PS Business Parks Inc/CA – ‘10-Q’ for 6/30/98 – EX-10.5

As of:  Friday, 8/14/98   ·   For:  6/30/98   ·   Accession #:  866368-98-24   ·   File #:  1-10709

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      27    145K 
 2: EX-10.1     Exhibit to Form 10-Q                                  53±   195K 
 3: EX-10.2     Exhibit to Form 10-Q                                  18±    80K 
 4: EX-10.3     Exhibit to Form 10-Q                                   2±     9K 
 5: EX-10.4     Exhibit to Form 10-Q                                   9     29K 
 6: EX-10.5     Credit Agreement                                      83    359K 
 7: EX-27       FDS --Financial Data Schedule                          1      7K 

EX-10.5   —   Credit Agreement
Exhibit Table of Contents

EX-10.5
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REVOLVING CREDIT AGREEMENT

 among

 PS BUSINESS PARKS, L.P.

 and

 THE LENDERS LISTED HEREIN

as Lenders

 and

 Wells Fargo Bank, National Association,

as Agent

August 6, 1998

$100,000,000

EXHIBITS HAVE BEEN OMITTED AND WILL BE PROVIDED AT THE REQUEST OF THE           
SECURITIES AND EXCHANGE COMMISSION                                              

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 TABLE OF CONTENTS
                                                                            Page

ARTICLE 1.    DEFINITIONS AND RELATED MATTERS.................................1 
             Section  1.1.    Definitions....................................1
              Section  1.2.    Related Matters................................24
                       1.2.1.  Construction...................................24
                       1.2.2.  Determinations.................................25
                       1.2.3.  Accounting Terms and Determinations............25
                       1.2.4.  Governing Law..................................25
                       1.2.5.  Headings.......................................26
                       1.2.6.  Severability...................................26
                       1.2.7.  Independence of Covenants......................26
                       1.2.8.  Exhibits, Etc..................................26
                       1.2.9.  Other Definitions..............................26

ARTICLE 2.    AMOUNTS AND TERMS OF THE CREDIT FACILITIES......................26
              Section  2.1.    Revolving Loans................................26
                       2.1.1.  Type of Loans and Minimum Amounts..............27
                       2.1.2.  Notice of Borrowing............................27
                       2.1.3.  Funding........................................29
              Section  2.2.    Interest; Late Charge; Conversion/Continuation.29
                       2.2.1.  Interest Rate and Payment......................29
                       2.2.2.  Conversion or Continuation.....................30
                       2.2.3.  Computations...................................31
                       2.2.4.  Maximum Lawful Rate of Interest................31
              Section  2.3.    Notes, Etc.....................................31
                       2.3.1.  Loans Evidenced by Notes.......................31
                       2.3.2.  Notation of Amounts and Maturities, Etc........31
                       2.3.3.  Loan Account...................................32
              Section  2.4.    Fees...........................................32
                       2.4.1.  Facility Fee...................................32
                       2.4.2.  Extension Fee..................................32
                       2.4.3.  Other Fees.....................................32
                       2.4.4.  Fees Non-Refundable............................32
   Section  2.5.    Termination and Reduction of Revolving
                               Commitment; Extension..........................33
                       2.5.1.  Termination....................................33
                       2.5.2.  Extension......................................33
              Section  2.6.    Repayments and Prepayments.....................34
                       2.6.1.  Mandatory Prepayment...........................34
                       2.6.2.  Optional Prepayments...........................34
                       2.6.3.  Payments Set Aside.............................35
              Section  2.7.    Manner of Payment..............................35
              Section  2.8.    Pro Rata Treatment.............................36
              Section  2.9.    Additional Fees and Costs......................37
              Section  2.10.   Taxes..........................................43
        Section  2.11.   Lending Office; Discretion of Lenders as to
                               Manner of Funding. ............................44

ARTICLE 3.    CONDITIONS TO LOANS.............................................45
              Section  3.1.    Closing Conditions.............................45
                       3.1.1.  Certain Documents..............................45
                       3.1.2.  Fees and Expenses Paid.........................45
                       3.1.3.  General........................................45
              Section  3.2.    Conditions Precedent to Loans..................45
                       3.2.1.  Conditions Precedent...........................45
                       3.2.2.  Notice of Borrowing............................45
                       3.2.3.  Representations and Warranties.................45
                       3.2.4.  No Default.....................................46
                       3.2.5.  No Overdraw....................................46
                       3.2.6.  Covenant Compliance............................46
                       3.2.7.  No Material Adverse Change.....................46
                       3.2.8.  Satisfaction of Conditions.....................46

ARTICLE 4.    REPRESENTATIONS AND WARRANTIES..................................46
              Section  4.1.    Organization, Powers and Good Standing.........46
Section  4.2.    Authorization, Binding Effect,     
                               No Conflict, Etc...............................47
                       4.2.1.  Authorization, Binding Effect, Etc.............47
                       4.2.2.  No Conflict....................................47
                       4.2.3.  Partnership Units; General Partner.............47
                       4.2.4.  Governmental Approvals.........................48
              Section  4.3.    Guarantor......................................48
              Section  4.4.    Subsidiaries...................................48
              Section  4.5.    Financial Information..........................48
              Section  4.6.    No Material Adverse Changes ...................49
              Section  4.7.    Litigation.....................................49
              Section  4.8.    Agreements; Applicable Law.....................49
              Section  4.9.    Taxes..........................................50
              Section  4.10.   Governmental Regulation........................50
              Section  4.11.   Margin Regulations.............................50
              Section  4.12.   Employees......................................50
              Section  4.13.   Title to Property..............................50
              Section  4.14.   Intellectual Property, Etc.....................51
              Section  4.15.   Environmental Condition........................51
              Section  4.16.   Labor Matters..................................52
              Section  4.17.   Disclosure.....................................52

ARTICLE 5.    AFFIRMATIVE COVENANTS OF THE BORROWER...........................53
              Section  5.1.    Financial Statements and Other Reports.........53
              Section  5.2.    Records and Inspection.........................56
              Section  5.3.    Corporate Existence, Etc.......................56
              Section  5.4.    Payment of Taxes...............................56
              Section  5.5.    Maintenance of Properties......................57
              Section  5.6.    Maintenance of Insurance.......................57
              Section  5.7.    Conduct of Business............................57
              Section  5.8.    Further Assurances.............................57
              Section  5.9.    Future Information.............................57
              Section  5.10.   Shareholder Agreement..........................58
              Section  5.11.   Limitation on Guarantor........................58
              Section  5.12.   Environmental Matters..........................58
              Section  5.13.   Listing and Organizational Requirements........59
              Section  5.14.   Year 2000......................................59
              Section  5.15.   Change of Management...........................59

ARTICLE 6.    NEGATIVE COVENANTS OF THE BORROWER PARTIES......................60
              Section  6.1.    Payment of Obligations. .......................60
              Section  6.2.    Investments. ..................................60
              Section  6.3.    Asset Dispositions. ...........................61
              Section  6.4.    Financial Covenants............................61
         6.4.1.  Ratio of Total Liabilities to Gross
                               Asset Value....................................61
          6.4.2.  Ratio of Unencumbered Asset Value to
                               Outstanding Unsecured Liabilities..............62
                       6.4.3.  Minimum Tangible Net Worth.....................62
                       6.4.4.  Secured Debt to Gross Asset Value..............62
                       6.4.5.  Interest Coverage..............................62
                       6.4.6.  Fixed Charge Coverage..........................62
                       6.4.7.  Distributions..................................62
                       6.4.8.  Land Holdings..................................62
                       6.4.9.  Securities Holdings............................62
                       6.4.10. Mortgage Holdings..............................62
                       6.4.11. Joint Ventures.................................63
                       6.4.12. Construction-In-Progress.......................63
                       6.4.13. Other Assets...................................63
                       6.4.14. Unsecured Interest Expense Coverage............63
              Section  6.5.    Restriction on Fundamental Changes.............63
              Section  6.6.    Transactions with Affiliates...................63
              Section  6.7.    ERISA..........................................64
              Section  6.8.    Amendments of Charter Documents................64
              Section  6.9.    Certain Obligations............................64
              Section  6.10.   Distributions..................................65

ARTICLE 7.    EVENTS OF DEFAULT...............................................65
              Section  7.1.    Events of Default..............................65
                       7.1.1.  Failure to Make Payments.......................65
                       7.1.2.  Default in Other Debt..........................65
                       7.1.3.  Breach of Covenants............................65
                       7.1.4.  Breach of Warranty.............................65
         7.1.5.  Involuntary Bankruptcy; Appointment
                               of Receiver, Etc...............................66
       7.1.6.  Voluntary Bankruptcy; Appointment
                               of Receiver, Etc...............................66
                       7.1.7.  Judgments and Attachments......................66
                       7.1.8.  Termination of Loan Documents, Etc.............66
                       7.1.9.  Change of Control..............................67
                       7.1.10. Change of Condition............................67
                       7.1.11. Guaranty.......................................67
              Section  7.2.    Remedies.......................................67

ARTICLE 8.    APPOINTMENT, POWERS AND DUTIES OF LENDERS AND AGENT.............68
              Section  8.1.    Relationship of Borrower and Lenders...........68
              Section  8.2.    Appointment and Authorization..................69
              Section  8.3.    Agent and Affiliates...........................69
              Section  8.4.    Lenders' Credit Decisions......................70
              Section  8.5.    Action by Agent................................70
              Section  8.6.    Non-Liability of Agent.........................71
              Section  8.7.    Indemnification................................73
              Section  8.8.    The Agent......................................74
              Section  8.9.    Successor Agent................................74
              Section  8.10.   Powers of the Agent............................75
              Section  8.11.   Limitations on the Agent.......................76
              Section  8.12.   Approval of Lenders............................76
              Section  8.13.   Method of Payment..............................77
              Section  8.14.   Increased Costs................................77
              Section  8.15.   Taxes..........................................78
              Section  8.16.   Excess Payments................................78
              Section  8.17.   Return of Payments.............................78
              Section  8.18.   Default By The Borrower; Acceleration..........79
              Section  8.19.   Defaults by Lender.............................79
              Section  8.20.   No Partnership or Joint Venture................81
              Section  8.21.   Indemnification................................81

ARTICLE 9.    MISCELLANEOUS...................................................82
              Section  9.1.    Expenses.......................................82
              Section  9.2.    Indemnity......................................82
              Section  9.3.    Waivers; Modifications in Writing..............84
              Section  9.4.    Cumulative Remedies; Failure or Delay..........85
              Section  9.5.    Notices, Etc...................................85
              Section  9.6.    Successors and Assigns.........................85
              Section  9.7.    Confidentiality................................87
              Section  9.8.    Set Off........................................87
              Section  9.9.    Changes in Accounting Principles...............88
    Section  9.10.   Survival of Agreements, Representations
                               and Warranties.................................88
              Section  9.11.   Execution in Counterparts......................88
              Section  9.12.   Complete Agreement.............................89
              Section  9.13.   Inspections....................................89
              Section  9.14.   Waiver of Right to Trial By Jury...............89
              Section  9.15.   Limitation of Liability........................90

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REVOLVING CREDIT AGREEMENT

         REVOLVING CREDIT AGREEMENT, dated as of August 6, 1998 (as amended from
time to time,  the  "Agreement"),  by and between PS  Business  Parks,  L.P.,  a
California  limited  partnership  (the  "Borrower"),  and the  Lenders and other
financial  institutions  that  either now or in the future  are  parties  hereto
(collectively,  the "Lenders" and each individually, a "Lender") and Wells Fargo
Bank, National Association (the "Arranger" and "Administrative Agent"), as agent
and   representative  for  the  Lenders  (in  such  capacity  the  Arranger  and
Administrative  Agent or any  successor  in such  capacity is referred to herein
collectively  as the  "Agent").  The  Lenders  and the  Agent  are  collectively
referred to herein as the "Lender  Parties" and each  individually  as a "Lender
Party".                                                                         

ARTICLE 1.

 DEFINITIONS AND RELATED MATTERS

     Section 1.1. Definitions.  The following terms with initial capital letters
have the following meanings:                                                    

"Accounts Payable" is defined in Section 6.1.                         

  "Acquiport Two" means Acquiport Two Corporation, a Delaware corporation.

     "Acquisition  Price"  means  the  aggregate  purchase  price  for an asset,
including  bona fide  purchase  money  financing  provided by the seller and all
other Debt encumbering such asset at the time of acquisition.                   

"Agent" is defined in the Preamble.                                   

     "Agent's  Account"  means the  account of the Agent  identified  as such on
Schedule  1.1A, or such other  account as the Agent may  hereafter  designate by
notice to the Borrower and each Lender Party.                                   

     "Agent's  Offices"  means the  offices of the Agent  identified  as such on
Schedule  1.1A, or such other  offices as the Agent may  hereafter  designate by
notice to the Borrower and each Lender Party.                                   

     "Affiliate"  means,  with  respect to any Person,  any other  Person  that,
directly or  indirectly  through  one or more  intermediaries,  controls,  or is
controlled  by, or is under common  control with,  such first  Person.  The term
"control" means the possession, directly or indirectly, of the power, whether or
not exercised, to direct or cause the direction of the management or policies of
a Person,  whether  through  the  ownership  of Capital  Stock,  by  contract or
otherwise,  and the terms  "controlled"  and "common  control" have  correlative
meanings. Unless otherwise indicated,  "Affiliate" refers to an Affiliate of any
Borrower  Party.  Notwithstanding  the  foregoing,  in no event shall any Lender
Party, any Affiliate of any Lender Party, or PSI be deemed to be an Affiliate of
the Borrower.                                                                   

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     "Agreement"  is defined in the  Preamble and  includes  all  Schedules  and
Exhibits.                                                                       

     "AOPP,  Inc." means  American  Office Park  Properties,  Inc., a California
corporation, predecessor to Guarantor.                                          

     "AOPP,  L.P." means  American  Office Park  Properties,  L.P., a California
limited partnership, currently known as Borrower.                               

"AMEX" means the American Stock Exchange.                             

     "Applicable Law" means all applicable  provisions of all (i) constitutions,
treaties,  statutes, laws, rules, regulations and ordinances of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders,  decisions,  judgments,
awards and decrees of any Governmental Authority.                               

     "Applicable  Margin"  means,  with  respect  to each Loan,  the  respective
percentages  per annum  determined,  at any time,  based on the range into which
Borrower's  Credit  Rating then falls,  in  accordance  with the table set forth
below. Any change in Borrower's  Credit Rating causing it to move to a different
range on the table shall effect an  immediate  change in the  Applicable  Margin
(including  existing  Loans).  Promptly  after  learning  of  a  change  in  the
Borrower's Credit Rating,  Agent shall give notice of such change to the Lenders
and include in such notice the new  Applicable  Margin and the effective date of
such change.  In the event that more than one (1)  different  Credit  Rating has
been assigned, the lower of the Credit Ratings will prevail.                    

 GRID A:
 -------

          Applicable
                                    Margin for                Applicable
          Range of                  Base Rate                 Margin for
           Borrower's                Loans                     LIBOR Loans
             Credit Rating             (% per annum)             (% per annum)
            ----------------         ----------------           ----------------

Level I       A-/A3                                                             
            or better                         0.0                      0.550

Level II      BBB+/Baa1                         0.0                      0.600  

Level III     BBB/Baa2                          0.0                      0.750  

Level IV      BBB-/Baa3                         0.0                      0.800  

Level V       Unrated or Below                                                  
              Investment Grade                  0.0                   See Grid B

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 GRID B:
 -------

                        Applicable
                                            Margin for          Applicable
                                            Base Rate           Margin for
                                             Loans               LIBOR Loans
                      Leverage                 (% per annum)       (% per annum)
                 ------------------         ------------------  ----------------

Level I          less than     25%                0.0                 0.800     

Level II                25% to 35%                0.0                 0.850     

Level III               35% to 45%                0.0                 0.900     

Level IV          greater than 45%                0.0                 0.950     

     "Assignee  Lender" means any Person to which an Assignment is made pursuant
to Section 9.6.2.                                                               

    "Assignment" and "Assignment and Acceptance" are defined in Section 9.6.2.

     "Availability"  means,  on any date,  the lesser of (i) an amount  equal to
Unencumbered  Asset Value as of the end of the most  recently  concluded  Fiscal
Quarter for which the Borrower is, as of such date of determination, required to
have reported to the Lenders  pursuant to Section 5.1.5.  hereof,  multiplied by
 .50, and (ii)  $100,000,000.  Notwithstanding  the foregoing, commencing on the
Closing  Date,  Availability  shall be  calculated  pursuant  to the  Compliance
Certificate  delivered  by the  Borrower on the Closing  Date until such time as
Availability is otherwise changed or modified under this Agreement.             

     "Available  Financing"  means the sum of all undrawn  committed funds under
credit facilities of the Borrower plus Cash and Cash Equivalents.               

     "Available  Unsecured  Liabilities" means the sum of Outstanding  Unsecured
Liabilities  plus the  positive  difference  (if any) between (i) the sum of all
Revolving  Commitments  of all  Lenders  and  (ii)  the  sum  of  all  Revolving
Commitment Usage of all Lenders.                                                

     "Bankruptcy  Code"  means  Title 11 of the  United  States  Code (11 U.S.C.
Section 101 et seq.), as amended from time to time.                             

     "Base Rate"  means,  at any time, a rate per annum equal to the greater of:
(i) the per annum rate of interest most recently publicly announced by the Agent
at its  principal  office  in San  Francisco  as its  prime  rate  for  domestic
commercial loans, or (ii) the Federal Funds Rate at such time plus 0.50%.       

     "Base Rate Loan" means a Loan that bears  interest by reference to the Base
Rate.                                                                           

"Borrower" is defined in the Preamble, and includes any successor.    

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     "Borrower Account" means the account of the Borrower maintained with Agent,
identified as account number -----------,  or such other account as the Borrower
may hereafter designate by notice to the Agent.                                 

     "Borrower  Party" means the Borrower,  Guarantor and any  Subsidiary of the
Borrower  or  Guarantor.  "Borrower  Parties"  shall mean each of the  foregoing
Persons individually, and all of the foregoing Persons collectively.            

  "Borrowing" means a contemporaneous borrowing of Loans of the same Type.

     "Borrowing  Period"  means,  with  respect  to each  LIBOR  Loan,  a period
commencing on a LIBOR Business Day and ending one (1), two (2), three (3) or six
(6) months thereafter,  as specified by the Borrower pursuant to Section 2.1. or
2.2.  hereof (or, if requested by the Borrower and available to all the Lenders,
a period  commencing  on a LIBOR  Business  Day and ending less than thirty (30)
days  thereafter),  provided that any such period that would  otherwise end on a
day that is not a LIBOR  Business  Day shall be extended to the next  succeeding
LIBOR  Business  Day unless such LIBOR  Business  Day falls in another  calendar
month,  in which case such period shall end on the next preceding LIBOR Business
Day.                                                                            

     "Business Day" means any day that is not a Saturday, Sunday or other day on
which Lenders in San Francisco, California are authorized or obligated to close.

     "Capital  Expenditure  Reserve" means, for any period,  the amount equal to
(i) $.95 annually,  multiplied by (ii) the gross rentable  square footage of all
Real Property owned for the entirety of such period.                            

     "Capital  Expenditures"  means, for any period,  the expenditures  (whether
paid in cash or accrued and including Capitalized Leases entered into during the
period) of the Borrower  Parties during such period with respect to property and
equipment that are capitalized on the balance sheets of the Borrower  Parties in
accordance with the Borrower Parties' current capitalization practice.          

     "Capital Lease" means, as applied to any Person,  any lease of any property
(whether real,  personal or mixed) by that Person as lessee which, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.                                                                 

     "Capital  Stock"  means,  with  respect  to any  Person,  all  (i)  shares,
interests, participations or other equivalents (howsoever designated) of capital
stock and other equity interests of such Person and (ii) rights (other than debt
securities  convertible into capital stock or other equity interests),  warrants
or options to acquire any such capital stock or other equity interests.         

"Capitalization Rate" means ten percent (10%).                        

     "Capitalized  Leases"  means all leases of the Borrower  Parties of real or
personal  property that are required to be  capitalized  on the balance sheet of
the  Borrower  Parties.  The  amount  of  any  Capitalized  Lease  shall  be the
capitalized amount thereof.                                                     

"Cash" means money, currency or a credit balance in a Deposit Account.

4 

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     "Cash  Equivalents"  means  (i)  marketable  direct  obligations  issued or
unconditionally  guaranteed  by the  United  States  Government  or issued by an
agency thereof and backed by the full faith and credit of the United States,  in
each case maturing within one year after the date of acquisition  thereof,  (ii)
marketable  direct  obligations  issued  by any  state of the  United  States of
America  or  any  political   subdivision  of  any  such  state  or  any  public
instrumentality  thereof,  maturing within 90 days after the date of acquisition
thereof and, at the time of  acquisition,  having one of the two highest ratings
obtainable  from any two of S&P,  Moody's,  Duff and Phelps,  or Fitch Investors
(or, if at any time no two of the  foregoing  shall be rating such  obligations,
then from such other nationally  recognized rating services acceptable to Agent)
and not listed for possible  down-grade in Credit Watch  published by S&P; (iii)
commercial  paper,  other than commercial  paper issued by any Borrower Party or
any of their respective Affiliates, maturing no more than 90 days after the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-2 or P-2 from  either  S&P or  Moody's  (or,  if at any time  neither  S&P nor
Moody's  shall be rating such  obligations,  then the  highest  rating from such
other nationally  recognized rating services acceptable to Agent); (iv) domestic
certificates  of deposit,  time deposits and bankers'  acceptances  which mature
within  one  year  after  the date of  acquisition  thereof;  and (v)  overnight
securities,  repurchase agreements,  or reverse repurchase agreements secured by
any of the foregoing  types of Securities or debt  instruments  issued,  in each
case, by (a) any commercial  bank organized  under the laws of the United States
of America or any state  thereof or the  District of  Columbia or Canada  having
combined capital and surplus of not less than $250,000,000 or (b) any Lender.   

     "Change of Control"  means the  occurrence of any of the following  events:
(a) all or  substantially  all of the assets of the Borrower  are sold,  leased,
exchanged or otherwise transferred to any Person or group of persons or entities
acting in concert as a partnership or other group; (b) the Borrower is merged or
consolidated  with or into another  corporation  with the effect that the common
stockholders of Borrower  immediately prior to such merger or consolidation hold
less  than  seventy-five  percent  (75%)  of the  ordinary  voting  power of the
outstanding  securities  of the  surviving  corporation  of such  merger  or the
corporation  resulting from such consolidation;  (c) a change in the composition
of the board of directors of the Borrower  after the Closing Date as a result of
which fewer than a majority of the incumbent  directors are directors who either
(i) had been  directors  of the Borrower  twenty-four  (24) months prior to such
change,  or (ii)  were  elected,  or  nominated  for  election,  to the board of
directors with the affirmative votes of a majority of the directors who had been
directors of the Borrower  twenty-four  (24) months prior to such change and who
were still in office at the time of the election or nomination;  or (d) a Person
or group (as such term is used in Rule 13d-5 under the  Securities  Exchange Act
of 1934) of Persons (other than PSI) and any Person eligible to file a statement
on Schedule 13G pursuant to Rule  13d-1(b)(1) of the Securities  Exchange Act of
1934) shall, as a result of a tender or exchange offer,  open market  purchases,
merger,  privately negotiated purchases or otherwise,  have become,  directly or
indirectly,  the  beneficial  owner  (within the meaning of Rule 13d-3 under the
Securities  Exchange Act of 1934) of securities having twenty-five percent (25%)
or more of the  ordinary  voting  power of then  outstanding  securities  of the
Borrower.                                                                       

     "Closing  Date"  means  August  6,  1998 or such  later  date on which  all
conditions set forth in Section 3.1. have been satisfied.                       

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time.                                                                           

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     "Commencement of Construction"  with respect to a Real Property,  means the
commencement of material on-site work (including grading) or the commencement of
a work of improvement on such Real Property.                                    

     "Commitments"  means,  collectively,  with  respect  to  each  Lender,  the
Revolving Commitment.                                                           

"Compliance Certificate" is defined in Section 5.1.3.                 

     "Consolidated  Entities" means,  collectively,  (i) the Borrower,  (ii) any
other Person the  accounts of which are  consolidated  or would be  consolidated
with those of any Borrower  Party in the  consolidated  financial  statements of
such Borrower Party in accordance with GAAP, and (iii) all Unconsolidated  Joint
Ventures of which any Borrower  Party or any Person  defined in  subclause  (ii)
above is a general partner.                                                     

     "Construction-in-Process"  means Real  Property for which  Commencement  of
Construction has occurred but such Real Property is not complete.               

     "Contingent Obligation" means, as to any Person, any obligation,  direct or
indirect,  contingent or otherwise,  of such Person (i) with respect to any Debt
or other  obligation  of  another  Person,  including  any  direct  or  indirect
guarantee  of such  Debt  (other  than any  endorsement  for  collection  in the
ordinary  course of  business) or any other  direct or indirect  obligation,  by
agreement or otherwise, to purchase or repurchase any such Debt or obligation or
any security  therefor,  or to provide funds for the payment or discharge of any
such  Debt  or  obligation  (whether  in the  form  of  loans,  advances,  stock
purchases,  capital  contributions  or  otherwise),  (ii) to  provide  funds  to
maintain the financial condition of any other Person,  (iii) otherwise to assure
or hold  harmless  the holders of Debt or other  obligations  of another  Person
against loss in respect thereof, or (iv) under Hedging Contracts.  The amount of
any  Contingent  Obligation  under clause (i) or (ii) shall be the lesser of (a)
the amount of such Debt or obligation guaranteed or otherwise supported thereby,
or (b) the maximum amount guaranteed or supported by the Contingent  Obligation.
The amount of any  obligation  under a Hedging  Contract  shall be determined in
accordance  with standard  methods of calculating  credit exposure under similar
arrangements  as prescribed by the Agent from time to time,  taking into account
potential movements in interest rates,  exchange rates or other relevant indices
and the  notional  principal  amount,  term and  termination  provisions  of the
arrangement.                                                                    

     "Contractual  Obligation" means, as applied to any Person, any provision of
any security  issued by that Person or of any  agreement or other  instrument to
which that  Person is a party or by which it or any of the  properties  owned or
leased by it is bound or otherwise subject.                                     

     "Credit  Rating"  means the  rating(s)  or implied  rating  assigned by the
Rating Agencies to Borrower's senior unsecured long term indebtedness.          

     "Debt"  means,  with respect to any Person,  without  duplication:  (i) all
obligations  for  borrowed  money;  (ii) all  obligations  evidenced  by  bonds,
debentures, notes or other similar instruments; (iii) all obligations to pay the
deferred  purchase price of property or services;  (iv) all Capitalized  Leases;
(v) all  obligations  of others  secured  by a Lien on any  asset  owned by such
Person or Persons whether or not such  obligation or liability is assumed;  (vi)
all obligations of such Person or Persons,  contingent or otherwise,  in respect
of  any  letters  of  credit  or  bankers'  acceptances;  (vii)  all  Contingent
Obligations;  and (viii) all  obligations  under  facilities for the discount or
sale of receivables.                                                            

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     "Default"  means any condition or event that,  with the giving of notice or
lapse  of time or  both,  would,  unless  cured or  waived,  become  an Event of
Default.                                                                        

     "Defined  Benefit Plan" means any plan subject to Title IV of ERISA that is
not a Multiemployer Plan.                                                       

     "Deposit Account" means a demand,  time, savings,  passbook or like account
with a bank,  savings and loan association,  credit union or like  organization,
other than an account evidenced by a negotiable certificate of deposit.         

     "Depreciation and Amortization  Expense" means (without  duplication),  for
any period,  the sum for such period of (i) total  depreciation and amortization
expense,  whether paid or accrued,  of the Borrower Parties and the Consolidated
Entities, plus (ii) the Borrower Parties' and any Consolidated Entity's pro rata
share  of  depreciation  and  amortization   expenses  of  Unconsolidated  Joint
Ventures.  For purposes of this  definition,  the pro rata share of depreciation
and  amortization  expense of any  Unconsolidated  Joint Venture shall be deemed
equal to the product of (i) the depreciation  and  amortization  expense of such
Unconsolidated  Joint  Venture,  multiplied by (ii) the  percentage of the total
outstanding  Capital  Stock  of such  Person  held by a  Borrower  Party  or any
Consolidated Entity, expressed as a decimal.                                    

     "Designated  Market" means, with respect to any LIBOR Rate Loan, the London
interbank LIBOR market or such other interbank LIBOR market as may be designated
in writing from time to time by the Agent.                                      

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

     "Domestic  Lending  Office" means the office,  branch or Affiliate of Agent
designated  as its  Domestic  Lending  Office or such  other  office,  branch or
Affiliate as the Agent may hereafter  designate as its Domestic  Lending  Office
for one or more Types of Loans by notice to the Borrower and the Agent.         

     "EBITDA" means,  for any period,  (i) Net Income for such period  excluding
gains (or losses)  from debt  restructuring,  sales of Real  Property or similar
extraordinary items as determined  pursuant to GAAP, plus (without  duplication)
(A) Interest  Expense,  (B) Tax Expense,  and (C)  Depreciation and Amortization
Expense,  in each  case for  such  period,  including  for the  purpose  of this
calculation any equity in Net Income,  plus (without  duplication)  (A) Interest
Expense, (B) Tax Expense, and (C) Depreciation and Amortization Expense, in each
case for such period, of Unconsolidated Joint Ventures.                         

     "Environmental  Damages"  means all  claims,  judgments,  damages,  losses,
penalties,   liabilities  (including  strict  liability),  costs  and  expenses,
including  costs  of  investigation,   remediation,   defense,   settlement  and
reasonable  attorneys' fees and consultants' fees, that are incurred at any time
as a result of the existence of Hazardous  Material  upon,  about or beneath any
Real  Property  or  migrating  to or from any Real  Property,  or arising in any
manner whatsoever out of any violation of Environmental Requirements.           

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     "Environmental  Lien" means a Lien in favor of any  Governmental  Authority
for Environmental Damages.                                                      

     "Environmental   Requirements"   means  all  Applicable  Laws  relating  or
pertaining to Hazardous Materials, including without limitation all requirements
pertaining to reporting,  permitting,  investigation and remediation of releases
or threatened releases of Hazardous Materials into the environment,  or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.                                   

     "Equity Offering Net Proceeds" means,  cumulatively,  the Net cash proceeds
received and the value of assets  acquired  (net of Debt  incurred or assumed in
connection  therewith)  through the  issuance of Capital  Stock of any  Borrower
Party after the Closing Date,  excluding any amounts attributable to mandatorily
redeemable  preferred stock (other than preferred stock  redeemable  solely with
common stock). "Net" means net of underwriters' discounts,  commission and other
reasonable  out-of-pocket  expenses  actually paid to any Person (other than any
Borrower Party or any Affiliate thereof).                                       

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time.                                                      

     "ERISA  Affiliate"  means  any  Person  that  is or  was a  member  of  the
controlled  group of  corporations  or  trades  or  businesses  (as  defined  in
Subsection  (b),  (c),  (m) or (o) of  Section  414 of the  Code) of  which  any
Borrower Party is or was a member at any time within the last six years.        

