Document:

LOAN AGREEMENT

                                      among

                  FRANKLIN STREET PARTNERS LIMITED PARTNERSHIP
                      FSP WESLAYAN OAKS LIMITED PARTNERSHIP
                    ESSEX LANE ASSOCIATES LIMITED PARTNERSHIP
                  FSP APARTMENT PROPERTIES LIMITED PARTNERSHIP
                       FSP PARK SENECA LIMITED PARTNERSHIP
                       FSP SANTA CLARA LIMITED PARTNERSHIP
                     FSP PIEDMONT CENTER LIMITED PARTNERSHIP
                    ONE TECHNOLOGY DRIVE LIMITED PARTNERSHIP
                FSP NORTH ANDOVER OFFICE PARK LIMITED PARTNERSHIP

                                       and

                        OTHER BORROWERS WHICH MAY BECOME
                            PARTIES TO THIS AGREEMENT

                                       and

                         CITIZENS BANK OF MASSACHUSETTS

                                February 23, 1999

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                                TABLE OF CONTENTS

Section
1.   BACKGROUND..............................................................1
     1.1      Definitions....................................................1
     1.2      Borrower.......................................................1
     1.3      Use of Proceeds................................................1
     1.4      Facility.......................................................1
2.   AGREEMENT TO MAKE LOAN..................................................1
     2.1      Agreement to Make Loan.........................................1
     2.2      Commitment to Borrow...........................................2
     2.3      Purpose of Loan................................................2
     2.4      Requests for Advances..........................................2
     2.5      The Loan Account...............................................4
     2.6      Establishment of Letter of Credits.............................5
     2.7      Effect of Honor of L/C's.......................................5
     2.8      Additional Provisions Relating to L/C's........................5
3.   THE NOTE 7
4.   FEES     ...............................................................8
5.   JOINDER DOCUMENTS.......................................................8
6.   CONDITIONS TO CLOSING...................................................8
     6.1      Loan Documents.................................................8
     6.2      Certified Copies of Organization Documents.....................9
     6.3      Resolutions....................................................9
     6.4      Incumbency Certificate; Authorized Signers.....................9
     6.5      Deliveries.....................................................9
     6.6      Legal Opinions................................................10
     6.7      Appraisal.....................................................10
     6.8      Closing Fee...................................................10
     6.9      Operating Accounts............................................10
     6.10     Performance; No Default.......................................10
     6.11     Representations and Warranties................................10
     6.12     Proceedings and Documents.....................................10

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     6.13     Waiver........................................................10
7.   CONDITIONS TO ALL BORROWINGS...........................................11
     7.1      Representations True; No Event of Default.....................11
     7.2      No Legal Impediment...........................................11
     7.3      Governmental Regulation.......................................11
     7.4      Proceedings and Documents.....................................11
8.   REPRESENTATIONS, WARRANTIES AND COVENANTS..............................11
     8.1      Organization; Authority, Etc..................................11
     8.2      Title to Asset................................................12
     8.3      Financial Statements..........................................13
     8.4      No Material Changes, Etc......................................13
     8.5      Franchises, Patents, Copyrights, Etc..........................13
     8.6      Litigation....................................................13
     8.7      No Materially Adverse Contracts, Etc..........................13
     8.8      Compliance With Other Instruments, Laws, Etc..................14
     8.9      Tax Status....................................................14
     8.10     No Event of Default...........................................14
     8.11     Setoff, Etc...................................................14
     8.12     Certain Transactions..........................................14
     8.13     Subsidiaries..................................................14
     8.14     General Partners..............................................14
     8.15     ERISA Plan....................................................15
     8.16     Solvency......................................................15
     8.17     The Project...................................................15
     8.18     Year 2000.....................................................18
     8.19     No Broker or Finder...........................................18
     8.20     General.......................................................18
     8.21     Representations and Warranties with Respect to the Project....18
9.   AFFIRMATIVE COVENANTS OF THE BORROWER..................................19
     9.1      Punctual Payment..............................................19
     9.2      Financial Statements, Certificates and Information............19

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<TABLE>
<CAPTION>
<S>                                                                                                     <C>
     9.3      Insurance.................................................................................20
     9.4      Liens and Other Charges...................................................................20
     9.5      Inspection of Project and Books, Appraisals...............................................20
     9.6      Compliance with Laws, Contracts, Licenses, and Permits....................................21
     9.7      Use of Proceeds...........................................................................21
     9.8      Publicity.................................................................................21
     9.9      Further Assurances........................................................................21
     9.10     Notices...................................................................................22
     9.11     Other Affirmative Covenants...............................................................22
     9.12     Ownership of Borrower.....................................................................22
     9.13     Wholly Owned Subsidiary...................................................................22
     9.14     Maintenance of Borrower's Properties......................................................22
     9.15     Acquisitions, Dispositions and Syndication of Borrower's assets...........................23
     9.16     Syndication Event.........................................................................23
     9.17     Business Activities.......................................................................23
     9.18     Post-Closing Delivery Items...............................................................23
10.  NEGATIVE COVENANTS OF THE BORROWER.................................................................23
     10.1     No Amendments, Terminations or Waivers....................................................23
     10.2     Restrictions on Indebtedness..............................................................24
     10.3  Restrictions on Liens, Etc...................................................................24
     10.4     Restrictions on Loans and Investments.....................................................24
     10.5     Merger, Consolidation, Conversion, Business Operations, and Ownership and Disposition
              of Assets.................................................................................25
     10.6     Sale and Leaseback........................................................................26
     10.7     Distributions.............................................................................26
     10.8     Financial Covenants.......................................................................26
     10.9     Other Negative Covenants..................................................................27
11.  EVENTS OF DEFAULT AND REMEDIES.....................................................................27
     11.1     Events of Default.........................................................................27
     11.2     Termination of Advances and Acceleration..................................................30
     11.3     Other Remedies............................................................................30
</TABLE>

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     11.4     Distribution of Collateral Proceeds...........................31
     11.5     Power of Attorney.............................................31
     11.6     Waivers.......................................................32
12.  SETOFF   32
13.  EXPENSES 32
14.  INDEMNIFICATION........................................................33
15.  LIABILITY OF THE LENDER................................................33
16.  RIGHTS OF THIRD PARTIES................................................34
17.  SURVIVAL OF COVENANTS, ETC.............................................34
18.  ASSIGNMENT AND PARTICIPATION...........................................34
     18.1     Conditions to Assignment by Lender............................34
     18.2     New Notes, Agreement..........................................35
     18.3     Participations................................................35
     18.4     Pledge by the Lender..........................................35
     18.5     No Assignment by the Borrower.................................36
19.  RELATIONSHIP...........................................................36
20.  NOTICES  36
21.  GOVERNING LAW..........................................................37
22.  CONSENT TO JURISDICTION; WAIVERS.......................................37
23.  PREFERENCES............................................................38
24.  RULES OF INTERPRETATION................................................38
25.  HEADINGS 39
26.  COUNTERPARTS...........................................................39
27.  ENTIRE AGREEMENT, ETC..................................................39
28.  CONSENTS, AMENDMENTS, WAIVERS, ETC.....................................39
29.           TIME OF THE ESSENCE...........................................40
30.  SEVERABILITY...........................................................40
31.  LIMITED RECOURSE.......................................................40

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                                    Exhibits

Exhibit A - Joinder Agreement

                                       -v-
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                                    SCHEDULES

Schedule 1 - Definitions
Schedule 2 - List of Borrowers; General Partner of each Borrower
Schedule 3 - [Intentionally Deleted]
Schedule 4 - Loan Request
Schedule 5 - Subsidiaries
Schedule 6 - Environmental Reports
Schedule 7 - Title Insurance Companies
Schedule 8- Mortgages, Liens and Security Interests

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                                 LOAN AGREEMENT

      This Loan Agreement is made as of the ___ day of February, 1999, by and
among FRANKLIN STREET PARTNERS LIMITED PARTNERSHIP ("FSP") and the additional
entities which are Wholly Owned Subsidiaries which are listed on Part A of
Schedule 2 attached hereto (which Schedule 2 may be amended from time to time)
(collectively, the "Borrower"), limited partnerships organized under the laws of
the Commonwealth of Massachusetts, with a principal place of business at 401
Edgewater Place, Suite 110, Wakefield, Massachusetts 01880-6210 and CITIZENS
BANK OF MASSACHUSETTS ("Lender"), with a principal place of business at 28 State
Street, Boston, Massachusetts 02109.

1.    BACKGROUND

1.1 Definitions. This Agreement and other Loan Documents utilize various defined
terms which shall have the meanings set forth in Schedule 1 attached to this
Agreement or, if separately defined elsewhere herein or in any other Loan
Documents, as set forth in such separate definitions. Unless otherwise specified
in the Loan Documents, the definitions contained in this Agreement shall
supercede any inconsistent definitions contained in the Note, the Security
Deed(s) or any other Loan Document and in the event of any inconsistencies
between this Agreement, the Note, the Security Deeds, or any other Loan
Document, this Agreement shall control.

1.2 Borrower. Each entity comprising the Borrower is a limited partnership
organized under the laws of the Commonwealth of Massachusetts. As of the date
hereof, the general partners of each Borrower entity listed on Schedule 2 is set
forth on Schedule 2 attached hereto.

1.3 Use of Proceeds. Borrower has applied to Lender to establish a revolving
line of credit facility in the maximum amount of $25,000,000.00, the proceeds of
which are to be used for general corporate purposes, including property
acquisitions , renovations, expansions, tenant improvement costs and equity
investments associated with institutional grade income-producing properties and
to pay costs and expenses incidental to closing the Loan.

1.4 Facility. Subject to all of the terms, conditions and provisions of this
Loan Agreement, and of the agreements and instruments referred to herein, Lender
agrees to establish the Loan and Borrower agrees to accept and repay proceeds
outstanding under the Loan.

2.    AGREEMENT TO MAKE LOAN.

2.1 Agreement to Make Loan. Subject to the terms and conditions of this
Agreement and relying upon the representations and warranties contained in this
Agreement and the other Loan Documents, the Lender agrees to lend to the
Borrower and the Borrower may borrow, repay and reborrow from time to time
between the

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Closing Date and the Termination Date such sums as are requested by Borrower up
to a maximum aggregate principal amount at any one time equal to the Loan
Amount. Each request for an Advance of the Loan hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth in
ss.ss.6, 7, and 8 have been satisfied on the date of such request unless, and
only to the extent that, any such representation and warranty relates
specifically and only to an earlier date in time.

2.2 Commitment to Borrow. So long as the Loan is outstanding, the Borrower
agrees that the Loan shall be its exclusive source of third Person debt
financing. Further, the Borrower agrees that prior to placing any permanent
loans on any of the properties included in the Project or refinancing any loan
with respect to any such properties, the Borrower shall provide the Lender with
notice and an opportunity (but not the obligation) to place such loan or loans
provided that the Borrower and the Lender agree upon terms that are mutually
acceptable to the Lender and the Borrower.

2.3 Purpose of Loan. The Loan shall be used by the Borrower for the following
purpose: general corporate purposes of the Borrower, including property
acquisitions, renovations, expansions, tenant improvement costs and equity
investments associated with institutional grade income-producing properties and
to pay the costs and expenses incidental to closing the Loan.

2.4 Requests for Advances. (a) The Borrower shall give to the Lender written
notice in the form of Schedule 4 hereto (or telephonic notice confirmed in
writing in the form of Schedule 4 hereto) of each Advance requested hereunder (a
"Loan Request") in accordance with the interest rate selection requirements set
forth in the Note. Each such Loan Request shall specify (i) the principal amount
of the Advance requested, (ii) the intended use of the proceeds of such Advance;
and (iii) the proposed Drawdown Date of such Advance. The Borrower agrees to
accept the Advance requested from the Lender on the proposed Drawdown Date. Each
Advance shall be a minimum aggregate amount of $1,000,000.00 or an integral
multiple of $100,000 in excess thereof.

      (b)   In the event that the Borrower shall receive Advance(s) in excess of
            the Loan Amount the Borrower shall immediately repay the Loan by an
            amount sufficient to reduce the outstanding principal balance to
            equal or less than the Loan Amount.

      (c)   The Lender may rely on any request for an Advance or financial
            accommodation which the Lender, reasonably and in good faith,
            believes to have been made by a person duly authorized to act on
            behalf of the Borrower and may decline to make any such requested
            Advance or to provide any such financial accommodation pending the
            Lender's being furnished with such documentation concerning that
            person's authority to act as may be satisfactory to the Lender.

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      (d)   A request by the Borrower for any Advance or of the issuance of an
            L/C shall be irrevocable and shall constitute certification by the
            Borrower that as of the date of such request, each of the following
            is true and correct:

            (i)   There has been no material adverse change in the Borrower's
                  financial condition from the most recent financial information
                  furnished the Lender pursuant to this Agreement;

            (ii)  The Borrower is in compliance with, and has not breached any
                  of, its covenants contained in this Agreement;

            (iii) Each representation which is made herein or in any of the Loan
                  Documents is then true and complete as of and as if made on
                  the date of such request unless such representation relates
                  specifically and only to an earlier date in time; and

            (iv)  No event has occurred nor failed to occur which occurrence or
                  failure is, or with the passage of time or giving of notice
                  (or both, would constitute an Event of Default (as described
                  herein), whether or not the Lender has exercised any of its
                  rights upon such occurrence or failure.

      (e)   The Borrower shall immediately become indebted to the Lender for the
            amount of each Advance when such Advance is made for or on behalf of
            the Borrower.

      (f)   (i)   The Borrower may request that the Lender issue L/C's for
                  the account of the Borrower subject to and in accordance
                  with ss.ss.2.6, 2.7 and 2.8 of this Agreement and the
                  other provisions of this clause (f). Each such request
                  shall be in such manner as may from time to time be
                  acceptable to the Lender, in writing.

            (ii)  The Lender, shall issue any L/C so requested by the Borrower,
                  provided that the aggregate Stated Amount, following the
                  requested issuance thereof, would not when aggregated with all
                  outstanding L/C's and Advances exceed the lesser of (A) the
                  L/C Limit, or (B) Availability, and provided that the L/C is
                  in form satisfactory to the Lender.

            (iii) The Borrower shall execute such documentation to apply for and
                  support the issuance of a L/C as may be required by the
                  Lender.

      (g)   The Lender, without the request of the Borrower, may make an Advance
            equal to the amount which the Borrower is obligated to pay to the
            Lender or for which the Borrower or the Lender becomes obligated on
            account of, or in respect to, any L/C. Such Advance shall be made
            and even if such

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            Advance would result in Loan Amount being exceeded. Such action on
            the part of the Lender shall not constitute a waiver of the Lender's
            rights under Section 2.4(b) above.

2.5 The Loan Account. (a) An account (the "Loan Account") shall be opened on the
books of the Lender, in which Loan Account ---------------- a record may be kept
of all Advances made by the Lender to the Borrower under or pursuant to this
Agreement and of all payments thereon.

      (b)   The Lender may also keep a record (either in the Loan Account or
            elsewhere, as the Lender may from time to time elect) of all
            interest, fees, service charges, costs, expenses, and other debits
            owed the Lender on account of the Obligations and of all credits
            against such amounts so owed.

      (c)   All credits against the Obligations shall be conditional upon final
            payment to the Lender of the items giving rise to such credits. The
            amount of any item credited against the Obligations which is charged
            back against the Lender for any reason or is not so paid shall be an
            Obligation and shall be added to the Loan Account, whether or not
            the item so charged back or not so paid is returned.

      (d)   Except as otherwise provided herein, all fees, service charges,
            costs, and expenses for which the Borrower is obligated hereunder
            are payable thirty (30) days after the invoice date. The Lender,
            without the request of the Borrower, may make an Advance of any
            interest, fee, service charge, or other payment to which the Lender
            is entitled from the Borrower pursuant hereto and may charge the
            same to the Loan Account notwithstanding that such amount so
            advanced may result in Availability's being exceeded. Such action on
            the part of the Lender shall not constitute a waiver of the Lender's
            rights under Section 2.4(b), above. Any amount which is added to the
            principal balance of the Loan Account as provided in this subsection
            shall bear interest at the interest rate applicable from time to
            time to the unpaid principal balance of the Loan Account.

      (e)   Any statement rendered by the Lender to the Borrower concerning the
            Obligations shall be considered correct and accepted by the Borrower
            and shall be conclusively binding upon the Borrower unless the
            Borrower provides the Lender with written objection thereto within
            thirty (30) days from the mailing of such statement, which written
            objection shall indicate, with particularity, the reason for such
            objection. The Loan Account and the Lender's books and records
            concerning the loan arrangement contemplated herein and the
            Obligations shall be prima facie evidence of the items described
            therein.

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2.6 Establishment of Letter of Credits. (a) Upon the written request of the
Borrower, the Lender agrees to cause the issuance of L/C's on behalf of a
Borrower as provided herein. The Borrower may request issuance of L/C's in such
manner as may from time to time be reasonably acceptable to the Lender. The
Borrower shall execute and deliver to the Lender such further documents and
instruments in connection with any L/C, as the Lender, in accordance with the
Lender's then customary practices with respect to similar facilities, may
reasonably request including, without limitation, the Lender's standard letter
of credit agreements (the "L/C Agreement"). In the event of any inconsistency
between the terms of the L/C Agreement and this Agreement the terms and
conditions of the L/C Agreement shall control.

            (b)   No L/C shall have an expiry date which is later than thirty
                  (30) days prior to the Maturity Date.

2.7 Effect of Honor of L/C's . The Borrower shall reimburse the Lender for the
amount of any honored L/C. Any such honoring which is not so reimbursed on the
Business Day when so honored shall constitute an Advance.

2.8. Additional Provisions Relating to L/C's. (a) The obligations of the
Borrower with respect to L/C's shall be absolute and unconditional. The
obligations of the Borrower with respect to L/C's shall rank pari passu with the
obligations of the Borrower to repay all other Obligations. The Lender's rights,
powers, privileges and immunities specified in or arising under this Agreement
are in addition to any hereafter created or arising, whether by statute or rule
of law or contract.

      (b)   The Borrower will

            (i)   promptly examine the copy of any L/C (and any amendments
                  thereof) sent to it by the Lender;

            (ii)  promptly examine all instruments and documents delivered to it
                  from time to time by the Lender; and

            (iii) within two (2) Business Days of receipt thereof, provide the
                  Lender with written notice of any irregularity or claim of
                  non-compliance with the instructions of such person or entity.

The Borrower is conclusively deemed to have waived any such claim against the
Lender and its correspondents unless such notice is so timely given.

      (c)   None of the Lender, the Lender's correspondents or any advising,
            negotiating, or paying bank with respect to any L/C, shall be
            responsible in any way for:

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            (i)   performance by any beneficiary under any L/C or payee under
                  any L/C of that beneficiary's or payee's obligations to the
                  Borrower; or

            (ii)  the form, sufficiency, correctness, genuineness, authority of
                  any person signing; falsification; or the legal effect of; any
                  documents called for under any L/C if (with respect to the
                  foregoing) such documents on their face are conforming.

      (d)   The Lender may honor, as complying with the terms of any L/C and of
            any drawing thereunder, any drafts or other documents otherwise in
            order, but signed or issued by an administrator, executor,
            conservator, trustee in bankruptcy, debtor in possession, assignee
            for the benefit of creditors, liquidator, receiver, or other legal
            representative of the Person authorized under such L/C to draw or
            issue such drafts or other documents.

      (e)   Unless otherwise agreed to, in the particular instance, the Borrower
            hereby authorizes the Lender to (i) select an advising bank, if any;
            (ii) select a paying bank, if any; and (iii) select a negotiating
            bank.

      (f)   The Lender shall have discharged its obligations under any L/C
            which, or the drawing under which, includes payment instructions, by
            the initiation of the method of payment called for in, and in
            accordance with, such instructions (or by any other commercially
            reasonable and comparable method). The Lender does not assume any
            responsibility for any inaccuracy, interruption, error, or delay in
            transmission or delivery by post, telegraph or cable, or for any
            inaccuracy of translation.

      (g)   The Lender's rights, powers, privileges and immunities specified in
            or arising under this Agreement are in addition to any hereafter
            created or arising, whether by statute or rule of law or contract.

      (h)   Except to the extent otherwise expressly provided hereunder or
            agreed to in writing by the Lender, and the Borrower, the L/C will
            be governed by the Uniform Customs and Practice for Documentary
            Credits, International Chamber of Commerce, Publication No. 500, and
            any subsequent revisions thereof.

