Document:

EXHIBIT 10.1

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                           LOAN AND SECURITY AGREEMENT

                          Dated as of December 15, 2000

                                     between

                        CEDARS LA LLC, HERALD SQUARE LLC,
            INDIANA AVENUE LLC, BRIDGEPOINT PROPERTY TRUST, LAKEWOOD
             PROPERTY TRUST and 1600 MARKET STREET PROPERTY TRUST,
                           collectively, as Borrowers

                                       and

                      MERRILL LYNCH MORTGAGE LENDING, INC.
                                    as Lender

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                                               Table of Contents

                                                                                                           Page
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                                                ARTICLE I
                                               DEFINITIONS

Section 1.1      Certain Defined Terms.......................................................................1
Section 1.2      Accounting Terms...........................................................................15
Section 1.3      Other Definitional Provisions..............................................................15

                                           ARTICLE II
                                       TERMS OF THE LOAN

Section 2.1      Loan.......................................................................................16
Section 2.2      Interest...................................................................................16
Section 2.3      Reserved...................................................................................18
Section 2.4      Payments...................................................................................18
Section 2.5      Maturity...................................................................................18
Section 2.6      Prepayment.................................................................................19
Section 2.7      Outstanding Balance........................................................................20
Section 2.8      Taxes......................................................................................20
Section 2.9      Reasonableness of Charges..................................................................20

                                          ARTICLE III
                                       CONDITIONS TO LOAN

Section 3.1      Conditions to Funding of the Loan on the Closing Date......................................21

                                           ARTICLE IV
                                 REPRESENTATIONS AND WARRANTIES

Section 4.1      Organization, Powers, Capitalization, Good Standing, Business..............................25
Section 4.2      Authorization of Borrowing, etc............................................................26
Section 4.3      Financial Statements.......................................................................27
Section 4.4      Indebtedness and Contingent Obligations....................................................27
Section 4.5      Title to Properties........................................................................27
Section 4.6      Zoning; Compliance with Laws...............................................................27
Section 4.7      Leases; Agreements.........................................................................28
Section 4.8      Condition of Properties....................................................................29
Section 4.9      Litigation; Adverse Facts..................................................................30
Section 4.10     Payment of Taxes...........................................................................30
Section 4.11     Adverse Contracts..........................................................................30
Section 4.12     Performance of Agreements..................................................................30
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Section 4.13     Governmental Regulation....................................................................31
Section 4.14     Employee Benefit Plans.....................................................................31
Section 4.15     Broker's Fees..............................................................................31
Section 4.16     Environmental Compliance...................................................................31
Section 4.17     Solvency...................................................................................31
Section 4.18     Disclosure.................................................................................32
Section 4.19     Use of Proceeds and Margin Security........................................................32
Section 4.20     Insurance..................................................................................32
Section 4.21     Separate Tax Lots..........................................................................32
Section 4.22     Investments................................................................................32
Section 4.23     Bankruptcy.................................................................................33
Section 4.24     Defaults...................................................................................33
Section 4.25     No Plan Assets.............................................................................33
Section 4.26     Governmental Plan..........................................................................33
Section 4.27     Not Foreign Person.........................................................................33
Section 4.28     No Collective Bargaining Agreements........................................................33

                                           ARTICLE V
                                 COVENANTS OF BORROWER PARTIES

Section 5.1      Financial Statements and Other Reports.....................................................33
Section 5.2      Existence; Qualification...................................................................36
Section 5.3      Payment of Impositions and Claims..........................................................36
Section 5.4      Maintenance of Insurance...................................................................37
Section 5.5      Maintenance of the Property; Alterations; Casualty.........................................40
Section 5.6      Inspection.................................................................................43
Section 5.7      Environmental Compliance...................................................................44
Section 5.8      Environmental Disclosure...................................................................44
Section 5.9      Compliance with Laws and Contractual Obligations...........................................45
Section 5.10     Further Assurances.........................................................................45
Section 5.11     Performance of Agreements and Leases.......................................................45
Section 5.12     Leases.....................................................................................46
Section 5.13     Management.................................................................................48
Section 5.14     Material Agreements........................................................................49
Section 5.15     Deposits; Application of Receipts..........................................................49
Section 5.16     Estoppel Certificates......................................................................49
Section 5.17     Indebtedness...............................................................................50
Section 5.18     Liens and Related Matters..................................................................51
Section 5.19     Contingent Obligations.....................................................................52
Section 5.20     Restriction on Fundamental Changes.........................................................52
Section 5.21     Transactions with Related Persons..........................................................52
Section 5.22     ERISA......................................................................................52
Section 5.23     Lender's Expenses..........................................................................53
Section 5.24     Tenant Estoppels...........................................................................53

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                                           ARTICLE VI
                                            RESERVES

Section 6.1      Security Interest in Reserves; Other Matters Pertaining to Reserves........................53
Section 6.2      Funds Deposited with Lender................................................................54
Section 6.3      Impositions and Insurance Reserve..........................................................54
Section 6.4      Replacement Reserve........................................................................55
Section 6.5      Hazardous Materials Remediation Reserve....................................................55

                                          ARTICLE VII
                        DEPOSIT ACCOUNTS/CENTRAL ACCOUNT/CASH MANAGEMENT

Section 7.1      Establishment of Deposit Accounts and Central Account......................................56
Section 7.2      Flow of Funds..............................................................................57
Section 7.3      Application of Funds After Event of Default................................................57
Section 7.4      Holdback Account; Release of Holdback Amount...............................................57

                                          ARTICLE VIII
                                  DEFAULT, RIGHTS AND REMEDIES

Section 8.1      Event of Default...........................................................................60
Section 8.2      Acceleration and Remedies..................................................................62
Section 8.3      Performance by Lender......................................................................64

                                           ARTICLE IX
          SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 9.1      Applicable to Primary Borrower Parties.....................................................64
Section 9.2      Applicable to Member and the Borrowers.....................................................66

                                           ARTICLE X
                       RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS

Section 10.1     Secondary Market Transactions Generally....................................................67
Section 10.2     Cooperation; Limitations...................................................................68
Section 10.3     Information................................................................................68
Section 10.4     Additional Provisions......................................................................69

                                           ARTICLE XI
                    RESTRICTIONS ON LIENS, TRANSFERS; RELEASE OF PROPERTIES

Section 11.1     Restrictions on Transfer and Encumbrance...................................................69
Section 11.2     Transfers of Beneficial Interests in Borrowers.............................................70

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Section 11.3     Reserved...................................................................................70
Section 11.4     Release of Properties......................................................................70

                                          ARTICLE XII
                               RECOURSE; LIMITATIONS ON RECOURSE

Section 12.1     Limitations on Recourse....................................................................72
Section 12.2     Partial Recourse...........................................................................73
Section 12.3     Miscellaneous..............................................................................73

                                          ARTICLE XIII
                         WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES

                                          ARTICLE XIV
                                         MISCELLANEOUS

Section 14.1     Expenses and Attorneys' Fees...............................................................76
Section 14.2     Indemnity..................................................................................76
Section 14.3     Amendments and Waivers.....................................................................77
Section 14.4     Retention of Borrower's Documents..........................................................77
Section 14.5     Notices....................................................................................77
Section 14.6     Survival of Warranties and Certain Agreements..............................................79
Section 14.7     Failure or Indulgence Not Waiver; Remedies Cumulative......................................79
Section 14.8     Marshaling; Payments Set Aside.............................................................79
Section 14.9     Severability...............................................................................79
Section 14.10    Headings...................................................................................79
Section 14.11    APPLICABLE LAW.............................................................................79
Section 14.12    Successors and Assigns.....................................................................80
Section 14.13    Sophisticated Parties, Reasonable Terms, No Fiduciary Relationship.........................80
Section 14.14    Reasonableness of Determinations...........................................................80
Section 14.15    No Duty....................................................................................81
Section 14.16    Entire Agreement...........................................................................81
Section 14.17    Construction; Supremacy of Loan Agreement..................................................81
Section 14.18    Consent to Jurisdiction....................................................................81
Section 14.19    Waiver of Jury Trial.......................................................................81
Section 14.20    Counterparts; Effectiveness................................................................82
Section 14.21    Servicer...................................................................................82
Section 14.22    Obligations of Borrower Parties............................................................82
Section 14.23    Guaranties Unsecured.......................................................................82
Section 14.24    Confidentiality............................................................................83
Section 14.25    Joint and Several Obligations..............................................................83
Section 14.26    Trustee Exculpation........................................................................83
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<PAGE>
                           LOAN AND SECURITY AGREEMENT

                  This LOAN AND SECURITY  AGREEMENT  (this "Loan  Agreement") is
dated as of  December  15,  2000 and  entered  into by and  between  BRIDGEPOINT
PROPERTY TRUST,  LAKEWOOD  PROPERTY TRUST and 1600 MARKET STREET PROPERTY TRUST,
each  a  Maryland  real  estate  investment  trust  (collectively,   the  "Trust
Borrowers");  CEDARS LA LLC,  HERALD SQUARE LLC, and INDIANA AVENUE LLC, each, a
Delaware limited  liability  company  (collectively,  the "LLC  Borrowers";  and
together with the Trust Borrowers,  collectively,  the "Borrowers"); and MERRILL
LYNCH  MORTGAGE  LENDING,   INC.  a  Delaware  corporation  (together  with  its
successors and assigns, "Lender").

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants  herein  contained,  Borrower  Parties and
Lender agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

Section 1.1 Certain Defined Terms. The terms defined below are used in this Loan
Agreement as so defined.  Terms  defined in the preamble to this Loan  Agreement
are used in this Loan Agreement as so defined.

         "Accounts"  means,  collectively,  the  Deposit  Accounts,  the Central
Account,  the  Sub-Accounts  thereof,  the Holdback  Account,  any Loss Proceeds
Account and any other accounts pledged to Lender pursuant to this Loan Agreement
or any other Loan Document.

         "Account  Collateral" means all of the right, title and interest of the
Borrowers in and to the Accounts, the Reserves, all monies and amounts which may
from time to time be on deposit therein, all monies, checks, notes, instruments,
documents,  deposits,  and credits from time to time in the possession of Lender
representing  or  evidencing  such  Accounts  and  Reserves and all earnings and
investments held therein and proceeds thereof.

         "Affiliate"  means in  relation to any Person,  any other  Person:  (i)
directly or indirectly controlling, controlled by, or under common control with,
the first Person;  (ii)  directly or indirectly  owning or holding fifty percent
(50%) or more of any equity interest in the first Person; or (iii) fifty percent
(50%) or more of whose  voting  stock or other  equity  interest  is directly or
indirectly  owned or held by the first Person.  In addition,  the  Affiliates of
each Borrower Party include,  without  limitation,  all other Borrower  Parties,
irrespective  of whether they now or hereafter  satisfy the foregoing  criteria.
For purposes of this definition, "control" (including with correlative meanings,
the terms "controlling",  "controlled by" and "under common control with") means
the  possession  directly  or  indirectly  of the  power to  direct or cause the
direction  of the  management  and  policies  of a Person,  whether  through the
ownership of voting securities, by contract or otherwise. Where expressions such
as "[name of party] or any  Affiliate"  are used,  the same  shall  refer to the
named party and any Affiliate of the named party.

                                      -1-
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         "Allocated  Loan Amount"  means the portion of the  original  Principal
Balance  allocated to each Property  (which  initially  shall be the  respective
amounts with  respect to such  Property set forth on Exhibit C), as such amounts
shall be adjusted  from time to time as set forth in this Loan  Agreement.  Upon
each adjustment in the Principal Balance (each, a "Total  Adjustment"),  whether
as a result of amortization, prepayment or otherwise, each Allocated Loan Amount
shall be increased or  decreased,  as the case may be, by an amount equal to the
product of (i) the Total Adjustment and (ii) a fraction,  the numerator of which
is the  applicable  Allocated  Loan Amount (prior to the adjustment in question)
and the denominator of which is the Principal Balance prior to the adjustment to
the Principal  Balance  resulting in the  recalculation  of the  Allocated  Loan
Amount.  However,  when the  Principal  Balance  is  reduced  as a result of the
Lender's receipt of Loss Proceeds or Net Proceeds, the Allocated Loan Amount for
the  Property  with  respect  to which the Loss  Proceeds  or Net  Proceeds  was
received  shall be reduced to zero (such  Allocated  Loan  Amount  prior to such
reduction being referred to as the "Withdrawn Allocated Amount"), and each other
Allocated Loan Amount shall (i) if the Withdrawn  Allocated  Amount exceeds such
Loss Proceeds or Net Proceeds, as the case may be (such excess being referred to
as the "Proceeds Deficiency"), be increased by an amount equal to the product of
(1) the Proceeds Deficiency and (2) a fraction (the "Allocation Fraction"),  the
numerator  of  which is the  applicable  Allocated  Loan  Amount  (prior  to the
adjustment in question) and the  denominator of which is the aggregate of all of
the Allocated Loan Amounts other than the Withdrawn  Allocated Amount or (ii) if
such Loss  Proceeds or Net  Proceeds,  as the case may be, are greater  than the
Withdrawn  Allocated  Amount  (such excess  being  referred to as the  "Proceeds
Surplus"),  be  decreased  by an amount equal to the product of (1) the Proceeds
Surplus  and (2)  the  Allocation  Fraction  for  such  Allocated  Loan  Amount.
Notwithstanding the foregoing sentence, when the Principal Balance is reduced as
a result of Lender's application of Loss Proceeds, the Allocated Loan Amount for
the  applicable  Property  shall not be reduced to zero (and the Allocated  Loan
Amounts for the other Properties shall not be adjusted pursuant to the foregoing
provisions) unless the applicable  Property is also being released from the Lien
of the Mortgage relating to such Property pursuant to Section 5.5(G) hereof; and
in the event that Loss Proceeds are applied to payment of the Obligation without
release  of the  applicable  Property  from  the  lien of the  related  Mortgage
pursuant to Section  5.5(G),  then the Allocated  Loan Amount for the applicable
Property  only shall be reduced by the amount of such Loss  Proceeds so applied.
In the event that any  Property is released  from the Lien of the  Mortgages  by
defeasance in accordance with Section 11.4 hereof, the Allocated Loan Amount for
the Property  being  released by defeasance  (such  Allocated  Loan Amount,  the
"Released Allocated Amount"), shall be reduced to zero, and each other Allocated
Loan Amount shall be reduced by an amount equal to the product of (1) the excess
of (a) the  Release  Price for such  Property  over (b) the  Released  Allocated
Amount, and (2) the Allocation Fraction for such Allocated Loan Amount.

         "Assignments of Leases" means, collectively,  the Assignments of Leases
and  Rents  of  even  date  herewith  from  each  of the  Borrowers  to  Lender,
constituting  assignments of their respective  right,  title and interest in the
Leases for each of the Properties  and proceeds  therefrom as Collateral for the
Loan, as same may be amended or modified from time to time.

         "Assignment of Management  Agreement" means that certain  Assignment of
Management Agreement of even date herewith executed by the Borrowers and current
Manager,

                                      -2-
<PAGE>
constituting  an assignment of the  Management  Agreement as Collateral  for the
Loan, as same may be amended or modified from time to time.

         "Bankruptcy  Code" means Title 11 of the United States Code, as amended
from time to time, and all rules and regulations promulgated thereunder.

         "Borrowers" has the meaning set forth in the preamble.

         "Borrower   Party"  and  "Borrower   Parties"  mean,   individually  or
collectively, the Borrowers, Member and Guarantor.

         "Borrower Party Secretary" has the meaning set forth in Section 3.1.

         "Business Day" means any day excluding (i) Saturday, (ii) Sunday, (iii)
any day which is a legal  holiday  under the laws of the State of New York,  and
(iv) any day on which banking  institutions  located in such state are generally
not open for the conduct of regular business.

         "Capital  Expenditures"  means  expenditures for capital  improvements,
furnishings, fixtures and equipment (whether paid in cash or property or accrued
as  liabilities)  made by a Borrower that, in conformity with GAAP, are required
to be included in the  property,  plant,  or  equipment,  or similar fixed asset
account or otherwise capitalized.

         "Capital  Expenditure  Budget" means each Borrower's budget for Capital
Expenditures  for its  Property,  the  costs  of which  are to be paid  from the
Replacement  Reserve,  which  budget has been  approved  by Lender as and to the
extent required hereunder.

         "Cash Management Agreement" means the Cash Management Agreement of even
date herewith among the Borrowers,  Lender, Manager and Central Account Bank, as
same may be amended or modified from time to time.

         "Cedars  Borrower"  means Cedars LA LLC, a Delaware  limited  liability
company.

         "Cedars  Guaranty"  means that certain  Guaranty of even date  herewith
from Medical  Office  Buildings  Ltd. and certain  limited  partners  thereof to
Lender guaranteeing a portion of the principal amount of the Loan.

         "Cedars Member" means HUB LA Limited  Partnership,  a Delaware  limited
partnership, which is the sole member of the Cedars Borrower.

         "Central Account" has the meaning set forth in Section 7.1

         "Central  Account  Bank" means First Union  National  Bank,  a national
banking association.

         "Claims" has the meaning set forth in Section 5.3.

         "Closing"  means  the  funding  of the Loan  contemplated  by this Loan
Agreement.

         "Closing Date" means the date on which the Closing occurs.

                                      -3-
<PAGE>
         "Collateral" means rights,  interests, and property of every kind, real
and personal,  tangible and intangible,  which is granted,  pledged,  liened, or
encumbered as security for the Loan or any of the other  Obligations  under this
Loan  Agreement,  the  Mortgages,  the Cash  Management  Agreement or other Loan
Documents,  including without limitation the Properties,  the Improvements,  the
Rents and the Accounts.

         "Compliance Certificate" has the meaning set forth in Section 5.1.

         "Contingent Obligation",  as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness,  lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability,  or the primary effect
thereof,  is to provide  assurance  to the obligee of such  liability  that such
liability will be paid or discharged,  or that any agreements  relating  thereto
will be complied  with, or that the holders of such  liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit  issued  for the  account  of that  Person or as to which  that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or  other  similar   agreement  or  arrangement   designed  to  protect  against
fluctuations  in interest  rates;  or (D) under any foreign  exchange  contract,
currency swap agreement or other similar  agreement or  arrangement  designed to
protect  that  Person  against  fluctuations  in  currency  values.   Contingent
Obligations  shall  include  (i) the direct or  indirect  guaranty,  endorsement
(other  than for  collection  or deposit in the  ordinary  course of  business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation  of  another,  (ii) the  obligation  to make  take-or-pay  or similar
payments if required  regardless of nonperformance by any other party or parties
to an agreement,  and (iii) any liability of such Person for the  obligations of
another through any agreement to purchase,  repurchase or otherwise acquire such
obligation or any property  constituting security therefor, to provide funds for
the  payment or  discharge  of such  obligation  or to  maintain  the  solvency,
financial condition or any balance sheet item or level of income of another. For
purposes of this definition, the amount of any Contingent Obligation at any time
shall  be  computed  as the  amount  that,  in  light  of all of the  facts  and
circumstances  existing at such time,  represents the amount that can reasonably
be expected to become an actual or matured liability.

         "Contractual   Obligation",   as  applied  to  any  Person,  means  any
indenture,  mortgage, deed of trust, contract,  undertaking,  agreement or other
instrument  to  which  that  Person  is a  party  or by  which  it or any of its
properties  is  bound  or to  which  it or  any  of its  properties  is  subject
including, without limitation, the Loan Documents.

         "Debt Service Coverage Ratio" shall mean, for any period,  the ratio of
(i) Underwritable  Cash Flow for such period  immediately  preceding the date of
calculation  to (ii) the amount of principal and interest due under the Loan for
such period.

         "Debt Service Sub-Account" has the meaning set forth in Section 7.1.

         "Default"  means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default,  and also any condition or event
that,  after  notice  or  lapse of time

                                      -4-
<PAGE>

or both,  would  constitute an Event of Default if that  condition or event were
not cured or removed within any applicable grace or cure period.

         "Default Rate" has the meaning set forth in Section 2.2.

         "Deposit Accounts" has the meaning set forth in Section 7.1.

         "Dollars"  and the sign "$" mean the lawful money of the United  States
of America.

         "Eligible Account" shall mean a separate and identifiable  account from
all other funds held by the holding institution,  which account is either (i) an
account  maintained  with an Eligible  Bank or (ii) a segregated  trust  account
maintained by a corporate trust department of a federal  depository  institution
or a state chartered  depository  institution  subject to regulations  regarding
fiduciary  funds  on  deposit  similar  to  Title  12 of  the  Code  of  Federal
Regulations ss.  9.10(B),  which has corporate trust powers and is acting in its
fiduciary  capacity and in either case having combined capital and surplus of at
least $100,000,000 or otherwise acceptable to the Rating Agencies.

         "Eligible  Bank"  shall  mean a bank  that  (i)  satisfies  the  Rating
Criteria  and (ii) insures the deposits  hereunder  through the Federal  Deposit
Insurance Corporation.

         "Employee  Benefit  Plan" means any  employee  benefit  plan within the
meaning of Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is
maintained for employees of any Borrower or any Affiliate, (ii) which has at any
time within the preceding six (6) years been maintained for the employees of any
Borrower or any current or former  Affiliate  or (iii) for which any Borrower or
any Affiliate has any liability, including contingent liability.

         "Environmental Claims" has the meaning set forth in Section 4.16.

         "Environmental  Indemnity" means the Environmental  Indemnity Agreement
of even date herewith from the Borrowers and Guarantor to Lender, as same may be
amended or modified from time to time.

         "Environmental Laws" means any federal,  state, or local law, ordinance
or  regulation  or any court  judgment or order of any  federal,  state or local
agency or regulatory body applicable to any Borrower or to any Property relating
to industrial  hygiene or to environmental or unsafe conditions  including,  but
not  limited  to,  those  relating  to  the  generation,  manufacture,  storage,
handling, transportation,  disposal, release, emission or discharge of Hazardous
Material,  those  in  connection  with  the  construction,  fuel  supply,  power
generation and transmission, waste disposal or any other operations or processes
relating to any Property,  and those relating to the atmosphere,  soil,  surface
and ground water,  wetlands,  stream  sediments and vegetation on, under,  in or
about any Property.  "Environmental Laws" also shall include, but not be limited
to, the Comprehensive  Environmental  Response,  Compensation and Liability Act,
the  Hazardous  Materials  Transportation  Act,  the Resource  Conservation  and
Recovery  Act, the Solid Waste  Disposal Act, the Clean Water Act, the Clean Air
Act,  the Toxic  Substance  Control  Act,  the Safe  Drinking  Water Act and the
Occupational  Safety and Health Act, and all  regulations  adopted in respect to
the foregoing laws.

                                      -5-
<PAGE>

         "Environmental Reports" means, collectively,  the environmental reports
and audits with respect to each of the Properties listed on Schedule 4.16.

         "ERISA" means the Employee  Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.

         "Event of Default" has the meaning set forth in Section 8.1.

         "Excess Interest" has the meaning set forth in Section 2.2.

         "Existing GSA Leases" has the meaning set forth in Section 7.4(A).

         "Financial  Statements" means (i) statements of operations and retained
earnings,  statements  of cash  flow,  and  balance  sheets  and (ii) such other
financial reports as the subject entity shall routinely and regularly prepare.

         "Financing  Statements"  means the Uniform  Commercial  Code  Financing
Statements  naming the  applicable  Borrower  Parties  as debtor,  and Lender as
secured  party,  required  under  applicable  state law to perfect the  security
interests created hereunder or under the other Loan Documents.

         "First Payment Date" has the meaning set forth in Section 2.4(A).

         "Fitch" means Fitch, Inc.

         "GAAP" means generally accepted  accounting  principles as in effect in
the United States of America from time to time.

         "Gross Revenues" means, without  duplication,  all revenue derived from
the  ownership and  operation of the  Properties by the Borrowers  from whatever
source  determined on a GAAP basis,  including,  but not limited to, Rents,  but
excluding  sales,  use and  occupancy or other taxes on receipts  required to be
accounted  for by the  Borrowers to any  governmental  authority,  non-recurring
revenues as reasonably determined by Lender (e.g. proceeds from a sale of assets
or refinancing), security deposits (except to the extent determined by Lender to
be  properly  utilized  to offset a loss of  Rent),  refunds  and  uncollectible
accounts,  proceeds of casualty  insurance and  condemnation  awards (other than
business  interruption  or other loss of income  insurance  related to  business
interruption   or  loss  of  income  for  the  period  in  question),   and  any
disbursements  to the Borrowers from the Reserve  Sub-Accounts or any other fund
established  by the Loan  Documents or any proceeds from the sale or refinancing
of any Property or recapitalization of any Borrower. In addition, if required by
Lender, income accrued but not paid in cash during an accounting period shall be
discounted for an allowance for doubtful  accounts in a manner  consistent  with
historical net realizable value.

         "Ground Leased  Properties" means the Properties  covered by the Ground
Leases as set forth on Exhibit B attached hereto.

                                      -6-
<PAGE>

         "Ground Leases" means the Ground Leases described on Exhibit B attached
hereto  pursuant to which certain  Borrowers hold leasehold  interests in and to
the Ground Leased Properties.

         "Ground  Lessor"  means  the  Person  that  holds the  ground  lessor's
interest under a Ground Lease as set forth on Exhibit B attached hereto.

         "GSA" has the meaning set forth in Section 7.4(A).

         "GSA Premises" has the meaning set forth in Section 7.4(A).

         "Guaranty"  means the Guaranty of Non-Recourse  Exceptions of even date
herewith  executed by  Guarantor  in favor of Lender,  as same may be amended or
modified from time to time.

         "Guarantor"  means HUB Realty  College Park I, LLC, a Maryland  limited
liability company.

         "Hazardous Material" means all or any of the following: (i) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in,  regulated by, or otherwise  classified  pursuant to, any  applicable
Environmental Laws, including any so defined, listed, regulated or classified as
"hazardous  substances",   "hazardous  materials",  "hazardous  wastes",  "toxic
substances", "pollutants",  "contaminants", or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious,  harmful
or dangerous  properties;  (ii) waste oil, oil,  petroleum or petroleum  derived
substances,  natural  gas,  natural gas liquids or  synthetic  gas and  drilling
fluids,  produced  waters  and other  wastes  associated  with the  exploration,
development  or  production of crude oil,  natural gas or geothermal  resources;
(iii) any flammable substances or explosives or any radioactive materials;  (iv)
asbestos in any form; (v) electrical or hydraulic  equipment  which contains any
oil or dielectric fluid  containing  polychlorinated  biphenyls;  (vi) radon; or
(vii) urea formaldehyde.

         "Hazardous Materials Remediation Reserve" means the Reserve established
pursuant to Section 6.5.

         "Holdback Account" has the meaning set forth in Section 7.4(A).

         "Holdback Amount" has the meaning set forth in Section 7.4(A).

         "Holdback Release Amount " has the meaning set forth in Section 7.4(A).

         "HRPT" means HRPT Properties  Trust, a Maryland real estate  investment
trust.

         "Impositions"  means (A) all real estate and personal  property  taxes,
and vault  charges and all other taxes,  levies,  assessments  and other similar
charges,  general  and  special,   ordinary  and  extraordinary,   foreseen  and
unforeseen,  of every kind and nature whatsoever (including any payments in lieu
of taxes),  which at any time prior to, at or after the execution  hereof may be
assessed,  levied or imposed by, in each case, a governmental authority upon any
Property or the rents relating thereto or upon the ownership,  use, occupancy or
enjoyment  thereof,  and  any

                                      -7-
<PAGE>
interest,  cost or penalties imposed by such governmental authority with respect
to any of the  foregoing  and (B) all  rents  payable  under  any  Ground  Lease
(excluding  any such rents  prepaid  under any Ground Lease on the date hereof).
Impositions shall not include any sales or use taxes payable by any Borrower.

         "Impositions  and  Insurance  Reserve"  means the  reserve  established
pursuant to Section 6.3.

         "Improvements"  means all  buildings,  structures and  improvements  of
every  kind and  nature  existing  and to be  constructed  upon  the land  which
comprises any portion of any Property.

         "Indebtedness" or "indebtedness",  as applied to any Person, means: (A)
all  indebtedness  for  borrowed  money;  (B) that portion of  obligations  with
respect to leases that is properly  classified as a liability on a balance sheet
in conformity  with GAAP  (excluding any prepaid rents under Leases);  (C) notes
payable and drafts  accepted  representing  extensions of credit  whether or not
representing  obligations for borrowed money; (D) any obligation owed for all or
any part of the deferred  purchase price of property or services if the purchase
price is due more than six months from the date the obligation is incurred or is
evidenced  by a note or similar  written  instrument;  and (E) all  indebtedness
secured  by any  Lien on any  property  or asset  owned  or held by that  Person
regardless of whether the  indebtedness  secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.

         "Indemnified Liabilities" has the meaning set forth in Section 14.2.

         "Indiana Avenue  Borrower" means Indiana Avenue LLC, a Delaware limited
liability company.

         "Indiana  Avenue  Property"  means the Property  located at 625 Indiana
Avenue, N.W., Washington, D.C.

         "Initial Interest Rate" has the meaning set forth in Section 2.2(A).

         "Insurance  Premiums"  means  the  annual  insurance  premiums  for the
insurance  policies  required to be maintained by the Borrowers  with respect to
the Properties under Section 5.4.

         "Interest Rate" has the meaning set forth in Section 2.2.

         "Involuntary  Borrower Party  Bankruptcy"  means any  involuntary  case
under the  Bankruptcy  Code or any  applicable  bankruptcy,  insolvency or other
similar law now or hereafter in effect,  in which any Borrower Party is a debtor
or all or any portion of any Property is property of the estate therein.

         "IRC"  means  the  Internal  Revenue  Code of  1986,  and  any  rule or
regulation promulgated thereunder from time to time, in each case as amended.

         "IRS" means the Internal Revenue Service or any successor thereto.

                                      -8-
<PAGE>

         "Knowledge":  Whenever  in  this  Loan  Agreement  or any  of the  Loan
Documents,  or in any document or certificate executed on behalf of any Borrower
Party pursuant to this Loan Agreement or any of the Loan Documents, reference is
made to the knowledge of Borrower or any other Borrower Party (whether by use of
the words "knowledge" or "known", or other words of similar meaning, and whether
or not the same are  capitalized),  such  shall be deemed to refer to the actual
knowledge, without duty of independent inquiry or investigation (except that the
persons  described  in clause (i) shall make  reasonable  inquiry of the persons
described in clause (ii) below), of (i) John A. Mannix,  John C. Popeo, David M.
Lepore and Jennifer B. Clark;  and (ii) the individuals  owning  interests in or
employed by any  Borrower  Party with whom the persons  mentioned  in clause (i)
above would  reasonably  be expected to consult for  information  on the subject
matter,  including  without  limitation,   the  property  manager,   maintenance
supervisor,  or other  individuals  with  responsibility  for  management of the
Property and/or the applicable entity.

         "Lease" means any lease, tenancy, license, sublease,  assignment and/or
other rental or occupancy agreement (including,  without limitation, any and all
guarantees  of  any of the  foregoing)  heretofore  or  hereafter  entered  into
affecting  the use,  enjoyment  or  occupancy  of any  Property  or any  portion
thereof,  including  any  extensions,   renewals,  modifications  or  amendments
thereof.

         "Lender"  is defined in the preamble.

         "Lien" means any lien, mortgage,  pledge, security interest,  charge or
encumbrance  of any kind,  whether  voluntary  or  involuntary,  (including  any
conditional  sale or other title  retention  agreement,  any lease in the nature
thereof, and any agreement to give any security interest).

         "LLC Borrowers" has the meaning set forth in the preamble.

         "Loan" has the meaning set forth in Section 2.1.

         "Loan Agreement" means this Loan and Security Agreement, as same may be
amended  or  modified  from time to time  (including  all  schedules,  exhibits,
annexes and appendices hereto).

         "Loan  Documents"  means this Loan Agreement,  the Note, the Mortgages,
the Assignments of Leases, the Assignment of Management Agreement, the Guaranty,
the  Environmental  Indemnity,  the Financing  Statements,  the Cash  Management
Agreement,  the Cedars  Guaranty and any and all other  documents and agreements
accepted by Lender for the purposes of evidencing and/or securing the Loan.

         "Loss  Proceeds"  means,  in the event of a  casualty  or  condemnation
affecting any  Property,  the insurance  proceeds  received  under any insurance
policy in connection  with such casualty or the  condemnation  award or proceeds
received  in  respect  of any  such  condemnation,  in  either  case,  less  all
reasonable  costs and expenses  incurred by Lender or Borrower,  as the case may
be,  in  connection  with the  adjustment,  settlement  and  collection  of such
insurance  proceeds  or  condemnation  award,  including,   without  limitation,
reasonable attorneys' fees and disbursements.

                                      -9-
<PAGE>
         "Loss  Proceeds  Account"  has the  meaning  given  thereto in the Cash
Management Agreement.

         "Major Lease" means for any Property any Lease demising  (together with
all other Leases to the same tenant or any  Affiliate  thereof) more than 75,000
square feet;  provided,  however,  that if as a result of the sale,  transfer or
issuance of any stock of HRPT or any  recapitalization or restructuring of HRPT,
HRPT  shall  hereafter  be  controlled  by  (as  defined  in the  definition  of
"Affiliate")  any Person (not having at least an investment grade rating ("BBB-"
or its equivalent) by at least two of the Rating  Agencies,  or if the surviving
Person  in  connection  with any  merger or  consolidation  of HRPT with or into
another Person, does not have at least an investment grade rating ("BBB-" or its
equivalent)  by at least  two of the  Rating  Agencies,  then from and after the
effective date of any such transaction,  for purposes hereof "Major Lease" shall
mean any Lease  demising  (together  with all other Leases to the same tenant or
any Affiliate thereof) more than 50,000 square feet of any Property.

         "Management   Agreement"   means  the  management   agreement  for  the
Properties  in effect on the date hereof  between the  Borrowers and the current
Manager and any  management  agreement  which may  hereafter  be entered into in
accordance  with  the  terms  and  conditions  hereof,  pursuant  to  which  any
subsequent Manager may hereafter manage the Property.

         "Management  Fee" means the fee earned by Manager pursuant to the terms
of the Management Agreement.

         "Manager" means REIT  Management & Research,  Inc., the current manager
of the  Properties,  or such  other  Person as may  hereafter  be  charged  with
management of the  Properties  pursuant to a Management  Agreement in accordance
with the terms and conditions hereof.

         "Material  Adverse Effect" means (A) a material adverse effect upon the
business,  operations,  properties, assets or condition (financial or otherwise)
of any  Borrower  or any  other  Borrower  Party  taken as a  whole,  or (B) the
material  impairment of the ability of any Borrower or any other  Borrower Party
to  perform  its  material  obligations  under  any Loan  Documents,  or (C) the
impairment  of  the  ability  of  Lender  to  enforce  or  collect  any  of  the
Obligations.  In  determining  whether any  individual  event would  result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect,  a Material  Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.

         "Material  Alteration"  means any  improvement or alteration  affecting
structural  elements of any Property the cost of which exceeds five percent (5%)
of the Allocated Loan Amount for such Property;  provided,  however,  that in no
event  shall (i) any tenant  improvement  work  performed  pursuant to any Lease
existing on the date hereof or entered  into  hereafter in  accordance  with the
provisions  of this Loan  Agreement or (ii)  alterations  performed as part of a
Restoration, constitute a Material Alteration.

         "Maturity  Date"  shall mean  January 31,  2011,  or such other date on
which the final  payment  of  principal  of the Note  becomes  due an payable as
therein  or  herein   provided,   whether  at  such  stated  maturity  date,  by
acceleration, or otherwise.

                                      -10-
<PAGE>
         "Maximum Rate" has the meaning set forth in Section 2.2(D).

         "Member"  means SP  Holding  Property  Trust,  a Maryland  real  estate
investment  trust,  which is (i) the sole  member  of each of the LLC  Borrowers
except  for the  Cedars  Borrower  (as to which  the  Cedars  Member is the sole
member) and (ii) the sole shareholder of each of the Trust Borrowers.

         "Monthly  Debt  Service  Payment  Amount"  has the meaning set forth in
Section 2.4(A).

         "Moody's" means Moody's Investors Service.

         "Mortgages" means,  collectively,  (i) that certain Mortgage Assignment
of Leases  and  Rents,  Security  Agreement  and  Fixture  Filing and (ii) those
certain Deeds of Trust, Assignments of Leases and Rents, Security Agreements and
Fixture Filings of even date herewith from the Borrowers to Lender, constituting
Liens on the  respective  Properties  or Ground  Leases,  as the case may be, as
Collateral for the Loan as same may be modified or amended from time to time.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
3(37) or Section  4001(a)(3)  of ERISA to which  Borrower  or any  Affiliate  is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make,  contributions  within the  preceding  six (6) years,  or for
which  Borrower  or  any  Affiliate  has  any  liability,  including  contingent
liability.

         "Net  Proceeds"  means,  with respect to any  Property,  (i) either (x)
unless clause (y) below applies,  the purchase price actually received by Lender
from a third party  purchaser  with respect to such  Property as a result of the
exercise by Lender of its rights,  powers,  privileges  and other remedies after
the  occurrence  of an Event of Default  or (y) in the event that  Lender is the
purchaser at foreclosure of such Property, the amount of Lender's credit bid, in
either case less (ii) all  reasonable  costs and  expenses,  including,  without
limitation,  all reasonable  attorneys' fees and disbursements and any brokerage
fees, if applicable,  incurred by Lender in connection with the exercise of such
remedies.

         "New GSA Leases" has the meaning set forth in Section 7.4(A).

         "Note" has the meaning set forth in Section 2.1.

         "O&M Plans" has the meaning set forth in Section 5.7(D).

         "Obligations"  means all  obligations,  liabilities and indebtedness of
every nature of each of the Borrowers from time to time owed to Lender under the
Loan  Documents,  including  the  principal  amount  of all  debts,  claims  and
indebtedness,  accrued and unpaid  interest  and all fees,  costs and  expenses,
whether primary, secondary, direct, contingent, fixed or otherwise,  heretofore,
now and/or  from time to time  hereafter  owing,  due or payable  under the Loan
Documents  whether  before  or  after  the  filing  of a  proceeding  under  the
Bankruptcy Code by or against any Borrower.

         "Operating  Budget"  means each  Borrower's  budget  setting forth such
Borrower's best estimate,  after due consideration,  of all revenue,  costs, and
expenses,  Gross  Revenues and

                                      -11-
<PAGE>

Operating  Expenses,  for the Property  owned or leased by such  Borrower  which
budget has been  reasonably  approved  by Lender if and to the  extent  required
hereunder.