"Event of Default" means any of the events specified in Section 7.1.  

     "Exchange Act" means the  Securities  Exchange Act of 1934, as amended from
time to time.                                                                   

"Excluded Tax" is defined in Section 2.10.1.                          

"Extension" is defined in Section 2.5.2.                              

"Extension Notice" is defined in Section 2.5.2.                       

"Facility Fee" is defined in Section 2.4.1.                           

     "Federal  Funds  Rate"  means,  for any day,  the rate per  annum  (rounded
upwards,  if  necessary,  to the  nearest  1/100th of 1%) equal to the  weighted
average of the rates on overnight Federal funds transactions with members of the
Federal  Reserve  System  arranged  by Federal  funds  brokers  on such day,  as
published  for such day (or,  if such day is not a  Business  Day,  for the next
preceding  Business Day) by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that if such rate is not so published for
any day that is a Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Agent on such day on such transactions as determined
by the Agent.                                                                   

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   "Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.                                               

     "Fee  Letter"  means that  certain  letter dated August 5, 1998 between the
Borrower and the Agent.                                                         

     "Fees"  means,  collectively,  the fees  described or referenced in Section
2.4.                                                                            

     "Fiscal Year" means the fiscal year of the Borrower,  which shall be the 12
month-period  ending on  December  31 in each year or such  other  period as the
Borrower  may  designate  and the Agent may approve in writing,  which  approval
shall not be unreasonably conditioned,  withheld or delayed. "Fiscal Quarter" or
"fiscal quarter" means any quarter of a Fiscal Year ending on March 31, June 30,
September 30 or December 31.                                                    

     "Fixed Charges" means,  for any Fiscal  Quarter,  and without  duplication,
Interest Expense for such Fiscal Quarter, plus scheduled principal  amortization
payments (other than balloon  payments) on Debt of the Borrower  Parties and the
Consolidated  Entities during such Fiscal Quarter,  plus the Capital Expenditure
Reserve.                                                                        

"Fixed Rate Loan" means any LIBOR Rate Loan.                          

"Foreign Lender Party" is as defined in 2.10.3.                       

     "Funding  Date" means any date on which a Loan is (or is  requested  to be)
made.                                                                           

     "Funds from Operations"  shall be interpreted  consistently with the NAREIT
Definition and shall mean, for any period,  Net Income for such period excluding
gains (or losses)  from debt  restructuring,  sales of Real  Property or similar
extraordinary  items as  determined  pursuant  to  GAAP,  plus  the  portion  of
Depreciation and Amortization  Expenses during such period which is attributable
to Real Property,  and after  adjustments  for  Unconsolidated  Joint  Ventures.
(Adjustments  for  Unconsolidated  Joint Ventures shall be calculated to reflect
funds from operations on the same basis.)                                       

     "GAAP" means generally accepted  accounting  principles as in effect in the
United States of America (as such principles are in effect on the date hereof). 

     "Governmental Approval" means an authorization,  consent,  approval, permit
or  license  issued  by, or a  registration  or filing  with,  any  Governmental
Authority.                                                                      

     "Governmental  Authority"  means  any  nation  and any  state or  political
subdivision thereof and any entity exercising executive, legislative,  judicial,
regulatory or  administrative  functions of or pertaining to government  and any
tribunal or arbitrator of competent jurisdiction.                               

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     "Gross Asset Value" means,  at any time,  the sum of (without  duplication)
the  following,  determined  in  accordance  with  GAAP,  subject  to the limits
established pursuant to Sections 6.4.10 and 6.4.11:                             

(i) EBITDA for the most recently  concluded Fiscal Quarter,  multiplied by four,
less  the  annual   Capital   Expenditure   Reserve  and  then  divided  by  the
Capitalization  Rate;  provided,   however,   that  for  the  purposes  of  this
calculation, any Real Property that was not Wholly Owned by a Borrower Party for
the entirety of such Fiscal Quarter shall be excluded;                          

(ii) the  acquisition  cost  (including  commissions,  closing  costs  and other
acquisition  expenses not in excess of two percent  (2.0%) of the purchase price
and  capitalized on the balance sheet of a Borrower  Party) of any improved Real
Property  acquired in compliance  with this  Agreement  during the most recently
concluded  Fiscal  Quarter and not included in subclauses  (i), (iii) or (iv) of
this definition;                                                                

(iii) the amount of all Cash and Cash  Equivalents  held by the  Borrower or the
Guarantor as of the end of the most recently concluded Fiscal Quarter; and      

(iv) the value of any Debt  payable  to a  Borrower  Party  which is  secured by
mortgages  or  deeds  of trust on real  estate,  marketable  equity  securities,
unconsolidated Joint Ventures and other tangible investments,  all determined in
accordance with GAAP.                                                           

     "Ground  Lease" means a ground lease  between the Borrower as ground lessor
and a Subsidiary  or other Person as ground  lessee,  in  connection  with which
ground lease the following conditions are satisfied:  (a) under the terms of the
ground lease, the ground lessee is obligated to diligently pursue development of
the leased premises as a commercial office,  light industrial or retail project;
and (b) either (i) the ground lessee is in compliance with that  obligation,  or
(ii) the Borrower is diligently pursuing remedies against the ground lessee as a
result of the ground lessee's failure to comply with that obligation.           

     "Guarantor"  means PS Business  Parks,  Inc., a California  corporation and
with respect to any financial information referred to herein, AOPP, Inc.        

     "Guaranty" means a General Continuing  Repayment Guaranty made by Guarantor
substantially in the form of Exhibit G, which shall bind any successor by merger
to the Guarantor.                                                               

     "Hazardous Materials" means any oil, flammable explosives,  asbestos,  urea
formaldehyde  insulation,  radioactive  materials,  hazardous  wastes,  toxic or
contaminated substances or similar materials, including, without limitation, any
substances  which are "hazardous  substances,"  "hazardous  wastes,"  "hazardous
materials" or "toxic  substances"  under the Hazardous  Materials  Laws,  and/or
other applicable environmental laws, ordinances and regulations.                

     "Hazardous  Materials  Laws"  means all laws,  ordinances  and  regulations
relating to Hazardous Materials  including,  without  limitation:  the Clean Air
Act, as amended,  42 U.S.C.  Section 7401 et seq.;  the Federal Water  Pollution
Control  Act,  as  amended,  33  U.S.C.  Section  1251  et  seq.;  the  Resource
Conservation  and Recovery Act of 1976,  as amended,  42 U.S.C.  Section 6901 et
seq.; the Comprehensive Environment Response,  Compensation and Liability Act of

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1980, as amended (including the Superfund  Amendments and Reauthorization Act of
1988,  "CERCLA"),  42 U.S.C.  Section 9601 et seq.; the Toxic Substances Control
Act, as amended,  15 U.S.C.  Section 2601, et seq.; the Occupational  Safety and
Health Act, as amended,  29 U.S.C.  Section  651,  the  Emergency  Planning  and
Community  Right-to-Know Act of 1986, 42 U.S.C.  Section 11001 et seq.; the Mine
Safety and Health Act of 1977, as amended,  30 U.S.C.  Section 801 et seq.;  the
Safe Drinking  Water Act, as amended,  42 U.S.C.  Section 300f et seq.;  and all
comparable  state and local  laws,  laws of other  jurisdictions  or orders  and
regulations.                                                                    

     "Hedging  Contract"  means, for any Person,  any interest rate,  commodity,
foreign exchange or other hedging agreement (including swaps,  collars, caps and
forward  contracts)  between such Person and one or more financial  institutions
providing  for the transfer or  mitigation of  fluctuations  of interest  rates,
exchange rates or other prices either generally or under specific contingencies.

"Indemnified Liabilities" is defined in Section 9.2.1.                

"Indemnitee" is defined in Section 9.2.1.                             

     "Intangible Assets" means (i) all write-ups (other than write-ups resulting
from foreign  currency  translations  and write-ups of assets of a going concern
business  made within  twelve  months after the  acquisition  of such  business)
subsequent  to March  31,  1998,  in the book  value of any  asset  owned by any
Borrower  Party  or any  Consolidated  Entity,  and (ii)  all  unamortized  debt
discount and expense,  unamortized  deferred  charges,  prepaid fees  (including
without limitation legal fees, financing fees and interest but excluding impound
accounts and other  deposits),  goodwill,  patents,  trademarks,  service marks,
trade names, copyrights,  organization or development expenses, receivables from
employees,   officers  or  partners,   leasehold  options,  licenses  and  other
intangible assets.                                                              

     "Interest  Coverage  Ratio" means, at any time, the ratio of (i) EBITDA for
the Fiscal Quarter then most recently ended (or, if shorter, for the period from
the Closing Date to the end of such period),  to (ii) Interest  Expense for such
period.                                                                         

     "Interest  Differential"  means the amount as of the date of any prepayment
of a LIBOR Rate Loan by which (a) the amount of interest that would have accrued
on such LIBOR Rate Loan for the  remainder of the  applicable  Borrowing  Period
exceeds (b) the amount of interest that would accrue on such LIBOR Rate Loan for
the period from the date of  prepayment  of such LIBOR Rate Loan to the last day
of the  applicable  Borrowing  Period for such LIBOR Rate Loan if the LIBOR Rate
applicable to such LIBOR Rate Loan (the "Applicable Rate") were determined three
(3) LIBOR Business Days prior to the date of prepayment of such LIBOR Rate Loan.
The period  commencing on the date of such prepayment and ending on the last day
of the applicable  Borrowing Period shall be deemed to be the "Borrowing Period"
for  determination  of such  Applicable  Rate.  The  calculation of the Interest
Differential by the Agent shall be conclusive in the absence of manifest error. 

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     "Interest Expense" means, for any period, the sum (without duplication) for
such period of (i) total  interest  expense,  whether  paid or  accrued,  of the
Borrower Parties and the Consolidated Entities, including without limitation the
portion of any Capitalized Lease Obligations  allocable to interest expense, and
the  Borrower  Parties'  share of  interest  expenses  in  Unconsolidated  Joint
Ventures but excluding  amortization  or write-off of debt discount and expense,
(ii) capitalized  interest,  (iii) to the extent not included in clauses (i) and
(ii) the Borrower  Parties' pro rata share of interest expense and other amounts
of the type referred to in such clauses of the  Unconsolidated  Joint  Ventures,
and (iv) interest  incurred on any liability or  obligation  that  constitutes a
Contingent  Obligation of any Borrower  Party or any  Consolidated  Entity.  For
purposes of clause (iii), a Borrower  Party's pro rata share of interest expense
or other amount of any Unconsolidated Joint Venture shall be deemed equal to the
product  of  (a)  the  interest   expense  or  other  relevant  amount  of  such
Unconsolidated  Joint  Venture,  multiplied  by (b) the  percentage of the total
outstanding  Capital  Stock  of such  Person  held by a  Borrower  Party  or any
Consolidated Entity, expressed as a decimal.                                    

     "Investment"  means, with respect to any Person, (i) any direct or indirect
purchase  or other  acquisition  by that Person of stock or  securities,  or any
beneficial  interest  in stock or other  securities,  of any other  Person,  any
partnership interest (whether general or limited) in any other Person, or all or
any  substantial  part of the business or assets of any other  Person,  (ii) any
direct or indirect loan,  advance or capital  contribution by that Person to any
other Person, including all indebtedness and accounts receivable from that other
Person  that are not  current  assets or did not arise  from sales to that other
Person in the ordinary course of business. The amount of any Investment shall be
the original cost of such  Investment  plus the cost of all  additions  thereto,
without any  adjustments  for  increases or decreases  in value,  or  write-ups,
write-downs or write-offs with respect to such Investment.                      

     "Joint Venture" means a joint venture,  partnership or similar arrangement,
whether in corporate, partnership or other legal form.                          

     "Land Holdings" means  unimproved Real Property owned by any Borrower Party
with respect to which Commencement of Construction has not occurred.            

     "Lender" is defined in the Preamble.  For purposes of the Sections referred
to in  (and  subject  to)  Section  9.6.3.,  "Lender"  includes  a  holder  of a
Participation.                                                                  

     "Lender  Party" is defined in the  Preamble.  For  purposes of the Sections
referred to in (and subject to) Section 9.6.3., "Lender Party" includes a holder
of a Participation.                                                             

     "Lending  Office" means,  with respect to the Agent, (i) in the case of any
payment with respect to LIBOR Rate Loans, the Agent's LIBOR Lending Office,  and
(ii) in the case of any  payment  with  respect  to Base Rate Loans or any other
payment under the Loan Documents, the Agent's Domestic Lending Office.          

     "Leverage" means Total Liabilities divided by Gross Asset Value,  expressed
as a percentage.                                                                

     "Liabilities"  means, at any time, the aggregate  amount of all liabilities
of the Guarantor  that have been or properly  would be classified as liabilities
on the consolidated balance sheet of the Guarantor.                             

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     "LIBOR  Business  Day" means any Business  Day on which  dealings in United
States  Dollar  deposits are  conducted by and between  banks in the  Designated
Market for LIBOR Rate Loans                                                     

"LIBOR Fee" is defined in Section 2.9.1.                              

     "LIBOR Lending  Office" means,  as to each Lender,  the office or branch of
the Lender so designated on the signature pages of this Agreement, or such other
office or branch  of such  Lender as the  Lender  may  hereafter  designate,  by
written notice to the Borrower and Agent, as its LIBOR Lending Office.          

     "LIBOR  Obligations" means Eurocurrency  liabilities (as defined in Section
204.2(h) of  Regulation D) and  nonpersonal  time deposits as defined in Section
204.2-(f)(v) of Regulation D).                                                  

     "LIBOR Rate" means, with respect to any LIBOR Rate Loan, the rate per annum
(rounded  upward to the next 1/16th of one percent) at which  deposits in United
States  Dollars  are  offered  by  the  Agent  in  the   Designated   Market  at
approximately 8:00 a.m. (Pacific Coast time) three (3) LIBOR Business Days prior
to the first day of the applicable  Borrowing Period in an amount  approximately
equal to such LIBOR Rate Loan, and for a period of time comparable to the number
of days in the applicable Borrowing Period; provided, however, that if the Agent
shall fail as a result of the occurrence of a Special  Circumstance to determine
the LIBOR Rate as provided in Section 2.1.2.3., no LIBOR Rate shall be available
with  respect to such LIBOR Rate Loan,  and such LIBOR Rate Loan shall  become a
Base  Rate Loan  until  further  designation  pursuant  to  Section  2.1.2.  The
determination  of the LIBOR Rate by the Agent shall be conclusive in the absence
of manifest error.                                                              

     "LIBOR  Rate Loan"  means a Loan which is  designated  as a LIBOR Rate Loan
pursuant to Section 2.1.2.                                                      

     "Lien" means any lien,  mortgage,  pledge,  security  interest,  charge, or
encumbrance of any kind (including any conditional sale or other title retention
agreement  or any lease in the  nature  thereof)  and any  agreement  to give or
refrain from giving any lien, mortgage,  pledge,  security interest,  charge, or
other encumbrance of any kind and with respect to property, shall include any of
the foregoing,  encumbering or otherwise relating to a partnership interest in a
partnership that owns such property.                                            

"Liquidated Cost" shall have the meaning set forth in Section 2.      

"Loan" means the Loan made or to be made pursuant to Article 2.       

"Loan Account" is defined in Section 2.3.3.                           

     "Loan  Documents"  means,  collectively,  this  Agreement,  the Notes,  the
Guaranty,  and any other  agreement,  instrument  or other  writing  executed or
delivered by any Borrower  Party in  connection  herewith,  and all  amendments,
exhibits and schedules to any of the foregoing.                                 

     "Major Agreements" means, with respect to any Real Property included within
the  Unencumbered  Pool or which  Borrower  proposes  for  inclusion  within the
Unencumbered  Pool,  (a) a lease of such Real  Property  with respect to 100,000
square feet or more of gross leasable area, and (b) each ground lease  affecting
such Real Property.                                                             

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     "Majority  Lenders"  means Lenders  having at least 66.67% of the aggregate
amount of the Commitments.                                                      

     "Mandatory  Prepayment" means any mandatory prepayment described in Section
2.6.1.                                                                          

     "Margin Regulations" means Regulations G, T, U and X of the Federal Reserve
Board, as amended from time to time.                                            

   "Margin Stock" means "margin stock" as defined in the Margin Regulations.

     "Material,"  "Material  Adverse Effect" or "Material  Adverse Change" means
(i) a condition,  circumstance  or event  material  to, (ii) a material  adverse
effect on or (iii) a material  adverse change in, as the case may be, any one or
more of the  following:  (A) the  business,  assets,  results of  operations  or
financial condition of a Borrower Party or (B) the ability of any Borrower Party
to  perform  its  obligations  under any Loan  Document  to which it is a party.
"Materially" has a correlative meaning.                                         

     "Maturity  Date"  means at any  time,  the  then-applicable  maturity  date
specified  hereunder.  The initial Maturity Date shall be the second anniversary
of the  Closing  Date,  although  such date may be  extended  by the  Lenders as
provided in Section 2.5.2. hereof.                                              

    "Moody's" means Moody's Investors Services, Inc. or any successor thereto.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
3(37) and  Section  4001(a)(3)(A)  of ERISA to which the  Borrower or any of the
ERISA Affiliates is making or accruing an obligation to make contributions or to
which any such  Person has within any of the  preceding  five plan years made or
accrued an obligation to make contributions.                                    

     "Multiple  Employer  Plan"  means a "single  employer  plan," as defined in
Section  4001(a)(15)  of ERISA,  that (i) is  maintained  for  employees  of the
Borrower or any ERISA  Affiliate and at least one person other than the Borrower
and the ERISA  Affiliates or (ii) was so maintained  and in respect of which the
Borrower or any ERISA  Affiliate could have liability under Section 4064 or 4069
of ERISA if such plan has been or were to be terminated.                        

     "Net Income" means, for any period,  without duplication,  total net income
(or loss) of the Borrower Parties and the Consolidated  Entities for such period
taken as a single  accounting  period,  including the Borrower Parties' pro rata
share of the  income  (or loss) of any  Unconsolidated  Joint  Venture  for such
period,  provided  that there  shall be excluded  therefrom  (i) any charges for
minority interests in the Borrower held by Persons other than the Borrower, (ii)
any  income or loss  attributable  to  extraordinary  items,  including  without
limitation,  income or loss  attributable to  restructuring of Debt, (iii) gains
and  losses  from  sales of  assets,  and (iv)  except to the  extent  otherwise
included hereunder, the income (or loss) of any Person accrued prior to the date
it  becomes a  Consolidated  Entity or is merged  with a  Borrower  Party or any
Consolidated  Entity or such Person's assets are acquired by a Borrower Party or
any Consolidated Entity. For purposes of this definition,  the Borrower Parties'
pro rata share of income (or loss) of any Unconsolidated  Joint Venture shall be
deemed  equal to the product of (i) the income (or loss) of such  Unconsolidated
Joint  Venture,  multiplied  by (ii) the  percentage  of the  total  outstanding
Capital  Stock of such Person held by the Borrower  Parties or any  Consolidated
Entity, expressed as a decimal.                                                 

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     "Net Worth" means, at any date, the  consolidated  stockholders'  equity of
the Borrower and the Consolidated  Entities,  excluding any amounts attributable
to mandatorily redeemable preferred stock (other than preferred stock redeemable
solely with common stock).                                                      

     "Nonrecourse Debt" means any indebtedness: (a) under the terms of which the
payee's  remedies  upon the  occurrence  of an event of default  are  limited to
specific,  identified assets of a Borrower Party which secure such indebtedness;
and (b) for the repayment of which such Borrower Party has no personal liability
beyond  the loss of such  specified  assets,  except  for  liability  for fraud,
material  misrepresentation  or misuse or misapplication of insurance  proceeds,
condemnation  awards or rents,  waste,  existence of  hazardous  wastes or other
customary exceptions to nonrecourse provisions.                                 

"Note" means a Revolving Loan Note.                                   

"Notice of Borrowing" is defined in Section 2.1.2.                    

"Notice of Continuation/Conversion" is defined in Section 2.2.2.2.    

"Notice of Responsible Officer" is defined in Section 2.1.2.6.        

     "Obligations"  means all present and future  obligations and liabilities of
the Borrower of every type and  description  arising under or in connection with
the Loan  Documents  due or to become  due to the  Lender  Parties or any Person
entitled to indemnification,  or any of their respective successors, transferees
or assigns,  whether for principal,  interest,  fees,  expenses,  indemnities or
other amounts  (including  attorneys'  fees and expenses) and whether due or not
due, direct or indirect, joint and/or several, absolute or contingent, voluntary
or involuntary,  liquidated or  unliquidated,  determined or  undetermined,  and
whether now or hereafter existing, renewed or restructured.                     

     "Occupancy Rate" with respect to any Real Property, shall mean the ratio of
(a) rentable square feet in such Real Property which are physically  occupied by
tenants  paying rent  pursuant  to a lease to (b) the number of rentable  square
feet in such Real Property, expressed as a percentage.                          

     "Office Park Property" means each commercial  office,  light  industrial or
retail property owned by any Borrower Party.                                    

     "Operating  Lease"  means,  as  applied  to any  Person,  any  lease of any
property  (whether  real,  personal,  or mixed)  under  which such Person is the
lessee and that is not capitalized on the balance sheet of such Person.         

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     "Other Assets" means (i) Land Holdings;  (ii) Capital Stock (which is owned
by a Borrower Party) of any Person; and (iii) Debt payable to a Borrower Party. 

     "Outstanding  Unsecured  Liabilities"  means,  at any time,  the sum of (i)
Revolving Commitment Usage; (ii) the outstanding principal balance of other Debt
of any of the  Borrower  Parties  which  is  not  secured  by a Lien  (provided,
however,  that Debt  pursuant to which any  Borrower  Party shall have granted a
negative pledge or similar promise shall not be deemed to be secured by a Lien);
(iii) trade  payables of the Borrower  for  construction  in progress;  (iv) all
Liquidated  Costs;  and (v) with  respect  to any  Borrower  Party  that has any
employees at any time or has any ERISA Affiliate,  benefit liabilities  (whether
or not vested) under all Plans  (excluding all Plans with assets greater than or
equal to liabilities  (whether or not vested)) in excess of the current value of
the assets of such Plans allocable to such benefits; provided, however, that the
portion  of any Debt  secured by  collateral  other  than real  property,  which
portion  exceeds  the fair market  value of the  collateral  therefor,  shall be
deemed to be Debt that is not secured by a Lien.                                

     "Overdraw"  means any event,  condition  or  circumstance  under  which the
aggregate Revolving Commitment Usage of all Lenders exceeds Availability.       

"Participant" means any holder of a Participation.                    

"Participation" is defined in Section 9.6.3.                          

     "PBGC" means the Pension Benefit Guaranty Corporation,  as defined in Title
IV of ERISA, or any successor.                                                  

"Periodic Payment Date" means the first Business Day of each month.   

"Permitted Liens" means:                                              

     (a) Liens (other than Environmental Liens and any Lien imposed under ERISA)
for taxes,  assessments or charges of any  Governmental  Authority or claims not
yet due;                                                                        

     (b) Liens  (other than any Lien imposed  under ERISA)  incurred or deposits
made in the ordinary course of business  (including  without  limitation  surety
bonds and appeal bonds) in connection with workers'  compensation,  unemployment
insurance  and  other  types  of  social  security  benefits  or to  secure  the
performance of tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), and statutory obligations;                                       

     (c) Liens imposed by laws, such as mechanics' liens and other similar liens
arising in the ordinary  course of business  which secure payment of obligations
not more than  thirty  (30) days past due or are being  contested  as  permitted
under this Agreement;                                                           

(d) any Liens which are approved by the Majority Lenders; and         

     (e) rights of lessees  under leases and the rights of lessors under Capital
Leases.                                                                         

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability company,  a trust, an unincorporated  organization or any other entity
or organization,  including a government or any agency or political  subdivision
thereof and, for the purpose of the definition of "ERISA  Affiliate," a trade or
business.                                                                       

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     "Plan" means any pension, retirement,  disability, defined benefit, defined
contribution,  profit sharing, deferred compensation,  employee stock ownership,
employee stock purchase,  health, life insurance, or other employee benefit plan
or arrangement,  other than a Multiemployer Plan, irrespective of whether any of
the  foregoing  is  funded,  in which any  personnel  of the  Borrower  or ERISA
Affiliate participates or from which any such personnel may derive a benefit.   

     "Post-Default  Rate" means, at any time, a rate per annum equal to the Base
Rate in effect at such time plus 5%.                                            

"Prescribed Forms" is defined in Section 2.10.3.                      

     "Prohibited  Transaction"  means a  transaction  that is  prohibited  under
Section  4975 of the Code or Section  406 or 407 of ERISA and not  exempt  under
Section 4975 of the Code or Section 408 of ERISA.                               

     "Projections" means those certain financial projections of the Borrower and
Guarantor  submitted  to Agent on December  15, 1997 and during the week of July
27, 1998.                                                                       

     "Property  Expenses" means, for any Real Property,  all operating  expenses
relating to such Real Property, including without limitation the following items
(provided,  however,  that  notwithstanding  anything  to the  contrary  in this
definition,   Property   Expenses  shall  not  include  Debt  service,   capital
improvements, Depreciation and Amortization Expenses and any extraordinary items
not considered  operating  expenses under GAAP,  and the  outstanding  principal
balance of assessments shown as a liability on the Borrower's balance sheet):   

     (i) all expenses for the  operation of such Real  Property,  including  any
management  fees  payable and all  insurance  expenses,  but not  including  any
expenses  incurred in connection with a sale or other capital or interim capital
transaction;                                                                    

     (ii) water charges, property taxes (including the nonprincipal component of
assessment debt not shown on Borrower's balance sheet), assessments, sewer rents
and other impositions, other than fines, penalties, interest or such impositions
(or  portions  thereof)  that are  payable  by reason of the  failure  to pay an
imposition timely; and                                                          

     (iii) the cost of routine  maintenance,  repairs and minor alterations,  to
the extent they are expensed by Borrower under GAAP.                            

     "Property Income" means, for any Real Property,  all gross revenue from the
ownership  and/or  operation of such Real Property (but excluding  income from a
sale or other  capital  item  transaction),  service  fees and  charges,  tenant
expense reimbursement income payable with respect to such Real Property (but not
such  reimbursement for expenditures not included as a Property Expense) and the
proceeds of any business or rental  interruption  insurance with respect to such
Real Property.                                                                  
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     "Property Information" means the following information and other items with
respect  to each  Real  Property  which  Borrower  intends  to  designate  as an
Unencumbered Asset to be added to the Unencumbered Pool:                        

          (i) A physical description of such Real Property,  the date upon which
     such Real  Property was acquired or is proposed to be acquired by Borrower,
     the  Acquisition  Price of such Real Property,  if the building  located on
     such  Real  Property  or the use of  such  building  does  not  conform  to
     applicable zoning ordinances and laws, a description of such  nonconformity
     and whether such  building or use is a legal  nonconforming  use, a copy of
     any reports delivered to Borrower with respect to the structural  integrity
     of  improvements  located on such Real Property and Borrower's  preliminary
     budget for nonrevenue enhancing capital expenditures for such Real Property
for the next succeeding eight (8) Fiscal Quarters;                    

          (ii) A current operating statement for such Real Property,  audited or
     certified  by Borrower as being true and correct in all  material  respects
     and prepared in accordance with GAAP, and comparative  operating statements
     for the current  interim  fiscal period and for the previous two (2) Fiscal
     Years (or such lesser period as it has been operating);  provided, however,
     that,  if Borrower  shall have owned such Real  Property  for less than the
     period to be covered by such operating statements and comparative operating
     statements, then the audit and certification requirements shall extend only
     to the period of ownership by Borrower, and Borrower shall provide to Agent
     complete copies of any operating  statements prepared by former owner(s) of
     such Real Property  with respect to the  remainder of the periods  required
hereunder, if the same are available to Borrower;                     

          (iii) A  current  Rent  Roll  for such  Real  Property,  certified  by
     Borrower as being true and correct (or if Borrower  does not  presently own
the Property, a copy of the Rent Roll prepared by the seller thereof);

          (iv) A "Phase I"  environmental  assessment  of such Real Property not
     more than twelve (12) months old, prepared by an environmental  engineering
firm reasonably acceptable to Agent;                                  

    (v) Copies of all Major Agreements affecting such Real Property;

          (vi) A copy of Borrower's  most recent Owner's or Leasehold  Policy of
     Title Insurance, covering such Real Property or a current preliminary title
report; and                                                           

          (vii)  If  Borrower's  interest  in such  Real  Property  is a  ground
     leasehold  interest,  a copy of the ground lease pursuant to which Borrower
     leases such Real Property and all amendments thereto and memoranda thereof.

     "Property  NOI"  means,  for any  Real  Property  for any  period,  (i) all
Property  Income for such  period,  minus (ii) all  Property  Expenses  for such
period.                                                                         

"PSI" means Public Storage, Inc., a California corporation.           

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     "Rating Agencies" means,  collectively,  S&P and Moody's.  Other nationally
recognized rating agencies shall be "Rating Agencies" following approval thereof
by the Agent.                                                                   

     "Real Property"  means each of those parcels (or portions  thereof) of real
property,  improvements  and fixtures thereon and  appurtenances  thereto now or
hereafter  owned or leased for use or  development as an Office Park Property by
any Borrower Party and uses ancillary thereto.                                  

     "Regulation D" means  Regulation D of the Federal Reserve Board, as amended
from time to time.                                                              

     "Regulatory  Change" means (i) the adoption or becoming effective after the
date hereof of any treaty, law, rule or regulation,  (ii) any change in any such
treaty, law, rule or regulation  (including  Regulation D), or any change in the
administration or enforcement  thereof, by any Governmental  Authority,  central
bank  or  other  monetary   authority   charged  with  the   interpretation   or
administration  thereof, in each case after the date hereof, or (iii) compliance
after the date hereof by any Lender Party (or its Lending Office or, in the case
of capital  adequacy  requirements,  any holding  Borrower of any Lender  Party)
with, any interpretation,  directive,  request,  order or decree (whether or not
having the force of law) of any such  Governmental  Authority,  central  bank or
other monetary authority.                                                       

     "Rent Roll" means, with respect to any Real Property,  a rent roll for such
Real Property stating for each tenancy within such Real Property the identity of
the lessee,  the suite designation of the space leased,  the gross leasable area
included within such space, the date of commencement and the date of termination
of such tenancy, the periods of any options to extend or terminate such tenancy,
the base rent and any escalations or operating expense  reimbursement payable in
respect of such  tenancy and the type of lease  (i.e.,  gross or degree to which
net of expenses, taxes and other items).                                        

     "Rental  Payments"  means,  for  any  period,   (i)  all  Interest  Expense
attributable  to  Capitalized  Leases  plus (ii) all rents paid under  Operating
Leases, in each case for such period.                                           

     "Reportable  Event" means any of the events set forth in Section 4043(b) of
ERISA or the  regulations  thereunder,  except  any such event  (other  than the
failure to meet minimum funding  standards of Section 412 of the Code or Section
302 of  ERISA)  as to which  the  provision  for 30 days'  notice to the PBGC is
waived under applicable regulations.                                            

"Responsible Officer" is defined in Section 2.1.2.6.                  

