Document:

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                                                                   Exhibit 10.30

                                 August 10, 2000

CVS Corporation
One CVS Drive
Woonsocket, RI 02895
Attn:    Chris W. Bodine

                       Subject: WHOLESALE SUPPLY AGREEMENT

         This letter will confirm the agreement (this "AGREEMENT") between
Cardinal Health* ("CARDINAL") and CVS Meridian, Inc. ("CVS") under which CVS
will purchase certain pharmaceutical and other products from Cardinal on the
following terms and conditions:

         SECTION 1.        DESIGNATION AS PRIMARY WHOLESALER.

         (a) RETAIL PHARMACIES. During the term of this Agreement, CVS will
         designate Cardinal as the primary wholesale pharmaceutical supplier to
         designated pharmacies, whether now or hereafter owned, managed or
         operated by CVS (collectively, the "PHARMACIES" and individually, a
         "PHARMACY"). A list of the Pharmacies (the "DESIGNATED PHARMACY LIST")
         and a comprehensive list of all of the pharmacies owned, managed or
         operated by CVS (the "TOTAL PHARMACY LIST") will be provided by CVS to
         Cardinal from time to time during the term of this Agreement, and upon
         Cardinal's request. The Qualified Annual Purchases of Merchandise (as
         defined below) by such designated Pharmacies compared to CVS' Qualified
         Annual Purchases of Merchandise by all of CVS' retail pharmacies will
         constitute not less than the percentage set forth in the Section 1(a)
         Disclosure Schedule.

         (b) DISTRIBUTION CENTERS. During the term of this Agreement, CVS will
         designate Cardinal as the primary wholesale pharmaceutical supplier to
         all distribution centers, whether now or hereafter owned, managed or
         operated by CVS ("CVS PHARMACY DCS"). A comprehensive list of all of
         the CVS Pharmacy DCs as of the Commencement Date (the "TOTAL DC LIST")
         is set forth in the Section 1(b) Disclosure Schedule.

         (c) CVS PROCARE. This Agreement specifically excludes purchases which
         are made on behalf of the CVS division known as "CVS ProCare".

         SECTION 2.        SALE OF MERCHANDISE AND BROKERAGE PURCHASES.

         (a) PRIMARY REQUIREMENTS. Each of the Pharmacies and the CVS Pharmacy
         DCs will purchase from Cardinal during the term of this Agreement its
         Primary Wholesale Requirements (as defined in the Section 2(a)
         Disclosure Schedule) of pharmaceutical products ("RX PRODUCTS"), which
         consist of purchases of Rx

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         Products for (a) delivery directly to the Pharmacies ("STORE RX
         PURCHASES"); and (b) delivery directly to the CVS Pharmacy DCs
         ("BROKERAGE PURCHASES"). CVS may purchase from Cardinal, at CVS'
         discretion, for delivery directly to the Pharmacies, its health and
         beauty aids, home health care products and other inventory carried by
         Cardinal ("STORE OTHER PURCHASES"). For purposes of this Agreement, the
         term "QUALIFIED PURCHASES" with respect to a period means all purchases
         of Merchandise made and paid for by CVS (and in some circumstances,
         either the CVS Pharmacy DCs or the Pharmacies are specifically
         designated) from Cardinal during that period, net of all returns and
         credits (related to ordering, shipping or accounting errors). For
         purposes of this Agreement, the term "MERCHANDISE" will mean the Rx
         Products (and Store Other Purchases, with respect to the Pharmacies
         only).

         (b) BROKERAGE PURCHASES. The Section 2(b) Disclosure Schedule describes
         the terms by which CVS will make its Brokerage Purchases through
         Cardinal.

         (c) DISCONTINUED MERCHANDISE. Cardinal will stock certain Merchandise
         that Cardinal would not otherwise stock but for CVS' request, except
         food items and Merchandise with limited dating ("SPECIALLY STOCKED
         MERCHANDISE"), subject to such credit considerations concerning the
         applicable manufacturer as Cardinal may reasonably consider appropriate
         (including but not limited to, potential insolvency or outstanding
         balance owed to Cardinal without legitimate reason for dispute). CVS
         guarantees that at least six (6) pieces of each item of Specially
         Stocked Merchandise will be purchased from each of Cardinal's
         distribution centers per month. If Cardinal notifies CVS that less than
         six (6) pieces of an item of Specially Stocked Merchandise were
         purchased in a month from one of Cardinal's distribution centers, then
         Cardinal may elect to discontinue carrying such item in its
         distribution centers. If Cardinal elects to discontinue carrying any
         such item, CVS will accept and purchase the remaining Specially Stocked
         Merchandise at the purchase price for such Specially Stocked
         Merchandise until the Specially Stocked Merchandise is depleted;
         provided, however, that Cardinal will use reasonable efforts to ensure
         that the item is discontinued in the most cost-effective manner, which
         may include, but not be limited to, returning such item directly to the
         manufacturer. Alternatively, Cardinal and CVS may mutually agree to a
         drop-ship arrangement in lieu of Cardinal stocking the item.

         (d) GENERALLY. CVS will be liable for any payment owing to Cardinal
         from any Pharmacy or CVS Pharmacy DC for purchases made hereunder.
         Cardinal reserves the right at all times to determine what Merchandise
         it will carry based upon product quality, manufacturer indemnity,
         insurance, and other policies, and other standards determined by it,
         and may delete from its available inventory items of Merchandise with
         limited or no movement activity.

         SECTION 3. PURCHASE PRICE. As further described in Sections 3(a) and
3(b) Disclosure Schedules, CVS will pay a purchase price ("COST OF GOODS") for
products purchased under this Agreement as follows:

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         (a) STORE RX PURCHASES AND STORE OTHER PURCHASES. CVS will pay a Cost
         of Goods for Merchandise in an amount equal to "Cardinal's Cost" plus
         the percentage set forth in the Section 3(a) Disclosure Schedule. The
         term "CARDINAL'S COST" as used herein means the manufacturer's
         published wholesale acquisition cost for Merchandise at the date of
         Cardinal's invoice to CVS, adjusted to reflect any then-applicable
         contract pricing, but without reduction for cash discounts.
         Manufacturer off-invoice quantity discounts and promotional allowances
         which are intended by the manufacturer to be passed through to
         Cardinal's retail national chain accounts will be made available to
         CVS.

                  The purchase price for selected Merchandise, including but not
         limited to, multisource pharmaceuticals, CardinalSOURCE(SM) generics,
         private label products, medical surgical supplies, home health
         care/durable medical equipment, Merchandise acquired from vendors not
         offering customary cash discount or other terms, and other
         non-pharmaceutical Merchandise will not be based upon Cardinal's
         Cost-plus pricing described above but will instead be net-billed in
         accordance with the terms and conditions established by Cardinal
         (including applicable mark-up) for such Merchandise. Merchandise
         described in this paragraph is sometimes referred to as "SPECIALLY
         PRICED MERCHANDISE." CVS may, but will have no obligation to, purchase
         any specified volume or percentage of its requirements for Specially
         Priced Merchandise, except as described in the Section 3(a) Disclosure
         Schedule.

                  All orders must be electronically transmitted via Telxon units
         or other electronic order entry system approved by Cardinal to qualify
         for the pricing specified in the Section 3(a) Disclosure Schedule.
         Cardinal and CVS agree and acknowledge that electronic ordering is a
         material and critical part of this Agreement and Cardinal's pricing to
         CVS. Accordingly, if Cardinal identifies that a Pharmacy or Pharmacies
         are causing Cardinal to consistently receive orders other than via
         electronically, Cardinal will notify CVS of the problem in writing, and
         CVS will use its reasonable efforts to resolve such problem within
         seven (7) business days of receiving notice from Cardinal. Thereafter,
         non-electronically transmitted orders are subject to Cardinal's Cost
         plus 2% pricing (excluding orders for Merchandise which are delivered
         to the Pharmacies outside of Cardinal's normal delivery schedule as
         described in Section 5 of this Agreement, orders for Schedule II Rx
         Products or override orders). Cardinal will promptly notify CVS of any
         such orders subject to Cardinal's Cost plus 2% pricing pursuant to this
         section.

         (b) BROKERAGE PURCHASES. CVS will pay a purchase price for all
         Brokerage Purchases in an amount equal to the cost set forth on the
         Section 3(b) Disclosure Schedule.

         (c) COST OF GOODS ADJUSTMENT. CVS' Cost of Goods will be subject to
         adjustment as described in the Section 3(c) Disclosure Schedule.

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         (d) ADDITIONAL VOLUME DISCOUNT. CVS is entitled to receive an
         additional volume discount as described in the Section 3(d) Disclosure
         Schedule.

         (e) GENERALLY. CVS acknowledges and agrees that its obligation to pay
         the purchase price for all Brokerage Purchases, Store Rx Purchases,
         Store Other Purchases and other amounts due or to become due under this
         Agreement will not be subject to any reduction, setoff, defense,
         counterclaim, or deferment for any reason, except as further described
         in this subsection (e), and except as described in the Section 10(a)
         Disclosure Schedule relating to returns. If Cardinal fails to pay CVS
         amounts due (that are not legitimately disputed by Cardinal) pursuant
         to the Sections 7(a), 12(a) or 12(b) Disclosure Schedules, then CVS may
         setoff such amounts (that are not legitimately disputed by Cardinal)
         against amounts due Cardinal for Brokerage Purchases, Store Rx
         Purchases, or Store Other Purchases. Any deductions incorrectly or
         improperly recognized (i.e., excluding legitimately disputed amounts)
         by CVS will be paid to Cardinal as soon as possible and in any event no
         later than fifteen (15) days following notification from Cardinal of
         such incorrect or improper deduction; provided, however, that with
         respect to such legitimately disputed amounts, CVS agrees to pay when
         due the remainder of each invoice which is not disputed, and provided
         further that CVS will pay when due any such legitimately disputed
         amounts after mutually satisfactory reconciliation; and provided
         further that nothing in this subsection will be construed to permit CVS
         to fail to cause Cardinal to receive payment when due of legitimately
         undisputed amounts.

         SECTION 4.        PAYMENT TERMS.

         (a) STORE RX PURCHASES AND STORE OTHER PURCHASES. CVS will cause
         Cardinal to receive payment in full and remittance by automated
         clearinghouse ("ACH") for all Store Rx Purchases and Store Other
         Purchases according to the schedule set forth in the Section 4
         Disclosure Schedule.

         (b) BROKERAGE PURCHASES. CVS will cause Cardinal to receive payment in
         full by ACH for all Brokerage Purchases according to the schedule set
         forth in the Section 4 Disclosure Schedule.

         (c) AUTOMATED CLEARINGHOUSE. All payments made by CVS to Cardinal under
         this Agreement will be made via ACH, to a financial institution
         designated by Cardinal, so as to provide Cardinal with good funds
         immediately available to Cardinal on the date such payment is due
         according to the schedule set forth in the Section 4 Disclosure
         Schedule. In the event that ACH is temporarily interrupted or cannot be
         utilized, CVS will seek alternative payment methods to ensure that
         Cardinal receives good funds immediately available to Cardinal on the
         date such payment is due.

         (d) GENERALLY.

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                  If Cardinal reasonably believes that CVS has suffered a
         material adverse effect with respect to its financial position, then
         Cardinal has the right to request that CVS provide it with information
         within one (1) business day from the date CVS receives the request
         (i.e., if CVS receives Cardinal's request at 3:00 p.m. Monday, the
         information will be provided no later than 3:00 p.m. Tuesday) that
         further describes or refutes (as applicable), in reasonable detail,
         such material adverse effect, and that may resolve any such concerns
         raised by Cardinal. In addition, CVS agrees to promptly notify Cardinal
         in the event CVS has suffered a material adverse effect with respect to
         its financial position, including, but not limited to an acceleration
         event under its credit facilities. If Cardinal has requested such
         information or CVS has notified Cardinal as set forth above and
         Cardinal and CVS cannot promptly resolve any such issues pursuant to a
         reasonable solution, then Cardinal may (i) limit CVS' daily purchases
         thereafter to the daily average of CVS' Qualified Purchases during the
         immediately preceding thirty (30) day period; (ii) modify payment
         terms, and (iii) in the event that CVS is in Payment Default (as
         defined below), give CVS notice of the amount of required payments
         under this Agreement by 10:00 a.m. Eastern Standard Time on a business
         day and require CVS to wire electronic confirmation of payment of such
         amount by non-refundable wire transfer by 2:00 p.m. Eastern Standard
         Time on the same business day. As used herein, a "PAYMENT DEFAULT"
         shall mean a circumstance where CVS has failed to cause Cardinal to
         receive payment when due. If any of the foregoing actions are taken by
         Cardinal, the parties will meet every approximate thirty (30) days
         following the execution of such action to review CVS' financial
         condition, and to reasonably consider reinstating the payment terms
         which were in effect prior to execution of such action.

                  If CVS reasonably believes that Cardinal has suffered a
         material adverse effect with respect to its financial position that has
         materially, adversely affected (or will imminently materially,
         adversely affect) Cardinal's Adjusted Service Level as further
         described in the Section 9 Disclosure Schedule, then CVS has the right
         to request that Cardinal provide it with information within one (1)
         business day from the date Cardinal receives the request (i.e., if
         Cardinal receives CVS' request at 3:00 p.m. Monday, the information
         will be provided no later than 3:00 p.m. Tuesday) that further
         describes or refutes (as applicable), in reasonable detail, such
         material adverse effect, and that may resolve any such concerns raised
         by CVS. In addition, Cardinal agrees to promptly notify CVS in the
         event Cardinal believes it has suffered, or will imminently suffer a
         material adverse effect with respect to its financial position,
         including an acceleration event under its credit facilities, that has
         materially, adversely effected (or will imminently materially,
         adversely affect) Cardinal's Adjusted Service Level as further
         described in the Section 9 Disclosure Schedule, or Cardinal's ability
         to pay amounts due CVS. If CVS has requested such information or
         Cardinal has notified CVS as set forth above, and with respect to
         service level issues, Cardinal cannot cure the resulting service level
         issues within ten (10) days, or with respect to Cardinal's ability to
         pay amounts due CVS, Cardinal cannot promptly resolve any such issues
         pursuant to a reasonable solution, then CVS may terminate this

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         Agreement upon providing written notice to Cardinal, subject to the
         Section 9 Disclosure Schedule. If neither Cardinal's service level has
         been (or will not imminently be, as applicable) materially, adversely
         affected, nor Cardinal's ability to pay amounts due CVS, then CVS may
         not terminate this Agreement.

         (e) UNCONDITIONAL GUARANTY. As an inducement for Cardinal to supply
         Merchandise and provide services to the subsidiaries and affiliates of
         CVS, whether existing now or in the future (collectively, "BORROWERS"),
         CVS Corporation (i) guarantees to Cardinal the punctual and full
         payment (and not merely the ultimate collectability) of all sums now or
         hereafter due from Borrowers to Cardinal; (ii) guarantees to Cardinal
         the performance of all other obligations under this Agreement; and
         (iii) agrees to indemnify and save harmless Cardinal against and from
         any and all losses, damages, liabilities, and claims now or at any time
         hereafter arising directly or indirectly out of any failure by
         Borrowers to promptly and fully perform all of the obligations
         hereunder.