         "Operating Expenses" means all costs and expenses accrued in accordance
with GAAP relating to the operation,  maintenance, repair, use and management of
the  Properties,   including,   without  limitation,   utilities,   repairs  and
maintenance,  insurance,  property taxes and assessments,  advertising expenses,
payroll and related taxes, equipment lease payments,  actual management fees and
all amounts paid into Reserves but excluding (i)  principal,  interest and other
payments  made by the Borrowers  under the Loan  Documents,  (ii)  depreciation,
amortization and other non-cash  expenses of the Properties;  provided,  however
such costs and expenses  shall be subject to reasonable  adjustment by Lender to
normalize such costs and expenses,  (iii) capital  expenditures  and other costs
and expenses to the extent paid from  Reserves and (iv) any rents  prepaid under
the  Ground  Leases on the date  hereof  (to the extent  such  prepaid  rents or
amortization  thereof  would  otherwise  be  included in  operating  expenses in
accordance with GAAP).

         "Outside Director" is defined in Section 9.2.

         "Payment Date" has the meaning set forth in Section 2.4(A).

         "PBGC" means the Pension Benefit Guaranty  Corporation or any successor
thereto.

         "Pension  Plan"  means  any  Employee   Benefit  Plan,   other  than  a
Multiemployer  Plan,  which is subject to the provisions of Part 3 of Title I of
ERISA,  Title IV of ERISA or Section 412 of the IRC and (i) which is  maintained
for employees of Borrower, or any of its ERISA Affiliates, (ii) which has at any
time within the  preceding  six (6) years been  maintained  for the employees of
Borrower or any of its current or former  ERISA  Affiliates,  or (iii) for which
Borrower  or  any  ERISA  Affiliate  has  any  liability,  including  contingent
liability.

         "Permitted Encumbrances" means (i) the Mortgages and the other Liens of
the Loan Documents in favor of Lender; (ii) the items shown in Schedule B to the
Title  Policies  as of  Closing;  (iii)  future  liens  for  property  taxes and
assessments  not then  delinquent;  (iv) Liens for  Impositions  not yet due and
payable or Liens arising after the date hereof which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted in
accordance  with Section 5.3(B)  hereof;  (v) in the case of Liens arising after
the  date  hereof,  statutory  Liens  of  carriers,   warehousemen,   mechanics,
materialmen  and other  similar  Liens  arising by operation  of law,  which are
incurred in the  ordinary  course of business  and  discharged  by a Borrower by
payment,  bonding or otherwise  within thirty (30) days after the filing thereof
or which are being  contested in good faith in  accordance  with Section  5.3(B)
hereof;  (vi)  Liens  arising  from  reasonable  and  customary  purchase  money
financing of personal  property and equipment leasing to the extent the same are
created in the ordinary  course of business in accordance  with Section  5.17(B)
hereof;  (vii) all  easements,  rights-of-way,  restrictions  and other  similar
charges  or  non-monetary  encumbrances  against  real  property  which  do  not
materially  and  adversely  affect (A) the ability of any Borrower to pay any of
its obligations to any Person as and when due, (B) the marketability of title to
any  Property,  (C) the fair  market  value of any  Property,  or (D) the use or
operation of any Property as of the Closing Date and  thereafter;  (viii)

                                      -12-
<PAGE>

rights of existing and future tenants,  as tenants only, pursuant to the Leases;
and (ix) any other Lien to which Lender may expressly consent in writing.

         "Permitted   Investments"  has  the  meaning  set  forth  in  the  Cash
Management Agreement.

         "Person"  means and includes  natural  persons,  corporations,  limited
liability companies,  limited partnerships,  general  partnerships,  joint stock
companies,  joint  ventures,  associations,   companies,  trusts,  banks,  trust
companies,  land trusts, business trusts or other organizations,  whether or not
legal entities,  and governments and agencies and political subdivisions thereof
and their  respective  permitted  successors  and  assigns  (or in the case of a
governmental Person, the successor functional equivalent of such Person).

         "Pre-Existing Condition" has the meaning set forth in Section 5.5.

         "Prepayment Consideration" has the meaning set forth in Section 2.6.

         "Principal Balance" means the outstanding principal balance of the Loan
from time to time.

         "Primary  Borrower  Parties"  means,  collectively,  the  Borrowers and
Member.

         "Properties"  means the properties  (including  land and  Improvements)
listed on Exhibit A attached  hereto which serve as Collateral  for the Loan and
which  shall  be  encumbered  by and  are  more  particularly  described  in the
respective Mortgages.

         "Property Release" has the meaning set forth in Section 11.4.

         "Rating  Agency" shall mean any of S&P,  Moody's,  Fitch,  or any other
nationally-recognized  statistical rating  organization  designated by Lender in
its sole discretion.

         "Rating  Confirmation"  with  respect to the  transaction  or matter in
question,  shall  mean:  (i) if all or any  portion  of the  Loan,  by itself or
together with other loans, has been the subject of a  Securitization,  then each
applicable  Rating Agency shall have confirmed in writing that such  transaction
or matter shall not result in a downgrade,  qualification,  or withdrawal of any
rating then in effect for any class of certificates or other  securities  issued
in connection  with such  Securitization;  and (ii) if the Loan has not been the
subject of a Securitization, then Lender shall have determined in its reasonable
discretion  (taking into  consideration  such  factors as Lender may  determine,
including the attributes of the loan pool in which the Loan might  reasonably be
expected  to be  securitized)  that no  rating  for  any  certificate  or  other
securities  that  would be  issued in  connection  with  Securitization  of such
portion of the Loan would be  downgraded,  qualified,  or  withheld by reason of
such transaction or matter.

         "Rating  Criteria" with respect to any Person,  shall mean that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P,  "P-1" by Moody's and "F-1+" by Fitch,  if deposits are held by such Person
for a  period  of less  than one  year,  or (ii) the  long-term  unsecured  debt
obligations of such Person are rated at least "AA-" by S&P, "Aa2" by Moody's and
"AA" by Fitch,  if deposits  are held by such Person for a period of one year or
more.

                                      -13-
<PAGE>

         "Receipts"  means all  revenues,  receipts and other  payments of every
kind arising from  ownership or operation of the  Properties and received by the
Borrowers or Affiliates thereof  including,  without  limitation,  all warrants,
stock  options,  or equity  interests  in any tenant,  licensee or other  Person
occupying space at, or providing  services related to or for the benefit of, the
Properties  received by the Borrowers or  Affiliates  thereof in lieu of rent or
other payment.

         "Related Person" means in relation to any Person, any other Person that
is (i) an Affiliate of the first Person; (ii) the sibling of the first Person or
of the Affiliate;  (iii) the then-current and former spouses of the first Person
or of the  Affiliate;  (iv) a Person that shares or has shared a residence  with
the first Person or with the  Affiliate;  (v) the ancestor or  descendant of the
first  Person or of any other  Person  described  in this items (i) through (iv)
above; or (vi) any other Person that, by reason of familial, economic, social or
other relationship, would reasonably be expected to favor the first Person or to
act as requested by the first Person. Where expressions such as "[name of party]
or any Related Person" are used, the same shall refer to the named party and any
Related Person of the named party.

         "Release Date" has the meaning set forth in Section 11.4.

         "Release Price" means, with respect to any Property, an amount equal to
125% of the Allocated Loan Amount relating to such Property.

         "Rent Rolls" has the meaning set forth in Section 3.1.

         "Rents" has the meaning  set forth in the  Granting  Clauses of each of
the Mortgages.

         "Replacement Reserve" means the reserve established pursuant to Section
6.4.

         "Reserves"  means the reserves held by or on behalf of Lender  pursuant
to this Loan Agreement or other Loan Documents,  including  without  limitation,
the reserves established pursuant to Article VI.

         "Reserve Sub-Accounts" has the meaning set forth in Section 7.1.

         "Restoration" has the meaning set forth in Section 5.5(B).

         "Restoration  Threshold" means, for any Property, an amount equal to 5%
of the Allocated Loan Amount for such Property.

         "S&P" shall mean Standard & Poor's Rating  Services,  a division of The
McGraw-Hill Companies, Inc.

         "Secondary  Market  Transaction"  has the  meaning set forth in Section
10.1.

         "Securities"  (whether  or not  capitalized)  means any stock,  shares,
voting trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness,  secured or unsecured,  convertible,  subordinated or
otherwise,  or in general any instruments  commonly known as "securities" or any
certificates  of  interest,  shares or  participations  in

                                      -14-
<PAGE>

temporary or interim  certificates  for the purchase or  acquisition  of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

         "Securitization" means a public or private rated offering of securities
representing  direct or indirect  interests in one or more mortgage loans or the
right to receive income therefrom.

         "Servicer" means a servicer selected by Lender from time to time in its
sole discretion to service the Loan.

         "Sub-Accounts" has the meaning set forth in Section 7.1.

         "Subordinate Lender" has the meaning set forth in Section 5.17.

         "Subordinate Loan" has the meaning set forth in Section 5.17.

         "Subordinate Loan Documents" has the meaning set forth in Section 5.17.

         "Survey" has the meaning set forth in Section 3.1(H).

         "Tax Liabilities" has the meaning given to such term in Section 2.8.

         "Title  Company" means Lawyers Title Insurance  Company,  or such other
national title insurance company as may be reasonably acceptable to Lender.

         "Title  Policies"  means  the  mortgage  policies  of  title  insurance
pertaining  to the  Mortgages  issued to Lender in  connection  with the Closing
meeting the requirements of Section 3.1(G).

         "Trust Borrowers" has the meaning set forth in the preamble.

         "Underwritable  Cash  Flow"  means for any  period  the excess of Gross
Revenues  over  Operating  Expenses  for such  period as  determined  by Lender.
Underwritable Cash Flow (including determination of any necessary adjustments to
Gross Revenues or Operating  Expenses)  shall be calculated by Lender based upon
Lender's sole good faith determination of Rating Agency criteria.

         "Waiving Party" has the meaning set forth in Article XIII.

         "Yield Maintenance Amount" has the meaning set forth in Section 2.6(C).

Section 1.2 Accounting Terms.

         Except as otherwise expressly provided herein, all accounting terms not
otherwise  defined  herein  shall have the  meanings  assigned  to such terms in
conformity with GAAP.

Section 1.3 Other Definitional Provisions.

         References to  "Articles",  "Sections",  "Subsections",  "Exhibits" and
"Schedules" shall be to Articles, Sections, Subsections, Exhibits and Schedules,
respectively, of this Loan

                                      -15-
<PAGE>

Agreement unless otherwise  specifically  provided.  Any of the terms defined in
Section 1.1 may, unless the context otherwise requires,  be used in the singular
or the plural  depending on the  reference.  In this Loan  Agreement,  "hereof",
"herein",  "hereto",  "hereunder"  and the  like  mean and  refer  to this  Loan
Agreement  as  a  whole  and  not  merely  to  the  specific  article,  section,
subsection,  paragraph or clause in which the  respective  word  appears;  words
importing any gender include the other genders;  references to "writing" include
printing, typing, lithography and other means of reproducing words in a tangible
visible form; the words "including", "includes" and "include" shall be deemed to
be followed by the words "without limitation";  and any reference to any statute
or regulation may include any amendments of same and any successor  statutes and
regulations. Further, (i) any reference to any agreement or other document shall
include subsequent amendments, assignments, and other modifications thereto, and
(ii) any reference to any Person may include such Person's respective  permitted
successors  and  assigns  or,  in the  case  of  governmental  Persons,  Persons
succeeding to the relevant functions of such Persons.

                                   ARTICLE II
                                TERMS OF THE LOAN

Section 2.1 Loan.

         (A) Loan.  Subject to the terms and  conditions of this Loan  Agreement
and in  reliance  upon  the  representations  and  warranties  of the  Borrowers
contained  herein,  Lender  agrees to lend to the  Borrowers,  and the Borrowers
jointly  and  severally  agree to borrow  from  Lender,  a loan in the amount of
$260,000,000  (such loan and the  obligation  of the Borrowers to repay the same
together with all interest and other  amounts from time to time owing  hereunder
may be referred to as the "Loan").

         (B) Note. On the Closing Date,  each of the Borrowers shall execute and
deliver to Lender a Promissory  Note,  dated of even date  herewith (as amended,
modified or restated,  and any replacement notes therefor,  the "Note"), made by
the  Borrowers  to the order of  Lender,  in the  original  principal  amount of
$260,000,000.

         (C) Use of Proceeds.  The proceeds of the Loan funded at Closing  shall
be  used  to (i)  repay  any  existing  indebtedness  secured  by  any  mortgage
encumbering all or any part of the  Properties;  (ii) pay all recording fees and
taxes, title insurance  premiums,  the reasonable costs and expenses incurred by
Lender,  including  the legal fees and expenses of counsel to Lender,  and other
costs and expenses  approved by Lender (which  approval will not be unreasonably
withheld) related to the Loan; (iii) establish the Reserves  required  hereunder
and (iv) to prepay ground rent under the Ground  Leases in  accordance  with the
terms thereof. The remaining proceeds of the Loan, if any, shall be disbursed to
Borrower;  provided,  however,  that any and all such remaining  proceeds of the
Loan  will be used  for  commercial  purposes  only  and  will  not be used  for
personal, family, agricultural or household use.

Section 2.2 Interest.

         (A) Rate of Interest.  The  outstanding  principal  balance of the Loan
shall bear interest at a rate per annum equal to six and eight-hundred  fourteen
one-thousandths  percent

                                      -16-
<PAGE>

(6.814%) (the  "Interest  Rate") during the period from the Closing Date through
and including the Maturity Date.

         (B) Default Rate.  Notwithstanding  the foregoing,  upon the occurrence
and during  the  continuance  of an Event of  Default  and in any event from and
after the Maturity Date of the Loan, the  outstanding  principal  balance of the
Loan and all other  Obligations shall bear interest until paid in full at a rate
per annum that is five percent  (5.0%) in excess of the Interest Rate  otherwise
applicable under this Loan Agreement and the Note (the "Default Rate").

         (C)  Computation  of  Interest.  Interest  on the  Loan  and all  other
Obligations  owing to Lender  shall be computed on the basis of a 360-day  year,
and shall be charged for the actual  number of days elapsed  during any month or
other accrual period. Interest shall be payable in arrears.

         (D)  Interest  Laws.  Notwithstanding  any  provision  to the  contrary
contained in this Loan  Agreement  or the other Loan  Documents,  the  Borrowers
shall not be required to pay, and Lender shall not be permitted to collect,  any
amount of interest in excess of the maximum amount of interest  permitted by law
("Excess  Interest").  If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Loan Agreement
or in any of the other Loan Documents, then in such event: (1) the provisions of
this  subsection  shall  govern  and  control;  (2) the  Borrowers  shall not be
obligated to pay any Excess  Interest;  (3) any Excess  Interest that Lender may
have received  hereunder shall be, at Lender's  option,  (a) applied as a credit
against  either  or both of the  outstanding  principal  balance  of the Loan or
accrued  and  unpaid  interest  thereunder  (not to exceed  the  maximum  amount
permitted by law), (b) refunded to the payor thereof,  or (c) any combination of
the  foregoing;   (4)  the  interest   rate(s)  provided  for  herein  shall  be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "Maximum Rate"),  and this Loan Agreement and the other Loan
Documents  shall be deemed to have been and shall be,  reformed  and modified to
reflect such reduction;  and (5) the Borrowers shall not have any action against
Lender for any damages  arising out of the payment or  collection  of any Excess
Interest.  Notwithstanding the foregoing,  if for any period of time interest on
any Obligation is calculated at the Maximum Rate rather than the applicable rate
under this Loan Agreement, and thereafter such applicable rate becomes less than
the Maximum Rate, the rate of interest payable on such Obligations shall, to the
extent  permitted  by law,  remain at the Maximum  Rate until  Lender shall have
received or accrued the amount of interest  which Lender would have  received or
accrued  during such  period on  Obligations  had the rate of interest  not been
limited to the Maximum  Rate during such  period.  If the Default  Rate shall be
finally  determined to be unlawful,  then the applicable  Interest Rate shall be
applicable  during any time when the  Default  Rate  would have been  applicable
hereunder,  provided  however that if the Maximum Rate is greater or lesser than
the applicable  Interest Rate,  then the foregoing  provisions of this paragraph
shall apply.

         (E) Late Charges.  If an Event of Default  relating to  non-payment  of
principal,  interest or other sums due  hereunder or under any of the other Loan
Documents shall occur,  then the Borrowers  shall pay to Lender,  in addition to
all  sums  otherwise  due and  payable,  a late fee in an  amount  equal to five
percent (5.0%) of such principal,  interest or other sums due hereunder or under
any other  Loan  Document  (or,  in the case of a partial  payment,  the  unpaid
portion  thereof),  such late charge to be immediately  due and payable  without
demand by Lender.

                                      -17-
<PAGE>

         (F)  Additional  Administrative  Fee. In  addition to the Default  Rate
provided for above,  upon  failure of any  Borrower  Party to deliver any of the
financial  statements,  reports or other information required to be delivered to
Lender as  provided  in  Section  5.1 hereof  upon their due dates,  if any such
failure shall continue for fifteen (15) Business Days  following  notice thereof
from Lender,  the  Borrowers  shall pay to Lender  together  with the  scheduled
monthly  payments  of  principal  and  interest  on the Note,  for each month or
portion thereof that any such financial  statement,  report or other information
remains undelivered, an administrative fee in the amount of Two Thousand Dollars
($2,000).  The Borrowers  agree that such  administrative  fee (i) is a fair and
reasonable fee necessary to compensate Lender for its additional  administrative
costs under the  circumstances,  (ii) is not a penalty and (iii) is necessary to
compensate  Lender  for  increased  costs and  obligations  to third  parties in
connection with the planned Securitization of the Loan.

Section 2.3 Reserved.

Section 2.4 Payments.

         (A)  Payments of Interest and  Principal.  The  Borrowers  shall make a
payment to Lender of interest  only on the Closing  Date for the period from the
Closing  Date  through the last day of the  calendar  month in which the Closing
Date occurs.  Commencing on the first day of the second calendar month following
the Closing (the "First  Payment  Date") and continuing on the first day of each
calendar month  thereafter  (each,  a "Payment  Date") through and including the
Maturity  Date,  Borrower  shall make equal  monthly  payments of principal  and
interest in the amount of  $1,697,430.85  (the  "Monthly  Debt  Service  Payment
Amount"). Each payment shall be applied first to accrued and unpaid interest and
the balance to principal. The Monthly Debt Service Payment Amount was calculated
using a  thirty  (30)  year  amortization  schedule  based  upon a 360 day  year
comprised of twelve-30 day months.

         (B) Date and Time of Payment.  The Borrowers  shall receive  credit for
payments on the Loan which are  transferred to the account of Lender as provided
below (i) on the day that  such  funds are  received  by Lender if such  receipt
occurs by 1:00 p.m. (New York time) on such day, or (ii) on the next  succeeding
Business  Day after such funds are  received  by Lender if such  receipt  occurs
after 1:00 p.m. (New York time). Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, the payment may be made
on the next succeeding Business Day.

         (C)  Manner  of  Payment.  The  Borrowers  promises  to pay  all of the
Obligations  relating to the Loan as such amounts become due or are declared due
pursuant to the terms of this Loan  Agreement.  All payments by the Borrowers on
the Loan shall be made without deduction,  defense,  set off or counterclaim and
in  immediately  available  funds  delivered to Lender by wire  transfer to such
accounts at such banks as Lender may from time to time designate.

Section 2.5  Maturity.  To the extent not sooner due and  payable in  accordance
with the Loan Documents, the then outstanding principal balance of the Loan, all
accrued and unpaid interest thereon the applicable Prepayment  Consideration (if
any), and all other sums then owing to

                                      -18-
<PAGE>

Lender hereunder and under the Note, the Mortgages and the other Loan Documents,
shall be due and payable on the Maturity Date.

Section 2.6 Prepayment.

         (A)  Limitation  on  Prepayment;   Prepayment   Consideration   Due  on
Acceleration.  The Borrowers  shall have no right to prepay the Loan in whole or
part at any time, except as expressly set forth in this provision.  On and after
August 1, 2010,  the  Borrowers  may prepay the Loan in whole,  but not in part,
without  payment of  Prepayment  Consideration,  provided that (i) the Borrowers
shall  provide  to Lender  not less than 30 days  prior  written  notice of such
prepayment,  (ii) together with such prepayment the Borrowers also shall pay all
accrued  and  unpaid  interest  and all  other  Obligations  and  (iii)  if such
prepayment  occurs on any day other than the first day of a calendar month, then
together therewith the Borrowers also shall pay to Lender the amount of interest
that would have accrued on the amount being  prepaid from and including the date
of  such  prepayment  to  the  first  day  of  the  following   calendar  month.
Notwithstanding the foregoing,  the Borrowers shall have the right to obtain the
release of Properties from the lien of the Mortgages by defeasance in accordance
with the terms and  conditions  of the Note and  subject  to the  conditions  of
Section 11.4 hereof.

         (B)  Prepayment  Consideration  Due.  If any  prepayment  of all or any
portion of the Loan shall occur prior to August 1, 2010, whether such prepayment
is voluntary,  involuntary,  on account of  acceleration of the Loan (whether or
not due to an Event of  Default),  or  otherwise,  then except only as expressly
provided  herein to the  contrary,  the  Borrowers  shall be required to pay the
Prepayment Consideration to Lender together with such prepayment,  as liquidated
damages  and  compensation  for costs  incurred,  and in  addition  to all other
amounts due and owing to Lender.  Notwithstanding  the foregoing,  no Prepayment
Consideration  will  be due as to a  prepayment  of  insurance  or  condemnation
proceeds  required by Lender pursuant to this Loan Agreement or the Mortgages in
the absence of an Event of Default.  The foregoing  designation of any amount of
Prepayment Consideration in this Agreement shall not create a right to prepay at
any time or in any  circumstances  where this Agreement does not expressly state
that such a right exists.

         (C) Definitions. The following terms shall have the meanings indicated:

                  "Prepayment  Consideration"  shall mean an amount equal to the
greater of (i) one percent  (1%) of the Loan  balance at the time of  prepayment
and (ii) the Yield Maintenance Amount.

                  "Yield Maintenance Amount" shall mean the positive difference,
if any, between (i) the present value on the date of prepayment (by acceleration
or otherwise)  of all future  installments  of principal and interest  which the
Borrowers  would  otherwise  be  required to pay under the Note from the date of
such prepayment  until the Maturity Date absent such  prepayment,  including the
unpaid  principal  amount which might  otherwise  be due upon the Maturity  Date
absent such prepayment, with such present value being determined by the use of a
discount rate equal to the yield to maturity (adjusted to a "Mortgage Equivalent
Basis"  pursuant to the  standards  and  practices  of the  Securities  Industry
Association),  on the date of such  prepayment  of the  United  States  Treasury
Security  having the term to maturity  closest to what

                                      -19-
<PAGE>

otherwise  would have been the remaining term hereof absent such  prepayment and
(ii) the principal balance of the Loan on the date of such prepayment.

Section 2.7 Outstanding Balance. The balance on Lender's books and records shall
be presumptive  evidence  (absent manifest error) of the amounts owing to Lender
by the Borrowers;  provided that any failure to record any transaction affecting
such  balance or any error in so recording  shall not limit or otherwise  affect
any Borrower's obligation to pay the Obligations.

Section 2.8 Taxes.  Any and all  payments or  reimbursements  made  hereunder or
under the Note shall be made free and clear of and without deduction for any and
all  taxes,  levies,  imposts,  deductions,  charges  or  withholdings,  and all
liabilities  with  respect  thereto  arising  out of or in  connection  with the
transactions  contemplated  by the  Loan  Documents  (all  such  taxes,  levies,
imposts,  deductions,  charges or withholdings  and all liabilities with respect
thereto  excluding  taxes imposed on net income in accordance with the following
sentence herein "Tax Liabilities"). Notwithstanding the foregoing, the Borrowers
shall  not be  liable  for  taxes  imposed  on the net  income  of Lender by the
jurisdiction  under the laws of which Lender is  organized or doing  business or
any  political  subdivision  thereof and taxes  imposed on its net income by the
jurisdiction of Lender's applicable lending office or any political  subdivision
thereof.  If the  Borrowers  shall be  required  by law to  deduct  any such Tax
Liabilities (or amounts in estimation or reimbursement  for the same) from or in
respect of any sum payable  hereunder to Lender,  then the sum payable hereunder
shall be  increased  as may be  necessary  so that,  after  making all  required
deductions,  Lender  receives an amount equal to the sum it would have  received
had no such deductions been made.

Section 2.9  Reasonableness  of  Charges.  Borrower  Parties  agree that (i) the
actual  costs and  damages  that  Lender  would  suffer by reason of an Event of
Default (exclusive of the attorneys' fees and other costs incurred in connection
with  enforcement of Lender's  rights under the Loan  Documents) or a prepayment
would be difficult and needlessly expensive to calculate and establish, and (ii)
the  amounts  of  the  Default  Rate,  the  late  charges,  and  the  Prepayment
Consideration are reasonable,  taking into consideration the circumstances known
to the parties at this time,  and (iii) such  Default  Rate and late charges and
Lender's  reasonable  attorneys'  fees and other costs and expenses  incurred in
connection with enforcement of Lender's rights under the Loan Documents shall be
due and  payable  as  provided  herein,  and (iv) such  Default  Interest,  late
charges, Prepayment Consideration, and the obligation to pay Lender's reasonable
attorneys'   fees  and  other   enforcement   costs  do  not,   individually  or
collectively, constitute a penalty.

                                      -20-
<PAGE>

                                  ARTICLE III
                               CONDITIONS TO LOAN

Section  3.1  Conditions  to  Funding  of the  Loan  on the  Closing  Date.  The
obligations  of Lender to fund the Loan are  subject to the prior or  concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents.  Where
in this Section any documents, instruments or information are to be delivered to
Lender,  then the condition shall not be satisfied  unless (i) the same shall be
in form and substance satisfactory to Lender, and (ii) if so required by Lender,
the  Borrowers  shall  deliver  to Lender a  certificate  duly  executed  by the
Borrowers  stating that the  applicable  document,  instrument or information is
true and complete and does not omit to state any  information  without which the
same might reasonably be deemed materially misleading.

         (A) Loan Documents.  On or before the Closing Date, the Borrowers shall
execute and deliver and cause to be executed and  delivered to Lender all of the
Loan  Documents  specified  in Schedule  3.1(A),  together  with such other Loan
Documents as may be reasonably required by Lender, each, unless otherwise noted,
of even date herewith,  duly  executed,  in form and substance  satisfactory  to
Lender and in  quantities  designated  by Lender  (except for the Note, of which
only one shall be signed),  which Loan Documents shall become effective upon the
Closing.

         (B) Origination  Fees. At the Closing and retained from the proceeds of
the Loan,  Lender shall have received its  origination fee of $975,000 and shall
have  received  its  advisory fee pursuant to the terms of that certain fee side
letter being  entered into between the  Borrowers and Lender on the date hereof.
The amount, if any, by which the application fee and expense deposit  previously
paid to Lender on behalf of the Borrowers exceeds Lender's  reasonable costs and
expenses  incurred in connection  with the Loan,  shall be credited  against the
origination fee.

         (C)  Deposits.   The  deposits   required  herein,   including  without
limitation, the initial deposits into the Reserves and Accounts, shall have been
made (and at the option of the Borrowers, the same may be made from the proceeds
of the Loan).

         (D) Performance of Agreements, Truth of Representations and Warranties.
Each Borrower  Party and all other Persons  executing any agreement on behalf of
any Borrower Party shall have performed in all material  respects all agreements
which this Loan  Agreement  provides shall be performed on or before the Closing
Date. The representations and warranties  contained herein and in the other Loan
Documents shall be true, correct and complete in all material respects on and as
of the Closing Date.

         (E) Closing  Certificate.  On or before the Closing Date,  Lender shall
have  received  certificates  of even date  herewith  executed  on behalf of the
Borrowers by the chief  financial  officer (or similar officer of each Borrower)
truly and  correctly  stating  that:  (i) on such  date,  no Default or Event of
Default has occurred and is continuing;  (ii) no material  adverse change in the
financial  condition  or  operations  of the  business of the  Borrowers  or the
projected  cash flow of the  Borrowers or any  Property  has occurred  since the
delivery to Lender of any financial statements,  budgets,  proformas, or similar
materials (or if there has been any change,  specifying  such change in detail),
and that, to each Borrower's  knowledge,  such materials delivered to

                                      -21-
<PAGE>

Lender are true and  materially  complete  and fairly  represent  the  financial
condition  of each  Borrower and the cash flow of each  Property;  and (iii) the
representations  and  warranties  set forth in this Loan  Agreement are true and
correct in all material  respects on and as of such date with the same effect as
though made on and as of such date (or if any such representations or warranties
require qualification, specifying such qualification in detail) and (iv) to each
Borrower's  knowledge,  there  are  no  material  adverse  facts  or  conditions
concerning  any Property or any Borrower  Party that have not been  disclosed to
Lender.

         (F) Opinions of Counsel.  On or before the Closing  Date,  Lender shall
have received from Skadden,  Arps, Slate,  Meagher & Flom LLP ("SASMF") or other
legal  counsel  for  the  Borrowers  reasonably  satisfactory  to  Lender,  such
counsel's written opinion as to such matters as Lender shall reasonably request,
including  opinions to the effect that (i) each of the Borrower  Parties is duly
formed, validly existing, and in good standing in its state of organization and,
in the case of each  Borrower,  in the state where each  Borrower's  Property is
located,  (ii)  this  Loan  Agreement  and the Loan  Documents  have  been  duly
authorized,  executed and delivered and are enforceable in accordance with their
terms subject to customary  qualifications  for bankruptcy and general equitable
principles;   and  (iii)  none  of  the  Borrowers   would  be  consolidated  in
bankruptcies of the Member, the Cedars Member, HRPT, any Ground Lessor,  Manager
or certain other  Affiliates of the  Borrowers  specified by Lender.  Also on or
before the Closing  Date,  Lender  shall have  received  (a) an opinion of local
counsel to the  Borrowers in the state where each  Property is located as to the
enforceability of the Mortgages and Assignments of Leases and such other matters
as Lender  may  reasonably  request  and (b)  opinions  of SASMF or other  legal
counsel for the Borrowers in the State of Delaware  reasonably  satisfactory  to
Lender that,  among other matters,  (1) under  Delaware law the prior  unanimous
written consent of Member and the board of directors or managers  (including the
Outside  Director)  would be required for a voluntary  bankruptcy  filing by any
Borrower and such unanimous consent requirement is enforceable against Member in
accordance with its terms;  (2) under Delaware law the bankruptcy or dissolution
of Member would not cause the  dissolution  of any Borrower;  (3) under Delaware
law,  creditors of Member shall have no legal or equitable remedies with respect
to the assets of any  Borrower;  and (4) a federal  bankruptcy  court would hold
that Delaware law governs the  determination  of what Persons have  authority to
file a voluntary bankruptcy petition on behalf of each Borrower.

         (G) Title  Policies.  Lender shall have  received a  preliminary  title
report or title  commitment  for each  Property.  On or before the Closing Date,
Lender shall have received and approved pro forma Title Policies for each of the
Properties,  and as of the Closing, Title Company shall be irrevocably committed
and prepared immediately to issue the Title Policies. Each Title Policy shall be
in form and substance  satisfactory to Lender.  Without  limitation,  Lender may
reasonably  require  that the Title  Policies be issued on the 1970 ALTA form by
the Title Company,  together with such reinsurance and direct access  agreements
as Lender may require,  insuring that the Mortgages  constitute  valid first and
prior  enforceable  liens on each Borrower's fee simple interest (or in the case
of the Ground  Leased  Properties,  ground  lessee  interest) in the  Properties
(including any easements appurtenant thereto) subject only to such exceptions to
coverage as are  acceptable  to Lender.  The Title  Policies  shall contain such
endorsements  as Lender may require (to the extent  available in the state where
the  Property is located) in form  reasonably  acceptable  to Lender,  including
deletion of the creditors' rights exception and affirmative endorsement coverage
for creditors' rights risks.

                                      -22-
<PAGE>

         (H)  Survey.  Lender  shall have  received  a survey of each  Property,
certified  to Lender and its  successors,  assigns  and  designees  and to Title
Company by a surveyor  reasonably  satisfactory  to Lender (the  "Survey").  All
surveys  shall  contain the  minimum  detail for land  surveys as most  recently
adopted  by  ALTA/ASCM,   shall   substantially   comply  with  Lender's  survey
requirements  and shall  contain  Lender's  standard  form  certification.  Said
surveys shall show no state of facts or conditions  reasonably  objectionable to
Lender.

         (I) Zoning.  On or before the Closing Date,  Lender shall have received
evidence  reasonably  satisfactory  to Lender as to the zoning  and  subdivision
compliance of each Property.

         (J)  Certificates  of  Formation  and Good  Standing.  On or before the
Closing Date, Lender shall have received copies of the organizational  documents
and filings of each Borrower Party, together with good standing certificates (or
similar documentation)  (including verification of tax status if available) from
the state of its  formation,  from the  states in which its  principal  place of
business is located,  and from all states in which the laws thereof require such
Person  to be  qualified  and/or  licensed  to do  business  (including  without
limitation,  the state in which the  Properties  are located for the  applicable
Borrower(s)).  Each such certificate  shall be dated not more than 30 days prior
to the Closing Date, as applicable, and certified by the applicable Secretary of
State or other authorized  governmental  entity.  In addition,  on or before the
Closing Date the secretary or  corresponding  officer of each Borrower Party, or
the secretary or corresponding officer of the partner,  trustee, or other Person
as required by such Borrower Party's  organizational  documents (as the case may
be, the "Borrower Party Secretary") shall have delivered to Lender a certificate
stating that the copies of the  organizational  documents as delivered to Lender
are true and complete  and are in full force and effect,  and that the same have
not been amended except by such amendments as have been so delivered to Lender.

         (K)  Certificates  of  Incumbency  and  Resolutions.  On or before  the
Closing  Date,  Lender  shall  have  received  certificates  of  incumbency  and
resolutions of each Borrower Party and its  constituents as requested by Lender,
approving and authorizing  the Loan and the execution,  delivery and performance
of the Loan  Documents,  certified as of the Closing Date by the Borrower  Party
Secretary as being in full force and effect without modification or amendment.

         (L) Financial  Statements.  On or before the Closing Date, Lender shall
have received such financial statements and other financial information as shall
be  satisfactory  to Lender for each Borrower Party and for each  Property.  All
such  financial  statements  shall be  certified  to  Lender  by the  applicable
Borrower Party (through its chief financial officer),  which certification shall
be in form and substance reasonably satisfactory to Lender.

         (M) Intentionally Omitted.

         (N)  Agreements.  On or before  the  Closing  Date,  Lender  shall have
received  copies of all material  operating  agreements,  service  contracts and
equipment leases, if any, relating to ownership and operation of each Property.

         (O) Management  Agreement.  On or before the Closing Date, Lender shall
have  received  copies of the  existing  Management  Agreement  and any  leasing
brokerage  agreements

                                      -23-
<PAGE>

pertaining to each Property and the  Assignment  of Management  Agreement,  duly
executed by current Manager and the Borrowers.

         (P) Rent Rolls, Leases,  Estoppels.  Prior to the Closing, Lender shall
have  received  from the  Borrowers  certified  copies of the current rent rolls
(each a "Rent Roll" and,  collectively,  the "Rent  Rolls") for each Property in
form and substance  satisfactory  to Lender.  Each Rent Roll shall  constitute a
true,  correct,  and  complete  list of each and every Lease for the  applicable
Property,  together  with all  extensions  and  amendments  thereof,  and  shall
accurately and  completely  disclose all annual and monthly rents payable by all
tenants, including all percentage rents, if any, expiration dates of the Leases,
and the amount of security deposit being held by the applicable  Borrowers under
each Lease, if any. Also prior to the Closing, Lender shall have received copies
of  the   Leases,   and  tenant   estoppel   certificates   and   subordination,
non-disturbance and attornment  agreements on Lender's form duly executed by the
applicable  Borrower  and tenants  (including  all tenants  under Major  Leases)
occupying, in the aggregate, at least eighty percent (80%) of the rentable space
at each Property.

         (Q) Licenses,  Permits and Approvals. On or before Closing Date, Lender
shall have received copies of the final, unconditional certificates of occupancy
issued  with  respect  to each  Property,  together  with all  other  applicable
licenses,  permits and approvals  required for the Borrower to own, use, occupy,
operate and maintain each Property.

         (R) Insurance Policies and Endorsements. On or before the Closing Date,
Lender  shall  have  received  copies  of  insurance  policies  required  to  be
maintained   under  this  Loan  Agreement  and  the  other  Loan  Documents  and
certificates  of  insurance  (dated not more than 20 days  prior to the  Closing
Date) evidencing such insurance coverages, together with endorsements reasonably
satisfactory to Lender naming Lender as an additional insured and loss payee, as
required  by Lender,  under such  policies.  In  addition,  as to any  insurance
matters  arising under  Environmental  Laws or  pertaining to any  environmental
insurance  that any Borrower  maintains  with respect to any Property,  the same
shall be endorsed to Lender as required by Lender.

         (S) Environmental Assessments.  Lender shall have received and approved
Environmental  Reports  prepared or updated not later than sixty (60) days prior
to the Closing, relating to each of the Properties,  together with a letter from
the preparer  thereof  entitling  Lender and its  successors and assigns to rely
upon said Environmental Report (if same is not addressed to Lender).

         (T) Property Condition  Reports.  On or before the Closing Date, Lender
shall have received property condition reports for each of the Properties, which
shall be prepared by an engineer or other consultant reasonably  satisfactory to
Lender and otherwise  shall be in form and substance  satisfactory  to Lender in
its sole  discretion.  Such  reports  shall  set  forth  any  items of  deferred
maintenance at each Property.

         (U)  Appraisals.  On or before  the  Closing  Date,  Lender  shall have
received  independent  appraisals,  dated not more than sixty (60) days prior to
the Closing Date, of each of the  Properties  from a state  certified  appraiser
engaged  by  Lender,  which  indicate  an  aggregate  fair  market  value of the
Properties  which would reflect a  loan-to-value  ratio for the Loan of not more
than 65%, and are otherwise satisfactory to Lender in its sole discretion in all
respects.

                                      -24-
<PAGE>

Each such appraisal shall conform in all respects to the criteria for appraisals
set forth in the Financial  Institutions Reform and Recovery Act of 1989 and the
regulations  promulgated  thereunder (as if Lender were an institution under the
jurisdiction  thereof)  and the  Uniform  Standards  of  Professional  Appraisal
Practices of the Appraisal Foundation.

         (V)  Searches.  Prior to the Closing  Date Lender  shall have  received
certified copies of Uniform Commercial Code, judgment,  tax lien, bankruptcy and
litigation  search  reports with respect to all Borrower  Parties and HRPT,  all
dated not more than thirty (30) days prior to the Closing Date.

         (W)  Documentation  Regarding  Application  of  Proceeds.  Prior to the
Closing  Date,  Lender  shall have  received  payoff  demand  letters and wiring
instructions  from each  lender or other  obligee of any  existing  indebtedness
which is  required  to be  repaid  pursuant  to this Loan  Agreement  and by the
Borrowers  regarding the application of any remaining  available proceeds of the
Loan.