     "Restricted  Payment" means (i) any dividend or other distribution,  direct
or  indirect,  on  account of any  Capital  Stock of any  Borrower  Party now or
hereafter  outstanding,  except (a) a  dividend  or other  distribution  payable
solely in shares or  equivalents  of the same class of Capital Stock and (b) the
issuance of equity interests upon the exercise of outstanding warrants,  options
or other rights,  or (ii) any  redemption,  retirement,  sinking fund or similar
payment,  purchase or other  acquisition for value,  direct or indirect,  of any
Capital Stock of any Borrower Party now or hereafter outstanding.               

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     "Revolving  Commitment" means, with respect to each Lender, the amount such
Lender is committed to loan with respect to this Agreement.  With respect to the
initial Lender hereunder, such amount shall mean $100,000,000.00.               

"Revolving Commitment Termination Date" is defined in Section 2.5.1.  

     "Revolving  Commitment  Usage" means,  at any time, (i) with respect to any
Lender,  the aggregate  unpaid  principal  amount of all Revolving Loans made by
such Lender and (ii) with respect to all Lenders, the aggregate unpaid principal
amount of all Revolving Loans.                                                  

"Revolving Loan" is defined in Section 2.1.                           

     "Revolving  Loan Note"  means a  Revolving  Loan Note made by the  Borrower
payable  to the order of any  Lender,  in the  amount of the  lesser of (i) such
Lender's  Revolving  Commitment  and  (ii) the  aggregate  principal  amount  of
Revolving Loans made by such Lender,  which note is substantially in the form of
Exhibit A-1, as amended from time to time.                                      

     "S&P"  means  Standard  &  Poor's  Ratings  Services,  a  division  of  The
McGraw-Hill Companies, Inc., or any successor thereto.                          

     "SEC" means the United States Securities and Exchange  Commission,  and any
successor.                                                                      

     "Secured Debt" means Debt of any Borrower Party or any Consolidated  Entity
in any case secured by any Lien,  including  without  limitation (i) all Debt of
the Borrower or any Consolidated Entity secured by a Lien upon any Real Property
and (ii) all Debt which has a liquidation preference,  contractual or otherwise,
over the Obligations (other than wages or tenant security deposits).            

     "Securities  Act" means the Securities Act of 1933, as amended from time to
time.                                                                           

     "Senior  Officer"  means,  with  respect  to  the  general  partner  of the
Borrower,  the  Chairman of the Board of  Directors,  the  President,  the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer or any Senior Vice President in charge of a principal business unit or
division of the general partner of the Borrower.                                

     "Shareholders'  Agreement" means that certain Agreement Among  Shareholders
And Company dated as of December 23, 1997 among Acquiport Two, AOPP, Inc., AOPP,
L.P. and PSI as amended by that certain  letter  agreement  amongst such parties
dated January 21, 1998.                                                         

"Single Employer Plan" means a Plan other than a Multiemployer Plan.  

     "Solvent"  means,  with respect to any Person,  that: (i) the total present
fair salable value of such Person's assets on a going concern basis is in excess
of  the  total  amount  of  such  Person's  liabilities,   including  contingent
liabilities;  (ii) such  Person is able to pay its  liabilities  and  contingent
liabilities as they become due; and (iii) such Person does not have unreasonably
small capital to carry on such Person's business as theretofore  operated and as
proposed to be operated.                                                        

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     "Special  Circumstance"  means the  application  or  adoption of any law or
interpretation,  or  any  change  therein  or  thereof,  or  any  change  in the
interpretation or administration  thereof by any Governmental  Authority charged
with the interpretation or administration thereof, or compliance by the Lenders,
any Assignee Lender, any Participant, or the LIBOR Lending Office of any Lender,
Assignee  Lender or Participant,  with any request or directive  (whether or not
having the force of law) of any such Governmental  Authority,  or the occurrence
of circumstances  affecting the Designated  Market or the ability of the Lenders
to fix interest rates with  reference to the Designated  Market which are beyond
the reasonable control of the Lenders, any Assignee Lender or Participant.      

"Stated Revolving Termination Date" is defined in Section 2.5.1.      

     "Subsidiary" means, as of any date of determination and with respect to any
Person,  any  corporation  or  partnership  (whether  or not,  in  either  case,
characterized  as  such  or as a  "joint  venture"),  whether  now  existing  or
hereafter  organized or acquired:  (a) in the case of a corporation,  of which a
majority of the  securities  having  ordinary  voting  power for the election of
directors or other governing body (other than securities  having such power only
by reason of the happening of a contingency) are at the time beneficially  owned
by such Person  and/or one or more  Subsidiaries  of such Person,  or (b) in the
case of a partnership,  of which such Person or a subsidiary of such Person is a
general  partner or of which a majority of the  partnership  or other  ownership
interests are at the time  beneficially  owned by such Person and/or one or more
of its subsidiaries.                                                            

     "Tangible Net Worth" means, at any time, Net Worth minus Intangible  Assets
at such time.                                                                   

     "Tax  Expense"  means  (without  duplication),  for any  period,  total tax
expense (if any) attributable to income and franchise taxes based on or measured
by income, whether paid or accrued, of the Borrower Parties and the Consolidated
Entities,  including the Borrower  Parties' and  Consolidated  Entity's pro rata
share of tax expenses in any Unconsolidated  Joint Venture. For purposes of this
definition,  a Borrower  Party's  pro rata share of any such tax  expense of any
Unconsolidated  Joint  Venture  shall be deemed equal to the product of (i) such
tax  expense  of such  Unconsolidated  Joint  Venture,  multiplied  by (ii)  the
percentage  of the total  outstanding  Capital  Stock of such Person held by the
Borrower Parties or any Consolidated Entity, expressed as a decimal.            

     "Taxes" means any present or future income, stamp and other taxes, charges,
fees, levies, duties, imposts, withholdings or other assessments,  together with
any interest and penalties,  additions to tax and additional  amounts imposed by
any federal, state, local or foreign taxing authority upon any Person.          

     "Termination  Event" means: (i) a Reportable Event or an event described in
Section  4068(f) of ERISA;  (ii) the  withdrawal  of the  Borrower or any of its
ERISA  Affiliates  from a Multiple  Employer Plan during a plan year in which it
was a  "substantial  employer" as defined in Section  4001(a)(2) of ERISA or the
cessation of operations at a facility in the circumstances  described in Section
4068(f) of ERISA;  (iii) the filing of a notice of intent to terminate a Defined
Benefit Plan  (including any such notice with respect to a Defined  Benefit Plan
amendment  referred  to in  Section  4041(e) of ERISA) or the  termination  of a
Defined Benefit Plan excluding,  for purposes of this clause (iii), any standard
termination  under Section 4041(b) of ERISA; (iv) the institution of proceedings
to terminate a Defined  Benefit Plan by the PBGC;  or (v) the  appointment  of a
trustee to administer any Defined  Benefit Plan under Section 4042 of ERISA;  or
(vi) any other event or condition that might reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Defined Benefit Plan.                                           

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     "To the best of  knowledge  of" means,  when  modifying  a  representation,
warranty or other statement of any Person,  that the fact or situation described
therein is known by the Person (or, in the case of a Person other than a natural
person,   known  by  a   Responsible   Officer  of  that   Person)   making  the
representation,  warranty or other statement, or with the exercise of reasonable
due diligence under the circumstances (in accordance with the standard of what a
reasonable man in similar  circumstances would have done) should have been known
by the Person (or, in the case of a Person other than a natural  person,  should
have been known by a Responsible Officer of that Person).                       

     "Total Liabilities" means, at any time, without duplication,  the aggregate
amount of (i) all Debt and other  liabilities  of the  Borrower  Parties and the
Consolidated  Entities  reflected in the  financial  statements  of the Borrower
Parties or disclosed in the financial  notes thereto,  plus (ii) all liabilities
of all Unconsolidated  Joint Ventures that is otherwise recourse to the Borrower
Parties or any  Consolidated  Entity or any of their  respective  assets or that
otherwise  constitutes  Debt of any Borrower Party or any  Consolidated  Entity,
plus  (iii)  the  Borrower  Parties'  pro  rata  share  of all  Debt  and  other
liabilities of any Unconsolidated Joint Venture not otherwise  constituting Debt
of or recourse to any Borrower  Party or any  Consolidated  Entity or any of its
assets.  For purposes of clause (iii),  the Borrower  Parties' pro rata share of
all Debt and other  liabilities  of any  Unconsolidated  Joint  Venture shall be
deemed equal to the product of (a) such Debt or other liabilities, multiplied by
(b) the percentage of the total outstanding Capital Stock of such Person held by
a Borrower Party or any Consolidated Entity, expressed as a decimal.            

     "Trademarks"   means   trademarks,   servicemarks   and  trade  names,  all
registrations  and  applications to register such  trademarks,  servicemarks and
trade  names  and  all  renewals  thereof,  and  the  goodwill  of the  business
associated with or relating to such  trademarks,  servicemarks  and trade names,
including without  limitation any and all licenses and rights granted to use any
trademark, servicemark or trade name owned by any other person.                 

"Type" is defined in Section 2.1.1.                                   

     "Unconsolidated  Joint Venture" means (i) any Joint Venture of any Borrower
Party  or  any  Consolidated   Entity  in  which  any  Borrower  Party  or  such
Consolidated Entity holds any Capital Stock but which would not be combined with
a Borrower Party in the consolidated financial statements of such Borrower Party
in  accordance  with  GAAP,  and  (ii) any  Investment  of the  Borrower  or any
Consolidated Entity in any Person that is not a Joint Venture.                  

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     "Unencumbered Asset Value" means, at any time, with respect to Unencumbered
Assets that have been  Wholly-Owned for at least one full Fiscal Quarter at such
time,  the product of the Property NOI of such  Unencumbered  Assets  during the
period of the full Fiscal Quarter ended most recently, multiplied by 4, less the
product of (i) $.95  multiplied by (ii) the gross rentable square footage of all
Unencumbered  Assets that have been Wholly-Owned owned for such period,  divided
by the  Capitalization  Rate plus Cash and Cash  Equivalents  (excluding  tenant
deposits and other restricted cash).                                            

     "Unencumbered  Asset" means any Real  Property  designated by Borrower that
satisfies all of the following conditions:                                      

(i) is an Office Park Property;                             

          (ii)  is free  and  clear  of any  Lien,  other  than  (a)  easements,
     covenants,  and other  restrictions,  charges or encumbrances  not securing
     Indebtedness that do not interfere  materially with the ordinary operations
     of such Real Property and do not materially  detract from the value of such
     Real   Property;   (b)  building   restrictions,   zoning  laws  and  other
     Requirements  of Law that do not  interfere  materially  with the  ordinary
     operations  of such Real  Property and do not  materially  detract from the
     value of such Real Property; (c) leases and subleases of such Real Property
     in the  ordinary  course  of  business;  and  (d)  Permitted  Liens  and no
     condition  exists with respect to such Real Property  which could give rise
to Environmental Damages;                                             

(iii) is Wholly-Owned; and                                  

          (iv) after adding such Real  Property to the  Unencumbered  Pool,  the
     Real  Properties  in the  Unencumbered  Pool  shall  not have an  aggregate
Occupancy Rate less than ninety percent (90%).                        

     As of the date hereof all  Unencumbered  Assets are  described  on Schedule
1.1C,  provided that if any Unencumbered  Asset (including any of the properties
listed on Schedule 1.1C) no longer  satisfies any of the conditions set forth in
the foregoing  clauses (i) through (iv),  inclusive,  the Majority Lenders shall
have the right,  at any time and from time to time, to notify the Borrower that,
effective  upon the  giving  of such  notice,  such  asset  shall no  longer  be
considered an Unencumbered  Asset.  If the Borrower  intends to designate a Real
Property as an Unencumbered Asset to be added to the Unencumbered Pool from time
to time, it will notify the Agent of such intention,  which notice will include,
with respect to such Real  Property,  the Property  Information  with respect to
such Real Property,  and such other  information  and items as may be reasonably
requested by Agent with respect to such Real Property.  Upon Agent's concurrence
that the  evidence  presented by Borrower is  sufficient  to show that such Real
Property   constitutes  an  Unencumbered   Asset,  it  shall  be  added  to  the
Unencumbered  Pool.  If the  Borrower at any time  intends to withdraw  any Real
Property  from the  Unencumbered  Pool,  it shall  (A)  notify  the Agent of its
intention,  and (B) deliver to the Agent a  certificate  of its chief  financial
officer,  chief executive  officer or chief operating  officer setting forth the
calculations  establishing  that the Borrower  will be in  compliance  with this
Agreement after giving effect to such withdrawal (and any concurrent addition of
Real Properties to the Unencumbered  Pool),  which calculations shall be in such
detail, and otherwise in such form and substance,  as Agent reasonably requires.
Effective automatically upon receipt of such notice and certificate by the Agent
(or upon any later date  stated in such  notice),  such Real  Property  shall no
longer constitute an Unencumbered Asset.                                        

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"Unencumbered Pool" means the pool of Unencumbered Assets.            

     "Unencumbered  Net  Operating  Income"  means that  portion of Property NOI
derived from Unencumbered Assets.                                               

     "Unsecured  Interest  Expense"  means  Interest  Expense  other  than  that
attributable to liabilities which are Secured Debt.                             

     "Wholly-Owned"  means,  with  respect to any Office Park  Property or other
asset  owned,  that (i) title to such asset is held  directly by the Borrower or
Guarantor,  or (ii) in the case of Office Park Property,  title to such property
is held by a  Consolidated  Entity at least 99% of the Capital Stock of which is
held of record and  beneficially by the Borrower or Guarantor and the balance of
the Capital  Stock of which (if any) is held of record and  beneficially  by the
Guarantor (or any wholly-owned Subsidiary of the Guarantor).                    

Section 1.2. Related Matters.                                         

          1.2.1.  Construction.  Unless the  context of this  Agreement  clearly
requires otherwise,  references to the plural include the singular, the singular
includes the plural,  the part includes the whole,  "including" is not limiting,
and "or" has the inclusive meaning represented by the phrase "and/or." The words
"hereof,"  "herein,"  "hereby,"  "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole  (including the Preamble,  the Recitals,  the
Schedules  and  the  Exhibits)  and  not to any  particular  provision  of  this
Agreement. Article, section, subsection, exhibit, schedule, recital and preamble
references in this Agreement are to this Agreement unless  otherwise  specified.
References  in  this  Agreement  to any  agreement,  other  document  or law "as
amended" or "as amended from time to time," or to  amendments of any document or
law, shall include any amendments, supplements,  replacements, renewals, waivers
or other modifications not prohibited by the Loan Documents.  References in this
Agreement  to any law (or any part  thereof)  include any rules and  regulations
promulgated   thereunder  (or  with  respect  to  such  part)  by  the  relevant
Governmental Authority, as amended from time to time.                           

               1.2.2. Determinations.  Except as expressly provided otherwise in
          Article 2, any determination or calculation  contemplated by Article 2
          of this  Agreement that is made by any Lender Party shall be final and
          conclusive  and  binding  upon  the  Borrower,  and,  in the  case  of
          determinations  by the Agent,  also the other Lender  Parties,  in the
          absence  of  manifest  error.  References  in  this  Agreement  to any
          "determination"  by any Lender Party  include good faith  estimates by
          such Lender Party (in the case of  quantitative  determinations),  and
          good faith  beliefs by such Lender  Party (in the case of  qualitative
          determinations).  All references  herein to "discretion" of any Lender
          Party (or terms of  similar  import)  shall  mean  "absolute  and sole
          discretion."  All  consents  and other  actions  of any  Lender  Party
          contemplated  by this Agreement may be given,  taken,  withheld or not
          taken in such Lender Party's discretion (whether or not so expressed),
except as otherwise expressly provided herein.              

               1.2.3.  Accounting  Terms and  Determinations.  Unless  otherwise
          specified   herein,   all  accounting   terms  used  herein  shall  be
          interpreted,  all accounting  determinations  hereunder shall be made,
          and all financial  statements required to be delivered hereunder shall
          be prepared on a consolidated  basis in accordance with GAAP,  applied
          on a  basis  consistent  (except  for  changes  concurred  in  by  the
          independent  public  accountants  of the  Borrower)  with the  audited
          consolidated  financial  statements  of  the  Borrower  and  Guarantor
referred to in Section 4.5.                                 

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               1.2.4.  Governing Law. THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
          CONSTRUED  IN  ACCORDANCE  WITH,  THE LAWS OF THE STATE OF  CALIFORNIA
          (OTHER THAN CHOICE OF LAW RULES THAT WOULD REQUIRE THE  APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION).                        

               1.2.5.  Headings.  The Article and Section  headings used in this
          Agreement are for  convenience  of reference only and shall not affect
the construction hereof.                                    

               1.2.6. Severability.  If any provision of this Agreement shall be
          held to be invalid,  illegal or unenforceable  under Applicable Law in
          any  jurisdiction,  such provision  shall be  ineffective  only to the
          extent of such invalidity, illegality or unenforceability, which shall
          not affect any other  provisions  hereof or the validity,  legality or
enforceability of such provision in any other jurisdiction. 

               1.2.7.  Independence  of  Covenants.  All  covenants  under  this
          Agreement  shall  each  be  given  independent  effect  so  that  if a
          particular  action or condition is not permitted by any such covenant,
          the  fact  that it would  be  permitted  by  another  covenant,  by an
          exception  thereto,  or be otherwise  within the limitations  thereof,
          shall not avoid the  occurrence of a Default or an Event of Default if
such action is taken or condition exists.                   

               1.2.8.  Exhibits,  Etc.  All  of  the  appendices,  exhibits  and
          schedules  attached  to this  Agreement  shall be deemed  incorporated
herein by reference.                                        

               1.2.9.  Other  Definitions.  Terms otherwise defined in Preamble,
          the Recitals,  and in any other  provision of this Agreement or any of
          the other Loan  Documents  not defined or  referenced  in Section 1.1.
       have their respective defined meanings when used herein or therein.

ARTICLE 2.

AMOUNTS AND TERMS OF THE CREDIT FACILITIES

     Section 2.1. Revolving Loans. Each Lender severally agrees,  upon the terms
and subject to the conditions set forth in this Agreement,  at any time from and
after the Closing  Date until the  Business  Day next  preceding  the  Revolving
Commitment  Termination  Date, to make revolving loans (each a "Revolving Loan")
to the  Borrower  in an  aggregate  principal  amount  not to exceed at any time
outstanding,  when added to other Revolving  Commitment  Usage of such Lender at
such time, the Revolving Commitment of such Lender,  provided that the Revolving
Commitment Usage of all Lenders at any time, in the aggregate,  shall not exceed
the  lesser of (i)  aggregate  Revolving  Commitments  of all  Lenders  and (ii)
Availability.                                                                   

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          2.1.0.1.  Revolving  Loans  may be  voluntarily  prepaid  pursuant  to
Section 2.6.2. and, subject to the provisions of this Agreement,  any amounts so
prepaid may be re-borrowed,  up to the amount  available under this Section 2.1.
at the time of such re-borrowing.                                               

          2.1.1.  Type of Loans and  Minimum  Amounts.  Loans  made  under  this
Section 2.1. may be Base Rate Loans or LIBOR Rate Loans (each a "Type" of Loan),
subject, however, to Section 2.2.2.                                             

          2.1.1.1.  Each  Borrowing of Loans (other than LIBOR Rate Loans) shall
be in a minimum  aggregate amount of Two Hundred Thousand Dollars  ($200,000.00)
and integral  multiples of Ten Thousand Dollars  ($10,000.00).  Unless the Agent
otherwise consents in writing:  (i) the principal amount of each LIBOR Rate Loan
shall be an integral multiple of Ten Thousand Dollars ($10,000.00), but not less
than Two Hundred Thousand Dollars  ($200,000.00);  and (ii) no more than fifteen
(15) LIBOR Rate Loans shall be permitted to be outstanding at any one time.     

2.1.2. Notice of Borrowing.                                 

         2.1.2.1.  When the  Borrower  desires  to borrow  Loans  pursuant  to
Section 2.1., it shall deliver to the Agent a Notice of Borrowing  substantially
in the form of Exhibit B-1, duly completed and executed by a Responsible Officer
(each such notice  shall be referred to herein as a "Notice of  Borrowing"),  no
later than 9:00 a.m.  (Pacific  Coast time) (a) at least one Business Day before
the proposed  Funding Date in the case of a Borrowing of Base Rate Loans, or (b)
at least three LIBOR Business Days before the proposed Funding Date, in the case
of a Borrowing of LIBOR Rate Loans.  Except to the extent  designated as a LIBOR
Rate Loan pursuant to this Section 2.1.2.,  the unpaid principal  balance of all
Loans shall constitute a Base Rate Loan, and each LIBOR Rate Loan shall become a
Base Rate Loan on the last day of the applicable Borrowing Period.              

         2.1.2.2.  Subject  to the  terms  and  conditions  set  forth in this
Agreement,  at any time and from time to time from the Closing Date to the LIBOR
Business Day next  preceding  the Revolving  Commitment  Termination  Date,  the
Borrower  may request  that any portion of  requested  or  outstanding  Loans be
designated,  pro rata as to each  Lender  according  to the  Commitment  of that
Lender,  as a LIBOR Rate Loan,  provided  that the amount  included  in any such
request shall not exceed the aggregate Revolving  Commitments less the aggregate
Revolving  Commitment  Usage  (other than LIBOR Rate Loans with respect to which
the last day in the applicable  Borrowing Period coincides with the first day in
the Borrowing Period applicable to the proposed LIBOR Rate Loan).               

         2.1.2.3.  As  soon  as  practicable  after  receipt  of a  Notice  of
Borrowing pursuant to Section 2.1.2.2., the Agent shall determine the applicable
LIBOR Rate (which  determination  shall be conclusive in the absence of manifest
error) and shall  promptly  (and in any event not later  than 9:00 a.m.  Pacific
Coast time on the date of receipt of such  request)  give  notice of the same to
the Borrower by telephone; at the time of receipt of such telephonic notice, the
Borrower shall  immediately  either accept such rate for the Loan in question or
reject such rate, in which case the Borrower's  Notice of Borrowing with respect
to such Loan shall be ineffective.                                              

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         2.1.2.4.  If the Borrower gives  confirmation  by 9:00 a.m.,  Pacific
Coast time, on the date of delivery of a Notice of Borrowing pursuant to Section
2.1.2.1.,  that it accepts the applicable  LIBOR Rate for the LIBOR Rate Loan in
question, as provided in Section 2.1.2.3., the Agent shall, prior to 10:00 a.m.,
Pacific  Coast time,  three (3) Business  Days before any LIBOR Rate Loan,  give
notice  to each  Lender  by  telephone,  telecopier  or  telex  stating  (i) the
effective  date of the LIBOR Rate  Loan,  (ii) the amount of the LIBOR Rate Loan
and (iii) the applicable LIBOR Rate. In no event shall the Agent's failure to so
notify each Lender affect the Borrower's election of the LIBOR Rate with respect
to any Loan.                                                                    

         2.1.2.5.  Upon fulfillment of the applicable  conditions set forth in
this Section  2.1.2.  and in Section 3.2., the LIBOR Rate quoted to and accepted
by the Borrower pursuant to Section 2.1.2.3. shall become effective with respect
to the LIBOR Rate Loan in question on the first day of the applicable  Borrowing
Period.                                                                         

         2.1.2.6.  The  Borrower  shall  notify  the Agent of the names of its
officers and employees of its general  partner  which are  authorized to request
and take other  actions with respect to loans on behalf of the Borrower  (each a
"Responsible  Officer")  by  providing  the Agent  with a Notice of  Responsible
Officers  substantially  in the form of Exhibit B-3, duly completed and executed
by a Senior  Officer (a "Notice of  Responsible  Officer").  The Agent  shall be
entitled to rely  conclusively on a Responsible  Officer's  authority to request
and take other actions with respect to Loans on behalf of the Borrower until the
Agent  receives a new Notice of  Responsible  Officer that no longer  designates
such Person as a Responsible Officer. The Agent shall have no duty to verify the
authenticity  of the signature  appearing on any Notice of Borrowing,  Notice of
Responsible Officer or any other notice given under the Loan Documents.         

         2.1.2.7.  Except as  provided  in  Section  2.1.2.3.,  any  Notice of
Borrowing delivered pursuant to this Section 2.1.2. shall be irrevocable and the
Borrower shall be bound to make a borrowing in accordance therewith.            

         2.1.2.8.  The Agent shall promptly notify each Lender of the contents
of any Notice of Borrowing  received by it and such Lender's pro rata portion of
the Borrowing  requested.  Not later than 10:00 a.m. (Pacific Coast time) on the
date specified in such notice as the Funding Date,  each Lender,  subject to the
terms and  conditions  hereof,  shall make its pro rata portion of the Borrowing
available, in immediately available funds, to the Agent at the Agent's Account. 

2.1.3. Funding.                                             

          Not later than 12:00 noon  (Pacific  Coast time) or such later time as
may be  agreed  to by the  Borrower  and the  Agent,  and  subject  to and  upon
satisfaction  of the applicable  conditions set forth in Article 3 as determined
by the Agent, the Agent shall make the proceeds of the requested Loans available
to the  Borrower  in  Dollars in  immediately  available  funds in the  Borrower
Account.                                                                        

Section 2.2. Interest; Late Charge; Conversion/Continuation.

2.2.1. Interest Rate and Payment.                           

          2.2.1.1.  Each Loan shall bear interest on the unpaid principal amount
thereof, from and including the date of the making of such Loan to and excluding
the due date or the date of any repayment  thereof,  at the following  rates per
annum:  (a) for so long as and to the extent that such Loan is a Base Rate Loan,
at the Base Rate (as in effect  from time to time) (b) for so long as and to the
extent that such Loan is a LIBOR Rate Loan, at the LIBOR Rate for each Borrowing
Period applicable thereto plus the Applicable Margin.                           

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          2.2.1.2.  In the event  that the  Borrower  fails to pay any  interest
payable  under this  Agreement  on or prior to the  expiration  of ten (10) days
after such interest first becomes due and payable, the Borrower shall pay to the
Agent  for the pro rata  benefit  of the  Lenders  a late  charge  equal to four
percent  (4%) of the  amount  of such  unpaid  interest  payment.  The  Borrower
acknowledges  and agrees that an accurate  determination  of the Lender Parties'
damages as a result of the  Borrower's  failure to pay  interest as and when due
hereunder is not reasonably practicable, and the late charge provided for herein
is a reasonable  estimate of the amount of additional  cost and the value of the
loss of use of funds that will be  suffered  by the Lender  Parties in the event
that an interest payment is not paid when due.                                  

          2.2.1.3.  Notwithstanding  the  foregoing  provisions  of this Section
2.2.1.,  any interest  payable under this Agreement and the other Loan Documents
that is not paid  within  thirty (30) days after the date such amount is due, or
any principal or other amount payable under this Agreement that is not paid when
due,  shall in each case  thereafter  bear interest at a rate per annum equal to
the  Post-Default  Rate,  without notice or demand of any kind. Such interest at
the  Post-Default  Rate  shall be in  addition  to, and not in lieu of, the late
charge provided for in Section 2.2.1.2.                                         

          2.2.1.4.  Accrued interest shall be payable in arrears (a) in the case
of any Type of Loan, on each Periodic  Payment Date;  and (b) in the case of any
Loan,  when the Loan  shall  become  due  (whether  at  maturity,  by  reason of
prepayment, acceleration or otherwise).                                         

          2.2.1.5.  In order  to  assure  timely  payment  to  Agent of  accrued
interest,  principal,  fees and late  charges  due and owing  under  the  Loans,
Borrower hereby irrevocably authorizes Agent to directly debit Borrower's demand
deposit account with Agent, account number 4828-665364,  for payment when due of
all such amounts payable  hereunder.  Borrower  represents and warrants to Agent
that Borrower is the legal owner of said account.  Written  confirmation  of the
amount and purpose of any such direct  debit shall be given to Borrower by Agent
not less  frequently  than monthly.  In the event any direct debit  hereunder is
returned  for  insufficient  funds,  Borrower  shall pay Agent upon  demand,  in
immediately available funds, all amounts and expenses due and owing to Agent.   

2.2.2. Conversion or Continuation.                          

          2.2.2.1.  Subject to  Section  2.1.2.  and this  Section  2.2.2.,  the
Borrower  shall have the option (a) at any time,  to convert  all or any part of
its outstanding  Base Rate Loans to Fixed Rate Loans, or (b) upon the expiration
of any Borrowing Period  applicable to a Fixed Rate Loan, to continue all or any
portion of such Loan as a Fixed Rate Loan provided that,  there does not exist a
Default or an Event of Default at such time. If a Default or an Event of Default
shall exist upon the expiration of the Borrowing Period  applicable to any Fixed
Rate Loan, such Loan automatically shall be converted into a Base Rate Loan.    

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          2.2.2.2.  If the  Borrower  elects to convert or continue a Loan under
this   Section   2.2.2.,   it  shall   deliver   to  the   Agent  a  Notice   of
Continuation/Conversion substantially in the form of Exhibit B-5, duly completed
and executed by a Responsible  Officer (a "Notice of  Continuation/Conversion"),
not later than 10:00 a.m.  (Pacific  Coast time) at least  three LIBOR  Business
Days before the  proposed  conversion  or  continuation  date,  if the  Borrower
proposes to convert into, or to continue, a LIBOR Rate Loan.                    

          2.2.2.3.  Any Notice of  Continuation/Conversion  shall be irrevocable
and the Borrower shall be bound to convert or continue in accordance  therewith.
If any  request  for the  conversion  or  continuation  of a Loan is not made in
accordance with this Section 2.2.2., or if no notice is so given with respect to
a LIBOR  Rate  Loan as to which the  Borrowing  Period  expires,  then such Loan
automatically shall be converted into a Base Rate Loan.                         

          2.2.3.  Computations.  Interest  on each  Loan and all Fees and  other
amounts  payable  hereunder or the other Loan Documents shall be computed on the
basis of a 360-day year and the actual number of days elapsed. Any change in the
interest  rate on any Loan or other amount  resulting  from a change in the rate
applicable thereto (or any component thereof) pursuant to the terms hereof shall
become  effective  as of the opening of business on the day on which such change
in the applicable rate (or component) shall become effective.                   

