10-Q

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

                           ---------------------------


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                        Commission File Number 333-18723


                           MAXXAM GROUP HOLDINGS INC.
             (Exact name of Registrant as specified in its charter)



                 DELAWARE                            76-0518669
       (State or other jurisdiction               (I.R.S. Employer
     of incorporation or organization)         Identification Number)

        5847 SAN FELIPE, SUITE 2600
              HOUSTON, TEXAS                            77057
 (Address of Principal Executive Offices)            (Zip Code)


       Registrant's telephone number, including area code: (713) 975-7600



      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/   No / /


     Number of shares of common stock outstanding at August 10, 2001: 1,000


      REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A)
AND (B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.

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                                TABLE OF CONTENTS


PART I.  -  FINANCIAL INFORMATION

    Item 1.   Financial Statements:
              Consolidated Balance Sheet at June 30, 2001 and December 31, 2000
              Consolidated Statement of Operations for the three and six months
                   ended June 30, 2001 and 2000
              Consolidated Statement of Cash Flows for the six months ended
                   June 30, 2001 and 2000
              Condensed Notes to Consolidated Financial Statements

    Item 2.   Management's Discussion and Analysis of Financial Condition
                   and Results of Operations

    Item 3.   Quantitative and Qualitative Disclosures About Market Risk

PART II.  -  OTHER INFORMATION

    Item 1.   Legal Proceedings
    Item 6.   Exhibits and Reports on Form 8-K
    Signatures

APPENDIX A - GLOSSARY OF DEFINED TERMS


                   MAXXAM GROUP HOLDINGS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
               (IN MILLIONS OF DOLLARS, EXCEPT SHARE INFORMATION)



                                                                                          JUNE 30,    DECEMBER 31,
                                                                                            2001          2000
                                                                                        ------------- -------------
                                                                                         (UNAUDITED)
                                        ASSETS

Current assets:
   Cash and cash equivalents........................................................... $       69.6  $      201.7
   Marketable securities and other investments.........................................         53.4          28.9
   Receivables:
      Trade............................................................................         16.7          10.4
      Receivables from MAXXAM..........................................................          8.0           6.6
      Other............................................................................          3.3           4.0
   Inventories.........................................................................         44.1          55.1
   Prepaid expenses and other current assets...........................................         17.3          14.2
                                                                                        ------------- -------------
      Total current assets.............................................................        212.4         320.9
Property, plant and equipment, net of accumulated depreciation of $107.3 and
   $102.9, respectively................................................................        231.5         100.0
Timber and timberlands, net of accumulated depletion of $187.3 and
   $183.8, respectively................................................................        243.1         244.3
Note receivable from MAXXAM............................................................        173.6         164.5
Investment in Kaiser...................................................................         44.3          27.6
Deferred financing costs, net..........................................................         23.9          19.8
Deferred income taxes..................................................................         18.4          27.3
Restricted cash, marketable securities and other investments...........................         88.8          96.6
Other assets...........................................................................          7.7           7.9
                                                                                        ------------- -------------
                                                                                        $    1,043.7  $    1,008.9
                                                                                        ============= =============

                         LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
   Accounts payable.................................................................... $        5.6  $        6.2
   Accrued interest....................................................................         30.0          32.4
   Accrued compensation and related benefits...........................................          9.3           8.2
   Deferred income taxes...............................................................          3.1          10.0
   Other accrued liabilities...........................................................          6.1           3.6
   Short-term borrowings and current maturities of long-term debt......................         18.8          53.5
                                                                                        ------------- -------------
      Total current liabilities........................................................         72.9         113.9
Long-term debt, less current maturities................................................        964.8         886.6
Deferred income taxes..................................................................         22.4          31.2
Other noncurrent liabilities...........................................................         25.1          26.6
                                                                                        ------------- -------------
      Total liabilities................................................................      1,085.2       1,058.3
                                                                                        ------------- -------------

Contingencies (See Note 8)

Stockholder's deficit:
   Common stock, $1.00 par value; 3,000 shares authorized; 1,000 shares issued.........            -             -
   Additional capital..................................................................        123.2         123.2
   Accumulated deficit.................................................................       (162.1)       (172.6)
   Accumulated other comprehensive loss................................................         (2.6)            -
                                                                                        ------------- -------------
      Total stockholder's deficit......................................................        (41.5)        (49.4)
                                                                                        ------------- -------------
                                                                                        $    1,043.7  $    1,008.9
                                                                                        ============= =============


   The accompanying notes are an integral part of these financial statements.


                   MAXXAM GROUP HOLDINGS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                            (IN MILLIONS OF DOLLARS)


                                                                     THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                          JUNE 30,                 JUNE 30,
                                                                   -----------------------  -----------------------
                                                                      2001         2000        2001        2000
                                                                   -----------  ----------  ----------  -----------
                                                                                      (UNAUDITED)
Net sales:
   Lumber and logs...............................................  $     47.1   $    51.0   $    84.9   $     94.7
   Other.........................................................         6.2         4.9        13.2          8.6
                                                                   -----------  ----------  ----------  -----------
                                                                         53.3        55.9        98.1        103.3
                                                                   -----------  ----------  ----------  -----------

Operating expenses:
   Cost of goods sold............................................        42.7        38.7        82.7         71.8
   Selling, general and administrative expenses..................         4.4         3.8         8.8          7.8
   Depletion and depreciation....................................         5.3         4.9        10.2          9.5
                                                                   -----------  ----------  ----------  -----------
                                                                         52.4        47.4       101.7         89.1
                                                                   -----------  ----------  ----------  -----------

Operating income (loss)..........................................         0.9         8.5        (3.6)        14.2

