LOAN AGREEMENT PART I- SUMMARY OF LOAN TERMS

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2 LOAN AGREEMENT THIS LOAN AGREEMENT (this "Agreement"), is made and entered into as of the 20 day ofnovember, 2007, by and between ALLERTON APARTMENTS L.P., an Ohio limited partnership (the "Borrower"), and COUNTY OF CUYAHOGA, OHIO, a county and political subdivision of the State of Ohio (the "Lender") WITNESSETH WHEREAS, the Lender is authorized by virtue of the laws of the State of Ohio, including, without limitation Chapter 165 and Section of the Ohio Revised Code, among other things, to make loans for the purpose of the economic welfare of the County of'cuyahoga, Ohio; WHEREAS, Bonower intends to address certain physical conditions and undertake certain activities with respect to the real property located at 1802 East 13th Street, City of Cleveland, Cuyahoga County, Ohio, more fully described in Exhibit A attached hereto and incorporated herein (the "Land"). Borrower proposes to undertake sich activities by completing Borrower's Work (as defined in Schedule 1); WHEREAS, Borrower has applied to Lender for a mortgage loan for the purpose of completing Borrower's Work and Lender is willing to make a mortgage loan to Borrower upon the terms and conditions hereinafter set forth (the "Loan"); WHEREAS, the Land is subject to a mortgage delivered by Borrower to Great Lakes Financial Group Limited Partnership ("Senior Mortgage"), and the performance of the obligations which are secured thereby are guaranteed by the Secretary of the U.S. Department of Housing and Urban Development ("HUD"), and in connection therewith, the Property is subject to a HUD Regulatory Agreement ("Regulatory Agreement"); the Land will be further encumbered by a restrictive covenant to and in favor of the Ohio Housing Finance Agency in connection with the allocation of'low-income housing tax credits thereto ("OHFA Tax Credit Restrictive Covenant"); WHEREAS, unless otherwise specifically defined herein, all capitalized terms used herein shall have the meanings ascribed to such terms on Schedule 1 attached hereto and incorporated herein; NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein contained, the sufficiency of which is hereby acknowledged, the parties hereto represent and agree as follows: PART I- SUMMARY OF LOAN TERMS Set forth below, and subject to each and every of the terms, provisions, covenants, agreements and conditions contained in Part II hereof, is a summary of the terms and conditions of the Loan, which are set forth for more convenient reference of the parties hereto: Borrower: Allerton Apartments L.P., an Ohio limited partnership. 1 B 1B

3 Loan Amount: Interest Rate: The principal amount of the Loan shall not exceed the lesser of- (i) One Million and 00/100ths Dollars U.S. ($1,000,000.00); or (ii) 100% of the Eligible Project Costs (as defined in Schedule 1.) No amount advanced and subsequently prepaid or otherwise paid to Lender shall be readvanced or be subject to re-borrowing under this Agreement From the Loan Closing Date (as defined in Schedule 1) until the Loan is paid in full, the rate of interest on all amounts disbursed under the Loan shall be equal to four percent (4%) per annum. Interest shall be computed on the aggregate principal balance outstanding from time to time, on the basis of a three hundred sixty (360) day year, but shall be charged foi the actual number of days within the period for which interest is being charged. Maturity Date: November 30,2010. Repayment: Loan Fees: Accrued and unpaid interest shall be due and payable on the last day of each calendar quarter after the Loan Disbursement Date until the Maturity Date, upon which date the Loan's principal amount shall be due and payable in full. All such payments shall be made from Surplus Cash (as defined in Schedule 1). Fees shall be payable by Borrower to Lender as follows: 1. A "Commitment Fee" of Two Thousand Five Hundred Dollars U.S. ($2,500.00) shall be paid upon execution of this Agreement. 2. A "Loan Origination Fee" of Five Thousand Dollars U.S. ($5,000.00) shall be paid on or before the Date of Closing. Borrower hereby acknowledges that each such fee shall be for the applicable services rendered, supported by good, valuable and adequate consideration, and not refundable for any reason. Prepayment: So long as no Default (as defined in Schedule 1) shall exist, Borrower may prepay the Loan in whole or in part, without penalty, at any time. Partial prepayments shall operate to pay the following items in such order as Lender may determine in Lender's sole discretion: (a) advances by Lender for payment of taxes, assessments, insurance premiums and other costs and expenses, as set forth in the Mortgage, the Note or any of the other Loan Documents; (b) any amounts which may be overdue under the Note, the Mortgage or any of the other Loan Documents; (c) interest on the indebtedness secured by the Mortgage; and (d) outstanding principal under the Note. No partial prepayment shall relieve Borrower from the obligation to pay any installment of interest, when due, and to pay all outstanding principal and all accrued and unpaid interest due under this Agreement on or before the Maturity Date. 2 1 B