          2.2.4.  Maximum Lawful Rate of Interest.  The rate of interest payable
on any  Loan  or  other  amount  shall  in no  event  exceed  the  maximum  rate
permissible under Applicable Law. If the rate of interest payable on any Loan or
other  amount  is ever  reduced  as a  result  of this  Section  and at any time
thereafter the maximum rate permitted by Applicable Law shall exceed the rate of
interest  provided  for in this  Agreement,  then the rate  provided for in this
Agreement  shall be increased to the maximum rate provided by Applicable Law for
such period as is required so that the total amount of interest  received by the
Lenders  is that which  would  have been  received  by the  Lenders  but for the
operation of the first sentence of this Section.                                

Section 2.3. Notes, Etc.                                    

          2.3.1.  Loans  Evidenced by Notes.  The  Revolving  Loans made by each
Lender  shall be  evidenced  by a single  Revolving  Loan  Note in favor of such
Lender. The Revolving Loan Notes shall each be dated the Closing Date and stated
to mature in accordance with the provisions of this Agreement  applicable to the
relevant Loans.                                                                 

          2.3.2.  Notation of Amounts and  Maturities,  Etc. The Agent is hereby
irrevocably  authorized  to  generate  a  computer  record  of  the  information
contemplated  by  Schedule A to the Notes and to attach  same to the Notes (or a
continuation  thereof).  The failure to record,  or any error in recording,  any
such  information  shall not,  however,  affect the  obligations of the Borrower
hereunder or under any Note to repay the principal amount of the Loans evidenced
thereby,  together with all interest accrued  thereon.  All such notations shall
constitute  conclusive  evidence of the accuracy of the information so recorded,
in the absence of manifest error.                                               

          2.3.3.  Loan  Account.  The Agent shall  maintain a loan  account (the
"Loan  Account")  on its books in which shall be recorded  (a) all Loans made by
the  Lenders  to  the  Borrower  pursuant  to  this  Agreement,  (b)  all  other
appropriate  debits  and  credits  as and  when  due  in  accordance  with  this
Agreement,  including  all Fees,  charges,  expenses and  interest,  and (c) all
payments  made by the  Borrower  on the  Obligations.  All  entries  in the Loan
Account shall be made in accordance with the customary  accounting  practices of
the Agent as in effect from time to time.                                       

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Section 2.4. Fees.                                          

          2.4.1.  Facility Fee. On each October 1, January 1, April 1 and July 1
of each year, the Borrower  shall pay in advance to the Agent,  for the pro rata
benefit of the Lenders,  a facility fee for the Fiscal  Quarter then  commencing
equal to one-fourth of the product of (i) the aggregate  Commitments  times (ii)
0.25% ("Facility Fee"). On or before the Closing Date, Borrower shall pay to the
Agent,  for the pro rata  benefit of the  Lenders,  the Facility Fee due for the
period from the Closing Date to October 1, 1998.                                

          2.4.2.  Extension  Fee.  If an  extension  occurs  pursuant to Section
2.5.2. as of the first  anniversary of the Closing Date, then the Borrower shall
pay to the Agent,  for the pro rata  benefit of the Lenders,  an  extension  fee
equal to .05% per annum of the aggregate  amount of the  Revolving  Commitments.
The extension  fee due for any  subsequent  extension  pursuant to Section 2.5.2
shall be  equal to .10% per  annum  of the  aggregate  amount  of the  Revolving
Commitments.                                                                    

          2.4.3.  Other  Fees.  On the  Closing  Date  and  from  time  to  time
thereafter as specified in the Fee Letter,  the Borrower  shall pay to the Agent
the fees specified in the Fee Letter.                                           

          2.4.4.  Fees  Non-Refundable.  All fees  shall be  fully  earned  when
accrued hereunder and shall be non-refundable.                                  

          Section  2.5.  Termination  and  Reduction  of  Revolving  Commitment;
Extension.                                                                      

          2.5.1. Termination. Unless extended pursuant to Section 2.5.2. hereof,
each Lender's Revolving Commitment shall terminate without further action on the
part of such Lender on the earlier to occur of (a) the Maturity Date (or if that
date is not a Business Day, the next preceding  LIBOR Business Day) (the "Stated
Revolving Commitment  Termination Date"), and (b) the date of termination of the
Revolving  Commitment pursuant to Section 7.2. (such earlier date being referred
to herein as the "Revolving Commitment Termination Date").                      

          2.5.2.  Extension.  Borrowers  may request  extensions of the Maturity
Date by making such  request to Agent  ("Extension  Notice") in writing at least
ninety (90) days prior to each  anniversary  of the Closing Date.  The Agent and
the Lenders have no obligation to extend the Maturity Date and the Maturity Date
shall not be extended  unless (i) the Borrower is in full compliance with all of
the terms, conditions and covenants of this Agreement at the time of request and
on the applicable  anniversary  Date, (ii) all of the Lenders and the Agent have
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agreed to do so in writing,  (iii) Borrower shall, on or prior to the applicable
anniversary,  have executed and delivered to the Agent an extension agreement in
the  form  provided  by  Agent,  and  (iv)  Borrower  shall,  on or prior to the
applicable  anniversary,  provided all Lenders  shall have approved the request,
have remitted to the Agent the extension fee due pursuant to Section  2.4.2.  If
Borrower's request for extension is approved and the other foregoing  conditions
are met,  then (i) the  extension of the Maturity  Date shall be for a period of
one (1) year and (ii) such  extension  shall be effective  as of the  applicable
anniversary.  The Agent and the Lenders shall have a period of  forty-five  (45)
days from  receipt  of  written  notice of  Borrowers'  intention  to extend the
Maturity Date to approve such extension,  in their sole and absolute discretion.
If Borrower has not received written notice of the Lenders'  intention to extend
the Maturity  Date within such  forty-five  (45) day period,  then the extension
request shall be deemed to be not approved. If an extension is granted, Borrower
may request  subsequent one (1) year extensions subject to the same criteria and
procedures  established in this Section 2.5.2. As an example, in order to extend
the initial Maturity Date,  Borrower must notify Agent at least ninety (90) days
prior to August 6, 1999.  If approved,  the Maturity Date would then be extended
from  August 6, 2000 to August 6,  2001.  In the event that  Borrower's  initial
request for extension is not granted,  any  subsequent  request for extension is
not granted,  or Borrower does not request an extension pursuant to this Section
2.5.2, then,  commencing on the Maturity Date,  Borrower shall no longer be able
to obtain Loans  hereunder  and all  outstanding  Loans shall become all due and
payable.                                                                        

Section 2.6. Repayments and Prepayments.                    

2.6.1. Mandatory Prepayment.                                

          2.6.1.1.  Excess  Revolving  Loans.  (i) If at any time the  aggregate
Revolving  Commitment  Usage of all Lenders exceeds the aggregate  amount of the
Revolving Commitments,  the Borrower shall, on or prior to two (2) Business Days
after  the day on which a  Responsible  Officer  of the  Borrower  learns  or is
notified of the excess, make mandatory prepayments of the Revolving Loans as may
be necessary so that, after such prepayment, such excess is eliminated.         

          (ii)  If  at  any  time  on  or  prior  to  the  Revolving  Commitment
Termination  Date, there is an Overdraw,  the Borrower shall, on or prior to two
(2) Business Days after the day on which a  Responsible  Officer of the Borrower
learns  or is  notified  of the  Overdraw,  make  mandatory  prepayments  of the
Revolving  Loans as may be  necessary,  so that,  after  such  prepayment,  such
Overdraw is eliminated (unless prior thereto the Borrower has taken such actions
as have  resulted in a sufficient  increase in  Availability  to eliminate  such
Overdraw).                                                                      

          (iii)  Each  Mandatory  Prepayment  shall  be  applied  to the  unpaid
principal  amount of Revolving  Loans;  provided that each Mandatory  Prepayment
shall be applied  first to reduce the Base Rate Loan  constituting  a portion of
the  respective  Loan and then to the Fixed  Rate Loans  constituting  a portion
thereof,  in the order of termination of Borrowing Periods  applicable  thereto.
Each Mandatory  Prepayment  shall be made together with accrued  interest on the
amount prepaid to the date of prepayment.                                       

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2.6.2. Optional Prepayments                                 

          2.6.2.1.  Subject to this Section  2.6.2.,  the  Borrower  may, at its
option,  at any time or from time to time, prepay the Loans in whole or in part,
without  premium or penalty,  provided  that (a) any  prepayment  shall be in an
aggregate   principal   amount  of  at  least  Two  Hundred   Thousand   Dollars
($200,000.00)  and in integral  multiples of Ten Thousand  Dollars  ($10,000.00)
(or,  alternatively,  the whole  amount of Loans then  outstanding)  and (b) any
prepayment of a Fixed Rate Loan, if made on a day other than the last day of the
Borrowing Period applicable thereto, shall be made with amounts payable pursuant
to Section 2.9.5.                                                               

          2.6.2.2.  If the  Borrower  elects to prepay a Loan under this Section
2.6.2.2.,  it shall deliver to the Agent a notice of optional prepayment (a) not
later than 10:00 a.m.  (Pacific  Coast time) at least three LIBOR  Business Days
before the proposed prepayment,  if the Borrower proposes to prepay a LIBOR Rate
Loan,  and (b) otherwise not later than 10:00 a.m.  (Pacific  Coast time) on the
Business Day on which Borrower proposes to prepay a Loan. Any notice of optional
prepayment shall be irrevocable, and the payment amount specified in such notice
shall be due and payable on the date  specified  in such notice.  Each  optional
prepayment shall be applied pro-rata to the unpaid principal amount of Revolving
Loans.                                                                          

          2.6.3.  Payments  Set  Aside.  To the  extent  the Agent or any Lender
receives  payment  of any  amount  under the Loan  Documents,  whether by way of
payment by the Borrower, the Guarantor,  set-off or otherwise,  which payment is
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
or  required  to be repaid to a trustee,  receiver  or any other party under any
bankruptcy law, other law or equitable  cause, in whole or in part, then, to the
extent of such payment received,  the Obligations or part thereof intended to be
satisfied  thereby  shall be revived and continue in full force and effect as if
such payment had not been received by the Agent or Lender.  If prior to any such
invalidation,  declaration,  setting aside or requirement,  this Agreement shall
have been canceled or  surrendered,  this Agreement  shall be reinstated in full
force and effect,  and such prior  cancellation or surrender shall not diminish,
discharge or otherwise  affect the obligations of the Borrower in respect of the
amount of the affected payment.                                                 

Section 2.7. Manner of Payment.                             

          2.7.1. The amount of each payment under this Agreement or on the Notes
shall be made in lawful money of the United  States of America,  in  immediately
available  funds.  Each such payment shall be made to the Agent, for the account
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of each of the Lenders or for the account of the Agent,  as the case may be. All
payments received by the Agent from the Borrower after 10:00 a.m., Pacific Coast
time,  on any Business  Day, or on a day which is not a Business  Day,  shall be
deemed received on the next succeeding Business Day.                            

          2.7.2.  Each  payment or  prepayment  of  principal or interest on the
Notes  shall be made and applied  pro rata among the  Lenders  according  to the
unpaid  principal  amount  of the Note  held by each  Lender  (with  appropriate
adjustments  for the periods during which each Lender's share of such amount was
loaned  by or  otherwise  owing to such  Lender);  provided,  however,  that the
Borrower shall have no liability  whatsoever for the Agent's failure to so apply
any such payment.                                                               

          2.7.3. Following receipt by the Agent from the Borrower of any payment
under this  Agreement  or on the  Notes,  the Agent  shall,  prior to 2:00 p.m.,
Pacific  Coast  time,  of the  Business  Day such  payment  is deemed  received,
initiate wire transfers to the other Lenders in immediately  available  funds of
the portions of such payment to which they are  entitled  under this  Agreement.
Delivery of a payment by the  Borrower to the Agent shall  discharge  all of the
Borrower's obligations to the Lenders with respect to the making of the payment.
In no event shall the Borrower  have any  liability for any failure by the Agent
to pay over to the  Lenders  their  respective  shares of  payments  made by the
Borrower.                                                                       

          2.7.4.  Whenever any payment to be made pursuant to this  Agreement or
on any Note is due on a day that is not a Business Day, payment shall be made on
the next  succeeding  Business Day, and such extension of time shall be included
in the computation of interest.                                                 

          2.7.5.  Any payment of the  principal  of any LIBOR Rate Loan shall be
made on a LIBOR Business Day.                                                   

          2.7.6.  The Agent (and each  Lender  with  respect to its own pro rata
portion of Loans)  shall keep a record of Loans made by each Lender and payments
of  principal  with respect to each Note,  and such record shall be  presumptive
evidence of the principal amount owing under each Note.                         

          2.7.7.  Each payment of principal  and interest and all other  amounts
payable by the Borrower under this Agreement and the other Loan Documents  shall
be made free and clear of, and without  reduction or offset for or by reason of,
any offset,  counterclaims,  taxes  (except as  permitted  by Section  2.10.3.),
assessments or other charges imposed by any Governmental Agency.                

          Section  2.8.  Pro Rata  Treatment.  Except  to the  extent  otherwise
expressly provided herein,  Revolving Loans shall be requested from the Lenders,
pro rata according to their respective Revolving Commitments.                   

Section 2.9. Additional Fees and Costs.                     

          2.9.1.  So long as any Lender,  any Assignee  Lender or Participant is
required to maintain  reserves against LIBOR Obligations under Regulation D, the
Borrower  shall pay to any such Lender,  Assignee  Lender or  Participant,  with
respect  to each LIBOR Rate Loan,  a fee  (hereinafter  referred  to as a "LIBOR
Fee")  (determined as though the LIBOR Lending  Office of such Lender,  Assignee
Lender or Participant had funded one hundred percent (100%) of such Lender's pro
rata portion of, or such Assignee Lender's or Participant's share in, such LIBOR
Rate Loan in the Designated Market) calculated as follows:                      

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          (i) [LIBOR  Rate  applicable  to the LIBOR  Rate Loan]  divided by [(1
minus rate [expressed as a decimal] of reserve  requirements  under Regulation D
in respect of LIBOR Obligations)] minus [LIBOR Rate applicable to the LIBOR Rate
Loan], times                                                                    

          (ii) [average daily unpaid  principal amount of such Lender's pro rata
portion of or such Assignee  Lender's or Participant's  share in such LIBOR Rate
Loan] times [number of days in the applicable Borrowing Period divided by 360]. 

          Notification  that a LIBOR  Fee is  payable  shall be  given  within a
reasonable time after discovery by the loan officers  responsible for the credit
or share hereunder that such LIBOR Fee is payable, and may be given by telephone
if communicated to a Responsible Officer or, if an attempt has been made by such
Lender,  Assignee  Lender or Participant  in good faith to communicate  with any
Responsible Officer and such attempt is not successful, then another responsible
official of the Borrower and, in either case, confirmed within a reasonable time
by letter to the Borrower,  with a copy of such letter sent  concurrently to the
Agent. The LIBOR Fee with respect to each LIBOR Rate Loan or share therein shall
be payable on the later of: (i) the last day of the applicable Borrowing Period;
or (ii) five (5) calendar  days after the relevant  Lender,  Assignee  Lender or
Participant  notifies  the  Borrower  of the  amount  due,  except  that  (x) if
notification  of the amount due is not given within  ninety (90) days after such
LIBOR Fee becomes payable with respect to the applicable  Borrowing Period, then
the Borrower  shall be allowed to pay such amount  within thirty (30) days after
the date upon which  notification is given; and (y) on final payment of any Note
in full,  any LIBOR Fee with respect to any LIBOR Rate Loan made  thereunder not
earlier paid or earlier payable  pursuant hereto shall be payable on the date of
payment  of such  Note.  In  determining  the  amount of any  LIBOR Fee  payable
pursuant to this Section, each Lender, Assignee Lender or Participant shall take
into account any transitional  adjustment or phase-in  provisions of the reserve
requirements which would reduce the reserve requirements otherwise applicable to
LIBOR Obligations  during the applicable  Borrowing Period,  and in the event of
any change or  variation  in the  reserve  requirements  during  the  applicable
Borrowing  Period,  each  Lender,  Assignee  Lender or  Participant  may use any
reasonable  averaging  or  attribution  method which it deems  appropriate.  The
determination  by each Lender,  Assignee  Lender or Participant of the amount of
any LIBOR Fee  payable to it shall be  conclusive  in the  absence  of  manifest
error. Terms used in Regulation D shall have the same meanings when used in this
Section.                                                                        

          2.9.2.  If, after the date of this  Agreement,  the  occurrence of any
Special Circumstance shall:                                                     

          (i) Subject any Lender,  Assignee Lender or Participant,  or the LIBOR
Lending Office of any Lender,  any Assignee Lender or  Participant,  to any tax,
duty or other charge or cost,  or shall change the basis of taxation of payments
to any Lender, Assignee Lender or Participant of the principal of or interest on
such  Lender's pro rata portion of, or such Assignee  Lender's or  Participant's
share in, any LIBOR Rate Loan,  any Note of such Lender,  or the  obligation  of
such Lender to permit LIBOR Rate Loans or the obligation of any Assignee  Lender
or Participant  to acquire any share therein  (except for changes in the rate of
tax  on the  overall  net  income  of  such  Lender,  such  Assignee  Lender  or
Participant,  or the LIBOR  Lending  office of such Lender,  Assignee  Lender or
Participant, imposed by the jurisdiction in which the principal executive office
or LIBOR  Lending  office of such  Lender,  Assignee  Lender or  Participant  is
located);                                                                       

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          (ii) Impose,  modify or deem applicable any reserve (including without
limitation any reserve  imposed by the Board of Governors of the Federal Reserve
System  other than with  regard to  Regulation  D),  special  deposit or similar
requirements  against assets of,  deposits with or for the account of, or credit
extended by, any Lender, any Assignee Lender or Participant or the LIBOR Lending
office of any Lender, Assignee Lender or Participant; or                        

          (iii) Impose on any Lender, Assignee Lender or Participant,  the LIBOR
Lending Office of any Lender, Assignee Lender or Participant,  or the Designated
Market any other  condition  affecting  any  Lender's pro rata portion of or any
Assignee  Lender's or  Participant's  share in, any LIBOR Rate Loan, any Note of
such Lender,  or the obligation of such Lender to permit LIBOR Rate Loans or the
obligation of any Assignee  Lender or  Participant to acquire any share therein,
or this Agreement,  or shall otherwise affect any of the same; and the result of
any of the foregoing would, in the reasonable  opinion of such Lender,  Assignee
Lender or  Participant,  increase  the cost to such Lender,  Assignee  Lender or
Participant  or the LIBOR  Lending  Office of such  Lender,  Assignee  Lender or
Participant of permitting, making, maintaining or funding any LIBOR Rate Loan or
share  therein,  or with  respect to such  Lender's pro rata portion of, or such
Assignee  Lender's or  Participant's  share in, any LIBOR Rate Loan, any Note of
such Lender,  or its  obligation to permit LIBOR Rate Loans or the obligation of
any Assignee  Lender or Participant to acquire any share therein,  or reduce the
amount of any sum  received or  receivable  by such Lender,  Assignee  Lender or
Participant  or the LIBOR  Lending  Office of such  Lender,  Assignee  Lender or
Participant  with respect to any LIBOR Rate Loan, such Lender's pro rata portion
of, or such Assignee  Lender's or  Participant's  share in, any LIBOR Rate Loan,
any Note of such  Lender,  or its  obligation  to permit LIBOR Rate Loans or the
obligation of any Assignee  Lender or  Participant  to acquire any share therein
(assuming  such Lender,  Assignee  Lender or  Participant  [or, in the case of a
LIBOR Rate Loan,  the LIBOR Lending  Office of such Lender,  Assignee  Lender or
Participant]  had funded one hundred  percent  [100%] of such  Lender's pro rata
portion of, or such Assignee Lender's or Participant's share in, such LIBOR Rate
Loan in the Designated  Market),  then,  within ten (10) calendar days following
notice and demand by such Lender,  Assignee Lender or Participant,  which demand
shall be made within a  reasonable  time after  discovery  by the loan  officers
responsible  for the  credit  or share  hereunder  that such  increased  cost or
reduction has been  incurred,  the Borrower  shall pay to such Lender,  Assignee
Lender or Participant such additional amount or amounts (taking into account any
LIBOR Fee paid to such Lender,  Assignee  Lender or  Participant by the Borrower
pursuant to Section 2.9.1.) as will  compensate such Lender,  Assignee Lender or
Participant for such increased cost or reduction. Any Lender, Assignee Lender or
Participant  which makes  demand on the  Borrower  for payment  pursuant to this
Section 2.9.2.  shall notify the Agent of such demand promptly (and in any event
within ten (10) days after making such demand).  Notwithstanding  the foregoing,
if demand is not made  within  ninety  (90) days  after such  increased  cost or
reduction  is incurred,  then the  Borrower  shall be allowed to pay such amount
within  thirty (30) days after the date upon which demand is made.  The Borrower

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hereby  indemnifies  each Lender,  Assignee Lender or Participant  against,  and
agrees to hold each Lender,  Assignee  Lender or  Participant  harmless from and
reimburse each Lender,  Assignee Lender or Participant on demand for, all costs,
expenses,  claims,  penalties,  liabilities,  losses,  legal  fees  and  damages
incurred  or  sustained  by such  Lender,  Assignee  Lender  or  Participant  in
connection  with  this  Agreement,  any  share in this  Agreement  or any of the
rights,  obligations or transactions  provided for or  contemplated  herein as a
result of the occurrence of any Special Circumstance. A statement of any Lender,
Assignee Lender or Participant  claiming  compensation under this Section 2.9.2.
and setting forth the additional  amount or amounts to be paid to it pursuant to
this  Agreement  shall be conclusive in the absence of manifest error or knowing
misrepresentation.                                                              

          2.9.3.  If, after the date of this  Agreement,  the  occurrence of any
Special  Circumstance  shall, in the reasonable opinion of any Lender,  Assignee
Lender or  Participant,  make it unlawful,  impossible or  impractical  for such
Lender,  Assignee  Lender or  Participant  or the LIBOR  Lending  Office of such
Lender,  Assignee  Lender or Participant to permit,  make,  maintain or fund any
LIBOR Rate Loan or share therein,  or materially  restrict the authority of such
Lender,  Assignee Lender or Participant to purchase or sell, or to take deposits
of,  nonpersonal  time deposits,  or to determine or charge interest rates based
upon the LIBOR  Rate,  then such  Lender's  obligation  to make LIBOR Rate Loans
shall  be  suspended  for the  duration  of such  illegality,  impossibility  or
impracticality  and such Lender  shall  immediately  give notice  thereof to the
Borrower.  Upon receipt of such notice, the outstanding  principal amount of all
LIBOR Rate Loans shall be automatically  converted to Base Rate Loans on either:
(i) the last day of the applicable Borrowing Period(s) if such Lender,  Assignee
Lender or Participant may lawfully continue to maintain and fund such LIBOR Rate
Loans or shares  therein to such  day(s);  or (ii)  immediately  if such Lender,
Assignee  Lender or Participant  may not lawfully  continue to fund and maintain
such LIBOR Rate Loans to such day(s); provided that in such event the conversion
shall not be subject to payment of a prepayment fee pursuant to Section 2.9.5.  

2.9.4. If, with respect to any proposed LIBOR Rate Loan:    

          (i) the Agent  reasonably  determines that, by reason of circumstances
affecting  the  Designated  Market  generally  which are beyond  the  reasonable
control of the Lenders,  Assignee Lenders or  Participants,  deposits in dollars
(in the  applicable  amounts)  are not  being  offered  to each of the  Lenders,
Assignee  Lenders or  Participants  in the Designated  Market for the applicable
Borrowing Period; or                                                            

          (ii) the Agent reasonably determines that the LIBOR Rate: (i) does not
represent  the  effective   pricing  to  such  Lenders,   Assignee   Lenders  or
Participants  for deposits in dollars in the  Designated  Market in the relevant
amount for the  applicable  Borrowing  Period;  or (ii) will not  adequately and
fairly reflect the cost to such Lenders,  Assignee  Lenders or  Participants  of
making the applicable LIBOR Rate Loan or share therein;                         

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          then the Agent shall  forthwith  give notice  thereof to the Borrower,
whereupon  until the Agent notifies the Borrower that the  circumstances  giving
rise to such suspension no longer exist, the obligation of the Lenders to permit
(and the  Borrower's  right to  designate)  any future LIBOR Rate Loans shall be
suspended.                                                                      

          2.9.5.  Upon  payment  or  prepayment  of  any  LIBOR  Rate  Loan,  or
conversion of a LIBOR Rate Loan (other than a conversion  required under Section
2.9.3.),  on a day other than the last day of the  applicable  Borrowing  Period
(whether  involuntarily,  by reason of acceleration or otherwise),  the Borrower
shall pay to the Agent a prepayment fee calculated as follows (and determined as
though one hundred  percent (100%) of the LIBOR Rate Loan had been funded in the
Designated Market):                                                             

          2.9.5.1.  the  Interest  Differential  with respect to such LIBOR Rate
Loan (which,  when received by the Agent,  shall be  distributed by the Agent to
the Lenders in proportion to their respective Lender Commitments); plus         

          2.9.5.2.  All  out-of-pocket  expenses  incurred  by the  Lenders  and
reasonably  attributable to such payment or prepayment (which,  when received by
the  Agent,  shall  be  distributed  by the  Agent  to the  Lenders  in  amounts
corresponding to their respective out-of-pocket expenses);                      

          provided  that no  prepayment  fee shall be payable  (and no credit or
rebate shall be required) under Section  2.9.5.1.  if the Interest  Differential
with respect to such LIBOR Rate Loan is not positive.  The  determination by the
Agent of the amount of any  prepayment  fee payable  under this  Section  2.9.5.
shall be conclusive in the absence of manifest error.                           

          2.9.6. The Borrower hereby  indemnifies  each Lender,  Assignee Lender
and  Participant  against,  and agrees to hold each Lender,  Assignee Lender and
Participant  harmless from and reimburse each Lender,  each Assignee  Lender and
Participant  within ten (10)  calendar days  following  notice and demand (which
notice and demand must be made within a reasonable  time after  discovery by the
loan officers  responsible  for the credit or share  hereunder)  for, all costs,
expenses,  claims,  penalties,  liabilities,  losses,  legal  fees  and  damages
(including  without  limitation  any interest  paid or that would be paid by any
Lender, Assignee Lender or Participant for deposits in dollars in the Designated
Market and any loss sustained or that would be sustained by any Lender, Assignee
Lender or Participant in connection with the  reemployment of funds) incurred or
sustained, or that would be incurred or sustained, by each such Lender, Assignee
Lender or Participant,  as reasonably  determined by each such Lender,  Assignee
Lender or Participant, as a result of any failure of the Borrower to consummate,
or the failure of any condition  required for the  consummation or effectiveness
of, any LIBOR Rate Loan on the date or in the amount  requested by the Borrower,
such indemnification to be determined as though each Lender, Assignee Lender and
Participant  (or, in the case of a LIBOR Rate Loan,  the LIBOR Lending office of
each  Lender,  Assignee  Lender and  Participant)  had or would have  funded one
hundred  percent (100%) of its pro rata portion of, or share in, such LIBOR Rate
Loan in the Designated Market. Any Lender,  Assignee Lender or Participant which
makes demand on the Borrower for payment  pursuant to this Section 2.9.6.  shall
notify the Agent of such demand  promptly (and in any event within ten (10) days
after making such demand).  Notwithstanding the foregoing, if demand is not made
within  ninety  (90) days  after the date upon  which the event  giving  rise to
liability of the Borrower  under this Section 2.9.6.  occurs,  then the Borrower
shall be allowed to pay the amounts  demanded  within thirty (30) days after the
date upon which demand is made. The determination of such amount by each Lender,
Assignee Lender and  Participant  shall be conclusive in the absence of manifest
error.                                                                          

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          2.9.7.  In the event that any Lender,  Assignee  Lender or Participant
shall have determined  that the adoption of any law,  treaty,  governmental  (or
quasi-governmental)  rule,  regulation,  guideline  or order  regarding  capital
adequacy, or any change therein or in the interpretation or application thereof,
or the  compliance  by such  Lender,  Assignee  Lender or  Participant  with any
request or directive regarding capital adequacy (whether or not having the force
of law and whether or not failure to comply  therewith  would be unlawful)  from
any central bank or  governmental  agency or body having  jurisdiction,  does or
shall have the effect of (i)  increasing  the amount of capital  required  to be
maintained by such Lender,  Assignee Lender or Participant with respect to Loans
made by such Lender or shares in Loans by such  Assignee  Lender or  Participant
and/or the Lender  Commitment  of such Lender or  obligations  of such  Assignee
Lender  or  Participant  to fund  portions  of any  Lender  Commitment,  or (ii)
increasing  the cost to such Lender with respect to making any Loan made by such
Lender or issuing or maintaining the  Commitments of such Lender,  or increasing
the cost to such  Assignee  Lender or  Participant  of  funding  or  issuing  or
maintaining  its share in any Loan or  Commitment,  then the Borrower shall from
time to time, within fifteen (15) days after written notice and demand from such
Lender,  Assignee Lender or Participant,  which notice and demand shall be given
and made  within a  reasonable  time,  pay to such  Lender,  Assignee  Lender or
Participant,  additional amounts sufficient to compensate such Lender,  Assignee
Lender  or  Participant  for the cost of such  additional  required  capital.  A
certificate,  evidencing the basis of such calculation in reasonable  detail, as
to the amount of such cost,  submitted  to  Borrower  by such  Lender,  Assignee
Lender or Participant,  shall,  absent manifest error, be final,  conclusive and
binding for all purposes. Any Lender, Assignee Lender or Participant which makes
demand on the Borrower for payment pursuant to this Section 2.9.7.  shall notify
the Agent of such demand  promptly  (and in any event within ten (10) days after
making such demand).  No Lender,  Assignee Lender or Participant  shall have the
right to collect  payments  from the Borrower  pursuant to this  Section  2.9.7.
unless it is the policy of such Lender,  Assignee Lender or Participant,  at the
time of such collection, to collect similar payments from borrowers (if any) who
are  comparable to the Borrower,  in connection  with credit  facilities to such
borrowers which credit  facilities are similar to those made available  pursuant
to  this  Agreement,  where  the  documents  governing  such  credit  facilities
establish the right of such Lender,  Assignee  Lender or  Participant to collect
such payments.                                                                  

          2.9.8.  Each Lender,  Assignee  Lender and  Participant  shall, at the
request of the Borrower, provide reasonable detail to the Borrower regarding the
manner in which the  amount  of any  payment  requested  by it  pursuant  to the
provisions of Section 2.9. has been determined.                                 

