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                                                                   Exhibit 10.12

                                 LOAN AGREEMENT

                         Dated as of September 18, 2000

                                     Between

                                HERITAGE SPE LLC,

                                   as Borrower

                                       and

                    PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC,

                                    as Lender
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                                      - i -


                                TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----

I.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section  1.1      Definitions ................................................ 1
Section  1.2      Principles of Construction ................................ 15

II.   THE LOAN

Section  2.1     The Loan ................................................... 15
       2.1.1     Agreement to Lend and Borrow ............................... 15
       2.1.2     Single Disbursement to Borrower ............................ 16
       2.1.3     The Note ................................................... 16
       2.1.4     Use of Proceeds ............................................ 16
Section  2.2     Interest Rate .............................................. 16
       2.2.1     Interest Rate .............................................. 16
       2.2.2     Default Rate ............................................... 16
       2.2.3     Interest Calculation ....................................... 16
       2.2.4     Usury Savings .............................................. 16
Section  2.3     Loan Payments .............................................. 17
       2.3.1     Payments ................................................... 17
       2.3.2     Payment on Maturity Date ................................... 17
       2.3.3     Late Payment Charge ........................................ 17
       2.3.4     Method and Place of Payment ................................ 17
Section  2.4     Prepayments ................................................ 18
       2.4.1     Voluntary Prepayments ...................................... 18
       2.4.2     Mandatory Prepayments ...................................... 18
       2.4.3     Prepayments After Event of Default ......................... 18
       2.4.4     Prepayment on Monthly Payment Date ......................... 18
Section  2.5     Defeasance ................................................. 19
       2.5.1     Total Defeasance ........................................... 19
       2.5.2     Partial Defeasance ......................................... 21
       2.5.3     Defeasance Collateral Account .............................. 23
       2.5.4     Successor Borrower ......................................... 24
Section  2.6     Partial Release ............................................ 24
       2.6.1     Conditions to Release ...................................... 24
       2.6.2     No Waiver .................................................. 27
Section  2.7     Property Substitutions ..................................... 27
       2.7.1     Substitution of Property ................................... 27
Section  2.8     Additional Advance ......................................... 33
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                                     - ii -


III.  REPRESENTATIONS AND WARRANTIES

Section  3.1     Borrower Representations ................................... 35
       3.1.1     Organization ............................................... 35
       3.1.2     Proceedings ................................................ 35
       3.1.3     No Conflicts ............................................... 35
       3.1.4     Litigation ................................................. 36
       3.1.5     Agreements ................................................. 36
       3.1.6     Consents ................................................... 36
       3.1.7     Title ...................................................... 36
       3.1.8     No Plan Assets ............................................. 36
       3.1.9     Compliance ................................................. 37
       3.1.10    Financial Information ...................................... 37
       3.1.11    Condemnation ............................................... 37
       3.1.12    Utilities and Public Access ................................ 37
       3.1.13    Separate Lots .............................................. 37
       3.1.14    Assessments ................................................ 37
       3.1.15    Enforceability ............................................. 37
       3.1.16    Assignment of Leases ....................................... 38
       3.1.17    Insurance .................................................. 38
       3.1.18    Licenses ................................................... 38
       3.1.19    Flood Zone ................................................. 38
       3.1.20    Seismic Exposure ........................................... 38
       3.1.21    Physical Condition ......................................... 38
       3.1.22    Boundaries ................................................. 38
       3.1.23    Leases ..................................................... 39
       3.1.24    Filing and Recording Taxes ................................. 39
       3.1.25    Single Purpose ............................................. 39
       3.1.26    Solvency ................................................... 42
       3.1.27    Federal Reserve Regulations ................................ 43
       3.1.28    Organizational Chart ....................................... 43
       3.1.29    Investment Company Act ..................................... 43
       3.1.30    Misstatements of Fact ...................................... 43
       3.1.31    Forfeiture ................................................. 43
       3.1.32    No Broker .................................................. 44
       3.1.33    Conviction of Criminal Acts ................................ 44
       3.1.34    Security Agreements ........................................ 44
Section  3.2     Survival of Representations ................................ 44

IV.   BORROWER COVENANTS

Section  4.1     Borrower Affirmative Covenants ............................. 44
       4.1.1     Existence; Compliance with Legal Requirements .............. 44
       4.1.2     Taxes and Other Charges .................................... 44
       4.1.3     Litigation ................................................. 45
       4.1.4     Access to Properties ....................................... 45
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                                     - iii -


       4.1.5     Further Assurances; Supplemental Mortgage Affidavits ....... 45
       4.1.6     Financial Reporting ........................................ 45
       4.1.7     Title to the Individual Properties ......................... 47
       4.1.8     Estoppel Certificates ...................................... 48
       4.1.9     Leases ..................................................... 48
       4.1.10    Alterations ................................................ 49
Section  4.2     Borrower Negative Covenants ................................ 50
       4.2.1     Liens ...................................................... 50
       4.2.2     Dissolution ................................................ 50
       4.2.3     Change in Business ......................................... 50
       4.2.4     Debt Cancellation .......................................... 50
       4.2.5     Affiliate Transactions ..................................... 51
       4.2.6     Zoning ..................................................... 51
       4.2.7     Assets ..................................................... 51
       4.2.8     No Joint Assessment ........................................ 51
       4.2.9     Principal Place of Business ................................ 51
       4.2.10    ERISA ...................................................... 51

V.    INSURANCE, CASUALTY AND CONDEMNATION

Section  5.1     Insurance .................................................. 52
       5.1.1     Insurance Policies ......................................... 52
       5.1.2     Insurance Company .......................................... 55
Section  5.2     Casualty and Condemnation .................................. 55
       5.2.1     Casualty ................................................... 55
       5.2.2     Condemnation ............................................... 55
Section  5.3     Delivery of Net Proceeds ................................... 56
       5.3.1     Minor Casualty or Condemnation ............................. 56
       5.3.2     Major Casualty or Condemnation ............................. 56

VI.   RESERVE FUNDS

Section  6.1 ................................................................ 59
       A.        Required Repair Funds ...................................... 59
       6.1.1(A)  Deposit of Required Repair Funds ........................... 59
       6.1.2(A)  Release of Required Repair Funds ........................... 59
       B.        Required Remediation Funds ................................. 60
       6.1.1(B)  Deposit of Required Remediation Funds ...................... 60
       6.1.2(B)  Transfers of Contaminated Properties ....................... 60
       6.1.3(B)  Release of Required Remediation Funds ...................... 61
Section  6.2     Tax Funds .................................................. 62
       6.2.1     Deposits of Tax Funds ...................................... 62
       6.2.2     Release of Tax Funds ....................................... 62
Section  6.3     Insurance Funds ............................................ 62
       6.3.1     Deposits of Insurance Funds ................................ 62
       6.3.2     Release of Insurance Funds ................................. 63
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                                     - iv -


Section  6.4     Capital Expenditures Funds ................................. 63
       6.4.1     Deposits of Capital Expenditures Funds ..................... 63
       6.4.2     Release of Capital Expenditure Funds ....................... 63
Section  6.5     Rollover Funds ............................................. 65
       6.5.1     Deposits of Rollover Funds ................................. 65
       6.5.2     Release of Rollover Funds .................................. 65
Section  6.6     Ground Rent Funds .......................................... 66
       6.6.1     Deposit of Ground Rent Funds ............................... 66
       6.6.2     Release of Ground Funds .................................... 66
Section  6.7     Oakwood Note Reserve ....................................... 66
Section  6.8     Application of Reserve Funds ............................... 67
Section  6.9     Security Interest in Reserve Funds ......................... 67
       6.9.1     Grant of Security Interest ................................. 67
       6.9.2     Income Taxes ............................................... 67
       6.9.3     Prohibition Against Further Encumbrance .................... 67
Section  6.10    Interest on Reserve Funds .................................. 68
Section  6.11    Letters of Credit .......................................... 68
       6.11.1    Delivery of Letters of Credit .............................. 68
       6.11.2    Security for Debt .......................................... 68
       6.11.3    Additional Rights of Lender ................................ 68

VII.  PROPERTY MANAGEMENT

Section  7.1     The Management Agreement ................................... 69
Section  7.2     Prohibition Against Termination or Modification ............ 69
Section  7.3     Replacement of Manager ..................................... 69

VIII. TRANSFERS

Section  8.1     Prohibition on Transfers ................................... 70
Section  8.2     Permitted Transfers ........................................ 70

IX.   SALE AND SECURITIZATION OF MORTGAGES

Section  9.1     Sale of Mortgage and Securitization ........................ 72
Section  9.2     Securitization Indemnification ............................. 75
Section  9.3     Rating Surveillance ........................................ 77

X.    DEFAULTS

Section  10.1    Event of Default ........................................... 78
Section  10.2    Remedies ................................................... 80
Section  10.3    Remedies Cumulative ........................................ 81
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                                      - v -


XI.   MISCELLANEOUS

Section  11.1    Successors and Assigns ..................................... 81
Section  11.2    Lender's Discretion ........................................ 82
Section  11.3    Governing Law .............................................. 82
Section  11.4    Modification, Waiver in Writing ............................ 83
Section  11.5    Delay Not a Waiver ......................................... 84
Section  11.6    Notices .................................................... 84
Section  11.7    Trial by Jury .............................................. 85
Section  11.8    Headings ................................................... 85
Section  11.9    Severability ............................................... 85
Section  11.10   Preferences ................................................ 85
Section  11.11   Waiver of Notice ........................................... 86
Section  11.12   Remedies of Borrower ....................................... 86
Section  11.13   Expenses; Indemnity ........................................ 86
Section  11.14   Schedules Incorporated ..................................... 87
Section  11.15   Offsets, Counterclaims and Defenses ........................ 87
Section  11.16   No Joint Venture or Partnership; No Third Party
                  Beneficiaries ............................................. 87
Section  11.17   Publicity .................................................. 88
Section  11.18   Cross-Default; Cross-Collateralization; Waiver of
                  Marshalling of Assets ..................................... 88
Section  11.19   Waiver of Offsets/Defenses/Counterclaims ................... 89
Section  11.20   Conflict; Construction of Documents; Reliance .............. 89
Section  11.21   Brokers and Financial Advisors ............................. 89
Section  11.22   Exculpation ................................................ 90
Section  11.23   Prior Agreements ........................................... 91
Section  11.24   Servicer ................................................... 91

                                    SCHEDULES

Schedule I        -   Allocated Loan Amounts
Schedule II       -   Required Repairs
Schedule III      -   Rent Roll
Schedule IV       -   Organizational Chart
Schedule V        -   Pennsylvania Leasehold Properties
Schedule VI(A)    -   Tennessee Leasehold Property
Schedule VI(B)    -   Tennessee Leasehold Property Legal Description
Schedule VII      -   Certificate of Revised Loan Terms
Schedule VIII     -   Watson Glen Release Parcel
Schedule IX       -   Phase II Individual Properties
Schedule 3.1.23   -   Lease Exceptions
<Page>

                                 LOAN AGREEMENT

            THIS LOAN AGREEMENT, dated as of September 18, 2000 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company, having an address at 100 Mulberry Street - GC4, 9th
Floor, Newark, New Jersey 07102-4069 ("Lender"), and HERITAGE SPE LLC, a
Delaware limited liability company, having an address at 535 Boylston Street,
Boston, Massachusetts 02116 ("Borrower").

            All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.

                                   WITNESSETH:

            WHEREAS, Borrower desires to obtain the Loan from Lender; and

            WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the conditions and terms of this Agreement and the other
Loan Documents.

            NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:


            I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

            SECTION 1.1 DEFINITIONS.

            For all purposes of this Agreement, except as otherwise expressly
provided:

            "ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in
Section 9.1(c).

            "ADDITIONAL IMPROVEMENTS" shall have the meaning set forth in
Section 2.6.1 hereof.

            "AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, owns more than forty percent (40%) of, is in control of,
is controlled by or is under common ownership or control with such Person or is
a director or officer of such Person or of an Affiliate of such Person. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise.

            "AGENT" shall mean Fleet National Bank, a national banking
association (as long as Fleet National Bank at all times maintains a rating
designated by the Rating Agencies that is acceptable to the Rating Agencies),
and any successor Eligible Institution thereto.

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                                       -2-


            "ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan allocated
to each Individual Property as set forth on Schedule I hereto, subject to
adjustment pursuant to and in accordance with the terms and provisions of
Section 2.8.

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

            "ALTERATION THRESHOLD" shall mean for each Individual Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such
Individual Property or (ii) $350,000 for such Individual Property.

            "ANNUAL BUDGET" shall mean the operating and capital budget for all
Individual Properties on a combined basis and for each Individual Property
setting forth Borrower's good faith estimate of Gross Revenue, Operating
Expenses, and Capital Expenditures for the applicable Fiscal Year.

            "APPROVED ANNUAL BUDGET" shall have the meaning set forth in Section
4.1.6(e).

            "ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower and Heritage, together, as assignor, to
Lender, as assignee, with respect to the Individual Properties listed on
Schedule V attached hereto, and from Borrower, as assignor, to Lender, as
assignee, with respect to all other Individual Properties, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

            "ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain Consent
and Agreement of Manager dated the date hereof among Borrower, Manager and
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

            "AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of an
Individual Property.

            "BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.

            "BASIC CARRYING COSTS" shall mean the sum of the following costs
associated with the Individual Properties for the relevant Fiscal Year or
payment period: (i) Taxes and (ii) Insurance Premiums.

            "BETHLEHEM GROUND LEASE" shall mean that certain Ground Lease of
even date herewith made by and between Heritage, as lessor, and Borrower, as
lessee, and covering certain property located in Bethlehem, Pennsylvania, as
more particularly listed on Schedule V attached hereto.

            "BORROWER" shall mean Heritage SPE LLC, a Delaware limited liability
company, together with its permitted successors and permitted assigns.
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                                       -3-


            "BORROWER'S KNOWLEDGE" shall mean to the actual knowledge of
Borrower after due inquiry of those Affiliates of Borrower and those employees
of Borrower and its Affiliates who have familiarity with or responsibility for
the subject matter of the related representation, covenant or other matter,
including, without limitation, Richard Trueblood, Thomas Prendergast, Robert
Prendergast, Louis Zicht, Gary Widett and Patrick O'Sullivan, and after due
inquiry of third party consultants who have been engaged by Lender and/or
Borrower to perform diligence services with respect to the Individual
Properties, including, without limitation, environmental, engineering and zoning
reviews.

            "BOYERTOWN GROUND LEASE" shall mean that certain Ground Lease of
even date herewith made by and between Heritage, as lessor, and Borrower, as
lessee, and covering certain property located in Boyertown, Pennsylvania, as
more particularly listed on SCHEDULE V attached hereto.

            "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a legal holiday on which national banks are not open for general business in (i)
the State of New York, (ii) the state where the corporate trust office of the
Trustee is located, or (iii) the state where the servicing offices of the
Servicer are located.

            "CAPITAL EXPENDITURES" for any period shall mean amounts expended
for repairs, replacements, alterations and improvements made to the Individual
Properties by Borrower and required to be capitalized according to GAAP.

            "CAPITAL EXPENDITURES FUNDS" shall have the meaning set forth in
Section 6.4.1.

            "CAPITAL EXPENDITURES WORK" shall mean any labor performed or
materials installed in connection with any Capital Expenditure.

            "CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement of even date herewith among Lender, Borrower, Manager and Agent.

            "CASUALTY" shall mean the occurrence of any casualty, damage or
injury, by fire or otherwise, to any of the Individual Properties or any part
thereof.

            "CASUALTY CONSULTANT" shall have the meaning set forth in Section
5.3.2(c).

            "CASUALTY RETAINAGE" shall have the meaning set forth in Section
5.3.2(d).

            "CLOSING DATE" shall mean the date of funding the Loan.

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

            "CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Properties, or any interest therein or
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                                       -4-


right accruing thereto, including any right of access thereto or any change of
grade affecting the Properties or any part thereof.

            "CONTAMINATED PROPERTY" shall mean an Individual Property (i) as to
which the estimated cost of the Required Remediation as set forth in the related
Phase II Report exceeds Five Million and No/100 Dollars ($5,000,000) for such
Individual Property, or (ii) as to which any environmental contamination
revealed in such Phase II Report has migrated into, on or over the property of
another Person and for which the related scope of Borrower's potential liability
to other Persons as a result thereof cannot be quantified, but the projected
cost thereof exceeds $5,000,000.

            "DEBT" shall mean the outstanding principal amount of the Loan
together with all interest accrued and unpaid thereon and all other sums
(including the Yield Maintenance Premium) due to Lender in respect of the Loan
under the Note, this Agreement, the Mortgages, the Environmental Indemnity or
any other Loan Document.

            "DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.

            "DEBT SERVICE COVERAGE RATIO" shall mean (i) with respect to all
Individual Properties, the ratio of (a) the sum of Underwritable Cash Flow for
the Individual Properties for the twelve (12) calendar month period immediately
preceding the date of calculation to (b) the projected Debt Service that would
be due with respect to all Individual Properties for the twelve (12) calendar
month period immediately following such calculation and (ii) with respect to an
Individual Property, the ratio of (y) Underwritable Cash Flow for the subject
Individual Property for the twelve (12) calendar month period immediately
preceding the date of calculation to (z) the projected Debt Service that would
be due with respect to the Allocated Loan Amount applicable to the subject
Individual Property for the twelve (12) month period immediately following such
calculation, which Debt Service Coverage Ratio shall be computed by Lender in
accordance with generally accepted industry underwriting standards for
securitized commercial mortgage loans.

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

            "DEFAULT RATE" shall mean, with respect to the Loan, a rate per
annum equal to the lesser of (i) the maximum rate permitted by applicable law,
or (ii) three percent (3%) above the Interest Rate.

            "DEFEASANCE COLLATERAL ACCOUNT" shall have the meaning set forth in
Section 2.5.3.

            "DEFEASANCE DATE" shall have the meaning set forth in Section
2.5.1(a)(i).

            "DEFEASED NOTE" shall have the meaning set forth in Section
2.5.2(iv) hereof.

            "DISCLOSURE DOCUMENT" shall have the meaning set forth in Section
9.2(a).
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                                       -5-


            "DISCLOSURE DOCUMENT DATE" shall have the meaning set forth in
Section 9.1(c)(iv).

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

            "ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by Standard & Poor's Ratings Group, P-1 by Moody's Investors Service, Inc. and
F-1+ by Fitch, Inc. in the case of accounts in which funds are held for thirty
(30) days or less or, in the case of accounts in which funds are held for more
than thirty (30) days, the long term unsecured debt obligations of which are
rated at least "AA" by Fitch and S&P and "Aa2" by Moody's.

            "ENVIRONMENTAL INDEMNITY" shall mean those certain Hazardous
Substances Indemnity Agreements dated as of the date hereof executed by
Borrower, Heritage and the REIT with respect to the Individual Properties listed
on SCHEDULE V attached hereto, and by Borrower and the REIT with respect to all
other Individual Properties, in connection with the Loan for the benefit of
Lender.

            "EQUIPMENT" shall have the meaning set forth in the granting clause
of the Mortgage with respect to each Individual Property.

            "ERISA" shall have the meaning set forth in Section 4.2.10.

            "EVENT OF DEFAULT" shall have the meaning set forth in Section 10.1.

            "EXCHANGE ACT" shall have the meaning set forth in Section 9.2(a).

            "EXCHANGE ACT FILING" shall have the meaning set forth in Section
9.l(c)(vi).

            "EXISTING SUBSTITUTE PROPERTY" shall mean a Substitute Property
owned by Borrower or any Affiliate of Borrower prior to the date of the proposed
substitution for a period of not less than one (1) year.

            "FISCAL YEAR" shall mean each twelve month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.

            "GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of
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                                       -6-


Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in such other
statements by such entity as may be in general use by significant segments of
the U.S. accounting profession.

            "GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever or any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.

            "GROSS REVENUE" shall mean all revenue, derived from the ownership
and operation of the Individual Properties from whatever source, including, but
not limited to, Rents, but excluding sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any Governmental Authority,
non-recurring revenues, security deposits (except to the extent properly
utilized to offset a loss of Rent), refunds and uncollectible accounts, proceeds
of casualty insurance and Awards (other than business interruption or other loss
of income insurance related to business interruption or loss of income for the
period in question), and any disbursements to Borrower from the Reserve Funds or
any other fund established by the Loan Documents.

            "GROUND LEASE" shall mean, collectively, the Boyertown Ground Lease,
the Bethlehem Ground Lease and the Oakwood Ground Lease.

            "HERITAGE" shall mean Heritage Property Investment Limited
Partnership, a Delaware limited partnership, together with its permitted
successors and permitted assigns.

            "IMPROVEMENTS" shall have the meaning set forth in the granting
clause of the related Mortgage with respect to each Individual Property.

            "INDEBTEDNESS" shall mean, for any Person, without duplication: (i)
all indebtedness of such Person for borrowed money, for amounts drawn under a
letter of credit, or for the deferred purchase price of property for which such
Person or its assets is liable, (ii) all unfunded amounts under a loan
agreement, letter of credit, or other credit facility for which such Person
would be liable if such amounts were advanced thereunder, (iii) all amounts
required to be paid by such Person as a guaranteed payment to partners or a
preferred or special dividend, including any mandatory redemption of shares or
interests, (iv) all indebtedness guaranteed by such Person, directly or
indirectly, (v) all obligations under leases that constitute capital leases for
which such Person is liable, and (vi) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements,
in each case whether such Person is liable contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss.

            "INDEMNIFIED LIABILITIES" shall have the meaning set forth in
Section 11.13(b).

            "INDEPENDENT DIRECTOR" shall have the meaning set forth in Section
3.1.24(p).

            "INDIVIDUAL PROPERTIES" shall mean, collectively, all of the
Individual Properties which are subject to the terms of this Agreement.
<Page>

                                 LOAN AGREEMENT

            THIS LOAN AGREEMENT, dated as of September 18, 2000 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company, having an address at 100 Mulberry Street - GC4, 9th
Floor, Newark, New Jersey 071024069 ("Lender"), and HERITAGE SPE LLC, a Delaware
limited liability company, having an address at 535 Boylston Street, Boston,
Massachusetts 02116 ("Borrower").

            All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.

                                   WITNESSETH:

            WHEREAS, Borrower desires to obtain the Loan from Lender; and


            WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the conditions and terms of this Agreement and the other
Loan Documents.

            NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:

            I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

            SECTION 1.1 DEFINITIONS.

            For all purposes of this Agreement, except as otherwise expressly
provided:

            "ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in
Section 9.1(c).

            "ADDITIONAL IMPROVEMENTS" shall have the meaning set forth in
Section 2.6.1 hereof.

            "AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, owns more than forty percent (40%) of, is in control of,
is controlled by or is under common ownership or control with such Person or is
a director or officer of such Person or of an Affiliate of such Person. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise.

            "AGENT" shall mean Fleet National Bank, a national banking
association (as long as Fleet National Bank at all times maintains a rating
designated by the Rating Agencies that is acceptable to the Rating Agencies),
and any successor Eligible Institution thereto.
<Page>

                                       -2-


            "ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan allocated
to each Individual Property as set forth on Schedule I hereto, subject to
adjustment pursuant to and in accordance with the terms and provisions of
Section 2.8.

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

            "ALTERATION THRESHOLD" shall mean for each Individual Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such
Individual Property or (ii) $350,000 for such Individual Property.

            "ANNUAL BUDGET" shall mean the operating and capital budget for all
Individual Properties on a combined basis and for each Individual Property
setting forth Borrower's good faith estimate of Gross Revenue, Operating
Expenses, and Capital Expenditures for the applicable Fiscal Year.

            "APPROVED ANNUAL BUDGET" shall have the meaning set forth in Section
4.1.6(e).

            "ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower and Heritage, together, as assignor, to
Lender, as assignee, with respect to the Individual Properties listed on
Schedule V attached hereto, and from Borrower, as assignor, to Lender, as
assignee, with respect to all other Individual Properties, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

            "ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain Consent
and Agreement of Manager dated the date hereof among Borrower, Manager and
Lender, as the same may. be amended, restated, replaced, supplemented or
otherwise modified from time to time.

            "AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of an
Individual Property.

            "BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.

            "BASIC CARRYING COSTS" shall mean the sum of the following costs
associated with the Individual Properties for the relevant Fiscal Year or
payment period: (i) Taxes and (ii) Insurance Premiums.

            "BETHLEHEM GROUND LEASE" shall mean that certain Ground Lease of
even date herewith made by and between Heritage, as lessor, and Borrower, as
lessee, and covering certain property located in Bethlehem, Pennsylvania, as
more particularly listed on Schedule V attached hereto.

            "BORROWER" shall mean Heritage SPE LLC, a Delaware limited liability
company, together with its permitted successors and permitted assigns.
<Page>

                                       -3-


            "BORROWER'S KNOWLEDGE" shall mean to the actual knowledge of
Borrower after due inquiry of those Affiliates of Borrower and those employees
of Borrower and its Affiliates who have familiarity with or responsibility for
the subject matter of the related representation, covenant or other matter,
including, without limitation, Richard Trueblood, Thomas Prendergast, Robert
Prendergast, Louis Zicht, Gary Widett and Patrick O'Sullivan, and after due
inquiry of third party consultants who have been engaged by Lender and/or
Borrower to perform diligence services with respect to the Individual
Properties, including, without limitation, environmental, engineering and zoning
reviews.

            "BOYERTOWN GROUND LEASE" shall mean that certain Ground Lease of
even date herewith made by and between Heritage, as lessor, and Borrower, as
lessee, and covering certain property located in Boyertown, Pennsylvania, as
more particularly listed on SCHEDULE V attached hereto.

            "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a legal holiday on which national banks are not open for general business in (i)
the State of New York, (ii) the state where the corporate trust office of the
Trustee is located, or (iii) the state where the servicing offices of the
Servicer are located.

            "CAPITAL EXPENDITURES" for any period shall mean amounts expended
for repairs, replacements, alterations and improvements made to the Individual
Properties by Borrower and required to be capitalized according to GAAP.

            "CAPITAL EXPENDITURES FUNDS" shall have the meaning set forth in
Section 6.4.1.

            "CAPITAL EXPENDITURES WORK" shall mean any labor performed or
materials installed in connection with any Capital Expenditure.

            "CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement of even date herewith among Lender, Borrower, Manager and Agent.

            "CASUALTY" shall mean the occurrence of any casualty, damage or
injury, by fire or otherwise, to any of the Individual Properties or any part
thereof.

            "CASUALTY CONSULTANT" shall have the meaning set forth in Section
5.3.2(c).

            "CASUALTY RETAINAGE" shall have the meaning set forth in Section
5.3.2(d).

            "CLOSING DATE" shall mean the date of funding the Loan.

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

            "CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Properties, or any interest therein or
<Page>

                                       -4-


right accruing thereto, including any right of access thereto or any change of
grade affecting the Properties or any part thereof.

            "CONTAMINATED PROPERTY" shall mean an Individual Property (i) as to
which the estimated cost of the Required Remediation as set forth in the related
Phase II Report exceeds Five Million and No/100 Dollars ($5,000,000) for such
Individual Property, or (ii) as to which any environmental contamination
revealed in such Phase II Report has migrated into, on or over the property of
another Person and for which the related scope of Borrower's potential liability
to other Persons as a result thereof cannot be quantified, but the projected
cost thereof exceeds $5,000,000.