4 Loan Documents The Loan shall be evidenced and secured by: and Security for the Loan: (a) A promissory note for the Loan Amount in substantially the form of Exhibit B attached hereto and incorporated herein; (b) (c) (d) (e) (f) (g) (h) An environmental indemnity agreement in substantially the form of Exhibit C attached hereto and incorporated herein; A mortgage which shall be (i) a valid and subsisting subordinate pai passu second lien upon the Premises, and (ii) in substantially the form of Exhibit D attached hereto and incorporated herein; An assignment of leases and rents in substantially the form of Exhibit E attached hereto and incorporated herein; An assignment to Lender of all of Borrower's right, title and interest in and to all present and future Work Contracts (as defined in Schedule 1), including but not limited to Borrower's contracts with the Contractor (as defined in Schedule 1), in the form of Exhibit F attached hereto and incorporated herein; A Letter of Credit;(as defined in Schedule 1) in favor of Lender substantially in the form of Exhibit G, attached hereto and made a part hereof; A letter agreement by and between Lender and the applicant for the Letter of Credit, dated as of even date herewith; and Such other documents as may be reasonably requested by Lender from time to time. All of the foregoing documhents together with the Loan Application (as defined in Schedule ) and this Agreement shall be known herein as the "Loan Documents." All Loan Documents shall be in form, substance and execution acceptable to Lender. Use of Proceeds: Loan Closing Date: Default Rate: The Loan Proceeds are to be used'solely for the purpose of paying Eligible Project Costs and such other costs of completing Borrower's Work as may be approved in writing by Lender The Loan Closing Date shall occur on or before November 30, 2007 or this Agreement shall immediately become null and void without further notice; provided, however, if written notice shall be given to the Bonower by Lender on or before such date, the Loan Closing Date shall be automatically extended for such period as is specified in the Lender's notice not to exceed thirty (30) days. Upon the occurrence of any Default (as defined in Schedule 1), at the option of Lender, the rate of interest for the Loan shall be increased to be 3 1B

5 equal to the sum of five (5) percentage points plus the Interest Rate (i.e, 9%). Expenses: Borrower shall pay all Loan Expenses (as defined in Schedule 1) Materials Required Pliorto Loan Closing Date: Conditions Precedent To Loan Disbursement: Borrower shall furnish the following documentation to Lender at least five (5) business days priol to Loan Closing Date, all in form, substance and execution entirely satisfactory to Lender and all subject to receipt, review and acceptance by Lender in accordance with this Agreement: (a) a fully completed Loan Application (as defined in Schedule 1); (b) the Budget (as defined in Schedule 1); (c) an Environmental Site Assessment (as defined in Schedule 1); (d) (e) (f) (g) (h) evidence that, following completion of Borrower's Work, the Premises will be in compliance with all applicable laws and that Borrower's intended use of the Premises will not conflict with any zoning regulation or private covenants or restrictions; a commitment for the issuance of the Title Insurance Policy (as defined in Schedule 1), together with complete copies of all exception documents and other items listed in Schedule B thereof; the Work Schedule (as defined in Schedule I); evidence of availability of all utilities necessary to operate the Premises for Borrower's intended purpose following completion of Borrower's Work; and The payment by Borrower of any Loan Expenses incurred by or due Lender, as of the Loan Closing Date. The following are conditions precedent to the first disbursement of Loan Proceeds pursuant to this Agreement: (a) final executed Work Contracts for completion of Borower's Work; (b) the Plans and Specifications (as defined in Schedule 1); (c) (d) (e) presentation to Lender of a certificate signed by the Project Architect and the Contractor showing that the Plans and Specifications have been reviewed and, upon full implementation, will be sufficient to complete Borrower's Work; fully executed originals of the Loan Documents; an appraisal from a qualified, state licensed real estate appraiser 4 1B

6 (f) indicating a fair market value of the Premises in both its "as-is" and "as built" condition" (the appraisal must be in narrative form and the appraiser must be acceptable to Lender); the opinion of Borrower's legal counsel, with customary exclusions and qualifications, that with respect to the Loan, the Loan Documents, the Borrower, the Premises, and Bonower's Work: (a) there is no threatened or pending litigation or administrative action or proceeding alleging a violation of any federal, state, or local environmental or other law o regulation, applicable to the Loan, the Loan Documents, the Borrower, the Premises, or the Borower's Work; (b) the transactions contemplated by this Agreement do not violate any provision of any law, restriction or other document affecting the Boirower, the Premises, or the Borrowe's Work; (c) the Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of the Borrower, and are enforceable in accordance with their terms; (d) the Borrower is a validly organized and existing limited partnership under the laws of the State of Ohio in full force and effect and qualified to do business in the State of Ohio; that the Borrower has the legal capacity to own, develop and operate the Premises and complete Borrower's Work, and to perform its obligations under the Loan Documents; and that the Loan has been duly authorized by the Borrower; and (e) such other matters concerning the Loan, the Loan Documents, the Borrower, the Premises, and the Borrowers Work, as the Lender or its counsel may reasonably require; (g) the Survey (as defined in Schedule 1V; (h) (i) (j) (k) evidence that the Premises is not in a "flood plain" area; certified copies of the Borrower's certificate of limited partnership, partnership agreement and certified resolutions evidencing Borrower's authority to enter into the Loan and the incumbency of the officer(s) executing the Loan Documents on behalf of Bonower; evidence of all permits and governmental approvals necessary for commencement of'borrower's Work; and evidence of the insurance coverages required by Article III, Section 3.1(h); and Additional Loan (a) Completion of Borrower's Work shall be achieved on or before the Conditions: Completion Date; (b) Upon completion of Borrower's Work, Borrower shall submit evidence of completion, consisting of a certificate from the 5 1B

