Exhibit 4.2
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                           LOAN AND SECURITY AGREEMENT

                            DATED AS OF JULY 15, 2003


                                  BY AND AMONG


                 MERRILL LYNCH MORTGAGE CAPITAL, INC., AS AGENT,


                         THE LENDERS REFERRED TO HEREIN,


                      MERRILL LYNCH CAPITAL SERVICES, INC.,


                                       AND


                            BELCREST CAPITAL FUND LLC




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                                TABLE OF CONTENTS

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1.       DEFINITIONS...........................................................1

2.       THE LOAN.............................................................10

         2.1      Loans.......................................................10

         2.2      Note........................................................10

         2.3      Borrowing Notice............................................11

         2.4      Interest....................................................11

         2.5      Alternate Rate of Interest..................................12

         2.6      Default Interest............................................12

         2.7      Repayment and Termination...................................12

         2.8      Optional Prepayments........................................12

         2.9      Manner of Payments..........................................12

         2.10     Commitment Fee and Other Fees...............................13

         2.11     Reduction or Termination of Commitment......................13

         2.12     Change in Circumstances.....................................13

         2.13     Letters of Credit...........................................15

3.       ESTABLISHMENT OF SECURITIES ACCOUNT; PLEDGE OF COLLATERAL............19

         3.1      Establishment of the Securities Account.....................19

         3.2      Other Account Provisions....................................19

4.       PLEDGE AND SECURITY AGREEMENT........................................19

         4.1      Grant of Security Interest..................................19

5.       SPECIAL AGREEMENTS WITH RESPECT TO PLEDGED SECURITIES................20

         5.1      Liquidation of Pledged Securities...........................20

6.       REPRESENTATIONS AND WARRANTIES.......................................21

         6.1      Collateral..................................................21

         6.2      Due Organization............................................22

         6.3      Power and Authority; Binding Agreements.....................22

         6.4      No Violation................................................22

         6.5      No Consents.................................................22

         6.6      No Litigation...............................................23

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         6.7      Compliance with Laws........................................23

         6.8      No Material Adverse Change..................................23

         6.9      Solvency....................................................23

         6.10     Organization; Place of Business.............................23

         6.11     Full Disclosure.............................................23

         6.12     Sole Business...............................................23

         6.13     Investment Company Act......................................24

         6.14     Private Placement Memorandum................................24

         6.15     Pledged Securities..........................................24

         6.16     Subsidiaries................................................24

         6.17     Belcrest Realty Corporation.................................24

         6.18     Preferred Equity Interests..................................24

7.       AFFIRMATIVE COVENANTS................................................25

         7.1      Maintenance of Existence....................................25

         7.2      Compliance with Laws........................................25

         7.3      Payment of Taxes............................................25

         7.4      Books and Records...........................................25

         7.5      Audit Rights................................................25

         7.6      Maintenance of Collateral...................................25

         7.7      Notices.....................................................25

         7.8      Bankruptcy..................................................26

         7.9      Financial and Credit Information............................26

         7.10     Financial Statements........................................26

         7.11     Report; Compliance Certificate..............................27

         7.12     Liens.......................................................27

         7.13     Government Approval.........................................27

         7.14     Use of Proceeds.............................................27

         7.15     Valuation Covenants.........................................27

         7.16     Formation of Additional Subsidiaries........................28

8.       NEGATIVE COVENANTS OF THE BORROWER...................................28

         8.1      No Indebtedness.............................................28

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                                TABLE OF CONTENTS

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         8.2      No Liens....................................................29

         8.3      No Mergers, Etc.............................................29

         8.4      No New Business.............................................29

         8.5      No Trading..................................................29

         8.6      No Distributions............................................30

         8.7      No Amendments...............................................30

         8.8      Manager, Investment Adviser and Custodian...................30

         8.9      Limitation on Restriction on Subsidiary Dividends
                  and Other Distributions, etc................................30

9.       CONDITIONS PRECEDENT TO CLOSING......................................30

         9.1      Conditions Precedent to Initial Loan........................30

         9.2      Conditions Precedent to All Loans...........................32

10.      DEFAULTS; REMEDIES...................................................32

         10.1     Events of Default...........................................32

         10.2     Remedies....................................................34

11.      THE AGENT............................................................36

         11.1     Administration by Agent.....................................36

         11.2     Advances and Payments.......................................36

         11.3     Sharing of Setoffs and Cash Collateral......................37

         11.4     Notice to the Lenders.......................................37

         11.5     Liability of Agent..........................................37

         11.6     Reimbursement and Indemnification...........................38

         11.7     Rights of Agent.............................................39

         11.8     Independent Investigation by Lenders........................39

         11.9     Agreement of Required Lenders...............................39

         11.10    Notice of Transfer..........................................39

         11.11    Successor Agent.............................................39

12.      MISCELLANEOUS........................................................40

         12.1     Expenses....................................................40

         12.2     Cost of Collection..........................................40

         12.3     Indemnities.................................................40

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         12.4     Delay in Enforcement; No Waiver.............................41

         12.5     Statements and Notices......................................42

         12.6     Waivers.....................................................42

         12.7     Non-Recourse................................................42

         12.8     Further Assurances..........................................42

         12.9     Successors and Assigns; Loan Sales; Participations..........43

         12.10    GOVERNING LAW AND JURISDICTION..............................43

         12.11    Effectiveness...............................................45

         12.12    WAIVER OF JURY TRIAL........................................45

         12.13    Amendments..................................................45
         12.14    Headings....................................................46

         12.15    Severability................................................46

         12.16    Entire Agreement............................................46

         12.17    Execution in Counterparts...................................46

         12.18    Confidentiality.............................................46

         12.19    Survival....................................................46


EXHIBITS

Exhibit A       Form of Note
Exhibit B       Form of Report
Exhibit C       Opinion of Counsel
Exhibit D       Form of Borrowing Notice
Exhibit E       Form of Compliance Certificate
Exhibit F       Form of Account Control Agreement
Exhibit G       Form of Intercreditor Agreement
Exhibit H       Form of Amendment to Swap Agreement

SCHEDULES

Schedule 1.1    Schedule of Commitments

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                           LOAN AND SECURITY AGREEMENT

     LOAN AND SECURITY  AGREEMENT  dated as of July 15, 2003 (as the same may be
amended,  supplemented or otherwise  modified,  renewed or replaced from time to
time, the "Agreement"),  by and among Belcrest Capital Fund LLC, a Massachusetts
limited  liability  company (the  "Borrower"),  the Lenders  referred to herein,
Merrill Lynch  Mortgage  Capital,  Inc., a Delaware  corporation,  as agent (the
"Agent") and Merrill Lynch Capital Services,  Inc., a Delaware  corporation (the
"Swap Provider").  This Agreement establishes the terms and conditions that will
govern the Loans from the Lenders to the Borrower.

                                    RECITALS

     All terms not otherwise defined above or in this Introductory Statement are
as defined in Article 1 hereof, or as defined elsewhere herein.

     The Borrower has requested the Lenders to make  available to the Borrower a
revolving credit facility in the aggregate amount of $138,000,000 or such lesser
amount as indicated  herein,  including a Letter of Credit  sub-facility  not to
exceed the amount of  $10,000,000.  The Borrower wishes to pledge the Collateral
to the Agent for the benefit of the Lenders as security for the Loans and to the
Swap Provider as security for Borrower's obligations under the Swap Agreement.

     The  Borrower  is entering  into the Term Loan  Agreement  (as  hereinafter
defined) concurrently herewith.

     The  Obligations  are to be  secured  by a pledge  by the  Borrower  of the
Collateral (as hereinafter defined),  including securities owned by the Borrower
and held in the Securities  Account (as  hereinafter  defined)  established  and
maintained with Investors Bank & Trust Company.

     Subject to the terms and conditions set forth herein,  the Agent is willing
to act as agent for the Lenders, and each Lender is willing to make Loans to the
Borrower in amounts in the aggregate at any one time  outstanding  not in excess
of its  Commitment  hereunder,  all as set forth on the Schedule of  Commitments
attached hereto as Schedule 1.1.

     Accordingly, the parties hereto hereby agree as follows:

1. DEFINITIONS

     For  the  purposes  hereof  unless  the  context  otherwise  requires,  the
following terms shall have the meanings indicated.  Unless the context otherwise
requires,  any of the following terms may be used in the singular or the plural,
depending on the reference:


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     "1934 Act" shall have the meaning given to such term in Section 5.1(f).

     "Acceptable  Securities"  shall have the  meaning  set forth in the Private
Placement Memorandum.

     "Account Control  Agreement" shall mean the Account Control Agreement among
the Borrower,  the Agent,  the Term Lender,  the  Investment  Manager,  the Swap
Provider and the Custodian of even date herewith,  substantially  in the form of
Exhibit F hereto.

     "Affiliate"  shall mean with respect to any Person,  any other Person which
directly or indirectly  controls,  is  controlled by or is under common  control
with such  Person.  A Person  shall be deemed to control a Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person,  whether through  ownership of
voting securities, by contract or otherwise.

     "Agent" shall mean Merrill Lynch Mortgage Capital, Inc., in its capacity as
agent for the Lenders  hereunder  or such  successor  Agent as may be  appointed
pursuant to Section 11.11 of this Agreement.

     "Alternate  Rate"  shall  mean a  floating  rate of  interest  equal to the
Federal Funds  Effective  Rate plus 0.75% per annum.  The  Alternate  Rate shall
change when and as the Federal Funds Effective Rate changes. A written statement
delivered to the Borrower by the Agent of the Alternate Rate shall be conclusive
evidence of such rate.

     "Amendment  to  Swap  Agreement"  shall  mean  the  Amendment  to the  Swap
Agreement, substantially in the form of Exhibit H hereto, among the Borrower and
the Swap Provider.

     "Applicable Law" shall mean all provisions of statutes,  rules, regulations
and orders of the United States, any state thereof or municipality  therein, the
Federal  Republic  of  Germany  or of any  foreign  governmental  body or of any
regulatory  agency  applicable  to the  Person in  question,  and all orders and
decrees of all courts and  arbitrators  in  proceedings  or actions in which the
Person in question is a party.

     "Belvedere Capital" shall mean Belvedere Capital Fund Company LLC.

     "Borrowing"  shall mean a group of Loans  initially made by the Lenders (or
continued into a subsequent Interest Period) on the same day and having the same
Interest Period.

     "Borrowing Date" shall have the meaning given to such term in Section 2.3.

     "Borrowing  Notice"  shall have the  meaning  given to such term in Section
2.3.

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     "BRC" shall mean Belcrest Realty Corporation, a Delaware corporation.

     "Business  Day"  means a day  (other  than a  Saturday  or Sunday) on which
deposits  in  Dollars  and any other  relevant  currency  may be dealt in on the
London Interbank Market and banks are open in London and New York City.

     "Cash Equivalents" shall mean (i) marketable securities issued, or directly
and fully  guaranteed or insured,  by the United States of America or any agency
or  instrumentality  thereof  (provided  that the full  faith and  credit of the
United States of America is pledged in support thereof) having maturities of not
more than twelve months from the date of acquisition, (ii) time deposits, demand
deposits,  certificates  of deposit,  acceptances or prime  commercial  paper or
repurchase  obligations  for  underlying  securities  of the types  described in
clause  (i)  entered  into  with,  any Lender or any  commercial  bank  having a
short-term  deposit rating of at least A-2 or the equivalent thereof by Standard
& Poor's  Corporation  or at least  P-2 or the  equivalent  thereof  by  Moody's
Investors  Service,  Inc., (iii) commercial paper with a rating of A-1 or A-2 or
the  equivalent  thereof by Standard & Poor's  Corporation  or P-1 or P-2 or the
equivalent thereof by Moody's Investors Service,  Inc. and in each case maturing
within  twelve months after the date of  acquisition  or (iv) any mutual fund or
other pooled  investment  vehicle  which  invests  principally  in the foregoing
obligations.

     "Closing  Date"  shall  mean the date on which  (i) the  Agent  shall  have
received  counterparts of this Agreement  executed by the Borrower,  each of the
Lenders and the Swap Provider and (ii) all conditions precedent to the making of
the Loans as set forth in Article 9 have been satisfied or waived.

     "Collateral" shall mean all personal property of the Borrower, tangible and
intangible,  wherever  located or situated  and  whether now owned or  hereafter
acquired  or  created,   including  without  limitation,  all  goods,  accounts,
documents,  instruments, chattel paper, cash, bank accounts, inventory, contract
rights, general intangibles,  equipment,  securities entitlements and securities
(including,  but not limited to the Pledged Securities) and financial assets and
any  proceeds  thereof  or income  therefrom,  specifically  including,  but not
limited to:

     (a) the Securities Account and all stocks, bonds, financial assets or other
securities (whether certificated or uncertificated) or property now or hereafter
in the Securities Account and all security entitlements in respect thereof;

     (b) all credit balances,  accounts,  contract rights,  general intangibles,
instruments, documents, money, certificates of deposit and all other property of
whatever kind or description now or hereafter in the Securities Account;

     (c) all  rights to any  securities  described  in  confirmations  and other
reports  delivered  by  Custodian  to the  Borrower or either  Secured  Party in
connection with the Securities Account, which securities are deemed to be in the
Securities Account for purposes of this Agreement;

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     (d) all dividends,  interest and proceeds of any of the property  described
in clauses (a), (b) or (c) above, including without limitation, proceeds of such
proceeds;

     (e) all its right, title and interest in and to all monies,  debts, claims,
securities and other property deposited with or owed or owing to the Borrower by
any member of the Merrill Lynch Group; and

     (f) all its rights,  title and interest in and to bullion,  precious metals
or other trades made on behalf of the Borrower (directly or indirectly);

provided,  however,  that assets encumbered by a lien to a person other than the
Secured  Parties  (or any  secured  party  under  the Term Loan  Agreement)  not
otherwise  prohibited  by Section 8.2 of this  Agreement  shall be excluded from
this definition of Collateral for such period as the underlying obligation which
is secured by such lien exists;  and provided further,  that the term Collateral
as used herein shall not include any preferred  stock of BRC issued from time to
time which are temporarily  held by the Borrower pending donation to one or more
charitable organizations as contemplated by the Private Placement Memorandum.

     "Commitment"  shall mean (i) the commitment of each Lender to make Loans to
the Borrower on the terms and subject to the  conditions  set forth herein up to
an aggregate principal amount, at any one time outstanding, not in excess of the
amount set forth opposite its name in the Schedule of  Commitments  appearing on
Schedule  1.1  hereto,  as  such  amount  may be  reduced  from  time to time in
accordance  with the terms of this Agreement  and,  included  therein,  (ii) the
commitment  of the  Agent to cause  the  issuance  of  Letters  of  Credit up to
$10,000,000 face amount, at any one time outstanding.

     "Commitment Fee" shall have the meaning given to such term in Section 2.10.

     "Commitment  Termination  Date" shall mean June 25,  2010,  or such earlier
date on which (i) the Loans shall become due in accordance  with Section 10.2 or
(ii) the Borrower terminates the Commitment pursuant to Section 2.11.

     "Compliance  Certificate"  shall  have the  meaning  given to such  term in
Section 2.3.

     "Custodian" shall mean Investors Bank & Trust Company.

     "Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.

     "Dollars"  or "$" shall mean the lawful  currency  of the United  States of
America.

     "Event of  Default"  shall have the  meaning  given to such term in Section
10.1.

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     "Excluded  Real  Estate  Investment"  shall  mean any  direct  or  indirect
investment  in real  property  of any type made by the  Borrower,  BRC or any of
their subsidiaries, other than Preferred Equity Interests.

     "Existing  Credit  Agreement"  shall mean the Loan and Security  Agreement,
dated as of November 24, 1998 among  Merrill Lynch  International  Bank Limited,
the Borrower and the Swap Provider.

     "Federal Funds  Effective  Rate" shall mean for any day, the rate per annum
(expressed as a decimal) equal to the weighted average of the rates on overnight
federal funds  transactions  with members of the Federal Reserve System arranged
by federal funds  brokers on such day, as published by the Federal  Reserve Bank
of New York on the Business Day next succeeding such day; provided,  (i) if such
day is not a Business Day, the Federal Funds  Effective  Rate for such day shall
be such  rate on such  transactions  on the next  preceding  Business  Day as so
published on the next  succeeding  Business  Day, and (ii) if no such rate is so
published,  the Federal Funds  Effective Rate for such day shall be such rate of
interest as the Agent, using any reasonable method, shall determine.

     "Fundamental  Documents" shall mean this Agreement,  the Notes, the Account
Control  Agreement,  the Swap  Agreement and any other  ancillary  documentation
which is required to be or is otherwise  executed by the Borrower and  delivered
to the Agent or the Swap Provider in connection with this Agreement or any other
Fundamental Document.

     "GAAP" shall mean United States generally  accepted  accounting  principles
consistently applied (except for accounting changes in response to FASB releases
or other authoritative pronouncements).

     "Governmental  Authority" shall mean any federal, state, municipal or other
governmental department,  commission,  board, bureau, agency or instrumentality,
or any  court,  in  each  case  whether  of the  United  States  or any  foreign
jurisdiction.