      (i)   If any change in any law, executive order or regulation, or any
            directive of any administrative or governmental authority (whether
            or not having the force of law), or in the interpretation thereof by
            any court or administrative or governmental authority charged with
            the administration thereof, shall either:

            (i)   impose, modify or deem applicable any reserve, special deposit
                  or similar requirements against L/C's hereafter

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                  caused to be issued by the Lender or with respect to which the
                  Lender has an obligation to lend to fund drawings thereunder;
                  or

            (ii)  impose on any Lender any other condition or requirements
                  relating to any such L/C's;

and the result of any event referred to in clause (i) or (ii), above, shall be
to increase the cost to the Lender of issuing or maintaining any L/C, then, upon
demand by the Lender made within six (6) months of the occurrence of any event
referred to in clause (i) or (ii) above, and delivery by the Lender to the
Borrower of a certificate of an officer of the Lender describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on the Lender, and the basis for determining such increased costs and
their allocation, the Borrower within five (5) days after receipt of such notice
shall pay to the Lender, from time to time as specified by the Lender, such
amounts as shall be sufficient to compensate the Lender for such increased cost.
The Lender's determination of costs incurred under clause (i) or (ii) above,
shall be conclusive and binding on the Borrower in the absence of manifest
error.

      (j)   The obligations of the Borrower under the within Agreement with
            respect to L/C's are absolute, unconditional, and irrevocable and
            shall be performed strictly in accordance with the terms hereof
            under all circumstances, whatsoever including, without limitation,
            the following:

                  (i)   Any lack of validity or enforceability or restriction,
                        restraint, or stay in the enforcement of the within
                        Agreement, any L/C or any other agreement or instrument
                        relating thereto.

                  (ii)  Any amendment or waiver of, or consent to the departure
                        from, all or any of the above.

                  (iii) The existence of any claim, set-off, defense, or other
                        right which the Borrower may have at any time against
                        the beneficiary of the L/C.

                  (iv)  Any honoring of a drawing under any L/C, which drawing
                        was nonconforming on account of minor nonsubstantive
                        variances from the requirements of the subject L/C.

3. THE NOTE. The obligation of the Borrower to pay the Loan Amount or, if less,
the aggregate unpaid principal amount of all Advances made by the Lender
hereunder plus accrued interest thereon, shall be evidenced by Note and payable
in accordance therewith. In the event the Note is lost, destroyed or mutilated
at any time prior to payment in full of the indebtedness evidenced thereby, the
Borrower shall execute and deliver to Lender a new note substantially in the
form of the Note and

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Lender shall execute and deliver to Borrower an affidavit and indemnification
reasonably acceptable to Borrower with respect to such lost Note.

4. FEES. a) The Borrower agrees to pay to the Lender on the Closing Date a
closing fee in the amount of $12,500.00 (the ----- "Closing Fee").

      (b)   On the earlier of (i) each anniversary date of the Closing Date, or
            (ii) the Termination Date, the Borrower shall pay the Lender an
            annual fee equal to ten (10) basis points of the Loan Amount, or a
            pro rated amount if the Loan is paid in full prior to the next
            anniversary date of the Closing Date (the "Annual Fee"). The Annual
            Fee shall be payable in arrears with the first such payment due on
            the first anniversary of the Closing Date. The Annual Fee shall be
            reduced by the Closing Fee and any Transaction Fee paid during such
            preceding twelve (12) month period.

      (c)   At the time of each Advance made (including any Advance made on
            account of a draw under a L/C) under the Loan the Borrower shall pay
            to the Lender a transaction fee equal to twenty five (25) basis
            points of the subject Advance made under the Loan (the "Transaction
            Fee").

      (d)   At the time of the issuance of any L/C, the Borrower shall pay an
            annual letter of credit fee equal to 1.25% of the Stated Amount of
            such L/C, or pro rated if the L/C is issued for a period of less
            than twelve (12) months (the "L/C Fee").

5. JOINDER DOCUMENTS. At the time of a Roll-Up, such Wholly Owned Subsidiary,
which has become a Wholly Owned Subsidiary in connection with such Roll-Up,
shall execute the Joinder Documents so as to become a Borrower under this
Agreement and shall be added as a maker under the Note. From and after the date
of the execution of such Joinder Documents, such entities shall be considered a
"Borrower" and subject to all of the terms and conditions hereof, provided,
however, that such Wholly Owned Subsidiary shall not be required to execute any
Security Documents.

6. CONDITIONS TO CLOSING . The obligation of the Lender to make the initial Loan
shall be subject to the satisfaction of the following conditions precedent:

6.1 Loan Documents. Each of the Loan Documents shall have been duly executed and
delivered by the respective parties thereto. Each of the Loan Documents, other
than the Security Documents, shall be in full force and effect and shall be in
form and substance satisfactory to the Lender. With respect to the Security
Documents, the Lender hereby agrees to hold the Security Documents in escrow and
shall not attempt to record or file such Security Documents until the occurrence
and continuation of an Event of Default beyond any applicable grace period.
Further, Lender agrees and acknowledges that the Security Documents shall have
no force or effect unless and until

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the occurrence and continuation of an Event of Default beyond any applicable
grace periods. After the Termination Date and payment in full by the Borrower of
any and all obligations to the Lender, Lender shall, upon Borrower's request,
return all original Security Documents to the Borrower.

6.2 Certified Copies of Organization Documents. The Lender shall have received
from each of the Borrower and FSP Holdings LLC a certified copy of its
Organization Documents as in effect on such date of certification, such
Organizational Documents to be in form and substance satisfactory to the Lender.

6.3 Resolutions. All action necessary for the valid execution, delivery and
performance by each of the Borrower and FSP Holdings LLC of this Agreement and
the other Loan Documents to which it is or is to become a party shall have been
duly and effectively taken, and evidence thereof satisfactory to the Lender
shall have been provided to the Lender. The Lender shall have received from each
such Person true copies of the resolutions authorizing the transactions
described herein, each certified as of a recent date to be true and complete.

6.4 Incumbency Certificate; Authorized Signers. The Lender shall have received
from each of the Borrower and FSP Holdings LLC an incumbency certificate, dated
as of the Closing Date, giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
such Person each of the Loan Documents to which such Person is or is to become a
Person; and (b) to give notices and to take other action on its behalf under the
Loan Documents.

6.5 Deliveries. The following items or documents shall have been delivered to
the Lender by the Borrower and shall be in form and substance satisfactory to
the Lender:

      (a)   Title Policy. An existing Title Policy or Title Policies.

      (b)   Other Insurance. Duplicate originals or certified copies of all
            policies and certificates of insurance maintained by the Borrower
            which shall be at least equal to insurance customarily obtained by
            owners of similar properties.

      (c)   Environmental Report. An existing environmental site assessment
            report or reports of one or more qualified environmental engineering
            or similar inspection firms approved by the Lender, which report or
            reports shall indicate the condition of the properties comprising
            the Project and any existing improvements thereon in compliance with
            all material Requirements and in all respects satisfactory to the
            Lender in its sole discretion.

      (d)   Survey and Taxes. An existing Survey of each of the properties
            comprising the Project (and any existing improvements thereon) and
            evidence of payment of all real estate taxes and municipal charges
            on

                                       -9-
<PAGE>

            each of the properties comprising the Project (and any existing
            improvements thereon) which were due and payable prior to the
            Closing Date.

6.6 Legal Opinions. The Lender shall have received a favorable opinion or
opinions in form and substance satisfactory to the Lender and the Lender's
counsel, addressed to the Lender and dated as of the Closing Date, from counsel
to the Borrower and FSP Holdings LLC acceptable to the Lender, as to such
matters as the Lender shall request, including, without limitation, the due
execution and authorization of all Loan Documents and the enforceability of this
Agreement, the Guaranty, the Indemnity Agreement and the Note.

6.7 Appraisal. The Lender shall have received Appraisals, in form and substance
satisfactory to the Lender, for each of the properties comprising the Project.

6.8 Closing Fee. The Borrower shall have paid to the Lender the Closing Fee
pursuant toss.4.

6.9 Operating Accounts. The Borrower shall have established and will maintain
with the Lender operating accounts for those Borrowers owning properties which
are part of the Project and are located within the Commonwealth of Massachusetts
(collectively, the "Operating Accounts") The term Operating Accounts shall
specifically exclude any trust accounts in the name of such Borrowers.

6.10 Performance; No Default. The Borrower shall have performed and complied
with all terms and conditions herein required to be performed or complied with
by it or there shall exist no Default or Event of Default.

6.11 Representations and Warranties. Without limiting the provisions set forth
in Sections 6.1 and 8.12, the representations of warranties made by the Borrower
in the Loan Documents or otherwise made by or on behalf of the Borrower in
connection therewith or after the date thereof shall have been true and correct
in all respects when made and shall be true and correct in all respects on the
Closing Date unless such representations and warranties relate specifically and
only to an earlier date in time.

6.12 Proceedings and Documents. All proceedings accounts in the name of such
Borrower entities in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be satisfactory to the Lender and
the Lender's counsel in form and substance, and the Lender shall have received
all information and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as the Lender and
the Lender's counsel may reasonably require.

6.13 Waiver. Any waiver by the Lender of any of the conditions precedent
contained herein for the closing of the Loan shall not be deemed to be a waiver
by the Lender of any other obligation of the Lender hereunder.

                                      -10-
<PAGE>

7. CONDITIONS TO ALL BORROWINGS. The obligations of the Lender to make the Loan
or any Advance, whether on or after the Closing Date, shall also be subject to
the satisfaction of the following conditions precedent:

7.1 Representations True; No Event of Default. Subject to Sections 6.1 and 8.21,
each of the representations and warranties of the Borrower contained in this
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Agreement shall be true as of the date as
of which they were made and shall also be true at and as of the time of the
making of such Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing. The Lender shall have received a
certificate of the Borrower signed by an authorized officer of the Borrower to
such effect.

7.2 No Legal Impediment. No change shall have occurred in any law or regulations
thereunder or interpretations thereof that in the reasonable opinion of the
Lender would make it illegal for the Lender to make such Loan.

7.3 Governmental Regulation. With respect to any LIBOR Advance (as defined in
the Note), the Lender shall have received such statements in substance and form
reasonably satisfactory to the Lender as the Lender shall require for the
purpose of compliance with any applicable regulations of the Comptroller of the
Currency or the Board of Governors of the Federal Reserve System.

7.4 Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement, the other Loan Documents and all
other documents incident thereto shall be reasonably satisfactory in substance
and in form to the Lender and its counsel, and the Lender and such counsel shall
have received all information and such counterpart originals or certified or
other copies of such documents as the Lender may reasonably request.

8. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower represents, warrants,
and covenants to the Lender as follows:

8.1 Organization; Authority, Etc.

      (a)   Organization; Good Standing. Each of the entities comprising the
            Borrower and FSP Holdings LLC is a limited partnership, limited
            liability company, or corporation, as the case may be, duly
            organized under the laws of its state of organization pursuant to
            each Person's respective Organizational Documents, and is, and will
            at all times be, validly existing and in good standing under the
            laws of such State.

                                      -11-
<PAGE>

            Each of the Borrower and FSP Holdings LLC is, and will at all times
            be, duly organized and is, and will at all times be, validly
            existing, in good standing, and qualified to do business in each
            jurisdiction where required except where failure to so qualify would
            not have a material adverse affect on the Project. Each of the
            entities comprising the Borrower and FSP Holdings LLC has, and will
            at all times have, all requisite power to own its property and
            conduct its business as now conducted and as presently contemplated.

      (b)   Authorization. The execution, delivery and performance of this
            Agreement and the other Loan Documents to which Borrower or FSP
            Holdings LLC is or is to become a Person and the transactions
            contemplated hereby and thereby (i) are within the authority of such
            Person, (ii) have been duly authorized by all necessary proceedings
            on the part of such Person, (iii) do not conflict with or result in
            any breach or contravention of any provision of any other agreement
            binding upon such Person or any provision of law, statute, rule or
            regulation to which such Person is subject or any judgment, order,
            writ, injunction, license or permit applicable to such Person, (iv)
            do not conflict with any provision of the Organizational Documents
            of such Person, and (v) do not require the approval or consent of,
            or filing with creditors, trustees for creditors or shareholders of,
            or other holders, directly or indirectly, of interests in, such
            Person or the approval or consent or filing (except for the Security
            Documents which will only be filed after the occurrence of an Event
            of Default continuing beyond any applicable grace periods) with any
            governmental agency or authority other than those approvals or
            consents already obtained.

      (c)   Enforceability. The execution and delivery of this Agreement and the
            other Loan Documents (except for the Security Documents, which shall
            not be effective until there is an Event of Default), to which each
            Borrower is or is to become a Person will result in valid and
            legally binding obligations of such Borrower enforceable against it
            in accordance with the respective terms and provisions hereof and
            thereof, except as enforceability is limited by bankruptcy,
            insolvency, reorganization, moratorium or other laws relating to or
            affecting generally the enforcement of creditors' rights and except
            to the extent that availability of the remedy of specific
            performance or injunctive relief is subject to the discretion of the
            court before which any proceeding therefor may be brought.

8.2 Title to Asset. The Borrower owns all of the assets reflected in the
financial statements of the Borrower as at the Balance Sheet Date or acquired
since that date free from all encumbrances except for Permitted Liens (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date).

                                      -12-
<PAGE>

8.3 Financial Statements. There has been furnished to the Lender a financial
statement for the Borrower as set forth in the October 15, 1998 offering
memorandum, audited financial statements for the year ended December 31, 1997
for all Borrowers (except for FSP Piedmont Center Limited Partnership); and
projections on a pro forma basis as of December 31, 1998 for the Borrower and
related entities and as of December 31, 1998 unadjusted financial statements for
the Borrower. Such statements have been prepared in accordance with generally
accepted accounting principles and fairly present the financial condition of the
Borrower as at the close of business on the date thereof and the results of
operations for the fiscal year then ended. As of the date of this Agreement,
there are no liabilities or contingent liabilities of the Borrower known to the
officers, partners, or trustees of the Borrower which are not disclosed in said
financial statements and the related notes thereto other than the Obligations.

8.4 No Material Changes, Etc. Since the Balance Sheet Date, there has occurred
no materially adverse change in the financial condition or business of the
Borrower other than changes described in the offering memorandum dated as of
October 15, 1998, and changes in the ordinary course of business that have not
had any material adverse effect either individually or in the aggregate on the
business or financial condition of such Borrower.

8.5 Franchises, Patents, Copyrights, Etc. The Borrower possesses, and will at
all times possess, all franchises, patents, copyrights, trademarks, trade names,
licenses and permits, and rights in respect of the foregoing, adequate for the
conduct of its business substantially as now conducted or as it is intended to
be conducted with respect to the Project, without known conflict with any rights
of others.

8.6 Litigation. There are no actions, suits, proceedings or investigations of
any kind pending or threatened against the Borrower before any court, tribunal
or administrative agency or board or any mediator or arbitrator that, if
adversely determined, might, either in any case or in the aggregate, adversely
affect the business, assets or financial condition of such Person, or result in
any material liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the balance sheet of such Person, or
which question the validity of this Agreement or any of the other Loan
Documents, any action taken or to be taken pursuant hereto or thereto, or any
lien or security interest created or intended to be created pursuant hereto or
thereto, or which will materially and adversely affect the ability of the
Borrower to use and occupy any of the properties comprising the Project or to
pay and perform the Obligations in the manner contemplated by this Agreement and
the other Loan Documents.

8.7 No Materially Adverse Contracts, Etc. The Borrower is not subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation that has or is reasonably expected in the future to have a
materially adverse effect on the business, assets or financial condition of such
Person. Each Borrower is not, and will not be, a party to any contract or
agreement that has or is expected to have any materially adverse effect on the
business of such Person.

                                      -13-
<PAGE>

8.8 Compliance With Other Instruments, Laws, Etc. The Borrower is not, and will
not at any time be, in violation of any provision of its Organizational
Documents or any agreement or instrument to which it may be subject or by which
it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that would be likely to materially and adversely affect the financial condition,
properties or business of such Person.

8.9 Tax Status. FSP Holdings LLC and each of the entities comprising the
Borrower (a) has made or filed, and will make or file in a timely fashion, all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (b) has paid, and will pay
when due, all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings, (c) if a
partnership, limited partnership, limited liability partnership, or limited
liability company, has, and will maintain, partnership tax classification under
the Code, and (d) has set aside, and will at all times set aside, on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the period to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers, partners or trustees of the
Borrower know of no basis for any such claim. The Borrower has filed, and will
continue to file, all of such tax returns, reports, and declarations either (i)
separately from any parent or affiliate or (ii) if part of a consolidated
filing, as a separate member of any such consolidated group.

8.10 No Event of Default. No Default or Event of Default has occurred and is
continuing.

8.11 Setoff, Etc. The Lender's rights with respect to the repayment of the
Obligations are not subject to any setoff, claims, withholdings or other
defenses.

8.12 Certain Transactions. None of (a) the officers, trustees, directors,
general partners, managers, members, stockholders, beneficiaries, or employees
of any Borrower or Subsidiary thereof or (b) to the knowledge of the Borrower,
any corporation, partnership, trust or other entity in which any such officer,
trustee, director, general partner, manager, member, stockholder, beneficiary,
or employee has a substantial interest or is an officer, director, trustee,
manager or general partner, is presently a party to any transaction with the
Borrower (other than for services as employees, officers, trustees, managers and
directors).

8.13 Subsidiaries. As of the date hereof, the Borrower's Subsidiaries are as set
forth on Schedule 5.

8.14 General Partners. As of the date hereof, except as set forth in Schedule 2,
the Borrower has no other general partners.

                                      -14-
<PAGE>

8.15 ERISA Plan. The Borrower does not, and will not, maintain or contribute to
an ERISA Plan.

8.16 Solvency. Borrower (a) is not insolvent nor will be rendered insolvent by
the Indebtedness incurred in connection with the Loan, (b) does not have
unreasonably small capital with which to engage in its business, or (c) has not
incurred Indebtedness beyond its ability to pay such Indebtedness as it matures.
The Borrower, on a consolidated basis, has assets having a value in excess of
amounts required to pay any Indebtedness.

8.17 The Project. The Borrower makes the following representations and
warranties, to the best of its knowledge, with respect to each individual
property included in the Project:

      (a)   Availability of Utilities. All utility services necessary and
            sufficient for the use and operation of each property comprising the
            Project are presently, and will at all times be, available to the
            boundaries of each of the properties comprising the Project through
            dedicated public rights of way or through perpetual private
            easements, with respect to which the Security Deeds create a valid
            and enforceable first lien. The Owner has obtained all utility
            installations and connections required for the operation and
            servicing of each of the properties comprising the Project for its
            intended purposes.

      (b)   Access. The rights of way for all roads necessary for the full
            utilization of each of the properties comprising the Project for its
            intended purposes have either been acquired by the appropriate
            Governmental Authority or have been dedicated to public use and
            accepted by such Governmental Authority. All such roads have been
            completed and the right to use all such roads, or suitable
            substitute rights of way approved by the Lender, have been obtained
            and shall be maintained at all times for each of the properties
            comprising the Project. All curb cuts, driveways and traffic signals
            required for the operation and use of each of the properties
            comprising the Project are existing and shall be maintained at all
            times.

      (c)   Condition of Project. Neither the Project nor any material part
            thereof is now damaged or injured as result of any fire, explosion,
            accident, flood or other casualty or has been the subject of any
            Taking, no Taking is pending or contemplated.

      (d)   Compliance with Requirements/Historic Status/Flood Area. The Project
            complies with, and will at times comply with, all material
            Requirements. The Borrower will give all such notices to, and take
            all such other actions with respect to, such Governmental Authority
            as may be required under applicable Requirements to use, occupy and
            operate the properties comprising the Project. Borrower has received
            no notice alleging any

                                      -15-
<PAGE>

            material non-compliance by any of the properties comprising the
            Project with any Requirements or indicating that any of the
            properties comprising the Project is located within any historic
            district or has, or may be, designated as any kind of historic or
            landmark site under applicable Requirements. None of the properties
            comprising the Project, except for 3231 Allen Parkway, Houston,
            Texas, is located in any special flood hazard area as defined under
            applicable Requirements.

      (e)   Other Contracts.

            (i)   The Borrower has not made, and will not make any, material
                  contract or arrangement of any kind or type whatsoever
                  (whether oral or written, formal or informal), the performance
                  of which by the other party thereto could give rise to a lien
                  or encumbrance on any of the properties comprising the Project
                  other than a Permitted Encumbrance.

            (ii)  The Borrower has not made, and will not make, any material
                  contract or arrangement of any kind or type whatsoever, with
                  any affiliate of the Borrower, except for management
                  agreements with FSP Property Management LLC which shall be
                  deemed approved by Lender, unless such contract or arrangement
                  is (i) approved in writing in advance by the Lender, (ii) on
                  the same terms as would be generally available to the Borrower
                  in an arm's length contract or arrangement with a third party,
                  and (iii) evidenced by a written agreement.

      (f)   Violations. The Borrower has received no notices of, or has any
            knowledge of, any violation of any applicable material Requirements
            with respect to any of the properties comprising the Project.