7 (c) (d) Project Architect and the Contractor certifying that Borrower's Work has been completed in accordance with the Plans and Specifications, and any other certificates or other assurances required by the State of Ohio or by any other applicable governmental department, agency or unit as part of Bonower's Work; Upon written request by Lender at any time during the term of the Loan, Borrower shall deliver to Lender its internally prepared financial statements for its last ending fiscal quarter and its most recent Federal income tax return for the fiscal year last ending; and Provided no Default exists, Lender will permit Borrower to pay Sinsurance premiums and real estate taxes outside of escrow during the term of the Loan. Borrower shall furnish to the Lender evidence that such insurance premiums and real estate taxes are paid at least five (5) days prior to the date such amounts become delinquent. No Transfer or Encumbrance: Until the Loan is paid in full, the Borrower, without the prior written consent of Lender, shall not create, effect, consent to, cause, attempt, contract for, agree to make, suffer, allow, or permit any conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest, encumbrance or alienation of the Premises, the Borrower or any interest in or portion of the Premises or the Borrower which is effected directly, indirectly, voluntarily, involuntarily, or by operation of law or otherwise. The foregoing notwithstanding, the Lender acknowledges that the Land and the Premises shall be subject to all Permitted Exceptions (as defined in Schedule 1), including the Senior Mortgage, Regulatory Agreement and OHFA Tax Credit Restrictive Covenant PART II- LOAN TERMS ARTICLE I REPRESENTATIONS AND WARRANTIES 1.1 Representations and Warranties. To induce Lender to execute and perform this Agreement, Borrower hereby represents, covenants and warrants to Lender as follows: (a) On the Loan Closing Date and at all times thereafter, until the Loan is paid in full, the Borrower will have good and marketable indefeasible fee simple title to the Premises, subject only to the Permitted Exceptions; 6 1B

8 (b) Borrower is duly organized and validly existing limited partnership under the laws of the State of Ohio, is in full force and effect, and has full power and authority to conduct its business as presently conducted, to own the Premises, to complete Borrower's Work, to enter into this Agreement, and to perform all of its duties and obligations under this Agreement and each of the Loan Documents. Execution of the Loan Documents and performance of Borrower's obligations have been duly authorized; (c) This Agreement, the Note, the Mortgage, and all of the other documents and instruments required to be executed and delivered by Borrower in connection with this Loan, as well as the Loan Documents when executed and delivered, will constitute the duly authorized, valid and legally binding obligations of each of the parties required to execute the same and will be enforceable strictly in accordance with their respective terms; (d) No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis therefor) exists which could adversely affect the validity or priority of the liens and security interests granted Lender under the Loan Documents, which could adversely affect the ability of Borrower to complete Borower's Work, which could adversely affect the ability of Borrower to perform its respective obligations under the Loan Documents, which would constitute a Default under any of the Loan Documents or which would constitute such a Default with the giving of notice or lapse of time or both; (e) The Land, the present use and occupancy of the Land, the completion of Borrower's Work, including the letting of contracts in connection therewith, and Borrower's intended use and occupancy of the. Premises will not violate or conflict with any lease, any applicable law, statute, ordinance, rule, regulation or order of any kind, including without limitation zoning, building, environmental, land use, occupational health and safety or other laws, any building permit or any condition, grant, easement, covenant, condition or restriction, whether recorded or not; (f) All financial statements submitted to Lender by Borrower in connection with this Loan are true and correct in all material respects, have been prepared in accordance with generally accepted accounting principles consistently applied, and fairly present their respective financial conditions and results of'operations of the entity and persons which are their subject as of the respective dates thereof, no materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof and no additional borrowings have been made by Borrower since the date thereof other than the borrowing contemplated herein or other borrowings approved by Lender; (g) This Agreement, the Budget (as defined in Schedule I), the Work Schedule (as defined in Schedule 1) and all financial statements, opinions, certificates, confirmations, applications, affidavits, agreements, Work Contracts, and other materials submitted to the Lender in connection with or in furtherance of this Agreement by or on behalf of the Borrower fully and fairly state the matters with which they purport to deal, and neither misstate any material fact nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading; 7 1B

