

  
	
  University
  Fields

  200 Curtis Street 

  Savoy, Illinois

  	
   

  	
  Savoy Village Associates, LLC

  	
   

  	
  $

  	
  25,237,798.00

  
	
  University
  Centre 

  5200 Croyden Avenue

  Kalamazoo, Michigan

  	
   

  	
  Croyden Avenue Associates, LLC

  	
   

  	
  $

  	
  26,946,062.00

  
	
  The Summit 

  1801 Marks Avenue 

  Mankato, Minnesota

  	
   

  	
  Monks Road Associates, LLC

  	
   

  	
  $

  	
  23,760,480.00

  
	
  University Oaks 

  21 National Guard Rd 

  Columbia, SC

  	
   

  	
  South Carolina Associates, LLC

  	
   

  	
  $

  	
  29,435,713.00

  
	
  University
  Highlands 

  2800 Enterprise Blvd 

  Reno, Nevada

  	
   

  	
  Reno Associates, LLC

  	
   

  	
  $

  	
  36,978,807.00

  
	
  University
  Uptown 

  2700 West Oak 

  Denton, Texas

  	
   

  	
  Denton Associates, LLC

  	
   

  	
  $

  	
  36,978,807.00

  
	
  Blanton Commons 

  Lankford Drive 

  Valdosta, Georgia

  	
   

  	
  Lankford Drive Associates, LLC

  	
   

  	
  $

  	
  26,808,504.00

  

 

 

SCHEDULE B

MEZZANINE ASSETS,
MEZZANINE ASSET OWNERS, MEZZANINE ALLOCATED

LOAN AMOUNTS AND MEZZANINE ALLOCATED VALUES

 

	
  Mezzanine
  Asset

  	
   

  	
  Mezzanine 

  Subsidiary

  	
   

  	
  Mezzanine Asset 

  Owner

  	
   

  	
  Mezzanine 

  Allocated Loan

  Amount

  	
   

  	
  Mezzanine 

  Allocated 

  Value

  
	
  University

  Commons:

  Bloomington, IN

  	
   

  	
  Clarizz Boulevard Associates Intermediate, LLC

  	
   

  	
  Clarizz Boulevard Associates, LLC

  	
   

  	
  $

  	
  5,667152

  	
   

  	
  $

  	
  26,683,052

  
	
  University

  Commons:

  Athens, GA

  	
   

  	
  Lakeside Associates Intermediate, LLC

  	
   

  	
  Lakeside Associates, LLC

  	
   

  	
  $

  	
  2,095,346

  	
   

  	
  $

  	
  17,675,230

  
	
  University

  Commons:

  Urbana, IL

  	
   

  	
  Urbana Associates Intermediate, LLC

  	
   

  	
  Urbana Associates, LLC

  	
   

  	
  $

  	
  2,642,732

  	
   

  	
  $

  	
  26,306,200

  
	
  University

  Commons:

  Lexington, KY

  	
   

  	
  Red Mile Road Associates Intermediate, LLC

  	
   

  	
  Red Mile Road Associates, LLC

  	
   

  	
  $

  	
  1,917,461

  	
   

  	
  $

  	
  19,591,215

  
	
  University

  Commons:

  Baton Rouge, LA

  	
   

  	
  Burbank Drive Associates Intermediate III, LLC

  	
   

  	
  Burbank Drive Associates III, LLC

  	
   

  	
  $

  	
  1,444,136

  	
   

  	
  $

  	
  21,159,200

  
	
  University

  Commons:

  Eugene, OR

  	
   

  	
  Commons Drive Associates Intermediate, LLC

  	
   

  	
  Commons Drive Associates, LLC

  	
   

  	
  $

  	
  1,468,027

  	
   

  	
  $

  	
  21,548,677

  
	
  University

  Commons:

  East Lansing, MI

  	
   

  	
  Abbott Road Associates Intermediate, LLC

  	
   

  	
  Abbott Road Associates, LLC

  	
   

  	
  $

  	
  3,252,900

  	
   

  	
  $

  	
  20,981,215

  
	
  University

  Commons:

  Starkville, MS

  	
   

  	
  Campus View Drive Associates Intermediate, LLC

  	
   

  	
  Campus View Drive Associates, LLC

  	
   

  	
  $

  	
  680,524

  	
   

  	
  $

  	
  10,649,316

  
	
  University

  Commons:

  Cayce, SC

  	
   

  	
  Alexander Road Associates Intermediate, LLC

  	
   

  	
  Alexander Road Associates, LLC

  	
   

  	
  $

  	
  2,354,558

  	
   

  	
  $

  	
  26,798,100

  
	
  University

  Commons:

  Oxford, OH

  	
   

  	
  Brown Road Associates Intermediate, LLC

  	
   

  	
  Brown Road Associates, LLC

  	
   

  	
  $

  	
  2,154,091

  	
   

  	
  $

  	
  21,344,944

  
	
  University

  Commons:

  Tuscaloosa, AL

  	
   

  	
  Keller Boulevard Associates Intermediate, LLC

  	
   

  	
  Keller Boulevard Associates, LLC

  	
   

  	
  $

  	
  3,075,000

  	
   

  	
  $

  	
  23,240,896

  

 

 

SCHEDULE C

ENCUMBERED PROPERTIES

	
  1.

