Document:

<PAGE>

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED TEXT HAS BEEN MARKED WITH AN ASTERISK
([ * ]) AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

================================================================================

                                 LOAN AGREEMENT

                                     between

                          LEHMAN BROTHERS HOLDINGS INC.
                                     Lender

                                       and

                                      [ * ]
                                    Borrower

                           Dated: as of July 10, 2002

                               Property Location:

                                      [ * ]

                               Shapiro & Block LLP
                              315 Park Avenue South
                                   19th Floor
                            New York, New York 10010
                          Attn.: Marc S. Shapiro, Esq.

================================================================================

<PAGE>

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>

Section                                                                                                        Page
<S>                                                                                                            <C>
1.    DEFINED TERMS...............................................................................................4

2.    PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS AND AGREEMENTS......................................9

3.    WARRANTY OF TITLE..........................................................................................10

4.    INSURANCE..................................................................................................11

5.    PAYMENT OF TAXES...........................................................................................14

6.    TAX AND INSURANCE ESCROW FUND..............................................................................14

7.    ANNUAL BUDGETS; ACCOUNTS...................................................................................15

8.    CONDEMNATION...............................................................................................16

9.    LEASES AND RENTS...........................................................................................17

10.      REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING LOAN...............................................18

11.      SINGLE PURPOSE ENTITY; AUTHORIZATION; NEGATIVE COVENANTS................................................20

12.      MAINTENANCE OF MORTGAGED PROPERTY.......................................................................21

13.      TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY.......................................................22

14.      ESTOPPEL CERTIFICATES; AFFIDAVITS.......................................................................23

15.      CHANGES IN THE LAWS REGARDING TAXATION..................................................................23

16.      NO CREDITS ON ACCOUNT OF THE DEBT.......................................................................23

17.      DOCUMENTARY STAMPS......................................................................................24

18.      CONTROLLING AGREEMENT...................................................................................24

19.      BOOKS AND RECORDS.......................................................................................24

20.      PERFORMANCE OF OTHER AGREEMENTS.........................................................................25

21.      FURTHER ASSURANCES; RIGHT TO SPLIT AND PARTICIPATE THE LOAN.............................................25

22.      RECORDING OF MORTGAGE...................................................................................26

23.      REPORTING REQUIREMENTS..................................................................................26

24.      EVENTS OF DEFAULT.......................................................................................27

25.      LATE PAYMENT CHARGE; SERVICER'S FEES....................................................................28

26.      RIGHT TO CURE DEFAULTS..................................................................................29

                                       i

<PAGE>

27.      REMEDIES................................................................................................29

28.      RIGHT OF ENTRY..........................................................................................32

29.      SECURITY AGREEMENT......................................................................................32

30.      ACTIONS AND PROCEEDINGS.................................................................................32

31.      WAIVER OF SETOFF AND COUNTERCLAIM.......................................................................32

32.      CONTEST OF CERTAIN CLAIMS...............................................................................33

33.      RECOVERY OF SUMS REQUIRED TO BE PAID....................................................................33

34.      MARSHALLING AND OTHER MATTERS...........................................................................33

35.      HAZARDOUS SUBSTANCES....................................................................................33

36.      ASBESTOS................................................................................................34

37.      ENVIRONMENTAL MONITORING................................................................................34

38.      MANAGEMENT OF THE MORTGAGED PROPERTY....................................................................35

39.      HANDICAPPED ACCESS......................................................................................36

40.      ERISA...................................................................................................37

41.      INDEMNIFICATION.........................................................................................37

42.      NOTICE..................................................................................................38

43.      AUTHORITY...............................................................................................38

44.      WAIVER OF NOTICE........................................................................................38

45.      REMEDIES OF BORROWER....................................................................................39

46.      SOLE DISCRETION OF LENDER...............................................................................39

47.      NON-WAIVER..............................................................................................39

48.      NO ORAL CHANGE..........................................................................................39

49.      LIABILITY...............................................................................................39

50.      INAPPLICABLE PROVISIONS.................................................................................40

51.      SECTION HEADINGS........................................................................................40

52.      COUNTERPARTS............................................................................................40

53.      CERTAIN DEFINITIONS.....................................................................................40

                                       ii

<PAGE>

54.      HOMESTEAD...............................................................................................40

55.      ASSIGNMENTS.............................................................................................40

56.      SUBMISSION TO JURISDICTION..............................................................................40

57.      AGENT FOR RECEIPT OF PROCESS............................................................................41

58.      SERVICE OF PROCESS......................................................................................41

59.      WAIVER OF JURY TRIAL....................................................................................41

60.      CHOICE OF LAW...........................................................................................41

61.      ADVANCES OF UNFUNDED PROCEEDS; CONDITIONS PRECEDENT.....................................................42

62.      INAPPLICABILITY OF CERTAIN PROVISIONS BY REASON OF PORTIONS OF THE MORTGAGED PROPERTY NOT OPERATING;
         INAPPLICABILITY OF REFERENCES TO MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT...........................43

63.      SERVICER'S FAILURE......................................................................................43

64.      LIMITATIONS ON RECOURSE.................................................................................43

65.      ENVIRONMENTAL RESERVE...................................................................................43

</TABLE>

                                      iii

<PAGE>

                                 LOAN AGREEMENT
                                 --------------

                  This LOAN AGREEMENT dated as of July ____, 2002, between [ * ]
, a [ * ] limited liability company having its principal place of business at
c/o Insignia Financial Group, Inc., 200 Park Avenue, 19th Floor, New York, New
York 10166 ("Borrower"), and LEHMAN BROTHERS HOLDINGS INC., a Delaware
corporation, having an address at 399 Park Avenue, 8th Floor, New York, New York
10022 ("Lender").

                              W I T N E S S E T H:
                              --------------------

                  WHEREAS, Lender is concurrently herewith making a loan to
Borrower in the original principal amount of Forty Million and 00/100
($40,000,000.00) Dollars (the "Loan") secured by a mortgage lien on, and
security interest in, Borrower's interest in and to the real and personal
property known as [ * ] and located in [ * ];

                  WHEREAS, the Loan is evidenced by a certain Mortgage Note
dated the date hereof made by Borrower in favor of Lender (the "Note") and
secured by, among other things, a certain First Priority Mortgage dated as of
the date hereof and encumbering the Mortgaged Property (the "Mortgage"; the
Note, the Mortgage, this Agreement and all other documents executed or delivered
in connection with the Loan, collectively, the "Loan Documents"); and

                  WHEREAS, Lender and Borrower have agreed to enter into this
Loan Agreement to memorialize their understanding regarding their respective
rights and obligations in respect of the Loan.

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

                  1.       DEFINED TERMS
                           -------------
                  The following terms shall have the following meanings:

                  (a)          "Access Laws" has the meaning set forth in
Section 39 hereof.

                  (b)          "Accounts" has the meaning set forth in
Section 7 hereof.

                  (c)          "Asbestos" has the meaning set forth in
Section 36 hereof.

                  (d)          "Assignment" has the meaning set forth in
Section 2 hereof.

                  (e)          "Borrower" has the meaning set forth in the
preamble to this Agreement.

                  (f)          "Budget" means, collectively, the following
budgets: (i) the budget for the use and application of the portion of the Loan
being advanced on the date hereof and Borrower's equity being invested in the
Mortgaged Property on the date hereof, all as more particularly set forth in
Exhibit A hereto; (ii) the budget for the use and application of the Unfunded
Proceeds as and when advanced; and (iii) subject to the provisions of Section 62
hereof, the annual budget for the use and application of all gross

<PAGE>

revenue derived from the operation of the Mortgaged Property, including all
expenses to be satisfied from the Accounts for each calendar year for so long as
any portion of the Debt remains outstanding.

                  (g)          "Capital Expenses" means all payments for any
fixed assets or improvements, or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized consistent with accounting methods employed by Borrower for the
Mortgaged Property.

                  (h)          "Collateral" means that portion of the Mortgaged
Property that is subject to the Uniform Commercial Code.

                  (i)          "Condemnation" has the meaning set forth in
Section 8 hereof.

                  (j)          "[ * ] Pledge" means the pledge of [ * ] Permit
No. [ * ] executed and approved by the [ * ] Department of [ * ], [ * ]
Commission, in accordance with [ * ].

                  (k)          "Debt" means the outstanding principal balance of
the Note from time to time, with all accrued and unpaid interest thereon, and
all other sums now or hereafter due under the Loan Documents.

                  (l)          "Default Rate" means the rate of interest payable
from and after the occurrence of an Event of Default, as more particularly
described in the Note; provided, however, that with respect to an Event of
Default of the type described in Section 24(a) hereof, such rate of interest
shall apply from and after the date on which any such payment is due, without
any period of grace or cure, as more particularly described in the Note.

                  (m)          "Environmental Agreement" has the meaning set
forth in Section 2 hereof.

                  (n)          "Environmental Laws" has the meaning set forth in
Section 35 hereof.

                  (o)          "Environmental Reserve Account" has the meaning
set forth in Section 7 hereof.

                  (p)          "Equipment" means all machinery, furnishings,
equipment, fixtures (including, without limitation, all heating, air
conditioning, plumbing, lighting, communications and elevator fixtures),
inventory and articles of personal property and accessions thereof and renewals,
replacements thereof and substitutions therefor (including, without limitation,
beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases,
tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage
racks, stools, sofas, chinaware, linens, pillows, blankets, glassware,
foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, clock radios, television sets, intercom and paging equipment, electric
and electronic equipment, dictating equipment, private telephone systems,
medical equipment, potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing apparatus, cooling and air-conditioning systems,
elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets,
electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving,
spotlighting equipment, dishwashers, garbage disposals, washer and dryers),
other customary [ * ] equipment and other property of every kind and nature,
whether tangible or intangible, whatsoever owned by Borrower, or in which
Borrower has or shall have an interest,

                                       5
<PAGE>

now or hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and
occupancy of the Premises and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, or usable in connection
with the present or future operation, enjoyment and occupancy of the Premises
and the Improvements.

                  (q)          "ERISA" has the meaning set forth in Section 40
hereof.

                  (r)          "Event of Default" has the meaning set forth in
Section 24 hereof.

                  (s)          "Expenses" means the aggregate of the following
items actually incurred by Borrower, whether or not paid, during the 12 month
period ending one month prior to the date on which the NOI is to be calculated
(except that Capital Expenses shall be excluded from any calculation of
Expenses):

                        (i)    Taxes and Other Charges;

                        (ii)   sales and use  taxes (if any),  gross  receipts,
       [ * ] and  personal  property taxes;

                        (iii)  management fees under the Management Agreement,
       in no event to exceed five (5%) percent of gross revenue derived from
       the operation of the Mortgaged Property and disbursements;

                        (iv)   wages, salaries, pension costs and all fringe
       and other employee-related benefits and expenses;

                        (v)    franchise fees and other fees due under a
       Franchise Agreement;

                        (vi)   Insurance Premiums;

                        (vii)  the cost of utilities, and all other
       administrative, management, ownership, operating, leasing and
       maintenance expenses incurred in connection with the operation of the
       Mortgaged Property;

                        (viii) the cost of replacement of Equipment with
       Equipment of like kind and quality or of such kind or quality that is
       necessary to maintain the Mortgaged Property to the same standards as
       competitive properties of similar size and location to the Mortgaged
       Property or that are required under the Franchise Agreement; and

                        (ix)   the cost of any other maintenance materials,
       HVAC repairs, parts and supplies, and equipment.

                  (t)          "Franchise Agreement" means a franchise agreement
approved by Lender from time to time, if any, pursuant to which Borrower has the
right to operate a [ * ] located on the Mortgaged Property under a name and/or [
* ] controlled by a Franchisor.

                  (u)          "Franchisor"  means any franchisor  approved by
Lender and party to a Franchise Agreement.

                                       6
<PAGE>

                  (v)          "Guarantor" means any guarantor of all or any
part of the Debt.

                  (w)          "Hazardous Substances" has the meaning set forth
in Section 35 hereof.

                  (x)          "Improvements" means the buildings, structures,
fixtures, additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located on the Premises, together
with all permits required therefor.

                  (y)          "Insurance Premiums" has the meaning set forth in
Section 4(d) hereof.

                  (z)          "Insured Casualty" has the meaning set forth in
Section 4(e)(ii) hereof.

                  (aa)         "Intangibles" means, without limitation, all
accounts, escrows, documents, instruments, chattel paper, claims, deposits and
general intangibles, as such terms are defined in the Uniform Commercial Code,
and all contract rights, franchises, books, records, appraisals, architects and
engineering plans, specifications, environmental and other reports relating to
the Premises, trademarks, trade names, symbols, permits, licenses (to the extent
assignable), approvals, actions, tenant or guest lists, correspondence with
present and prospective purchasers, tenants, guests and suppliers, advertising
materials and telephone exchange numbers as identified in such materials,
refunds of real estate taxes and assessments and causes of action which now or
hereafter relate to, are derived from or are used in connection with the
Premises, or the use, operation, maintenance, occupancy or enjoyment thereof or
the conduct of any business or activities thereon.

                  (bb)         "Interest Account" has the meaning set forth in
Section 7 hereof.

                  (cc)         "Leases" means all leases and other agreements
affecting the use, enjoyment or occupancy of the Premises or the Improvements
heretofore or hereafter entered into (including, without limitation, subleases,
licenses, concessions, tenancies and other occupancy agreements covering or
encumbering all or any portion of the Premises), together with any guarantees,
supplements, amendments, modifications, extensions and renewals of any thereof,
and all additional remainders, reversions, and other rights and estates
appurtenant thereto.

                  (dd)         "Lender" has the meaning set forth in the
preamble to this Agreement.

                  (ee)         "Loan" has the meaning set forth in the recitals
of this Agreement.

                  (ff)         "Loan Documents" has the meaning set forth in the
recitals of this Agreement.

                  (gg)         "Loan-to-Value Ratio" means the ratio of: (i) the
Debt, plus all other debt (or other liquidated economic obligations) which are
then outstanding and secured by the Mortgaged Property, to (ii) the appraised
value of the Mortgaged Property as estimated by an appraiser acceptable to
Lender. Any appraisal for purposes of calculating the Loan-to-Value Ratio shall
be performed in accordance with the then-approved standards under the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended (FIRREA).

                  (hh)         "Lockbox Account" has the meaning set forth in
Section 7 hereof.

                  (ii) "Management Agreement" means any management agreement
approved by Lender pursuant to which Manager operates the Mortgaged Property.

                                       7
<PAGE>

                  (jj)         "Manager"  means any property or similar  manager
approved by Lender and party to a Management Agreement.

                  (kk)         "Maturity Date" has the meaning ascribed in the
Note.

                  (ll)         "Mortgage" has the meaning set forth in the
recitals of this Agreement.

                  (mm)         "Mortgaged Property" shall mean the Premises, all
real and personal property located on or related to the Premises, including
without limitation, the Collateral, Equipment, Improvements, Intangibles, Rents,
Condemnation awards, [ * ] permits, insurance proceeds, tradenames, trademarks,
servicemarks, logos, copyrights, goodwill, books and records, all refunds,
rebates or credits in connection with a reduction in real estate taxes and
assessments charged against the Premises as a result of tax certiorari or any
applications or proceedings for reduction, all agreements, contracts,
certificates, instruments, franchises, permits, licenses, plans, specifications
and other documents, now or hereafter entered into, and all proceeds,
substitutions and replacements thereof.

                  (nn)         "NOI" means the gross revenue derived from the
operation of the Mortgaged Property less Expenses. NOI shall include only Rents
and such other revenue, including any rent loss, business interruption or
business income insurance proceeds, vending or concession revenue, late fees,
forfeited security deposits and other miscellaneous tenant charges, which are
actually received and Expenses actually incurred and paid during the period for
which the NOI is being calculated, as set forth on operating statements
satisfactory to Lender. NOI shall be calculated on a cash basis in accordance
with generally accepted accounting principles consistently applied, based on the
Uniform System of Accounts.

                  (oo)         "Note" has the meaning set forth in the recitals
of this Agreement.

                  (pp)         "Operating Expense Account" has the meaning set
forth in Section 7 hereof.

                  (qq)         "Other Charges" has the meaning set forth in
Section 5 hereof.

                  (rr)         "Policies" has the meaning set forth in
Section 4(d) hereof.

                  (ss)         "Premises" means the real property comprising the
Mortgaged Property, more particularly described on Exhibit A to the Mortgage.

                  (tt)         "Redevelopment Agreement" means that certain
Redevelopment Funds Agreement dated as of the date hereof between Borrower and
Lender.

                  (uu)         "Redevelopment Funds Account" has the meaning set
forth in Section 7 hereof.

                  (vv)         "Remedial Work" has the meaning set forth in
Section 37 hereof.

                  (ww)         "Rents" means all income, rents, room rates,
issues, profits, revenues (including oil and gas or other mineral royalties and
bonuses), deposits and other benefits from the Mortgaged Property including,
without limitation, all revenues and credit card receipts collected from guest
rooms, restaurants, bars, mini-bars, meeting rooms, banquet rooms and
recreational facilities and otherwise, all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of

                                       8
<PAGE>

the possession, use or occupancy of all or any portion of the Mortgaged Property
or personalty located thereon, or rendering of services by Borrower or any
operator or manager of the Mortgaged Property or acquired from others including,
without limitation, from the rental of any office space, retail space,
commercial space, guest room or other space, halls, stores or offices, including
any deposits securing reservations of such space, exhibit or sales space of
every kind, license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail sales, service
charges, vending machine sales and proceeds, if any, from business interruption
or other loss of income insurance relating to the use, enjoyment or occupancy of
the Mortgaged Property; provided, however, that Rents shall not include fees
that may paid to Borrower upon the purchase of [ * ] membership interests.

                  (xx)         "Securities" has the meaning set forth in
Section 21 hereof.

                  (yy)         "Security Deposits Account has the meaning set
forth in Section 7 hereof.

                  (zz)         "Servicer" means the servicer of the Loan
designated by Lender, in its sole and absolute discretion, from time to time.

                  (aaa)        "Tax and Insurance Escrow Account" has the
meaning  set forth in Section 7 hereof.

                  (bbb)        "Tax and Insurance Escrow Fund" has the meaning
set forth in Section 6 hereof.

                  (ccc)        "Taxes" has the meaning set forth in Section 5
hereof.

                  (ddd)        "Uniform Commercial Code" means the Uniform
Commercial Code, as adopted and enacted by the Territory where any of the
Mortgaged Property is located.

                  (eee)        "Unfunded Commitment Fee" has the meaning set
forth in the Note.

                  (fff)        "Unfunded Proceeds" has the meaning set forth in
the Note.

                  (ggg)        "Uniform System of Accounts" has the meaning set
forth in Section 19 hereof.

                  Capitalized  terms not otherwise  defined herein shall have
the meanings  ascribed to them in the Note.