9 (h) The Premises is connected to all utility and municipal services required for the development, occupancy and operation of the Premises, including, but not limited to, water supply, storm and sanitary sewage disposal system, gas, electric and telephone facilities; (i) All governmental permits and licenses required by applicable law to complete Borrower's Work have been issued and are in full force; if the present stage of Borrower's Work does not require such issuance, then such permits and licenses will be issued if and when Borrower's Work is sufficiently complete; (j) All utility, access, development, and other permits and easements required for the development and use of the Land have been or will be granted and issued prior to the Commencement Date; (k) On and as of the Loan Closing Date, the Plans and Specifications are complete in all respects and upon completion of Borrower's Work, the Premises shall be ready for Borrower's intended use thereof; (1) The Borrower is and will remain in compliance, and will take whatever actions are necessary to assure compliance while this Agreement is in effect, in all material respects with all applicable federal, state, and local laws, ordinances, rules, regulations, and provisions of this Agreement; (m) The Borrower is and will remain in compliance, and will take whatever actions are necessary to assure compliance while this Agreement is in effect, in all material respects, with all the requirements, covenants and conditions contained in any of the loan documents evidencing, securing, or other wise delivered in connection with the mortgage loan from Great Lakes Financial Group Limited Partnership to Borrower in the principal amount of Seven Million Five Hundred Thousand and No/100t Dollars ($7,500,000.00); and (n) Neither the Borrower, nor any affiliate thereof or any person having any direct or indirect ownership in or control of Borrower or any affiliate thereof, is or will be a Prohibited Person. For the purposes hereof; the term Prohibited Person shall mean: (i) any individual or entity (a) who has ever been convicted of a felony or any other crime involving moral turpitude, or (b) is alleged to be an "organized crime figure" by Bishop's Investigation Service or other similar private investigative service and such investigation has been confirmed by any federal, state, or county prosecutorial, investigative or regulatory agency or authority, or (c) who has provided any assistance to any organization on the United States Department of State exclusion list; (ii) any individual or entity (x) against whom any action or proceeding is pending to enforce rights of'any federal, state, county, municipal or other local government, or any agency, department or division thereof (a "governmental agency") arising out of a contractual obligation to a governmental agency, or (y) who has incurred but has not paid in full when due any monetary obligation for federal, state or local income taxes or any real estate taxes or assessments to a governmental agency, including an unresolved finding for recovery; issued by the auditor of the State of Ohio after January 1, 2001 as the same is defined in Ohio Revised Code Section 9.24; or (iii) any person or entity who has ever received notice of a violation of any federal, state or other environmental laws or regulations. 8 1 B

10 1 2 Continuation of Representations and Warranties. The Borrower hereby covenants, warrants and agrees that the representations and warranties made in Section 1.1 hereof shall be and shall remain true and correct at the time of the Loan Closing Date and at all times thereafter so long as any part of the Loan shall remain outstanding. Each Certificate for Payment (as defined in Schedule 1) shall constitute a reaffirmation that these representations and warranties are true as of the date of such Certificate for Payment and will be true on the date of each Disbursement. ARTICLE I THE LOAN 2.1, Agreement to Borrow and Lend. Borrower agrees to bonow from Lender, and Lender agrees to lend to Borrower such amount as shall be requested by the Borrower, but in no event exceeding the Loan Amount, on the terms of and subject to the conditions of this Agreement. Lender, in agreeing to make the loan to Borrower has relied on Borrowei's representations of obtaining financing sufficient to complete the Project Borrower represents and warrants that the following additional sources of funds shall be available to complete the Project in the amounts below: (a) A first priority mortgage loan from Great Lakes Financial Group Limited Partnership to Alletton Apartments L.P. in the principal amount of not less than Seven Million Five Hundred Thousand and No/100h Dollars ($7,500,000.00); (b) A second lien priority mortgage loan from Teamster Retiree-Youngstown, Inc. to Allerton Apartments L.P. in the amourit of One Million and No/100ths Dollars ($1,000,000), which loan shall be pai passu in rank and priority to the Loan; and (c) An equity investment in Borrower, deferred development fees, and loans fiom the general partner of Borower in an aggregate amount not less than Eight Million Thee Hundred Fifty-Six Thousand Five Hundred Sixty-Nine and No/100ths Dollars ($8,356,569.00) Conditions Precedent to Disbursement of Loan Proceeds. No Disbursement (as defined in Schedule 1) shall be made by Lender at any time unless: (a) All conditions precedent to that Disbursement have been satisfied, including without limitation, performance of all of the then pending obligations of Borrower under this Agreement and the Loan Documents; (b) The Loan is In Balance (as provided in Section 4.9 hereof); (c) Lender shall be satisfied as to the continuing accuracy of'the Budget; (d) No Default exists under this Agreement or under any Loan Document, and no event, circumstance or condition exists which, with the passage of time or the giving of notice, would constitute a Default under this Agreement or under any of the other Loan Documents; 9 1 B

11 (e) There is no litigation or administrative action or proceeding pending or, to the best of its knowledge, threatened against the Borower, or the Premises, alleging a violation of any federal, state or local environmental or other law or regulation applicable to the Project or which litigation or proceedings, in the sole and exclusive judgment of Lender would materially affect Borrower's ability to perform any of their respective obligations under any of the Loan Documents; * (f) No event, circumstance or condition exists or has occurred which could, in Lender's sole judgment, delay or prevent the completion of Borrower's Work by the Completion Date; (g) No adverse change, which in the sole and exclusive judgment of Lender, has occurred or is threatened against the Premises or the financial condition of Borrower which would materially affect Borrower's ability to perform any of their respective obligations under any of the Loan Documents; (h) All representations and warranties made by Bonower to Lender herein and otherwise in connection with this Loan continue to be accurate; all statements and representations made in the Loan Application continue to be accurate; (i) Lender shall have received evidence satisfactory to it that all Loan Proceeds disbursed to date have been applied to payment of Eligible Project Costs; (j) Lender shall have received evidence satisfactory to it that Borrower's Work is in conformity with applicable law; (k) Lender shall have received evidence that the sources of funds set forth in Section 2.1(a)- (d) hereof are available for use at the Project; and (1) Lender shall have received evidence satisfactory to it that Borrower's Work is being completed in accordance with the Plans and Specifications, the Work Schedule, the Work Contracts and the Budget Interest From the Loan Closing Date until the Maturity Date, the rate of interest on all amounts disbursed under the Loan shall be equal to four percent (4%) per annum. Interest shall be computed on the aggregate principal balance outstanding from time to time,.on the basis of a three hundred sixty (360) day year, but shall be charged for the actual number of days within the period for which interest is being charged 2.4. Maturity Date. The Maturity Date of the Loan shall be November 30, Loan Disbursement. Subject to the satisfaction of the terms and conditions herein contained, the Loan Proceeds shall be disbursed as follows: (a) Disbursement of Loan Proceeds shall be made at such time as all of the conditions and requirements of this Agreement required to be performed by Borrower or other patty prior to the Loan Disbursement Date have been satisfied or performed. 10 1B