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          2.9.9.  Any  request by any  Lender  Party for  payment of  additional
amounts  pursuant  to  Sections  2.9.1.  through  2.9.4.  and  2.9.7.  shall  be
accompanied  by a  certificate  of such Lender Party setting forth the basis and
amount of such request.  In determining the amount of such payment,  such Lender
Party may use such  reasonable  attribution  or  averaging  methods  as it deems
appropriate and practical.                                                      

Section 2.10. Taxes.                                        

          2.10.1.  If the  Borrower is required  by  Applicable  Law to make any
deduction or  withholding  in respect of any Taxes (other than  Excluded  Taxes)
from any amount  payable  under any Loan  Document  to or for the account of any
Lender Party, the Borrower shall pay to or for the account of such Lender Party,
on the date such amount is payable, such additional amounts as such Lender Party
reasonably determines may be necessary so that the net amounts received by it or
for  its  account,  in  the  aggregate,   after  all  applicable  deductions  or
withholdings,  shall  equal the amount  that such  Lender  Party would have been
entitled to receive if no deductions or withholdings were made. "Excluded Taxes"
means, with respect to any payment to any Lender Party, any (a) taxes imposed on
or measured by the overall net income  (including  a franchise  tax based on net
income) of such Lender  Party by the United  States of America or any  political
subdivision or taxing authority thereof or therein, and (b) any taxes imposed on
or measured by the overall net income  (including  a franchise  tax based on net
income) of such Lender Party or its agent's Offices or Lending Office in respect
of which the payment is made, by the  jurisdiction in which it is  incorporated,
maintains its principal executive office or in which such agent's Lending Office
is located.  Whenever any such Taxes (other than Excluded  Taxes) are payable by
the Borrower,  as promptly as possible after payment is made, the Borrower shall
send to such Lender  Party a certified  copy of any  original  official  receipt
received by the Borrower showing payment.                                       

          2.10.2.  If any Lender Party is required by law to make any payment on
account  of Taxes  (other  than  Excluded  Taxes) on or in  relation  to any sum
received or receivable by it under any Loan Document, or any liability for Taxes
(other than Excluded Taxes) in respect of any such payment is imposed, levied or
assessed  against such Lender Party,  then the Borrower  shall pay when due such
additional amounts as such Lender Party reasonably determines to be necessary so
that the amount  received by it, less any such Taxes  paid,  imposed,  levied or
assessed,  including  any Taxes  (other  than  Excluded  Taxes)  imposed on such
additional  amounts,  shall equal the amount  that such Lender  Party would have
been  entitled  to retain in the  absence of the  payment,  imposition,  levy or
assessment  of such Taxes.  Each Lender Party shall make  reasonable  efforts to
minimize the amount of such Taxes and shall remit to the Borrower any refunds of
Taxes paid,  less the costs of such Lender  Party  expended  in  obtaining  such
refund.                                                                         

          2.10.3.  Notwithstanding  Section 2.10.1.,  if any Lender Party is not
organized  and  existing  under the laws of the United  States of America or any
political  subdivision  thereof or  therein  (a  "Foreign  Lender  Party"),  the
Borrower shall be entitled, in respect of payments to or for the account of such
Foreign Lender Party,  to the extent it is required to do so by Applicable  Law,
to deduct or withhold  (and shall not be required to make  payments as otherwise
required in Section 2.10.1. on account of such deductions or withholdings) Taxes
imposed by the United  States of America,  except (a) Taxes (other than Excluded
Taxes)  payable as a result of any  Regulatory  Change (i) after the date hereof
(in the case of any  Foreign  Lender  Party  hereto on the date  hereof) or (ii)
after the date on which such Lender Party becomes a Lender Party (in the case of

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any Foreign Lender Party becoming a party hereto after the date hereof  pursuant
to Section  9.6.) and (b) if the Foreign  Lender  Party shall on the date hereof
(or on a  subsequent  date on which such Foreign  Lender Party  becomes a Lender
Party  pursuant to Section 9.6.) be entitled to furnish,  and the Borrower shall
have been furnished by such Foreign Lender Party, a duly executed certificate to
the effect  that such  Foreign  Lender  Party is  entitled  to receive  all such
payments  without  deduction or  withholding of such Taxes imposed by the United
States (A) pursuant to the terms of an applicable  tax treaty in effect with the
United States of America (in which case such certificate shall be accompanied by
two executed copies of IRS Form 1001),  (B) under Code Section 1441(c) (in which
case such  certificate  shall be accompanied by two executed  copies of IRS Form
4224) or (C)  pursuant to an  exemption  certificate  received  from the IRS (in
which case such  certificate  shall be  accompanied  by a copy of such exemption
certificate)  (such forms or  statements  being the  "Prescribed  Forms".)  Such
Foreign Lender Party shall  thereafter,  to the extent entitled under Applicable
Law,  provide to the Borrower new Prescribed  Forms upon the obsolescence of any
previously  delivered  form,  in each case duly  executed and  completed by such
Foreign Lender Party.  If the Borrower shall so deduct or withhold any Taxes, it
shall provide a statement to such Foreign Lender Party, setting forth the amount
of such  Taxes so  deducted  or  withheld,  the  applicable  rate and any  other
information  or  documentation  that such Foreign  Lender  Party may  reasonably
request.                                                                        

          Section 2.11.  Lending  Office;  Discretion of Lenders as to Manner of
Funding. Each Lender may make, carry or transfer Fixed Rate Loans at, to, or for
the account of an Affiliate of the Lender,  provided  that such Lender shall not
be entitled to receive any greater amount under Section 2.10. as a result of the
transfer  of any such Loan than such Lender  would be  entitled  to  immediately
prior  thereto  unless (a) such transfer  occurred at a time when  circumstances
giving rise to the claim for such greater amount did not exist or (b) such claim
would have arisen even if such  transfer had not occurred.  Notwithstanding  any
other  provision  of this  Agreement,  each Lender shall be entitled to fund and
maintain its funding of all or any part of its Fixed Rate Loans in any manner it
sees fit, it being understood,  however, that for purposes of this Agreement all
determinations hereunder shall be made as if each Lender had actually funded and
maintained each Fixed Rate Loan through the purchase of deposits in the relevant
interbank market having a maturity corresponding to such Loan's Borrowing Period
and bearing interest at the applicable rate.                                    

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ARTICLE 3.

 CONDITIONS TO LOANS

          Section 3.1.  Closing  Conditions.  The occurrence of the Closing Date
shall be subject to satisfaction of the following conditions:                   

          3.1.1. Certain Documents.  The Agent shall have received the documents
listed on Schedule 3.1.1, and the Lenders shall have received the Revolving Loan
Notes, all of which shall be in form and substance satisfactory to the Agent and
the Lenders.                                                                    

          3.1.2.  Fees and Expenses  Paid. The Borrower shall have paid all Fees
and expenses then due and payable, on the Closing Date.                         

          3.1.3.  General.  All other  documents and legal matters in connection
with the  transactions  contemplated by this Agreement shall have been delivered
or executed in form and substance  satisfactory to the Agent and the Lenders and
the Agent shall have received all such counterpart originals or certified copies
thereof as Agent may request.                                                   

          Section 3.2.  Conditions  Precedent to Loans.  The  obligation  of the
Lenders to make any Loan on any Funding  Date shall be subject to the  following
conditions precedent:                                                           

          3.2.1.  Conditions  Precedent.  The conditions  precedent set forth in
Section 3.1. shall have been satisfied.                                         

          3.2.2.  Notice of Borrowing.  The Borrower shall have delivered to the
Agent,  after the time the  conditions set forth in Section 3.1. shall have been
satisfied or waived and otherwise in accordance  with the applicable  provisions
of this Agreement, a Notice of Borrowing.                                       

          3.2.3.  Representations and Warranties. All of the representations and
warranties  of the Borrower  contained in the Loan  Documents  shall be true and
correct in all material respects on and as of the Funding Date as though made on
and as of that date.                                                            

          3.2.4.  No  Default.  No Default or Event of  Default  shall  exist or
result from the making of the Loan.                                             

     3.2.5. No Overdraw. There shall be no Overdraw then in existence.

3.2.6. Covenant Compliance.                                 

          The Borrower  Parties shall be in full  compliance  with the financial
covenants set forth in Section 6.4.                                             

          3.2.7.  No Material  Adverse  Change No Material  Adverse Change shall
have occurred since the date of the financial statements most recently delivered
to the Lenders pursuant hereto (or, in the case of any Funding Date prior to the
delivery  of  financial  statements  pursuant  hereto,  since  the  date  of the
financial statements referred to in Section 4.5.2.).                            

          3.2.8.  Satisfaction  of  Conditions.  Each  borrowing of a Loan shall
constitute a representation  and warranty by the Borrower as of the Funding Date
that the  conditions  contained  in Sections  3.2.3.  through  3.2.7.  have been
satisfied.                                                                      

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ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lender Parties as follows:

          Section  4.1.  Organization,  Powers  and Good  Standing.  Each of the
Borrower  Parties (a) is duly organized as a  corporation,  partnership or other
organization,  as shown as of the date  hereof on Schedule  4.1,  (b) is validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
organization,  as shown as of the date hereof on Schedule  4.1,  and (c) has all
requisite corporate, partnership or other organizational power and authority and
the legal right to own and operate its  properties,  to carry on its business as
heretofore  conducted  and as proposed to be  conducted,  to enter into the Loan
Documents to which it is a party and to carry out the transactions  contemplated
thereby.  Each of the Borrower  Parties is duly  qualified  and in good standing
authorized to do business in each state or other  jurisdiction  where the nature
of its business  activities  conducted or proposed to be conducted or properties
owned or leased  requires it to be so  qualified.  The Borrower is a partnership
for purposes of federal income  taxation and for purposes of the tax laws of any
state or  locality in which the  Borrower  is subject to  taxation  based on its
income.   Guarantor  is  organized  in  conformity  with  the  requirements  for
qualification as a real estate investment trust under the Code and its ownership
and method of operation  enables it to meet the  requirements  for taxation as a
real estate investment trust under the Code.                                    

 Section 4.2. Authorization, Binding Effect, No Conflict, Etc.

          4.2.1.  Authorization,  Binding Effect, Etc. As of the Closing Date or
any  date  thereafter,  (a) the  execution,  delivery  and  performance  by each
Borrower Party of each Loan Document to which it is or will be a party have been
duly authorized by all necessary corporate,  partnership or other organizational
action on the part of such Borrower Party;  (b) each such Loan Document has been
duly executed and delivered by such Borrower  Party and (c) is the legal,  valid
and  binding  obligation  of such  Borrower  Party,  enforceable  against  it in
accordance  with its terms,  except as  enforcement  may be limited by equitable
principles and by bankruptcy, insolvency, reorganization,  moratorium or similar
laws relating to creditors' rights generally.                                   

          4.2.2.  No Conflict.  The execution,  delivery and  performance by any
Borrower Party of each Loan Document to which it is or will be a party,  and the
consummation of the transactions  contemplated  thereby, do not and will not (a)
violate any provision of the charter or other  organizational  documents of such
Borrower  Party,  (b) conflict with,  result in a breach of, or constitute  (or,
with the giving of notice or lapse of time or both, would  constitute) a default
under,  or require  the  approval  or consent  of any  Person  pursuant  to, any
material Contractual Obligation of any Borrower Party, or violate any Applicable
Law binding on any Borrower  Party,  except for consents that have been obtained
and are in full force and effect, or (c) result in the creation or imposition of
any Lien upon any asset of the Borrower.                                        

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          4.2.3.  Partnership Units; General Partner.  Guarantor owns 19,595,122
Partnership  Units (as defined in partnership  agreement of the Borrower),  free
and clear of any Liens.  All  partnership  units owned by Guarantor were offered
and sold in compliance with all Applicable Law (including,  without  limitation,
federal and state securities laws). Except as set forth on Schedule 4.2.3, there
are no outstanding  securities  convertible into or exchangeable for partnership
units of the  Borrower,  or options,  warrants  or rights to  purchase  any such
partnership  units,  or  commitments  of any kind for the issuance of additional
partnership units or any such convertible or exchangeable securities or options,
warrants or rights to purchase  such  partnership  units.  Guarantor is the sole
general partner of the Borrower.  The Shareholder Agreement is in full force and
effect and has not been amended or supplemented in any respect.  No party to the
Shareholder  Agreement  is in default  under such  agreement,  nor has any event
occurred  which,  but for the  passing of time or the  giving of  notice,  would
constitute  a default  under  such  Agreement.  The "PSA  Registration  Date" as
defined in the Shareholder Agreement is March 17, 2001.                         

          4.2.4.  Governmental Approvals. No Governmental Approval is or will be
required in  connection  with the  execution,  delivery and  performance  by any
Borrower  Party of any Loan  Document  to which it is party or the  transactions
contemplated  thereby.  Each Borrower  Party and each of the other  Consolidated
Entities possesses all Government Approvals,  in full force and effect, that are
necessary for the  ownership,  maintenance  and operation of its  properties and
conduct of its business as now  conducted  and proposed to be conducted  and the
absence of which would not result in a Material  Adverse  Effect on any Borrower
Party, and is not in violation thereof.                                         

          Section 4.3. Guarantor. All of the outstanding shares of Capital Stock
of the Guarantor have been duly authorized and validly issued and are fully paid
and nonassessable.  Except as disclosed on Schedule 4.3, as amended from time to
time, there are not outstanding any securities  convertible into or exchangeable
for shares of Capital Stock of the Guarantor, or any options,  warrants or other
rights to purchase any such Capital  Stock,  or any  commitments of any kind for
the issuance of additional  shares of such Capital Stock or any such convertible
or  exchangeable  securities  or options,  warrants  or rights to purchase  such
Capital Stock. Except for directors qualifying shares or similar arrangements or
as disclosed on Schedule  4.3,  neither the Borrower nor Guarantor is a party to
any agreement with respect to the issuance, voting or sale of issued or unissued
shares of Capital Stock of the Guarantor.                                       

          Section 4.4. Subsidiaries.  The Borrower has no Subsidiaries except as
set forth in Schedule 4.4.                                                      

          Section 4.5. Financial  Information.  4.5.1. The consolidated  balance
sheets of the  Borrower  and  Guarantor as of December 31, 1996 and December 31,
1997 and the consolidated  statements of income, retained earnings and cash flow
of the Borrower and Guarantor for the Fiscal Years then ended,  certified by the
Borrower's  independent certified public accountants,  copies of which have been
delivered  to  the  Lender  Parties,  were  prepared  in  accordance  with  GAAP
consistently  applied and fairly present the consolidated  financial position of
the Borrower  and its  Consolidated  Subsidiaries,  as of the  respective  dates
thereof  and the  results  of  operations  and cash flow of the  Guarantor,  the
Borrower  and its  Consolidated  Subsidiaries  for the periods  then  ended.  No
Borrower  Party nor any  Consolidated  Subsidiary on such dates had any material
Contingent  Obligations,  liabilities for Taxes or long-term leases,  forward or
long-term commitments or unrealized losses from any unfavorable commitments that
are not reflected in the foregoing  statements or in the notes thereto and which
are Material.                                                                   

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          4.5.2. The unaudited consolidated balance sheet of the Guarantor as at
September 30, 1997 and March 31, 1998 and related statements of income, retained
earnings  and cash  flow for the  period  then  ended,  certified  by the  Chief
Financial  Officer of the  Guarantor,  a copy of which has been delivered to the
Lender,  were prepared in accordance with GAAP  consistently  applied (except to
the extent noted therein) and fairly present the consolidated financial position
of the Guarantor, the Borrower and the Consolidated Entities as of such date and
the results of operations and cash flow for the period covered thereby,  subject
to normal  year-end audit  adjustments.  No Borrower Party nor any  Consolidated
Entity had on such date any material  Contingent  Obligations,  liabilities  for
Taxes  or  long-term  leases,   unusual  forward  or  long-term  commitments  or
unrealized  losses from any unfavorable  commitments  which are not reflected in
the foregoing statements or in the notes thereto and which are Material.        

          4.5.3.  Except as  otherwise  disclosed  in writing to and approved in
writing by the Agent prior to the date hereof,  with respect to the Projections:
(a) all  assumptions  made therein were, in the Borrower  Parties' best business
judgment, reasonable under the circumstances existing at the time of preparation
of the Projections, and (b) the forecasts or projections contained therein were,
in the  Borrower  Parties'  best  business  judgment,  reasonably  based  on the
assumptions contained therein.                                                  

          Section 4.6. No Material Adverse  Changes.  Since March 31, 1998 there
has been no Material Adverse Change.                                            

          Section 4.7.  Litigation.  Except as disclosed in Schedule 4.7,  there
are no actions,  suits or  proceedings  pending or, to the best knowledge of the
Borrower,  threatened  against or affecting  any Borrower  Party or any of their
respective properties before any Governmental  Authority (a) in which there is a
reasonable  possibility  of an  adverse  determination  that  could  result in a
Material  liability or have a Material  Adverse Effect or (b) that in any manner
draws  into  question  the  validity,  legality  or  enforceability  of any Loan
Document or any transaction contemplated thereby.                               

          Section  4.8.  Agreements;  Applicable  Law. No  Borrower  Party is in
violation  of any  Applicable  Law, or in default  under any of its  Contractual
Obligations, except where such violation or default could not individually or in
the aggregate have a Material Adverse Effect. No Borrower Party is a party to or
bound by any unduly burdensome Contractual  Obligation that,  individually or in
the aggregate, has a Material Adverse Effect.                                   

          Section 4.9.  Taxes.  All income tax returns of the  Borrower  Parties
have been filed with the appropriate  Governmental  Authority through the fiscal
year ended  December 31, 1997.  All United States Federal income tax returns and
all other material tax returns required to be filed by the Borrower Parties have
been filed and all Taxes due  pursuant to such  returns  have been paid,  except
such  Taxes,  if any,  as are  being  contested  in good  faith  and as to which
adequate  reserves have been  established  in accordance  with GAAP. To the best
knowledge  of the  Borrower,  there have not been  asserted  or  proposed  to be
asserted any Tax  deficiency  against any Borrower  Party that would be Material
that is not  reserved  against on the  financial  books of the  Borrower and its
Subsidiaries. No Borrower Party is a party to or obligated under any Tax sharing
or similar agreement.                                                           
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          Section 4.10.  Governmental  Regulation.  No Borrower  Party is (a) an
"investment   company"  registered  or  required  to  be  registered  under  the
Investment  Company Act of 1940, as amended,  or a company  controlled by such a
company,  or (b) subject to regulation  under the Public Utility Holding Company
Act of 1935,  the  Federal  Power Act,  the  Interstate  Commerce  Act or to any
Federal or state,  statute or regulation  limiting its ability to incur Debt for
money borrowed (other than the Margin Regulations).                             

          Section  4.11.  Margin  Regulations.  No  Borrower  Party  is  engaged
principally, or as one of its important activities, in the business of extending
credit for the purposes of purchasing or carrying Margin Stock. The value of all
Margin  Stock  held by the  Borrower  Parties  constitutes  less than 25% of the
value, as determined in accordance with the Margin Regulations, of all assets of
the  Borrower  Parties.  The  execution,  delivery and  performance  of the Loan
Documents by the Borrower Parties will not violate the Margin Regulations.      

          Section 4.12.  Employees.  As of the date hereof,  the Borrower has no
employees.  The Borrower has not had, on any date prior to the date hereof,  any
employees. As of the date hereof, the Borrower has no ERISA Affiliates.         

          Section  4.13.  Title to Property.  Each  Borrower  Party has good fee
title to, or valid and existing leasehold interests in, all of its Real Property
reflected  in its books and  records as being owned or leased by it. Each of the
Real Properties listed in Schedule 1.1C is an Unencumbered Asset.               

          Section 4.14.  Intellectual Property, Etc. Each Borrower Party owns or
holds  valid  licenses  in and to all  Trademarks,  copyrights,  patents,  trade
secrets and other intellectual  property rights that are material to the conduct
of its  business as  heretofore  operated  and as proposed to be  conducted.  No
Borrower Party has  infringed,  or been charged or, to the best knowledge of the
Borrower,  threatened  to be charged  with any  infringement  of, any  unexpired
Trademark,  copyright, patent, trade secret or other intellectual property right
of any Person where such infringement  could result in a Material Adverse Effect
on any of the Borrower Parties.                                                 
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Section 4.15. Environmental Condition.                      

          4.15.1.  Except as disclosed in Schedule 4.15.1, to the best knowledge
of the  Borrower,  each  Real  Property  in the  Unencumbered  Pool is free from
contamination  from  any  Hazardous  Materials.  To the  best  knowledge  of the
Borrower,  no  polychlorinated  biphenyls  (PCBs)  (including  PCBs contained in
dialectic fluid in any  transformers,  capacitors,  ballasts or other equipment)
stored,  used  or  located  on,  or  disposed  of at any  Real  Property  in the
Unencumbered Pool in violation of Applicable Law and no asbestos is stored, used
or located on, or has been disposed of at, any Real Property in the Unencumbered
Pool, other than asbestos that does not pose a hazard to human health,  which is
not required to be remediated  under  Applicable Law, and which is subject to an
operations and  maintenance  plan of the Borrower which  restricts and regulates
the disturbance thereof. Neither the Borrower Parties nor, to the best knowledge
of the  Borrower,  any prior  owner or other  user of any Real  Property  in the
Unencumbered Pool has caused or suffered any Environmental Damages.             

          4.15.2.  Except as disclosed in Schedule 4.15.2,  neither the Borrower
Parties  nor, to the best  knowledge of the  Borrower,  any prior owner or other
user of any Real Property in the  Unencumbered  Pool has received  notice of any
actual or alleged  violation  of  Environmental  Requirements,  or notice of any
actual or alleged  liability for  Environmental  Damages in connection  with any
Real  Property in the  Unencumbered  Pool.  There  exists no order,  judgment or
decree,  and there is not pending  or, to the best  knowledge  of the  Borrower,
threatened, any action, suit, proceeding or investigation relating to any actual
or alleged  liability  arising  out of the  presence  or  suspected  presence of
Hazardous   Material,   any  actual  or  alleged   violation  of   Environmental
Requirements  or any actual or alleged  liability for  Environmental  Damages in
connection  with any Real Property in the  Unencumbered  Pool or the business or
operations  of any of the  Borrower  Parties  nor, to the best  knowledge of the
Borrower,  does  there  exist any basis for such  action,  suit,  proceeding  or
investigation being instituted or filed.                                        

          4.15.3.  There is no  violation  of  Environmental  Requirements  with
respect to any Real Property  owned by any Borrower Party which Real Property is
not in the  Unencumbered  Pool, which violation has a Material Adverse Effect on
the Borrower.  The Borrower is not obligated to pay  Environmental  Damages with
respect to any Real  Property not in the  Unencumbered  Pool which payment has a
Material Adverse Effect on the Borrower.                                        

          4.15.4.  None of the Real Property in the  Unencumbered  Pool has been
designated as Border Zone Property under the provisions of California Health and
Safety Code, Sections 25220 et seq. or any comparable statute and there has been
no occurrence or condition on any real property  adjoining or in the vicinity of
any of the Real Property in the  Unencumbered  Pool that could cause any of such
Real Property or any part thereof to be designated as Border Zone Property.     

          Section 4.16.  Labor Matters.  There are no material  strikes or other
material labor disputes or material grievances pending or, to the best knowledge
of the Borrower,  threatened against any Borrower Party.  Except as set forth in
Schedule  4.16,  there  are no  collective  bargaining  agreements  to which any
Borrower  Party is a party.  Each  Borrower  Party has  complied in all material
respects  with  the  requirements  of  the  Worker  Adjustment  and  Restraining
Notification  Act, 29 U.S.C.  Section 2101 et seq.  (the "WARN  Act").  No claim
under  the WARN  Act is  pending  or,  to the best  knowledge  of the  Borrower,
threatened  against  any  Borrower  Party nor is there any  reasonable  basis to
anticipate any such claim.                                                      

          Section 4.17.  Disclosure.  All factual  information  in any document,
certificate or written statement furnished to the Lender Parties by any Borrower
Party and prepared by any Borrower  Party or any Affiliate  thereof with respect
to the business, assets, prospects,  results of operation or financial condition
of any Borrower Party for use in connection with the  transactions  contemplated
by this  Agreement was true and correct in all material  respects as of the date
of such  document,  certificate  or  statement.  There  is no fact  known to the
Borrower (other than matters of a general economic nature) that has had or could
reasonably be expected to have a Material  Adverse  Effect and that has not been
disclosed herein or in such other documents,  certificates or statements. To the
best of the  Borrower's  knowledge,  all factual  information  in any  document,

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certificate or written statement furnished to the Lender Parties by any Borrower
Party and prepared by any Person (other than a Borrower Party or an Affiliate of
any Borrower Party) with respect to the business, assets, prospects,  results of
operation or financial  condition  of any Borrower  Party for use in  connection
with the transactions contemplated by this Agreement was true and correct in all
material respects as of the date of such document, instrument or certificate and
the Borrower has no actual knowledge,  without duty of investigation or inquiry,
of any materially untrue or misleading statement or omission therein.           

ARTICLE 5.

 AFFIRMATIVE COVENANTS OF THE BORROWER

          So  long  as  any  portion  of  the  Commitment  is in  effect  or any
Obligations  remain  unpaid or have not been  performed  in full,  the  Borrower
covenants with the Lender Parties as follows:                                   

          Section 5.1.  Financial  Statements  and Other  Reports.  The Borrower
shall deliver to the Agent:                                                     

          5.1.1. As soon as practicable and in any event within ninety-five (95)
days after the end of each Fiscal Year,  (i) the  consolidated  balance sheet of
the  Borrower  Parties as of the end of such year and the  related  consolidated
statements  of  income,  stockholders'  equity  and  cash  flow of the  Borrower
Parties,  for such Fiscal Year,  setting forth in each case in comparative  form
the consolidated  figures for the previous Fiscal Year, all in reasonable detail
and (ii) the consolidated balance sheet of the Borrower Parties as of the end of
such year and the  related  consolidated  statements  of  income,  stockholder's
equity and cash flow for such fiscal  years,  all in  reasonable  detail and, in
each  case,  certified  by the  Guarantor's  chief  financial  officer as fairly
presenting the  consolidated  financial  condition of the Borrower Parties as of
the dates  indicated and the  consolidated  results of operations and cash flows
for the periods indicated.  With respect to the financial statements of Borrower
Parties,  such statements shall be accompanied by an unqualified  report thereon
of Ernst & Young,  LLP or other  independent  certified  public  accountants  of
recognized  national  standing  selected by the Borrower  Parties and reasonably
satisfactory to the Agent,  which report shall state that such statements fairly
present the financial  position of the Borrower Parties as of the date indicated
and their  results of  operations  and cash flows for the periods  indicated  in
conformity  with  GAAP  (except  as  otherwise  stated  therein)  and  that  the
examination by such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards.             

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          5.1.2.  As soon as practicable and in any event within fifty (50) days
after  the end of each  Fiscal  Quarter  a  consolidated  balance  sheet  of the
Borrower  Parties as of the end of such  quarter  and the  related  consolidated
statements  of income,  stockholders'  equity and cash flow for such quarter and
the portion of the Fiscal Year ended at the end of such  quarter,  setting forth
in each case in comparative form the consolidated  figures for the corresponding
periods of the prior Fiscal Year, all in reasonable  detail and certified by the
Guarantor's  chief  financial  officer  as fairly  presenting  the  consolidated
financial  condition of the Borrower  Parties as of the dates  indicated and the
consolidated  results of  operations  and cash flows for the periods  indicated,
subject to normal year-end adjustments and made in accordance with GAAP.        

          5.1.3.  Within fifty (50) days after the end of each Fiscal Quarter, a
certificate of the senior  vice-president,  corporate  finance,  chief financial
officer,  controller or treasurer of the Guarantor  substantially in the form of
Exhibit F (a "Compliance  Certificate"),  (a) duly  completed  setting forth the
calculations required to establish Availability and compliance with Section 6.4.
on the date of such  financial  statements  and (b)  stating  that,  to the best
knowledge of such officer,  after making such inquiry and other investigation as
such officer deems reasonable under the circumstances,  no Default exists or, if
a Default  does  exist,  the nature  thereof  and the action  that the  Borrower
proposes to take with respect thereto;                                          

          5.1.4.  Within fifty (50) days after the end of each Fiscal Quarter, a
report showing Available Financing as of the end of such Fiscal Quarter.        