         (X) Ground Leases;  Ground Lessor  Estoppels.  On or before the Closing
Date,  Lender  shall have  received (i)  certified  copies of each of the Ground
Leases  duly  executed  by the  respective  Ground  Lessors  and the  applicable
Borrowers and same shall each be in full force and effect and (ii) estoppels and
agreements  duly executed by each of the  respective  Ground Lessors in form and
substance reasonably acceptable to Lender.

         (Y) Legal Fees; Closing Expenses. The Borrowers shall have paid any and
all reasonable  legal fees and expenses of counsel to Lender,  together with all
recording fees and taxes, title insurance  premiums,  and other reasonable costs
and expenses related to the Closing.

         (Z) Other Review.  Lender shall have  completed all other review of the
Borrowers  Parties,  the  Properties,  and such  other  items  as it  reasonably
determines  relevant,  and shall have determined  based upon such review to fund
the Loan.  Borrower Parties shall have satisfied such other reasonable  criteria
as Lender may reasonably specify.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

         In order to induce Lender to enter into this Loan Agreement and to make
the Loan,  each Borrower  represents  and warrants to Lender that the statements
set forth in this Article IV, after giving effect to the Closing, will be, true,
correct and complete in all material  respects as of the Closing Date.  Further,
each of the other  Borrower  Parties  represents and warrants to Lender that the
statements  set forth in this Article IV pertaining to such party,  after giving
effect to the  Closing,  will be,  true,  correct and  complete in all  material
respects as of the Closing Date.

Section 4.1 Organization, Powers, Capitalization, Good Standing, Business.

         (A) Organization and Powers.  Each LLC Borrower is a limited  liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware.  Each Trust Borrower is a real estate  investment  trust,
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Maryland.  Guarantor is a limited  liability  company,  duly organized,
validly  existing and in good standing  under the laws of the State of Delaware.

                                      -25-
<PAGE>
Each Borrower Party has all requisite power and authority to own and operate its
properties,  to  carry on its  business  as now  conducted  and  proposed  to be
conducted,  and to enter into each Loan  Document  to which it is a party and to
perform the terms thereof.

         (B)  Qualification.  Each Borrower  Party is duly qualified and in good
standing in the state of its  formation.  Each of the Borrowers and, if required
by applicable  law, the Member and the Cedars Member are also duly qualified and
in good standing in the states where the respective  Properties are located.  In
addition,  each  Borrower  Party is duly  qualified and in good standing in each
state where necessary to carry on its present business and operations, except in
jurisdictions  in which the failure to be qualified and in good  standing  could
not reasonably be expected to have a Material Adverse Effect.

         (C) Organization. The organizational chart set forth as Schedule 4.1(C)
accurately  sets  forth the  direct  and  indirect  ownership  structure  of the
Borrower Parties.

Section 4.2 Authorization of Borrowing, etc.

         (A)  Authorization  of  Borrowing.  Each  Borrower  has the  power  and
authority  to incur  the  Indebtedness  evidenced  by the Note.  The  execution,
delivery and performance by each Borrower Party of each of the Loan Documents to
which  it is a  party  and the  consummation  of the  transactions  contemplated
thereby have been duly authorized by all necessary  limited  liability  company,
partnership, trust, corporate or other action, as the case may be.

         (B) No  Conflict.  The  execution,  delivery  and  performance  by each
Borrower Party of the Loan Documents to which it is a party and the consummation
of the  transactions  contemplated  thereby do not and will not: (1) violate (x)
any  provision of law  applicable  to any Borrower  Party;  (y) the  partnership
agreement,  certificate of limited  partnership,  certificate of  incorporation,
bylaws,  declaration  of  trust,  operating  agreement  or other  organizational
documents,  as the  case  may be,  of each  Borrower  Party;  or (z) any  order,
judgment  or decree of any court or other  agency of  government  binding on any
Borrower Party or any of its Affiliates;  (2) conflict with,  result in a breach
of or constitute  (with due notice or lapse of time or both) a default under any
Contractual  Obligation of any Borrower Party or any of its Affiliates except to
the  extent  that such  conflict,  breach or  default  could not  reasonably  be
expected  to have a  Material  Adverse  Effect;  (3)  result in or  require  the
creation or  imposition  of any  material  Lien (other than the Lien of the Loan
Documents)  upon any  Property  or  assets of any  Borrower  Party or any of its
Affiliates;  or (4)  except  as set forth on  Schedule  4.2 and  except  for any
approvals  or consents  the  failure to obtain  which  could not  reasonably  be
expected to have a Material  Adverse Effect,  require any approval or consent of
any  Person  under any  Contractual  Obligation  of any  Borrower  Party,  which
approvals or consents have been obtained on or before the dates  required  under
such Contractual Obligation, but in no event later than the Closing Date.

         (C) Governmental Consents.  The execution,  delivery and performance by
each  Borrower  Party of the  Loan  Documents  to  which it is a party,  and the
consummation  of the  transactions  contemplated  thereby  do not and  will  not
require any  registration  with,  consent or approval of, or notice to, or other
action to, with or by, any  federal,  state or other  governmental  authority or
regulatory  body  except for the  recording  of the  Mortgages  and  filings and
recordings

                                      -26-
<PAGE>

required in connection  with the creation or  perfection  of any other  security
interests  with respect to the  Collateral  granted under this Loan Agreement or
any of the other Loan Documents.

         (D)  Binding  Obligations.   This  Loan  Agreement  is,  and  the  Loan
Documents,  including the Note, when executed and delivered will be, the legally
valid and binding  obligations  of each  Borrower  Party,  as  applicable,  each
enforceable  against Borrower Parties,  as applicable,  in accordance with their
respective terms, subject to bankruptcy, insolvency, moratorium,  reorganization
and other similar laws  affecting  creditor's  rights  generally or by equitable
principles  relating to  enforceability.  No  Borrower  Party has any defense or
offset to any of its obligations under the Loan Documents. No Borrower Party has
any claim against Lender or any Affiliate of Lender.

Section 4.3  Financial  Statements.  All  financial  statements  concerning  the
Borrowers, their Affiliates and the Properties which have been or will hereafter
be  furnished by or on behalf of the  Borrowers to Lender  pursuant to this Loan
Agreement  have been or will be prepared in  accordance  with GAAP  consistently
applied  (except as disclosed  therein) and do (or will, as to those  statements
that are not yet due)  present  fairly the  financial  condition  of the Persons
covered thereby as at the dates thereof and the results of their  operations for
the periods then ended. Since the date of the financial  statements delivered to
Lender,  there has been no material  adverse change in the financial  condition,
operations or business of the Borrower  Parties or the Properties  from that set
forth in said financial statements.

Section 4.4 Indebtedness and Contingent Obligations.  As of the Closing, Primary
Borrower Parties shall have no Indebtedness or Contingent Obligations other than
the Obligations or any other  Indebtedness  expressly  permitted under this Loan
Agreement or the other Loan Documents.

Section 4.5 Title to Properties. Each Borrower has good marketable and insurable
fee simple or  leasehold  title (as the case may be) to its  Property,  free and
clear of all Liens except for any liens  described  in clauses  (i)-(iii) of the
definition of "Permitted  Encumbrances".  Each Borrower owns and will own at all
times all  personal  property  relating to its  Property  (other  than  personal
property  which is (a) leased by such  Borrower  (as to which such  Borrower has
valid leasehold title),  (b) owned by Manager or (c) is both owned by tenants of
such  Property and not used or necessary  for the  operation of such  Property),
subject  only to Permitted  Encumbrances.  There are no pending  proceedings  in
condemnation or eminent domain  affecting any Property,  and to the knowledge of
Borrower Parties, none is threatened. No Person has any option or other right to
purchase  all or any portion of any  Property or any  interest  therein.  To the
knowledge of the  Borrowers,  there are no  mechanic's,  materialman's  or other
similar  liens or claims  which  have been  filed for work,  labor or  materials
affecting  any  Property  which  are or may be  liens  prior  to,  or  equal  or
coordinate with, the liens of any Mortgage.  None of the Permitted Encumbrances,
individually or in the aggregate,  materially interfere with the benefits of the
security  intended  to be  provided by the  Mortgages  and this Loan  Agreement,
materially  and adversely  affect the value of any  Property,  impair the use or
operations of any Property or impair  Borrower's  ability to pay its obligations
in a timely manner.

Section 4.6 Zoning;  Compliance with Laws. Each Property is zoned for commercial
use, which zoning designation is unconditional, in full force and effect, and is
beyond all applicable

                                      -27-
<PAGE>
appeal periods. To the knowledge of the Borrowers,  each Borrower, each Property
and the use thereof comply in all material respects with all applicable  zoning,
subdivision  and land use  laws,  regulations  and  ordinances,  all  applicable
health, fire, building codes, parking laws and all other laws, statutes,  codes,
ordinances, rules and regulations applicable to such Property, including without
limitation  the  Americans  with  Disabilities  Act.  To  the  knowledge  of the
Borrowers,  there are no illegal activities relating to controlled substances on
any  Property.  All  certificates  of occupancy or the  equivalent,  and, to the
knowledge  of  the  Borrowers,   all  other  required   permits,   licenses  and
certificates  for the  lawful  use and  operation  of the  Properties  have been
obtained and are current and in full force and effect.  To the  knowledge of the
Borrowers,  in the event that all or any part of the Improvements located on any
Property  are   destroyed  or  damaged,   said   Improvements   can  be  legally
reconstructed  to their  condition  prior to such  damage  or  destruction,  and
thereafter  exist  for the  same  use  without  violating  any  zoning  or other
ordinances  applicable  thereto and  without  the  necessity  of  obtaining  any
variances or special  permits,  other than  customary  demolition,  building and
other construction  related permits. No legal proceedings are pending or, to the
knowledge  of the  Borrowers,  threatened  with  respect  to the  zoning  of any
Property.  Neither the zoning nor any other right to  construct,  use or operate
any  Property is in any way  dependent  upon or related to any real estate other
than such Property.  No tract map,  parcel map,  condominium  plan,  condominium
declaration,  or plat of  subdivision  will be  recorded  by any  Borrower  with
respect to any Property without  Lender's prior written  consent,  which consent
shall not be unreasonably withheld, delayed or conditioned.

Section 4.7 Leases; Agreements.

         (A) Leases; Agreements. The Borrowers have delivered to Lender true and
complete  copies of all (i) Leases and (ii) material  contracts  and  agreements
affecting the operation and  management  of each  Property,  including,  without
limitation,  the existing Management Agreement,  any leasing brokerage agreement
and any  service  and  maintenance  contracts  and such  Leases,  contracts  and
agreements  have not been modified or amended  except  pursuant to amendments or
modifications  delivered  to Lender.  Except  for the rights of current  Manager
pursuant  to the  existing  Management  Agreement,  no  Person  has any right or
obligation to manage any Property or to receive  compensation in connection with
such management.  Except for the parties to any leasing brokerage agreement that
has been delivered to Lender,  no Person has any right or obligation to lease or
solicit tenants for the Property, or (except for cooperating outside brokers) to
receive compensation in connection with such leasing.

         (B) Rent Roll,  Disclosure.  True and correct  copies of the Rent Rolls
for each of the Properties are attached hereto as Schedule 4.7(B) and except for
the Leases  described  in the Rent Rolls the  Properties  are not subject to any
Leases.  Except only as specified in the Rent Rolls,  (i) the Leases are in full
force and effect;  (ii) no Borrower or any Affiliate of any Borrower,  has given
any notice of default to any tenant under any Lease which remains uncured; (iii)
no tenant has  asserted  in writing  any rights of set off,  claims or  defenses
under any Lease and no tenant has any such  rights of set off,  claim or defense
to the  enforcement  of any Lease except as  expressly  set forth in the Leases;
(iv) no tenant is in arrears  in the  payment  of rent,  additional  rent or any
other  material  charges  due  under any  Lease,  or,  to the  knowledge  of the
Borrowers,  is materially in default in the performance of any other obligations
under  the  applicable  Lease;  (v) the  Borrowers  have  completed  all work or
alterations  required to be completed by the landlord or lessor

                                      -28-
<PAGE>
under  each Lease as of the date  hereof,  and all of the other  obligations  of
landlord  or lessor  under the Leases  required to be  completed  as of the date
hereof, have been performed; (vi) there are no rent concessions (whether in form
of cash contributions, work agreements, assumption of an existing tenant's other
obligations, or otherwise) or extensions of time whatsoever not reflected in the
Rent Rolls;  (vii) no tenant has an option to  terminate  its  respective  Lease
except as provided in the Leases and (viii) to the  knowledge of the  Borrowers,
no bankruptcy or insolvency  proceedings  has been commenced (and is continuing)
by or against any tenant under any Lease.

         (C) Lease Issues.  Except as set forth on Schedule 4.7(C), there are no
legal proceedings commenced (or, to the knowledge of the Borrowers,  threatened)
against any Borrower or  Affiliate  thereof by any tenant or former  tenant.  No
rental in excess of one month's  rent has been  prepaid  under any of the Leases
(except for security  deposits  and  estimated  additional  rent amounts paid on
account  of  operating   expenses,   taxes  and  other  expense  escalations  or
pass-throughs).  Each of the Leases is valid and binding on the parties  thereto
in accordance with its terms.

         (D) No  Residential  Units.  There  are  no  residential  units  in the
Properties.  To the  Borrowers'  knowledge,  no person  occupies any part of any
Property for dwelling purposes.

         (E) GSA  Leases.  The GSA is in  occupancy  of the entire GSA  Premises
under the respective  Existing GSA Leases and is paying rent in accordance  with
each of the Existing GSA Leases.  The Indiana  Avenue  Borrower and the GSA have
agreed upon the term, the fixed rent and additional rent amounts payable and all
other  material  terms  of each of the New GSA  Leases  and  such  terms  are as
reflected  in the  unexecuted  copies of the New GSA Leases  delivered to Lender
prior to the Closing  Date.  The New GSA Leases  (each in the form  delivered to
Lender)  have been  delivered  by the  Indiana  Avenue  Borrower  to the GSA for
execution.  The Indiana  Avenue  Borrower has executed and delivered the New GSA
Leases  (each in the form  delivered  to Lender)  and, to the  knowledge  of the
Borrowers,  the GSA also  intends to execute  such New GSA Leases  (each in such
form).

Section 4.8 Condition of Properties. To the Borrowers' knowledge,  except as set
forth in the property condition reports for the Properties  delivered to Lender,
all Improvements at the Properties including,  without limitation,  the roof and
all structural  components,  plumbing  systems,  HVAC systems,  fire  protection
systems,  electrical  systems,  equipment,  elevators,  exterior doors,  parking
facilities,  sidewalks and  landscaping  are in good  condition and repair.  The
Borrowers  are not aware of any latent or patent  structural  or other  material
defect or  deficiency in any  Property.  City water  supply,  storm and sanitary
sewers,  and  electrical,  gas and  telephone  facilities  are available to each
Property within the boundary lines of such Property,  are fully connected to the
Improvements  and are fully  operational,  are sufficient to meet the reasonable
needs of such Property as now used or presently  contemplated to be used, and no
other  utility  facilities  are necessary to meet the  reasonable  needs of such
Property as now used or presently  contemplated.  To the  knowledge of Borrower,
the design and as-built  conditions  of each  Property are such that surface and
storm  water  does  not  accumulate  on  any  Property   (except  in  facilities
specifically  designed for the same) and does not drain from any Property across
land of  adjacent  property  owners in any  manner  which  would have a Material
Adverse  Effect on such Property or, to the  Borrowers'  knowledge,  violate any
applicable  law.  To the  Borrowers'  knowledge,  except  as may be shown on the
Surveys,  no part of any  Property  is  within  a flood

                                      -29-
<PAGE>
plain and none of the Improvements  create encroachment over, across or upon any
Property's boundary lines, rights of way or easements,  and no building or other
improvements  on  adjoining  land  create  such  an  encroachment   which  could
reasonably  be  expected  to have a  Material  Adverse  Effect.  Access  to each
Property for the current and  contemplated  uses thereof is provided by means of
public roads and streets  which are  physically  and legally open for use by the
public.  To the knowledge of the Borrowers,  any liquid or solid waste disposal,
septic or sewer system located at any Property is in good and safe condition and
repair and in compliance with all applicable law.

Section 4.9  Litigation;  Adverse  Facts.  Except as set forth on Schedule  4.9,
there are no judgments  outstanding against any Borrower Party, or affecting any
Property or any property of any Borrower Party, nor is there any action, charge,
claim,  demand,  suit,  proceeding,   petition,  governmental  investigation  or
arbitration now pending or, to the knowledge of the Borrowers after due inquiry,
threatened  against any Borrower Party or affecting any Property  which,  in the
case of Guarantor,  could reasonably be expected to result in a Material Adverse
Effect and other  than any  claims or  proceedings  fully  covered by  insurance
maintained  by  the   applicable   Borrower  Party  (except  to  the  extent  of
commercially  reasonable  deductibles).  The actions,  charges,  claims, demand,
suits,  proceedings,  petitions,  investigations  and  arbitrations set forth on
Schedule 4.9 will not result, if adversely determined,  and could not reasonably
be expected to result, either individually or in the aggregate,  in any Material
Adverse Effect and do not relate to and will not affect the  consummation of the
transactions contemplated hereby.

Section  4.10  Payment of Taxes.  All  federal,  state and local tax returns and
reports of each Borrower Party required to be filed have been timely filed,  and
all taxes,  assessments,  fees and other  governmental  charges  (including  any
payments  in lieu of taxes) upon such  Person and upon its  properties,  assets,
income  and  franchises  which are due and  payable  have been paid when due and
payable,  except  for those  taxes  which are being  contested  in good faith by
appropriate  proceedings and for which adequate  reserves have been established.
Except as  otherwise  disclosed  in writing to  Lender,  there is not  presently
pending (and to the knowledge of the Borrowers,  there is not  contemplated) any
special assessment  against any Property or any part thereof.  No tax liens have
been  filed and to the  knowledge  of  Borrower  Parties,  no  claims  are being
asserted with respect to any such taxes.  The charges,  accruals and reserves on
the books of  Borrower  Parties in  respect  of any taxes or other  governmental
charges are in accordance with GAAP.

Section  4.11  Adverse  Contracts.  Except for the Loan  Documents,  none of the
Borrower  Parties is a party to or bound by, nor is any  property of such Person
subject to or bound by, any contract or other  agreement  which  restricts  such
Person's  ability to conduct its  business  in the  ordinary  course or,  either
individually  or in the  aggregate,  has a  Material  Adverse  Effect  or  could
reasonably be expected to have a Material Adverse Effect.

Section 4.12  Performance of Agreements.  No Borrower Party is in default in the
performance,  observance  or  fulfillment  of any of the  material  obligations,
covenants or  conditions  contained in any  Contractual  Obligation  of any such
Person which could have a Material Adverse Effect, and no condition exists that,
with the giving of notice or the lapse of time or both,  would constitute such a
default.

                                      -30-
<PAGE>
Section 4.13 Governmental Regulation. No Borrower Party is subject to regulation
under the Public Utility  Holding  Company Act of 1935, the Federal Power Act or
the  Investment  Company  Act of 1940 or to any  federal  or  state  statute  or
regulation limiting its ability to incur indebtedness for borrowed money.

Section 4.14 Employee  Benefit Plans.  No Primary  Borrower  Party  maintains or
contributes to, or has any obligation (including a contingent obligation) under,
any Employee Benefit Plans.

Section 4.15 Broker's  Fees. No broker's or finder's fee,  commission or similar
compensation  will be payable by or pursuant to any contract or other obligation
of any Borrower Party with respect to the making of the Loan or any of the other
transactions contemplated hereby or by any of the Loan Documents.

Section 4.16 Environmental Compliance.

         (A)  No  Environmental  Claims.  There  are  no  claims,   liabilities,
investigations,  litigation,  administrative  proceedings,  pending  or  to  the
knowledge of the Borrowers,  threatened,  or judgments or orders relating to any
Hazardous Materials  (collectively,  "Environmental Claims") asserted or, to the
knowledge of the Borrowers,  threatened  against any Borrower or relating to any
Property.  Except as disclosed in the Environmental  Reports delivered to Lender
prior to Closing,  none of the Borrowers nor, to the knowledge of the Borrowers,
any other  Person has caused or  permitted  any  Hazardous  Material to be used,
generated, reclaimed, transported, released, treated, stored or disposed of in a
manner  which  could  form the  basis for an  Environmental  Claim  against  any
Borrower or relating to any Property.

         (B)  Storage  of  Hazardous  Materials.  Except  as  disclosed  in  the
Environmental Reports delivered to Lender prior to Closing, except for materials
customarily  used or stored in  connection  with  operation  and  management  of
properties  similar to the Properties,  which materials at the Properties  exist
only in reasonable  quantities  and are stored,  contained,  transported,  used,
released,  and disposed of reasonably and without violation of any Environmental
Laws,  to the  knowledge of the  Borrowers,  no Hazardous  Materials are or were
stored  or  otherwise  located,  and no  underground  storage  tanks or  surface
impoundments  are or were  located,  on any Property or any other real  property
currently  or  formerly  owned,  leased  or  operated  any  Borrower,  or to the
knowledge of the Borrowers, on adjacent parcels of real property, and no part of
such  real  property,  or to the  knowledge  of the  Borrowers,  no part of such
adjacent parcels of real property,  including the groundwater located therein or
thereunder, is presently contaminated by Hazardous Materials.

         (C)  Compliance  with  Environmental  Laws.  To  the  knowledge  of the
Borrowers,  except  as may be set  forth  in  the  Environmental  Reports,  each
Borrower has been and is currently in compliance  in all material  respects with
all applicable Environmental Laws, including obtaining and maintaining in effect
all  permits,   licenses  or  other   authorizations   required  by   applicable
Environmental Laws.

Section 4.17 Solvency.  The Borrowers (a) have not entered into the  transaction
or any Loan  Document with the actual  intent to hinder,  delay,  or defraud any
creditor and (b) have received reasonably equivalent value in exchange for their
respective obligations under the Loan

                                      -31-
<PAGE>

Documents. Giving effect to the Loan, the fair saleable value of each Borrower's
assets exceeds and will,  immediately  following the making of the Loan,  exceed
such Borrower's total liabilities, including, without limitation,  subordinated,
unliquidated,  disputed and Contingent  Obligations.  The fair saleable value of
each  Borrower's  assets is and will,  immediately  following  the making of the
Loan,  be greater  than such  Borrower's  probable  liabilities,  including  the
maximum amount of its  Contingent  Obligations on its debts as such debts become
absolute and matured.  Each Borrower's assets do not and, immediately  following
the making of the Loan will not, constitute  unreasonably small capital to carry
out its  business  as  conducted  or as proposed  to be  conducted.  No Borrower
intends  to,  or  believes  that it will,  incur  Indebtedness  and  liabilities
(including  Contingent  Obligations and other commitments) beyond its ability to
pay such  Indebtedness  and  liabilities as they mature (taking into account the
timing and amounts of cash to be received by such Borrower and the amounts to be
payable on or in respect of obligations of such Borrower).

Section 4.18  Disclosure.  No financial  statements,  Loan Document or any other
document,  certificate or written statement  furnished to Lender by any Borrower
Party and, to the knowledge of the Borrowers, no document or statement furnished
by any third party on behalf of any Borrower  Party,  for use in connection with
the Loan contains any untrue representation, warranty or statement of a material
fact, and none omits or will omit to state a material fact necessary in order to
make the  statements  contained  herein or therein not  misleading.  There is no
material  fact  known  to the  Borrowers  that has had or will  have a  Material
Adverse  Effect  and that has not been  disclosed  in  writing  to Lender by the
Borrowers.

Section 4.19 Use of Proceeds and Margin Security. Borrower Parties shall use the
proceeds of the Loan only for the purposes set forth herein and consistent  with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of the Loan shall be used by any Borrower or any Person in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation T,
Regulation U or  Regulation X or any other  regulation of the Board of Governors
of the Federal Reserve System.

Section 4.20  Insurance.  Set forth on Schedule  4.20 is a complete and accurate
description of all policies of insurance for each Borrower that are in effect as
of the Closing Date. Each Borrower's insurance under such policies satisfies the
requirements contained in Section 5.4 hereof, no notice of cancellation has been
received with respect to such policies,  and, to the knowledge of the Borrowers,
each Borrower is in compliance with all conditions contained in such policies.

Section 4.21  Separate Tax Lots.  Each  Property is comprised of one (1) or more
parcels which constitute  separate tax lots. No part of any Property is included
or assessed  under or as part of another  tax lot or parcel,  and no part of any
other  property  is  included  or  assessed  under or as part of the tax lots or
parcels comprising any Property.

Section  4.22  Investments.  No  Primary  Borrower  Party has any (i)  direct or
indirect interest in, including without limitation stock,  partnership  interest
or other  securities  of, any other  Person,  or (ii) direct or  indirect  loan,
advance or capital contribution to any other Person,  including all indebtedness
and accounts receivable from that other Person.

                                      -32-
<PAGE>

Section  4.23  Bankruptcy.  No Borrower  Party is a or has been  debtor,  and no
property of any of them  (including the Property) is property of the estate,  in
any  voluntary  or  involuntary  case  under  the  Bankruptcy  Code or under any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect.  No  Borrower  Party and no property of any of them is or has been under
the possession or control of a receiver, trustee or other custodian. No Borrower
Party has made any assignment for the benefit of creditors.  No such  assignment
or bankruptcy or similar case or proceeding is now contemplated.

Section 4.24 Defaults. No Default or Event of Default exists.

Section 4.25 No Plan Assets.  No Borrower is or will be (i) an employee  benefit
plan as defined in Section 3(3) of ERISA which is subject to ERISA,  (ii) a plan
as defined in Section  4975(e)(1) of the IRC which is subject to Section 4975 of
the IRC, or (iii) an entity whose underlying  assets constitute "plan assets" of
any  such  employee  benefit  plan or plan for  purposes  of Title I of ERISA or
Section 4975 of the IRC.

Section 4.26 Governmental Plan. No Borrower is or will be a "governmental  plan"
within the  meaning of Section  3(32) of ERISA and  transactions  by or with the
Borrowers  are not and will not be subject to state  statutes  applicable to the
Borrowers regulating  investments of and fiduciary  obligations with obligations
with respect to governmental plans.

Section 4.27 Not Foreign Person.  No Borrower Party is a "foreign person" within
the meaning of Section 1445(f)(3) of the IRC.

Section 4.28 No Collective Bargaining  Agreements.  No Borrower Party is a party
to any collective bargaining agreement.

                                   ARTICLE V
                          COVENANTS OF BORROWER PARTIES

         Each Borrower Party  covenants and agrees that until payment in full of
the Loan,  all accrued and unpaid  interest  and all other  Obligations,  unless
Lender shall otherwise give its prior written consent, such Person shall perform
and comply with all covenants in this Article V applicable to such Person.

Section 5.1 Financial Statements and Other Reports.

         (A) Financial Statements.

               (i) Annual  Reporting.  Within  ninety (90) days after the end of
each calendar year,  each Borrower and Guarantor shall provide true and complete
copies of its Financial  Statements for such year to Lender.  All such Financial
Statements  (other than those of any natural  person) shall be audited by a "Big
Five"  accounting  firm or by other  independent  certified  public  accountants
reasonably  acceptable  to  Lender  (as of the  date  hereof,  Ernst & Young  is
acceptable  to Lender),  and shall bear the  unqualified  certification  of such
accountants  that such  Financial  Statements  present  fairly  in all  material
respects the financial  position of the subject  company.  The annual  Financial
Statements  for each  Borrower  Party shall be  accompanied  by a  certification
executed by the entity's chief  executive  officer or chief  financial

                                      -33-
<PAGE>

officer,   satisfying  the  criteria  set  forth  below.  The  annual  Financial
Statements  of  each  Borrower   shall  also  be  accompanied  by  a  Compliance
Certificate (as defined below).

               (ii) Quarterly Reporting - Borrowers. Within forty-five (45) days
after the end of each calendar  quarter,  each  Borrower  shall provide true and
complete copies of its Financial Statements for such quarter to Lender, together
with a certification  executed on behalf of such Borrower by its chief executive
officer or chief  financial  officer in  accordance  with the criteria set forth
below and a Compliance Certificate.

               (iii)  Quarterly  Reporting - Guarantor.  Within  forty-five (45)
days after the end of each calendar  quarter,  Guarantor  shall provide true and
complete copies of its Financial Statements for such quarter to Lender, together
with a  certification  executed on behalf of  Guarantor  by its chief  executive
officer or chief  financial  officer in  accordance  with the criteria set forth
below.

               (iv) Leasing  Reports.  Within  thirty (30) days after the end of
each calendar  quarter,  the Borrowers  shall provide to Lender  certified  Rent
Rolls and  schedules  of  security  deposits  held under  Leases for each of the
Properties in form and substance reasonably acceptable to Lender.

               (v) Monthly  Reporting.  Within thirty (30) days after the end of
each  calendar  month,  each  Borrower  shall  provide to Lender  accrual  basis
operating statements,  together with a statement of cash flow, for its Property,
each in a form reasonably  satisfactory to Lender,  (a) for such month,  (b) for
the  year to date and (c) for the 12  month  period  ended as of the end of such
calendar month.

               (vi)  Additional  Reporting.  In addition to the foregoing,  each
Borrower  Party shall  promptly  provide to Lender such  further  documents  and
information concerning its operations,  properties,  ownership,  and finances as
Lender shall from time to time reasonably request.

               (vii) GAAP.  Borrower Parties will maintain systems of accounting
established and  administered  in accordance  with sound business  practices and
sufficient  in all respects to permit  preparation  of Financial  Statements  in
conformity with GAAP. All Financial  Statements  shall be prepared in accordance
with GAAP, consistently applied.

               (viii)   Certifications   of  Financial   Statements   and  Other
Documents,  Compliance  Certificate.  Together with the Financial Statements and
other  documents  and  information  provided  to  Lender  by or on behalf of any
Borrower  Party under this Section,  such  Borrower  Party also shall deliver to
Lender a certification in form and substance reasonably  satisfactory to Lender,
executed  on behalf of such  Borrower  Party by its chief  executive  officer or
chief  financial  officer,  stating  that,  to such  officer's  knowledge,  such
Financial  Statements,  documents,  and information are true and complete in all
material  respects  and do not omit to state any  material  information  without
which the same might  reasonably  be  misleading.  In addition,  where this Loan
Agreement  requires a "Compliance  Certificate",  the Borrower Party required to
submit the same shall  deliver a  certificate  duly  executed  on behalf of such
Borrower Party by its chief  executive  officer or chief financial  officer,  in
form and substance  reasonably

                                      -34-
<PAGE>

satisfactory  to Lender,  stating that there does not exist any Default or Event
of Default under the Loan  Documents (or if the any exists,  specifying the same
in detail) and stating the Debt Service Coverage Ratio for the twelve (12) month
period ended as of the end of such quarter.

               (ix) Fiscal Year. Each Borrower Party  represents that its fiscal
year ends on December 31, and agrees that it shall not change its fiscal year.

         (B) Accountants'  Reports.  Promptly upon receipt thereof, each Primary
Borrower  Party will  deliver  copies of all  significant  reports  submitted by
independent  public  accountants  in  connection  with each  annual,  interim or
special  audit of the  Financial  Statements  or other  affairs of such Borrower
Party made by such accountants.

         (C) Tax Returns.  Within  thirty (30) days after filing the same,  each
Borrower  shall  deliver to Lender a copy of its Federal  income tax returns (or
the return of the applicable  Person into which such  Borrower's  Federal income
tax  return is  consolidated)  certified  on its  behalf by its chief  financial
officer (or similar position) to be true and correct.

         (D) Annual  Operating and Capital  Expenditure  Budgets.  No later than
thirty (30) days prior to the  expiration of each calendar  year,  the Borrowers
shall deliver to Lender for informational purposes only the Operating Budget and
the Capital  Expenditure  Budget (in each case presented on a monthly and annual
basis) for each Property for the following  calendar year. Each Operating Budget
shall identify and set forth the applicable Borrower's best estimate,  after due
consideration,  of all revenue,  costs, and expenses for its Property, and shall
specify Gross Revenue and Operating Expenses for such Property.

         (E) Material Notices.

               (i)  The  Borrowers  shall  promptly  deliver,  or  caused  to be
delivered  to Lender,  copies of all notices of default  given or received  with
respect to  noncompliance  related to any  Indebtedness  of any Borrower  Party,
including Indebtedness under the Loan Documents.

               (ii) The Borrowers shall promptly deliver to Lender copies of any
and all material notices  (including  without limitation any notice alleging any
default or breach) received from any manager, franchisors,  licensors, or tenant
for or pertaining to any Property.

         (F)  Events of  Default,  etc.  Promptly  upon any  Borrower  obtaining
knowledge of any of the following  events or  conditions,  the  Borrowers  shall
deliver a certificate  executed on their behalf by their chief financial officer
or  similar  officer  specifying  the nature  and  period of  existence  of such
condition or event and what action the  Borrowers or any  Affiliate  thereof has
taken, is taking and proposes to take with respect thereto: (i) any condition or
event that constitutes an Event of Default or Default; (ii) any Material Adverse
Effect;  or (iii) any actual or alleged  breach or default or  assertion  of (or
written threat to assert) remedies under any Management Agreement.

         (G) Litigation. Promptly upon any Borrower's obtaining knowledge of (1)
the institution of any action, suit, proceeding,  governmental  investigation or
arbitration  against or affecting  any  Borrower or any Property not  previously
disclosed in writing by the Borrowers to Lender or (2) any material  development
in any action, suit,  proceeding,  governmental

                                      -35-
<PAGE>

investigation  or  arbitration  at any time  pending  against or  affecting  any
Borrower or any Property  which,  in each case,  if adversely  determined  would
reasonably be expected to have a Material  Adverse  Effect,  the Borrowers  will
give  notice  thereof to Lender and  provide  such other  information  as may be
reasonably available to enable Lender and its counsel to evaluate such matter.

         (H)  Insurance.  Within the thirty (30) day period  prior to the end of
each  insurance  policy  period of the  Borrowers,  the  Borrowers  will deliver
binders  or  certificates  of  insurance  evidencing  renewal  of  any  existing
coverages (or copies of any new insurance  policies not previously  delivered to
Lender), reports, and/or other information (all in form and substance reasonably
satisfactory  to  Lender),   (i)  outlining  all  material   insurance  coverage
maintained as of the date thereof by the  Borrowers  and all material  insurance
coverage  planned to be maintained by the Borrowers in the subsequent  insurance
policy  period,  and (ii)  evidencing  payment in full of the  premiums for such
insurance policies.

         (I) Other Information.  With reasonable promptness, each Borrower Party
will deliver such other information and data with respect to such Person and its
Affiliates or any Property as from time to time may be  reasonably  requested by
Lender.

Section 5.2 Existence;  Qualification.  Each Primary  Borrower Party will at all
times  preserve  and keep in full force and effect  its  existence  as a limited
partnership,  limited liability company, or corporation,  as the case may be and
all rights and franchises material to its business,  including its qualification
to do business in each state where it is required by law to so qualify.  Without
limitation  of the  foregoing,  each  Borrower  and,  to the extent  required by
applicable  law,  Member  (or in the case of the  Cedars  Borrower,  the  Cedars
Member)  shall at all times be  qualified  to business in the states  where such
Borrower's Property is located.

Section 5.3 Payment of Impositions and Claims.

         (A) Subject to each  Borrower's  contest rights set forth in subsection
(B)  below,  the  Borrowers  will pay (i) all  Impositions  with  respect to the
Properties; (ii) all claims (including claims for labor, services, materials and
supplies)  for sums that have become due and payable and that by law have or may
become a Lien  upon any  Property  or  assets  (hereinafter  referred  to as the
"Claims");  and (iii) all federal,  state and local income  taxes,  sales taxes,
excise  taxes and all other  taxes and  assessments  of the  Borrowers  on their
business,  income or assets;  in each  instance  before  any  penalty or fine is
incurred with respect thereto.

         (B) The Borrowers shall not be required to pay, discharge or remove any
Imposition or Claim  relating to a Property so long as the  applicable  Borrower
contests in good faith such  Imposition or Claim or the validity,  applicability
or amount thereof by an appropriate  legal  proceeding which operates to prevent
the  collection of such amounts and the sale of the  applicable  Property or any
portion thereof,  so long as: (i) no Event of Default shall have occurred and be
continuing,  (ii)  prior to the date on which  such  Imposition  or Claim  would
otherwise  have become  delinquent,  the  applicable  Borrower  shall have given
Lender prior written  notice of its intent to contest said  Imposition or Claim;
(iii) prior to the date on which such  Imposition or Claim would  otherwise have
become  delinquent,  in the case of Impositions or Claims in excess of $200,000,
the  applicable  Borrower  shall have  deposited with Lender (or with a court of

                                      -36-
<PAGE>
competent  jurisdiction  or other  appropriate  body  approved  by Lender)  such
additional  amounts as are necessary to keep on deposit at all times,  an amount
equal to at least one hundred  twenty-five percent (125%) (or such higher amount
as may be  required by  applicable  law) of the total of (x) the balance of such
Imposition or Claim then  remaining  unpaid,  and (y) all  interest,  penalties,
costs  and  charges  accrued  or  accumulated  thereon;  (iv) no  risk of  sale,
forfeiture  or loss of any  interest  in the  applicable  Property  or any  part
thereof arises,  in Lender's  reasonable  judgment,  during the pendency of such
contest; (v) such contest does not, in Lender's reasonable determination, have a
Material Adverse Effect; and (vi) such contest is based on bona fide,  material,
and reasonable claims or defenses. Any such contest shall be prosecuted with due
diligence,  and the  applicable  Borrower  shall promptly pay the amount of such
Imposition  or Claim as  finally  determined,  together  with all  interest  and
penalties  payable in  connection  therewith.  Lender  shall have full power and
authority,  but no obligation,  to apply any amount  deposited with Lender under
this subsection to the payment of any unpaid  Imposition or Claim to prevent the
sale or forfeiture of the applicable Property for non-payment thereof, if Lender
reasonably  believes  that such sale or forfeiture  is  threatened.  Any surplus
retained by Lender after payment of the  Imposition or Claim for which a deposit
was made shall be promptly repaid to the applicable  Borrower unless an Event of
Default  shall have  occurred,  in which case said  surplus  may be  retained by
Lender to be applied to the Obligations.  Notwithstanding  any provision of this
Section to the contrary,  the  applicable  Borrower  shall pay any Imposition or
Claim  which it might  otherwise  be  entitled to contest if an Event of Default
shall occur, or if, in the reasonable  determination  of Lender,  the applicable
Property is in jeopardy or in danger of being  forfeited or foreclosed.  If such
Borrower  refuses to pay any such  Imposition  or Claim,  upon five (5) Business
Days' prior written notice, Lender may (but shall not be obligated to) make such
payment  and  such  Borrower  shall  reimburse  Lender  on  demand  for all such
advances.