                  2.   PAYMENT OF DEBT; INCORPORATION OF COVENANTS, CONDITIONS
                       AND AGREEMENTS
                       -------------------------------------------------------

                  (a)  Borrower will pay the Debt at the time and in the manner
provided in the Note, the Mortgage and in this Agreement. Subject to the
provisions of Section 62 hereof, all gross revenue derived from the Mortgaged
Property (other than fees that may paid to Borrower upon the purchase of [ * ]
membership interests at the Mortgaged Property) shall be paid directly into the
Lockbox Account and, on a monthly basis, or more frequently if dictated by
specific circumstances, Servicer shall release funds held in the Lockbox Account
for distribution to the Accounts and otherwise in accordance with the
then-applicable Budget in the following order of priority:

                       (i)   first, to fund the Tax and Insurance Escrow
         Account;

                                       9
<PAGE>

                       (ii)  next, the balance, if any, to reimburse Lender for
         any unpaid costs and expenses incurred by Lender on Borrower's behalf
         or in the enforcement of Lender's rights hereunder, including the
         Unfunded Commitment Fee as and when payable;

                       (iii) next, the balance, if any, to fund the Operating
         Expense Account;

                       (iv)  next, the balance, if any, to fund the Interest
         Account; and

                       (v)   fifty (50%) percent of the balance, if any, to
         reduce the outstanding principal balance of the Loan, and the
         remaining balance to Borrower.

                  (b)  Additionally, on the fifteenth day of each month (except
that if the fifteenth day of the month is not a business day, then on the last
business day preceding the fifteenth day of such month), Servicer shall withdraw
funds from the Lockbox Account for same-day disbursement to fund the Operating
Expense Account in accordance with the then-applicable Budget, to the extent
that such account requires replenishment in accordance with the then-applicable
Budget.

                  (c)  Anything herein to the contrary notwithstanding, a
portion of the Loan being advanced on and as of the closing date is being
deposited into the Redevelopment Funds Account. If proceeds of the Lockbox are
insufficient from time to time to satisfy Borrower's obligations to pay: (i) the
monthly installments of the Tax and Insurance Escrow Fund due under Section 6
hereof; (ii) accrued and unpaid interest next becoming due under the Note; and
(iii) the Servicer's fees to the extent of the payment thereof next becoming due
under Section 25(b) hereof, then proceeds shall be released from the
Redevelopment Funds Account in an amount sufficient to pay such amounts.

                  (d)  Servicer shall, on Borrower's behalf, pay from the
Interest Account and in accordance with the then-applicable Budget, the Debt at
the time and in the manner provided in the Note, the Mortgage and in this
Agreement.

                  (e)  All the covenants, conditions and agreements contained in
the Note, the Mortgage, the Assignment of Leases and Rents dated as of the date
hereof from Borrower to Lender (the "Assignment"), the [ * ] Pledge, the
Environmental Indemnity Agreement dated as of the date hereof among Lender,
Borrower and Insignia [ * ] Corp. (the "Environmental Agreement") and the other
Loan Documents are hereby made a part of this Agreement to the same extent and
with the same force as if fully set forth herein.

                  3.   WARRANTY OF TITLE
                       -----------------

                  Borrower represents and warrants that Borrower has: (a) good
and insurable fee simple title to that portion of the Mortgaged Property known
as Parcels Nos. [ * ], [ * ], [ * ], [ * ]; (b) a valid leasehold interest in
that portion of the Mortgaged Property known as Parcels Nos. [ * ], [ * ],
[ * ], [ * ], [ * ]; and (c) use and development rights of that certain [ * ]
area pursuant to [ * ] permit [ * ] (as may be amended or replaced) adjacent to
the fee property referenced in subsection (a) of this Section. Borrower further
represents and warrants that Borrower has the full power, authority and right to
execute, deliver and perform its obligations under this Agreement and to
encumber, mortgage, give, grant, bargain, sell, alienate, enfeoff, convey,
confirm, pledge, assign, hypothecate and grant a security interest in the
Mortgaged Property and that Borrower possesses an unencumbered fee and leasehold
estate in the Premises and the Improvements, and that it owns the Mortgaged
Property free and clear of all liens, encumbrances and charges whatsoever except
for those exceptions approved by Lender or shown in the title insurance policy
insuring the lien of the Mortgage, and that the Mortgage is and will remain a
valid and enforceable first lien

                                       10
<PAGE>

on and security interest in the Mortgaged Property, subject only to such
exceptions. Borrower shall forever warrant, defend and preserve such title and
the validity and priority of the lien of the Mortgage and shall forever warrant
and defend such title, validity and priority to Lender against the claims of all
persons whomsoever.

                  4.   INSURANCE
                       ---------

                  (a)  Borrower, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Agreement for the
mutual benefit of Borrower and Lender against loss or damage by fire and against
loss or damage by other risks and hazards covered by a standard property and
extended coverage insurance policy including, to the extent available in the
insurance market at commercially reasonable rates, terms and limits, windstorm,
riot and civil commotion, vandalism, malicious mischief, burglary and theft. The
insurance policy or policies insuring any structural improvements on the
Mortgaged Property shall contain, where applicable, option perils and income
loss endorsements and if any of the Improvements or the use of the Mortgaged
Property shall at any time constitute legal non-conforming structures or uses, a
law and ordinance endorsement. Such insurance, to the extent available in the
marketplace, shall be: (i) for property insurance on structures and
improvements, an amount equal to the then functional replacement cost of the
structures and improvements without deduction for physical depreciation;
provided, however, that, to the extent available in the marketplace, such
insurance shall be in an amount such that the insurer would not deem Borrower a
co-insurer under such policies. The deductible for such property insurance
(except for the perils of windstorm, wave action, earthquake or any other
coverage for which deductibles are commonly or customarily in the insurance
industry based on a percentage of the total insurable value of the property,
with respect to a two (2%) percent "value at risk" deductible shall apply) shall
not exceed $50,000.00, unless a higher deductible is required by law. Unless
such premiums are deposited in escrow pursuant to Section 6 of this Agreement,
the premiums for the insurance carried in accordance with this Section shall be
paid annually in advance and each policy shall contain, as applicable and if
available, the "Replacement Cost Endorsement" with a waiver of depreciation.
Anything herein to the contrary notwithstanding, Borrower shall not be required
to insure against loss by reason of damage to the bulkhead and retaining wall
located on the portion of the Mortgaged Property that is subject to the Ground
Lease (as such term is defined in the Mortgage) provided: (I) such losses are
covered by an insurance policy for the benefit of the lessor under the Ground
Lease; and (II) such ground lessor is obligated in all events to use any and all
proceeds of such insurance to repair, restore, rebuild and reconstruct such
bulkhead and retaining wall.

                  (b)  Borrower shall also obtain and maintain during the entire
term of this Agreement, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, the following policies of insurance (all of the policies of
insurance required pursuant to this Section 4, collectively, the "Policies"):

                       (i)      INTENTIONALLY OMITTED.

                       (ii)     Comprehensive public liability insurance,
         including broad form property damage, blanket contractual and personal
         injuries (including death resulting therefrom) coverages and "dram
         shop" or other liquor liability coverage if alcoholic beverages are
         sold from the Mortgaged Property, and containing limits per occurrence
         and in the aggregate of $50,000,000.00 for the Premises and the
         Improvements, or such greater amount as may be required under the
         Franchise Agreement. Such coverage may be provided under blanket
         policies of insurance or any combination of primary and excess or
         umbrella liability insurance policies.

                       (iii)    Rental loss insurance in an amount equal to the
         aggregate annual amount of all rents and additional rents payable by
         all of the tenants under the Leases (whether or not such

                                       11
<PAGE>

         Leases are terminable in the event of a fire or casualty), such rental
         loss insurance to cover rental losses for a period of one year after
         the date of the fire or covered casualty in question. The amount of
         such rental loss insurance shall be increased from time to time during
         the term of this Agreement as and when new Leases and renewal Leases
         are entered into in accordance with the terms of this Agreement, to
         reflect all increased rent and increased additional rent payable by
         all of the tenants under such renewal Leases and all rent and
         additional rent payable by all of the tenants under such new Leases.

                       (iv)     Business income insurance containing an extended
         period of indemnity endorsement which provides that after the physical
         loss to the Improvements and all personal property has been repaired,
         the continued loss of income will be insured until such income either
         returns to the same level it was at prior to the loss, or the
         expiration of 12 months from the date of the loss, whichever first
         occurs, and notwithstanding that the policy may expire prior to the end
         of such period; and in an amount equal to the sum of Expenses and NOI,
         in each case for the preceding full calendar year. The amount of such
         business income insurance shall be determined prior to the date hereof
         and at least once each year thereafter.

                       (v)      Insurance, in an amount equal to the lesser of
         $2,000,000.00, or the insurable value of the Improvements, against loss
         or damage from: (A) leakage of sprinkler systems; and (B) explosion of
         steam boilers, air conditioning equipment, high pressure piping,
         machinery and equipment, pressure vessels or similar apparatus now or
         hereafter installed in the Improvements; provided, however, that the
         insurance coverage under this subsection shall not be required until
         such time as such apparatus is actually installed at the Mortgaged
         Property.

                       (vi)     Worker's compensation insurance including, if
         required, Longshoreman's and Harborworkers' Liability insurance, with
         respect to any employees of Borrower, as required by any governmental
         authority or legal requirement with limits no less than the amount
         required by applicable law.

                       (vii)    Motor vehicle liability coverage for all owned
         and non-owned vehicles, if any, including rented and leased vehicles,
         containing minimum limits per occurrence of $5,000,000.00, or such
         greater amount as may be required under the Franchise Agreement.

                       (viii)   A blanket fidelity bond and errors and
         omissions insurance coverage insuring against losses resulting from
         dishonest or fraudulent acts committed by: (A) Borrower's personnel;
         and (B) temporary contract employees or student interns.

                       (ix)     Earthquake insurance (including subsidence), if
         the Mortgaged Property is located in an earthquake prone region and if
         required by Lender, to the extent available in the insurance market at
         commercially reasonable rates.

                       (x)      The insurance provided for in subsection (a) of
         this Section written in a so-called builder's risk completed value
         form: (A) on a non-reporting basis; (B) against all risk insured
         against pursuant to subsection (a) of this Section, (C) including
         permission to occupy the Mortgaged Property, (D) with an agreed amount
         endorsement waiving co-insurance provisions; and (E) otherwise subject
         to the caveats and provisions set forth in subsection (a) of this
         Section.

                       (xi)     Insurance covering environmental liabilities in
         form and substance, and with limits and premiums, mutually agreeable to
         Borrower and Lender, with required limits not to

                                       12
<PAGE>

         exceed $20,000,000.00 per occurrence and in the aggregate, and naming
         Lender and Borrower as insured parties thereunder.

                       (xi)     Such other insurance as may from time to time be
         reasonably required by Lender in order to protect its interests in the
         Mortgaged Property or as may be required by the Franchise Agreement, in
         all cases to be in amounts and covering such risks as are consistent
         with the requirements of similar lenders for like properties in the
         vicinity of such portion of the Mortgaged Property for which such other
         insurance is being required.

                  (c)  Borrower shall increase the amount of insurance required
to be provided hereunder at the time that each such policy is renewed (but, in
any event not less frequently than once during each 12-month period) by using
the F.W. Dodge Building Index to determine whether there has been an increase in
the replacement cost of the improvement since the most recent adjustment of any
such policy and, if there has been any such increase, the amount of insurance
required to be provided hereunder shall be adjusted accordingly.

                  (d)  All property and extended coverage insurance policies
shall: (i) be issued by an insurer with an "A" rating or better for claims
paying ability by Moody's Investors Service, Inc. and Standard & Poor's Rating
Group, or a general policy rating of "A" or better and a financial class of VIII
or better assigned by A.M. Best Company, Inc.; (ii) be maintained throughout the
term of this Agreement without cost to Lender; (iii) include the interest of
Lender for any such loss; (iv) contain such provisions as Lender deems
reasonably necessary or appropriate to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer thereunder, and that Lender shall receive at least
30 days prior written notice of any material modification, reduction or
cancellation; and (v) be reasonably satisfactory in form and substance to
Lender, and be approved by Lender, acting reasonably, as to amounts, risk
coverage, deductible, loss payees and insureds. Borrower shall pay the premiums
for the Policies (the "Insurance Premiums") as they become due and payable. Not
later than 30 days prior to the expiration date of each of the Policies,
Borrower will deliver to Lender satisfactory evidence of the renewal of each
Policy.

                  (e)  If the Mortgaged Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty, Borrower shall give prompt
notice thereof to Lender.

                       (i)      In the case of a loss covered by any policy
         insuring the Mortgaged Property, Lender may: (A) settle and adjust any
         claim without the consent of Borrower, or (B) allow Borrower to agree
         with the insurance company or companies on the amount to be paid upon
         the loss; provided, however, that Borrower may adjust losses
         aggregating not in excess of $50,000.00 if such adjustment is carried
         out in a competent and timely manner, and provided in any case that
         Lender shall be, and is hereby, authorized to collect and receipt for
         any such insurance proceeds and make such proceeds available to
         Borrower for restoration of the Mortgaged Property in accordance with
         the terms hereof. The reasonable expenses incurred by Lender in the
         adjustment and collection of insurance proceeds shall become part of
         the Debt, shall be secured by the Mortgage and shall be reimbursed by
         Borrower to Lender on demand.

                       (ii)     In the event of any insured damage to or
         destruction of the Mortgaged Property or any part thereof (an "Insured
         Casualty") the proceeds of insurance shall be paid to Lender for
         application in repayment of the Debt.

                       (iii)    In no case shall any such application reduce or
         postpone any payments otherwise required pursuant to the Note, other
         than the final payment on the Note.

                                       13
<PAGE>

                       (iv)     Intentionally omitted.

                       (v)      Intentionally omitted.

                  (f)  Borrower shall not carry separate insurance, concurrent
in kind or form or contributing in the event of loss, with any insurance
required under this Section. Notwithstanding the foregoing, Borrower may carry
insurance not required under this Agreement, provided any such insurance
affecting the Mortgaged Property shall be for the mutual benefit of Borrower and
Lender, as their respective interests may appear, and shall be subject to all
other provisions of this Section.

                  (g)  Any insurance coverages required hereunder may be carried
under a blanket policy which covers property other than the Mortgaged Property.

                  5.   PAYMENT OF TAXES
                       ----------------

                  Borrower shall pay all taxes, assessments, water rates and
sewer rents, now or hereafter levied, assessed or imposed against the Mortgaged
Property or any part thereof (collectively, the "Taxes") and all ground rents,
maintenance charges, other governmental impositions, and other charges
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter
levied, assessed or imposed against the Mortgaged Property or any part thereof
(collectively, the "Other Charges") as they become due and payable. Borrower
will deliver to Lender evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid, or are not then delinquent, no later than 30 days
following the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Borrower shall not 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 Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property. Borrower shall furnish to
Lender or its designee receipts for the payment of the Taxes, Other Charges and
charges for utility services prior to the date that such obligations shall
become delinquent. Borrower shall be entitled to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount of any Taxes or Other Charges. Notwithstanding the
preceding sentence, during the pendency of any such contest Borrower shall pay
or cause to be paid all Taxes and Other Charges as and when due and payable, or
otherwise in accordance with Section 32 hereof.

                  6.   TAX AND INSURANCE ESCROW FUND
                       -----------------------------

                  Borrower shall pay to Lender on the first day of each calendar
month: (a) one-twelfth of an amount which would be sufficient to pay the Taxes
payable, or estimated by Lender to be payable, during the next ensuing 12
months; and (b) one-twelfth of an amount which would be sufficient to pay the
Insurance Premiums due for the renewal of the coverage afforded by the Policies
upon the expiration thereof (the amounts described in clauses (a) and (b) above,
collectively, the "Tax and Insurance Escrow Fund"). The Tax and Insurance Escrow
Fund and the monthly installments of principal and interest payable under the
Note shall be added together and shall be paid as an aggregate sum by Borrower
to Lender. Borrower hereby pledges to Lender any and all monies now or hereafter
deposited in the Tax and Insurance Escrow Fund as additional security for the
payment of the Debt. Lender will apply the Tax and Insurance Escrow Fund to
payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Sections 4 and 5 hereof. If the amount of the Tax and Insurance
Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Sections 4 and 5 hereof, Lender shall, in its discretion, return any
excess to Borrower or credit such excess against future payments to be made to
the Tax and Insurance Escrow Fund. If the Tax and Insurance Escrow Fund is not
sufficient to pay the items set forth in clauses (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall

                                       14
<PAGE>

reasonably estimate as sufficient to make up the deficiency. Upon the occurrence
of an Event of Default, Lender may apply any sums then comprising the Tax and
Insurance Escrow Fund to the payment of the Debt in any order in its sole
discretion. Until expended or applied as above provided, any amounts in the Tax
and Insurance Escrow Fund shall constitute additional security for the Debt. To
the extent permitted by applicable law, the Tax and Insurance Escrow Fund shall
not constitute a trust fund and may be commingled with other monies held by
Lender. All interest actually accruing on the balance from time to time of the
Tax and Insurance Escrow Fund shall be added thereto, and shall be deemed for
all purposes to be and become a part thereof.

                  7.   ANNUAL BUDGETS; ACCOUNTS
                       ------------------------

                  (a)  Subject to the provisions of Section 62 hereof, no later
than December 1 of each year Borrower shall submit to Lender, for Lender's
approval, a form of Budget for the 12 calendar months succeeding the term
covered by the last approved Budget. Lender's approval of any proposed Budget
shall not be unreasonably withheld or delayed. If Lender's approval or
disapproval is not given prior to December 31, Borrower shall be deemed to be
authorized to operate the Mortgaged Property in accordance with the most
recently approved Budget with each line item increased by five (5%) percent;
provided, however, that if Lender does not affirmatively disapprove such
proposed Budget by January 31, the proposed Budget shall be deemed approved.