Other income (expense):
   Equity in earnings (loss) of Kaiser...........................       (22.4)        3.9        19.6          8.0
   Investment, interest and other income (expense), net..........         9.1        13.2        18.4         24.0
   Interest expense..............................................       (17.9)      (19.9)      (36.5)       (40.1)
                                                                   -----------  ----------  ----------  -----------
Income (loss) before income taxes................................       (30.3)        5.7        (2.1)         6.1

Benefit (provision) in lieu of income taxes......................         3.5       (0.8)         9.0          0.8
                                                                   -----------  ----------  ----------  -----------
Income (loss) before extraordinary item..........................       (26.8)        4.9         6.9          6.9
Extraordinary item:
   Gains on repurchases of debt, net of income tax provisions
      of $0.9, $2.0 and $1.0, respectively.......................         1.7           -         3.6          1.4
                                                                   -----------  ----------  ----------  -----------
Net income (loss)................................................  $    (25.1)  $     4.9   $    10.5   $      8.3
                                                                   ===========  ==========  ==========  ===========


   The accompanying notes are an integral part of these financial statements.


                   MAXXAM GROUP HOLDINGS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (IN MILLIONS OF DOLLARS)


                                                                                                 SIX MONTHS ENDED
                                                                                                     JUNE 30,
                                                                                               --------------------
                                                                                                 2001       2000
                                                                                               ---------  ---------
                                                                                                    (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income................................................................................. $   10.5   $    8.3
   Adjustments to reconcile net income to net cash used for operating activities:
      Depletion and depreciation..............................................................     10.2        9.5
      Extraordinary gains on repurchases of debt..............................................     (3.6)      (1.4)
      Equity in undistributed earnings of Kaiser..............................................    (19.6)      (8.0)
      Amortization of deferred financing costs................................................      1.1        1.2
      Net gain on marketable securities.......................................................     (3.0)      (5.1)
      Deferral of interest payment on note receivable from MAXXAM.............................     (9.0)      (8.1)
   Increase (decrease) in cash resulting from changes in:
      Receivables.............................................................................     (5.6)      (0.9)
      Inventories, net of depletion...........................................................      9.5       (1.5)
      Prepaid expenses and other assets.......................................................     (3.1)      (3.7)
      Accounts payable........................................................................     (0.6)         -
      Accrued interest........................................................................     (2.4)      (1.4)
      Accrued and deferred income taxes.......................................................    (10.3)      (0.3)
      Other liabilities.......................................................................      3.9        1.9
      Long-term assets and long-term liabilities..............................................     (1.9)       1.0
                                                                                               ---------  ---------
        Net cash used for operating activities................................................    (23.9)      (8.5)
                                                                                               ---------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net purchases of marketable securities.....................................................    (21.2)     (23.6)
   Capital expenditures.......................................................................   (138.6)      (6.0)
   Restricted cash withdrawals used to acquire timberlands....................................        -        0.3
   Net proceeds from dispositions of property and investments.................................        -        0.1
                                                                                               ---------  ---------
        Net cash used for investing activities................................................   (159.8)     (29.2)
                                                                                               ---------  ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuances of long-term debt..................................................    122.5          -
   Borrowings (repayments) under revolving credit agreements..................................    (37.0)       5.6
   Redemptions, repurchases of and principal payments on long-term debt.......................    (36.5)     (18.1)
   Incurrence of deferred financing costs.....................................................     (5.2)         -
   Restricted cash (deposits) withdrawals, net................................................      7.8        9.3
   Dividends paid to stockholder..............................................................        -      (45.0)
   Other......................................................................................        -          -
                                                                                               ---------  ---------
        Net cash provided by (used for) financing activities..................................     51.6      (48.2)
                                                                                               ---------  ---------

NET DECREASE IN CASH AND CASH EQUIVALENTS.....................................................   (132.1)     (85.9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..............................................    201.7      189.8
                                                                                               ---------  ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................................... $   69.6   $  103.9
                                                                                               =========  =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest paid, net of capitalized interest................................................. $   37.7   $   40.3
   Tax allocation payments to MAXXAM..........................................................      1.3        0.5

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Repurchases of debt using restricted cash and marketable securities........................ $      -   $   20.1


   The accompanying notes are an integral part of these financial statements.


                   MAXXAM GROUP HOLDINGS INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    GENERAL

      The information contained in the following notes to the consolidated
financial statements is condensed from that which would appear in the annual
consolidated financial statements; accordingly, the consolidated financial
statements included herein should be reviewed in conjunction with the
consolidated financial statements and related notes thereto contained in the
Form 10-K. Any capitalized terms used but not defined in these Condensed Notes
to Consolidated Financial Statements are defined in the "Glossary of Defined
Terms" contained in Appendix A. All references to the "Company" include MAXXAM
Group Holdings Inc. and its subsidiary companies unless otherwise noted or the
context indicates otherwise. Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end. The results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the entire year.

      The consolidated financial statements included herein are unaudited;
however, they include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary for a fair presentation of the consolidated
financial position of the Company at June 30, 2001, and the consolidated results
of operations for the three and six months ended June 30, 2001 and 2000, and the
consolidated cash flows for the six months ended June 30, 2001 and 2000. The
Company is a wholly owned subsidiary of MAXXAM.

      COMPREHENSIVE INCOME (LOSS)
      The following table sets forth comprehensive income (loss) (in millions).