12 (b) All Disbursements will be made in accordance with the provisions of Article IV hereof' and other applicable terms of this Agreement. (c) Borrower hereby requests and authorizes Lender to make Disbursements (as defined in Schedule 1) directly to or for the account of Lender for payment and reimbursement of Loan Expenses. (d) Borrower shall not be entitled to any Disbursement at any time that the Borrower's obligations under any other terms and conditions of the Loan Documents are not being fully satisfied as and when required hereunder. The Loan Proceeds must be used only for payment of Eligible Project Costs in strict accordance with the Budget. No amendment of the Budget shall be made without the Lender's prior written consent No reallocation of line items within the Budget shall be made unless Borrower can demonstrate to the Lender's satisfaction that (i) sufficient funds remain in the line item from which the amount is to be reallocated to pay all Eligible Project Costs which may be paid from that line item; (ii) no line item in the Budget (other than the line item to which the reallocation is sought) is required, in Lender's judgment, to be increased; and (iii) Borrower shall present paid receipts or other proof of payment prior to subsequent Disbursements Borrower's Work shall commence on or before the Commencement Date and shall be completed on or before the Completion Date, unless extended by agreement of the parties Borrower shall provide the Title Company with such information and indemnities as Title Company may require to issue the Title Insurance Loan Policy in form acceptable to Lender, and, in particular, such policy will not be subject to the notice of commencement filed for record by Borrower prior to the Loan Closing Date Non-Recourse. By its execution and delivery of this Agreement, Lender, for itself and its successors and assigns, covenants and agrees that from the date hereof, that Borrower, its officers, partners, and employees shall not have any personal liability for the payment of the Loan or for the performance and observation of any of the monetary terms, conditions, covenants, agreements, provisions or obligations contained in this Agreement; provided however that Borrower shall be and remain liable for any costs incurred by the County in the enforcement of this Agreement, including attorneys fees, and any and all costs related to exercising any of the remedies provided herein or in any of the other Loan Documents. ARTICLE I CONDITIONS TO LOAN DISBURSEMENT 3.1. Conditions To Loan Disbursement. In addition to the materials required prior to Loan Closing Date as set forth in Part I, Borrower shall furnish the following materials to Lender and to its Inspecting Agent where so requested, all at least five (5) business days prior to the Loan Disbursement Date or at such time as is set forth below and all of which must be strictly satisfactory to Lender and Lender's counsel in form, content and execution: (a) Work Contracts. Collectively, all of the final executed Work Contracts; 11 1B

13 (b) Construction Certificate. A construction certificate signed by the Project Architect and the Contractor showing that the Plans and Specifications have been reviewed and, upon full implementation, will be sufficient to complete Borrower's Work; (c) Loan Documents. Fully executed originals of the Loan Documents; (d) Appraisal An appraisal from a qualified, state licensed real estate appraiser indicating a fair market value of the Premises in its "as-is" and "as built" condition (the appraisal must be in narrative form and the appraiser must be acceptable to the Board). The term "as-built" shall mean only those improvements that the appraiser, in its judgment reasonably exercised, determines will be completed or maintained during the twelve (12) month period following the date of the appraisal; (e) Plans and Specifications. Fully executed originals of the Plans and Specifications; (f) Title Insurance Policy. An ALTA Loan Policy of Title Insurance (ALTA form adopted 06/17/06) issued as of the Loan Closing Date by the Title Company to Lender, satisfactory to Lender, in the Loan Amount, insuring the Mortgage to be a valid subordinate lien upon the fee title to the Premises, subject only to the Permitted Exceptions and to customary exceptions for pending disbursements of the Loan (the "Title Insurance Policy"). The Title Insurance Policy shall specifically insure Lender for claims and questions related to: (i) mechanic's or materialmen's liens; (ii) the location of improvements being constructed on the Land; and (iii) endorsements for such other matters as Lender may reasonably require. In addition, the Title Insurance Policy must contain an unconditional "Comprehensive Endorsement No. I", or a customary form of like "conformity" endorsement upon completion of Borrower's Work in accordance with.the Plans and Specifications. If the Land consists of more than one parcel, the Title Insurance Policy must affirmatively insure contiguity of the Land; (g) Survey. The Survey of the Land made by a qualified, state licensed land surveyor, which Survey must be satisfactory to the Lender showing: (i) (ii) (iii) the location (A) of all existing improvements, if any, on the Land, and (B) of all proposed improvements to be constructed or pursuant to the Plans and Specifications. the location (and recording numbers, to the extent recorded) of all visible or recorded easements including appurtenant easements, water courses, drains, sewers, public and private roads (including the names and widths thereof and recording numbers for the dedications thereof), other rights of way, and curb cuts, if any, within, adjacent to or serving the Land or to which the Land is subject, and the proposed location of any such easements to be granted; that the same are, and after completion of Borrower's Work and granting of easements will be, unobstructed; and that all building lots of the Land will have direct access to dedicated public roads; the dimensions, boundaries and acreage or square footage of the Land; 12 1 B