Section 5.4 Maintenance of Insurance. The Borrowers will maintain or cause to be
maintained,  with financially  sound and reputable  insurers,  public liability,
property damage, business interruption and other types of insurance with respect
to their business and each Property  (including all Improvements now existing or
hereafter erected thereon) against all losses, hazards, casualties,  liabilities
and contingencies as customarily carried or maintained by Persons of established
reputation  engaged in similar businesses and as Lender shall require (and, with
respect to the Ground Leased  Properties,  as required  under the Ground Leases)
and in such  amounts  and for such  periods  as Lender  shall  require.  Without
limitation  of the  foregoing,  the  Borrowers  shall  maintain  or  cause to be
maintained  policies of insurance with respect to each Property in the following
amounts and covering the following risks:

               (i) Property  damage  insurance  covering  loss or damage to each
Property caused by fire, lightning,  hail, windstorm,  explosion,  hurricane (to
the extent available),  vandalism,  malicious  mischief,  and such other losses,
hazards,  casualties,  liabilities and contingencies as are normally and usually
covered by fire  policies in effect where such  Property is located  endorsed to
include  all of the  extended  coverage  perils  and other  broad  form  perils,
including the standard "all risks" clauses, with such endorsements as Lender may
from time to time reasonably require  including,  without  limitation,  building
ordinance and law (including demolition costs and increased cost of construction
coverage),  lightning,  windstorm,  civil commotion,  hail, riot, strike,  water
damage,  sprinkler leakage,  collapse and malicious  mischief.  Each such policy
shall  be in an  amount  not  less  than  that  necessary  to  comply  with  any
coinsurance  percentage  stipulated in the policy, but not less than 100% of the
full  replacement

                                      -37-
<PAGE>
cost  of  all   Improvements  at  each  Property   (without  any  deduction  for
depreciation),   and  shall  contain  a  replacement   cost  and  agreed  amount
endorsement  in an  amount  not less than the  Allocated  Loan  Amount  for such
Property.  The  deductible  under  each  policy,  shall  not  exceed  an  amount
customarily  required by  institutional  lenders for similar  properties  in the
general  vicinity  of the  applicable  Property,  but in no event in  excess  of
$100,000.

               (ii) Broad form boiler and machinery  insurance for each Property
in an amount  equal to the  lesser of 100% of the full  replacement  cost of the
Improvements at such Property  (without any deduction for depreciation) in which
the boiler or similar vessel is located, or $2,000,000.  In addition, Lender may
require a rider to such policy to extend such coverage to  electrical  machinery
and equipment, air conditioning, refrigeration, and mechanical objects.

               (iii)  With  respect  to the  Property  located  in the  State of
California,  insurance covering risks from geological phenomena,  including, but
not limited to, sinkholes, mine subsidence or earthquakes, in an amount equal to
$25,000,000 and with a maximum permissible  deductible in an amount equal to the
greater of (A) five percent (5%) of the Allocated  Loan Amount for such Property
and (B) $100,000.

               (iv) Flood  insurance for any Property that is located,  in whole
or in  part,  in an area now or  hereafter  designated  as  "flood  prone"  or a
"special flood hazard area" (as defined under the National  Flood  Insurance Act
of  1968,  the  Flood  Disaster  Protection  Act of 1973 or the  National  Flood
Insurance  Reform Act of 1994 (as each may be  amended,  or any  successor  law,
collectively,  the "Flood Insurance  Acts")).  Such policy shall be in an amount
equal to the lesser of (1) the  Allocated  Loan Amount for such Property and (2)
the maximum amount of such insurance  available  under the Flood  Insurance Acts
and shall have a maximum  permissible  deductible equal to an amount customarily
required by institutional lenders for similar properties in the general vicinity
of such Property, but in no event in excess of $100,000.

               (v)  Business  interruption  or rent loss  insurance in an amount
equal to the gross income or rentals from each Property for an indemnity  period
of eighteen (18) months,  such amount being adjusted  annually.  Lender shall be
named as loss payee under such insurance.

               (vi)  During  any  period  of   reconstruction,   renovation   or
alteration of any Property,  a complete value, "All Risks" Builders Risk form or
"Course of Construction" insurance policy in non-reporting form and in an amount
reasonably satisfactory to Lender.

               (vii) Commercial General Liability  insurance covering claims for
bodily  injury,  death or  property  damage  occurring  upon,  in or about  each
Property in an amount not less than  $1,000,000 per occurrence and $3,000,000 in
the  aggregate  with  a  deductible  in  an  amount   customarily   required  by
institutional  lenders for  similar  properties  in the general  vicinity of the
respective  Properties,  but in no event in excess of $100,000,  and an umbrella
liability policy in the amount of $50,000,000.  If Lender permits such liability
coverage to be written on a blanket  basis,  then such policy shall provide that
the aggregate limit of insurance applies separately to each Property.

                                      -38-
<PAGE>

               (viii)  If  required   by   applicable   state   laws,   worker's
compensation or employer's liability insurance in accordance with such laws.

               (ix) The  Borrowers  shall cause  Manager to maintain  errors and
omissions  insurance  in an amount  satisfactory  to  Lender  in its  reasonable
discretion.

               (x) Such other insurance and  endorsements,  if any, with respect
to the  Properties and the operation  thereof as Lender may  reasonably  require
from time to time,  provided  same are  customarily  required  by  institutional
lenders  for  similar  properties  in the  general  vicinity  of the  respective
Properties, or which are otherwise required by the Loan Documents.

                  Each carrier  providing  any  insurance,  or portion  thereof,
required by this Section  (other than the insurance  required under clause (iii)
of this  Section 5.4) shall be licensed to do business in the  jurisdictions  in
which the Properties are located,  and shall have a claims paying ability rating
by S&P of not less than "AA",  by Moody's of not less than "Aa2" and by Fitch of
not less than "AA" and an A.M. Best Company,  Inc. rating of not less than A and
financial size category of not less than XIII. Each carrier providing  insurance
under  clause  (iii) of this  Section  5.4,  shall be licensed to do business in
California,  and shall have a claims  paying  ability  rating by S&P of not less
than "A" and an A.M. Best Company,  Inc. rating of not less than A and financial
size  category  of not less than VIII.  Notwithstanding  the  foregoing,  Lender
hereby  approves:  (a) St.  Paul Fire and Marine  Insurance  Co. as the  carrier
providing the commercial general liability  insurance under clause (vii) of this
Section 5.4 so long as such carrier  maintains a claims paying ability by S&P of
not less than "AA-" and by Moody's of not less than "Aa3" and (b) Great American
Insurance Co. as the carrier providing the umbrella liability insurance required
under  clause  (vii) of this  Section  5.4 so long as such  carrier  maintains a
claims paying  ability by S&P of not less than "A+", by Moody's of not less than
"A3" and by Fitch of not less than "AA-" and an A.M. Best Company,  Inc.  rating
of not less than A and  financial  size  category  of not less than XII.  In the
event that such general or umbrella  liability  insurance  under clause (vii) of
this Section 5.4 shall hereafter be provided by another insurance  carrier,  any
such carrier shall thereafter be required to comply with ratings requirements of
the first sentence of this paragraph. Except as otherwise expressly set forth in
this Loan  Agreement,  the Borrowers  shall cause all insurance  (except general
public liability and workers' compensation insurance) carried in accordance with
this Section to be payable to Lender as a mortgagee and not as a coinsured, and,
in the case of all policies of insurance  carried by each lessee for the benefit
of any  Borrower,  if any, to cause all such policies to be payable to Lender as
Lender's interest may appear.

                  All insurance  policies and renewals thereof (i) shall be in a
form reasonably  acceptable to Lender, (ii) shall provide for a term of not less
than one year,  (iii) shall  provide by way of  endorsement,  rider or otherwise
that such insurance policy shall not be canceled, endorsed, altered, or reissued
to effect a change in coverage unless such insurer shall have first given Lender
thirty (30) days prior  written  notice  thereof,  (iv) shall include a standard
mortgagee clause in favor of and in form acceptable to Lender, (v) shall provide
for claims to be made on an occurrence  basis,  except that boiler and machinery
coverage  may be made on an  accident  basis,  and (vi) shall  contain an agreed
value clause  updated  annually (if the amount of coverage  under

                                      -39-
<PAGE>
such policy is based upon the  replacement  cost of a  Property).  All  property
damage  insurance  policies  (except  for flood and  earthquake  policies)  must
automatically reinstate after each loss.

Section 5.5 Maintenance of the Property; Alterations; Casualty.

         (A) Each  Borrower  will maintain its Property or cause its Property to
be maintained in good repair,  working order and condition,  subject to ordinary
wear and tear and the provisions of this Loan Agreement with respect to casualty
and  condemnation  and will  make or cause to be made all  appropriate  repairs,
renewals and replacements  thereof.  Without  limitation of the foregoing,  each
Borrower will operate and maintain its Property substantially in accordance with
the applicable  Operating Budget and Capital  Expenditure  Budget.  In addition,
unless  Lender  agrees  otherwise,  each  Borrower  shall cause all items in the
Capital  Expenditure  Budget to be performed and completed in  substantially  in
accordance  with such  plan.  All work  required  or  permitted  under this Loan
Agreement shall be performed in a good and workmanlike  manner and in compliance
with all  applicable  laws.  So long as no Event of Default has  occurred and is
continuing,  the Borrowers may, without Lender's consent, perform alterations to
any  Property  which (i) do not  constitute a Material  Alteration,  (ii) do not
adversely  affect  any  Borrower's  financial  condition  or  the  value  or Net
Operating  Income of the affected  Property and (iii) are in the ordinary course
of the  applicable  Borrower's  business.  The  Borrowers  shall not perform any
Material Alteration without Lender's prior written consent,  which consent shall
not be unreasonably withheld or delayed; provided,  however, that Lender may, in
its sole and absolute  discretion,  withhold consent to any Material  Alteration
which is likely  to  result  in a  decrease  of Net  Operating  Income  from the
applicable  Property  by 5% or more for a period  of 30 days or  longer.  Lender
shall approve or disapprove any request for approval of any Material  Alteration
within fifteen (15) Business Days after the submission by any Borrower to Lender
of a written  request for such  approval  together  with a  reasonably  detailed
description of such Material Alteration including a construction budget therefor
on a line item basis, copies of the plans and specifications for same, a list of
all contractors and subcontractors providing services or materials in connection
with  such  Material  Alteration  and  copies  of  all  material  contracts  and
subcontracts. Lender's consent to any Material Alteration shall be deemed given,
if the  correspondence  from such  Borrower to Lender  requesting  such approval
contains a bold-faced,  conspicuous  legend at the top of the first page thereof
stating  that "IF YOU FAIL TO RESPOND TO OR TO  EXPRESSLY  DENY THIS REQUEST FOR
APPROVAL IN WRITING WITHIN  FIFTEEN (15) BUSINESS  DAYS,  YOUR APPROVAL SHALL BE
DEEMED  GIVEN," and if Lender shall fail to respond to or to expressly deny such
request for approval in writing  within fifteen (15) Business Days after receipt
of such  Borrower's  written  request  therefor  together with the documents and
information  required above and any other  information  reasonably  requested by
Lender in writing  prior to the  expiration  of such fifteen  (15)  Business Day
period in order to  adequately  review the same,  then Lender shall be deemed to
have approved such Material Alteration. Lender may, as a condition to giving its
consent to a Material  Alteration,  require that the applicable Borrower deliver
to Lender evidence reasonably satisfactory to Lender that such Borrower has cash
available for payment of the cost of such Material Alteration in an amount equal
to 125% of the  cost of the  Material  Alteration  as  reasonably  estimated  by
Lender. Upon substantial  completion of the Material Alteration,  the applicable
Borrower shall provide evidence  reasonably  satisfactory to Lender that (i) the
Material  Alteration was  constructed in accordance with all applicable laws and
substantially  in accordance  with plans and  specifications  approved by Lender
(which  approval  shall  not be

                                      -40-
<PAGE>
unreasonably  withheld  or  delayed),  (ii)  all  contractors,   subcontractors,
materialmen  and  professionals  who  provided  work,  materials  or services in
connection  with  the  Material  Alteration  have  been  paid in full  and  have
delivered  unconditional  releases  of lien  and  (iii)  all  material  licenses
necessary for the use, operation and occupancy of the Material Alteration (other
than those which depend on the performance of tenant improvement work) have been
issued.  The Borrowers  shall  reimburse  Lender upon demand for all  reasonable
out-of-pocket   costs  and  expenses  (including  the  reasonable  fees  of  any
architect,  engineer or other professional engaged by Lender) incurred by Lender
in reviewing plans and specifications or in making any determinations  necessary
to implement the provisions of this Section 5.5(A).

         (B) In the event of casualty  or loss at any  Property,  the  Borrowers
shall give immediate  written notice of the same to the insurance carrier and to
Lender and shall promptly  commence and diligently  prosecute to completion,  in
accordance with the terms hereof, the repair and restoration of such Property as
nearly as  possible  to the  Pre-Existing  Condition  (hereinafter  defined)  (a
"Restoration"). The Borrowers shall pay all costs of such Restoration whether or
not such costs are covered by insurance.  Each Borrower  hereby  authorizes  and
empowers Lender as attorney-in-fact  for such Borrower to make proof of loss, to
adjust and  compromise  any claim  under  insurance  policies,  to appear in and
prosecute  any action  arising  from such  insurance  policies,  to collect  and
receive insurance  proceeds,  and to deduct therefrom Lender's expenses incurred
in the collection of such proceeds;  provided however, that nothing contained in
this  Section  shall  require  Lender to incur any  expense  or take any  action
hereunder.  Each Borrower further  authorizes Lender, at Lender's option, (i) to
hold the balance of such proceeds to be used to reimburse  such Borrower for the
cost of  Restoration  of its Property or (ii) subject to Subsection  5.5(C),  to
apply such  proceeds to payment of the  Obligations  whether or not then due, in
any  order,  and,  provided  that  no  Event  of  Default  has  occurred  and is
continuing,  upon any such application of insurance  proceeds to the Obligations
pursuant to the foregoing, no Prepayment Consideration shall be due and payable.
Notwithstanding the foregoing,  in the event of a casualty to any Property where
the loss does not  exceed  the  Restoration  Threshold  for such  Property,  the
applicable Borrower may settle and adjust such claim; provided that (a) no Event
of Default has occurred and is continuing and (b) such adjustment is carried out
in a commercially reasonable and timely manner.

         (C)  Lender  shall not  exercise  Lender's  option  to apply  insurance
proceeds to payment of the  Obligations  if all of the following  conditions are
met: (i) no Event of Default then exists; (ii) Lender reasonably determines that
there will be  sufficient  funds to complete  the  Restoration  of the  affected
Property to at least the Pre-Existing  Condition and to timely make all payments
due under the Loan Documents  during the  Restoration  of such  Property;  (iii)
Lender  reasonably  determines  that the sum of (1) the  rental  income  of such
Property, after the Restoration thereof to the Pre-Existing Condition (and after
the expiration of any business interruption or rent loss insurance), and (2) the
rental  income from the other  Properties  (taking  into  account  any  business
interruption insurance being paid with respect to the other Properties), will be
sufficient  to meet all  Operating  Expenses  for the  Properties,  payments for
Reserves  and payments of  principal  and interest  under the Note and any other
loan  payment  obligations   (including  any  obligations  under  any  permitted
subordinate  financing)  relating to the  Properties and maintain a Debt Service
Coverage  Ratio at least equal to the lesser of the Debt Service  Coverage Ratio
as of the Closing  Date and  immediately  preceding  the  casualty;  (iv) Lender
reasonably  determines  that the  Restoration  of the  affected  Property to the
Pre-Existing  Condition will be completed within one

                                      -41-
<PAGE>
(1) year of the date of the loss or casualty to such  Property,  but in no event
later  than six (6)  months  prior to the  Maturity  Date;  (v) less than  fifty
percent  (50%) of the  total  floor  area of the  Improvements  of the  affected
Property has been  damaged,  destroyed or rendered  unusable as a result of such
fire or other  casualty;  (vi) tenant  leases  requiring  payment of annual rent
equal to at least seventy percent (70%) of the Gross Revenues from such Property
during the twelve (12) month period immediately  preceding the date of such fire
or other  casualty  remain  in full  force  and  effect  during  and  after  the
Restoration of such Property,  and (vii) Lender is reasonably satisfied that the
affected  Property  can be  restored  and  repaired as nearly as possible to the
condition it was in  immediately  prior to such casualty and in compliance  with
all  applicable  zoning,  building  and other laws and codes (the  "Pre-Existing
Condition").  Notwithstanding anything to the contrary set forth in this Section
5.5, to the extent the  insurance  proceeds  paid or payable with respect to any
casualty to any Property  (either singly or when  aggregated with all other then
unapplied  proceeds with respect to such Property) do not exceed the Restoration
Threshold, the estimated cost of completing the applicable Restoration shall not
be greater than the Restoration Threshold, and provided that no Event of Default
shall have occurred and be continuing,  such proceeds are to be paid directly to
the  applicable  Borrower  to be  applied to  Restoration  of such  Property  in
accordance  with the terms hereof  (except  that  insurance  proceeds  paid with
respect to the  insurance  maintained  under  Section  5.4(v) shall be deposited
directly to the Central Account and applied in accordance with the provisions of
the Cash Management Agreement).

         (D) If  Lender  elects to make the  insurance  proceeds  available  for
Restoration  of any  Property  (or is required to make such  proceeds  available
pursuant to Section  5.5(C)  above),  the  Borrowers  agree that, if at any time
during the Restoration,  the cost of completing such Restoration,  as reasonably
determined by Lender,  exceeds the undisbursed insurance proceeds, the Borrowers
shall,  promptly  upon demand by Lender,  deposit the amount of such excess with
Lender,  and Lender  shall first  disburse  such deposit to pay for the costs of
such Restoration on the same terms and conditions as the insurance  proceeds are
disbursed.  If the  Borrowers  deposit  such excess  with  Lender and if,  after
completion  of the  Restoration,  any  funds  remain  from  the  combination  of
insurance proceeds and the funds so deposited with Lender by the Borrowers,  and
if no Event of Default shall have occurred and be continuing,  then Lender shall
disburse to the  applicable  Borrower such  remaining  funds  (together with any
interest earned thereon).

         (E) Lender may,  at  Lender's  option,  condition  disbursement  of any
insurance  proceeds  on  Lender's  approval  of plans and  specifications  of an
independent  architect  licensed  in the state  where the  affected  Property is
located and reasonably  satisfactory  to Lender (the  "Architect"),  any and all
material contractors,  subcontractors and materialmen engaged in the Restoration
and  the  contracts  and  subcontracts  under  which  they  have  been  engaged,
contractor's cost estimates,  architect's certificates,  waivers of liens, sworn
statements  of  mechanics  and  materialmen  and such other  evidence  of costs,
percentage completion of construction, application of payments, and satisfaction
of liens as Lender may  reasonably  require.  Lender  shall not be  obligated to
disburse  insurance  proceeds more frequently than once every calendar month. If
insurance  proceeds  are  applied to the  payment of the  Obligations,  any such
application of proceeds to principal  shall not extend or postpone the due dates
of the  monthly  payments  due  under  the  Note or  otherwise  under  the  Loan
Documents,  or change the  amounts  of such  payments.  Any amount of  insurance
proceeds  remaining  in  Lender's  possession  after full and final  payment and
discharge of all Obligations  shall be refunded to Borrower or otherwise paid

                                      -42-
<PAGE>
in accordance  with applicable law. If any Property is sold at foreclosure or if
Lender acquires title to any Property, Lender shall have all of the right, title
and  interest of the  Borrowers  in and to any  insurance  policies and unearned
premiums  thereon and in and to the proceeds  resulting  from any damage to such
Property prior to such sale or acquisition.

         (F) In no event shall  Lender be  obligated  to make  disbursements  of
insurance  proceeds in excess of an amount equal to the costs actually  incurred
from time to time for work in place as part of the Restoration,  as certified by
the  Architect,  less a  retainage  equal  to five  percent  (5%) of such  costs
incurred until the  Restoration  has been  completed.  The retainage shall in no
event be less than the amount actually held back by the applicable Borrower from
contractors,  subcontractors  and materialmen  engaged in the  Restoration.  The
retainage shall not be released until the Architect certifies to Lender that the
Restoration has been completed  substantially  in accordance with the provisions
of  this  Section  5.5  and  that  all  material  approvals  necessary  for  the
re-occupancy  and use of the  affected  Property  have  been  obtained  from all
appropriate  governmental  authorities,  and Lender receives evidence reasonably
satisfactory to Lender that the costs of the Restoration  have been paid in full
or will be paid in full out of the retainage.

         (G) If pursuant to Section  5.5(B),  Lender has the right to and elects
to apply insurance proceeds against the Obligations as to the affected Property,
then the Borrowers,  in any such instance, must prepay the Note to the extent of
the  insurance  proceeds  received up to the Release  Price with  respect to the
relevant Property, and the Allocated Loan Amounts for all other Properties shall
be increased or decreased in the manner  provided in the definition of Allocated
Loan Amount. In the event that any portion of such insurance proceeds is applied
toward the  repayment  of the  Obligations,  the  applicable  Borrower  shall be
entitled to obtain from Lender a Property  Release  (without  representation  or
warranty except for the representations and warranties  expressly required to be
given by Lender in connection  with a Property  Release in the last paragraph of
Section 11.4 hereof) of the  applicable  Property  from the Lien of the Mortgage
relating to such Property (in which event the  Borrowers  shall not be obligated
to restore the applicable  Property  pursuant to Section 5.5(B) above)  provided
that (i) no Event of Default exists,  (ii) the applicable  Borrower shall comply
with the provisions  hereof and (iii) the Borrowers pay to Lender the amount, if
any, by which the Release Price for such Property exceeds the insurance proceeds
received by Lender and applied to  repayment of the  Obligations,  in which case
the  Allocated  Loan Amount for such  Property  shall be reduced to zero. If any
proceeds are applied to reduce the  Obligations,  Lender shall apply the same in
accordance with the provisions of the Note. Any excess proceeds over the Release
Price paid to Lender in connection with the release of any Property  pursuant to
the foregoing, shall also be applied against the Obligations.

Section 5.6  Inspection.  Subject to the rights of tenants,  the Borrowers shall
permit any authorized  representatives designated by Lender to visit and inspect
during normal business hours the Properties and their business,  including their
financial  and  accounting  records,  and  to  make  copies  and  take  extracts
therefrom,  and to discuss  their  affairs,  finances  and  business  with their
officers   and   independent    public   accountants   (with   such   Borrower's
representative(s)  present),  at such  reasonable  times during normal  business
hours and as often as may be  reasonably  requested.  Unless an Event of Default
has occurred,  Lender shall provide advance

                                      -43-
<PAGE>

written  notice  of at least  three  (3)  Business  Days  prior to  visiting  or
inspecting any Property or any Borrower's offices.

Section 5.7 Environmental Compliance.

         (A) Environmental  Laws. Each Borrower shall at all times comply in all
material  respects with all applicable  Environmental  Laws. The Borrowers shall
not:  (i) violate any  applicable  Environmental  Law;  or (ii)  generate,  use,
transport,  handle,  store,  release or dispose of any Hazardous  Material in or
into, on or onto, or from any Property  (except in  accordance  with  applicable
law); or (iii) permit any Lien imposed pursuant to any  Environmental  Law to be
imposed or to remain on any Property.

         (B) Remedial  Action.  Each Borrower shall promptly take and diligently
prosecute any and all necessary remedial actions upon obtaining knowledge of the
presence, storage, use, disposal,  transportation,  active or passive migration,
release or discharge of any Hazardous  Materials on, under or about any Property
in violation of any Environmental Laws. In the event any Borrower undertakes any
remedial  action with respect to any Hazardous  Materials on, under or about any
Property,  such Borrower  shall  conduct and complete  such  remedial  action in
compliance  with all applicable  Environmental  Laws, and in accordance with the
applicable  policies,  orders and  directives  of all  federal,  state and local
governmental authorities.

         (C) Further Assurance.  If Lender at any time has a reasonable basis to
believe  that a violation of any  Environmental  Law related to any Property has
occurred and is continuing or that any basis for a material  Environmental Claim
affecting  any Borrower or related to any Property  exists,  then the  Borrowers
agree,  promptly after written request from Lender,  to provide Lender with such
reports, certificates,  engineering studies or other written material or data as
Lender may  reasonably  require so as to satisfy  Lender that such  Borrower and
such Property are in material compliance with all applicable Environmental Laws.

         (D) O&M Plans.  The Cedars  Borrower  and 1600 Market  Street  Property
Trust agree to  develop,  implement  and carry out  operations  and  maintenance
programs with respect to asbestos and  asbestos-containing  materials  (the "O&M
Plans")   located  in  their   respective   Properties  as  recommended  in  the
Environmental  Reports for such  Properties.  Within  thirty (30) days after the
date  hereof,  the  Borrowers  shall  cause the O&M Plans to be  prepared by the
environmental  consultant or engineer that prepared the Environmental Reports or
another  environmental  consultant or engineer reasonably  acceptable to Lender,
and deliver such O&M Plans to Lender for Lender's  approval which approval shall
not be unreasonably withheld,  conditioned or delayed. Lender's requirement that
the  Borrowers  develop  and  comply  with the O&M Plans  shall not be deemed to
constitute  a waiver or  modification  of any  covenants  or  agreements  of any
Borrower or Guarantor with respect to Hazardous  Materials or Environmental Laws
as set forth herein or in the Environmental Indemnity.

Section 5.8 Environmental Disclosure.

         (A) The Borrowers  shall  promptly upon becoming  aware thereof  advise
Lender in writing  and in  reasonable  detail of: (1) any  release,  disposal or
discharge of any Hazardous Material on, under, or about any Property required to
be reported to any federal,  state or local

                                      -44-
<PAGE>
governmental or regulatory agency under any applicable Environmental Laws except
such releases,  disposals or discharges pursuant to and in compliance with valid
permits,  authorizations or registrations under said Environmental Laws; (2) any
and all written  communications sent or received by any Borrower with respect to
any  Environmental  Claims or any  release,  disposal or  discharge of Hazardous
Material required to be reported to any federal,  state or local governmental or
regulatory  agency;  (3) any remedial  action taken by any Borrower or any other
Person in response to any  Hazardous  Material on, under or about any  Property;
(4) the  discovery  by any Borrower of any  occurrence  or condition on any real
property  adjoining  or in the  vicinity of any  Property  that could cause such
Property or any part thereof to be classified as "border-zone property" or to be
otherwise   subject   to  any   restrictions   on  the   ownership,   occupancy,
transferability  or use thereof  under any  Environmental  Laws the existence of
which could result in an Environmental  Claim with respect to any Property;  and
(5) any request for information from any governmental agency that indicates such
agency is investigating whether any Borrower may be potentially  responsible for
a release, disposal or discharge of Hazardous Materials.

         (B) The Borrowers  shall promptly  notify Lender of any proposed action
to be taken  pertaining  in any way to any Property to commence  any  operations
that could  reasonably  be expected to subject any  Borrower or any  Property to
additional  laws,  rules or regulations,  including laws,  rules and regulations
requiring  additional or amended  environmental  permits or licenses which could
reasonably  be expected to subject any Borrower to any material  obligations  or
requirements  under any  Environmental  Laws.  Each Borrower  shall,  at its own
expense,  provide  copies  of  such  documents  or  information  as  Lender  may
reasonably  request  in  relation  to any  matters  disclosed  pursuant  to this
Section.

Section 5.9 Compliance with Laws and Contractual Obligations. Each Borrower will
(A) comply with the  requirements  of all present  and future  applicable  laws,
rules, regulations and orders of any governmental authority in all jurisdictions
in which it is now doing business or may hereafter be doing business, other than
those laws, rules, regulations and orders the noncompliance with which would not
reasonably  be expected to have,  either  individually  or in the  aggregate,  a
Material  Adverse  Effect,  (B)  maintain  all  licenses and permits now held or
hereafter  acquired by such  Borrower,  the loss,  suspension,  or revocation of
which,  or  failure  to renew,  could  have a  Material  Adverse  Effect and (C)
perform,  observe,  comply and fulfill  all of its  obligations,  covenants  and
conditions  contained  in  any  Contractual   Obligation,   including  the  Loan
Documents.

Section 5.10 Further  Assurances.  Borrower Parties and their Affiliates  shall,
from  time  to  time,  execute  and/or  deliver  such  documents,   instruments,
agreements,  financing  statements,  and perform such acts as Lender at any time
may reasonably  request to evidence,  preserve  and/or protect the Collateral at
any time  securing or intended  to secure the  Obligations  and/or to better and
more  effectively  carry out the purposes of this Loan  Agreement  and the other
Loan Documents.

Section 5.11  Performance  of Agreements  and Leases.  Each Borrower Party shall
duly and punctually  perform,  observe and comply in all material  respects with
all of the terms, provisions,  conditions,  covenants and agreements on its part
to be performed,  observed and complied with  hereunder and under the other Loan
Documents  to which it is a party and all  material  agreements

                                      -45-
<PAGE>
entered into or assumed by such Person in connection with any Property, and will
not suffer or permit  any  default  or event of  default  (giving  effect to any
applicable  notice  requirements  and cure  periods)  to exist  under any of the
foregoing.  Each  Borrower  shall comply  with,  observe and perform all of such
Borrower's  material  obligations as landlord under all Leases and shall enforce
the material  terms,  covenants and conditions  contained in the Leases upon the
part of the tenants thereunder to be observed or performed.

Section 5.12 Leases.

         (A) Without the prior written consent of Lender,  none of the Borrowers
shall (i) enter  into any Major  Lease;  (ii)  cancel or  terminate  (including,
without  limitation,  by exercise of any  landlord  recapture  rights) any Major
Lease  (except  to  enforce  any such Major  Lease  after an "event of  default"
thereunder or pursuant to the exercise by any tenant of any  termination  rights
expressly provided in any existing Major Lease or Major Lease hereafter approved
by Lender);  (iii) approve any assignment of any Major Lease (except as required
pursuant  to the  express  terms of any  existing  Major  Lease  or Major  Lease
hereafter  approved  by Lender)  that  releases  the  original  tenant  from its
obligations under such Major Lease,  (iv) amend,  modify or waive the provisions
of any Major Lease in any  material  and  adverse  respect  (including,  without
limitation,  any amendment,  modification  or waiver  reducing the fixed initial
term of any Major  Lease,  reducing  the rent  payable  under  any Major  Lease,
changing any renewal provisions of any Major Lease or materially  increasing the
obligations  of the landlord or materially  decreasing  the  obligations  of the
tenant under any Major Lease or pursuant to which any  premises  covered by such
Major Lease is  surrendered);  or (v) cancel or modify any guaranty,  or release
any security  deposit,  letter of credit,  or other item  constituting  security
pertaining to any Major Lease (except as required  pursuant to the express terms
of any existing Major Lease or Major Lease hereafter approved by Lender).

         Lender shall not unreasonably withhold,  delay or condition its consent
to any Major  Lease  transaction  described  in clauses  (i)  through  (v) above
provided that (x) no Event of Default shall have occurred and be continuing, (y)
the conditions of clauses (i) and (ii) of Subsection 5.12(B) below are satisfied
with respect to such proposed Major Lease and (z) in the reasonable  judgment of
Lender,  the  proposed  tenant  thereunder  (if not then a tenant of the subject
Property) is a reputable Person engaged in a business  activity  consistent with
ordinary office building uses and with  creditworthiness  reasonably adequate to
perform its obligations  under the proposed Major Lease (taking into account any
security,  guarantees  or other  credit  support  posted  or  delivered  by such
proposed tenant).

         (B)   Notwithstanding  the  provisions  of  Subsection  5.12(A)  above,
provided  that no  Event of  Default  shall  have  occurred  and be  continuing,
Lender's  consent  shall not be  required as  provided  above for the  creation,
assignment,  termination  (including,  without  limitation,  by  exercise of any
landlord recapture rights),  amendment or modification of any Lease which is not
a Major Lease  (including the renewal or extension  after the date hereof of any
Lease which is not a Major Lease (such renewal or extension, a "Renewal Lease"))
provided that the applicable Lease (or Renewal Lease):

               (i) provides for payment of a net  effective  rent (after  taking
into account any free rent, construction allowances or other concessions granted
by landlord) and other material

                                      -46-
<PAGE>

amounts  payable no less than  ninety-five  percent (95%) of the then  effective
fair market rent then prevailing for similar properties and leases in the market
area (and taking into account the type and  creditworthiness  of the tenant, the
length of the term  including  any  renewals,  and the  location and size of the
premises covered thereby);

               (ii) is otherwise on commercially reasonable terms; and

               (iii) a copy of such Lease is delivered to Lender  promptly after
execution  thereof together with the applicable  Borrower's  certification  that
such Lease satisfies the foregoing conditions of this Section 5.12.

         (C) Any request for approval of a Lease,  or  assignment,  termination,
amendment or  modification  of any Lease  requiring  approval as set forth above
shall be made to Lender in writing and together with such request the applicable
Borrower shall furnish to Lender:  (i) a brief  biographical  description of and
current  financial  statements for the proposed tenant and any guarantor of such
proposed  Lease,  (ii) a copy of the  proposed  form of Lease (or  amendment  or
modification),  and (iii) a summary of the material terms of such proposed Lease
(or amendment or modification) including,  without limitation,  rental terms and
the  term of the  proposed  Lease  and any  options.  Lender  shall  approve  or
disapprove  each Major Lease or other Lease (or amendment or modification of any
Major Lease or other Lease) for which  Lender's  approval is required under this
Loan  Agreement  within  ten (10)  Business  Days after the  submission  by such
Borrower to Lender of a written  request  for such  approval,  accompanied  by a
substantially  final draft of the Major Lease or other  Lease (or  amendment  or
modification) together with the information and documents required under clauses
(i) through (iii) above (and provided that any such approval shall be subject to
delivery  by the  applicable  Borrower  of an  executed  copy of the  Lease  (or
amendment or  modification)  promptly after  execution  thereof,  which executed
Lease (or amendment or modification)  shall not have been modified or revised in
any material respect from the prior drafts thereof reviewed by Lender). Lender's
consent  to any  Major  Lease  or other  Lease  shall be  deemed  given,  if the
correspondence  from such Borrower to Lender requesting such approval contains a
bold-faced, conspicuous legend at the top of the first page thereof stating that
"IF YOU FAIL TO RESPOND TO OR TO  EXPRESSLY  DENY THIS  REQUEST FOR  APPROVAL IN
WRITING WITHIN TEN (10) BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN," and
if Lender fails to respond to or to expressly  deny such request for approval in
writing  within ten (10)  Business  Days after receipt by Lender of such written
request  and  the  information  and  documents  required  above  and  any  other
information reasonably requested by Lender in writing prior to the expiration of
such ten (10) Business Day period in order to adequately  review the same,  then
Lender shall be deemed to have approved such Major Lease or other Lease.

         The  Borrowers  shall  promptly  send  Lender  copies of any notices of
default  received  from the tenant under any Lease;  and will enforce  (short of
terminating   such  Lease)  the  performance  by  the  tenant  of  the  tenant's
obligations under any Lease.

         Except for security  deposits or estimated  additional  rent amounts on
account of operating  expense,  tax or other  escalations or  pass-throughs,  no
Lease shall provide for payment of rent more than one month in advance,  and the
Borrowers shall not under any circumstances collect any rent more than one month
in advance.  The  Borrowers,  at Lender's  request,  shall  furnish

                                      -47-
<PAGE>
Lender  with  executed  copies of all Leases  hereafter  made (to the extent not
theretofore  provided to Lender).  Each Lease or a separate  agreement  with the
tenant of such Lease, in recordable form and substance  reasonably  satisfactory
to Lender,  shall specifically  provide that, subject to the following sentence,
such Lease is subordinate to the Mortgage  encumbering the applicable  Property;
that the tenant attorns to Lender, such attornment to be effective upon Lender's
acquisition  of title to such  Property;  that the tenant agrees to execute such
further  evidences  of  attornment  as Lender  may from time to time  reasonably
request;  that  the  attornment  of  the  tenant  shall  not  be  terminated  by
foreclosure;  that in no event  shall  Lender,  as holder of the  Mortgage or as
successor landlord, be liable to the tenant for any act or omission of any prior
landlord or for any  liability or  obligation  of any prior  landlord  occurring
prior to the date that  Lender or any  subsequent  owner  acquire  title to such
Property. Lender shall enter into, and, if required by applicable law to provide
constructive notice, record in the county where the subject Property is located,
and permit the applicable tenant to record, a subordination, non-disturbance and
attornment  agreement,  in form and substance  substantially similar to the form
attached hereto as Exhibit D (a  "Non-Disturbance  Agreement"),  with any tenant
(other than an Affiliate of any Borrower)  entering  into any Lease  demising at
least 5,000  square feet of any  Property  within ten (10)  Business  Days after
written request therefor by the applicable  Borrower  delivered together with an
executed copy of the applicable  Lease,  and provided that Lender has reasonably
determined  that such Lease  satisfies the conditions of clauses (i) and (ii) of
Subsection 5.12(B) above.

Section 5.13 Management.

         (A) The  Borrowers  shall  cause  Manager to manage the  Properties  in
accordance  with the Management  Agreement.  The Borrowers  shall (i) diligently
perform and observe all of the material  terms,  covenants and conditions of the
Management  Agreement on the part of the  Borrowers to be performed and observed
and (ii)  promptly  notify  Lender of any notice to any  Borrower of any default
under the  Management  Agreement  of which it is aware.  If any  Borrower  shall
default in the  performance  or  observance  of any material  term,  covenant or
condition  of the  Management  Agreement  on the  part  of such  Borrower  to be
performed or observed beyond applicable notice and cure periods,  then,  without
limiting  Lender's  other rights or remedies  under this  Agreement or the other
Loan  Documents,  and without waiving or releasing such Borrower from any of its
obligations  hereunder or under the Management  Agreement upon five (5) Business
Days' notice to such Borrower,  Lender shall have the right,  but shall be under
no  obligation,  to pay any sums and to perform any act as may be appropriate to
cause  all the  material  terms,  covenants  and  conditions  of the  Management
Agreement  on the  part  of such  Borrower  to be  performed  or  observed.  The
Borrowers  shall cause any new  Manager to execute  and deliver a  subordination
agreement  reasonably  satisfactory  to  Lender  at the  time of  execution  and
delivery of any Management Agreement.