                  (b)  Borrower shall this day, or as soon hereafter as is
practicable, establish and shall thereafter maintain the following
interest-bearing escrow accounts at one or more federally insured institutions
to be designated by Lender (collectively, the "Accounts"), each of which shall
be in Servicer's name with Borrower as beneficial owner (except for the
Operating Expense Account, which shall be in Borrower's name), pledged to Lender
pursuant to the Loan Documents as additional security for the Loan:

                       (i)    Lockbox Account, into which shall be paid
         directly, all gross revenue derived from operation of the Mortgaged
         Property (the "Lockbox Account");

                       (ii)   Operating Expense Account, into which shall be
         deposited semi-monthly, pursuant to the then-applicable Budget,
         proceeds from the Lockbox Account sufficient for Borrower to discharge
         the normal and ordinary day-to-day general operating expenses of the
         Mortgaged Property for which a separate Account has not been
         established, including Lender-approved fees to Borrower's affiliates
         (the "Operating Expense Account"); provided, however, that the
         Operating Expense Account shall be funded as of the date hereof with
         certain proceeds of the Loan, as more particularly set forth in the
         Budget;

                       (iii)  Redevelopment Funds Account: (A) into which
         shall be deposited (1) at closing, the amount by which $38,500,000.00
         (comprised of the $20,000,000.00 portion of the Loan being funded on
         and as of the date hereof and Borrower's required minimum equity of
         $18,500,000.00) exceeds the actual costs and expenses payable upon the
         closing of the acquisition of the Mortgaged Property; and (2) the
         Unfunded Proceeds, as and when advanced in accordance with the
         provisions of Section 61 hereof; and (B) from which proceeds shall be
         disbursed (1) from time to time to fund the Interest Account and the
         Tax and Insurance Escrow Account, and to pay the Servicer's fees, when
         the balance in the Lockbox Account is otherwise insufficient to fund
         such Accounts and pay such fees, and (B) at Borrower's request to fund
         Lender-approved costs of construction at the Mortgaged Property, and
         other Lender-approved soft costs in connection with the development and
         operation of the Mortgaged Property as more particularly set forth in
         the Redevelopment Agreement (the "Redevelopment Funds Account");

                                       15
<PAGE>

                       (iv)   Environmental Reserve Account, into which shall
         be deposited at closing $165,000.00, and from which proceeds shall be
         released from time to time as more particularly set forth in Section 65
         hereof (the "Environmental Reserve Account");

                       (v)    Interest Account, into which shall be deposited
         monthly, pursuant to the then-applicable Budget, proceeds from the
         Lockbox Account or, to the extent proceeds of the Lockbox Account are
         insufficient for such purpose, proceeds from the Redevelopment Funds
         Account or, to the extent proceeds of the Redevelopment Funds Account
         are insufficient for such purpose, Unfunded Proceeds, in any such case
         in an amount sufficient to satisfy Borrower's obligations for the
         regular and periodic monthly payment of interest on the outstanding
         principal balance of the Loan (the "Interest Account");

                       (vi)   Tax and Insurance Escrow Account, into which
         shall be deposited monthly, pursuant to the then-applicable Budget,
         proceeds from the Lockbox Account or, to the extent proceeds of the
         Lockbox Account are insufficient for such purpose, proceeds from the
         Redevelopment Funds Account or, to the extent proceeds of the
         Redevelopment Funds Account are insufficient for such purpose, Unfunded
         Proceeds, in any such case in an amount sufficient to satisfy
         Borrower's obligations under Section 6 hereof (the "Tax and Insurance
         Escrow Account"); and

                       (vii)  Security Deposits Account, into which shall be
         deposited at closing (and thereafter upon receipt), all sums held by
         Borrower as security deposits under tenant leases (the "Security
         Deposits Account").

                  (c)  Servicer, as Lender's agent, shall have sole signatory
authority with respect to any and all withdrawals from the Accounts, except for
the Operating Expense Account with respect to which Borrower shall have sole
signatory authority. All such withdrawals shall be made solely in accordance
with the then-applicable Budget, and by this instrument Borrower does hereby
irrevocably authorize and direct Servicer to make all such withdrawals on
Borrower's behalf to satisfy Borrower's obligations hereunder.

                  (d)  All interest actually accrued on the balance from time to
time of the Accounts shall be added thereto, and shall be deemed for all
purposes to be and become a part thereof.

                  8.   CONDEMNATION
                       ------------

                  (a)  Borrower shall promptly give Lender written notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding (a "Condemnation") and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Lender is hereby irrevocably
appointed as Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any award or payment for such
Condemnation and, provided no Event of Default has occurred and is continuing,
in consultation with Borrower, to make any compromise or settlement in
connection with such proceeding, subject to the provisions of this Agreement.
Notwithstanding any taking by any public or quasi-public authority through
eminent domain or otherwise (including, without limitation, 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 in the Note,
the Mortgage, this Agreement, the Assignment, the Environmental Agreement and
the other Loan Documents, and the Debt shall not be reduced until any award or
payment therefor shall have been actually received after expenses of collection
and applied by Lender to the 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 in
the Note.

                                       16
<PAGE>

                  (b)  If the Mortgaged Property shall be the subject of a
Condemnation, in whole or in part, Borrower shall give prompt notice thereof to
Lender.

                       (i)    In the case of a Condemnation, Lender may: (A)
         settle and adjust any claim, provided no Event of Default has occurred
         and is continuing, in consultation with Borrower, or (B) allow Borrower
         to agree with the condemning authority on the amount to be paid upon
         the Condemnation; provided, however, that Borrower may adjust losses
         aggregating not in excess of $50,000.00 if such adjustment is carried
         out in a competent and timely manner, and provided in any case that
         Lender shall be, and is hereby, authorized to collect and receipt for
         any such Condemnation award or proceeds. The expenses incurred by
         Lender in the adjustment and collection of a Condemnation award or
         proceeds shall become part of the Debt, shall be secured by the
         Mortgage and shall be reimbursed by Borrower to Lender on demand.

                       (ii)   In the event of any Condemnation affecting all
         or any portion of the Mortgaged Property the cash proceeds of any such
         Condemnation shall be paid to Lender for application in repayment of
         the Debt.

                       (iii)  In no case shall any such application reduce or
         postpone any payments otherwise required pursuant to the Note, other
         than the final payment on the Note.

                  9.   LEASES AND RENTS
                       ----------------

                  (a)  In connection with the Loan, Borrower hereby absolutely
and unconditionally assigns to Lender all of Borrower's right, title and
interest in all current and future Leases and Rents, it being intended by
Borrower that such assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Such assignment to Lender shall not
be construed to bind Lender to the performance of any of the covenants,
conditions or provisions contained in any such Lease or otherwise to impose any
obligation upon Lender. Borrower shall execute and deliver to Lender such
additional instruments, in form and substance reasonably satisfactory to Lender,
as may hereafter be requested by Lender to further evidence and confirm such
assignment. Nevertheless, subject to the terms of this Section, Lender has
granted to Borrower a revocable license to operate and manage the Mortgaged
Property and to collect the Rents. Borrower shall hold the Rents, or a portion
thereof sufficient to discharge all current sums due on the Debt, in trust for
the benefit of Lender for use in the payment of such sums. Upon the occurrence
of an Event of Default, the license granted to Borrower shall automatically be
revoked, and Lender shall immediately be entitled to possession of all Rents,
whether or not Lender enters upon or takes control of the Mortgaged Property.
Lender is hereby granted and assigned by Borrower the right, at its option, upon
revocation of the license granted herein, to enter upon the Mortgaged Property
in person, by agent or by court-appointed receiver to collect the Rents. Any
Rents collected after revocation of the license may be applied toward payment of
the Debt in such priority and proportions as Lender in its discretion shall deem
appropriate.

                  (b)  Borrower shall furnish Lender with executed copies of all
Leases. All renewals of Leases and all proposed Leases shall provide for rental
rates comparable to existing local market rates and shall be arms-length
transactions. Lender's consent shall not be required with respect to proposed
Leases which:

                       (i)    are for less than 5,001 rentable square feet; and

                                       17
<PAGE>

                       (ii)   do not contain any terms which would materially
         adversely affect Lender's rights under the Note, the Mortgage, this
         Agreement, the Assignment, the Environmental Agreement or the other
         Loan Documents,

Lender's approval shall be required with respect to all other proposed Leases,
which approval shall not be unreasonably withheld or delayed. All Leases shall
provide that they are subordinate to the Mortgage and that the lessee agrees to
attorn to Lender, and Lender shall enter into non-disturbance agreements, in
form and substance reasonably acceptable to Lender, with those tenants entitled
thereto under and pursuant to approved Leases. Borrower shall: (A) observe and
perform all the obligations imposed upon the lessor under the Leases and shall
not do or permit to be done anything to impair the value of the Leases as
security for the Debt; (B) promptly send to Lender copies of all notices of
default which Borrower shall send or receive thereunder; (C) enforce all of the
terms, covenants and conditions contained in the Lease on the part of the lessee
thereunder to be observed or performed, short of termination thereof; (D) except
for the first and last month's rents and the security deposit, if any, not
collect any Rents more than one month in advance; (E) not execute any other
assignment of the lessor's interest in the Leases or Rents; (F) other than any
month-to-month Leases and de minimis non-financial amendments, not alter, modify
or change the terms of the Leases without the prior written consent of Lender
(which consent shall not be unreasonably withheld or delayed), or, except if a
lessee is in default, cancel or terminate the Leases or accept a surrender
thereof or convey or transfer or suffer or permit a conveyance or transfer of
the Mortgaged Property or of any interest therein so as to effect a merger of
the estates and rights of, or a termination or diminution of the obligations of,
lessees thereunder; provided, however, that any Lease may be cancelled if at the
time of the cancellation thereof a new Lease is entered into with a bona fide,
independent third-party on substantially the same terms or more favorable terms
as the cancelled Lease; (G) other than any month-to-month Leases, not alter,
modify or change the terms of any guaranty of a Lease or cancel or terminate
such guaranty without the prior written consent of Lender; (H) not consent to
any assignment of or subletting under the Leases not in accordance with their
terms, without the prior written consent of Lender; and (I) execute and deliver
at the request of Lender all such further assurances, confirmations and
assignments in connection with the Mortgaged Property as Lender shall from time
to time reasonably request.

                  (c)  All security deposits of lessees, whether held in cash or
any other form, shall not be commingled with any other funds of Borrower and, if
cash, shall be deposited by Borrower into the Security Deposits Account. Any
bond or other instrument which Borrower is permitted to hold in lieu of cash
security deposits under any applicable legal requirements shall be maintained in
full force and effect unless replaced by cash deposits as hereinabove described,
shall be issued by an institution reasonably satisfactory to Lender, shall, if
permitted pursuant to any legal requirements, name Lender as payee or mortgagee
thereunder (or at Lender's option, be fully assignable to Lender) and shall, in
all respects, comply with any applicable legal requirements and otherwise be
reasonably satisfactory to Lender. Borrower shall, upon request, provide Lender
with evidence reasonably satisfactory to Lender of Borrower's compliance with
the foregoing. Following the occurrence and during the continuance of any Event
of Default, Borrower shall, upon Lender's request, if permitted by any
applicable legal requirements, turn over to Lender the security deposits (and
any interest theretofore earned thereon) with respect to all or any portion of
the Mortgaged Property, to be held by Lender subject to the terms of the Leases.

                  10.  REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING LOAN
                       ---------------------------------------------------------

                  Borrower represents, warrants and covenants as follows:

                  (a)  The Note, the Mortgage, this Agreement, the Assignment,
the Environmental Agreement and the other Loan Documents are the legal, valid
and binding obligations of Borrower, and are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor

                                       18
<PAGE>

would the operation of any of the terms of the Note, the Mortgage, this
Agreement, the Assignment, the Environmental Agreement and the other Loan
Documents, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury.

                  (b)  All certifications, permits, licenses and approvals as
and to the extent required for the legal use, occupancy and operation of the
Mortgaged Property including, without limitation, all applicable [ * ] permits,
any applicable liquor license, certificate of completion and occupancy permit,
have been or will be obtained and, to the extent obtained, are in full force and
effect. With respect to those licenses and permits required for the current
operation of the Mortgaged Property, to the extent such licenses and permits
have not been issued to Borrower as of the date hereof, Borrower has made
interim arrangements for the continued operations by the holders of such
licenses and permits. Other than the proposed approximately 14-foot road
widening, there is no proceeding pending or, to the best of Borrower's
knowledge, threatened for the total or partial condemnation of, or affecting,
the Mortgaged Property.

                  (c)  Except as shown on the land survey of the Mortgaged
Property delivered to Lender in connection with this Agreement, no improvements
on adjoining properties encroach upon the Mortgaged Property, and no easements
or other encumbrances upon the Premises encroach upon any of the Improvements,
so as to affect the value or marketability of the Mortgaged Property. The
Mortgaged Property is contiguous to and has access to a physically and legally
open all-weather public street, has all necessary permits and approvals for
ingress and egress, is adequately serviced by public water, sewer systems and
utilities and is on one or more separate tax parcels, all of which are separate
and apart from any other property owned by Borrower or any other person. The
Mortgaged Property has all necessary access by public roads or easements which
in each case are not terminable and are not subordinate to any mortgage other
than the Mortgage.

                  (d)  The Mortgaged Property is not subject to any leases,
licenses or other use or occupancy agreements other than the Leases described in
the rent roll delivered to Lender in connection with this Agreement. To the best
of Borrower's knowledge, no person has any possessory interest in the Mortgaged
Property or right to occupy any portion thereof except under and pursuant to the
provisions of the Leases or [ * ] in the ordinary course of Borrower's business.

                  (e)  The survey of the Mortgaged Property delivered to Lender
in connection with this Agreement has been performed by a duly licensed surveyor
or registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated and, to the best of Borrower's knowledge, except as set
forth in Lender's title insurance policy insuring the Mortgage, does not fail to
reflect any material matter affecting the Mortgaged Property or the title
thereto.

                  (f)  Borrower does not have on the date hereof any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments which in each
case are known to Borrower and which, in Borrower's opinion, are reasonably
likely to result in a material adverse effect on the Mortgaged Property or the
operation thereof, except as referred to or reflected or provided for in the
financial statements heretofore furnished to Lender or as otherwise disclosed to
Lender herein.

                  (g)  Intentionally omitted.

                  (h)  Intentionally omitted.

                                       19
<PAGE>

                  (i)  To the best of Borrower's knowledge, neither the
execution and delivery of the Loan Documents, Borrower's performance thereunder,
the recordation of the Mortgage, nor the exercise of any remedies by Lender,
will adversely affect: (A) the existing licenses, registrations, permits,
certificates, authorizations and approvals necessary for the operation of the
Mortgaged Property; or (B) any other law, rule or regulation applicable to the
Mortgaged Property.

                  (j)  All of the Leases currently in effect are month-to-month
and are terminable by Borrower upon not more than 30 days' notice.

                  11.  SINGLE PURPOSE ENTITY; AUTHORIZATION; NEGATIVE COVENANTS
                       --------------------------------------------------------

                  Borrower represents and warrants, and covenants for so long as
any obligations secured by the Mortgage remain outstanding, as follows:

                  (a)  Borrower does not and will not own any asset or property
other than: (i) the Mortgaged Property; and (ii) incidental personal property
necessary for the ownership or operation of the Mortgaged Property.

                  (b)  Borrower does not and will not engage in any business
other than the ownership, management and operation of the Mortgaged Property,
and Borrower will conduct and operate its business in all material respects as
presently conducted and operated.

                  (c)  Except with respect to a Management Agreement approved by
Lender and a Development Agreement contemplated to be entered into after the
date hereof pursuant to which Insignia [ * ] Corp. or an affiliate is to be paid
a development fee not to exceed 5% of project costs exclusive of acquisition
costs, Borrower will not enter into any contract or agreement with any Guarantor
or an affiliate, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an arms-length
third-party basis.

                  (d)  Borrower has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than: (i) the Debt; (ii) the
[ * ] Loan and Permitted Manager Loans, as such terms are defined, and as
contemplated and permitted, under Borrower's operating agreement in effect as of
the date hereof; and (iii) trade and operational debt incurred in the ordinary
course of business with trade creditors and in amounts as are customary and
reasonable under the circumstances. Except with Lender's prior written approval
in each instance, no indebtedness other than the Debt is or shall be secured by
the Mortgaged Property. Lender's approval shall be granted or withheld at
Lender's sole discretion. In connection with any such financing approved by
Lender, Borrower shall be required to obtain and deliver to Lender a
subordination and standstill agreement from such lender which shall be in form
and substance satisfactory to Lender in its sole discretion.

                  (e)  Without Lender's prior approval, Borrower has not made
and will not make any loans or advances to any third party (including any
constituent party, any Guarantor or any affiliate of Borrower, of any
constituent party or of any Guarantor), except in de minimis amounts in the
ordinary course of business and of the character of trade or operational
expenses.

                  (f)  Borrower has done or caused to be done, and will do or
cause to be done, all things necessary to preserve its existence, and Borrower
will not, nor will Borrower permit any constituent party or Guarantor, to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, trust or other organizational documents,
as the case may be, of Borrower or

                                       20
<PAGE>

such constituent party or Guarantor in a manner which would adversely affect
Borrower's existence as a single purpose entity.

                  (g)  Borrower will maintain books and records and bank
accounts separate from those of its affiliates and any constituent party, and
Borrower will file or cause to be filed separate tax returns. Borrower shall not
change the principal place of its business without providing Lender with at
least 30 days prior written notice of such change to Lender.

                  (h)  Borrower is and will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct from any other
entity (including any affiliate of Borrower, any constituent party, any
Guarantor or any affiliate of any constituent party or Guarantor).

                  (i)  Neither Borrower nor any constituent party will cause or
seek the dissolution or winding up, in whole or in part, of Borrower.

                  (j)  Borrower will not commingle its funds and other assets
with those of any constituent party, any Guarantor, any affiliate of Borrower,
of any constituent party or of any Guarantor, or any other person.

                  (k)  Borrower will not file or consent to the filing of any
petition to take advantage of any applicable insolvency, bankruptcy, liquidation
or reorganization statute, or make an assignment for the benefit of creditors.

                  (l)  Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any other person.

                  (m)  Borrower's manager shall at all times maintain at least
one duly appointed independent member of its Board of Directors, which member
has not been at the time of such individual's appointment and may not have been
at any time during the preceding two years: (i) a stockholder of, or an officer
or an employee of Borrower; (ii) a customer of or supplier to Borrower; (iii) a
person or other entity controlling any such stockholder, officer, employee,
customer or supplier; or (iv) a member of the immediate family of any such
stockholder, officer, employee, customer or supplier or any other director of
Borrower. As used in this subsection (m), the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person or entity, whether
through ownership of voting securities by contract or otherwise.

                  12.  MAINTENANCE OF MORTGAGED PROPERTY
                       ---------------------------------

                  Borrower shall cause the Mortgaged Property to be maintained
in a safe condition and repair. Subject to the provisions of Section 62 hereof,
the Improvements and the Equipment shall not be removed, demolished or
materially altered (except for normal replacement of the Equipment) without the
consent of Lender or as set forth in a Lender-approved Budget. Except as
expressly permitted in writing by Lender, such permission not to be unreasonably
withheld or delayed, Borrower shall not initiate, join in, acquiesce in, or
consent to any change in any private restrictive covenant, zoning law or other
public or private restriction limiting or defining the uses which may be made of
the Mortgaged Property or any part thereof. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Borrower will not cause or permit such nonconforming
use to be discontinued or abandoned without the prior written consent of Lender.
Except with Lender's prior approval, which approval shall not be unreasonably
withheld or delayed, Borrower shall not take any steps whatsoever to convert the
Mortgaged Property, or any portion thereof, to a condominium or cooperative

                                       21
<PAGE>

form of ownership. Anything herein to the contrary notwithstanding, Borrower and
Lender contemplate that during the term of the Loan the Improvements shall be
[ * ] in accordance with plans and specifications which are subject to Lender's
prior approval, which approval shall not be unreasonably withheld or delayed;
provided, however, that no such approval shall be required with respect to any
environmental remediation required by any governmental agency or instrumentality
or in connection with the [ * ] located on the Mortgaged Property. Any such
[ * ] with Lender's prior approval shall not be deemed to be a breach of this
Section or constitute the basis for an Event of Default hereunder.

                  13.  TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY
                       -------------------------------------------------

                  (a)  Borrower acknowledges that Lender has examined and relied
on the creditworthiness and experience of Borrower and its managing members,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Mortgaged Property in agreeing to make the
Loan, and that Lender will continue to rely on Borrower's ownership of the
Mortgaged Property as a means of maintaining the value of the Mortgaged Property
as security for repayment of the Debt. Borrower acknowledges that Lender has a
valid interest in maintaining the value of the Mortgaged Property so as to
ensure that, should Borrower default in the repayment of the Debt, Lender can
recover the Debt by a sale of the Mortgaged Property.