            "DEBT" shall mean the outstanding principal amount of the Loan
together with all interest accrued and unpaid thereon and all other sums
(including the Yield Maintenance Premium) due to Lender in respect of the Loan
under the Note, this Agreement, the Mortgages, the Environmental Indemnity or
any other Loan Document.

            "DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.

            "DEBT SERVICE COVERAGE RATIO" shall mean (i) with respect to all
Individual Properties, the ratio of (a) the sum of Underwritable Cash Flow for
the Individual Properties for the twelve (12) calendar month period immediately
preceding the date of calculation to (b) the projected Debt Service that would
be due with respect to all Individual Properties for the twelve (12) calendar
month period immediately following such calculation and (ii) with respect to an
Individual Property, the ratio of (y) Underwritable Cash Flow for the subject
Individual Property for the twelve (12) calendar month period immediately
preceding the date of calculation to (z) the projected Debt Service that would
be due with respect to the Allocated Loan Amount applicable to the subject
Individual Property for the twelve (12) month period immediately following such
calculation, which Debt Service Coverage Ratio shall be computed by Lender in
accordance with generally accepted industry underwriting standards for
securitized commercial mortgage loans.

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

            "DEFAULT RATE" shall mean, with respect to the Loan, a rate per
annum equal to the lesser of (i) the maximum rate permitted by applicable law,
or (ii) three percent (3%) above the Interest Rate.

            "DEFEASANCE COLLATERAL ACCOUNT" shall have the meaning set forth in
Section 2.5.3.

            "DEFEASANCE DATE" shall have the meaning set forth in Section
2.5.1(a)(i).

            "DEFEASED NOTE" shall have the meaning set forth in Section
2.5.2(iv) hereof.

            "DISCLOSURE DOCUMENT" shall have the meaning set forth in Section
9.2(a).
<Page>

                                       -5-


            "DISCLOSURE DOCUMENT DATE" shall have the meaning set forth in
Section 9.1(c)(iv).

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

            "ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by Standard & Poor's Ratings Group, P-1 by Moody's Investors Service, Inc. and
F-1+ by Fitch, Inc. in the case of accounts in which funds are held for thirty
(30) days or less or, in the case of accounts in which funds are held for more
than thirty (30) days, the long term unsecured debt obligations of which are
rated at least "AA" by Fitch and S&P and "Aa2" by Moody's.

            "ENVIRONMENTAL INDEMNITY" shall mean those certain Hazardous
Substances Indemnity Agreements dated as of the date hereof executed by
Borrower, Heritage and the REIT with respect to the Individual Properties listed
on SCHEDULE V attached hereto, and by Borrower and the REIT with respect to all
other Individual Properties, in connection with the Loan for the benefit of
Lender.

            "EQUIPMENT" shall have the meaning set forth in the granting clause
of the Mortgage with respect to each Individual Property.

            "ERISA" shall have the meaning set forth in Section 4.2.10.

            "EVENT OF DEFAULT" shall have the meaning set forth in Section 10.1.

            "EXCHANGE ACT" shall have the meaning set forth in Section 9.2(a).

            "EXCHANGE ACT FILING" shall have the meaning set forth in Section
9.1(c)(vi).

            "EXISTING SUBSTITUTE PROPERTY" shall mean a Substitute Property
owned by Borrower or any Affiliate of Borrower prior to the date of the proposed
substitution for a period of not less than one (1) year.

            "FISCAL YEAR" shall mean each twelve month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.

            "GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of
<Page>

                                       -6-


Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in such other
statements by such entity as may be in general use by significant segments of
the U.S. accounting profession.

            "GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever or any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.

            "GROSS REVENUE" shall mean all revenue, derived from the ownership
and operation of the Individual Properties from whatever source, including, but
not limited to, Rents, but excluding sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any Governmental Authority,
non-recurring revenues, security deposits (except to the extent properly
utilized to offset a loss of Rent), refunds and uncollectible accounts, proceeds
of casualty insurance and Awards (other than business interruption or other loss
of income insurance related to business interruption or loss of income for the
period in question), and any disbursements to Borrower from the Reserve Funds or
any other fund established by the Loan Documents.

            "GROUND LEASE" shall mean, collectively, the Boyertown Ground Lease,
the Bethlehem Ground Lease and the Oakwood Ground Lease.

            "HERITAGE" shall mean Heritage Property Investment Limited
Partnership, a Delaware limited partnership, together with its permitted
successors and permitted assigns.

            "IMPROVEMENTS" shall have the meaning set forth in the granting
clause of the related Mortgage with respect to each Individual Property.

            "INDEBTEDNESS" shall mean, for any Person, without duplication: (i)
all indebtedness of such Person for borrowed money, for amounts drawn under a
letter of credit, or for the deferred purchase price of property for which such
Person or its assets is liable, (ii) all unfunded amounts under a loan
agreement, letter of credit, or other credit facility for which such Person
would be liable if such amounts were advanced thereunder, (iii) all amounts
required to be paid by such Person as a guaranteed payment to partners or a
preferred or special dividend, including any mandatory redemption of shares or
interests, (iv) all indebtedness guaranteed by such Person, directly or
indirectly, (v) all obligations under leases that constitute capital leases for
which such Person is liable, and (vi) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements,
in each case whether such Person is liable contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss.

            "INDEMNIFIED LIABILITIES" shall have the meaning set forth in
Section 11.13(b).

            "INDEPENDENT DIRECTOR" shall have the meaning set forth in Section
3.1.24(p).

            "INDIVIDUAL PROPERTIES" shall mean, collectively, all of the
Individual Properties which are subject to the terms of this Agreement.
<Page>

                                       -7-


            "INDIVIDUAL PROPERTY" shall mean each parcel of real property, the
improvements thereon and all personal property owned by Borrower and encumbered
by a Mortgage, together with all rights pertaining to such property and
improvements, as more particularly described in the Granting Clauses of such
Mortgages.

            "INSOLVENCY OPINION" shall mean that certain bankruptcy
nonconsolidation opinion letter dated the date hereof delivered by Bingham Dana
LLP in connection with the Loan.

            "INSURANCE FUNDS" shall have the meaning set forth in Section 6.3.1.

            "INSURANCE PREMIUMS" shall have the meaning set forth in Section
5.1.1(b).

            "INTEREST RATE" shall mean a rate per annum equal to seven and
eighty-eight one hundredths percent (7.88%).

            "LEASE" shall mean any lease, sublease or subsublease, letting,
license, rental agreement, occupancy agreement, concession or other agreement
(whether written or oral and whether now or hereafter in effect) pursuant to
which any Person is granted a possessory interest in, or right to use or occupy
all or any portion of any space in any Individual Property, and every
modification, extension, renewal, replacement, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.

            "LEGAL REQUIREMENTS" shall mean, with respect to Borrower and each
Individual Property, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or such
Individual Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, whether now or hereafter enacted and in
force, including, without limitation, the Americans with Disabilities Act of
1990, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (ii) in any way limit the
use and enjoyment thereof.

            "LENDER" shall mean Prudential Mortgage Capital Company, LLC, a
Delaware limited liability company, together with its successors and assigns.

            "LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Lender and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Lender and entitling Lender to draw thereon in New York, New York,
issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible Institution. If at any time the bank issuing any such Letter of
Credit shall cease to be an Eligible Institution, Lender shall have the right
immediately to draw down the same in full and hold the
<Page>

                                       -8-


proceeds of such draw in accordance with the applicable provisions hereof. Such
Letter of Credit must be obtained by a Person, on behalf of Borrower, other than
Managing Member or SPC Party and neither Borrower, Managing Member nor SPC Party
shall have or be permitted to have any liability or other obligations under any
reimbursement agreement with respect to any Letter of Credit or otherwise in
connection with reimbursement to the Letter of Credit bank for draws on such
Letter of Credit.

            "LIABILITIES" shall have the meaning set forth in Section 9.2(b).

            "LIEN" shall mean, with respect to each Individual Property, any
mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting such
Individual Property or any portion thereof or Borrower, or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.

            "LOAN" shall mean the loan in the original principal amount of Two
Hundred Forty-Four Million and No/100 Dollars ($244,000,000.00), or so much
thereof as may be advanced from time to time, made by Lender to Borrower
pursuant to this Agreement.

            "LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
the Mortgages, the Assignments of Leases, the Cash Management Agreement, the
Environmental Indemnity, the Assignment of Management Agreement as well as all
other documents now or hereafter executed and/or delivered in connection with
the Loan.

            "MAJOR LEASE" shall mean any Lease (i) covering more than 20,000
square feet at any Individual Property or (ii) made with a Tenant that is a
Tenant under another Lease at such Individual Property or that is an Affiliate
of any other Tenant under a Lease at such Individual Property, if the Leases
together cover more than 20,000 square feet.

            "MANAGEMENT AGREEMENT" shall mean, with respect to any Individual
Property, the management agreement entered into by and between Borrower and the
Manager, pursuant to which the Manager is to provide management and other
services with respect to said Individual Property.

            "MANAGER" shall mean Heritage Realty Management, Inc. or any other
manager approved in accordance with the terms and conditions of the Loan
Documents.

            "MATURITY DATE" shall mean October 1, 2010, or such other date on
which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.

            "MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness evidenced by the Note
and as provided for herein or the other Loan Documents, under the laws of such
state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.
<Page>

                                       -9-


            "MINIMUM DISBURSEMENT AMOUNT" shall mean Twenty-Five Thousand and
No/100 Dollars ($25,000.00).

            "MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant monthly
payment of $1,704,728.71, subject to adjustment pursuant to and in accordance
with the terms and provisions of Section 2.8 hereof.

            "MONTHLY PAYMENT DATE" shall mean the first (1st) day of every
calendar month occurring during the term of the Loan.

            "MORTGAGE" shall mean, with respect to each Individual Property
listed on SCHEDULE V attached hereto, a first priority Fee and Leasehold
Mortgage and Security Agreement, dated the date hereof, executed and delivered
by Borrower and Heritage as security for the Loan made to Borrower and
encumbering the Individual Properties listed on SCHEDULE V attached hereto and,
with respect to all other Individual Properties, a first priority Mortgage (or
Deed of Trust or Deed to Secure Debt, as applicable), and Security Agreement,
dated the date hereof, executed and delivered by Borrower as security for the
Loan made to Borrower and encumbering such other Individual Properties, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

            "NET PROCEEDS" shall mean: (i) the net amount of all insurance
proceeds payable as a result of a Casualty to an Individual Property, after
deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and
expenses (including, but not limited to, reasonable attorneys' fees), if any, in
collecting such Award.

            "NET PROCEEDS DEFICIENCY" shall have the meaning set forth in
Section 5.3.2(f).

            "NOTE" shall have the meaning set forth in Section 2.1.3.

            "NOTICE" shall have the meaning set forth in Section 11.6.

            "OAKWOOD GROUND LEASE" shall mean that certain Ground Lease
Agreement dated as of April 16, 1987 made by and between Charles H. Turner and
Virginia W. Turner, as individuals, as lessor, and The Mitchell Company, an
Alabama general partnership, as lessee, and covering certain property located in
Davidson County, Tennessee, as more particularly listed on SCHEDULE VI(A)
attached hereto, a memorandum of which was recorded in Book 7210, Page 942 in
the Register's Office for Davidson County, Tennessee; as amended by Amendment to
Ground Lease Agreement dated December 16, 1987; as further amended by Second
Amendment to Ground Lease dated May 26, 1988; as lessee's interest was assigned
by The Mitchell Company to William J. McCarthy, et als, Trustees of Net Realty
Holding Trust under a Declaration of Trust dated as of July 1, 1970 pursuant to
that certain Assignment of Lessee's Interest in Ground Lease dated June 28, 1989
and recorded in Book 7877, Page 353; as lessor's interest was assigned by
Charles H. Turner and Virginia W. Turner, as individuals, to The Charles H.
Turner Family Limited Partnership, a Tennessee limited partnership; as lessee's
interest was further assigned by the trustees of Net Realty Holding Trust to
Heritage Realty Limited Partnership (which subsequently amended its name of
record to Heritage Property
<Page>

                                      -10-


Investment Limited Partnership in Book 11628, Page 735) pursuant to that certain
Assignment and Assumption of Lease dated as of July 9, 1999 and recorded in Book
11567, Page 303; as lessee's interest is being further assigned by Heritage to
Borrower pursuant to that certain Assignment and Assumption of Lease of even
date herewith, which is intended to be recorded promptly following the date
hereof.

            "OAKWOOD NOTE" shall mean that certain Lease Assignment Note dated
May 25, 1988 in the original principal amount of $2,000,000 made by Charles H.
Turner and Virginia W. Turner, as individuals, as maker, in favor of The
Mitchell Company, an Alabama general partnership, as payee, as subsequently
assigned by The Mitchell Company to William J. McCarthy, et als, Trustees of Net
Realty Holding Trust under a Declaration of Trust dated as of July 1, 1970
pursuant to that certain Allonge dated June 28, 1989, as further assigned by the
trustees of Net Realty Holding Trust to Heritage pursuant to that certain
Allonge dated July, 1999, and as further assigned by Heritage to Borrower
pursuant to that certain Allonge of even date herewith.

            "OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender
by Borrower which is signed by an authorized senior officer of the managing
member of the managing member of Borrower.

            "OPERATING AGREEMENTS" shall have the meaning set forth in Section
2.6.1(iii).

            "OPERATING EXPENSES" shall mean all costs and expenses actually
incurred relating to the operation, maintenance and management of each
Individual Property, including, without limitation, utilities, repairs and
maintenance, insurance, property taxes and assessments, advertising expenses,
payroll and related taxes, ground rent, general and administrative expenses,
professional fees, equipment lease payments, a management fee equal to the
greater of four percent (4%) of annual rents (including percentage rents) or the
actual management fee, $0.20 per rentable square foot of the Improvements per
annum with respect to capital costs and $0.52 per rentable square foot of the
Improvements per annum with respect to tenant rollover expenses (including,
without limitation, tenant improvements and leasing commissions), but excluding
actual Capital Expenditures, depreciation, amortization and deposits required to
be made to the Reserve Funds; provided, however such costs and expenses shall be
subject to adjustment to normalize such costs and expenses.

            "OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Individual Properties, now or hereafter levied or
assessed or imposed against the Individual Properties or any part thereof.

            "PARTIAL DEFEASANCE COLLATERAL" shall mean U.S. Obligations which
provide payments (i) on or prior to, but as close as possible to, all Monthly
Payment Dates and other scheduled payment dates, if any, under the Defeased Note
after the Defeasance Date and up to and including the Maturity Date, and (ii) in
amounts equal to or greater than the Scheduled Defeasance Payments.

            "PARTIAL DEFEASANCE DATE" shall have the meaning set forth in
Section 2.5.2(a)(i).
<Page>

                                      -11-


            "PARTIAL DEFEASANCE EVENT" shall have the meaning set forth in
Section 2.5.2(a).

            "PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
Property, collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Individual Property or any part thereof,
(iii) Liens, if any, for Taxes imposed by any Governmental Authority not yet due
or delinquent, (iv) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's reasonable discretion, and (v)
Liens which are being contested by Borrower or are bonded over or otherwise
discharged by Borrower as may be permitted under Sections 1.6 and 1.9 of the
Mortgage and Section 4.1.2 hereof and within the applicable grace and/or notice
periods set forth herein, provided such contest, bonding over or discharge is
performed in compliance with the provisions of such Sections.

            "PERMITTED INVESTMENTS" shall have the meaning set forth in the Cash
Management Agreement.

            "PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, any other entity, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.

            "PHYSICAL CONDITIONS REPORT" shall mean with respect to any
Individual Property a report prepared by a company reasonably satisfactory to
Lender regarding the physical condition of such Individual Property,
satisfactory in form and substance to Lender in its reasonable discretion, which
report shall, among other things, confirm that such Individual Property and its
use complies, in all material respects, with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws).

            "POLICIES" shall have the meaning specified in Section 5.1.1(b).

            "PREPAYMENT DATE" shall mean the date on which the Loan is prepaid
in accordance with the terms hereof.

            "PROPERTIES" shall mean, collectively, all of the Individual
Properties.

            "PRUDENTIAL" shall have the meaning set forth in Section 9.2(b).

            "PRUDENTIAL GROUP" shall have the meaning set forth in Section
9.2(b).

            "RATING AGENCIES" shall mean, prior to the Securitization of the
Loan, each of Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., Moody's Investors Service, Inc. and Fitch, Inc., or any other
nationally-recognized statistical rating agency which has been designated by
Lender and, after the Securitization of the Loan, shall mean each of the
foregoing that have rated any of the Securities.

            "RATING AGENCY CONFIRMATION" shall mean a written affirmation from
each of the Rating Agencies that the credit rating of the Securities given, or
to be given, by such Rating Agency immediately prior to the occurrence of the
event with respect to which such Rating
<Page>

                                      -12-


Agency Confirmation is sought will not be qualified, downgraded or withdrawn as
a result of the occurrence of such event, which affirmation may be granted or
withheld in such Rating Agency's sole and absolute discretion.

            "RATING SURVEILLANCE CHARGE" shall have the meaning set forth in
Section 9.3.

            "REGISTRATION STATEMENT" shall have the meaning set forth in Section
9.2(b).

            "REIT" shall mean Heritage Property Investment Trust, Inc., a
Maryland corporation.

            "RELEASE DATE" shall mean the date that is twenty-five (25) months
from the "startup day" (within the meaning of Section 860G(a)(9) of the Code) of
the REMIC Trust established in connection with a Securitization involving the
Loan.

            "RELEASE PARCEL" shall have the meaning set forth in Section 2.6.1
hereof.

            "RELEASE PROPERTY" shall have the meaning set forth in Section
2.5.2(a)(i).

            "REMIC Trust" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.

            "RENTS" shall mean, with respect to each Individual Property, all
rents (including, without limitation, percentage rent), moneys payable as
damages or in lieu of rent, revenues, royalties, deposits (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, rights, benefits and other consideration
of whatever form or nature received by or paid to or for the account of or
benefit of Borrower or its agents or employees from any and all sources arising
from or attributable to the Individual Property, including, without limitation,
minimum rents, additional rents, termination payments, forfeited security
deposits, liquidated damages following default and all proceeds payable under
any policy of insurance covering loss of rents resulting from untenantability
due to destruction or damage to such Individual Property.

            "REPORTS" shall mean, with respect to the Individual Properties, the
engineering reports and environmental reports prepared by EMG and the zoning
reports prepared by The Planning & Zoning Resource Corporation copies of which
were delivered to Lender prior to the date hereof.

            "REQUIRED REPAIR FUNDS" shall have the meaning set forth in Section
6.1.1.

            "REQUIRED REPAIRS" shall have the meaning set forth in Section
6.1.1.

            "RESERVE FUNDS" shall mean, collectively, Capital Expenditure Funds,
the Insurance Funds, the Tax Funds, the Required Repair Funds, the Rollover
Funds, the Oakwood Reserve Funds and the Ground Rent Funds.

            "RESTORATION" shall have the meaning set forth in Section 5.2.1.

<Page>

                                      -13-


            "RESTORATION THRESHOLD" shall mean the greater of (i) $500,000 or
(ii) five percent (5%) of the Allocated Loan Amount for the applicable
Individual Property, provided that in no event shall the aggregate Restoration
Threshold for all Individual Properties at any one time exceed $1,500,000.

            "ROLLOVER FUNDS" shall have the meaning set forth in Section 6.5.1.

            "SCHEDULED DEFEASANCE PAYMENTS" shall mean scheduled payments of
interest and principal under the Note in the case of a Total Defeasance and
under the Defeased Note in the case of a Partial Defeasance for all Monthly
Payment Dates occurring after the Defeasance Date and up to and including the
Maturity Date (including, in the case of a total defeasance, the outstanding
principal balance on the Note as of the Maturity Date and, in the case of a
partial defeasance, the outstanding principal balance on the Defeased Note as of
the Maturity Date), and all payments required after the Defeasance Date, if any,
under the Loan Documents for servicing fees, Rating Surveillance Charges and
other similar charges.

            "SECONDARY MARKET TRANSACTION" shall have the meaning set forth in
Section 9.1(a).

            "SECURITIES" shall have the meaning set forth in Section 9.1(a).

            "SECURITIES ACT" shall have the meaning set forth in Section 9.2(a).

            "SECURITIZATION" shall have the meaning set forth in Section 9.1(a).

            "SECURITY AGREEMENT" shall mean a security agreement in form and
substance satisfactory to Lender pursuant to which Borrower grants Lender a
perfected, first priority security interest in the Defeasance Collateral
Account, the Total Defeasance Collateral and the Partial Defeasance Collateral,
as applicable.

            "SERVICER" shall have the meaning set forth in Section 11.24.

            "SERVICING AGREEMENT" shall have the meaning set forth in Section
11.24.

            "SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
10.2(c).

            "SPC PARTY" shall have the meaning set forth in Section 3.1.25(o).

            "STANDARD STATEMENT" shall have the meaning set forth in Section
9.1(c).

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

            "SUBSTITUTE PROPERTY" shall have the meaning set forth in Section
2.7.1 hereof.

            "SUBSTITUTED PROPERTY" shall have the meaning set forth in Section
2.7.1 hereof.

            "SUCCESSOR BORROWER" shall have the meaning set forth in Section
2.5.4.

<Page>

                                      -14-


            "SURVEY" shall mean a survey of the Individual Property in question
prepared by a surveyor licensed in the State and satisfactory to Lender, and
containing Lender's standard survey certification or such other certification as
is reasonably satisfactory to Lender.

            "SURVEYOR" shall have the meaning set forth in Section 2.6.1 hereof.

            "TAX FUNDS" shall have the meaning set forth in Section 6.2.1.

            "TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Individual Properties or part thereof, together with
all interest and penalties thereon.

            "TENANT" shall mean any Person obligated by contract or otherwise to
pay monies (including, without limitation, a percentage of gross income, revenue
or profits) under any Lease now or hereafter affecting all or any part of any
Individual Property.

            "TITLE INSURANCE POLICIES" shall mean, with respect to each
Individual Property, an ALTA mortgagee title insurance policies in the form
(acceptable to Lender) issued with respect to such Individual Property and
insuring the lien of the Mortgage encumbering such Individual Property.

            "TOTAL DEFEASANCE COLLATERAL" shall mean U.S. Obligations, which
provide payments (i) on or prior to, but as close as possible to, all Monthly
Payment Dates and other scheduled payment dates, if any, under the Note after
the Defeasance Date and up to and including the Maturity Date, and (ii) in
amounts equal to or greater than the Scheduled Defeasance Payments.

            "TOTAL DEFEASANCE EVENT" shall have the meaning set forth in Section
2.5.1(a).

            "TRANSFER" shall have the meaning given to such term in the
Mortgage.

            "TRANSFEREE" shall have the meaning set forth in Section 2.6.1
hereof.

            "TRUSTEE" shall mean any trustee holding the Loan in a
Securitization.

            "UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State or Commonwealth in which an Individual
Property is located.

            "UNDEFEASED NOTE" shall have the meaning set forth in Section
2.5.2(iv) hereof.

            "UNDERWRITABLE CASH FLOW" shall mean the excess of Gross Revenue
over Operating Expenses, as further adjusted to incorporate a vacancy allowance.
The calculation of Underwritable Cash Flow (including determination of items
that do not qualify as Gross Revenue or Operating Expenses) shall be computed by
Lender in accordance with generally accepted industry underwriting standards for
securitized commercial mortgage loans.

            "UNDERWRITER GROUP" shall have the meaning set forth in Section
9.2(b).
<Page>

                                      -15-


            "UNDATED INFORMATION" shall have the meaning set forth in Section
9.1(b)(i).

            "U.S. OBLIGATIONS" shall mean direct full faith and credit
obligations of the United States of America that are not subject to prepayment,
call or early redemption.

            "YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the
greater of: (i) one percent (1%) of the principal amount of the Loan being
prepaid or (ii) the present value as of the Prepayment Date of the Calculated
Payments from the Prepayment Date through the Maturity Date determined by
discounting such payments at the Discount Rate. As used in this definition, the
term "Prepayment Date" shall mean the date on which prepayment is made. As used
in this definition, the term "CALCULATED PAYMENTS" shall mean the monthly
payments of interest only which would be due based on the principal amount of
the Loan being prepaid on the Prepayment Date and assuming an interest rate per
annum equal to the difference (if such difference is greater than zero) between
(y) the Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in
this definition, the term "DISCOUNT RATE" shall mean the rate which, when
compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when
compounded semi-annually. As used in this definition, the term "YIELD
MAINTENANCE TREASURY RATE" shall mean the yield calculated by Lender by the
linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Yield Maintenance Treasury Rate. In no event,
however, shall Lender be required to reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise.

            SECTION 1.2 PRINCIPLES OF CONSTRUCTION.

            All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.

            II. THE LOAN

            SECTION 2.1 THE LOAN.

            2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the terms
and conditions set forth herein, Lender shall make the Loan to Borrower and
Borrower shall accept the Loan from Lender on the Closing Date.

            2.1.2 SINGLE DISBURSEMENT TO BORROWER. Subject to the provisions of
Section 2.8 hereof, Borrower shall receive only one borrowing hereunder in
respect of the Loan and any amount borrowed and repaid hereunder in respect of
the Loan may not be reborrowed.
<Page>

                                      -16-


            2.1.3 THE NOTE. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the stated principal amount of Two
Hundred Forty-Four Million and No/100 Dollars ($244,000,000.00), or so much
thereof as may be advanced from time to time, executed by Borrower and payable
to the order of Lender in evidence of the Loan (as the same may hereafter be
amended, supplemented, restated, increased, extended or consolidated, together
with any Defeased Note and Undefeased Note that may exist from time to time, the
"NOTE") and shall be repaid in accordance with the terms of this Agreement and
the Note.

            2.1.4 USE OF PROCEEDS. Borrower shall use proceeds of the Loan to
(i) pay and discharge any existing loans relating to the Individual Properties,
(ii) pay all past-due Basic Carrying Costs, if any, in respect of the Individual
Properties, (iii) deposit the Reserve Funds, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, as approved by Lender, (v)
fund any working capital requirements of the Individual Properties, as approved
by Lender and (vi) retain and disburse the balance, if any.

            SECTION 2.2 INTEREST RATE.

            2.2.1 INTEREST RATE. Interest on the outstanding principal balance
of the Loan shall accrue from the Closing Date up to and including the Maturity
Date at the Interest Rate.

            2.2.2 DEFAULT RATE. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest in
respect of the Loan, shall accrue interest at the Default Rate, calculated from
the date such payment was due without regard to any grace or cure periods
contained herein. Notwithstanding the foregoing, on one (1) occasion during any
rolling twelve (12) calendar month period, Borrower shall have a five (5) day
grace period prior to the accrual of interest at the Default Rate following an
Event of Default under Section 10.1 (a)(i).

            2.2.3 INTEREST CALCULATION. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate equal to the Interest Rate or the Default Rate, as the case may be,
divided by three hundred sixty (360) by (c) the outstanding principal balance.
The accrual period for calculating interest due on each Monthly Payment Date
shall be the calendar month immediately prior to such Monthly Payment Date.

            2.2.4 USURY SAVINGS. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrower be required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Interest Rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder, which
payment shall not be subject to any Yield Maintenance Premium. All sums paid or
agreed to be paid to Lender for the use, forbearance, or detention of the sums
due under the Loan, shall, to the extent permitted by applicable law, be
amortized, prorated,
<Page>

                                      -17-


allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.