                                                                    THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                         JUNE 30,                JUNE 30,
                                                                  ----------------------- -----------------------
                                                                     2001        2000        2001         2000
                                                                  ----------  ----------- -----------  ----------

Net income (loss)...............................................  $   (25.1)  $      4.9  $     10.5   $     8.3
Cumulative effect of accounting change, net of income tax
   provision of $0.2............................................       (0.1)           -         0.6           -
Unrealized losses, net of income tax benefit of $0.8 and $1.5,
   respectively, on derivative instruments arising during the
   period.......................................................       (1.4)           -        (2.5)          -
Less reclassification adjustment for realized gains (losses),
   net of income tax (provision) benefit of $(2.1) and $0.3,
   respectively, on derivative instruments included in net
   income.......................................................        3.1            -        (0.9)          -
Change in value of available-for-sale investments, net of income
   tax provision of $0.2 for each period........................       (0.1)           -         0.2           -
                                                                  ----------  ----------- -----------  ----------
Comprehensive income (loss).....................................  $   (23.6)  $      4.9  $      7.9   $     8.3
                                                                  ==========  =========== ===========  ==========

      ACCOUNTING PRONOUNCEMENTS FOR DERIVATIVE FINANCIAL INSTRUMENTS - KAISER
      Effective January 1, 2001, Kaiser began reporting derivative activities
pursuant to SFAS No. 133, which requires companies to recognize all derivative
instruments as assets or liabilities in the balance sheet and to measure those
instruments at fair value. Kaiser, the Company's equity investee, utilizes
derivative financial instruments primarily to mitigate its exposure to changes
in prices for certain of the products which Kaiser sells and consumes and, to a
lesser extent, to mitigate its exposure to changes in foreign currency exchange
rates. Changes in the market value of Kaiser's derivative instruments represent
unrealized gains or losses. Such unrealized gains or losses will fluctuate,
based on prevailing market prices at each subsequent balance sheet date, until
the transaction occurs. Under SFAS No. 133, these changes are recorded as an
increase or reduction in stockholders' equity through either other comprehensive
income or net income, depending on the facts and circumstances with respect to
the hedge and its documentation. To the extent that changes in the market values
of Kaiser's hedging positions are initially recorded in other comprehensive
income, such changes are reversed from other comprehensive income (offset by any
fluctuations in other "open" positions) and are recorded in traditional net
income upon the occurrence of the transactions to which the hedges relate. Under
the equity method of accounting which the Company follows in accounting for its
investment in Kaiser, the Company will reflect its equity share of Kaiser's
adjustments through either other comprehensive income or traditional net income,
as appropriate.

      SFAS No. 133 requires that as of the date of the initial adoption, the
difference between the market value of derivative instruments and the previous
carrying amount of those derivatives recorded on Kaiser's consolidated balance
sheet be reported in net income or other comprehensive income, as appropriate,
as the cumulative effect of a change in accounting principle. As previously
discussed, this impact was reflected in Kaiser's first quarter 2001 financial
statements, and in turn the Company's equity share of the impact was recorded in
its first quarter 2001 financial statements.

2.    SEGMENT INFORMATION

      As a result of the acquisition of certain real estate in June 2001 which
is described in Note 3 below, the Company has determined that it is now
appropriate to present segment information for its forest products and real
estate operations. The following table presents such unaudited financial
information, consistent with the manner in which management reviews and
evaluates the Company's business activities (in millions).


                                                              FOREST          REAL       CORPORATE    CONSOLIDATED
                                                             PRODUCTS        ESTATE      AND OTHER        TOTAL
                                                           -------------  ------------  ------------  -------------
Net sales for the three months ended:
      June 30, 2001....................................... $       53.2   $       0.1   $         -   $       53.3
      June 30, 2000.......................................         55.9            -              -           55.9

Operating income (loss) for the three months ended:
      June 30, 2001.......................................          1.0           0.1          (0.2)           0.9
      June 30, 2000.......................................          8.6             -          (0.1)           8.5

Other income (expense), net for the three months ended:
      June 30, 2001.......................................        (12.0)         (0.1)        (19.1)         (31.2)
      June 30, 2000.......................................        (10.1)            -           7.3           (2.8)

Net sales for the six months ended:
      June 30, 2001.......................................         98.0           0.1             -           98.1
      June 30, 2000.......................................        103.3            -              -          103.3

Operating income (loss) for the six months ended:
      June 30, 2001.......................................         (3.5)          0.1          (0.2)          (3.6)
      June 30, 2000.......................................         14.4             -          (0.2)          14.2

Other income (expense), net for the six months ended:
      June 30, 2001.......................................        (23.3)         (0.1)         24.9            1.5
      June 30, 2000.......................................        (20.8)            -          12.7           (8.1)

Total assets as of:
      June 30, 2001.......................................        616.7         136.8         290.2        1,043.7
      December 31, 2000...................................        726.2             -         282.7        1,008.9

      The column corporate and other includes the results of the parent company
and the investment in Kaiser, and also serves to reconcile the total of the
reportable segments' amounts to the total in the Company's consolidated
financial statements.

3.    ACQUISITION OF ASSETS

      In June 2001, Lakepointe Assets purchased Lake Pointe Plaza, an office
complex located in Sugarland, Texas, for a purchase price of $131.3 million. The
transaction was financed with proceeds of $122.5 million, net of $5.2 million in
deferred financing costs, from the Lakepointe Notes ($122.5 million principal
amount with a final maturity date of June 8, 2021, and an interest rate of
7.56%), and with a cash payment of $14.0 million. Lakepointe Assets acquired the
property subject to two leases to existing tenants while simultaneously leasing
a majority of the premises, representing all of the remaining space, to an
affiliate of the seller. The office complex is fully leased for a period of 20
years under these three leases. Lakepointe Assets is accounting for these leases
as operating leases. The Lakepointe Notes are secured by the leases, Lake Pointe
Plaza and a $60.0 million residual value insurance contract.