                  (b)  Except as expressly set forth herein, no sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property, or of any interest therein, shall be permitted during the
term of the Loan without Lender's prior written approval. A sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer within the meaning of this
Section shall be deemed to include: (i) an installment sales agreement wherein
Borrower agrees to sell the Mortgaged Property or any part thereof for a price
to be paid in installments; (ii) an agreement by Borrower leasing all or a
substantial part of the Mortgaged Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Borrower's right, title and interest in and to any
Leases or any Rents; and (iii) if Borrower or any managing member of Borrower is
a limited or general partnership, limited liability company or joint venture,
the change, removal or resignation of a general partner, managing member or
joint venturer or the transfer of the partnership interest of any general
partner, the membership interest of any managing member or the interest of any
joint venturer. Notwithstanding anything to the contrary provided herein, the
principals of Borrower existing on the date hereof shall have the right to
transfer, voluntarily or involuntarily, their ownership interests in Borrower:
(A) to one or more single purpose entities owned and controlled by Insignia
Financial Group, Inc., [ * ] and/or [ * ], or by an affiliate of Insignia
Financial Group, Inc., [ * ] and/or [ * ], with respect to which transfers
Lender shall be given notice, but for which Lender's consent shall not be
required; and (B) to one or more third-party single purpose entities provided in
the case of all transfers under clause (A) or clause (B) that: (1) Borrower
maintain at all times when any portion of the Loan remains outstanding not less
than $10,000,000.00 cash equity in the Mortgaged Property; (2) any proceeds of
such transfers in excess of $10,000,000.00 shall either be paid to Lender for
application in reduction of the outstanding principal balance of the Loan, or be
applied in respect of Lender-approved construction and development costs at the
Mortgaged Property; (3) Insignia Financial Group, Inc., itself or together with
[ * ] and/or [ * ], shall retain decision-making and operational control of
Borrower; and (4) with respect to transfers under clause (B) above, the identity
of the transferees of such equity interests shall be subject to Lender's prior
approval, not to be unreasonably withheld or delayed, and in all events Lender's
failure to approve or disapprove any proposed transferee within three business
days of such request shall be deemed approval.

                  (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 Borrower's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property without Lender's consent where such consent was required.
This provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged

                                       22
<PAGE>

Property regardless of whether voluntary or not, or whether or not Lender has
consented to any previous sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property.

                  (d)  Lender's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged Property shall not be
deemed to be a waiver of Lender's right to require such consent in the future.
Any sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
the Mortgaged Property made in contravention of this Section shall be null and
void and of no force or effect.

                  (e)  Borrower agrees to bear and shall pay or reimburse Lender
on demand for all reasonable expenses (including, without limitation, Lender's
reasonable out-of-pocket attorney's fees and disbursements, title search costs
and title insurance endorsement premiums) incurred by Lender in connection with
the review, approval or disapproval, and documentation of any such sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer.

                  14.  ESTOPPEL CERTIFICATES; AFFIDAVITS
                       ---------------------------------

                  (a)  Within ten (10) days after request by Lender or Borrower,
each shall furnish the other with a statement, duly acknowledged and certified,
setting forth: (i) the amount of the original principal amount of the Note; (ii)
the then outstanding principal balance of the Note; (iii) the rate of interest
of the Note; (iv) the date on which installments of interest and/or principal
were last paid; (v) any offsets or defenses to the payment of the Debt; and (vi)
that the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement and the other Loan Documents are valid, legal and binding obligations,
which have not been modified or if modified, giving particulars of such
modification.

                  (b)  Within ten (10) days after request by Lender, Borrower
shall furnish Lender with a certificate reaffirming all representations and
warranties of Borrower set forth herein and in the other Loan Documents as of
the date requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes.

                  (c)  Borrower shall deliver to Lender upon request, tenant
estoppel certificates from each tenant under a Lease in form and substance
reasonably satisfactory to Lender; provided, however, that Borrower shall not be
required to deliver such certificates more frequently than one time in any
calendar year.

                  15.  CHANGES IN THE LAWS REGARDING TAXATION
                       --------------------------------------

                  If any law is enacted, adopted or amended after the date of
this Agreement which deducts the Debt from the value of the Mortgaged Property
for the purpose of taxation, or which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Mortgaged Property, Borrower
will pay such tax, with interest and penalties thereon, if any. In the event
Lender or its counsel determines that the payment of such tax or interest and
penalties by Borrower would be unlawful or taxable to Lender or unenforceable or
provide the basis for a defense of usury, then in any such event, Lender shall
have the option, by written notice of not less than 90 days, to declare the Debt
immediately due and payable.

                  16.  NO CREDITS ON ACCOUNT OF THE DEBT
                       ---------------------------------

                  Borrower will not claim, demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Mortgaged Property, or any part

                                       23
<PAGE>

thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of the Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Lender shall have the option, by written
notice of not less than 90 days, to declare the Debt immediately due and
payable.

                  17.  DOCUMENTARY STAMPS
                       ------------------

                  If at any time the United States of America, any State or
Territory thereof or any subdivision of any such State or Territory shall
require revenue or other stamps to be affixed to the Note or the Mortgage, or
shall impose any other tax or charge on the same, Borrower will pay for the
same, with interest and penalties thereon, if any.

                  18.  CONTROLLING AGREEMENT
                       ---------------------

                  It is expressly stipulated and agreed to be the intent of
Borrower and Lender at all times to comply with applicable state law or
applicable United States federal law (to the extent that it permits Lender to
contract for, charge, take, reserve, or receive a greater amount of interest
than under state law) and that this Section shall control every other covenant
and agreement in this Agreement and the other Loan Documents. If the applicable
law (state or federal) is ever judicially interpreted so as to render usurious
any amount called for under the Note or under any of the other Loan Documents,
or contracted for, charged, taken, reserved, or received with respect to the
Debt, or if Lender's exercise of the option to accelerate the maturity of the
Note, or if any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is Borrower's
and Lender's express intent that all excess amounts theretofore collected by
Lender shall be credited on the principal balance of the Note and all other Debt
(or, if the Note and all other Debt have been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.

                  19.  BOOKS AND RECORDS
                       -----------------

                  Borrower will maintain full and accurate books of accounts and
other records reflecting the operations of the Mortgaged Property. Borrower will
furnish, or cause to be furnished to Lender, within 30 days of the end of each
calendar month, the following items, each certified by a senior financial
officer of Borrower as true, correct and complete as of the end of and for such
period (subject to normal year-end adjustments), and as having been prepared in
accordance with the Uniform System of Accounts for [ * ] properties as approved
by [ * ] (as in effect from time to time, the "Uniform System of Accounts"),
consistently applied: (a) a written occupancy statement dated as of the last day
of the most recently ended calendar quarter identifying each of the Leases by
the term, space occupied, rental required to be paid, security deposit paid, any
rental concessions, and identifying any defaults or payment delinquencies
thereunder; (b) monthly and year to date operating statements detailing the
total revenues received and total expenses incurred in connection with the
ownership and operation of the Mortgaged Property, including a comparison of the
budgeted income and expenses and the actual income and expenses for such month
and

                                       24
<PAGE>

the year to date (which operating information shall include the Improvements);
and (c) a written statement dated as of the last day of the most recently ended
month showing [ * ]. Upon request by Lender, Borrower will provide a detailed
explanation of any variances of ten (10%) percent or more between budgeted and
actual amounts for such periods. Borrower shall furnish, within 90 days
following the end of each calendar year, a statement of the financial affairs
and condition of the Mortgaged Property, including a statement of profit and
loss and a balance sheet for the Mortgaged Property (and Borrower) for the
immediately preceding fiscal year, prepared by an independent certified public
accountant acceptable to Lender. Borrower shall deliver to Lender on or before
December 31 of each calendar year an itemized operating budget and capital
expenditure budget for the Mortgaged Property and a management plan for the
Mortgaged Property for the next succeeding calendar year in such detail as
Lender may reasonably request. Borrower shall promptly after receipt deliver to
Lender copies of all quality inspection reports or similar reports or inspection
results that are delivered to it by the Franchisor. At any time and from time to
time Borrower shall deliver to Lender or its agents such other financial data as
Lender or its agents shall reasonably request with respect to Borrower and the
ownership, maintenance, use and operation of the Mortgaged Property. All
information required to be furnished to Lender pursuant to this Section shall be
on the form provided by Lender (which form shall accompany Lender's request).

                  20.  PERFORMANCE OF OTHER AGREEMENTS
                       -------------------------------

                  Borrower shall observe and perform each and every term to be
observed or performed by Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Mortgaged Property.

                  21.  FURTHER ASSURANCES; RIGHT TO SPLIT AND PARTICIPATE THE
                       LOAN
                       ------------------------------------------------------

                  (a)  Borrower will, at the cost of Borrower, and without
expense to Lender, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
Uniform Commercial Code financing statements or continuation statements,
transfers and assurances as Lender shall, from time to time, reasonably require,
for the better assuring, conveying, assigning, transferring, and confirming unto
Lender the property and rights hereby mortgaged, given, granted, bargained,
sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and
hypothecated or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Agreement or
for filing, registering or recording the Mortgage. Borrower, on demand, will
execute and deliver and hereby authorizes Lender to execute in the name of
Borrower or without the signature of Borrower to the extent Lender may lawfully
do so, one or more financing statements, chattel mortgages or other instruments,
to evidence more effectively the security interest of Lender in the Mortgaged
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including without
limitation such rights and remedies available to Lender pursuant to this
Section; provided, however, that so long as Borrower is in compliance with the
terms and conditions of this Agreement, Lender will first seek Borrower's
assistance in exercising and perfecting such rights and remedies.

                  (b)  Borrower acknowledges that Lender intends to sell the
Loan to a party who may pool the Loan with a number of other loans and to have
the holder of such loans grant participations therein or issue one or more
classes of Mortgage Backed, Pass-Through Certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (the "Securities"). The Securities may be rated by one or more
national rating agencies. In connection therewith, Borrower agrees to make
available to Lender all information concerning its business and operations which
Lender reasonably requests. Lender may share such information with the
investment banking firms, rating agencies, accounting firms, law firms and other
third-party advisory firms involved with the Loan or the Securities. The

                                       25
<PAGE>

information provided by Borrower to Lender may ultimately be incorporated into
the offering documents for the Securities and thus such information may be
disclosed to various investors. Lender and all of the aforesaid third-party
advisors and professional firms shall be entitled to rely on the information
supplied by, or on behalf of, Borrower.

                  (c)  Lender shall have the right, at any time in its sole and
absolute discretion, to split and sever the Loan into two or more separate
loans, or to sell participations in the Loan to third parties. Borrower shall
execute and deliver all such instruments, documents and other papers, and do or
cause to be done all such acts and things as Lender may reasonably request in
order to effect such splitter and severance or participation. In no event shall
any such splitter and severance or participation expand or increase Borrower's
liability or obligations hereunder, and Lender shall pay all of Borrower's
actual out-of-pocket expenses and third-party costs (including attorneys fees
and expenses associated therewith). In connection with any participation,
Borrower agrees to make available to Lender all information concerning its
business and operations which Lender reasonably requests and Lender may share
such information and any other information in Lender's possession concerning
Borrower and the Loan with prospective participants and other third-party
advisory firms involved with such activities.

                  (d)  If Lender intends to sell the Loan or any interest
therein to a third party, not affiliated with Lender, and Lender reasonably
believes that such third party is a direct competitor of Insignia Financial
Group, Inc., [ * ] and/or [ * ], then Lender shall give Borrower notice thereof
three business days prior to the closing of such sale. This provision is
intended solely to create an obligation for Lender to give Borrower notice of
any such sale, and shall not otherwise create or confer any other rights of any
kind with respect to the Loan, or give rise to any claim for damages or form the
basis for any injunctive relief by reason of any such sale.

                  22.  RECORDING OF MORTGAGE
                       ---------------------

                  Borrower forthwith upon the execution and delivery of this
Agreement and thereafter, from time to time, will cause the Mortgage, and any
security instrument creating a lien or security interest or evidencing the lien
thereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien or security interest thereof upon, and the interest of Lender
in, the Mortgaged Property. Borrower will pay all filing, registration or
recording fees, and all expenses incident to the preparation, execution and
acknowledgment of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property and any instrument of further
assurance, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of the Mortgage, any mortgage supplemental thereto, any security
instrument with respect to the Mortgaged Property or any instrument of further
assurance, except where prohibited by law so to do. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability incurred
by reason of the imposition of any tax on the making and recording of the
Mortgage.

                  23.  REPORTING REQUIREMENTS
                       ----------------------

                  Borrower agrees to give prompt notice to Lender of the
insolvency or bankruptcy filing of Borrower or any constituent thereof, or the
death, insolvency or bankruptcy filing of any Guarantor.

                                       26
<PAGE>

                  24.  EVENTS OF DEFAULT
                       -----------------

                  Subject to the provisions of Section 63 hereof, the term
"Event of Default" as used herein shall mean the occurrence or happening, at any
time and from time to time, of any one or more of the following:

                  (a)  if any portion of the Debt is not paid prior to the tenth
(10th) day after the date such payment is due or if the entire Debt is not paid
on or before the Maturity Date;

                  (b)  subject to Borrower's right to contest as provided
herein, if any of the Taxes or Other Charges are not paid when due and payable
other than by reason of Servicer's failure to properly apply amounts escrowed
for such purpose;

                  (c)  if the Policies are not kept in full force and effect
other than by reason of Servicer's failure to properly apply amounts escrowed
for such purpose, or if the Policies are not delivered to Lender upon request;

                  (d)  if Borrower transfers or encumbers any portion of the
Mortgaged Property in a manner inconsistent with the terms of this Agreement;

                  (e)  if any representation or warranty of Borrower, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material respect
when made;

                  (f)  if Borrower or any Guarantor shall make an assignment for
the benefit of creditors, or if Borrower shall generally not be paying its debts
as they become due;

                  (g)  if a receiver, liquidator or trustee of Borrower or of
any Guarantor shall be appointed, or if Borrower or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, that such appointment, adjudication, petition or proceeding, if
involuntary and not consented to by Borrower or such Guarantor, shall constitute
an Event of Default only if not being discharged, stayed or dismissed within 90
days;

                  (h)  if Borrower shall be in default under any other mortgage
or security agreement covering any part of the Mortgaged Property, whether it be
superior or junior in lien to the Mortgage;

                  (i)  subject to Borrower's right to contest as provided
herein, if the Mortgaged Property becomes subject to any mechanic's,
materialman's or other lien (except a lien for local real estate taxes and
assessments not then due and payable) and such lien remains outstanding for a
period of 30 days;

                  (j)  if Borrower fails to cure promptly any violations of laws
or ordinances affecting the Mortgaged Property (provided, however, that
Borrower's failure to cure promptly existing violations of laws or ordinances of
which Lender has been advised in writing, at or prior to closing, shall not
constitute an Event of Default hereunder unless Borrower fails to cure such
violations after receiving notice from the applicable governmental agency
requiring that such violations be cured, and such failure continues for 90 days
(or such shorter period as may be required by such agency or applicable law));

                                       27
<PAGE>

                  (k)  except as expressly set forth in Sections 12 and 62
hereof or as otherwise expressly permitted in this Agreement, the actual or
threatened material alteration, improvement, demolition or removal of any of the
Improvements without the prior written consent of Lender, which consent shall
not be unreasonably withheld or delayed;

                  (l)  except as expressly set forth in Section 62 hereof, if
there shall occur any material damage to the Mortgaged Property in any manner
which is not covered by insurance solely as a result of Borrower's failure to
maintain insurance required in accordance with this Agreement;

                  (m)  subject to the provisions of Section 62 hereof, if
without Lender's prior written consent, which consent shall not be unreasonably
withheld or delayed: (i) the manager under the Management Agreement (or any
succeeding management agreement) resigns or is removed; (ii) the ownership,
management or control of such manager is transferred to a person or entity other
than the general partner or managing member of Borrower; or (iii) there is any
material adverse change in or termination of the Management Agreement (or any
succeeding management agreement);

                  (n)  subject to the provisions of Section 62 hereof, if
without Lender's prior written consent, there is any material change in the
Franchise Agreement (or any succeeding franchise agreement);

                  (o)  if for more than 30 days after receipt of notice from
Lender, Borrower shall continue to be in default under any term, covenant or
condition of this Agreement, the Assignment, the Environmental Agreement or any
of the other Loan Documents other than as specified in any of subsections (a)
through (n) of this Section; provided, however, that if the cure of any such
default cannot reasonably be effected within such 30 day period and Borrower
shall have promptly and diligently commenced to cure such default within such 30
day period, then the period to cure shall be deemed extended for up to an
additional 60 days from Lender's default notice so long as Borrower diligently
and continuously proceeds to cure such default to Lender's satisfaction;

                  (p)  subject to the provisions of Section 62 hereof, if a
default has occurred and continues beyond any applicable cure period under the
Management Agreement if such default permits a party to terminate or cancel the
Management Agreement;

                  (q)  subject to the provisions of Section 62 hereof, if a
default has occurred and continues beyond any applicable cure period under the
Franchise Agreement if such default permits a party to terminate or cancel the
Franchise Agreement;

                  (r)  subject to the provisions of Section 62 hereof, if
without Lender's prior written consent Borrower terminates or cancels a
Franchise Agreement or operates the Mortgaged Property under the name of [ * ]
other than as contemplated under such Franchise Agreement; and

                  (s)  if Borrower fails, within 90 days of the date hereof, to
obtain all required consent to the [ * ] Pledge; provided, however, that if
notwithstanding Borrower's diligent efforts such consents are not obtained
within such 90-day period, then the period to obtain such consents shall be
extended for so long as Borrower is diligently pursuing such required consent,
but only until such consent is refused.

                  25.  LATE PAYMENT CHARGE; SERVICER'S FEES
                       ------------------------------------

                  (a)  Subject to the provisions of Section 63 hereof, if any
portion of the Debt is not paid prior to the tenth (10th) day after the date
such payment is due or if the entire Debt is not paid within 10 days after the
Maturity Date, Borrower shall pay to Lender upon demand an amount equal to five
(5%)

                                       28
<PAGE>

percent of such overdue portion of the Debt, 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, and such amount shall
be secured by the Mortgage, the Assignment, the Environmental Agreement and the
other Loan Documents.

                  (b)  Borrower shall pay a fee to the Servicer in respect of
servicing the Loan in an amount equal to 15 basis points of the Loan on an
annual basis. The Servicer's fees shall be payable monthly, contemporaneously
with the payments of interest under the Note. In addition to the Servicer's fees
payable monthly, Borrower shall pay all out-of-pocket costs incurred by Servicer
in connection with its review of leases, non-disturbance agreements, property
inspections, matters relating to casualty and condemnation at the Mortgaged
Property and the occurrence of defaults under the Loan Documents.