            SECTION 2.3 LOAN PAYMENTS.

            2.3.1 PAYMENTS. Borrower shall make a payment to Lender of interest
only on the Closing Date for the period from the Closing Date through the last
day of the month in which the Closing Date occurs (unless the Closing Date is
the first day of a calendar month, in which case no such separate payment of
interest shall be due). Borrower shall make a payment to Lender of principal and
interest in the amount of the Monthly Debt Service Payment Amount on the Monthly
Payment Date occurring in November, 2000 and on each Monthly Payment Date
thereafter to and including the Maturity Date. Each payment shall be applied
first to accrued and unpaid interest and the balance to principal. The Monthly
Debt Service Payment Amount required hereunder is based upon a thirty (30) year
amortization schedule.

            2.3.2 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.

            2.3.3 LATE PAYMENT CHARGE. If any principal, interest or any other
sum due under the Loan Documents is not paid by Borrower on the date on which it
is due, Borrower shall pay to Lender upon demand an amount equal to the lesser
of (i) four percent (4%) of such unpaid sum or (ii) the maximum amount permitted
by applicable law (the "LATE PAYMENT CHARGE") in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents.
Notwithstanding the foregoing, on one (1) occasion during any rolling twelve
(12) calendar month period, Borrower shall have a five (5) day grace period
prior to the application of such Late Payment Charge following an Event of
Default under Section l0.1(a)(i).

            2.3.4 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.

            (b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal due on the Maturity Date, interest shall
be payable at the Interest Rate or the Default Rate, as the case may be, during
such extension.
<Page>

                                      -18-


            (c) All payments required to be made by Borrower hereunder or under
the Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective
of any defense thereto.

            SECTION 2.4 PREPAYMENTS.

            2.4.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided herein,
Borrower shall not have the right to prepay the Loan in whole or in part. From
and after the Monthly Payment Date which is three (3) months prior to the
Maturity Date, Borrower may, at its option and upon ten (10) days prior notice
to Lender, prepay the Debt in whole or in part without payment of the Yield
Maintenance Premium. Any partial prepayment shall be applied to the last
payments of principal due under the Loan.

            2.4.2 MANDATORY PREPAYMENTS. On each date on which Lender actually
receives a distribution of Net Proceeds, and if Lender is not required to make
such Net Proceeds available to Borrower for a Restoration in accordance with the
provisions of Section 5.3, Lender may, at Lender's option, apply the Net
Proceeds to the outstanding principal balance of the Note in an amount equal to
one hundred percent (100%) of such Net Proceeds together with interest that
would have accrued on such amounts through the next Monthly Payment Date. No
Yield Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2. The Allocated Loan Amount with respect to such
Individual Property will be reduced in an amount equal to such prepayment. Any
prepayment received by Lender pursuant to this Section 2.4.2 on a date other
than a Monthly Payment Date shall be held by Lender as collateral security for
the Loan in an interest bearing account, with such interest accruing to the
benefit of Borrower, and shall be applied by Lender on the next Monthly Payment
Date.

            2.4.3 PREPAYMENTS AFTER EVENT OF DEFAULT. If after an Event of
Default, payment of all or any part of the principal of the Loan is tendered by
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrower, such purchaser at foreclosure or other Person shall
pay the Yield Maintenance Premium plus an additional prepayment fee of three
percent (3%) of the principal balance of the Loan (provided that such additional
three percent (3%) prepayment fee shall be waived in the event that all of the
Properties are purchased at foreclosure sale by a Person which is not Borrower
or an Affiliate of Borrower), in addition to the outstanding principal balance,
all accrued and unpaid interest and other amounts payable under the Loan
Documents.

            2.4.4 PREPAYMENT ON MONTHLY PAYMENT DATE. Any prepayment of the Loan
made pursuant to this Section 2.4 shall be made on a Monthly Payment Date. If
for any reason any such prepayment is made on a date which is not a Monthly
Payment Date, Borrower shall also pay interest in connection with such
prepayment that would have accrued on the Note through the next Monthly Payment
Date.

            SECTION 2.5 DEFEASANCE.

            2.5.1 TOTAL DEFEASANCE. (A) Provided no Event of Default shall have
occurred and remain uncured (but subject to the provisions of Section 2.5.1(c)
hereof), Borrower shall
<Page>

                                      -19-


have the right at any time after the Release Date and prior to the Monthly
Payment Date which is three (3) months prior to the Maturity Date to voluntarily
defease the entire Loan and obtain a release of the lien of the Mortgages
encumbering all Individual Properties by providing Lender with the Total
Defeasance Collateral (hereinafter, a "TOTAL DEFEASANCE EVENT"), subject to the
satisfaction of the following conditions precedent:

            (i) Borrower shall provide Lender not less than thirty (30) days
notice specifying a Monthly Payment Date (the "DEFEASANCE DATE") on which the
Total Defeasance Event is to occur;

            (ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the principal balance of the Note to and including the Defeasance
Date and (B) all other sums, then due under the Note, this Agreement, the
Mortgages and the other Loan Documents. If for any reason the Defeasance Date is
not a Monthly Payment Date, Borrower shall also pay interest in connection with
such Total Defeasance Event that would have accrued on the Note through the next
Monthly Payment Date;

            (iii) Borrower shall deposit the Total Defeasance Collateral into
the Defeasance Collateral Account and otherwise comply with the provisions of
Sections 2.5.3 and 2.5.4 hereof;

            (iv) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Total
Defeasance Collateral;

            (v) Borrower shall deliver to Lender an opinion of counsel for
Borrower that would be reasonably satisfactory to a prudent lender opining,
among other things, that (A) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral Account and the Total
Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust
formed pursuant to such Securitization will not fail to maintain its status as a
"real estate mortgage investment conduit" within the meaning of Section 860D of
the Code as a result of the Total Defeasance Event pursuant to this Section 2.5,
(C) the Total Defeasance Event will not result in a deemed exchange for purposes
of the Code and will not adversely effect the status of the Note as indebtedness
for federal income tax purposes, (D) delivery of the Total Defeasance Collateral
and the grant of a security interest therein to Lender shall not constitute an
avoidable preference under Section 547 of the Bankruptcy Code or applicable
state law and (E) a non-consolidation opinion with respect to the Successor
Borrower;

            (vi) Borrower shall deliver to Lender a Rating Agency Confirmation
as to the Total Defeasance Event;

            (vii) Borrower shall deliver an Officer's Certificate certifying
that the requirements set forth in this Section 2.5 have been satisfied;

            (viii) Borrower shall deliver a certificate of a "Big Five" or other
nationally recognized public accounting firm acceptable to Lender certifying
that the Total Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments;
<Page>

                                      -20-


            (ix) Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and

            (x) Borrower shall pay all costs and expenses of Lender incurred in
connection with the Total Defeasance Event, including Lender's reasonable
attorneys' fees and expenses and Rating Agency fees and expenses.

            (b) If Borrower has elected to defease the entire Note and the
requirements of this Section 2.5 have been satisfied, all of the Individual
Properties shall be released from the Liens of their respective Mortgages and
the Total Defeasance Collateral, pledged pursuant to the Security Agreement,
shall be the sole source of collateral securing the Note. In connection with the
release of the Liens, Borrower shall submit to Lender, not less than ten (10)
days prior to the Defeasance Date, a release of Lien (and related Loan
Documents) for execution by Lender. Such release shall be in a form appropriate
in each jurisdiction in which an Individual Property is located and that would
be reasonably satisfactory to a prudent lender. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all material Legal
Requirements, and (ii) will effect such releases in accordance with the terms of
this Agreement. Borrower shall pay all costs, taxes and expenses associated with
the release of the lien of the Mortgages, including Lender's reasonable
attorneys' fees. Except as set forth in this Section 2.5, no repayment,
prepayment or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of any lien of
any Mortgage on any of the Individual Properties.

            (c) Notwithstanding the provisions of Section 2.5.1(a) hereof to the
contrary, Borrower may affect a Total Defeasance Event after the Release Date
and prior to the Monthly Payment Date which is three (3) months prior to the
Maturity Date, despite the occurrence of an Event of Default (but otherwise
subject to all of the other conditions of this Section 2.5) provided that:

            (i) such Event of Default is not an Event of Default pursuant to
Section 1O.1(a)(i) or Section l0.1(a)(ii) hereof and does not involve the
commission of fraud by Borrower or any of its Affiliates, and no other Event of
Default shall have then or thereafter occurred;

            (ii) Borrower has deposited with Lender, in the form of immediately
available funds or a Letter of Credit in form and substance acceptable to
Lender, an amount equal to the amount of projected costs and expenses which
Lender reasonably estimates that Lender will incur in connection with the
completion of the Total Defeasance Event (the "DEFEASANCE EXPENSE DEPOSIT");

            (iii) Borrower promptly commences, and thereafter diligently
prosecutes to completion, the satisfaction of all of the conditions precedent to
the completion of the Total Defeasance Event;

            (iv) within twenty (20) days following the occurrence of such Event
of Default (time being of the essence), Borrower provides Lender with a copy of
an unconditional funding
<Page>

                                      -21-


commitment in favor of Borrower (in form and substance acceptable to Lender in
good faith and issued by a lender acceptable to Lender in good faith) in an
amount sufficient to purchase the required Total Defeasance Collateral and all
other costs and expenses in connection with such Total Defeasance Collateral;
and

            (v) the Total Defeasance Event is consummated within forty (40) days
following the occurrence of such Event of Default, time being of the essence.

            Notwithstanding the foregoing provisions of this Section 2.5.1(c) to
the contrary, Lender shall, at all times, have and retain all of Lender's rights
and remedies set forth herein and in the other Loan Documents with respect to
such Event of Default and any other Event of Default and the fact that Borrower
may be pursuing the consummation of the Total Defeasance Event shall not affect
Lender's rights and remedies in any way (including, without limitation, Lender's
right to foreclose, charge Default Interest and collect a late payment charge
pursuant to the terms of this Agreement and the other Loan Documents). In
addition, if Lender determines, in its sole discretion, that such pursuit of the
consummation of the Total Defeasance Event is in any way materially delaying or
adversely affecting the exercise or potential exercise of any of Lender's rights
and remedies, Lender shall not be obligated to cooperate with Borrower's efforts
to consummate such Total Defeasance Event. Lender may draw down on the
Defeasance Expense Deposit in whole or in part at any time to pay any costs and
expenses incurred by Lender in connection with the completion of the Total
Defeasance Event.

            2.5.2 PARTIAL DEFEASANCE. (a) Provided no Event of Default shall
have occurred and remain uncured, Borrower shall have the right at any time
after the Release Date and prior to the Monthly Payment Date which is three (3)
months prior to the Maturity Date to voluntarily defease a portion of the Loan
and obtain a release of the lien of the Mortgages encumbering one or more
Individual Properties by providing Lender with the Partial Defeasance Collateral
(hereinafter, a "PARTIAL DEFEASANCE EVENT"), subject to the satisfaction of the
following conditions precedent:

            (i) Borrower shall provide Lender not less than thirty (30) days
notice specifying (A) a Monthly Payment Date (the "PARTIAL DEFEASANCE DATE") on
which the Partial Defeasance Event is to occur and (B) the Individual Property
or Properties proposed to be released from the Lien of the Mortgages
(individually a "RELEASE PROPERTY" and collectively the "RELEASE PROPERTIES");

            (ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the principal balance of the Note to and including the Partial
Defeasance Date and (B) all other sums, then due under the Note, this Agreement,
the Mortgages and the other Loan Documents. If for any reason the Defeasance
Date is not a Monthly Payment Date, Borrower shall also pay interest in
connection with such Partial Defeasance Event that would have accrued on the
Note through the next Monthly Payment Date;

            (iii) Borrower shall deposit the Partial Defeasance Collateral into
the Defeasance Collateral Account and otherwise comply with the provisions of
Sections 2.5.3 and 2.5.4 hereof;
<Page>

                                      -22-


            (iv) Borrower shall prepare all necessary documents to modify this
Agreement and to amend and restate the Note and issue two substitute notes, one
note having a principal balance equal to 125% of the Allocated Loan Amount (for
this purpose only, after taking into account amortization of principal under the
Loan as of the Partial Defeasance Date that would be allocable on a pro rata
basis to such Allocated Loan Amount) for the Release Property or Release
Properties, as the case may be (the "DEFEASED NOTE"), and the other note having
a principal balance equal to the excess of (I) the original principal amount of
the Loan, over (II) the amount of Defeased Note (the "UNDEFEASED NOTE"). The
Defeased Note and Undefeased Note shall have identical terms as the Note except
for the principal balance. The Defeased Note and the Undefeased Note shall be
cross defaulted and cross collateralized. A Defeased Note may not be the subject
of any further defeasance;

            (v) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Partial
Defeasance Collateral;

            (vi) After giving effect to the release of the lien of the Mortgages
encumbering the Individual Property or Individual Properties proposed by
Borrower to be released, the Debt Service Coverage Ratio with respect to the
remaining Individual Properties is not less than the greater of (A) the Debt
Service Coverage Ratio of all Individual Properties encumbered by the Mortgages
immediately prior to the release and (B) the Debt Service Coverage Ratio of all
Individual Properties encumbered by the Mortgages as of the Closing Date;

            (vii) Borrower shall have delivered to Lender and the Rating
Agencies shall have received from Borrower with respect to the matters referred
to in clause (vi), (A) statements of the Underwritable Cash Flow and Debt
Service (both on a consolidated basis and separately for the applicable
Individual Property or Individual Properties to be released) for the applicable
measuring period and (B) based on the foregoing statements of Underwritable Cash
Flow and Debt Service, calculations of the Debt Service Coverage Ratio both with
and without giving effect to the proposed release, and (C) calculations of the
ratios referred to in such clause (vi);

            (viii) Borrower shall deliver to Lender an opinion of counsel for
Borrower that would be reasonably satisfactory to a prudent lender opining,
among other things, that (A) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral Account and the Partial
Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust
formed pursuant to such Securitization will not fail to maintain its status as a
"real estate mortgage investment conduit" within the meaning of Section 860D of
the Code as a result of the Partial Defeasance Event pursuant to this Section
2.5, (C) the Partial Defeasance Event will not result in a deemed exchange for
purposes of the Code and will not adversely effect the status of the Defeased
Note and the Undefeased Note as indebtedness for federal income tax purposes,
(D) delivery of the Partial Defeasance Collateral and the grant of a security
interest therein to Lender shall not constitute an avoidable preference under
Section 547 of the Bankruptcy Code or applicable state law and (E) a
non-consolidation opinion with respect to the Successor Borrower;

            (ix) Borrower shall deliver to Lender a Rating Agency Confirmation
as to the Partial Defeasance Event;
<Page>

                                      -23-


            (x) Borrower shall deliver to Lender a certificate of a "Big Five"
or other nationally recognized public accounting firm acceptable to Lender
certifying that the Partial Defeasance Collateral will generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments;

            (xi) Borrower shall deliver to Lender an Officer's Certificate
certifying that the requirements set forth in this Section 2.5.2(a) have been
satisfied;

            (xii) Borrower shall deliver to Lender such other certificates,
documents or instruments as Lender may reasonably request; and

            (xiii) Borrower shall pay all costs and expenses of Lender incurred
in connection with the Partial Defeasance Event, including Lender's reasonable
attorneys' fees and expenses.

            (b) If Borrower has elected to make a partial defeasance and the
requirements of this Section 2.5 have been satisfied, the Release Property or
Release Properties shall be released from the lien of their Mortgage. In
connection with the release of the lien, Borrower shall submit to Lender, not
less than ten (10) days prior to the Partial Defeasance Date, a release of lien
(and related Loan Documents) for execution by Lender. Such release shall be in a
form appropriate in the jurisdiction in which such Individual Property is
located and that would be reasonably satisfactory to a prudent lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all material Legal Requirements, and (ii) will effect such
releases in accordance with the terms of this Agreement. Borrower shall pay all
costs, taxes and expenses associated with the release of the lien of the
Mortgages, including Lender's reasonable attorneys' fees. Borrower shall cause
title to the Individual Property so released from the lien of the Mortgage to be
transferred to and held by a Person other than Borrower. Except as set forth in
this Section 2.5, no repayment, prepayment or defeasance of all or any portion
of the Note shall cause, give rise to a right to require, or otherwise result
in, the release of any lien of any Mortgage on any of the Individual Properties.

            2.5.3 DEFEASANCE COLLATERAL ACCOUNT. On or before the date on which
Borrower delivers the Total Defeasance Collateral or Partial Defeasance
Collateral, Borrower shall open at any Eligible Institution the defeasance
collateral account (the "DEFEASANCE COLLATERAL ACCOUNT") which shall at all
times be an Eligible Account. The Defeasance Collateral Account shall contain
only (i) Total Defeasance Collateral and Partial Defeasance Collateral, and (ii)
cash from interest and principal paid on the Total Defeasance Collateral or
Partial Defeasance Collateral. All cash from interest and principal payments
paid on the Total Defeasance Collateral or Partial Defeasance Collateral shall
be paid over to Lender on each Monthly Payment Date and applied first to accrued
and unpaid interest and then to principal due on the Note, in the event of a
Total Defeasance Event, or the Defeased Note, in the event of a Partial
Defeasance Event. Any cash from interest and principal paid on the Total
Defeasance Collateral or the Partial Defeasance Collateral not needed to pay
accrued and unpaid interest or principal shall be retained in the Defeasance
Collateral Account as additional collateral for the Loan. Borrower shall cause
the Eligible Institution at which the Total Defeasance Collateral and
<Page>

                                      -24-


Partial Defeasance Collateral are deposited to enter into an agreement with
Borrower and Lender, reasonably satisfactory to Lender, pursuant to which such
Eligible Institution shall agree to hold and distribute the Total Defeasance
Collateral and Partial Defeasance Collateral in accordance with this Agreement.
The Successor Borrower shall be the owner of the Defeasance Collateral Account
and shall report all income accrued on Total Defeasance Collateral and Partial
Defeasance Collateral for federal, state and local income tax purposes in its
income tax return. Borrower shall prepay all costs and expenses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall not in
any way be liable by reason of any insufficiency in the Defeasance Collateral
Account.

            2.5.4 SUCCESSOR BORROWER. In connection with a Total Defeasance
Event or Partial Defeasance Event under this Section 2.5, Borrower shall
establish or designate, or Lender, at its option, may designate, a successor
entity (the "SUCCESSOR BORROWER") which shall be a single purpose bankruptcy
remote entity which may be owned directly or indirectly by Borrower unless a
Rating Agency Confirmation with respect to such Total Defeasance Event or
Partial Defeasance Event cannot be obtained as a result of the direct or
indirect ownership of such Successor Borrower by Borrower. Borrower shall
transfer and assign all obligations, rights and duties under and to the Note or
the Defeased Note, as applicable, together with the Total Defeasance Collateral
or the Partial Defeasance Collateral, as applicable, to such Successor Borrower.
Such Successor Borrower shall assume the obligations under the Note or the
Defeased Note, as applicable, and the Security Agreement and Borrower shall be
relieved of its obligations under such documents. Borrower shall pay a minimum
of $1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note or the Defeased Note, as applicable, and the Security
Agreement. Borrower shall pay all actual costs and expenses incurred by Lender,
including Lender's reasonable attorney's fees and expenses, incurred in
connection therewith.

            SECTION 2.6 PARTIAL RELEASE.

            2.6.1 CONDITIONS TO RELEASE. The parties acknowledge that the
Release Parcel (hereinafter defined) was not material in the underwriting for
the Loan or the appraised value for the Individual Property of which such
Release Parcel is a part. Accordingly, notwithstanding the prohibitions against
Transfer contained in this Loan Agreement or the other Loan Documents, Lender
agrees, upon the request of Borrower, to release from the lien of the related
Mortgage and the other Loan Documents that portion of the Individual Property
commonly known as Watson Glen Shopping Center and located in Franklin,
Tennessee, as described on SCHEDULE VIII attached hereto (the "RELEASE PARCEL"),
provided that such release shall be subject to and conditioned upon satisfaction
of each of the following conditions:

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

            (ii) the actual dimensions of the Release Parcel shall not
materially deviate from the proposed dimensions of the Release Parcel as
depicted upon SCHEDULE VIII attached hereto;

            (iii) not less than fifteen (15) days prior to the date of the
release, Lender shall have received an Officer's Certificate (1) certifying
that, simultaneously with the release,
<Page>

                                      -25-


Borrower shall convey fee simple title to the Release Parcel to a Person other
than Borrower (the "TRANSFEREE"), the identity of which Transferee shall be
specified in such Officer's Certificate, (2) describing in reasonable detail any
planned improvements (the "ADDITIONAL IMPROVEMENTS") to be constructed on the
Release Parcel, (3) describing in reasonable detail (i) the impact, during the
period the Additional Improvements are being constructed, that construction of
the Additional Improvements may have on the related Individual Property
including, without limitation, the impact on parking, vehicular and pedestrian
traffic flow, vehicular ingress and egress to the related Individual Property
from public streets, pedestrian ingress and egress to improvements on the
related Individual Property and any other impact on existing improvements on the
related Individual Property, and (ii) the actions to be taken by Borrower to
eliminate or reduce any adverse impact on the related Individual Property from
construction of the Additional Improvements, (4) describing in reasonable detail
(i) the impact, after construction of the Additional Improvements is completed,
that the completed Additional Improvements may have on the related Individual
Property including without limitation impact on parking, vehicular and
pedestrian traffic flow, vehicular ingress and egress to the related Individual
Property from public streets, pedestrian ingress and egress to the improvements
on the related Individual Property and any other impact on existing improvements
on the related Individual Property, and (ii) the actions to be taken by Borrower
to eliminate or reduce any adverse impact on the related Individual Property
from the construction and operation of the Additional Improvements, (5)
certifying that Borrower has complied with all requirements of and obtained all
approvals required under any Leases, operating agreements and any other
agreements (such Leases, operating agreements and other agreements collectively
hereinafter referred to as the "Operating Agreements") applicable to the
release, that the release does not violate any of the provisions of the
Operating Agreements and that, to the extent necessary to comply with the
Operating Agreements, the Transferee has assumed all of Borrower's obligations,
if any, relating to the Release Parcel under the Operating Agreements, (6)
certifying that (i) the Release Parcel is not necessary for the operation or use
of the related Individual Property for its then current use, (ii) the Release
Parcel may be subdivided from the related Individual Property without diminution
in the value of the related Individual Property, and (iii) the subdivision in
connection with the release shall not adversely affect the utility or operation
of the remaining related Individual Property, (7) certifying that the Operating
Agreements and/or other agreements allow the owner of the related Individual
Property to continue to use the Release Parcel to the extent that the Release
Parcel is necessary for the uses of the related Individual Property, including,
without limitation, for access, driveways, parking utilities, drainage flows or
any other purpose, and (8) providing evidence in support of the conclusions
reached in (6), which Officer's Certificate shall be confirmed by Lender as
demonstrating compliance with the requirements of this clause (iii);

            (iv) Lender shall have received evidence demonstrating (1)
compliance with subparagraphs (iii)(2), (iii)(3), (iii)(4), and (iii)(6) above,
(2) that the Release Parcel and the balance of the related Individual Property
remaining after the release and the construction of the Additional Improvements
(i) comply with applicable zoning, building, subdivision, land use, parking and
other Legal Requirements applicable to the Release Parcel and the related
Individual Property, and (3) that (i) construction of the Additional
Improvements on the Release Parcel shall not affect the utility or operation of
the related Individual Property (excluding the Release Parcel) in any material
adverse respect, and (ii) any connection to, or contemplated shared use of,
other portions of the related Individual Property in order to provide utility
services and access to
<Page>

                                      -26-


the Release Parcel shall not affect the availability or provision of services to
the related Individual Property;

            (v) Lender shall have received a metes and bounds description of the
Release Parcel from a surveyor licensed in the State (a "SURVEYOR"), and an
updated survey, performed by a Surveyor, of the Release Parcel and the remainder
of the related Individual Property;

            (vi) Lender shall have received (1) a redated endorsement to the
Title Policy indicating that the Release Parcel has been legally subdivided from
the remainder of the related Individual Property, and (2) a redated endorsement
to the Title Policy indicating that each of the Release Parcel and the balance
of the related Individual Property constitutes a separate tax lot;

            (vii) Lender shall have received, effective on the date of the
release, an endorsement to the Title Policy (1) insuring Lender's interest in
any easements created in connection with the release, (2) extending the
effective date of the Title Policy to the effective date of the release, and (3)
confirming no change in the priority of the Mortgage on the balance of the
related Individual Property or in the amount of the insurance or the coverage
under the Title Policy;

            (viii) Borrower shall submit to Lender, not less than ten (10) days
prior to the date of the proposed release, all documents, in a form appropriate
in the jurisdiction in which the related Individual Property is located,
required to release the lien of the related Mortgage on the Release Parcel and
any required modifications of the related Mortgage and any of the other Loan
Documents for execution by Lender;

            (ix) In the event that the Transferee is an Affiliate of Borrower,
Borrower shall deliver to Lender (i) evidence that such Affiliate has given
Borrower fair consideration for such Release Parcel and (ii) an updated
Insolvency Opinion in form and substance that a prudent lender originating
securitized commercial mortgage loans would accept;

            (x) To the extent any Operating Agreements then exist with respect
to the Release Parcel or are being created in connection with such release,
Lender shall have received (i) documentation evidencing (A) the assumption by
Transferee of all of Borrower's obligations relating to the Release Parcel under
such Operating Agreements and (B) the release of Borrower from such obligations
relating to the Release Parcel under the Operating Agreements to the extent
Borrower is not released from such obligations by operation of law as a result
of the release, and (ii) in the event that Lender does not receive documentation
evidencing such release in accordance with subsection (B), an Officer's
Certificate certifying that Borrower is released from such obligations by
operation of law;

            (xi) Borrower shall execute such documents and instruments as are
typical for transactions similar to such release; and

            (xii) Borrower shall pay all third party costs, taxes and expenses
associated with the release of the Lien of the related Mortgage and the transfer
of the Release Parcel to the Transferee, including Lender's and the Rating
Agencies' reasonable attorneys' fees and disbursements.
<Page>

                                      -27-


            2.6.2 NO WAIVER. No partial release made hereunder or otherwise
shall affect the liability of Borrower or any other Person for the payment of
the Debt, or affect the lien of the related Mortgage upon the remainder of the
related Individual Property for the full amount of the Debt then remaining
unpaid. Lender's release of the portion of the related Individual Property to be
released: (a) shall not cure or waive, and shall not be deemed or construed to
cure or waive, any Event of Default then in existence or invalidate any act done
by Lender in response to any such Event of Default (including, without
limitation, the delivery of any notice of default); and (b) shall not
invalidate, extinguish, limit, impair, or otherwise affect any indemnity in
favor of Lender with respect to the portion of the related Individual Property
released.

            SECTION 2.7 PROPERTY SUBSTITUTIONS.