     "Indebtedness" of any Person means (a) any liability of such Person (i) for
borrowed money,  or under any  reimbursement  obligation  related to a letter of
credit or bond or performance bond facility,  or (ii) evidenced by a bond, note,
debenture  or  other  evidence  of  indebtedness  (including  a  purchase  money
obligation)  representing  extensions of credit or issued in connection with the
acquisition of any business,  property, service or asset of any kind (other than
trade accounts  payable and securities  transaction  settlements in the ordinary
course of  business)  (iii) under swap,  cap or other  interest  rate or foreign
currency hedging agreements and options,  financial future contracts and options
on financial futures contracts or (iv) under margin accounts or other securities
transactions  conducted  by the  Borrower  on  margin or (v) with  respect  to a
capital  lease;  (b) any liability of others  either for any lease,  dividend or
letter of credit or for any  obligation  described in the  preceding  clause (a)
that (i) the Person has  guaranteed  or that is  otherwise  its legal  liability
(whether   contingent  or  otherwise  or  direct  or  indirect,   but  excluding

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endorsements of negotiable instruments for deposit or collection in the ordinary
course of business) or (ii) is secured by any Lien, charge, easement,  mortgage,
pledge,  security interest or other encumbrance or any restriction or limitation
of any kind on any property or asset owned or held by that Person, regardless of
whether  the  obligation  secured  thereby  shall  have been  assumed by or is a
personal   liability  of  that  Person  and  (c)  any   amendment,   supplement,
modification,  deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) and (b) above.

     "Intercreditor  Agreement" shall mean an Intercreditor  Agreement among the
Borrower,  the Agent,  the Term  Lender,  the  Investment  Manager  and the Swap
Provider,  substantially  in the form of  Exhibit G hereto or such other form as
may be acceptable to the Agent and all Lenders.

     "Interest  Payment  Date"  shall mean the 25th day of each month or if such
25th day is not a Business Day, the first  Business Day  immediately  following,
commencing July 25, 2003.

     "Interest  Period"  shall mean a period of  approximately  one month  which
begins on an  Interest  Payment  Date and ends on the next  succeeding  Interest
Payment Date,  except that the first Interest  Period shall begin on the Closing
Date and end on the first Interest Payment Date.

     "Interest  Rate"  shall  mean a rate per  annum of  LIBOR,  reset  for each
Interest Period, plus 0.38%.

     "Investment   Advisor"  shall  mean  Boston  Management  and  Research,   a
subsidiary of Eaton Vance Management.

     "Investment  Advisory  Agreement"  shall  mean  the  agreement  dated as of
November 18, 1998 between the Borrower and the Investment Advisor.

     "Investment  Manager"  shall mean  Wells  Fargo  Bank  Minnesota,  National
Association,  in its capacity as investment  manager for the Term Lender or such
successor Investment Manager as may be appointed by the Term Lender.

     "L/C Exposure" shall mean, at any time, the amount  expressed in Dollars of
the  aggregate  face  amount  of all  drafts  which  may then or  thereafter  be
presented by  beneficiaries  under all Letters of Credit then  outstanding  plus
(without  duplication),  the face amount of all drafts which have been presented
or accepted  under all Letters of Credit but have not yet been paid or have been
paid  but not  reimbursed,  whether  directly  or from  the  proceeds  of a Loan
hereunder.

     "Letter of Credit" shall mean a letter of credit caused to be issued by the
Agent pursuant to Section 2.13 hereof.

     "Lender" and "Lenders"  shall mean the financial  institutions  whose names
appear on the  signature  page of this  Agreement  and any  assignee of a Lender
pursuant to Section 12.9.

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     "LIBOR"  shall mean,  for each  Interest  Period,  the rate of interest per
annum  that is the U.S.  Dollar  London  Interbank  Offered  Rate for one  month
periods as  published on page BBAM by  Bloomberg  L.P. as of 11:00 a.m.,  London
time two Business  Days before the first day of such  Interest  Period.  If such
interest  rate is not  offered or  published  for any  period,  then during that
period LIBOR means the London  Interbank  Offered Rate for one month  periods as
published  in The Wall Street  Journal in its  regular  column  entitled  "Money
Rates" two Business Days before the first day of such Interest Period.

     "Lien" shall mean any mortgage, pledge, hypothecation,  assignment, deposit
arrangement,  encumbrance (excluding  restrictions on the transfer of securities
arising under Federal or state  securities laws or by reason of contract),  lien
(statutory or other),  preference,  priority or other security  agreement of any
kind or nature whatsoever (including,  without limitation,  any conditional sale
or other title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code or any other similar recording or notice
statute,  and any  lease  having  substantially  the same  effect  as any of the
foregoing).

     "Liquidation" shall have the meaning given to such term in Section 5.1(c).

     "Loan" or "Loans" shall mean  individually or collectively,  as the context
so requires, the loans made by the Lenders to the Borrower under this Agreement.

     "Manager" shall mean Eaton Vance Management.

     "Maturity Date" shall mean June 25, 2010, or such earlier date on which the
Loans shall become due in accordance with Section 10.2.

     "Maximum Loan Amount" shall mean $138,000,000.

     "Merrill  Lynch  Group"  shall  mean  Merrill  Lynch & Co.,  Inc.  ("MLC"),
together  with any company  (whether now existing or hereafter  formed) of which
MLC is or becomes a  Subsidiary  and all  companies  (whether  now  existing  or
hereinafter  formed or acquired)  including,  but not limited to, Merrill Lynch,
Pierce, Fenner & Smith Incorporated,  and any partnership,  association, firm or
other organization (whether now existing or hereafter formed or acquired) during
the period it is directly or  indirectly  owned or  controlled by MLC and/or any
such company and/or one or more of their Subsidiaries.

     "Note" shall have the meaning given to such term in Section 2.2.

     "Obligations"  shall mean the  obligations  of the Borrower to make due and
punctual  payment of  principal  and  interest on the Loans,  any  reimbursement
obligations  in respect of Letters of Credit,  the  Commitment Fee and all other
monetary  obligations of the Borrower owed to the Agent,  any Lender or the Swap
Provider  under this  Agreement,  the  Notes,  the Swap  Agreement  or any other
Fundamental Document.

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     "Operating  Agreement"  shall  mean  the  Amended  and  Restated  Operating
Agreement of the Borrower dated as of November 24, 1998, as amended by the First
Amendment dated as of September 1, 1999.

     "Overflow  Exposure"  shall  mean,  at any time,  the amount  expressed  in
Dollars of the  aggregate  outstanding  principal  balance  of the  Loans,  plus
accrued and unpaid interest on the Loans, plus the then current L/C Exposure.

     "Percentage"  shall mean, with respect to any Lender, a percentage equal to
the ratio obtained by dividing the  applicable  Commitment of such Lender by the
applicable aggregate Commitments of the Lenders.

     "Person"  shall  include  any  individual,   company,  corporation,   firm,
partnership, joint venture, association, organization, trust, state or agency of
a state (in each case, whether or not having separate legal personality).

     "Pledged  Securities"  shall mean all securities and security  entitlements
held in the  Securities  Account,  including  but not limited to all  Qualifying
Assets and Acceptable  Securities,  and all shares of Belvedere  Capital and BRC
owned by the Borrower.

     "Portfolio"  shall  mean the  Tax-Managed  Growth  Portfolio,  an  open-end
management investment company.

     "Preferred Equity Interests" shall mean income-producing,  preferred equity
interests  issued by real estate  operating  partnerships  or limited  liability
companies  that are  affiliated  with  publicly  traded real  estate  investment
trusts.

     "Private  Placement   Memorandum"  shall  mean  the  Confidential   Private
Placement  Memorandum of the Borrower dated August 14, 1998 and any  supplements
thereto.

     "Qualifying  Assets"  shall mean any assets,  including  but not limited to
Preferred Equity Interests and Excluded Real Estate Investments  acquired by the
Borrower or BRC or other  subsidiaries  in order for the exchange of  Acceptable
Securities for shares of the Borrower to be non-taxable.

     "Regulation  D" shall mean  Regulation  D of the Board of  Governors of the
Federal Reserve System of the United States of America,  as from time to time in
effect, and all official rulings and interpretations thereunder or thereof.

     "Report" shall have the meaning given to such term in Section 7.11.

     "Required  Amount" shall mean an amount equal to the "Net Market Quotation"
(as hereinafter  defined), if such amount is positive;  provided,  however, that
(A) if and for so long as the principal amount of the Loans outstanding shall be
less than the greater of (i)  $25,000,000 and (ii) 15% of the notional amount of
all  Transactions  under the Swap  Agreement or (B) if the  Commitment  shall be
terminated,  then the  Required  Amount shall mean an amount equal to the sum of

                                       8
<PAGE>
(x) 3.7% of the notional amount of the Transactions under the Swap Agreement and
(y) if  positive,  the  amount  of the Net  Market  Quotation.  The "Net  Market
Quotation" is the sum of all Market  Quotations (both positive and negative) for
all Transactions under the Swap Agreement; provided, that the Swap Provider need
not obtain  quotations  from Reference  Market-Makers,  but shall  determine the
Market  Quotation on the basis of their  customary  methods of  valuation  using
mid-market  swap  rates  and a zero  coupon  yield  curve  for  the  purpose  of
discounting to the present value. A positive  Market  Quotation  shall mean that
the Swap Provider is exposed to the Borrower,  a negative Market Quotation shall
mean the Borrower is exposed to the Swap Provider. Terms used in this definition
and not otherwise  defined in this Agreement shall have the meaning  ascribed to
them in the Swap Agreement.

     "Required  Lenders"  shall mean (i) the Swap  Provider,  (ii) the Agent and
(iii) the Lenders  (including  the Agent)  holding a majority  of the  aggregate
principal amount of Loans then outstanding, or if no Loans are then outstanding,
Lenders (including the Agent) holding a majority of the Commitments.

     "Secured  Parties"  shall mean the Agent,  for the  benefit of the  Lenders
referred to herein, and the Swap Provider.

     "Securities  Account"  shall  mean the  securities  account,  number  4931,
established  with the Custodian  which shall be known as the  "Belcrest  Capital
Fund  LLC-Collateral  Account for DrKW  Holdings,  Inc.,  Merrill Lynch Mortgage
Capital,  Inc. and Merrill  Lynch  Capital  Services,  Inc." or such other title
acceptable to the Agent to reflect its interest therein. The Borrower agrees, as
a  condition  to the  Lenders'  obligation  to make  Loans to place the  Pledged
Securities in the Securities Account, subject to the terms and provisions of the
Account Control Agreement.

     "Security  Interest"  shall have the meaning  given to such term in Section
4.1.

     "Shareholder"  shall  have the  meaning  given to such term in the  Private
Placement Memorandum.

     "Shares" shall have the meaning given to such term in the Private Placement
Memorandum.

     "Swap  Agreement" shall mean the ISDA Master Agreement dated as of November
24,  1998,   including   the  schedule  and  all  exhibits   thereto,   and  any
"Transactions"  and  "confirmations"  thereunder which shall supplement,  form a
part of and be subject to the ISDA Master Agreement, all as they may be amended,
supplemented  or otherwise  modified from time to time,  by and between  Merrill
Lynch Capital Services, Inc. and the Borrower.

     "Swap Provider" shall mean Merrill Lynch Capital Services, Inc.

                                       9
<PAGE>
     "Term  Lender"  shall mean DrKW  Holdings,  Inc., in its capacity as lender
under the Term Loan Agreement.

     "Term Loan Agreement"  shall mean the Loan and Security  Agreement dated as
of July 15, 2003 by and between the Term Lender and the Borrower.

     "Value"  shall mean,  at any time and with respect to any  Collateral,  the
value of such Collateral  (expressed in Dollars)  determined by the Borrower for
use in its  financial  reports  using the  methodology  described in the Private
Placement Memorandum.

2. THE LOAN

     2.1 Loans.

     (a)  Each  Lender  severally  but not  jointly  agrees,  on the  terms  and
conditions  set forth herein,  from and  including  the date hereof  through and
including  the  Commitment  Termination  Date to make Loans to the Borrower from
time to time in an amount not to exceed its Commitment less the principal amount
of any outstanding Loans; provided,  however, that (i) the minimum amount of any
Borrowing  shall be $500,000 (or such lesser amount as shall equal the available
portion  of the  Commitment)  or such  greater  amount  which is a  multiple  of
$100,000 and (ii) the aggregate  outstanding  principal  amount of all Loans and
L/C Exposure shall not at any time exceed the Maximum Loan Amount.

     (b) Subject to the terms of this Agreement,  the Borrower may borrow, repay
and reborrow Loans at any time prior to the Commitment Termination Date.

     (c) Each Loan requested  hereunder on any date shall be made by each Lender
in accordance with its respective  Percentage,  except as otherwise indicated on
the Schedule of Commitments attached as Schedule 1.1 hereto.

     2.2 Note.

     (a) The Loans made by each Lender shall be evidenced by a single promissory
note  substantially  in the  form  of  Exhibit  A  hereto  (each  a  "Note"  and
collectively  the  "Notes"),  in the face  amount of such  Lender's  Commitment,
payable to the order of such Lender, duly executed by the Borrower and dated the
date hereof.

     (b) Each Note shall bear  interest  on the  outstanding  principal  balance
thereof as set forth in Section  2.4  hereof.  Each  Lender and the Agent on its
behalf is hereby  authorized by the Borrower,  but not  obligated,  to enter the
amount of each Loan and the amount of each payment or prepayment of principal or
interest thereon in the appropriate spaces on the reverse of or on an attachment
to the Notes.

                                       10
<PAGE>
     2.3 Borrowing Notice.

     (a) The Borrower shall give the Agent notice  (substantially in the form of
Exhibit D hereto or in such other  form as may be  mutually  agreed  upon by the
Borrower and the Agent (a  "Borrowing  Notice"))  not later than 11:00 a.m. (New
York City time) at least two Business  Days before the proposed  borrowing  date
(the  "Borrowing  Date") of any Borrowing  specifying  (i) the Borrowing Date of
such  Borrowing  which shall be a Business Day and (ii) the principal  amount of
such Borrowing, and certifying the matters contained in Section 9.2 hereof. Such
notice  shall be  irrevocable  to the extent  that the Lenders or the Agent have
relied on the notice to their own  detriment  or incurred  costs and expenses in
connection therewith;  provided that the Borrower may revoke such notice, in any
case,  if the  Borrower  fully  reimburses  the  Lenders  and the  Agent for any
reasonable costs and expenses  associated with their reliance on such notice. In
addition to such notice,  the Borrower  shall  deliver a Compliance  Certificate
substantially  in the form of  Exhibit E hereto or in such  other form as may be
mutually agreed upon by the Borrower and the Agent (a "Compliance  Certificate")
to the Agent.

     (b) The  Agent  shall  promptly  notify  each  Lender  of its share of each
Borrowing  under this Section 2.3, the date of such  Borrowing  and the Interest
Period applicable  thereto. On the Borrowing Date specified in such notice, each
Lender  shall  make its share of the  Borrowing  available  at the office of the
Agent no later than 1:00 p.m. New York City time in Federal or other immediately
available  funds.  Upon receipt of the funds to be made available by the Lenders
to fund each  Borrowing  hereunder,  the Agent  shall  disburse  such  funds via
Federal Funds wire transfer to the Borrower's account at the Custodian,  ABA No.
011-001-438, Account No. 5821-5013 Control Wire, Re: Belcrest Capital Fund LLC -
4931, or to such other account as to which the Borrower shall instruct the Agent
in writing.

     2.4 Interest.

     (a) Interest  shall accrue on the unpaid  principal  amount of each Loan at
the Interest  Rate from and  including the date of the Loan to but excluding the
date of any principal payment whether upon  acceleration or otherwise.  Interest
accrued on each Loan shall be payable on each applicable  Interest  Payment Date
and on any  day on  which  Loans  are  repaid  whether  due to  acceleration  or
otherwise.  Notwithstanding  anything in this  Agreement  to the  contrary,  the
interest  rate on the Loans or with  respect  to any  drawing  under a Letter of
Credit shall in no event be in excess of the maximum  interest rate permitted by
Applicable  Law. All interest  shall accrue daily and shall be calculated on the
basis of a 360-day year and the actual number of days elapsed.

     (b) Until the  Maturity  Date,  the Borrower may elect from time to time to
renew the Interest  Period for all or part of an outstanding  Loan by requesting
such renewal from the Agent, which request must be received not later than 11:00
a.m.  (New York city  time)  three  Business  Days  prior to the last day of the
Interest  Period for such Loan and shall  specify (i) the renewal  date for such
Loan (which shall be the last day of the Interest Period for such Loan) and (ii)
the  aggregate  amount of the Loans to be renewed as part of the same  Borrowing

                                       11
<PAGE>
(which shall not be less than  $500,000  and  integral  multiples of $100,000 in
excess  thereof).   All  requests  made  under  this  Section  2.4(b)  shall  be
irrevocable.  If the Borrower  shall fail to request the renewal of any Interest
Period for any Loan by the  required  time,  the  Interest  Period for such Loan
shall be renewed  after the last day of the Interest  Period for such Loan for a
successive  Interest  Period having the same duration as the Interest  Period in
effect as of the date the renewal request should have been received and interest
shall accrue and be payable on such Loan at the Interest Rate  determined by the
Agent for such Interest Periods for amounts  comparable to the unpaid balance of
such Loan, subject to the provisions of this Agreement.