14 (iv) (v) (vi) (vii) that all improvements under development or to be developed pursuant to the Plans and Specifications, and all other improvements to the Land, are placed within the boundaries of the Land and in compliance with all deed restrictions, recorded plats, other restrictions of record and ordinances relating to the location thereof (and, to the extent that any deed restrictions, recorded plats, other restrictions of record, or ordinances require existing or proposed structures to be set back specified distances fiom any line, showing said line and the measured distance of' said structure(s) from said line); that there are no encroachments onto the Land from improvements located on adjoining property; the location and course of all utility lines; if the Land is comprised of more than one parcel, interior lines and other data sufficient to insure contiguity; (viii) that the Land is not in a "flood hazard" area; and (ix) such additional information which may be reasonably required by the Lender or the Title Insurance Company. The Survey shall be made in accordance with (i) the most current survey standards of the American Land Title Association and the American Congress on Surveying and Mapping and meet the Accuracy Standards established in connection with such survey standards, and include items 1-4, 6-12, 14 and 16 of Table A thereof and (ii) the applicable statutory regulations governing surveying in the State of Ohio. The Survey shall be dated not earlier than one month priot to the Loan Closing Date, and shall bear a proper certificate by the surveyor, which certificate shall recite compliance with the laws and standards enumerated above, shall include the legal description of the Land and shall tun in favor of Borower, Lendei and the Title Company; (h) Insurance Policies. Borrower shall keep, or cause to be kept, all of the following insurance policies with respect to the Premises in companies, forms, amounts and coverage satisfactory to Lender, containing waiver of subrogation and first mortgagee clauses in favor oflendet: (i) (ii) Builders Risk Insurance on an "all risk" basis in the amount of One Million Dollars U.S. ($1,000,000.00), insuring the Premises, including materials in storage, or other casualty, vandalism and malicious mischief coverage, bearing a replacement cost agreed amount endorsement (such Builders Risk Insurance may be included in the coverage provided by the policy of insurance required pursuant to Section 3,1(h)(iii) of this Agreement. Insurance against loss or damage by fire and such other hazards, casualties and contingencies (including, without limitation, so-called all risk coverages) as Lender reasonably may require, in an amount equal to the greater of' (1) the Loan Amount, or (2) the replacement cost of the Premises, with a replacement cost endorsement and in such amounts so as to avoid the operation of any coinsurance 13 1B

15 clause, for such periods and otherwise as Lender reasonably may require from time to time. (iii) (iv) (v) Comprehensive owner's and general contractors' general public liability, property damage and indemnity insurance, including, without limitation, so-called assumed and contractual liability coverage and claims for bodily injury, death or property damage, naming Lender as an additional insured, in such amounts as Lendei reasonably may fiom time to time require. Evidence of suitable workmen's compensation and employee liability insurance (whether from Boirower or a general contractor), naming Lender as additional insured covering all employees working on or about the Premises and death, injury and/or property damage occurring on or about the Premises or resulting from activity thereat, with liability insurance limits for death of or injury to persons not less than Three Million Dollars U.S. ($3,000,000.00) and for damage to propety other than the Premises of not less than Five Hundred Thousand Dollars U.S. ($500,000.00) Such other insurance relating to the Premises as Lender may reasonably require fiom time to time. Borrower shall deliver renewal certificates of all insurance required above, together with written evidence of full payment of the annual premiums therefor at least thirty (30) days prior to the expiration of the existing insurance Any such insurance may be provided under so-called "blanket" policies, so long as the amounts and coverages thereunder will, in Lender's sole judgment, provide protection equivalent to that provided under a single policy meeting the requirements hereinabove. All policies of insurance required hereunder shall: (A) be written by cariers which are licensed and authorized to transact business in the State of Ohio and are rated "A" or higher, according to the latest published Best's Key Rating Guide and which shall be otherwise acceptable to Lender in all other respects, (B) provide that Lender shall receive thirty (30) days' prior written notice fiom the insurer before cancellation, modification, material change or non-renewal of the policy becomes effective and ten (10) days' written notice in advance of payment of any insurance claims under said policies to any person, (C) be written for such amounts as are sufficient to prevent Borrower from becoming a co-insurer thereunder, and (D) be otherwise satisfactory to Lender; (i) Utilities: Licenses: Permits. Evidence satisfactory to Lender that: (i) (ii) all services and utilities such as water, gas, electricity and storm and sanitary sewers required for use of the Premises for Borrower's intended purpose are available for use and tap-on at the Land, subject only to payment of fees included in the Budget, or will be available after installation thereof, subject only to payment of costs and fees included in the Budget; all governmental approvals, permits and licenses ("Permits"), including all Permits issued by the appropriate governmental authority authorizing commencement of Borrower's Work in accordance with the Plans and Specifications, and including all building and grading permits and tap-in permits 14 1B