            2.7.1 SUBSTITUTION OF PROPERTY. Upon not less than thirty (30) days
prior written notice to Lender, and subject to the terms and conditions set
forth in this Section 2.7, Borrower may obtain a release of the Lien of a
Mortgage and the related Loan Documents encumbering an Individual Property
(each, a "SUBSTITUTED PROPERTY" and collectively, the "SUBSTITUTED PROPERTIES")
by substituting therefor another shopping center property acquired by Borrower
(which must be of at least the same general character and quality as the
Substituted Property) (a "SUBSTITUTE PROPERTY"), provided that the Allocated
Loan Amount of the Substituted Property together with the Allocated Loan Amounts
of all previous Substituted Properties, does not exceed twenty-five percent
(25%) of the original principal amount of the Loan. In addition, any such
substitution shall be subject, in each case, to the satisfaction of the
following conditions precedent (with all documentation required to be submitted
by or on behalf of Borrower hereunder being submitted to Lender or Servicer):

            (i) Simultaneously with the substitution, Borrower shall convey fee
simple title to the Substituted Property to a Person other than Borrower.

            (ii) Lender shall have received an appraisal of the Substitute
Property dated no more than sixty (60) days prior to the substitution by a
reputable, independent, licensed MAI appraiser in the state in which the
Substitute Property is located, indicating an appraised value of the Substitute
Property that is equal to or greater than the value of the Substituted Property
determined by Lender at the time of the encumbrance of the Substituted Property
by the related Mortgage at or about the Closing Date.

            (iii) After giving effect to the substitution, the Debt Service
Coverage Ratio for the Loan for all of the Properties (including the Substitute
Property but excluding the Substituted Property) is not less than the Debt
Service Coverage Ratio for the Loan for all of the Properties (including the
Substituted Property but excluding the Substitute Property) as of the Closing
Date and as of the date immediately preceding the substitution.

            (iv) To the extent the Substitute Property is an Existing Substitute
Property, the Underwritable Cash Flow for the Substitute Property does not show
a downward trend over the three (3) years immediately prior to the date of
substitution or, with respect to a Substitute Property for which information
regarding the Underwritable Cash Flow of such Substitute Property for the three
(3) years immediately prior to the date of substitution cannot be obtained by
Borrower after Borrower's exercise of diligent efforts, the Underwritable Cash
Flow shall not
<Page>

                                      -28-


show a downward trend for such period of time immediately prior to the date of
substitution as may be determined from the information regarding such
Underwritable Cash Flow available.

            (v) The Underwritable Cash Flow and Debt Service Coverage Ratio for
the Substitute Property for the twelve (12) month period immediately preceding
the substitution is greater than the Underwritable Cash Flow for the related
Substituted Property for the twelve (12) month period immediately preceding the
substitution. For purposes of this clause (v), the Debt Service Coverage Ratio
with respect to a Substitute Property or a Substituted Property shall be
calculated using the Underwritable Cash Flow with respect to such Substitute
Property or the Substituted Property, as applicable, and the principal and
interest due and payable on the Note with respect to the related Allocated Loan
Amount for the Substitute Property immediately after the substitution or the
Allocated Loan Amount for the Substituted Property immediately prior to the
substitution, as applicable.

            (vi) Lender shall have received a Rating Agency Confirmation.

            (vii) No Default or Event of Default shall have occurred and be
continuing and Borrower shall be in compliance in all material respects with all
terms and conditions set forth in this Agreement and in each Loan Document on
Borrower's part to be observed or performed. Lender shall have received an
Officer's Certificate confirming the foregoing, stating that, to Borrower's
Knowledge, the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of the substitution with respect to the
Substitute Property, stating that there has been no material adverse change in
the financial condition of Borrower, the REIT or the Properties from that set
forth in the most recent financial statements delivered to Lender pursuant to
Section 4.1.6 hereof and containing any other representations and warranties
with respect to Borrower, the Properties, the Substitute Property or the Loan as
the Rating Agencies may require, such Officer's Certificate to be confirmed by
Lender as demonstrating compliance with the requirements of this clause (vii).

            (viii) Borrower shall have executed, acknowledged and delivered to
Lender at Lender's discretion, amendments to the existing Loan Documents related
to the Substituted Property, or (A) a Mortgage, an Assignment of Leases and two
UCC Financing Statements with respect to the Substitute Property, together with
a letter from Borrower countersigned by a title insurance company acknowledging
receipt of such Mortgage, Assignment of Leases and UCC-1 Financing Statements
and agreeing to record or file, as applicable, such Mortgage, Assignment of
Leases and Rents and one of the UCC-1 Financing Statements in the real estate
records for the county in which the Substitute Property is located and to file
one of the UCC-1 Financing Statement in the office of the Secretary of State of
the state in which the Substitute Property is located, so as to effectively
create upon such recording and filing valid and enforceable Liens upon the
Substitute Property, of the requisite priority, in favor of Lender (or such
other trustee as may be desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents and (B) and an Environmental Indemnity with respect to the Substitute
Property. The Mortgage, Assignment of Leases, UCC-1 Financing Statements and
Environmental Indemnity shall be the same in form and substance as the
counterparts of such documents executed and delivered with respect to the
related Substituted Property subject to modifications reflecting the Substitute
Property as the Individual Property
<Page>

                                      -29-


that is the subject of such documents and such modifications reflecting the laws
of the state in which the Substitute Property is located as shall be recommended
by the counsel admitted to practice in such state and delivering the opinion as
to the enforceability of such documents required pursuant to clause (xiv) below.
The Mortgage encumbering the Substitute Property shall secure all amounts
evidenced by the Note, provided that in the event that the jurisdiction in which
the Substitute Property is located imposes a mortgage recording, intangibles or
similar tax and does not permit the allocation of indebtedness for the purpose
of determining the amount of such tax payable, the principal amount secured by
such Mortgage shall be equal to one hundred fifty percent (150%) of the
Allocated Loan Amount of the Substitute Property. The Allocated Loan Amount of
the Substitute Property shall equal the Allocated Loan Amount of the related
Substituted Property.

            (ix) Lender shall have received (A) any "tie-in" or similar
endorsement to each Title Insurance Policy insuring the Lien of an existing
Mortgage as of the date of the substitution available with respect to the Title
Insurance Policy insuring the Lien of the Mortgage with respect to the
Substitute Property and (B) a Title Insurance Policy (or a marked, signed and
redated commitment to issue such Title Insurance Policy) insuring the Lien of
the Mortgage encumbering the Substitute Property, issued by the title company
that issued the Title Insurance Policies insuring the Lien of the existing
Mortgages and dated as of the date of the substitution, with reinsurance and
direct access agreements that replace such agreements issued in connection with
the Title Insurance Policy insuring the Lien of the Mortgage encumbering the
Substituted Property. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the Allocated
Loan Amount if the "tie-in" or similar endorsement described above is available
or, if such endorsement is not available, in an amount equal to one hundred
fifty percent (150%) of the Allocated Loan Amount, (2) insure Lender that the
relevant Mortgage creates a valid first lien on the Substitute Property
encumbered thereby, free and clear of all exceptions from coverage other than
Permitted Encumbrances and standard exceptions and exclusions from coverage (as
modified by the terms of any endorsements), (3) contain such endorsements and
affirmative coverages as are contained in the Title Insurance Policies insuring
the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender
also shall have received copies of paid receipts showing that all premiums in
respect of such endorsements and Title Insurance Policies have been paid.

            (x) Lender shall have received a current title survey for each
Substitute Property, certified to the title company and Lender and their
successors and assigns, in the same form and having the same content as the
certification of the Survey of the Substituted Property prepared by a
professional land surveyor licensed in the state in which the Substitute
Property is located, in accordance with the 1992 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the
same legal description contained in the Title Insurance Policy relating to such
Substitute Property and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute Property.
The surveyor's seal shall be affixed to each survey and each survey shall
certify that the surveyed property is not located in a "one-hundred-year flood
hazard area."

            (xi) Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance required for an
Individual Property hereunder have
<Page>

                                      -30-


been satisfied with respect to the Substitute Property and evidence of the
payment of all premiums payable for the existing policy period.

            (xii) Lender shall have received a Phase I environmental report and,
if recommended under the Phase I environmental report, a Phase II environmental
report, which conclude that the Substitute Property does not contain any
Hazardous Substance (as defined in the Mortgage) in violation of Environmental
Law and is not subject to any risk of contamination from any off-site Hazardous
Substance which is determined by Lender to be material. If any such report
discloses the presence of any Hazardous Substance in violation of Environmental
Law or the risk of contamination from any off-site Hazardous Substance which is
determined by Lender to be material, such report shall include an estimate of
the cost of any related remediation and Borrower shall deposit with Lender an
amount equal to one hundred twenty-five percent (125%) of such estimated cost,
which deposit shall constitute additional security for the Loan and shall be
released to Borrower upon the delivery to Lender of (A) an update to such report
indicating that there is no longer any Hazardous Substance on the Substitute
Property in violation of Environmental Law or any danger of contamination from
any off-site Hazardous Substance that has not been fully remediated to the
extent required under Environmental Law and (B) with respect to remediation
preformed or caused to be performed by Borrower, paid receipts indicating that
the costs of all such remediation work have been paid.

            (xiii) Borrower shall deliver or cause to be delivered to Lender (A)
updates certified by Borrower of the schedule attached to Borrower's
organizational documentation delivered to Lender in connection with the closing
of the Loan which lists the properties owned by Borrower in order to add the
Substitute Property thereto and delete the Substituted Property therefrom; (B)
good standing certificates, certificates of qualification to do business in the
jurisdiction in which the Substitute Property is located (if required in such
jurisdiction) and (C) resolutions of the Borrower authorizing the substitution
and any actions taken in connection with such substitution.

            (xiv) Lender shall have received the following opinions of
Borrower's counsel: (A) an opinion or opinions of reputable counsel admitted to
practice under the laws of the state in which the Substitute Property is located
stating that the Loan Documents delivered with respect to the Substitute
Property pursuant to clause (viii) above are valid and enforceable in accordance
with their terms, subject to the laws applicable to creditors' rights and
equitable principles, and that Borrower is qualified to do business and in good
standing under the laws of the jurisdiction where the Substitute Property is
located or that Borrower is not required by applicable law to qualify to do
business in such jurisdiction; (B) an opinion of reputable counsel stating that
the Loan Documents delivered with respect to the Substitute Property pursuant to
clause (viii) above were duly authorized, executed and delivered by Borrower and
that the execution and delivery of such Loan Documents and the performance by
Borrower of its obligations thereunder will not cause a breach of, or a default
under, any agreement, document or instrument to which Borrower is a party or to
which it or its properties are bound; (C) an opinion of reputable counsel
stating that subjecting the Substitute Property to the Lien of the related
Mortgage and the execution and delivery of the related Loan Documents does not
and will not affect or impair the ability of Lender to enforce its remedies
under all of the Loan Documents or to realize the benefits of the
cross-collateralization provided for thereunder; (D) an update of the Insolvency
Opinion indicating that the substitution does not affect the opinions set forth
therein; (E) an opinion of
<Page>

                                      -31-


reputable counsel stating that the substitution and the related transactions do
not constitute a fraudulent conveyance under applicable bankruptcy and
insolvency laws and (F) an opinion of reputable counsel that the substitution
does not constitute a "significant modification" of the Loan under Section 1001
of the Code or otherwise cause a tax to be imposed on a "prohibited transaction"
by any REMIC Trust.

            (xv) Borrower shall have paid all Basic Carrying Costs relating to
the Substitute Property to the extent due, including without limitation, (i)
accrued but unpaid insurance premiums relating to the Properties and the
Substitute Property, (ii) currently due Taxes (including any in arrears)
relating to the Properties and the Substitute Property and (iii) currently due
Other Charges relating to the Properties and Substitute Property.

            (xvi) Borrower shall have paid Lender a servicing fee of $20,000,
and paid or reimbursed Lender for all costs and expenses actually incurred by
Lender (including, without limitation, reasonable attorneys fees and
disbursements) in connection with the substitution and Borrower shall have paid
all recording charges, filing fees, taxes or other expenses (including, without
limitation, mortgage and intangibles taxes and documentary stamp taxes) payable
in connection with the substitution. Borrower shall have paid all costs and
expenses of the Rating Agencies incurred in connection with the substitution.

            (xvii) Lender shall have received annual operating statements and
occupancy statements for the Substitute Property for the most current completed
fiscal year and a current operating statement for the Substituted Property, each
certified to Lender as being true and correct and a certificate from Borrower
certifying that there has been no material adverse change in the financial
condition of the Substitute Property since the date of such operating statements
(provided that with respect to any such Substitute Property, for the period
covered by such statements during which Borrower or an Affiliate of Borrower did
not own such Substitute Property, such certification shall be made to Borrower's
Knowledge).

            (xviii) Borrower shall have delivered to Lender estoppel
certificates from any existing tenants (A) under Major Leases at the Substitute
Property, (B) leasing an entire building at the Substitute Property, (C) whose
rent equals or exceeds five percent of the Gross Revenues relating to the
Substitute Property or (D) that, disregarding the area leased by those described
in clauses (A), (B) and (C), lease no less than seventy-five percent (75%) of
the remaining gross leasable area at the Substitute Property. All such estoppel
certificates shall be in the same form used in connection with the original
closing of the Loan or the form required by the related Lease or that would
otherwise be acceptable to a prudent lender originating securitized commercial
mortgage loans, and shall indicate that (1) the subject lease is a valid and
binding obligation of the tenant thereunder, (2) there are no defaults under
such lease on the part of the landlord or tenant thereunder, (3) the tenant
thereunder has no defense or offset to the payment of rent under such leases,
(4) no rent under such lease has been paid more than one (1) month in advance,
(5) the tenant thereunder has no option or right of first refusal under such
lease to purchase all or any portion of the Substitute Property and (6) all
tenant improvement work required under such lease has been completed and the
tenant under such lease is in actual occupancy of its leased premises.
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                                      -32-


            (xix) Lender shall have received copies of all tenant leases and any
ground leases affecting the Substitute Property certified by Borrower as being
true and correct. Lender shall have received a current rent roll of the
Substitute Property certified by Borrower as being true and correct.

            (xx) Lender shall have received subordination, nondisturbance and
attornment agreements in the form used in connection with the original closing
of the Loan, or that would otherwise be acceptable to a prudent lender
originating securitized commercial mortgage loans, with respect to all of the
Major Leases affecting the Substitute Property, and from Tenants (including
Tenants under Major Leases) leasing space constituting not less than
seventy-five percent (75%) of the rentable square footage at such Substitute
Property, other than such Leases that are, by their terms, subordinate to the
Mortgage with respect to the Substitute Property and, if the law of the State
where the Substitute Property is located allows the tenant under the Lease in
question to treat such Lease as terminated in the event of sale by foreclosure
or power of sale, provide for attornment to a subsequent owner in the case of
sale by foreclosure or power of sale.

            (xxi) Lender shall have received (A) an endorsement to the Title
Insurance Policy insuring the Lien of the Mortgage encumbering the Substitute
Property insuring that the Substitute Property constitutes a separate tax lot
or, if such an endorsement is not available in the state in which the Substitute
Property is located, a letter from the title insurance company issuing such
Title Insurance Policy stating that the Substitute Property constitutes a
separate tax lot or (B) a letter from the appropriate taxing authority stating
that the Substitute Property constitutes a separate tax lot.

            (xxii) Lender shall have received a Physical Conditions Report with
respect to the Substitute Property stating that the Substitute Property and its
use comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of damage or
waste. If compliance with any Legal Requirements are not addressed by the
Physical Conditions Report, such compliance shall be confirmed by delivery to
Lender of a certificate of an architect licensed in the state in which the
Substitute Property is located, a letter from the municipality in which such
Property is located, a certificate of a surveyor that is licensed in the state
in which the Substitute Property is located (with respect to zoning and
subdivision laws), an ALTA 3.1 zoning endorsement to the Title Insurance Policy
delivered pursuant to clause (ix) above (with respect to zoning laws) or a
subdivision endorsement to the Title Insurance Policy delivered pursuant to
clause (ix) above (with respect to subdivision laws). If the Physical Conditions
Report recommends that any repairs be made with respect to the Substitute
Property, such Physical Conditions Report shall include an estimate of the cost
of such recommended repairs and Borrower shall deposit with Lender an amount
equal to one hundred twenty-five percent (125%) of such estimated cost, which
deposit shall constitute additional security for the Loan and shall be released
to Borrower upon the delivery to Lender of (A) an update to such Physical
Conditions Report or a letter from the engineer that prepared such Physical
Conditions Report indicating that the recommended repairs were completed in good
and workmanlike manner and (B) paid receipts indicating that the costs of all
such repairs have been paid.
<Page>

                                      -33-


            (xxiii) Lender shall have received a certified copy of an amendment
to the Management Agreement reflecting the deletion of the Substituted Property
and the addition of the Substitute Property as a property managed pursuant
thereto and Manager shall have executed and delivered to Lender an amendment to
the Assignment of Management Agreement reflecting such amendment to the
Management Agreement.

            (xxiv) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the substitution as the
Rating Agencies may have requested.

            (xxv) Lender shall have received copies of all material contracts
and agreements relating to the leasing and operation of the Substitute Property
(other than the Management Agreement) together with a certification of Borrower
attached to each such contract or agreement certifying that the attached copy is
a true and correct copy of such contract or agreement and all amendments
thereto.

            (xxvi) Borrower shall submit to Lender, not less than five (5) days
prior to the date of such substitution, a release of Lien (and related Loan
Documents) for the Substituted Property for execution by Lender. Such release
shall be in a form appropriate for the jurisdiction in which the Substituted
Property is located and which would otherwise be satisfactory to a prudent
lender originating securitized commercial mortgage loans. Borrower shall deliver
an Officer's Certificate certifying that the requirements set forth in this
Section 2.7.1 have been satisfied.

            Upon the satisfaction of the foregoing conditions precedent, Lender
will cause its Lien from the Substituted Property to be released and the
Substitute Property shall be deemed to be an Individual Property for purposes of
this Agreement and the Substitute Release Amount with respect to such Substitute
Property shall be deemed to be the Release Amount with respect to such
Substitute Property for all purposes hereunder.

            SECTION 2.8 ADDITIONAL ADVANCE.

            (a) On the date hereof, Lender has advanced to Borrower the
principal sum of $235,000,000.00. In the event that, at any time prior to the
Securitization of the Loan, Lender determines that, based upon further input
from the Rating Agencies involved in the Securitization of the Loan, including,
without limitation, receipt of final subordination levels from the Rating
Agencies in connection with the Securitization of the Loan, that the credit
rating allocations and sizing parameters provided by such Rating Agencies would
permit the advance of additional Loan proceeds to Borrower (the "INCREMENTAL
PROCEEDS") such that no less than a BBB- (or comparable) rating will be
established by all Rating Agencies for all securities to be issued in connection
with such Securitization, Lender shall notify Borrower in writing (the "LENDER
NOTICE") of the amount of such Incremental Proceeds, which shall in no event
exceed $9,000,000.00. Such Lender Notice shall be delivered to Borrower pursuant
to the notice provisions of Section 11.6 hereof; provided, however, that copies
thereof (the "ADDITIONAL NOTICES") shall also be delivered to (i) the attention
of Patrick O'Sullivan at Borrower's notice address and (ii) the attention of
Robert Falzon at Prudential Real Estate Investors, 8 Campus Drive, Parsippany,
New Jersey 07054, Fax No. (973) 734-1475; and provided, further, that any
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                                      -34-


failure by Lender to deliver the Lender Notice or the Additional Notices shall
not serve to extend the Election Deadline (as defined below) so long as any one
of the intended recipients of such Lender Notice and/or Additional Notices
receives such notice in accordance with the terms hereof. Borrower may, by
written notice to Lender (the "BORROWER NOTICE") delivered to Lender within two
(2) Business Days following Borrower's receipt of the Lender Notice (the
"ELECTION DEADLINE"), time being of the essence, elect to receive a one-time
advance of such additional Loan proceeds equal to the Incremental Proceeds. In
no event shall the aggregate Loan amount advanced on the date hereof plus the
amount of the Incremental Proceeds which may be advanced to Borrower exceed
$244,000,000.00. In the event Borrower fails to deliver the Borrower Notice on
or before the Election Deadline, Borrower's right to elect to receive the
Incremental Proceeds shall immediately terminate and shall thereafter be of no
further force or effect. In the event Borrower delivers the Borrower Notice on
or before the Election Deadline, Borrower shall have the right to receive such
one-time additional advance of Incremental Proceeds upon satisfaction of each of
the following conditions precedent:

            (i) All conditions precedent to the receipt of the Incremental
Proceeds set forth in this Section 2.8 shall be satisfied to the satisfaction of
Lender within five (5) Business Days following Lender's receipt of the Borrower
Notice, time being of the essence, and in all events must be satisfied prior to
the Securitization.

            (ii) No Default or Event of Default shall have occurred.

            (iii) Lender shall have received such endorsements to Lender's Title
Insurance Policies determined by Lender in Lender's sole discretion to be
necessary to insure Lender's continuing first priority lien on the Properties
for the full amount of disbursed Loan proceeds, including, without limitation,
such endorsements which date-down the Lender's Title Insurance Policies as of
the date of the advance of the Incremental Proceeds (the "ADVANCE DATE") and
insure there are no new liens or encumbrances on the title other than those
shown on Lender's Title Insurance Policies as of the Closing Date.

            (iv) No material adverse change shall have occurred in the condition
of the Properties or in the financial or credit position of Borrower or the
REIT.

            (v) All of Borrower's representations and warranties contained
herein and in the other Loan Documents shall be true, accurate and complete as
of the Advance Date and be deemed remade as of the Advance Date.

            (vi) Borrower shall have paid all out-of-pocket costs and expenses
of Lender in connection with the documentation and disbursement of the
Incremental Proceeds, including without limitation, all reasonable attorneys'
fees and costs, title insurance charges and premiums, and taxes and recording
fees or charges, if any.

            (vii) Borrower shall have satisfied any other reasonable conditions
required by Lender to protect its collateral and to comply with Rating Agency
requirements.

            (b) In the event Incremental Proceeds are advanced, then as of the
Advance Date the Monthly Debt Service Payment Amount, Allocated Loan Amounts and
other affected economic terms shall be revised by Lender in its reasonable
discretion to reflect the advance of
<Page>

                                      -35-


such Incremental Proceeds. In connection therewith, Lender and Borrower shall
execute a certificate in the form of SCHEDULE VII attached hereto (the
"CERTIFICATE OF REVISED LOAN TERMS") which shall be prepared by Lender.

            (c) Borrower acknowledges and agrees that there may be only one
advance of Incremental Proceeds and that if such advance of Incremental Proceeds
is made, it shall be made in one installment. Borrower further acknowledges and
agrees that in no event shall Lender be obligated to make any advance of
Incremental Proceeds unless and until Lender, in its reasonable discretion,
determines that Borrower is entitled to the receipt thereof in accordance with
the terms and conditions of this Section 2.8.

            III. REPRESENTATIONS AND WARRANTIES

            SECTION 3.1 BORROWER REPRESENTATIONS.

            Borrower represents and warrants that:

            3.1.1 ORGANIZATION. Each of Borrower, Managing Member and SPC Party
is duly organized, validly existing and in good standing with full power and
authority to own its assets and conduct its business, and is duly qualified in
all jurisdictions in which the ownership or lease of its property or the conduct
of its business requires such qualification. Borrower has taken all necessary
action to authorize the execution, delivery and performance of this Agreement
and the other Loan Documents by it, and has the power and authority to execute,
deliver and perform under this Agreement, the other Loan Documents and all the
transactions contemplated hereby.

            3.1.2 PROCEEDINGS. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute a legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

            3.1.3 NO CONFLICTS. The execution and delivery of this Agreement and
the other Loan Documents by Borrower and the performance of its obligations
hereunder and thereunder will not conflict with any provision of any law or
regulation to which Borrower is subject, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any of Borrower's organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree
applicable to Borrower, or result in the creation or imposition of any lien on
any of Borrower's assets or property (other than pursuant to the Loan
Documents).

            3.1.4 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to Borrower's Knowledge, threatened against Borrower
or the REIT or any Affiliate of either, in any court or by or before any other
Governmental Authority which would materially and
<Page>

                                      -36-


adversely affect the ability of Borrower or the REIT or such Affiliate to carry
out the transactions contemplated by this Agreement or the other Loan Documents.

            3.1.5 AGREEMENTS. Borrower is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default would be likely to have consequences that
would materially and adversely affect the condition (financial or other) or
operations of Borrower or the Properties or might have consequences that would
adversely affect its performance hereunder.

            3.1.6 CONSENTS. No consent, approval, authorization or order of any
court or Governmental Authority is required for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, this Agreement or
the consummation of the transactions contemplated hereby, other than those which
have been obtained by Borrower.

            3.1.7 TITLE. Borrower has (a) good, marketable and insurable title
to, and possesses, an unencumbered leasehold estate in (i) the real property
comprising the Individual Properties listed on SCHEDULE V hereto and (ii) the
real property described in SCHEDULE VI(B) comprising part of the Individual
Property listed on SCHEDULE VI(A) hereto and (b) has good, marketable and
insurable title in fee simple to the real property hereto comprising all of the
remaining Individual Properties, and good title to the balance of such
Individual Properties, free and clear of all Liens whatsoever except the
Permitted Encumbrances. Heritage has good, marketable and insurable title in fee
simple to the real property comprising the Individual Properties listed on
SCHEDULE V hereto. Each Mortgage, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create (i) a valid, first priority,
perfected lien on the applicable Individual Property, subject only to Permitted
Encumbrances and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any Permitted
Encumbrances. To Borrower's Knowledge, there are no mechanics', materialman's or
other similar liens or claims which have been filed for work, labor or materials
affecting any Individual Property which are or may be liens prior to, or equal
or coordinate with, the lien of the related Mortgage, except for such liens or
claims which are insured over by the related Title Insurance Policy or bonded
over to the satisfaction of Lender. None of the Permitted Encumbrances,
individually or in the aggregate, materially interfere with the security
intended to be provided by the Mortgages and this Agreement, materially and
adversely affect the value of the Individual Properties, materially and
adversely impair the use or operations of the Individual Properties or impair
Borrower's ability to pay its obligations in a timely manner.

            3.1.8 NO PLAN ASSETS. As of the date hereof (a) Borrower is not and
will not be an "employee benefit plan," as defined in Section 3(3) of ERISA,
subject to Title I of ERISA, (b) none of the assets of Borrower constitutes or
will constitute "plan assets" of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101, (c) Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(32) of ERISA and (d) transactions by or
with Borrower are not and will not be subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans.
<Page>

                                      -37-


            3.1.9 COMPLIANCE. Except as specifically shown in the Reports, to
Borrower's Knowledge, Borrower and each of the Individual Properties and the use
thereof comply in all material respects with all material Legal Requirements,
including, without limitation, building and zoning ordinances and codes.
Borrower is not in default or violation of any order, writ, injunction, decree
or demand of any Governmental Authority, the violation of which might materially
adversely affect the condition (financial or otherwise) or business of Borrower.
Borrower has not committed any act which may give any Governmental Authority the
right to cause Borrower to forfeit any of the Individual Properties or any part
thereof or any monies paid in performance of Borrower's obligations under any of
the Loan Documents.

            3.1.10 FINANCIAL INFORMATION. All financial data, including, without
limitation, the operating statements, that have been delivered to Lender in
respect of the Individual Properties (i) are true, complete and correct in all
material respects and (ii) accurately represent the historical performance of
the Individual Properties for the period covered by such data. Since the date of
the financial statements, there has been no material adverse change in the
financial condition of the REIT or the operations or business of the Individual
Properties from that set forth in such financial statements.