     2.5 Alternate Rate of Interest. If the Agent reasonably determines that for
any reason deposits in Dollars are not offered to any Lender by leading banks in
the London  Interbank  Market in an amount  comparable  to a proposed Loan or an
unpaid  advance for which renewal of the Interest  Period has been requested and
for a period equal to the  requested  Interest  Period for such Loan,  the Agent
shall so notify the Borrower and,  until the  circumstances  giving rise to such
notice no longer exist, interest shall accrue and be payable on such Loan at the
Alternate Rate, subject to the terms and conditions of this Agreement.

     2.6 Default  Interest.  So long as an Event of Default  shall have occurred
and be continuing  (after as well as before  judgment),  the Borrower  shall pay
interest on the unpaid principal  amount of all Loans and on any interest,  fees
and other  amounts  payable  hereunder,  at the times  specified  in Section 2.4
hereof and on demand at a rate per annum equal (i) in the case of the  principal
amount of Loans,  the Interest  Rate then  applicable  to such Loans plus 2% per
annum  and  (ii) in the  case of such  other  amounts,  an  amount  equal to the
Alternate Rate plus 2% per annum.

     2.7 Repayment and  Termination.  The Borrower  shall repay the  outstanding
principal amount of all Loans on the Maturity Date.

     2.8 Optional Prepayments.  Subject to Section 12.3, the Borrower may at any
time and from time to time,  upon two Business Days' prior written notice to the
Agent,  pay the outstanding  principal amount of the Loans, in whole or in part,
without prepayment  penalty,  together with accrued interest to the date of such
prepayment on the principal amount prepaid, provided that each partial principal
repayment shall be in a minimum  aggregate  amount of $1,000,000 or any integral
multiple of $100,000 in excess thereof.  Each notice of prepayment shall specify
the prepayment  date, each Loan to be prepaid and the principal  amount thereof,
shall be  irrevocable  and shall  commit the Borrower to prepay such Loan in the
amount and in the date stated therein.

     2.9 Manner of Payments.  All payments by the Borrower  hereunder  and under
the Notes shall be made by the  Borrower on the date when due without  offset or
counterclaim in Dollars in federal or other immediately  available funds by wire
transfer  to the  account of Merrill  Lynch  Mortgage  Capital,  Inc. at Bankers
Trust, ABA No.  021001033,  Account No. 0081294,  Attn:  MLMCI, or in accordance
with any other wire transfer  instructions provided by the Agent to the Borrower

                                       12
<PAGE>
from time to time. Any such payment received after 11:00 a.m. New York City time
on any Business Day shall be deemed received on the following Business Day.

     2.10  Commitment Fee and Other Fees. The Borrower  agrees to pay in arrears
to the Agent for the  account of each  Lender on the last  Business  Day of each
March,  June,  September  and  December  in each  year  (commencing  on the last
Business Day of September 2003), prior to the Commitment Termination Date and on
the Commitment  Termination Date, a fee (the "Commitment Fee") of 1/10 of 1% per
annum, computed on the basis of the actual number of days elapsed over a year of
360 days, on the average daily amount by which such Lender's Commitment, as such
Commitment may be reduced in accordance  with the provisions of this  Agreement,
exceeds the sum of the  principal  balance of such Lender's  outstanding  Loans,
and/or such  Lender's then current L/C Exposure  during the preceding  period or
quarter.  Such Commitment Fee shall commence to accrue on and including the date
on which  this  Agreement  is fully  executed  and shall  cease to accrue on and
excluding the Commitment Termination Date.

     2.11 Reduction or Termination of Commitment.

     (a) The  Borrower  shall  have the right,  upon at least five (5)  Business
Days' prior written notice to the Agent,  to reduce  permanently the Commitments
in whole at any time,  or in part from time to time,  to an amount not less than
the  aggregate  principal  balance of the Loans then  outstanding  (after giving
effect to any contemporaneous prepayment thereof in accordance with Section 2.8)
in the case of the Commitments to make Loans,  and the then current L/C Exposure
in the case of Commitments to issue Letters of Credit,  in either case,  without
premium or penalty and provided that each partial  reduction of the  Commitments
shall be in an amount equal to  $1,000,000  or such  greater  amount which is an
integral  multiple  thereof.  Any partial  reduction of the Commitments shall be
made among the Lenders in accordance with their respective pro rata share of the
Commitments  of the  applicable  type,  except  as  otherwise  set  forth on the
Schedule of Commitments attached as Schedule 1.1 hereto.

     (b)  Simultaneously   with  each  such  termination  or  reduction  of  the
Commitments,  the Borrower shall pay to the Agent for the benefit of each Lender
all  accrued  and  unpaid  Commitment  Fees on the amount of the  Commitment  so
terminated or reduced through the date of such termination or reduction.

     2.12 Change in Circumstances.

     (a) In the event that after the date hereof any change in Applicable Law or
in the official  interpretation or administration  thereof  (including,  without
limitation, any request, guideline or policy not having the force of law) by any
authority charged with the  administration  or  interpretation  thereof or, with
respect to clause  (ii),  (iii) or (iv) below any  change in  conditions,  shall
occur which shall:

          (i)  subject  any Lender to, or  increase  the net amount of, any tax,
     levy, impost,  duty, charge,  fee, deduction or withholding with respect to
     any Loan for  which the  Interest  Rate is based  upon  LIBOR  (other  than
     withholding  tax imposed by the United  States of America or any  political

                                       13
<PAGE>
     subdivision or taxing  authority  thereof or any other tax,  levy,  impost,
     duty,  charge,  fee,  deduction or  withholding  (x) that is measured  with
     respect to the  overall net income of such  Lender,  and that is imposed by
     the United States of America,  or by the  jurisdiction in which such Lender
     is  incorporated,  or in which such Lender has its principal office (or any
     political  subdivision or taxing authority thereof or therein), or (y) that
     is imposed solely by reason of any Lender failing to make a declaration of,
     or otherwise to  establish,  non-residence,  or to make any other claim for
     exemption,  or otherwise to comply with any certification,  identification,
     information,  documentation or reporting requirements  prescribed under the
     laws of the  relevant  jurisdiction,  in those  cases  where a  Lender  may
     properly make such  declaration or claim or so establish  non-residence  or
     otherwise comply); or

          (ii)  change  the basis of  taxation  of any  payment to any Lender of
     principal or any interest on any Loan for which the Interest  Rate is based
     upon LIBOR (except as limited in clause (i) above); or

          (iii)  impose,  modify or deem  applicable  any  reserve,  deposit  or
     similar  requirement  against any assets held by,  deposits with or for the
     account of or loans or  commitments by an office of any Lender with respect
     to any Loan for which the interest rate is based upon LIBOR; or

          (iv) impose upon any Lender or the London  Interbank  Market any other
     condition  with respect to any Loans for which the  interest  rate is based
     upon LIBOR or this Agreement;

and the result of any of the  foregoing  shall be to increase the actual cost to
such Lender of making or maintaining  any Loan hereunder or to reduce the amount
of any  payment  (whether  of  principal,  interest  or  otherwise)  received or
receivable by such Lender in connection with any Loan  hereunder,  or to require
such Lender to make any payment in connection with any Loan  hereunder,  in each
case by or in an amount  which such Lender in its sole and  reasonable  judgment
shall deem  material,  then and in each case the Borrower shall pay to the Agent
for the account of such Lender, as provided in paragraph (b) below, such amounts
as shall be  reasonably  necessary  to  compensate  such  Lender  for such cost,
reduction or payment.

     (b) Each Lender  shall  deliver to the  Borrower and the Agent from time to
time,  one or more  certificates  setting  forth the  amounts due to such Lender
under  paragraph  (a) above,  the changes as a result of which such  amounts are
due,  the manner of  computing  such  amounts  and the manner of  computing  the
amounts allocable to Loans hereunder  pursuant to paragraph (a) above. Each such
certificate  shall be  conclusive  in the  absence of  demonstrable  error.  The
Borrower  shall pay to the Agent for the account of each such Lender the amounts
shown as due on any such  certificate  within 10 Business Days after its receipt
of the same. No failure on the part of any Lender to demand  compensation  under
paragraph (a) above on any one occasion shall  constitute a waiver of its rights
to demand  compensation  on any other  occasion.  The protection of this Section
shall be available to each Lender  regardless of any possible  contention of the

                                       14
<PAGE>
invalidity or  inapplicability  of any law,  regulation or other condition which
shall give rise to any demand by such Lender for compensation thereunder.

     2.13 Letters of Credit.

     (a) (i)  Upon  the  terms  and  subject  to the  conditions  hereof  and of
Applicable  Law, the Agent agrees,  upon the request of the  Borrower,  to cause
Letters of Credit payable in Dollars to be issued from time to time at and after
the  Closing  Date and prior to the  Commitment  Termination  Date (and to cause
Letters  of  Credit  previously  issued  hereunder  to be  extended);  provided,
however,  that (A) the Borrower shall not request, and the Agent shall not cause
to be issued, any Letter of Credit if, after giving effect thereto, (x) the then
current L/C Exposure would exceed the aggregate  Commitments to issue Letters of
Credit then in effect or (y) the aggregate  outstanding  principal amount of all
Loans and L/C Exposure would exceed the Maximum Loan Amount and (B) the Borrower
shall not  request,  and the Agent  shall not cause to be issued or extend,  any
Letter of Credit having an expiration date (x) later than the tenth day prior to
the  Commitment  Termination  Date or (y) more  than one year  after its date of
issuance;  provided,  however,  that a Letter of Credit may, if requested by the
Borrower, provide that such Letter of Credit is renewable for successive periods
of one  year or  less  unless  the  Agent  shall  have  delivered  a  notice  of
non-renewal to the beneficiary of such Letter of Credit.

          (ii)  Immediately  upon the  issuance of each  Letter of Credit,  each
     Lender shall be deemed to, and hereby agrees to, have irrevocably purchased
     from the  issuer  thereof  a  participation  in such  Letter  of  Credit in
     accordance with such Lender's Percentage.

          (iii) Each Letter of Credit  may, at the option of the Agent,  provide
     that the issuer  thereof may (but shall not be required  to) pay all or any
     part of the maximum  amount which may at any time be available  for drawing
     thereunder to the  beneficiary  thereof upon the occurrence or continuation
     of an Event of Default and the  acceleration  of the maturity of the Loans,
     provided  that,  if payment is not then due to the  beneficiary,  the Agent
     shall cause the funds in question to be deposited  in a segregated  account
     with the  Agent to  secure  payment  to the  beneficiary,  and any funds so
     deposited  shall be paid to the  beneficiary  of the  Letter  of  Credit if
     conditions  to such payment are  satisfied or returned to the Agent (or, if
     all  Obligations  shall have been paid in full in cash, to the Borrower) if
     no payment to the  beneficiary  has been made and the final date  available
     for drawings under the Letter of Credit has passed. Each payment or deposit
     of funds by the Agent as  provided in this  paragraph  shall be treated for
     all  purposes of this  Agreement as a drawing duly honored by the issuer of
     the related Letter of Credit.

     (b) Whenever the  Borrower  desires the issuance of a Letter of Credit,  it
shall  deliver to the Agent a written  notice no later than 2:00 p.m.  (New York
City  time) at least  three (3)  Business  Days  prior to the  proposed  date of
issuance.  That notice shall  specify (i) the proposed  date of issuance  (which
shall be a Business  Day),  (ii) the face amount of the Letter of Credit,  (iii)

                                       15
<PAGE>
the expiration date of the Letter of Credit and (iv) the name and address of the
beneficiary.  Such notice shall be  accompanied  by a brief  description  of the
underlying  transaction  and,  upon  request of the Agent,  the  Borrower  shall
provide  additional details regarding the underlying  transaction.  Concurrently
with the giving of written  notice of a request for the  issuance of a Letter of
Credit,  the Borrower  shall provide a precise  description of the documents and
the verbatim text of any  certificate to be presented by the beneficiary of such
Letter of Credit which, if presented by such beneficiary prior to the expiration
date of the Letter of Credit,  would require the issuer  thereof to make payment
under the Letter of Credit; provided, however, that the Agent, in its reasonable
discretion, may require customary changes in any such documents and certificates
to be presented by the beneficiary.

     (c) The  acceptance  and payment of drafts under any Letter of Credit shall
be made in  accordance  with the terms of such  Letter of Credit and the Uniform
Customs and Practice for Documentary Credits,  International Chamber of Commerce
Publication  No. 500, as adopted or amended  from time to time.  The issuer of a
Letter of Credit shall be entitled to honor any drafts and accept any  documents
presented to it by the  beneficiary of such Letter of Credit in accordance  with
the terms of such  Letter of Credit and  believed by the issuer in good faith to
be genuine.  The issuer of a Letter of Credit shall not have any duty to inquire
as to the accuracy or authenticity of any draft or other drawing documents which
may be presented to it, but shall be responsible only to determine in accordance
with customary  commercial practices that the documents which are required to be
presented  before  payment or  acceptance  of a draft under any Letter of Credit
have been delivered and that they comply on their face with the  requirements of
that Letter of Credit.

     (d) If the issuer of any Letter of Credit  shall make  payment on any draft
presented under a Letter of Credit  (regardless of whether a Default or Event of
Default or  acceleration  has  occurred),  the Agent  shall give  notice of such
payment to the Lenders and each Lender hereby  authorizes and requests the Agent
to  advance  for its  account  pursuant  to the terms  hereof  its share of such
payment  based  upon its  Percentage  participation  in the Letter of Credit and
agrees  promptly to reimburse the Agent in immediately  available  funds for the
Dollar equivalent of the amount so advanced on its behalf. If such reimbursement
is not made by any  Lender  in  immediately  available  funds on the same day on
which the issuer  shall have made  payment on any such draft,  such Lender shall
pay interest  thereof to the Agent at a rate per annum equal to the Agent's cost
of obtaining overnight funds in the New York Federal Funds Market.

     (e) The Borrower is absolutely,  unconditionally and irrevocably  obligated
to  reimburse  all amounts  drawn  under each Letter of Credit.  If any draft is
presented under a Letter of Credit,  the payment of which is required to be made
at any time on or before the Commitment  Termination  Date,  then payment by the
issuer of such draft shall constitute a Loan hereunder and interest shall accrue
from the date such  issuer  makes  payment  on such draft  under such  Letter of
Credit. If any draft is presented under a Letter of Credit, the payment of which
is required to be made after the Commitment  Termination  Date or at a time when
an Event of Default or Default shall have occurred and then be continuing,  then
the Borrower shall immediately pay to the Agent, in immediately available funds,

                                       16
<PAGE>
the full amount of such draft together with interest thereon at a rate per annum
of 2% in excess of the  Alternate  Rate from the date on which the issuer of the
relevant  Letter of Credit  makes such  payment of such draft  until the date it
receives full  reimbursement  for such payment from the  Borrower.  The Borrower
further  agrees  that the Agent may  reimburse  itself  or the  issuer  for such
drawing from the balance in any other  account of the Borrower  maintained  with
the Agent or any of its Affiliates.

     (f) The Agent agrees to notify the Borrower if payment on any draft is made
by the  issuer of any Letter of Credit  hereunder;  provided,  however,  that an
inadvertent failure by the Agent to so notify the Borrower shall not be a breach
by the Agent of such obligation.

     (g) The  Borrower  agrees to pay to the Agent or  directly to the issuer of
any Letter of Credit issued hereunder with respect to any such Letters of Credit
any and all charges imposed by any issuing, confirming or advising bank.