4.    CASH, MARKETABLE SECURITIES AND OTHER INVESTMENTS

      Cash, marketable securities and other investments include the following
amounts which are restricted (in millions):


                                                                                         June 30,     DECEMBER 31,
                                                                                           2001           2000
                                                                                       ------------- --------------

Current assets:
   Cash and cash equivalents:
      Amounts held as security for short positions in marketable securities..........  $          -  $         9.2
      Other restricted cash and cash equivalents.....................................          18.5           29.2
                                                                                       ------------- --------------
                                                                                               18.5           38.4
                                                                                       ------------- --------------
   Marketable securities, restricted:
      Amounts held in SAR Account....................................................          16.7           16.3
                                                                                       ------------- --------------

Long-term restricted cash, marketable securities and other investments:
   Amounts held in SAR Account.......................................................         136.9          144.4
   Other amounts restricted under the Timber Notes Indenture.........................           2.8            2.9
   Other long-term restricted cash...................................................           2.2            2.0
   Less: Amounts attributable to Timber Notes held in SAR Account....................         (53.1)         (52.7)
                                                                                       ------------- --------------
                                                                                               88.8           96.6
                                                                                       ------------- --------------

Total restricted cash, marketable securities and other investments...................  $      124.0  $       151.3
                                                                                       ============= ==============

      Cash, marketable securities and other investments include a limited
partnership interest in the Equity Fund Partnership, which invests in a
diversified portfolio of common stocks and other equity securities whose issuers
are involved in merger, tender offer, spin-off or recapitalization transactions.
The following table shows the Company's investment in the Equity Fund
Partnership, including restricted amounts held in the SAR Account, and the
ownership interest (dollars in millions).


                                                                                          JUNE 30,       DECEMBER 31,
                                                                                            2001             2000
                                                                                        -------------   --------------
Investment in Equity Fund Partnership:
   Restricted........................................................................   $       10.5    $        10.1
   Unrestricted......................................................................           36.5               -
                                                                                        -------------   --------------
                                                                                        $       47.0    $        10.1
                                                                                        =============   ==============

Percentage of ownership held.........................................................           15.0%            10.8%
                                                                                        =============   ==============


5.    INVENTORIES

      Inventories consist of the following (in millions):


                                                                                        JUNE 30,      DECEMBER 31,
                                                                                          2001            2000
                                                                                     --------------  --------------


Lumber.............................................................................  $        33.4   $        34.0
Logs...............................................................................           10.7            21.1
                                                                                     --------------  --------------
                                                                                     $        44.1   $        55.1
                                                                                     ==============  ==============

6.    INVESTMENT IN KAISER

      The Company owns the 27,938,250 Kaiser Shares, 23,443,953 shares of which
are pledged as collateral for the MGHI Notes as of June 30, 2001. Kaiser
operates in several principal aspects of the aluminum industry through the
following business segments: bauxite and alumina, primary aluminum, flat-rolled
products, engineered products and commodities marketing. Kaiser uses a portion
of its bauxite, alumina and primary aluminum production for additional
processing at certain downstream facilities. Kaiser's common stock is publicly
traded on the New York Stock Exchange under the trading symbol "KLU." The Kaiser
Shares represent a 34.6% equity interest in Kaiser at June 30, 2001.

      The market value for the Kaiser Shares based on the price per share quoted
at the close of business on August 9, 2001, was $90.8 million. There can be
no assurance that such value would be realized should the Company dispose of the
Kaiser Shares. The following tables contain summarized financial information of
Kaiser (in millions).


                                                                                          JUNE 30,    DECEMBER 31,
                                                                                            2001          2000
                                                                                        ------------- -------------

Current assets......................................................................... $      903.7  $    1,012.1
Property, plant and equipment, net.....................................................      1,219.1       1,176.1
Other assets...........................................................................      1,220.0       1,154.9
                                                                                        ------------- -------------
        Total assets................................................................... $    3,342.8  $    3,343.1
                                                                                        ============= =============

Current liabilities.................................................................... $      882.8  $      841.4
Long-term debt, less current maturities................................................        698.8         957.8
Other liabilities......................................................................      1,517.7       1,360.6
Minority interests.....................................................................        113.9         101.1
Stockholders' equity...................................................................        129.6          82.2
                                                                                        ------------- -------------
        Total liabilities and stockholders' equity..................................... $    3,342.8  $    3,343.1
                                                                                        ============= =============



                                                                     THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                          JUNE 30,                 JUNE 30,
                                                                   ------------------------------------------------
                                                                      2001         2000        2001        2000
                                                                   -----------  ----------  ----------  -----------

Net sales........................................................  $    446.8   $   552.8   $   927.1   $  1,128.5
Costs and expenses...............................................      (474.4)     (501.3)     (739.3)    (1,040.1)
Other expenses - net.............................................       (78.8)      (34.7)      (99.4)       (53.0)
                                                                   -----------  ----------  ----------  -----------
Income (loss) before income taxes and minority interests.........      (106.4)       16.8        88.4         35.4
Benefit (provision) for income taxes.............................        41.5        (6.4)      (34.5)       (13.7)
Minority interests...............................................         0.8         0.6         1.6          1.0
                                                                   -----------  ----------  ----------  -----------
Net income (loss)................................................  $    (64.1)  $    11.0   $    55.5   $     22.7
                                                                   ===========  ==========  ==========  ===========
Equity in earnings (loss) of Kaiser..............................  $    (22.4)  $     3.9   $    19.6   $      8.0
                                                                   ===========  ==========  ==========  ===========

7.    LONG-TERM DEBT

      Long-term and short-term debt consists of the following (in millions):