         SECTION 5. DELIVERY/ORDER SUBMISSION PROCEDURES. Cardinal will deliver
the Merchandise F.O.B. to the Pharmacies and exercise its good faith efforts to
provide an efficient delivery schedule designed to meet the mutual needs of
Cardinal and the Pharmacies. All deliveries will be accompanied by an invoice
and all delivery costs (not including emergency deliveries) absorbed by
Cardinal. Cardinal will deliver Merchandise to each Pharmacy five (5) days per
week (Monday through Friday, except Pharmacies located outside of the
continental United States or other Pharmacies mutually agreed upon by the
parties from time to time) in accordance with Cardinal's general delivery
schedules established from time to time by the applicable Cardinal servicing
division (exclusive of holidays, etc.). Any additional deliveries will
constitute emergency deliveries, which if required, will incur a separate
delivery charge at Cardinal's cost for such deliveries. Delivery schedules and
purchase order deadlines may be reviewed and changed from time to time as
mutually agreed upon by Cardinal and the Pharmacies. Delivery of Brokerage
Purchases will be subject to the terms and conditions set forth in the Section 2
Disclosure Schedule.

         The Pharmacies will submit all orders, except for orders for Schedule
II drugs, for all Merchandise to Cardinal via Telxon units or other electronic
order entry system approved by Cardinal. Any such equipment supplied by Cardinal
will be returned to Cardinal by CVS upon the expiration or termination of this
Agreement for any reason, or upon Cardinal's request, if in Cardinal's
reasonable discretion, Cardinal's proprietary rights are threatened. In the
event that electronic order entry is temporarily interrupted for reasons beyond
the control of CVS or Cardinal, CVS may place orders manually and both parties
will use reasonable efforts to rectify the problem.

         DEA Form 222 may be mailed or given to the delivery driver to be
delivered to the applicable Cardinal distribution center. Schedule II orders
will be delivered within one (1) business day of Cardinal's receipt of the
signed original of DEA Form 222. CVS acknowledges that if CVS gives the DEA Form
222s to the delivery driver, such forms will not be received by Cardinal until
such time that the delivery driver physically

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delivers the DEA Form 222 to the applicable Cardinal distribution center.
Notwithstanding the foregoing, no Schedule II orders will be delivered other
than in compliance with DEA regulations.

         SECTION 6. OTHER SERVICES.

         (a) CARDINALCHOICE-HQ(TM). Cardinal will license two (2)
         CardinalCHOICE-HQ(TM) software systems to CVS' headquarters on the
         terms set forth in the Section 6(a) Disclosure Schedule. Such licensing
         will be pursuant to the terms and conditions of Cardinal's standard
         software license agreement for such software. In addition, Cardinal
         will provide CVS with the related hardware as described in the Section
         6(a) Disclosure Schedule, pursuant to Cardinal's standard hardware
         purchase agreement.

         (b) MANAGEMENT INFORMATION SERVICES. Cardinal will provide to CVS those
         programs and services described in the Base Service Package set forth
         on the Section 6(b) Disclosure Schedule on the terms and conditions
         described in that schedule.

         (c) RAPIDISTRIBUTION(SM). Cardinal will make available to the
         Pharmacies participation in Cardinal's RAPIDistribution(SM) program,
         pursuant to the standard terms of that program.

         (d) EMPLOYEES.

                  (i) CVS will engage a Pharmacy DSD employee with the skills
                  set forth in the Section 6(d) Disclosure Schedule to act as a
                  liaison between Cardinal and CVS. During the term of this
                  Agreement and for a two (2) year period thereafter, Cardinal
                  will not directly or indirectly employ, engage, or otherwise
                  solicit for employment or engagement such employee, or induce
                  or encourage such employee to terminate or otherwise modify
                  such employee's relationship with CVS.

                  (ii) Cardinal will also engage a Pharmacy employee with the
                  skills set forth in the Section 6(d) Disclosure Schedule to
                  act as a liaison between Cardinal and CVS and work on matters
                  related to this Agreement. During the term of this Agreement
                  and for a two (2) year period thereafter, CVS will not
                  directly or indirectly employ, engage, or otherwise solicit
                  for employment or engagement such employee, or induce or
                  encourage such employee to terminate or otherwise modify such
                  employee's relationship with Cardinal.

                  (iii) Cardinal may elect, in its sole discretion, to employ
                  one or more supervisory employees in the areas of receiving,
                  shipping and inventory management of Cardinal transaction at
                  one (1) or more of the CVS Pharmacy DCs. The employee selected
                  will be subject to CVS' advance

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                  approval, which will not be unreasonably withheld. If Cardinal
                  engages an employee to perform these functions, during the
                  term of this Agreement and for a two (2) year period
                  thereafter, CVS will not directly or indirectly employ,
                  engage, or otherwise solicit for employment or engagement such
                  employee(s), or induce or encourage such employee(s) to
                  terminate or otherwise modify such employee's(s') relationship
                  with Cardinal.

         (e) PROFITPAK(R). CVS will fully participate in the ProfitPak(R)
         program, with autosubstitution, as more fully described in the Section
         6(e) Disclosure Schedule.

         SECTION 7. CVS GENERIC FORMULARY AND CARDINALSOURCE(SM) PROGRAM.
Cardinal understands that CVS has established a preferred list of generic Rx
Products for the Pharmacies which CVS stocks in the CVS Pharmacy DCs (the "CVS
GENERIC FORMULARY"). Subject to Cardinal's manufacturer standards and product
movement conditions for those manufacturers with which Cardinal is not doing
business under the CardinalSOURCE(SM) program at that time, Cardinal will make
reasonable efforts to stock all such existing items for the Pharmacies
identified by CVS on CVS' Generic Formulary as of the Commencement Date;
provided, however, in no event will Cardinal be required to stock any item(s)
listed on the CVS Generic Formulary if the manufacturer or item(s) do not meet
Cardinal's criteria (for example, in the event that a manufacturer fails to
obtain the required insurance coverage amounts, or is insolvent or bankrupt, or
is in a debit balance in Cardinal's accounts payable system) or if Cardinal does
not already stock such item(s) to supply to other retail and GPO customers.
Whenever a Pharmacy orders an A-B equivalent generic product (as defined by the
FDA), Cardinal will automatically substitute the corresponding CVS Generic
Formulary item, if applicable. For any such generic item ordered by a Pharmacy
under CVS' Generic Formulary for which Cardinal is out-of-stock, Cardinal will
automatically substitute such item with the corresponding A-B equivalent generic
product, if any, from the CardinalSOURCE(SM) generic formulary (the "CARDINAL
GENERIC FORMULARY"). In addition, for any generic item ordered by any Pharmacy
for which there is not a corresponding item under the CVS Generic Formulary,
Cardinal will automatically substitute such item with the corresponding Cardinal
Generic Formulary item. In the event that the Cardinal Generic Formulary item is
out-of-stock, then Cardinal will automatically substitute such corresponding
item with the corresponding item under the second tier Cardinal generic
formulary (the "SECONDARY CARDINAL GENERIC FORMULARY"). Notwithstanding the
foregoing to the contrary, CVS, from time to time, reserves the right to
prohibit Cardinal from substituting certain items on the Cardinal Generic
Formulary and Secondary Cardinal Generic Formulary for corresponding items on
the CVS Generic Formulary provided that (i) CVS has valid reasons for
prohibiting such items, in CVS' sole reasonable discretion, and (ii) such
prohibited items designated by CVS do not constitute a significant percentage of
the Cardinal Generic Formulary and Secondary Cardinal Generic Formulary. In
addition, in consideration for the competitive pricing offered to CVS hereunder
and other valuable consideration, CVS will not materially (as reasonably
determined by Cardinal) increase the ratio of Qualified Purchases through the
CVS Generic Formulary compared to Qualified Purchases of all generic Rx
Products.

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         CVS has provided Cardinal with a list of items on CVS' Generic
Formulary as of the Commencement Date. As items on the CVS Generic Formulary
change from time to time, CVS will provide Cardinal with electronic notice of
such changes including the proposed effective date of such change. Cardinal will
make reasonable efforts to stock items to be added to the CVS Generic Formulary
within the later of thirty (30) days of receipt of such notice or the proposed
effective date, subject to Cardinal's manufacturer acceptance policy for those
manufacturers with which Cardinal is not doing business under the Cardinal
Generic Formulary program at that time. In the event that Cardinal's inventory
level of any product being deleted from the CVS Generic Formulary exceeds the
amount anticipated to be purchased by CVS prior to CVS' proposed effective date
of such deletion and the Rx Product is not on CardinalSOURCE(SM) or another of
Cardinal's retail chain generic programs, then Cardinal will notify CVS of such
situation and Cardinal and CVS will mutually agree upon the adjusted effective
date of such deletion. In addition, CVS will provide Cardinal on a monthly basis
in an acceptable file format with a list setting forth all items on CVS' Generic
Formulary as of the end of the previous month. Cardinal will use the information
on such files to verify its records of CVS' Generic Formulary and notify CVS of
any discrepancies so that such discrepancies may be reconciled and corrected.

         CVS will be entitled to a discount (in the form of a rebate) based on
the volume of generic Rx Products purchased by the Pharmacies as described in
the Section 7(a) Disclosure Schedule.

         SECTION 8. CONTRACT ADMINISTRATION. Cardinal will recognize and
administer mutually agreed upon manufacturer contracts between CVS and any
manufacturer ("MANUFACTURER CONTRACTS") subject to their continued validity in
accordance with applicable laws and subject to such credit considerations
concerning the applicable manufacturer as Cardinal may reasonably consider
appropriate; however, if manufacturers' chargebacks for contract items submitted
by Cardinal are disallowed or unreconcilable, then the disputed charge will be
billed back to CVS. Notwithstanding the foregoing, credit considerations with
respect to a manufacturer may arise subsequent to Cardinal's initial agreement
to administer a Manufacturer Contract, and in such event, Cardinal may elect not
to recognize or administer such Manufacturer Contract prospectively. Cardinal
will use its reasonable efforts to notify CVS of any manufacturers with which
Cardinal has credit considerations. CVS will provide Cardinal with a copy of all
new Manufacturer Contracts to be administered by Cardinal that are entered into
after the Commencement Date and a copy (in the vendor's form) of all renewals,
replacements or terminations of all Manufacturer Contracts. Cardinal will begin
recognizing and administering each new Manufacturer Contract, renewal, or
replacement at the later of: (i) seven business (7) days after Cardinal has
received a copy of the new Manufacturer Contract, renewal or replacement from
CVS and verification thereof, or (ii) the effective date of the new Manufacturer
Contract, renewal or replacement. Failure of CVS to comply with these notice
requirements will entitle Cardinal to exclude the applicable items from the
Adjusted Service Level calculation pursuant to the provisions of Section 9
hereof until thirty (30) days after delivery of accurate usage data for the
applicable items.

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         In order to facilitate Cardinal's inventory management requirements,
CVS will provide Cardinal in file format thirty (30) days prior to participation
under this Agreement by that Pharmacy or CVS Pharmacy DC the following: (a) with
respect to each Pharmacy and CVS Pharmacy DC, accurate six (6) months' usage
figures (including NDC numbers) on both contract and non-contract items; and (b)
with respect to each distribution center of CVS, Brokerage Purchases broken down
by brokerage volume, vendors and items. Cardinal acknowledges that CVS may
desire to sell overstocked Merchandise (that it purchased from Cardinal) to an
alternate source to relieve CVS' inventory position. CVS will sell such
overstocked Merchandise in compliance with all applicable federal, state and
local laws. The parties acknowledge and agree that nothing herein will require
Cardinal to take any affirmative action with respect to the same. CVS will
assume all liability associated with such sale and indemnify Cardinal against
any claims, losses or other damages that Cardinal may incur in connection with
such sale.

         SECTION 9. SERVICE LEVEL. Cardinal will exercise all reasonable efforts
to provide CVS with the average adjusted monthly service levels described in the
Section 9 Disclosure Schedule.

         SECTION 10. RETURNED GOODS POLICY. Cardinal will accept returns from
the Pharmacies in accordance with the Standard Cardinal Returned Goods Policy
(the "CARDINAL RETURNS POLICY") in effect from time to time during the term of
this Agreement. A current copy of the Cardinal Returns Policy is set forth in
the Section 10(a) Disclosure Schedule. Set forth in the Section 2 Disclosure
Schedule are the terms and conditions of the Cardinal Returns Policy applicable
to CVS for Brokerage Purchases in effect on the Commencement Date. Cardinal will
work with a third party returned goods processor in accordance with the Standard
Third Party Returned Goods Policy (the "THIRD PARTY RETURNS POLICY") in effect
from time to time during the term of this Agreement. A current copy of the Third
Party Returns Policy is set forth in the Section 10(b) Disclosure Schedule.

         SECTION 11. TERM.

         (a) The term of this Agreement will begin on January 1, 2000 (the
         "COMMENCEMENT DATE"), and will continue for sixty-four (64) months
         thereafter (the "INITIAL TERM"). This Agreement may be renewed for
         successive renewal periods of one (1) year each upon mutual agreement
         of the parties. In the event either party desires not to renew the
         Agreement at the expiration of the Initial Term or any renewal term,
         that party shall provide the other party with at least ninety (90) days
         written notice prior to the expiration of the then current term. In the
         event such notification is not provided with at least the ninety (90)
         day notice, the parties agree that the then current term shall be
         extended for a period of ninety (90) days from the date notice is
         actually received, or if no notice is given, for a period of ninety
         (90) days after the expiration of such term to provide for an adequate
         transition period. Any reference in this Agreement to the "term of this
         Agreement" will include the Initial Term and any renewal term.

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         (b) Either party may effect an early termination of this Agreement for
         cause by giving written notice to the other party, provided such party
         has first given written notice to the other party of the occurrence of
         a material breach of this Agreement (which notice will specify the
         nature of such breach) and the other party has failed to cure such
         breach within ninety (90) days following its receipt of such notice or,
         in the event such breach is not capable of being cured in such ninety
         (90) day period, the breaching party's failure to diligently prosecute
         such cure thereafter; provided that with respect to any failure to make
         any payment when due under this Agreement, such period in which to cure
         will be reduced to ten (10) days; provided, however, that the foregoing
         in no way limits or modifies Cardinal's right to refuse orders, modify
         payment terms or cease its supply relationship pursuant to Section 4(c)
         herein.

         (c) Either party will have the right to terminate this Agreement
         immediately upon notice to the other party following the commencement
         of any bankruptcy or insolvency proceeding (whether voluntary or
         involuntary) with respect to such other party or its assets, the
         general assignment for the benefit of creditors by such other party, or
         the appointment of a receiver, trustee, or liquidator by or for such
         other party.