      (g)   Environmental Matters. The Borrower has caused an investigation to
            be made of the past and present condition and usage of each
            individual property included in the Project and the operations
            conducted thereon and, based upon such diligent investigation,
            except as disclosed in the Environmental Report makes the following
            representations and warranties:

            (i)   With respect to the Project, neither the Borrower nor any
                  operator of any of the properties comprising the Project or
                  any operations thereon is in violation of any Environmental
                  Law or any judgment, decree or order related thereto which
                  violation would have a material

                                      -16-
<PAGE>

                  adverse effect on the environment or the business, assets or
                  financial condition of the Borrower.

            (ii)  The Borrower has not received notice from any third Person
                  including, without limitation, any federal, state or local
                  governmental authority, asserting (i) that it has been
                  identified by the United States Environmental Protection
                  Agency ("EPA) as a potentially responsible Person with respect
                  to a site listed on the National Priorities List, 40 C.F.R.
                  Part 300 Appendix B (1986); (ii) that any Hazardous Substances
                  which it has generated, transported or disposed of have been
                  found at any site at which a federal, state or local agency or
                  other third Person has conducted or has ordered that the
                  Borrower conduct a remedial investigation, removal or other
                  response action pursuant to any Environmental Law; or (iii)
                  that it is or shall be a named Person to any claim, action,
                  cause of action, complaint, or legal or administrative
                  proceeding (in each case, contingent or otherwise) arising out
                  of any third Person's incurrence of costs, expenses, losses or
                  damages of any kind whatsoever in connection with the release
                  of Hazardous Substances.

            (iii) With respect to the Project: (i) no portion of the Project has
                  been used for the handling, processing, storage or disposal of
                  Hazardous Substances except for use incidental to the primary
                  use of the Property which use has been in accordance with
                  applicable Environmental Laws; and no underground tank or
                  other underground storage receptacle for Hazardous Substances
                  is located on any portion of the Project; (ii) in the course
                  of any activities conducted by the Borrower or the operators
                  of its properties, no Hazardous Substances have been generated
                  or are being used on the Project except in accordance with
                  applicable Environmental Laws; (iii) there has been no
                  release, i.e. any past or present releasing, spilling,
                  leaking, pumping, pouring, emitting, emptying, discharging,
                  injecting, escaping, disposing or dumping (a "Release") or
                  threatened Release of Hazardous Substances on, upon, into or
                  from the Project, which Release would have a material adverse
                  effect on the value of the Project or adjacent properties or
                  the environment; (iv) there have been no Releases on, upon,
                  from or into any real property in the vicinity of any of the
                  Project which, through soil or groundwater contamination, has
                  come to be located on, and which has

                                      -17-
<PAGE>

                  a material adverse effect on the value of the Project; and (v)
                  any Hazardous Substances that have been generated by Borrower
                  on any of the Project have been transported off-site only by
                  carriers having an identification number issued by the EPA,
                  treated or disposed of only by treatment or disposal
                  facilities maintaining valid permits as required under
                  applicable Environmental Laws, which transporters and
                  facilities have been and are operating in compliance with such
                  permits and applicable Environmental Laws.

            (iv)  Neither the Borrower nor any property comprising the Project
                  is subject to any applicable Environmental Law requiring the
                  performance of Hazardous Substances site assessments, or the
                  removal or remediation of Hazardous Substances, or the giving
                  of notice to any governmental agency or the recording or
                  delivery to other Persons of an environmental disclosure
                  document or statement by virtue of the transactions set forth
                  herein and contemplated hereby, or as a condition to the
                  recording of the Security Deed or to the effectiveness of any
                  other transactions contemplated hereby.

8.18 Year 2000. Borrower represents and warrants to the Lender (which
representation and warranty shall survive the making of the Loan) that the
Borrower has taken or is taking and shall complete by June 30, 1999 all
necessary action to assess, evaluate and correct all of the hardware, software,
embedded microchips and other processing capabilities it uses, directly or
indirectly, to ensure that it will be able to function accurately and without
interruption or ambiguity using date information before, during and after
January 1, 2000.

8.19 No Broker or Finder. Neither Borrower, nor anyone on behalf thereof, has
dealt with any broker, finder or other person or entity who or which may be
entitled to a broker's or finder's fee, or other compensation, payable by Lender
in connection with establishing of the Loan.

8.20 General. Each Borrower has disclosed any material fact or condition which
is necessary to make the representations and warranties set forth herein or in
any other Loan Document not materially misleading.

8.21 Representations, Warranties, Covenants and Agreements with Respect to the
Project. The representations, warranties, covenants and agreements contained
herein with respect to the Project, or any of the properties comprising the
Project, shall be made as of the date hereof. In accordance with Section 6.1 of
this Agreement, any representations, warranties, covenants and agreements
contained in the Security

                                      -18-
<PAGE>

Documents shall not be effective or enforceable until the occurrence of an Event
of Default continuing beyond any applicable grace periods.

9. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants and agrees
that, so long as the Loan is outstanding:

9.1 Punctual Payment. The Borrower will duly and punctually pay or cause to be
paid the principal and interest on the Loan and all other amounts provided for
in the Note, this Agreement and the other Loan Documents to which the Borrower
is a Person, all in accordance with the terms of the Note, this Agreement and
such other Loan Documents.

9.2 Financial Statements, Certificates and Information. The Borrower will
deliver, or cause to be delivered, to the Lender:

      (a)   as soon as practicable, but in any event not later than ninety (90)
            days after the end of each fiscal year of the Borrower, on a
            consolidated basis the audited balance sheet of the Borrower at the
            end of such year, and the related audited statement of income,
            statement of retained earnings, changes in capital, operating
            statements, and statement of cash flows for such year, each setting
            forth in comparative form the figures for the previous fiscal year
            and all such statements to be in reasonable detail, prepared in
            accordance with generally accepted accounting principles, and
            accompanied by an auditor's report prepared without qualification by
            BDO Seidman LLP or by another independent certified public
            accountant reasonably acceptable to the Lender, together with a
            written statement from the chief financial officer of the company
            stating that they have read a copy of this Agreement, and that, in
            making the examination necessary to said certification, they have
            obtained no knowledge of any Default or Event of Default under this
            Agreement, or, if such officer shall have obtained knowledge of any
            then existing Default or Event of Default he or she shall disclose
            in such statement any such Default or Event of Default;

      (b)   as soon as practicable, but in any event not later than forty-five
            (45) days after the end of each fiscal quarter of the Borrower,
            copies of the unaudited balance sheet of the Borrower as at the end
            of such quarter, and the related unaudited statement of income,
            statement of retained earnings, changes in capital, and statement of
            cash flows for the portion of the Borrower's fiscal year then
            elapsed, all in reasonable detail and prepared in accordance with
            generally accepted accounting principles, together with a
            certification by the principal financial or accounting officer,
            partner or trustee of the Borrower that the information contained in
            such financial statements fairly presents the financial position of
            the Borrower on the date thereof (subject to year-end adjustments)
            and that, in making the examination necessary to said certification,
            such Person

                                      -19-
<PAGE>

            has obtained no knowledge of any Default or Event of Default under
            this Agreement;

      (c)   contemporaneously with the delivery of the financial statements
            referred to in clause (a) above, a statement of all contingent
            liabilities of the Borrower which are not reflected in such
            financial statements or referred to in the notes thereto, and annual
            budget and cash flow forecasts for the Borrower and Project all in
            reasonable detail and certified by the principal financial or
            accounting officer of the Borrower;

      (d)   simultaneously with the delivery of the financial statements
            referred to in clauses (a) and (b) above, a covenant compliance
            certificate signed by the principal financial or accounting officer
            of the Borrower and setting forth in reasonable detail computations
            evidencing compliance with the covenants contained in ss.10.8;

      (e)   Simultaneously with the filing thereof a copy of the Borrower's tax
            return together with all schedules thereof; and

      (f)   from time to time such other financial data and information
            (including accountants' management letters) as the Lender may
            reasonably request.

9.3 Insurance. (a) The Borrower will provide evidence of insurance with respect
to each of the properties comprising the --------- Project and the operations of
the Owners.

      (b)   The Borrower will provide the Lender with certificates evidencing
            such insurance upon the request of the Lender.

9.4 Liens and Other Charges. The Borrower will duly pay and discharge, or cause
to be paid and discharged, before the same shall become overdue all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property or any of the properties comprising the Project.

9.5 Inspection of Project and Books, Appraisals. (a) The Borrower shall permit
the Lender at the Borrower's expense, to visit and inspect any of the properties
comprising the Project and will cooperate with the Lender during such
inspections provided that this provision shall not be deemed to impose on the
Lender any obligation to undertake such inspections; provided that so long as no
Default or Event of Default shall have occurred and be continuing, the Borrower
shall only be obligated to pay the reasonable expenses associated with one (1)
such investigation of the books of account of the Borrower during any twelve
(12) month period commencing with the first anniversary of this Agreement. Any
such inspections are to be conducted during normal business hours and prior to
the occurrence and continuation of an Event of Default, Lender shall provide
Borrower with forty-eight (48) hours advance notice.

                                      -20-
<PAGE>

      (b)   The Borrower shall permit the Lender at the Borrower's reasonable
            expense to discuss the affairs, finances and accounts of the
            Borrower with, and to be advised as to the same by, its officers,
            partners, or trustees, all at such reasonable times and intervals as
            the Lender may reasonably request.

      (c)   After the occurrence and during the continuation of an Event of
            Default, the Lender shall have the right to obtain from time to
            time, at the Borrower's reasonable cost and expense, updated
            Appraisals of each of the properties comprising the Project and an
            updated or new Environmental Report for each of the properties
            comprising the Project.

      (d)   The reasonable costs and expenses incurred by the Lender in
            obtaining such Appraisals or performing such inspections shall be
            paid by the Borrower within thirty (30) days of the invoice date.

9.6 Compliance with Laws, Contracts, Licenses, and Permits. The Borrower will
comply with (a) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws and, in the case of the Borrower,
all Requirements, (b) the provisions of its Organizational Documents and all
Loan Documents to which Borrower or Subsidiary are signatories, (c) all
agreements and instruments by which it or any of its properties may be bound,
including, all restrictions, covenants and easements affecting the Property, (d)
all applicable decrees, orders and judgments, and (e) all licenses and permits
required by applicable laws and regulations for the conduct of its business or
the ownership, use or operation of its properties.

9.7 Use of Proceeds. The Borrower will use the proceeds of the Loan solely for
the purposes described herein. No portion of the Loan shall be used directly or
indirectly, and whether immediately, incidentally or ultimately (i) to purchase
or carry any margin stock, or to extend credit to others for the purpose
thereof, or to repay or refund indebtedness previously incurred for such
purpose, or (ii) for any purpose which would violate or is inconsistent with the
provisions of regulations of the Board of Governors of the Federal Reserve
System including, without limitation, Regulations G, U and X thereof.

9.8 Publicity. The Borrower will permit the Lender to obtain publicity in
connection with the financing through press releases.

9.9 Further Assurances. (a) Regarding Preservation of Collateral. The Borrower
will execute and deliver to the Lender such further documents, instruments,
assignments and other writings, and will do such other acts necessary or
desirable, to preserve and protect the Collateral at any time securing or
intended to secure the Obligations, as the Lender may reasonably require.

      (b)   Regarding this Agreement. The Borrower will cooperate with, and will
            do such further acts and execute such further instruments and
            documents

                                      -21-
<PAGE>

            as the Lender shall reasonably request to carry out to its
            satisfaction the transactions contemplated by this Agreement and the
            other Loan Documents.

9.10 Notices. The Borrower will promptly notify the Lender in writing of (i) the
occurrence of any Default or Event of Default; (ii) the occurrence of any other
event which is likely to have a materially adverse effect on any of the
properties comprising the Project or the business or financial condition of the
Borrower; or (iii) the receipt by the Borrower of any notice of default or
notice of termination with respect to any contract or agreement relating to the
ownership, operation, or use of any of the properties comprising the Project
which is likely to have a materially adverse effect. Without limiting the
foregoing, Borrower agrees to promptly notify Lender in writing of the
occurrence of any event which is inconsistent with the environmental
representations under ss.8.17(g), the litigation responsibilities in ss.8.6, or
the solvency representation in ss.8.16.

9.11 Other Affirmative Covenants. The Borrower will:

      (a)   Remain solvent and pay all of its Indebtedness from its assets as
            the same become due;

      (b)   At all times hold itself out to the public as a legal entity,
            separate and distinct from any other Person, including any Obligor,
            Subsidiary of the Borrower, or any parent or affiliate of the
            Borrower;

      (c)   Maintain adequate capital for the normal obligations reasonably
            foreseeable for a business of its size and character and in light of
            its contemplated business operations; and

      (d)   Maintain the Operating Accounts with the Lender.

9.12 Ownership of Borrower. Borrower agrees that George J. Carter, or a
replacement officer which is approved by Lender in its sole discretion, shall,
at all times, maintain control of the day to day operations of the Borrower.

9.13 Wholly Owned Subsidiary. The Borrower shall provide Lender with written
notice of the establishment of a Wholly Owned Subsidiary. The Borrower shall
cause such Wholly Owned Subsidiary to execute the Joinder Documents and become a
Borrower under this Agreement.

9.14 Maintenance of Borrower's Properties. Borrower will protect and maintain,
or cause to be maintained, in a manner consistent with Borrower's current
maintenance standards at all times, the buildings and structures now standing or
hereafter erected on the Borrower's properties, and any additions and
improvements thereto, and all personal property now or hereafter situated
therein, and the utility services, the parking areas and access roads, and all
building fixtures and equipment and articles of personal property

                                      -22-
<PAGE>

now or hereafter acquired and used in connection with the operation of the
Borrower's properties.

9.15 Acquisitions, Dispositions and Syndication of Borrower's Assets. Borrower
shall provide Lender with written notice of all dispositions or acquisitions of
individual properties by a Wholly Owned Subsidiary within fifteen (15) days
prior to the disposition or acquisition. With respect to any acquisitions, the
notice shall include a summary of the key business terms for such acquisition.
With respect to any disposition, the notice shall include a certification from
the chief financial officer of FSP stating that such disposition shall not cause
a violation of any covenant contained herein, including, without limitation, any
breach of ss.10.8, both before and after such disposition, and that no Default
or Event of Default exists hereunder. Borrower shall provide Lender with written
notice of all Syndication Events within fifteen (15) days prior to the scheduled
closing thereof. With respect to any Syndication Event, the notice shall
include, at Lender's request, a summary of the key business terms.

9.16 Syndication Event. The Borrower shall use any net proceeds (after payment
of costs, fees and expenses) received by Borrower from a Syndication Event to
repay, to the extent outstanding, the Loan. Such proceeds may be reborrowed by
the Borrower subject to the terms herein and any such repayment shall be made in
accordance with and subject to the terms of paragraph 2 of Section 4.2 of the
Note.

9.17 Business Activities. The Borrower shall limit its business activities to
the ownership, construction, operation and maintenance of income producing
properties and investment banking activities related thereto and all matters
incidental or accessory thereto.

9.18 Post-Closing Delivery Items. The Borrower, within thirty (30) days after
the date of this Agreement, shall obtain and record or file, as the case may be,
discharges, terminations or releases, as applicable, for all of the mortgages,
liens and security interests listed on Schedule 8 attached hereto and
incorporated herein, and deliver copies of the same to Lender within such time
period. In addition, with respect to the properties located at 3919 Essex Lane,
Houston, Texas and 3231 Allen Parkway, Houston, Texas, the Borrower shall,
within the same thirty (30) day time period, provide Lender with evidence that
real estate taxes are current through the date of this Agreement.

10. NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants and agrees that,
so long as the Loan is outstanding or the Lender has any obligation to make any
Advances:

10.1 No Amendments, Terminations or Waivers. The Borrower will not, directly or
indirectly, amend, or allow the amendment of, any of the Organizational
Documents of the Borrower in any material respect.

                                      -23-
<PAGE>

10.2 Restrictions on Indebtedness. The Borrower will not create, incur, assume,
guaranty or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:

      (a)   Indebtedness to the Lender arising under any of the Loan Documents;
            and

      (b)   current liabilities of the Borrower incurred in the ordinary course
            of business but not incurred through (i) the borrowing of money, or
            (ii) the obtaining of credit except for credit on an open account
            basis customarily extended and in fact extended in connection with
            normal purchases of goods and services.

10.3 Restrictions on Liens, Etc. With the exception of Permitted Liens, the
Borrower will not (a) create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom or, directly or indirectly, upon any of the beneficial or legal
interests in Borrower; (b) transfer any of its property or assets or the income
or profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors; (c) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; (d) suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid would likely by law or
upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors; or (e) sell, assign, pledge or otherwise transfer
any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrower may create or
incur or suffer to be created or incurred or to exist liens in favor of the
Lender under the Loan Documents. Notwithstanding the foregoing, the Borrower may
sell any of its real property, whether now owned or hereafter acquired, provided
that prior to and after any such sale (i) the Borrower is in compliance with all
of its covenants herein, including, without limitation, the financial covenants
contained in ss.10.8, and (ii) No Default or Event of Default has occurred and
is continuing hereunder. Upon such permitted sale the Lender shall return any
escrowed Security Documents relating to such real property.

10.4 Restrictions on Loans and Investments. The Borrower will not make or permit
to exist or to remain outstanding any loan by the Borrower to any Person or any
Investment except Investments in:

      (a)   marketable direct or guaranteed obligations of the United States of
            America that mature within one (1) year from the date of purchase by
            the Borrower;

                                      -24-
<PAGE>

      (b)   demand deposits and bankers L/Cs of United States banks having total
            assets in excess of $1,000,000,000;

      (c)   certificates of deposit and time deposits of United States banks
            having total assets in excess of $1,000,000,000 that mature within
            one (1) year from the date of purchase by the Borrower;

      (d)   securities commonly known as "commercial paper" issued by a
            corporation organized and existing under the laws of the United
            States of America or any state thereof that at the time of purchase
            have been rated and the ratings for which are not less than "P 1" if
            rated by Moody's Investors Services, Inc., and not less than "A 1"
            if rated by Standard and Poor's;

      (e)   Subsidiaries;

      (f)   mutual funds managed by Lender;

      (g)   mutual or closed-end funds substantially all of whose assets are
            comprised or securities of the types described in clauses (a)
            through (d) above;

      (h)   Investments in an aggregate amount not to exceed $2,000,000.00;

      (i)   Investments consisting of loans and advances to employees for
            reasonable travel, relocation and business expenses in the ordinary
            course of business, extensions of trade credit in the ordinary
            course of business and prepaid expenses in the ordinary course of
            business; and

      (j)   Investments in connection with Syndication Events and Roll-Ups.

10.5 Merger, Consolidation, Conversion, Business Operations, and Ownership and
Disposition of Assets.

      (a)   The Borrower shall not own any assets other than income-producing
            properties, other assets incidental to the ownership or operation of
            such property, investment banking services and property management
            companies.

      (b)   After the date of this Agreement, the Borrower will not become a
            party to any merger or consolidation, or agree to or effect any
            asset acquisition or stock acquisition except in connection with (i)
            a Syndication Event, or (ii) a Roll-Up.

                                      -25-
<PAGE>

      (c)   The Borrower will not convert into any other type of entity,
            including, without limitation, a limited liability partnership or a
            limited liability company.

      (d)   The Borrower will not engage in any business operations other than
            those necessary for the ownership, construction, management, or
            operation of income-producing property and investment banking
            services.

10.6 Sale and Leaseback. The Borrower will not enter into any arrangement,
directly or indirectly, whereby the Borrower shall sell or transfer any property
owned by it in order then or thereafter to lease such property or lease other
property that the Borrower intends to use for substantially the same purpose as
the property being sold or transferred.

10.7 Distributions. After the occurrence and during the continuation of a
Default or an Event of Default (unless and until cured within any applicable
cure period), the Borrower will not make any Distributions. The Borrower will
also not make any Distributions which would cause a Default or Event of Default

10.8 Financial Covenants. The Borrower covenants and agrees that, so long as the
Loan is outstanding,

      (a)   Loan to Value. The ratio ("Loan to Value Ratio") obtained by
            dividing the outstanding principal balance of the Loan by the Value
            of the Project, expressed as a percentage, shall not be greater than
            forty percent (40%). This covenant shall be tested at the end of
            each fiscal quarter of the Borrower. In testing compliance with this
            covenant the Value of the Project attributed to any one property may
            not exceed 25% of the aggregate Value of the Project for all
            properties.

      (b)   Ratio of Net Operating Income to Debt Service Charges. The Borrower
            will not permit the ratio of Net Operating Income to Debt Service
            Charges to be less than 2.5 to 1.0. This covenant shall be tested at
            the end of each fiscal quarter of the Borrower.

      (c)   Consolidated Indebtedness. The Borrower will not permit Consolidated
            Indebtedness to exceed 33% of the aggregate of (i) the Value of the
            Project plus (ii) the book value of all tangible assets of the
            Borrower (other than real estate and after eliminating any
            duplication). This covenant shall be tested at the end of each
            fiscal quarter of the Borrower.