          5.1.5.   An   Unencumbered   Pool  report  which   includes  for  each
Unencumbered  Asset,  the Property NOI for such Fiscal  Quarter with  reasonable
detail as to all Property Expenses,  Capital Expenditures  incurred, and average
Occupancy  Rate during the Fiscal  Quarter.  This portion of the report shall be
submitted  to the Agent  within  fifty  (50) days  after the end of each  Fiscal
Quarter.                                                                        

          5.1.6. Within three (3) Business Days after the Borrower becomes aware
of the occurrence of any Default or Event of Default,  a certificate of a Senior
Officer of the Borrower  setting  forth the details  thereof and the action that
the Borrower is taking or proposes to take with respect thereto;                

          5.1.7.  Promptly upon their becoming available and in any event within
five (5) Business  Days after  submission  to the SEC,  copies of all  financial
statements,  reports (including forms 10Q and 10K), notices and proxy statements
sent  or  made  available  by  the  Guarantor  to  its  security  holders,   all
registration statements (other than the exhibits thereto) and annual,  quarterly
or monthly  reports,  if any,  filed by the Guarantor with the SEC and all press
releases by the Borrower or the Guarantor  concerning  material  developments in
the business of the Borrower or the Guarantor;                                  

          5.1.8.  At any  time  after  the  Borrower  has any  employees  and is
required to comply with ERISA or has any ERISA  Affiliates which are required to
comply with ERISA,  within  three (3)  Business  Days after any of the  Borrower
Parties  becomes  aware  of  the  occurrence  of (a)  any  Reportable  Event  in
connection with any Plan, (b) any Prohibited  Transaction in connection with any
Plan (or any trust  created  thereunder),  or (c) any  assertion  of  withdrawal
liability of any Multiemployer  Plan, (d) any partial or complete  withdrawal by
the Borrower or any ERISA Affiliate from any  Multiemployer  Plan under Title IV
of ERISA (or assertion thereof), (e) any cessation of operations by the Borrower
or any ERISA Affiliate at a facility in the  circumstances  described in Section
4068(f) of ERISA, (f) the withdrawal by the Borrower or any ERISA Affiliate from

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a  Multiple  Employer  Plan  during a plan year for  which it was a  substantial
employer,  as defined in Section  4001(a)(2)  of ERISA,  (g) the  failure by the
Borrower  or any ERISA  Affiliate  to make a payment  to a Plan  required  under
Section 302(f)(1) of ERISA, (h) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA,  or (i)
the PBGC's  intent to  terminate  any Plan  administered  or  maintained  by the
Borrower or any ERISA Affiliate or to have a trustee appointed to administer any
such Plan, a written notice specifying the nature thereof,  and, when known, any
action  taken or  threatened  by the Internal  Revenue  Service or the PBGC with
respect thereto;                                                                

          5.1.9.  Within  three (3)  Business  Days after the  Borrower  obtains
knowledge  thereof,  notice  of  all  litigation  or  proceedings  commenced  or
threatened  affecting any Borrower Party (a) that involves alleged  liability in
excess of $2,500,000  (in the  aggregate)  and which is not covered by insurance
(or,  if  purportedly  covered by  insurance,  then as to which the  insurer has
reserved its rights with respect to such coverage),  (b) in which  injunctive or
similar relief is sought that, if obtained, could have a Material Adverse Effect
or (c) that questions the validity or enforceability of any Loan Document;      

          5.1.10.  Within three (3) Business Days after the receipt  thereof,  a
copy of any notice,  summons,  citation or written communication  concerning any
actual,   alleged,   suspected  or   threatened   violation   of   Environmental
Requirements,  or  liability of any Borrower  Party for  Environmental  Damages,
where the amount in  controversy  is equal to or greater  than Two Million  Five
Hundred Thousand Dollars ($2,500,000.00);                                       

          5.1.11.  Within five (5) Business Days after the availability thereof,
copies  of all  amendments  to  the  charter,  bylaws  or  other  organizational
documents of the Borrower or the Guarantor;                                     

          5.1.12.  Each Borrower Party shall deliver or cause to be delivered to
the Agent, as the Agent may from time to time request, schedules identifying all
insurance then in effect and certificates evidencing such insurance;            

          5.1.13.  Promptly upon request of the Agent, copies of each Schedule B
(Actuarial Information) to the most recent annual report (Form 5500 Series) with
respect to each Plan (if any);                                                  

          5.1.14.  From time to time such additional  information  regarding the
Borrower   Parties,   the   Guarantor,   the   Consolidated   Entities  and  the
Unconsolidated   Joint  Ventures  or  their   respective   businesses,   assets,
liabilities, prospects, results of operation or financial condition as the Agent
(or any Lender  through the Agent) may  reasonably  request,  including  without
limitation  evidence  regarding  the Lien  status  of any Real  Property  in the
Unencumbered Pool.                                                              

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          Section  5.2.  Records and  Inspection.  The  Borrower  Parties  shall
maintain adequate books, records and accounts as may be required or necessary to
permit the preparation of consolidated  financial  statements in accordance with
sound  business  practices  and GAAP.  The  Borrower  Parties  shall permit such
Persons as the Agent may designate,  after  reasonable  advance  notice,  during
normal  business  hours,  and as often as may be  requested,  to (a)  visit  and
inspect any of the Real  Properties of any Borrower  Party or the offices of any
Borrower Party, (b) inspect and copy any Borrower Party's books and records, and
(c) discuss with its officers and employees and its independent accountants, its
business,  assets,  liabilities,  prospects,  results of  operation or financial
condition;  provided,  however, that (i) representatives of the Borrower Parties
may be present during all such  inspections  and  discussions,  (ii) each person
designated by the Agent shall take  reasonable  steps to minimize  disruption to
the  operations  of such  Borrower  Party caused by such  inspection;  and (iii)
nothing  contained  herein shall require any Borrower Party to permit any Lender
to  examine  or  otherwise  have  access to any matter  that is  protected  from
disclosure  by the  attorney-client  privilege or the doctrine of attorney  work
product.                                                                        

          Section 5.3. Corporate Existence, Etc. Except as permitted pursuant to
Section 6.9.,  each Borrower  Party shall at all times preserve and keep in full
force and effect its corporate existence and all Material rights and franchises.

          Section  5.4.  Payment of Taxes.  Each  Borrower  Party  shall pay and
discharge  all Taxes  imposed upon it or any of its  properties or in respect of
any of its franchises,  business, income or property before any penalty shall be
incurred with respect to such Taxes,  provided,  however, that, unless and until
foreclosure,  distraint, levy, sale or similar proceedings shall have commenced,
a Borrower  Party need not pay or discharge any such Tax so long as the validity
or  amount  thereof  is  being  contested  in  good  faith  and  by  appropriate
proceedings and so long as any reserves or other  appropriate  provisions as may
be required by GAAP shall have been made therefor.                              

          Section 5.5.  Maintenance  of  Properties.  Each Borrower  Party shall
maintain or cause to be maintained  in good repair,  working order and condition
(ordinary wear and tear  excepted),  all Real Properties and other assets useful
or necessary to its business,  and from time to time each  Borrower  Party shall
make or cause to be made all  appropriate  repairs,  renewals  and  replacements
thereto;  provided,  however that the failure to maintain a  particular  item of
property (other than an improved Real Property) that is not of significant value
to such Borrower  Party or which is obsolete shall not constitute a violation of
this covenant.                                                                  

          Section 5.6.  Maintenance  of  Insurance.  Each  Borrower  Party shall
maintain in full force and effect with insurers duly licensed in the  applicable
jurisdictions  insurance  of such types and in such  amounts as are  customarily
carried in their  respective lines of business,  including,  but not limited to,
fire, hazard, public liability, property damage, products liability and workers'
compensation insurance.                                                         

          Section 5.7.  Conduct of Business.  No Borrower  Party shall engage in
any business  other than the  businesses in which the Borrower and the Guarantor
are  engaged  on the date  hereof or any  businesses  substantially  similar  or
related thereto. Each Borrower Party shall conduct its business in compliance in
all  material   respects  with  all  Applicable  Law  and  all  its  Contractual
Obligations.                                                                    

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          Section 5.8.  Further  Assurances.  At any time and from time to time,
upon the request of the Agent,  each  Borrower  Party shall  execute and deliver
such  further  documents  and do such  other  acts and  things  as the Agent may
reasonably  request in order to effect fully the purposes of the Loan  Documents
and any other  agreement  contemplated  thereby  and to provide  for payment and
performance  of the  Obligations  in  accordance  with  the  terms  of the  Loan
Documents.                                                                      

          Section  5.9.  Future  Information.  All  factual  information  in any
document,  certificate or written  statement  furnished to the Lender Parties by
any Borrower  Party after the date hereof and prepared by any Borrower  Party or
any Affiliate thereof with respect to the business,  assets, prospects,  results
of operation or financial  condition of any Borrower Party for use in connection
with the transactions contemplated by this Agreement will be true and correct in
all material respects as of the date of such document, certificate or statement.
Each fact  known to the  Borrower  (other  than  matters  of a general  economic
nature) that has had or could  reasonably be expected to have a Material Adverse
Effect  and that has not  been  disclosed  herein  or in such  other  documents,
certificates  or statements  will be disclosed  promptly to the Agent in writing
promptly after a Responsible Officer learns thereof.  All factual information in
any document,  certificate or written statement  furnished to the Lender Parties
by any Borrower Party and prepared by any Person (other than a Borrower Party or
an  Affiliate  of any  Borrower  Party) with  respect to the  business,  assets,
prospects, results of operation or financial condition of any Borrower Party for
use in connection with the transactions  contemplated by this Agreement will, to
the Borrower's  actual knowledge,  without duty of investigation or inquiry,  be
true and  correct  in all  material  respects  as of the date of such  document,
instrument  or  certificate  except as  disclosed  by the Borrower to the Lender
Parties in writing  concurrently with the delivery to the Lender Parties of such
document,  instrument or certificate;  provided, however, that Borrower makes no
covenant  regarding  the truth or accuracy of any third party  research  reports
regarding the business and  operations  of the Guarantor  which may hereafter be
delivered to the Lender Parties.                                                

          Section 5.10. Shareholder  Agreement.  No Borrower Party shall modify,
amend,  terminate,  breach or  otherwise  violate any of the  provisions  of the
Shareholder  Agreement in any material respect without the prior written consent
of the Lenders,  which may be withheld in their sole discretion.  Borrower shall
cause PSI to comply with all provisions of the Shareholder Agreement.           

          Section  5.11.  Limitation  on  Guarantor.  The  sole  Investments  of
Guarantor shall at all times be (i) its general partnership interest in Borrower
(ii) any  wholly-owned  Subsidiary  of the  Guarantor  which  Subsidiary's  sole
business is the  construction,  ownership  and operation of Office Park Property
owned by the Borrower and its  Subsidiaries,  (iii) Cash,  Cash  Equivalents and
institutional  money market funds  organized under the laws of the United States
of America or any state thereof that invest solely in Cash Equivalents, and (iv)
loans to employees of the Guarantor  for the purpose of  purchasing  the Capital
Stock of the Guarantor  pursuant to a program therefor adopted by the Guarantor.
The  Guarantor  shall  not at any time  incur  any  Liabilities  other  than (i)
Liabilities  for which the Guarantor is jointly and severally  liable due to its
status as the general  partner in the Borrower,  (ii)  Liabilities for overhead,
payroll  and  employee-related  expenses,  (iii)  Liabilities  relating  to  any
guaranty or suretyship executed by the Guarantor of the Borrower's  obligations;
and (iv) Liabilities relating to obligations of wholly-owned Subsidiaries of the
Guarantor  not to exceed at any time Two  Million  Dollars  ($2,000,000)  in the
aggregate  (including  Contingent  Obligations).  At no time shall the Guarantor
have any Debt for borrowed money other than with respect to  transactions  among
Borrower  Parties.  Guarantor  shall not hold or acquire an interest in any Real
Property other than Office Park Properties.                                     

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Section 5.12. Environmental Matters.                        

          5.12.1.  Promptly upon discovery of any violation or alleged violation
of Environmental  Requirements with respect to any Real Property of any Borrower
Party,  the  Borrower  shall  attempt  in good faith as soon as  practicable  to
determine the cost to remediate such violation of Environmental Requirements and
the  Borrower  shall  thereupon  notify the Agent in  writing of the  Borrower's
reasonable,  good faith  estimate of the cost to  remediate  such  violation  or
alleged  violation.  Such  good  faith  estimate  of  the  cost  of  remediation
(exclusive of costs and expenses of investigation), as revised from time to time
pursuant hereto,  shall be deemed to be the "Liquidated  Cost" of such violation
or  alleged  violation  of  Environmental   Requirements.   From  time  to  time
thereafter,  not less than fifty (50) days after the end of each Fiscal Quarter,
the Borrower  shall review and update all  Liquidated  Costs and shall deliver a
written report to the Agent setting forth, in reasonable detail, each Liquidated
Cost  in  excess  of  One  Million  Dollars  ($1,000,000),  the  basis  for  the
determination  of the Liquidated  Cost, and the Borrower's plans with respect to
such violation or alleged violation of Environmental Requirements.              

          5.12.2. The Borrower Parties shall at all times comply in all material
respects with all Environmental Requirements.                                   

          Section 5.13.  Listing and Organizational  Requirements.  The Borrower
shall cause the  Guarantor to continue to list its Capital  Stock on the AMEX or
any other  national  stock  exchange  and  continue  to qualify as a real estate
investment  trust under the Code,  and the Borrower  will do or cause to be done
all things  necessary to cause it to be treated as a partnership for purposes of
federal  income  taxation and the tax laws of any state or locality in which the
Borrower is subject to taxation based on its income.                            

          Section 5.14. Year 2000.  Borrower shall ensure that the following are
Year 2000 Compliant in a timely manner,  but in no event later than December 31,
1999:  (a) the Office Park  Properties and  improvements  located  thereon;  (b)
Borrower itself; and (c) Guarantor any other major entities in which Borrower or
Guarantor hold a controlling  interest.  Borrower shall further make  reasonable
inquiries of, and request reasonable  validation that, each of the following are
similarly  Year 2000  Compliant:  (x) all major  tenants or other  entities from
which Borrower or Guarantor  receives  payments;  and (y) all major contractors,
suppliers,  service  providers and vendors of Borrower or Guarantor.  As used in
this paragraph, "major" shall mean entities the failure of which to be Year 2000
Compliant  would  have a material  adverse  economic  impact  upon  Borrower  or
Guarantor.  The term "Year 2000 Compliant" shall mean, in regard to any property
or entity, that all software, hardware,  equipment, goods or systems utilized by
or  material to the  physical  operations,  business  operations,  or  financial
reporting of such property or entity  (collectively the "systems") will properly
perform date  sensitive  functions  before,  during and after the year 2000.  In
furtherance of this covenant, Borrower shall, in addition to any other necessary
actions  perform  a  comprehensive  review  and  assessment  of all  systems  of
Borrower,  Guarantor,  the Office Park Properties and the  improvements  located
thereon, and shall adopt a detailed plan, with itemized budget, for the testing,
remediation,  and  monitoring of such  systems.  Borrower  shall,  within thirty
business days of Lender's written request, provide to Lender such certifications
or other evidence of Borrower's  compliance  with the terms of this paragraph as
Lender may from time to time reasonably require.                                

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          Section 5.15.  Change of Management.  The Borrower Parties shall cause
Ronald  Havner,  Jr. to be actively  involved  in the  management  of  Borrower;
provided that if Mr. Havner ceases his active  involvement in management for any
reason,  within one hundred and twenty (120) calendar days after the date of the
commencement of his lack of active  involvement,  Borrower shall have retained a
replacement that is reasonably satisfactory to the Majority Lenders.            

ARTICLE 6.

NEGATIVE COVENANTS OF THE BORROWER PARTIES

          So  long  as  any  portion  of  the  Commitment  is in  effect  or any
Obligations remain unpaid or have not been performed in full:                   

Section 6.1. Payment of Obligations.                        

          Each  Borrower  Party shall pay within ninety (90) days of its receipt
of a bill therefor all Accounts Payable,  except that a Borrower Party shall not
be required, under this Section 6.1., to pay (a) any Account Payable (or portion
thereof)  that  is  being  actively  contested  in  good  faith  by  appropriate
proceedings;  or (b) any Account  Payable  that is less than Two  Hundred  Fifty
Thousand  Dollars  ($250,000.00)  so long as the  aggregate  amount of  Accounts
Payable of all  Borrower  Parties  with  respect  to which a Borrower  Party has
received a bill more than ninety (90) days prior to the date of calculation does
not exceed Seven Hundred Fifty Thousand Dollars  ($750,000.00).  For purposes of
this Section  6.1.,  "Accounts  Payable"  means all amounts owed by the Borrower
Parties  from  time to time,  arising  out of the  conduct  of their  respective
businesses, including utility charges, amounts owing under open purchase orders,
service contracts or equipment  leases,  and other amounts owing with respect to
maintenance,  clean-up,  landscaping and other services  performed in connection
with the  operation of the Borrower  Parties'  respective  businesses.  The term
"Accounts  Payable" shall not include  indebtedness for borrowed money,  amounts
owing with  respect to  federal,  state or local  taxes,  insurance  premiums or
amounts a Borrower Party is required to contribute to any Borrower Plan.        

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          Section  6.2.  Investments.   No  Borrower  Party  shall  directly  or
indirectly, make or own any investment, except:                                 

          6.2.1.  Cash,  Cash  Equivalents or  institutional  money market funds
organized  under the laws of the United  States of America or any state  thereof
that invest solely in Cash Equivalents;                                         

          6.2.2.  (a) Trade credit  extended on usual and customary terms in the
ordinary  course  of  business,  and  (b)  advances  to  employees  for  moving,
relocation and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business;                                                    

          6.2.3.  Existing  Office Park Property or land upon which the Borrower
plans to develop commercial office, light industrial or retail projects;        

          6.2.4. Subsidiaries engaged in the construction or operation of Office
Park Property;                                                                  

          6.2.5. Any material acquisition, merger, formation, or investment in a
Joint Venture,  asset purchase,  or any transfer of assets permitted pursuant to
Section 6.9.; or                                                                

         6.2.6.  Subject to the limits established pursuant to Sections 6.4.8,
6.4.9, 6.4.10, 6.4.11, 6.4.12 and 6.4.13, Debt payable to a Borrower Party which
is secured by  mortgages  or deeds of trust on real  estate,  marketable  equity
securities, and unconsolidated Joint Ventures.                                  

          Section 6.3. Asset Dispositions. Subject to Section 6.5., the Borrower
may sell,  lease or  otherwise  dispose  of assets in the  normal  course of its
business  and so long as such  dispositions  do not result in a violation of any
other provision of this Agreement.                                              

Section 6.4. Financial Covenants.                           

          6.4.1.  Ratio of Total  Liabilities to Gross Asset Value. The ratio of
Total Liabilities to Gross Asset Value shall not at any time exceed 0.50:1.     

          6.4.2.  Ratio of  Unencumbered  Asset Value to  Outstanding  Unsecured
Liabilities.  The ratio of  Unencumbered  Asset Value to  Outstanding  Unsecured
Liabilities shall at all times be not less than 2.0:1.0.                        

          6.4.3. Minimum Tangible Net Worth.  Tangible Net Worth of Borrower and
Guarantor  shall not be less than, at any time: (i)  $620,000,000  plus (ii) Net
Income, if any, less (iii) Restricted Payments plus (iv) ninety percent (90%) of
Equity Offering Net Proceeds.                                                   

          6.4.4. Secured Debt to Gross Asset Value. The ratio of Secured Debt to
Gross Asset Value shall not be greater than 0.30:1.0.                           

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          6.4.5. Interest Coverage. At any time, the ratio of EBITDA to Interest
Expense for the most recently  completed  Fiscal  Quarter shall not be less than
2.25:1.0.                                                                       

          6.4.6.  Fixed  Charge  Coverage.  At any time,  the ratio of EBITDA to
Fixed Charges for the most recently  completed  Fiscal Quarter shall not be less
than 2.0:1.0.                                                                   

          6.4.7. Distributions.  Restricted Payments paid by the Borrower during
the four  immediately  preceding  Fiscal  Quarters  shall not at any time exceed
ninety-five  percent (95%) of Funds from  Operations,  calculated  for such four
Fiscal Quarters.                                                                

          6.4.8. Land Holdings. The aggregate value of Land Holdings of Borrower
and Guarantor  (valued at the lesser of acquisition  cost or market value) shall
not at any time exceed ten percent (10%) of Gross Asset Value.                  

          6.4.9.  Securities  Holdings.  The aggregate value of Capital Stock of
any  Person  other than in Joint  Ventures  which is owned by  Borrower  Parties
(valued at the lesser of acquisition cost or market value) shall not at any time
exceed fifteen percent (15%) of Gross Asset Value.                              

          6.4.10.  Mortgage Holdings. The aggregate value of any Debt payable to
Borrower  Parties  shall not at any time exceed  fifteen  percent (15%) of Gross
Asset Value.                                                                    

          6.4.11.  Joint  Ventures.  The aggregate value of Capital Stock of any
Joint  Venture  which is owned by  Borrower  Parties  (valued  at the  lesser of
acquisition  cost or market value) shall not at any time exceed fifteen  percent
(15%) of Gross Asset Value.                                                     

          6.4.12.   Construction-In-Progress.   The  aggregate  rentable  square
footage of Construction-in-Progress that is not subject to signed leases between
the  applicable  Borrower  Party and the tenant for such space  shall not at any
time exceed ten percent (10%) of the aggregate  rentable  square  footage of the
Real  Property.  In  addition,  the  aggregate  rentable  square  footage of all
Construction-in-Progress  shall not at any time exceed  twenty  percent (20%) of
the aggregate rentable square footage of the Real Property.                     

          6.4.13.  Other Assets.  The  aggregate  value of Other Assets owned by
Borrower  Parties  (valued at the lesser of  Acquisition  Cost or Market  Value)
shall not at any time exceed forty percent (40%) of Gross Asset Value.          

          6.4.14. Unsecured Interest Expense Coverage. At any time, the ratio of
Unencumbered  Net Operating  Income to Unsecured  Interest  Expense shall not be
less than 2.00:1.0.                                                             

          Section 6.5. Restriction on Fundamental  Changes.  Except as permitted
pursuant to Section 6.9., no Borrower Party shall directly or indirectly,  enter
into any merger, consolidation,  reorganization or recapitalization,  reclassify
its Capital Stock,  liquidate,  wind up or dissolve or sell, lease,  transfer or
otherwise  dispose of, in one  transaction or a series of  transactions,  all or
substantially  all of its or their  business  or  assets,  whether  now owned or
hereafter acquired.                                                             

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          Section 6.6. Transactions with Affiliates.  The Borrower Parties shall
not directly or indirectly,  enter into any transaction  (including the transfer
or lease of any property or the  rendering of any service) with any Affiliate of
the Borrower  unless (a) such  transaction is in the ordinary course of business
of the party thereto,  and (b) such  transaction is on fair and reasonable terms
no less favorable to such Borrower Party than those terms that might be obtained
at the time in a comparable arm's length transaction with a Person who is not an
Affiliate of the Borrower or, if such  transaction is not one that by its nature
could be obtained from such other Person,  is on fair and  reasonable  terms and
was negotiated in good faith and (c) if such transaction  involves a transfer or
lease of property in with a value in excess of $5,000,000.00 or the rendering of
services  resulting in gross revenues in excess of  $5,000,000.00,  the Borrower
shall  have  delivered  to the  Agent a  certified  resolution  of the  Board of
Directors of general partner of the Borrower  determining that the standards set
forth in clause  (c) above  are  satisfied  with  respect  to such  transaction,
provided that this Section 6.6. shall not restrict (i) dividends,  distributions
and other payments and transfers on account of the Capital Stock of the Borrower
or the  Guarantor,  (ii)  payments  pursuant  to the  terms  of any  Contractual
Obligations  in effect on the date hereof  listed on Schedule  6.6, or (iii) any
transaction  in the  ordinary  course of business  between the  Borrower and any
other  Borrower  Party.  Notwithstanding  the  foregoing,  in no event shall any
Borrower  Party sell  (including  within the  meaning of a sale,  any grant of a
purchase  option or any lease of fifteen (15) or more years,  including  renewal
options) any  property or other  assets of the Borrower or any  Affiliate to the
Borrower or any  Affiliate,  unless the terms and  conditions  of such sale have
been approved by the  independent  directors of  Guarantor,  as described in its
By-Laws.                                                                        

          Section  6.7.  ERISA.  In the  event  that the  Borrower  ever has any
employees,  the Borrower  will not, and will not permit any ERISA  Affiliate to:
(a) engage in any Prohibited  Transaction or engage in any conduct or commit any
act or suffer to exist any  condition  that could  give rise to any excise  tax,
penalty,   interest  or  liability,  (b)  fail  to  make  any  payments  to  any
Multiemployer  Plan  that the  Borrower  or any of its ERISA  Affiliates  may be
required to make under any agreement relating to such Multiemployer Plan, or any
law pertaining thereto; or (c) voluntarily terminate or amend any one or more of
their Plans, if such termination  would result in the imposition of Liens on the
Borrower or any ERISA Affiliate.                                                

          Section 6.8.  Amendments  of Charter  Documents.  None of the Borrower
Parties  shall  amend  its  charter,  bylaws,  partnership  agreement  or  other
organizational documents in any material respect, without in each case obtaining
the prior  written  consent of the Majority  Lenders,  which consent will not be
unreasonably withheld, conditioned or delayed, except to increase the percentage
of  shares  that  may  be  owned  by any  person  and to  reflect  issuances  of
securities.                                                                     

          Section 6.9.  Certain  Obligations.  No Borrower Party shall engage in
any material acquisition, merger, formation, investment in any partnership/joint
venture/Subsidiary,  asset  acquisition  (other than of Office Park Property) or
transfer of assets  without first giving notice  thereof to Agent and certifying
compliance  with all  covenants of this  Agreement  after  giving  effect to the
proposed  transaction.  For purposes of this Section 6.9., "material" is defined
as any transaction in which the obligation of a Borrower Party equals or exceeds
ten percent (10%) of Gross Asset Value. With respect to any proposed acquisition
of Office Park Property,  if the acquisition  price of such Office Park Property
is greater than ten percent (10%) of Gross Asset Value, Borrower must first give
notice  thereof  to Agent and  certify  compliance  with all  covenants  of this
Agreement after giving effect to the proposed transaction.                      

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          Section 6.10. Distributions. Unless waived by the Majority Lenders, no
Borrower  Party shall make any  Restricted  Payments after the occurrence of and
during the  continuation  of an Event of Default  under  Section  7.1.1.  and no
Borrower Party shall make any  Restricted  Payment in excess of that required to
maintain  Guarantor's  status as a REIT after the  occurrence  of and during the
continuation of a Material non-monetary Event of Default under Section 7.1.     

ARTICLE 7.

 EVENTS OF DEFAULT

          Section 7.1.  Events of Default.  The occurrence of any one or more of
the following  events,  acts or occurrences shall constitute an event of default
(each an "Event of Default"):                                                   

          7.1.1. Failure to Make Payments. The Borrower (a) shall fail to pay as
and when due  (whether at stated  maturity,  upon  acceleration,  upon  required
prepayment or otherwise) any principal of any Loan, or (b) shall fail to pay any
interest  within ten (10) days after it first  becomes due, or (c) shall fail to
pay Fees or other amounts  payable under the Loan  Documents  when due under the
Loan Documents; or                                                              

          7.1.2.  Default in Other Debt. Any Borrower Party shall have defaulted
(beyond any  applicable  grace  period) under any Debt of such party (other than
the  Obligations)  if the  aggregate  amount of such other  Debt is One  Million
Dollars  ($1,000,000)  or more and such  default  shall not have  been  cured or
waived; or                                                                      

          7.1.3. Breach of Covenants.  Any Borrower Party shall fail to perform,
comply with or observe any  agreement,  covenant or obligation  under any of the
Loan  Documents  (other  than those set forth in the other  subsections  of this
Section 7.1.) and such failure  shall  continue for a period of thirty (30) days
after notice of such failure is given by the Agent; or                          

          7.1.4.   Breach  of  Warranty.   Any  representation  or  warranty  or
certification  made or furnished by any Borrower  Party under any Loan  Document
shall prove to have been false or incorrect  in any  Material  respect when made
(or deemed made); or                                                            

          7.1.5.  Involuntary  Bankruptcy;  Appointment of Receiver,  Etc. There
shall be commenced  against any Borrower Party an  involuntary  case seeking the
liquidation or  reorganization of such Borrower Party under Chapter 7 or Chapter
11,  respectively,  of the Bankruptcy Code or any similar  proceeding  under any
other  Applicable  Law  or  an  involuntary  case  or  proceeding   seeking  the
appointment of a receiver, liquidator, sequestrator, custodian, trustee or other
officer having similar powers of any Borrower Party or to take possession of all
or any portion of its property or to operate all or a substantial portion of its
business,  and any of the  following  events  occur:  (a)  such  Borrower  Party
consents to the  institution  of the  involuntary  case or  proceeding;  (b) the
petition   commencing  the   involuntary   case  or  proceeding  is  not  timely
controverted;  (c) the petition  commencing the  involuntary  case or proceeding
remains  undismissed  or  undischarged  and  unstayed for a period of sixty (60)
days; or (d) an order for relief shall have been issued or entered therein; or  

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          7.1.6.  Voluntary  Bankruptcy;   Appointment  of  Receiver,  Etc.  Any
Borrower  Party  shall  institute  a  voluntary  case  seeking   liquidation  or
reorganization  under Chapter 7 or Chapter 11,  respectively,  of the Bankruptcy
Code or any similar  proceeding under any other Applicable Law, or shall consent
thereto;  or  shall  consent  to the  conversion  of an  involuntary  case  to a
voluntary  case;  or shall file a  petition,  answer a  complaint  or  otherwise
institute  any  proceeding  seeking,  or shall  consent to or  acquiesce  in the
appointment  of, a receiver,  liquidator,  sequestrator,  custodian,  trustee or
other  officer  with  similar  powers  of it or to take  possession  of all or a
substantial  portion of its property or to operate all or a substantial  portion
of its  business;  or  shall  make a  general  assignment  for  the  benefit  of
creditors;  or shall  generally  not pay its debts as they  become  due; or such
Borrower  Party (or any committee  thereof)  adopts any  resolution or otherwise
authorizes action to approve any of the foregoing; or                           

          7.1.7.  Judgments and Attachments.  (a) A final unappealable  judgment
against a Borrower  Party shall be entered for the payment of money in excess of
Two and One Half Million Dollars  ($2,500,000.00)  and shall remain  unsatisfied
without  procurement  of a stay of execution  within  thirty (30)  calendar days
after the date of entry of judgment;  or (b) a judgment  creditor shall obtain a
lien against or possession of any Real Property in the Unencumbered  Pool by any
means, including levy, distraint, replevin or self-help; or                     

          7.1.8.  Termination of Loan Documents,  Etc. Any Loan Document, or any
material provision  thereof,  shall cease to be in full force and effect for any
reason,  except upon a release or termination of such Loan Document  pursuant to
the terms  thereof;  or any Borrower Party shall contest or purport to repudiate
or disavow any of its obligations under or the validity of enforceability of any
Loan Document or any material provision thereof; or                             

7.1.9. Change of Control. A Change of Control shall occur;  

          7.1.10. Change of Condition. The Majority Lenders reasonably determine
that a change has occurred since the date of this  Agreement in the  operations,
business or condition,  financial or otherwise,  which change has a material and
adverse  effect on the  ability of any of the  Borrower  Parties to perform  its
obligations  under the Loan Documents,  and fifteen (15) days have elapsed since
the date that  notice of such  determination  has been  given to such  Borrowing
Party; or                                                                       

         7.1.11. Guaranty. An Event of Default shall occur under the Guaranty.

      Section 7.2. Remedies. Upon the occurrence of an Event of Default:

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          7.2.1.  If an Event of Default occurs under Section 7.1.5.  or 7.1.6.,
then the Commitment  shall  automatically  and  immediately  terminate,  and the
obligation of the Lender Parties to make any Loan hereunder shall cease, and the
unpaid  principal  amount  of  the  Loans  and  all  other   Obligations   shall
automatically become immediately due and payable,  without presentment,  demand,
protest,  notice  or other  requirements  of any kind,  all of which are  hereby
expressly waived by the Borrower.                                               

          7.2.2. If an Event of Default occurs,  other than under Section 7.1.5.
or 7.1.6.,  the Majority  Lenders may declare the unpaid principal of all Notes,
all interest  accrued and unpaid thereon and all other amounts payable under the
Loan Documents to be forthwith due and payable,  whereupon the same shall become
and be  forthwith  due and  payable,  without  protest,  presentment,  notice of
dishonor,  demand or  further  notice of any  kind,  all of which are  expressly
waived by the Borrower.                                                         

          7.2.3.  The order and manner in which the Lenders' rights and remedies
are to be exercised  shall be determined  by the Majority  Lenders in their sole
discretion.  Regardless of how each Lender may treat payments received by it for
the purpose of its own  accounting,  for the purpose of computing the Borrower's
obligations  under this Agreement and under the Notes,  all moneys  collected or
received  by the  Agent on  account  of the  Obligations  or in  respect  of the
security for the  Obligations,  directly or indirectly,  shall be applied in the
following order of priority:                                                    

          7.2.3.1.  to the  payment  of all  proper  and  reasonable  costs  and
expenses actually incurred in the collection of such moneys;                    

          7.2.3.2.  to the  payment  of all  proper  and  reasonable  costs  and
expenses  (including  attorneys' fees and  disbursements and the allocated costs
and expenses of in-house  legal and other  professional  services) of the Agent,
acting as Agent, and of the Lenders as set forth above;                         

          7.2.3.3.  (A) in case the entire unpaid  principal of the  Obligations
shall not have become due and  payable,  first to the payment of interest on the
Obligations  ratably to the Lenders as their  respective pro rata shares appear,
and then to the payment of principal to the Lenders as their respective pro rata
shares appear, or (B) in case the entire unpaid principal of the Loan shall have
become due and payable,  to the payment of the whole amount then due and payable
on the  Obligations  until paid in full,  for  principal to the Lenders as their
respective  pro rata shares appear,  and for interest  ratably to the Lenders as
their respective pro rata shares appear; and                                    

          7.2.3.4.  to the payment of all other  amounts  (including  fees) then
owing to the Agent or the Lenders under the Loan Documents.                     