     (h) If by reason  of (i) any  change in  Applicable  Law after the  Closing
Date, or in the  interpretation or administration  thereof  (including,  without
limitation, any request, guideline or policy not having the force of law) by any
Governmental Authority charged with the administration or interpretation thereof
or (ii)  compliance  by the Agent or any Lender with any  direction,  request or
requirement  (whether or not having the force of law)  issued  after the Closing
Date by any Governmental  Authority or monetary  authority,  including,  without
limitation, any change whether or not proposed or published prior to the Closing
Date and any modifications to Regulation D occurring after the Closing Date:

          (A) the Agent or any Lender shall be subject to any tax, levy, impost,
     duty, fee,  charge,  deduction or withholding of any nature with respect to
     any Letter of Credit  (other  than  withholding  tax  imposed by the United
     States of  America or any other  tax,  levy,  impost,  duty,  fee,  charge,
     deduction or  withholding  (1) that is measured with respect to the overall
     net income of the Agent or such  Lender , and that is imposed by the United
     States of America, or by the jurisdiction in which the Agent or such Lender
     is incorporated,  or the Agent or such Lender has its principal office or a
     presence  which is not  otherwise  connected  with,  or  required  by, this
     transaction (or any political  subdivision or taxing  authority  thereof or
     therein)  or (2) that is  imposed  solely  by  reason  of the Agent or such
     Lender  failing  to make a  declaration  of,  or  otherwise  to  establish,
     non-residence  or to make any other claim for  exemption,  or  otherwise to
     comply with any certification,  identification,  information, documentation
     or  reporting  requirements  prescribed  under  the  laws  of the  relevant
     jurisdiction,  in those cases  where the Agent or such Lender may  properly
     make the  declaration or claim or so establish  non-residence  or otherwise

                                       17
<PAGE>
     comply),  or to any variation thereof or to any penalty with respect to the
     maintenance  or  fulfillment  of its  obligations  under this Section 2.13,
     whether  directly  or by such being  imposed on or suffered by the Agent or
     such Lender;

          (B) the basis of taxation of any fee or amount payable  hereunder with
     respect  to any  Letter  of Credit or any  participation  therein  shall be
     changed;

          (C) any  reserve,  deposit  or  similar  requirement  is or  shall  be
     applicable,  imposed or modified in respect of any Letter of Credit  caused
     to be issued by the Agent; or

          (D) there shall be imposed on the Agent, any Lender or any issuer of a
     Letter of Credit any other  condition  regarding  this  Section  2.13,  any
     Letter of Credit or any participation therein;

and the result of the foregoing is to directly or  indirectly  increase the cost
to the  Agent,  any  Lender or the  issuer of any  Letter of Credit of  issuing,
making or maintaining  any Letter of Credit or of purchasing or maintaining  any
participation  therein, or to reduce the amount receivable in respect thereof by
the Agent,  any Lender or any such  issuer,  then and in any such case the Agent
may, at any time,  notify the Borrower,  and the Borrower shall promptly pay the
Agent upon its demand such  amounts as the Agent may specify to be  necessary to
compensate for such additional cost or reduced receipt. The determination by the
Agent,  any Lender or any such issuer of any amount due pursuant to this Section
2.13 as set forth in a  certificate  setting  forth the  calculation  thereof in
reasonable  detail  shall,  in the  absence  of  demonstrable  error,  be final,
conclusive and binding on all of the parties hereto.

     (i) If at any time when an Event of  Default  shall  have  occurred  and be
continuing,  any Letters of Credit shall remain outstanding,  then the Agent may
require the Borrower to deliver to it Cash Equivalents in an amount equal to the
full amount of the L/C Exposure or to furnish other  security  acceptable to the
Agent.  Any amounts so delivered  pursuant to the  preceding  sentence  shall be
applied to  reimburse  the Agent for the amount of any  drawings  honored  under
Letters of Credit; provided, however, that if prior to the Maturity Date, (i) no
Default or Event of Default is then continuing,  then the Agent shall return all
of such  collateral  relating to such deposit to the Borrower if requested by it
or (ii) Letters of Credit shall expire or be returned by the beneficiary so that
the amount of the Cash Equivalents delivered to the Agent hereunder shall exceed
the then  current L/C  Exposure,  then such excess shall first be applied to pay
any  Obligations  then due  under  this  Agreement  and the  remainder  shall be
returned to the Borrower.

     (j) Notwithstanding the termination of the Commitments and the repayment of
the Loans,  the obligations of the Borrower under this Section 2.13 shall remain
in full force and effect  until the issuers of all Letters of Credit  shall have
been  irrevocably  released  from their  obligations  with regard to any and all
Letters of Credit.

                                       18
<PAGE>
3. ESTABLISHMENT OF SECURITIES ACCOUNT; PLEDGE OF COLLATERAL

     3.1 Establishment of the Securities  Account.  The Borrower shall establish
with the Custodian the Securities  Account.  The Borrower agrees at all times to
maintain the Pledged  Securities in the Securities  Account,  until the Borrower
has satisfied all of the Obligations in full.

     3.2 Other Account Provisions. The Borrower acknowledges that the Securities
Account  shall be subject to the terms and  conditions  of the  Account  Control
Agreement.

4. PLEDGE AND SECURITY AGREEMENT

     4.1 Grant of Security Interest.

     (a) As security for the Obligations,  the Borrower hereby assigns, pledges,
grants and conveys to the Secured Parties,  a continuing first priority lien and
security  interest (the "Security  Interest") in the  Collateral,  except to the
extent provided for herein and in the  Intercreditor  Agreement,  which security
interest  replaces,  continues and supercedes the security  interest  previously
granted to the Swap Provider pursuant to the Existing Credit Agreement.

     (b) The Borrower will take all action which either  Secured Party  requests
and which is reasonably necessary to assure that each of the Secured Parties has
a continuing  perfected first priority Security Interest in the Collateral while
this Agreement is in effect, except to the extent provided for herein and in the
Intercreditor Agreement.  Upon the request of either Secured Party, the Borrower
will  promptly  execute and deliver to such Secured Party  financing  statements
conforming  to the  Uniform  Commercial  Code in effect in the  Commonwealth  of
Massachusetts,  the State of Delaware and any other state or jurisdiction deemed
appropriate by such Secured Party and such other documents as may be required in
order to perfect the Security  Interest,  all in a form such Secured Party deems
to be  acceptable.  Upon the request of such Secured  Party,  the Borrower  also
agrees to promptly execute and deliver continuation statements conforming to the
Uniform  Commercial  Code in effect in the  Commonwealth of  Massachusetts,  the
State of Delaware and any other state or jurisdiction deemed appropriate by such
Secured  Party and in a form such Secured Party deems to be  acceptable.  If the
Borrower fails to promptly deliver to such Secured Party financing statements or
continuation  statements required by such Secured Party, such Secured Party may,
to the extent  permitted by law and without limiting its other rights under this
Agreement  and the  Notes,  execute  and  file in the  Borrower's  name,  as the
Borrower's attorney-in-fact, such documents.

     (c) If the  jurisdiction of the Borrower's  organization or the location of
the Borrower's  principal  executive office changes,  the Borrower will promptly
notify  both  Secured  Parties in writing to that  effect and will  execute  and
deliver to the Secured  Parties any additional  financing  statements or similar
documentation the Secured Parties may reasonably request to assure the continued

                                       19
<PAGE>
effectiveness of the Security Interest. Once both the Secured Parties agree that
the Borrower has fully and  indefeasibly  performed the  Obligations and the L/C
Exposure has been reduced to zero, the Security  Interest in any Collateral will
be  terminated,  any such  Collateral  will be returned to the  Borrower and the
Secured  Parties will,  at the  Borrower's  expense,  execute and deliver to the
Borrower such documents as the Borrower may reasonably  request to evidence such
termination.

5. SPECIAL AGREEMENTS WITH RESPECT TO PLEDGED SECURITIES

     On a continuing  basis,  the Borrower  covenants  with the Secured  Parties
that:

     5.1 Liquidation of Pledged Securities.

     (a) Subject to the Account Control  Agreement,  the Borrower may direct the
Custodian to release from the  Securities  Account and pay to the Secured  Party
proceeds of the Pledged Securities sufficient to provide for payment then due on
the Loan (whether principal or interest) or any other amounts hereunder. Nothing
in  this  section  shall  affect  the  Secured  Party's  rights  to  direct  the
application  of the  Collateral  to the  payment of amounts due on the Loan upon
acceleration  thereof.  Upon the release of any  Collateral  from the Securities
Account to the Secured Party in accordance  with the terms of this section,  the
security interest  evidenced by this Agreement in such released  Collateral will
automatically terminate and be of no further force and effect.

     (b) If an Event of Default has  occurred and is  continuing,  either of the
Secured  Parties shall be entitled to take market action  against any securities
held in the  Securities  Account in accordance  with this  Agreement,  and where
appropriate,  either of the Secured  Parties may execute and file the  requisite
number of S.E.C. Forms 144 on behalf of the Borrower.

     (c) In the event that upon the occurrence and  continuation  of an Event of
Default, a Secured Party sells,  assigns and delivers or otherwise transfers any
of the Pledged Securities under this Agreement (a  "Liquidation"),  the Borrower
will  cooperate  with such Secured  Party in taking any and all action that such
Secured  Party deems  necessary  or  appropriate  to effect or  facilitate  such
Liquidation. The Borrower agrees that upon the occurrence and continuation of an
Event of  Default,  a Secured  Party may, in its sole and  absolute  discretion,
sell,  or  instruct  the  Custodian  to  sell,  all or any  part of the  Pledged
Securities at private sale in such manner and under such  circumstances  as such
Secured  Party may deem  necessary  or  advisable  in order that the sale may be
lawfully conducted, provided, however, that, without prejudice to the foregoing,
to the extent  notice of any such sale shall be  required by law,  the  Borrower
agrees that at least ten days'  notice to the  Borrower of the time and place of
any public  sale or the time after  which any  private  sale is to be made shall
constitute  reasonable  notification.  The purchaser of any or all Collateral so
sold shall thereafter hold the same absolutely free from any claim,  encumbrance
or right of any kind whatsoever created by or through the Borrower.  Any sale of

                                       20
<PAGE>
the Collateral  conducted in conformity with reasonable  commercial practices of
banks,  insurance  companies,  commercial finance companies,  or other financial
institutions  disposing of property similar to the Collateral shall be deemed to
be  commercially  reasonable.  The Secured  Party may, in its own name or in the
name of a designee or nominee, buy any of the Collateral at any public sale and,
if permitted by  applicable  law, at any private sale.  All expenses  (including
court costs and reasonable  attorneys' fees,  expenses and disbursements) of, or
incident  to,  the  enforcement  of  any  of  the  provisions  hereof  shall  be
recoverable  from  the  proceeds  of  the  sale  or  other  disposition  of  the
Collateral.

     (d) Without  limiting the  foregoing,  a Secured Party may (i) approach and
negotiate with a limited number of potential  purchasers,  and (ii) restrict the
prospective  bidders or purchasers to persons who will  represent and agree that
they are purchasing the Pledged  Securities for their own account for investment
and not with a view to distribution or resale thereof.  In the event that any of
the Pledged Securities are sold at private sale, the Borrower agrees that if the
Pledged  Securities  are sold for a price which such Secured Party in good faith
believed to be reasonable,  then (a) the sale will be deemed to be  commercially
reasonable  in all  respects  and (b) the  Secured  Parties  will not  incur any
liability  or   responsibility   to  the  Borrower  in   connection   therewith,
notwithstanding  the possibility  that a  substantially  higher price might have
been realized at a public sale.

     (e) Any surplus of such cash or cash proceeds held by the Secured Party and
remaining after payment in full of the Loan (and any accrued  interest  thereon)
shall be paid over to the Borrower or to whomsoever may be lawfully  entitled to
receive such surplus.

     (f) The Borrower  understands and acknowledges  that it or its Shareholders
may incur monetary  liability to the issuer of certain of the Pledged Securities
under  Section  16(b) of the  Securities  Exchange Act of 1934,  as amended (the
"1934  Act"),  in  connection  with a sale of such Pledged  Securities,  whether
initiated by it or by the Agent under this Agreement.  The Borrower acknowledges
that any such liability is strictly personal to it and/or its Shareholders,  and
the Borrower  agrees to indemnify  and hold the Agent,  the Lenders and the Swap
Provider  harmless from and against any and all losses,  costs,  liabilities  or
expenses  arising out of or relating to a purchase or sale of any of the Pledged
Securities under Section 16(b) of the 1934 Act at any time whatsoever.

6. REPRESENTATIONS AND WARRANTIES

     On the date hereof and on each Borrowing Date, the Borrower  represents and
warrants to the Agent, each Lender and the Swap Provider that:

     6.1 Collateral.

     (a) Except  for (i) the  Secured  Parties'  rights  established  under this
Agreement,  the Swap  Agreement and the Account  Control  Agreement and (ii) the
Term Lender's rights  established  under the Term Loan Agreement and the Account
Control  Agreement,   the  Borrower  owns  the  Collateral   (including  without

                                       21
<PAGE>
limitation  the shares of common  stock of BRC and the  interests  in  Belvedere
Capital  owned by the  Borrower)  free of any  interest  or Lien in favor of any
third party or any restriction on transfer, other than pursuant to the Operating
Agreement.

     (b) The Security  Interest is and shall remain a perfected  and valid first
priority Lien and security interest upon the Collateral.

     6.2 Due  Organization.  The Borrower is a limited liability company and BRC
is a corporation,  and each of them is duly organized and validly existing under
the  jurisdiction of its organization and has the power and authority to own its
assets and to conduct the business  which it conducts.  Each of the Borrower and
BRC is in good standing under the laws of the  jurisdiction of its  organization
or formation and is duly qualified to do business in all  jurisdictions in which
the nature of its activities requires such qualification.

     6.3 Power and  Authority;  Binding  Agreements.  The  Borrower has the full
right, power and authority to make, execute, deliver and perform its obligations
under  this  Agreement  and  the  execution,  delivery  and  performance  of the
documents  contemplated by this Agreement and  consummation of the  transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Borrower.  The Agreement and the Notes  constitute the legal,
valid and binding  obligation of the Borrower,  enforceable  in accordance  with
their respective terms,  except as  enforceability  may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general  equitable  principles
(whether enforcement is sought by proceedings in equity or at law).

     6.4 No Violation.  Neither the  execution,  delivery or  performance by the
Borrower of this Agreement and the related  documents,  the  consummation of the
transactions  contemplated by this Agreement, nor compliance with the provisions
of this  Agreement  will (i) violate  any law,  regulation,  order,  judgment or
decree  binding on the Borrower,  (ii) violate or conflict  with, as applicable,
the  Borrower's  certificate  of  organization,  Operating  Agreement  or  other
organizational or governing  documents,  (iii) conflict with, cause a breach of,
constitute a default under, be cause for the acceleration of the maturity of, or
create  or  result  in the  creation  or  imposition  of  any  Lien,  charge  or
encumbrance (other than in favor of the Agent) on any of the Borrower's property
under,  any agreement,  notice,  indenture,  instrument or other  undertaking to
which the Borrower is a party.

     6.5 No Consents. No order, consent,  license,  authorization,  recording or
registration  is required to  authorize  or is required in  connection  with the
execution,  delivery and performance by the Borrower or the legality,  validity,
binding effect or enforceability of this Agreement upon or against the Borrower,
any documents  executed by the Borrower in connection with this Agreement or any
transactions  contemplated  by this Agreement other than (i) the filing of UCC-1
financing  statements,  (ii) the registration of the shares of Belvedere Capital
and BRC in the name of the  Custodian or the  Custodian's  nominee and (iii) the

                                       22
<PAGE>
written consent of the manager of Belvedere  Capital to the Borrower's pledge of
its shares of Belvedere Capital.

     6.6  No   Litigation.   There  are  no  actions,   suits,   litigation   or
investigations, pending or, threatened, against the Borrower that could (i) have
a material adverse effect on the business,  condition  (financial or otherwise),
or  operations,  properties  or  prospects  of the  Borrower  or (ii) affect the
Borrower's  ability  to enter  into  and  perform  its  obligations  under  this
Agreement or any of the transactions contemplated by this Agreement.

     6.7 Compliance  with Laws. The operations of the Borrower are and have been
in  compliance  in all  material  respects  with all federal,  state,  local and
foreign laws and regulations  applicable to it, including,  without  limitation,
tax, environmental and health and safety laws and regulations.

     6.8 No Material  Adverse  Change.  Since March 31, 2003,  there has been no
material  adverse  change in the business,  condition  (financial or otherwise),
obligations, operations, performance or properties of the Borrower.

     6.9 Solvency.  After giving effect to the Loans, the Swap Agreement and the
Borrower's  Obligations,  (i) the present  fair value of the  Borrower's  assets
exceeds  the total  amount of the  Borrower's  liabilities  (including,  without
limitation,  contingent  liabilities),  (ii) the Borrower has capital and assets
sufficient to carry on its businesses,  (iii) the Borrower is not engaged and is
not about to engage  in a  business  or a  transaction  for which its  remaining
assets are  unreasonably  small in relation to such business or transaction  and
(iv) the  Borrower  does not intend to incur or believe that it will incur debts
beyond its ability to pay as they become due. The Borrower  will not be rendered
insolvent by the execution,  delivery and  performance of documents  relating to
this Agreement or by the  consummation of the  transactions  contemplated  under
this Agreement.

     6.10 Organization;  Place of Business. The Borrower was organized under the
laws of the  Commonwealth  of  Massachusetts,  and the address of the  principal
executive  office of the Borrower as indicated on the  signature  page hereto is
correct.

     6.11 Full  Disclosure.  Neither this  Agreement  nor the Private  Placement
Memorandum nor any, agreement,  document,  certificate or statement furnished to
the Agent,  any Lender or the Swap Provider by the Borrower in  connection  with
the transactions contemplated hereby, at the time it was furnished or delivered,
contained any untrue statement of a material fact or omitted to state a material
fact,  under the  circumstances  under which it was made,  necessary in order to
make the statements contained herein or therein not misleading.

     6.12 Sole  Business.  Neither  of the  Borrower  and BRC is  engaged in any
business other than as described in the Private Placement Memorandum.