            3.1.11 CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower's Knowledge, is contemplated with respect to all or
any portion of any of the Individual Properties or for the relocation of
roadways providing access to any of the Individual Properties.

            3.1.12 UTILITIES AND PUBLIC ACCESS. Each of the Individual
Properties has rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service such Individual
Property for its respective intended uses.

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

            3.1.14 ASSESSMENTS. Except as shown in the Title Policies, to
Borrower's Knowledge, there are no pending or proposed special or other
assessments for public improvements or otherwise affecting any of the Individual
Properties, nor, to Borrower's Knowledge, are there any contemplated
improvements to any of the Individual Properties that may result in such special
or other assessments.

            3.1.15 ENFORCEABILITY. All of the Loan Documents constitute valid,
legal and binding obligations of Borrower and are fully enforceable against
Borrower in accordance with their terms, subject only to bankruptcy laws and
general principles of equity. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
<Page>

                                      -38-


            3.1.16 ASSIGNMENT OF LEASES. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to Borrower to exercise
certain rights and to perform certain obligations of the lessor under such
Leases, including the right to operate the related Individual Property. No
Person other than Lender has received an assignment of the Leases or has any
rights in the Leases or any portion of the Rents due and payable or to become
due and payable thereunder.

            3.1.17 INSURANCE. Borrower has obtained and has delivered to Lender
original or certified copies of all of the Policies, with all premiums due
having been paid thereunder, reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. To Borrower's Knowledge, no
Person, including Borrower, has done, by act or omission, anything which would
materially impair the coverage of any of the Policies.

            3.1.18 LICENSES. To Borrower's Knowledge, all material permits and
approvals, including without limitation, certificates of occupancy required by
any Governmental Authority for the use, occupancy and operation of each of the
Individual Properties in the manner in which such Individual Property is
currently being used, occupied and operated have been obtained and are in full
force and effect.

            3.1.19 FLOOD ZONE. Except as shown in the Surveys and/or the flood
certifications delivered to Lender in connection with the closing of the Loan,
to Borrower's Knowledge, none of the Improvements on any of the Individual
Properties are located in an area identified by the Federal Emergency Management
Agency as a special flood hazard area.

            3.1.20 SEISMIC EXPOSURE. None of the Individual Properties is
located in Zone 3 or Zone 4 of the "Seismic Zone Map of the U.S.".

            3.1.21 PHYSICAL CONDITION. Except as shown on the Reports, to
Borrower's Knowledge, each of the Individual Properties, including, without
limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects, subject to ordinary wear
and tear; there exists no structural or other material defects or damages in any
of the Individual Properties, whether latent or otherwise, and Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in any of the Individual Properties, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.

            3.1.22 BOUNDARIES. Except as shown in the Surveys, all of the
improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and no improvements on adjoining properties
encroach upon such Individual Property, and no easements or other encumbrances
affecting the applicable Individual Property encroach upon any of the
improvements, so as to materially and adversely affect the value or
marketability of the applicable Individual Property except those which are
insured against by title insurance.
<Page>

                                      -39-


            3.1.23 LEASES. Borrower represents and warrants to Lender with
respect to the Leases that, except as shown on SCHEDULE 3.1.23, (a) the rent
roll attached hereto as SCHEDULE III is true, complete and correct and the
Property is not subject to any Leases (excluding any subleases and subsubleases)
other than the Leases described in SCHEDULE III, (b) the Leases identified on
SCHEDULE III are in full force and effect and there are no material defaults
thereunder by either party, (c) the copies of the Leases delivered to Lender are
true and complete in all material respects, and there are no oral agreements
with respect thereto, (d) no Rent (excluding security deposits) has been paid
more than three (3) months in advance of its due date, (e) all work required to
be performed by Borrower as of the Closing Date under each Lease has been
performed as required and has been accepted by the applicable Tenant, (f) any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any Tenant leasing
more than 10,000 square feet at any Individual Property has already been
received by such Tenant and (g) no Tenant has an option to purchase any
Individual Property, any portion thereof or any interest therein.

            3.1.24 FILING AND RECORDING TAXES. ALL transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Individual Properties to Borrower have been paid. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid under
applicable Legal Requirements in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Mortgages, have been paid or are
being paid simultaneously herewith. All taxes and governmental assessments due
and owing in respect of each Individual Property have been paid, or an escrow of
funds in an amount sufficient to cover such payments has been established
hereunder or are insured against by the title insurance policy to be issued in
connection with the Mortgages.

            3.1.25 SINGLE PURPOSE. Borrower hereby represents and warrants to,
and covenants with, Lender that as of the date hereof and until such time as the
Debt shall be paid in full:

            (a) Borrower does not own and will not own any asset or property
other than (i) the Individual Properties, and (ii) incidental personal property
necessary for the ownership or operation of the Individual Properties.

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

            (c) Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any
constituent party, except upon terms and conditions that are fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than any such party.

            (d) Borrower has not incurred and will not incur any Indebtedness
other than (i) the Debt, (ii) unsecured trade payables and operational debt not
evidenced by a note, (iii) Indebtedness (other than that referenced in clause
(ii) hereof) incurred in the financing of
<Page>

                                      -40-


equipment and other personal property used on the Property and (iv) unsecured
obligations to tenants to pay or reimburse costs of tenant improvements;
provided that any Indebtedness and obligations incurred pursuant to subclauses
(ii), (iii) and (iv) shall be (x) not more than sixty (60) days past due and (y)
incurred in the ordinary course of business; and provided further that the
amount of all such Indebtedness and obligations pursuant to subclauses (ii),
(iii) and (iv) associated with all Individual Properties at any time outstanding
shall not exceed four percent (4%) of the initial Loan amount, or such greater
amount as may be approved by Lender. No Indebtedness other than the Debt may be
secured (subordinate or PARI PASSU) by the Individual Properties.

            (e) Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party) other than the
Oakwood Note, and shall not acquire obligations or securities of its Affiliates.

            (f) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due.

            (g) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will not, nor will Borrower permit any constituent party to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, operating agreement, trust or other
organizational documents of Borrower or such constituent party without the prior
consent of Lender, which consent shall not be unreasonably withheld with respect
to non-material changes which do not in any way affect the single-purpose
bankruptcy-remote nature of Borrower or such constituent party.

            (h) Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates and any
constituent party. Borrower's assets will not be listed as assets on the
financial statements of any other entity (unless such other entity's financial
statements contain a footnote indicating that the assets of Borrower are not,
and shall not be, available to satisfy the general obligations of such other
entity). Borrower will file its own tax returns and will not file a consolidated
federal income tax return with any other Person, unless required by law.
Borrower shall maintain its books, records, resolutions and agreements as
official records.

            (i) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate of Borrower or any constituent party of Borrower), shall correct
any known misunderstanding regarding its status as a separate entity, shall
conduct business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other and shall maintain and utilize
separate stationery, invoices and checks bearing its own name.

            (j) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
<Page>

                                      -41-


            (k) Neither Borrower nor any constituent party will seek or effect
the liquidation, dissolution, winding up, liquidation, consolidation or merger,
in whole or in part, of Borrower.

            (l) Borrower will not commingle the funds and other assets of
Borrower with those of any Affiliate or constituent party or any other Person,
and will hold all of its assets in its own name.

            (m) Borrower has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any other
Person.

            (n) Borrower will not guarantee or become obligated for the debts of
any other Person and does not and will not hold itself out to be responsible for
or have its credit available to satisfy the debts or obligations of any other
Person.

            (o) The managing member of Borrower (the "MANAGING MEMBER") shall be
a limited liability company whose sole asset is its interest in Borrower and
Managing Member will at all times comply, and will cause Borrower to comply with
each of the representations, warranties and covenants contained in this Section
3.1.25 as if such representation, warranty or covenant was made directly by such
Managing Member. In addition, the managing member of the Managing Member (the
"SPC PARTY") shall be a corporation whose sole asset is its interest in Managing
Member and such SPC Party will at all times comply, and will cause Managing
Member and Borrower to comply, with each of the representations, warranties, and
covenants contained in this Section 3.1.25 as if such representation, warranty
or covenant was made directly by such SPC Party. Upon the withdrawal or the
disassociation of an SPC Party from Managing Member as approved by Lender in its
sole discretion, Borrower shall immediately appoint a new SPC Party whose
articles of incorporation are substantially similar to those of such SPC Party
and deliver a new non-consolidation opinion to the Rating Agency or Rating
Agencies, as applicable, with respect to the new SPC Party and its equity
owners. Upon the withdrawal or the disassociation of the Managing Member as
approved by Lender in its sole discretion, Borrower shall immediately appoint a
new managing member of Borrower whose operating agreement is substantially
similar to that of Managing Member and deliver a new non-consolidation opinion
to the Rating Agency or Rating Agencies, as applicable, with respect to the new
managing member and its equity owners.

            (p) Borrower shall at all times cause there to be at least two duly
appointed members of the board of directors (each, an "INDEPENDENT DIRECTOR") of
each SPC Party reasonably satisfactory to Lender who shall not have been at the
time of such individual's appointment or at any time while serving as a director
of such SPC Party, and may not have been at any time during the preceding five
years (i) a stockholder, director (other than as an Independent Director),
officer, employee, partner, attorney or counsel of such corporation, Borrower or
any Affiliate of either of them, (ii) a customer, supplier or other Person who
derives any of its purchases or revenues from its activities with such
corporation, Borrower or any Affiliate of either of them, (iii) a Person or
other entity controlling or under common control with any such stockholder,
partner, customer, supplier or other Person, or (iv) a member of the immediate
family of any such stockholder, director, officer, employee, partner, customer,
<Page>

                                      -42-


supplier or other Person. As used in this definition, the term "CONTROL" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.

            (q) Borrower shall not cause or permit the board of directors of any
SPC Party to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires a vote of the board of directors of each SPC Party unless at the
time of such action there shall be at least two members who are each an
Independent Director.

            (r) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion shall be true and correct in
all respects. In connection with the foregoing, Borrower hereby covenants and
agrees that it will comply with or cause the compliance with, (i) all of the
facts and assumptions (whether regarding Borrower or any other Person) set forth
in the Insolvency Opinion, (ii) all the representations, warranties and
covenants in this Section 3.1.25, and (iii) all the organizational documents of
Borrower and any SPC Party.

            (s) Borrower will not permit any Affiliate or constituent party
independent access to its bank accounts.

            (t) Borrower shall pay the salaries of its own employees (if any)
from its own funds and maintain a sufficient number of employees (if any) in
light of its contemplated business operations.

            (u) Borrower shall compensate each of its consultants and agents
from its funds for services provided to it and pay from its own assets all
obligations of any kind incurred.

            3.1.26 SOLVENCY. Borrower (a) has not entered into the transaction
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower's assets exceeds and will, immediately following the
making of the Loan, exceed Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Indebtedness and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Indebtedness and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of Borrower). Neither Borrower, nor any
general partner or member of Borrower, nor any guarantor of the Loan is
currently (a) the subject of or a party to any completed or pending bankruptcy,
reorganization or insolvency proceeding; or (b) the subject of any judgment
unsatisfied of record or docketed in any court of any state in which an
Individual Property is located or in any other court located in the United
States.
<Page>

                                      -43-


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

            3.1.28 ORGANIZATIONAL CHART. The organizational chart attached as
SCHEDULE IV hereto, relating to Borrower and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.

            3.1.29 INVESTMENT COMPANY ACT. Borrower is not (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.

            3.1.30 MISSTATEMENTS OF FACT. No statement of fact made in the Loan
Documents contains any untrue statement of a material fact or to Borrower's
Knowledge omits to state any material fact necessary to make statements
contained herein or therein not materially misleading. There is no fact
presently known to Borrower which has not been disclosed which materially
adversely affects, nor as far as Borrower can reasonably foresee, is likely to
materially adversely affect the business, operations or condition (financial or
otherwise) of the representing party. Further, and in clarification of the
foregoing, all reports, certificates, affidavits, statements and other data
prepared by Borrower or any Affiliate of Borrower furnished by or on behalf of
Borrower to Lender, or their respective agents, in connection with the Loan are
true and correct in all material respects and do not omit to state any material
fact or circumstance necessary to make the statements contained therein not
misleading.

            3.1.31 FORFEITURE. There has not been and shall never be committed
by Borrower or its Affiliates nor shall Borrower permit any other person in
occupancy of or involved with the operation or use of any Individual Property to
commit (provided Borrower is aware of such proposed action) any act or omission
affording the federal government or any state or local government the right of
forfeiture as against any such Individual Property or any part thereof or any
monies paid in performance of Borrower's obligations under any of the Loan
Documents.

            3.1.32 NO BROKER. No financial advisors, brokers, underwriters,
placement agents, agents or finders have been dealt with by Borrower in
connection with the Loan.

            3.1.33 CONVICTION OF CRIMINAL ACTS. Each of Borrower, any Affiliate
of Borrower and any indemnitor and guarantor of Borrower's obligations under the
Loan Documents, and any general partner, shareholder, member or principal of
Borrower, and any such indemnitor or guarantor of Borrower, has never been
convicted of a crime and is not currently the subject of any pending or
threatened criminal investigation or proceeding.
<Page>

                                      -44-


            3.1.34 SECURITY AGREEMENTS. There are no security agreements or
financing statements affecting any Individual Property other than (i) as
disclosed in writing by Borrower to Lender prior to the date hereof and (ii) the
security agreements and financing statements created in favor of Lender.

            SECTION 3.2 SURVIVAL OF REPRESENTATIONS.

            The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.

            IV. BORROWER COVENANTS

            SECTION 4.1 BORROWER AFFIRMATIVE COVENANTS.

            Borrower hereby covenants and agrees with Lender that:

            4.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower shall
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
comply with all Legal Requirements in all material respects applicable to it and
its Individual Properties.

            4.1.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and
Other Charges now or hereafter levied or assessed or imposed against the
Individual Properties or any part thereof as the same become due and payable;
provided, however, Borrower's obligation to directly pay Taxes shall be
suspended for so long as Borrower complies with the terms and provisions of
Section 6.2 hereof. Borrower shall furnish to Lender receipts for the payment of
the Taxes and the Other Charges prior to the date the same shall become
delinquent; provided, however, that Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 6.2 hereof. Borrower shall not permit or suffer and
shall promptly discharge any lien or charge against the Individual Properties.
After prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, conducted in good faith and with due diligence,
the amount or validity of any Taxes or Other Charges, provided that (i) no Event
of Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) no Individual Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of Taxes or Other Charges from the
applicable Individual Property; and (vi) if such contested amount is in excess
of $125,000, Borrower shall deposit with Lender cash, or other security as may
be approved by Lender, in an amount equal to one hundred percent (100%) of the
contested amount together with all interest and penalties that may accrue, to
insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon.
<Page>

                                      -45-


            4.1.3 LITIGATION. Borrower shall give prompt notice to Lender of any
litigation or governmental proceedings pending or threatened against Borrower
which is likely to materially adversely affect any of the Individual Properties
or Borrower's ability to perform its obligations hereunder or under the other
Loan Documents.

            4.1.4 ACCESS TO PROPERTIES. Borrower shall permit agents,
representatives and employees of Lender to inspect any of its Individual
Properties or any part thereof at reasonable times during normal business hours
(except in the event of an emergency) upon reasonable advance notice and subject
to compliance with the terms and provisions of the Leases as to tenant space.

            4.1.5 FURTHER ASSURANCES; SUPPLEMENTAL MORTGAGE AFFIDAVITS. Borrower
shall, at Borrower's sole cost and expense:

            (a) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and

            (b) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.

            4.1.6 FINANCIAL REPORTING.

            (a) Borrower shall keep and maintain or will cause to be kept and
maintained proper and accurate books and records, in accordance with GAAP,
reflecting the financial affairs of Borrower. Lender shall have the right from
time to time during normal business hours upon reasonable notice to Borrower to
examine such books and records at the office of Borrower or other Person
maintaining such books and records and to make such copies or extracts thereof
as Lender shall reasonably require.

            (b) Borrower shall furnish Lender annually, within ninety (90) days
following the end of each Fiscal Year, (i) a complete copy of Borrower's annual
financial statements audited by a "Big Five" accounting firm or other
independent certified public accountant acceptable to Lender (the "CPA")
prepared in accordance with GAAP covering the Individual Properties on a
combined basis, such financial statements to include statements of income and
expense for Borrower a balance sheet for Borrower, and (ii) a summary report for
the prior Fiscal Year containing aggregate sales by Tenants under Leases or
other occupants of each Individual Property who provide such sales reports to
Borrower or are required to provide such reports to Borrower (provided that
Borrower shall use commercially reasonable efforts to obtain sales reports from
Tenants and occupants required to provide such reports in accordance with the
terms of their Leases, provided, further, that if despite such commercially
reasonable efforts, Borrower is unable to obtain such sales reports required to
be delivered under such Leases, then Borrower shall not be required to deliver
such summary report with respect to those Leases). Borrower shall also furnish
to Lender annually, within ninety (90) days following the end of each
<Page>

                                      -46-


Fiscal Year, a complete copy of Borrower's annual financial statements covering
each Individual Property, including, without limitation, statements of income
and expense for the Individual Properties. Borrower's annual financial
statements shall be accompanied by a certificate executed by an authorized
officer of Borrower stating that such annual financial statement presents fairly
the financial condition and the results of operations of Borrower. Together with
Borrower's annual financial statements, Borrower shall furnish to Lender an
Officer's Certificate certifying as of the date thereof whether to the best of
Borrower's knowledge there exists an event or circumstance which constitutes a
Default or Event of Default by Borrower under the Loan Documents and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same. Such tenant
sales summaries shall also be accompanied by a certificate from an authorized
officer of Borrower, certifying that such summaries are true, correct, and
complete copies of the statements delivered to Borrower.

            (c) Borrower will furnish Lender on or before the forty-fifth (45th)
day after the end of each fiscal quarter (based on Borrower's Fiscal Year), the
following items, accompanied by certificate from an authorized officer of
Borrower, certifying that such items are true, correct, accurate and complete
and fairly present the financial condition and results of the operations of
Borrower and each Individual Property in accordance with GAAP as applicable:

            (i) quarterly and year-to-date statements of income and expense for
      such quarter with respect to each Individual Property, with a balance
      sheet for such quarter for Borrower;

            (ii)a current rent roll with occupancy figures for each Individual
      Property in a form reasonably acceptable to Lender; and

            (iii) upon request of Lender, lease abstracts (if prepared in the
      ordinary course of business) for, and copies of, each new Major Lease
      entered into during the prior quarter.

            (d) Prior to Securitization, Borrower will furnish Lender on or
before the tenth (10th) day after the end of each calendar month (the "CURRENT
MONTH"), the following items, accompanied by a certificate from an authorized
financial officer of Borrower, certifying that such items are true, correct,
accurate, and complete and fairly present the financial condition and results of
the operations of Borrower and each Individual Property in a manner consistent
with GAAP, as applicable:

            (i) monthly and year-to-date statements of income and expense
      prepared for the month immediately prior to the Current Month with respect
      to each Individual Property ("INDIVIDUAL PROPERTY STATEMENTS");

            (ii) a current rent roll (as of the first day of the month following
      the Current Month) for each Individual Property in a form reasonably
      acceptable to Lender; and

              (iii) any notice received from a Tenant whose leased premises
      exceed 10,000 square feet (a "SIGNIFICANT TENANT") threatening non-payment
      of Rent or other default, alleging or acknowledging a default by landlord,
      requesting a termination or a material
<Page>

                                      -47-


      modification of any such Lease or notifying Borrower of the exercise or
      non-exercise of any option provided for in such Tenant's Lease, or any
      other similar material correspondence received by Borrower from
      Significant Tenants during the subject month.

            In addition, Borrower shall use commercially reasonable efforts to
      furnish Individual Property Statements for the Current Month by the tenth
      (10th) day after the end of the Current Month, or as soon as practicable
      thereafter.

            (e) Borrower shall submit the Annual Budget to Lender not later than
thirty (30) days prior to the commencement of each Fiscal Year.

            (f) Borrower shall furnish Lender with copies of all tax returns
filed by Borrower separately within thirty (30) days after the date of filing.

            (g) Upon request, Borrower shall furnish Lender with such financial
information regarding the REIT as Lender may reasonably request.

            (h) After completion of a Securitization, Borrower shall furnish to
Lender, within fifteen (15) Business Days after request (or as soon thereafter
as may be reasonably possible), such further detailed information with respect
to the operation of any of the Individual Properties and the financial affairs
of Borrower and the REIT as may be reasonably requested by Lender.

            (i) If any of the aforementioned materials are not furnished to
Lender within the applicable time periods or Lender is dissatisfied in its
reasonable discretion with the contents of any of the foregoing, in addition to
any other rights and remedies of Lender contained herein, Lender shall have the
right, but not the obligation, to obtain the same by means of an audit by an
independent certified public accountant selected by Lender, in which event
Borrower agrees to pay, or to reimburse Lender for, any reasonable expense of
such audit and further agrees to provide all necessary information to said
accountant and to otherwise cooperate in the making of such audit.

            (j) Copies of any information provided to Lender pursuant to this
Agreement may, in Lender's discretion, be provided to the Rating Agencies.

            4.1.7 TITLE TO THE INDIVIDUAL PROPERTIES. Borrower, and as to the
Individual Properties listed on SCHEDULE V attached hereto, Heritage, will
warrant and defend the validity and priority of the Liens of the Mortgages and
the Assignments of Leases on the Individual Properties against the claims of all
Persons whomsoever, subject only to Permitted Encumbrances.

            4.1.8 ESTOPPEL CERTIFICATES.

            (a) After request by Lender but no more than twice in any twelve
(12) calendar month period, Borrower shall within five (5) Business Days furnish
Lender with a statement, duly acknowledged and certified, stating (i) the unpaid
principal amount of the Note, (ii) the Applicable Interest Rate of the Note,
(iii) the date installments of interest and/or principal were last paid, (iv)
any offsets or defenses to the payment of the Debt, if any, and (v) that this
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                                      -48-


Agreement and the other Loan Documents have not been modified or if modified,
giving particulars of such modification.

            (b) Borrower shall use commercially reasonable efforts to deliver to
Lender, upon request, an estoppel certificate from each Tenant under any Lease;
provided that such certificate may be in the form required under such Lease;
provided further that Borrower shall not be required to deliver such
certificates more frequently than one (1) time in any calendar year.

            4.1.9 LEASES.

            (a) Borrower shall not enter into any Lease after the date hereof
which would, evaluated alone or in conjunction with any then existing Leases,
result in any material impairment of the fair market value, as of the date such
Lease is executed by Borrower, of the affected Individual Property. Subject to
subsection (d) of this Article 4.1.9, Borrower may enter into any Lease which is
not inconsistent with the provisions of this Article 4.1.9 and the other
applicable provisions of this Agreement, if any. Each Lease entered into after
the date hereof (including the renewal or extension on or after the date hereof
of any Lease entered into prior to the date hereof) shall provide for rent
(provided that, if a Lease, as of the date hereof, specifies a fixed rental
payment for such renewal or extension period, then such fixed rental payment
shall apply during such renewal or extension period) and all other material
items thereunder to be payable in amounts at least equal to the fair market
rental value (taking into account the type and quality of the Tenant), as of the
date such Lease is executed by Borrower, of the space covered by such Lease or
renewal for the term thereof, including any renewal options, (i) shall not have
a material adverse effect on the value of the related Individual Property, the
Properties as a whole or the ability of Borrower to pay its obligations in
respect of the Loan Documents and (ii) shall otherwise be on commercially
reasonable terms.

            (b) Borrower may, without the consent of Lender, amend, modify or
waive the provisions of any Lease, provided that such action does not have a
material adverse effect upon the value of any of the Individual Properties, and
provided further that such Lease, as amended, modified or waived, is otherwise
in compliance with the requirements of this Agreement and a certified copy of
the amendment, modification or waiver is delivered to Lender.

            (c) Borrower may terminate or permit the termination of any Lease of
space or accept surrender of all or any portion of the space demised under the
Lease or shorten the term of any Lease so long as such action (taking into
account the planned alternative uses of the space) does not materially adversely
affect the value of any of the Properties or the ability of Borrower to pay its
obligations in respect of the Loan Documents.

            (d) After the occurrence and during the continuation of a Cash Sweep
Event (as defined in the Cash Management Agreement), Borrower shall not enter
into any Lease or renewal thereof, or amend or modify any Lease or waive any
provisions of any Lease, or terminate or permit the termination of any Lease, or
accept surrender of all or any portion of the space demised under any lease or
shorten the term of any Lease, in each case where the space demised under such
Lease exceeds 20,000 square feet, without in each instance obtaining the prior
written approval of Lender (which such approval shall be granted or withheld by
Lender
<Page>

                                      -49-


within ten (10) Business Days after Lender's receipt of a fully executed copy of
such Lease, together with such additional information as Lender may reasonably
require in order to make a determination as to whether such approval is
appropriate). In the event Lender fails to grant or withhold its consent during
such ten (10) Business Day Period, Borrower may deliver a written notice to
Lender (the "LEASE DETERMINATION NOTICE") requesting a determination as to the
granting or withholding of such consent. In the event Lender fails to grant or
withhold its consent within five (5) Business Days following receipt of the
Lease Determination Notice, then Lender shall be deemed to have approved such
Lease.

            (e) Borrower (i) shall observe and perform the obligations imposed
upon the lessor under the Leases in a commercially reasonable manner (including,
without limitation, requiring Tenants to provide all tenant sales reports
required under the Leases); (ii) subject to the foregoing provisions of this
Article, shall enforce the terms, covenants and conditions contained in the
Leases upon the part of the lessee thereunder to be observed or performed in a
commercially reasonable manner; (iii) shall not collect any of the Rents more
than one (1) month in advance (other than security deposits); and (iv) shall not
execute any assignment of lessor's interest in the Leases or the Rents (except
as contemplated by the Loan Documents). Upon request, Borrower shall furnish
Lender with executed copies of all Leases, certified by Borrower.

            (f) All security deposits of Tenants, whether held in cash or in any
other form, shall not be commingled with any other funds of Borrower or any
other person and, if cash, shall be deposited by Borrower at such commercial or
savings bank or banks, or otherwise held in compliance with applicable law, as
may be reasonably satisfactory to Borrower. Any bond or other instrument which
Borrower is permitted to hold in lieu of cash security deposits under any
applicable legal requirements shall be maintained in full force and effect in
the full amount of such deposits required by the respective Leases unless
replaced by cash deposits as hereinabove described; shall be assigned to Lender
pursuant to the Assignment of Leases; and shall, in all material respects,
comply with any applicable legal requirements and otherwise be reasonably
satisfactory to Lender. Borrower shall, upon request, provide Lender with
evidence reasonably satisfactory to Lender of Borrower's compliance with the
foregoing. Upon an Event of Default, Borrower shall, immediately upon Lender's
request (if permitted by applicable law), deliver to Lender the security
deposits (and any interest previously earned thereon and not disbursed to the
person(s) lawfully entitled to receive same) with respect to all or any portion
of any Individual Property, to be held by Lender subject to the terms of the
Leases.