                                                                                      JUNE 30,       DECEMBER 31,
                                                                                        2001             2000
                                                                                   ---------------  ---------------

Pacific Lumber Credit Agreement................................................... $            -   $         37.0
6.55% Scotia LLC Timber Notes due July 20, 2028...................................          123.5            136.7
7.11% Scotia LLC Timber Notes due July 20, 2028...................................          243.2            243.2
7.71% Scotia LLC Timber Notes due July 20, 2028...................................          463.3            463.3
12% MGHI Notes due August 1, 2003.................................................           88.2            118.8
7.56% Lakepointe Notes (See Note 3)...............................................          122.5                -
Other.............................................................................            1.1              1.0
                                                                                   ---------------  ---------------
                                                                                          1,041.8          1,000.0
Less: current maturities..........................................................          (18.8)           (53.5)
      Timber Notes held in SAR Account............................................          (58.2)           (59.9)
                                                                                   ---------------  ---------------
                                                                                   $        964.8   $        886.6
                                                                                   ===============  ===============


      The amount attributable to the Timber Notes held in the SAR Account of
$53.1 million reflected in Note 4 above represents the amount paid to acquire
$58.2 million of principal amount of Timber Notes.

8.    CONTINGENCIES

      Regulatory and environmental matters play a significant role in the
Company's forest products business, which is subject to a variety of California
and federal laws and regulations, as well as the HCP and SYP and Pacific
Lumber's timber operator's license, dealing with timber harvesting practices,
threatened and endangered species and habitat for such species, and air and
water quality.

      The SYP complies with the California Board of Forestry and Fire Protection
regulations requiring timber companies to project timber growth and harvest on
their timberlands over a 100-year planning period and to demonstrate that their
projected average annual harvest for any decade within a 100-year planning
period will not exceed the average annual harvest level during the last decade
of the 100-year planning period. The SYP is effective for 10 years (subject to
review after five years) and may be amended by Pacific Lumber, subject to
approval by the CDF. Revised SYPs will be prepared every decade that address the
harvest level based upon reassessment of changes in the resource base and other
factors. The HCP and the Permits allow incidental "take" of certain species
located on the Company's timberlands which species have been listed as
endangered or threatened under the ESA and/or the CESA so long as there is no
"jeopardy" to the continued existence of such species. The HCP identifies the
measures to be instituted in order to minimize and mitigate the anticipated
level of take to the greatest extent practicable. The SYP is also subject to
certain of these provisions. The HCP and related Permits have a term of 50
years.

      Under the CWA, the EPA is required to establish TMDLs in water courses
that have been declared to be "water quality impaired." The EPA and the North
Coast Water Board are in the process of establishing TMDLs for 17 northern
California rivers and certain of their tributaries, including nine water courses
that flow within the Company's timberlands. The Company expects this process to
continue into 2010. In the December 1999 EPA report dealing with TMDLs on two of
the nine water courses, the agency indicated that the requirements under the HCP
would significantly address the sediment issues that resulted in TMDL
requirements for these water courses. However, the September 2000 report by the
staff of the North Coast Water Board proposed various actions, including
restrictions on harvesting beyond those required under the HCP. Dates for
hearings concerning these matters have not been scheduled. Establishment of the
final TMDL requirements applicable to the Company's timberlands will be a
lengthy process, and the final TMDL requirements applicable to the Company's
timberlands may require aquatic protection measures that are different from or
in addition to the prescriptions to be developed pursuant to the watershed
analysis process provided for in the HCP.

      Since the consummation of the Headwaters Agreement on March 1, 1999, there
has been a significant amount of work required in connection with the
implementation of the Environmental Plans. As a result of the implementation
process, 1999 and 2000 were transition years for Pacific Lumber with respect to
the filing and approval of its THPs, principally because government agencies
have failed to approve THPs in a timely manner. The rate of approvals of THPs
during the three months ended June 30, 2001, has improved somewhat over prior
quarters; however, it continues to be below what Pacific Lumber requires to meet
its targeted harvest levels under the SYP. Nevertheless, Pacific Lumber
anticipates that once the Environmental Plans are fully implemented, the process
of preparing THPs will become more streamlined, and the time to obtain approval
of THPs will potentially be shortened.

      Lawsuits are pending and threatened which seek to prevent the Company from
implementing the HCP and/or the SYP, implementing certain of the Company's
approved THPs, or carrying out certain other operations. On December 2, 1997,
the Wrigley lawsuit was filed. This action alleges, among other things, that the
defendants' logging practices have contributed to an increase in flooding and
damage to domestic water systems in a portion of the Elk River watershed.

      On January 28, 1997, the ERF lawsuit was filed. This action alleges that
Pacific Lumber has discharged pollutants into federal waterways, and the
plaintiffs are seeking to enjoin Pacific Lumber from continuing such actions,
civil penalties of up to $25,000 per day for each violation, remediation and
other damages. This case was dismissed by the District Court on August 19, 1999,
but the dismissal was reversed by the U.S. Ninth Circuit Court of Appeals on
October 30, 2000, and the case was remanded to the District Court, but no
further proceedings have occurred. The Company believes that it has strong
factual and legal defenses with respect to the Wrigley lawsuit and ERF lawsuit;
however, there can be no assurance that they will not have a material adverse
effect on the Company's financial position, results of operations or liquidity.