16 required by applicable law to construct, occupy and operate the Premises have been issued, are in full force and all fees therefor have been fully paid or will so be issued prior to the Commencement Date or, if the stage of completion of Borrower's Work does not allow such issuance, then evidence that such Permits will be issued upon completion of Bonowet's Work in accordance with the Plans and Specifications; (iii) the storm and sanitary sewage disposal system, and all mechanical systems serving the Premises do (or when installed will) comply with all applicable environmental, and pollution control laws, ordinances, rules and regulations, and the applicable environmental protection agency, pollution control board and/or other governmental agencies having jurisdiction of the Land have issued or will -- issue prior to the Commencement Date, their permits for the development and operation thereof; but if no storm sewer is available on the Land, Borrower shall funish evidence that proper disposal of lain water is assured; and (j) Documents of Record. Copies of all covenants, conditions, restrictions, easements and matters of record which affect the Land; (k) Work Contracts. Bonower shall submit to Lender for its approval certified copies of all the Work Contracts; (m) Borrower's Attorney's Opinion. The opinion of Borrower's legal counsel, including customary exclusions and qualifications, that with respect to the Loan, the Loan Documents, the Borrower, the Premises, and the Borrower's Work: (a) there is no threatened orxpending litigation or administrative action or proceeding alleging a violation of any federal, state, or local environmental or other law or regulation applicable to the Loan, the Loan Documents, the Borrower, the Premises, or the Borrower's Work; (b) the transactions contemplated by this Agreement do not violate any provision of any law, restriction or other document affecting the Borrower, the Premises, or the Borrower's Work; (c) the Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of the Borrower and are enforceable in accordance with their terms; (d) the Borrower is a validly organized and existing limited partnership under the laws of the State of Ohio, is in full force and effect, and is qualified to do business in the State of Ohio; that the Borrower has the legal capacity to own, develop and operate the Premises and complete Borrower's Work, and to perform its obligations under the Loan Documents; and that the Loan has been duly authorized by the Borrower; and (e) such other matters concerning the Loan, the Loan Documents, the Borrower, the Premises, and the Borrower's Work, as the Lender or its counsel may reasonably require. (n) Or anizational Documents. (1) Certified copies of the certificate of limited partnership and operating agreement for Borrower; (2) Certificates of incumbency for Borrower, (3) Certified resolutions for Borrower. 15 1B

17 (o) Zoning. Evidence of compliance with all applicable zoning requirements; and (p) Additional Documents. Such other papers and documents regarding Borrower, the Land, or the Project as Lender may reasonably require. ARTICLE IV DISBURSEMENTS 4.1. Request for Loan Disbursements. Requests for Disbursements shall be submitted on a Certificate for Payment (as defined in Schedule 1). Unless otherwise agreed in writing by the Lender, each Certificate for Payment shall be accompanied by the Borrower's affidavit, subcontractor and supplier invoices, lien waivers in form and substance satisfactory to Lender and the Title Company and any other supporting documentation required by Lender. Borrower shall not submit more than one Certificate for Payment per calendar month. Each Certificate for Payment and all other documents required for a Disbursement must be received by the Lender on or before a date which is at least ten (10) calendar days prior to the date upon which the requested Disbursement is to be made, excluding the date of receipt by the Lender Requirements for Funding Disbursements. Prior to the funding of each Disbursement after the initial Disbursement the Lender must receive and approve: (1) An endorsement to the Title Insurance Policy, which endorsement insures that no claim exists which constitutes a cloud on the Lender's secured position established by the insured Mortgage and that no matters exist subordinate to the Mortgage which are unacceptable to the Lender; extends the effective date of the Title Insurance Policy to the date of the Disbursement; and covers the amount of the requested Disbursement so that the total amount insured by the Title Insurance Policy equals the total amount disbursed by Lender under the terms of this Agreement (or at the option of the Lender, confirmation from the Title Company that all requirements for the issuance of such an endorsement have been satisfied and confirmation that the Title Company will issue such an endorsement within a specified time acceptable to the Lender); (2) The lien waivers equired pursuant to Section 4.1 hereof; (3) Within ten (10) days of receipt, Lender, or its agent, shall have inspected the Premises to verify satisfactory completion of that portion of Borrower's Work for which the Draw Request is made. All inspections shall be completed by the Inspecting Agent who, within reason, may require futher information, including, but not limited to, documents such as contracts and invoices to complete the analysis of the Draw Request. The cost of this inspection shall be paid directly by the Borrower; (4) Borrower shall present evidence to Lender, upon completion of all major stages of Borrower's Work of suitable policies of insurance as described in Section 3.1(h); (5) No Default or condition in which, with notice or the passage of time or both, would constitute a Default shall be continuing with respect to the Loan or under of any of the Loan Documents; and 16 1B