  	
   

  	
  Cambridge at Southern-Statesboro, GA

  
	
  2.

  	
   

  	
  University Crescent

  
	
  3.

  	
   

  	
  University Greens

  
	
  4.

  	
   

  	
  University Heights

  
	
  5.

  	
   

  	
  University Lodge

  
	
  6.

  	
   

  	
  University Pines

  
	
  7.

  	
   

  	
  University Trails

  
	
  8.

  	
   

  	
  University Court

  
	
  9.

  	
   

  	
  University Estates

  
	
  10.

  	
   

  	
  University Gables

  
	
  11.

  	
   

  	
  University Glades

  
	
  12.

  	
   

  	
  University Manor

  
	
  13.

  	
   

  	
  University Mills

  
	
  14.

  	
   

  	
  University Place

  
	
  15.

  	
   

  	
  Collegiate Hall

  
	
  16.

  	
   

  	
  Campus Club-Statesboro

  
	
  17.

  	
   

  	
  University Edge

  
	
  18.

  	
   

  	
  Campus Connection

  
	
  19.

  	
   

  	
  University Pointe

  
	
  20.

  	
   

  	
  College Park-Chapel Ridge

  
	
  21.

  	
   

  	
  Grand Marc at University Village

  
	
  22.

  	
   

  	
  The Verge

  
	
  23.

  	
   

  	
  Willowtree Apartments and Towers

  
	
  24.

  	
   

  	
  Campus Walk

  
	
  25.

  	
   

  	
  Pirates Cove

  
	
  26.

  	
   

  	
  University Walk

  
	
  27.

  	
   

  	
  Campus Club-Gainesville

  
	
  28.

  	
   

  	
  The Enclave

  
	
  29.

  	
   

  	
  The Ridge

  

 

	
  30.

  	
   

  	
  The View

  
	
  31.

  	
   

  	
  State College Park

  
	
  32.

  	
   

  	
  Nittany Crossing

  
	
  33.

  	
   

  	
  GrandMarc at Seven Corners

  
	
  34.

  	
   

  	
  Campus Edge Associates LLC

  
	
  35.

  	
   

  	
  Chapel View

  
	
  36.

  	
   

  	
  Campus Ridge Apartments

  
	
  37.

  	
   

  	
  Southview Apartments

  
	
  38.

  	
   

  	
  Stone Gate Apartments

  
	
  39.

  	
   

  	
  The Commons Apartments

  
	
  40.

  	
   

  	
  University Crossings (KS)

  
	
  41.

  	
   

  	
  Seminole Suites

  
	
  42.

  	
   

  	
  The Tower at 3rd

  
	
  43.

  	
   

  	
  Campus Walk-UNCW

  
	
  44.

  	
   

  	
  University Crossing

  
	
  45.

  	
   

  	
  University Meadows

  
	
  46.

  	
   

  	
  Pegasus Connection

  
	
  47.

  	
   

  	
  Royal Riverwood Manor (Univ. Village)

  
	
  48.

  	
   

  	
  Jacobs Heights

  
	
  49.

  	
   

  	
  University Commons (Norman, OK)

  
	
  50.

  	
   

  	
  University Commons (State College)

  
	
  51.

  	
   

  	
  Aspen Apartments

  
	
  52.

  	
   

  	
  Brookstone Village

  
	
  53.

  	
   

  	
  College Suites Stadium

  
	
  54.

  	
   

  	
  College Manor Apartments

  
	
  55.

  	
   

  	
  Jacob Height Phase III

  
	
  56.

  	
   

  	
  Blanton Commons Phase II

  

 

SCHEDULE D

O&M PROGRAMS

NONE

SCHEDULE
E

SOURCES AND USES

(see attached page)

SCHEDULE 4.1.1

ORGANIZATIONAL CHART

SCHEDULE 4.1.4

LITIGATION

1.                                       GMH
Communities Trust (“Trust”) is currently involved in several class action
lawsuits that are pending class certification. Material facts surrounding the
litigation are presented in the Trust’s periodic reports as filed with the
United States Securities and Exchange Commission, including its Annual Report
on Form 10-K for the fiscal year ended December 31, 2005, and in each of its
subsequent Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2006 and June 30, 2006.  The Trust will
continue to report material updates with respect to such litigation in its
periodic reports filed in the future.

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