                                       23
<PAGE>
     6.13  Investment  Company Act. The  Borrower is not an  investment  company
required to be registered under the Investment Company Act of 1940, as amended.

     6.14 Private Placement  Memorandum.  All transactions  contemplated by this
Agreement are consistent in all material respects with the descriptions thereof,
if any,  contained  in the  Private  Placement  Memorandum  and  neither  of the
Borrower or BRC has entered into any agreements which would otherwise  prohibit,
restrict or limit the transactions contemplated by this Agreement or the Private
Placement Memorandum other than agreements as a holder of interests of Belvedere
Capital to be bound by the operating agreement of Belvedere Capital,  agreements
as a holder of shares of common stock of BRC to be bound by the  Certificates of
Incorporation of BRC and agreements  entered into or made in connection with the
acquisition of Qualifying  Assets which restrict the transfer of such Qualifying
Assets.

     6.15 Pledged  Securities.  Any outstanding  certificates  representing  the
Pledged Securities will be physically held in the United States by the Custodian
or an authorized sub-custodian or agent of the Custodian.

     6.16  Subsidiaries.  As of the Closing Date,  other than BRC,  there are no
subsidiaries of the Borrower.

     6.17 Belcrest  Realty  Corporation.  As of the Closing Date, the authorized
capitalization  of BRC consists of (i) 7,000 shares of common  stock,  par value
$0.01 per share of which  6,080.180367  shares are  outstanding and owned by the
Borrower on the date hereof and (ii) 3,000 shares of preferred  stock, par value
$0.01 per share, of which 2,100 shares have been designated as Class A preferred
stock with a liquidation  preference of $100 per share,  all of which  preferred
stock has been issued to the Borrower and donated by the Borrower to  charitable
organizations as contemplated by the Private Placement Memorandum.

     6.18 Preferred  Equity  Interests.  To the Borrower's  knowledge:  (i) each
issuer of Preferred  Equity  Interests which are included in the Collateral is a
limited  partnership  or limited  liability  company duly  organized and validly
existing under the laws of the state of its  organization  and has all requisite
power  and  authority  to  conduct  its  business  as now  conducted;  (ii) each
Preferred  Equity  Interest  which is included in the Collateral has been issued
pursuant  to a  written  partnership  agreement  or  limited  liability  company
agreement,  a true and  correct  copy of which  has been made  available  to the
Secured Parties, has been duly authorized, executed and delivered by all parties
thereto,  has not been amended or otherwise modified (except as disclosed to the
Secured  Parties),  is in  full  force  and  effect  and  is  binding  upon  and
enforceable  against all parties  thereto in  accordance  with its terms.  There
exists no default  under any such  partnership  agreement  or limited  liability
company  agreement  by the Borrower or, to  Borrower's  knowledge,  by any other
Person, which default is material in the context of this Agreement.

                                       24
<PAGE>
7. AFFIRMATIVE COVENANTS

     Until this  Agreement has  terminated and the L/C Exposure has been reduced
to zero, and all Obligations have been  indefeasibly  paid in full, the Borrower
will and will cause its subsidiaries to:

     7.1  Maintenance  of  Existence.  Preserve and maintain its  existence  and
material rights and franchises.

     7.2  Compliance  with  Laws.  Comply  in all  material  respects  with  all
Applicable  Laws,  statutes,  codes,  ordinances,  regulations,  rules,  orders,
awards, judgments, decrees, injunctions, approvals and permits applicable to it.

     7.3 Payment of Taxes. Pay all taxes,  assessments and governmental  charges
imposed  upon  it or  upon  its  property  and all  claims  (including,  without
limitation,  claims for labor, materials,  supplies or services) which might, if
unpaid,  become a lien upon its property,  unless, in each case, the validity or
amount thereof is being  contested in good faith by appropriate  proceedings and
it has maintained adequate reserves with respect thereto.

     7.4 Books and Records. Maintain or cause to be maintained at all times true
and  complete  books and records of its  financial  and business  operations  in
accordance with GAAP, except that the valuation of the Pledged  Securities shall
be in  accordance  with  the  valuation  procedures  described  in  the  Private
Placement Memorandum.

     7.5 Audit Rights. Permit any representative of the Agent, any Lender or the
Swap  Provider to examine the  Borrower's,  and its  consolidated  subsidiaries'
books and records and to make copies and take extracts therefrom, and to discuss
the  Borrower's  affairs,  finances and  accounts  with the Manager and with the
Borrower's independent accountants, all at such reasonable times upon reasonable
prior  notice and as often as the Agent,  such Lender or the Swap  Provider  may
reasonably request.

     7.6  Maintenance of Collateral.  Maintain the Pledged  Securities and other
Collateral in the  Securities  Account;  provided,  however,  that  withdrawals,
releases, distributions and transfers of Pledged Securities and other Collateral
may be made in accordance with the terms of the Account Control Agreement.

     7.7 Notices.  Furnish to the Secured  Parties:  (i) within ten (10) days of
becoming aware of the  occurrence of any Default or Event of Default,  notice of
the  occurrence and nature of such Default and of the steps that are being taken
to cure  such  Default  or Event of  Default;  and (ii)  promptly  after (a) the
occurrence  thereof,  notice  of  the  institution  of or any  material  adverse
development in any action, suit or proceeding or any governmental  investigation
or any arbitration, before any court or arbitrator or any Governmental Authority
(involving in excess of $500,000, or otherwise material) against the Borrower or
any material property of the Borrower,  or (b) actual knowledge thereof,  notice
of  the  threat  of  any  such  action,  suit,   proceeding,   investigation  or
arbitration.

                                       25
<PAGE>
     7.8  Bankruptcy.  Notify the Secured  Parties in writing  before filing any
petition  seeking the  protection of any  bankruptcy,  insolvency or any similar
statutes,  and neither the  Borrower nor any of its  subsidiaries  will take any
action (or fail to take any  necessary  action)  which may cause a  petition  in
bankruptcy,  insolvency  or any similar law or procedure to be filed against the
Borrower or Belvedere Capital.

     7.9 Financial and Credit Information.

     (a) Notify the Secured  Parties  immediately,  in writing,  of any material
change in the Borrower's or any of its subsidiaries'  financial  condition which
would adversely affect the Borrower's  ability to repay any obligation(s) to the
Agent,  the  Lenders  or the  Swap  Provider  according  to the  terms  of  this
Agreement, the Notes or the Swap Agreement.

     (b) Supply to the Secured  Parties such current  financial  information  or
other  information as either  Secured Party may reasonably  request from time to
time.

     (c) Permit the Secured  Parties to share with any of their  Affiliates,  or
any Person authorized by the Borrower,  for legitimate  business  purposes,  any
information  about the Borrower which it may currently  possess or obtain in the
future.

     (d) Permit  each  Secured  Party to answer any  questions  about its credit
experience with the Borrower.

     (e) Comply  with any  reasonable  requests  from either  Secured  Party for
additional  documentation  required to be filed or executed by the Borrower from
time to time by  Applicable  Law or the policies and  procedures of such Secured
Party.

     7.10 Financial Statements. Furnish the Secured Parties:

     (a) within 90 days after the end of the first  six-month  fiscal  period of
the  Borrower,   semi-annual,   unaudited,   consolidated  financial  statements
consisting of a consolidated  balance sheet of the Borrower and its subsidiaries
and consolidated statements of operations and cash flows of the Borrower and its
subsidiaries,  for such period,  all in  reasonable  detail and certified by the
Manager of the Borrower, that such statements are correct and fairly present the
consolidated financial condition of the Borrower and its subsidiaries, as at the
end of such fiscal period (subject to normal year-end audit adjustments);

     (b)  within 90 days  after  the end of each  fiscal  year of the  Borrower,
annual,  audited,  consolidated  financial  statements  of the  Borrower and its
subsidiaries, consisting of a consolidated balance sheet as of the close of such
fiscal year and related consolidated statements of operations and cash flows for
such year,  attached to which shall be a report of Deloitte & Touche LLP or such
other independent certified public accountants of recognized standing acceptable
to the  Secured  Parties  and  which  statement  shall  have  been  prepared  in
accordance with GAAP, except that the valuation of the Pledged  Securities shall
be in  accordance  with  the  valuation  procedures  described  in  the  Private
Placement Memorandum;

                                       26
<PAGE>
     (c)  upon  receipt  by  the  Borrower,  copies  of  all  financial  reports
distributed by or on behalf of Belvedere Capital;

     (d) concurrently with such  distributions,  copies of all financial reports
distributed by or on behalf of the Borrower to all Shareholders; and

     (e) promptly upon their becoming available,  copies of (i) all registration
statements, proxy statements, and all reports which the Borrower shall file with
any securities  exchange or with the  Securities and Exchange  Commission or any
successor agency and (ii) all reports, financial statements,  press releases and
other  information  which the Borrower shall release,  send or make available to
its Shareholders generally.

     7.11 Report;  Compliance  Certificate.  Provide the Secured Parties, within
ten Business Days after the end of each calendar  month, a Statement in the form
of Exhibit B hereto (the  "Report")  and a Compliance  Certificate.  The Secured
Parties reserve the right to request such  additional  information in connection
with the Report and any Pledged Security as they deem appropriate.

     7.12  Liens.  Defend the  Collateral  (including  the  Pledged  Securities)
against any and all Liens, claims and other impediments howsoever arising, other
than (i) the Lien in favor of the Secured  Parties  created  hereunder  and (ii)
Liens not otherwise prohibited under Section 8.2.

     7.13  Government  Approval.  If  any  further  authorizations,   approvals,
registrations  or filings with any  governmental  or public  regulatory  body or
authority  of the United  States,  any state  thereof or any other  jurisdiction
required for the performance by the Borrower of this Agreement  should hereafter
become  necessary,  obtain or make,  or cause to be obtained  or made,  all such
authorizations, approvals, registrations or filings.

     7.14 Use of Proceeds.  The Borrower  shall use the proceeds of the Loans to
refinance certain existing  indebtedness,  to finance the purchase of Qualifying
Assets, to pay loan facility expenses of the Borrower,  for short-term liquidity
needs,  and for other general working  capital  purposes,  including  payment of
interest and fees hereunder.

     7.15 Valuation Covenants. Maintain:

     (a) the Value of the  total  assets of the  Borrower  and its  consolidated
subsidiaries  (less the Value of its assets pledged to any Person other than the
Secured  Parties and less (without  duplication)  the Value of all Excluded Real
Estate  Investments),  at an amount  equal to or in excess of 250% of the sum of
the Required Amount plus the outstanding  principal  balance of the Loans,  plus
accrued and unpaid  interest on the Loans,  plus the then current L/C  Exposure,
plus any liability of the Borrower for which the  termination  value on any swap
exceeds  the  collateral  held for such  swap,  plus the  outstanding  principal

                                       27
<PAGE>
balance of the Loan (as defined in the Term Loan  Agreement),  plus  accrued and
unpaid  interest on the Loan (as defined in the Term Loan  Agreement)  under the
Term Loan Agreement;

     (b) the Value of the  Qualifying  Assets,  other than  Excluded Real Estate
Investments,  at an  amount  not in  excess  of 40% of the  market  value of the
Collateral;

     (c) the Value of all  securities  of any single issuer held by the Borrower
by reason of its indirect  interest in the securities which are directly held by
the  Portfolio  at an amount not in excess of 5% of the Value of all  Collateral
held in the Securities  Account;  provided that such restriction shall not apply
to the Borrower's  direct  investments in (w) Qualifying  Assets,  (x) shares in
Belvedere  Capital or BRC, (y) the Borrower's  indirect  investment in shares of
the Portfolio  (as  distinguished  from the  underlying  securities  held by the
Portfolio) held through its direct  investment in shares of Belvedere Capital or
(z) BRC's investments in Qualifying Assets; and

     (d) the Value of all securities  held by the Borrower of issuers  primarily
engaged in any one industry by reason of its indirect interest in the securities
which are directly  held by the  Portfolio at an amount not to exceed 25% of the
Value of all  Collateral  held in the  Securities  Account;  provided  that such
restriction  shall  not  apply  to  the  Borrower's  direct  investments  in (w)
Qualifying  Assets,  (x) shares in Belvedere  Capital or BRC, (y) the Borrower's
indirect  investment  in  shares of the  Portfolio  (as  distinguished  from the
underlying  securities held by the Portfolio) held through its direct investment
in shares of Belvedere Capital or (z) BRC's investments in Qualifying Assets.

     In the event that any of the  foregoing  restrictions  contained in clauses
(b),  (c) and (d) above are  exceeded,  the Value for that portion of the excess
shall not be included for purposes of determining  the Value of the total assets
of the Borrower  and its  consolidated  subsidiaries  for purposes of clause (a)
above.

     7.16 Formation of Additional Subsidiaries.  Promptly following the creation
thereof, notify the Secured Parties of any additional subsidiary and the purpose
for which it is being created.

8. NEGATIVE COVENANTS OF THE BORROWER

     Until this  Agreement has  terminated and the L/C Exposure has been reduced
to zero and all Obligations  have been  indefeasibly  paid in full, the Borrower
will not and it will not allow its subsidiaries to:

     8.1  No  Indebtedness.  Create,  incur,  assume  or  suffer  to  exist  any
Indebtedness,  except for (i)  Indebtedness of the Borrower under this Agreement
and the Notes, the Term Loan Agreement and the Swap Agreement, (ii) Indebtedness
in respect of (x) swap, cap or other interest rate or foreign  currency  hedging
arrangements  (in each case,  where used for hedging  purposes) and (y) options,
financial  futures contracts and options on financial futures contracts (in each
case,  where  used for  hedging  purposes),  (iii)  Indebtedness  in  respect of
purchases  of  securities  on  short-term  credit  as may be  necessary  for the

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<PAGE>
clearance of purchases  and sales of  portfolio  securities  as described in the
Private Placement  Memorandum,  (iv) overdrafts  extended by the Custodian under
the Account Control Agreement,  (v) Indebtedness of a subsidiary of the Borrower
incurred in connection  with the  acquisition by such  subsidiary of an Excluded
Real Estate  Investment,  provided that such Indebtedness is without recourse to
the Borrower and BRC except to the extent of a so-called  "bad boy"  guaranty by
the Borrower or BRC on terms and conditions consistent with the past practice of
the  Borrower  and  similar  entities  advised by the  Investment  Advisor or an
Affiliate  thereof.  Nothing  contained in this  Section 8.1 shall  prohibit the
incurrence of the Required Amount.

     8.2 No Liens.  Create,  incur, assume or suffer to exist any Lien on any of
its  properties  or assets  except (i) Liens on assets of the Borrower  (but not
BRC) in respect of Indebtedness permitted under Sections 8.1(i)-(iv), (ii) liens
on  assets  of  subsidiaries  of BRC to  secure  Indebtedness  incurred  by such
subsidiaries in connection with the acquisition by such subsidiaries of Excluded
Real Estate Investments,  (iii) Liens for taxes,  assessments or similar charges
incurred in the ordinary  course of business  which are not  delinquent or which
are being  contested  in good faith and by  appropriate  proceedings  diligently
conducted,  and for which  adequate  reserves  have been set aside in accordance
with  GAAP,  provided  that  proceedings  to  enforce  such  Liens have not been
commenced or have been stayed pending such contest, (iv) statutory Liens arising
by operation of law such as mechanics,  materials,  carriers',  warehouse liens,
(A) which occur in the ordinary course of business, (B) secure normal trade debt
which is not yet due and payable,  (C) do not secure  Indebtedness  for borrowed
money,  (D)  which  are  being  contested  in  good  faith  and  by  appropriate
proceedings diligently conducted,  and (E) for which adequate reserves have been
set aside in accordance  with GAAP,  provided that  enforcement of such Liens is
stayed pending such contest, (v) Liens arising out of judgments or decrees which
are being  contested  in good faith and by  appropriate  proceedings  diligently
conducted,  and for which  adequate  reserves  have been set aside in accordance
with GAAP,  provided that  enforcement  thereof is stayed  pending such contest,
(vi) Liens of the Custodian under the Account Control  Agreement and (vii) Liens
created  pursuant to this  Agreement,  the Term Loan  Agreement  and the Account
Control Agreement.

     8.3 No Mergers,  Etc. Enter into any transaction of merger or consolidation
or  liquidate,  wind  up or  dissolve  itself  (or  suffer  any  liquidation  or
dissolution).

     8.4 No New Business.  Engage in any business other than as described in the
Private Placement Memorandum.

     8.5 No Trading.  Conduct any sale of any Qualifying  Assets (other than (i)
in connection with a distribution or redemption not otherwise  prohibited  under
this  Agreement,  (ii) if the proceeds of such sale will be utilized to purchase
(x) other Qualifying Assets which are comparable Qualifying Assets being sold or
(y) cash  equivalents,  but only if such investment in cash equivalents will not
result in the Borrower being treated as an investment company within the meaning
of Section 351 of the  Internal  Revenue  Code or (iii) if the  proceeds of such

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<PAGE>
sale will be utilized to repay the Loans) without  providing three Business Days
prior notice to the Agent.