                  26.  RIGHT TO CURE DEFAULTS
                       ----------------------

                  Upon the occurrence of any Event of Default, Lender may, but
without any obligation to do so and without notice to or demand on Borrower and
without releasing Borrower from any obligation hereunder, take such action as
Lender may deem necessary to protect its security for the Loan. Lender is
authorized to enter upon the Mortgaged Property for such purposes or to appear
in, defend, or bring any action or proceeding to protect its interest in the
Mortgaged Property or to foreclose the Mortgage or collect the Debt, and the
cost and expense thereof (including Lender's reasonable attorneys' fees to the
extent permitted by law), with interest at the Default Rate for the period after
notice from Lender that such cost or expense was incurred to the date of payment
to Lender, shall constitute a portion of the Debt, shall be secured by the
Mortgage, the Assignment, the Environmental Agreement and the other Loan
Documents and shall be due and payable to Lender upon demand.

                  27.  REMEDIES
                       --------

                  (a)  Upon the occurrence of any Event of Default, Lender may
take such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the Mortgaged Property by
Lender itself or otherwise including, without limitation, the following actions,
each of which may be pursued concurrently or otherwise, at such time and in such
order as Lender may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Lender:

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

                       (ii)   institute a proceeding or proceedings, judicial or
         nonjudicial, by advertisement or otherwise, for the complete
         foreclosure of the Mortgage in which case the Mortgaged Property or
         any interest therein may be sold for cash or otherwise in one or more
         parcels or in several interests or portions and in any order or
         manner;

                       (iii)  with or without entry, to the extent permitted
         and pursuant to the procedures provided by applicable law, institute
         proceedings for the partial foreclosure of the Mortgage for the portion
         of the Debt then due and payable, subject to the continuing lien of the
         Mortgage for the balance of the Debt not then due;

                       (iv)   sell for cash or otherwise the Mortgaged
         Property or any part thereof and all estate, claim, demand, right,
         title and interest of Borrower therein and rights of redemption
         thereof, pursuant to the power of sale contained herein or otherwise,
         at one or more sales, as an entity or in parcels, at such time and
         place, upon such terms and after such notice thereof as may be required
         or permitted by law;

                                       29
<PAGE>

                       (v)    institute an action, suit or proceeding in equity
         for the specific performance of any covenant, condition or agreement
         contained herein, in the Assignment, the Environmental Agreement, the
         Note or in the other Loan Documents;

                       (vi)   recover judgment on the Note either before,
         during or after any proceedings for the enforcement of the Mortgage;

                       (vii)  apply for the appointment of a trustee,
         receiver, liquidator or conservator of the Mortgaged Property, without
         notice and without regard for the adequacy of the security for the Debt
         and without regard for the solvency of Borrower, any Guarantor or of
         any person, firm or other entity liable for the payment of the Debt;

                       (viii) revoke the license granted to Borrower to
         collect the Rents and other sums due under the Leases and enforce
         Lender's interest in the Leases and Rents and enter into or upon the
         Mortgaged Property, either personally or by its agents, nominees or
         attorneys and dispossess Borrower and its agents and servants
         therefrom, and thereupon Lender may to the maximum extent permitted, or
         not restricted, under applicable law: (A) use, operate, manage,
         control, insure, maintain, repair, restore and otherwise deal with all
         and every part of the Mortgaged Property and conduct the business
         thereat; (B) complete any construction on the Mortgaged Property in
         such manner and form as Lender deems advisable; (C) make alterations,
         additions, renewals, replacements and improvements to or on the
         Mortgaged Property; (D) exercise all rights and powers of Borrower with
         respect to the Mortgaged Property, whether in the name of Borrower or
         otherwise including, without limitation, the right to make, cancel,
         enforce or modify Leases, obtain and evict tenants, and demand, sue
         for, collect and receive all earnings, revenues, rents, issues, profits
         and other income of the Mortgaged Property and every part thereof; and
         (E) apply the receipts from the Mortgaged Property to the payment of
         the Debt, after deducting therefrom all expenses (including Lender's
         reasonable attorneys' fees) incurred in connection with the aforesaid
         operations and all amounts necessary to pay the taxes, assessments,
         insurance and other charges in connection with the Mortgaged Property,
         as well as just and reasonable compensation for the services of Lender,
         its counsel, agents and employees;

                       (ix)   require Borrower to pay monthly in advance to
         Lender, or any receiver appointed to collect the Rents, the fair and
         reasonable rental value for the use and occupancy of any portion of the
         Mortgaged Property occupied by Borrower and require Borrower to vacate
         and surrender possession of the Mortgaged Property to Lender or to such
         receiver and, in default thereof, evict Borrower by summary proceedings
         or otherwise; and

                       (x)    pursue such other rights and remedies as may be
         available at law or in equity or under the Uniform Commercial Code,
         including the right to establish a lock box for all Rents and other
         receivables of Borrower relating to the Mortgaged Property.

In the event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, the Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.

                  (b)  The proceeds of any sale made under or by virtue of this
Section, together with any other sums which then may be held by Lender under
this Agreement, whether under the provisions of this Section or otherwise, shall
be applied by Lender to the payment of the Debt in such priority and proportion
as Lender in its sole discretion shall deem proper.

                                       30
<PAGE>

                  (c)  Lender may adjourn from time to time any sale by it to be
made under or by virtue of the Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Lender, without further
notice or publication, may make such sale at the time and place to which such
sale shall be so adjourned.

                  (d)  Upon the completion of any sale or sales pursuant hereto,
Lender or an officer of any court empowered to do so, shall execute and deliver
to the accepted purchaser or purchasers a good and sufficient instrument, or
good and sufficient instruments, conveying, assigning and transferring all
estate, right, title and interest in and to the property and rights sold. Lender
is hereby irrevocably appointed the true and lawful attorney-in-fact of
Borrower, to act in its name and stead (such power of attorney being coupled
with an interest, and irrevocable), to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Lender may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Borrower hereby ratifying and confirming all that its attorney or
such substitute or substitutes shall lawfully do by virtue hereof. Any sale or
sales made under or by virtue of this Section, whether made under the power of
sale herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of Borrower in and to the properties and rights so sold, and shall be
a perpetual bar both at law and in equity against Borrower and against any and
all persons claiming or who may claim the same, or any part thereof from,
through or under Borrower.

                  (e)  Upon any sale made under or by virtue of this Section,
whether made under the power of sale granted in the Mortgage or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Lender may bid for and acquire the Mortgaged Property or any part thereof
and in lieu of paying cash therefor may make settlement for the purchase price
by crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Lender is
authorized to deduct under the Mortgage.

                  (f)  No recovery of any judgment by Lender and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Borrower shall affect in any manner or to any extent the lien of the
Mortgage upon the Mortgaged Property or any part thereof, or any liens, rights,
powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired as before.

                  (g)  Lender may terminate or rescind any proceeding or other
action brought in connection with its exercise of the remedies provided in this
Section at any time before the conclusion thereof, as determined in Lender's
sole discretion and without prejudice to Lender.

                  (h)  Lender may resort to any remedies and the security given
by the Note, the Mortgage, this Agreement, the Assignment, the Environmental
Agreement or the other Loan Documents in whole or in part, and in such portions
and in such order as determined in Lender's sole discretion. No such action
shall in any way be considered a waiver of any rights, benefits or remedies
evidenced or provided by the Note, the Mortgage, this Agreement, the Assignment,
the Environmental Agreement or the other Loan Documents. The failure of Lender
to exercise any right, remedy or option provided in the Note, the Mortgage, this
Agreement, the Assignment, the Environmental Agreement or the other Loan
Documents shall not be deemed a waiver of such right, remedy or option or of any
covenant or obligation secured by the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents. No
acceptance by Lender of any payment after the occurrence of any Event of Default
and no payment by Lender of any obligation for which Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower's liability to pay such obligation. No sale

                                       31
<PAGE>

of all or any portion of the Mortgaged Property, no forbearance on the part of
Lender, and no extension of time for the payment of the whole or any portion of
the Debt or any other indulgence given by Lender to Borrower, shall operate to
release or in any manner affect the interest of Lender in the remaining
Mortgaged Property or the liability of Borrower to pay the Debt. No waiver by
Lender shall be effective unless it is in writing and then only to the extent
specifically stated.

                  (i)  The interests and rights of Lender under the Note, the
Mortgage, this Agreement, the Assignment, the Environmental Agreement or the
other Loan Documents shall not be impaired by any indulgence, including: (i) any
renewal, extension or modification which Lender may grant with respect to any of
the Debt; (ii) any surrender, compromise, release, renewal, extension, exchange
or substitution which Lender may grant with respect to the Mortgaged Property or
any portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, guarantor or surety of any of the Debt.

                  (j)  Anything herein to the contrary notwithstanding, if any
of the foregoing remedies conflict or are otherwise inconsistent with any
remedies available under the Mortgage (or as a matter of law in the jurisdiction
governing the Mortgage) then, to the extent permitted as a matter of law in the
jurisdiction in which any such remedy is being sought, such inconsistency shall
be resolved in favor of the interpretation that would grant Lender the broadest
possible remedies.

                  (k)  Borrower hereby expressly waives and releases to the
fullest extent permitted by law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its obligations under any of
the Loan Documents.

                  28.  RIGHT OF ENTRY
                       --------------

                  Lender and its agents shall have the right to enter and
inspect the Mortgaged Property during normal business hours upon reasonable
prior notice.

                  29.  INTENTIONALLY OMITTED.
                       ----------------------

                  30.  ACTIONS AND PROCEEDINGS
                       -----------------------

                  Lender has the right to appear in and defend any action or
proceeding brought with respect to the Mortgaged Property and to bring any
action or proceeding, in the name and on behalf of Borrower, which Lender, in
its reasonable discretion, decides should be brought to protect its interest in
the Mortgaged Property. Lender shall, at its option, be subrogated to the lien
of any mortgage or other security instrument discharged in whole or in part by
the Debt, and any such subrogation rights shall constitute additional security
for the payment of the Debt.

                  31.  WAIVER OF SETOFF AND COUNTERCLAIM
                       ---------------------------------

                  All amounts due under the Mortgage, the Note and the other
Loan Documents shall be payable without setoff, counterclaim or any deduction
whatsoever. Borrower hereby waives the right to assert a counterclaim (other
than compulsory counterclaims) in any action or proceeding brought against it by
Lender, or arising out of or in any way connected with this Agreement, the
Mortgage, the Note, any of the other Loan Documents, or the Debt.

                                       32
<PAGE>

                  32.  CONTEST OF CERTAIN CLAIMS
                       -------------------------

                  Notwithstanding the provisions of Sections 5 and 24(i) hereof,
Borrower shall not be in default for failure to pay or discharge Taxes, Other
Charges or a mechanic's or materialman's lien asserted against the Mortgaged
Property if, and so long as: (a) Borrower shall have notified Lender of such
nonpayment and the reasons therefor within five days of obtaining knowledge
thereof; (b) Borrower shall diligently and in good faith contest such Taxes,
Other Charges or lien by appropriate legal proceedings which shall operate to
prevent the enforcement or collection thereof and the sale of the Mortgaged
Property or any part thereof, in satisfaction thereof; (c) Borrower shall have
furnished to Lender a cash deposit, or an indemnity bond satisfactory to Lender
with a surety reasonably satisfactory to Lender, in the amount of the Taxes,
Other Charges or mechanic's or materialman's lien claim, plus a reasonable
additional sum to pay all costs, interest and penalties that may be imposed or
incurred in connection therewith, to assure payment of the matters under contest
and to prevent any sale or forfeiture of the Mortgaged Property or any part
thereof; (d) Borrower shall promptly upon final determination thereof pay the
amount of any such Taxes, Other Charges or claim so determined, together with
all costs, interest and penalties which may be payable in connection therewith;
and (e) the failure to pay the Taxes, Other Charges or mechanic's or
materialman's lien claim does not constitute a default under any other deed of
trust, mortgage or security interest covering or affecting any part of the
Mortgaged Property. Notwithstanding the foregoing, Borrower shall immediately
upon request of Lender pay (and if Borrower shall fail so to do, Lender may, but
shall not be required to, pay or cause to be discharged or bonded against) any
such Taxes, Other Charges or claim notwithstanding such contest, if in the
reasonable opinion of Lender, the Mortgaged Property or any part thereof or
interest therein may be in danger of being sold, forfeited, foreclosed,
terminated, cancelled or lost. Lender may pay over any such cash deposit or part
thereof to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established.

                  33.  RECOVERY OF SUMS REQUIRED TO BE PAID
                       ------------------------------------

                  Lender shall have the right from time to time to take action
to recover any sum or sums which constitute a part of the Debt as they become
due, without regard to whether or not the balance of the Debt shall be due, and
without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing
at the time such earlier action was commenced.

                  34.  MARSHALLING AND OTHER MATTERS
                       -----------------------------

                  Borrower hereby waives, to the extent permitted by law, the
benefit of all appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force, and all rights of marshalling in the
event of any sale hereunder of the Mortgaged Property or any part thereof or any
interest therein. Further, Borrower hereby expressly waives any and all rights
of redemption from sale under any order or decree of foreclosure of the Mortgage
on behalf of Borrower, and on behalf of each and every person acquiring any
interest in or title to the Mortgaged Property subsequent to the date of this
Agreement and on behalf of all persons to the extent permitted by applicable
law.

                  35.  HAZARDOUS SUBSTANCES
                       --------------------

                  Except for matters set forth in the environmental reports
furnished to Lender in connection with the Loan, Borrower hereby represents and
warrants to Lender that, to the best of Borrower's knowledge: (a) the Mortgaged
Property is not in direct or indirect violation of any local, state, federal or
other governmental authority, statute, ordinance, code, order, decree, law, rule
or regulation pertaining to or imposing liability or standards of conduct
concerning environmental regulation, contamination or clean-up including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act,

                                       33
<PAGE>

as amended, the Resource Conservation and Recovery Act, as amended, and any
State or Territory super-lien and/or environmental clean-up statutes
(collectively, "Environmental Laws"); (b) the Mortgaged Property is not subject
to any private or governmental lien or judicial or administrative notice or
action relating to hazardous and/or toxic, dangerous and/or regulated,
substances, solvents, wastes, materials, pollutants or contaminants, petroleum,
tremolite, anthlophylie or actinolite or polychlorinated biphenyls (including,
without limitation, any raw materials which include hazardous constituents) and
any other substances, materials or solvents which are included under or
regulated by Environmental Laws (collectively, "Hazardous Substances"); (c) no
Hazardous Substances are or have been, prior to Borrower's acquisition of the
Mortgaged Property, discharged, generated, treated, disposed of or stored on,
incorporated in or removed or transported from the Mortgaged Property other than
in compliance with all Environmental Laws; and (d) no underground storage tanks
exist on any of the Mortgaged Property. So long as Borrower owns or is in
possession of the Mortgaged Property, Borrower shall keep or cause the Mortgaged
Property to be kept free from Hazardous Substances (other than existing
conditions at the Mortgaged Property which, as and when remediated by Borrower,
are to be remediated in accordance with Lender-approved plans and
specifications, and de minimis quantities of Hazardous Substances that are
necessary and lawfully used in the operation of the Mortgaged Property, and
which are stored and disposed of in compliance with all Environmental Laws) and
in compliance with all Environmental Laws, shall promptly notify Lender if
Borrower shall become aware of any other Hazardous Substances on the Mortgaged
Property and/or if Borrower shall become aware that the Mortgaged Property is in
violation of any Environmental Laws (other than with respect to existing
conditions at the Mortgaged Property which shall be remediated in accordance
with Lender-approved plans and specifications) and Borrower shall remove such
Hazardous Substances and/or cure such violations, as applicable, as required by
law, promptly after Borrower becomes aware of such Hazardous Substances or such
violations, at Borrower's sole expense. Nothing herein shall prevent Borrower
from recovering such expenses from any other party that may be liable for such
removal or cure. Upon Lender's request, at any time and from time to time while
this Agreement is in effect (but in no event more frequently than once in any
three-year period or more frequently if specific facts and circumstances
reasonably dictate, or otherwise at Lender's election but at Lender's expense),
Borrower shall provide at Borrower's sole expense, an inspection or audit of the
Mortgaged Property prepared by a licensed hydrogeologist or licensed
environmental engineer approved by Lender indicating the presence or absence of
Hazardous Substances on the Mortgaged Property. If Borrower fails to provide
such inspection or audit within 30 days after such request, Lender may order
such inspection or audit, and Borrower hereby grants to Lender and its employees
and agents access to the Mortgaged Property and a license to undertake such
inspection or audit. The cost of such inspection or audit shall be paid by
Borrower and, if not so paid, shall be added to the principal balance of the
sums due under the Note and the Mortgage and shall bear interest thereafter
until paid at the Default Rate. The obligations and liabilities of Borrower
under this Section shall survive any termination, satisfaction, or assignment of
the Mortgage and the exercise by Lender of any of its rights or remedies
thereunder including, without limitation, the acquisition of the Mortgaged
Property by foreclosure or a conveyance in lieu of foreclosure.

                  36.  ASBESTOS
                       --------

                  Borrower shall not remove, disturb, encapsulate or otherwise
remediate any asbestos or any substance containing asbestos (collectively,
"Asbestos") in the Improvements except in compliance with all Environmental
Laws. If Borrower makes any alterations or modifications to the Improvements
that would disturb or expose any Asbestos in the Improvements or cause any of
such Asbestos to become friable, Borrower shall remove or encapsulate such
Asbestos in compliance with all applicable Environmental Laws.

                  37.  ENVIRONMENTAL MONITORING
                       ------------------------

                  Borrower shall give prompt written notice to Lender of: (a)
any proceeding or inquiry by any party with respect to the presence of any
Hazardous Substance on, under, from or about the Mortgaged

                                       34
<PAGE>

Property; (b) all claims made or threatened by any third party against Borrower
or the Mortgaged Property relating to any loss or injury resulting from any
Hazardous Substance; and (c) Borrower's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of the Mortgaged Property that
could cause the Mortgaged Property to be subject to any investigation or cleanup
pursuant to any Environmental Law. Borrower shall permit Lender to join and
participate, as a party if it so elects, in any legal proceedings or actions
initiated with respect to the Mortgaged Property in connection with any
Environmental Law or Hazardous Substance, and Borrower shall pay all reasonable
attorneys' fees incurred by Lender in connection therewith. In the event that
any operations and maintenance plan for Asbestos or any Hazardous Substance is
formulated for the Mortgaged Property, upon Lender's reasonable request Borrower
shall cause such operations and maintenance plan to be implemented at Borrower's
expense. In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration, or other work of any kind is reasonably necessary
or desirable under an applicable Environmental Law ("Remedial Work"), Borrower
shall, at its sole cost and expense, commence and thereafter diligently
prosecute to completion all such Remedial Work within a reasonable period after
written demand by Lender for performance thereof (or such shorter period of time
as may be required under applicable law).

                  38.  MANAGEMENT OF THE MORTGAGED PROPERTY
                       ------------------------------------

                  Subject to the provisions of Section 62 hereof, Borrower
further covenants and agrees with Lender as follows:

                  (a)  Borrower shall cause the Improvements to be operated
pursuant to the Franchise Agreement and the Management Agreement.