            4.1.10 ALTERATIONS. Lender's prior approval shall be required in
connection with any alterations to any Improvements on any Individual Property
(a) that may have a material adverse effect on Borrower's financial condition,
the value of the related Individual Property or the Underwritable Cash Flow, or
(b) the cost of which (including any related alteration, improvement or
replacement) is reasonably anticipated to exceed the Alteration Threshold for
such Individual Property (provided that as to this clause (b), such approval
shall not be unreasonably withheld, conditioned or delayed). If the total unpaid
amounts incurred and to be incurred with respect to such alterations to the
Improvements (collectively, the "AGGREGATE ALTERATION AMOUNT") shall at any one
time exceed $4,000,000 with respect to all of the Individual Properties,
Borrower shall promptly deliver to Lender as security for the payment of the
Aggregate Alteration Amount and as additional security for Borrower's
obligations under the Loan Documents, a sum (the "ALTERATION DEPOSIT") equal to
the amount by which such
<Page>

                                      -50-


Aggregate Alteration Amount exceeds $4,000,000, such sum being in the form of
any of the following: (i) cash, (ii) U.S. Obligations, (iii) other securities
acceptable to Lender, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same, or (iv) a completion bond,
provided that Lender shall have received a Rating Agency Confirmation as to the
form and issuer of same. Such security shall be in an amount equal to the excess
of the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements on the Individual Property (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.

            SECTION 4.2 BORROWER NEGATIVE COVENANTS.

            Borrower covenants and agrees with Lender that:

            4.2.1 LIENS. Borrower shall not create, incur, assume or suffer to
exist (subject to Borrower's right to contest pursuant to and in accordance with
Section 1.6 and Section 1.9 of the Mortgage and Section 4.1.2 hereof) any Lien
on any portion of any of the Individual Properties except for Permitted
Encumbrances.

            4.2.2 DISSOLUTION. Borrower shall not (i) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(ii) engage in any business activity not related to the ownership and operation
of the Properties, (iii) transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the properties or
assets of Borrower except to the extent expressly permitted by the Loan
Documents, or (iv) cause, permit or suffer any SPC Party to (A) dissolve, wind
up or liquidate or take any action, or omit to take an action, as a result of
which such SPC Party would be dissolved, wound up or liquidated in whole or in
part, or (B) amend, modify, waive or terminate the certificate of incorporation
or bylaws of such SPC Party, in each case, without obtaining the prior consent
of Lender.

            4.2.3 CHANGE IN BUSINESS. Borrower shall not enter into any line of
business other than the ownership and operation of the Individual Properties.

            4.2.4 DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any material claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.

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

            4.2.6 ZONING. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any of the Individual Properties or seek any
variance (other than the issuance of variances required in connection with a
Tenant's particular use of its leased premises, provided that such particular
use is consistent with similar uses at properties similar to such Individual
Property) under any existing zoning ordinance or use or permit the use of any
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                                      -51-


portion of any of the Individual Properties in any manner that could result in
such use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of Lender
which consent shall not be unreasonably withheld.

            4.2.7 ASSETS. Borrower shall not purchase or own any properties
other than the Individual Properties and personal property incidental to the
conduct of its business at the Individual Properties.

            4.2.8 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of any Individual Property (i) with any other real
property constituting a tax lot separate from such Individual Property, and (ii)
with any portion of such Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Individual Property.

            4.2.9 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its
principal place of business from the address set forth on the first page of this
Agreement without first giving Lender ten (10) Business Days prior notice.

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

            (b) Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as requested by
Lender in its reasonable discretion, that (A) Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) none of the assets of Borrower constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101.

            V. INSURANCE, CASUALTY AND CONDEMNATION

            SECTION 5.1 INSURANCE.

            5.1.1 INSURANCE POLICIES. (a) Borrower shall obtain and maintain, or
cause to be maintained, insurance for Borrower and each of the Individual
Properties providing at least the following coverages:

            (i) comprehensive Special Form insurance on the Improvements and the
personal property at the Individual Properties, in each case (A) in an amount
equal to one hundred percent (100%) of the "Full Replacement Cost," which for
purposes of this Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations,
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                                      -52-


underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the outstanding principal balance of the
Loan; (B) containing an agreed amount endorsement with respect to the
Improvements and personal property at the Individual Properties waiving all
co-insurance provisions; (C) providing for no deductible in excess of the
greater of (I) Ten Thousand and No/l00 Dollars ($10,000) or (II) five percent
(5%) of the Underwritable Cash Flow for the related Individual Property, for all
such insurance coverage, other than with respect to flood and earthquake, which
maximum deductibles are as set forth below, and windstorm, which shall not
exceed one percent (1%) of the estimated replacement cost of the applicable
Individual Property; and (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the
Individual Property shall at any time constitute legal non-conforming structures
or uses. In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a federally
designated "special flood hazard area", flood hazard insurance in an amount not
less than One Hundred Million and No/100 Dollars ($100,000,000) with a maximum
deductible of Twenty-Five Thousand and No/l00 Dollars ($25,000); and (z)
earthquake insurance in amounts and in form and substance satisfactory to Lender
in the event the Individual Property is located in an area with a high degree of
seismic activity with a maximum deductible of Twenty-Five Thousand and No/l00
Dollars $25,000) or such level as is customarily required by a prudent lender
originating securitized commercial mortgage loans in such geographic area;

            (ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit, excluding umbrella coverage, of not
less than One Million and No/100 Dollars ($1,000,000) per occurrence and Two
Million and No/100 Dollars ($2,000,000) in the aggregate; (B) to continue at not
less than the aforesaid limit until required to be changed by Lender by reason
of changed economic conditions making such protection inadequate; and (C) to
cover at least the following hazards: (1) premises and operations; (2) products
and completed operations on an "if any" basis; (3) independent contractors; (4)
blanket contractual liability for all legal contracts to the extent such
coverage is customarily required by prudent lenders originating securitized
commercial mortgage loans in the geographic area in which the related Individual
Property is located; and (5) contractual liability covering Borrower's
indemnification obligations under the Loan Documents to the extent the same is
available and is customarily required by prudent lenders originating securitized
commercial mortgage loans in the geographic area in which the related Individual
Property is located;

            (iii) business income insurance (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and Personal
Property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration of twenty-four (24) months from the date that the Individual Property
is repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period; and
(D) in an amount equal to one hundred percent (100%) of the projected gross
income from the Individual Property for a period of twenty-four (24) months from
the date that the Individual Property is repaired or replaced and operations are
resumed. The amount of such business income insurance shall be determined
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                                      -53-


prior to the date hereof and at least once each year thereafter based on
Borrower's reasonable estimate of the gross income from the Individual Property
for the succeeding twenty-four (24) month period. All proceeds payable to Lender
pursuant to this subsection shall be held by Lender and shall be applied to the
obligations secured by the Loan Documents from time to time due and payable
hereunder and under the Note; provided, however, that nothing herein contained
shall be deemed to relieve Borrower of its obligations to pay the obligations
secured by the Loan Documents on the respective dates of payment provided for in
the Note and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

            (iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Individual Property coverage form does not otherwise apply, (A) owner's
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Individual
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;

            (v) workers' compensation, subject to the statutory limits of the
state in which the Individual Property is located, and employer's liability
insurance with a limit of at least One Million and No/100 Dollars ($1,000,000)
per accident and per disease per employee, and One Million and No/100 Dollars
($1,000,000) for disease aggregate in respect of any work or operations on or
about the Individual Property, or in connection with the Individual Property or
its operation (if applicable);

            (vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender;

            (vii) umbrella liability insurance in addition to primary coverage
in an amount not less than Fifty Million and No/100 Dollars ($50,000,000) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above;

            (viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, of One Million and No/100 Dollars
($1,000,000);

            (ix) in the event that any of the Individual Properties or the
Improvements constitutes a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, an ordinance or law coverage endorsement
providing coverage identical to the following coverages set forth in the
standard ISO form: Coverage A: "Loss Due to Operation of Law" (with a minimum
liability limit equal to Replacement Cost With Agreed Value Endorsement),
Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of Construction"
coverages; and

<Page>

                                      -54-


            (x) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time are
commonly insured against for property similar to the Individual Property located
in or around the region in which the Individual Property is located.

            (b) All insurance provided for in Section 5.1.1(a) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY") and, to the extent not specified above, shall be subject
to the approval of Lender as to deductibles, loss payees and insureds. Not less
than thirty (30) days prior to the expiration dates of the Policies theretofore
furnished to Lender, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to Lender of payment of the premiums then
due thereunder (the "INSURANCE PREMIUMS"), shall be delivered by Borrower to
Lender.

            (c) Any blanket insurance Policy shall include the amount of
coverage from time to time required hereunder and shall otherwise provide the
same protection as would a separate Policy insuring only the Individual Property
in compliance with the provisions of Section 5.1.1(a).

            (d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name Borrower as the insured and Lender and its successors and/or assigns as the
additional insured, as its interests may appear, and in the case of property
damage, boiler and machinery, flood and earthquake insurance, shall contain a
standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.

            (e) All Policies of insurance provided for in Section 5.1.1(a) shall
contain clauses or endorsements to the effect that:

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

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

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

            (f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Individual Property, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender
<Page>

                                      -55-


upon demand and until paid shall be secured by the Mortgages and shall bear
interest at the Default Rate.

            (g) In the event of foreclosure of the Mortgage with respect to the
Individual Property, or other transfer of title to the Individual Property in
extinguishment in whole or in part of the Debt all right, title and interest of
Borrower in and to the Policies that are not blanket Policies then in force
concerning the Individual Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.

            5.1.2 INSURANCE COMPANY. The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the state
in which each Individual Property is located and having a claims paying ability
rating of "AA" or better by the Rating Agencies that so rate insurance companies
and a financial strength rating of A2 by Moody's if such insurance companies are
rated by Moody's (or a financial strength rating of A+ by Standard & Poor's if
Moody's does not rate such insurance companies).

            SECTION 5.2 CASUALTY AND CONDEMNATION.

            5.2.1 CASUALTY. If an Individual Property shall sustain a Casualty,
Borrower shall give prompt notice of such Casualty to Lender and shall promptly
commence and diligently prosecute to completion the repair and restoration of
the Individual Property as nearly as possible to the condition the Individual
Property was in immediately prior to such Casualty (a "RESTORATION") and
otherwise in accordance with Section 5.3. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance. Lender may, but
shall not be obligated to, make proof of loss if not made promptly by Borrower.

            5.2.2 CONDEMNATION. Borrower shall give Lender prompt notice of any
actual or threatened Condemnation by any Governmental Authority of all or any
part of any Individual Property and shall deliver to Lender a copy of any and
all papers served in connection with such proceedings. Lender may participate in
any such proceedings, and Borrower shall from time to time deliver to Lender all
instruments reasonably requested by Lender to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement. If an
Individual Property or any portion thereof is taken by any Governmental
Authority, Borrower shall promptly commence and diligently prosecute the
Restoration of the Individual Property and otherwise comply with the provisions
of Section 5.3. If the Individual Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.
<Page>

                                      -56-


            SECTION 5.3 DELIVERY OF NET PROCEEDS.

            5.3.1 MINOR CASUALTY OR CONDEMNATION. If a Casualty or Condemnation
has occurred to an Individual Property and the Net Proceeds shall be less than
the Restoration Threshold and the costs of completing the Restoration shall be
less than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to
Borrower. Promptly after receipt of the Net Proceeds, Borrower shall commence
and satisfactorily complete with due diligence the Restoration in accordance
with the terms of this Agreement.

            5.3.2 MAJOR CASUALTY OR CONDEMNATION. (a) If a Casualty or
Condemnation has occurred to an Individual Property and the Net Proceeds are
equal to or greater than the Restoration Threshold or the costs of completing
the Restoration is equal to or greater than the Restoration Threshold, Lender
shall make the Net Proceeds available for the Restoration, provided that each of
the following conditions are met:

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

            (ii) in the event the Net Proceeds are an Award, less than ten
percent (10%) of the land constituting the Individual Property is taken, and
such land is located along the perimeter or periphery of the Individual
Property, and no portion of the Improvements is the subject of the Condemnation;

            (iii) Leases requiring payment of annual rent equal to seventy
percent (70%) of the Gross Revenue received by Borrower during the twelve (12)
month period immediately preceding the Casualty or Condemnation and all Major
Leases shall remain in full force and effect during and after the completion of
the Restoration without abatement of rent beyond the time required for
Restoration, notwithstanding the occurrence of such Casualty or Condemnation.

            (iv) Borrower shall promptly commence the Restoration as soon as
reasonably practicable and shall diligently pursue the same to satisfactory
completion;

            (v) Lender shall be reasonably satisfied that any operating deficits
and all payments of principal and interest under the Note will be paid during
the period required for Restoration from (A) the Net Proceeds, or (B) other
funds of Borrower;

            (vi) Lender shall be reasonably satisfied that the Restoration will
be completed on or before the earliest to occur of (A) the date six (6) months
prior to the Maturity Date, (B) such time as may be required under applicable
Legal Requirements in order to repair and restore the Individual Property to the
condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as
applicable or (C) the expiration of the insurance coverage referred to in
Section 5.1.1 (a)(iii);

            (vii) the Individual Property and the use thereof after the
Restoration will be in material compliance with and permitted under all
applicable Legal Requirements;
<Page>

                                      -57-


            (viii) the Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in material compliance with all applicable
Legal Requirements; and

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

            (b) The Net Proceeds shall be paid directly to Lender and held by
Lender in an interest-bearing account and, until disbursed in accordance with
the provisions of this Section 5.3.2, shall constitute additional security for
the Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by,
Borrower from time to time during the course of the Restoration, upon receipt of
evidence reasonably satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the Individual Property arising out
of the Restoration which have not either been fully bonded to the satisfaction
of Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.

            (c) To the extent the cost of Restoration exceeds the Restoration
Threshold, all plans and specifications required in connection with the
Restoration shall be subject to prior reasonable approval by Lender and by an
independent architect selected by Lender (the "CASUALTY CONSULTANT"). To the
extent the cost of Restoration exceeds the Restoration Threshold, the identity
of the contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be subject to
reasonable approval by Lender and the Casualty Consultant. All costs and
expenses incurred by Lender in connection with recovering, holding and advancing
the Net Proceeds for the Restoration including, without limitation, reasonable
attorneys' fees and disbursements and the Casualty Consultant's fees and
disbursements, shall be paid by Borrower.

            (d) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "CASUALTY
RETAINAGE" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than the amount actually held back
by Borrower from contractors, subcontractors and materialmen engaged in the
Restoration. The Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been substantially
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the Individual Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
<Page>

                                      -58-


provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the related Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

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

            (f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation with the
Casualty Consultant, be sufficient to pay in full the balance of the costs which
are estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the "NET
PROCEEDS DEFICIENCY") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 5.3.2 shall constitute additional security for the Debt.

            (g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under any of the Loan Documents.

            (h) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 5.3.2(g) may be retained and applied by Lender toward the payment of
the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper without the
payment of any prepayment penalty, or, at the discretion of Lender, the same may
be paid, either in whole or in part, to Borrower for such purposes as Lender
shall designate.
<Page>

                                      -59-


            VI.   RESERVE FUNDS

            SECTION 6.1

            A.    REQUIRED REPAIR FUNDS.

            6.1.1(A) DEPOSIT OF REQUIRED REPAIR FUNDS. Borrower shall perform
the repairs at the Individual Properties as set forth on SCHEDULE II hereto
(such repairs hereinafter referred to as "REQUIRED REPAIRS") and shall complete
each of the Required Repairs on or before the respective deadline for each
repair as set forth on SCHEDULE II. On the Closing Date, Borrower shall deposit
with Lender or Servicer immediately available funds in the amount for each
Individual Property set forth on such SCHEDULE II hereto to perform the Required
Repairs for such Individual Property. At any time prior to the Securitization of
the Loan, and provided that no Event of Default has occurred, Borrower may, upon
five (5) Business Days prior written notice to Lender (provided that under all
circumstances such replacement must occur prior to such Securitization), elect
to replace the cash deposit of the Required Repair Funds with a Letter of Credit
in form and substance acceptable to Lender in the amount of the then current
balance of the Required Repair Funds. Amounts deposited pursuant to this Section
6.1.1(A) are referred to herein as the "REQUIRED REPAIR FUNDS".

            6.1.2(A) RELEASE OF REQUIRED REPAIR FUNDS. In the event Borrower has
not elected to post a Letter of Credit pursuant to Section 6.1.1(A) above,
Lender shall disburse, or direct Servicer to disburse, to Borrower the Required
Repair Funds upon satisfaction by Borrower of each of the following conditions:
(a) Borrower shall submit a request for payment to Lender at least ten (10) days
prior to the date on which Borrower requests such payment be made and specifies
the Required Repairs to be paid, (b) on the date such request is received by
Lender and on the date such payment is to be made, no Event of Default shall
exist and remain uncured, (c) Lender shall have received a certificate from
Borrower (i) stating that all Required Repairs at the applicable Individual
Property to be funded by the requested disbursement have been completed in a
good and workmanlike manner and in material compliance with all applicable Legal
Requirements, (ii) identifying each Person that supplied materials or labor in
connection with the Required Repairs performed at such Individual Property to be
funded by the requested disbursement, and (iii) stating that each such Person
has been paid in full or will be paid in full upon such disbursement, such
certificate to be accompanied by lien waivers or other evidence of payment
satisfactory to Lender, (d) at Lender's option, a title search for such
Individual Property indicating that such Individual Property is free from all
liens, claims and other encumbrances not previously approved by Lender, (e) at
Lender's option, if the cost of the Required Repairs exceeds $250,000, Lender
shall have received a report satisfactory to Lender in its reasonable discretion
from an architect or engineer approved by Lender in respect of such architect or
engineer's inspection of the Required Repairs, and (f) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Repairs at such Individual Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement to Borrower. Lender shall not be required to disburse Required
Repair Funds more frequently than once each calendar month, or with respect to
any Individual Property unless such requested disbursement is in an amount
greater than the Minimum Disbursement Amount (or a lesser amount if the total
Required Repair Funds is less than the Minimum Disbursement Amount, in which
case only one disbursement of the amount
<Page>

                                      -60-


remaining in the account shall be made). In the event Borrower has elected to
post a Letter of Credit pursuant to Section 6.1.1(A) above, Lender shall return
such Letter of Credit to Borrower only upon completion of all Required Repairs
and satisfaction of all of the conditions set forth in clauses (a)-(f) of this
Section 6.1.2(A) as to all Required Repairs and provided no Event of Default has
occurred; provided, however, that following the completion of individual
Required Repairs and satisfaction of all of the conditions set forth in clauses
(a)-(f) of this Section 6.1.2(A) with respect to such individual Required
Repairs, and provided no Event of Default has occurred, Borrower shall be
permitted to deliver a replacement Letter of Credit or an amended Letter of
Credit in the amount of the then existing Letter of Credit less the amount of
Required Repair Funds which Borrower would otherwise be entitled to receive upon
satisfaction of all of the conditions in clauses (a)-(f) for such individual
Required Repairs, if such individual Required Repair Funds were then being held
in the form of immediately available funds.

            B.    REQUIRED REMEDIATION FUNDS.

            6.1.1(B) DEPOSIT OF REQUIRED REMEDIATION FUNDS. Borrower shall
deposit with Lender on the date hereof the sum of $732,813.00 (the "INITIAL
REMEDIATION DEPOSIT") as a reserve to cover the estimated costs of (i)
performing additional investigatory work set forth in the scope of work which
has been agreed to by the parties and approved by Lender's consultant, with
respect to the Individual Properties listed on SCHEDULE IX hereto, (ii)
obtaining Phase II reports from Lender's consultant with respect to the results
of such additional investigations (the "PHASE II REPORTS"), and (iii) performing
any remedial action recommended in such Phase II Reports. Immediately following
the date hereof, Borrower shall cause an environmental consultant reasonably
acceptable to Lender to perform such investigatory work and deliver the results
thereof to Lender within sixty (60) days following the date hereof (the "PHASE
II INVESTIGATION PERIOD"), time being of the essence. Also within the Phase II
Investigation Period, Borrower and Lender shall have cooperated with Lender's
consultant as necessary to obtain the Phase II Reports within such Phase II
Investigation Period. Borrower shall promptly commence and thereafter diligently
prosecute to completion any environmental remediation recommended by Lender's
consultant in its Phase II Reports after its review of the results of such
investigation. Borrower shall deposit with Lender prior to the expiration of the
Phase 11 Investigation Period immediately available funds or a Letter of Credit
in form and substance acceptable to Lender in an amount equal to 125% of the
amount which Lender's consultant estimates to be necessary to complete the
Required Remediation, including, without limitation, any further investigatory
work that is recommended to be completed (the "REQUIRED REMEDIATION FUNDS");
provided, however, that Borrower shall be entitled to credit the Initial
Remediation Deposit against the amount which Borrower is required to deposit for
the Required Remediation Funds; and provided, further, that in the event the
Initial Remediation Deposit exceeds the Required Remediation Funds and no Event
of Default has occurred, Lender shall disburse to Borrower such excess and shall
retain the balance of the Initial Remediation Deposit as the Required
Remediation Funds. In the event Borrower fails to deposit the Required
Remediation Funds with Lender prior to the expiration of the Phase II
Investigation Period, all excess cash flow from all Individual Properties shall
be deposited with Lender pursuant to the terms and conditions of the Cash
Management Agreement until such time as the Required Remediation Funds are fully
funded.
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                                      -61-


            6.1.2(B) TRANSFERS OF CONTAMINATED PROPERTIES. In the event that
Lender's consultant determines that a particular Individual Property is a
Contaminated Property, Borrower shall, upon Lender's request, within thirty (30)
days following Lender's receipt of such Phase II Report, transfer such
Contaminated Property to an Affiliate of Borrower which is a newly formed,
single purpose, bankruptcy-remote entity meeting all of the requirements of this
Agreement and otherwise acceptable to Lender (an "ENVIRONMENTAL TRANSFEREE"),
and such Environmental Transferee shall become a joint and several obligor with
Borrower under the Loan and shall assume all obligations under the Loan and
under the Loan Documents with respect to such Individual Property. In connection
with any such transfer, Borrower and such Environmental Transferee shall execute
such amendments to the Loan Documents, assumption agreements, contribution
agreements and/or such new documents as Lender may reasonably request in order
to reflect such transfer and assumption, including, without limitation, new or
severed security documents and an amendment to the Note and other Loan Documents
to add the Environmental Transferee as joint and several obligor thereon. In
addition, Borrower shall deliver to Lender a new or updated non-consolidation
opinion substantially comparable to the non-consolidation opinion delivered in
connection with the closing of the Loan meeting Lender's reasonable requirements
with respect thereto and a Rating Agency Confirmation. Borrower hereby covenants
and agrees to cooperate with Lender in affecting the foregoing transfer,
assumption and modifications. Borrower shall reimburse Lender for all of
Lender's costs and expenses in connection with the remedial investigations and
other work to be performed under Section 6.1.1(B) and any transfer of a
Contaminated Property pursuant to this Section 6.1.2(B), including, without
limitation, reasonable attorneys' fees and disbursements.

            6.1.3(B) RELEASE OF REQUIRED REMEDIATION FUNDS. In the event
Borrower has not elected to post a Letter of Credit pursuant to Section 6.1.1(B)
above, Lender shall disburse, or direct Servicer to disburse, to Borrower the
Required Repair Funds upon satisfaction by Borrower of each of the following
conditions: (a) Borrower shall submit a request for payment to Lender at least
ten (10) days prior to the date on which Borrower requests such payment be made
and specifies the Required Remediation to be paid, (b) on the date such request
is received by Lender and on the date such payment is to be made, no Event of
Default shall exist and remain uncured, (c) Lender shall have received a
certificate from Borrower (i) stating that all Required Remediation at the
applicable Individual Property to be funded by the requested disbursement has
been completed in a good and workmanlike manner and in material compliance with
all applicable Legal Requirements, (ii) identifying each Person that supplied
materials or labor in connection with the Required Remediation performed at such
Individual Property to be funded by the requested disbursement, and (iii)
stating that each such Person has been paid in full or will be paid in full upon
such disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (d) at Lender's option, a title
search for such Individual Property indicating that such Individual Property is
free from all liens, claims and other encumbrances not previously approved by
Lender, (e) at Lender's option, if the cost of the Required Remediation exceeds
$250,000, Lender shall have received a report satisfactory to Lender in its
reasonable discretion from an engineer approved by Lender in respect of such
engineer's inspection of the Required Remediation, and (f) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Remediation at such Individual Property to be funded by the requested
disbursement has been completed and is paid for or will be paid upon such
disbursement to Borrower. Lender shall not be required to disburse Required
Remediation Funds more
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                                      -62-


frequently than once each calendar month, or with respect to any Individual
Property unless such requested disbursement is in an amount greater than the
Minimum Disbursement Amount (or a lesser amount if the total Required
Remediation Funds is less than the Minimum Disbursement Amount, in which case
only one disbursement of the amount remaining in the account shall be made). In
the event Borrower has elected to post a Letter of Credit pursuant to Section
6.1.1(B) above, Lender shall return such Letter of Credit to Borrower only upon
completion of all Required Remediation and satisfaction of all of the conditions
set forth in clauses (a)-(f) of this Section 6.1.2(B) as to all Required
Remediation and provided no Event of Default has occurred; provided, however,
that following the completion of individual Required Remediation and
satisfaction of all of the conditions set forth in clauses (a)-(f) of this
Section 6.1.2(B) with respect to such individual Required Remediation, and
provided no Event of Default has occurred, Borrower shall be permitted to
deliver a replacement Letter of Credit or an amended Letter of Credit in the
amount of the then existing Letter of Credit less the amount of Required
Remediation Funds which Borrower would otherwise be entitled to receive upon
satisfaction of all of the conditions in clauses (a)-(f) for such individual
Required Remediation, if such individual Required Remediation Funds were then
being held in the form of immediately available funds.

            SECTION 6.2 TAX FUNDS.

            6.2.1 DEPOSITS OF TAX FUNDS. On the Closing Date, Borrower shall
deposit with Lender or Servicer the amount of Two Million Nine Hundred Forty
Thousand Five Hundred Twenty-Five and 63/100 Dollars ($2,940,525.63) and shall
thereafter deposit with Lender or Servicer on each Monthly Payment Date an
amount equal to one-twelfth of the Taxes that Lender estimates will be payable
during the next ensuing twelve (12) months in order to accumulate sufficient
funds to pay all such Taxes at least ten (10) days prior to their respective due
dates. Amounts deposited pursuant to this Section 6.2.1 are referred to herein
as the "TAX FUNDS". If at any time Lender reasonably determines that the Tax
Funds will not be sufficient to pay the Taxes, Lender shall notify Borrower of
such determination and the monthly deposits for Taxes shall be increased by the
amount that Lender estimates is sufficient to make up the deficiency at least
ten (10) days prior to the respective due dates for the Taxes; provided that if
Borrower receives notice of any deficiency after the date that is ten (10) days
prior to the date that Taxes are due, Borrower will deposit such amount within
one (1) Business Day after its receipt of such notice.

            6.2.2 RELEASE OF TAX FUNDS. Lender shall apply the Tax Funds to
payments of Taxes. So long as no Event of Default has occurred and provided
there are sufficient Tax Funds available for such purpose, Lender will pay all
Taxes from the Tax Funds prior to the date on which such Taxes would be
delinquent. In making any payment relating to Taxes, Lender may do so according
to any bill, statement or estimate procured from the appropriate public office
(with respect to Taxes) without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. Lender will use reasonable
efforts to cause Servicer to provide Borrower with copies of such evidence of
payment of tax bills as may be available from the taxing authorities as promptly
as practicable. If the amount of the Tax Funds shall exceed the amounts due for
Taxes, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be
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                                      -63-


made to the Tax Funds. Any Tax Funds remaining after the Debt has been paid in
full shall be returned to Borrower.