         (B) The Borrowers shall not surrender,  terminate (except in connection
with the enforcement of their rights  thereunder upon a default by Manager,  and
after  delivery of notice  thereof to Lender (but no consent of Lender  shall be
required for such termination)),  cancel, materially modify, renew or extend the
Management  Agreement  (except any renewal or extension  pursuant to the express
terms of the  Management  Agreement  as in  effect  on the date  hereof or other
renewal or extension of the Management  Agreement  with the existing  Manager on
terms no less  favorable  to the  Borrowers  than  those in  effect  on the date
hereof), or enter into

                                      -48-
<PAGE>
any other Management  Agreement with Manager or any other Person,  or consent to
the assignment by the Manager of its interest under the Management Agreement, in
each case  without the express  consent of Lender,  which  consent  shall not be
unreasonably  withheld and may be  conditioned  upon the Borrowers  delivering a
Rating Confirmation.  If at any time Lender consents to the appointment of a new
Manager,  such new Manager and the Borrowers  shall,  as a condition of Lender's
consent,  execute a subordination of management  agreement in the form delivered
in connection with the closing of the Loan.

         (C) Lender shall have the right to require the Borrowers to replace the
Manager with a Person chosen by Lender, upon the earliest to occur of any one or
more of the following events: (i) upon the occurrence and during the continuance
of an Event of Default; or (ii) thirty (30) days after notice from Lender to the
Borrowers  that  Manager  has  engaged  in fraud,  gross  negligence  or willful
misconduct  arising  from  or in  connection  with  its  performance  under  the
Management Agreement.

Section 5.14  Material  Agreements.  Except for Leases  complying  with the Loan
Documents and Management  Agreements  complying with the foregoing,  no Borrower
shall enter into or become obligated under any material agreement  pertaining to
any Property, including without limitation brokerage agreements, unless the same
may be terminated without cause and without payment of a penalty or premium,  on
not more than 30 day's prior written notice.

Section 5.15 Deposits;  Application of Receipts.  The Borrowers will deposit all
Receipts  from the  Property  into,  and  otherwise  comply  with,  the Accounts
established  from time to time hereunder.  Subject to Article VII hereof and the
Cash Management  Agreement,  the Borrowers shall promptly apply such Receipts to
the payment of all current and past due Operating Expenses, and to the repayment
of all sums  currently due or past due under the Loan  Documents,  including all
payments into the Reserves.

Section 5.16 Estoppel Certificates.

         (A) Within ten (10)  Business Days  following a request by Lender,  the
Borrowers  shall  provide  to  Lender  a  duly  acknowledged  written  statement
confirming (i) the amount of the outstanding principal balance of the Loan, (ii)
the terms of  payment  and  maturity  date of the Note,  (iii) the date to which
interest  has been paid,  (iv) to the  knowledge of the  Borrowers,  whether any
offsets or defenses  exist against the  Obligations,  and if any such offsets or
defenses are alleged to exist,  the nature thereof shall be set forth in detail,
and (v) that this Loan  Agreement,  the Note,  the  Mortgages and the other Loan
Documents are valid, legal and binding obligations of the Borrowers and have not
been modified or amended, or, if modified or amended,  giving particulars of any
such modification or amendment.

         (B) Within ten (10)  Business Days  following a written  request by the
Borrowers,  Lender shall  provide to the Borrowers  for  informational  purposes
only, a duly  acknowledged  written  statement  setting  forth the amount of the
outstanding  principal  balance of the Loan, the date to which interest has been
paid,  and whether  Lender has provided any Borrower with written  notice of any
Event  of  Default  which  remains  uncured.   Compliance  by  Lender  with  the
requirements of this Section shall be for informational  purposes only and shall
not be deemed to be a waiver of any rights or  remedies of Lender  hereunder  or
under any other Loan Document.

                                      -49-
<PAGE>
Section  5.17  Indebtedness.  So long as the  Loan is  outstanding,  no  Primary
Borrower Party will directly or indirectly create,  incur, assume,  guaranty, or
otherwise  become or remain  directly or  indirectly  liable with respect to any
Indebtedness except:

         (A) the Obligations;

         (B) (i)  unsecured  trade  payables not evidenced by a note and arising
out of  purchases  of goods or services in the  ordinary  course of business and
(ii)  Indebtedness  incurred in the  financing of  equipment  or other  personal
property used at any Property in the ordinary course of business,  provided that
(a) each such trade payable is payable not later than 60 days after the original
invoice  date and is not  overdue  by more  than 30 days  and (b) the  aggregate
amount of such  Indebtedness  relating to financing  of  equipment  and personal
property  referred  to in clause (ii) above  outstanding  does not, at any time,
exceed [two percent (2%) of the annual Gross Revenues from any Property].  In no
event  shall any  Indebtedness  other than the Loan be  secured,  in whole or in
part, by any Property or any portion thereof or interest therein;

         (C) tenant  improvement  obligations  (or allowances  therefor) due and
payable  by any  Borrower  pursuant  to the  Leases  and  amounts  due under the
Management Agreement; and

         (D) provided  that no Event of Default has occurred and is  continuing,
Affiliates of the Borrowers (such  Affiliates,  collectively,  the  "Subordinate
Borrower")  may obtain  from a lender  (the  "Subordinate  Lender")  one or more
subordinate loans (collectively, the "Subordinate Loan") not secured by deeds of
trust or  mortgages  on the  Property  or any  other  Liens  on any  Collateral,
provided that: (i) such  Subordinate Loan shall be due and payable in full on or
before  the  Maturity  Date;  (ii)  the  aggregate   principal  amount  of  such
Subordinate  Loan,  together with the outstanding  principal amount of the Loan,
shall at no time exceed an amount  equal to 75% of the then  current fair market
value of the Properties (as indicated in current independent appraisals prepared
by a state certified appraiser,  and in form,  reasonably acceptable to Lender);
(iii)  the  Debt  Service   Coverage  Ratio   calculated   based  upon  (1)  the
Underwritable  Cash Flow for the twelve (12) month period then ended and (2) the
aggregate principal and interest due under the Loan and the Subordinate Loan for
the succeeding  twelve (12) month period shall not be less than 1.25 to 1.0; and
(iv) the following conditions are satisfied:

               (a) The  Subordinate  Loan will be evidenced by a promissory note
in favor of the  Subordinate  Lender  and, if  applicable,  will be secured by a
pledge agreement  encumbering direct or indirect  ownership  interests in one or
more of the Borrowers (but in no event shall the Subordinate  Loan be secured by
a Lien on any Property or any other Collateral for the Loan) and UCC-1 financing
statements,  each  of such  documents  to be in form  and  substance  reasonably
acceptable to Lender (such  documents  together with any and all other documents
and agreements  evidencing and securing the  Subordinate  Loan, as amended,  the
"Subordinate Loan Documents").

               (b) The Subordinate Lender will deliver to Lender a subordination
and  intercreditor  agreement in form and substance  reasonably  satisfactory to
Lender providing, among other things, that:

                                      -50-
<PAGE>
                  (1)  the  Subordinate   Loan  Documents,   any  Liens  created
thereunder and all rights of the Subordinate Lender thereunder will be expressly
subject and  subordinate  to the terms,  covenants  and  conditions  of the Loan
Documents,  the Liens created and additional  advances made thereunder,  and any
and all  amendments  or  modifications  thereto,  including  any  relating  to a
restructuring or refinancing of the Obligations;

                  (2) The  Subordinate  Loan shall be subordinate  and junior in
right and time of  payment  to  payment  of  principal,  interest  and all other
amounts  due under the Loan  Documents;  provided,  however,  that so long as no
Event of Default shall have occurred and be continuing, the Subordinate Borrower
(or its Affiliates)  may make payment of amounts due under the Subordinate  Loan
Documents  to the  extent of any  amounts  distributed  to the  Borrowers  under
Section 3.3 of the Cash Management Agreement;

                  (3) in the event of any default beyond applicable cure periods
under the Subordinate Loan Documents,  provided that (x) no Event of Default has
occurred and is continuing  hereunder,  (y) Subordinate  Lender has delivered to
Lender and the Rating  Agencies a  substantive  non-consolidation  opinion  with
respect to the Borrowers  and the new holder of any  ownership  interests in any
Borrower,  in form and substance  acceptable to Lender and the Rating  Agencies,
and (z) Subordinate Lender has delivered prior written notice thereof to Lender,
Subordinate Lender may enforce its remedies under the Subordinate Loan Documents
(including  foreclosure of any ownership  interests in the Borrowers  pledged to
Subordinate Lender thereunder);

                  (4) the  Subordinate  Lender  will send  Lender  copies of all
default notices under the Subordinate Loan Documents;

                  (5)  the  Subordinate  Lender  will  covenant  not  to  file a
petition  commencing any proceeding seeking to liquidate or adjudicate  Borrower
as  bankrupt or  insolvent  and shall waive any right to file any motion or take
any action in any such  bankruptcy  or  insolvency  proceeding  of any  Borrower
commenced by any Borrower or any other Person; and

                  (6) the  Subordinate  Lender will not assign or  transfer  the
Subordinate  Loan or the  Subordinate  Loan Documents or any portion  thereof or
interest  therein  without  the prior  written  consent of Lender and the Rating
Agencies.

               (c) The Borrowers shall deliver to Lender prior to obtaining such
Subordinate Loan a Rating  Confirmation  from each applicable Rating Agency with
respect to such Subordinate Loan.

Section 5.18 Liens and Related  Matters.  The  obligations  of Borrower  Parties
under this Section are in addition to and not in limitation of their obligations
under Article XI herein. So long as the Loan is outstanding:

         (A) No Liens.  No Primary  Borrower  Party shall directly or indirectly
create,  incur,  assume or permit  to exist any Lien on or with  respect  to the
Property,  any other Collateral or any direct or indirect  ownership interest in
any Borrower,  except Permitted Encumbrances and with

                                      -51-
<PAGE>
respect to the encumbrance of any ownership interest in any Borrower,  except as
permitted in connection  with any  Subordinate  Loan in accordance  with Section
5.17 above.

         (B) No Negative Pledges.  No Primary Borrower Party shall enter into or
assume any agreement (other than the Loan Documents) prohibiting the creation or
assumption  of any Lien upon its  properties  or  assets,  whether  now owned or
hereafter  acquired except as permitted in connection with any Subordinate  Loan
in accordance with Section 5.17 above.

Section 5.19 Contingent Obligations. No Primary Borrower Party shall directly or
indirectly  create  or  become  or be  liable  with  respect  to any  Contingent
Obligation  except  Contingent  Obligations  existing  on the  Closing  Date and
described in Schedule 4.4.

Section 5.20 Restriction on Fundamental  Changes.  Except as otherwise expressly
permitted  under  this Loan  Agreement  (or with the prior  written  consent  of
Lender):

         (A) No Primary  Borrower Party shall,  or shall permit any other Person
to, (i) amend,  modify or waive any term or provision of such  Borrower  Party's
partnership   agreement,   certificate  of  limited  partnership,   articles  of
incorporation,  by-laws, articles of organization, operating agreement, or other
organizational  documents relating to any of the representations,  warranties or
covenants of Article IX of this Loan Agreement or this Section 5.20 or any other
material term or provision of such  Borrower  Party's  organizational  documents
unless  required by law; or (ii)  liquidate,  wind-up or dissolve  such Borrower
Party.

         (B) No Primary  Borrower  Party  shall,  nor permit or suffer any other
Person on its behalf, to (i) issue, sell,  assign,  pledge,  convey,  dispose or
otherwise encumber any stock,  membership  interest,  partnership  interest,  or
other equity or  beneficial  interest in any Borrower or (ii) grant any options,
warrants,  purchase rights or other similar  agreements or  understandings  with
respect thereto.

         (C) No Primary  Borrower  Party shall  acquire by purchase or otherwise
all or any part of the  business  or assets  of, or stock or other  evidence  of
beneficial ownership of, any Person.

Section  5.21  Transactions  with  Related  Persons.  Except for fees payable to
Manager  under  the  Management  Agreement,  the  Borrowers  shall  not  pay any
management,  consulting,  director or similar fees to any Related  Person of any
Borrower  or to any  director  (other  than any  customary  fees of the  Outside
Director),  officer or employee of Borrower. The Borrowers shall not directly or
indirectly  enter  into or  permit  to  exist  any  transaction  (including  the
purchase,  sale,  lease or exchange  of any  property  or the  rendering  of any
service) with any Related  Person of any Borrower or with any director,  officer
or employee of any Borrower Party, except transactions in the ordinary course of
and pursuant to the reasonable requirements of the business of the Borrowers and
upon fair and reasonable  terms which are no less favorable to any Borrower than
would be obtained in a comparable arm's length transaction with a Person that is
not a Related Person of any Borrower.  The Borrowers  shall not make any payment
or permit any payment to be made to any Related  Person of any Borrower  when or
as to any time when any Event of Default shall exist.

                                      -52-
<PAGE>
Section 5.22 ERISA.

         (A) No ERISA Plans. None of the Primary Borrower Parties will establish
any Employee Benefit Plan, Pension Plan or Multiemployer  Plan, or will commence
making  contributions  to (or become  obligated  to make  contributions  to) any
Employee Benefit Plan, Pension Plan or Multiemployer Plan.

         (B) Compliance  with ERISA.  The Borrowers shall not: (i) engage in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC; or
(ii)  permit  the   establishment   of  any  Employee   Benefit  Plan  providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which  establishment  or amendment  could result in liability to any Borrower or
any ERISA Affiliate or increase the obligation of any Borrower.

         (C) No Plan Assets. The Borrowers shall not at any time during the term
of this Loan  Agreement  become (1) an employee  benefit plan defined in Section
3(3) of ERISA  which is  subject  to ERISA,  (2) a plan as  defined  in  Section
4975(e)(1)  of the IRC  which is  subject  to  Section  4975 of the  IRC,  (3) a
"governmental  plan"  within the  meaning  of  Section  3(32) of ERISA or (4) an
entity  any of whose  underlying  assets  constitute  "plan  assets" of any such
employee  benefit  plan,  plan or  governmental  plan for purposes of Title I or
ERISA, Section 4975 of the IRC or any state statutes applicable to the Borrowers
regulating investments of governmental plans.

Section 5.23 Lender's  Expenses.  The Borrowers  shall pay, on demand by Lender,
all  reasonable  expenses,   charges,   costs  and  fees  (including  reasonable
attorneys' fees and expenses) in connection with the negotiation, documentation,
closing, administration,  servicing, enforcement interpretation,  and collection
of the Loan and the Loan Documents,  and in the  preservation  and protection of
Lender's rights hereunder and thereunder.  Without  limitation of the foregoing,
the Borrowers shall pay all costs and expenses,  including reasonable attorneys'
fees,  incurred by Lender in any case or proceeding under Title 11 of the United
States  Code  (or any law  succeeding  or  replacing  any of the  same).  At the
Closing,  Lender is authorized to pay directly from the proceeds of the Loan any
or all of the foregoing expenses then or theretofore incurred.

Section 5.24 Tenant  Estoppels.  Upon  request by Lender,  the  Borrowers  shall
exercise  commercially  reasonable  efforts to obtain and  deliver,  in form and
substance  reasonably  satisfactory  to  Lender,  estoppel  certificates  and/or
subordination   agreements  from  tenants  from  which   satisfactory   estoppel
certificates and/or subordination agreements were not obtained prior to Closing.
The failure of the Borrowers to obtain any such additional estoppel certificates
or  subordination  agreements  after  exercising  such  commercially  reasonable
efforts shall not be a default hereunder.

                                   ARTICLE VI
                                    RESERVES

Section 6.1 Security Interest in Reserves; Other Matters Pertaining to Reserves.

         (A) Each  Borrower  hereby  pledges,  assigns  and  grants  to Lender a
security interest in and to all of such Borrower's right,  title and interest in
and to the  Reserves,  as security  for payment  and  performance  of all of the
Obligations  hereunder  and  under the Note and the other

                                      -53-
<PAGE>
Loan Documents.  The Reserves  constitute  Account Collateral and are subject to
the security  interest in favor of Lender  created  herein and all provisions of
this  Loan  Agreement  and  the  other  Loan  Documents  pertaining  to  Account
Collateral.

         (B) In addition to the rights and remedies  provided in Article VII and
elsewhere herein, upon the occurrence of any Event of Default, Lender shall have
all rights and remedies pertaining to the Reserves as are provided for in any of
the Loan Documents or under any applicable law.  Without limiting the foregoing,
upon and at all times after the  occurrence  and during the  continuance  of any
Event  of  Default,  Lender  in its sole and  absolute  discretion,  may use the
Reserves (or any portion thereof) for any purpose,  including but not limited to
any  combination  of the  following:  (i)  payment  of  any  of the  Obligations
including  the  Prepayment  Consideration  applicable  upon such payment in such
order as Lender may determine in its sole discretion;  provided,  however,  that
such application of funds shall not cure or be deemed to cure any default;  (ii)
reimbursement  of  Lender  for  any  losses  or  expenses  (including,   without
limitation,  reasonable  legal  fees)  suffered  or incurred as a result of such
default;  (iii) payment for the work or obligation  for which such Reserves were
reserved or were required to be reserved;  and (iv)  application of the Reserves
in connection with the exercise of any and all rights and remedies  available to
Lender at law or in equity or under this Loan  Agreement  or  pursuant to any of
the other Loan Documents.

Section 6.2 Funds Deposited with Lender.

         (A)  Interest,  Offsets.  Except only as expressly  provided  otherwise
herein,  all funds of the Borrowers  which are deposited with Lender as Reserves
hereunder shall be held by Lender in one or more Permitted  Investments.  Lender
is  authorized  to commingle  any of the  Reserves  with each other and with any
other funds held by Lender.  All interest which accrues on the Reserves shall be
taxable to the  Borrowers and shall be added to and disbursed in the same manner
and  under the same  conditions  as the  principal  sum on which  said  interest
accrued.  Additional  provisions  pertaining  to  investments  are set  forth in
Article VII.

         (B) Funding at Closing.  The  Borrowers  shall  deposit with Lender the
amounts necessary to fund each of the Reserves as set forth below. Deposits into
the Reserves at Closing may occur by deduction  from the amount of the Loan that
otherwise would be disbursed to the Borrowers, followed by prompt deposit of the
same into the applicable  Sub-Account of the Central  Account in accordance with
the Cash Management Agreement.  Notwithstanding such deductions,  the Loan shall
be deemed for all purposes to be fully disbursed at Closing.

Section  6.3  Impositions  and  Insurance  Reserve.  On the  Closing  Date,  the
Borrowers  shall  deposit  with  Lender  (or such  agent of Lender as Lender may
designate  in writing to the  Borrowers  from time to time)  $4,083,300.04  and,
pursuant to the Cash Management Agreement,  the Borrowers shall deposit monthly,
on the first day of each calendar month commencing with February 1, 2001, 1/12th
of the annual  charges (as reasonably  estimated by Lender) for all  Impositions
and,  to the extent such  amounts are  required  to the  escrowed  hereunder  as
provided  below,  Insurance  Premiums  payable  with  respect to the  Properties
hereunder (said funds, together with any interest thereon and additions thereto,
the  "Impositions  and Insurance  Reserve").  The initial  amount of the monthly
deposit to be made to the Impositions  and Insurance  Reserve from and after the
date hereof is  $693,659.79.  The  Borrowers  shall also

                                      -54-
<PAGE>

deposit with Lender on demand,  to be added to and included within such reserve,
a sum of money which Lender  reasonably  estimates,  together  with such monthly
deposits,  will be  sufficient  to make the payment of each such charge at least
thirty (30) days prior to the date  initially  due. The Borrowers  shall provide
Lender  with  bills and all other  documents  necessary  for the  payment of the
foregoing  charges  at least  thirty  (30) days  prior to the date on which each
payment  shall first become due. So long as (i) no Event of Default has occurred
and is continuing,  (ii) the Borrowers  have provided  Lender with the foregoing
bills and other  documents in a timely manner,  and (iii)  sufficient  funds are
held by Lender for the payment of the  Impositions  and  Insurance  Premiums (if
applicable)  relating to each of the Properties,  Lender shall pay said items or
disburse to the  Borrowers  from such  Reserve  amounts  sufficient  to pay said
items.  Notwithstanding  the  foregoing  or anything to the  contrary  contained
herein or in the other Loan  Documents,  the Borrowers  shall not be required to
deposit  Insurance  Premiums in the Impositions and Insurance Reserve unless and
until (x) any Borrower fails to maintain any of the insurance  coverage required
under Section 5.4 hereof, (y) the Debt Service Coverage Ratio for the Properties
for any twelve (12) month  period shall fall below 1.25:1 or (z) any other Event
of Default shall occur hereunder;  whereupon the Borrowers shall  immediately be
required to commence and  continue to escrow  Insurance  Premiums in  accordance
with this Section 6.3 for the remainder of the term of the Loan.

Section 6.4 Replacement Reserve.  Pursuant to the Cash Management Agreement, the
Borrowers shall deposit with Lender (or such agent) monthly, on the first day of
each calendar month commencing with February 1, 2001, $53,854 for the purpose of
creating a reserve  for  Capital  Expenditures  in  accordance  with the Capital
Expenditure  Budget  then in effect  (said  funds,  together  with any  interest
thereon and additions thereto, the "Replacement  Reserve").  The funds contained
in the Replacement Reserve shall be utilized by the Borrowers solely for Capital
Expenditures  performed  during  the  term of the  Loan in  accordance  with the
Capital Expenditure Budget (as amended from time to time) for each Property, and
shall not be used by any Borrower  for  purposes for which any other  Reserve is
established.  Within  ten (10) days after  written  request  from any  Borrower,
Lender  shall  direct  the  Central  Account  Bank to  disburse  funds  from the
Replacement  Reserve to pay for costs that have been  incurred by such  Borrower
for such  Capital  Expenditures,  provided  that (i) no  Event  of  Default  has
occurred and is  continuing,  (ii) such  Borrower  shall  provide to Lender such
documentation   and   certifications   as  Lender  may  reasonably   request  to
substantiate  the requirement for and  entitlement to such  disbursement,  (iii)
such Borrower shall provide Lender with all invoices, receipts, lien waivers and
other documentation of lawful and workmanlike progress or completion,  lien-free
status, and availability of sufficient funds, all as may be reasonably requested
by Lender and Lender may require,  at such Borrower's  expense, an inspection of
the  subject   Property  and/or  a  certificate  of  completion  by  a  licensed
independent architect approved by Lender.

Section 6.5 Hazardous Materials  Remediation  Reserve. At Closing, the Borrowers
shall  reserve from the  proceeds of the Loan and shall  deposit with Lender (or
such agent of Lender as Lender may  designate in writing from time to time),  an
amount  equal to $8,125  (said funds,  together  with any  interest  thereon and
additions thereto,  the "Hazardous Materials  Remediation  Reserve") for certain
work related to Hazardous  Materials at certain  Properties  as indicated in the
Environmental  Reports or the  property  condition  reports for such  Properties
prepared  and  delivered  prior  to  the  Closing  and  as  such  work  is  more
particularly  described on Schedule 6.5 (the "Environmental  Work").  Within six
(6) months after the Closing,  the

                                      -55-
<PAGE>
Borrowers  shall  complete such  Environmental  Work and shall provide to Lender
such  closure  reports,   no-further-action   letters,  and  other  evidence  of
compliance with law as Lender may reasonably require. The funds contained in the
Hazardous  Materials  Remediation  Reserve  shall be utilized  by the  Borrowers
solely  for  performance  of the  Environmental  Work  in  accordance  with  the
Environmental  Reports,  and shall not be used by the Borrowers for purposes for
which  any  other  Reserve  is  established.  Upon  written  application  of any
Borrower,  such Borrower shall be entitled to draw upon the Hazardous  Materials
Remediation  Reserve to pay for costs that have been  incurred by such  Borrower
for such Environmental  Work, provided that (i) no Event of Default has occurred
and is continuing, (ii) such Borrower shall provide to Lender such documentation
and  certifications  as  Lender  may  reasonably  request  to  substantiate  the
requirement for and entitlement to such disbursement,  (iii) such Borrower shall
provide Lender with all invoices, receipts, lien waivers and other documentation
of  lawful  and  workmanlike  progress  or  completion,  lien-free  status,  and
availability of sufficient funds, all as may be reasonably  requested by Lender,
and (iv) such Borrower  shall provide  Lender such evidence as may be reasonably
satisfactory to Lender that,  after payment of such draw, the funds remaining in
such Reserve shall be sufficient to pay for the remainder of such  Environmental
Work. Subject to the foregoing conditions,  the such Borrowers shall be entitled
to draw any remaining  balance in the Hazardous  Materials  Remediation  Reserve
when all such Environmental Work is complete to Lender's reasonable satisfaction
and is paid for.

                                  ARTICLE VII
                DEPOSIT ACCOUNTS/CENTRAL ACCOUNT/CASH MANAGEMENT

Section 7.1 Establishment of Deposit Accounts and Central Account.

         (A) Deposit  Accounts.  On or before the Closing Date,  pursuant to the
terms of the Cash  Management  Agreement,  the  Borrowers  shall  establish  and
maintain,  at the Central  Account Bank,  Eligible  Accounts each in the name of
Lender, as secured party hereunder,  to serve as the "Deposit  Accounts" for the
respective  Properties  (said  accounts,  and  any  accounts  replacing  same in
accordance  with  this  Loan  Agreement  and  the  Cash  Management   Agreement,
collectively,  the "Deposit Accounts").  The Deposit Accounts shall be under the
sole dominion and control of Lender (which dominion and control may be exercised
by  Servicer);  and except as expressly  provided  hereunder  and/or in the Cash
Management  Agreement,  the Borrowers  shall have no rights to control or direct
the investment or payment of funds therein.

         (B) Central  Account.  On or before the Closing  Date,  pursuant to the
terms of the Cash  Management  Agreement,  the  Borrowers  shall  establish  and
maintain,  at the Central  Account Bank, an Eligible  Account in the name of the
Lender,  as secured party  hereunder,  to serve as the "Central  Account"  (said
account,  and any  account  replacing  the same in  accordance  with  this  Loan
Agreement and the Cash Management Agreement,  the "Central Account") The Central
Account shall be under the sole  dominion and control of Lender (which  dominion
and control may be exercised  by  Servicer);  and except as  expressly  provided
hereunder and/or in the Cash Management  Agreement,  the Borrowers shall have no
rights to control or direct the investment or payment of funds  therein.  Lender
may elect to change  any  financial  institution  in which any  Deposit  Account
and/or the Central  Account shall be  maintained.  The Central  Account shall be
deemed to contain such  sub-accounts  as Lender may designate  ("Sub-Accounts"),
which may be  maintained  as separate  ledger  accounts and need not be separate

                                      -56-
<PAGE>
Eligible  Accounts.  The  Sub-Accounts  shall  include  the  following  as  more
particularly described in the Cash Management Agreement:

               (i) "Debt Service  Sub-Account" shall mean the Sub-Account of the
Central  Account  established  for the  purposes of  reserving  for  payments of
principal  and  interest  and other  amounts due under the Loan  Documents  (but
without duplication of amounts covered under item (ii) below); and

               (ii) "Reserve  Sub-Accounts"  shall mean the  Sub-Accounts of the
Central  Account  established  for the purpose of holding  funds in the Reserves
including:  (a) the "Imposition and Insurance Reserve Sub-Account";  and (b) the
"Replacement Reserve Sub-Account".

Section 7.2 Flow of Funds.

         (A) Deposit of Receipts into the Deposit Accounts; Transfers to Central
Account.  The  Borrowers  shall direct (i) all tenants  under the Leases at each
Property  to pay all  Rents  thereunder  directly  into the  respective  Deposit
Account for such Property and (ii) any and all other Receipts  (including  Rents
that are not paid into the Deposit Accounts in accordance with the foregoing) to
be deposited  promptly  into the Central  Account and in no event later than two
(2) Business Days after the same are paid to or for the benefit of any Borrower.
To the extent that any Borrower or any Person on any Borrower's behalf holds any
Receipts,  whether in accordance  with this Loan  Agreement or  otherwise,  such
Borrower shall be deemed to hold the same in trust for Lender for the protection
of the interests of Lender  hereunder and under the Loan Documents.  Pursuant to
the Cash  Management  Agreement,  the Central  Account Bank shall be required to
transfer all available funds on deposit in the Deposit Accounts on each Business
Day of each calendar month from the Deposit Accounts to the Central Account.

         (B)  Application  of Funds in  Central  Account.  Funds in the  Central
Account shall be allocated to the  Sub-Accounts (or paid, as the case may be) in
accordance with the Cash Management Agreement.

Section 7.3 Application of Funds After Event of Default. If any Event of Default
shall occur and be continuing,  then notwithstanding anything to the contrary in
this Section or elsewhere,  Lender shall have all rights and remedies  available
under  applicable law and under the Loan  Documents.  Without  limitation of the
foregoing,  for so long as an Event of Default exists,  Lender may apply any and
all funds in the Accounts  against all or any portion of any of the Obligations,
in any order.

Section 7.4 Holdback Account; Release of Funds.

         (A) Holdback Account.  Pursuant to the Cash Management  Agreement,  the
Borrowers  shall  jointly  open and  maintain  at the  Central  Account  Bank an
interest  bearing  Eligible  Account  in the name of Lender,  as  secured  party
hereunder to serve as the "Holdback  Account" (the "Holdback  Account").  On the
Closing Date, an amount equal to $15,000,000 (such amount, together with any and
all interest accrued thereon, the "Holdback Amount") shall be deposited into the
Holdback  Account from the proceeds of the Loan.  The Holdback  Account shall at
all times be an Eligible  Account.  Subject to the  provisions of Section 7.4(B)
below,  the

                                      -57-
<PAGE>
Borrowers shall have no right of withdrawal from the Holdback  Account,  and the
Holdback  Account  shall be under the sole dominion and control of Lender (which
dominion and control may be exercised by Servicer).

         (B) Conditions Precedent to Release of Funds from Holdback Account. The
Borrowers shall not be entitled to receive funds from the Holdback Account until
the following conditions shall have been satisfied:

               (i) No Event of Default shall have occurred and be continuing.

               (ii) The Indiana  Avenue  Borrower  shall have entered into three
(3) Leases (the "New GSA Leases") with the General Services  Administration,  an
agency of the federal government of the United States of America (the "GSA"), or
another  applicable agency or  instrumentality  of the federal government of the
United States of America,  covering the following premises at the Indiana Avenue
Property:  (a)  approximately  59,509  square  feet  presently  covered by Lease
#GS-11B-00091   (GSA-Judiciary)   (such  space,  the  "Judiciary  Space");   (b)
approximately  12,598  square  feet  presently  covered  by Lease  #GS-11B-10295
(GSA-DOJ  Childcare  Center)  (such  space,  the  "Childcare  Space");  and  (c)
approximately  16,648  square  feet  presently  covered  by Lease  #GS-11B-00154
(GSA-United  States  Court of  Veterans  Appeal)  (such  space,  the "VA Space";
together with the Childcare  Space, the "Other GSA Space") (the foregoing Leases
in clauses  (a)-(c)  above,  the "Existing GSA Leases;" and the above  described
premises demised  thereunder,  "GSA Premises");  and the Indiana Avenue Borrower
shall have delivered to Lender true and correct  executed  copies of the New GSA
Leases.

               (iii) The term of each of such New GSA Leases, the fixed rent and
additional rent payable  thereunder and all other material terms of such New GSA
Leases shall be on  substantially  the same economic  terms and not otherwise be
materially  less  favorable to the Indiana  Avenue  Borrower  than the terms set
forth in the drafts of such New GSA Leases delivered to Lender prior to the date
hereof.

               (iv)  Each of the New  GSA  Leases  shall  be in full  force  and
effect;  no defaults by the GSA or the Indiana Avenue Borrower shall exist under
any New GSA Lease;  the GSA shall have  accepted  possession of the GSA Premises
and be in occupancy thereof;  and the GSA shall have commenced paying rent under
each of the New GSA Leases.

               (v)  With  respect  to each of the New GSA  Leases,  the  Indiana
Avenue Borrower shall have executed and/or delivered to Lender (a) an Assignment
of U.S.  Government  Contract;  (b) a Notice of Assignment which shall have been
duly executed by the GSA; (c) a Novation  Agreement  between HUB Realty Funding,
Inc. and the Indiana Avenue  Borrower which shall have been duly executed by the
GSA (or a supplemental  lease agreement or other amendment of the applicable New
GSA Lease which in  Lender's  sole good faith  opinion has the same  substantive
effect as a Novation Agreement);  and (d) a Statement of Lease, duly executed by
the  GSA,  each of the  foregoing  documents  in form and  substance  reasonably
acceptable to Lender.

                                      -58-
<PAGE>
               (vi) The Borrowers shall pay all reasonable  out-of-pocket  costs
and expenses  (including,  without  limitation,  reasonable  attorney's fees and
disbursements) incurred by the Lender and/or the Servicer in connection with the
review of the New GSA Leases and the GSA Documents and release of funds from the
Holdback Account.

Promptly after receipt of written request for release of funds from the Holdback
Account from the Indiana Avenue Borrower and Lender's determination (in its sole
good faith  discretion)  that each of the above  conditions have been satisfied,
Lender shall deliver notice to the Central  Account Bank to release the Holdback
Amount, to (or at the direction of) the Indiana Avenue Borrower.

         (C) Failure to Satisfy Conditions to Release of Holdback Amount. In the
event that the Indiana  Avenue  Borrower shall fail to satisfy the conditions to
release of the  Holdback  Amount  under  Section  7.4(B) and the GSA vacates the
Judiciary  Space,  Lender shall release  portions of the Holdback  Amount to the
Indiana Avenue Borrower as it relets the GSA Premises upon the terms and subject
to the conditions of Section 7.4(D).

         (D) Release of Holdback Amount Upon Reletting of GSA Space.  Subject to
the terms and conditions hereinafter set forth, Lender shall release portions of
the Holdback  Amount to the Indiana Avenue Borrower as it enters into new Leases
covering all or a portion of the Judiciary  Space  provided that (i) no Event of
Default shall have occurred and be continuing,  (ii) the Indiana Avenue Borrower
shall have delivered an executed copy of such Lease to Lender, which Lease shall
have been approved by Lender in accordance  with the  provisions of Section 5.12
hereof (whether or not such Lease  constitutes a Major Lease),  (iii) the tenant
under such Lease shall have accepted  possession of the premises covered by such
Lease and be paying rent thereunder and (iv) such tenant shall have executed and
delivered to Lender a tenant estoppel  certificate with respect to such space in
form and  substance  reasonably  acceptable  to  Lender.  In the event  that the
Indiana Avenue  Borrower shall enter into any Lease covering all or a portion of
the Judiciary  Space,  and provided  that, as of such date,  the GSA is still in
possession  of the Other GSA Space under the Existing GSA Leases (or any New GSA
Leases) which  Existing GSA Leases (or any New GSA Leases) are in full force and
effect,  then Lender shall release to the Indiana Avenue Borrower a portion (the
"Holdback  Release Amount") of the Holdback equal to the difference  between (a)
the product of (i) $15,000,000 and (ii) a fraction (1) the numerator of which is
the sum of the fixed  annual rent (in  accordance  with GAAP) for the first full
year of such Lease plus the fixed annual rent (in accordance  with GAAP) for the
first full year of each other Lease  previously  entered into in accordance with
the provisions of this Section 7.4(D)  covering  portions of the Judiciary Space
and (2) the  denominator of which is  $2,281,344,  minus (b) all portions of the
Holdback  Amount  previously  paid to the  Indiana  Avenue  Borrower  under this
Section  7.4(D).  In the  event  that as of the  date  that the  Indiana  Avenue
Borrower enters into any Lease (satisfying the conditions above) covering all or
any portion of the Judiciary Space the GSA is not in possession of the Other GSA
Space under the Existing  GSA Leases (or under any New GSA Lease),  the Holdback
Release  Amount shall be calculated as provided  above except that such Holdback
Release  Amount shall be decreased by an amount equal to the quotient of (a) the
positive  difference  (if any) between  $1,128,860 and the fixed annual rent (in
accordance  with GAAP) for the first full lease year of each Lease  entered into
by the Indiana Avenue Borrower in connection with the reletting of the Other GSA
Space and (b) .152. If the balance of the Holdback Account shall ever be reduced
below  $500,000,

                                      -59-
<PAGE>
provided that no Event of Default shall have  occurred and be  continuing,  upon
written request from the Indiana Avenue Borrower,  such remaining  balance shall
be promptly paid to the Indiana  Avenue  Borrower . The Borrowers  shall pay any
and all reasonable  costs and expenses  incurred by Lender,  including  Lender's
reasonable  legal fees and expenses,  in connection with considering any request
for release of funds from the Holdback Account pursuant to this Section 7.4(D).

                                  ARTICLE VIII
                          DEFAULT, RIGHTS AND REMEDIES

Section 8.1 Event of Default.