          No  application  of the  payments  will cure any Event of  Default  or
prevent acceleration,  or continued  acceleration,  of amounts payable under the
Loan  Documents or prevent the  exercise,  or continued  exercise,  of rights or
remedies of the Lenders under this Agreement or under law.                      

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ARTICLE 8.

 APPOINTMENT, POWERS AND DUTIES OF LENDERS AND AGENT

          Section 8.1.  Relationship  of Borrower  and Lenders.  It is expressly
understood  and  agreed  that  with the  exception  of this  Section  8.1.,  the
provisions of Article 8. are among,  and for the benefit of, the Lenders and the
Agent only and contain terms, conditions and agreements to which the Borrower is
not bound,  under which the Borrower  does not have  rights,  and with which the
Borrower need not be concerned.  Each of the Lenders and the Agent hereby agrees
that as to all matters  relating to the Loans and any other provision  contained
in this Agreement to which the Borrower is bound, unless expressly stated to the
contrary, the Borrower need only deal with the Agent and need not send notice to
or seek the consent or approval of any of the Lenders other than the Agent.  The
Borrower shall be entitled to rely solely on notices,  consents,  authorizations
and  directions  received from the Agent and shall have no duty to inquire as to
whether the Agent shall have received the consents or approval of the Lenders as
provided in this Article 8. In the event the Agent or any of the Lenders  breach
their  respective  obligations  under this  Article  8., the sole  remedy of the
non-breaching  parties shall be against the Lender or Agent which committed such
breach, and the Borrower shall have no liability for such breach.               

          Section  8.2.  Appointment  and  Authorization.   Each  Lender  hereby
irrevocably  appoints and  authorizes  the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Agent by the terms thereof or are reasonably incidental, as determined by
the Agent,  thereto;  and each Lender hereby irrevocably appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under the Loan  Documents as are  delegated to the Agent by the terms thereof or
are  reasonably   incidental,   as  determined  by  the  Agent,  thereto.  These
appointments  and   authorizations  are  intended  solely  for  the  purpose  of
facilitating the servicing of the Loans and do not constitute the appointment of
the Agent as trustee for any Lender or as a representative of any Lender for any
other purpose and,  except as  specifically  set forth in this  Agreement to the
contrary,  the Agent shall take such action and exercise  such powers only in an
administrative and ministerial capacity.                                        

          Section  8.3.  Agent and  Affiliates.  The  Agent  and each  successor
thereto,  has the same rights and powers  under the Loan  Documents as any other
Lender  and may  exercise  the same as  though  it were not a Agent.  The  terms
"Lender(s)" or "Lender Parties" includes each Agent.  Unless otherwise expressly
prohibited  hereunder,  each  Agent and each  Lender  (and each of the  Lenders'
respective  successors) and its respective  Affiliates may accept deposits from,
lend  money to,  and  generally  engage in any kind of  banking,  trust or other
business with, the Borrower, the Guarantor,  any Affiliate of the Borrower or of
the  Guarantor,  as if it were not a Agent or a Lender,  as the case may be, and
without  any duty to account  therefor to the other  Lenders.  No Agent shall be
obligated to account to any other  Lender for any monies  received by it for any
credit  facility  management  fees,  reimbursement  of its costs and expenses as
Agent under this Agreement,  or for any monies received by it in its capacity as
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a Lender  under this  Agreement.  If any  property  is taken by any Agent or any
Lender as  collateral  for any other loans or  extensions  of credit made by any
Agent or any Lender to or for the Borrower, or any property is in any Agent's or
any Lender's possession or control, or any deposit is held or other indebtedness
is owing by any Agent or any Lender, and that property, deposit or indebtedness,
or the proceeds thereof,  may be or become collateral for or otherwise available
for  payment  in  connection  with the  Obligations  by  reason  of the  general
description of secured obligations  contained in any security agreement or other
agreement or instrument held by any Agent, or any Lender or by reason of a right
of setoff,  counterclaim or otherwise,  the other Lenders shall have no interest
in that property, deposit or indebtedness,  or the indebtedness, or the proceeds
thereof, except that if the property,  deposit or indebtedness,  or the proceeds
thereof, shall be applied in reduction of amounts outstanding in connection with
the  Obligations,  then each  Lender  shall be  entitled  to its pro rata  share
therein.                                                                        

          Section  8.4.   Lenders'   Credit   Decisions.   Each  Lender   hereby
acknowledges  that it has received the Loan Documents and financial  statements,
certificates,  instruments, documents, affidavits, resolutions and agreements as
it deemed  necessary to make its own credit  analysis and decision to enter into
this  Agreement.  Each  Lender  agrees  that it has,  independently  and without
reliance  upon the  Agent,  any  Lender or the  directors,  officers,  agents or
employees of the Agent or any Lender,  and instead in reliance upon  information
supplied to it by or on behalf of the Borrower  and upon such other  information
as it has deemed  appropriate,  made its own  independent  credit  analysis  and
decision  to enter into this  Agreement.  Each Lender also agrees that it shall,
independently  and without reliance upon the Agent, any Lender or the directors,
officers,  agents or employees of the Agent or any Lender,  continue to make its
own independent  credit analyses and decisions in acting or not acting under the
Loan Documents.                                                                 

Section 8.5. Action by Agent.                               

          8.5.1. The Agent has only those  obligations  under the Loan Documents
as are expressly set forth therein.                                             

          8.5.2.  The Agent may assume  that no Event of Default  has  occurred,
unless the Agent has actual  knowledge  of the Event of  Default,  has  received
notice from the  Borrower  stating  the nature of the Event of  Default,  or has
received  notice  from a Lender  stating  the nature of the Event of Default and
that the Lender considers the Event of Default to have occurred.                

          8.5.3. If the Agent has actual  knowledge of an Event of Default,  has
received  notice from the Borrower  stating the nature of an Event of Default or
has  received  notice  from a Lender  stating the nature of an Event of Default,
such Agent shall give notice thereof to the Lenders.                            

          8.5.4.  Except  for any  obligation  expressly  set  forth in the Loan
Documents  and as long as the  Agent may  assume  that no Event of  Default  has
occurred,  the Agent may, but shall not be required to,  exercise its discretion
to act or not act,  except  that (i) the Agent may, if it elects to do so in its
sole   discretion,   suspend  the  taking  of  any  action  pending  receipt  of
instructions  or  authorizations  from the Majority  Lenders of the action to be
taken  and  (ii)  the  Agent  shall  be  required  to act or not  act  upon  the
instructions  of the Majority  Lenders and those  instructions  shall be binding
upon the  Agent  and all the  Lenders,  provided  that the  Agent  shall  not be
required to act or not act if to do so would be contrary to any Loan Document or
to applicable Law.                                                              

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          8.5.5.  If the  Agent  has  knowledge  that an  Event of  Default  has
occurred,  the Agent shall act or not act upon the  instructions of the Majority
Lenders,  provided  that the Agent shall not be required to act or not act if to
do so would be contrary to any Loan  Document or to  applicable  Law, and except
that if the Majority  Lenders fail to instruct the Agent within the time periods
set forth  herein,  then the Agent in its  discretion,  may act or not act as it
deems advisable for the protection of the interests of the Lenders.             

          8.5.6. The Agent shall have no liability to any Lender for acting,  or
not acting, notwithstanding any other provision hereof, except for its own gross
negligence or willful misconduct while so acting or not acting.                 

          Section  8.6.  Non-Liability  of Agent.  The Agent  shall  perform its
duties under this Agreement and the other Loan Documents with the same degree of
care as the Agent would use in performing  similar  functions  with respect to a
loan of similar size and type held for its own account.  Neither the Agent,  nor
any of its respective directors,  officers,  agents or employees shall be liable
for any action taken or not taken by them under or in  connection  with the Loan
Documents or as  instructed  by the Majority  Lenders,  except for its own gross
negligence  or willful  misconduct.  Without  limitation on the  foregoing,  but
subject to the  foregoing  provisions  concerning  gross  negligence  or willful
misconduct,  the  Agent  and its  respective  directors,  officers,  agents  and
employees:                                                                      

          8.6.1. may treat the payee of any Note as the holder thereof until the
Agent receives notice of the assignment or transfer thereof,  and may treat each
Lender  as the  owner  of that  Lender's  interest  in the  Obligations  for all
purposes of this Agreement  until the Agent receives notice of the assignment or
transfer thereof;                                                               

          8.6.2.  may  consult  with legal  counsel  (including  in-house  legal
counsel),  accountants  (including in-house accountants) and other professionals
or  experts  selected  by it,  or  with  legal  counsel,  accountants  or  other
professionals  or  experts  for the  Borrower,  and shall not be liable  for any
action  taken or not taken by it or them in good  faith in  accordance  with the
advice of such legal counsel, accountants or other professionals or experts;    

          8.6.3.  make no  representation or warranty to any Lender and will not
be responsible to any Lender for any statement,  warranty or representation made
in any of the Loan Documents or in any notice,  certificate,  report, request or
other  statement  (written or oral) in connection with any of the Loan Documents
or the  financial  condition of the Borrower or any other party or for the title
of any collateral hereunder;                                                    

          8.6.4. except to the extent expressly set forth in the Loan Documents,
will have no duty to ascertain or inquire as to the performance or observance by
the  Borrower of any of the terms,  conditions  or  covenants of any of the Loan
Documents or to inspect the property, books or records of the Borrower;         

          8.6.5.  will not be  responsible  to any Lender for the due execution,
legality, validity,  enforceability,  genuineness,  effectiveness,  sufficiency,
value or collectability of any Loan Document, or any other instrument or writing
furnished pursuant thereto or in connection therewith;                          

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          8.6.6.  will  not be  responsible  to any  Lender  for  the  legality,
validity, enforceability,  genuineness,  sufficiency, perfection (other than the
timely filing of any continuation  statements for financing  statements given to
the Agent by the Borrower in connection with the collateral  hereunder),  value,
collectability or priority of any rights in all or any portion of the collateral
hereunder;                                                                      

          8.6.7.  will not  incur  any  liability  by  acting  or not  acting in
reliance  upon any  Loan  Document,  notice,  consent,  certificate,  statement,
request or other  instrument  or writing  (which may be by  telegram,  telecopy,
cable or telex)  believed  by it or them to be genuine and signed or sent by the
proper party or parties; and                                                    

          8.6.8.  will not incur any  liability  for any  arithmetical  error in
computing any amount payable to or receivable  from any Lender  pursuant to this
Agreement,  including without limitation  principal,  interest,  fees, Loans and
other  amounts;  provided  that  promptly  upon  discovery  of such an  error in
computation,  the Agent, the Lenders and (to the extent applicable) the Borrower
shall  make such  adjustments  as are  necessary  to  correct  such error and to
restore the parties to the position  that they would have occupied had the error
not occurred.                                                                   

Section 8.7. Indemnification.                               

          8.7.1. Each Lender,  individually and severally in accordance with its
pro rata share, agrees to indemnify,  defend,  reimburse and hold the Agent (and
its directors,  officers, agents or employees) ("Indemnified Parties") harmless,
within ten (10) Business Days of request  therefor (to the extent not reimbursed
by the  Borrower),  in  accordance  with  its pro  rata  share,  for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
and costs,  expenses or  disbursements  which may be imposed on, incurred by, or
asserted  against the Indemnified  Parties in any way relating to or arising out
of the  Obligations,  or any action taken or omitted by the Indemnified  Parties
under the Loan Documents,  provided that each Lender shall not be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from: (i) the gross
negligence  or willful  misconduct  of the  Indemnified  Parties or their breach
hereunder or (ii) the acts or  omissions  of any other Lender or Agent.  Without
limitation of the foregoing,  each Lender agrees to reimburse the Agent promptly
upon  demand  for its  pro  rata  share  in any  and  all  out-of-pocket  costs,
disbursements and expenses (including  appraisal fees,  third-party expanses and
reasonable  counsel fees) incurred or made by the Agent or any of them after the
Closing  Date  in  connection  with  the   preparation,   execution,   delivery,
modification,    amendment,   collection   or   enforcement   (whether   through
negotiations,  legal proceedings,  foreclosure or otherwise) of, or legal advice
in respect  of rights or  responsibilities  under,  the Loan  Documents,  to the
extent that the Agent is not  reimbursed  for such expenses by the Borrower.  In
addition, each Lender agrees to reimburse the Agent promptly upon demand for its
pro rata share in all protective  advances made by the Agent. The Agent shall be
entitled  to  deduct  from any  payments  to be made to any  Lender  under  this
Agreement,  and to retain,  amounts  due the Agent as  reimbursement  hereunder,
provided  that the Agent shall have first  delivered to such Lender  thirty (30)
days prior  written  notice of such  amounts and the  circumstances  giving rise
thereto,  and such  Lender  has not paid  such  amounts  The  Agent  shall  make
reasonable  attempts to collect such amounts  referred to in this Section 8.7.1.
from the  Borrower to the extent that the  Borrower  is  obligated  to make such
reimbursement under this Agreement.  If the Agent receives payment of any amount
referred to in this Section 8.7.1.  from the Borrower or any third party after a
Lender has reimbursed the Agent for such amount, the Agent shall promptly return
to such Lender the amount of the reimbursement (or, if more than one Lender made
reimbursement, such Lender's ratable portion thereof).                          

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          8.7.2.  Each Defaulting  Lender shall  indemnify,  defend and hold the
Agent  and each of the  other  Lenders  harmless  from and  against  any and all
losses,  damages,  liabilities  or  expenses  (including,  but not  limited  to,
reasonable  attorneys'  fees and  interest at the Default  Rate set forth in the
Loan  Documents  for funds  advanced by any of the Agent or any other  Lender on
account of such Defaulting  Lender) which they may sustain or incur by reason of
or in consequence of each Defaulting Lender's failure or refusal to abide by its
obligations  under this Agreement.  The Agent shall setoff against principal and
interest  payments due to each Defaulting Lender for the claims of the Agent and
the other  Lenders  against such  Defaulting  Lender.  The exercise of the above
remedies  shall not reduce,  diminish or liquidate the  Defaulting  Lender's pro
rata share of the  obligations  for the sharing of losses and  reimbursement  of
costs, liabilities and expenses under the Loan Documents.                       

          Section  8.8. The Agent.  The Agent shall have primary  responsibility
for the following activities:                                                   

          (i)  Funding  the  Loans in  accordance  with the  provisions  of this
Agreement and the Loan Documents. With respect to the respective pro rata shares
of the Lenders in the Loans,  unless the Agent receives  notice from a Lender on
or prior to the Closing or, with respect to any Loan made after the Closing,  at
least one Business Day prior to the date of such Loan, that such Lender will not
make  available as and when  required  hereunder to the Agent for the account of
the Borrower the amount of such  Lender's pro rata share of the Loan,  the Agent
may assume  that each  Lender  has made such  amount  available  to the Agent in
immediately available funds on the Funding Date and the Agent may (but shall not
be so  required),  in  reliance  upon such  assumption,  make  available  to the
Borrower on such date a  corresponding  amount.  If and to the extent any Lender
shall  not have  made its full  amount  available  to the  Agent in  immediately
available  funds and the Agent in such  circumstances  has made available to the
Borrower  such amount,  that Lender shall on the  Business  Day  following  such
Funding Date make such amount available to the Agent,  together with interest at
the Federal  Funds Rate for each day during such  period.  A notice of the Agent
submitted  to any Lender with  respect to amounts  owing  under this  subsection
shall be conclusive, absent manifest error. If such amount is so made available,
such payment to the Agent shall  constitute  such  Lender's  Loan on the Funding
Date for all purposes of this Agreement. If such amount is not made available to
the Agent on the Business Day following the Funding Date,  the Agent will notify
the Borrower of such failure to fund and, upon demand by the Agent, the Borrower
shall  pay such  amount  to the Agent for the  Agent's  account,  together  with
interest thereon for each day elapsed since the date of such Loan, at a rate per
annum equal to the interest rate applicable at the time to such Loan;           

          (ii)  Receiving  all payments of principal,  interest,  fees and other
charges paid by, or on behalf of, the Borrower and distribute  such funds to the
Lenders as specifically required in this Agreement.                             

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Section 8.9. Successor Agent.                               

          8.9.1.  Upon written  notice to the  Lenders,  the Agent may resign as
Agent  hereunder at any time without the prior written consent of the Lenders or
any of  them.  Upon any  such  resignation  in  accordance  with  the  foregoing
provisions,  the  Majority  Lenders  shall have the right to appoint a successor
Agent (subject to the provisions below).                                        

          8.9.2. In addition,  the Majority Lenders may elect, by written notice
to the  Agent,  to remove  the Agent  hereunder  for good  cause.  Upon any such
removal in accordance with the foregoing provisions,  the Majority Lenders shall
have the right to appoint a successor.                                          

          8.9.3.  If,  within  thirty  (30) days of the  giving of notice of the
Agent's  resignation,  a successor  Agent has not been appointed by the Majority
Lenders or such successor has not accepted such appointment,  the retiring Agent
may, on behalf of the Lenders,  appoint a successor  Agent.  Any successor Agent
must be a Lender.  Upon the acceptance of any appointment as the Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of a retiring (or removed)
Agent, including the right to any agency fee to be paid by the Borrower, and the
retiring (or removed) Agent shall be discharged  from its duties and obligations
under this Agreement.                                                           

          Section  8.10.  Powers of the  Agent.  Except as  otherwise  expressly
provided for in this  Agreement,  and subject to the provisions of Section 8.11.
hereof,  the  Agent  shall  have  the  right,  in its sole  discretion,  in each
instance:  (a) to grant or withhold  approvals under the Loan Documents;  (b) to
exercise or refrain  from  exercising  any rights which the Agent or the Lenders
may have with respect to the obligations, the Loan Documents, or with respect to
any of the collateral  hereunder;  and (c) including,  without  limitation,  the
right to:                                                                       

          (i) Receive, review and process all documents, certificates, opinions,
insurance  policies,  reports,  requisitions and other materials of every nature
and description submitted by, or on behalf of, the Borrower or any other party; 

          (ii) Enforce all of the rights,  remedies and  privileges  afforded or
available to the Lenders  under the terms of this  Agreement  and the other Loan
Documents, any opinion, certificates,  warranties,  representations or insurance
policies  furnished by or on behalf of the Borrower or any other party (but only
after  election  to declare an Event or Events of Default  and/or to  accelerate
amounts outstanding under the Loan Documents as provided in this Agreement); and

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          (iii)  Do or  refrain  from  doing  all  such  other  acts  as  may be
reasonably  necessary  or  incident  to the  implementation,  administration  or
servicing of the Loan  Documents and the  enforcement of the rights and remedies
of the Lenders.                                                                 

          Section 8.11.  Limitations on the Agent.  Notwithstanding  anything to
the contrary herein contained, the Agent shall not (a) agree to the modification
or waiver of any of the terms of this  Agreement,  the Notes,  or the other Loan
Documents,  or (b) consent to any act or omission by the Borrower,  or any other
party,  or (c)  exercise  any rights  which either Agent or the Lenders may have
with respect to the  Obligations,  this Agreement,  the Notes, or the other Loan
Documents,  if any such  modification,  waiver,  agreement,  consent or exercise
would  compromise  or settle any  litigation  or legal  proceeding  against  the
Borrower or the Guarantor in connection with the Obligations in any manner which
would have a Material  and Adverse  Effect on the  interest of any Lender in the
Obligations  once such litigation or legal  proceeding has been commenced by the
Agent;  or, unless  consented to in writing by the Majority Lenders or by all of
the Lenders if required by Section 9.3.1.1.                                     

          As to any matters  which are  subject to the  consent of the  Majority
Lenders (as the case may be),  the Agent shall not be  permitted to exercise any
discretion  or take any action  except  upon the  instructions  of the  Majority
Lenders, which instructions shall be binding upon all Lenders. The Agent and its
directors,  officers, agents and employees shall be fully protected in acting or
in refraining from acting upon such instructions  (subject to Section 8.5.), but
in no event  shall the Agent be required  to take any action  which  exposes the
directors,  officers,  agents or employees of the Agent to personal liability or
which is contrary to the Loan Documents or applicable Law. As to any matters not
expressly provided for by the Loan Documents or this Agreement,  the Agent shall
not be required  to  exercise  any  discretion  or take any action,  unless such
inaction on the part of an Agent exposes the Agent or its  directors,  officers,
agents or employees to personal  liability or is contrary to applicable  Law. In
acting  hereunder  as an Agent,  Agent shall be acting for the account of and as
agent for all Lenders,  to the extent of their respective pro rata shares in the
Obligations.                                                                    

Section 8.12. Approval of Lenders.                          

          8.12.1.  All  communications  ("Communication")  from the Agent to the
Lenders requesting the Lenders' determination,  consent, approval or disapproval
(i) shall be given in the form of a written notice to each Lender, (ii) shall be
accompanied  by  a  description  of  the  matter  or  thing  as  to  which  such
determination,  approval,  consent or disapproval is requested,  or shall advise
each Lender  where such  matter or thing may be  inspected,  or shall  otherwise
describe the matter or issue to be resolved,  (iii) shall include, if reasonably
requested by a Lender and to the extent not previously  provided to such Lender,
written materials and a summary of all oral information provided to the Agent by
the  Borrower in respect of the matter or issue to be  resolved,  and (iv) shall
include the Agent's  recommended  course of action or  determination  in respect
thereof and the date by which the Lender shall respond.  Each Lender shall reply
promptly, but in any event (x) if this Agreement or any other Loan Document sets
forth a period within which the Lenders are to reply to the Communication,  each
Lender shall reply to the  Communication  within such period,  or (y) if no such
period is set forth, within ten (10) Business Days (or such lesser period as may
be required under the Loan Documents for the Agent to respond) for those matters
requiring  the consent by all Lenders,  Majority  Lenders or less than  Majority
Lenders,  in each instance,  after receipt of the request therefore by the Agent
(in any event, the "Lender Reply Period").                                      

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          8.12.2. Unless a Lender shall give written notice to the Agent that it
objects to the  recommendation  or  determination  of the Agent (together with a
written  explanation  of the reasons behind such  objection),  within the Lender
Reply  Period,  such Lender shall be deemed to have  approved of or consented to
such recommendation or determination.                                           

          Section  8.13.  Method of  Payment.  Upon  receipt of any  payments of
principal,  interest  and  late  payment  charges  in  connection  with the Loan
Documents or Fees,  the Agent shall  distribute  each such payment in accordance
with the  applicable  provisions of this  Agreement.  If the Agent fails to make
such  distribution  by the close of business on the  Business  Day on which such
payment is required to be delivered pursuant to the terms of this Agreement, the
Agent  shall  remit to each  Lender  its Pro Rata  Share in such  payment on the
immediately  following  Business  Day,  together  with  interest  thereon at the
overnight  rate for federal funds  transactions  between  member  Lenders of the
Federal  Reserve  System,  as published by the Federal Reserve Bank of New York.
Each payment to the Agent under this Section  8.13.  shall  constitute a similar
payment by the Borrower to each Lender,  and any portion of the Obligations paid
by any such  payment to the Agent by or on behalf of the  Borrower  shall not be
considered  outstanding  for any  purpose  after the date of its  receipt by the
Agent;  provided,  however,  as between each Lender and the Agent,  such payment
shall be deemed outstanding until made by the Agent to each Lender in accordance
with the  provisions  above.  In the  absence  of gross  negligence  or  willful
misconduct,  the Agent shall not be liable for any apportionment or distribution
of payments made by it in good faith pursuant to this Agreement, and if any such
apportionment  or distribution  is subsequently  determined to have been made in
error,  the sole  recourse of any Person to whom  payment was due, but not made,
shall be, except as otherwise expressly set forth in this Agreement,  to recover
from the  recipient of such payment any payment in excess of the amount to which
they are determined to have been entitled.                                      

          Section  8.14.  Increased  Costs.  If any  Lender is  entitled  to and
decides to require  payment of any amounts  described in Sections 2.9. or 2.10.,
such Lender  shall:  (a) give written  notice  thereof to the Borrower and shall
send a copy of such notice to the Agent,  and such  amounts  shall be payable to
such  Lender in  accordance  with the terms of Sections  2.9. or 2.10.;  and (b)
simultaneously  with the giving of such  notice,  furnish to the  Borrower  (and
deliver a copy to the Agent)  (i) a  certificate  of an  officer of such  Lender
setting  forth the  amount to which such  Lender is then  entitled  pursuant  to
Section  2.9.  or 2.10.  and (ii) such  other  information,  certifications  and
documentation  as is required to be furnished to the Borrower under the terms of
Section 2.9. or 2.10.                                                           

          Section  8.15.  Taxes.  Except  as  specifically  set  forth  in  this
Agreement,  all taxes due and payable on any  payments to be made to the Lenders
in respect of the Obligations or under this Agreement shall be the Lenders' sole
responsibility. All payments payable to the Lenders hereunder or with respect to
the Loan Documents shall be made to the Lenders without deduction for any taxes,
charges,  levies or withholdings except to the extent, if any, that such amounts
are required to be withheld by the Agent under the laws,  rules and  regulations
of the United States of America and any other applicable taxing authority.  If a
Lender  is  organized  or is  existing  under the laws of  another  jurisdiction
outside  the United  States,  such  Lender  shall  provide to the Agent upon the
execution of this  Agreement  and, from time to time  thereafter,  completed and
signed  copies of any form that may be  required by the United  States  Internal
Revenue Service in order to certify such Lender's  exemptions from United States
withholding  taxes with respect to payments to be made to such Lender in respect
of the Obligations or under this Agreement.                                     

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          Section 8.16.  Excess  Payments.  If a Lender shall obtain any payment
(whether voluntary,  involuntary, through the exercise of any right of setoff or
otherwise)  on account of its interest in the  Obligations  in excess of its pro
rata share in the Obligations,  such excess shall be shared among all Lenders in
accordance with their respective pro rata shares. However, if all or any portion
of such excess  payment is  thereafter  recovered by the Borrower or other party
entitled  thereto through legal action or otherwise,  each Lender shall promptly
reimburse  the party  required to refund such  payment to the  Borrower or other
party entitled thereto in an amount equal to such Lender's pro rata share in the
amount of the excess  required to be refunded.  Within three Business Days after
obtaining any such payment,  the Lender  obtaining the same agrees to notify the
Agent of such excess payment.                                                   

          Section 8.17. Return of Payments.  If, for any reason, the Agent makes
any  payment  to a  Lender  before  the  Agent  has  received  or  applied  that
corresponding  payment on the obligations (it being understood that the Agent is
under no obligation to do so), and,  thereafter,  the Agent does not receive the
corresponding  payment  within five  Business Days after the date the Agent made
such  payment to a Lender (or in the event the Agent by error makes a payment to
a  Lender  to which it is not  entitled),  such  Lender  shall,  at the  Agent's
request,  promptly  return that payment to the Agent  (together with interest on
that payment at the overnight rate for federal funds transactions between member
Lenders of the Federal Reserve System,  as published by the Federal Reserve Bank
of New York for each day from the making of that  payment to such  Lender  until
its return to the Agent); provided,  however, interest on such payment shall not
be due:  (a) if such  payment  was  made to a  Lender  and  such  Lender  had no
knowledge  that it had received such payment due to error which was the fault of
the Agent (except for the period after which such Lender receives notice that it
has received  such  payment),  and (b) if such Lender can provide the Agent with
evidence,  reasonably  satisfactory to the Agent, that any such payment received
by such Lender was not  invested by such  Lender.  If the Agent has  received or
applied any payment in respect of the  Obligations and has paid a Lender its Pro
Rata Share in such  payment  and,  thereafter,  the  payment or  application  is
rescinded or must  otherwise  be returned or paid over by the Agent,  whether or
not  required  pursuant to any  bankruptcy  or  insolvency  law,  the sharing of
payments  clause of any loan  agreement or  otherwise,  such Lender will, at the
Agent's  request,  promptly  return  its  pro  rata  share  in that  payment  or
application  to the Agent,  together  with such  Lender's  pro rata share in any
interest or other  amount  required to be paid by the Agent with respect to that
payment or application.                                                         

          Section 8.18.  Default By The Borrower;  Acceleration.  The Agent will
send to each  Lender  copies of any  notices of a Default or an Event of Default
sent by the Agent to the Borrower under the terms of the Loan Documents promptly
after  sending the same to the Borrower,  but in any case within three  Business
Days after  sending  the same to the  Borrower.  In the event of any  Default or
Event  of  Default,  the  Agent  shall  (as  soon as is  practicable  under  the
circumstances)  consult  with the  Lenders in an effort to  determine a mutually
acceptable course of action with respect to the Default or Event of Default. The
Agent may deliver to the Lenders a written  recommendation of a course of action
(the  "recommended  course of  action"),  in which case each Lender shall either
approve such action in writing or object in writing to such action within thirty
(30) days (or such  lesser  period as  specified  in the notice  from the Agent)
following such notice. Failure to deliver a written objection within thirty (30)
days (or such lesser period) will be deemed to constitute an approval. The Agent
may take the  recommended  course of action if consented or approved as provided
above by the Majority Lenders; provided that no rights shall be released without
the consent of all Lenders. In furtherance of the foregoing, and notwithstanding
anything herein to the contrary, each Lender hereby appoints and constitutes the
Agent its agent with full power and authority to exercise in the name of, and on
behalf of each  Lender,  any and all rights and  remedies  which each Lender may
have with respect to, and to the extent  necessary under applicable law for, the
enforcement  of the Loan  Documents,  or which the Agent may have as a matter of
law. It is  understood  and agreed that in the event the Agent  determines it is
necessary to engage  counsel for the Lenders from and after the occurrence of an
Event of Default, said counsel shall be selected by the Agent and written notice
of the same shall be delivered to the Lenders.                                  

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Section 8.19. Defaults by Lender.                           