            SECTION 6.3 INSURANCE FUNDS.

            6.3.1 DEPOSITS OF INSURANCE FUNDS. On the Closing Date, Borrower
shall deposit with Lender or Servicer the amount of Ninety-One Thousand Five
Hundred Seventy-Two and 25/100 Dollars ($91,572.25) and shall thereafter deposit
with Lender or Servicer on each Monthly Payment Date an amount equal to
one-twelfth of the Insurance Premiums that Lender estimates will be payable for
the renewal of the coverage afforded by the Policies upon the expiration thereof
in order to accumulate sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies. Amounts
deposited pursuant to this Section 6.3.1 are referred to herein as the
"INSURANCE FUNDS". If at any time Lender reasonably determines that the
Insurance Funds will not be sufficient to pay the Insurance Premiums, Lender
shall notify Borrower of such determination and the monthly deposits for
Insurance Premiums shall be increased by the amount that Lender estimates is
sufficient to make up the deficiency at least thirty (30) days prior to
expiration of the Policies.

            6.3.2 RELEASE OF INSURANCE FUNDS. Lender shall apply the Insurance
Funds to payment of Insurance Premiums. So long as no Event of Default has
occurred and provided there are sufficient Insurance Funds available for such
purpose, Lender will pay all Insurance Premiums from the Insurance Funds prior
to the date on which the related Policies would lapse. In making any payment
relating to Insurance Premiums, Lender may do so according to any bill,
statement or estimate procured from the insurer or its agent, without inquiry
into the accuracy of such bill, statement or estimate. Lender will use
reasonable efforts to cause Servicer to provide Borrower with copies of such
evidence of payment of insurance bills as may be available from the insurance
companies as promptly as practicable. If the amount of the Insurance Funds shall
exceed the amounts due for Insurance Premiums, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Insurance Funds. Any Insurance Funds remaining after
the Debt has been paid in full shall be returned to Borrower.

            SECTION 6.4 CAPITAL EXPENDITURES FUNDS.

            6.4.1 DEPOSITS OF CAPITAL EXPENDITURES FUNDS. Borrower shall deposit
with Lender or Servicer on each Monthly Payment Date one-twelfth of an amount
equal to $0.10 per square foot of the aggregate rentable square footage for all
the Individual Properties, as determined by Lender on an annual basis (the
"MONTHLY CAPITAL EXPENDITURE DEPOSIT"), for annual Capital Expenditures approved
by Lender, which approval shall not be unreasonably withheld or delayed until
such time, if any, as the amount so deposited and held in such account equals or
exceeds an amount equal to $0.20 times the aggregate rentable square footage for
all the Individual Properties (the "CAPITAL EXPENDITURES CAP"); provided,
however, that in the event, at any time following the full funding of the
Capital Expenditures Cap, the amount of Capital Expenditure Funds should ever be
less than the Capital Expenditures Cap, Borrower shall again immediately begin
depositing the Monthly Capital Expenditures Deposit until such time as the
Capital Expenditures Cap is once again reached. Amounts deposited pursuant to
this Section 6.4.1 are referred to herein as the "CAPITAL EXPENDITURE FUNDS".
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                                      -64-


            6.4.2 RELEASE OF CAPITAL EXPENDITURE FUNDS. (a) Lender shall
disburse, or direct Servicer to disburse, to Borrower the Capital Expenditure
Funds within ten (10) days following satisfaction by Borrower of each of the
following conditions: (i) Borrower shall submit a request for payment to Lender
at least ten (10) days prior to the date on which Borrower requests such payment
be made and specifies the Capital Expenditures to be paid, (ii) on the date such
request is received by Lender and on the date such payment is to be made, no
Event of Default shall exist and remain uncured, (iii) Lender shall have
received a certificate from Borrower (A) stating that the items to be funded by
the requested disbursement are Capital Expenditures, (B) stating that all
Capital Expenditures at the applicable Individual Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and in
material compliance with all applicable Legal Requirements, (C) identifying each
Person that supplied materials or labor in connection with the Capital
Expenditures performed at such Individual Property to be funded by the requested
disbursement, and (D) stating that each such Person has been paid in full or
will be paid in full upon such disbursement, such certificate to be accompanied
by lien waivers or other evidence of payment satisfactory to Lender, (iv) at
Lender's option, a title search for such Individual Property indicating that
such Individual Property is free from all liens, claims and other encumbrances
not previously approved by Lender, and (v) Lender shall have received such other
evidence as Lender shall reasonably request that the Capital Expenditures at
such Individual Property to be funded by the requested disbursement have been
completed and are paid for or will be paid upon such disbursement to Borrower.
Lender shall not be required to disburse Capital Expenditure Funds more
frequently than once each calendar month or with respect to any Individual
Property unless such requested disbursement is in an amount greater than the
Minimum Disbursement Amount (or a lesser amount if the total amount of Capital
Expenditure Funds is less than the Minimum Disbursement Amount, in which case
only one disbursement of the amount remaining in the account shall be made).

            (b) Nothing in this Section 6.4.2 shall (i) make Lender responsible
for making or completing the Capital Expenditures Work; (ii) require Lender to
expend funds in addition to the Capital Expenditure Funds to complete any
Capital Expenditures Work; (iii) obligate Lender to proceed with the Capital
Expenditures Work; or (iv) obligate Lender to demand from Borrower additional
sums to complete any Capital Expenditures Work.

            (c) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties to enter onto each Individual Property during normal
business hours (subject to the rights of Tenants under their Leases) to inspect
the progress of any Capital Expenditures Work and all materials being used in
connection therewith and to examine all plans and shop drawings relating to such
Capital Expenditures Work. Borrower shall cause all contractors and
subcontractors to cooperate with Lender or Lender's representatives or such
other Persons described above in connection with inspections described in this
Section 6.4.2(c).

            (d) If an architect or engineer (which architect or engineer shall
be an independent, licensed, professional architect or engineer (an "Independent
Architect")) has been retained by Borrower in connection with any Capital
Expenditures, then Lender may require (i) an inspection of the related
Individual Property by such Independent Architect and (ii) a certificate of
completion by such Independent Architect, prior to making a disbursement of
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                                      -65-


Capital Expenditure Funds for such Capital Expenditure Work in order to verify
completion of the Capital Expenditures Work for which reimbursement is sought.
If an Independent Architect has not been retained by Borrower in connection with
any Capital Expenditures and the aggregate cost of any such Capital Expenditures
related to a single project exceeds $250,000, then Lender may require (y) an
inspection of the related Individual Property by an Independent Architect and
(z) a certificate of completion by such Independent Architect, prior to making a
disbursement of Capital Expenditure Funds for such Capital Expenditure Work, in
order to verify completion of the Capital Expenditures Work for which
reimbursement is sought. Borrower shall pay the reasonable expense of the
inspection and certificate of completion as required hereunder.

            (e) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with Capital Expenditures Work. All
such policies shall be in form and amount reasonably satisfactory to Lender.

            SECTION 6.5 ROLLOVER FUNDS.

            6.5.1 DEPOSITS OF ROLLOVER FUNDS. From and after the occurrence of a
Cash Sweep Event (as defined in the Cash Management Agreement), Borrower shall
deposit with Lender or Servicer on each Monthly Payment Date one-twelfth of an
amount equal to $0.52 per square foot of the aggregate rentable square footage
for all the Individual Properties for tenant improvements and leasing
commissions that may be incurred following the date hereof; provided, however,
that in the event the Cash Sweep Event was triggered only by the occurrence of a
Coverage Failure (as defined in the Cash Management Agreement), the obligation
of Borrower to deposit Rollover Funds pursuant to this Section 6.5.1 shall cease
upon such time, if any, as Lender reasonably determines that the Debt Service
Coverage Ratio has at all times been greater than 1.35 to 1.0 for two (2)
consecutive calendar quarters, subject to Borrower's obligation to once again
immediately begin making deposits of Rollover Funds on each Monthly Payment Date
pursuant to this Section 6.5.1 should a Cash Sweep Event once again occur.
Amounts deposited pursuant to this Section 6.5.1 are referred to herein as the
"ROLLOVER FUNDS".

            6.5.2 RELEASE OF ROLLOVER FUNDS. Lender shall disburse, or direct
Servicer to disburse, to Borrower the Rollover Funds within ten (10) days
following satisfaction by Borrower of each of the following conditions: (i)
Borrower shall submit a request for payment to Lender at least ten (10) days
prior to the date on which Borrower requests such payment be made and specifies
the tenant improvement costs and leasing commissions to be paid, (ii) on the
date such request is received by Lender and on the date such payment is to be
made, no Event of Default shall exist and remain uncured, (iii) Lender shall
have reviewed and approved the Lease in respect of which Borrower is obligated
to pay or reimburse certain tenant improvement costs and leasing commissions,
(iv) Lender shall have received and approved a budget for tenant improvement
costs and a schedule of leasing commissions payments and the requested
disbursement will be used to pay all or a portion of such costs and payments,
(v) Lender shall have received a certificate from Borrower (A) stating that all
tenant improvements at the applicable Individual Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and in
accordance with all applicable federal, state and local
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                                      -66-


laws, rules and regulations, such certificate to be accompanied by a copy of any
license, permit or other approval by any Governmental Authority required in
connection with such improvements, (B) identifying each Person that supplied
materials or labor in connection with the tenant improvements performed at such
Individual Property to be funded by the requested disbursement, and (C) stating
that each such Person has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (vi) at Lender's option, a title
search for such Individual Property indicating that such Individual Property is
free from all liens, claims and other encumbrances not previously approved by
Lender, and (vii) Lender shall have received such other evidence as Lender shall
reasonably request that the tenant improvements at such Individual Property to
be funded by the requested disbursement have been completed and are paid for or
will be paid upon such disbursement to Borrower. Lender shall not be required to
disburse Rollover Funds more frequently than once each calendar month or with
respect to any Individual Property unless such requested disbursement is in an
amount greater than the Minimum Disbursement Amount (or a lesser amount if the
total amount of Rollover Funds is less than the Minimum Disbursement Amount, in
which case only one disbursement of the amount remaining in the account shall be
made).

            SECTION 6.6 GROUND RENT FUNDS.

            6.6.1 DEPOSIT OF GROUND RENT FUNDS. On the Closing Date, Borrower
shall deposit with Lender or Servicer the amount of Thirty-One Thousand and
No/100 Dollars ($31,000.00), such amount being equal to Lender's estimate of one
month's payment of ground rent (including, without limitation, fixed rent and
percentage rent) and brokerage fees due under the Ground Lease. Amounts
deposited pursuant to this Section 6.6.1 are referred to herein as the "GROUND
RENT FUNDS".

            6.6.2 RELEASE OF GROUND FUNDS. Lender may apply the Ground Rent
Funds to payment of ground rent (including, without limitation, fixed rent and
percentage rent) due under the Ground Lease upon Borrower's failure to pay any
such amount when due. Any Ground Rent Funds remaining after the Debt has been
paid in full shall be returned to Borrower.

            SECTION 6.7 OAKWOOD NOTE RESERVE.

            (a) Borrower is obliged under the Oakwood Ground Lease to pay on the
first day of each calendar month (the "LEASEHOLD PAYMENT DATE") fixed ground
rent and brokerage fees of $31,000 (the "FIXED GROUND RENT") and is entitled to
receive payments of principal and interest under the Oakwood Note in the amount
of $19,767.48 (the "OAKWOOD OFFSET AMOUNT"). Borrower has historically credited
the Oakwood Offset Amount against the Fixed Ground Rent pursuant to the terms of
a ground lessor estoppel certificate, and paid to the ground lessor under the
Oakwood Ground Lease the difference between such amounts in the amount of
$11,232.52 (the "ACTUAL GROUND RENT PAYMENT").

            (b) The parties acknowledge and agree that in the event that Lender
succeeds to the interest of Borrower under the Oakwood Note after a
Securitization, the Oakwood Offset Amount may no longer be available as a credit
against the Fixed Ground Rent. As a result, in order to assure Lender that funds
will be available to pay that portion of the Fixed Ground Rent
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                                      -67-


equal to the Oakwood Offset Amount (the "OAKWOOD PAYMENT DIFFERENTIAL") in such
event, Borrower has agreed to reserve certain funds as follows.

            (c) On the Closing Date, Borrower shall deposit with Lender an
amount equal to the Oakwood Offset Amount and shall thereafter deposit with
Lender or Servicer on each of the next eleven (11) Monthly Payment Dates an
amount equal to the Oakwood Offset Amount. Amounts deposited pursuant to this
Section 6.7 are referred to herein as the "OAKWOOD RESERVE FUNDS."

            (d) From and after the date upon which Lender or Servicer reasonably
determines that the Debt Service Coverage Ratio with respect to the Properties
is less than 1.35 to 1.0 (the "OAKWOOD SWEEP EVENT"), Borrower shall deposit
with Lender or Servicer into the Oakwood Reserve Funds account on each of the
next twelve (12) Monthly Payment Dates (the "RESERVE FUNDING PERIOD") following
such Debt Service Coverage Ratio determination, an amount Lender reasonably
determines will be sufficient, together with previous funds (plus interest
accrued thereon) deposited into the Oakwood Reserve Funds account and together
with interest projected to accrue at the rate of five percent (5%) per annum on
all Oakwood Reserve Funds during the remaining term of the Loan, to have accrued
by the end of the Reserve Funding Period sufficient Oakwood Reserve Funds (such
sufficient funds, as reasonably determined by Lender, and as such sufficient
funds shall be recalculated by Lender or its Servicer on a monthly basis,
hereinafter referred to as the "OAKWOOD RESERVE MINIMUM") to pay the Oakwood
Payment Differential on each Leasehold Payment Date through the remaining term
of the Loan. On a monthly basis following the initial funding of the Oakwood
Reserve Minimum, Lender shall, in its reasonable discretion, recalculate the
Oakwood Reserve Minimum and, provided no Event of Default has occurred, disburse
to Borrower the amount by which the Oakwood Reserve Funds then held by Lender
exceed the Oakwood Reserve Minimum.

            (e) Lender and/or Servicer shall have the right, but not the
obligation, to pay Fixed Ground Rent to the ground lessor (and any applicable
broker) under the Oakwood Ground Lease on behalf of Borrower in the event
Borrower fails to make such payment on the due date thereof or if Lender
reasonably determines that Borrower may not make such payment on the Leasehold
Payment Date.

            (f) Upon such time, if any, as the Oakwood Ground Lease is amended
to reduce the amount of monthly Fixed Ground Rent payable thereunder during the
balance of the term of the Loan from the Fixed Ground Rent to the Actual Ground
Rent Payment, and provided no Event of Default has occurred, Lender shall
disburse all remaining Oakwood Reserve Funds to Borrower.

            SECTION 6.8 APPLICATION OF RESERVE FUNDS.

            Upon the occurrence of an Event of Default, Lender, at its option,
may withdraw the Reserve Funds and apply the Reserve Funds to the items for
which the Reserve Funds were established or to payment of the Debt in such
order, proportion and priority as Lender may determine in its sole discretion.
Lender's right to withdraw and apply the Reserve Funds shall be in addition to
all other rights and remedies provided to Lender under the Loan Documents.
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                                      -68-


            SECTION 6.9 SECURITY INTEREST IN RESERVE FUNDS.

            6.9.1 GRANT OF SECURITY INTEREST. Borrower shall be the owner of the
Reserve Funds. Borrower hereby pledges, assigns and grants a security interest
to Lender, as security for payment of the Debt and the performance of all other
terms, conditions and covenants of the Loan Documents on Borrower's part to be
paid and performed, in all of Borrower's right, title and interest in and to the
Reserve Funds. The Reserve Funds shall be under the sole dominion and control of
Lender.

            6.9.2 INCOME TAXES. Borrower shall report on its federal, state and
local income tax returns all interest or income accrued on the Reserve Funds.

            6.9.3 PROHIBITION AGAINST FURTHER ENCUMBRANCE. Borrower shall not,
without the prior consent of Lender, further pledge, assign or grant any
security interest in the Reserve Funds.

            SECTION 6.10 INTEREST ON RESERVE FUNDS.

            So long as no Event of Default has occurred and is continuing,
Borrower may direct the investment of the Reserve Funds in Permitted Investments
in accordance with the terms of this Agreement and the Cash Management
Agreement, and all interest and other income earned thereon shall become part of
the Reserve Funds.

            SECTION 6.11 LETTERS OF CREDIT.

            6.11.1 DELIVERY OF LETTERS OF CREDIT. (a) In lieu of depositing the
Required Repair Funds with Lender or its Servicer in immediately available
funds, Borrower may deliver to Lender a Letter of Credit in accordance with the
provisions of this Section 6.11. Additionally, Borrower may deliver to Lender a
Letter of Credit in accordance with the provisions of Section 2.5.1(c) hereof.
The amount of any Letter of Credit shall at all times be at least equal to the
amount which Borrower is required to have on deposit pursuant to this Agreement,
as reasonably estimated by Lender.

            (b) Borrower shall not be entitled to draw from any such Letter of
Credit. Upon thirty (30) days notice to Lender, Borrower may replace a Letter of
Credit with a cash deposit in an amount equal to the amount of the Letter of
Credit.

            6.11.2 SECURITY FOR DEBT. Each Letter of Credit delivered under this
Agreement shall be additional security for the payment of the Debt. Upon the
occurrence of an Event of Default, Lender shall have the right, at its option,
to draw on any Letter of Credit and to apply all or any part thereof to the
payment of the items for which such Letter of Credit was established or to apply
each such Letter of Credit to payment of the Debt in such order, proportion or
priority as Lender may determine. Any such application to the Debt shall be
subject to the Yield Maintenance Premium. On the Maturity Date, any such Letter
of Credit may be applied to reduce the Debt.

            6.11.3 ADDITIONAL RIGHTS OF LENDER. In addition to any other right
Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement,
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                                      -69-


Lender shall have the additional rights to draw in full on any Letter of Credit:
(a) with respect to any evergreen Letter of Credit, if Lender has received a
notice from the issuing bank that the Letter of Credit will not be renewed and a
substitute Letter of Credit is not provided at least thirty (30) days prior to
the date on which the outstanding Letter of Credit is scheduled to expire; (b)
with respect to any Letter of Credit with a stated expiration date, if Lender
has not received a notice from the issuing bank that it has renewed the Letter
of Credit at least thirty (30) days prior to the date on which such Letter of
Credit is scheduled to expire and a substitute Letter of Credit is not provided
at least thirty (30) days prior to the date on which the outstanding Letter of
Credit is scheduled to expire; (c) upon receipt of notice from the issuing bank
that the Letter of Credit will be terminated (except if the termination of such
Letter of Credit is permitted pursuant to the terms and conditions of this
Agreement or a substitute Letter of Credit is provided); or (d) if Lender has
received notice that the bank issuing the Letter of Credit has ceased to be an
Eligible Institution (each, a "Letter of Credit Draw Event"). In the event
Lender, in its sole and absolute discretion, elects to draw upon a Letter of
Credit following the occurrence of a Letter of Credit Draw Event, then, provided
no Event of Default has occurred, the proceeds resulting from such draw shall be
deposited into the related escrow account for which such Letter of Credit was
delivered. In the event Lender so elects to draw upon a Letter of Credit, all
interest and other investment income earned on the funds so converted shall
belong to Lender. Notwithstanding anything to the contrary contained herein,
Lender is not obligated to draw on any Letter of Credit upon the happening of a
Letter of Credit Draw Event and shall not be liable for any losses sustained by
Borrower due to the insolvency of the bank issuing the Letter of Credit if
Lender has not drawn on the Letter of Credit.

            VII. PROPERTY MANAGEMENT

            SECTION 7.1 THE MANAGEMENT AGREEMENT.

            Borrower hereby approves that certain Management Agreement of even
date herewith made by and between Borrower and Heritage Realty Management, Inc.
as the initial Management Agreement for the Properties. Borrower shall cause
Manager to manage each Individual Property in accordance with the Management
Agreement. Borrower shall (i) diligently perform and observe all of the terms,
covenants and conditions of the Management Agreement on the part of Borrower to
be performed and observed and (ii) promptly notify Lender of any notice to
Borrower of any default by Borrower in the performance or observance of any of
the terms, covenants or conditions of the Management Agreement on the part of
Borrower to be performed and observed. If Borrower shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower to be performed or observed, then,
without limiting Lender's other rights or remedies under this Agreement or the
other Loan Documents, and without waiving or releasing Borrower from any of its
obligations hereunder or under the Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of the Management Agreement on the part of Borrower to be performed or observed.
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                                      -70-


            SECTION 7.2 PROHIBITION AGAINST TERMINATION OR MODIFICATION.

            Borrower shall not surrender, terminate, cancel, modify, renew or
extend the Management Agreement, or enter into any other agreement relating to
the management or operation of any Individual Property with Manager or any other
Person, or consent to the assignment by the Manager of its interest under the
Management Agreement or replace Manager as manager, in each case without the
express consent of Lender, which consent shall not be unreasonably withheld;
provided, however, with respect to a new manager such consent shall be
conditioned upon Borrower delivering a Rating Agency Confirmation as to such new
manager and management agreement. If at any time Lender consents to the
appointment of a new manager, such new manager and Borrower shall, as a
condition of Lender's consent, execute a subordination of management agreement
in the form reasonably required by Lender.

            SECTION 7.3 REPLACEMENT OF MANAGER.

            Lender shall have the right to require Borrower to replace the
Manager with a Person chosen by Borrower and approved by Lender upon the
occurrence of any one or more of the following events: (i) at any time following
the occurrence of an Event of Default and/or (ii) if Manager shall be in
material default under the Management Agreement beyond any applicable notice and
cure period or if at any time the Manager has engaged in gross negligence, fraud
or willful misconduct.

            VIII. TRANSFERS

            SECTION 8.1 PROHIBITION ON TRANSFERS.

            Except as otherwise specifically set forth in Section 8.2 below,
Borrower shall not permit or suffer any Transfer without (i) the prior written
consent of Lender and (ii) a Rating Agency Confirmation.

            SECTION 8.2 PERMITTED TRANSFERS.

            (a) Notwithstanding the provisions of Section 8.1 hereof to the
contrary, and except as otherwise set forth in Section 8.2(c) or Section 8.2(d)
below, the REIT may issue and/or redeem stock interests in the REIT, and holders
of stock interests in the REIT shall have the right to transfer such stock
interests without Lender's consent provided that:

            (i) no Event of Default has occurred;

            (ii) from and after such issuance, redemption or transfer, all of
Borrower, Managing Member and the SPC Party shall continue to be wholly-owned,
directly or indirectly, by the REIT;

            (iii) such issuance, redemption or transfer shall not affect the
single purpose, bankruptcy remote nature of Borrower, Managing Member or the SPC
Party as required herein and under the Loan Documents nor the Insolvency Opinion
(and if required by the Rating
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                                      -71-


Agencies, Borrower shall deliver to Lender a new or updated non-consolidation
opinion meeting Rating Agency requirements);

            (iv) Borrower shall continue to own the Individual Properties from
and after such issuance, redemption or transfer;

            (v) such issuance, redemption or transfer shall not result in a
change in the Persons who are directing the management, policies and day-to-day
business and affairs of Borrower, Managing Member, SPC Party and the REIT from
those Persons who are so directing as of the date hereof;

            (vi) at all times at least 51% of the stock interests in the REIT
shall be held by those Persons holding stock interests in the REIT as of the
Closing Date; and

            (vii) Lender shall have received, within fifteen (15) days following
the end of each calendar quarter, a certificate indicating all such transfers
which have occurred during such calendar quarter.

            (b) Notwithstanding the provisions of Section 8.1 hereof to the
contrary, transfers of partnership interests in Heritage shall be permitted
without Lender's consent provided that:

            (i) no Event of Default has occurred;

            (ii) from and after such transfer, the SPC Party shall continue to
be wholly-owned directly by the REIT and Borrower and Managing Member shall
continue to be at least 51% owned, directly or indirectly, by the REIT;

            (iii) such transfer shall not affect the single purpose, bankruptcy
remote nature of Borrower, Managing Member or the SPC Party as required herein
and under the Loan Documents, nor the Insolvency Opinion (and if required by the
Rating Agencies, Borrower shall deliver to Lender a new or updated
non-consolidation opinion meeting Rating Agency requirements);

            (iv) Borrower shall continue to own the Individual Properties from
and after such transfer;

            (v) the REIT shall at all times after such transfer be and remain
the managing general partner of Heritage and shall have the right and power to
direct the management, policies and day-to-day business and affairs of Heritage;

            (vi) at all times at least 51% of the partnership interests in
Heritage shall be owned by the REIT; and

            (vii) Lender shall have received, within fifteen (15) days following
the end of each calendar quarter, a certificate indicating all such transfers
which have occurred during such calendar quarter.
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                                      -72-


            (c) Notwithstanding the provisions of Section 8.1 hereof to the
contrary, the REIT may issue and/or redeem stock interests in the REIT, and
holders of stock interests in the REIT shall have the right to transfer such
stock interests without Lender's consent (but upon prior written notice to
Lender) in connection with a transaction in which the REIT is converting from a
private real estate investment trust to a public real estate investment trust
provided that:

            (i) no Event of Default has occurred;

            (ii) from and after such issuance, redemption or transfer, all of
Borrower, Managing Member and the SPC Party shall continue to be wholly-owned,
directly or indirectly, by the REIT;

            (iii) such issuance, redemption or transfer shall not affect the
single purpose, bankruptcy remote nature of Borrower, Managing Member or the SPC
Party as required herein and under the Loan Documents nor the Insolvency Opinion
(and if required by the Rating Agencies, Borrower shall deliver to Lender a new
or updated non-consolidation opinion meeting Rating Agency requirements);

            (iv) Borrower shall continue to own the Individual Properties from
and after such issuance, redemption or transfer;

            (v) Lender shall have received a Rating Agency Confirmation;

            (vi) such issuance, redemption or transfer shall not result in a
change in the Persons who are directing the management, policies and day-to-day
business and affairs of Borrower, Managing Member, SPC Party and the REIT from
those who are so directing as of the date hereof; and

            (vii) Lender shall have received from Borrower a $20,000 transfer
fee (plus Lender's costs and expenses, including reasonable attorneys' fees and
disbursements) in connection therewith.

            (d) Notwithstanding the provisions of Section 8.1 hereof to the
contrary, the REIT may issue and/or redeem stock interests in the REIT, and
holders of stock interests in the REIT shall have the right to transfer such
stock interests without Lender's consent (but upon prior written notice to
Lender) in connection with a transaction in which the REIT merges with or into
another Person provided that:

            (i) no Event of Default has occurred;

            (ii) from and after such issuance, redemption or transfer, all of
Borrower, Managing Member and the SPC Party shall continue to be wholly-owned,
directly or indirectly, by the REIT or the survivor of such merger;

            (iii) such issuance, redemption or transfer shall not affect the
single purpose, bankruptcy remote nature of Borrower, Managing Member or the SPC
Party as required herein and under the Loan Documents and a new
non-consolidation opinion meeting Rating Agency requirements shall be delivered
to Lender);
<Page>

                                      -73-


            (iv) Borrower shall continue to own the Individual Properties from
and after such issuance, redemption or transfer;

            (v) Lender shall have received a Rating Agency Confirmation; and

            (vi) Lender shall have received from Borrower a $20,000 transfer fee
(plus Lender's costs and expenses, including reasonable attorneys' fees and
disbursements) in connection therewith.