      (d)   Unencumbered Liquidity. The Borrower shall maintain minimum
            unencumbered cash and other liquid investments in the form of the
            Investments described in Section 10.4 (a) through (d) and (f), and
            in the form of Operating Accounts in an amount of not less than of
            $4,000,000.

                                      -26-
<PAGE>

            This covenant shall be tested at the end of each fiscal quarter of
            the Borrower.

      (e)   Account Balances. The Borrower, any Wholly Owned Subsidiaries and
            affiliated companies, shall, at all times, maintain with the Lender
            minimum Operating Accounts checking account and savings account
            (exclusive of trust accounts) collected balances of $1,500,000.00.
            This covenant shall be tested at the end of each fiscal quarter of
            the Borrower.

      (f)   Net Worth. The Borrower shall, at the end of any fiscal year,
            maintain a minimum Tangible Net Worth of $70,000,000. This covenant
            shall be tested at the end of each fiscal quarter of the Borrower.

10.9 Other Negative Covenants. The Borrower will not:

      (a)   Seek the dissolution or winding up, in whole or in part, of the
            Borrower or voluntarily file, or consent to the filing of, a
            petition for bankruptcy, reorganization, assignment for the benefit
            of creditors or similar proceedings; and

      (b)   Commingle any of its accounts with accounts of any other Person,
            including, any Obligor, Subsidiary of the Borrower, or parent or
            affiliate of the Borrower.

11. EVENTS OF DEFAULT AND REMEDIES.

11.1 Events of Default. The occurrence of any one or more of the following
conditions or events shall constitute an "Event of Default":

      (a)   any failure by the Borrower to pay, within five (5) days of the due
            date, any interest on or principal of or other sum payable under the
            Note; or

      (b)   any failure by the Borrower to pay as and when due and payable any
            other sums to be paid by the Borrower to the Lender under this
            Agreement and the continuance of such failure for a period of five
            (5) days after notice thereof from the Lender; or

      (c)   with the exception of a Permitted Lien, title to the Collateral is
            or becomes reasonably unsatisfactory to the Lender by reason of any
            lien, charge, encumbrance, title condition or exception and such
            matter causing title to be or become unsatisfactory is not cured to
            Lender's reasonable satisfaction or removed within twenty (20) days
            after notice thereof from the Lender to the Borrower; or

      (d)   the Project or any material part thereof is subject to a Taking; or

                                      -27-
<PAGE>

      (e)   any failure by the Borrower to duly observe or perform any term,
            covenant, condition or agreement contained in ss.9.3, ss.9.13,
            ss.10.1, ss.10.2, ss.10.4, ss.10.8 or ss.10.9 hereof; or

      (f)   any representation or warranty made or deemed to be made by or on
            behalf of the Borrower in this Agreement or in any of the other Loan
            Documents, or in any report, certificate, financial statement,
            document or other instrument delivered pursuant to or in connection
            with this Agreement, any Advance or any of the other Loan Documents,
            shall prove to have been false or incorrect in any material respect
            upon the date when made or deemed to be made or repeated; or

      (g)   any dissolution, termination, partial or complete liquidation,
            merger or consolidation of the Borrower, or any sale, transfer or
            other disposition of all or substantially all of the assets of the
            Borrower, other than as permitted under the terms of this Agreement;
            or

      (h)   any suit or proceeding shall be filed against the Borrower or any of
            the properties comprising the Project which, if adversely
            determined, would have a materially adverse affect on the ability of
            the Borrower to perform their respective material obligations under
            and by virtue of the Loan Documents; or

      (i)   unless otherwise approved by Lender in its sole discretion, George
            J. Carter fails to retain control of the day to day management of
            the Borrower; or

      (j)   any failure by the Borrower to pay at maturity, or within any
            applicable period of grace, any material obligation for borrowed
            money or credit received, including, without limitation, any
            Obligations, or in respect of any capitalized material lease, or any
            failure to observe or perform any material term, covenant or
            agreement contained in any material agreement by which it is bound,
            evidencing or securing borrowed money or credit received, or in
            respect of any capitalized lease, for such period of time as would
            permit (assuming the giving of appropriate notice and the lapse of
            applicable grace periods if required) the holder or holders thereof
            or of any obligations issued thereunder to accelerate the maturity
            thereof; or

      (k)   Borrower shall file a voluntary petition in bankruptcy under Title
            11 of the United States Code, or an order for relief shall be issued
            against any such Person in any involuntary petition in bankruptcy
            under Title 11 of the United States Code, or any such Person shall
            file any petition or answer seeking or acquiescing in any
            reorganization, arrangement, composition, readjustment, liquidation,
            dissolution or similar relief for itself under any present or future
            federal, state or other law or regulation

                                      -28-
<PAGE>

            relating to bankruptcy, insolvency or other relief of debtors, or
            such Person shall seek or consent to or acquiesce in the appointment
            of any custodian, trustee, receiver, conservator or liquidator of
            such Person, or of all or any substantial part of its respective
            property, or such Person shall make an assignment for the benefit of
            creditors, or such Person shall give notice to any governmental
            authority or body of insolvency or pending insolvency or suspension
            of operation; or

      (l)   an involuntary petition in bankruptcy under Title 11 of the United
            States Code shall be filed against the Borrower and such petition
            shall not be dismissed within sixty (60) days of the filing thereof;
            or

      (m)   a court of competent jurisdiction shall enter any order, judgment or
            decree approving a petition filed against the Borrower seeking any
            reorganization, arrangement, composition, readjustment, liquidation
            or similar relief under any present or future federal, state or
            other law or regulation relating to bankruptcy, insolvency or other
            relief for debtors, or appointing any custodian, trustee, receiver,
            conservator or liquidator of all or any substantial part of its
            property; or

      (n)   any uninsured final judgment in excess of $250,000 shall be rendered
            against the Borrower and shall remain in force, undischarged,
            unsatisfied and unstayed, for more than thirty (30) days, whether or
            not consecutive; or

      (o)   any of the Loan Documents shall be canceled, terminated, revoked or
            rescinded otherwise than in accordance with the terms thereof or
            with the express prior approval of the Lender, or any action at law,
            suit in equity or other legal proceeding to cancel, revoke or
            rescind any of the Loan Documents shall be commenced by or on behalf
            of the Borrower which is a Person thereto or any of their respective
            stockholders, partners or beneficiaries, or any court or any other
            governmental or regulatory authority or agency of competent
            jurisdiction shall make a determination that, or issue a judgment,
            order, decree or ruling to the effect that, any one or more of the
            Loan Documents is illegal, invalid or unenforceable in accordance
            with the terms thereof; or

      (p)   any Borrower or any Subsidiary thereof shall be indicted for a
            federal or state crime, a punishment for which could include the
            forfeiture of any of its assets; or

      (q)   any failure by the Borrower to duly observe or perform any other
            term, covenant, condition or agreement under this Agreement and
            continuance of such failure for a period of thirty (30) days after
            notice thereof from the Lender; or

                                      -29-
<PAGE>

      (r)   any "Event of Default", as defined or otherwise set forth in any of
            the other Loan Documents, shall occur.

      Notwithstanding the foregoing, in no event shall a default under any of
the Security Documents constitute an Event of Default hereunder unless and until
such Security Document or Documents become effective in accordance with Section
6.1 and Section 8.21.

11.2 Termination of Advances and Acceleration. Upon the occurrence of any
Default or Event of Default, Lender shall have the right to suspend the making
of any Advances or issuance of any L/C hereunder, and after the occurrence of an
Event of Default and the expiration of any applicable grace periods the terms
and obligations of Borrower with respect to the Security Documents shall
immediately become effective and Lender may immediately record and file the
Security Documents and obtain a first priority lien on all of the properties
comprising the Project. Further, if any one or more Events of Default shall
occur and be continuing, the Lender may by notice to the Borrower declare its
obligations to make Advances hereunder to be terminated, whereupon the same
shall terminate and the Lender shall be relieved of all obligations to make
Advances to the Borrower, and/or declare all unpaid principal of and accrued
interest on the Note, together with all other amounts owing under the Loan
Documents, to be immediately due and payable, whereupon same shall become and be
immediately due and payable, anything in the Loan Documents to the contrary
notwithstanding, without presentment, protest, demand or other notice of any
kind, all of which are hereby expressly waived by the Borrower and, to the
extent Lender holds in an account any unapplied proceeds from a Syndication
Event, Lender may immediately apply such funds in satisfaction of any unpaid
principal of and accruing interest on the Note; provided that if any one or more
of the Events of Default specified in ss.11.1 (k), ss.11.1 (l), or ss.11.1 (m),
above, shall occur with respect to any Borrower, the Lender's obligations to
make Advances hereunder automatically shall so terminate and all unpaid
principal of and accrued interest on the Note, together with all other amounts
owing under the Loan Documents, automatically shall become and be immediately so
due and payable, without any declaration or other act on the part of the Lender.

11.3 Other Remedies. If any one or more of the Events of Default shall have
occurred and continued beyond any applicable grace periods, and whether or not
the Lender shall have terminated its obligations to make Advances or accelerated
the maturity of the Loan pursuant to ss.11.2 or obtained a first priority lien
on all of the properties comprising the Project, the Lender may proceed to
protect and enforce its rights and remedies under this Agreement, the Note or
any of the other Loan Documents, including, by foreclosure, exercise of set-off
or pledge rights and/or by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, including as permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and, if
any amount owed to the Lender shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable

                                      -30-
<PAGE>

right of the Lender. No remedy conferred upon the Lender or the holder of the
Note in this Agreement or in any of the other Loan Documents is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or thereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.

11.4 Distribution of Collateral Proceeds. In the event that, following the
occurrence and during the continuance of any Default or Event of Default, the
Lender receives any monies in connection with the enforcement of any the
Security Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:

      (a)   First, to the payment of, or (as the case may be) the reimbursement
            of the Lender for or in respect of all reasonable costs, expenses,
            disbursements and losses which shall have been incurred or sustained
            by the Lender in connection with the collection of such monies by
            the Lender, for the exercise, protection or enforcement by the
            Lender of all or any of the rights, remedies, powers and privileges
            of the Lender under this Agreement or any of the other Loan
            Documents or in respect of the Collateral or in support of any
            provision of adequate indemnity to the Lender against any taxes or
            liens which by law shall have, or may have, priority over the rights
            of the Lender to such monies;

      (b)   Second, to all other Obligations in such order or preference as the
            Lender may determine; provided, however, that the Lender may in its
            discretion make proper allowance to take into account any
            Obligations not then due and payable;

      (c)   Third, upon payment and satisfaction in full or other provisions for
            payment in full satisfactory to the Lender of all of the
            Obligations, to the payment of any obligations required to be paid
            pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
            Commonwealth of Massachusetts; and

      (d)   Fourth, the excess, if any, shall be returned to the Borrower or to
            such other Persons as are entitled thereto.

11.5 Power of Attorney. For the purposes of carrying out the provisions and
exercising the rights, remedies, powers and privileges granted by or referred to
in this Article, after the occurrence of an Event of Default and during the
continuation thereof the Borrower hereby irrevocably constitutes and appoints
the Lender its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Article, in the name and on
behalf of the Borrower. The power vested in such attorney-in-fact is, and shall
be deemed to be, coupled with an interest and irrevocable.

                                      -31-
<PAGE>

11.6 Waivers. The Borrower hereby waives to the extent not prohibited by
applicable law and to the extent not expressly required hereunder (a) all
presentments, demands for performance, notices of nonperformance (except to the
extent required by the provisions hereof or of any of the other Loan Documents),
protests and notices of dishonor, (b) any requirement of diligence or promptness
on the Lender's part in the enforcement of its rights (but not fulfillment of
its obligations) under the provisions of this Agreement or any of the other Loan
Documents, and (c) any and all notices of every kind and description which may
be required to be given by any statute or rule of law and any defense of any
kind which the Borrower may now or hereafter have with respect to its liability
under this Agreement or under any of the other Loan Documents.

12. SETOFF. After an Event of Default, Borrower hereby grants to Lender a direct
and continuing lien, right of set off and security interest, as security for the
Obligations, whether now existing or hereafter arising, upon and against all
Operating Accounts (excluding all non-Borrower accounts or trust accounts)
deposits, credits, collateral and other property, now or hereafter in the
possession, custody, safekeeping or control of Lender or any entity related to
or affiliated with Lender or in transit to any of them. Regardless of the
adequacy of any other collateral, after the occurrence of an Event of Default
continuing beyond any applicable grace periods, any such deposits (general or
specific, time or demand, provisional or final, regardless of currency,
maturity, or the branch of the Lender where such deposits are held) credits,
collateral and property may be applied to or set off, without notice or
compliance with any other condition precedent (all of which is hereby waived)
against the payment of the Obligations and any and all other Obligations in such
manner and order as Lender in its sole discretion may determine subject to
ss.11.4.

13. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income), including any recording, mortgage or
intangibles taxes in connection with the Security Deed, or other taxes payable
on or with respect to the transactions contemplated by this Agreement, including
any taxes payable by the Lender after the Closing Date (the Borrower hereby
agreeing to indemnify the Lender with respect thereto), (c) all title insurance
premiums, and the reasonable fees, expenses and disbursements of the Lender's
counsel or any local counsel to the Lender incurred in connection with the
preparation, administration or interpretation of the Loan and the Loan Documents
and other instruments mentioned herein, the making of each Advance hereunder,
and amendments, modifications, approvals, consents or waivers hereto or
hereunder, (d) the reasonable fees, expenses and disbursements of the Lender
incurred in connection with the preparation, administration or interpretation of
the Loan and the Loan Documents and other instruments mentioned herein, and the
making of each Advance hereunder (including all reasonable Appraisal fees, and
surveyor fees subject to the terms of ss.9.5 hereof), (e) all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and costs) and the
reasonable fees and costs of consultants, accountants, auctioneers, receivers,
brokers, property managers, appraisers, investment

                                      -32-
<PAGE>

bankers or other experts retained by the Lender in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents against
the Borrower or any Obligor or the administration thereof after the occurrence
and during the continuation of a Default or Event of Default and (ii) any
litigation, proceeding or dispute arising hereunder or otherwise, in any way
related to the Lender's relationship with the Borrower, (f) all reasonable fees,
expenses and disbursements of the Lender incurred in connection with UCC
searches, UCC filings, title rundowns, title searches or mortgage recordings in
accordance with the terms hereof; and (g) all reasonable costs associated with
annual inspections, or at any time after the occurrence and continuation of an
Event of Default, all reasonable expenses incurred by Lender for site visits for
real property located outside of the Commonwealth of Massachusetts which
expenses shall not exceed $1,000.00 per property. The covenants of this Section
shall survive payment or satisfaction of payment of all amounts owing with
respect to the Note.

14. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the
Lender from and against any and all claims, actions and suits, whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Agreement
or any of the other Loan Documents or the transactions contemplated hereby and
thereby including, without limitation, (a) any brokerage, leasing, finders or
similar fees, (b) any disbursement of the proceeds of any of the Advances, (c)
any condition of the properties comprising the Project whether related to the
quality of construction or otherwise, (d) any actual or proposed use by the
Borrower of the proceeds of any of the Advances, (e) any actual or alleged
violation of any Requirements or Project Approvals, (f) any action taken by
Lender to enforce its rights and remedies under the Loan Documents, including
the rights and remedies set forth in ss.11 hereof, or (g) the Borrower entering
into or performing this Agreement or any of the other Loan Documents, in each
case including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Lender shall be
entitled to select its own counsel and, in addition to the foregoing indemnity,
the Borrower agrees to pay within thirty (30) days the reasonable fees and
expenses of such counsel. The obligations of the Borrower under this Section
shall survive the repayment of the Loan and shall continue in full force and
effect so long as the possibility of such claim, action or suit exists. If, and
to the extent that the obligations of the Borrower under this Section are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law.

15. LIABILITY OF THE LENDER. The liability of the Lender to the Borrower for any
breach of the terms of this Agreement by the Lender shall not exceed a sum equal
to the amount which the Lender shall be determined to have failed to advance in
consequence of a breach by the Lender of its obligations under this Agreement,
together with interest thereon at the rate payable by the Borrower under the
terms of the Note for Advances which the Borrower is to receive hereunder,
computed from the date when the Advance should have been made by the Lender to
the date when the Advance is, in fact,

                                      -33-
<PAGE>

made by the Lender, and, upon the making of any such payment by the Lender to
the Borrower, the same shall be treated as an Advance under this Agreement, in
the same fashion as any other Advance under the terms of this Agreement. In no
event shall the Lender be liable to the Borrower, or anyone claiming by, under
or through the Borrower, for any special, exemplary, punitive or consequential
damages, whatever the nature of the breach of the terms of this Agreement by the
Lender, such damages and claims therefor being expressly WAIVED by the Borrower.

      Notwithstanding the foregoing, Borrower agrees that no action shall be
commenced by Borrower for any claim of any kind against the Lender under or in
connection with this Agreement unless written notice specifically setting forth
the claim of Borrower shall have been given to the Lender within ninety (90)
days after the occurrence of the event which Borrower alleges gives rise to such
claims, and failure to give such notice shall constitute a WAIVER of any such
claim.

16. RIGHTS OF THIRD PARTIES. All conditions to the performance of the
obligations of the Lender under this Agreement, including the obligation to make
Advances, are imposed solely and exclusively for the benefit of the 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 the Lender will
refuse to make Advances 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 and all of which may be freely waived in
whole or in part by the Lender at any time if in its sole discretion it deems it
desirable to do so.

17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and
warranties made herein, in the Note, in any of the other Loan Documents or in
any documents or other papers delivered by or on behalf of the Borrower pursuant
hereto and thereto shall be deemed to have been relied upon by the Lender,
notwithstanding any investigation heretofore or hereafter made by it, and shall
survive the making by the Lender of the Advances, as herein contemplated, and
shall continue in full force and effect either (i) so long as any amount due
under this Agreement or the Note or any of the other Loan Documents remains
outstanding or the Lender has any obligation to make any Advances or (ii) for
such longer period as may be provided for herein or in any other Loan Document.
All statements contained in any certificate or other paper delivered to the
Lender at any time by or on behalf of any Person or any Subsidiary thereof
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by such Person.

18. ASSIGNMENT AND PARTICIPATION.

18.1 Conditions to Assignment by Lender. Except as provided herein, the Lender
may assign to one or more banks or other entities (the "Banks") its interests,
rights and obligations under this Agreement; provided, however, prior to the
occurrence and continuation of an Event of Default: (i) the Lender may only
assign up to fifty (50%) percent of its interests, rights, and obligation under
this Agreement, (ii) any such assignee

                                      -34-
<PAGE>

shall be a financial institution with a net worth of not less than $100,000,000;
and (iii) Lender shall provide the Borrower with at least thirty (30) days'
prior written notice of such intended assignment. From and after the effective
date of any such assignment, (i) the assignee thereunder shall be deemed to be a
party hereto and, to the extent agreed to by the Lender, have the rights and
obligations of a Lender hereunder, and (ii) the Lender shall, to the extent of
its interest assigned as provided herein, be released from its obligations under
this Agreement.

18.2 New Notes, Agreement. Upon any such assignment by the Lender, the Borrower,
at its own expense, shall execute and deliver to the Lender (a) in exchange for
the Note, a new Note (or Notes) to the order of each such assignee in an amount
equal to the amount assumed by such assignee and, if the Lender has retained
some portion of its obligations hereunder, a new Note to the order of the Lender
in an amount equal to the amount retained by it hereunder and (b) an amendment
to this Agreement and any other Loan Documents, as may be reasonably requested
by the Lender, to evidence the assignment, provide for the rights and interest
of the assignee, and establish the rights, responsibilities and obligations of
the Lender as agent for itself and any such assignee. Such new Note (or Notes)
shall be provided as replacements for the surrendered Note (or Notes), shall be
in an aggregate principal amount equal to the aggregate principal amount of the
surrendered Note (or Notes), shall be dated the effective date of such
assignment and shall otherwise be in substantially the form of the assigned Note
(or Notes). Within five (5) days of issuance of any new Notes pursuant to this
ss.18.2, the Borrower shall deliver an opinion of counsel, addressed to the
Lender and the Agent (if any), relating to the due authorization, execution and
delivery of such new Notes and the legality, validity and binding effect
thereof, in form and substance satisfactory to the Lender. The surrendered Note
(or Notes) shall be canceled and returned to the Borrower.

18.3 Participations. The Lender (and any Bank) may sell participations to one or
more banks or other entities in all or a portion of the Lender's (or Bank's)
rights and obligations under this Agreement and the other Loan Documents;
provided that (a) any such sale of participations shall not affect the rights
and duties of the Lender (or Bank) hereunder to the Borrower and (b) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Loan Documents shall
be the right to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on the Loan, extend the term or increase
the amount of the Loan or extend any regularly scheduled payment date for
principal or interest.