     8.6 No  Distributions.  Make any  distributions  or honor any  requests for
redemptions if such  distributions or withdrawals,  if made, would result in the
occurrence of a Default or an Event of Default of the type specified in Sections
10.1(a)(i), 10.1(b), 10.1(h) or 10.1(i).

     8.7 No Amendments. Amend or modify, or permit to be amended or modified the
Private  Placement  Memorandum  or  Operating  Agreement  of the Borrower or the
organizational  documents of any of its subsidiaries,  without the prior written
consent  of the  Secured  Parties,  which  consent  shall  not  be  unreasonably
withheld.  Notwithstanding the foregoing,  the Borrower and its subsidiaries may
make ministerial or other non-material changes,  changes required to comply with
statutory or regulatory requirements or revisions or changes reflecting matters,
events or  circumstances  which  should be  described  in the Private  Placement
Memorandum,  provided,  however,  that the Borrower  shall  promptly  notify the
Secured Parties of such changes.

     8.8 Manager,  Investment  Adviser and Custodian.  Terminate the services or
accept the resignation of the Manager or Investment Adviser or Custodian without
the prior written consent of the Secured Parties.

     8.9   Limitation  on   Restriction   on  Subsidiary   Dividends  and  Other
Distributions,  etc.  Create  or  otherwise  cause or  suffer to exist or become
effective any consensual encumbrance or restriction on the ability of BRC to (a)
pay dividends or make any other interest or  participation  in its profits owned
by the  Borrower  other  than  such  restrictions  as are  set  forth  in  BRC's
certificates  of  incorporation  or BRC's  Certificate of Designation of Class A
preferred stock, or pay any indebtedness owed to the Borrower, (b) make loans or
advances to the Borrower, or (c) transfer any of its properties or assets to the
Borrower.

9. CONDITIONS PRECEDENT TO CLOSING

     9.1 Conditions Precedent to Initial Loan. It shall be a condition precedent
to the making of the initial Loan hereunder that:

     (a) the Agent shall have received, with copies for each of the Lenders, the
following,  in  form  and  substance  satisfactory  to the  Agent  in  its  sole
discretion:

          (i) evidence  that the Borrower is duly  authorized to enter into this
     Agreement  and all  transactions  contemplated  hereby and to  execute  and
     deliver  this  Agreement,  the Notes and all  documents  to be  executed in
     connection therewith;

          (ii) a  certificate  of the Manager of the Borrower  attesting,  among
     other things,  (w) that true, correct and complete copies of the Borrower's
     certificate  of  formation  and  Operating  Agreement,  together  with  all
     amendments  thereto,  have been delivered to the Agent, (x) that provisions

                                       30
<PAGE>
     of  the  Operating   Agreement  authorize  the  Manager  to  authorize  the
     execution,  delivery and  performance in accordance with their terms of the
     Agreement, the Notes and the other documents and transactions  contemplated
     thereby and the borrowings  hereunder and the Manager has so authorized and
     such   authorization   is  in  full   force  and   effect,   (y)  that  all
     representations  and warranties  made in connection with this Agreement are
     true,  accurate  and  correct  in  all  material  respects  and  (z) to the
     incumbency of the Manager,  or any other Person  executing this  Agreement,
     the Notes and any related documents on behalf of the Borrower;

          (iii)  (w) a copy  of the  certificate  of  formation  of  each of the
     Borrower and BRC filed in each entity's jurisdiction of organization, (x) a
     copy of the by-laws of BRC, (y) a copy of BRC's  Certificate of Designation
     of Class A preferred  shares and (z) a  certificate  of good  standing from
     each of the  Borrower's  and BRC's  jurisdiction  of  organization  and the
     jurisdiction  in which  its  principal  executive  office  is  located,  if
     different;

          (iv) the  Account  Control  Agreement  duly  executed on behalf of the
     Agent,  the Swap Provider,  the Term Lender,  the Investment  Manager,  the
     Borrower and Custodian;

          (v) evidence that the Securities Account has been established and that
     the Pledged Securities have been deposited into the Securities Account;

          (vi) the appropriate UCC-1 Financing Statements;

          (vii) the Private Placement Memorandum;

          (viii)  evidence that the Existing  Credit  Agreement and all liens in
     connection therewith have been terminated;

          (ix) the Investment Advisory Agreement;

          (x) instructions from the Borrower in connection with the payment from
     the proceeds of the initial Loan of certain existing indebtedness;

          (xi) the favorable opinion of Testa, Hurwitz & Thibeault, LLP, counsel
     to the Borrower in the form of Exhibit C hereto;

          (xii) the Notes, dated as of the date hereof,  duly executed on behalf
     of the Borrower;

          (xiii)  (x) the  Swap  Agreement  and  all  Exhibits  thereto  and the
     Amendment to Swap  Agreement,  duly  executed on behalf of the Borrower and
     (y) evidence that the Borrower has executed the "Confirmation"  relating to
     the Swap Agreement;

          (xiv) the Intercreditor Agreement; and

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<PAGE>
          (xv) a Form G-3 executed by the Borrower and the Agent.

     (b) the Agent shall have received such other  documents as the Agent or any
Lender may reasonably request.

     9.2 Conditions Precedent to All Loans. It shall be a condition precedent to
all Loans  (including  the initial Loan  hereunder)  and to the issuance of each
Letter of Credit that on the date of such Loan or issuance of a Letter of Credit
the following  statements shall be true (and each request for a Loan or issuance
of a Letter of Credit  shall  constitute  a  representation  and warranty by the
Borrower that on the date of such Loan or such issuance of Letter of Credit that
such statements are true):

     (a) After giving  effect to such Loan,  the total of all Loans  outstanding
will not exceed the Total Commitment;

     (b) The representations and warranties  contained in Article 6 are true and
correct in all material  respects on and as of the date of such Loan or issuance
of such  Letter  of  Credit,  except  to the  extent  such  representations  and
warranties specifically relate to an earlier date;

     (c) No event has occurred or is  continuing or would result from the making
of such Loan or  issuance of such Letter of Credit,  which  would  constitute  a
Default or an Event of Default;

     (d) The  Borrower  has  delivered  to the Agent the  Borrowing  Notice  and
Compliance Certificate required pursuant to Section 2.3 hereof; and

     (e) After  giving  effect to all Loans and the  issuances of all Letters of
Credit, (a) the Value of the total assets of the Borrower (less the Value of its
assets  pledged to any Person other than the Secured  Parties and less  (without
duplication) the Value of all Excluded Real Estate Investments),  shall be equal
to or in excess of 250% of the sum of the Required Amount,  plus the outstanding
principal  balance of the Loans,  plus accrued and unpaid interest on the Loans,
plus the then current L/C Exposure, plus any liability of the Borrower for which
the  termination  value on any swap exceeds the  collateral  held for such swap,
plus the outstanding  principal balance of the Loan (as defined in the Term Loan
Agreement), plus accrued and unpaid interest on the Loan (as defined in the Term
Loan Agreement) under the Term Loan Agreement.

10. DEFAULTS; REMEDIES

     10.1 Events of Default. An event of default ("Event of Default") will occur
under this Agreement and the Notes if:

     (a) the  Borrower  fails (i) to make any payment when it is due as required
by this Agreement and such default continues unremedied, in the case of payments
of any amounts other than principal, for five days after such amount becomes due
or (ii) to observe or perform any covenant or  agreement  contained in Article 8
of this  Agreement  or Section 4 of the Account  Control  Agreement  or (iii) to

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<PAGE>
observe or perform any other  covenant or agreement  contained in this Agreement
and such default continues unremedied for 30 days;

     (b) the Value of the Collateral  falls below the  requirement  contained in
Section 7.15, and the Borrower has not, within two Business Days after demand by
the Agent, reduced the outstanding  principal balance of the Loans plus the then
current L/C Exposure or deposited in the  Securities  Account  additional  funds
and/or securities as Collateral with a Value sufficient to increase the Value of
the Collateral to at least that required pursuant to Section 7.15;

     (c) the Borrower  makes, or the Agent discovers that the Borrower has made,
a  material  misrepresentation  under  this  Agreement  or in  any  certificate,
financial  statement  or  other  document  delivered  in  connection  with  this
Agreement, the Notes or the Loans;

     (d)  default  shall be made  (and not cured  within  any  applicable  grace
period) with respect to the payment of any  Indebtedness or other  obligation of
the Borrower,  the outstanding  amount of which exceeds  $1,000,000 or a default
shall have occurred under the Swap Agreement;

     (e)  (i)  an  attachment  is  levied  against  all or  any  portion  of the
Securities  Account or (ii) the  Custodian  shall have breached any provision of
the Account Control Agreement in any material respect;

     (f) either Secured Party reasonably  determines that the Security  Interest
(in whole or in part) hereby created is not in full force and effect or does not
have the priority stated herein;

     (g) final  judgment for the payment of money in excess of $1,000,000  shall
be  rendered  against the  Borrower or BRC and within  thirty (30) days from the
entry of judgment  shall not have been  discharged or stayed  pending  appeal or
shall not have been discharged within thirty (30) days from the entry of a final
order of affirmance or appeal;

     (h) the  Borrower or BRC shall admit in writing  its  inability  to pay its
debts  generally as they become due, or shall make a general  assignment for the
benefit of creditors; or the Borrower or BRC shall commence any case, proceeding
or other action  seeking to have an order for relief  entered on its behalf as a
debtor or to  adjudicate  it a bankrupt or insolvent or seeking  reorganization,
arrangement,  adjustment,  liquidation,  dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors or seeking  appointment  of a receiver,  trustee,  custodian or other
similar  official for it or for all or any  substantial  part of its property or
shall file an answer or other  pleading  in any such case,  proceeding  or other
action admitting the material allegations of any petition,  complaint or similar
pleading  filed against it or consenting  to the relief sought  therein;  or the
Borrower shall take any action to authorize any of the foregoing;

                                       33
<PAGE>
     (i) any involuntary case, proceeding,  or other action against the Borrower
or BRC shall be commenced seeking to have an order for relief entered against it
as  debtor  or  to  adjudicate   it  as  bankrupt  or   insolvent,   or  seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition
of  it  or  its  debts  under  any  law  relating  to  bankruptcy,   insolvency,
reorganization  or relief of  debtors,  or seeking  appointment  of a  receiver,
trustee,  custodian  or  other  similar  official  for  it or  for  all  or  any
substantial part of its property,  and such case, proceeding or other action (i)
results  in the entry of any order for relief  against  it or (ii) shall  remain
undismissed for a period of thirty (30) days;

     (j) the Borrower is subject to  dissolution or termination as the result of
(i) a vote to  dissolve  by the  Shareholders,  (ii) the  election by Manager to
terminate the operations of the Borrower or (iii) the  expulsion,  bankruptcy or
dissolution of a Shareholder, unless within 90 days thereafter, the Shareholders
holding at least a majority of the  interests in the  Borrower  vote to continue
the operations of the Borrower;

     (k) any event occurs  which would  entitle the  beneficiary  of any limited
recourse  guaranty  permitted by clause (v) of Section 8.1 to demand  payment in
excess of  $500,000  from BRC  pursuant  to the terms of such  limited  recourse
guaranty;

     (l) the ratio of  Belvedere  Capital's  total  assets to total  liabilities
(excluding  the  amount  of any  Shares  submitted  for  redemption  but not yet
redeemed  in the  ordinary  course of  business)  shall at any time be less than
10:1;

     (m) a material  adverse  change in the  business,  condition  (financial or
otherwise),  obligations,  operations, performance or properties of the Borrower
shall have occurred; or

     (n) the  occurrence  of an Event of  Default  (as  defined in the Term Loan
Agreement) under the Term Loan Agreement.

     10.2 Remedies.

     (a) Upon the occurrence and during the continuation of an Event of Default,
the Agent may,  without  prejudice  to any other right or remedy of the Agent or
any Lender, at law, by contract or otherwise,  by notice to the Borrower declare
all Loans,  accrued interest thereon and any other sum then payable hereunder to
be  immediately  due and payable by the Borrower  whereupon  such amounts  shall
become so due and payable,  and/or  declare the  Commitments  to be  terminated,
whereupon  they shall so terminate.  If an Event of Default  specified in clause
(h) or (i)  above  shall  have  occurred,  the  Commitment  shall  automatically
terminate and the Notes shall automatically  become due and payable,  both as to
interest and principal, without presentment,  demand, protest or other notice of
any kind. Upon the occurrence and continuation of an Event of Default, the Agent
may demand  Cash  Equivalents  in an amount  equal to the full amount of the L/C
Exposure or to furnish other securities  therefor  acceptable to the Lender, and

                                       34
<PAGE>
may, to the extent permitted by Applicable Law, also set-off, against any amount
owing to it under this  Agreement and the Note,  any  securities,  cash or other
property of the Borrower in the Agent's possession.

     (b) Upon the occurrence  and  continuation  of an Event of Default,  either
Secured  Party may, at its option,  instruct  the  Custodian  to cancel any open
orders and close any and all  outstanding  financial  contracts  referred  to in
subparagraph (a)(iii) of the definition of Indebtedness,  transfer any or all of
the Pledged Securities to such Secured Party or its designee, transfer the whole
or any part of the  Collateral  into its name or the name of its  nominee  or to
notify the obligors on any Collateral to make payment to the Secured  Parties or
its nominee of any amounts due thereon and to take  control or grant its nominee
the right to take  control of any  proceeds  of the  Collateral,  liquidate  the
Pledged  Securities or other  Collateral,  withdraw and/or sell any such Pledged
Securities  or other  Collateral  and apply any such  Collateral  as well as the
proceeds  of any such  Pledged  Securities  or other  Collateral  to all  unpaid
Obligations  in such  order as the Agent  defines  in its sole  discretion.  The
Borrower  will be  responsible  for any decrease in the value of the  Collateral
occurring prior to liquidation. Upon the occurrence and continuation of an Event
of Default,  the Secured Parties may, to the extent permitted by Applicable Law,
also set-off,  against any amount owing to it under this Agreement, the Notes or
the Swap Agreement,  any  securities,  cash or other property of the Borrower in
the possession of any such Person.

     (c) Either Secured Party may exercise any or all of the rights contained in
this Section without further demand for additional Collateral, or notice of sale
or purchase,  or other  notice or  advertisement.  Any sales or  purchases  made
pursuant to this Section may be made at such Secured  Party's  discretion on any
exchange or other market where such business is usually transacted, or at public
auction or private sale, and such Secured Party or its agent or any Affiliate of
either Secured Party or its agent may be the purchaser for such Secured Party or
its agent or such Affiliate's or its agent's own account.  It is understood that
the giving of any prior  demand or call or prior notice of the time and place of
such sale or purchase by such Secured  Party or its agent will not be considered
a waiver of the Agent's  right to sell or buy without any such  demand,  call or
notice except as provided in this Agreement.

     (d) In addition to the Secured  Parties'  rights and remedies  described in
this  Agreement,  the Secured Parties have the right to exercise any one or more
of the rights and remedies of a secured  creditor  under the Uniform  Commercial
Code in effect in the State of New York.  All the rights and remedies  which are
available to the Agent under this  Agreement are  cumulative and are in addition
to any and all other rights and remedies  which are  otherwise  available to the
Agent either at law,  equity or otherwise.  The Secured Parties may exercise any
one or more of such rights and remedies simultaneously or successively.

11. THE AGENT

     11.1 Administration by Agent.

                                       35
<PAGE>
     (a) The general  administration of the Fundamental  Documents and any other
documents contemplated by this Agreement shall be by the Agent or its designees.
Except  as  otherwise  expressly  provided  herein  each of the  Lenders  hereby
irrevocably  authorizes the Agent,  at its  discretion,  to take or refrain from
taking  such  actions  as agent on its behalf and to  exercise  or refrain  from
exercising such powers under the Fundamental Documents,  the Notes and any other
documents contemplated by this Agreement as are expressly delegated by the terms
hereof  or  thereof,  as  appropriate,   together  with  all  powers  reasonably
incidental thereto. The Agent shall have no duties or responsibilities except as
set forth in the Fundamental Documents.

     (b) The Lenders hereby authorize the Agent (in its sole discretion):

          (i) in  connection  with the sale or other  disposition  of any  asset
     included in the Collateral, to the extent undertaken in accordance with the
     terms of this  Agreement,  to release a Lien granted to it (for the benefit
     of the Lenders) on such asset;

          (ii) to determine that the cost to the Borrower is disproportionate to
     the benefit to be realized by the Lenders by  perfecting  a Lien in a given
     asset or group of assets  included in the  Collateral and that the Borrower
     should not be required to perfect such Lien in favor of the Agent;

          (iii) to appoint  subagents to be the holder of record of a Lien to be
     granted to the Agent or to hold on behalf of the Agent such  collateral  or
     instruments relating thereto;

     11.2 Advances and Payments.

     (a) On the date requested by the Borrower for the funding of each Loan, the
Agent shall be authorized  (but not  obligated)  to advance,  for the account of
each of the Lenders,  the amount of the Loan to be made by it in accordance with
provisions  of  Article 2 hereof.  Each of the  Lenders  hereby  authorizes  and
requests the Agent to advance for its account, pursuant to the terms hereof, the
amount of the Loan to be made by it, and each of the Lenders agrees forthwith to
reimburse the Agent in immediately available funds for the amount so advanced on
its behalf by the Agent.  If any such  reimbursement  is not made in immediately
available  funds on the same day on which  the  Agent  shall  have made any such
amount available on behalf of any Lender,  such Lender shall pay interest to the
Agent at a rate per annum equal to the Agent's cost of obtaining overnight funds
in the New York Federal  Funds Market for the first day  following the time when
such Lender fails to make the required  reimbursement,  and thereafter at a rate
per annum equal to the Alternate Rate.