18 I (6) Borrower shall have paid all Expenses incurred by Lender in connection with the satisfaction of the foregoing conditions Payments Directly to Subcontractor. Lender may, but shall not be obligated to, in its discretion, make or cause to be made payments for Eligible Project Costs directly to any subcontractor or to any vendor or jointly to the Borrower and any of such parties Disbursements Subject to Conditions. The Lender's obligation to make each Disbursement shall be subject to the following conditions: (1) All provisions of this Agreement shall have been complied with to the satisfaction of the Lender's legal counsel and the Lender and this Agreement shall remain in full force and effect; (2) The Borrower representations and warranties shall remain true and correct; (3) The Borrower's Work shall have been completed to the date of such Disbursement in accordance with the Plans and Specifications and the terms of this Agreement; (4) No Default shall have occurred under this Agreement or under any other Loan Document; and (5) All other requirements of this Article shall have been fully satisfied Final Disbursement. At such time as the Borrower's Work shall have been fully completed, the Borrower shall submit to the Lender a final Certificate for Payment in an amount not to exceed the amount of the Eligible Project Costs shown on the Budget (as modified by any change orders approved by the Lender) less the aggregate amount of all previous Disbursements made by the Lender Documents Required for Final Disbursement. The final Certificate for Payment shall be accompanied by the following items, and the Lender shall not be required to make the final Disbursement until ten (10) calendar days after receipt by the Lender of the following items: (1) An affidavit of'the Borrower and the Contractor stating that each person providing any material or performing any work in connection with the Premises has been paid in full and that all withholding taxes have been paid; (2) A certificate by the Contractor and Project Architect certifying that Borrower's Work has been completed in accordance with the Plans and Specifications and any other certificates or permits as required by the State of Ohio or by any other applicable governmental department, agency or unit; (3) Any permits, licenses, or other evidence of compliance with the requirements of any governmental authorities necessary for Borrower's intended use of the Premises; and 17 1B

19 (4) Such other items as may be required by Lender, including, without limitation, evidence that Borrower's Work has been completed by the Completion Date and to the satisfaction of the Lender Amount of Disbursements. Subject to the provisions of this Agreement and the other Loan Documents, Lender shall make Disbursements up to the aggregate amount of the Eligible Project Costs specified in the Budget for the purposes and in the amounts described therein, and not in excess of the budgeted amount thereof; provided, however, that in no event shall the total of all Disbursements exceed the undisbursed, original Loan Amount unless otherwise approved by the Board. If a contingency reserve is in the Budget, the Lender reserves the right to disburse such amounts fiom the contingency reserve, to such payees and in such amounts as the Lender, in its sole discretion, may approve or deem appropriate. The amount of each Disbursement will be based upon the percentage of completion of Borrower's Work. All Disbursements shall be deposited in the account to receive Disbursements, except that if the Lender deems it necessary or desirable to do so the Lender may disburse all or any portion of any Disbursements by check either made payable directly to any patty who is to be paid from such Disbursement or by check made payable jointly to the Borrower and such party. In the event a dispute arises with respect to any request for Disbursement or Certificate for Payment, the Lender shall have the right without notice, to delay the Disbursement until the dispute has been resolved Governmental Charges. Notwithstanding anything to the contrary herein, Lender may withhold from the final disbursement any amount required by any governmental authority for completion of improvements, or maintenance of same, as required by such governmental authority Sufficiency of Loan to Complete Borrower's Work. Anything in this Agreement to the contrary notwithstanding, it is expressly understood and agreed that the Loan shall at all times be "in balance." The Loan shall be "in balance" only at such time and from time to time, as Lender may reasonably determine, that the then undisbursed portion of the Loan equals or exceeds the amount necessary to pay for (i) all Eligible Project Costs incurred and not theretofore paid for.or to be done in connection with the completion of Borrower's Work in accordance with the Plans and Specifications, and (ii) all costs incured and not theretofore paid for, or to be incurred in connection with completion of Borrower's Work and as shown on the Budget Borrower agrees that prior to the Loan Closing Date, Lender shall have the right to make (and thereafter from time to time Lender shall have the right to revise), in its reasonable discretion, an estimate of the cost of completion of Borrower's Work; such estimate is herein sometimes called "Lender's Estimate of Cost." In the first instance, Lender's Estimate of Cost shall take into consideration the Work Contracts, or, in those instances where Work Contracts have not yet been let, upon the basis of either written bids with responsible contractors, tradesmen and material suppliers satisfactory to Lender or Lender's estimate of such costs, and shall take into account such allowances for reserves and contingencies as Lender shall deem appropriate. Thereafter, Lender's Estimate of Cost will take into account, in addition to the subcontracts and purchase orders, other considerations which Lender, in its reasonable discretion, deems relevant or likely to have an impact upon the cost of completion of Borrower's Work, including current costs for availability of the subcontractors to.perform under the subcontracts and purchase orders, past and current expenses for completion of Borrower's Work, and other projects similar to the Project. If there is an "identity of interest" between the Borrower's contractors, any contract between patties having such "identity of interest" shall be regarded solely as an estimate for the purpose of this Section. 18 1B