          8.19.1. If for any reason any Lender ("Defaulting  Lender") shall fail
or refuse to abide by its  obligations  under this  Agreement  or under any Loan
Document and such failure or refusal  shall  continue for five (5) Business Days
after  notice with respect to monetary  obligations  hereunder or under any Loan
Document  or  thirty  (30)  days  after  notice  with  respect  to  non-monetary
obligations  hereunder or under any Loan Document  (provided,  however,  that if
such  non-monetary  default is of a nature  that the same  cannot be  reasonably
cured within thirty (30) days and such Lender shall have  commenced to cure such
non-monetary  default  within  such  period and shall  thereafter  proceed  with
reasonable due diligence and good faith to cure such non-monetary  default, such
period shall be extended for such longer  period as shall be necessary  for such
Lender to cure  such  default  with all  reasonable  diligence,  but in no event
beyond  that date which is one  hundred  twenty  (120)  days  after such  Lender
received  notice of such default),  then, in addition to the rights and remedies
that  may be  available  to the  Agent  at law and in  equity,  such  Defaulting
Lender's  right to  participate  in the  administration  of the Loan  Documents,
including,  without limitation, any rights to consent to or direct any action or
inaction of the Agent,  pursuant to Section 8.11.  above or otherwise,  or to be
taken into account in the  calculation of Majority  Lenders,  shall be suspended
during the pendency of such failure or refusal. If for any reason a Lender fails
to make  timely  payment  to the Agent of any amount  required  to be paid to it
hereunder (without giving effect to any notice or cure periods),  in addition to
other rights and remedies which the Agent may have under this Section 8.19.1. or
otherwise,  the Agent shall be entitled (i) to collect interest from such Lender
for the period from the date on which the payment was due at the overnight  rate
for federal funds  transactions  between member  Lenders of the Federal  Reserve
System,  as  published  by the Federal  Reserve  Bank of New York,  for each day
during such period,  (ii) to withhold or setoff,  and to apply to the payment of
the defaulted  amount and any related  interest,  any amounts to be paid to such
Lender under this  Agreement,  and (iii) to bring an action or suit against such
Lender in a court of competent  jurisdiction to recover the defaulted amount and
any related interest.                                                           

          8.19.2.  In the event a Lender  becomes  a  Defaulting  Lender,  other
Lenders shall have the right, but not the obligation,  in their sole discretion,
to acquire (or, if more than one Lender  exercises such right,  each such Lender
shall  have the right to  acquire,  pro  rata,  or such  proportion  as they may
mutually agree) the pro rata share in the Obligations of the Defaulting  Lender.
Upon  any  such  purchase  of the  Pro  Rata  Share  in the  Obligations  of the
Defaulting Lender,  the Defaulting  Lender's interest in the Obligations and its
rights  hereunder (but not its liability with respect  thereof or under the Loan
Documents or this Agreement to the extent the same relate to the period prior to
the effective date of the purchase) shall terminate at the date of purchase, and
the Defaulting Lender shall promptly execute all documents  reasonably requested
to surrender and transfer such interest, including an Assignment and Assumption.
On or before the date of such purchase,  the Defaulting  Lender shall pay to the
Agent a processing fee of Five Thousand Dollars ($5,000.00).                    

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          8.19.3. The Lenders, and each of them, shall have the right to acquire
the pro rata share in the  Obligations  of the  Defaulting  Lender  pursuant  to
Section 8.19.2. for a purchase price equal to the proportionate  share amount of
the principal balance of the Obligations outstanding and owed by the Borrower to
the Defaulting Lender. Payment of the purchase price for the Defaulting Lender's
pro rata share in the Loan so acquired shall be deferred and shall be limited to
and made only from the  repayment of the  outstanding  principal  balance of the
Obligations  (after all of the  non-defaulting  Lenders  have been paid the full
principal  amount of their  respective  proportionate  shares of the Obligations
exclusive of any Defaulting  Lender's  proportionate  share-which  may have been
purchased  pursuant to Section  8.19.2.),  if and as received  in  repayment  of
principal  of the  Obligations,  and  credited  to the  pro  rata  share  in the
Obligations previously owned by the Defaulting Lender.  Interest on the purchase
price of the Defaulting Lender's pro rata share in the Obligations shall be paid
to the Defaulting Lender.  Such interest shall be equal to the amount that would
have  been  payable  to the  Defaulting  Lender  pursuant  to the  terms of this
Agreement,  calculated on the unpaid balance of the purchase price,  and payment
thereof  shall be limited to and made only from the repayment of interest on the
Obligations,  and credited to the pro rata share in the  Obligations  previously
owned by the Defaulting  Lender. The Defaulting Lender shall also be entitled to
receive  amounts  owed to it by the  Borrower  under  the Loan  Documents  which
accrued prior to the date of the default by the Defaulting Lender, to the extent
the same are  received  by the Agent  from or on behalf of the  Borrower.  There
shall be no  recourse  against any  non-defaulting  Lender nor the Agent for the
payment of such sums  except to the extent of the  receipt of such sums from the
Borrower by a  non-defaulting  Lender or the Agent.  Payments to the  Defaulting
Lender shall be made  promptly  after  receipt of such  payments by the Agent in
accordance with the payment provisions set forth in Section 8.13. hereof.       

          8.19.4.  The  provisions  of Sections  8.19.2.  and 8.19.3.  shall not
preclude any Lender from  acquiring  the interest of a Defaulting  Lender on any
other terms agreed to by the Defaulting Lender and the purchasing Lender(s).    

          Section 8.20. No Partnership  or Joint Venture.  Neither the execution
of this  Agreement nor the purchase of the pro rata share in the  Obligations or
in the Loan  Documents,  or any agreement to share in profits and losses arising
out of this transaction, is intended to be, nor shall it be construed to be, the
formation of a partnership or joint venture  between any of the Lenders,  or the
Agent,  and none of the Agent or Lenders  shall be liable to any other person or
entity for the  liability  in tort or contract of the Agent or any other  Lender
arising in connection with the Obligations or any transaction connected herewith
or therewith nor shall the Agent have any fiduciary  obligations  to any Lender.
The Agent shall have and may exercise such powers as are specifically  delegated
to it under this Agreement.                                                     

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          Section  8.21.  Indemnification.  Agent  shall  not  in any  event  be
required to take any action  under the Loan  Documents  or in  relation  thereto
unless it shall first be indemnified to its  satisfaction  by the Lender parties
against any and all  liability and expense that it may incur by reason of taking
any such action. Each Lender agrees to indemnify and hold the Agent harmless (to
the extent not promptly paid or reimbursed by the Borrower, ratably according to
their respective Commitments),  from and against any and all (a) costs, expenses
and other  amounts  incurred  by the Agent  otherwise  payable  by the  Borrower
pursuant to Section 9.1. and (b) Indemnified Liabilities that may be imposed on,
incurred  by, or  asserted  against  the Agent,  except to the  extent  they are
finally adjudged by a court of competent  jurisdiction to have directly resulted
from the gross negligence or willful misconduct of the Agent. Without limitation
of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any  out-of-pocket  expenses  (including  counsel fees)
incurred by the Agent in connection with the preparation,  execution,  delivery,
administration,   modification,   amendment  or  enforcement   (whether  through
negotiations,  legal proceedings or otherwise) of, or legal advice in respect to
rights or  responsibilities  under,  the Loan Documents,  to the extent that the
Agent is not promptly reimbursed for such expenses by the Borrower.             

ARTICLE 9.

 MISCELLANEOUS

Section 9.1. Expenses. The Borrower shall pay on demand:    

          9.1.1.  Any and  all  reasonable  attorneys'  fees  and  disbursements
(including  allocated  costs of in-house  counsel)  and  out-of-pocket  cost and
expenses incurred by the Agent in connection with the development,  drafting and
negotiation  of  the  Loan  Documents,   and  the   arrangement,   underwriting,
syndication,   administration  and  closing  of  the  transactions  contemplated
thereby; and                                                                    

          9.1.2.  all costs and expenses  (including fees and  disbursements  of
in-house and other attorneys, appraisers and consultants) incurred by the Lender
Parties in any amendment, workout,  restructuring or similar arrangements or, in
connection with the  administration  (including  photocopying and overnight mail
cost for  communication  with Lenders),  protection,  preservation,  exercise or
enforcement of any of the terms of the Loan Documents or in connection  with any
collection or bankruptcy proceedings.                                           

Section 9.2. Indemnity.                                     

          9.2.1. Borrower shall indemnify,  defend and hold harmless each Lender
Party and the officers,  directors,  employees,  agents, attorneys,  affiliates,
successors and assigns of each Lender Party  (collectively,  the  "Indemnitees")
from and against (a) any and all transfer taxes,  documentary taxes, assessments
or charges made by any  Governmental  Authority by reason of the  execution  and
delivery of the Loan  Documents or the making of the Loans,  and (b) any and all
liabilities,  losses, damages, penalties,  judgments, claims, costs and expenses

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of  any  kind  or  nature  whatsoever  (including  reasonable  attorneys'  fees,
including  allocated costs of in-house counsel,  and disbursements in connection
with  any  actual  or  threatened  investigative,   administrative  or  judicial
proceeding,  whether or not such Indemnitee shall be designated a party thereto)
that may be imposed on, incurred by or asserted against such Indemnitee,  in any
manner relating to or arising out of the relationship between any Borrower Party
and any Lender  Party  under any of the Loan  Documents,  the Loans,  the use or
intended  use of the  proceeds  of the Loans  (the  "Indemnified  Liabilities");
provided that (i) no Indemnitee  shall have the right to be  indemnified or held
harmless  hereunder  for its own gross  negligence  or  willful  misconduct,  as
determined by a final  judgment of a court of competent  jurisdiction,  and (ii)
Indemnified  Liabilities  shall include  amounts  attributable to the passive or
active negligence of any Lender Party                                           

          9.2.2. Each Indemnitee will promptly notify the Borrower of each event
of which it has  knowledge  that may give rise to a claim  under  clause  (b) of
Section 9.2.1.,  provided that the failure to so notify the Borrower shall in no
way impair the  Borrower's  obligations  under this Section 9.2.  (except to the
extent  that such  failure  to so notify  arises  from the gross  negligence  or
willful  misconduct  of  such  Indemnitee  and  has  an  adverse  effect  on the
Borrower).  If any  investigative,  judicial  or  administrative  proceeding  is
brought  against  any  Indemnitee  indemnified  or  intended  to be  indemnified
pursuant to this Section  9.2.,  the  Borrower,  to the extent and in the manner
directed by the Indemnitee,  will resist and defend such proceeding with counsel
designated by the Borrower  (which counsel shall be reasonably  satisfactory  to
the  Indemnitee).  Each Indemnitee will use its best efforts to cooperate in the
defense of any such action,  writ, or  proceeding.  The Borrower shall keep such
Indemnitee  advised  of the  status  of  such  defense  and  consult  with  such
Indemnitee  prior to taking any material  position  with respect  thereto.  Such
Indemnitee shall,  however,  be entitled to employ counsel separate from counsel
for the Borrower and from any other party in such  proceeding if such Indemnitee
shall  reasonably  determine  that a conflict of interest or other  circumstance
exists  that  makes  representation  by  counsel  chosen  by  the  Borrower  not
advisable.  The fees and disbursements of such separate counsel shall be paid by
the  Borrower.  Such  Indemnitee  shall not agree to the  settlement of any such
claim without the consent of the Borrower,  unless the Borrower  shall have been
given notice of the  commencement  of an action and shall have failed to provide
the  defense  thereof  as herein  provided  or an Event of  Default  shall  have
occurred.                                                                       

          9.2.3.  To the  extent  that the  undertaking  to  indemnify  and hold
harmless set forth in Section 9.2.1.  may be  unenforceable  as violative of any
Applicable  Law  or  public   policy,   the  Borrower  shall  make  the  maximum
contribution  to the  payment  and  satisfaction  of  each  of  the  Indemnified
Liabilities   that  is  permissible   under   Applicable  Law.  All  Indemnified
Liabilities shall be payable on demand.                                         

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Section 9.3. Waivers; Modifications in Writing.             

          9.3.1.  No amendment of any  provision of this  Agreement or any other
Loan Document  (including a waiver thereof or consent relating thereto) shall be
effective  unless the same  shall be in writing  and signed by the Agent and the
Majority Lenders. Notwithstanding the foregoing,                                

          9.3.1.1.  no amendment that has the effect of (a) reducing the rate or
amount,  or extending the stated  maturity or due date, of any amount payable by
the Borrower to any Lender Party under the Loan  Documents,  (b)  increasing the
amount,  or extending the stated  termination or reduction date, of any Lender's
Revolving  Commitment hereunder or subjecting any Lender Party to any additional
obligation  to extend  credit,  (c) altering the rights and  obligations  of the
Borrower to prepay the Loans,  (d) releasing  any Guarantor  under the Guaranty,
(e) changing this Section 9.3. or the definition of the term "Majority Lenders,"
or (f)  forgiving of principal or interest,  shall be effective  unless the same
shall be signed by or on behalf of all of the Lenders;                          

          9.3.1.2. no amendment that has the effect of (a) increasing the duties
or obligations of the Agent,  (b) increasing the standard of care or performance
required  on the  part  of  the  Agent,  or  (c)  reducing  or  eliminating  the
indemnities  or  immunities  to which  the  Agent  is  entitled  (including  any
amendment of this Section 9.3.1.2.), shall be effective unless the same shall be
signed by or on behalf of the Agent; and                                        

          9.3.1.3. any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
the  Borrower  in any case shall  entitle  the  Borrower to any other or further
notice or demand in similar or other  circumstances.  Any amendment  effected in
accordance  with this Section 9.3. shall be binding upon each present and future
Lender Party and the Borrower.                                                  

          Section 9.4.  Cumulative  Remedies;  Failure or Delay.  The rights and
remedies  provided for under this Agreement are cumulative and are not exclusive
of any rights and remedies  that may be available  to the Lender  Parties  under
Applicable Law or otherwise. No failure or delay on the part of any Lender Party
in the  exercise of any power,  right or remedy under the Loan  Documents  shall
impair such power, right or remedy or operate as a waiver thereof, nor shall any
single or partial exercise of any such power,  right or remedy preclude other or
further exercise thereof or of any other power, right or remedy.                

          Section 9.5. Notices,  Etc. All notices and other communications under
this Agreement shall be in writing and (except for financial  statements,  other
related informational documents and routine communications, which may be sent by
first-class  mail,  postage  prepaid)  shall be personally  delivered or sent by
prepaid courier,  by overnight,  registered or certified mail (postage prepaid),
or by prepaid telex or telecopy,  and shall be deemed given when received by the
intended  recipient  thereof.  Unless  otherwise  specified  in a notice sent or
delivered  in  accordance   with  this  Section  9.5.,  all  notices  and  other
communications  shall  be  given  to the  parties  hereto  at  their  respective
addresses (or to their respective telex or telecopier  numbers) indicated on the
signature pages attached hereto.                                                

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Section 9.6.  Successors and Assigns.                       
          9.6.1.  This Agreement  shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns. The
Borrower  may not assign or transfer any  interest  hereunder  without the prior
written consent of each Lender.                                                 

          9.6.2.  Each  Lender  shall  have the right at any time to assign  (an
"Assignment") all or any portion of such Lender's Revolving Commitment to one or
more Lenders or other institutions;  provided that the following  conditions are
satisfied: (a) each Assignment shall be of a portion of the Revolving Commitment
at least equal to $10,000,000 and, unless  otherwise  agreed by the Agent,  each
such assignment shall be of a constant, and not a varying,  percentage of all of
the assigning Lender's rights and obligations under this Agreement and the other
Loan Documents;  (b) no Assignment (other than an Assignment to a Person that is
then a Lender  or an  Affiliate  of a Lender)  shall be  effective  without  the
consent of the Borrower and the Agent,  which consents shall not be unreasonably
withheld or  delayed;  provided,  however,  no consent of the  Borrower  will be
required if a monetary  Event of Default has  occurred and has not been cured on
or prior to the date  that is six (6)  months  after  such  occurrence,  and the
Majority  Lenders have not, on or prior to the  expiration of such six (6) month
period,  agreed upon a plan  submitted by the Borrower  (which may be an interim
plan)  setting  forth the  Borrower's  then  intended plan to cure such Event of
Default (provided, further, that nothing herein shall constitute a waiver by any
Lender Party of any rights or remedies of any Lender  Party upon the  occurrence
of a Default or an Event of Default);  (c) the parties to the  Assignment  shall
execute and deliver to the Agent, with a copy to the Borrower, an Assignment and
Assumption   substantially  in  the  form  of  Exhibit  E  (an  "Assignment  and
Assumption");  (d)  the  assignee  shall  pay  to the  Agent  a  processing  and
recordation  fee of $3,000;  (e) if the assignee is not  organized  and existing
under the laws of the  United  States of America  or any  political  subdivision
thereof or therein,  the  assignee  shall have  furnished  to the  Borrower  the
Prescribed Forms; and (f) the Revolving  Commitment  retained by the Agent shall
not be reduced below the amount of the largest Revolving  Commitment held by any
Lender other than Agent.  Each proposed assignee must be an existing Lender or a
bank or financial  institution which (A) has (or, in the case of a bank which is
a  subsidiary,  such bank's  parent has) a rating of its senior  unsecured  debt
obligations  of not less than  Baa-2 by one of the Rating  Agencies  and (B) has
total assets in excess of Ten Billion Dollars ($10,000,000,000). Unless Borrower
gives  written  notice to the  assigning  Lender that it objects to the proposed
assignment  (together  with a written  explanation  of the  reasons  behind such
objection)  within ten (10)  Business  Days  following  receipt of the assigning
Lender's written request for approval of the proposed assignment, Borrower shall
be deemed to have approved such assignment. From and after the date on which the
conditions in the foregoing  clauses and the Assignment and Acceptance have been
satisfied,  the assignee  shall be a "Lender"  hereunder and, to the extent that
rights and obligations hereunder have been assigned to it, shall have the rights
and  obligations,  and the assigning Lender shall, to the extent that rights and
obligations  hereunder  have been assigned by it,  relinquish  its rights and be
released  from its  obligations  under this  Agreement  (and,  in the case of an
Assignment  covering  all or the  remaining  portion of the  assigning  Lender's
rights and obligations under this Agreement, cease to be a party hereto).       

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          9.6.3.  Each Lender  shall have the right at any time to grant or sell
participations  (each a "Participation")  in all or any portion of such Lender's
Revolving  Commitment,  Loans  to one or more  Lenders  or  other  institutions,
subject to the terms and  conditions  set forth in this Section  9.6.3..  If any
Lender sells or grants a  Participation,  (a) such Lender shall make and receive
all payments for the account of its participant,  (b) such Lender's  obligations
under this Agreement shall remain  unchanged,  (c) such Lender shall continue to
be the sole  holder  of its  Notes  and  other  Loan  Documents  subject  to the
Participation  and shall have the sole right to enforce its rights and  remedies
under the Loan  Documents,  (d) the Borrower and the other Lender  Parties shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's  rights  and  obligations  under  the  Loan  Documents,   and  (e)  the
Participation agreement shall not restrict such Lender's ability to agree to any
amendment  of the terms of the Loan  Documents,  or to exercise or refrain  from
exercising any powers or rights that such Lender may have under or in respect of
the Loan  Documents,  except  that the  participant  may be granted the right to
consent to any (A)  reduction  of the rate or amount,  or any  extension  of the
stated  maturity or due date, of any principal,  interest or Fees payable by the
Borrower  and  subject  to the  Participation,  (B)  increase  in the  amount or
extension  of the  stated  termination  or any  reduction  date of the  affected
Revolving  Commitment or Term Commitment or (C) release of the Guaranty,  except
to the extent otherwise provided in the Loan Documents. A participant shall have
the rights of the Lenders under  Sections 2.9.,  2.10. and 9.9.,  subject to the
obligations  imposed by such  Sections;  provided  that  amounts  payable to any
participant shall not exceed the amounts that would have been payable under such
Sections to the Lender granting the  Participation,  had such  Participation not
been granted, unless the Participation is made with the prior written consent of
the Borrower.                                                                   

          9.6.4. Each Lender may at any time assign or pledge any portion of its
rights under the Loan Documents to a Federal Reserve Bank. No such assignment or
pledge shall be subject to the provisions of Sections 9.6.2. or 9.6.3.          

          9.6.5.  Subject to the  provisions of Section 9.7.,  each Lender shall
have  the  right at any  time to  furnish  one or more  potential  assignees  or
participants with any information concerning the Borrower and the Guarantor that
has been supplied by the Borrower to any Lender Party. The Borrower shall supply
all  reasonably   requested   information  and  execute  and  deliver  all  such
instruments  and take  all such  further  action  (including,  in the case of an
Assignment,  the execution and delivery of  replacement  Notes) as the Agent may
reasonably   request  in  connection   with  any  Assignment  or   Participation
arrangement.                                                                    

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Section 9.7. Confidentiality.                               

          Each Lender Party will maintain any  confidential  information that it
may receive  from the  Borrower  or the  Guarantor  pursuant  to this  Agreement
confidential  and shall not disclose such  information to third parties  without
the prior consent of the Borrower, except for disclosure:  (a) to legal counsel,
accountants  and  other  professional  advisors  to  the  Lender  Party;  (b) to
regulatory  officials having jurisdiction over the Lender Party; (c) required by
Applicable  Law or in  connection  with any legal  proceeding;  (d) to any other
Lender Party; (e) to another Person in connection with a potential Assignment or
Participation,  provided  such Person shall have agreed in writing to be subject
to this Section 9.7.; and (g) of information that has been previously  disclosed
publicly without breach of this provision.  Each Lender Party shall return, upon
request by the Borrower made within a reasonable time after  termination of this
Agreement,   any  confidential   material  clearly  and   conspicuously   marked
"Confidential  and Subject to Return" by the  Borrower  when  furnished  to such
Lender Party, provided that the return of such material is not inconsistent with
standard  banking  practice or, in the judgment of the Lender  Party,  otherwise
disadvantageous to it.                                                          

Section 9.8. Set Off.                                       

          In addition to any rights now or hereafter  granted  under  Applicable
Law, upon and after any acceleration of the Maturity Date hereunder, each Lender
Party is hereby irrevocably authorized by the Borrower, at any time or from time
to time,  without notice to the Borrower or to any other Person, any such notice
being hereby  expressly  waived,  to set off and to appropriate and to apply any
and all deposits (general or special, including certificates of deposit, whether
matured  or  unmatured,   but  not  including  trust  accounts)  and  any  other
indebtedness,  in each case whether  direct or indirect or contingent or matured
or unmatured at any time held or owing by such Lender Party to or for the credit
or the account of the Borrower, against and on account of the Obligations of the
Borrower to such Lender Party under the Loan  Documents to which the Borrower is
a party,  irrespective  of whether or not such Lender  Party shall have made any
demand  for  payment  and  although  such  Obligations  may  be  contingent  and
unmatured.  Each Lender Party agrees to notify the Borrower promptly of any such
set-off and the application made by such Lender Party, provided that the failure
to  give  such  notice  shall  not  affect  the  validity  of such  set-off  and
application.                                                                    

Section 9.9. Changes in Accounting Principles.              

          If any changes in generally accepted accounting  principles from those
used  in the  preparation  of  the  financial  statements  referred  to in  this
Agreement  hereafter  result  from by the  promulgation  of rules,  regulations,
pronouncements, or opinions of or required by the Financial Accounting Standards
Board or the American  Institute of Certified Public  Accountants (or successors
thereto or agencies with similar functions),  or there shall occur any change in
the Borrower's  fiscal or tax years and, as a result of any such changes,  there
shall  result  a  change  in the  method  of  calculating  any of the  financial
covenants,  negative covenants,  standards or other terms or conditions found in
this  Agreement,  then the parties  hereto agree to enter into  negotiations  in
order to amend such provisions so as to equitably  reflect such changes with the
desired  result  that the  criteria  for  evaluating  the  Borrower's  financial
condition  shall be the same after such  changes as if such changes had not been
made.                                                                           

         Section 9.10. Survival of Agreements, Representations and Warranties.

          All  agreements,  representations  and  warranties  made herein  shall
survive  the  execution  and  delivery  of this  Agreement,  the closing and the
extensions of credit  hereunder and shall continue until payment and performance
of any and all Obligations.  Any  investigation at any time made by or on behalf

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of Lender  Parties  shall not  diminish  the  right of  Lender  Parties  to rely
thereon.  Without  limitation,  the agreements  and  obligations of the Borrower
contained in Sections 2.9.,  2.10.,  9.1. and 9.2.,  and the  obligations of the
Lender  Parties  under  Section  8.21.  shall survive the payment in full of all
other Obligations.                                                              

Section 9.11. Execution in Counterparts.                    

          This Agreement may be executed in any number of counterparts,  each of
which  counterparts,  when so executed and  delivered,  shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement. This Agreement shall become effective upon the execution
of a counterpart hereof by each of the parties hereto.  Faxed signatures to this
Agreement shall be binding for all purposes.                                    

Section 9.12. Complete Agreement.                           

          This Agreement, together with the other Loan Documents, is intended by
the parties as the final  expression  of their  agreement  regarding the subject
matter  hereof  and as a  complete  and  exclusive  statement  of the  terms and
conditions of such agreement.                                                   

Section 9.13. Inspections.                                  

          Lender shall have the right to enter upon the Office Park  Property at
all reasonable times to inspect the improvements  thereon to verify  information
disclosed or required pursuant to this Agreement, provided that Lender shall not
unreasonably  disturb any tenants  occupying  such  Office  Park  Property.  Any
inspection  or review  of the  improvements  by  Lender  is solely to  determine
whether  Borrower is properly  discharging its obligations to Lender and may not
be relied upon by Borrower or by any third party as a representation or warranty
of compliance with this Agreement or any other agreement. Lender owes no duty of
care to Borrower or any third party to protect against, or to inform Borrower or
any third party of, any  negligent,  faulty,  inadequate or defective  design or
construction of the improvements as determined by Lender.                       

Section 9.14. Waiver of Right to Trial By Jury.             

          EACH  PARTY TO THIS  AGREEMENT  HEREBY  EXPRESSLY  WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND,  ACTION OR CAUSE OF ACTION (a) ARISING UNDER
THE LOAN  DOCUMENTS,  INCLUDING,  WITHOUT  LIMITATION,  ANY  PRESENT  OR  FUTURE
MODIFICATION  THEREOF OR (b) IN ANY WAY CONNECTED  WITH OR RELATED OR INCIDENTAL
TO THE  DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM WITH  RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER  MODIFIED) OR ANY OTHER  INSTRUMENT,  DOCUMENT OR
AGREEMENT  EXECUTED OR DELIVERED IN  CONNECTION  HEREWITH,  OR THE  TRANSACTIONS
RELATED HERETO OR THERETO.  IN EACH CASE WHETHER SUCH CLAIM,  DEMAND,  ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER  SOUNDING IN
CONTRACT OR TORT OR  OTHERWISE;  AND EACH PARTY HEREBY  AGREES AND CONSENTS THAT
ANY PARTY TO THIS  AGREEMENT MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.          

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Section 9.15. Limitation of Liability.                      

          In the event that any Lender is found to have breached its obligations
hereunder,  then such Lender shall be severally  and not jointly  liable for all
damages  available under Applicable Law for breach of contract.  Notwithstanding
the foregoing  sentence or anything in this Agreement to the contrary,  no claim
shall be made by the  Borrower  against  any  Lender  Party  or the  Affiliates,
directors,  officers,  employees  or agents of any Lender Party for any special,
indirect,  consequential  or punitive damages in respect of any claim for breach
of contract or under any other theory of liability  arising out of or related to
the transactions  contemplated by this Agreement,  or any act, omission or event
occurring in connection therewith;  and the Borrower waives, releases and agrees
not to sue upon any claim  for any such  damages,  whether  or not  accrued  and
whether or not known or suspected to exist in its favor.                        

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          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be executed and delivered as of the date first set forth above.                 

                 Borrower:

                               PS BUSINESS PARKS, L.P.
                                        a California limited partnership

                                      By:    PS Business Parks, Inc.
                                               a California corporation,
                                     General Partner

                               By:    /s/Jack Corrigan
                                              ------------------------
                                           Name:   Jack Corrigan
                                            Title:  Vice President
                                             Chief Financial Officer

THE BORROWER:                               PS BUSINESS PARKS, L.P.             
                          701 Western Avenue
                                   Glendale, California  91201
                                           Attention:  Chief Financial Officer
                                  Telephone:  (818) 244-8080
                                   Telecopier:  (818) 244-9267

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Agent:
                                Wells Fargo Bank, National Association

               By:   /s/ KIM SURCH
                                          ----------------------------------
           Name: Kim Surch
                                          ----------------------------------
                Title:Vice President
                                          ----------------------------------

WELLS FARGO:                          Wells Fargo Bank, National Association    
                       2030 Main Street, 8th Floor
                    Irvine, California 92614
                      Attention:  Office Manager
                      Telephone:  (949) 251-4300
                       Telecopier:  (949) 851-9728

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   Lender:
                                  Wells Fargo Bank, National Association

               By:   /s/ KIM SURCH
                                  ----------------------------
               Name:     Kim Surch
                                  ----------------------------
                    Title:    Vice President
                                  ----------------------------

WELLS FARGO:                          Wells Fargo Bank, National Association    
                       2030 Main Street, 8th Floor
                    Irvine, California 92614
                      Attention:  Office Manager
                      Telephone:  (949) 251-4300
                       Telecopier:  (949) 851-9728

WELLS FARGO'S                          Wells Fargo Bank, National Association   
LIBOR LENDING                          2120 East Park Place, Suite 100          
OFFICE:                                El Segundo, California 90245             
                    Attention: Anne Colvin
                       Telephone: (310) 335-9458
                        Telecopier: (310) 615-1014

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
		8/6/01		33
		3/17/01		45
		8/6/00		33
		12/31/99		54					10-K405
		8/6/99		33
		10/1/98		32
Filed on:		8/14/98
		8/6/98		1		7
		8/5/98		11
		7/27/98		19
For Period End:		6/30/98
		3/31/98		13		46			10-Q,  10-Q/A
		1/21/98		22
		12/31/97		45		46			10-K405
		12/23/97		22
		12/15/97		19
		9/30/97		46					10-Q
		12/31/96		45					10-K405,  10-K405/A
									List all Filings

6 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/22/22  PS Business Parks, Inc./MD        10-K       12/31/21   64:18M
 2/22/22  Public Storage                    10-K       12/31/21   90:13M
 5/20/21  PS Business Parks, Inc./MD        POSASR      5/20/21    4:649K                                   Donnelley … Solutions/FA
 3/09/21  PS Business Parks, Inc./MD        S-3ASR      3/09/21    6:1.5M                                   Donnelley … Solutions/FA
 2/24/21  Public Storage                    10-K       12/31/20   86:26M                                    Certent, Inc./FA
 2/23/21  PS Business Parks, Inc./MD        10-K       12/31/20   65:26M