         (d) CVS' payment obligations to Cardinal will survive termination or
         expiration of this Agreement. The parties acknowledge that in the event
         of a breach of this Agreement, in addition to all other remedies
         available to them under this Agreement or at law, the parties may be
         entitled to the remedy of specific performance.

         (e) Upon termination of this Agreement for any reason, CVS' rights as a
         licensee of CardinalCHOICE-HQ(TM) software and other Cardinal software
         will automatically expire, and CVS will (upon request) promptly return
         such software and any related hardware not purchased by CVS to a return
         location specified by Cardinal. Further, CVS will comply with the
         provisions of any related hardware purchase agreement, if any,
         regarding termination. Upon termination of this Agreement for any
         reason, Cardinal will use its reasonable efforts to provide CVS with
         access to CVS' historical purchase data.

         (f) Termination of this Agreement will be subject to a termination fee
         as described in the Section 11(f) Disclosure Schedule.

         (g) This Agreement will supersede and replace that certain Wholesale
         Supply Agreement dated March 9, 1998 by and between Cardinal and CVS
         (the "ORIGINAL AGREEMENT"), and that certain Interim Letter Agreement
         dated March 7, 2000, and all extensions thereof. Upon commencement of
         this Agreement, the Original Agreement will terminate and be of no
         further force or effect whatsoever.

<PAGE>   12

         SECTION 12. GUARANTEED SAVINGS PROGRAMS. CVS and Cardinal will develop
guaranteed savings programs as described in the Section 12(a) and 12(b)
Disclosure Schedules.

         SECTION 13. NOTICES. All notices required or permitted under this
Agreement will be in writing to the other party at the address set forth below
(or such other address as that party may give to the other party by written
notice hereunder) and will be deemed given (a) if delivered personally
(including by overnight express or messenger), upon delivery, (b) if delivered
by first class, registered or certified mail (return receipt requested), upon
the earlier of actual delivery or three (3) days after being mailed, or (c) if
given by telecopy, upon confirmation of receipt of automatic transmission
report.

         If to:

         CVS MERIDIAN, INC.                  CARDINAL HEALTH

         One CVS Drive                       7000 Cardinal Place
         Woonsocket, RI 02895                Dublin, Ohio  43017
         Attn: Senior Vice President,        Attn:  Senior Vice President,
               Healthcare Services                  Retail Sales and Marketing
         Telecopy:  (401) 769-9473           Telecopy:  (614) 757-8787

         with copy to:                       with copy to:

         General Counsel                     General Counsel at the same address
         at the same address                 Telecopy:  (614) 757-8919
         Telecopy: (401) 765-7887

         SECTION 14. TAXES/COMPLIANCE WITH LAWS. CVS will pay when due any
sales, use, excise, gross receipts, or other federal, state, or local taxes or
other assessments (other than any tax based solely on the net income of
Cardinal) and related interest and penalties in connection with or arising out
of the transactions contemplated by this Agreement. If Cardinal pays any such
amounts which CVS is obligated to pay under this section, then CVS will promptly
reimburse Cardinal in an amount equal to the amount so paid by Cardinal.

         If and to the extent any discounts, credits, rebates or other purchase
incentives are paid or applied by Cardinal with respect to the Merchandise
and/or Brokerage Purchases purchased under this Agreement, then applicable
provisions of the Medicare/Medicaid and state health care fraud and
abuse/anti-kickback laws (collectively, "fraud and abuse laws") may require
disclosure of the applicable price reduction on CVS' claim or cost reports for
reimbursement from governmental or other third parties. CVS agrees to comply
with all applicable provisions of the fraud and abuse laws and to indemnify and
hold Cardinal harmless for any failure on CVS' part to do so.

<PAGE>   13

         CVS will certify to Cardinal that all of the Pharmacies are properly
and completely licensed in compliance with all applicable state and federal
laws, regulations, rules and orders. Such certification will be provided in the
form of a Schedule listing all of the Pharmacies, and their respective state and
federal license numbers and expiration dates. CVS will provide Cardinal with an
updated Schedule no later than the twenty-fifth (25th) day of each month which
will include information for the following month.

         SECTION 15. FORCE MAJEURE. One or more of Cardinal's obligations under
this Agreement will be excused if, but only if, and to the extent that any delay
or failure to perform such obligations is due to fire or other casualty, product
or material shortages, strikes or labor disputes, transportation delays, change
in business conditions (other than insignificant changes), manufacturer
out-of-stock or delivery disruptions, acts of God, seasonal supply disruptions,
or other causes beyond the reasonable control of Cardinal. During the period of
any such delay or failure, CVS may purchase the Primary Wholesale Requirements
for the affected pharmacies from others, but will recommence purchasing from
Cardinal upon cessation of such delay or failure. Further, CVS will be excused
from meeting its Pharmacy Minimum Volume Requirements as set forth in the
Section 3(a) Disclosure Schedule during such period (only in the amounts that
the affected Pharmacies are required to purchase from others due to the event of
force majeure).

         SECTION 16. RECORDS AND AUDIT.

         (a) Cardinal will maintain records pertaining to the Merchandise
         purchased by CVS under this Agreement as required by applicable
         federal, state and local laws, rules and regulations. Not more than
         twice in any twelve (12) month period, and following thirty (30) days'
         advance written notice to Cardinal, or as required by administrative
         ruling or court order, CVS will have the right to appoint one or more
         of its agents or employees to review those relevant records applicable
         to its pharmaceutical purchases for the sole purpose of verifying
         compliance with the pricing terms of this Agreement. Any such review
         will be limited to twenty-four (24) months of historical information as
         of the date such review begins, except if Cardinal is required by
         applicable law to maintain records pertaining to the Merchandise
         purchased by CVS under this Agreement for a period longer than
         twenty-four (24) months, then Cardinal will allow CVS to access such
         information also. The information will be subject to a confidentiality
         agreement prepared by Cardinal and signed by CVS and its employee(s)
         and agent(s) who will have access to the information prior to beginning
         the review. Notwithstanding the foregoing, CVS may only appoint agents
         who are employees of one of the top five national accounting firms, as
         may be deemed reasonably acceptable to Cardinal and CVS. Further, with
         respect to contracts between Cardinal and certain manufacturers which
         must remain confidential pursuant to a contractual provision, CVS may
         only review records relating to such contracts through an employee of
         one of the top five national accounting firms deemed reasonably
         acceptable to Cardinal (i.e., not a CVS employee) to verify compliance
         with the pricing terms of such contracts. Such accounting firm may
         confirm to

<PAGE>   14

         CVS that Cardinal has (or has not) complied with the pricing terms of
         such contracts, but may not (and will not) disclose to CVS the
         confidential information.

         (b) CVS will maintain records pertaining to the Merchandise purchased
         by CVS and all pharmacies and distribution centers, whether now or
         hereafter owned, managed or operated by CVS, under this Agreement as
         required by applicable federal, state and local laws, rules and
         regulations. Not more than twice in any twelve (12) month period, or as
         required by administrative ruling or court order, and following thirty
         (30) days' advance written notice to CVS, Cardinal will have the right
         to appoint one or more of its employees or agents to review those
         relevant records applicable to such purchases of Rx Products for the
         sole purposes of verifying (i) compliance with the Minimum Volume
         Percentage with respect to the Pharmacies as further described in the
         Section 1(a) Disclosure Schedule, (ii) that each CVS Pharmacy DC is
         purchasing its Primary Wholesale Requirements of Brokerage Purchases
         from Cardinal, as further described in the Section 2 Disclosure
         Schedule, (iii) that CVS has not made any purchases of Rx Products from
         alternate sources (unless directed by Cardinal and agreed upon by CVS),
         and (iv) compliance with any other material terms of this Agreement.
         Any such review will be limited to twenty-four (24) months of
         historical information as of the date such review begins, except if CVS
         is required by applicable law to maintain records pertaining to the
         Merchandise purchased by CVS under this Agreement for a period longer
         than twenty-four (24) months, then CVS will allow Cardinal to access
         such information also. The information will be subject to a
         confidentiality agreement prepared by CVS and signed by Cardinal and
         its employee(s) and agent(s) who will have access to the information
         prior to beginning the review. Notwithstanding the foregoing, Cardinal
         may only appoint agents who are employees of one of the top five
         national accounting firms, as may be deemed reasonably acceptable to
         CVS and Cardinal.

         SECTION 17. CONFIDENTIALITY. Each party acknowledges that as a result
of this Agreement, that party and its employees and agents, will learn
confidential information of the other party (including, but not limited to, the
information Cardinal provides to CVS pursuant to the Guaranteed Savings Program
set forth in the Section 12(a) and (b) Disclosure Schedules). Neither party will
disclose any confidential information of the other party to any person or
entity, or use, or permit any person or entity to use, any of such confidential
information, excepting only: (a) disclosures on a confidential basis to and use
by the directors, officers, employees, and agents of that party who have a
reasonable need to know such information in connection with that party's
performance of this Agreement, (b) disclosures which are required by law, as
reasonably determined by that party or its legal counsel, (c) disclosures which
are made on a confidential basis to that party's attorneys, accountants, and
other professional advisors in connection with matters relating to this
Agreement, (d) information which is or becomes available to the other party on a
non-confidential basis from a source entitled to disclose it on a
non-confidential basis, (e) information that is or becomes generally available
to the public or within the industry to which such information relates other
than as a result of disclosure by the other party or its representatives, (f)
routine disclosures to IMS/DDD or similar

<PAGE>   15

organizations consistent with past practices, so long as confidential
information regarding CVS is provided only on an aggregate or "blinded" basis
and not identified specifically as CVS information other than as otherwise
contemplated or described in this Agreement, and (g) disclosures to vendors as
reasonably required by Cardinal to enable Cardinal to purchase Merchandise on
behalf of CVS and to generate Gross Margin related to the IPP. The specific
material terms of this Agreement will be deemed to be confidential information
of each party. Each party will be responsible for any breach of this
confidentiality provision by its representatives.

         The obligations of confidentiality hereunder will survive the
termination of this Agreement for a period of two (2) years. Upon termination of
this Agreement (for any reason) each party will promptly: (i) return to the
other party all documentation and other materials (including copies of original
documentation or other materials) containing any confidential information of the
other party; or (ii) certify to the other party, pursuant to a certificate in
form and substance reasonably satisfactory to the other party, as to the
destruction of all such documentation and other materials. Notwithstanding the
foregoing, each party may keep one copy of any documentation containing
confidential information of the other party, provided that such copy will be
retained and used solely by the legal department of that party.

         Each employee described in section 6(d) of this Agreement will execute
a Confidentiality Agreement as mutually agreed upon by the parties.

         SECTION 18. INDEMNITY. Cardinal will indemnify and hold harmless CVS
and all future parent corporations, subsidiaries and affiliates and each of
their officers, directors, employees and representatives (collectively referred
to in this paragraph as CVS) from and against those claims, damages or
liabilities (exclusive of any incidental damages, which are defined as claims,
damages and liabilities associated with or related to actual damages but are in
excess of repayment for actual losses, and exclusive of any consequential
damages, which are defined as claims, damages and liabilities that do not flow
directly and immediately from an act that would require indemnification
hereunder but that result indirectly from such an act) directly attributable to
the failure of Cardinal to properly store, handle or distribute Merchandise in
accordance with this Agreement or in accordance with applicable law, it being
understood, however, that Cardinal is not the manufacturer of the Merchandise
and that no indemnification of any type is being provided other than as
specifically stated in this paragraph. In addition, Cardinal will transfer to
CVS (on a non-exclusive basis) any representations, warranties and indemnities
made by the manufacturers of the Merchandise to the extent that such
representations, warranties and indemnities are assignable by Cardinal, and will
cooperate with all reasonable requests made by CVS to enforce such
representations, warranties and indemnities against such manufacturers.
Notwithstanding anything to the contrary herein, Cardinal reserves its own
rights under such representations, warranties and indemnities made by such
manufacturers and the remedies available to it for any breach of such
representations, warranties and indemnities by the manufacturers.

<PAGE>   16

CVS will indemnify and hold harmless Cardinal and all future parent
corporations, subsidiaries and affiliates and each of their officers, directors,
employees and representatives (collectively referred to in this paragraph as
Cardinal) from and against those claims, damages or liabilities (exclusive of
any incidental damages, which are defined as claims, damages and liabilities
associated with or related to actual damages but are in excess of repayment for
actual losses, and exclusive of any consequential damages, which are defined as
claims, damages and liabilities that do not flow directly and immediately from
an act that would require indemnification hereunder but that result indirectly
from such an act) directly attributable to CVS' negligence or wrongdoing. The
parties agree that neither CVS nor Cardinal will be obligated under this section
18 with respect to any claim that results solely from the negligence or
intentional wrongdoing of the other party.

         SECTION 19. INSURANCE. Cardinal and CVS agree to maintain the insurance
as set forth in the Section 19 Disclosure Schedule.

         SECTION 20. ENTIRE AGREEMENT; SUCCESSORS. This Agreement, together with
the Disclosure Schedules referenced herein, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, proposals, and
understandings between the parties relative to the subject matter hereof.
Cardinal may delegate its rights and obligations to any corporation that is
controlled by or under common control with Cardinal Health, Inc. and CVS may
delegate its rights and obligations to any corporation that is controlled by or
under common control with CVS Corporation, provided that in each such assignment
by Cardinal or CVS the assignor will remain the primary obligor for all payment
obligations. If all or substantially all of the stock or assets of CVS
Corporation are acquired by an unrelated third party (which expressly excludes a
merger where CVS Corporation is the surviving entity), then Cardinal may elect
(but will not be required) to terminate this Agreement during the thirty (30)
day period following such acquisition, by providing written notice to CVS of its
intent to terminate sixty (60) days prior to the intended termination date.
Further, if all or substantially all of the stock or assets of Cardinal Health,
Inc. are acquired by an unrelated third party (which expressly excludes a merger
where Cardinal Health, Inc. is the surviving entity), then CVS may elect (but
will not be required) to terminate this Agreement during the thirty (30) day
period following such acquisition, by providing written notice to Cardinal of
its intent to terminate sixty (60) days prior to the intended termination date.
If CVS is acquired and Cardinal terminates this Agreement pursuant to such
acqusition, CVS will not be required to pay the Termination Fee (as such term is
defined in the Section 11(f) Disclosure Schedule), but will be required to
refund the applicable portion of the Additional Volume Discount. This Agreement
will be binding on, and inure to the benefit of, and be enforceable by and
against the respective successors and assigns of each party to this Agreement.

         SECTION 21. AMENDMENTS. No changes to this Agreement will be made or be
binding on any party unless made in writing and signed by each party to this
Agreement.

<PAGE>   17

         SECTION 22. WAIVER. Neither party's failure to enforce any provision of
this Agreement will be considered a waiver of any future right to enforce such
provision.

         SECTION 23. GOVERNING LAW. This Agreement will be governed by the laws
of the State of Ohio, without regard to choice of law principles.