      On March 31, 1999, the EPIC-SYP/Permits lawsuit was filed alleging various
violations of the CESA and the California Environmental Quality Act, and
challenging, among other things, the validity and legality of the SYP and the
Permits issued by California. On March 31, 1999, the USWA lawsuit was filed also
challenging the validity and legality of the SYP. The Company believes that
appropriate procedures were followed throughout the public review and approval
process concerning the HCP and the SYP, and the Company is working with the
relevant government agencies to defend these challenges. Although uncertainties
are inherent in the final outcome of the EPIC-SYP/Permits lawsuit and the USWA
lawsuit, the Company believes that the resolution of these matters should not
result in a material adverse effect on its financial condition, results of
operations or the ability to harvest timber.

      In connection with a February 2001 notice of intent to sue Pacific Lumber,
on July 24, 2001, the Bear Creek lawsuit was filed. The lawsuit alleges that
Pacific Lumber's harvesting and other activities under certain of its approved
and proposed THPs will result in discharges of pollutants in violation of the
CWA. The plaintiff asserts that the CWA requires the defendants to obtain a
permit from the North Coast Water Board before beginning timber harvesting and
road construction activities in the Bear Creek watershed, and is seeking to
enjoin these activities until such permit has been obtained. The plaintiff also
seeks civil penalties of up to $27,000 per day for the defendant's alleged
continued violation of the CWA. The Company believes that the requirements under
the HCP are adequate to ensure that sediment and pollutants from its harvesting
activities will not reach levels harmful to the environment. Furthermore, EPA
regulations specifically provide that such activities are not subject to CWA
permitting requirements. The Company believes that it has strong legal defenses
in this matter; however, there can be no assurance that this lawsuit will not
have a material adverse effect on its consolidated financial condition or
results of operations.

      While the Company expects environmentally focused objections and lawsuits
to continue, it believes that the HCP, the SYP and the Permits should enhance
its position in connection with these continuing challenges and, over time,
reduce or minimize such challenges.

ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

      The following should be read in conjunction with the financial statements
in Part I, Item 1 of this Report and Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Item 8.
"Financial Statements and Supplementary Data" of the Form 10-K. Any capitalized
terms used but not defined in this Item are defined in the "Glossary of Defined
Terms" contained in Appendix A. Except as otherwise noted, all references to
notes represent the Notes to the Condensed Consolidated Financial Statements
included in Item 1.

      This Quarterly Report on Form 10-Q contains statements which constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in a number of places in
this section, in Item 3. "Quantitative and Qualitative Disclosures About Market
Risk," and in Part II. Item 1. "Legal Proceedings." Such statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may vary materially from the
forward-looking statements as a result of various factors. These factors include
the effectiveness of management's strategies and decisions, general economic and
business conditions, developments in technology, new or modified statutory or
regulatory requirements and changing prices and market conditions. This Form
10-Q and the Form 10-K identify other factors that could cause such differences
between the forward-looking statements and actual results. No assurance can be
given that these are all of the factors that could cause actual results to vary
materially from the forward-looking statements.

RESULTS OF OPERATIONS

      The Company's wholly owned subsidiary, MGI, and its operating
subsidiaries, Pacific Lumber and Britt, are engaged in forest products
operations. The Company's business is somewhat seasonal, and its net sales have
been historically higher in the months of April through November than in the
months of December through March. Management expects that the Company's revenues
and cash flows will continue to be markedly seasonal. Accordingly, the Company's
results for any one quarter are not necessarily indicative of results to be
expected for the full year.

      In recent years, MGI has experienced reduced harvests on its property, and
as a result, production of lumber has decreased. The decline in harvest levels
is a result of the difficulties with THPs described under "--Trends."
Furthermore, logging costs have increased due to the harvest of smaller diameter
logs and compliance with environmental regulations and the Environmental Plans.
MGI's management is currently reevaluating MGI's operations in view of these
continuing difficulties. This may result in reductions or curtailments in
sawmill or other operations. As a result of this analysis, MGI may be required
to evaluate the realizability of MGI's investment in any facilities which are
curtailed as a result, and a writedown of the investment in certain assets may be
required.

      The following table presents selected operational and financial
information for the three and six months ended June 30, 2001 and 2000.


                                                                     THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                          JUNE 30,                 JUNE 30,
                                                                   -----------------------  -----------------------
                                                                      2001         2000        2001        2000
                                                                   -----------  ----------  ----------  -----------
                                                                   (IN MILLIONS OF DOLLARS, EXCEPT SHIPMENTS AND PRICES)
Shipments:
   Lumber: (1)
      Redwood upper grades.......................................         4.4         3.8         8.5           7.3
      Redwood common grades......................................        44.8        41.2        82.0          76.6
      Douglas-fir upper grades...................................         2.6         3.2         4.6           5.7
      Douglas-fir common grades..................................        19.9        19.8        32.9          38.9
      Other......................................................         2.1         1.7         2.6           4.7
                                                                   -----------  ----------  ----------  -----------
        Total lumber.............................................        73.8        69.7       130.6         133.2
                                                                   ===========  ==========  ==========  ===========
   Wood chips (2)................................................        34.1        45.5        60.7          84.5
                                                                   ===========  ==========  ==========  ===========

Average sales price:
   Lumber: (3)
      Redwood upper grades.......................................  $    1,775   $   1,830   $   1,809   $     1,728
      Redwood common grades......................................         602         759         607           750
      Douglas-fir upper grades...................................       1,350       1,342       1,365         1,324
      Douglas-fir common grades..................................         349         372         338           398
   Wood chips (4)................................................          68          69          69            66