     (b) Any amounts  received by the Agent in connection with this Agreement or
the Notes the  application  of which is not  otherwise  provided  for,  shall be
applied, first, to pay accrued but unpaid Commitment Fees in accordance with the
Lenders' unused  Commitments,  second, to pay accrued but unpaid interest on the
Notes in  proportion  to the amounts  owed to each Lender,  third,  to repay the

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<PAGE>
principal  balance  outstanding on the Notes  (allocated in accordance  with the
outstanding amounts thereof owing to each Lender as set forth on the Schedule of
Commitments  attached as Schedule 1.1 hereto) and fourth,  to pay other  amounts
payable to the Agent.  All amounts to be paid to any of the Lenders by the Agent
shall be credited to the Lenders,  after collection by the Agent, in immediately
available   funds  either  by  wire   transfer  or  deposit  in  such   Lender's
correspondent account with the Agent, or as such Lender and the Agent shall from
time to time agree.

     11.3  Sharing of Setoffs and Cash  Collateral.  Each of the Lenders  agrees
that if it shall,  through the exercise of a right of banker's  lien,  setoff or
counterclaim  against  the  Borrower,  including,  but not limited to, a secured
claim under Section 506 of Title 11 of the United States Code or other  security
or interest arising from, or in lieu of, such secured claim and received by such
Lender under any  applicable  bankruptcy,  insolvency  or other  similar law, or
otherwise,  obtain  payment  in  respect  of its  Loans as a result of which the
unpaid portion of its Loans is  proportionately  less than the unpaid portion of
any of the other  Lenders  (a) it shall  promptly  purchase at par (and shall be
deemed to have thereupon  purchased) from such other Lenders a participation  in
the Loans of such other Lenders,  so that the aggregate  unpaid principal amount
of each of the  Lenders'  Loans  and its  participation  in Loans  of the  other
Lenders shall be in the same proportion to the aggregate unpaid principal amount
of all Loans then  outstanding as the principal amount of its Loans prior to the
obtaining of such payment was to the principal  amount of all Loans  outstanding
and prior to the obtaining of such payment and (b) such other  adjustments shall
be made from time to time as shall be equitable to ensure that the Lenders share
such  payment  pro  rata.  If all or any  portion  of  such  excess  payment  is
thereafter  recovered  from a  Lender  which  originally  received  such  excess
payment,  such purchase (or portion  thereof) shall be canceled and the purchase
price restored to the extent of such recovery.  The Borrower  expressly consents
to the foregoing  arrangements and agrees that any Lender or Lenders holding (or
deemed to be holding) a participation  in a Note may exercise any and all rights
of banker's  lien,  setoff or  counterclaim  with  respect to any and all moneys
owing by the  Borrower  to such  Lender or Lenders as fully as if such Lender or
Lenders held a Note and was the original  obligee  thereon in the amount of such
participation.

     11.4 Notice to the Lenders.  Upon receipt by the Agent from the Borrower of
any  communication  calling  for an action on the part of the  Lenders,  or upon
notice to the Agent of any Event of Default,  the Agent will in turn immediately
inform  the  other   Lenders  in  writing   (which   shall   include   facsimile
communications)  of the nature of such communication or of the Event of Default,
as the case may be.

     11.5 Liability of Agent.

     (a) The Agent, when acting on behalf of the Lenders, may execute any of its
duties  under  this Loan  Agreement  or the other  Fundamental  Documents  by or
through its  officers,  agents,  or employees  and neither the Agent,  nor their
respective  officers,  agents or employees shall be liable to the Lenders or any
of them for any  action  taken or  omitted  to be  taken in good  faith,  nor be
responsible  to the  Lenders  or to any of  them  for  the  consequences  of any

                                       37
<PAGE>
oversight  or error of judgment,  or for any loss,  unless the same shall happen
through  its  gross  negligence  or  willful  misconduct.  The  Agent,  and  its
directors,  officers,  agents,  and employees shall in no event be liable to the
Lenders  or to any of them for any  action  taken or  omitted  to be taken by it
pursuant to instructions received by it from the Lenders or in reliance upon the
advice of counsel  selected by it with  reasonable  care.  Without  limiting the
foregoing, neither the Agent, nor any of its directors,  officers, employees, or
agents  shall  be  responsible  to any of the  Lenders  for the  due  execution,
validity, genuineness, effectiveness,  sufficiency, or enforceability of, or for
any  statement,  warranty,  or  representation  in, or for the perfection of any
security  interest  contemplated  by, this  Agreement or any related  agreement,
document  or order,  or shall be required  to  ascertain  or to make any inquiry
concerning  the  performance  or  observance  by  the  Borrower  of  the  terms,
conditions,  covenants, or agreements of this Agreement or any related agreement
or document.

     (b) Neither the Agent, as agent for the Lenders  hereunder,  nor any of its
directors,  officers,  employees, or agents shall have any responsibility to the
Borrower on account of the failure or delay in  performance  or breach by any of
the Lenders of any of their respective  obligations  under this Agreement or the
Notes  or any  related  agreement  or  document  or in  connection  herewith  or
therewith.

     (c) The Agent,  as agent for the  Lenders  hereunder,  shall be entitled to
rely on any communication,  instrument, or document reasonably believed by it to
be  genuine or  correct  and to have been  signed or sent by a Person or Persons
believed by it to be the proper  Person or Persons,  and it shall be entitled to
reasonably rely on advice of legal counsel,  independent public accountants, and
other professional advisers and experts selected by it.

     11.6 Reimbursement and  Indemnification.  Each of the Lenders agrees (i) to
reimburse  the  Agent in  accordance  with  such  Lender's  Percentage,  for any
expenses and fees incurred for the benefit of the Lenders under the  Fundamental
Documents,  including,  without  limitation,  counsel fees and  compensation  of
agents and employees  paid for services  rendered on behalf of the Lenders,  and
any other expense  incurred in  connection  with the  operations or  enforcement
thereof not reimbursed by the Borrower,  and (ii) to indemnify and hold harmless
the Agent and any of its directors,  officers,  employees, or agents, on demand,
in  accordance  with each  Lender's  Percentage,  from and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses, or disbursements of any kind or nature whatsoever which may be
imposed  on,  incurred  by,  or  asserted  against  it or any of them in any way
relating to or arising out of the  Fundamental  Documents or any action taken or
omitted by it or any of them under the  Fundamental  Documents to the extent not
reimbursed  by the  Borrower  (except  such as shall  result  from  their  gross
negligence or willful misconduct).  To the extent indemnification  payments made
by the Lenders pursuant to this Section 11.6 are  subsequently  recovered by the
Agent from the Borrower,  the Agent will promptly  refund such  previously  paid
indemnity payments to the Lenders.

     11.7 Rights of Agent. It is understood and agreed that the Agent shall have
the same rights and powers as a Lender  hereunder  (including  the right to give
any  instructions  hereunder)  as the other Lenders and may exercise such rights

                                       38
<PAGE>
and  powers,  as well as its  rights  and  powers  under  other  agreements  and
instruments  to which it is or may be party,  and  engage in other  transactions
with the  Borrower,  as though it were not the Agent of the  Lenders  under this
Agreement.

     11.8 Independent Investigation by Lenders. Each of the Lenders acknowledges
that it has decided to enter into this Agreement and to make the Loans hereunder
based on its own  analysis of the  transactions  contemplated  hereby and of the
creditworthiness  of the  Borrower  and  agrees  that the  Agent  shall  bear no
responsibility therefor.

     11.9  Agreement  of  Required  Lenders.  Upon  any  occasion  requiring  or
permitting an approval, consent, waiver, election or other action on the part of
the  Required  Lenders,  action shall be taken by the Agent for and on behalf or
for the benefit of all Lenders upon the  direction  of the Required  Lenders and
any such action shall be binding on all  Lenders.  No  amendment,  modification,
consent or waiver shall be effective except in accordance with the provisions of
Section 12.13 hereof.

     11.10 Notice of Transfer.  The Agent may deem and treat any Lender which is
a party to this Agreement as the owner of such Lender's  respective  portions of
the Loans for all purposes,  unless and until a written notice of the assignment
or transfer  thereof executed by any such Lender shall have been received by the
Agent and become effective in accordance with Section 12.9 hereof.

     11.11 Successor  Agent.  The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower,  but such resignation  shall not
become  effective  until  acceptance  by a  successor  Agent of its  appointment
pursuant hereto.  Upon any such  resignation,  the retiring Agent shall promptly
appoint a  successor  Agent from among the Merrill  Lynch Group or the  Lenders,
provided  that, if such  replacement is not a member of the Merrill Lynch Group,
such  replacement  is  reasonably  acceptable  (as  evidenced in writing) to the
Borrower and the  Required  Lenders.  If no  successor  Agent shall have been so
appointed by the retiring Agent and shall have accepted such appointment  within
30 days after the retiring Agent's giving of notice of resignation, the Borrower
may appoint a successor  Agent (which  successor may be replaced by the Required
Lenders; provided that such replacement is reasonably acceptable to the Borrower
if such replacement is not a member of the Merrill Lynch Group),  which shall be
either a Lender or a  commercial  bank  organized  under the laws of the  United
States of America or of any State  thereof  and  having a combined  capital  and
surplus of at least  $250,000,000.  Upon the  acceptance of any  appointment  as
Agent  hereunder by a successor  Agent,  such  successor  Agent shall  thereupon
succeed to and become vested with all the rights, powers,  privileges and duties
of the retiring  Agent,  and the  retiring  Agent shall be  discharged  from its
duties and obligations under this Agreement, the other Fundamental Documents and
any other credit documentation. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article 11 shall inure to its benefit as to any
actions  taken or  omitted  to be taken by it  while  it was  Agent  under  this
Agreement.

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<PAGE>
12. MISCELLANEOUS

     12.1 Expenses. Whether or not the transactions hereby contemplated shall be
consummated,  Merrill Lynch Group agrees to pay all reasonable expenses incurred
by the Borrower,  the Agent and the Lenders in  connection  with, or growing out
of, the negotiation,  preparation,  execution and delivery of this Agreement and
any other  documentation  contemplated  hereby,  the  Notes  and the  Collateral
(including  the  Pledged  Securities),   including,  but  not  limited  to,  the
reasonable fees and  disbursements  of any counsel for the Borrower or the Agent
and the Lenders.  The Borrower agrees to pay all reasonable expenses incurred by
the Agent and the  Lenders in  connection  with,  or growing out of, any waiver,
modification or enforcement and administration of this Agreement  (including any
amendment hereto) and any other documentation contemplated hereby, the Notes and
the Collateral  (including the Pledged Securities),  including,  but not limited
to, the reasonable fees and  disbursements  of any counsel for the Agent and the
Lenders.

     12.2 Cost of  Collection.  If the Borrower  fails to make any payment under
this  Agreement  as and when  required,  the  Borrower  must pay,  to the extent
permitted by Applicable  Law, the Secured  Parties' court and collection  costs,
including  legal fees, any costs incurred in the  disposition of the Collateral,
and, if the Loan is referred for  collection to any attorney not employed by the
Agent or one of its Affiliates, the Agent's reasonable attorney fees.

     12.3 Indemnities. The Borrower shall on demand indemnify the Agent, each of
the  Lenders and the Swap  Provider to the extent the Agent,  any such Lender or
the Swap Provider has sustained or suffered:

          (i) Any increased cost in maintaining its Commitment,  all or any part
     of any Loan or any other  amount  outstanding  under this  Agreement or any
     reduction in the effective return to such Lender under this Agreement or in
     the rate of overall  return on its  capital  below that which it would have
     been able to  achieve  but for its  entering  into or giving  effect to the
     Agreement,  in each  case,  which is  sustained  or  incurred  directly  or
     indirectly as a consequence of, or of compliance with, any change after the
     date hereof in any law,  regulation,  guideline,  order or any directive or
     the like  (whether or not having the force of law) of any  governmental  or
     other  regulatory  body or  authority  affecting  the  manner in which such
     Lender allocates  capital resources to its obligations under this Agreement
     or any  interpretation  by any  such  governmental  or  regulatory  body or
     authority;

          (ii) Any funding and any other cost,  expense or liability  (including
     loss of profit,  legal fees and taxes)  sustained or incurred by the Agent,
     any Lender or the Swap Provider (1) to render this Agreement (including the
     Security Interest created by this Agreement) enforceable, (2) in connection
     with  protecting  or  enforcing  the  Agent's,  the  Lender's  or the  Swap
     Provider's rights under this Agreement and/or any amendment thereto, (3) as
     a result of the  occurrence  or  continuance  of any  Default,  or (4) as a
     result of the  receipt or recovery by a Lender of all or any part of a Loan

                                       40
<PAGE>
     (other than a Loan  interest on which is  calculated  by  reference  to the
     Alternate  Rate) or an  overdue  sum  otherwise  than on the last day of an
     Interest Period applicable to that Loan;

          (iii) Any stamp,  documentary,  registration or similar tax payable in
     connection with the entry into, registration,  performance,  enforcement or
     admissibility  in  evidence  of the  Agreement  and/or any such  amendment,
     supplement  or waiver,  promptly  and in any event  before any  interest or
     penalty  becomes  payable,  together with any liability  with respect to or
     resulting from any delay in paying or omission to pay any such tax;

          (iv) Any claims, demands, losses,  judgments,  damages and liabilities
     (including liabilities for penalties) incurred by the Agent, any Lender, or
     the Swap Provider and/or their  directors,  officers,  employees and agents
     (each an "Indemnified  Party") as a result of, or arising out of, or in any
     way  related  to, or by  -----------------  reason of,  any  investigation,
     litigation (excluding litigation among the Lenders or between the Agent and
     the Lenders in  connection  with the  Fundamental  Documents  or in any way
     relating  to the  transactions  contemplated  hereby)  or other  proceeding
     (whether  or not either the Agent,  such  Lender or the Swap  Provider is a
     party thereto)  related to the entering into and/or the performance of this
     Agreement, or the use of the proceeds of any Loan hereunder or the issuance
     of any  Letter of  Credit,  or the  consummation  of any other  transaction
     contemplated  by  this  Agreement,   including,   without  limitation,  the
     reasonable fees and  disbursements  of counsel  incurred in connection with
     any such  investigation,  litigation or other proceeding (but excluding any
     such losses,  liabilities,  claims,  damages or expenses of an  Indemnified
     Party to the  extent  incurred  (i) by reason of the  gross  negligence  or
     willful  misconduct  of such  Indemnified  Party or (ii) as a result of any
     dispute between Indemnified  Parties or any conflicting  instructions given
     to the Borrower by Indemnified Parties); and

          (v) Any claims, demands,  losses,  judgments,  damages and liabilities
     (including  liabilities for penalties) incurred by the Agent, any Lender or
     the Swap  Provider as a result of, or arising out of, or in any way related
     to, or by reason  of, any loss  incurred  by any  Shareholder  whether as a
     result of an adverse tax situation or otherwise, arising from or in any way
     related to any act or failure to act by either  Secured Party in connection
     with the Collateral or this Agreement.

     12.4 Delay in Enforcement; No Waiver. The Secured Parties or either of them
can choose to delay or not to enforce any of their rights  under this  Agreement
without  losing  such  rights or in any way  affecting  the ability of the other
Secured Party to exercise such rights.  If either of the Secured Parties chooses
not to exercise or enforce (or is prevented from exercising or enforcing) any of
such  rights,  the Borrower  agrees that such  Secured  Party is not waiving the
right to enforce  such  rights at a later time or any of its other  rights,  and
that the other Secured Party may, nonetheless, proceed to independently exercise
or enforce any or all of such rights as it may deem  appropriate.  Any waiver of
the Secured Parties' rights under this Agreement must be in writing.

                                       41
<PAGE>
     12.5  Statements  and Notices.  Statements  and notices will be sent to the
address for the Borrower  indicated  on the  signature  page hereto,  unless the
Borrower  notifies  the Agent in writing of a change in  address.  The  Borrower
agrees to provide the Agent with 30 Business  Days' prior written  notice of any
change of address or name.  The Borrower  agrees to send  correspondence  to the
Agent  at the  address  for the  Agent  indicated  on the  signature  page or as
otherwise  provided  by the Agent,  or if to a Lender to it at its  address  set
forth on the signature page.

     12.6  Waivers.  To the extent  permitted  by  Applicable  Law, the Borrower
waives the  Borrower's  rights to require the Agent,  (a) to demand  payments of
amounts due (known as  "presentment");  (b) to give notice that amounts due have
not been paid  (known as "notice of  dishonor");  and (c) to obtain an  official
certification of non-payment (known as "protest").