         SECTION 24. RELATIONSHIP OF THE PARTIES. The relationship of the
parties is and will be that of independent contractors. This Agreement does not
establish or create a partnership or joint venture among the parties.

         SECTION 25. SEVERABILITY. The intention of the parties is to fully
comply with all applicable laws and public policies, and this Agreement will be
construed consistently with all such laws and policies to the extent possible.
If and to the extent that a court of competent jurisdiction determines that it
is impossible to so construe any provision of this Agreement and consequently
holds that provision to be invalid, such holding will in no way affect the
validity of the other provisions of this Agreement, which will remain in full
force and effect.

         SECTION 26. ANNOUNCEMENTS. CVS will not issue any press release or
other public announcement, verbally or in writing, referring to Cardinal or any
entity which is controlled by or under common control with Cardinal Health,
Inc., without Cardinal's prior written consent and advice of counsel. CVS will
provide Cardinal's Executive Vice President, Retail Sales and Marketing, 7000
Cardinal Place, Dublin, Ohio 43017, with a written copy of any such press
release or other public announcement no less than seventy-two (72) hours prior
to CVS' intent to issue such release or announcement. CVS is responsible for
confirming in writing that Cardinal's Executive Vice President, Retail Sales and
Marketing has received any such proposed press release. Any such press release
or other public announcement proposed by CVS will be subject to Cardinal's
revision and final approval. Nothing contained herein will limit the right of
CVS to issue a press release if, in the opinion of CVS' counsel, such press
release is required pursuant to state or federal securities laws, rules or
regulations.

         Cardinal will not issue any press release or other public announcement,
verbally or in writing, referring to CVS or any entity which is controlled by or
under common control with CVS Pharmacy, Inc., without CVS' prior written consent
and advice of counsel. Cardinal will provide CVS' marketing department, Attn:
Director of Corporate Communications, with a written copy of any such press
release or other public announcement no less than seventy-two (72) hours prior
to Cardinal's intent to issue such release or announcement. Cardinal is
responsible for confirming in writing that CVS' marketing department has
received any such proposed press release. Any such press release or other public
announcement proposed by Cardinal will be subject to CVS' revision and final
approval. Nothing contained herein will limit the right of Cardinal to issue a
press release if, in the opinion of Cardinal's counsel, such press release is
required pursuant to state or federal securities laws, rules or regulations.

<PAGE>   18

         SECTION 27. AUTHORIZED SIGNATORIES. All signatories to this Agreement
represent that they are authorized by their respective companies to execute and
deliver this Agreement on behalf of their respective companies, and to bind such
companies to the terms herein.

                                         Cardinal Health*

                                         By: /s/ GORDON TROUP
                                             ------------------------------
                                             Gordon Troup
                                             President

                                         Date:  8-18-00
                                               ----------------------------

Accepted and Agreed to by:

CVS MERIDIAN, INC.

By: /s/ CHRISTOPHER W. BODINE
    ----------------------------
    Chris W. Bodine

Its: SR. V.P. MERCHANDISING
     ---------------------------

Date:   8/17/00
      --------------------------

And with respect to Section 3(e) only:

CVS CORPORATION

By: /s/ DOUGLAS A. SGARRO
    ------------------------
    Douglas A. Sgarro

Its: V.P. CVS Corp.
     -----------------------

Date:  8/17//00
      ----------------------

*The term "CARDINAL HEALTH" or "CARDINAL" will include the following affiliated
operating companies: Cardinal Syracuse, Inc., a New York corporation (Syracuse,
New York); Williams Drug Distributors, Inc., a Delaware corporation (Zanesville,
Ohio); Marmac Distributors, Inc., a Connecticut corporation (Hartford,
Connecticut); James W. Daly, Inc., a Massachusetts corporation (Peabody,
Massachusetts); Ohio Valley-Clarksburg, Inc., a Delaware corporation (Wheeling,
West Virginia); Cardinal Southeast, Inc. a Mississippi corporation (Madison,
Mississippi); Whitmire Distribution Corporation, a Delaware corporation (Folsom,
California); Cardinal Health Systems, Inc., an Ohio corporation; and any other
subsidiary of Cardinal Health, Inc., an Ohio corporation ("CHI"), as may be
designated by CHI.<PAGE>

                    WASHINGTON REAL ESTATE INVESTMENT TRUST
                          Medium-Term Notes, Series B
                  Due Nine Months or More From Date of Issue

                            DISTRIBUTION AGREEMENT
                                                            September 5, 2000

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310

BB&T CAPITAL MARKETS/SCOTT & STRINGFELLOW, INC.
909 East Main Street
Richmond, Virginia 23219

BANC ONE CAPITAL MARKETS, INC.
1 Bank One Plaza
Chicago, Illinois 60670

DEUTSCHE BANK SECURITIES INC.
31 West 52nd Street
New York, New York 10019

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue, 9th Floor
New York, New York 10172

A.G. EDWARDS & SONS, INC.
One North Jefferson Avenue
St. Louis, Missouri 63103

LEGG MASON WOOD WALKER, INCORPORATED
100 Light Street, 31st Floor
Baltimore, Maryland 21202

SALOMON SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

     Washington Real Estate Investment Trust, a Maryland real estate investment
trust (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, BB&T Capital Markets/Scott &
Stringfellow, Inc., Banc One Capital
<PAGE>

Markets, Inc., Deutsche Bank Securities Inc., Donaldson , Lufkin & Jenrette
Securities Corporation, A.G. Edwards & Sons, Inc., Legg Mason Wood Walker,
Incorporated and Salomon Smith Barney Inc. (each, an "Agent," and collectively,
the "Agents") with respect to the issue and sale by the Company of its Medium-
Term Notes, Series B, Due Nine Months or More From Date of Issue (the "Notes").
The Notes are to be issued pursuant to an Indenture, dated as of August 1, 1996,
as amended or modified from time to time (the "Indenture"), between the Company
and Bank One Trust Company, N.A. (as successor in interest to The First National
Bank of Chicago), as trustee (the "Trustee"). As of the date hereof, the Company
has authorized the issuance and sale of up to U.S. $125,000,000 aggregate
initial offering price of Notes (or its equivalent, based upon the applicable
exchange rate on the applicable trade date, in such foreign or composite
currencies as the Company shall designate at the time of issuance) to or through
the Agents pursuant to the terms of this Agreement. It is understood, however,
that the Company may from time to time authorize the issuance of additional
Notes and that such additional Notes may be sold to or through the Agents
pursuant to the terms of this Agreement, all as though the issuance of such
Notes were authorized as of the date hereof.

     This Agreement provides both for the sale of Notes by the Company to one or
more Agents as principal for resale to investors and other purchasers and for
the sale of Notes by the Company directly to investors (as may from time to time
be agreed to by the Company and the applicable Agent), in which case the
applicable Agent will act as an agent of the Company in soliciting offers for
the purchase of Notes.

     The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-81913) for the
registration of its common shares of beneficial interest, preferred shares of
beneficial interest, warrants to purchase common shares of beneficial interest
and debt securities, including the Notes, under the Securities Act of 1933, as
amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"), and the Company has filed such post-
effective amendments thereto as may be required prior to any acceptance by the
Company of an offer for the purchase of Notes.  Such registration statement (as
so amended, if applicable) has been declared effective by the Commission and the
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act").  Such registration statement (as so amended, if
applicable) is referred to herein as the "Registration Statement"; and the final
prospectus and all applicable amendments or supplements thereto (including the
final prospectus supplement and pricing supplement relating to the offering of
Notes), in the form first furnished to the applicable Agent(s), are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall also be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to any
acceptance by the Company of an offer for the purchase of Notes; provided,
further, that if the Company files a registration statement with the Commission
pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b)
Registration Statement"), then after such filing, all references to the
"Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement.  A "preliminary prospectus" shall be deemed to refer to
any prospectus used before the Registration Statement became effective and any
prospectus furnished by the Company after the Registration Statement became
effective and before any acceptance by the Company of an offer for the purchase
of Notes that omitted information to be included upon

                                       2
<PAGE>

pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations. For purposes of this Agreement, all
references to the Registration Statement, Prospectus or preliminary prospectus
or to any amendment or supplement thereto shall be deemed to include any copy
filed with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval system ("EDGAR").

     All references in this Agreement to financial statements and schedules and
other information that is "disclosed," "contained," "included" or "stated" (or
other references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to include all such financial statements
and schedules and other information that is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, Prospectus or preliminary prospectus shall be deemed to
include the filing of any document under the 1934 Act that is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be.

SECTION 1.  Appointment as Agent.
            --------------------

     (a)    Appointment.  Subject to the terms and conditions stated herein and
            -----------
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes will be sold exclusively to
or through the Agents.  The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.

     (b)    Sale of Notes.  The Company shall not sell or approve the
            -------------
solicitation of offers for the purchase of Notes in excess of the amount that
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.

     (c)    Purchases as Principal.  The Agents shall not have any obligation to
            ----------------------
purchase Notes from the Company as principal.  However, absent an agreement
between an Agent and the Company that such Agent shall be acting solely as an
agent for the Company, such Agent shall be deemed to be acting as principal in
connection with any offering of Notes by the Company through such Agent.
Accordingly, the Agents, individually or in a syndicate, may agree from time to
time to purchase Notes from the Company as principal for resale to investors and
other purchasers determined by such Agents.  Any purchase of Notes from the
Company by an Agent as principal shall be made in accordance with Section 3(a)
hereof.

     (d)    Solicitations as Agent.  If agreed upon between an Agent and the
            ----------------------
Company, such Agent, acting solely as agent for the Company and not as
principal, will solicit offers for the purchase of Notes.  Such Agent will
communicate to the Company, orally, each offer for the purchase of Notes
solicited by it on an agency basis other than those offers rejected by such
Agent.  Such Agent shall have the right, in its discretion reasonably exercised,
to reject any offer for the purchase of Notes, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein.  The
Company may accept or reject any offer for purchase of

                                       3
<PAGE>

the Notes, in whole or in part. Such Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer for
the purchase of Notes has been solicited by it on an agency basis and accepted
by the Company. Such Agent shall not have any liability to the Company in the
event that any such purchase is not consummated for any reason. If the Company
shall default on its obligation to deliver Notes to a purchaser whose offer has
been solicited by such Agent on an agency basis and accepted by the Company, the
Company shall (i) hold such Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii) pay to such
Agent any commission to which it would otherwise be entitled absent such
default.

     (e)    Reliance.  The Company and the Agents agree that any Notes purchased
            --------
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as agent of the Company shall be
placed by such Agent, in reliance on the representations, warranties, covenants
and agreements of the Company contained herein and on the terms and conditions
and in the manner provided herein.

SECTION 2.  Representations and Warranties.
            ------------------------------

     (a)    The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to such Agent as principal or through such Agent as
agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to the
Agent as principal is referred to herein as a "Settlement Date"), and as of any
time that the Registration Statement or the Prospectus shall be amended or
supplemented (each of the times referenced above is referred to herein as a
"Representation Date"), as follows:

            (i)    Due Incorporation, Good Standing and Due Qualification of the
                   -------------------------------------------------------------
     Company. The Company has been duly organized and is validly existing as a
     -------
     real estate investment trust of unlimited duration with transferable shares
     of beneficial interest in good standing under the laws of the State of
     Maryland, with full power and authority to own, lease and operate its
     properties and to conduct its business as described in the Prospectus and
     to enter into this Agreement and to consummate the transactions
     contemplated in the Prospectus; the Company is duly qualified to transact
     business and is in good standing in each jurisdiction in which such
     qualification is required, whether by reason of the ownership or leasing of
     property or the conduct of business, except where the failure to so qualify
     or be in good standing would not result in a material adverse change in the
     condition, financial or otherwise, or the earnings, business affairs or
     business prospects of the Company and its subsidiaries considered as one
     enterprise, whether or not arising in the ordinary course of business (a
     "Material Adverse Effect"); all of the issued and outstanding shares of
     beneficial interest of the Company have been duly authorized and are
     validly issued, fully paid and non-assessable; and none of the outstanding
     shares of beneficial interest of the Company were issued in violation of
     preemptive or other similar rights of any security holder of the Company.

            (ii)   Due Incorporation, Good Standing and Due Qualifications of
                   ----------------------------------------------------------
     Significant Subsidiaries.  Each "significant subsidiary" of the Company (as
     ------------------------
     such term is defined in Rule 1-02 of Regulation S-X promulgated under the
     1933 Act) (each a "Subsidiary" and,

                                       4
<PAGE>

     collectively, the "Subsidiaries") (which term includes corporations,
     limited and general partnerships, limited liability companies, joint
     ventures and other entities, and includes direct and indirect
     subsidiaries), if any, has been duly organized and is validly existing as a
     corporation or partnership, as the case may be, in good standing under the
     laws of the jurisdiction of its organization, has power and authority to
     own, lease and operate its properties and to conduct its business as
     described in the Prospectus and is duly qualified to transact business and
     is in good standing in each jurisdiction in which such qualification is
     required, whether by reason of the ownership or leasing of property or the
     conduct of business, except where the failure to so qualify or be in good
     standing would not result in a Material Adverse Effect; except as otherwise
     stated in the Prospectus, all of the issued and outstanding capital stock
     or other ownership interests of each Subsidiary have been duly authorized
     and validly issued, are fully paid and non-assessable and are owned by the
     Company, directly or through subsidiaries, free and clear of any security
     interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of
     the outstanding shares of capital stock of any Subsidiary was issued in
     violation of preemptive or other similar rights of any security holder of
     such Subsidiary.

            (iii)  Registration Statement and Prospectus.  At the time of the
                   -------------------------------------
     filing of the Registration Statement and at the time of filing any post-
     effective amendment thereto, the Company met the requirements for use of
     Form S-3 under the 1933 Act; the Registration Statement (including any Rule
     462(b) Registration Statement) has become effective under the 1933 Act and
     no stop order suspending the effectiveness of the Registration Statement
     (including any Rule 462(b) Registration Statement) has been issued under
     the 1933 Act and no proceedings for that purpose have been instituted or
     are pending or, to the knowledge of the Company, are contemplated by the
     Commission, and any request on the part of the Commission for additional
     information has been complied with; the Indenture has been duly qualified
     under the 1939 Act; at the respective times that the Registration
     Statement, any Rule 462(b) Registration Statement and any post-effective
     amendments thereto (including the filing of the Company's most recent
     Annual Report on Form 10-K with the Commission (the "Annual Report on Form
     10-K")) became effective and at each Representation Date, the Registration
     Statement (including any Rule 462(b) Registration Statement) and any
     amendments and supplements thereto complied and will comply in all material
     respects with the requirements of the 1933 Act and the 1933 Act Regulations
     and the 1939 Act and the rules and regulations of the Commission under the
     1939 Act (the "1939 Act Regulations") and did not and will not contain an
     untrue statement of a material fact or omit to state a material fact
     required to be stated therein or necessary to make the statements therein
     not misleading; each preliminary prospectus and prospectus filed as part of
     the Registration Statement as originally filed or as part of any amendment
     thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
     filed in all material respects with the 1933 Act Regulations; each
     preliminary prospectus and the Prospectus delivered to the applicable
     Agent(s) for use in connection with the offering of Notes will, at the time
     of such delivery, be identical to any electronically transmitted copies
     thereof filed with the Commission pursuant to EDGAR, except to the extent
     permitted by Regulation S-T; and at the date hereof, at the date of the
     Prospectus and at each Representation Date, the Prospectus did not include
     and will not include an untrue statement of a material fact and did not
     omit and will not omit to state a material fact necessary in order to make
     the statements therein, in the light of the circumstances under

                                       5
<PAGE>

     which they were made, not misleading; provided, however, that the
     representations and warranties in this subsection shall not apply to
     statements in or omissions from the Registration Statement or the
     Prospectus made in reliance upon and in conformity with information
     furnished to the Company in writing by the Agents expressly for use in the
     Registration Statement or the Prospectus.