Net sales:
   Lumber, net of discount.......................................  $     45.5   $    50.1   $    82.7   $      93.8
   Wood chips....................................................         2.3         3.2         4.2           5.6
   Cogeneration power............................................         3.0         1.0         7.4           1.6
   Other.........................................................         2.5         1.6         3.8           2.3
                                                                   -----------  ----------  ----------  -----------
        Total net sales..........................................  $     53.3   $    55.9   $    98.1   $     103.3
                                                                   ===========  ==========  ==========  ===========
Operating income (loss)..........................................  $      0.9   $     8.5   $    (3.6)  $      14.2
                                                                   ===========  ==========  ==========  ===========
Operating cash flow (5)..........................................  $      6.2   $    13.4   $     6.6   $      23.7
                                                                   ===========  ==========  ==========  ===========
Income (loss) before income taxes................................  $    (30.3)  $     5.7   $    (2.1)  $       6.1
                                                                   ===========  ==========  ==========  ===========
Net income (loss) (6)............................................  $    (25.1)  $     4.9   $    10.5   $       8.3
                                                                   ===========  ==========  ==========  ===========
- --------------------

(1)   Lumber shipments are expressed in millions of board feet.
(2)   Wood chip shipments are expressed in thousands of bone dry units of 2,400
      pounds.
(3)   Dollars per thousand board feet.
(4)   Dollars per bone dry unit.
(5)   Operating income before depletion and depreciation, also referred to as
      "EBITDA."
(6)   2001 results include after-tax extraordinary gains of $1.7 million and
      $3.6 million for the three and six month periods, respectively, on the
      repurchase of MGHI Notes. 2000 results for the six month period includes
      an after-tax extraordinary gain of $1.4 million on the repurchase of
      Timber Notes.

      Net Sales
      Net sales for the second quarter and first six months of 2001 were lower
than the comparable periods of 2000 primarily as a result of lower prices for
redwood common grade lumber and lower shipments of Douglas-fir lumber. These
declines were offset somewhat by higher shipments of redwood lumber.

      Operating Income (Loss)
      The Company had lower operating income for the second quarter of 2001
compared to the second quarter of 2000, and an operating loss for the six months
ended June 30, 2001, as compared to operating income for the same period of
2000, as a result of the decline in net sales as well as higher costs associated
with lumber production and logging operations.

      Income (Loss) Before Income Taxes
      The Company had a loss before income taxes for the second quarter and
first six months of 2001 as compared to income before income taxes for the
comparable prior year periods. In addition to the impact of the decline in
operating income discussed above, the loss before income taxes for the second
quarter of 2001 was also affected by a decrease in equity in earnings of Kaiser
from $3.9 million for the three months ended June 30, 2000, to $(22.4) million
for the three months ended June 30, 2001. Results for the six months ended June
30, 2001, were lower due to the decline in operating income which was offset in
part by an increase in equity in earnings of Kaiser from $8.0 million to $19.6
million. Kaiser's results improved largely as a result of non-recurring gains on
power sales.

      Benefit (provision) in Lieu of Income Taxes
      The effective benefit (provision) in lieu of income taxes differs from the
statutory rate primarily due to disallowance of a portion of the Company's net
operating loss carryforwards for state tax purposes, and the exclusion of equity
in earnings (loss) of Kaiser from taxable income.

FINANCIAL CONDITION AND INVESTING AND FINANCING ACTIVITIES

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See above for cautionary information with respect to such
forward-looking statements.

      Note 7 to the Consolidated Financial Statements in the Form 10-K contains
additional information concerning the Company's indebtedness and information
concerning certain restrictive debt covenants. "MGHI PARENT" is used in this
section to refer to the Company on a stand-alone basis without its subsidiaries.

      The following table summarizes certain data related to financial condition
and to investing and financing activities of the Company and its subsidiaries.



                                                                  SCOTIA        PACIFIC     MGI AND       MGHI
                                                                    LLC         LUMBER       OTHER       PARENT      TOTAL
                                                                 ---------     --------    ---------    --------    --------
                                                                             (IN MILLIONS OF DOLLARS)
DEBT AND CREDIT FACILITIES (EXCLUDING INTERCOMPANY NOTES)
Short-term borrowings and current maturities of long-term debt:
   June 30, 2001................................................ $   16.8     $    0.1 (1) $   1.9      $     -     $  18.8
   December 31, 2000............................................     16.4         37.1           -            -        53.5

Long-term debt, excluding current maturities:
   June 30, 2001................................................ $  755.5 (2) $    0.5     $ 120.6 (4)  $  88.2 (2) $ 964.8
   December 31, 2000............................................    767.2          0.6           -        118.8       886.6

Revolving credit facilities:
   Facility commitment amounts.................................. $   61.1     $   60.0     $   2.5      $     -     $ 123.6
   June 30, 2001:
      Borrowings................................................        -            -           -            -           -
      Letters of credit.........................................        -         11.8           -            -        11.8
      Unused and available credit...............................     61.1         31.5         2.5            -        95.1

CASH, CASH EQUIVALENTS, MARKETABLE
   SECURITIES AND OTHER INVESTMENTS
June 30, 2001:
   Current amounts restricted for debt service.................. $   34.9     $      -     $     -      $     -     $  34.9
   Other current amounts........................................      4.6          7.0        35.5         41.0        88.1
                                                                 ---------    ---------    --------     --------    --------
                                                                     39.5          7.0        35.5         41.0       123.0
                                                                 ---------    ---------    --------     --------    --------
   Long-term amounts restricted for debt service................     86.6            -           -            -        86.6
   Other long-term restricted amounts...........................        -            -         2.2            -         2.2
                                                                 ---------    ---------    --------     --------    --------
                                                                     86.6            -         2.2            -        88.8
                                                                 ---------    ---------    --------     --------    --------
                                                                 $  126.1     $    7.0     $  37.7      $  41.0     $ 211.8
                                                                 =========    =========    ========     ========    ========