                  (b)  Borrower shall:

                       (i)    pay all sums required to be paid by Borrower
         under the Franchise Agreement and the Management Agreement and promptly
         perform and/or observe all of the covenants and agreements required to
         be performed and observed by it under the Franchise Agreement and the
         Management Agreement and do all things reasonably necessary to preserve
         and to keep unimpaired its material rights thereunder;

                       (ii)   promptly notify Lender of any default under the
         Franchise Agreement or the Management Agreement of which it is aware
         and provide Lender with copies of any notices delivered in connection
         therewith;

                       (iii)  promptly deliver to Lender a copy of each
         financial statement, business plan, capital expenditures plan, notice,
         report and estimate received by it under the Franchise Agreement or the
         Management Agreement;

                       (iv)   promptly enforce the performance and observance
         of all of the covenants and agreements required to be performed and/or
         observed by the franchisor under the Franchise Agreement and the
         manager under the Management Agreement;

                       (v)    assign to Lender any right it may have to modify
         the Franchise Agreement or the Management Agreement;

                       (vi)   grant Lender the right, but Lender shall be
         under no obligation, to pay any sums and to perform any act or take any
         action as may be appropriate to cause all the terms, covenants and
         conditions of the Franchise Agreement on the part of Borrower to be
         performed or observed to be promptly performed or

                                       35
<PAGE>

         observed on behalf of Borrower, to the end that the rights of Borrower
         in, to and under the Franchise Agreement shall be kept unimpaired and
         free from default;

                       (vii)  use its reasonable efforts to obtain, from time
         to time, from the franchisor under the Franchise Agreement such
         certificates of estoppel with respect to compliance by Borrower with
         the terms of the Franchise Agreement as may be requested by Lender, but
         not more frequently than twice a year; and

                       (viii) exercise each individual option, if any, to
         extend or renew the term of the Franchise Agreement upon demand by
         Lender made at any time within one year of the last day upon which any
         such option may be exercised, and Borrower hereby expressly authorizes
         and appoints Lender its attorney-in-fact to exercise any such option in
         the name of and upon behalf of Borrower, which power of attorney shall
         be irrevocable and shall be deemed to be coupled with an interest.

                  (c)  Borrower shall not, without Lender's prior written
consent, not to be unreasonably withheld or delayed: (i) surrender, terminate or
cancel the Franchise Agreement or the Management Agreement; (ii) reduce or
consent to the reduction of the term of the Franchise Agreement or the
Management Agreement; (iii) increase or consent to the increase of the amount of
any charges under the Franchise Agreement or the Management Agreement; (iv)
otherwise modify, change, supplement, alter or amend, or waive or release any of
its rights and remedies under the Franchise Agreement or the Management
Agreement in any material respect; or (v) operate the [ * ] at the Mortgaged
Property under the name [ * ] other than as contemplated under the Franchise
Agreement or otherwise as permitted by Lender.

                  (d)  Except for the Management Agreement, Borrower shall not,
without Lender's prior written consent, not to be unreasonably withheld or
delayed, enter into transactions with any affiliate including, without
limitation, any arrangement providing for the management of the [ * ] on the
Mortgaged Property, the rendering or receipt of services or the purchase or sale
of inventory, except any such transaction in the ordinary course of business of
Borrower if the monetary or business consideration arising therefrom would be
substantially as advantageous to Borrower as the monetary or business
consideration which would obtain in a comparable transaction with a person not
an affiliate of Borrower.

                  (e)  Borrower irrevocably authorizes and directs Franchisor to
deliver to Lender: (i) all operating information concerning the Property
submitted by Borrower to Franchisor; (ii) the written results of all quality
assurance inspections of the Property performed by Franchisor's Quality
Assurance Directors; and (iii) such other information that Lender or Lender's
agents may reasonably request, from time to time, including any information in
the possession of Franchisor relating to Borrower not included in the reports
referred to above.

                  39.  HANDICAPPED ACCESS
                       ------------------

                  (a)  Borrower agrees that after completion of the contemplated
redevelopment of the Mortgaged Property, the Mortgaged Property shall at all
times strictly comply to the extent applicable with the requirements of the
Americans with Disabilities Act of 1990, all state and local laws and ordinances
related to handicapped access and all rules, regulations, and orders issued
pursuant thereto including, without limitation, the Americans with Disabilities
Act Accessibility Guidelines for Buildings and Facilities (collectively, "Access
Laws").

                  (b)  Notwithstanding any provisions set forth herein or in any
other document regarding Lender's approval of alterations of the Mortgaged
Property, Borrower shall not alter the Mortgaged Property in any manner which
would increase Borrower's responsibilities for compliance with the applicable
Access

                                       36
<PAGE>

Laws without the prior written approval of Lender, not to be unreasonably
withheld or delayed. The foregoing shall apply to tenant improvements
constructed by Borrower or by any of its tenants. Lender may condition any such
approval upon receipt of a certificate of Access Law compliance from an
architect, engineer or other person acceptable to Lender.

                  (c)  Borrower agrees to give prompt notice to Lender of the
receipt by Borrower of any complaints related to violation of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.

                  40.  ERISA
                       -----

                  (a)  Borrower covenants and agrees that it shall not engage in
any transaction which would cause any obligation, or action taken or to be
taken, hereunder (or the exercise by Lender of any of its rights under the Note,
the Mortgage, this Agreement and the other Loan Documents) to be a non-exempt
(under a statutory or administrative class exemption) prohibited transaction
under the Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended ("ERISA").

                  (b)  Borrower further covenants and agrees to deliver to
Lender such certifications or other evidence from time to time throughout the
term of this Agreement, as requested by Lender in its reasonable discretion,
that: (i) Borrower is not 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; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:

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

                  (B)  Less than 25 percent of each outstanding class of equity
         interests in Borrower are held by "benefit plan investors" within the
         meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or

                  (C)  Borrower qualifies as an "operating company" or a "real
         estate operating company" within the meaning of 29 C.F.R. ss.
         2510.3-101(c) or (e) or an investment company registered under The
         Investment Company Act of 1940.

                  41.  INDEMNIFICATION
                       ---------------

                  In addition to any other indemnifications provided herein, in
the Assignment, the Environmental Agreement or in the other Loan Documents,
Borrower shall protect, defend, indemnify and save harmless Lender from and
against all liabilities, obligations, claims, demands, damages (excluding
consequential damages), penalties, causes of action, losses, fines, costs and
expenses (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses), imposed upon or incurred by or asserted against Lender
by reason of: (a) ownership of the Mortgage, the Mortgaged Property or any
interest therein or receipt of any Rents, except to the extent resulting from
Lender's status or Lender's acts or omissions; (b) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Mortgaged Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (c) any use,
nonuse or condition in, on or about the Mortgaged Property or any part thereof
or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (d) any failure on the part of Borrower to perform or comply
with any of the terms of this Agreement; (e) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Mortgaged Property or any part thereof; (f) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance or Asbestos on, from, or

                                       37
<PAGE>

affecting the Mortgaged Property; (g) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Substance or Asbestos; (h) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Substance or
Asbestos; (i) any violation of the Environmental Laws, which are based upon or
in any way related to such Hazardous Substance or Asbestos including, without
limitation, the costs and expenses of any remedial action, reasonable
out-of-pocket attorney's and consultant's fees, investigation and laboratory
fees, court costs, and litigation expenses; (j) any failure of the Mortgaged
Property to comply with any Access Laws; (k) any representation or warranty made
by Borrower in the Note, the Mortgage, this Agreement, the Environmental
Agreement or the other Loan Documents being false in any material respect as of
the date such representation or warranty was made; (l) any claim by brokers,
finders or similar persons claiming to be entitled to a commission in connection
with any Lease or other transaction involving the Mortgaged Property or any part
thereof under any legal requirement or any liability asserted against Lender
with respect thereto; and (m) the claims of any lessee of all or any portion of
the Mortgaged Property or any person acting through or under any lessee or
otherwise arising under or as a consequence of any Lease. Any amounts payable to
Lender by reason of the application of this Section shall be immediately due and
payable, shall be secured by the Mortgage and shall bear interest at the Default
Rate from the date loss or damage is sustained by Lender until paid. Subject to
and as more particularly set forth in the Environmental Agreement, the
obligations and liabilities of Borrower under this Section shall survive any
termination, satisfaction or assignment of this Agreement or the entry of a
judgment of foreclosure, sale of the Mortgaged Property by nonjudicial
foreclosure sale, or delivery of a deed in lieu of foreclosure.

                  42.  NOTICE
                       ------

                  Any notice, demand, statement, request or consent made
hereunder shall be in writing and shall be deemed given on the next business day
if sent by Federal Express or other reputable overnight courier and designated
for next business day delivery, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address or
additional party as Borrower or Lender, as the case may be, shall in like manner
designate in writing.

                  43.  AUTHORITY
                       ---------

                  Borrower represents and warrants that: (a) it has full power,
authority and right to execute, deliver and perform its obligations pursuant to
this Agreement, and to mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, hypothecate and assign the Mortgaged Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Agreement on Borrower's part to be performed; and (b) Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended, as applied to and by the [ * ], and the related Treasury
Department regulations, including temporary regulations. Lender represents and
warrants that it has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Agreement.

                  44.  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
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement does not specifically and expressly provide for the giving of notice
by Lender to Borrower.

                                       38
<PAGE>

                  45.  REMEDIES OF BORROWER
                       --------------------

                  In the event that a claim or adjudication is made that Lender
has acted unreasonably or has unreasonably delayed acting in any case where by
law or under the Note, the Mortgage, this Agreement, the Assignment, the
Environmental Agreement or the other Loan Documents, it has an obligation to act
reasonably or promptly, Lender shall not be liable for any monetary damages, and
Borrower's remedies shall be limited to injunctive relief or declaratory
judgment.

                  46.  SOLE DISCRETION OF LENDER
                       -------------------------

                  Wherever 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 that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.

                  47.  NON-WAIVER
                       ----------

                  The failure of Lender to insist upon strict performance of any
term hereof shall not be deemed to be a waiver of any term of this Agreement.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of:
(a) the failure of Lender to comply with any request of Borrower or any
Guarantor to take any action to foreclose the Mortgage or otherwise to enforce
any of the provisions hereof or of the Note, the Assignment, the Environmental
Agreement or the other Loan Documents; (b) the release, regardless of
consideration, of the whole or any part of the Mortgaged Property, or of any
person liable for the Debt or any portion thereof; or (c) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, the Mortgage, this Agreement, the
Assignment, the Environmental Agreement or the other Loan Documents. Upon the
occurrence and during the continuance of any Event of Default Lender may resort
for the payment of the Debt to any other security held by Lender in such order
and manner as Lender, in its discretion, may elect. Upon the occurrence of any
Event of Default Lender may take action to recover the Debt, or any portion
thereof. Lender may enforce any covenant hereof without prejudice to the right
of Lender thereafter to foreclose the Mortgage. The rights and remedies of
Lender under this Agreement shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.

                  48.  NO ORAL CHANGE
                       --------------

                  This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.

                  49.  LIABILITY
                       ---------

                  If Borrower consists of more than one person, the obligations
and liabilities of each such person hereunder shall be joint and several.
Subject to the provisions hereof requiring Lender's consent to any transfer of
the Mortgaged Property, this Agreement shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns
forever.

                                       39
<PAGE>

                  50.  INAPPLICABLE PROVISIONS
                       -----------------------

                  If any term, covenant or condition of the Note, the Mortgage
or this Agreement is held to be invalid, illegal or unenforceable in any
respect, the Note, the Mortgage and this Agreement shall be construed without
such provision.

                  51.  SECTION HEADINGS
                       ----------------

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

                  52.  COUNTERPARTS
                       ------------

                  This Agreement may be executed in any number of counterparts
and each such duplicate original shall be deemed to be an original.

                  53.  CERTAIN DEFINITIONS
                       -------------------

                  Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Agreement may
be used interchangeably in singular or plural form and the word "Borrower" shall
mean "each Borrower and any subsequent owner or owners of the Mortgaged Property
or any part thereof or any interest therein", the word "Lender" shall mean
"Lender and any subsequent holder of the Note", the word "Debt" shall mean "the
Note and any other evidence of indebtedness secured by the Mortgage", the word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority and any other
entity, and the words "Mortgaged Property" shall include any portion of the
Mortgaged Property and any interest therein and the words "attorneys' fees"
shall include any and all reasonable attorneys' fees, paralegal and law clerk
fees including, without limitation, fees at the pretrial, trial and appellate
levels incurred or paid by Lender in protecting its interest in the Mortgaged
Property and Collateral and enforcing its rights hereunder. Whenever the context
may require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

                  54.  HOMESTEAD
                       ---------

                  Borrower hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any State or Territory, in and to the Premises as against the collection
of the Debt, or any part thereof.

                  55.  ASSIGNMENTS
                       -----------

                  Subject to the provisions of Section 21(d) hereof, Lender
shall have the right to assign or transfer its rights under this Agreement
without limitation. Any assignee or transferee shall be entitled to all the
benefits afforded Lender under this Agreement.

                  56.  SUBMISSION TO JURISDICTION
                       --------------------------

                  BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS

                                       40
<PAGE>

AGREEMENT. LENDER MAY, AT ITS SOLE DISCRETION, ELECT THE STATE OF NEW YORK, NEW
YORK COUNTY, OR THE UNITED STATES OF AMERICA, FEDERAL DISTRICT COURT HAVING
JURISDICTION OVER NEW YORK COUNTY, AS THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCH VENUE AS BEING AN
INCONVENIENT FORUM.

                  57.  AGENT FOR RECEIPT OF PROCESS
                       ----------------------------

                  Borrower hereby irrevocably appoints Akin, Gump, Strauss,
Hauer & Feld, LLP, 590 Madison Avenue, New York, New York 10022, Att'n.: Robert
G. Koen, Esq., as its authorized agent to accept and acknowledge, on behalf of
Borrower, service of any and all process which may be served in any suit, action
or proceeding of the nature referred to in Section 56 hereof in any State or
Federal court within New York County. If such agent shall cease so to act,
Borrower shall irrevocably designate and appoint without delay another such
agent reasonably satisfactory to Lender, and shall promptly deliver to Lender
written evidence of such other agent's acceptance of such appointment.

                  58.  SERVICE OF PROCESS
                       ------------------

                  To the extent permitted by applicable law, process in any
suit, action or proceeding of the nature referred to in Section 56 hereof may be
served: (a) by registered or certified mail, postage prepaid, to Borrower at the
address set forth above or to such other address of which Borrower shall have
given Lender written notice; or (b) if Borrower shall not have made an
appearance within 21 days after service in accordance with clause (a) of this
Section, by hand delivery to the agent identified in Section 57 hereof, or such
successor agent as shall have been identified in accordance with Section 57
hereof. Nothing in this Section shall affect the Lender's right to serve process
in any manner permitted by law, or limit Lender's right to bring proceedings
against Borrower in the courts of any other jurisdiction.

                  59.  WAIVER OF JURY TRIAL
                       --------------------

                  BORROWER AND LENDER EACH HEREBY AGREES 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 NOTE, THE MORTGAGE, THIS AGREEMENT OR THE OTHER 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. BORROWER
OR LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE PARTIES.

                  60.  CHOICE OF LAW
                       -------------

                  THIS LOAN 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 SUCH
JURISDICTION.

                                       41
<PAGE>

                  61.  ADVANCES OF UNFUNDED PROCEEDS; CONDITIONS PRECEDENT
                       ---------------------------------------------------

                  (a)  Lender shall advance the unfunded balance of the Loan, to
the extent not funded on and as of the date hereof, in the aggregate amount of
$20,000,000.00 (the "Unfunded Proceeds") in accordance with the terms hereof
including, without limitation, Borrower's satisfaction of the conditions
precedent set forth in this Section.

                  (b)  Upon Borrower's written request, the Unfunded Proceeds
shall be advanced in up to four installments, each in the amount of not less
than $5,000,000.00; provided, however, that portions of the Unfunded Proceeds
may be advanced in amounts less than $5,000,000.00 if: (i) such funds are being
advanced to pay the accrued and unpaid interest then payable, the then-current
deposits to the Tax and Insurance Escrow Fund or the Servicer's fees then
payable; or (ii) such advance reduces to zero the balance of the Unfunded
Proceeds. The Unfunded Proceeds, as and when advanced, shall be deposited into
the Redevelopment Funds Account, and made available to fund Lender-approved
costs of construction at the Mortgaged Property, and other Lender-approved soft
costs in connection with the development and operation of the Mortgaged Property
in accordance with the provisions of the Redevelopment Funds Agreement. Any
advance of Unfunded Proceeds under clause (i) of this subsection shall be made
by Lender automatically at any time, without any requirement for further
documentation, when there exist insufficient funds on deposit in the
Redevelopment Funds Account and the Lockbox Account to pay the items enumerated
in such clause (i), and such advances shall be paid directly to Lender for such
purposes.

                  (c)  Any request by Borrower for an advance of Unfunded
Proceeds shall be made, and all conditions thereto satisfied, prior to the last
day of the 18th full calendar month following the date hereof. From and after
such date, Lender shall have no further or continuing commitment to advance, and
Borrower shall have no further or continuing right to borrow, any portion of the
Unfunded Proceeds.

                  (d)  As more particularly set forth in the Redevelopment Funds
Agreement, it shall be a condition to each advance of portions of the Unfunded
Proceeds that: (i) there not be a then-existing payment default or Event of
Default in respect of the Loan; (ii) there exist a Lender-approved Budget for
the contemplated uses for such funds; (iii) Borrower shall have demonstrated to
Lender's reasonable satisfaction that the construction to such date of all
capital improvements at the Mortgaged Property has been completed without
exceeding the Lender-approved Budget for such work, and that the Unfunded
Proceeds, together with Borrower's available cash equity, are sufficient to
complete the Lender-approved scope of work at the Mortgaged Property; and (iv)
Borrower shall have furnished evidence to Lender's reasonable satisfaction that
all necessary and appropriate building permits have been issued and are in
effect from the appropriate governmental authority.

                  (e)  In addition to all other conditions set forth in this
Section, it shall be a condition: (i) to the advance of the first $5,000,000.00
of Unfunded Proceds that Lender be furnished with a preliminary conceptual site
plan for the Mortgaged Property, preliminarily illustrating the location of the
building footprints for the various components included in the master
development plan for the Mortgaged Property, walkways, driveways, parking
structures and surface parking areas; (ii) to the advance of the next
$5,000,000.00 of Unfunded Proceeds that Lender be furnished with an updated
conceptual site plan for the Mortgaged Property, together with a preliminary
detailed project budget for the development as proposed therein; and (iii) to
the next advance of Unfunded Proceeds (after the first $10,000,000.00 has been
advanced) that Lender be furnished with evidence that all permits that are
required for the development of the [ * ] component at the Mortgaged Property
have issued.

                                       42
<PAGE>

                  (f)  Borrower may elect at any time, by written notice to
Lender, to terminate Lender's commitment to advance the Unfunded Proceeds. Any
earned but unpaid portion of the Unfunded Commitment Fee shall be paid at the
time of such termination.