18.4 Pledge by the Lender. The Lender may at any time pledge all or any portion
of its interest and rights under this Agreement (including all or any portion of
the Note) to any of the twelve Federal Reserve Banks organized under ss.4 of the
Federal Reserve Act, 12 U.S.C. ss.341. No such pledge or the enforcement thereof
shall release the Lender from its obligations hereunder or under any of the
other Loan Documents.

                                      -35-
<PAGE>

18.5 No Assignment by the Borrower. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior approval of the Lender.

19. RELATIONSHIP. The relationship between the Lender and the Borrower is solely
that of a lender and borrower, and nothing contained herein or in any of the
other Loan Documents shall in any manner be construed as making the parties
hereto partners, joint venturers or any other relationship other than lender and
borrower.

20. NOTICES. Except as otherwise provided herein or in any other Loan Document,
each notice, demand, election or request provided for or permitted to be given
pursuant to this Agreement (hereinafter in this Section referred to as "Notice")
must be in writing and shall be deemed to have been properly given or served by
personal delivery or by sending same by overnight courier, by depositing same in
the United States Mail, postpaid and registered or certified, return receipt
requested, or by facsimile transmission, and addressed as follows:

                  If to the Lender:

                  Citizens Bank of Massachusetts
                  28 State Street
                  Boston, Massachusetts 02109
                  Attention:  Mr. Daniel R. Ouellette
                              Vice President
                  Facsimile: (617) 725-5602

                  with a copy to:

                  Goulston & Storrs, P.C.
                  400 Atlantic Avenue
                  Boston, Massachusetts 02110
                  Attention: James H. Lerner, Esq.
                  Facsimile: (617) 574-4112

                  If to the Borrower:

                  Franklin Street Partners Limited Partnership
                  401 Edgewater Place
                  Suite 110
                  Wakefield, Massachusetts 01880-6210
                  Attention:  President
                  Facsimile: (781) 246-2807

                  with a copy to:

                                      -36-
<PAGE>

                  Hale and Dorr LLP
                  60 State Street
                  Boston, Massachusetts 02109
                  Attention:  Kenneth A. Hoxsie, Esq.
                  Facsimile: (617) 526-5000

Each Notice shall be effective upon being personally delivered, receipt of
facsimile transmission or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. However, (i) the time period
in which a response to such Notice must be given or any action taken with
respect thereto (if any), and (ii) the commencement of a default period, to the
extent notice is required hereunder, shall commence to run from the date of
receipt if personally delivered, sent by facsimile transmission, or sent by
overnight courier, or if so deposited in the United States Mail, the earlier of
three (3) Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to accept or the
inability to deliver because of changed address for which no Notice was given
shall be deemed to be receipt of the Notice sent. By giving at least thirty (30)
days' prior Notice thereof, the Borrower or the Lender shall have the right from
time to time and at any time during the term of this Agreement to change their
respective addresses and each shall have the right to specify as its address any
other address within the United States of America.

21. GOVERNING LAW. This Agreement and each of the other Loan Documents, except
as otherwise specifically provided therein, are contracts under the laws of the
Commonwealth of Massachusetts and shall for all purposes be construed in
accordance with and governed by the laws of said Commonwealth (excluding the
laws applicable to conflicts or choice of law).

22. CONSENT TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO NONEXCLUSIVE PERSONAL JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND (B) WAIVES
ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE RIGHT, IF
ANY, TO TRIAL BY JURY, (II) TO OBJECT TO JURISDICTION WITHIN THE COMMONWEALTH OF
MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM WITHIN THE COMMONWEALTH OF
MASSACHUSETTS, AND (III) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN ACTUAL
DAMAGES. THE BORROWER AGREES THAT, IN ADDITION TO ANY METHODS OF SERVICE OF
PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN ss.20
ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL
BE SO MAILED. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE

                                      -37-
<PAGE>

LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST ANY COLLATERAL AND AGAINST THE BORROWER, AND AGAINST ANY PROPERTY OF THE
BORROWER, IN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR
TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE
AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER
OR THE SUBMISSION HEREIN BY THE BORROWER TO NONEXCLUSIVE PERSONAL JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS.

23. PREFERENCES. Lender shall have no obligation to marshal any assets in favor
of Borrower or any other party or against or in payment of any or all of the
obligations of Borrower pursuant to this Agreement, the Note, the Security Deed
or any other Loan Document. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of such obligations. To the extent Borrower makes a payment or payments to
Lender for Borrower's benefit, 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 Person under any
bankruptcy law, state or federal law, the obligations 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.

24. RULES OF INTERPRETATION. The following rules of interpretation shall govern:

      (a)   A reference to any Loan Document, agreement, budget, document or
            schedule shall include such agreement, budget, document or schedule
            as revised, amended, modified or supplemented from time to time in
            accordance with its terms and the terms of this Agreement.

      (b)   A reference to any Exhibit hereto shall be deemed to specifically
            incorporate the terms and provisions of such Exhibit herein.

      (c)   The singular includes the plural and the plural includes the
            singular.

      (d)   A reference to any law includes any amendment or modification to
            such law.

      (e)   A reference to any Person includes its permitted successors and
            permitted assigns.

      (f)   Accounting terms not otherwise defined herein have the meaning
            assigned to them by generally accepted accounting principles applied
            on a consistent basis by the accounting entity to which they refer.

                                      -38-
<PAGE>

      (g)   The words "approval" and "approved", as the context so determines,
            means an approval in writing given to the Person seeking approval
            after full and fair disclosure to the Person giving approval of all
            material facts necessary in order to determine whether approval
            should be granted.

      (h)   Reference to a particular "ss." refers to that section of this
            Agreement unless otherwise indicated.

      (i)   Use of the word "including" shall mean "including, without
            limitation" unless the context otherwise requires.

25. HEADINGS. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.

26. COUNTERPARTS. This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.

27. ENTIRE AGREEMENT. The Loan Documents and any other documents executed in
connection herewith or therewith express the entire understanding of the parties
with respect to the transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated, except as
provided inss.28.

28. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly set forth
in any particular provision of this Agreement, any consent or approval required
or permitted by this Agreement to be given by the Lender may be given, and any
term of this Agreement or of any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower of any
terms of this Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Lender. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Lender in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No Advance made by the Lender hereunder during the continuance of any Default or
Event of Default shall constitute a waiver thereof. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances. Any amendment to this Agreement or any other
Loan Document shall be made in writing and signed by the Borrower and the
Lender.

                                      -39-
<PAGE>

29. TIME OF THE ESSENCE. Time is of the essence with respect to each and every
covenant, agreement and obligation of the Borrower under this Agreement and the
other Loan Documents.

30. SEVERABILITY. The provisions of this Agreement are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Agreement in any jurisdiction.

31. LIMITED RECOURSE. No deficiency will be sought or judgment for money damages
will be entered against the general partners (the "General Partners") or limited
partners of the Borrower (collectively, the "Partners") with respect to any
deficiency remaining after foreclosure of any Security Deed and the Partners
shall not be personally liable in any action with respect to any deficiency
remaining after any such foreclosure or to collect any amount payable under this
Agreement, the Note and the other Loan Documents.

      Notwithstanding the foregoing, however, nothing contained in this Section
31 shall in any way whatsoever release, affect, impair or derogate from the
indebtedness evidenced by this Agreement and other Loan Documents, or the
liabilities and obligations of the Borrower under the Loan Documents or in
connection therewith, or restrict, impair or preclude the exercise of any of the
rights and remedies of the Lender under the Loan Documents, or otherwise
available at law or in equity, including, without limitation, any action to
foreclose a Security Deed or Deeds, actions against the Borrower that do not
seek to impose personal liability on the Partners, or the exercise of the rights
and remedies of Lender under this Agreement or any other Loan Document.

      Further, it is expressly understood and agreed that the aforesaid
limitation on liability shall in no way release or restrict the liability of the
General Partners to the Lender under any separate guarantees or indemnities
provided in connection with the Loan or for all amounts arising out of or
relating to the following (provided however, that in no event shall any of the
general partners or limited partners of Franklin Street Partners Limited
Partnership have any liability whatsoever to the Lender):

      (i)   fraud or intentional misrepresentation made in connection with this
            Note, any Security Deed or Deeds, or any of the other Loan
            Documents, or any property comprising the Project;

      (ii)  other than in accordance with the requirements of the Loan
            Documents, the misappropriation of (a) proceeds of condemnation
            actions or insurance covering any portion of the Project, or (b)
            proceeds of the sale or transfer of any portion of any property
            comprising the Project, or (c) proceeds from any Syndication Event;
            and

                                      -40-
<PAGE>

      (iii) rental payments received by or on behalf of the Borrower subsequent
            to the date on which the Lender makes written demand therefor
            pursuant to the Loan Documents following the occurrence and during
            the continuation of an Event of Default.

            [The remainder of this page is intentionally left blank.]

                                      -41-
<PAGE>

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.

                                           FRANKLIN STREET PARTNERS
                                           LIMITED PARTNERSHIP

                                           By: /s/ Geaorge J. Carter
                                              ----------------------
                                           Name: George J. Carter
                                           Its:  Managing General Partner

                                           FSP WESLAYAN OAKS LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           ESSEX LANE ASSOCIATES LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP APARTMENT PROPERTIES
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                      -42-
<PAGE>

                                           FSP PARK SENECA LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP SANTA CLARA LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP PIEDMONT CENTER LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                           ONE TECHNOLOGY DRIVE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                      -43-
<PAGE>

                                           FSP NORTH ANDOVER OFFICE PARK
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           CITIZENS BANK OF MASSACHUSETTS

                                           By: /s/ Daniel R. Ouellette
                                              ------------------------
                                           Name: Daniel R. Ouellette
                                           Title: Vice President

                                      -44-
<PAGE>
                                    Exhibit A

                                JOINDER AGREEMENT

                                                           -----------, -------

      Reference is made to the Loan Agreement, dated as of February 23, 1999 (as
amended on the date hereof and as from time to time further amended and in
effect, the "Loan Agreement"), among Franklin Street Partners Limited
Partnership ("FSP"), those other Borrowers listed on Schedule 2 (as amended) of
the Loan Agreement and each other Borrower (collectively, the "Borrower") which
from time to time is a party to the Loan Agreement, and Citizens Bank of
Massachusetts (the "Lender"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Loan Agreement.

      In consideration of and as an inducement to the Lender continuing to
provide financing under the Loan Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
________________________ (the "Additional Borrower"), a Wholly Owned Subsidiary
of FSP, hereby acknowledges and agrees to the terms and conditions of the Loan
Agreement and the Note, joins in the agreements of the Borrower under the Loan
Agreement and the Note and agrees that all Obligations of the Borrower under the
Loan Agreement and the Note shall be the obligations, jointly and severally, of
the Additional Borrower with the same force and effect as if the Additional
Borrower was originally a Borrower under the Loan Agreement and an original
signatory to the Loan Agreement and the Note. Furthermore, the Additional
Borrower shall have all the liabilities and obligations of a maker under the
Note.

      The Additional Borrower further agrees that its liability hereunder is
direct and primary and may be enforced by the Lender before or after proceeding
against any other Borrower or the Guarantor.

      Unless waived by the Lender, at least five (5) Business Days prior to this
Joinder Agreement becoming effective, the Additional Borrower shall have
delivered to the Lender, with respect to such Additional Borrower's
property(ies), those documents referred to in Section 6.5 and current and
historical financial statements reasonably requested by Lender with respect to
the Additional Borrower. Such documents and statements shall not be subject to
Lender's approval or satisfaction.

                                       -1-
<PAGE>

      The undersigned hereby represents and warrants to the Lender that it has
the complete right, power and authority to execute and deliver this Joinder
Agreement and, to perform all of the obligations hereunder and the Obligations
under the Loan Agreement and the Note. This Joinder Agreement shall be binding
upon the undersigned and its successors and assigns and shall inure to the
benefit of the Lender and its successors and assigns.

      Executed as a sealed instrument as of the __ day of __________, ______.

                                           ----------------------------
                                           By:  ________________________
                                           Its: General Partner

                                                    By:____________________
                                                    Name: ________________
                                                    Its:  __________________
Acknowledged and Agreed:

Franklin Street Partners Limited Partnership, as agent for each Borrower

By:_____________________, its sole general partner (SEAL)

FSP Holdings LLC, as Guarantor

By:______________________________(SEAL)

                                       -2-
<PAGE>

                                   Schedule 1
                                   Definitions

      Advance. Any disbursement, including a readvance of any amount previously
repaid by the Borrower, of the proceeds of the Loan made or to be made by the
Lender pursuant to the terms of this Agreement.

      Agreement. This Loan Agreement, including the Schedules and Exhibits
hereto.

      Annual Fee. Seess.4.

      Appraisal. With respect to each property included in the Project an
appraisal of the "as built" market value of such property, or any property
comprising the Project, performed by a qualified independent appraiser approved
by the Lender.

      Appraised Value. The market value of the any individual property included
in the Project, determined by the most recent Appraisal obtained pursuant
hereto, as such may be reviewed and adjusted by the Lender.

      Availability. The difference between (i) the Loan Amount, and (ii) the
aggregate of (x) the aggregate Stated Amount under all outstanding L/Cs, and (y)
the unpaid principal balance owed under the Loan.

      Balance Sheet Date. December 31, 1998 on a pro forma basis.

      Borrower. As defined in the preamble hereto. All definitions,
representations, warranties, covenants, rights and remedies provided for herein
apply to each entity individually and collectively except as the context
otherwise provides. Further, any and all references to Obligations shall mean
and refer to the joint Obligations of each entity to the Lender. Any and all
Advances hereunder shall be advanced to one of the entities but shall represent
an Obligation of all of the entities to the Lender.

      Business Day. Any day on which the Lender is open for the transaction of
banking business in Boston, Massachusetts.

      Closing Date. The first date on which the conditions set forth inss.6 have
been satisfied.

      Closing Fee. Seess.4.

      Code. The Internal Revenue Code of 1986 and the regulations thereunder,
all as amended and in effect from time to time.

      Collateral. All of the property, rights and interests that are or are
intended to be subject to the security interests, assignments, and mortgage
liens created by the Security Documents, including, without limitation, all of
the properties comprising the Project.

                                       -1-
<PAGE>

      Consolidated Indebtedness. After elimination of duplication, for the
Borrower, all obligations, contingent and otherwise, that in accordance with
generally accepted accounting principles should be classified upon the obligor's
balance sheet as liabilities, or to which reference should be made by footnotes
thereto, including in any event and whether or not so classified: (a) all debt
and similar monetary obligations, whether direct or indirect; (b) all
liabilities secured by any mortgage, pledge, security interest, lien, charge, or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (c) all
liabilities under capitalized leases; (d) all guaranties, endorsements and other
contingent obligations whether direct or indirect in respect of indebtedness of
others, including the obligations to reimburse the issuer in respect of any
letters of credit, and (e) all unsecured indebtedness.

      Debt Service Charges. For any fiscal period of the Borrower, the sum of
the expenses of the Borrower for such period for (x) Debt Service On The Loan,
and (without duplication) any other principal and interest on Consolidated
Indebtedness secured by all or any part of the Project and (y) fees payable
under the Loan Documents, or in connection with any other Consolidated
Indebtedness secured by all or any part of the Project in each case determined
in accordance with generally accepted accounting principles.

      Debt Service on the Loan. Shall mean the principal and interest payable
under the Loan during the test period based upon the greater of: (i) the actual
interest rate in effect under the Loan for the test period plus principal
payments based upon a twenty (20) year amortization schedule, or (ii) the
greater of (I) the rate for the ten (10) year United States Treasury obligations
in amounts approximating the principal balance of the Loan during the test
period plus one hundred eighty five (185) basis points, or (II) seven and
one-half percent (7.5%) per annum, plus in the case of (I) and (II), principal
payments based upon a twenty (20) year amortization schedule.

      Default. A condition or event which would, with either the giving of
notice or lapse of time or both, constitute an Event of Default.

      Default Rate. See the Note.

      Distribution. The (i) declaration or payment of any dividend, (ii)
distribution of cash or other property, (iii) purchase, redemption, or other
retirement (directly or indirectly), (iv) repayment of any loan to any Person
directly or indirectly holding an interest in Borrower, or (iv) other
distribution, in each case, of, on or in respect of any shares of any class of
capital stock, partnership interests, or other beneficial or ownership interests
of the Borrower.

      Drawdown Date. The date that an Advance is made hereunder.

      Environmental Laws. As defined in the Indemnity Agreement.

                                       -2-
<PAGE>

      Environmental Report(s). The environmental site assessment reports listed
on Schedule 6 attached hereto.

      ERISA Plan. Any employee benefit, employee pension, or multiemployer plan
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.

      Event of Default. Seess.11.

      Financing Statements. Uniform Commercial Code Form 1 Financing
Statement(s) from the Borrower in favor of the Lender.

      FSP. As defined in the Preamble.

      Generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time
and (b) consistently applied with past financial statements of the Borrower
adopting the same principles; provided that a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.

      Government Authority. The United States of America, the State in which any
of the properties comprising the Project is located, the city or town in which
the Land is located, and any political subdivision agency, authority,
department, commission, board, bureau, or instrumentality of any of them.

      Gross Cash Receipts. The sum of cash actually received during any test
period of the Borrower and FSP, including, without limitation, cash received
with respect to the properties comprising the Project in payment of the
following items:

      (a)   rentals, including minimum or base rent, percentage rent, and rent
            attributable to recovery of tenant improvement costs received from
            tenants occupying space in the properties comprising the Project
            during such period;

      (b)   cash reimbursements from tenants of operating expenses, insurance
            premiums, and real estate taxes and the cost of tenant improvements;

      (c)   parking revenues received in connection with the operation of
            parking facilities;

                                       -3-
<PAGE>

      (d)   receipts from laundries, vending machines, recreational facilities
            and any and all other operating revenues received from the Project;
            and

      (e)   security deposits, to the extent applied by Borrower.

If the Borrower shall receive cash by reason of fire or other casualty insurance
proceeds, or a taking by eminent domain, or a loan or advance or a sale of any
part of the Project, such amounts shall not be included in Gross Cash Receipts
unless such cost to repair is included in the calculation of expenses.

      Gross Cash Receipts shall be determined on a cash basis consistent with
the basis used in the preparation of the computations of Gross Cash Receipts
furnished pursuant to ss.9.2 of this Agreement

      Guarantor. FSP Holdings LLC, a Delaware limited liability company.

      Hazardous Substances. As defined in the Indemnity Agreement.

      Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; (c) all liabilities under capitalized leases; (d) all
guaranties, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including the obligations to
reimburse the issuer in respect of any letters of credit, and (e) all unsecured
indebtedness.

      Indemnity Agreement. The Environmental Warranty and Indemnification
Agreement dated or to be dated on or prior to the Closing Date, made, jointly
and severally, by the Borrower in favor of the Lender, as the same may hereafter
be amended with the prior written consent of Lender.

      Investment. All expenditures made and all liabilities incurred
(continently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect to any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person.

      Joinder Documents. The one or more joinder agreements to be executed by a
Wholly Owned Subsidiary which is to become a Borrower after the Closing Date in
the form attached hereto as Exhibit A.

                                       -4-
<PAGE>

      L/C. Any Letter of Credit, the issuance of which is procured by the Lender
for the account of the Borrower and any letter of credit made on account of such
letter of credit.

      L/C Agreement. Seess.2.6(a)

      L/C Fee. Seess.4

      L/C Limit. The aggregate maximum Stated Amounts of all L/C's issued by the
Lender on behalf of the Borrower shall not exceed the lesser of (i) ten (10%)
percent of the Loan Amount, or (ii) the Availability.

      Loan. The loan or any portion thereof which is the subject of this
Agreement.

      Loan Amount. An amount equal to $25,000,000.

      Loan Documents. This Agreement, the Note, the Guaranty, the Indemnity
Agreement, the Joinder Documentation, and the Security Documents, and all other
agreements, documents and instruments now or hereafter evidencing, securing or
otherwise relating to the Loan, all as the same may hereafter be amended with
the prior written consent of Lender.

      Maturity Date. February 23, 2001 which date may be extended from time to
time upon the mutual written agreement between the Lender and the Borrower.

      Loan to Value Ratio. Seess.10.8(a)

      Net Operating Income. The amount by which the Gross Cash Receipts of (i)
the Borrower from all of the properties comprising the Project and (ii) FSP for
any fiscal period exceed the aggregate of the following items for such fiscal
period:

      (a)   all operating costs and expenses incurred by FSP Holdings LLC in its
            operations or incurred by the Borrower in the operation of the
            properties comprising the Project, including, without limitation,
            real estate taxes and betterment assessments, management fees for
            each of the properties comprising the Project and cash security
            deposits from tenants returned to tenants in cash to the extent the
            same were included as a part of Gross Cash Receipts;

      (b)   the greater of: (i) actual capital expenditures on the Project in
            such test period or (iii) a capital expenditure reserve of $.50
            square feet of space at the Project;

      (c)   for tenancies of space in the Project, the cost and expense
            (including brokerage commissions) of leasing space in the Project
            and performing tenant improvement work; and

                                       -5-
<PAGE>

      (d)   funded reserves established for replacement and other purposes for
            the Project for which funds are set aside in a separate account or
            accounts,

paid in cash (or, in the case of reserves, set aside in cash) during such
period, but there shall not be deducted from Gross Cash Receipts amounts paid
from funded reserves theretofore established. Without limitation, charges for
income taxes, capital gain taxes, corporate excise taxes and similar taxes, and
depreciation, amortization and other non-cash expenses shall not be deducted
from Gross Cash Receipts in determining Net Operating Income.