     12.7 Non-Recourse. Each Secured Party hereby agrees for the benefit of each
and every  Shareholder  of the  Borrower,  the  Manager  of the  Borrower,  each
employee, officer and trustee of the Manager and of the Borrower, the Investment
Advisor, and any successor,  assignee,  heir, estate,  administrator or personal
representative  of any  such  person  (a  "Non-Recourse  Person")  that:  (a) no
Non-Recourse  Person shall have any personal liability for any obligation of the
Borrower under this Agreement or the Notes or the Account  Control  Agreement or
the Swap Agreement or any other instrument or document delivered pursuant hereto
or thereto;  (b) no claim  against any  Non-Recourse  Person may be made for any
obligation of the Borrower under this Agreement,  the Notes, the Account Control
Agreement  or any other  instrument  or document  delivered  pursuant  hereto or
thereto,  whether for payment of principal  of, or interest on, the Loans or for
any fees, costs,  expenses or other amounts payable by the Borrower hereunder or
thereunder,  or otherwise;  and (c) the  obligations  of the Borrower under this
Agreement,  the Note,  the Account  Control  Agreement or the Swap  Agreement or
other  document  or  instrument   delivered   pursuant  hereto  or  thereto  are
enforceable  against the  Borrower  and the  Borrower's  properties  and assets.
Nothing  contained  in this  Section  shall be construed as limiting the Secured
Parties'  rights  against the Custodian in its capacity as custodian and account
carrier under the Account Control Agreement.

     12.8  Further  Assurances.  The  Borrower  agrees  that upon the request of
either Secured Party, it shall execute and/or deliver any additional agreements,
documents and  instruments as may be reasonably  requested by such Secured Party
from time to time,  including,  without  limitation,  opinions  of counsel  with
respect to the continuing  authority of the Borrower to perform its  obligations
under this Agreement (which counsel shall be satisfactory to the Secured Parties
in their sole discretion),  which agreements,  documents or instruments shall be
satisfactory to the Secured Parties in their sole discretion.

                                       42
<PAGE>
     12.9 Successors and Assigns; Loan Sales; Participations.

     (a) This  Agreement  shall be binding  upon and inure to the benefit of the
successors  and  permitted  assigns of all the parties to this  Agreement.  Each
Lender and the Swap  Provider  may assign at its sole  option all or part of its
rights,  obligations  and  remedies  under this  Agreement  to any member of the
Merrill Lynch Group. In the event that any Lender or the Swap Provider wishes to
assign all or part of its rights,  obligation  and remedies under this Agreement
to anyone other than a member of the Merrill  Lynch Group,  such  assignment  is
subject to the written  consent of the  Borrower  and the Agent  (which  consent
shall not unreasonably be withheld);  provided  however,  that no consent by the
Borrower  shall be required for any  assignment  which is made while an Event of
Default has  occurred  or is  continuing.  Any such  assignee of such rights and
obligations  shall be entitled to the full benefit of this Agreement to the same
extent as if it were an original  party in respect of the rights or  obligations
assigned or  transferred  to it. The Agent,  any Lender or the Swap Provider may
disclose  to a  potential  assignee  (or any other  Person  who has  entered  or
proposes to enter into contractual  arrangements  with any Lender in relation to
or concerning this  Agreement),  such information  about the Borrower,  and this
Agreement as it may deem  appropriate  provided that such assignee (or any other
Person who has entered or proposes to enter into contractual  arrangements  with
any  Lender in  relation  to or  concerning  this  Agreement)  is subject to the
provisions set forth in Section 12.18. The Borrower may not assign its rights or
obligations under this Agreement.

     (b) Each  Lender may grant  participations  in all or any part of its Loans
and its Commitment to one or more financial institutions, provided that (i) such
Lender's  obligations  under this Agreement  shall remain  unchanged,  (ii) such
Lender shall remain solely  responsible  to the Borrower for the  performance of
such obligations,  (iii) the Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's  rights and obligations  under
this Agreement, (iv) no sub-participations shall be permitted and (v) the voting
rights of any holder of any  participation  shall be limited to  decisions  that
only do any of the  following:  (A) subject the  participant  to any  additional
obligation, (B) reduce the principal of, or interest on the Loans or any fees or
other amounts payable hereunder, (C) postpone the Commitment Termination Date or
Maturity  Date,  or the date fixed for  payment of  interest on the loans or the
Commitment Fee payable hereunder.

     (c) If any  participation  made pursuant to subsection (b) shall be made to
any Person that is not a United States Person as defined in Section  7701(a)(30)
of the  Internal  Revenue Code of 1986,  such Person shall  furnish to the Agent
such forms as may be specified by the Internal  Revenue Service to evidence such
Person's  complete  exemption  from (or  entitlement to a reduced rate for) U.S.
withholding   taxes  with  respect  to  all   payments   with  respect  to  such
participation.

     12.10 GOVERNING LAW AND JURISDICTION.

     (a) THIS AGREEMENT AND THE NOTES HAVE BEEN DELIVERED BY THE BORROWER IN THE
STATE OF NEW YORK AND IN ALL RESPECTS SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE  LAWS OF THE  STATE  OF NEW  YORK  APPLICABLE  TO  CONTRACTS  MADE AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.  EACH LETTER OF CREDIT SHALL BE GOVERNED BY,
AND SHALL BE  CONSTRUED  AND  ENFORCED  IN  ACCORDANCE  WITH,  THE LAWS OR RULES

                                       43
<PAGE>
DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED,
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS,  INTERNATIONAL CHAMBER
OF  COMMERCE  PUBLICATION  NO. 500 AS ADOPTED OR AMENDED  FROM TIME TO TIME (THE
"UNIFORM  CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,  THE
LAWS OF THE STATE OF NEW YORK.

     (b) THE BORROWER HEREBY  IRREVOCABLY  SUBMITS ITSELF TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY AND TO THE JURISDICTION OF THE
UNITED  STATES  DISTRICT  COURT FOR THE  SOUTHERN  DISTRICT  OF NEW YORK FOR THE
PURPOSES OF ANY SUIT,  ACTION OR OTHER  PROCEEDING  ARISING OUT OF OR BASED UPON
THIS  AGREEMENT  OR THE  SUBJECT  MATTER  HEREOF  BROUGHT  BY THE  AGENT  OR ITS
SUCCESSORS OR ASSIGNS. THE BORROWER,  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
(A) HEREBY  WAIVES AND AGREES NOT TO ASSERT,  BY WAY OF MOTION,  AS A DEFENSE OR
OTHERWISE,  IN ANY SUCH  SUIT,  ACTION OR  PROCEEDING,  ANY CLAIM THAT IT IS NOT
SUBJECT  PERSONALLY TO THE  JURISDICTION  OF THE  ABOVE-NAMED  COURTS,  THAT ITS
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT  FORUM,  THAT THE VENUE OF THE SUIT,
ACTION OR  PROCEEDING IS IMPROPER OR THAT THIS  AGREEMENT OR THE SUBJECT  MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,  AND (B) HEREBY WAIVES THE RIGHT
TO ASSERT IN ANY SUCH SUIT,  ACTION OR  PROCEEDING  ANY OFFSET OR  COUNTERCLAIM,
EXCEPT  COUNTERCLAIMS  THAT ARE COMPULSORY.  THE BORROWER HEREBY CONSENTS TO THE
SERVICE OF PROCESS BY MAIL AT ITS NOTICE  ADDRESS SET FORTH IN SECTION 12.5. THE
BORROWER  AGREES THAT ITS SUBMISSION TO  JURISDICTION  AND CONSENT TO SERVICE OF
PROCESS BY MAIL IS MADE FOR THE EXPRESS  BENEFIT OF THE SECURED  PARTIES.  FINAL
JUDGMENT  AGAINST THE BORROWER IN ANY SUCH SUIT,  ACTION OR PROCEEDING  SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR
PROCEEDING  ON THE  JUDGMENT,  A  CERTIFIED  OR TRUE  COPY  OF  WHICH  SHALL  BE
CONCLUSIVE  EVIDENCE  OF THE  FACT  AND OF THE  AMOUNT  OF THE  INDEBTEDNESS  OR
LIABILITY OF THE BORROWER OR (Y) IN ANY OTHER MANNER  PROVIDED BY OR PURSUANT TO
THE LAWS OF SUCH OTHER JURISDICTION;  PROVIDED, HOWEVER, THAT EACH SECURED PARTY

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MAY AT ITS OPTION BRING SUIT OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
BORROWER OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES
OR OF ANY COUNTRY OR PLACE WHERE THE BORROWER OR SUCH ASSETS MAY BE FOUND.

     12.11  Effectiveness.  The  Borrower  hereby  acknowledges  that  (i)  this
Agreement  shall become  effective with respect to each Lender only at such time
as such Lender has accepted  this  Agreement  and such Lender shall not have any
liability or obligation  hereunder until such time, (ii) the Agent,  Lenders and
the Swap  Provider may execute this  Agreement by telecopy and provide  executed
originals to the Borrower.

     12.12 WAIVER OF JURY TRIAL. TO THE EXTENT  PERMITTED BY APPLICABLE LAW, THE
BORROWER  HEREBY  WAIVES  AND  COVENANTS  THAT IT WILL NOT  ASSERT  (WHETHER  AS
PLAINTIFF,  DEFENDANT OR OTHERWISE),  ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE NOTES OR THE SUBJECT MATTER HEREOF OR THEREOF, IN
EACH CASE WHETHER NOW  EXISTING OR  HEREAFTER  ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE.  THE BORROWER  ACKNOWLEDGES  THAT IT HAS BEEN INFORMED BY THE
SECURED  PARTIES  THAT THE  PROVISIONS  OF THIS  SECTION  CONSTITUTE  A MATERIAL
INDUCEMENT UPON WHICH THE SECURED PARTIES HAVE RELIED, ARE RELYING AND WILL RELY
IN ENTERING INTO THIS  AGREEMENT,  THE NOTES,  THE SWAP  AGREEMENT AND ANY OTHER
DOCUMENT RELATED THERETO. EACH SECURED PARTY MAY FILE AN ORIGINAL COUNTERPART OF
THIS SECTION  WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE BORROWER
TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.

     12.13 Amendments. No amendment,  modification or waiver of any provision of
this Agreement and no consent to any departure by the Borrower  herefrom,  shall
be  effective  unless the same shall be in  writing  and signed by the  Required
Lenders and then such waiver or consent shall be effective  only in the specific
instance and for the purpose for which given;  provided,  however,  that no such
modification,  amendment or waiver shall,  without the written consent of all of
the Lenders,  (i) change the Commitment of any Lender,  (ii) amend or modify any
provision of this Agreement which provides for the unanimous consent or approval
of the Lenders,  (iii) release any  Collateral or any of the Pledged  Securities
(except as  contemplated  herein),  (iv) alter the fixed  scheduled  maturity or
principal amount of any Loan, or the rate of interest  payable  thereon,  or the
rate at which the  Commitment  Fees  accrue or the fixed  scheduled  maturity or
amount of any other  payment  required  to be made  under  this  Agreement,  (v)
subordinate the Obligations  hereunder to other  Indebtedness or subordinate the
security interests of the Collateral Agent in the Collateral except as permitted
by Section 11.1,  (vi) amend the definition of "Required  Lenders,"  (vii) amend
the definition of "Collateral," or (viii) amend or modify this Section 12.13. No
such amendment or modification  may adversely  affect the rights and obligations
of the Agent hereunder without its prior written consent. No notice to or demand
on any of the Borrower shall entitle the Borrower to any other or further notice

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or demand in the same,  similar or other  circumstances.  Each  holder of a Note
shall be bound by any amendment,  modification,  waiver or consent authorized as
provided  herein,  whether or not a Note shall have been marked to indicate such
amendment,  modification,  waiver or consent  and any consent by any holder of a
Note shall bind any Person subsequently  acquiring a Note, whether or not a Note
is so marked.

     12.14  Headings.  The heading of each  provision  of this  Agreement is for
descriptive  purposes  only and shall not be deemed to modify or qualify  any of
the rights or obligations described in each such provision.

     12.15  Severability.  If any  provision  of  this  Agreement  is held to be
invalid,   illegal,  void  or  unenforceable,   by  reason  of  any  law,  rule,
administrative  order or judicial or arbitral decision,  such decision shall not
affect the validity of the remaining provisions of this Agreement.

     12.16 Entire  Agreement.  This Agreement and the Account Control  Agreement
constitute  the entire  agreement  between the parties and supersede any and all
prior agreements (whether written or oral).

     12.17  Execution in  Counterparts.  This  Agreement  may be executed in any
number of counterparts,  each of which shall constitute an original,  but all of
which when taken together shall constitute one and the same instrument.

     12.18 Confidentiality. The Agent and each Lender agree to keep confidential
any  written  or oral  information  (a)  provided  to it by or on  behalf of the
Borrower pursuant to or in connection with this Agreement or (b) obtained by the
Agent based on a review of the books and records of the Borrower;  provided that
nothing  herein shall prevent the Agent or any Lender from  disclosing  any such
information (i) to any assignee, transferee, prospective assignee or prospective
transferee  which agrees to comply with the provisions of this Section,  (ii) to
its affiliates,  employees, directors, agents, attorneys,  accountants and other
professional  advisors,  (iii) upon the request or demand of any governmental or
other  regulatory body or authority,  (iv) in response to any order of any court
or other  governmental or other regulatory body or authority or as may otherwise
be required pursuant to any present or future law or regulation or any directive
or the like  (whether  or not  having the force of law) of any  governmental  or
other regulatory body or authority,  (v) which has been publicly disclosed other
than in breach of this  Section or (vi) in  connection  with the exercise of any
remedy hereunder.

     12.19 Survival. The Borrower hereby acknowledges that the Security Interest
created hereby is for the benefit of the Secured Parties. To the extent that the
Loans have been indefeasibly paid, the Commitment  terminated,  the L/C Exposure
has been reduced to zero, and all other Obligations of the Borrower to the Agent
and the Lenders  have been  satisfied  (as  determined  by the Agent in its sole
discretion) while the Swap Agreement remains  effective,  then the Swap Provider
or its designee shall have or continue to have all rights hereunder as a Secured
Party and all provisions of this Agreement relating in any manner to such rights
shall survive the  satisfaction  of the Borrower's  Obligations to the Agent and
the Lenders.  At such time,  the Swap Provider  shall be entitled to exercise or

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<PAGE>
refrain from exercising any such rights,  without regard to the  satisfaction of
the Borrower's  Obligations to the Agent and the Lenders. To the extent that all
Obligations  of the  Borrower  to the Swap  Provider  have  been  satisfied  (as
determined by the Swap  Provider in its sole  discretion)  while the  Borrower's
Obligations to the Agent and the Lenders remain outstanding,  the Agent, for the
benefit of the Lenders, shall have or continue to have all rights hereunder as a
Secured  Party and all  provisions of this  Agreement  relating in any manner to
such rights shall survive the satisfaction of the Borrower's  Obligations to the
Swap Provider.  At such time, the Agent shall be entitled to exercise or refrain
from  exercising  any such rights,  without  regard to the  satisfaction  of the
Borrower's Obligation to the Swap Provider.

                           [Signature page to follow]

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<PAGE>
     IN WITNESS  WHEREOF,  the parties hereto have caused this Loan and Security
Agreement to be duly executed by its  authorized  officer as of the day and year
first written above.

                                Borrower:

                                BELCREST CAPITAL FUND LLC, as Borrower

                                By:      EATON VANCE MANAGEMENT, as Manager


                                By:     /s/ Thomas E. Faust Jr.
                                        -----------------------------------
                                Name:     Thomas E. Faust Jr.
                                Title:    Executive Vice President
                                Address:  The Eaton Vance Building
                                          255 State Street
                                          Boston, Massachusetts  02109
                                Telephone No.:  (617) 482-8260
                                Telecopier No.:  (617) 482-3836

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                                Lenders:

                                MERRILL LYNCH MORTGAGE CAPITAL, INC.,
                                individually and as Agent


                                By:     /s/ Joshua A. Green
                                        -----------------------------------
                                Name:     Joshua A. Green
                                Title:    Vice President
                                Address:  4 World Financial Center
                                          10th Floor
                                          New York, New York 10080
                                Telephone No.:  (212) 449-7330
                                Telecopier No.:  (212) 449-6673

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<PAGE>
                                Swap Provider:

                                MERRILL LYNCH CAPITAL SERVICES, INC.,
                                as Swap Provider


                                By:     /s/ Thomas Finley
                                        -----------------------------------
                                Name:     Thomas Finley
                                Title:    Managing Director
                                Address:  4 World Financial Center
                                          12th Floor
                                          New York, New York  10080
                                Telephone No.:  (212) 449-8169
                                Telecopier No.:  (212) 449-6993

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<PAGE>
                                                                    SCHEDULE 1.1


                             SCHEDULE OF COMMITMENTS



              LENDER                                            LOAN COMMITMENT

Merrill Lynch Mortgage Capital, Inc.                              $138,000,000