          (iv) Incorporated Documents.  The documents incorporated or deemed to
               ----------------------
     be incorporated by reference in the Registration Statement and the
     Prospectus, at the time they were or hereafter are filed with the
     Commission, complied and will comply, in all material respects with the
     requirements of the 1934 Act and the rules and regulations of the
     Commission under the 1934 Act (the "1934 Act Regulations") and, when read
     together and with the other information in the Prospectus, at the date
     hereof, at the date of the Prospectus and at each Representation Date, did
     not and will not include an untrue statement of a material fact or omit to
     state a material fact necessary in order to make the statements therein, in
     the light of the circumstances under which they were made, not misleading.

          (v)  Independent Accountants.  The accountants who certified the
               -----------------------
     financial statements and any supporting schedules thereto included in the
     Registration Statement and the Prospectus are independent public
     accountants as required by the 1933 Act and the 1933 Act Regulations.

          (vi) Financial Statements.  The financial statements of the Company
               --------------------
     included in the Registration Statement and the Prospectus, together with
     the related schedules and notes, present fairly the financial position of
     the Company and its consolidated subsidiaries at the dates indicated, and
     the statement of operations, shareholders' equity and cash flows of the
     Company and its consolidated subsidiaries for the periods specified.  Such
     financial statements have been prepared in conformity with generally
     accepted accounting principles ("GAAP") applied on a consistent basis
     throughout the periods involved.  The supporting schedules, if any,
     included in the Registration Statement and the Prospectus present fairly in
     accordance with GAAP the information required to be stated therein.  The
     selected financial data and the summary financial information included in
     the Registration Statement and Prospectus present fairly the information
     shown therein and have been compiled on a basis consistent with that of the
     audited financial statements included in the Registration Statement and the
     Prospectus.  Any historical summaries of revenue and certain operating
     expenses included or incorporated by reference in the Registration
     Statement and the Prospectus present fairly the revenue and those operating
     expenses included in such summaries of the properties related thereto for
     the periods specified in conformity with GAAP.  In addition, any pro forma
     financial statements of the Company and its subsidiaries and the related
     notes thereto included in the Registration Statement and the Prospectus
     present fairly the information shown therein, have been prepared in
     accordance with the Commission's rules and guidelines with respect to pro
     forma financial statements and have been properly compiled on the bases
     described therein, and the assumptions used in the preparation thereof are
     reasonable and the adjustments used therein are appropriate to give effect
     to the transactions and circumstances referred to therein.

                                       6
<PAGE>

          (vii)  No Material Changes.  Since the respective dates as of which
                 -------------------
     information is given in the Registration Statement and the Prospectus,
     except as otherwise stated therein, (A) there has been no event or
     occurrence that would result in a Material Adverse Effect, (B) there have
     been no transactions entered into by the Company or any of its
     subsidiaries, other than those arising in the ordinary course of business,
     that are material with respect to the Company and its subsidiaries
     considered as one enterprise and (C) except for regular dividends on the
     Company's common shares of beneficial interest, there has been no dividend
     or distribution of any kind declared, paid or made by the Company on any
     class of its capital stock.

          (viii) Authorization, etc., of this Agreement, the Indenture and the
                 -------------------------------------------------------------
     Notes.  This Agreement has been duly authorized, executed and delivered by
     -----
     the Company; the Indenture has been duly authorized, executed and delivered
     by the Company and is a valid and legally binding agreement of the Company
     enforceable against the Company in accordance with its terms, except as the
     enforcement thereof may be limited by (1) bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the enforcement
     of creditors' rights generally, (2) general equitable principles
     (regardless of whether enforcement is considered in a proceeding in equity
     or at law), (3) requirements that a claim with respect to any debt
     securities issued under the Indenture that are payable in a foreign
     currency or composite currency (or a foreign or composite currency judgment
     in respect of such claim) be converted into U.S. dollars at a rate of
     exchange prevailing on a date determined pursuant to applicable law or (4)
     governmental authority to limit, delay or prohibit the making of payments
     outside the United States; the Notes have been duly authorized by the
     Company for offer, sale, issuance and delivery pursuant to this Agreement
     and, when issued, authenticated and delivered in the manner provided for in
     the Indenture and delivered against payment of the consideration therefor,
     will constitute valid and legally binding obligations of the Company,
     enforceable against the Company in accordance with their terms, except as
     the enforcement thereof may be limited by (1) bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the enforcement
     of creditors' rights generally, (2) general equitable principles
     (regardless of whether enforcement is considered in a proceeding in equity
     or at law), (3) requirements that a claim with respect to any Notes payable
     in a foreign currency or composite currency (or a foreign or composite
     currency judgment in respect of such claim) be converted into U.S. dollars
     at a rate of exchange prevailing on a date determined pursuant to
     applicable law or (4) governmental authority to limit, delay or prohibit
     the making of payments outside the United States; the Notes will be
     substantially in a form previously certified to the Agents; and each holder
     of Notes will be entitled to the benefits of the Indenture.

          (ix)   Description of the Indenture and the Notes.  The Indenture and
                 ------------------------------------------
     the Notes conform and will conform in all material respects to the
     statements relating thereto contained in the Prospectus and are
     substantially in the form filed or incorporated by reference, as the case
     may be, as an exhibit to the Registration Statement.

          (x)    Accuracy of Exhibits.  There are no contracts or documents that
                 --------------------
     are required to be described in the Registration Statement, the Prospectus
     or the documents incorporated by reference therein or to be filed as
     exhibits thereto that have not been so described and filed as required.

                                       7
<PAGE>

          (xi)  Absence of Defaults and Conflicts.  Neither the Company nor any
                ---------------------------------
     of its subsidiaries is in violation of its declaration of trust,
     partnership agreement, charter, by-laws or other organizational document or
     in default in the performance or observance of any obligation, agreement,
     covenant or condition contained in any contract, indenture, mortgage, deed
     of trust, loan or credit agreement, note, lease or other agreement or
     instrument to which the Company or any of its subsidiaries is a party or by
     which it or any of them may be bound, or to which any property or assets of
     the Company or any of its subsidiaries is subject, except for such defaults
     that would not result in a Material Adverse Effect; and the execution,
     delivery and performance of this Agreement, the Indenture, the Notes and
     any other agreement or instrument entered into or issued or to be entered
     into or issued by the Company in connection with the transactions
     contemplated by the Prospectus, the consummation of the transactions
     contemplated in the Prospectus (including the issuance and sale of the
     Notes and the use of proceeds therefrom as described in the Prospectus) and
     the compliance by the Company with its obligations hereunder and under the
     Indenture, the Notes and such other agreements or instruments have been
     duly authorized by all necessary action on the part of the Company and do
     not and will not, whether with or without the giving of notice or passage
     of time or both, conflict with or constitute a breach of, or default under,
     or result in the creation or imposition of any lien, charge or encumbrance
     upon any assets, properties or operations of the Company or any of its
     subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust,
     loan or credit agreement, note, lease or other agreement or instrument to
     which the Company or any of its subsidiaries is a party or by which it or
     any of them may be bound or to which any property or assets of the Company
     or any of its subsidiaries is subject (except for such conflicts, breaches,
     defaults, events or liens, charges or encumbrances that would not result in
     a Material Adverse Effect) nor will such action result in any violation of
     the provisions of the declaration of trust, partnership agreement, charter,
     by-laws, or other organizational documents of the Company or any of its
     subsidiaries or any applicable law, statute, rule, regulation, judgment,
     order, writ or decree of any government, government instrumentality or
     court, domestic or foreign, having jurisdiction over the Company or any of
     its subsidiaries or any of their assets, properties or operations.

          (xii) Absence of Proceedings.  There is not pending or threatened any
                ----------------------
     action, suit, proceeding, inquiry or investigation before or brought by any
     court or governmental agency or body, domestic or foreign, now pending, or
     to the knowledge of the Company threatened, against or affecting the
     Company or any of its subsidiaries that is required to be disclosed in the
     Registration Statement and the Prospectus (other than as stated therein),
     or that might reasonably be expected to result in a Material Adverse
     Effect, or that might reasonably be expected to materially and adversely
     affect the assets, properties or operations thereof or the performance by
     the Company of its obligations under this Agreement, the Indenture and the
     Notes or the consummation of the transactions contemplated in the
     Prospectus.  The aggregate of all pending legal or governmental proceedings
     to which the Company or any of its subsidiaries is a party or of which any
     of their respective assets, properties or operations is the subject that
     are not described in the Registration Statement and the Prospectus,
     including ordinary routine litigation incidental to the business, could not
     reasonably be expected to result in a Material Adverse Effect.

                                       8
<PAGE>

          (xiii)  Filings, Approvals, etc..  Each approval, consent, order,
                  ------------------------
     authorization, designation, declaration or filing by or with any
     regulatory, administrative or other governmental body necessary in
     connection with the performance by the Company of its obligations under
     this Agreement, the Indenture and the Notes, or in connection with the
     transactions contemplated in the Prospectus (except such additional steps
     as may be necessary to qualify the Notes for public offering by the Agents
     under state securities or Blue Sky laws) has been obtained or made and is
     in full force and effect.

          (xiv)   Possession of Licenses and Permits. The Company and its
                  ----------------------------------
     subsidiaries hold all licenses, certificates and permits from governmental
     authorities that are necessary to the conduct of their business the absence
     of which would result in a Material Adverse Effect; and neither the Company
     nor any subsidiary has infringed any patents, patent rights, trade names,
     trademarks or copyrights, which infringement would result in a Material
     Adverse Effect.

          (xv)    REIT Status.  With respect to all tax periods regarding which
                  -----------
     the Internal Revenue Service is or will be entitled to assert any claim,
     the Company has met the requirements for qualification as a real estate
     investment trust under Sections 856 through 860 of the Internal Revenue
     Code, as amended, and the Company's present and contemplated operations,
     assets and income continue to meet such requirements.

          (xvi)   Title to Property.  The Company and its subsidiaries have
                  -----------------
     good and marketable title to, or valid and enforceable leasehold estates
     in, all items of real and personal property referred to in the Prospectus
     as owned or leased by them, in each case free and clear of all liens,
     encumbrances, claims, security interests and defects, other than those
     referred to in the Prospectus or that are not material in amount.  The
     Company has no reason to believe that the lessee under any lease (excluding
     leases for which rent payments due for the remainder of such lease are less
     than $1,000,000) calling for annual lease payments in excess of $1,000,000
     is not financially capable of performing its obligations thereunder.

          (xvii)  Insurance.  The Company and its subsidiaries are insured by
                  ---------
     insurers of recognized financial responsibility against such losses and
     risks and in such amounts as are prudent and customary in the businesses in
     which they are engaged; and the Company has no reason to believe that it or
     any of its subsidiaries will not be able to renew its existing insurance
     coverage as and when such coverage expires or to obtain similar coverage
     from similar insurers as may be necessary to continue its business at a
     cost that would not have a Material Adverse Effect; and the Company and
     each of its subsidiaries has obtained title insurance on all of the
     properties owned by each of them in an amount at least equal to the
     original purchase price to acquire land and improvements and such title
     insurance is in full force and effect.

          (xviii) Taxes.  The Company has filed all Federal, State and foreign
                  -----
     income tax returns that have been required to be filed and has paid all
     taxes indicated by said returns and all assessments received by it to the
     extent that such taxes have become due.

                                       9
<PAGE>

            (xix)   Investment Company Act.  The Company is not, and upon the
                    ----------------------
     issuance and sale of the Notes as herein contemplated and the application
     of the net proceeds therefrom as described in the Prospectus will not be,
     an "investment company" within the meaning of the Investment Company Act of
     1940, as amended (the "1940 Act").

            (xx)    Commodity Exchange Act.  The Notes, upon issuance, will be
                    ----------------------
     excluded or exempted under, or beyond the purview of, the Commodity
     Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and
     regulations of the Commodity Futures Trading Commission under the Commodity
     Exchange Act (the "Commodity Exchange Act Regulations").

            (xxi)   Ratings.  The Medium-Term Note Program under which the Notes
                    -------
     are issued (the "Program"), as well as the Notes, are rated Baa1 by Moody's
     Investors Service, Inc. and A- by Standard & Poor's Ratings Service, or
     such other rating as to which the Company shall have most recently notified
     the Agents pursuant to Section 4(a) hereof.

            (xxii)  Environmental Laws.  The Company has no knowledge of (a) the
                    ------------------
     unlawful presence of any hazardous substances, hazardous materials, toxic
     substances or waste materials (collectively, "Hazardous Materials") on any
     of the properties owned by it or any of its subsidiaries, or of (b) any
     lawful spills, releases, discharges or disposal of Hazardous Materials that
     have occurred or are presently occurring off such properties as a result of
     any construction on or operation and use of such properties, which presence
     or occurrence, singly or in the aggregate, would result in a Material
     Adverse Effect.  In connection with the construction on or operation and
     the use of the properties owned by the Company and its subsidiaries, the
     Company represents that, as of the date of this Agreement and will
     represent that, as of each Settlement Date and each Representation Date, it
     has no knowledge of any failure to comply with all applicable local, state
     and federal environmental laws, regulations, ordinances and administrative
     and judicial orders relating to the generation, recycling, reuse, sale,
     storage, handling, transport and disposal of any Hazardous Materials, which
     failure would result in a Material Adverse Effect.

            (xxiii) Doing Business with Cuba.  The Company has complied and will
                    ------------------------
     comply with the provisions of Florida H.B. 1771, codified as Section
     517.075 of the Florida Statutes, 1987, as amended, and all regulations
     promulgated thereunder relating to issuers doing business in Cuba or is
     exempt therefrom.

     (b)    Additional Certifications.  Any certificate signed by any officer of
            -------------------------
the Company and delivered to one or more Agents or to counsel for the Agents in
connection with an offering of Notes to one or more Agents as principal or
through an Agent as agent shall be deemed a representation and warranty by the
Company to such Agent or Agents as to the matters covered thereby on the date of
such certificate and, unless subsequently amended or supplemented, at each
Representation Date subsequent thereto.