      Net Operating Income shall be determined on a cash basis, modified as
described above, consistent with the basis used in the preparation of the
computations of Net Operating Income furnished pursuant to ss.9.2 of this
Agreement.

      Note. The Master Promissory Note in the principal face amount of the Loan
Amount dated as of the date hereof, made by the Borrower to the order of the
Lender, as such Promissory Note may hereafter be extended, renewed, replaced,
substituted, or modified with the prior written consent of Borrower and Lender.

      Obligations. All indebtedness, obligations and liabilities of the Borrower
to the Lender, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, or incurred under this Agreement or any
of the other Loan Documents or in respect of any of the Advances or the Note.

      Operating Accounts. Accounts established and maintained with the Lender
for those Borrowers owning properties which are (i) part of the Project and (ii)
located within the Commonwealth of Massachusetts. The term Operating Accounts
shall specifically exclude any trust accounts in the name of such Borrowers.

      Organizational Documents. For any corporation, partnership, trust, limited
liability company, limited liability partnership, unincorporated association,
business or other legal entity, the documents pursuant to which such entity has
been established or organized, as such documents may hereafter be amended with
the prior written consent of Lender which shall not be unreasonably withheld or
delayed.

      Outstanding. With respect to the Advances or the Loan, the aggregate
unpaid principal thereof as of any date of determination.

      Owner(s). The following entities which each hold fee title to one of the
properties comprising the Project: FSP Weslayan Oaks Limited Partnership, Essex
Lane Associates Limited Partnership, FSP Apartment Properties Limited
Partnership, FSP Park Seneca Limited Partnership, FSP Santa Clara Limited
Partnership, FSP Piedmont Center Limited Partnership, One Technology Drive
Limited Partnership and

                                       -6-
<PAGE>

FSP North Andover Office Park Limited Partnership as may be supplemented as
provided herein.

      Permitted Liens. Liens: (i) permitted by ss.9.4, (ii) for taxes unpaid and
diligently contested in good faith by the Borrower unless payment is required
prior to the contesting of any such taxes and provided no enforcement
proceedings have been commenced with respect to any lien filed in connection
with such dispute and adequate reserves have been established for such taxes,
(iii) for assessments, governmental charges, liens or claims for labor,
materials or supplies which do not materially interfere with the use of the
properties comprising the Project or the operation of the business of the
Borrower and do not exceed in the aggregate at any one time $500,000.00.

      Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.

      Personal Property. All materials, furnishings, fixtures, furniture,
machinery, equipment and all items of tangible or intangible personal property
now or hereafter owned or acquired by the Borrower, in which the Lender has
been, or will be granted an interest to secure the Project Obligations.

      Project. Collectively, the following properties: 3231 Allen Parkway,
Houston, Texas; Weslayan Oaks Apartments, 4041 Drake Street and 4041 Law Street,
Houston, Texas; Essex House, 3919 Essex Lane, Houston, Texas; 1515 Mockingbird,
Charlotte, North Carolina; 4995 Patrick Henry Drive, Santa Clara, California; 33
and 37 Villa Road, Greenville, South Carolina; One Technology Drive, Peabody,
Massachusetts; 451 Andover Street, North Andover and 203 Turnpike Street,
Massachusetts, and other properties as may be supplemented as provided herein.

      Project Approvals. All approvals, consents, waivers, orders, agreements,
acknowledgments, authorizations, permits and licenses required under applicable
Requirements or under the terms of any restriction, covenant or easement
affecting any of the properties comprising the Project, or otherwise necessary
or desirable, for the ownership, acquisition, construction, equipping, use,
occupancy and operation of any of the properties comprising the Project, whether
obtained from a Governmental Authority or any other Person.

      Requirements. Any law, ordinance, code, order, rule or regulation of any
Governmental Authority relating in any way to the acquisition, ownership,
construction, use, occupancy and operation of the properties comprising the
Project.

      Roll-Up. The acquisition (by merger, consolidation or otherwise) by FSP,
or an affiliate, of limited partnership interests or other similar interests in
an owner of real property established or sponsored by FSP, the Borrower, or an
affiliate, in connection with such owner of real property becoming a Wholly
Owned Subsidiary.

                                      -7-
<PAGE>

      Security Deed(s). Those certain Mortgage, Security Agreements and
Assignments and Deeds of Trust, Security Agreements and Assignments, delivered
on or before the Closing Date and held in escrow as provided herein.

      Security Documents. The Security Deed(s), the Financing Statements and any
other agreement, document or instrument now or hereafter securing the
Obligations, all as the same may hereafter be amended with the prior written
consent of Lender and Borrower.

      Stated Amount. The face amount of any L/C.

      Subsidiary. Any corporation, partnership, association, trust, or other
business entity of which the Borrower shall at any time own directly, or
indirectly through a Subsidiary or Subsidiaries, at least a majority of the
beneficial or ownership interests therein.

      Survey. An ALTA "as built" Survey.

      Syndication Event. The sale by the Borrower, or an affiliate, of limited
partnership interests or other similar interests in an owner of real property
established by the Borrower, or an affiliate in connection with the syndication
of such property by the Borrower.

      Taking. Any condemnation for public use of, or damage by reason of, the
action of any Governmental Authority, or any transfer by private sale in lieu
thereof, either temporarily or permanently.

      Tangible Net Worth. The excess of Total Assets over Total Liabilities, and
less the sum of:

      (a)   the total book value of all assets of the Borrower properly
            classified as intangible assets under generally accepted accounting
            principles, including such items as good will, the purchase price of
            acquired assets in excess of the fair market value thereof,
            trademarks, trade names, service marks, brand names, copyrights,
            patents and licenses, and rights with respect to the foregoing; plus

      (b)   all amounts representing any write-up in the book value of any
            assets of the Borrower resulting from a revaluation thereof
            subsequent to the Balance Sheet Date; plus

      (c)   to the extent otherwise includable in the computation of Tangible
            Net Worth, any subscriptions receivable.

      Termination Date. The earlier of: (i) the occurrence of an Event of
Default and the continuation thereof beyond any applicable grace periods, (ii)
the payment in full of

                                       -8-
<PAGE>

all Obligations and the termination of the Borrower's rights to request
Advances, or (iii) the Maturity Date.

      Title Insurance Company. The companies listed on Schedule 7 attached
hereto.

      Title Policy. An ALTA standard form owners title insurance policy issued
by the Title Insurance Company.

      Total Assets. All assets of the Borrower determined in accordance with
generally accepted accounting principles.

      Total Liabilities. All liabilities of the Borrower determined in
accordance with generally accepted accounting principles and all Indebtedness of
the Borrower, whether or not so classified.

      Transaction Fee. Seess.4.

      Value of the Project. As of the relevant date of determination the
aggregate value of all of the properties comprising the Project based upon the
next preceding twelve (12) month Net Operating Income divided by a 9.50%
capitalization rate.

      Wholly Owned Subsidiaries. Any Subsidiary which: FSP or its principals
shall own directly or indirectly (through a Subsidiary or Subsidiaries) 100% of
the outstanding voting interest and economic interest.

                                       -9-
<PAGE>

                                   Schedule 2

                List of Borrowers; General Partners of Borrowers

Part A

      Wholly Owned Subsidiaries

      FSP Weslayan Oaks Limited Partnership

      Essex Lane Associates Limited Partnership

      FSP Apartment Properties Limited Partnership

      FSP Park Seneca Limited Partnership

      FSP Santa Clara Limited Partnership

      FSP Piedmont Center Limited Partnership

      One Technology Drive Limited Partnership

      FSP North Andover Office Park Limited Partnership

      General Partner of the Wholly Owned Subsidiaries Listed in Part A

      The sole general partner of each of the above-listed Wholly Owned
      Subsidiaries is FSP Holdings LLC.

Part B

      Wholly Owned Subsidiaries Which Are Not Borrowers Hereunder

      FSP Holdings LLC, the sole member of which is Franklin Street Partners
      Limited Partnership.

      Franklin Street Partners Limited Partnership

      The General Partners of Franklin Street Partners Limited Partnership are
      the following:

                  George J. Carter
                  R. Scott MacPhee
                  Richard R., Norris
                  William W. Gribbell

                                       -1-
<PAGE>

                                   Schedule 3

                             [Intentionally Deleted]

                                       -1-
<PAGE>

                                   Schedule 4

                              Advance/Loan Request

                                     [Date]

Citizens Bank of Massachusetts
28 State Street
Boston, Massachusetts  02109
         Attention:  _______________
         Loan No.  ________________

Dear Gentlemen:

      This letter is to request an Advance of the above-referenced loan in the
amount of $________________ (the "Advance"). The Advance shall be transferred to
Account No. _________________ with Citizens Bank of Massachusetts and received
in said Account by _________, ______ at _________ a.m./p.m.

                                Very truly yours,

                                FRANKLIN STREET PARTNERS
                                LIMITED PARTNERSHIP

                                By:________________________
                                Name:
                                Its:

                                       -1-
<PAGE>

                                   Schedule 5

                                  Subsidiaries

         FSP Holdings LLC
         FSP Investments LLC
         FSP Property Management LLC
         FSP Weslayan Oaks Limited Partnership Essex Lane Associates Limited
         Partnership FSP Apartment Properties Limited Partnership FSP Park
         Seneca Limited Partnership FSP Santa Clara Limited Partnership FSP
         Piedmont Center Limited Partnership One Technology Drive Limited
         Partnership FSP North Andover Office Park Limited Partnership

                                       -1-
<PAGE>

                                   Schedule 6

                              Environmental Reports

1.    Environmental Site Assessment of Weslayan Oaks Apartments, 4041 Law
      Street, Houston, Texas, prepared by Maxim Technologies, Inc., 222
      Cavalcade, Houston, Texas 77009, Report No. 1409703208.10.

2.    Level I Environmental Site Assessment of 203 Turnpike Street and 451
      Andover Street, North Andover, Massachusetts prepared by Rizzo Associates,
      Inc., 235 West Central Street, Natick, Massachusetts 01760.

3.    Phase I Environmental Site Assessment of Piedmont Center, Greenville,
      South Carolina, prepared by S&ME, Inc., 400 Northeast Drive, Suite A,
      Columbia, South Carolina, dated February 1998, Project No. 1614-98-005.

4.    Phase I Environmental Site Assessment of Park Seneca Office Building,
      Charlotte, North Carolina, prepared by S&ME, Inc., 400 Northeast Drive,
      Suite A, Columbia, South Carolina, dated June 1997, Project No.
      1614-97-274.

5.    Environmental Site Assessment of One Technology Drive, Peabody,
      Massachusetts, prepared by Hidell-Eyster Technical Services, Inc., 195
      Whiting Street, Hingham, Massachusetts, dated October 12, 1995, Project
      No. 05-95039.

6.    Environmental Site Assessment of Allen Parkway, Houston, Texas, prepared
      by Southwestern Laboratories, Inc., 1225 North Loop West, Suite 1000, P.O.
      Box 8768, Houston, Texas 77249, Project No. 505193-039.

7.    Phase I Real Estate Transfer Assessment of Essex House Apartment Complex,
      Houston, Texas, prepared by Roy F. Weston, Inc., 5599 San Felipe, Suite
      700, Houston, Texas 77056, dated June 28, 1993.

8.    Phase I Environmental Site Assessment of 4995 Patrick Henry Drive, Santa
      Clara, California, prepared by E2C, Inc., Civic Center Tower, 675 North
      First Street, Fifth Floor, San Jose, California 95112, dated November 11,
      1997.

                                       -1-
<PAGE>

                                   Schedule 7

                            Title Insurance Companies

1.    Park Seneca Office Building
      1515 Mockingbird Lane
      Charlotte, North Carolina

      Owner:            FSP Park Seneca Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Chicago Title Insurance Company
                        Policy No. 34-901-106-9702056

2.    Piedmont Center Office Building
      33 and 37 Villa Road
      Greenville, South Carolina

      Owner:            FSP Piedmont Center Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Lawyer's Title Insurance Company
                        Policy No. 136-00-791341

3.    Weslayan Oaks Apartments
      Houston, TX

      Owner:            FSP Weslayan Oaks Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Chicago Title Insurance Company
                        Policy No. 44-901-100-000209414

4.    Essex House
      Houston, TX

      Owner:            Essex Lane Associates Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Stewart Title Guaranty Company
                        Policy No. 0-5841-42283

                                       -1-
<PAGE>

5.    3231 Allen Parkway (Reata)
      Houston, TX

      Owner:            FSP Apartment Properties Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Commonwealth Land Title Insurance Company
                        Policy No. 175-122691

6.    4995 Patrick Henry Drive
      Santa Clara, CA

      Owner:            FSP Santa Clara Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  Chicago Title Insurance Company
                        Policy No. 779332

7.    One Technology Drive
      Peabody, MA

      Owner:            One Technology Drive Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  First American Title Insurance Company
                        Policy No. 20236549

8.    451 Andover Street
      203 Turnpike Street
      Andover, MA

      Owner:            FSP North Andover Office Park Limited Partnership
                        (a Massachusetts limited partnership)

      Title Insurance:  First American Title Insurance Company
                        Policy No. 20251431

                                       -2-
<PAGE>

                                   Schedule 8

                     Mortgages, Liens and Security Interests

1.    1515 Mockingbird, Charlotte, North Carolina

      a.    North Carolina Secretary of State filings:

            (i)   Fixture Filing with California Federal Bank as Secured Party
            (ii)  Fixture filing with Franklin Street Partners as Secured Party

      b.    Mecklenburg County Registry of Deeds:

            (i)   Assignment of Leases, Rents and Profits recorded in Book 5663,
                  page 764
            (ii)  Absolute Assignment of Rents and of Landlord's Interest in
                  Leases in favor of California Federal Bank recorded in Book
                  9184, page 855
            (iii) UCC Financing Statement in favor of California Federal Bank
                  filed as #97-11974, Mecklenburg County Registry, and filed as
                  #001482865, North Carolina Secretary of State
            (iv)  Deed of Trust from FSP Park Seneca Limited Partnership to
                  Joseph J. Christian, trustee for Franklin Street Partners
                  Limited Partnership recorded in Book 9184, page 867 as
                  subordinated to the first mortgage by Subordination Agreement
                  recorded in Book 9184, page 874
            (v)   UCC Financing Statement in favor of Franklin Street Partners
                  Limited Partnership filed as #97-11975, Mecklenburg County
                  Registry, and filed as #001482866, North Carolina Secretary of
                  State

2.    4995 Patrick Henry Drive, Santa Clara, California

      Santa Clara County filings:

            (i)   Real Estate/Fixture Filing with Franklin Street Partners LP as
                  Secured Party
            (ii)  Deed of Trust with Assignment of Rents to Franklin Street
                  Partners LP

3.    Weslayan Oak Apartments, Houston, Texas

      a.    Texas Secretary of State filing:

            Real Estate filing with Franklin Street Partners LP as Secured Party

      b.    Harris County Registry of Deeds:

            (i)   Deed of Trust dated April 29, 1997, filed for record on April
                  29, 1997, under Harris County Clerk's File No. S427043,
                  executed by FSP

                                       -1-
<PAGE>

                  Weslayan Oaks Limited Partnership, a Massachusetts limited
                  partnership to Joseph J. Christian, Trustee, to secure the
                  payment of one note of even date therewith in the original
                  principal sum of $2,000,000.00, payable to the order of George
                  J. Carter, R. Scott MacPhee, Richard R. Norris and William W.
                  Gribbell, bearing interest and due and payable as therein
                  provided, and subject to all of the terms, conditions and
                  stipulations contained therein, including but not limited to
                  any future indebtedness also secured by this lien.

            (ii)  Deed of Trust dated April 29, 1997, filed for record on April
                  29, 1997, under Harris County Clerk's File No. S427044,
                  executed by FSP Weslayan Oaks Limited Partnership, a
                  Massachusetts limited partnership to Joseph J. Christian,
                  Trustee, to secure the payment of one note of even date
                  therewith in the original principal sum of $2,200,000.00,
                  payable to the order of Franklin Street Partners Limited
                  Partnership bearing interest and due and payable as therein
                  provided, and subject to all of the terms, conditions and
                  stipulations contained therein, including but not limited to
                  any future indebtedness also secured by this lien.

4.    Essex House, 3919 Essex Street, Houston, Texas

      Harris County Registry of Deeds:

            Vendor's Lien retained in Deed dated June 28, 1993, executed by
            Essex Investors Ltd., a Texas limited partnership to Essex Lane
            Associates Limited Partnership, a Massachusetts limited partnership
            securing the payment of one note of even date therewith in the
            principal sum of $6,900,000.00 payable to the order of The First
            National Bank of Boston additionally secured by Deed of Trust,
            Security Agreement, Financing Statement, and Assignment of Rentals
            of even date therewith to Robert S. Ladd, Trustee, said Deed Of
            Trust, Security Agreement, Financing Statement, and Assignment of
            Rentals filed for record in the County Clerk of Harris County, Texas
            on June 30, 1993, under Clerk's File No. P-309712; together with all
            indebtedness of whatsoever nature secured or to be secured thereby
            and the terms, conditions and stipulations contained in such
            instruments.

5.    One Technology Drive, Peabody, Massachusetts

      a.    Massachusetts Secretary of State filing:

            Fixture Filing with BayBank as Secured Party

      b.    Town of Peabody, MA

            Fixture Filing with BayBank as Secured Party

                                       -2-
<PAGE>

      c.    Essex South Registry of Deeds and Essex Registry District of the
            Land Court

            Mortgage, Security Agreement, and Assignment from One Technology
            Drive Limited Partnership to BayBank, N.A. in the original principal
            amount of $6,050,000.00, dated September 1, 1995 and recorded on
            December 1, 1995 in Book 13309, Page 115 and filed as Document No.
            314174.

6.    451 Andover Street and 203 Turnpike Street, North Andover, Massachusetts

            Essex South Registry of Deeds:

            Mortgage, Security Agreement and Assignment from BF North Andover
            Office Park Limited Partnership to BayBank, N.A. in the original
            principal amount of $5,300,000.00, dated June 13, 1996 and recorded
            on record on June 13, 1996 as Instrument No. 14846.

                                       -3-
<PAGE>

                        FIRST AMENDMENT TO LOAN AGREEMENT

      This First Amendment (the "First Amendment") is made as of this 27th day
of December, 1999 and hereby amends that certain Loan Agreement dated as of
February 23, 1999 (the "Agreement") by and among Franklin Street Partners
Limited Partnership, FSP Weslayan Oaks Limited Partnership, Essex Lane
Associates Limited Partnership, FSP Apartment Properties Limited Partnership,
FSP Parks Seneca Limited Partnership, FSP Santa Clara Limited Partnership, FSP
Piedmont Center Limited Partnership, One Technology Drive, Limited Partnership,
FSP North Andover Office Park Limited Partnership, other Borrowers which may
become parties to the Agreement (individually and collectively the "Borrower")
and Citizens Bank of Massachusetts (the "Lender"). Capitalized terms used but
not defined herein shall have the meanings attributed thereto in the Agreement,
unless otherwise noted herein.

      1. The definition of the Loan Amount is hereby amended by deleting the
reference to Twenty Five Million ($25,000,000.00) Dollars and replacing with as
follows:

      "Thirty Five Million ($35,000,000.00) Dollars, subject to reduction to
      Twenty Five Million ($25,000,000.00) Dollars as provided in Section
      2.1(b)."

      2. Schedule A of the Loan Agreement is hereby amended by adding the
following in alphabetical order thereto:

      "Additional Entities": as defined in paragraph 11 below.

      "Additional Projects": 5751-5771 Copley Drive, San Diego, California and
      7250 Perkins Road, Baton Rouge, Louisiana.

      "Permanent Increase Conditions": The granting to the Lender of Security
      Documents covering the Additional Projects to be held in escrow as
      provided in the Loan Agreement, the status of title and other due
      diligence of such Additional Projects shall be in form satisfactory to the
      Lender and the satisfactory syndication of the Loan and documentation of
      same by the Lender to a satisfactory financial institution.

      3. The reference in Section 1.3 to Twenty Five Million ($25,000,000.00)
Dollars shall be deleted and replaced with Thirty Five Million ($35,000,000.00)
Dollars, subject, however, to a decrease as provided in Section 2.1(b).

      4. The Borrower acknowledges that the Borrower shall be obligated to
satisfy all of the conditions of closing in Article 6 as it relates to the
delivery of the Additional Projects.