         "Event of Default" shall mean the occurrence or existence of any one or
more of the following:

         (A) Scheduled  Payments.  Failure of the Borrowers to pay any scheduled
payment amount when the same is due under this Loan Agreement,  the Note, or any
other Loan Documents (whether such amount is interest,  principal,  Reserves, or
otherwise); or

         (B) Other  Payments.  Failure of the  Borrowers  to pay any amount from
time to time  owing  under  this Loan  Agreement,  the Note,  or any other  Loan
Documents  (other than amounts  subject to the preceding  paragraph)  within ten
(10) days after written notice to the applicable Borrower that same is due; or

         (C) Breach of Reporting  Provisions.  Failure of any Borrower  Party to
perform or comply  with any term or  condition  contained  in Section  5.1 which
continues for a period of thirty (30) days after written notice; or

         (D) Breach of Provisions Regarding Insurance,  Transfers, Liens, Single
Purpose.  (i)  Failure to keep in force the  insurance  required  by Section 5.4
hereof or (ii) the  failure to comply  with any other  covenant  of Section  5.4
which failure under this clause (ii)  continues for five (5) Business Days after
notice from Lender.  The demolition or removal of, or except as permitted  under
Section  5.5(A),  the  making  of  any  Material  Alterations  to,  any  of  the
Improvements  without Lender's consent.  Breach or default under any of Sections
5.13(B),  5.17, 5.18, 5.19 or 5.20, Article IX or Section 11.1 hereof or Section
9 of any Mortgage; or

         (E) Breach of Warranty. Any representation,  warranty, certification or
other  statement  made by any Borrower  Party or  Affiliate  thereof in any Loan
Document  or in any  statement  or  certificate  at any time  given  in  writing
pursuant to or in  connection  with any Loan  Document is false in any  material
respect as of the date made and if such breach in the sole and absolute judgment
of Lender is capable of cure (it being  acknowledged that any material breach of
the  representations  and  warranties  under  Sections 4.3, 4.4, 4.7, 4.9, 4.13,
4.18,  4.25,  or 4.26 shall not be deemed  capable of cure),  such breach is not
cured within the applicable cure period provided under Section 8.1(F); or

         (F) Other Defaults Under Loan  Documents.  A default shall occur in the
performance  of or compliance  with any term contained in this Loan Agreement or
the other Loan  Documents and such default is not fully cured within thirty (30)
days after  receipt by the

                                      -60-
<PAGE>
applicable   Borrower  of  notice  from  Lender  of  such  default  (other  than
occurrences  described in other provisions of this Section 8.1 for which none or
a different  grace or cure period is  specified  or which  constitute  immediate
Events of Default);  provided however that if (i) the default is capable of cure
but with diligence  cannot be cured within such period of thirty (30) days, (ii)
such Borrower (or the applicable  Borrower  Party) has commenced the cure within
such thirty (30) day period and at all times after such commencement has pursued
such cure  diligently,  and (iii)  such  Borrower  delivers  to Lender  promptly
following demand (which demand may be made from time to time by Lender) evidence
satisfactory to Lender of the foregoing,  then such period shall be extended for
so long as is  reasonably  necessary  for such  Borrower in the  exercise of due
diligence  to cure such  default,  but in no event beyond the 90th day after the
original notice of default; or

         (G) Involuntary  Bankruptcy;  Appointment of Receiver, etc. (i) A court
enters a decree or order for relief with  respect to any Borrower  Party,  in an
Involuntary  Borrower Party  Bankruptcy,  which decree or order is not stayed or
other similar relief is not granted under any  applicable  federal or state law;
(ii) the  occurrence and  continuance  of any of the following  events for sixty
(60) days unless  dismissed or discharged  within such time:  (x) an Involuntary
Borrower Party Bankruptcy is commenced, (y) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer  having  similar  powers  over  any  Borrower  Party  or  over  all or a
substantial  part of its  property,  is  entered,  or (z) an  interim  receiver,
trustee or other  custodian  is  appointed  without the consent of any  Borrower
Party, for all or a substantial part of the property of such Person; or

         (H) Voluntary  Bankruptcy;  Appointment of Receiver,  etc. (i) An order
for relief is entered  with respect to any  Borrower  Party,  or any such Person
commences  a  voluntary  case  under  the  Bankruptcy  Code  or  any  applicable
bankruptcy,  insolvency  or other  similar law now or  hereafter  in effect,  or
consents  to the entry of an order for relief in an  involuntary  case or to the
conversion  of an  involuntary  case to a  voluntary  case under any such law or
consents to the  appointment of or taking  possession by a receiver,  trustee or
other  custodian for any Borrower Party or for all or a substantial  part of the
property of any Borrower Party; (ii) any Borrower Party makes any assignment for
the benefit of  creditors;  or (iii) the Board of Directors  or other  governing
body of any Borrower Party adopts any resolution or otherwise  authorizes action
to approve any of the actions referred to in this subsection 8.1(H); or

         (I) Bankruptcy Involving Ownership Interests or Property. Other than as
described in either of Subsections  8.1(G) or 8.1(H),  all or any portion of the
Collateral  becomes  property of the estate or subject to the automatic  stay in
any case or proceeding  under the Bankruptcy Code or any applicable  bankruptcy,
insolvency or other similar law now or hereafter in effect (provided that if the
same occurs in the context of an involuntary proceeding, it shall not constitute
an Event of Default if it is  dismissed  or  discharged  within  sixty (60) days
following its occurrence); or

         (J)  Solvency.  Any  Borrower  Party  ceases to be solvent or admits in
writing its inability to pay its debts as they become due; or

         (K) Judgment and Attachments. Any lien, money judgment, writ or warrant
of attachment, or similar process is entered or filed against any Borrower Party
or any of its assets,

                                      -61-
<PAGE>
which claim is not fully  covered by  insurance  (other than with respect to the
amount  of  commercially  reasonable  deductibles  permitted  hereunder),  could
reasonably  be  expected  to  have  a  Material   Adverse   Effect  and  remains
undischarged,  unvacated, unbonded or unstayed for a period of thirty (30) days;
or

         (L)  Injunction.  Any Borrower Party is enjoined,  restrained or in any
way  prevented  by the order of any court or any  administrative  or  regulatory
agency from conducting all or any material part of its business which injunction
could  reasonably be expected to have a Material  Adverse  Effect and such order
continues for more than sixty (60) days; or

         (M) Invalidity of Loan Documents.  This Loan Agreement, any Mortgage or
any Loan Document for any reason ceases to be in full force and effect or ceases
to be a legally valid, binding and enforceable obligation of any Borrower or any
Lien  securing  the  Obligations  shall,  in  whole  or in  part,  cease to be a
perfected first priority Lien, subject to the Permitted  Encumbrances (except in
any of the  foregoing  cases in  accordance  with the terms  hereof or under any
other Loan Document); or

         (N)  Cross-Default  with Other  Loan  Documents.  A default  beyond any
applicable grace periods shall occur under any of the other Loan Documents;

         (O) Default  under  Management  Agreement.  Any event of default on the
part of the  Borrowers  shall  occur  and be  continuing  under  the  Management
Agreement; or

         (P) Ground  Lease  Defaults.  Any  default by any  Borrower  beyond any
applicable  grace  periods  shall  occur  under any Ground  Lease or any actual,
attempted or purported surrender, termination,  modification or amendment of any
Ground Lease without Lender's consent.

If more than one of the foregoing  paragraphs  shall describe the same condition
or  event,  then  Lender  shall  have the  right to select  which  paragraph  or
paragraphs  shall apply. In any such case,  Lender shall have the right (but not
the  obligation)  to designate  the  paragraph or  paragraphs  which provide for
non-written  notice (or for no notice) or for a shorter  time to cure (or for no
time to cure).

Section 8.2 Acceleration and Remedies.

         (A) Upon the  occurrence  of any Event of Default  described  in any of
Subsections  8.1(G),  8.1(H),  or  8.1(I),  the unpaid  principal  amount of and
accrued  interest  and  fees  on  the  Loan  and  all  other  Obligations  shall
automatically become immediately due and payable,  without presentment,  demand,
protest,  notice of  intent  to  accelerate,  notice  of  acceleration  or other
requirements  of any kind,  all of which  are  hereby  expressly  waived by each
Borrower Party.  Upon and at any time after the occurrence of any other Event of
Default,  at the  option of Lender,  which may be  exercised  without  notice or
demand to anyone,  all or any  portion of the Loan and other  Obligations  shall
immediately become due and payable.

         (B) Upon the occurrence of an Event of Default,  all or any one or more
of the rights, powers, privileges and other remedies available to Lender against
the Borrowers under this Loan Agreement or any of the other Loan  Documents,  or
at law or in  equity,  may be  exercised  by

                                      -62-
<PAGE>
Lender  at any  time and from  time to  time,  whether  or not all or any of the
Obligations  shall be declared due and payable,  and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and  remedies  under any of the Loan  Documents  with  respect to any
Property.  Any such actions taken by Lender shall be cumulative  and  concurrent
and may be pursued independently,  singly, successively,  together or otherwise,
at such time and in such order as Lender may  determine in its sole  discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender  permitted by law, equity or contract or
as set  forth  herein or in the  other  Loan  Documents.  Without  limiting  the
generality of the  foregoing,  if an Event of Default is  continuing  (i) to the
fullest extent permitted by law, Lender shall not be subject to any "one action"
or  "election  of remedies"  law or rule,  and (ii) all liens and other  rights,
remedies or privileges  provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies  against the  Properties  and the
Mortgages  have  been  foreclosed,   sold  and/or  otherwise  realized  upon  in
satisfaction of the Obligations or the Obligations have been paid in full.

         (C)  Lender  shall  have  the  right  from  time to  time to  partially
foreclose  any  Mortgage  in any  manner  and for any  amounts  secured  by such
Mortgage  then due and payable as  determined  by Lender in its sole  discretion
including, without limitation, the following circumstances: (i) in the event the
Borrowers  default beyond any  applicable  grace period in the payment of one or
more  scheduled  payments of principal  and  interest,  Lender may foreclose any
Mortgage to recover such delinquent payments, or (ii) in the event Lender elects
to accelerate less than the entire  outstanding  principal  balance of the Loan,
Lender may foreclose any Mortgage to recover so much of the principal balance of
the Loan as Lender may  accelerate  and such other sums secured by such Mortgage
as Lender may  elect.  Notwithstanding  one or more  partial  foreclosures,  the
Properties  shall  remain  subject to the  Mortgages  to secure  payment of sums
secured by the Mortgages and not previously recovered.

         (D) Lender shall have the right from time to time to sever the Note and
the other Loan  Documents into one or more separate  notes,  mortgages and other
security  documents in such  denominations as Lender shall determine in its sole
discretion  for purposes of  evidencing  and  enforcing  its rights and remedies
provided hereunder.  The Borrowers shall execute and deliver to Lender from time
to time,  promptly after the request of Lender,  a severance  agreement and such
other  documents  as  Lender  shall  request  in order to effect  the  severance
described  in the  preceding  sentence,  all in form  and  substance  reasonably
satisfactory to Lender. Each Borrower hereby absolutely and irrevocably appoints
Lender as its true and lawful  attorney,  coupled with an interest,  in its name
and stead to make and execute all documents necessary or desirable to effect the
aforesaid  severance upon the occurrence and during the  continuance of an Event
of Default,  such  Borrower  ratifying  all that its said  attorney  shall do by
virtue  thereof;  provided,  however,  Lender shall not make or execute any such
documents  under such power until three (3) days after  notice has been given to
the  Borrowers  by Lender of Lender's  intent to exercise  its rights under such
power.

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

                                      -63-
<PAGE>
         (F) The  rights,  powers and  remedies of Lender  under this  Agreement
shall be cumulative and not exclusive of any other right,  power or remedy which
Lender may have  against the  Borrowers  pursuant to this Loan  Agreement or the
other Loan  Documents,  or existing at law or in equity or  otherwise.  Lender's
rights, powers and remedies may be pursued singly, concurrently or otherwise, at
such time and in such order as Lender may determine in Lender's sole discretion.
No delay or omission to exercise  any remedy,  right or power  accruing  upon an
Event  of  Default  shall  impair  any such  remedy,  right or power or shall be
construed  as a waiver  thereof,  but any  such  remedy,  right or power  may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one  Default  or Event of Default  with  respect  to any  Borrower  shall not be
construed  to be a waiver of any  subsequent  Default or Event of Default by any
Borrower or to impair any remedy, right or power consequent thereon.

Section 8.3 Performance by Lender.

         (A) If any  Borrower  Party  shall  fail to  perform,  or  cause  to be
performed,  any  covenant,  duty  or  agreement  contained  in any  of the  Loan
Documents  beyond any applicable  notice and cure period,  Lender may (but shall
have no  obligation  to) perform or attempt to perform  such  covenant,  duty or
agreement on behalf of such Borrower Party. In such event,  the Borrowers shall,
at the request of Lender,  promptly pay to Lender any amount reasonably expended
by Lender in such performance or attempted  performance,  together with interest
thereon at the Default Rate, from the date of such  expenditure  until paid. Any
amounts advanced or expended by Lender to perform or attempt to perform any such
matter shall be added to and included within the  indebtedness  evidenced by the
applicable  Note and shall be  secured  by all of the  Collateral  securing  the
applicable  Loan.  Notwithstanding  the foregoing,  it is expressly  agreed that
Lender shall not have any liability or responsibility for the performance of any
obligation  of the  Borrowers  under  this  Loan  Agreement  or any  other  Loan
Document.

         (B) Lender may cease or suspend  any and all  performance  required  of
Lender under the Loan Documents upon and during the  continuance of any Event of
Default.

                                   ARTICLE IX
               SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
                            WARRANTIES AND COVENANTS

Section 9.1 Applicable to Primary Borrower Parties.  Each Primary Borrower Party
hereby  jointly and  severally  represents,  warrants  and  covenants  as of the
Closing  Date and until  such  time as all  Obligations  are paid in full,  that
absent  express  advance  written  waiver from Lender,  which may be withheld in
Lender's sole discretion, such Primary Borrower Party:

         (A) does not own and will not own any assets  other  than its  Property
(including  incidental personal property necessary for the operation thereof and
proceeds  therefrom) or direct or indirect ownership  interests in the Borrowers
(the "Ownership Interests");

         (B) is not  engaged  and will not engage in any  business,  directly or
indirectly,  other than the ownership,  management and operation of its Property
or the Ownership Interests;

         (C) will not enter into any  contract or  agreement  with any  partner,
member,  shareholder,  trustee,  beneficiary,  principal  or  Affiliate  of  any
Borrower Party except upon terms

                                      -64-
<PAGE>
and conditions that are intrinsically  fair and  substantially  similar to those
that would be available on an  arms-length  basis with third  parties other than
such Affiliate;

         (D) has not incurred and will not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than (i) the
Obligations, (ii) subject to the terms and conditions of Section 5.17, unsecured
trade  payables  incurred in the ordinary  course of business of  operating  its
Property  and  Indebtedness  relating to  financing  of  equipment  and personal
property in the  ordinary  course of business  and (iii) any other  Indebtedness
expressly permitted hereunder or under the other Loan Documents;

         (E) has not made and will not make any loan or  advances  to any Person
(including any of its Affiliates);

         (F) is and  reasonably  expects  to  remain  solvent  and  pay  its own
liabilities,  indebtedness,  and  obligations  of any kind from its own separate
assets as the same shall become due;

         (G) has done or caused to be done and will do all things  necessary  to
preserve its existence;

         (H) shall  continuously  maintain its  existence and be qualified to do
business in all states  necessary to carry on its business  including  the state
where its Property is located (or, in the case of Member, if required by law, in
the states where each of the Properties are located);

         (I) will conduct and operate its business as  presently  conducted  and
operated;

         (J) will  maintain  books and records and bank  accounts  separate from
those  of  its  partners,  members,   shareholders,   trustees,   beneficiaries,
principals, Affiliates, and any other Person;

         (K) will be, and at all times will hold  itself out to the public as, a
legal entity  separate and distinct from any other Person  (including any of its
partners,  members,  shareholders,   trustees,  beneficiaries,   principals  and
Affiliates,  and any Affiliates of any of the same),  and not as a department or
division of any Person;

         (L) will  file  such tax  returns  with  respect  to  itself  as may be
required under applicable law;

         (M) has and  reasonably  expects to maintain  adequate  capital for the
normal  obligations  reasonably  foreseeable  in a  business  of  its  size  and
character and in light of its contemplated business operations;

         (N) will not enter into any transaction of merger or consolidation,  or
acquire by purchase or  otherwise  all or  substantially  all of the business or
assets of, or any stock or beneficial ownership of, any Person;

         (O) will not  commingle or permit to be  commingled  its funds or other
assets with those of any other Person;

                                      -65-
<PAGE>
         (P) has and will  maintain  its assets in such a manner  that it is not
costly or difficult to segregate,  ascertain or identify its  individual  assets
from those of any other Person;

         (Q) does not and will not hold  itself  out to be  responsible  for the
debts or  obligations  of any other Person  (except that each Borrower  shall be
jointly and  severally  liable for the  Obligations  as provided  under the Loan
Documents);

         (R) has not and will not guarantee or otherwise  become liable on or in
connection  with any  obligation of any other Person  (except that each Borrower
shall be jointly and severally  liable for the Obligations as provided under the
Loan Documents);

         (S) except for funds deposited into the Accounts in accordance with the
Loan Documents, shall not hold title to its assets other than in its name;

         (T)   shall   comply   with   all  of  the   assumptions,   statements,
certifications,  representations,  warranties and covenants regarding or made by
it contained in or appended to the  nonconsolidation  opinion delivered pursuant
hereto.

Section  9.2  Applicable  to Member  and the  Borrowers.  In  addition  to their
respective  obligations  under  Section 9.1,  each of the  Borrowers  and Member
hereby represents,  warrants and covenants as of the Closing Date and until such
time as all  Obligations  are paid in full,  that absent express advance written
waiver from Lender, which may be withheld in Lender's sole discretion:

         (A) Member  shall at all times act as the sole  shareholder  of each of
the Trust Borrowers and the sole member of each of the LLC Borrowers (except the
Cedars Borrower as to which the Cedars Member shall at all times act as the sole
member),  with all of the rights,  powers,  obligations and liabilities  thereof
under the trust agreements or operating  agreements,  as the case may be, of the
respective  Borrowers  and  shall  take any and all  actions  and do any and all
things  necessary  or  appropriate  to the  accomplishment  of the same and will
engage in no other business;

         (B) neither Member nor any Borrower shall, without the affirmative vote
of the Outside  Director,  institute  proceedings to be adjudicated  bankrupt or
insolvent;  consent to the institution of a bankruptcy or insolvency proceedings
against  it  or  any  Borrower;   file  a  petition  seeking,   or  consent  to,
reorganization  or relief under any applicable  federal or state law relating to
bankruptcy;  consent to the  appointment  of a receiver,  liquidator,  assignee,
trustee,  sequestrator (or other similar official) for itself or any Borrower or
a substantial  part of its or any Borrower's  property;  make any assignment for
the benefit of  creditors;  or admit in writing its  inability  to pay its debts
generally as they become due;

         (C) neither Member nor any Borrower shall, without the affirmative vote
of the  Outside  Director,  for  itself or for any  Borrower  (i)  liquidate  or
dissolve, in whole or in part; (ii) consolidate, merge or enter into any form of
consolidation with or into any other Person,  nor convey,  transfer or lease its
or any Borrower's  assets  substantially as an entirety to any Person nor permit
any Person to consolidate, merge or enter into any form of consolidation with or
into itself or any Borrower, nor convey, transfer or lease its or any Borrower's
assets  substantially  as

                                      -66-
<PAGE>
an  entirety  to any  Person;  and  (iii)  amend  any  provisions  of its or any
Borrower's  organizational  documents  containing  provisions  similar  to those
contained in this Article IX.

         (D) each  Borrower  and Member  shall  promptly  elect and at all times
maintain at least one independent  director or independent  manager (an "Outside
Director"),  as the case may be, who shall be  selected by Member (or the Cedars
Member),  or  the  sole  shareholder  of  Member,  respectively,  and  shall  be
reasonably  satisfactory  to Lender  and shall not have been at the time of such
individual's  appointment as Outside Director, and may not have been at any time
during  the  preceding  five  years  (except  solely by virtue of such  person's
serving as an independent  director or independent manager of one or more of the
other Borrowers,  Member and/or their respective  Affiliates (other than HRPT or
any Person directly or indirectly  controlling any Primary Borrower Party)), (i)
a shareholder, member or partner of, or an officer, director, paid consultant or
employee  of,  any  Borrower  or  any of its  shareholders,  members,  partners,
subsidiaries  or  Affiliates,  (ii) a customer,  supplier or creditor of, or any
Person that has provided any service in any form  whatsoever to, any Borrower or
Affiliate  of any  Borrower or any of their  respective  shareholders,  members,
partners, subsidiaries or Affiliates, (iii) a Person controlling or under common
control  with any such  shareholder,  director,  partner,  member,  supplier  or
customer,  or (iv) a member of the  immediate  family  of any such  shareholder,
member,  officer,  director,  partner,  employee,  supplier or customer. As used
herein, the term "control" means the possession,  directly or indirectly, of the
power to direct or cause the direction of  management  and policies of a Person,
whether  through  ownership  of  voting   securities  or  beneficial   ownership
interests, by contract or otherwise.

                                   ARTICLE X
                RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS

Section 10.1  Secondary  Market  Transactions  Generally.  Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and  restructure  all or any part of the Loan,  including
without limitation in multiple tranches,  as a wraparound loan, or for inclusion
in a  Securitization.  Lender  currently  anticipates  that  the  Loan  shall be
included in a  Securitization  which is a "Rule 144A"  offering or other private
rated  offering.  Without  limitation,  Lender shall have the right to cause the
Note and the Mortgages to be split into a first and a second  mortgage  loan, or
into a one or more loans secured by mortgages and by ownership  interests in the
Borrowers in whatever proportion Lender determines,  and thereafter to engage in
Secondary  Market   Transactions  with  respect  to  all  or  any  part  of  the
indebtedness and loan documentation. Each Borrower Party acknowledges that it is
the  intention  of the  parties  that  all or a  portion  of the  Loan  will  be
securitized  and that all or a portion  of the Loan will be rated by one or more
Rating  Agencies.  Each Borrower  Party  further  acknowledges  that  additional
structural  modifications may be required to satisfy issues raised by any Rating
Agencies.  As used herein,  "Secondary Market  Transaction" means any of (i) the
sale, assignment,  or other transfer of all or any portion of the Obligations or
the Loan Documents or any interest  therein to one or more  investors,  (ii) the
sale,  assignment,  or other transfer of one or more participation  interests in
the  Obligations  or Loan  Documents  to one or more  investors,  or  (iii)  the
transfer or deposit of all or any portion of the  Obligations  or Loan Documents
to or with one or more trusts or other entities which may sell  certificates  or
other instruments to investors evidencing an ownership interest in the assets of
such  trust or the right to  receive  income or  proceeds  therefrom  including,
without limitation, in connection with a Securitization.

                                      -67-
<PAGE>
Section 10.2 Cooperation; Limitations. Borrower Parties shall use all reasonable
efforts and cooperate  reasonably and in good faith with Lender in effecting any
such  restructuring or Secondary  Market  Transaction.  Such  cooperation  shall
include without limitation,  executing and delivering such reasonable amendments
to the Loan  Documents  and the  organizational  documents  of Primary  Borrower
Parties  as  Lender  may  reasonably  request,  provided  however  that  no such
amendment  shall modify (i) the interest rate payable  under the Note;  (ii) the
stated maturity date of the Note, (iii) the amortization of the principal amount
of the Note, (iv) any other material economic terms of the Obligations,  (v) the
non-recourse  provisions of the Loan or (vi) any provision,  the effect of which
would materially increase the Borrowers'  obligations or materially decrease the
Borrowers' rights under the Loan Documents.  Such cooperation also shall include
using  reasonable  efforts  to obtain  such  certificates  and  assurances  from
governmental  entities  and others as Lender may  reasonably  request.  Borrower
Parties  shall not be required  to provide  additional  collateral  that was not
initially  contemplated  by the  parties  to effect  any such  restructuring  or
Secondary Market Transaction after the Closing Date.  Borrower Parties shall not
be  required to pay any third  party  costs and  expenses  incurred by Lender in
connection with any such Secondary Market  Transaction  unless otherwise payable
by the Borrower Parties under this Loan Agreement or the other Loan Documents.

Section  10.3  Information.  At no  cost or  expense  to the  Borrower  Parties,
Borrower Parties shall provide such access to personnel and such information and
documents relating to Borrower Parties,  Manager,  the Properties and Collateral
and the business and  operations  of all of the  foregoing  and such opinions of
counsel (including  nonconsolidation  opinions) as Lender may reasonably request
or as any Rating Agency may request in connection with any such Secondary Market
Transaction  including,  without  limitation,   updated  financial  information,
appraisals,   market   studies,   environmental   reviews  (Phase  I's  and,  if
appropriate,  Phase II's),  property  condition  reports and other due diligence
investigations   together  with   appropriate   verification   of  such  updated
information and reports  through letters of auditors and consultants  and, as of
the closing date of the Secondary Market  Transaction,  updated  representations
and warranties  made in the Loan Documents and such  additional  representations
and warranties as Lender or the Rating Agencies may reasonably  require.  Within
ten (10) days after request by Lender,  SASMF or other counsel for the Borrowers
reasonably  satisfactory  to Lender,  shall provide an opinion of counsel to the
effect  that the  description  of the Loan and the  terms of the Loan  Documents
contained in the Disclosure Documents (hereinafter defined) and such other legal
matters  contained  therein as Lender may reasonably  require do not contain any
untrue  statement  of any  material  fact or omit to  state  any  material  fact
necessary to make the  statements  therein not misleading and if required by any
Rating  Agency or  reasonably  required by Lender,  SASMF or such other  counsel
shall provide  revisions or  "bringdowns"  to the opinions  delivered at Closing
(including  nonconsolidation  opinions),  or if  required  new  versions of such
opinions,  addressed to Lender, any trustee under any  Securitization  backed in
whole or in part by the Loan,  any Rating  Agency  that  assigns a rating to any
securities  in  connection  therewith  and any  investor  purchasing  securities
therein.  Lender  shall be  permitted  to share  all such  information  with the
investment  banking firms,  Rating Agencies,  accounting firms, law firms, other
third party advisory  firms,  potential  investors,  servicers and other service
providers  and  other  parties   involved  in  any  proposed   Secondary  Market
Transaction.   The  Borrowers  understand  that  any  such  information  may  be
incorporated  into any offering  circular,  prospectus,  prospectus  supplement,
private  placement  memorandum  or other  offering  documents  for any Secondary
Market  Transaction.  Lender and all of the aforesaid  third-party  advisors and
professional   firms

                                      -68-
<PAGE>
and investors shall be entitled to rely upon such information.  Without limiting
the foregoing, the Borrowers and Guarantor shall provide in connection with each
of  (i) a  preliminary  and a  final  private  placement  memorandum  or  (ii) a
preliminary and final  prospectus or prospectus  supplement,  as applicable (the
documents referred to in the foregoing clauses (i) and (ii),  collectively,  the
"Disclosure  Documents"),   an  agreement  certifying  that  the  Borrowers  and
Guarantor have examined such Disclosure  Documents  specified by Lender and that
each such Disclosure Document,  as it relates to the Borrowers,  Guarantor,  any
Affiliates, the Properties, Manager and all other aspects of the Loan, does not,
and  as to  information  provided  in  third  party  reports  of  engineers  and
environmental  consultants,  to each Borrower's and Guarantor's knowledge,  does
not, contain any untrue statement of a material fact or omit to state a material
fact  necessary  in order  to make  the  statements  made,  in the  light of the
circumstances  under which they were made,  not  misleading.  The  Borrowers and
Guarantor shall indemnify,  defend,  protect and hold harmless  Lender,  Merrill
Lynch,  Pierce,  Fenner & Smith  Incorporated  ("Merrill  Lynch"),  First  Union
National Bank ("FUNB") and their respective  Affiliates,  directors,  employees,
agents and each Person, if any, who controls Lender,  Merrill Lynch, FUNB or any
such Affiliate within the meaning of Section 15 of the Securities Act of 1993 or
Section 20 of the Securities Exchange Act of 1934, and any other placement agent
or  underwriter  with  respect  to  any   Securitization   or  Secondary  Market
Transaction from and against any losses, claims, damages, liabilities, costs and
expenses  (including,   without  limitation,   reasonable  attorneys'  fees  and
disbursements)  that  arise out of or are based  upon any  untrue  statement  or
alleged untrue  statement of any material fact  contained in any  information or
documents  furnished  by  the  Borrowers,   Guarantor  or  their  Affiliates  or
representative  or in any  representation  or  warranty  of any  Borrower  Party
contained  herein or in the other  Loan  Documents  or arise out of or are based
upon the omission or alleged  omission to state therein a material fact required
to be stated in such information or necessary in order to make the statements in
such information not materially  misleading.  Lender may publicize the existence
of the  Obligations in connection  with Lender's  Secondary  Market  Transaction
activities or otherwise.

Section 10.4 Additional Provisions. In any Secondary Market Transaction,  Lender
may transfer its obligations  under this Loan Agreement and under the other Loan
Documents (or may transfer the portion thereof  corresponding to the transferred
portion of the  Obligations),  and  thereafter  Lender  shall be relieved of any
obligations  hereunder and under the other Loan Documents arising after the date
of said  transfer  with respect to the  transferred  interest.  Each  transferee
investor shall become a "Lender" hereunder.

                                   ARTICLE XI
             RESTRICTIONS ON LIENS, TRANSFERS; RELEASE OF PROPERTIES

Section  11.1  Restrictions  on Transfer  and  Encumbrance.  Except as expressly
permitted in this Article XI or as otherwise expressly permitted under this Loan
Agreement  or in the other  Loan  Documents,  the  Borrowers  shall not cause or
suffer to occur or exist, directly or indirectly,  voluntarily or involuntarily,
by operation of law or otherwise, any sale, transfer,  mortgage, pledge, Lien or
encumbrance  (other than Permitted  Encumbrances)  of (i) all or any part of any
Property or any interest  therein,  or (ii) any direct or indirect  ownership or
beneficial  interest  in any  Borrower,  irrespective  of the number of tiers of
ownership, without the prior written consent of Lender.

                                      -69-
<PAGE>
Section 11.2  Transfers of Beneficial  Interests in  Borrowers.  For purposes of
this Section, a sale or transfer of a beneficial interest in a Borrower shall be
deemed to include, but is not limited to:

         (A) if a  Borrower  or any  general  partner  or  managing  member of a
Borrower is a corporation,  (i) the voluntary or involuntary  sale,  conveyance,
transfer  or pledge of a majority of such  corporation's  stock (or the stock of
any corporation directly or indirectly controlling such corporation by operation
of law or  otherwise)  or (ii) the creation or issuance of new stock,  in any of
the  foregoing   cases,  by  which  an  aggregate  of  more  than  49%  of  such
corporation's  stock  shall  be  vested  in a party or  parties  who are not now
stockholders;

         (B) if a  Borrower  or any  general  partner  or  managing  member of a
Borrower is a limited liability company, (i) the change,  removal or resignation
of a managing  member of such Borrower or such general partner or member or (ii)
the sale, conveyance, transfer or pledge of all or any portion of the membership
interests  of a  managing  member  (or for a  single  member  limited  liability
company,  the sole member) of such Borrower or such general  partner or managing
member  or any  profits  or  proceeds  relating  to  such  membership  interest;
provided,  however, that if a Borrower or any general partner or managing member
of  a  Borrower  is  a  single  member  limited  liability  company,  the  sale,
conveyance, transfer or pledge in the aggregate of not more than 49% of the sole
member's  interest in such Borrower or such general  partner or managing  member
shall not  constitute a sale or transfer  prohibited by this Section 11 provided
that such sale, conveyance,  transfer or pledge does not in the aggregate result
in a change of control of such  Borrower  or such  general  partner or  managing
member;

         (C) if a  Borrower,  or any  general  partner or  managing  member of a
Borrower,  is a limited  or  general  partnership,  (i) the  change,  removal or
resignation of a managing  general partner or managing partner or (ii) the sale,
conveyance,  transfer or pledge of all or any  portion of the general  partner's
interest of any general  partner or managing  partner or any profits or proceeds
relating to such partnership interest; or

         (D) if a  Borrower  or any  general  partner  or  managing  member of a
Borrower  is a limited  partnership  or  limited  liability  company,  the sale,
conveyance,  transfer or pledge of partnership interests or membership interests
which in the aggregate  constitute  more than a 49% interest in such Borrower or
any  general  partner or  managing  member of such  Borrower,  or any profits or
proceeds relating to such limited partnership interests or membership interests.

Notwithstanding the foregoing, the sale, transfer, issuance,  conveyance, pledge
or  hypothecation  of any  shares  of  stock in HRPT,  the  recapitalization  or
restructuring of any debt and/or  shareholders'  equity of HRPT or the merger or
consolidation  of HRPT with or into another Person shall not be deemed a sale or
transfer of a beneficial  interest in a Borrower  for purposes of this  Section.
Any  reference in this  paragraph  to HRPT shall also apply to any  successor to
HRPT, whether by operation of law or otherwise.

Section 11.3 Reserved.

Section 11.4 Release of Properties.  On one or more occasions, the Borrowers may
obtain  the  release of one (1) or more of the  Properties  from the Lien of the
applicable  Mortgage(s) in

                                      -70-
<PAGE>
connection  with a partial  defeasance of the Loan in accordance  with the terms
and subject to the conditions of the Note and subject to the satisfaction of the
following conditions:

         (A) Lender  shall have  received  from the  Borrowers  at least 30 days
prior written notice of the date proposed for such release (the "Release Date");

         (B) No Event of Default shall have occurred and be continuing as of the
date of such notice and the Release Date;

         (C) The  Borrowers  shall defease a portion of the Loan by delivering a
Defeasance  Deposit  (as  defined  in the Note) in amount  necessary  to pay all
Scheduled  Defeasance  Payments (as defined in the Note) relating to the Release
Price of the  Property  being  released  (together  with all  accrued and unpaid
interest on the principal  amount being so defeased),  and such defeasance shall
be undertaken  pursuant to the terms and conditions of the Note, and all of such
terms and conditions shall be satisfied;

         (D)  The  Borrowers   shall  have  delivered  to  Lender  an  Officer's
Certificate,  dated the Release  Date,  confirming  the  matters  referred to in
clause (B) above,  certifying  that the provisions of clause (C) above have been
complied  with and  certifying  that all  conditions  precedent for such release
contained in this Loan Agreement have been complied with;

         (E) The Borrowers at their sole cost and expense,  shall have delivered
to Lender, one or more endorsements to the Title Policies delivered to Lender on
the date hereof in connection  with the Mortgages  insuring  that,  after giving
effect to such  release,  (i) the Liens  created  hereby and thereby and insured
under the Title Policies are first  priority  Liens on the respective  remaining
Properties  subject  only  to  the  Permitted  Encumbrances  applicable  to  the
remaining  Properties and (ii) that the Title Policies  remain in full force and
effect and unaffected by such release;

         (F) After  giving  effect to such  proposed  release,  the Debt Service
Coverage Ratio for the remaining Properties  (calculated based upon the ratio of
(i) the Underwritable Cash Flow of the remaining  Properties for the twelve (12)
month period prior to the Release Date to (ii) the principal and interest  which
would be due under the  Undefeased  Note (as defined in the Note) for the twelve
(12) month period after the Release  Date) would be not less than the greater of
(a) the Debt Service  Coverage  Ratio for all of the  Properties  for the twelve
(12) month period  immediately  prior to giving effect to such release,  and (b)
1.40:1;

         (G)  Lender  and the  Rating  Agencies  shall  have  received  from the
Borrowers with respect to the matters  referred to in clause (F), (i) statements
of the  Underwritable  Cash Flow and debt service (both on a consolidated  basis
and  separately  for  the  applicable  Property(ies)  to be  released)  for  the
applicable  measuring  period,  and (ii) based on the  foregoing  statements  of
Underwritable  Cash  Flow and debt  service,  calculations  of the Debt  Service
Coverage Ratio both with and without giving effect to the proposed release,  and
(iii) calculations of the ratios referred to in such clause (F),  accompanied by
an  Officer's  Certificate  stating  that  such  statements,   calculations  and
information are true, correct, and complete in all material respects; and

         (H) Notwithstanding the above, the Borrowers may not obtain the release
of more than  three (3)  Properties  by  defeasance  under  this  Section  11.4;
provided, however, that the

                                      -71-
<PAGE>
foregoing  shall  not  limit  the  right  of the  Borrowers  to  effect  a total
defeasance of the Loan in accordance with the Note; and

         (I) The Borrowers shall pay all costs and expenses (including,  without
limitation,   title  search  costs  and  endorsement   premiums  and  reasonable
attorney's  fees and  disbursements)  incurred by Lender in connection  with the
release.

Upon or after the delivery of the required Defeasance Deposit in accordance with
Section 11.4 (C) above, satisfaction of the above conditions and satisfaction of
all other  conditions  to  defeasance  provided  for in the Note,  Lender  shall
effectuate the following (hereinafter referred to as a "Property Release"):  the
security interest of Lender in the Mortgage and other Loan Documents relating to
the released  Property shall be released and Lender will execute and deliver any
agreements  reasonably  requested  by the  applicable  Borrower  to release  and
terminate  or  reassign,  at such  Borrower's  option,  the  Mortgage  as to the
released Property;  provided,  that such release and termination or reassignment
shall be without recourse to Lender and without any  representation  or warranty
except that Lender  shall be deemed to have  represented  that such  release and
termination  or  reassignment  has  been  duly  authorized  and  that it has not
assigned or encumbered the Mortgage or the other Loan Documents  relating to the
released  Property  (except as contemplated  hereby) and Lender shall return the
originals of any Loan Documents  that relate solely to the released  Property to
such  Borrower;  provided,  further,  that upon the release and  termination  or
reassignment  of  Lender's  security  interest in the  Mortgage  relating to the
released Property all references herein to the Mortgage relating to the released
Property  shall be deemed  deleted,  except as  otherwise  provided  herein with
respect to indemnities.

                                  ARTICLE XII
                        RECOURSE; LIMITATIONS ON RECOURSE

Section 12.1 Limitations on Recourse. Subject to the provisions of this Article,
and notwithstanding any provision of the Loan Documents other than this Article,
no  personal  liability  shall be  asserted,  sought  or  obtained  by Lender or
enforceable  against (i) any Borrower Party,  (ii) any Affiliate of any Borrower
Party, (iii) any Person owning, directly or indirectly,  any legal or beneficial
interest in any Borrower  Party or any  Affiliate of any Borrower  Party or (iv)
any  partner,  member,  principal,  officer,  controlling  person,  beneficiary,
trustee,  advisor,  shareholder,  employee,  agent, Affiliate or director of any
Persons  described  in  clauses  (i)  through  (iv)  above  (collectively,   the
"Exculpated  Parties")  by  Lender  in  respect  of the  Obligations,  this Loan
Agreement,  the Mortgages,  the Note, the Properties or any other Loan Document,
or the making,  issuance or transfer thereof, all such liability,  if any, being
expressly  waived  by  Lender  and each  successive  holder  of the Note and the
Mortgages  shall accept the Note and the  Mortgages  upon the express  condition
that  Lender's  sole  recourse  for  the  Obligations  and the  performance  and
observance of the obligations  contained in this Loan  Agreement,  the Note, the
Mortgages  and the other Loan  Documents  shall be to exercise any or all of its
rights  and  remedies  with  respect  to the  Properties,  the  Rents  and other
Collateral including, without limitation, any or all of the following:

               (i)  Foreclosure of the lien of the Mortgages in accordance  with
the terms and provisions set forth in the Mortgages;

                                      -72-
<PAGE>

               (ii)  Action  against  any other  security  at any time  given to
secure the payment of the Note and under the other Loan Documents;

               (iii)  Exercise  of any  other  remedy  set  forth  in this  Loan
Agreement, the Mortgages or any other Loan Document.

Notwithstanding  anything to the contrary in this Loan Agreement,  the Mortgages
or any of the Loan  Documents,  Lender  shall not be deemed to have  waived  any
right which Lender may have under Section 506(a),  506(b),  1111(b) or any other
provisions  of the  Bankruptcy  Code to file a claim for the full  amount of the
Obligations  secured by the  Mortgages or to require that all  collateral  shall
continue to secure all of the Obligations owing to Lender in accordance with the
Loan Documents.