SECTION 3.  Purchase as Principal, Solicitations as Agent.
            ---------------------------------------------

                                       10
<PAGE>

     (a)  Purchase as Principal.  Notes purchased from the Company by the
          ---------------------
Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between such Agent or Agents and the Company (which
terms, unless otherwise agreed, shall, to the extent applicable, include those
terms specified in Exhibit A hereto and shall be agreed upon orally, with
written confirmation prepared by such Agent or Agents and mailed to the
Company). An Agent's commitment to purchase Notes as principal shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Unless the context otherwise requires, references herein to "this
Agreement" shall include the applicable agreement of one or more Agents to
purchase Notes from the Company as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule A hereto. The
Agents may engage the services of any broker or dealer in connection with the
resale of the Notes purchased by them as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers or dealers. At the time of each purchase of Notes from
the Company by one or more Agents as principal, such Agent or Agents shall
specify the requirements for the officers' certificate, opinion of counsel and
comfort letters pursuant to Sections 7(b), 7(c) and 7(d) hereof.

     If the Company and two or more Agents enter into an agreement pursuant to
which such Agents agree to purchase Notes from the Company as principal and one
or more of such Agents shall fail at the Settlement Date to purchase the Notes
that it or they are obligated to purchase (the "Defaulted Notes"), then the
nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Notes in such amounts as
may be agreed upon and upon the terms herein set forth; provided, however, that
if such arrangements shall not have been completed within such 24-hour period,
then:

          (a) if the aggregate principal amount of Defaulted Notes does not
     exceed 10% of the aggregate principal amount of Notes to be so purchased by
     all of such Agents on the Settlement Date, the nondefaulting Agents shall
     be obligated, severally and not jointly, to purchase the full amount
     thereof in the proportions that their respective initial underwriting
     obligations bear to the underwriting obligations of all nondefaulting
     Agents; or

          (b) if the aggregate principal amount of Defaulted Notes exceeds 10%
     of the aggregate principal amount of Notes to be so purchased by all of
     such Agents on the Settlement Date, such agreement shall terminate without
     liability on the part of any nondefaulting Agent.

No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default.  In the event of any such default that
does not result in a termination of such agreement, either the nondefaulting
Agents or the Company shall have the right to postpone the Settlement Date for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or the Prospectus or in any other documents or
arrangements.

                                       11
<PAGE>

     (b)    Solicitations as Agent.  On the basis of the representations and
            ----------------------
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers to purchase the Notes
upon the terms set forth in the Prospectus.  The Agents are not authorized to
appoint sub-agents with respect to Notes sold through them as agent.  All Notes
sold through an Agent as agent will be sold at 100% of their principal amount
unless otherwise agreed to between the Company and such Agent.

     The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time for any period of time or permanently.
As soon as practicable after receipt of instructions from the Company, such
Agent will suspend solicitation of purchases from the Company until such time as
the Company has advised such Agent that such solicitation may be resumed.

     The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent, as an
agent of the Company, as set forth in Schedule A hereto.

     (c)    Administrative Procedures.  The purchase price, interest rate or
            -------------------------
formula, maturity date and other terms of the Notes specified in Exhibit A
hereto (as applicable) shall be agreed upon by the Company and the applicable
Agent(s) and specified in a pricing supplement to the Prospectus (each, a
"Pricing Supplement") to be prepared by the Company in connection with each sale
of Notes.  Except as otherwise specified in the applicable Pricing Supplement,
the Notes will be issued in denominations of U.S. $1,000 or any larger amount
that is an integral multiple of U.S. $1,000.  Administrative procedures with
respect to the issuance and sale of the Notes (the "Procedures") shall be agreed
upon from time to time among the Company, the Agents and the Trustee.  The
Agents and the Company agree to perform, and the Company agrees to cause the
Trustee to agree to perform, their respective duties and obligations
specifically provided to be performed by them in the Procedures.

SECTION 4.  Covenants of the Company.
            ------------------------

     The Company covenants with the Agents as follows:

     (a)    Notice of Certain Events.  The Company will notify the Agents
            ------------------------
immediately, and confirm such notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
amendment or supplement to the Prospectus (other than any amendment or
supplement thereto providing solely for the determination of the variable terms
of the Notes or relating solely to the offering of securities other than the
Notes), (ii) the receipt of any comments from the Commission, (iii) any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement, or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that purpose
and (v) any change in the rating assigned by any nationally recognized
statistical rating organization to the Program or any debt securities (including
the Notes) of the Company, or the public announcement by any nationally
recognized statistical rating organization that it has under surveillance or
review,

                                       12
<PAGE>

with possible negative implications, its rating of the Program or any such debt
securities, or the withdrawal by any nationally recognized statistical rating
organization of its rating of the Program or any such debt securities. The
Company will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.

     (b)  Filing or Use of Amendments.  The Company will give the Agents notice
          ---------------------------
of its intention to file or prepare any additional registration statement with
respect to the registration of additional Notes, any amendment to the
Registration Statement (including any filing under Rule 462(b) of the 1933 Act
Regulations) or any amendment or supplement to the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus
(other than an amendment or supplement providing solely for the determination of
the variable terms of the Notes or relating solely to the offering of securities
other than the Notes), whether pursuant to the 1933 Act, the 1934 Act or
otherwise, and will furnish to the Agents copies of any such document a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file any such document to which the Agents or counsel for the
Agents shall object.

     (c)  Delivery of the Registration Statement.  The Company has furnished to
          --------------------------------------
the Agents and to counsel for the Agents, without charge, signed and conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein
and documents incorporated or deemed to be incorporated by reference therein)
and signed and conformed copies of all consents and certificates of experts.
The Registration Statement and each amendment thereto furnished to the Agents
will be identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

     (d)  Delivery of the Prospectus.  The Company will deliver to each Agent,
          --------------------------
without charge, as many copies of each preliminary prospectus as such Agent may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act.  The Company will furnish to each Agent,
without charge, such number of copies of the Prospectus (as amended or
supplemented) as such Agent may reasonably request.  The Prospectus and any
amendments or supplements thereto furnished to the Agents will be identical to
any electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.

     (e)  Preparation of Pricing Supplements.  The Company will prepare, with
          ----------------------------------
respect to any Notes to be sold to or through one or more Agents pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents.  The Company will deliver such Pricing
Supplement no later than 11:00 a.m., New York City time, on the business day
following the date of the Company's acceptance of the offer for the purchase of
such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3)
under the 1933 Act not later than the close of business of the Commission on the
fifth business day after the date on which such Pricing Supplement is first
used.

     (f)  Revisions of Prospectus - Material Changes.  Except as otherwise
          ------------------------------------------
provided in subsection (m) of this Section 4, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary, in the opinion of counsel for the

                                       13
<PAGE>

Agents or counsel for the Company, to amend the Registration Statement in order
that the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or to amend or
supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
or if it shall be necessary, in the opinion of either such counsel, to amend the
Registration Statement or to amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company shall give immediate notice, confirmed in writing, to the Agents to
cease the solicitation of offers for the purchase of Notes in their capacity as
agents and to cease sales of any Notes they may then own as principal, and the
Company will promptly prepare and file with the Commission, subject to Section
4(b) hereof, such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement and Prospectus
comply with such requirements, and the Company will furnish to the Agents,
without charge, such number of copies of such amendment or supplement as the
Agents may reasonably request. In addition, the Company will comply with the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so
as to permit the completion of the distribution of each offering of Notes.

     (g)  Prospectus Revisions - Periodic Financial Information.  Except as
          -----------------------------------------------------
otherwise provided in subsection (m) of this Section 4, on or prior to the date
on which there shall be reported interim financial statement information related
to the Company with respect to each of the first three quarters of any fiscal
year or preliminary financial statement information with respect to any fiscal
year, the Company shall furnish such information to the Agents, confirmed in
writing, and shall cause the Prospectus to be amended or supplemented to include
financial information with respect thereto and corresponding information for the
comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for an understanding thereof
or as shall be required by the 1933 Act or the 1933 Act Regulations.

     (h)  Prospectus Revisions - Audited Financial Information.  Except as
          ----------------------------------------------------
otherwise provided in subsection (m) of this Section 4, on or prior to the date
on which there shall be released to the general public financial information
included in or derived from the audited consolidated financial statements of the
Company for the preceding fiscal year, the Company shall furnish such
information to the Agents, confirmed in writing, and shall cause the Prospectus
to be amended or supplemented, to include such audited consolidated financial
statements and the report or reports, and consent or consents to such inclusion,
of the independent accountants with respect thereto, as well as such other
information and explanations as shall be necessary for an understanding of such
financial statements or as shall be required by the 1933 Act or the 1933 Act
Regulations.

     (i)  Earnings Statements.  The Company will timely file such reports
          -------------------
pursuant to the 1934 Act as are necessary in order to make generally available
to its security holders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act Regulations.

     (j)  Reporting Requirements.  The Company, during the period when the
          ----------------------
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be

                                       14
<PAGE>

filed with the Commission pursuant to the 1934 Act within the time periods
prescribed by the 1934 Act and the 1934 Act Regulations.

     (k)    Restriction on Offers and Sales of Securities.  Unless otherwise
            ---------------------------------------------
agreed upon between one or more Agents acting as principal and the Company,
between the date of the agreement by such Agent(s) to purchase the related Notes
from the Company and the Settlement Date with respect thereto, the Company will
not, without the prior written consent of such Agent(s), issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise dispose of, any
debt securities of the Company (other than the Notes that are to be sold
pursuant to such agreement or commercial paper in the ordinary course of
business).

     (l)    Use of Proceeds.  The Company will use the net proceeds received by
            ---------------
it from the issuance and sale of the Notes in the manner specified in the
Prospectus under the caption "Use of Proceeds."

     (m)    Suspension of Certain Obligations.  The Company shall not be
            ---------------------------------
required to comply with the provisions of subsections (f), (g) or (h) of this
Section during any period from the time (i) the Agents shall have suspended
solicitation of offers for the purchase of Notes in their capacity as agents
pursuant to a request from the Company and (ii) no Agent shall then hold any
Notes purchased from the Company as principal, as the case may be, until the
time the Company shall determine that solicitation of offers for the purchase of
Notes should be resumed or an Agent shall subsequently purchase Notes from the
Company as principal.

SECTION 5.  Conditions of Agents' Obligations.
            ---------------------------------

     The obligations of one or more Agents to purchase Notes from the Company as
principal and to solicit offers for the purchase of Notes as agent of the
Company, and the obligations of any purchasers of Notes sold through an Agent as
agent of the Company, will be subject to the accuracy of the representations and
warranties on the part of the Company herein contained or contained in any
certificate of an officer of the Company delivered pursuant to the provisions
hereof, to the performance and observance by the Company of all its covenants
and other obligations hereunder and to the following additional conditions
precedent:

     (a)    Effectiveness of Registration Statement.  The Registration Statement
            ---------------------------------------
(including any Rule 462(b) Registration Statement) has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been instituted or shall be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Agents.

     (b)    Legal Opinions.  On the date hereof, the Agents shall have received
            --------------
the following legal opinions, dated as of the date hereof and in form and
substance satisfactory to the Agents.

            (1) Opinion of Company Counsel.  The favorable opinion of Arent Fox
                --------------------------
     Kintner Plotkin & Kahn, PLLC, counsel to the Company, to the effect that:

                                       15
<PAGE>

               (i)   The Company has been duly organized and is validly existing
          as a real estate investment trust in good standing under the laws of
          the State of Maryland, with trust power and authority to own, lease
          and operate its properties and conduct its business as described in
          the Prospectus and to enter into this Agreement and to consummate the
          transactions contemplated in the Prospectus; and at the time of filing
          the Registration Statement and at the time of the filing of any post-
          effective amendment to the Registration Statement (including the
          filing of the Annual Report on Form 10-K) the conditions for use of a
          registration statement on Form S-3 were satisfied.

               (ii)  The Company is duly qualified to transact business in each
          jurisdiction in which such qualification is required, whether by
          reason of the ownership or leasing of property or the conduct of
          business, except where the failure to so qualify would not result in a
          Material Adverse Effect.

               (iii) Each Subsidiary has been duly organized and is validly
          existing as a corporation or partnership, as the case may be, in good
          standing under the laws of the jurisdiction of its organization and
          has corporate or partnership power and authority, as the case may be,
          to own, lease and operate its properties and to conduct its business
          as described in the Prospectus.  Except as otherwise stated in the
          Registration Statement and the Prospectus, all of the issued and
          outstanding capital stock or other ownership interests of each
          Subsidiary have been duly authorized and are validly issued, are fully
          paid and non-assessable and, to the best of the knowledge of such
          counsel, are owned by the Company, directly or through subsidiaries,
          free and clear of any security interest, mortgage, pledge, lien,
          encumbrance, claim or equity.  To such counsel's knowledge, none of
          the outstanding shares of capital stock of any Subsidiary was issued
          in violation of preemptive or other similar rights of any security
          holder of such Subsidiary

               (iv)  Each Subsidiary of the Company is duly qualified as a
          foreign corporation to transact business and is in good standing in
          each jurisdiction in which such qualification is required, whether by
          reason of the ownership or leasing of property or the conduct of
          business, except where the failure to so qualify or be in good
          standing would not result in a Material Adverse Effect.

               (v)   All of the issued and outstanding shares of beneficial
          interest of the Company have been duly authorized and validly issued
          by the Company and are fully paid and non-assessable, and none of such
          shares of beneficial interest was issued in violation of preemptive or
          other similar rights of any security holder of the Company arising by
          operation of law or, to such counsel's knowledge, otherwise.

               (vi)  This Agreement has been duly authorized, executed and
          delivered by the Company.

               (vii) The Indenture has been duly authorized, executed and
          delivered by the Company and (assuming the Indenture has been duly
          authorized, executed and

                                       16
<PAGE>

          delivered by the Trustee) constitutes a valid and legally binding
          agreement of the Company, enforceable against the Company in
          accordance with its terms, except as the enforcement thereof may be
          limited by (A) bankruptcy, insolvency, reorganization, moratorium or
          other similar laws relating to or affecting creditors' rights
          generally, (B) general equitable principles (regardless of whether
          enforcement is considered in a proceeding in equity or at law), (C)
          requirements that a claim with respect to any debt securities issued
          under the Indenture that are payable in a foreign currency or
          composite currency (or a foreign or composite currency judgment in
          respect of such claim) be converted into U.S. dollars at a rate of
          exchange prevailing on a date determined pursuant to applicable law or
          (D) governmental authority to limit, delay or prohibit the making of
          payments outside the United States.