                  62.  INAPPLICABILITY OF CERTAIN PROVISIONS BY REASON OF
PORTIONS OF THE MORTGAGED PROPERTY NOT OPERATING; INAPPLICABILITY OF REFERENCES
TO MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT
-------------------------------------------------------------------------------

                  (a)  Certain portions of the Mortgaged Property are not
currently operating and do not generate any proceeds or revenue. Accordingly,
wherever in this document certain provisions are expressly made subject to the
provisions of this Section 62, such provisions shall not apply to those portions
of the Mortgaged Property not operating unless and until proceeds or revenue is
generated therefrom. The provisions of the following Sections hereof shall not
be applicable unless and until proceeds or revenue is generated therefrom:
Sections 2, 7, 12, 24(j), (k), (l), (m), (n), (p), (q) and (r), 38 and 39.

                  (b)  Those provisions hereof which refer to a Management
Agreement or Franchise Agreement shall be and become applicable only if, as and
when such documents are executed and delivered.

                  63.  SERVICER'S FAILURE
                       ------------------

                  Anything herein or in the other Loan Documents to the contrary
notwithstanding, if any amounts payable hereunder or under any other Loan
Document are not timely paid solely by reason of Servicer's failure to credit
properly funds in the Lockbox Account, to transfer funds from the Lockbox
Account or otherwise to follow its instructions properly given in accordance
with the Loan Documents, such non-payment shall not constitute a default of
Borrower's obligations hereunder, and no late charge, Default Rate interest or
other charge will be imposed with respect thereto. Without limiting the
foregoing, Lender acknowledges that it shall be Servicer's responsibility to
make the disbursements described in Section 2 hereof and to cause all funds
deposited into the Lockbox Account from time to time to be disbursed as provided
in the Lockbox Agreement.

                  64.  LIMITATIONS ON RECOURSE
                       -----------------------

                  Anything herein to the contrary notwithstanding, Lender's
recourse upon the occurrence of an Event of Default hereunder is limited
pursuant to the express provisions of the Note.

                  65.  ENVIRONMENTAL RESERVE
                       ---------------------

                  The sum of $106,250.00 shall be deposited at closing into the
Environmental Reserve Account. Amounts shall be released from the Environmental
Reserve Account as follows:

                  (a)  $20,000.00 shall be released for payment upon Lender's
receipt of a report documenting the PCE sampling results for five
to-be-installed ground water monitoring wells;

                  (b)  $20,000.00 shall be released for payment upon Lender's
receipt of a report documenting the sampling of areas of Tank Pit A and Tank Pit
B (which sampling shall include for Total Petroleum Hydrocarbons (TPH)-gasoline,
and for TPH-diesel;

                  (c)  $26,250.00 shall be released upon Lender's receipt of
evidence that oil-containing PCB transformers were removed from the Mortgaged
Property and manifested off-site and sent to an approved landfill;

                                       43
<PAGE>

                  (d)  $20,000.00 shall be released upon Lender's receipt of a
report evaluating at least five soil and water samples from the land fill area
for VOCs, BTEX, TPH and PCE on landfill area;

                  (e)  $20,000.00 shall be released upon Lender's receipt of a
report evaluating at least five soil samples from the drum storage area for
VOCs, BTEX, TPH and PCE in the area under and surrounding the drums.

                                       44
<PAGE>

                  IN WITNESS WHEREOF, Borrower and Lender have executed this
instrument as of the day and year first above written.

                                    BORROWER:

                                    [ * ]

                                    By:   Insignia [ * ] Corp.
                                          Manager

                                    By: /s/ Adam B. Gilbert
                                        ---------------------------------------
                                           Name: Adam B. Gilbert
                                           Title: Vice President and Secretary

                                    LENDER:

                                    LEHMAN BROTHERS HOLDINGS INC.

                                    By: /s/ Joseph J. Flannery
                                        ---------------------------------------
                                           Joseph J. Flannery
                                           Authorized Signatory

                                    [ACKNOWLEDGMENT]

                                       45
<PAGE>

STATE OF NEW YORK     )
                      :     ss.:
COUNTY OF NEW YORK    )

                  On the 9 day of July, 2002, before me, the undersigned,
personally appeared Adam B. Gilbert, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, that by his/her signature on the instrument, the individual,
or the person upon behalf of which the individual acted, executed the
instrument, and that such individual made such appearance before the undersigned
in the State of New York, County of New York.

(Notarial Seal)
                                    ----------------------------------
                                    Notary Public

STATE OF NEW YORK     )
                      :     ss.:
COUNTY OF NEW YORK    )

                  On the 9 day of July, 2002, before me, the undersigned,
personally appeared Joseph J. Flannery, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in the State of New York, County of New York.

(Notarial Seal)
                                    ----------------------------------
                                    Notary Public

                                       46

<PAGE>

                                    EXHIBIT A
                                    ---------

                                 Initial Budget
                                 --------------

================================================================================<PAGE>

                                                                     Exhibit 4.5

                                FOURTH AMENDMENT
                                ----------------

                  FOURTH AMENDMENT, dated as of June 14, 2002 (this
"Amendment"), to the Credit Agreement, dated as of May 28, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
unless otherwise defined herein, capitalized terms which are defined in the
Credit Agreement are used herein as defined therein), among PANAVISION INC., a
Delaware corporation (the "Borrower"), the several banks and other financial
institutions or entities from time to time parties thereto (the "Lenders"),
CREDIT SUISSE FIRST BOSTON, as documentation agent, and JPMORGAN CHASE BANK
(formerly known as The Chase Manhattan Bank), as administrative agent (in such
capacity, the "Administrative Agent").

                               W I T N E S S E T H
                               - - - - - - - - - -

                  WHEREAS, pursuant to the Credit Agreement, the Lenders have
agreed to make, and have made, certain loans and other extensions of credit to
the Borrower; and

                  WHEREAS, the Borrower has requested, and, upon this Amendment
becoming effective, the Lenders have agreed, that certain provisions of the
Credit Agreement be amended in the manner provided for in this Amendment.

                  NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises, the parties hereto hereby agree as follows:

                              SECTION I AMENDMENTS

     1.1. Amendments to Section 1.1.

     (a)   Section 1.1 of the Credit Agreement is hereby amended by inserting
the following definitions in the appropriate alphabetical order:

          "DHD Ventures": DHD Ventures, LLC, a Delaware limited liability
     company formed by the Borrower and Sony Electronics Inc. to pursue the
     rental of digital cameras.

          "Earnout Payment": as defined in the EFILM Operating Agreement.

          "EFILM": EFILM, LLC, a Delaware limited liability company.

          "EFILM Agreements": collectively, the EFILM Operating Agreement, the
     EFILM Option Agreement and the Digital Laboratory Services Agreement, dated
     as of May 17, 2002, between the Borrower, Las Palmas, the other holder of
     Capital Stock of EFILM and EFILM.

          "EFILM Operating Agreement": the Operating Agreement, dated May 17,
     2002, between the Borrower, Las Palmas and the other holder of the Capital
     Stock of EFILM.

          "EFILM Option Agreement": the Option Agreement, dated as of May 17,
     2002, between the Borrower, Las Palmas and the other holder of Capital
     Stock of EFILM.
<PAGE>

                                                                               2

          "Fourth Amendment Effective Date": the date on which the conditions to
     effectiveness set forth in Section 2.1 of the Fourth Amendment, dated as of
     June 14, 2002, to this Agreement were satisfied.

          "Initial EFILM Stock": as defined in Section 10.16.

          "Las Palmas": Las Palmas Productions, Inc., a California corporation.

          "M&F Worldwide": M&F Worldwide Corp., a Delaware corporation.

          "Note Option Agreement": that certain option agreement, dated April 1,
     2002, among the Borrower and certain holders of the Senior Subordinated
     Notes, pursuant to which the Borrower has the option to acquire such Senior
     Subordinated Notes on the terms (including the payment of an option fee)
     set forth therein.

          "Stock Purchase Agreement": the Stock Purchase Agreement, dated July
     2, 2001, between M&F Worldwide, Las Palmas and the selling shareholders
     named therein.

     (b) Section 1.1 of the Credit Agreement is hereby further amended by
deleting the definitions of "Consolidated Net Income", "Consolidated Total
Debt", "Subsidiary Guarantor" and "Transaction Charges" in their respective
entireties and substituting in lieu thereof the following definitions:

          "Consolidated Net Income": for any fiscal period of the Borrower, the
     amount which, in conformity with GAAP, would be set forth opposite the
     caption "net income" (or any like caption) or "net loss" (or any like
     caption), as the case may be, on a consolidated statement of earnings of
     the Borrower and its Subsidiaries for such fiscal period; provided that
     there shall be excluded the income (or loss) of EFILM (or any predecessor
     operations), except to the extent that any such income is actually received
     by the Borrower or such Subsidiary in the form of dividends or similar
     distributions.

          "Consolidated Total Debt": at any date, the aggregate principal amount
     of all Indebtedness of the Borrower and its Subsidiaries at such date,
     determined on a consolidated basis in accordance with GAAP; provided that
     (a) Indebtedness of the types described in clause (j) of the definition of
     the term Indebtedness shall not be included for the purpose of calculating
     Consolidated Total Debt and (b) the Indebtedness described in Section
     7.2(k) shall not be included for the purpose of calculating Consolidated
     Total Debt for, and only for, the first, second, third and fourth fiscal
     quarters of the Borrower's 2002 fiscal year.

          "Subsidiary Guarantor": each Subsidiary of the Borrower other than (a)
     any Foreign Subsidiary and (b) to the extent permitted by Section 10.16,
     EFILM.

          "Transaction Charges": nonrecurring charges related to or arising out
     of (a) the transactions contemplated by the Recapitalization Agreement, the
     Stockholders Agreement and the Escrow Agreement, (b) the Third and Fourth
     Amendments to this Agreement and (c) fees and expenses incurred during the
     first and second quarters of 2002 in connection with a proposed refinancing
     and restructuring of this Agreement and the Senior Subordinated Notes and
     any charge associated with the Note Option Agreement.

     (c) Section 1.1 of the Credit Agreement is hereby further amended by
inserting the following paragraphs immediately following clause (b)(viii) in the
definition of "Excess Cash Flow":
<PAGE>

                                                                               3

          (ix) the portion of any Earnout Payment referred to in Section 7.8(l)
               that is reasonably estimated to arise from the portion of
               Consolidated EBITDA attributable to EFILM for such period; plus

          (x)  Transaction Charges payable in cash to the extent included in
               Consolidated EBITDA for such period; plus

     (d) Section 1.1 of the Credit Agreement is hereby further amended by
inserting the following phrase immediately following "during such period" at the
end of clause (c)(i) in the definition of "Excess Cash Flow": "(other than any
such Net Cash Proceeds that are not so applied pursuant to the second proviso to
Section 2.10(a))".

     1.2. Amendment to Section 2.7. Section 2.7 of the Credit Agreement is
hereby amended by (a) deleting the term "June 30, 2002" in paragraph (d) therein
and substituting in lieu thereof the following: "the Fourth Amendment Effective
Date" and (b) deleting the term "July 1, 2002" in paragraph (d) therein and
substituting in lieu thereof the following: "the Fourth Amendment Effective
Date".

     1.3. Amendment to Section 2.10(a). Section 2.10(a) of the Credit Agreement
is hereby amended by deleting the "." at the end thereof and substituting in
lieu thereof the following:

     ; provided, further, that, notwithstanding the foregoing, (x) up to
     $5,200,000 received by EFILM from the issuance of Capital Stock of EFILM in
     a transaction permitted by Section 7.5(c) shall not constitute Net Cash
     Proceeds received from a Net Proceeds Event for purposes of this Section
     2.10(a) and (y) if EFILM or any Subsidiary of EFILM receives any Net Cash
     Proceeds from any other Net Proceeds Events (other than any disposition
     permitted by Section 7.5(f)), such Net Cash Proceeds shall be deemed not to
     have been received by the Borrower or any of its Subsidiaries for purposes
     of this Section 2.10(a) except to the extent actually received by the
     Borrower or Las Palmas in the form of cash dividends or cash distributions.

     1.4. Amendment to Section 4.15(b). Section 4.15(b) of the Credit Agreement
is hereby amended in its entirety to read as follows:

          (b) There are no outstanding subscriptions, options, warrants, calls,
     rights or other agreements or commitments (other than stock options granted
     under compensatory stock option plans and other than directors' qualifying
     shares) of any nature relating to any Capital Stock of the Borrower or any
     Subsidiary, except (i) under the Loan Documents and (ii) as set forth on
     Schedule 4.15(b).

     1.5. Amendment to Section 4.19(a). Section 4.19(a) of the Credit Agreement
is hereby amended by (a) inserting "(x)" immediately after the word "except" in
the penultimate line thereof and (b) inserting the following phrase immediately
following the term "Section 7.3" in the last line thereof: "and (y) in the case
of Capital Stock of EFILM, to the extent permitted by Sections 7.3(q) and
7.3(r)".

     1.6. Amendments to Section 6.9.

     (a) Section 6.9(a) of the Credit Agreement is hereby amended by (i)
deleting the term "and" immediately preceding clause (y) therein and
substituting "," in lieu thereof and (ii) inserting the following phrase
immediately following the term "Section 7.3(g)" therein: "and (z) as
contemplated by the second sentence of Section 10.16".
<PAGE>

                                                                               4

     (b) Section 6.9(b) of the Credit Agreement is hereby amended by inserting
the following phrase immediately following the term "Section 7.3(g)" therein:
"and other than as contemplated by the second sentence of Section 10.16".

     (c) Section 6.9(c) of the Credit Agreement is hereby amended by inserting
the following phrase in clause (iii) thereof immediately following the phrase
"cause such new Subsidiary": "(other than, to the extent contemplated by the
second sentence of Section 10.16, EFILM or any Subsidiary of EFILM)".

     (d) Section 6.9(d) of the Credit Agreement is hereby amended by inserting
the following parenthetical therein immediately following the phrase "or any of
its Domestic Subsidiaries": "other than, to the extent contemplated by the
second sentence of Section 10.16, EFILM or any Subsidiary of EFILM)".

     1.7. Amendments to Section 7.2.

     (a) Section 7.2(b) of the Credit Agreement is hereby amended by inserting
the following phrase immediately following the term "Subsidiary Guarantor"
contained in clause (ii) therein: "(other than EFILM)".

     (b) Section 7.2 of the Credit Agreement is hereby amended by (i) deleting
the term "and" at the end of paragraph (i) thereof, (ii) deleting the "." at the
end of paragraph (j) thereof and substituting ";" in lieu thereof and (iii)
adding the following paragraphs at the end thereof:

          (k) a subordinated note, in form and substance reasonably satisfactory
     to the Administrative Agent, in an aggregate principal amount not to exceed
     $6,700,000 on the date of issuance, issued by the Borrower to M&F Worldwide
     as consideration for the acquisition of Las Palmas, provided that in no
     event shall (i) such Indebtedness require any payments of principal or cash
     interest thereon prior to the date that is six months after the final
     maturity of the Tranche B Term Loans and (ii) M&F Worldwide assign such
     subordinated note to any Person other than an Affiliate of M&F Worldwide;
     and

          (l) so long as no Default or Event of Default shall have occurred and
     be continuing, or would result therefrom, Indebtedness of EFILM to (i) the
     Borrower or a Wholly Owned Subsidiary Guarantor; provided that the
     aggregate outstanding principal amount of all such Indebtedness permitted
     by this clause (l)(i), when added together with the amount of investments
     made pursuant to Section 7.8(n) and then outstanding, does not exceed
     $3,000,000 at any one time outstanding or (ii) any other holder of Capital
     Stock of EFILM, provided that (x) any Indebtedness issued under this clause
     (l)(ii) is issued substantially contemporaneously with Indebtedness issued
     under clause (l)(i) and (y) the aggregate principal amount of any
     Indebtedness so issued under this clause (l)(ii) shall not exceed at the
     time of issuance an amount of Indebtedness in proportion to such holder's
     equity interest in EFILM at such time.

     1.8. Amendments to Section 7.3. Section 7.3 of the Credit Agreement is
hereby amended by (a) deleting the term "and" at the end of paragraph (o)
thereof, (b) deleting the "." at the end of paragraph (p) thereof and
substituting ";" in lieu thereof and (c) adding the following paragraphs at the
end thereof:

          (q) Liens in the nature of options granted to the other holder of
     Capital Stock of EFILM in respect of up to 29% of the Capital Stock of
     EFILM;
<PAGE>
                                                                               5

          (r) any rights of first offer or first refusal granted by the Borrower
     or Las Palmas to the other holder of Capital Stock of EFILM in respect of
     the Capital Stock of EFILM owned by the Borrower or Las Palmas contained in
     the documents governing the relationship of the holders of the Capital
     Stock of EFILM and any other rights granted to the other holder of the
     Capital Stock of EFILM substantially on the terms set forth in the EFILM
     Agreements and any material modifications thereto that are reasonably
     satisfactory to the Administrative Agent; and

          (s) Liens on the assets of EFILM to secure Indebtedness of EFILM
     permitted by Section 7.2(l).

     1.9. Amendments to Section 7.5. Section 7.5 of the Credit Agreement is
hereby amended by (a) deleting the term "and" at the end of paragraph (b)
thereof and (b) deleting paragraph (c) in its entirety and substituting in lieu
thereof the following paragraphs:

          (c) the issuance by EFILM of up to 20% of the Capital Stock of EFILM
     to the other holder of Capital Stock of EFILM substantially on the terms
     set forth in the EFILM Operating Agreement and any material modifications
     thereto that are reasonably satisfactory to the Administrative Agent for
     $5,000,000 payable in cash on the date of such issuance plus $200,000
     payable in cash within 90 days of such issuance;

          (d) the Disposition by Las Palmas of its post production business and
     the disposition by the Borrower of its assets exclusively related to such
     business, in each case to EFILM upon the issuance of consideration solely
     consisting of (i) up to 80% of the Capital Stock of EFILM to the Borrower
     or Las Palmas or pursuant to Section 7.8(l)(ii) and (ii) the assumption by
     EFILM of (x) the obligation to make Earnout Payments under the Stock
     Purchase Agreement and (y) all liabilities exclusively related to such
     business;

          (e) the issuance by the Borrower or Las Palmas to the other holder of
     Capital Stock of EFILM of options in respect of up to 29% of the Capital
     Stock of EFILM substantially upon the terms set forth in the EFILM Option
     Agreement and any material modifications thereto that are reasonably
     satisfactory to the Administrative Agent;

          (f) the Disposition by the Borrower or Las Palmas to the other holder
     of Capital Stock of EFILM of up to 29% of the Capital Stock of EFILM upon
     the exercise by such holder of the options described in Section 7.5(e),
     provided that (i) the exercise price in respect of such options is payable
     solely in cash on the date of exercise and (ii) the requirements of Section
     2.10(a) are complied with in connection therewith;

          (g) the Disposition of other assets having a fair market value not to
     exceed $5,000,000 in the aggregate, provided that the requirements of
     Section 2.10(a) are complied with in connection therewith; and

          (h) Dispositions resulting from the exercise of rights contemplated by
     Section 7.3(r).