Section 12.2 Partial  Recourse.  Notwithstanding  Section 12.1,  the  Borrowers,
Guarantor and any general partner of the Borrowers shall be personally liable in
the amount of any liability,  loss, damage, cost or expense (including,  without
limitation,  attorneys'  fees and  expenses)  resulting  from any and all of the
following:  (i) fraud;  (ii) material and intentional  misrepresentation  by any
Borrower Party in this Loan Agreement or any other Loan Document or otherwise in
connection  with  obtaining the Loan;  (iii)  insurance  proceeds,  condemnation
awards,  or other  sums or  payments  attributable  to the  Property  which  any
Borrower  has  received  and  which  are not  applied  in  accordance  with  the
provisions of the Loan Documents;  (iv) all rents, profits, issues, products and
income of the Property  received or collected by or on behalf of any Borrower or
any Borrower Party and not deposited into the Central Account in accordance with
Article VII and the Cash  Management  Agreement or otherwise  received after the
occurrence  and during the  continuance  of an Event of Default  (other  than by
Lender or Servicer) and not applied in accordance with the Loan  Documents;  (v)
failure to turn over to Lender,  after the occurrence and during the continuance
of an Event of Default,  or  misappropriation of any tenant security deposits or
rents  collected in advance (other than by Lender or Servicer);  (vi) failure by
any  Borrower,  any  general  partner  of any  Borrower,  or any  indemnitor  or
guarantor to comply with the covenants, obligations, liabilities, warranties and
representations contained in the Environmental Indemnity or otherwise pertaining
to environmental matters; (vii) waste; (viii) all reasonable costs and expenses,
including  attorneys'  fees and expenses,  incurred in collecting any amount due
under  the  Loan  Documents;   (ix)  all  liabilities  and  expenses  under  the
indemnification  provisions  of Section 10.3;  and (x) any actual,  attempted or
purported modification,  amendment, termination or surrender of any Ground Lease
(except pursuant to rejection of any Ground Lease in a case under the Bankruptcy
Code in which any  Borrower  or Ground  Lessor  is a debtor)  without  the prior
written consent of Lender.

Section 12.3  Miscellaneous.  No provision of this Article  shall (i) affect the
enforcement  of the  Environmental  Indemnity,  the  Guaranty or any guaranty or
similar  agreement  executed in connection with the Loan, (ii) release or reduce
the debt  evidenced  by the Note,  (iii)  impair the lien of any Mortgage or any
other  security  document,  (iv)  impair  the  rights of Lender to  enforce  any
provisions  of the Loan  Documents,  or (v) limit  Lender's  ability to obtain a
deficiency  judgment or judgment on the Note or  otherwise  against any Borrower
Party to the extent necessary to obtain any amount for which such Borrower Party
may be  personally  liable in  accordance  with this  Article  or any other Loan
Document.

                                      -73-
<PAGE>
                                  ARTICLE XIII
                 WAIVERS OF DEFENSES OF GUARANTORS AND SURETIES

               To the  extent  that  any  Borrower  Party  (in this  Article,  a
"Waiving  Party") is deemed for any reason to be a guarantor or surety of or for
any other  Borrower  Party or to have rights or obligations in the nature of the
rights or obligations  of a guarantor or surety  (whether by reason of execution
of a  guaranty,  provision  of  security  for the  obligations  of  another,  or
otherwise)  then this  Article  shall apply.  This Article  shall not affect the
rights of the  Waiving  Party other than to waive or limit  rights and  defenses
that  Waiving  Party would have (i) in its  capacity as a guarantor or surety or
(ii) in its  capacity  as one having  rights or  obligations  in the nature of a
guarantor or surety.  Waiving  Party,  in the  broadest  and most  comprehensive
sense,  hereby  waives  any and all  claims,  rights,  or  defenses  that may be
asserted by a guarantor or surety against a creditor.  Without limitation of the
foregoing:

               Waiving Party hereby  waives  diligence,  presentment,  demand of
payment,  filing  of  claims  with a  court  in the  event  of  receivership  or
bankruptcy of any of the other Borrower Parties,  protest or notice with respect
to any of the  obligations  of any of the other  Borrower  Parties,  setoffs and
counterclaims  and  all  presentments,   demands  for  performance,  notices  of
nonperformance, protests, notices of protest, notices of dishonor and notices of
acceptance,  the benefits of all statutes of  limitation,  and all other demands
whatsoever (and,  except to the extent expressly  required under any of the Loan
Documents,  shall not require that the same be made on any of the other Borrower
Parties as a condition  precedent  to the  obligations  of Waiving  Party),  and
covenants that the Loan  Documents  will not be  discharged,  except by complete
payment and performance of the obligations evidenced and secured thereby, except
only as limited by the express  contractual  provisions  of the Loan  Documents.
Waiving  Party  further  waives all notices that the  principal  amount,  or any
portion  thereof,  and/or any interest on any instrument or document  evidencing
all or any part of the  obligations  of any of the  other  Borrower  Parties  to
Lender is due,  notices of any and all  proceedings  to collect  from any of the
other Borrower Parties or any endorser or any other guarantor of all or any part
of their  obligations,  or from any other  person or entity,  and, to the extent
permitted by law, notices of exchange,  sale, surrender or other handling of any
security or collateral  given to Lender to secure  payment of all or any part of
the obligations of any of the other Borrower Parties.

               Except  only to the  extent  provided  otherwise  in the  express
contractual  provisions of the Loan Documents,  Waiving Party hereby agrees that
all of its  obligations  under the Loan Documents shall remain in full force and
effect,  without  defense,  offset or counterclaim of any kind,  notwithstanding
that any right of Waiving  Party  against any of the other  Borrower  Parties or
defense of Waiving Party against Lender may be impaired, destroyed, or otherwise
affected  by reason of any action or  inaction  on the part of  Lender.  Waiving
Party waives all rights and  defenses  arising out of an election of remedies by
the Lender,  even  though that  election of  remedies,  may have  destroyed  the
Waiving  Party's  rights of  subrogation  and  reimbursement  against  the other
Borrower Parties.

               Lender is hereby authorized,  without notice or demand, from time
to time,  (a) to renew,  extend,  accelerate  or  otherwise  change the time for
payment of, or other terms  relating to, all or any part of the  obligations  of
any of the other Borrower Parties;  (b) to accept partial payments on all or any
part of the  obligations of any of the other Borrower  Parties;  (c) to take

                                      -74-
<PAGE>
and  hold  security  or  collateral  for the  payment  of all or any part of the
obligations  of any of the other  Borrower  Parties;  (d) to exchange,  enforce,
waive and release any such security or collateral for such  obligations;  (e) to
apply such security or collateral and direct the order or manner of sale thereof
as in  its  discretion  it may  determine;  (f) to  settle,  release,  exchange,
enforce,  waive, compromise or collect or otherwise liquidate all or any part of
such obligations and any security or collateral for such obligations. Any of the
foregoing  may be done in any  manner,  and Waiving  Party  agrees that the same
shall not  affect or impair the  obligations  of  Waiving  Party  under the Loan
Documents.

               Waiving Party hereby  assumes  responsibility  for keeping itself
informed of the financial condition of all of the other Borrower Parties and any
and all endorsers  and/or other guarantors of all or any part of the obligations
of the other Borrower Parties,  and of all other circumstances  bearing upon the
risk of  nonpayment  of such  obligations,  and Waiving Party hereby agrees that
Lender shall have no duty to advise  Waiving  Party of  information  known to it
regarding such condition or any such circumstances.

               Waiving Party agrees that neither Lender nor any person or entity
acting for or on behalf of Lender shall be under any  obligation to marshall any
assets in favor of  Waiving  Party or against or in payment of any or all of the
obligations  secured  hereby.  Waiving Party further  agrees that, to the extent
that any of the other Borrower Parties or any other guarantor of all or any part
of the obligations of the other Borrower  Parties makes a payment or payments to
Lender, or Lender receives any proceeds of collateral for any of the obligations
of the other Borrower Parties, which payment or payments or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
and/or required to be repaid or refunded, then, to the extent of such payment or
repayment,  the  part of such  obligations  which  has  been  paid,  reduced  or
satisfied by such amount  shall be  reinstated  and  continued in full force and
effect as of the time immediately  preceding such initial payment,  reduction or
satisfaction.

               Waiving Party (i) shall have no right of subrogation with respect
to the  obligations  of the other  Borrower  Parties;  (ii)  waives any right to
enforce any remedy that Lender now has or may hereafter  have against any of the
other Borrower  Parties any endorser or any guarantor of all or any part of such
obligations or any other person;  and (iii) waives any benefit of, and any right
to  participate  in, any  security or  collateral  given to Lender to secure the
payment  or  performance  of all or any part of such  obligations  or any  other
liability of the other parties to Lender.

               Waiving  Party  agrees  that any and all claims  that it may have
against any of the other Borrower  Parties,  any endorser or any other guarantor
of all or any part of the obligations of the other Borrower Parties,  or against
any of their respective properties, shall be subordinate and subject in right of
payment  to the  prior  payment  in  full  of all  obligations  secured  hereby.
Notwithstanding  any right of any of the Waiving Party to ask, demand,  sue for,
take or receive any payment from the other Borrower Parties,  all rights,  liens
and security  interests of Waiving Party,  whether now or hereafter  arising and
howsoever existing,  in any assets of any of the other Borrower Parties (whether
constituting  part of the  security  or  collateral  given to  Lender  to secure
payment of all or any part of the  obligations of the other Borrower  Parties or
otherwise) shall be and hereby are subordinated to the rights of Lender in those
assets.

                                      -75-
<PAGE>
                                  ARTICLE XIV
                                  MISCELLANEOUS

Section  14.1  Expenses and  Attorneys'  Fees.  Whether or not the  transactions
contemplated  hereby shall be  consummated,  the Borrowers  shall be jointly and
severally  liable for and agree to promptly pay all reasonable  fees,  costs and
expenses  incurred by Lender in connection  with any matters  contemplated by or
arising out of this Loan Agreement,  including the following, and all such fees,
costs and  expenses  shall be part of the  Obligations,  payable on demand:  (A)
reasonable fees, costs and expenses (including  reasonable  attorneys' fees, and
other  professionals  retained  by  Lender)  incurred  in  connection  with  the
examination,  review, due diligence investigation,  documentation and closing of
the financing arrangements evidenced by the Loan Documents; (B) reasonable fees,
costs and expenses (including reasonable attorneys' fees and other professionals
retained by Lender) incurred in connection with the  administration  of the Loan
Documents and the Loan and any amendments,  modifications  and waivers  relating
thereto;   (C)  reasonable  fees,  costs  and  expenses  (including   reasonable
attorneys'  fees)  incurred  in  connection  with  the  review,   documentation,
negotiation,  closing and  administration  of any subordination or intercreditor
agreements;  and (D) reasonable fees, costs and expenses  (including  attorneys'
fees and fees of other professionals  retained by Lender) incurred in any action
to enforce or interpret  this Loan  Agreement or the other Loan  Documents or to
collect any payments due from the Borrowers under this Loan Agreement,  the Note
or any other Loan Document or incurred in  connection  with any  refinancing  or
restructuring  of the credit  arrangements  provided under this Loan  Agreement,
whether in the nature of a "workout" or in  connection  with any  insolvency  or
bankruptcy  proceedings or otherwise.  Any costs and expenses due and payable to
Lender  after  the  Closing  Date  may be paid to  Lender  pursuant  to the Cash
Management Agreement.

Section  14.2  Indemnity.  In  addition  to the  payment of expenses as required
elsewhere herein,  whether or not the transactions  contemplated hereby shall be
consummated,  the Borrowers agree to indemnify,  defend,  protect,  pay and hold
Lender, its successors and assigns (including,  without limitation,  the trustee
and/or the trust  under any trust  agreement  executed  in  connection  with any
Securitization backed in whole or in part by the Loan and any other Person which
may  hereafter  be the  holder  of the Note or any  interest  therein),  and the
officers,  directors,  stockholders,  partners,  members,  employees, agents and
Affiliates of Lender and such  successors and assigns  (collectively  called the
"Indemnitees")  harmless from and against any and all liabilities,  obligations,
losses, damages, penalties,  actions, judgments, suits, claims, Tax Liabilities,
broker's or finders fees,  reasonable  costs,  expenses and disbursements of any
kind or nature  whatsoever  (including the reasonable fees and  disbursements of
counsel   for  such   Indemnitees   in   connection   with  any   investigative,
administrative or judicial  proceeding  commenced or threatened,  whether or not
such  Indemnitee  shall be  designated a party  thereto) that may be imposed on,
incurred by, or asserted against that  Indemnitee,  in any manner relating to or
arising out of any of the following (to the extent that insurance  proceeds paid
on account of same shall be inadequate)  (A) the  enforcement of any of the Loan
Documents;  (B) any  breach by any  Borrower  of any  representation,  warranty,
covenant,  or other agreement  contained in any of the Loan  Documents;  (C) the
presence,  release,  threatened  release,  disposal,  removal, or cleanup of any
Hazardous  Material  located on, about,  within or affecting any Property or any
violation of any applicable  Environmental Law for which any Borrower is liable;
(D) any claim  brought  by any  third  party  arising  out of any  condition  or
occurrence  at or  pertaining  to any  Property;

                                      -76-
<PAGE>
(E) any design, construction,  operation,  repair, maintenance,  use, non-use or
condition of any Property or Improvements, including claims or penalties arising
from violation of any applicable laws or insurance requirements,  as well as any
claim  based on any  patent or latent  defect,  whether or not  discoverable  by
Lender;  (F) any  performance  of any labor or services or the furnishing of any
materials or other property in respect of any Property or any part thereof;  (G)
any  contest  referred  to in  Section  5.3(B)  hereof;  (H) any  obligation  or
undertaking  relating  to the  performance  or  discharge  of any of the  terms,
covenants and conditions of the landlord contained in the Leases; (I) any action
or proceeding relating to any Ground Lease including,  without  limitation,  any
case commenced by or against any Ground Lessor under the Bankruptcy  Code or any
applicable state or local bankruptcy,  insolvency or similar law; or (J) the use
or intended  use of the proceeds of any of the Loan (the  foregoing  liabilities
herein  collectively  referred to as the "Indemnified  Liabilities");  provided,
however,  that the  Borrowers  shall be  relieved  of  their  obligations  to an
Indemnitee  under this  Section  14.2 with  respect to  Indemnified  Liabilities
arising (i) from the gross  negligence or willful  misconduct of such Indemnitee
as  determined  by a court of  competent  jurisdiction  or (ii)  from any of the
matters  described  in  clauses  (C)-(I)  above  occurring  after  the date (the
"Transfer  Date") of transfer of title to the  Property  to such  Indemnitee  by
foreclosure,  deed-in-lieu  thereof, the exercise of power of sale or otherwise,
except for any Indemnified Liabilities arising under clauses (C) or (E) above as
a result of any Hazardous  Material  located on, about,  within or affecting the
Property or any latent defect  affecting the Property which existed prior to the
Transfer  Date.  Any  amounts  payable  to  any  Indemnitee  by  reason  of  the
application  of this  Section  14.2  shall be  payable  on demand and shall bear
interest at the Default  Rate from the date such loss or damage is  sustained by
any Indemnitee  until paid.  The  obligations  and  liabilities of the Borrowers
under this Section  14.2 shall  survive the term of the Loan and the exercise by
Lender of any of its rights or remedies under the Loan Documents,  including the
acquisition  of  any  Property  by  foreclosure  or  a  conveyance  in  lieu  of
foreclosure.

Section 14.3 Amendments and Waivers.  Except as otherwise  provided  herein,  no
amendment,  modification,  termination  or waiver of any  provision of this Loan
Agreement,  the Note or any other Loan  Document,  or  consent to any  departure
therefrom,  shall in any event be effective  unless the same shall be in writing
and  signed  by  Lender  and any  other  party to be  charged.  Each  amendment,
modification,  termination  or waiver  shall be  effective  only in the specific
instance  and for the specific  purpose for which it was given.  No notice to or
demand on any Borrower in any case shall entitle any Borrower or other Person to
any other or further notice or demand in similar or other circumstances  (except
for any notices as expressly required herein or under the other Loan Documents).

Section 14.4 Retention of Borrower's  Documents.  Lender may, in accordance with
Lender's  customary  practices,  destroy or otherwise  dispose of all documents,
schedules, invoices or other papers, delivered by the Borrowers to Lender unless
the Borrowers request in writing that same be returned. Upon such request and at
the expense of the  Borrowers,  Lender  shall  return such papers when  Lender's
actual or anticipated need for same has terminated.

Section 14.5 Notices.  Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given shall be in writing and
addressed to the respective party as set forth below. Notices shall be effective
(i) three  (3) days  after the date  such  notice  is  mailed,  (ii) on the next
Business Day if sent by a nationally recognized overnight

                                      -77-
<PAGE>
courier service,  (iii) on the date of delivery by personal delivery and (iv) on
the date of  transmission if sent by telefax during business hours on a Business
Day (otherwise on the next Business Day) (with receipt of confirmation).

Notices shall be addressed as follows:

If to any Borrower or any Borrower Party:

c/o HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458-2076
Attn:  Jennifer Clark, Esq.
Facsimile: (617) 928-1305

With copies to:

Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, New York 10036
Attn:    Harvey R. Uris, Esq.
Facsimile: (917) 977-2212

If to Lender:

c/o Merrill Lynch & Co.
100 Church Street
18th Floor
New York, New York 10080
Attn:  Andrea Balkan
Facsimile:  (212) 602-7552

With a copy to:

Sidley & Austin
875 Third Avenue
New York, New York 10022
Attn:    Robert L. Boyd, Esq.
Facsimile:  (212) 906-2021

Any party may  change the  address at which it is to receive  notices to another
address  in the  United  States  at  which  business  is  conducted  (and  not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose  additional  requirements for the delivery or effectiveness of any notice
(i) given in accordance with  applicable  statutes or rules of court, or (ii) by
service of process in accordance with applicable law. If there is any assignment
or  transfer of  Lender's  interest  in the Loan,  then the new Lenders may give
notice to the parties in accordance with this

                                      -78-
<PAGE>
Section, specifying the addresses at which the new Lenders shall receive notice,
and they shall be entitled  to notice at such  address in  accordance  with this
Section.

Section 14.6  Survival of Warranties  and Certain  Agreements.  All  agreements,
representations  and  warranties  made herein shall  survive the  execution  and
delivery  of this  Loan  Agreement,  the  making of the Loan  hereunder  and the
execution  and  delivery  of the  Note.  Notwithstanding  anything  in this Loan
Agreement or implied by law to the contrary,  the agreements of Borrower Parties
to indemnify or release Lender or Persons related to Lender,  or to pay Lender's
costs,  expenses,  or  taxes  shall  survive  the  payment  of the  Loan and the
termination of this Loan Agreement.

Section 14.7 Failure or Indulgence Not Waiver;  Remedies Cumulative.  No failure
or delay on the part of Lender in the exercise of any power,  right or privilege
hereunder or under the Note or any other Loan Document  shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein,  nor shall any single or partial  exercise of any such power,  right or
privilege  preclude  other or further  exercise  thereof or of any other  right,
power or privilege.  All rights and remedies existing under this Loan Agreement,
the Note and the other Loan  Documents are  cumulative to, and not exclusive of,
any rights or remedies otherwise available.

Section  14.8  Marshaling;  Payments  Set Aside.  Lender  shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations.  To the extent that any Person makes a payment
or payments to Lender,  or Lender  enforces its remedies or exercises its rights
of set off, and such payment or payments or the proceeds of such  enforcement or
set  off or any  part  thereof  are  subsequently  invalidated,  declared  to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other  party under any  bankruptcy  law,  state or federal  law,
common  law or  equitable  cause,  then  to the  extent  of such  recovery,  the
Obligations or part thereof originally intended to be satisfied,  and all Liens,
if any, and rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.

Section 14.9 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation  under this Loan  Agreement,  the
Note or other Loan Documents  shall not affect or impair the validity,  legality
or  enforceability  of the remaining  provisions or obligations  under this Loan
Agreement,  the Note or other Loan  Documents or of such provision or obligation
in any other jurisdiction.

Section 14.10 Headings.  Section and subsection  headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan  Agreement for any other  purpose or be given any  substantive
effect.

Section 14.11  APPLICABLE  LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
WERE  NEGOTIATED  IN THE STATE OF NEW YORK,  AND EXECUTED  AND  DELIVERED IN THE
STATE OF NEW YORK,  AND THE PROCEEDS OF THE LOAN WERE  DISBURSED  FROM NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL  RELATIONSHIP TO THE PARTIES

                                      -79-
<PAGE>
AND  TO THE  UNDERLYING  TRANSACTION  EMBODIED  HEREBY,  AND  IN  ALL  RESPECTS,
INCLUDING,  WITHOUT  LIMITING  THE  GENERALITY  OF  THE  FOREGOING,  MATTERS  OF
CONSTRUCTION,  VALIDITY AND PERFORMANCE.  THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF THE  STATE  OF NEW  YORK
APPLICABLE  TO  CONTRACTS  MADE AND  PERFORMED  IN THE STATE OF NEW YORK AND ANY
APPLICABLE  LAWS OF THE UNITED  STATES OF AMERICA  EXCEPT  THAT AT ALL TIMES THE
PROVISIONS  FOR THE  CREATION,  PERFECTION  AND  ENFORCEMENT  OF THE  LIENS  AND
SECURITY  INTERESTS  CREATED  PURSUANT TO THE MORTGAGES AND THE  ASSIGNMENTS  OF
LEASES  SHALL  BE  GOVERNED  BY THE  LAWS OF THE  STATES  WHERE  THE  RESPECTIVE
PROPERTIES ARE LOCATED, EXCEPT THAT THE SECURITY INTERESTS IN ACCOUNT COLLATERAL
SHALL BE  GOVERNED  BY THE LAWS OF THE STATE OF NEW YORK OR THE STATE  WHERE THE
SAME IS HELD, AT THE OPTION OF LENDER.

Section 14.12 Successors and Assigns.  This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and assigns  except that no Borrower  Party may assign its rights or obligations
hereunder or under any of the other Loan Documents except as expressly  provided
in Article XI.

Section   14.13   Sophisticated   Parties,   Reasonable   Terms,   No  Fiduciary
Relationship.  Borrower Parties represent, warrant and acknowledge that (i) they
are  sophisticated  real estate  investors,  familiar with  transactions of this
kind,  and (ii) they have  entered into this Loan  Agreement  and the other Loan
Documents after conducting their own assessment of the alternatives available to
them in the  market,  and after  lengthy  negotiations  in which  they have been
represented by competent  legal counsel of their choice.  Borrower  Parties also
acknowledge  and agree that the rights of Lender under this Loan  Agreement  and
the  other  Loan  Documents  are  reasonable   and   appropriate,   taking  into
consideration  all of the facts and circumstances  including without  limitation
the quantity of the Loan, the nature of the  Properties,  and the risks incurred
by Lender in this transaction.  No provision in this Loan Agreement or in any of
the other Loan  Documents and no course of dealing  between the parties shall be
deemed to create (i) any  partnership  or joint venture  between  Lender and any
Borrower or any other Person, or (ii) any fiduciary or similar duty by Lender to
any  Borrower  or any other  Person.  The  relationship  between  Lender and any
Borrower is exclusively  the  relationship  of a creditor and a debtor,  and all
relationships  between Lender and any other Borrower Party are ancillary to such
creditor/debtor relationship.

Section  14.14  Reasonableness  of  Determinations.  In any  instance  where any
consent,  approval,  determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be  unreasonably  withheld,  the Borrowers  shall bear the burden of proof of
showing that the same was not reasonable. In all cases Lender shall conclusively
be deemed to be acting  reasonably when implementing any standard or requirement
of any applicable  Rating Agency.  In the event that a claim or  adjudication is
made that Lender or its agents have acted  unreasonably or unreasonably  delayed
acting in any case where,  by law or under this Loan Agreement or the other Loan
Documents,

                                      -80-
<PAGE>
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly,  neither  Lender  nor its  agents  shall be  liable  for any  monetary
damages, and the Borrowers' sole remedy shall be limited to commencing an action
seeking injunctive relief or declaratory  judgment.  Any action or proceeding to
determine  whether Lender has acted  reasonably shall be determined by an action
seeking declaratory judgment.

Section  14.15  No Duty.  All  attorneys,  accountants,  appraisers,  and  other
professional  Persons and consultants retained by Lender shall have the right to
act  exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any Borrower Party or Affiliates thereof, or any other Person.

Section 14.16 Entire  Agreement.  This Loan  Agreement,  the Note, and the other
Loan Documents  referred to herein embody the final,  entire agreement among the
parties  hereto  and  supersede  any  and  all  prior  commitments,  agreements,
representations,  and  understandings,  whether written or oral, relating to the
subject  matter  hereof and may not be  contradicted  or varied by  evidence  of
prior,  contemporaneous,  or subsequent  oral  agreements or  discussions of the
parties  hereto.  There are no oral  agreements  among the  parties  to the Loan
Documents.

Section 14.17  Construction;  Supremacy of Loan Agreement.  Borrower Parties and
Lender acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an  opportunity  to review this Loan  Agreement
and the other Loan Documents with its legal counsel and that this Loan Agreement
and the other Loan  Documents  shall be construed  as if jointly  drafted by the
Borrowers and Lender. If any term, condition or provision of this Loan Agreement
shall be  inconsistent  with any term,  condition or provision of any other Loan
Document, then this Loan Agreement shall control.

Section 14.18 Consent to  Jurisdiction.  EACH BORROWER PARTY HEREBY  CONSENTS TO
THE  JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK,  STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH THE PROPERTY IS
LOCATED AND IRREVOCABLY AGREES THAT,  SUBJECT TO LENDER'S ELECTION,  ALL ACTIONS
OR  PROCEEDINGS  ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR THE OTHER LOAN
DOCUMENTS  SHALL BE LITIGATED IN SUCH COURTS.  EACH  BORROWER  PARTY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH THE PROPERTY,  GENERALLY AND UNCONDITIONALLY,  THE
NONEXCLUSIVE  JURISDICTION  OF THE  AFORESAID  COURTS AND WAIVES ANY  DEFENSE OF
FORUM  NON  CONVENIENS,  AND  IRREVOCABLY  AGREES  TO BE BOUND  BY ANY  JUDGMENT
RENDERED  THEREBY IN CONNECTION WITH THIS  AGREEMENT,  THE NOTE, SUCH OTHER LOAN
DOCUMENTS  OR SUCH  OBLIGATION.  NOTHING  HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER
TO BRING  PROCEEDINGS  AGAINST  ANY  BORROWER  PARTY IN THE  COURTS OF ANY OTHER
JURISDICTION.

Section  14.19 Waiver of Jury Trial EACH OF BORROWER  PARTIES AND LENDER  HEREBY
WAIVES  ITS  RESPECTIVE  RIGHTS TO A JURY  TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN

                                      -81-
<PAGE>
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN ANY BORROWER PARTY
AND LENDER  RELATING  TO THE  SUBJECT  MATTER OF THIS LOAN  TRANSACTION  AND THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. EACH OF BORROWER PARTIES
AND  LENDER  ALSO  WAIVES  ANY BOND OR SURETY OR  SECURITY  UPON SUCH BOND WHICH
MIGHT,  BUT FOR THIS  WAIVER,  BE  REQUIRED  OF IT. THE SCOPE OF THIS  WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT  RELATE TO THE  SUBJECT  MATTER  OF THIS  TRANSACTION,  INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER  COMMON LAW AND  STATUTORY  CLAIMS.  EACH OF  BORROWER  PARTIES AND LENDER
ACKNOWLEDGES  THAT THIS WAIVER IS A MATERIAL  INDUCEMENT TO ENTER INTO THIS LOAN
AGREEMENT, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS LOAN
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THE FUTURE.  EACH
OF BORROWER  PARTIES AND LENDER  FURTHER  WARRANTS  AND  REPRESENTS  THAT IT HAS
REVIEWED  THIS  WAIVER  WITH  ITS  LEGAL  COUNSEL,  AND  THAT IT  KNOWINGLY  AND
VOLUNTARILY  WAIVES  ITS JURY TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE,  MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY  OR IN  WRITING  (OTHER  THAN BY A  MUTUAL  WRITTEN  WAIVER  SPECIFICALLY
REFERRING TO THIS SECTION 14.19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,  RENEWALS,  SUPPLEMENTS OR
MODIFICATIONS  TO THIS  LOAN  AGREEMENT,  THE LOAN  DOCUMENTS,  OR TO ANY  OTHER
DOCUMENTS OR AGREEMENTS  RELATING TO THE LOAN. IN THE EVENT OF LITIGATION,  THIS
LOAN AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 14.20  Counterparts;  Effectiveness.  This Loan Agreement and other Loan
Documents  and any  amendments  or  supplements  thereto  may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and  delivered  shall be deemed an original,  but
all of  which  counterparts  together  shall  constitute  but one  and the  same
instrument.  This Loan Agreement shall become  effective upon the execution of a
counterpart hereof by each of the parties hereto.

Section  14.21  Servicer.  Lender  shall  have the  right  from  time to time to
designate  and  appoint  one or more  Servicers,  and to change or  replace  any
Servicer. All rights of the Lender hereunder may exercised by Servicer. Servicer
shall be entitled to the benefit of all  obligations of any of Borrower Party in
favor of Lender.

Section 14.22 Obligations of Borrower  Parties.  Borrower Parties other than the
Borrowers  are  parties  to  this  Loan   Agreement  only  with  regard  to  the
representations, warranties, and covenants specifically applicable to them.

Section 14.23 Guaranties Unsecured. Anything to the contrary herein or elsewhere
notwithstanding,  the Guaranty and all obligations arising under same, including
the obligations

                                      -82-
<PAGE>
incorporated therein from this Agreement by reference,  are not and shall not be
secured in any manner  whatsoever,  including by the Mortgages or by any Lien on
any Collateral.

Section 14.24  Confidentiality.  Subject to and without limiting Lender's rights
under  Article  X  hereof,  Lender  shall  use  reasonable  efforts  to hold all
non-public  information  obtained in connection with the Loan in accordance with
Lender's  customary  procedures  for handling  confidential  information of this
nature and in accordance with prudent lending or investing  practices,  it being
understood  and  agreed  by the  Borrowers  that in any  event  Lender  may make
disclosures to Lender's employees, officers, agents, representatives, attorneys,
accountants, consultants and advisors in connection with the Loan, Affiliates of
Lender  (and to other  Persons  authorized  by Lender to  organize,  present  or
disseminate such  information in connection with  disclosures  otherwise made in
accordance  with  this  Section  14.24),  to  the  Rating  Agencies,  assignees,
participants,  investors or prospective  assignees,  participants  or investors,
servicers,  trustees or other  Persons as Lender,  in its sole  discretion,  may
require in connection with any Secondary Market  Transaction or  Securitization,
or   disclosures   required  or   requested  by  any   governmental   agency  or
representative   thereof  of  pursuant  to  legal  process;   provided,   unless
specifically  prohibited  by  applicable  law or court order,  Lender shall make
reasonable  efforts to notify the  Borrowers of any request by any  governmental
agency or representative thereof (other than any such request in connection with
any  examination  of the  financial  condition or other routine  examination  of
Lender  by such  governmental  agency)  for  disclosure  of any such  non-public
information prior to disclosure of such information.

Section  14.25  Joint and  Several  Obligations.  Subject to the  provisions  of
Article XII hereof,  the  Borrowers  shall be jointly and  severally  liable for
payment and performance of all of the Obligations under this Loan Agreement, the
Note and the other Loan Documents.

Section 14.26 Non-Liability of Trustees.  The Declarations of Trust of the Trust
Borrowers  and  Member,  copies of which are duly filed with the  Department  of
Assessments  and  Taxation of the State of  Maryland,  provide that the names of
such  Trusts  refer  to the  trustees  under  each  such  Declaration  of  Trust
collectively  as  trustees,  but not  individually  or  personally,  and that no
trustee, officer, shareholder, employee or agent of any Trust Borrower or Member
shall  be  held  to any  personal  liability,  jointly  or  severally,  for  any
obligation  of, or claim  against any of them.  Except as expressly  provided in
this Loan  Agreement,  all persons  dealing with any Trust Borrower or Member in
any way shall  look only to the  assets of the Trust  Borrowers  or  Member,  as
applicable,  for the  payment of any sum or the  performance  of any  obligation
under this Loan Agreement or the other Loan Documents.

                        [signatures follow on next page]

<PAGE>

                  IN WITNESS WHEREOF,  the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.

                             BORROWERS:
                             ---------

                             BRIDGEPOINT PROPERTY TRUST,
                               a Maryland real estate investment trust

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                             CEDARS LA LLC
                               a Delaware limited liability company

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                             HERALD SQUARE LLC
                               a Delaware limited liability company

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                             INDIANA AVENUE LLC
                               a Delaware limited liability company

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                             LAKEWOOD PROPERTY TRUST
                               a Maryland real estate investment trust

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                             1600 MARKET STREET PROPERTY TRUST
                               a Maryland real estate investment trust

                             By:  /s/ John A. Mannix
                             Name:  John A. Mannix
                             Title:    President

                                Signature Page 1

<PAGE>

                              MEMBER:
                              ------

                              SP HOLDING PROPERTY TRUST,
                                a Maryland real estate investment trust

                              By: /s/ John A. Mannix
                              Name:  John A. Mannix
                              Title: Vice President

                              GUARANTOR:
                              ----------

                              HUB REALTY COLLEGE PARK I, LLC
                                a Maryland limited liability company

                              By:  Hub Management, Inc.
                                   Its Manager

                              By: /s/ John A. Mannix
                              Name:  John A. Mannix
                              Title:

                              LENDER:
                              ------

                              MERRILL LYNCH MORTGAGE
                              LENDING, INC.,
                                a Delaware corporation

                              By: /s/ Andrea Balkam
                              Name:  Andrea Balkam
                              Title: Vice President

                                Signature Page 2

<PAGE>
STATE OF NEW YORK  )
                   )  SS:
COUNTY OF NEW YORK )

         On  this   ______   day  of   December,   2000,   before  me   appeared
__________________,  to me personally known, or satisfactorily  proven to be the
person  whose name is  subscribed  to the  foregoing as  ___________________  of
___________________,  for the purposes  therein set forth,  and that the same is
its act and deed.

                                  ____________________________________
                                  Name of Notary:
                                  Notary Public
                                  My Commission expires:______________

<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES

Exhibits
Exhibit A - Properties
Exhibit B - Ground Leases; Ground Leased Properties
Exhibit C - Allocated Loan Amounts
Exhibit D - Form of Subordination, Non-Disturbance and Attornment Agreement

Schedules
Schedule 3.1(A) - Loan Documents
Schedule 4.1(C) - Organizational Chart for Borrower Parties
Schedule 4.2    - Consents
Schedule 4.7(B) - Rent  Rolls
Schedule 4.7(C) - Lease Proceedings
Schedule 4.9    - Litigation
Schedule 4.16   - Environmental Reports
Schedule 4.20   - Insurance
Schedule 6.5    - Environmental Work

                          List of Exhibits & Schedules

<PAGE>

                                    EXHIBIT A

1.       Bridgepoint Square, 6300 Bridgepoint Parkway, Austin, Texas

2.       Lakewood on the Park,  7600  Capital of Texas  Highway  North,  Austin,
         Texas

3.       Herald Square, 1250 H Street, N.W., Washington, D.C.

4.       625 Indiana Avenue N.W., Washington, D.C.

5.       PNC Tower, 1600 Market Street, Philadelphia, Pennsylvania

6.       Cedars-Sinai  Medical Office  Towers,  8625,  8631,  8635 and 8645 West
         Third Street, Los Angeles, California

                                       A-1

<PAGE>

                                    EXHIBIT B

                     GROUND LEASES; GROUND LEASED PROPERTIES

1. Ground Lease,  dated as of December __, 2000,  between HUB  Properties  Trust
("HUB"),  as lessor, and 1600 Market Street Property Trust, as lessee,  covering
1600 Market Street, Philadelphia, Pennsylvania.

2. Ground  Lease,  dated as of December  __, 2000,  between HUB, as lessor,  and
Herald  Square LLC, as lessee,  covering  Herald  Square,  1250 H Street,  N.W.,
Washington, D.C.

3. Ground  Lease,  dated as of December  __, 2000,  between HUB Realty  Funding,
Inc., as lessor, and Indiana Avenue LLC, as lessee, covering 625 Indiana Avenue,
Washington, D.C.

                                       B-1

<PAGE>
                                    EXHIBIT C

<TABLE>
<CAPTION>
                             Allocated Loan Amounts
<S>      <C>                                                                        <C>

1.       Bridgepoint Square, Austin, Texas                                            $45,342,000

2.       Lakewood on the Park, Austin, Texas                                           23,312,000

3.       Herald Square, Washington, D.C.                                               32,058,000

4.       625 Indiana Avenue, Washington, D.C.                                          23,221,000

5.       PNC Tower, Philadelphia, Pennsylvania                                         63,238,000

6.       Cedars-Sinai Medical Office Towers, Los Angeles, California                   72,829,000
                                                                                     ============

                                                                                     $260,000,000

</TABLE>

                                       C-1

<PAGE>

                                    EXHIBIT D

                             FORM OF SUBORDINATION,
                    NON DISTURBANCE AND ATTORNMENT AGREEMENT

                                                    TENANT: __________________

                                 SUBORDINATION,
                    NON-DISTURBANCE AND ATTORNMENT AGREEMENT

         THIS  SUBORDINATION,  NON-DISTURBANCE  AND ATTORNMENT  AGREEMENT  (this
"Agreement")  is  entered  into by and among  ______________________________,  a
___________________________       ("Tenant"),       whose       address       is
_____________________________,         ______________________________,         a
___________________________       ("Landlord"),       whose      address      is
___________________________,         and         _______________________________
_______________________________, its successors and/or assigns ("Lender"), whose
address is ________________________________________.

                              W I T N E S S E T H:
                               - - - - - - - - - -

         WHEREAS,  Landlord  is the  owner in fee  simple  of the real  property
described in Exhibit A attached hereto,  together with the improvements  thereon
(the "Property");

         WHEREAS,  Landlord or its  predecessor  and Tenant have  entered into a
certain lease, dated _________________ [and amended/modified/extended/renewed by
____________________________,  dated _______________] (as the same may hereafter
be amended,  modified,  renewed, extended or replaced, the "Lease"),  leasing to
Tenant a portion of the Property (the "Premises");

         WHEREAS,  Lender has agreed to make a certain mortgage loan to Landlord
(the  "Loan"),  which will be evidenced by  Landlord's  Promissory  Note in such
amount (the "Note") and secured by, among other things, a certain Mortgage [Deed
of Trust],  Assignment of Rents,  Security  Agreement and Fixture Filing (as the
same may hereafter be amended, modified, extended or recast, the "Mortgage") and
a  certain   Assignment  of  Leases  and  Rents  (the  "Assignment  of  Leases")
encumbering  the  Property,  which  Mortgage and  Assignment of Leases are to be
recorded simultaneously herewith;

         WHEREAS,   Lender,   Landlord  and  Tenant   desire  to  confirm  their
understanding  with  respect  to the Lease and the Loan and the rights of Tenant
and Lender thereunder.

         NOW THEREFORE,  in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

         1. Subordination. The Lease, including all of the terms thereof, is and
shall  be  subject  and  subordinate  to the  lien  and all of the  terms of the
Mortgage to the full extent of all amounts  secured by the Mortgage and interest
thereon.

                                      D-1
<PAGE>

         2.  Attornment.  Tenant agrees that it will attorn to and recognize any
purchaser of the Property at a Mortgage  foreclosure  sale or any transferee who
acquires the Property by deed in lieu of  foreclosure  or exercise of a power of
sale or otherwise in respect of the Mortgage (in any such case, the "New Owner")
and the successors and assigns of such purchaser or transferee,  as its landlord
for the unexpired balance (and any extensions or renewals,  if exercised) of the
term of said Lease upon the same terms and conditions set forth in said Lease.