               (viii)  The Notes have been duly authorized by the Company for
          offer, sale, issuance and delivery pursuant to this Agreement and,
          when issued, authenticated and delivered in the manner provided for in
          the Indenture and delivered against payment of the consideration
          therefor, will constitute valid and legally binding obligations of the
          Company, enforceable against the Company in accordance with their
          terms, except as the enforcement thereof may be limited by (A)
          bankruptcy, insolvency, reorganization, moratorium or other similar
          laws relating to or affecting creditors' rights generally, (B) general
          equitable principles (regardless of whether enforcement is considered
          in a proceeding in equity or at law), (C) requirements that a claim
          with respect to any Notes payable in a foreign currency or composite
          currency (or a foreign or composite currency judgment in respect of
          such claim) be converted into U.S. dollars at a rate of exchange
          prevailing on a date determined pursuant to applicable law or (D)
          governmental authority to limit, delay or prohibit the making of
          payments outside the United States; and the Notes, in the forms
          certified on the date hereof, are in the form contemplated by, and
          each registered holder thereof is entitled to the benefits of, the
          Indenture.

               (ix)    The Indenture and the Notes, in the forms certified on
          the date hereof, conform in all material respects to the statements
          relating thereto contained in the Prospectus and are in substantially
          the form filed or incorporated by reference, as the case may be, as an
          exhibit to the Registration Statement.

               (x)     The statements in the Prospectus under "Description of
          Debt Securities," "Description of the Notes" and "United States
          Federal Income Taxation" and in the Registration Statement under Item
          15, insofar as such statements constitute a summary of documents
          referred to therein or matters of law, are accurate summaries and
          fairly and correctly present the information called for with respect
          to such documents and matters in all material respects.

               (xi)    To such counsel's knowledge, neither the Company nor any
          of its subsidiaries is in violation of its declaration of trust,
          partnership agreement, charter, by-laws or other organizational
          document.

                                       17
<PAGE>

               (xii)   Such counsel does not know of any contracts or documents
          required to be filed as exhibits to or incorporated by reference in
          the Registration Statement or described in the Registration Statement
          or the Prospectus that are not so filed, incorporated by reference or
          described as required, and such contracts and documents as are
          summarized in the Registration Statement or the Prospectus are fairly
          summarized in all material respects (except that such counsel need
          express no opinion as to the financial statements, schedules and other
          financial information included or incorporated by reference therein).

               (xiii)  The execution, delivery and performance of this
          Agreement, the Indenture and the Notes and any other agreement or
          instrument entered into or issued or to be entered into or issued by
          the Company in connection with the transactions contemplated in the
          Prospectus, the consummation of the transactions contemplated in the
          Prospectus (including the issuance and sale of the Notes and the use
          of the proceeds therefrom as described in the Prospectus) and the
          compliance by the Company with its obligations hereunder and
          thereunder have been duly authorized by the Company and do not
          constitute a breach of any of the terms or provisions of, or
          constitute a material default under, (a) the declaration of trust,
          partnership agreement, charter, by-laws, or other organizational
          document of the Company or any of its subsidiaries, (b) certain
          specified agreements that are set forth on a schedule to such opinion
          to which the Company is a party, (c) any order known to such counsel
          of any court or government agency or body having jurisdiction over the
          Company or any of its subsidiaries or any of their properties.

               (xiv)   Such counsel knows of no material legal proceedings
          pending or threatened against the Company.

               (xv)    No approval, consent, order, authorization, designation,
          declaration or filing by or with any regulatory, administrative or
          other governmental body is necessary in connection with the
          performance by the Company of its obligations under this Agreement,
          the Indenture or the Notes or the consummation of the transactions
          contemplated in the Prospectus (other than as may be required by state
          securities or Blue Sky laws, as to which such counsel need express no
          opinion) except such as have been obtained or made.

               (xvi)   The investments of the Company described in the
          Prospectus are permitted investments under its declaration of trust.

               (xvii)  The Company has qualified to be taxed as a real estate
          investment trust pursuant to Sections 856-860 of the Internal Revenue
          Code, as amended, for the fiscal years ended December 31, 1995 through
          December 31, 1999, and the Company's present method of operation and
          its assets and contemplated income are such that the Company is in a
          position under present law to so qualify for the fiscal year ended
          December 31, 2000, and under the present law the federal income tax
          treatment of the Company will be as set forth in the Prospectus under
          the heading "Description of Shares."

                                       18
<PAGE>

               (xviii)  The Indenture has been duly qualified under the 1939
          Act.

               (xix)    The Registration Statement has been declared effective
          under the 1933 Act; any required filing of the Prospectus pursuant to
          Rule 424(b) has been made in the manner and within the time period
          required by Rule 424(b); and, to such counsel's knowledge, no stop
          order suspending the effectiveness of the  Registration Statement has
          been issued under the 1933 Act and no proceedings for that purpose
          have been initiated or are pending or threatened by the Commission.

               (xx)     The Registration Statement and the Prospectus, excluding
          the documents incorporated by reference therein, and each amendment or
          supplement to the Registration Statement and Prospectus, excluding the
          documents incorporated by reference therein, as of their respective
          effective or issue dates (other than the financial statements and
          supporting schedules included therein or omitted therefrom and the
          Trustee's Statement of Eligibility on Form T-1 (the "Form T-1"), as to
          which such counsel need express no opinion) complied as to form in all
          material respects with the requirements of the 1933 Act and the 1933
          Act Regulations.

               (xxi)    Each document filed pursuant to the 1934 Act and
          incorporated by reference in the Prospectus complied when so filed as
          to form in all material respects with the 1934 Act and the 1934 Act
          Regulations.

               (xxii)   The Notes, in the forms certified on the date hereof,
          will be excluded or exempted under, or beyond the purview of, the
          Commodity Exchange Act.

               (xxiii)  The Company is not, and upon the issuance and sale of
          the Notes and the application of the net proceeds therefrom as
          described in the Prospectus will not be, an "investment company"
          within the meaning of the 1940 Act.

          (2)  Opinion of Counsel to the Agents.  The favorable opinion of
               --------------------------------
     Vinson & Elkins L.L.P., counsel to the Agents, covering the matters
     referred to in subsection (b)(1) under the subheadings (vi), (vii), (viii),
     (ix), (xviii), (xix) and (xx) above.

          (3)  Disclosure Documents.  In giving their opinions required by
               --------------------
     subsection (b)(1) and (b)(2), respectively, of this Section 5, Arent Fox
     Kintner Plotkin & Kahn, PLLC, and Vinson & Elkins L.L.P. shall each
     additionally state that nothing has come to their attention that would lead
     them to believe that the Registration Statement or any post-effective
     amendment thereto (except for financial statements, supporting schedules
     and other financial data included therein or omitted therefrom and for the
     Form T-1, as to which such counsel need make no statement), at the time the
     Registration Statement or any post-effective amendment thereto (including
     the filing of the Company's Annual Report on Form 10-K with the Commission)
     became effective or at the date hereof, contained or contains an untrue
     statement of a material fact or omitted or omits to state a material fact
     required to be stated therein or necessary in order to make the statements
     therein not misleading or that the Prospectus or any amendment or
     supplement thereto (except for financial statements, supporting schedules
     and other financial data included

                                       19
<PAGE>

     therein or omitted therefrom, as to which such counsel need make no
     statement), at the time the Prospectus was issued, at the time any such
     amended or supplemented prospectus was delivered or at date hereof (or, if
     such opinion is being delivered in connection with the purchase of Notes
     from the Company by one or more Agents as principal pursuant to Section
     7(c) hereof, at the date of any agreement by such Agent or Agents to
     purchase Notes as principal and at the Settlement Date with respect
     thereto, as the case may be) included or includes an untrue statement of a
     material fact or omitted or omits to state a material fact necessary in
     order to make the statements therein, in the light of the circumstances
     under which they were made, not misleading. With respect to such statement,
     Arent Fox Kintner Plotkin & Kahn, PLLC, and Vinson & Elkins L.L.P. may
     state that their belief is based upon the procedures set forth therein, but
     is without independent check and verification.

     (c)  Officers' Certificate.  On the date hereof, there shall not have been,
          ---------------------
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Agents shall have received a certificate of
the President or a Vice President of the Company and of the chief financial
officer and chief accounting officer of the Company, dated as of the date
hereof, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties of the Company herein contained are true
and correct with the same force and effect as though expressly made at and as of
the date of such certificate, (iii) the Company has performed or complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the date of such certificate and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or, to the
best of such officer's knowledge, are threatened by the Commission.

     (d)  Comfort Letter of Arthur Andersen LLP.  On the date hereof, the Agents
          ----------------- -------------------
shall have received a letter from Arthur Andersen LLP, dated as of the date
hereof and in form and substance satisfactory to the Agents, to the effect that:

          (i)   they are independent accountants with respect to the Company and
     its subsidiaries within the meaning of the 1933 Act, the 1933 Act
     Regulations, the 1934 Act and the 1934 Act Regulations;

          (ii)  it is their opinion that the consolidated financial statements
     and supporting schedule(s) of the Company and its subsidiaries and included
     or incorporated by reference in the Registration Statement and the
     Prospectus and audited by them and covered by their opinions therein comply
     as to form in all material respects with the applicable accounting
     requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act and
     the 1934 Act Regulations;

          (iii) based upon limited procedures set forth in detail in such
     letter (which shall include, without limitation, the procedures specified
     by the American Institute of Certified Public Accountants for a review of
     interim financial information as described in SAS No. 71, Interim Financial
     Information, with respect to the unaudited condensed consolidated

                                       20
<PAGE>

     financial statements of the Company and its subsidiaries included or
     incorporated by reference in the Registration Statement), nothing has come
     to their attention that causes them to believe that:

            (1)  any material modifications should be made to the unaudited
          condensed consolidated financial statements included or incorporated
          by reference in the Registration Statement for them to be in
          conformity with generally accepted accounting principles;

            (2)  the unaudited condensed consolidated financial statements
          included or incorporated by reference in the Registration Statement do
          not comply as to form in all material respects with the applicable
          accounting requirements of the 1933 Act and the 1934 Act as it applies
          to Form 10-Q and the related published rules and regulations;

            (3)  at a specified date not more than three days prior to the date
          of such letter, there was any change in the capitalization of the
          Company and its subsidiaries, any decrease in total assets, any change
          in long-term debt or any change in short-term borrowings of the
          Company and its subsidiaries, as compared with the amounts shown in
          the most recent consolidated balance sheet incorporated by reference
          in the Registration Statement; or

            (4)  during the period from the date of the most recent consolidated
          balance sheet incorporated by reference in the Registration Statement
          to a specified date not more than three days prior to the date of such
          letter, there were any decreases, as compared with the corresponding
          period in the preceding year, in real estate rental revenue, net
          income or net income per share of the Company and its subsidiaries;
          except in all cases for changes, increases or decreases that the
          Registration Statement discloses have occurred or may occur;

          (iv) in addition to the limited procedures referred to in clause
     (iii) above, they have carried out certain specified procedures, not
     constituting an audit, with respect to certain amounts, percentages and
     financial information that are derived from the general accounting records
     of the Company and its subsidiaries, which are included or incorporated by
     reference in the Registration Statement and which are specified by you, and
     have compared such amounts, percentages and financial information with the
     accounting records of the Company and its subsidiaries and have found them
     to be in agreement; and

          (v)  based upon limited procedures set forth in detail in such letter,
     nothing came to their attention that caused them to believe that the
     unaudited pro forma consolidated financial statements included or
     incorporated by reference in the Registration Statement and the Prospectus
     do not comply as to form in all material respects with the applicable
     accounting requirements of Rule 11-02 of Regulation S-X or that the pro
     forma adjustments have not been properly applied to the historical amounts
     in the compilation of those statements.

                                       21
<PAGE>

     (e)  Comfort Letter of Stoy, Malone & Company, P.C..  On the date hereof,
          ----------------------------------------------
the Agents shall have received a letter from Stoy, Malone & Company, P.C., dated
as of the date hereof and in form and substance satisfactory to the Agents, to
the effect that (i) they are independent accountants with respect to the Company
and its subsidiaries and certain properties and assets acquired by the Company
and its subsidiaries, within the meaning of the 1933 Act and the 1933 Act
Regulations; and (ii) it is their opinion that the historical financial
statements for the properties or assets that have been audited by them and
covered by their opinions included or incorporated by reference into the
Registration Statement and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the 1933 Act, the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations.

     (f)  Additional Documents.  On the date hereof, counsel to the Agents shall
          --------------------
have been furnished with such documents and opinions as such counsel may require
for the purpose of enabling such counsel to pass upon the issuance and sale of
Notes as herein contemplated and related proceedings, or in order to evidence
the accuracy and completeness of any of the representations and warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.

     If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
applicable Agent or Agents by notice to the Company at any time and any such
termination shall be without liability of any party to any other party, except
as provided in Section 10 hereof, and except that Sections 8, 9, 11, 14 and 15
hereof shall survive any such termination and remain in full force and effect.

SECTION 6.  Delivery of and Payment for Notes Sold through an Agent as Agent.
            ----------------------------------------------------------------

     Delivery of Notes sold through an Agent as an agent of the Company shall be
made by the Company to such Agent for the account of any purchaser only against
payment therefor in immediately available funds.  In the event that a purchaser
shall fail either to accept delivery of or to make payment for a Note on the
date fixed for settlement, such Agent shall promptly notify the Company and
deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent.  If such failure occurred for any reason other than default by such Agent
in the performance of its obligations hereunder, the Company will reimburse such
Agent on an equitable basis for its loss of the use of the funds for the period
such funds were credited to the Company's account.

SECTION 7.  Additional Covenants of the Company.
            -----------------------------------

     The Company covenants and agrees with each Agent as follows:

     (a)  Reaffirmation of Representations and Warranties.  Each acceptance by
          -----------------------------------------------
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company herein contained and contained in any certificate

                                       22
<PAGE>

theretofore delivered to the Agents pursuant hereto are true and correct at the
time of such acceptance or sale, as the case may be, and an undertaking that
such representations and warranties will be true and correct at the time of
delivery to such Agent or Agents or to the purchaser or its agent, as the case
may be, of the Notes relating to such acceptance or sale, as the case may be, as
though made at and as of each such time (it being understood that such
representations and warranties shall relate to the Registration Statement and
Prospectus as amended and supplemented to each such time).

     (b)  Subsequent Delivery of Certificates.  Each time that (i) the
          -----------------------------------
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished to the Agent(s), forthwith a certificate dated
the date of filing with the Commission or the date of effectiveness of such
amendment, or supplement, as applicable, or the date of such sale, as the case
may be, in form satisfactory to the Agent(s) to the effect that the statements
contained in the certificate referred to in Section 5(c) hereof which were last
furnished to the Agents are true and correct at the time of such filing or
effectiveness of such amendment or supplement, as applicable, or the time of
such sale, as the case may be, as though made at and as of such time (except
that such statements shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
Section 5(c) hereof, modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such certificate (it being understood that, in the case of clause (ii) above,
any such certificate shall also include a certification that there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise since the date of the agreement by
such Agent(s) to purchase Notes from the Company as principal).