      5. The following subsection (b) is added to Section 2.1 of the Agreement
as follows:

                                       -1-
<PAGE>

      "(b) If the Permanent Increase Conditions have not been satisfied on or
      before February 25, 2000, then the Loan Amount shall revert back to Twenty
      Five Million ($25,000,000.00) Dollars and the Borrower shall repay such
      sums as are necessary to reduce the outstanding balance owed under the
      Loan to the then applicable Loan Amount."

      6. Section 10.8(a) of the Loan Agreement is hereby amended by deleting the
first sentence in its entirety and replacing it with the following:

      "The ratio ("Loan to Value Ratio") obtained by dividing the outstanding
      principal balance of the Loan by the Value of the Project, expressed as a
      percentage, shall not be greater than fifty (50%) percent until the
      earlier of: (i) February 25, 2000, or (ii) satisfaction of the Permanent
      Increase Conditions, after which the Loan to Value Ratio shall
      automatically be decreased to forty (40%) percent."

      7. Section 10.8(f) of the Loan Agreement is hereby amended by deleting the
reference of Seventy Million ($70,000,000.00) Dollars and replacing it instead
with One Hundred and Five Million ($105,000,000.00) Dollars.

      8. Any and all Loan Documents not specifically amended shall be deemed
amended to replace the reference to Twenty Five Million ($25,000,000.00) Dollars
to Thirty Five Million ($35,000,000.00) Dollars as provided herein.

      9. Any and all references to the Note shall mean the Amended and Restated
Master Promissory in the principal face amount of the Loan Amount dated as of
the date hereof, made by the Borrower to the order of the Lender, as such
Promissory Note may hereafter be extended, renewed, replaced, substituted,
restated, or modified with the prior written consent of the Borrower and Lender.

      10. The Borrower acknowledges and agrees that the Borrower and the Lender
are, contemporaneously herewith, revising the existing Security Documents that
are presently being held in escrow by the Lender to reflect the increased the
Loan Amount as provided in this First Amendment, which revised Security
Documents shall continue to be dated as of February 23, 1999 and shall include
the Obligations as amended by the First Amendment. The Borrower shall as soon as
possible, but in any event before February 25, 2000, provide the Lender with
satisfactory title update letters for all existing Projects indicating no
intervening liens on such Projects since the issuance of the owners title
insurance policies furnished to the Lender by the Borrower.

      11. The Borrower has informed the Lender that the Borrower intends to
complete a Roll-Up of FSP Silverside Plantation Limited Partnership, FSP
Hillview Center Limited Partnership, and FSP Telecom Business Center Limited
Partnership (the "Additional Entities") as of January 1, 2000. The Borrower will
cause each Additional Entity to execute the Joinder Documents at the time of the
Roll-Up and deliver the required items in Section 6.5 of the Loan Agreement as
soon as possible, but in any event on or before February 25, 2000.

                                       -2-
<PAGE>

      12. The Borrower shall pay the Lender an additional commitment fee of
Thirteen Thousand ($13,000.00) Dollars on or before February 25, 2000, which fee
shall be deemed fully earned as of the date hereof.

      13. Except as specifically amended herein, all of the terms and conditions
of the Agreement shall remain in full force and effect as originally constituted
and the Borrower confirms and ratifies all representations, warranties and
covenants contained therein.

      14. The Borrower represents and warrants that no event has occurred or
failed to occur which constitutes, or which solely with the passage of time or
the giving of notice (or both) would constitute an Event of Default. The
Borrower confirms that as of the date hereof it does not have any offsets,
defenses, claims or counterclaims arising out of the Loan Documents and that to
the extent the Borrower has any offsets, defenses, claims or counterclaims the
Borrower hereby WAIVES and RENOUNCES such offsets, defenses, claims or
counterclaims.

      15. This First Amendment shall take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first above
written.

      16. This First Amendment may be executed in counterparts each of which
shall constitute one single executed document.

      IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
a sealed instrument at Boston, Massachusetts as of the date first above written.

                                           FRANKLIN STREET PARTNERS
                                           LIMITED PARTNERSHIP

                                           By: /s/ George J. Carter
                                              ---------------------
                                           Name: George J. Carter
                                           Its:  Managing General Partner

                                           FSP WESLAYAN OAKS LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -3-
<PAGE>

                                           ESSEX LANE ASSOCIATES LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP APARTMENT PROPERTIES
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                           FSP PARK SENECA LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP SANTA CLARA LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -4-
<PAGE>

                                           FSP PIEDMONT CENTER LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                           ONE TECHNOLOGY DRIVE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP NORTH ANDOVER OFFICE PARK
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           CITIZENS BANK OF MASSACHUSETTS

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: Daniel R. Ouellette
                                                    Title: Vice President

                                       -5-
<PAGE>

      The undersigned Guarantor of the Obligation joins in the execution of this
First Amendment and expressly acknowledges and confirms that although not
necessary to bind such person, such person consents to the above First Amendment
and acknowledges that Obligations as amended herein shall be guaranteed under
their Guaranty.

Witness:                                     FSP HOLDINGS LLC,
                                             a Delaware limited lability company

                                             By: /s/ George J. Carter
------------------------------------            ---------------------
                                             Name: George J. Carter
                                             Its:  President

                                       -6-
<PAGE>

                       SECOND AMENDMENT TO LOAN AGREEMENT

      This Second Amendment (the "Second Amendment") is made as of this 14th day
of February, 2001 and hereby amends that certain Loan Agreement dated as of
February 23, 1999 as amended by a First Amendment to Loan Agreement dated as of
December 27, 1999 (the "Agreement") by and among Franklin Street Partners
Limited Partnership, FSP Weslayan Oaks Limited Partnership, Essex Lane
Associates Limited Partnership, FSP Apartment Properties Limited Partnership,
FSP Park Seneca Limited Partnership, FSP Santa Clara Limited Partnership, FSP
Piedmont Center Limited Partnership, One Technology Drive Limited Partnership,
FSP North Andover Office Park Limited Partnership, FSP Southfield Centre Limited
Partnership, FSP Blue Ravine Limited Partnership, FSP Bollman Place Limited
Partnership, FSP Austin N.W. Limited Partnership, FSP Gateway Crossing Limited
Partnership, FSP Lyberty Way Limited Partnership, FSP Hillview Center Limited
Partnership, FSP Silverside Plantation Limited Partnership, FSP Telecom Business
Center Limited Partnership, other Borrowers which may become parties to the
Agreement (individually and collectively the "Borrower") and Citizens Bank of
Massachusetts (the "Lender"). Capitalized terms used but not defined herein
shall have the meanings attributed thereto in the Agreement, unless otherwise
noted herein.

      1. The definition of Collateral is hereby amended by inserting at the end
of the definition the following:

      "(except for the Additional Properties, which are not intended to be
      Collateral or the subject of any Security Documents hereunder)."

      2. Schedule A of the Loan Agreement is hereby amended by adding the
following in alphabetical order thereto:

      "Additional Properties. Collectively, the following properties: 678-686
      Hillview Drive, Milpitas, California; 81 Blue Ravine, Folsom, California;
      18000 W. Nine Mile Road, Southfield, Michigan; 11211 Taylor Draper Lane,
      Austin, Texas; 7130-7150 Columbia Gateway Drive, Columbia, Maryland; 10
      Lyberty Way, Westford, Massachusetts; 8730 Bollman Place, Savage (Jessup),
      Maryland."

      3. The definition of the Loan Amount is hereby amended by deleting the
current definition and replacing it with:

      "An amount equal to Fifty Million ($50,000,000.00) Dollars."

      4. The definition of Maturity Date is hereby amended by deleting the
reference to February 23, 2001 and replacing it with:

      "February 23, 2003."

                                       -1-
<PAGE>

      5. The definition of Project is hereby deleted in its entirety and
replaced with the following:

      "Project. Collectively, the Additional Properties plus the following
      properties: Essex House, 3919 Essex Lane, Houston, Texas; 3231 Allen
      Parkway, Houston, Texas; Weslayan Oaks Apartments, 4041 Law Street,
      Houston, Texas; 7250 Perkins Road, Baton Rouge, Louisiana; 451 Andover
      Street, North Andover, Massachusetts; 1515 Mockingbird Lane, Charlotte,
      North Carolina; 33 and 37 Villa Road, Greenville, South Carolina; 4995
      Patrick Henry Drive, Santa Clara, California; 5751-5771 Copley Drive, San
      Diego, California; One Technology Drive, Peabody, Massachusetts, and other
      properties as may be supplemented as provided herein."

      6. The first sentence of Section 4(b) is hereby deleted in its entirety
and replaced with the following:

      "On the earlier of (i) each anniversary date of the Closing Date, or (ii)
      the Termination Date, the Borrower shall pay the Lender an annual fee of
      $125,000.00 (first such payment due on February 23, 2002), or a pro rated
      amount if the Loan is paid in full prior to the next anniversary date of
      the Closing Date."

      7. The reference to 1.25% in Section 4(d) is hereby deleted and replaced
with 1.35%.

      8. The reference in Section 1.3 to "Thirty Five Million ($35,000,000.00)
Dollars, subject, however, to decrease as provided in Section 2.1(b)" shall be
deleted and replaced with "Fifty Million ($50,000,000.00) Dollars."

      9. Section 10.8 (a) of the Loan Agreement is deleted in its entirety and
replaced with the following:

      "(a) Loan to Value. (i) The ratio ("Loan to Value Ratio") obtained by
      dividing the outstanding principal balance of the Loan by the Value of the
      Project, expressed as a percentage, shall not be greater than forty (40%)
      percent. This covenant shall be tested at the end of each fiscal quarter
      of the Borrower. In testing compliance with this covenant the Value of the
      Project attributed to any one property may not exceed twenty five (25%)
      percent of the aggregate Value of the Project for all properties.

      (ii) The Loan to Value Ratio (excluding the value of the Additional
      Properties from such calculation) shall not be greater than fifty-five
      (55%) percent. This covenant shall be tested at the end of each fiscal
      quarter of the Borrower."

                                       -2-
<PAGE>

      10. Section 10.8(f) of the Loan Agreement is hereby amended by deleting
the reference of One Hundred and Five Million ($105,000,000.00) Dollars and
replacing it instead with One Hundred and Forty Million ($140,000,000.00)
Dollars.

      11. Any and all Loan Documents not specifically amended shall be deemed
amended to replace the reference to Thirty Five Million ($35,000,000.00) Dollars
to Fifty Million ($50,000,000.00) Dollars as provided herein.

      12. Any and all references to the Note shall mean the Second Amended and
Restated Master Promissory in the principal face amount of the Loan Amount dated
as of the date hereof, made by the Borrower to the order of the Lender, as such
Promissory Note may hereafter be extended, renewed, replaced, substituted,
restated, or modified with the prior written consent of the Borrower and Lender.

      13. The Borrower acknowledges and agrees that the Borrower and the Lender
are, contemporaneously herewith, revising the existing Security Documents that
are presently being held in escrow by the Lender to reflect the increased Loan
Amount as provided in this First Amendment, which revised Security Documents
shall continue to be dated as of February 23, 1999 and shall include the
Obligations as amended by the Second Amendment. The Borrower shall as soon as
possible, but in any event before March 14, 2001, provide the Lender with
satisfactory title update letters for the Project properties located in the
Commonwealth of Massachusetts indicating no intervening liens on such properties
since the issuance of the owners title insurance policies furnished to the
Lender by the Borrower.

      14. The Borrower shall pay the Lender an additional commitment fee of
Twenty Five Thousand ($25,000.00) Dollars, which fee shall be deemed fully
earned as of the date hereof.

      15. Except as specifically amended herein, all of the terms and conditions
of the Agreement shall remain in full force and effect as originally constituted
and the Borrower confirms and ratifies all representations, warranties and
covenants contained therein.

      16. The Borrower represents and warrants that no event has occurred or
failed to occur which constitutes, or which solely with the passage of time or
the giving of notice (or both) would constitute an Event of Default. The
Borrower confirms that as of the date hereof it does not have any offsets,
defenses, claims or counterclaims arising out of the Loan Documents and that to
the extent the Borrower has any offsets, defenses, claims or counterclaims the
Borrower hereby WAIVES and RENOUNCES such offsets, defenses, claims or
counterclaims.

      17. This Second Amendment shall take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first above
written.

                                       -3-
<PAGE>

      18. This Second Amendment may be executed in counterparts each of which
shall constitute one single executed document.

      IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
a sealed instrument at Boston, Massachusetts as of the date first above written.

                                           FRANKLIN STREET PARTNERS
                                           LIMITED PARTNERSHIP

                                           By:      FSP General Partner LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP WESLAYAN OAKS LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -4-
<PAGE>

                                           ESSEX LANE ASSOCIATES LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP APARTMENT PROPERTIES
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                           FSP PARK SENECA LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP SANTA CLARA LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -5-
<PAGE>

                                           FSP PIEDMONT CENTER LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name: George J. Carter
                                                    Its:  President

                                           ONE TECHNOLOGY DRIVE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP NORTH ANDOVER OFFICE PARK
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP SOUTHFIELD CENTRE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -6-
<PAGE>

                                           FSP BLUE RAVINE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP BOLLMAN PLACE LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP AUSTIN N.W. LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP GATEWAY CROSSING LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                       -7-
<PAGE>

                                           FSP LYBERTY WAY LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP HILLVIEW CENTER LIMITED
                                           PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP SILVERSIDE PLANTATION
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           FSP TELECOM BUSINESS CENTER
                                           LIMITED PARTNERSHIP

                                           By:      FSP Holdings LLC,
                                                    its general partner

                                                    By: /s/ George J. Carter
                                                       ---------------------
                                                    Name:  George J. Carter
                                                    Its:  President

                                           CITIZENS BANK OF MASSACHUSETTS

                                           By: /s/ Daniel R. Ouellette
                                              ------------------------
                                           Name:  Daniel R. Ouellette
                                           Title:  Senior Vice President

                                       -8-
<PAGE>

      The undersigned Guarantor of the Obligation joins in the execution of this
Second Amendment and expressly acknowledges and confirms that although not
necessary to bind such person, such person consents to the above Second
Amendment and acknowledges that Obligations as amended herein shall be
guaranteed under their Guaranty.

Witness:                                   FSP HOLDINGS LLC,
                                           a Delaware limited lability company

                                           By: /s/ George J. Carter
----------------------------                  ---------------------
                                           Name:  George J. Carter
                                           Its:  President

                                       -9-Prepared by R.R. Donnelley Financial -- SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

  
 Exhibit 10.4 
  
 THE MCCLATCHY COMPANY 
  
 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 
  
 (As Amended and Restated Effective January 1, 2002) 
 

  
 
TABLE OF CONTENTS 
  
 
	  	  	  	  	 Page
 

	 ARTICLE 1
PURPOSE 
 	  	 1
 
	 ARTICLE 2
PARTICIPATION 
 	  	 1
 
	 ARTICLE 3
ELIGIBILITY FOR SERP PAYMENT 
 	  	 1
 
	       3.1
 	  	 
Normal Retirement Benefit 
 	  	 1
 
	       3.2
 	  	 
Early Retirement Benefit 
 	  	 2
 
	       3.3
 	  	 
Deferred Retirement Benefit 
 	  	 2
 
	       3.4
 	  	 
No Other Payments 
 	  	 2
 
	       3.5
 	  	 
Adjustments for Form of Benefit 
 	  	 2
 
	 ARTICLE 4
SERP BENEFIT 
 	  	 3
 
	       4.1
 	  	 
Accrued Benefit 
 	  	 3
 
	       4.2
 	  	 
Basic Formula Amount and Pension Offset 
 	  	 3
 
	       4.3
 	  	 
Early Retirement Benefit 
 	  	 3
 
	 ARTICLE 5
SURVIVOR AND DEATH BENEFITS 
 	  	 4
 
	       5.1
 	  	 
Post-Retirement Survivor Benefits 
 	  	 4
 
	       5.2
 	  	 
Pre-Retirement Death Benefits 
 	  	 4
 
	       5.3
 	  	 
No Other Death Benefits 
 	  	 5
 
	 ARTICLE 6
SUSPENSION OF BENEFITS FOR REEMPLOYED RETIRED PARTICIPANTS 
 	  	 5
 
	 ARTICLE 7
FORFEITURE FOR CRIMINAL CONDUCT 
 	  	 5
 
	 ARTICLE 8
INFORMATION FOR BENEFITS CALCULATIONS 
 	  	 6
 
	       8.1
 	  	 
Incomplete or Incorrect Information 
 	  	 6
 
	       8.2
 	  	 
Overpayments 
 	  	 6
 
	 ARTICLE 9
CLAIMS PROCEDURE 
 	  	 6
 
	       9.1
 	  	 
Initial Claim 
 	  	 6
 
	       9.2
 	  	 
Claims Appeal 
 	  	 7
 
	 ARTICLE 10
MANAGEMENT AND ADMINISTRATION 
 	  	 7
 
	     10.1
 	  	 
Administration 
 	  	 7
 
	     10.2
 	  	 
Amendment and Termination of the Plan 
 	  	 8
 
	 ARTICLE 11
GENERAL PROVISIONS 
 	  	 8
 
	     11.1
 	  	 
Alienation of Benefits and Assignment 
 	  	 8
 
	     11.2
 	  	 
Withholding Taxes 
 	  	 9
 
	     11.3
 	  	 
Distributions to Minors and Incompetents 
 	  	 9
 
	     11.4
 	  	 
No Right to Employment 
 	  	 9
 
	     11.5
 	  	 
Unfunded Plan 
 	  	 9
 
	     11.6
 	  	 
Trust Fund 
 	  	 10
 
	     11.7
 	  	 
Miscellaneous 
 	  	 10
 
	     11.8
 	  	 
Governing Law 
 	  	 10
 
	 ARTICLE 12
DEFINITIONS 
 	  	 11
 

 
 

 1 

  
 
ARTICLE 1 
 PURPOSE 
  
 McClatchy Newspapers, Inc. (the “MNI”) established the Supplemental Executive Retirement Plan (the “SERP” or the “Plan”) with the intention of retaining executives whose skills and talents are important to the
MNI. The principal objective of the SERP is to provide a monthly retirement income that supplements benefits under the Restated Retirement Plan for Employees of McClatchy Newspapers (the “Pension Plan”). This amendment and restatement
transfers sponsorship of the Plan to The McClatchy Company (the “Company”). This amendment and restatement shall apply to any Participant who is an Employee on January 1, 2002. Benefits payable with respect to a Participant in the Plan who
ceased to be an Employee prior to January 1, 2002 shall be determined by the terms of the Plan as in effect on the date of such Participant’s termination of employment, except that the administrative and general provisions of this amendment and
restatement shall be applied. 
  
 
ARTICLE 2 
 PARTICIPATION 
  
 Participation is limited to Designated Employees. Active participation shall continue for as long as the Employee is a Designated Employee. A Participant shall not be credited with any additional Years of Benefit Service under this Plan
once he or she ceases active participation in the Plan. 
  
 
ARTICLE 3 
 ELIGIBILITY FOR SERP PAYMENT 
  
 
3.1    Normal Retirement Benefit 
  
 A Participant who ceases to be an Employee
during the month in which he or she attains Normal Retirement Age shall be eligible to receive a pension equal to his or her Accrued Benefit, if any, commencing as of his or her Normal Retirement Date (or as soon as reasonable practicable thereafter
retroactive to his or her Normal Retirement Date). The Company shall commence any such payments automatically to the Participant. Payment shall be made in the form of benefit under which the Participant’s Pension Plan benefit is to be paid, and
the amount of payment under this Plan shall be adjusted in accordance with Section 3.5 if the form of benefit is other than the Normal Form under the Pension Plan. 
 

  
 
3.2    Early Retirement Benefit 
  
 A Participant who is Vested and who ceases
to be an Employee prior to Normal Retirement Age shall be eligible to receive a pension. Such pension either shall be: (a) a pension equal to his or her Accrued Benefit, if any, provided such pension commences as of his or her Normal Retirement
Date; or (b) a pension equal to his or her Early Retirement Benefit, if any, provided such pension commences on his or her Early Retirement Date or the first day of any month thereafter that is prior to the Participant’s Normal Retirement Date.

  
 The Company shall commence payment to the Participant under this Section 3.2 automatically as of the Participant’s Benefit
Commencement Date under the Pension Plan. Payment shall be made in the form of benefit under which the Participant’s Pension Plan benefit is to be paid, and the amount of payment under this Plan shall be adjusted in accordance with Section 3.5
if the form of benefit is other than the Normal Form under the Pension Plan. 
  
 
3.3    Deferred Retirement Benefit 
  
 A Participant may continue as an
Employee past his or her Normal Retirement Age without the consent of the Employer. Such a Participant shall be eligible to receive a pension equal to his or her Accrued Benefit, if any, commencing as of his or her Deferred Retirement Date. The
Company shall commence any such payments automatically to the Participant. Payment shall be made in the form of benefit under which the Participant’s Pension Plan benefit is to be paid, and the amount of payment under this Plan shall be
adjusted in accordance with Section 3.5 if the form of benefit is other than the Normal Form under the Pension Plan. 
  