         3. Non-Disturbance.  Provided there is no default under the Lease which
continues beyond the expiration of any applicable notice and grace period,  such
New Owner will not  terminate  the Lease or disturb  Tenant's  possession of the
Premises under the Lease or the right to quiet enjoyment thereof,  but the Lease
shall continue in accordance with its terms as a direct lease between Tenant and
New Owner.

         4. Cure by Lender of Landlord Defaults. Tenant agrees to give Lender or
any other New Owner (in accordance with Paragraph 8 hereof) a copy of any notice
of default  served upon  Landlord  which with the  passage of time or  otherwise
would  entitle  Tenant to cancel  the Lease or abate the rent  under the  Lease,
provided  that prior to such notice  Tenant has been  notified in writing of the
address of the New Owner,  or its agent,  servicer or designee.  Tenant  further
agrees that if Landlord  shall have failed to cure such default  within the time
provided  for in the Lease,  then Lender have an  additional  ten (10) days with
respect  to  a  monetary  default  and  thirty  (30)  days  with  respect  to  a
non-monetary  default  after its  receipt  of notice  within  which to cure such
default or if such  non-monetary  default cannot be cured within that time, then
such  additional  time as may be necessary to cure such default shall be granted
if within such thirty (30) days Lender has commenced and is diligently  pursuing
the  remedies  necessary to cure such  default  (including,  but not limited to,
commencement of foreclosure proceedings necessary to effect such cure), in which
event the  Lease  shall  not be  terminated  while  such  remedies  are being so
diligently pursued.

         5.  Payments  to Lender and  Exculpation  of  Tenant.  Tenant is hereby
notified that the Lease and the rent and all other sums due thereunder have been
assigned to Lender as security for the Loan.  In the event that Lender  notifies
Tenant of a default  under the Mortgage and directs that Tenant pay its rent and
all other sums due under the Lease to Lender,  Tenant shall honor such direction
without  inquiry  and pay its rent and all  other  sums due  under  the Lease in
accordance with such notice. Landlord agrees that Tenant shall have the right to
rely on any  such  notice  from  Lender  without  incurring  any  obligation  or
liability to Landlord as if such notice were given at the direction of Landlord.
Tenant is hereby  instructed  to disregard  any notice to the contrary  received
from or at the behest of Landlord.

         6.  Limitation of Liability.  If the New Owner acquires the interest of
Landlord under the Lease, the New Owner shall not be:

               (a)  liable  for  any  act  or  omission  of any  prior  landlord
(including Landlord);

                                      D-2
<PAGE>

               (b) subject to any  claims,  offsets,  defenses or  counterclaims
which Tenant might have against any prior landlord (including  Landlord) arising
prior to the date upon which the New Owner  shall  succeed to the  interests  of
Landlord under the Lease;

               (c) bound by any rent or additional  rent which Tenant shall have
paid  more  than one (1)  month in  advance  to any  prior  landlord  (including
Landlord) unless received by New Owner;

               (d) liable for the return of any  security  deposit not  actually
received by New Owner;

               (e) bound by any  amendment  or  modification  of the Lease  made
without  the  written  consent of New Owner (if  consent is  required  under the
Mortgage  or any of the other loan  documents  evidencing  and/or  securing  the
Loan);

               (f)  bound  by  any   covenant  to   undertake  or  complete  any
improvement  to or  restoration  of the Premises or the Property,  except to the
extent insurance proceeds or condemnation awards are made available to New Owner
to cover the cost of the improvement.

Lender shall not, either by virtue of the Mortgage,  the Assignment of Leases or
this Agreement,  be or become (i) a  mortgagee-in-possession  or (ii) subject to
any liability or obligation under the Lease or otherwise until Lender shall have
acquired by  foreclosure  or otherwise the interest of Landlord in the Premises.
Lender's  liability  or  obligation  under the Lease shall  extend only to those
liabilities  or  obligations  accruing  subsequent  to the date that  Lender has
acquired  the  interest of Landlord in the  Premises as modified by the terms of
this  Agreement.  In  addition,  upon such  acquisition,  Lender  shall  have no
obligation,  nor incur any  liability,  beyond  Lender's  then  interest  in the
Property.  In the event of the  assignment or transfer of the interest of Lender
under this  Agreement,  all  obligations  and  liabilities  of Lender under this
Agreement shall terminate and,  thereupon,  all such obligations and liabilities
shall be the sole  responsibility  of the  party to whom  Lender's  interest  is
assigned or transferred.

         7. Notice.  Any notice,  consent or other  communication made hereunder
shall be in writing and  delivered (i)  personally,  (ii) mailed by certified or
registered  mail,  postage  prepaid,   return  receipt  requested  or  (iii)  by
depositing the same with a reputable overnight courier service, postage prepaid,
for next  business day  delivery,  to the parties at their  addresses  first set
forth above and if to Lender, with a copy to Merrill Lynch Credit Corporation at
4802  Deer  Lake  Drive  East,  Jacksonville,   Florida  32246-6484,  Attention:
Commercial  Mortgage  Servicing.  Notice  shall be deemed  given when  delivered
personally,  or four (4) business  days after being placed in the United  States
mail,  if sent by certified or  registered  mail,  or one (1) business day after
deposit with such overnight courier service. Any party can change its address or
party to receive notice by giving at least fifteen (15) days prior notice to the
other parties hereto in accordance with this provision.  Tenant agrees to send a
copy of any notice or statement  under the Lease to Lender at the same time such
notice or statement is sent to Landlord.

         8. Miscellaneous.

               (a) Successors and Assigns.  This Agreement  shall bind and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns.

               (b)  Governing  Law.  This  Agreement  shall be  governed  by and
construed  in  accordance  with the laws of the State in which the  Property  is
located.

                                      D-3
<PAGE>

               (c)  Amendment.  This  Agreement  shall be  deemed  to amend  any
provisions of the Lease which are inconsistent with the terms hereof.

               (d) Counterparts. This Agreement may be executed in any number of
separate  counterparts,  each of which shall be deemed an  original,  but all of
which, collectively and separately, shall constitute one and the same agreement.

               (e) Non-disturbance.  Tenant agrees that this Agreement satisfies
any  condition  or  requirement  in the  Lease  relating  to the  granting  of a
non-disturbance agreement.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
dates set forth  adjacent to their  signatures  below to be  effective as of the
date of the Mortgage.

Date: ______________                 TENANT:  _________________________

                                   By:   ______________________________
                                            Name: _____________________
                                            Title: ____________________

Date: ______________                 LANDLORD:  _______________________

                                   By:   ______________________________
                                            Name: _____________________
                                            Title: ____________________

Date: ______________                 LENDER:

                                   By:   ______________________________
                                            Name: _____________________
                                            Title: ____________________

WHEN RECORDED, RETURN TO:

                                      D-4
<PAGE>

                        NOTARIZATION FORMS FOR SIGNATURES

Form of Notarial Acknowledgment

STATE OF ________________ss.
                                          ss.    ss.
COUNTY OF ______________ ss.

         On ___________________,  before me, _____________________________,  the
undersigned,    a   notary   public   for   the   state,   personally   appeared
________________________________, personally known to me (or proved to me on the
basis  of  satisfactory  evidence)  to be the  person(s)  whose  name(s)  is/are
subscribed to the within  instrument  and  acknowledged  to me that  he/she/they
executed  the  same  in  his/her/their  authorized  capacity(ies),  and  that by
his/her/their  signature(s)  on the  instrument the person(s) or the entity upon
behalf of which the person(s) acted, executed the instrument.

         WITNESS my hand and official seal.

Signature_______________________________________
          (SEAL)

                                      D-5
<PAGE>

                                 SCHEDULE 3.1(A)

                             List of Loan Documents

1.       Loan Agreement
2.       Note
3.       Mortgages
4.       Assignments of Leases
5.       Assignment of Management Agreement
6.       Guaranty
7.       Environmental Indemnity
8.       Financing Statements
9.       Cash Management Agreement
10.      Cedars Guaranty

                                 Schedule 3.1(A)

<PAGE>

                                  SCHEDULE 4.2

                                    Consents

None.

                                  Schedule 4.2

<PAGE>

                                 SCHEDULE 4.7(C)

                                Lease Proceedings

None.

                                 Schedule 4.7(C)

<PAGE>

                                  SCHEDULE 4.9

                                   Litigation

None.

                                  Schedule 4.9

<PAGE>

                                  SCHEDULE 4.16

                              Environmental Reports

1.       Bridgepoint

         Phase I  Environmental  Site  Assessment,  dated  September  27,  2000,
         prepared by Aqua Terra Assessment Services Corp. ("Aqua Terra").

2.       Lakewood

         Phase I  Environmental  Site  Assessment,  dated  September  26,  2000,
         prepared by Aqua Terra.

3.       Herald

         Phase I  Environmental  Site  Assessment,  dated  September  27,  2000,
         prepared by Aqua Terra.

4.       Indiana Avenue

         Phase I  Environmental  Site  Assessment,  dated  September  27,  2000,
         prepared by Aqua Terra.

5.       PNC Tower

         Phase I Environmental Site Assessment, dated October 10, 2000, prepared
         by Aqua Terra.

6.       Cedars-Sinai

         Phase I Environmental Site Assessment, dated October 11, 2000, prepared
         by Aqua Terra.

                                  Schedule 4.16

<PAGE>

                                  SCHEDULE 4.20

                                    Insurance

                                  Schedule 4.20

<PAGE>

                                  SCHEDULE 6.5

                               Environmental Work

Bridgepoint Square                                         Estimated Cost

Construction of secondary  containment for two 250            $3,000
gallon   diesel   above   ground   storage   tanks
associated    with   two   emergency    electrical
generators.

Lakewood on the Park

Construction of secondary  containment for one 300            $1,500
gallon diesel above ground storage tank associated
with emergency electrical generator - Building B

Indiana Avenue

Construction of concrete berm or containment  area            $2,000
to protect against leaks from one 275-gallon above
ground oil storage tank.
                                                             -------
                                                              $6,500

                                  Schedule 6.5

<PAGE>
                               Omitted Schedules

         The following  Schedules to the Loan and Security  Agreement  have been
omitted:

          Schedule Number                         Schedule Title

               4.1(c)                             Organizational Chart for
                                                  Borrower Parties

               4.7(b)                             Rent Rolls

         The Registrant agrees to furnish supplementally a copy of the foregoing
omitted Schedules to the Securities and Exchange Commission upon request.EXHIBIT 10.2

                                 PROMISSORY NOTE

$ 260,000,000                                               December 15, 2000

         FOR VALUE RECEIVED,  the  undersigned  CEDARS LA LLC, HERALD SQUARE LLC
and  INDIANA  AVENUE  LLC,  each  a  Delaware  limited  liability  company,  and
BRIDGEPOINT  PROPERTY  TRUST,  LAKEWOOD  PROPERTY  TRUST and 1600 MARKET  STREET
PROPERTY TRUST, each a Maryland real estate investment trust (each, a "Borrower"
and, collectively, the "Borrowers") jointly and severally, promise to pay to the
order of MERRILL LYNCH MORTGAGE LENDING,  INC., a Delaware corporation (together
with its successors and assigns,  "Lender"),  at 100 Church Street,  18th Floor,
New York,  New York  10080,  or such  other  place as Lender  may  designate  in
writing,  the  principal  sum of Two Hundred  Sixty  Million and 00/100  Dollars
($260,000,000),  with interest on the unpaid principal  balance from the date of
this Note,  until paid, at the Interest Rate (as hereinafter  defined) in effect
from time to time  hereunder.  This Promissory Note may be referred to herein as
the  "Note,"  and the loan  evidenced  hereby may be  referred  to herein as the
"Loan."

         PAYMENTS OF PRINCIPAL AND INTEREST.  The Borrowers shall make a payment
on the date  hereof to  Lender of  interest  only on the  outstanding  principal
balance of this Note at the Interest Rate (hereinafter  defined),  from the date
hereof  through and including  the last day of the calendar  month in which this
Note is executed.  Commencing on February 1, 2001 (the "First Payment Date") and
on the first day of each calendar month (each, a "Payment  Date")  thereafter to
and including the Maturity Date (hereinafter  defined), the Borrowers shall make
payments  to  Lender  of   principal   and  interest  in   consecutive   monthly
installments,  each  in the  amount  of One  Million  Six  Hundred  Ninety-Seven
Thousand Four Hundred  Thirty and 85/100 Dollars  ($1,697,430.85)  (the "Monthly
Debt Service  Payment  Amount").  Each payment shall be applied first to accrued
and unpaid  interest  and the  balance  to  principal.  The  entire  outstanding
principal  balance of the Loan, all accrued and unpaid interest  thereon and all
other amounts due hereunder and under the other Loan Documents (collectively the
"Debt") if not sooner  paid,  shall be due and  payable on January 31, 2011 (the
"Maturity Date").

         Interest on the  principal  sum of this Note shall be calculated on the
basis of a 360 day year,  and shall be  charged  for the  actual  number of days
elapsed during any month or other accrual period. Interest on this Note shall be
payable in arrears.

         DEFINITIONS.  The term "Interest  Rate" as used in this Note shall mean
six and eight hundred fourteen one-thousandths percent (6.814%) per annum.

         SECURITY;  LOAN  DOCUMENTS.  This Note is being  executed and delivered
pursuant  to that  certain  Loan and  Security  Agreement,  dated as of the date
hereof (the "Loan  Agreement"),  between the Borrowers and Lender and is secured
by, among other things,  that certain Mortgage,  Assignment of Leases and Rents,
Security  Agreement  and  Fixture  Filing,  and  those  certain  Deeds of Trust,
Assignments of Leases and Rents,  Security Agreements and Fixture Filings,  each
dated as of the date hereof (collectively,  the "Instruments"),  executed by the
Borrowers,  encumbering the fee interests and ground  lessee's  interests of the
respective
<PAGE>

Borrowers  in and to certain  properties  more  particularly  described  therein
(collectively,   the   "Properties").   This  Note,  the  Loan  Agreement,   the
Instruments,  and all other  documents or instruments  given by the Borrowers or
any  guarantor  and  accepted by Lender for  purposes of  evidencing,  securing,
perfecting,  or  guaranteeing  the  indebtedness  evidenced  by this Note may be
referred to as the "Loan  Documents."  Capitalized  terms used but not otherwise
defined  herein but  defined  in the Loan  Agreement  shall have the  respective
meanings given thereto in the Loan Agreement.

         DEFEASANCE.

         A. Notwithstanding anything to the contrary contained in this Note, the
Instruments  or  the  Loan  Documents,  at  any  time  after  the  second  (2nd)
anniversary of the date that is the "startup day," within the meaning of Section
860G of the Internal  Revenue Code of 1986,  as amended from time to time or any
successor statute (the "Code"), of a "real estate mortgage investment  conduit,"
within  the  meaning  of Section  860D of the Code,  that  holds this Note,  the
Borrowers  shall  have  the  right to  defease  all or any  portion  of the Loan
evidenced  by this  Note  with  U.S.  Government  Securities  (a  "Defeasance");
provided  that a partial  Defeasance  of this Note  shall be  permitted  only in
connection  with the release of one or more of the  Properties  from the lien of
the  Instruments and the other Loan Documents in accordance with Section 11.4 of
the Loan  Agreement  and  upon  the  satisfaction  of the  following  conditions
precedent (all of which conditions shall become covenants upon occurrence of the
Defeasance):

               (i) The  Borrowers  shall  provide to Lender not less than thirty
(30)  days'  prior  written  notice  specifying  a  Payment  Date on  which  the
Defeasance  Deposit  (hereinafter  defined) is to be made (the date so specified
may be referred to as the "Defeasance Election Date").

               (ii) The Borrowers shall pay to Lender on the Defeasance Election
Date all interest accrued and unpaid on the outstanding principal amount of this
Note due  through  the  Defeasance  Election  Date and the  scheduled  principal
amortization  payment due on such  Defeasance  Election Date,  together with all
other amounts, if any, then due and payable under this Note, the Instruments and
the other Loan Documents.

               (iii) The  Borrowers  shall  irrevocably  deposit  with Lender an
amount of U.S.  Government  Securities  (hereinafter  defined) which through the
scheduled  payment of principal  and interest in respect  thereof in  accordance
with their  terms  will  provide,  not later than the due dates of the  payments
owing hereunder,  cash in an amount  sufficient,  without  reinvestment,  in the
opinion  of a  firm  of  independent  certified  public  accountants  reasonably
acceptable to Lender expressed in a written  certification  thereof delivered to
Lender (the "CPA Certificate"),  (1) with respect to a total Defeasance,  to pay
and discharge the Scheduled  Defeasance Payments  (hereinafter  defined) for the
principal  balance of this Note or (2) with respect to a partial  Defeasance  in
connection with the release of one or more Properties,  to pay and discharge the
Scheduled Defeasance Payments relating to the Release Price for such Property or
Properties  (the U.S.  Government  Securities  so  deposited  together  with any
interest or other increase from the issuer of the securities earned thereon, and
any  replacements  thereof,  shall be  referred  to  herein  as the  "Defeasance
Deposit"). All such U.S. Government Securities,  if in registered form, shall be
registered  in the name of Lender or its nominee  (and, if registered in nominee
name endorsed to Lender or in blank) and, if issued in book-entry form, the name
of Lender or its

                                       2
<PAGE>
nominee shall appear as the owner of such securities on the books of the Federal
Reserve Bank or other party maintaining such book-entry system.

               (iv) The  Borrowers  shall cause the following to be delivered to
Lender on or prior to the  Defeasance  Election  Date, all in form and substance
satisfactory to Lender in its reasonable discretion:

                    (a) a security agreement,  in form and substance  reasonably
satisfactory to Lender, creating a first priority lien on the Defeasance Deposit
(the "Defeasance Security Agreement");

                    (b) the CPA Certificate;

                    (c) a  certificate  of the  Borrowers  certifying  that  all
requirements for the Defeasance set forth herein have been satisfied;

                    (d) an  opinion  of counsel  for the  Borrowers  in form and
substance reasonably  satisfactory to Lender to the effect that (i) Lender has a
perfected first priority security interest in the Defeasance  Deposit,  (ii) the
holder of this Note will not  recognize  income,  gain or loss for United States
federal income tax purposes as a result of the Defeasance and will be subject to
United States federal income tax on the same amounts,  in the same manner and at
the same times as would have been the case if the  Defeasance  had not occurred,
(iii) any  holder,  trustee or  custodian  of this Note which is a "real  estate
mortgage investment conduit" within the meaning of Section 860D of the Code will
not fail to maintain its status as such as a result of the  Defeasance  and (iv)
the  Defeasance  Security  Agreement  is  enforceable  against the  Borrowers in
accordance with its terms;

                    (e) evidence in writing from the applicable  Rating Agencies
for any  Securities  backed in whole or in part by this Note, to the effect that
the Defeasance will not result in a downgrading, withdrawal, or qualification of
the ratings in effect immediately prior to such Defeasance for any class of such
then outstanding Securities;

                    (f) evidence reasonably  satisfactory to Lender that each of
the Borrowers  remains  validly  existing and in good standing under the laws of
the state where it is organized  and qualified to do business in the state where
its  respective  Property is located;  and the  Borrowers  shall  maintain  such
existence during the time thereafter when this Note shall be outstanding (unless
a Successor  Borrower  (hereinafter  defined) assumes the obligations of each of
the Borrowers or the Defeasing  Borrower(s)  (hereinafter  defined), as the case
may be, under this Note); and

                    (g) a certificate  of the Borrowers  certifying  that all of
the  representations,  and  warranties  contained in the Loan  Agreement and the
other Loan  Documents  are true and correct in all  material  respects as of the
Defeasance  Election Date and ratifying all of the covenants and  obligations of
the  Borrowers  under  the  Loan  Documents  as of  such  date  and  such  other
certificates,  documents or instruments  as Lender may reasonably  request or as
may be required by the Rating  Agencies  referred to above,  provided  that such
certificates,  documents  or  instruments  shall  not  increase  the  Borrowers'
obligations or decrease the Borrowers' rights under the Loan Documents.

                                       3
<PAGE>
               (v)  Either  (i)  each of the  Borrowers,  in the case of a total
Defeasance,  or the Defeasing Borrower(s),  in the case of a partial Defeasance,
shall  deliver to Lender a certificate  stating that at all times  following the
Defeasance,  the  Borrowers or the  Defeasing  Borrower(s),  as the case may be,
shall have no interest in any assets other than the Defeasance  Deposit, or (ii)
such Borrowers shall satisfy all of the requirements of Section C below.

               (vi)  The   Borrowers   shall  pay  to  Lender   all   reasonable
out-of-pocket  costs and expenses  (including,  without  limitation,  reasonable
attorneys'  fees and  disbursements)  incurred by Lender in connection  with the
Defeasance.

               (vii) In the event only a portion of the Loan  evidenced  by this
Note is the subject of the Defeasance in connection with the release of any Lien
of any applicable  Instrument on one or more individual Properties under Section
11.4 of the  Loan  Agreement,  the  Borrowers  shall  execute  and  deliver  all
necessary  documents  to amend and  restate  this Note and issue two  substitute
promissory  notes  therefor:  one note having a principal  balance  equal to the
defeased  portion of the original Note (the "Defeased Note") and one note having
a principal  balance equal to the  undefeased  portion of the original Note (the
"Undefeased  Note").  The  Defeased  Note and the  Undefeased  Note  shall  have
identical  terms as the original Note (and the Defeased Note and the  Undefeased
Note or  Notes  shall  be  cross-defaulted  with  each  other),  except  for the
principal  balance.  A  Defeased  Note  cannot  be the  subject  of any  further
Defeasance.  An  Undefeased  Note may be the subject of a further  Defeasance in
accordance  with the terms of this Note (the term "Note",  as used above in this
clause (vii) for these  purposes,  being deemed to refer to the Undefeased  Note
that is the  subject of further  defeasance);  provided,  however,  that no such
partial  Defeasance  shall  take  place  unless  the  conditions  hereof and the
conditions of Section 11.4 of the Loan Agreement are satisfied.

         B.  Upon  compliance  with the  requirements  of  Section  A above  and
compliance with the  requirements of Section 11.4 of the Loan Agreement,  Lender
shall cause each of the Properties,  in the case of a total Defeasance,  or each
Defeased Property (as hereinafter defined), in the case of a partial Defeasance,
to be released  from the lien of the  applicable  Instruments,  the  obligations
under  the Loan  Documents  with  respect  to the  Properties  or each  Defeased
Property, as the case may be, shall no longer be applicable,  and the Defeasance
Deposit  shall  be the sole  source  of  collateral  securing  this  Note or the
Defeased Note, as the case may be. Lender shall apply the Defeasance Deposit and
the payments  received  therefrom to the payment of all scheduled  principal and
interest  payments due on all  successive  Payment  Dates under this Note or the
Defeased  Note,  as the case may be, after the  Defeasance  Election Date to and
including the Maturity Date and to payment of the entire  remaining  Debt or the
entire remaining  principal balance,  accrued and unpaid interest and other sums
due  under  the  Defeased  Note,  as the  case  may  be,  on the  Maturity  Date
(collectively,  the "Scheduled Defeasance Payments"). The Borrowers, pursuant to
the Defeasance  Security Agreement or other appropriate  document,  shall direct
that the payments received from the Defeasance Deposit shall be made directly to
Lender and applied to satisfy the  obligations of the Borrowers  under this Note
or the Defeased Note.

         C. If,  after the  Defeasance,  the  Borrowers,  in the case of a total
Defeasance,  or the Defeasing  Borrower(s) (as hereinafter defined), in the case
of a partial Defeasance,  will own any assets other than the Defeasance Deposit,
the Borrowers or Defeasing  Borrower(s),  as the case may be, shall establish or
designate a  single-purpose,  bankruptcy-remote  successor entity

                                       4
<PAGE>

acceptable  to  Lender  (the  "Successor  Borrower"),  with  respect  to which a
nonconsolidation opinion reasonably satisfactory in form and substance to Lender
and any applicable  Rating Agencies shall be delivered to Lender and such Rating
Agencies in which case the Borrowers or Defeasing  Borrower(s),  as the case may
be, shall transfer and assign to the Successor  Borrower all of their respective
obligations,  rights and  duties  under  this Note and the  Defeasance  Security
Agreement,  together with the pledged Defeasance Deposit. The Successor Borrower
shall assume the obligations of the Borrowers or Defeasing  Borrower(s),  as the
case may be, under this Note and the  Defeasance  Security  Agreement,  and such
Borrower(s)  shall be relieved of their  respective  obligations  hereunder  and
thereunder.  Each of the Borrowers or the applicable Defeasing  Borrower(s),  as
the case may be,  shall pay not less than  $1,000 to the  Successor  Borrower as
consideration for assuming such Borrower obligations.

         D. As used  herein,  the  following  terms  shall  have  the  following
meanings:

               (i) "Defeased  Property"  shall mean any Property  being released
from the lien of the Instrument  relating to such Property pursuant to a partial
Defeasance  in accordance  with the  provisions of this Note and Section 11.4 of
the Loan Agreement.

               (ii) "U.S. Government  Securities" shall mean securities that are
(i) direct  obligations  of the United States of America for the full and timely
payment of which its full faith and credit is pledged or (ii)  obligations of an
entity  controlled or  supervised by and acting as an agency or  instrumentality
and  guaranteed as a full faith and credit  obligation  which shall be fully and
timely  paid by the  United  States of  America,  which in  either  case are not
callable  or  redeemable  at the  option  of the  issuer  thereof  (including  a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the United
States  Securities  Act)) as custodian with respect to any such U.S.  Government
Securities  or a specific  payment of  principal of or interest on any such U.S.
Government  Securities  held by such  custodian for the account of the holder of
such  depository  receipt,  provided  that  (except  as  required  by law)  such
custodian is not authorized to make any deduction from the amount payable to the
holder of such  depository  receipt from any amount received by the custodian in
respect of the securities or the specific payment of principal of or interest on
the securities evidenced by such depository receipt.

               (iii)  "Defeasing  Borrower"  shall mean the  Borrower  owning or
leasing, as the case may be, a Defeased Property.

               (iv)  "Release  Price"  shall mean,  with respect to any Defeased
Property,  an amount equal to 125% of the Allocated Loan Amount relating to such
Defeased Property.

         E. If, after payment in full of all obligations  evidenced by this Note
or any other of the Loan Documents,  any of the Defeasance Deposit remains, then
on request by the Borrowers  such remaining  balance of the  Defeasance  Deposit
shall be returned to the Borrowers (or to the  Successor  Borrower,  as the case
may be) or Lender shall assign to the Borrowers (or the Successor  Borrower) all
of Lender's right, title, and interest in the Government Securities constituting
the Defeasance Deposit.

         PREPAYMENT;  PREPAYMENT  CONSIDERATION.  If any  prepayment  (except as
expressly permitted in this Note) of all or any portion of the principal balance
hereunder occurs,

                                       5
<PAGE>

whether in connection with Lender's acceleration of the unpaid principal balance
of this Note or in any other circumstances  whatsoever,  or if any Instrument is
satisfied  or  released  by  foreclosure  (whether  by power of sale or judicial
proceeding),  deed  in lieu of  foreclosure  or by any  other  means,  then  the
Borrowers shall be obligated to pay the Prepayment Consideration.  The foregoing
shall not  create any right of  prepayment.  The  Borrowers  shall have no right
whatsoever to prepay all or any portion of the  principal  balance of this Note,
except only as follows:

               (i) The Borrowers shall have the right to prepay and shall not be
required to pay any Prepayment  Consideration or any other early payment penalty
or premium with respect to  prepayment  required by Lender  pursuant to the Loan
Agreement as a result of the  application of insurance  proceeds or condemnation
awards under the Loan Agreement.

               (ii)  Further,  provided no Event of Default has  occurred and is
continuing  hereunder or under any of the Loan  Documents  and provided that the
Borrowers  provide not less than thirty (30) days' prior written  notice thereof
to Lender, the Borrowers shall have the right to pay all (but not less than all)
obligations then  outstanding  under this Note and the other the Loan Documents,
including  the  prepayment  of all  principal,  all accrued and unpaid  interest
hereunder and any and all other sums then due under this Note and the other Loan
Documents on any Payment Date on or after  August 1, 2010.  In such case,  there
shall be no Prepayment  Consideration  or other early payment penalty or premium
due, except that if any such  prepayment  occurs on any day other than a Payment
Date, then in addition to the prepayment  amount the Borrowers also shall pay to
Lender the amount of  interest  that  would have  accrued  under the Note on the
amount being prepaid from and including the prepayment  date to the next Payment
Date.

                  The  "Prepayment  Consideration"  shall be the amount equal to
the  greater  of (i)  one  percent  (1%)  of the  Loan  balance  at the  time of
prepayment  or (ii) the  positive  difference,  if any,  between (a) the present
value on the date of such  prepayment  (by  acceleration  or  otherwise)  of all
future  installments  of  principal  and  interest  which  the  Borrowers  would
otherwise  be required  to pay under this Note from the date of such  prepayment
until the Maturity Date absent such prepayment,  including payment of the entire
remaining  principal  balance due upon the Maturity Date absent such prepayment,
with such present value being  determined by the use of a discount rate equal to
the yield to maturity (adjusted to a "Mortgage Equivalent Basis" pursuant to the
standards and practices of the Securities Industry Association),  on the date of
such  prepayment  of the  United  States  Treasury  Security  having the term to
maturity  closest to the period from such  prepayment  date to the Maturity Date
and (b) the principal balance of the Loan on the date of such prepayment.

         THE  BORROWERS   HEREBY   EXPRESSLY  WAIVE  THE  RIGHT  TO  PREPAY  THE
INDEBTEDNESS  EVIDENCED  HEREBY  IN  WHOLE OR PART  WITHOUT  PENALTY  EXCEPT  AS
EXPRESSLY SET FORTH  HEREIN,  AND  EXPRESSLY  AGREE TO PAY THE AMOUNTS  REQUIRED
HEREIN IN THE EVENT OF AN ACCELERATION.  THE BORROWERS AGREE THAT THE PREPAYMENT
CONSIDERATION REQUIRED HEREIN IS REASONABLE. THE BORROWERS HAVE GIVEN INDIVIDUAL
WEIGHT TO THE  CONSIDERATION  IN THIS TRANSACTION FOR THIS WAIVER AND

                                       6
<PAGE>

AGREEMENT.  THE BORROWERS  HEREBY  EXPRESSLY WAIVE THE BENEFIT OF ANY APPLICABLE
LAW TO THE CONTRARY.

         EVENTS OF DEFAULT;  ACCELERATION.  Upon and at any time  following  the
occurrence of any Event of Default (as defined in the Loan  Agreement),  then at
the option of Lender and without  notice,  the entire  principal  amount and all
interest  accrued and  outstanding  hereunder and all other amounts  outstanding
under any of the Loan Documents shall at once become due and payable, and Lender
may  exercise  any and all of its  rights  and  remedies  under  any of the Loan
Documents or pursuant to  applicable  law. The holder  hereof may so  accelerate
such  obligations and exercise such remedies at any time after the occurrence of
any Event of Default, regardless of any prior forbearance.

         LATE  CHARGES;  DEFAULT  INTEREST.  If an Event of Default  relating to
non-payment  of any  principal,  interest  or other  sums due under this Note or
under any of the other Loan Documents shall occur,  then the Borrowers shall pay
to Lender,  in addition to all sums otherwise due and payable,  a late fee in an
amount equal to five percent (5%) of such principal,  interest or other sums due
hereunder  or under  any  other  Loan  Document  (or,  in the case of a  partial
payment, the unpaid portion thereof), such late charge to be immediately due and
payable without demand by Lender.

         Upon the occurrence  and during the  continuance of an Event of Default
and in any event from and after the Maturity Date of the Loan,  the  outstanding
principal  balance of this Note shall bear interest until paid in full at a rate
per annum (the  "Default  Rate")  equal to the sum of (i) five  percent (5%) and
(ii) the Interest Rate otherwise applicable under this Note.

         The Borrowers agree that such late charges and Default Rate of interest
are reasonable and do not constitute a penalty.

         LAWFUL  INTEREST.  The parties hereto intend to conform strictly to the
applicable  usury laws.  In no event,  whether by reason of demand for  payment,
prepayment, acceleration of the maturity hereof or otherwise, shall the interest
contracted for,  charged or received by the holder hereof hereunder or otherwise
exceed  the  maximum  amount  permissible  under  applicable  law.  If from  any
circumstance  whatsoever interest would otherwise be payable to Lender in excess
of the maximum  lawful amount,  the interest  payable to Lender shall be reduced
automatically to the maximum amount permitted by applicable law. If Lender shall
ever receive  anything of value deemed interest under applicable law which would
apart from this provision be in excess of the maximum  lawful amount,  an amount
equal to any amount which would have been excessive interest shall be applied to
the reduction of the principal  amount (without any Prepayment  Consideration or
any other early payment penalty or premium) owing hereunder in the inverse order
of its  maturity  and not to the payment of  interest,  or if such amount  which
would have been  excessive  interest  exceeds  the unpaid  balance of  principal
hereof,  such excess shall be refunded to the  Borrowers.  All interest  paid or
agreed to be paid to Lender shall, to the extent permitted by applicable law, be
amortized,  prorated,  allocated,  and spread  throughout  the full  stated term
(including any renewal or extension) of such  indebtedness so that the amount of
interest on account of such  indebtedness  does not exceed the maximum permitted
by applicable  law. The provisions of this paragraph  shall control all existing
and future agreements between the Borrowers and Lender.

                                       7
<PAGE>

         CERTAIN RIGHTS AND WAIVERS.  From time to time,  without  affecting the
obligation  of  the  Borrowers  or  their  successors  or  assigns  to  pay  the
outstanding  principal balance of this Note,  interest thereon and other amounts
due  hereunder  and to  observe  the  covenants  contained  herein,  in the Loan
Agreement, the Instruments or in any other Loan Document,  without affecting the
guaranty  of any  person or entity  for  payment  of the  outstanding  principal
balance of this Note,  without  giving notice to or obtaining the consent of any
Borrower or its  successors  or assigns or any  guarantors  or  indemnitor,  and
without liability on the part of Lender,  Lender may, at its option,  extend the
time for payment of the outstanding  principal  balance of this Note or any part
thereof,  reduce the payments thereon,  release anyone liable for payment of all
or a portion of said  indebtedness,  accept a renewal  of this Note,  modify the
terms and time of payment of said  outstanding  principal  balance,  join in any
extension or subordination  agreement,  release any security given herefor, take
or  release  other  or  additional  security,  and  agree  in  writing  with the
undersigned  to modify the rate of  interest or period of  amortization  of this
Note or change the amount of the monthly installments payable hereunder.

         Presentment,  notice of dishonor,  and protest are hereby waived by the
Borrowers and all makers,  sureties,  guarantors and endorsers hereof. This Note
shall be binding upon the Borrowers and their successors and assigns.

         EACH   BORROWER   AND  LENDER   HEREBY   KNOWINGLY,   VOLUNTARILY   AND
INTENTIONALLY  WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION  BASED HEREON,  OR ARISING OUT OF, UNDER OR IN CONJUNCTION  WITH THIS
NOTE, THE INSTRUMENTS, ANY OTHER LOAN DOCUMENT, ANY OTHER AGREEMENT CONTEMPLATED
TO BE  EXECUTED IN  CONNECTION  HEREWITH,  OR ANY COURSE OF  CONDUCT,  COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.

         ASSIGNMENT AND TRANSFER OF NOTE.  Lender shall have the right to assign
or transfer,  in whole or in part  (including  the right to grant  participation
interests in) any or all of its obligations under this Note, the Loan Agreement,
the  Instruments  and any or all of the other Loan  Documents.  Lender  shall be
released  of any  obligations  to the extent  that the same are so  assigned  or
transferred,  and the rights and obligations of "Lender"  hereunder shall become
the rights and  obligations of the transferee  holder.  Lender agrees to provide
the  Borrowers  with  notice of any such  assignment  and in no event  shall the
Borrowers' monetary  obligations  hereunder or under the other Loan Documents be
increased as a result of such assignment (except in accordance with Section 10.2
of the Loan Agreement);  provided,  however, that no Borrower's consent shall be
required  in  connection  with any such  assignment  and no  failure or delay by
Lender  in  delivering  such  notice  shall  limit  the  effectiveness  of  such
assignment.

         LIMITATION ON RECOURSE. Lender's rights of recourse for the obligations
of the Borrowers  hereunder  are limited in  accordance  with Article XII of the
Loan  Agreement.  This provision  shall not limit any rights of Lender under the
Guaranty of Non-Recourse  Exceptions or the Environmental  Indemnity  Agreement,
each dated as of the date hereof.

         ATTORNEYS' FEES, COSTS OF COLLECTION. The Borrowers shall pay to Lender
on demand all out-of-pocket costs and expenses,  including reasonable attorneys'
fees and expenses,  incurred by Lender in collecting  the  indebtedness  arising
hereunder  or under any other

                                       8
<PAGE>

Loan Documents or secured thereby or otherwise exercising any rights or remedies
of Lender  hereunder  or  thereunder  or at law or in equity  or  enforcing  the
obligations of any parties hereto or thereto,  or as a consequence of any breach
or  default  by any  Borrower  or any  guarantor  hereunder  or  thereunder,  or
otherwise as a consequence of any right evidenced or secured by this Note or the
Loan Documents.  Without limitation, such costs and expenses to be reimbursed by
the Borrowers shall include reasonable  attorneys' fees and expenses incurred in
any Bankruptcy case or proceeding and in any appeal.

         APPLICABLE  LAW.  This  Note  shall be  governed  by and  construed  in
accordance with the laws of the State of New York and applicable federal law.

         TIME OF  ESSENCE.  Time shall be of the essence as to all of the terms,
covenants  and  conditions  of this  Note.  If the due date of any  payment  due
hereunder  or under any of the other  Loan  Documents  shall fall on a day other
than a Business Day, the Borrowers shall be required to make such payment on the
next succeeding Business Day.

                        [NO ADDITIONAL TEXT ON THIS PAGE]

                                       9
<PAGE>
         IN WITNESS  WHEREOF,  the undersigned has executed this Promissory Note
as of the date first written above.

                                    BORROWERS:

                                    BRIDGEPOINT PROPERTY TRUST,
                                      a Maryland real estate investment trust

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

                                    CEDARS LA LLC,
                                      a Delaware limited liability company

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

                                    HERALD SQUARE LLC,
                                      a Delaware limited liability company

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

                                    INDIANA AVENUE LLC,
                                      a Delaware limited liability company

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

<PAGE>

                                    LAKEWOOD PROPERTY TRUST,
                                      a Maryland real estate investment trust

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

                                    1600 MARKET STREET PROPERTY TRUST,
                                      a Maryland real estate investment trust

                                    By:     /s/ John A. Mannix
                                            Name:  John A. Mannix
                                            Title:  President

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