     (c)  Subsequent Delivery of Legal Opinions.  Each time that (i) the
          -------------------------------------
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished forthwith to the Agent(s) and to counsel to the
Agents the written opinion of Arent Fox Kintner Plotkin & Kahn, PLLC, counsel to
the Company, or other counsel satisfactory to the Agent(s), dated the date of
filing with the Commission or the date of effectiveness of such amendment or
supplement, as applicable, or the date of such sale, as the case may be, in form
and substance satisfactory to the Agent(s), of the same tenor as the opinion
referred to in Section 5(b)(1) and 5(b)(3) hereof, but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish the
Agent(s) with a letter substantially to the effect that the Agent(s) may rely on
such last opinion to the same extent

                                       23
<PAGE>

as though it was dated the date of such letter authorizing reliance (except that
statements in such last opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such letter authorizing reliance).

     (d)   Subsequent Delivery of Comfort Letters.  Each time that (i) the
           --------------------------------------
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information (other than by an amendment or
supplement relating solely to the issuance and/or offering of securities other
than the Notes) or (ii) (if required in connection with the purchase of Notes
from the Company by one or more Agents as principal) the Company sells Notes to
one or more Agents as principal, the Company shall cause Arthur Andersen LLP and
Stoy, Malone & Company, P.C. forthwith to furnish to the Agent(s) letters, dated
the date of filing with the Commission or the date of effectiveness of such
amendment or supplement, as applicable, or the date of such sale, as the case
may be, in form satisfactory to the Agent(s), of the same tenor as the letters
referred to in Sections 5(d) and 5(e) hereof but modified to relate to the
Registration Statement and Prospectus as amended and supplemented to the date of
such letter.

SECTION 8. Indemnification.
           ---------------

     (a)   Indemnification of the Agents.  The Company agrees to indemnify and
           -----------------------------
hold harmless each Agent and each person, if any, who controls such Agent within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:

           (i)   against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact contained in the Registration Statement
     (or any amendment thereto), or the omission or alleged omission therefrom
     of a material fact required to be stated therein or necessary to make the
     statements therein not misleading, or arising out of any untrue statement
     or alleged untrue statement of a material fact included in any preliminary
     prospectus or the Prospectus (or any amendment or supplement thereto), or
     the omission or alleged omission therefrom of a material fact necessary in
     order to make the statements therein, in the light of the circumstances
     under which they were made, not misleading.

           (ii)  against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, to the extent of the aggregate amount paid in
     settlement of any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission, provided that any such settlement is
     effected with the written consent of the Company; and

           (iii) against any and all expense whatsoever, as incurred (including
     the fees and disbursements of counsel chosen by such Agent), reasonably
     incurred in investigating, preparing or defending against any litigation,
     or investigation or proceeding by any governmental agency or body,
     commenced or threatened, or any claim whatsoever based upon any such untrue
     statement or omission, or any such alleged untrue statement or omission, to
     the extent that any such expense is not paid under subparagraph (i) or (ii)
     above.

                                       24
<PAGE>

provided however; that this indemnity does not apply to any loss, liability,
-------- -------
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any Agent
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).

     (b) Indemnification of Company and its Trustees and Officers.  Each Agent
         --------------------------------------------------------
severally agrees to indemnify and hold harmless the Company, its trustees, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 8(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

     (c) Actions Against Parties; Notification.  Each indemnified party shall
         -------------------------------------
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement.  In the case of parties indemnified pursuant to Section 8(a) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified parties shall be selected by the Company.  An indemnifying
party may participate at its own expense in the defense of any such action;
provided however, that counsel to the indemnifying party shall not (except with
-------- -------
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.

     No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or 9 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) included an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

                                       25
<PAGE>

SECTION 9.  Contribution.
            ------------

     If the indemnification provided for in Section 8 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the applicable
Agent(s), on the other hand, from the offering of the Notes that were the
subject of the claim for indemnification or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

     The relative benefits received by the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the offering of the
Notes that were the subject of the claim for indemnification shall be deemed to
be in the same respective proportions as the total net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discount or commission received by each applicable Agent, as the case
may be, bears to the aggregate initial offering price of such Notes.

     The relative fault of the Company, on the one hand, and the applicable
Agent(s), on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the applicable Agent(s) and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     The Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the applicable Agent(s) were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 9.  The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue statement
or omission or alleged omission.

     Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not

                                       26
<PAGE>

guilty of such fraudulent misrepresentation. In addition, in connection with an
offering of Notes purchased from the Company by two or more Agents as principal,
the respective obligations of such Agents to contribute pursuant to this Section
9 are several, and not joint, in proportion to the aggregate principal amount of
Notes that each such Agent has agreed to purchase from the Company.

     For purposes of this Section 9, each person, if any, who controls an Agent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Agent, and each trustee of
the Company, each officer of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company.

SECTION 10. Payment of Expenses.
            -------------------

     The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:

     (a)    The preparation, filing, printing and delivery of the Registration
Statement as originally filed and all amendments thereto and any preliminary
prospectus, the Prospectus and any amendments or supplements thereto;

     (b)    The preparation, photocopying and delivery of this Agreement and the
Indenture;

     (c)    The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the eligibility and issuance of
Notes in book-entry form and the cost of obtaining CUSIP or other identification
numbers for the Notes;

     (d)    The fees and disbursements of the Company's accountants and counsel,
of the Trustee and its counsel, and of any calculation agent or exchange rate
agent;

     (e)    The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the Program and incurred from
time to time in connection with the transactions contemplated hereby;

     (f)    The fees charged by nationally recognized statistical rating
organizations for the rating of the Program and the Notes;

     (g)    The fees and expenses incurred in connection with any listing of
Notes on a securities exchange;

     (h)    The fees and expenses incurred with respect to any filing with the
National Association of Securities Dealers, Inc. ("NASD"); and

     (i)    Any advertising and other out-of-pocket expenses of the Agents
incurred with the approval of the Company.

                                       27
<PAGE>

SECTION 11. Representations, Warranties and Agreements to Survive Delivery.
            --------------------------------------------------------------

     All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Company submitted pursuant hereto or
thereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agents or any controlling person of an
Agent, or by or on behalf of the Company, and shall survive each delivery of and
payment for the Notes.

SECTION 12. Termination.
            -----------

     (a)    Termination of this Agreement.  This Agreement (excluding any
            -----------------------------
agreement by one or more Agents to purchase Notes from the Company as principal)
may be terminated for any reason, at any time by either the Company or an Agent,
as to itself, upon the giving of 30 days' written notice of such termination to
the other party hereto.

     (b)    Termination of Agreement to Purchase Notes as Principal.  The
            -------------------------------------------------------
applicable Agent(s) may terminate any agreement by such Agent(s) to purchase
Notes from the Company as principal, immediately upon notice to the Company, at
any time prior to the Settlement Date relating thereto, if (i) there has been,
since the date of such agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
there has occurred any material adverse change in the financial markets in the
United States or, if such Notes are denominated and/or payable in, or indexed
to, one or more foreign or composite currencies, in the international financial
markets, or any outbreak of hostilities or escalation thereof or other calamity
or crisis or any change or development or event involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of such
Agent(s), impracticable to market such Notes or enforce contracts for the sale
of such Notes, or (iii) trading in any securities of the Company has been
suspended or limited by the Commission or a national securities exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by either of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or (iv) a banking
moratorium has been declared by either Federal or New York authorities or by the
relevant authorities in the country or countries of origin of any foreign
currency or currencies in which such Notes are denominated or payable, or (v)
the rating assigned by any nationally recognized statistical rating organization
to the Program or any debt securities (including the Notes) of the Company as of
the date of such agreement shall have been lowered or withdrawn since that date
or if any such rating organization shall have publicly announced that it has
under surveillance or review, its rating of the Program or any such debt
securities, or (vi) there shall have come to the attention of such Agent(s) any
facts that would cause such Agent(s) to believe that the Prospectus, at the time
it was required to be delivered to a purchaser of such Notes, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances existing at
the time of such delivery, not misleading.

                                       28
<PAGE>

     (c)    General.  In the event of any such termination, neither party will
            -------
have any liability to the other party hereto, except that (i) the Agents shall
be entitled to any commission earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it from the Company as principal or (b) an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser or his agent of such Notes relating thereto has not
occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 4(i) hereof, the provisions of Section
10 hereof, the indemnity and contribution agreements set forth in Sections 8 and
9 hereof, and the provisions of Sections 11, 14 and 15 hereof shall remain in
effect.

SECTION 13. Notices.
            -------

     Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.

     If to the Company:

          Washington Real Estate Investment Trust
          6110 Executive Boulevard
          Suite 800
          Rockville, Maryland 20852
          Attention: Mr. Larry E. Finger
          Telecopy No.: (301) 984-9610

                                       29
<PAGE>

     If to the Agents:

          Merrill Lynch & Co.
          Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
          World Financial Center
          North Tower - 10th Floor
          New York, New York 10281-1310
          Attention: MTN Product Management
          Telecopy No.: (212) 449-2234

          BB&T Capital Markets/Scott & Stringfellow, Inc.
          909 East Main Street
          Richmond, Virginia 23219
          Attention: Investment Banking
          Telecopy No.: (804) 649-0990

          Banc One Capital Markets, Inc.
          1 Bank One Plaza, Suite IL1-0595
          Chicago, Illinois 60670
          Attention: Corporate Securities Structuring
          Telecopy No.: (312) 732-4773

          Deutsche Bank Securities Inc.
          1290 Avenue of the Americas, 6th Floor
          New York, New York 10019
          Attention: DCM Operations Support
          Telecopy No.: (212) 469-2246

          Donaldson, Lufkin & Jenrette Securities Corporation
          277 Park Avenue, 9th Floor
          New York, New York 10172
          Attention: Medium-Term Note Department
          Telecopy No.: (212) 892-2682

          A.G. Edwards & Sons, Inc.
          One North Jefferson Avenue
          St. Louis, Missouri 63103
          Attention: 7th Floor Bond Department
          Telecopy No.: (314) 955-5989

          Legg Mason Wood Walker, Incorporated
          100 Light Street, 31st Floor
          Baltimore, Maryland 21202
          Attention: Real Estate Investment Banking

                                       30
<PAGE>

          Telecopy No.: (410) 454-5342

          Salomon Smith Barney Inc.
          388 Greenwich Street, 34th Floor
          New York, New York 10013
          Attention: Medium-Term Note Department
          Telecopy No.: (212) 816-7912

or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.

SECTION 14.  Parties.
             -------

     This Agreement shall inure to the benefit of and be binding upon the Agents
and the Company and their respective successors.  Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and trustees referred to in Sections 8 and
9 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained.  This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and respective
successors and said controlling persons and officers and trustees and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation.  No purchaser of Notes shall be deemed to be a successor by reason
merely of such purchase.

SECTION 15.  GOVERNING LAW; FORUM.
             --------------------

     THIS AGREEMENT AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.  ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY AGAINST ANY AGENT IN CONNECTION WITH OR ARISING UNDER
THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURT OF
APPROPRIATE JURISDICTION LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW
YORK.

SECTION 16.  Effect of Headings.
             ------------------

     The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.

SECTION 17.  Counterparts.
             ------------

     This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts hereof shall constitute
a single instrument.

                                       31
<PAGE>

     If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Distribution Agreement, along with all counterparts, will become a binding
agreement among the Agents and the Company in accordance with its terms.

                    Very truly yours,

                    WASHINGTON REAL ESTATE INVESTMENT TRUST

                    By: ________________________________
                        Name:
                        Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED

By: ________________________________________
     Authorized Signatory

BB&T CAPITAL MARKETS/SCOTT & STRINGFELLOW, INC.

By: ________________________________________
     Authorized Signatory

BANC ONE CAPITAL MARKETS, INC.

By: ________________________________________
     Authorized Signatory

DEUTSCHE BANK SECURITIES INC.

By: ________________________________________
     Authorized Signatory

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

By: ________________________________________
     Authorized Signatory

                                       32
<PAGE>

A.G. EDWARDS & SONS, INC.

By: ________________________________________
     Authorized Signatory

LEGG MASON WOOD WALKER, INCORPORATED

By: ________________________________________
     Authorized Signatory

SALOMON SMITH BARNEY INC.

By: ________________________________________
     Authorized Signatory

                                       33
<PAGE>

                                  SCHEDULE A

     As compensation for the services of the Agents hereunder, the Company shall
pay the applicable Agent, on a discount basis, a commission for the sale of each
Note equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:

                                                            PERCENT OF
MATURITY RANGES                                          PRINCIPAL AMOUNT
---------------                                          ----------------

From 9 months to less than 1 year.............................   .125%

From 1 year to less than 18 months............................   .150

From 18 months to less than 2 years...........................   .200

From 2 years to less than 3 years.............................   .250

From 3 years to less than 4 years.............................   .350

From 4 years to less than 5 years.............................   .450

From 5 years to less than 6 years.............................   .500

From 6 years to less than 7 years.............................   .550

From 7 years to less than 10 years............................   .600

From 10 years to less than 15 years...........................   .625

From 15 years to less than 20 years...........................   .700

From 20 years to 30 years.....................................   .750

Greater than 30 years. . . . . . . . .........................   *

______________________
* As agreed to by the Company and the applicable Agent at the time of sale.
<PAGE>

                                                                       EXHIBIT A

                                 PRICING TERMS

     Principal Amount: $_______
          (or principal amount of foreign currency or composite currency)

     Interest Rate or Formula:
          If Fixed Rate Note,
            Interest Rate:
            Default Rate:
            Interest Payment Dates:
          If Floating Rate Note,
            Interest Rate Basis(es):
                  If LIBOR,
                    [_] LIBOR Reuters Page:
                    [_] LIBOR Telerate Page:
                    LIBOR Currency:
                  If CMT Rate,
                    Designated CMT Telerate Page:
                  If Telerate Page 7052,
                         [_] Weekly Average
                         [_] Monthly Average
                    Designated CMT Maturity Index:
            Index Maturity:
            Spread and/or Spread Multiplier, if any:
            Initial Interest Rate, if any:
            Initial Interest Reset Date:
            Interest Reset Dates:
            Interest Payment Dates:
            Maximum Interest Rate, if any:
            Minimum Interest Rate, if any:
            Fixed Rate Commencement Date, if any:
            Fixed Interest Rate, if any:
            Day Count Convention:
            Calculation Agent:

     Redemption Provisions:
          Initial Redemption Date:
          Initial Redemption Percentage:
          Annual Redemption Percentage Reduction, if any:
     Repayment Provisions:
          Optional Repayment Date(s):

     Original Issue Date:
     Stated Maturity Date:
     Specified Currency:
     Exchange Rate Agent:
     Authorized Denomination:
     Purchase Price: ___%, plus accrued interest, if any, from ___________
<PAGE>

     Price to Public: ___%, plus accrued interest, if any, from ___________
     Issue Price:
     Settlement Date and Time:
     Additional/Other Terms:

Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:

     Officers' Certificate pursuant to Section 7(b) of the Distribution
     Agreement.
     Legal Opinion pursuant to Section 7(c) of the Distribution Agreement.
     Comfort Letters pursuant to Section 7(d) of the Distribution Agreement.

                                       2

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