            IX. SALE AND SECURITIZATION OF MORTGAGES

            SECTION 9.1 SALE OF MORTGAGE AND SECURITIZATION.

            (a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or any portion thereof or (iii) to securitize the Loan or
any portion thereof in a single asset securitization or a pooled loan
securitization. (The transaction referred to in clauses (i), (ii) and (iii)
shall hereinafter be referred to collectively as "SECONDARY MARKET TRANSACTIONS"
and the transactions referred to in clause (iii) shall hereinafter be referred
to as a "SECURITIZATION". Any certificates, notes or other securities issued in
connection with a Securitization are hereinafter referred to as "SECURITIES".)

            (b) If requested by Lender (which request shall not be made by
Lender during the first six (6) months following the date hereof unless
requested by the Rating Agencies), Borrower shall assist Lender in satisfying
the market standards to which Lender customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any Secondary Market Transactions, including, without limitation, to:

            (i) if required by the Rating Agencies, (A) provide updated
financial and other information with respect to the Individual Properties, the
business operated at the Individual Properties, Borrower and the Manager, (B)
provide updated budgets relating to the Individual Properties and (C) provide
updated appraisals, market studies, environmental reviews (Phase I's and, if
appropriate, Phase II's), property condition reports and other due diligence
investigations of the Individual Properties (the "UPDATED INFORMATION"),
together, if customary, with appropriate verification of the Updated Information
through letters of auditors or opinions of counsel reasonably acceptable to
Lender and acceptable to the Rating Agencies;

            (ii) provide opinions of counsel, which may be relied upon by
Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, fraudulent conveyance, and true sale
or any other opinion customary in Secondary Market Transactions or required by
the Rating Agencies with respect to the Individual Properties and Borrower and
Affiliates, which counsel and opinions shall be reasonably satisfactory to
Lender and satisfactory to the Rating Agencies;

            (iii) provide updated, as of the closing date of the Secondary
Market Transaction, representations and warranties made in the Loan Documents
and such additional representations and warranties as the Rating Agencies may
require; and
<Page>

                                      -74-


            (iv) execute amendments to the Loan Documents and Borrower's,
Managing Member's and/or SPC Party's organizational documents reasonably
requested by Lender; provided, however, that Borrower shall not be required to
modify or amend any Loan Document if such modification or amendment would (A)
change the interest rate, the stated maturity or the amortization of principal
as set forth herein or in the Note, or (B) modify or amend any other material
economic term of the Loan.

            (c) If requested by Lender, Borrower shall provide Lender with the
following financial statements (it being understood that Lender shall request
(i) full financial statements if it anticipates that the principal amount of the
Loan at the time of Securitization may, or if the principal amount of the Loan
at any time during which the Loan is included in a Securitization does, equal or
exceed 20% of the aggregate principal amount of all mortgage loans included in
the Securitization and (ii) summaries of such financial statements if the
principal amount of the Loan at any such time equals or exceeds 10% of such
aggregate principal amount):

            (i) As of the Closing Date, a balance sheet with respect to the
Individual Properties on a combined basis for the two most recent Fiscal Years,
meeting the requirements of Section 210.3-01 of Regulation S-X of the Securities
Act and statements of income and statements of cash flows with respect to the
Individual Properties for the three most recent Fiscal Years, meeting the
requirements of Section 210.3-02 of Regulation S-X, and, to the extent that such
balance sheet is more than 135 days old as of the Closing Date, interim
financial statements of the Individual Properties meeting the requirements of
Section 210.3-01 and 210.3-02 of Regulation S-X (all of such financial
statements, collectively, the "STANDARD STATEMENTS"); provided, however, that
with respect to any of the Individual Properties that would be deemed to
constitute a business and not real estate under Regulation S-X that have been
acquired by Borrower from an unaffiliated third party, as to which the other
conditions set forth in Section 210.3-05 of Regulation S-X for provision of
financial statements in accordance with such Section have been met, at Lender's
election in lieu of or in addition to the Standard Statements otherwise required
by this Section 9.1(c)(i), Borrower shall instead provide the financial
statements required by such Section 210.3-05 of Regulation S-X ("ACQUIRED
PROPERTY STATEMENTS"). Notwithstanding the foregoing, Borrower covenants and
agrees that it shall deliver to Lender in satisfaction of the foregoing
requirements, the following items with respect to this subclause (i) at
Borrower's cost and expense: (a) CPA comforted (based on agreed upon procedures)
financial statements with respect to the Individual Properties on a combined
basis (including, without limitation, statements of income and cash flows) for
the Fiscal Year from July 1, 1999 to June 30, 2000, for calendar year 1999 and
for the Fiscal Year from October 1, 1997 through September 30, 1998; (b) audited
financials for the REIT for the Fiscal Year ended December 31, 1999 and interim
unaudited financial statements for the REIT through the most current date
prepared; and (c) 1997 (and prior if required) audited financial statements and
unaudited Individual Property statements. If Lender requires additional
financial statements in connection with this Section (i) Borrower shall
cooperate with Lender in obtaining any such financial statements and any
additional financial statements that may be reasonably required by Lender
provided that Lender shall bear the cost of any such additional financial
statements under this Section (i).

            (ii) Not later than 45 days after the end of each fiscal quarter
following the Closing Date, a balance sheet of Borrower as of the end of such
fiscal quarter, meeting the
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                                      -75-


requirements of Section 210.3-01 of Regulation S-X, and statements of income
and statements of cash flows of the Individual Properties for the period
commencing on the day following the last day of the most recent Fiscal Year and
ending on the date of such balance sheet and for the corresponding period of the
most recent Fiscal Year, meeting the requirements of Section 210.3-02 of
Regulation S-X (provided, that if for such corresponding period of the most
recent Fiscal Year Acquired Property Statements were permitted to be provided
hereunder pursuant to paragraph (i) above, Borrower shall instead provide
Acquired Property Statements for such corresponding period). If requested by
Lender, Borrower shall also provide summarized financial information," as
defined in Section 210.1-02(bb) of Regulation S-X, with respect to such
quarterly financial statements.

            (iii) Not later than 90 days after the end of each Fiscal Year
following the Closing Date, a balance sheet of Borrower as of the end of such
Fiscal Year, meeting the requirements of Section 210.3-01 of Regulation S-X,
and statements of income and statements of cash flows of the Individual
Properties for such Fiscal Year, meeting the requirements of Section 210.3-02 of
Regulation S-X. If requested by Lender, Borrower shall provide summarized
financial information with respect to such annual financial statements.

            (iv) Upon ten (10) Business Days after notice from Lender in
connection with the Securitization of this Loan, such additional financial
statements, such that, as of the date (each a "DISCLOSURE DOCUMENT DATE") of
each Disclosure Document, Borrower shall have provided Lender with all financial
statements as described in paragraph (i) above; provided that the Fiscal Year
and interim periods for which such financial statements shall be provided shall
be determined as of such Disclosure Document Date.

            (v) In the event Lender determines, in connection with a
Securitization, that the financial statements required in order to comply with
Regulation S-X or Legal Requirements are other than as provided herein, then
notwithstanding the provisions of this Section, Lender may request, and Borrower
shall promptly provide, such combination of Acquired Property Statements and/or
Standard Statements as may be necessary for such compliance.

            (vi) Any other or additional financial statements, or financial,
statistical or operating information, as shall be required pursuant to
Regulation S-X or other Legal Requirements in connection with any Disclosure
Document or any filing under or pursuant to the Exchange Act in connection with
or relating to a Securitization (hereinafter an "EXCHANGE ACT FILING") or as
shall otherwise be reasonably requested by Lender to meet disclosure, rating
agency or marketing requirements.

All financial statements provided by Borrower pursuant to this Section 9.1(c)
shall be prepared in accordance with GAAP, and shall meet the requirements of
Regulation S-X and other applicable Legal Requirements. All financial statements
relating to a Fiscal Year shall be audited by the independent accountants in
accordance with generally accepted auditing standards, Regulation S-X and all
other applicable Legal Requirements, shall be accompanied by the manually
executed report of the independent accountants thereon, which report shall meet
the requirements of Regulation S-X and all other applicable Legal Requirements,
and shall be further accompanied by a manually executed written consent of the
independent accountants, in form and substance acceptable to Lender, to the
inclusion of such financial statements in any
<Page>

                                      -76-


Disclosure Document and any Exchange Act Filing and to the use of the name of
such independent accountants and the reference to such independent accountants
as "experts" in any Disclosure Document and Exchange Act Filing, all of which
shall be provided at the same time as the related financial statements are
required to be provided. All other financial statements shall be certified by
the chief financial officer of Borrower, which certification shall state that
such financial statements meet the requirements set forth in the first sentence
of this paragraph.

            SECTION 9.2 SECURITIZATION INDEMNIFICATION.

            (a) Borrower understands that information provided to Lender by
Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, a "DISCLOSURE DOCUMENT")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.

            (b) Borrower shall provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, an agreement (A)
certifying that Borrower has examined such Disclosure Documents specified by
Lender and that each such Disclosure Document, as it relates to Borrower,
Borrower Affiliates, Individual Properties, Manager and all other aspects of the
Loan, does not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder shall include its
officers and directors), the Affiliate of The Prudential Insurance Company of
America ("PRUDENTIAL") or such other Person that has filed the registration
statement relating to the Securitization (the "REGISTRATION STATEMENT") or has
acted as depositor, sponsor or seller with respect to the trust or other Person
issuing the Securities, each of its directors, each of its officers who have
signed the Registration Statement and each Person that controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "PRUDENTIAL GROUP"), and Prudential and any
other Person acting as underwriter, placement agent, initial purchaser or in a
similar role (such Persons, together with Prudential, collectively,
"UNDERWRITERS"), each director of each Underwriter and each Person who controls
each Underwriter within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act (collectively, the "UNDERWRITER GROUP") for any
losses, claims, damages or liabilities (collectively, the "LIABILITIES") to
which Lender, the Prudential Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such sections or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such sections or necessary in order to
make the statements in such sections, in light of the circumstances under which
they were made, not misleading and (C) agreeing to reimburse Lender, the
Prudential Group and/or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the Prudential Group and the Underwriter Group in
connection with investigating or defending the Liabilities; provided, however,
that
<Page>

                                      -77-


Borrower will be liable in any such case under clauses (B) or (C) above only to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the Disclosure Document or in
connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of Borrower, operating statements, rent rolls,
appraisals, market studies, environmental site assessment reports and property
condition reports with respect to the Individual Properties. This indemnity
agreement will be in addition to any liability which Borrower may otherwise
have.

            (c) In connection with Exchange Act Filings, Borrower shall (i)
indemnify Lender, the Prudential Group and the Underwriter Group for Liabilities
to which Lender, the Prudential Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon the omission
or alleged omission to state in the Disclosure Document a material fact required
to be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Prudential Group or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Prudential Group or the Underwriter Group in connection with defending or
investigating the Liabilities.

            (d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2, such indemnified party shall pay for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.

            (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be
<Page>

                                      -78-


unenforceable as to an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein which
would otherwise be indemnifiable under Section 9.2(b) or (c), the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages or liabilities (or actions in respect
thereof); PROVIDED, HOWEVER, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) the Person(s) seeking contribution and Borrower's relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted; (ii) the opportunity to correct and prevent any statement or omission;
and (iii) any other equitable considerations appropriate in the circumstances.
Lender and Borrower hereby agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation.

            (f) The liabilities and obligations of both Borrower and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

            SECTION 9.3 RATING SURVEILLANCE.

            Borrower will retain the Rating Agencies to provide rating
surveillance services on any certificates issued in a Securitization. Such
rating surveillance will be at the expense of Borrower in an amount determined
by Lender in its reasonable discretion prior to the occurrence of a
Securitization, not to exceed a maximum cost of $25,000 per year (the "RATING
SURVEILLANCE CHARGE").

            X. DEFAULTS

            SECTION 10.1 EVENT OF DEFAULT.

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

            (i) if any Monthly Debt Service Payment Amount is not paid when due
and/or any amount required to be deposited in the Reserve Funds is not paid when
due (provided, however, that on two (2) occasions during any rolling twelve (12)
month period, Borrower shall have a five (5) day grace period prior to such
payment failure constituting an Event of Default);

            (ii) if the Debt is not paid in full on the Maturity Date;

            (iii) if any of the Taxes or Other Charges are not paid when due
(except to the extent Lender is obligated to disburse Tax Funds to pay for such
Taxes under Section 6.2.2, has sufficient funds in such Tax Funds account to
make such payment and fails to make such payment) and after Lender has given
five (5) days written notice that such payment is due;
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                                      -79-


            (iv) if any of the Insurance Premiums are not paid when due (except
to the extent Lender is obligated to disburse Insurance Funds to pay for such
Insurance Premiums under Section 6.3.2, has sufficient funds in such Insurance
Funds account to make such payment and fails to make such payment) and after
Lender has given five (5) days written notice that such payment is due;

            (v) if any other portion of the Debt is not paid within five (5)
days following written notice from Lender;

            (vi) if the Policies are not kept in full force and effect;

            (vii) if Borrower breaches or permits or suffers a breach of Article
VIII of this Agreement;

            (viii) if any representation or warranty made by Borrower herein or
in any other Loan Document, or in any report, certificate, financial statement
or other instrument, agreement or document furnished to Lender shall have been
false or misleading in any material respect as of the date the representation or
warranty was made;

            (ix) if Borrower, Managing Member or any SPC Party shall make an
assignment for the benefit of creditors;

            (x) if a receiver, liquidator or trustee shall be appointed for
Borrower, Managing Member or any SPC Party or if Borrower, Managing Member or
any SPC Party shall be adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy
law, or any similar federal or state law, shall be filed by or against,
consented to, or acquiesced in by, Borrower, Managing Member or any SPC Party,
or if any proceeding for the dissolution or liquidation of Borrower, Managing
Member or any SPC Party shall be instituted; PROVIDED, HOWEVER, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Managing Member or such SPC Party, upon the same not
being discharged, stayed or dismissed within sixty (60) days;

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

            (xii) if any of the assumptions contained in the Insolvency Opinion,
or in any other non-consolidation opinion delivered to Lender in connection with
the Loan, or in any other non-consolidation delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect;

            (xiii) if Borrower breaches any representation, warranty or covenant
contained in Section 3.1.25 hereof;

            (xiv) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xiii) above, for thirty (30) days after notice to Borrower
from Lender; PROVIDED, HOWEVER, that if such non-monetary Default is susceptible
of cure but cannot reasonably be cured within such 30-day
<Page>

                                      -80-


period and provided further that Borrower shall have commenced to cure such
Default within such 30-day period and thereafter diligently and expeditiously
proceeds to cure the same, such 30-day period shall be extended for such time as
is reasonably necessary for Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed ninety (90) days;

            (xv) if there shall be default under any of the other Loan Documents
beyond any applicable cure periods contained in such Loan Documents, whether as
to Borrower or any of the Individual Properties, or if any other such event
shall occur or condition shall exist, if the effect of such event or condition
is to accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt;

            (xvi) if a default by Borrower under the Ground Lease occurs and
such default shall not have been remedied within the time limit in the Ground
Lease for the remedying of such default; or

            (xvii) if the Ground Lease is surrendered, terminated, modified,
changed, supplemented, altered or amended without the prior written consent of
Lender in violation of the terms of Section 1.25 of the Mortgage.

            (b) Upon the occurrence of an Event of Default (other than an Event
of Default described in clauses (ix), (x) or (xi) above) and at any time
thereafter Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to all or any of
the Individual Properties, including, without limitation, declaring the Debt to
be immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and any
or all of the Individual Properties, including, without limitation, all rights
or remedies available at law or in equity; and upon any Event of Default
described in clauses (ix), (x) or (xi) above, the Debt and all other obligations
of Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.

            SECTION 10.2 REMEDIES.

            (a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any of the Individual Properties. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its sole discretion, to the fullest extent permitted by
law,
<Page>

                                      -81-


without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, if an Event of
Default is continuing (i) Lender is not subject to any "one action" or "election
of remedies" law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Individual Properties and each
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

            (b) With respect to Borrower and the Individual Properties, nothing
contained herein or in any other Loan Document shall be construed as requiring
Lender to resort to any Individual Property for the satisfaction of any of the
Debt in preference or priority to any other Individual Property, and Lender may
seek satisfaction out of all of the Individual Properties or any part thereof,
in its absolute discretion in respect of the Debt. In addition, Lender shall
have the right from time to time to partially foreclose the Mortgages in any
manner and for any amounts secured by the Mortgages then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose one or more of the Mortgages to
recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose one or more of the Mortgages to recover so much of the
principal balance of the Loan as Lender may accelerate and such other sums
secured by one or more of the Mortgages as Lender may elect. Notwithstanding one
or more partial foreclosures, the Individual Properties shall remain subject to
the Mortgages to secure payment of sums secured by the Mortgages and not
previously recovered.

            (c) Upon the occurrence of an Event of Default, Lender shall have
the right from time to time to sever the Note and the other Loan Documents into
one or more separate notes, mortgages and other security documents (the "SEVERED
LOAN DOCUMENTS") in such denominations as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute, from and after the occurrence of an Event of Default, all documents
necessary or desirable to effect the aforesaid severance, Borrower ratifying all
that its said attorney shall do by virtue thereof; provided, however, Lender
shall not make or execute any such documents under such power until three (3)
days after notice has been given to Borrower by Lender of Lender's intent to
exercise its rights under such power. Except as may be required in connection
with a Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.
<Page>

                                      -82-


            (d) Any amounts recovered from any Individual Property or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.

            SECTION 10.3 REMEDIES CUMULATIVE.

            The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.

            XI. MISCELLANEOUS

            SECTION 11.1 SUCCESSORS AND ASSIGNS.

            All covenants, promises and agreements in this Agreement, by or on
behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

            SECTION 11.2 LENDER'S DISCRETION.

            Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.

            SECTION 11.3 GOVERNING LAW.

            (A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
<Page>

                                      -83-


WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY
LAW, BORROWER AND LENDER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM
TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.

             (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER AND LENDER WAIVES
ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM
NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER AND LENDER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

            HERITAGE REALTY MANAGEMENT, INC.
            185 GREAT NECK ROAD
            GREAT NECK, NEW YORK 11021

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID
<Page>

                                      -84-


AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO
BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

            SECTION 11.4 MODIFICATION, WAIVER IN WRITING.

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

            SECTION 11.5 DELAY NOT A WAIVER.

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

            SECTION 11.6 NOTICES.

            All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "NOTICE") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Any Notice shall be deemed to have been
received: (a) three (3) days after the
<Page>

                                      -85-


date such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day) and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:

            If to Lender:     Prudential Mortgage Capital Company, LLC
                              100 Mulberry Street - GC4
                              9th Floor
                              Newark, New Jersey 07102-4069
                              Attention: Duane Tucker
                              Facsimile No.: (973) 802-4838

            with a copy to:   Cadwalader, Wickersham & Taft
                              100 Maiden Lane
                              New York, New York 10038
                              Attention: John J. Busillo, Esq.
                              Facsimile No.: (212) 504-6666

            If to Borrower:   Heritage SPE LLC
                              535 Boylston Street
                              Boston, Massachusetts 02116
                              Attention: Richard Trueblood
                              Facsimile No.: (617) 266-0885

            with a copy to:   Heritage Property Investment Trust, Inc.
                              535 Boylston Street
                              Boston, Massachusetts 02116
                              Attention: Louis Zicht, Esq.
                              Facsimile No.: (617) 266-0885

            with a copy to:   Bingham Dana LLP
                              150 Federal Street
                              Boston, Massachusetts 02110
                              Attention: Richard A. Toelke, Esq.
                              Facsimile No.: (617) 951-8736

            SECTION 11.7 TRIAL BY JURY.

            BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
<Page>

                                      -86-


AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER AND
LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

            SECTION 11.8 HEADINGS.

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

            SECTION 11.9 SEVERABILITY.

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

            SECTION 11.10 PREFERENCES.

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

            SECTION 11.11 WAIVER OF NOTICE.

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

            SECTION 11.12 REMEDIES OF BORROWER.

            In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any
<Page>

                                      -87-


monetary damages, and Borrower's sole remedy shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. Any action or
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment. Any expedited procedure legally
available with such a declaratory judgment action or action for injunctive
relief may be utilized to the extent possible.

            SECTION 11.13 EXPENSES; INDEMNITY.

            (a) Borrower shall pay or, if Borrower fails to pay, reimburse
Lender upon receipt of notice from Lender, for all reasonable, out-of-pocket
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Lender in connection with (i) Borrower's ongoing performance of and
compliance with Borrower's agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (ii) Lender's ongoing performance of
and compliance with all agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Borrower; (iv) the filing and recording fees and expenses, title
insurance and reasonable fees and expenses of counsel for providing to Lender
all required legal opinions, and other similar expenses incurred, in creating
and perfecting the Liens in favor of Lender pursuant to this Agreement and the
other Loan Documents; (v) enforcing or preserving any rights, in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents, the Individual Properties, or any other
security given for the Loan; and (vi) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Individual Properties or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender. Any costs due and payable to Lender
may be paid to Lender pursuant to the Cash Management Agreement.

            (b) Borrower shall indemnify, defend and hold harmless Lender from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the
<Page>

                                      -88-


undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.

            SECTION 11.14 SCHEDULES INCORPORATED.

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

            SECTION 11.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.

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

            SECTION 11.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
                          BENEFICIARIES.

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

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

            SECTION 11.17 PUBLICITY.

            All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender, Prudential or any of their Affiliates shall be subject to the prior
approval of Lender.
<Page>

                                      -89-


            SECTION 11.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF
                          MARSHALLING OF ASSETS.

            (a) Borrower acknowledges that Lender has made the Loan to Borrower
upon the security of its collective interest in the Individual Properties and in
reliance upon the aggregate of the Individual Properties taken together being of
greater value as collateral security than the sum of the Individual Properties
taken separately. Borrower agrees that the Mortgages are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Mortgages shall constitute an Event of Default under
each of the other Mortgages which secure the Note; (ii) an Event of Default
under the Note or this Agreement shall constitute an Event of Default under each
Mortgage; and (iii) each Mortgage shall constitute security for the Note as if a
single blanket lien were placed on all of the Individual Properties as security
for the Note.

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

            SECTION 11.19 WAIVER OF OFFSETS/DEFENSES/COUNTERCLAIMS.

            Borrower hereby waives the right to offset any obligations to make
the payments required by the Loan Documents. No failure by Lender to perform any
of its obligations hereunder shall be a valid defense to, or result in any
offset against, any payments which Borrower is obligated to make under any of
the Loan Documents.

            SECTION 11.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.

            In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
competent counsel in connection with the negotiation, drafting and execution of
the Loan Documents and that such Loan Documents shall not be subject to the
principle of construing their meaning against the party which drafted same.
<Page>

                                      -90-


Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely
on its own judgment and advisors in entering into the Loan without relying in
any manner on any statements, representations or recommendations of Lender or
any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to
any limitation whatsoever in the exercise of any rights or remedies available to
it under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.

            SECTION 11.21 BROKERS AND FINANCIAL ADVISORS.

            Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower shall
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender's attorneys' fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 11.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.

            SECTION 11.22 EXCULPATION.

            Subject to the qualifications below, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Individual Properties, the
Rents, or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Individual Properties, in the Rents and in
any other collateral given to Lender, and Lender, by accepting the Note, this
Agreement, the Mortgages and the other Loan Documents, agrees that it shall not
sue for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding under or by reason of or under or in connection with the
Note, this Agreement, the Mortgages or the other Loan Documents. The provisions
of this Section shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under any of the Mortgages; (c) affect
the validity or enforceability of or any guaranty or indemnity made in
connection with the Loan or any of the rights and remedies of Lender thereunder;
(d) impair the right of Lender to obtain the appointment of a receiver after an
Event of Default; (e) impair the enforcement of any of the Assignments of Leases
after an Event of
<Page>

                                      -91-


Default; (f) constitute a prohibition against Lender to seek a deficiency
judgment against Borrower in order to fully realize the security granted by each
of the Mortgages or to commence any other appropriate action or proceeding in
order for Lender to exercise its remedies against all of the Individual
Properties; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:

            (i) fraud or intentional misrepresentation by Borrower or any
guarantor in connection with the Loan;

            (ii) intentional waste of any of the Individual Properties by
Borrower;

            (iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the Mortgages
concerning environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either document;

            (iv) the misapplication or conversion by Borrower of (A) any
insurance proceeds paid by reason of any loss, damage or destruction to the
Individual Properties, (B) any Awards or other amounts received in connection
with the Condemnation of all or a portion of the Individual Properties, or (C)
any Rents following an Event of Default;

            (v) failure to pay charges for labor or materials or other charges
that can create liens on any portion of the Individual Properties which accrue
after the occurrence of an Event of Default;

            (vi) any security deposits, advance deposits or any other deposits
collected with respect to the Individual Properties which are not delivered to
Lender upon a foreclosure of the Individual Properties or action in lieu
thereof, except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to the
occurrence of the Event of Default that gave rise to such foreclosure or action
in lieu thereof; and

            (vii) Borrower's indemnification of Lender set forth in Section 9.2
hereof.

            Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) Borrower fails to permit
on-site inspections of the Individual Properties or fails to provide financial
information, each as required by, and in accordance with the terms and
provisions of, this Agreement and the Mortgages, to the extent that any of same
is not cured within any applicable grace and/or cure periods set forth herein;
(ii) Borrower fails to maintain its status as a single purpose entity or fails
to appoint a new property manager upon the request of Lender after an Event of
Default, each as required by, and in accordance with the terms and provisions
of, this Agreement and the Mortgages; (iii) Borrower fails to obtain Lender's
prior written consent to any subordinate financing or other
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                                      -92-


voluntary lien encumbering the Individual Properties, subject to Section 4.2.1;
or (iv) there is an assignment, transfer, or conveyance of the Individual
Properties or any interest therein in violation of the provisions of the
Mortgages or this Agreement.

            SECTION 11.23 PRIOR AGREEMENTS.

            This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, that certain
term sheet dated September 11, 2000 between Borrower and Lender, are superseded
by the terms of this Agreement and the other Loan Documents.

            SECTION 11.24 SERVICER.

            At the option of Lender, the Loan may be serviced by a servicer (the
"SERVICER") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "SERVICING AGREEMENT") between
Lender and Servicer. Borrower shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrower shall not be responsible for payment
of the monthly servicing fee due to the Servicer under the Servicing Agreement.
<Page>

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


                                  LENDER:


                                  PRUDENTIAL MORTGAGE CAPITAL
                                  COMPANY, LLC, a Delaware limited liability
                                  company


                                  By: /s/ Robert Falzon
                                      -----------------------------------
                                  Name:   Robert Falzon
                                  Title:  Vice President


                                  BORROWER:


                                  HERITAGE SPE LLC, a Delaware limited
                                  liability company

                                  By:   Heritage SPE MGR LLC, a Delaware limited
                                        liability company, its managing
                                        member

                                        By:   Heritage SPE Corp., a Delaware
                                              corporation, its managing member

                                              By: /s/ Gary C. Widett
                                                  ------------------------------
                                              Name:   Gary C. Widett
                                              Title:  Assistant Vice President