 
3.4    No Other Payments 
  
 A Participant who ceases to be an Employee at a
time that he or she is not Vested shall not be entitled to any Benefit, including any survivor or death benefit, under the Plan. 
  
 
3.5    Adjustments for Form of Benefit 
  
 After any appropriate reduction is
made in a Participant’s pension under this Plan for the commencement of payment prior to the Participant’s Normal Retirement Date, appropriate adjustment shall be made to reflect the form of payment in which the Participant’s Benefit
under this Plan is to be made. Notwithstanding anything to the contrary under this Plan, a Participant’s Benefit shall be paid in the same form and at the same time as his or her pension under the Pension Plan. The adjustment made to the
Benefit amount under this Plan to reflect payment in a form that is not the Normal Form shall be made using the same 
 

 2 

  
 adjustment tables and actuarial factors applied to convert the Participant’s Pension Plan benefit to the same form
of payment. 
  
 
ARTICLE 4 
 SERP BENEFIT 
  
 
4.1    Accrued Benefit 
  
 A Participant’s Accrued Benefit, when
expressed as a single life annuity payable monthly and commencing as of the Participant’s Normal Retirement Date, shall be equal to the excess, if any, of (i) the Participant’s Basic Formula Amount over (ii) the Participant’s Pension
Offset. 
  
 
4.2    Basic Formula Amount and Pension Offset 
  
 A Participant’s Basic
Formula Amount is 1.5% of the Participant’s Average Monthly Earnings multiplied by his or her Years of Benefit Service up to a maximum of 35 such years, and determined without regard to any limitations on qualified plan benefits, including, but
not limited to, the limitations on Earnings under section 401(a)(17) of the Code and on benefits under section 415 of the Code. A Participant’s Pension Offset shall be a single life annuity equal to the monthly amount that would be payable to
the Participant from the Pension Plan as of his or her Normal Retirement Date or, in the case of a Participant who continues to be an Employee past Normal Retirement Age, his or her Deferred Retirement Date under this Plan. 
  
 
4.3    Early Retirement Benefit 
  
 A Participant’s Early Retirement
Benefit, when expressed as a single life annuity payable monthly, shall be equal to the Participant’s Accrued Benefit, reduce for early payment by multiplying the Accrued Benefit by the percentage determined in accordance with the following
Schedule. 
 

 3 

  
 Schedule of Early Retirement
Factors                             
  
 
	 Number of Whole Years
 Between Early Retirement Date
and
 Normal Retirement Date
 
	  	 Percentage
 

	 0
 	  	 100.00%
 
	 1
 	  	 100.00%
 
	 2
 	  	 100.00%
 
	 3
 	  	 100.00%
 
	 4
 	  	   96.00%
 
	 5
 	  	   92.00%
 
	 6
 	  	   87.00%
 
	 7
 	  	   82.00%
 
	 8
 	  	   77.00%
 
	 9
 	  	   72.00%
 
	 10
 	  	   67.00%
 

 
  
 Straight line interpolation of these percentages will be employed where fractional whole years prior to
Normal Retirement Date are involved. 
  
 
ARTICLE 5 
 SURVIVOR AND DEATH BENEFITS 
  
 
5.1    Post-Retirement Survivor Benefits 
  
 If a Participant dies after his
or her Benefit Commencement Date, survivor benefits, if any, will only be payable according to the provisions of the form of benefit in which the Participant’s Accrued Benefit was being paid. For example, no survivor benefit shall be payable to
a Participant who receives payment as a single lump sum or is receiving payment as a single life annuity. 
  
 
5.2    Pre-Retirement Death Benefits 
  
 If a Participant, who is Vested dies
before his or her Benefit Commencement Date and is survived by a Surviving Spouse, the Surviving Spouse shall be eligible to receive the Spousal Death Benefit, if any, determined in accordance with this Section 5.2. 
  
 (a)  The Spousal Death Benefit shall be a monthly benefit payable for the life of the Surviving Spouse and equal to the
monthly benefit that would have been payable to the spouse if the Participant survived to and had begun receiving benefit payments under this Plan as a 100% Joint and Survivor Annuity commencing on the date the benefit is to commence under Paragraph
(b). Notwithstanding the preceding, to determine the Participant’s Years of Benefit Service, the Plan 
 

 4 

  
 Administrator shall use the Participant’s actual date of ceasing to be an Employee (which, in the case of a
Participant who dies while an Employee, shall be the date of death). 
  
 (b)  Payment of the Spousal
Death Benefit shall begin to the Surviving Spouse as of the date that would have been the Participant’s Normal Retirement Date or, if later, the first day of the month following the Participant’s death. If the Participant dies prior to
attaining Normal Retirement Age and the Surviving Spouse has elected an earlier payment under the Pension Plan, then that early payment date, along with the applicable reduction factors, also shall be applied to the Spousal Death Benefit.
Notwithstanding the foregoing, if the Actuarial Equivalent lump sum value of the Spousal Death Benefit (determined using the Applicable Interest Rate) is $5,000 or less, payment shall be made to the Surviving Spouse without the spouse’s consent
in a lump sum as soon as practicable following the date of the Participant’s death. 
  
 
5.3    No Other Death Benefits 
  
 If a Participant who is Vested dies before
his or her Benefit Commencement Date without a Surviving Spouse, there shall not be any Benefit payable. 
  
 
ARTICLE 6 
 SUSPENSION OF BENEFITS FOR REEMPLOYED 
 RETIRED
PARTICIPANTS 
  
 If a retired Participant is re-employed by the Company, any Benefit otherwise payable to the Participant shall
be suspended during the period of reemployment. Except as next described, Benefit payments shall resume in the same amount to the Participant when he or she subsequently ceases to be an Employee. Notwithstanding the preceding, if during the period
of reemployment the Participant again was an active participant in the Plan, the Participant shall be eligible to receive the additional Benefit accrued under the terms of the Plan in effect on the date the Participant ceases active participation,
based on the Participant’s Average Monthly Earnings, Years of Benefit Service and the Pension Offset as of that date he or she ceases to be an active participant, but reduced by the Actuarial Equivalent of any Benefit paid before the
Participant’s reemployment. 
  
 
ARTICLE 7 
 FORFEITURE FOR CRIMINAL CONDUCT 
  
 If the Company terminates the employment of the Participant at any time for a crime committed against the business or property of the Company which is evidenced by a conviction of the Participant for a felony by a
court of law, which 
 

 5 

 conviction, if appealed, is sustained by the highest court to which such conviction is appealed, all rights to benefits which the Participant or any of the
beneficiaries of the Participant would be entitled under this Plan shall be forfeited. 
  
 
ARTICLE 8 
 INFORMATION FOR BENEFITS CALCULATIONS 
  
 
8.1    Incomplete or Incorrect Information 
  
 Any delay in receiving from a
Participant or Surviving Spouse information requested by the Company shall result in the Benefits payable being based initially on the information then available to the Company and the Plan Administrator, and their estimate of any unavailable
information. If additional or different information thereafter becomes available to the Company or the Plan Administrator, Benefits shall be adjusted appropriately as determined by the Plan Administrator. 
  
 
8.2    Overpayments 
  
 If any overpayment of Benefits is made under the Plan,
the amount of the overpayment may be set off against further amounts payable to or on account of the person who received the overpayment until the overpayment has been recovered in full. The foregoing remedy is not intended to be exclusive.

  
 
ARTICLE 9 
 CLAIMS PROCEDURE 
  
 
9.1    Initial Claim 
  
 If a Participant believes he or she is entitled to
payments under the Plan which have not been paid or have been paid in a lesser amount, the Participant may submit a written claim to the Plan Administrator. If the Plan Administrator determines that the claim should be denied, written notice of the
decision will be furnished to the Participant within a reasonable period of time. This notice will set forth in clear and precise terms the specific reasons for the denial, specific reference to pertinent Plan provisions on which the denial is
based, a description of additional material or information necessary for the Participant to perfect the claim, and an explanation of the Plan’s review procedure. The written notice shall be given to the Participant within ninety (90) days after
receipt of the claim, unless special circumstances require an extension of time for processing the claim, in which case a decision will be rendered and written notice furnished within one hundred eighty (180) days after receipt of the claim. A
written notice of such extension of time 
 

 6 

  
 indicating the special circumstances and expected date of decision will be furnished to the Participant within the
initial ninety (90) day period. 
  
 
9.2    Claims Appeal 
  
 The Participant may, within 60 days after receiving
notice denying the claim, request a review of the decision by written application to the Committee. The Participant may also review pertinent documents and submit issues and comments in writing. A written decision on the appeal will be made by the
Committee not later than 60 days after receipt of the appeal, unless special circumstances require an extension of time, in which case a decision will be rendered within a reasonable period of time, but in no event later than 120 days after receipt
of the appeal. A written notice of such extension of time will be furnished to the Participant before such extension begins. The decision will include the specific reason(s) for the decision and the specific reference(s) to the pertinent plan
provisions on which the decision is based. The decision will be final. The Participant’s Surviving Spouse also may use the claim procedures set forth in Section 9.1 and this Section. 
  
 
ARTICLE 10 
 MANAGEMENT AND ADMINISTRATION 
  
 
10.1    Administration 
  
 The Company shall serve as the Plan Administrator.
The Plan Administrator shall have the full power and authority to control and manage the operation and administration of the Plan, including the authority, in its sole discretion: (a) to promulgate and enforce such rules and regulations as deemed
necessary or appropriate for the administration of the Plan; (b) to interpret the Plan consistent with the terms and intent thereof; and (c) to resolve any possible ambiguities, inconsistencies and omissions in the Plan. All such actions shall be in
accordance with the terms and intent of the Plan. 
  
 The Company may designate one or more persons to carry out its fiduciary
responsibilities as Plan Administrator. To the extent of any such delegation, the delegate shall become the Plan Administrator responsible for the matters assigned by the Company, and references to the Company in such capacity shall apply instead to
the delegate. Additionally, the Company may assign any of its responsibilities to specific persons who are directors, officers, or employees of the Company or its Controlled Group members, or a Committee composed of such persons, in order to execute
its actions as the Plan Administrator. Any action by the Company assigning any of its responsibilities to specific persons who are directors, officers, or employees of the Company or its Controlled Group members, or a Committee composed of such
persons, shall not constitute delegation of the Company’s 
 

 7 

  
 responsibility as Plan Administrator, but rather shall be treated as the manner in which the Company has determined
internally to discharge such responsibility. 
  
 The Plan Administrator may engage the services of accountants, attorneys,
actuaries, consultants and such other professional personnel as deemed necessary or advisable to assist them in fulfilling responsibilities of the Plan Administrator under the Plan. The Plan Administrator, and its delegates and assistants shall be
entitled to act on the basis of all tables, valuations, certificates, opinions and reports furnished by such professional personnel. 
  
 
10.2    Amendment and Termination of the Plan 
  
 The Company may, in their
sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part, and for any reason, by action of its Board or, pursuant to this delegation, by action of the Committee. However, no termination, amendment
or suspension of the Plan will impair a retired Participant’s right, if any, or the right, if any, of a retired Participant’s Surviving Spouse to receive Benefits in accordance with this Plan as it was in effect on the last day of the
Participant’s active participation. Furthermore, with respect to an individual who is an active Participant on the date of Plan amendment or termination, and if such Participant would have been entitled to payment of a Benefit under the terms
of the Plan as in effect prior to amendment or termination at the time he or she actually ceases to be an Employee in the future, then no such amendment or termination of this Plan shall reduce the Benefit that the Company is obligated to pay,
commencing at such time that payment otherwise would be due, to an amount that is less than the Accrued Benefit calculated under Section 4.1 by using (a) the Basic Formula Amount accrued to the date of amendment or termination, determined by
assuming that the Participant ceases to be an Employee on the previous day, and (b) the Pension Offset calculated as of the Participant’s actual date of ceasing to be an Employee, determined as if the Plan had continued in effect to the
Participant’s actual employment termination date without the amendment or termination. 
  
 
ARTICLE 11 
 GENERAL PROVISIONS 
  
 
11.1    Alienation of Benefits and Assignment 
  
 No Benefit payable under the
Plan shall be subject to alienation, sale, transfer, assignment, pledge, attachment, garnishment, lien, levy or like encumbrance. No Benefit under the Plan shall in any manner be liable for or subject to the debts or liabilities of any person
entitled to Benefits under the Plan. The Company, however, may assign any of its rights, interests and obligations under this Plan to any Controlled Group member or other affiliate, or to any successor person or 
 

 8 

  
 entity to the Company or the Controlled Group member in connection with a merger, consolidation, reorganization,
business combination, sale of substantially all of the assets of the Company or the affiliate, or any other similar transaction to which the Company or the affiliate is a party. Otherwise, the Company may not assign its rights, interests and
obligations under this Plan. 
  
 
11.2    Withholding Taxes 
  
 The Plan Administrator shall withhold such taxes
and make such reports to governmental authorities as it reasonably believes to be required by law. 
  
 
11.3    Distributions to Minors and Incompetents 
  
 If the Plan Administrator
determines that any Participant or Surviving Spouse receiving or entitled to receive Benefits under the Plan is incompetent to care for his or her affairs, and in the absence of the appointment of a legal guardian of the property of the incompetent,
payments due under the Plan (unless prior claim thereto has been made by a duly qualified guardian, committee or other legal representative) may be made to the spouse, parent, brother or sister or other person, including a hospital or other
institution, deemed by the Plan Administrator to have incurred or to be liable for expenses on behalf of such incompetent. 
  
 The
Plan Administrator, however, in its sole discretion, may require that a legal guardian for the property of any such incompetent be appointed before authorizing the payment of Benefits in such situations. Benefit payments made under the Plan in
accordance with determinations of the Plan Administrator pursuant to this Article 11 shall be a complete discharge of any obligation arising under the Plan with respect to such Benefit payments. 
  

11.4    No Right to Employment 
  
 Nothing contained in this Plan shall be
deemed to give any employee the right to be retained in the service of the Company or to interfere with the right of the Company to demote, discharge or discipline any employee at any time without regard to the effect that such demotion, discharge
or discipline may have upon the employee under the Plan. 
  
 
11.5    Unfunded Plan 
  
 The Plan shall be an unfunded, unsecured obligation
of the Company payable from general assets. The Company shall not be required to segregate any assets to provide Benefits, and the Plan shall not be construed as providing for such segregation. Any liability of the Company to any Participant or
Surviving Spouse with respect to Benefits shall be based solely upon any contractual obligations created 
 

 9 

  
 by the Plan. Any such obligation shall not be deemed to be secured by any pledge or other encumbrance or any property of
the Company or its subsidiaries. 
  
 
11.6    Trust Fund 
  
 At its discretion, the Company may establish one or
more trusts for the purpose of assisting in the payment of Benefits. To the extent Benefits provided for under the Plan are paid from any such trust, the Company shall not have any further obligation to pay such Benefits. The establishment and
maintenance of any such trust shall not alter the nature of Benefits under the Plan as unfunded and unsecured. 
  
 
11.7    Miscellaneous 
  
 (a)  Construction

  
 Unless the contrary is plainly required by the context, wherever any words are used herein in the masculine gender, they shall
be construed as though they were also used in the female gender, and vice versa, and wherever any words are used herein in the singular form, they shall be construed as though they were also used in the plural form, and vice versa. 

 
 (b)  Severability 
  
 If any provision of the Plan is held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if such illegal or invalid provision had never been included in it. 
  
 (c)  Titles
and Headings Not to Control 
  
 The titles to Articles and the headings of Sections in the Plan are for convenience of
reference only, and in the event of any conflict, the text of the Plan, rather than the titles or headings, shall control. 
  
 (d)  Complete Statement of Plan 
  
 This document is a complete statement of the
Plan. The Plan may be amended, modified or terminated only in writing and then only as provided herein. 
  
 
11.8    Governing Law 
  
 The Plan shall be governed by ERISA, and to the
extent not preempted by ERISA, the laws of the State of California without regard to its choice of law provisions. 
 

 10 

  
 
ARTICLE 12 
 DEFINITIONS 
  
 Except for those definitions set forth in Article 1 or elsewhere in this Plan, the following terms shall have the meaning assigned below in this Article 12. Terms not specifically defined in this Plan shall have the meaning set forth under
the Pension Plan. 
  
 12.1    “Accrued Benefit” means the series of payments described in Section
4.1. 
  
 12.2    “Average Monthly Earnings” means the average of the Participant’s monthly
Earnings for each month during the 36 consecutive months in which the Participant is an Employee and an active Participant with respect to which the average is the highest. 
  
 12.3    “Basic Formula Amount” means the monthly amount determined in accordance with Section 4.2. 
  

12.4    “Benefit” means amounts payable under the Plan to a Participant who becomes entitled to a payment of an Accrued Benefit or an Early Retirement
Benefit or to a Surviving Spouse as a Spousal Death Benefit in respect of a Participant who is Vested. 
  
 12.5    “Board” means the Board of Directors of the Company. 
  
 12.6    “Code” means the Internal Revenue Code of 1986, as amended. 
  
 12.7    “Committee” means the Retirement Committee or such other persons or group as the Board may appoint to perform the functions of the Committee with respect to the Plan. In the absence of such an
appointment, the Board shall serve as the Committee. 
  
 12.8    “Deferred Retirement Date” means in
the case of a Participant who ceases to be an Employee after attaining Normal Retirement Age, the first day of the month next following his or her employment termination date. 
  
 12.9    “Designated Employee” means, as of the designation date or, if later, the first date on which the Employee attains such title, a classification of
executive designated by the Company as being eligible to participate in the Plan or an Employee who has been designated by the Chief Executive Officer (“CEO”) of the Company to participate in this Plan, provided any such designated person
also is a member under the Pension Plan. The Company (or, in the case of a designation made by the CEO, the CEO) may de-designate an individual person or title or classification of executive, at which point that person or group of persons no longer
shall be eligible to participate actively in the Plan. 
 

 11 

 12.10    “Early Retirement Benefit” means the series of payments described in Section 4.3. 

 
 12.11    “Early Retirement Date” means, with respect to a Participant who ceases to be an Employee on or after
attaining age 55, the first day of the month following the date on which the Participant retires from employment with the Company, or in the case of a Participant who ceases to be an Employee prior to attaining age 55, the first day of the month
following the month in which he or she attains age 55. 
  
 12.12    “Earnings” means, with respect to
a Participant, the Participant’s Earnings as defined in the Pension Plan, but (i) including, provided such bonus is paid in a year other than the year the person ceases to be an Employee, the Participant’s annual MBO bonus paid during the
period for which Earnings is being determined, and (ii) disregarding the limitation on compensation under section 401(a)(17) of the Code. 
  
 12.13    “Employee” means a common law employee of the Company or a Controlled Group member entity. 
  
 12.14    “ERISA” means the Employee Retirement Income Security Act of l974, as amended. 
  
 12.15    “Normal Retirement Age” means the age 65. 
  
 12.16    “Normal Retirement Date” means the first day of the month next following the date the Participant attains Normal Retirement Age. 
  
 12.17    “Participant” means an Employee who meets the participation requirements of Article 2. 
  
 12.18    “Pension Offset” means the monthly amount determined in accordance with Section 4.2. 
  
 12.19    “Plan Administrator” means the Company. 
  
 12.20     “Plan Year” means the calendar year. 
  
 12.21    “Spousal Death Benefit” means the payment or series of payments described in Section 5.2. 
  
 12.22    “Surviving Spouse” means the person to whom, according to the laws of the state of a Participant’s domicile, the Participant is married on the
date of the Participant’s death. 
  
 12.23    “Vested” means, with respect to a Participant,
that the Participant (i) has to his or her credit five (5) years of Vesting Service as defined under the Pension 
 

 12 

  
 Plan or (ii) ceases to be an Employee after having attained age 55 and on account of becoming Disabled. 

 
 12.24    “Years of Benefit Service” means, with respect to a Participant, the number of years of his or her
Benefit Service credited under the Pension Plan but frozen as of the date he or she ceases to be an active Participant in this Plan. 
  
 12.25    “Year of Vesting Service” means, with respect to a Participant, his or her years of Vesting Service determined under the Pension Plan. 
  
 *     *     *     *     * 
  
 To reflect the adoption of this amended and restated Plan by each Board, effective as of January 1, 2002, the authorized officer hereby executes this Plan document on behalf of the Company. 
  
  
 
	 THE MCCLATCHY COMPANY
 
	 
	 By:
 	 	 /S/    KAROLE
MORGAN-PRAGER        
 

 
 
	 
	 Name:
 	 	       KAROLE
MORGAN-PRAGER        
 

 
 
	 
	 Title:
 	 	         VICE PRESIDENT,
SECRETARY      
 

 
 

 13

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