     1.10. Amendments to Section 7.6. Section 7.6 of the Credit Agreement is
hereby amended by (a) deleting the term "or" at the end of clause (i) thereof
and substituting "," in lieu thereof and (b) deleting the "." at the end thereof
and substituting in lieu thereof the following:

     and (iii) EFILM may make Restricted Payments to the holders of its Capital
     Stock ratably in accordance with their respective ownership interests;
     provided, that no such Restricted Payment

<PAGE>
                                                                               6

     may be made by EFILM in accordance with this clause (iii) at any time that
     any Indebtedness permitted by Section 7.2(l) is outstanding.

     1.11. Amendment to Section 7.7. Section 7.7 of the Credit Agreement is
hereby amended by deleting Section 7.7 in its entirety and substituting in lieu
thereof the following:

          7.7. Limitation on Capital Expenditures. Make or commit to make any
     Capital Expenditure, except (a) Capital Expenditures of the Borrower and
     its Subsidiaries in the ordinary course of business not exceeding
     $30,000,000 for the 2001 fiscal year of the Borrower, $21,000,000 for the
     2002 fiscal year of the Borrower and $25,000,000 in each fiscal year of the
     Borrower thereafter; (b) Capital Expenditures made with the proceeds of any
     event which would be a Recovery Event but for the second parenthetical
     clause in the definition thereof; and (c) Capital Expenditures made with
     the proceeds of any Dispositions of Property by the Borrower or its
     Subsidiaries pursuant to Section 7.5(a)(i).; provided that (i) with respect
     to clause (a) above, in no event shall Capital Expenditures of EFILM, or by
     the Borrower or any other Subsidiary in respect of EFILM made pursuant to
     such clause (a), exceed $4,500,000 for the 2002 fiscal year of the
     Borrower, $4,000,000 for the 2003 fiscal year of the Borrower and
     $5,000,000 in each fiscal year of the Borrower thereafter, (ii) Capital
     Expenditures made by EFILM with cash received pursuant to Section 7.5(c)
     shall not be included in determining compliance with, and shall be
     permitted without regard to, any of the limitations set forth in clause (a)
     or (i) above, and (iii) with respect to clauses (b) and (c) above, Capital
     Expenditures made in respect of EFILM with the proceeds of a Recovery Event
     or with the proceeds of any Dispositions of Property by the Borrower or any
     of its Subsidiaries pursuant to Section 7.5(a)(i) shall only be permitted
     under such clauses (b) and (c) to the extent that such Recovery Event or
     Disposition of Property specifically relates to EFILM property.

     1.12. Amendments to Section 7.8. Section 7.8 of the Credit Agreement is
hereby amended by (a) adding the term "other than EFILM" immediately after the
term "Subsidiary Guarantor" in clause (ii) of paragraph (g) thereof, (b)
deleting the term "and" at the end of paragraph (i) thereof, (c) deleting the
"." at the end of paragraph (j) thereof and inserting in lieu thereof: ";", and
(e) adding the following paragraphs at the end thereof:

          (k) the acquisition by the Borrower of all of the issued and
     outstanding Capital Stock of Las Palmas for aggregate consideration not in
     excess of $6,700,000, plus the assumption of any Earnout Payment
     obligations under the Stock Purchase Agreement;

          (l) investments made by Las Palmas in EFILM consisting of its post
     production business and investments made by the Borrower (directly or
     through Las Palmas) in EFILM consisting of (i) its assets, which may
     include cash, in the amount of $7,000,000 (with such assets to be measured
     by their fair market value at the time of the investment) and liabilities
     (including its obligations to make Earnout Payments under the Stock
     Purchase Agreement) exclusively related to such business upon the issuance
     of up to 80% of the Capital Stock of EFILM to the Borrower or Las Palmas
     and (ii) up to an additional $800,000 of assets related to such business or
     cash within 90 days of such issuance;

          (m) so long as no Default or Event of Default shall have occurred and
     be continuing, or would result therefrom, additional capital contributions
     to or equity investments by Las Palmas in EFILM to fund any Earnout
     Payments referred to in Section 7.8(l);

          (n) other investments (by way of capital contribution, loan or
     otherwise) by the Borrower or any of its Subsidiaries in EFILM (and,
     without duplication, by EFILM in any other

<PAGE>
                                                                               7

     Person) or DHD Ventures, which when added together with the aggregate
     principal amount of Indebtedness incurred pursuant to Section 7.2(l)(i) and
     then outstanding, do not exceed $3,000,000 in the aggregate at any one time
     outstanding (such investments to be measured by their fair market value at
     the time of the investment); and

          (o) investments resulting from the exercise of rights contemplated by
     Section 7.3(r).

     1.13. Amendments to Section 7.13. Section 7.13 of the Credit Agreement is
hereby amended by (a) deleting the term "and" at the end of clause (b) thereof
and substituting "," in lieu thereof and (b) deleting the ";" at the end of
clause (c) thereof and substituting in lieu thereof the following:

     and (d) once 20% of the Capital Stock of EFILM has been disposed of in a
     transaction permitted by Section 7.5(c), the documents governing the
     relationship among the holders of the Capital Stock of EFILM and any
     agreement relating to the Indebtedness of EFILM permitted by Section 7.2(l)
     (in which case any prohibition or limitation shall only be effective
     against the assets of EFILM or its Subsidiaries);

     1.14. Amendments to Section 7.14. Section 7.14 of the Credit Agreement is
hereby amended by (a) deleting the term "or" at the end of clause (ii) thereof
and substituting "," in lieu thereof and (b) deleting the "." at the end of
clause (iii) thereof and substituting in lieu thereof the following:

     or (iv) once 20% of the Capital Stock of EFILM has been disposed of in a
     transaction permitted by Section 7.5(c), the documents governing the
     relationship among the holders of the Capital Stock of EFILM and any
     agreement relating to the Indebtedness of EFILM permitted by Section 7.2(l)
     (in which case any prohibition or limitation shall only be effective
     against the assets of EFILM or its Subsidiaries).

     1.15. Amendment to Section VIII. Section VIII of the Credit Agreement is
hereby amended by (a) inserting the word "or" at the end of paragraph (n)
thereof and (b) adding the following new paragraph (o) immediately after
paragraph (n):

          (o) (i) the Borrower shall fail to satisfy or assign its obligation to
     pay the option fee payable pursuant to the Note Option Agreement in either
     of the following ways on or before the date on which such fee is due as set
     forth in the Note Option Agreement as in effect on the Fourth Amendment
     Effective Date or such later date to which such due date may be extended as
     a result of an amendment to the Note Option Agreement: (x) by paying such
     fee (either in the amount set forth in the Note Option Agreement as in
     effect on the Fourth Amendment Effective Date or in such lesser amount to
     which such fee may be reduced as a result of an amendment to the Note
     Option Agreement) out of the proceeds of cash received by the Borrower from
     one or more Persons (other than any Subsidiary of the Borrower) in an
     aggregate amount equal to such payment in exchange solely for shares of
     newly issued common stock or perpetual preferred stock of the Borrower; or
     (y) by assigning the rights and obligations of the Borrower, including the
     obligation to pay such fee, to one or more Persons (other than any
     Subsidiary of the Borrower) who shall expressly assume all of such
     obligations; it being understood that any assignment or amendment referred
     to in this paragraph (o) shall not be prohibited by any other provision of
     this Agreement;

     1.16. Amendment to Section 10.16. Section 10.16 of the Credit Agreement is
hereby amended by adding the following sentence at the end of such Section:
<PAGE>
                                                                               8

     For the avoidance of doubt and notwithstanding anything to the contrary
     contained in any Loan Document, it is understood and agreed that once 20%
     of the Capital Stock of EFILM has been disposed of in a transaction
     permitted by Section 7.5(c) (the "Initial EFILM Stock"), (a) EFILM shall
     automatically be released from its Guarantee Obligations under the
     Guarantee and Collateral Agreement, (b) the Initial EFILM Stock and all
     Collateral transferred to or otherwise owned by EFILM shall be
     automatically released from the Lien created by the Guarantee and
     Collateral Agreement, (c) Sections 6.9(a), 6.9(b), 6.9(c) and 6.9(d) shall
     not at any time thereafter apply to EFILM or any Subsidiary of EFILM and
     (d) the remaining Capital Stock of EFILM owned by the Borrower or any of
     its Subsidiaries shall continue to be subject to the Lien in favor of the
     Administrative Agent created by the Guarantee and Collateral Agreement
     (provided that, with respect to any such Capital Stock that is disposed of
     in a transaction permitted by Section 7.5(f), such Capital Stock shall
     automatically be released from such Lien). The Administrative Agent shall,
     at the expense of the Borrower, take such action as the Borrower or EFILM
     reasonably may request to evidence such releases.

     1.17. Schedule 4.15(b). The Credit Agreement is hereby amended by adding as
Schedule 4.15(b) thereto the document attached to this Amendment as Schedule
4.15(b).

                            SECTION II MISCELLANEOUS

     2.1. Conditions to Effectiveness of Amendment. This Amendment shall become
effective as of the date first set forth above upon satisfaction of the
following conditions:

          (a) the Administrative Agent shall have received counterparts of this
     Amendment duly executed and delivered by the Borrower, the Administrative
     Agent and the Required Lenders; and

          (b) the Administrative Agent shall have received (i) for the account
     of each Lender executing this Amendment, an amendment fee equal to 0.10% of
     the sum of each such Lender's Revolving Credit Commitment and Term Loans
     then outstanding and (ii) for the account of each Lender, the fees payable
     pursuant to Section 2.7(d) of the Agreement, as in effect after giving
     effect to this Amendment.

     2.2. Representations and Warranties. The Borrower represents and warrants
to each Lender that as of the effective date of this Amendment: (a) this
Amendment constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors' rights generally, by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law) and an implied covenant of good faith and fair dealing; (b) the
representations and warranties made by the Loan Parties in the Loan Documents
are true and correct in all material respects on and as of the date hereof
(except to the extent that such representations and warranties are expressly
stated to relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects on and as
of such earlier date); and (c) no Default or Event of Default shall have
occurred and be continuing as of the date hereof.

     2.3. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Amendment signed by all the parties shall be lodged with the Borrower and the

<PAGE>
                                                                               9

Administrative Agent. The execution and delivery of the Amendment by any Lender
shall be binding upon each of its successors and assigns (including Transferees
of its commitments and Loans in whole or in part prior to effectiveness hereof)
and binding in respect of all of its commitments and Loans, including any
acquired subsequent to its execution and delivery hereof and prior to the
effectiveness hereof.

     2.4. Continuing Effect; No Other Amendments. Except to the extent the
Credit Agreement is expressly amended hereby, all of the terms and provisions of
the Credit Agreement and the other Loan Documents are and shall remain in full
force and effect. This Amendment shall constitute a Loan Document.

     2.5. Payment of Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all of its out-of-pocket costs and reasonable expenses
incurred to date in connection with this Amendment and the other Loan Documents,
including, without limitation, the reasonable fees and disbursements of legal
counsel to the Administrative Agent.

     2.6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.

                                    PANAVISION INC.

                                    By: /s/  KENNETH KRAINMAN
                                       -----------------------------------------
                                       Name:  Kenneth Krainman
                                       Title: Controller and Assistant Secretary

                                    JPMORGAN CHASE BANK, as
                                      Administrative Agent and as a Lender

                                    By: /s/  TRACEY NAVIN EWING
                                       -----------------------------------
                                       Name:  Tracey Navin Ewing
                                       Title: Vice President

                                    CREDIT SUISSE FIRST BOSTON, as
                                      Documentation Agent and as a Lender

                                    By: /s/  JOEL GLODOWSKI
                                       -----------------------------------------
                                       Name:  Joel Glodowski
                                       Title: Managing Director

                                    By: /s/  JOHN D. LEWIS
                                       -----------------------------------
                                       Name:  John D. Lewis
                                       Title: Associate

<PAGE>

                                     Archimedes Funding I, Ltd
                                     By:      ING Capital Advisors, Inc.
                                              as Collateral Manager

                                     By:   /s/  JANE MUSSER NELSON
                                        ----------------------------------------
                                       Name:    Jane Musser Nelson
                                       Title:   Managing Director

                                     Archimedes Funding III, Ltd
                                     By:      ING Capital Advisors, Inc.
                                              as Collateral Manager

                                     By:   /s/  JANE MUSSER NELSON
                                        ----------------------------------------
                                       Name:    Jane Musser Nelson
                                       Title:   Managing Director

                                     Crescent/Mach I Partners, L.P.,
                                     By:      TCW Asset Management Company,
                                              its Investment Manager

                                     By:   /s/  RICHARD F. KURTH
                                        ----------------------------------------
                                       Name:    Richard F. Kurth
                                       Title:   Vice President

                                     CSAM Funding I

                                     By:   /s/  ANDREW H. MARSHAK
                                        ----------------------------------------
                                       Name:    Andrew H. Marshak
                                       Title:   Authorized Signatory

                                     Debt Strategies Fund, Inc.

                                     By:   /s/  SAVITRI ALEX
                                        ----------------------------------------
                                       Name:    Savitri Alex
                                       Title:   Authorized Signatory

                                     First Dominion Funding I

                                     By:   /s/  ANDREW H. MARSHAK
                                        ----------------------------------------
                                       Name:    Andrew H. Marshak
                                       Title:   Authorized Signatory

<PAGE>

                                     First Dominion Funding II

                                     By:   /s/  ANDREW H. MARSHAK
                                        ----------------------------------------
                                       Name:    Andrew H. Marshak
                                       Title:   Authorized Signatory

                                     First Dominion Funding III

                                     By:   /s/  ANDREW H. MARSHAK
                                        ----------------------------------------
                                       Name:    Andrew H. Marshak
                                       Title:   Authorized Signatory

                                     Galaxy CLO 1999-1 Ltd

                                     By:   /s/  THOMAS G. BRANDT
                                        ----------------------------------------
                                       Name:    Thomas G. Brandt
                                       Title:   Managing Director

                                     General Electric Capital Corporation
                                     (Acting through its Commercial Finance Bank
                                     Loan Group)

                                     By:   /s/  JANET K. WILLIAMS
                                        ----------------------------------------
                                        Name:    Janet K. Williams
                                        Title:   Duly Authorized Signatory

                                     General Electric Capital Corporation

                                     By:   /s/  SUSAN TIMMERMAN
                                        ----------------------------------------
                                        Name:    Susan Timmerman
                                        Title:   Sr. Risk Manager

                                     ING Prime Rate Trust
                                     By:      ING Investments, LLC
                                        ----------------------------------------
                                              as its Investment Manager

                                     By:   /s/  BRIAN S. HORTON
                                        ----------------------------------------
                                        Name:    Brian S. Horton
                                        Title:   Vice President
<PAGE>

                                   KZH Crescent - 2 LLC

                                   By:   /s/  VIRGINIA CONWAY
                                     -----------------------------------------
                                      Name:    Virginia Conway
                                      Title:   Authorized Agent

                                   KZH Soleil LLC

                                   By:   /s/  VIRGINIA CONWAY
                                      ----------------------------------------
                                      Name:    Virginia Conway
                                      Title:   Authorized Agent

                                   Merrill Lynch Senior Floating Rate Fund, Inc.

                                   By:   /s/  SAVITRI ALEX
                                      ----------------------------------------
                                      Name:    Savitri Alex
                                      Title:   Authorized Signatory

                                   Mizuho Corporate Bank, Ltd.

                                   By:   /s/  JOHN DOYLE
                                      ----------------------------------------
                                      Name:    John Doyle
                                      Title:   Senior Vice President

                                   ML CLO XV Pilgrim America (Cayman) Ltd.
                                   By:      ING Investments, LLC
                                            as its Investment Manager

                                   By:   /s/  BRIAN S. HORTON
                                      ----------------------------------------
                                      Name:    Brian S. Horton
                                      Title:   Vice President

                                   Morgan Stanley Prime Income Trust

                                   By:   /s/  SHEILA A. FINNERTY
                                      ----------------------------------------
                                      Name:    Sheila A. Finnerty
                                      Title:   Executive Director

<PAGE>

                                    Natexis Banques Populaires

                                    By:   /s/  FRANK H. MADDEN
                                       -----------------------------------------
                                       By:      Frank H. Madden
                                       Title:   Vice President & Group Manager

                                    By:   /s/  CHRISTIAN GIORDANO
                                       -----------------------------------------
                                       Name:    Christian Giordano
                                       Title:   Vice President

                                    Pilgrim America High Income Investments Ltd.
                                    By:      ING Investments, LLC
                                             as its Investment Manager

                                    By:   /s/  BRIAN S. HORTON
                                       -----------------------------------------
                                       Name:    Brian S. Horton
                                       Title:   Vice President

                                    Satellite Senior Income Fund, LLC
                                    By:      Satellite Asset Management, L.P.,
                                             its Investment Manager

                                    By:   /s/  BRIAN KRIFTCHER
                                       -----------------------------------------
                                       Name:    Brian Kriftcher
                                       Title:   Principal

                                    Sequils - Pilgrim I, Ltd.
                                    By:      ING Investments, LLC
                                             as its Investment Manager

                                    By:   /s/  BRIAN S. HORTON
                                       -----------------------------------------
                                       Name:    Brian S. Horton
                                       Title:   Vice President

                                    Van Kampen CLO I, Limited
                                    By:      Van Kampen Investment Advisory Corp
                                             as Collateral Manager

                                    By:   /s/  WILLIAM LENGA
                                       -----------------------------------------
                                       Name:    William Lenga
                                       Title:   Vice President

<PAGE>

                                   Van Kampen Prime Rate Income Trust
                                   By:      Van Kampen Investment Advisory Corp.

                                   By:   /s/  CHRISTINA JAMIESON
                                      -----------------------------------------
                                      Name:    Christina Jamieson
                                      Title:   Vice President

                                   Van Kampen Senior Floating Rate Fund
                                   By:      Van Kampen Investment Advisory Corp.

                                   By:   /s/  CHRISTINA JAMIESON
                                      -----------------------------------------
                                      Name:    Christina Jamieson
                                      Title:   Vice President

                                   Van Kampen Senior Income Trust
                                   By:      Van Kampen Investment Advisory Corp.

                                   By:   /s/  CHRISTINA JAMIESON
                                      -----------------------------------------
                                      Name:    Christina Jamieson
                                      Title:   Vice President

<PAGE>

     THE UNDERSIGNED GUARANTORS HEREBY CONSENT AND AGREE TO THE FOREGOING FOURTH
AMENDMENT AS OF THE DATE HEREOF.

                                PANAPAGE ONE LLC

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

                                PANAPAGE TWO LLC

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

                                PANAPAGE CO. LLC

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

                                PANAVISION INTERNATIONAL, L.P.
                                By:  Panavision Inc., its General Partner

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

                                PANAVISION U.K. HOLDINGS, INC.

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

                                PANAVISION REMOTE SYSTEMS, INC.

                                By:   /s/  KENNETH KRAINMAN
                                   --------------------------------------------
                                  Name:     Kenneth Krainman
                                  Title:    Controller and Assistant Secretary

<PAGE>

                                                                SCHEDULE 4.15(B)

        OUTSTANDING SUBSCRIPTIONS, OPTIONS, WARRANTS AND OTHER AGREEMENTS
             REFERRED TO IN SECTION 4.15(b) OF THE CREDIT AGREEMENT

Rights and obligations relating to the Capital Stock of EFILM set forth in the
EFILM Operating Agreement and the EFILM Option Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]