December 31, 2000:
   Current amounts restricted for debt service.................. $   45.8     $      -     $      -     $     -     $  45.8
   Other current amounts........................................     68.6          0.2         61.7        54.3       184.8
                                                                 ---------    ---------     --------    --------    --------
                                                                    114.4          0.2         61.7        54.3       230.6
                                                                 ---------    ---------     --------    --------    --------

   Long-term amounts restricted for debt service................     92.1            -            -           -        92.1
   Other long-term restricted amounts...........................      2.5            -          2.0           -         4.5
                                                                 ---------    ---------     --------    --------    --------
                                                                     94.6            -          2.0           -        96.6
                                                                 ---------    ---------     --------    --------    --------
                                                                 $  209.0     $    0.2     $   63.7     $  54.3     $ 327.2
                                                                 =========    =========     ========    ========    ========

CHANGES IN CASH AND CASH EQUIVALENTS
Capital expenditures:
   June 30, 2001................................................ $   2.9      $    3.6     $  132.1 (4) $     -     $ 138.6
   June 30, 2000................................................     3.2           1.7          1.1           -         6.0

Net proceeds from dispositions of property and investments:
   June 30, 2001................................................ $     -      $      -     $      -     $     -     $     -
   June 30, 2000................................................       -           0.1            -           -         0.1

Borrowings (repayments) of debt and credit facilities, net of
   financing costs:
   June 30, 2001................................................ $ (11.4)(2)  $  (37.0)    $  117.3 (4) $ (25.1)(2) $  43.8
   June 30, 2000................................................    (7.5)          0.1          3.0        (8.1)      (12.5)

Dividends and advances received (paid):
   June 30, 2001................................................ $ (73.1)(3)  $   73.1 (3) $  (17.1)(3) $  17.1 (3) $     -
   June 30, 2000................................................       -          50.0       (158.4)       63.4       (45.0)

- ------------------

(1)     The decrease in Pacific Lumber's short-term borrowings and current
        maturities of long-term debt between December 31, 2000, and June 30,
        2001, was due to the repayment of borrowings under the Pacific Lumber
        Credit Agreement.
(2)     The decrease in Scotia LLC's long-term debt between December 31, 2000,
        and June 30, 2001, was the result of principal payments on the Timber
        Notes of $11.4 million during the six months ended June 30, 2001. The
        decrease in MGHI Parent's long-term debt was due primarily to
        repurchases of debt.
(3)     For the six months ended June 30, 2001, $73.1 million of dividends were
        paid by Scotia LLC to Pacific Lumber, $63.9 million of which was made
        using proceeds from the sale of the Scotia LLC's Owl Creek grove. For
        the six months ended June 30, 2000, $90.0 million of the dividends paid
        from MGI to MGHI were made using proceeds from the sale of the
        Headwaters Timberlands. MGHI in turn paid a $45.0 million dividend to
        MAXXAM Parent.
(4)     The increase in debt and capital expenditures for MGI and other is
        attributable to the Lake Pointe Plaza acquisition and related
        borrowings described in Note 3.

      MGHI Parent expects that interest payments on the $88.2 million of MGHI
Notes outstanding as of June 30, 2001, will be paid with its existing cash.

      The Scotia LLC Line of Credit allows Scotia LLC to borrow up to one year's
interest on the Timber Notes. On June 1, 2001, this facility was extended for an
additional year to July 12, 2002. The Pacific Lumber Credit Agreement expires on
October 31, 2001, but it is expected to be renewed for a two-year period.

      On the January 22, 2001, note payment date for the Timber Notes, Scotia
LLC had $37.4 million set aside in the note payment account to pay the $28.9
million of interest due as well as $8.5 million of principal. Scotia LLC repaid
an additional $2.9 million of principal on the Timber Notes using funds held in
the SAR Account, resulting in a total principal payment of $11.4 million, an
amount equal to Scheduled Amortization. In addition, Scotia LLC made a
distribution to Pacific Lumber of $73.1 million, $63.9 million of which was made
using funds from the December 2000 sale of Scotia LLC's Owl Creek grove and $9.2
million of which was made using excess funds released from the SAR Account.

      On the July 20, 2001, note payment date for the Timber Notes, Scotia LLC
had $29.9 million set aside in the note payment account to pay the $28.5 million
of interest due as well as $1.4 million of principal. Scotia LLC repaid an
additional $1.4 million of principal on the Timber Notes using funds held in the
SAR Account, resulting in a total principal payment of $2.8 million, an amount
equal to Scheduled Amortization. In addition, Scotia LLC made a distribution in
the amount of $3.0 million to its parent, Pacific Lumber.

      In June 2001, Lakepointe Assets purchased Lake Pointe Plaza, an office
complex located in Sugarland, Texas, for a purchase price of $131.3 million. The
transaction was financed with proceeds of $122.5 million, net of $5.2 million in
deferred financing costs, from the Lakepointe Notes ($122.5 million principal
amount with a final maturity date of June 8, 2021, and an interest rate of
7.56%), and with a cash payment of $14.0 million. Lakepointe Assets acquired the
property subject to two leases to existing tenants while simultaneously leasing
a majority of the premises, representing all of the remaining space, to an
affiliate of the seller. The office complex is fully leased for a period of 20
years under these three leases.

      MGHI Parent believes that its existing resources, together with the cash
available from subsidiaries, will be sufficient to fund its debt service and
working capital requirements for the next year. With respect to its long-term
liquidity, MGHI Parent believes that its existing cash and cash resources,
together with distributions from its subsidiaries, should be sufficient to meet
its debt service and working capital requirements. However, there can be no
assurance that this will be the case. Any adverse outcome of the regulatory and
environmental matters described under "--Trends" below could materially
adversely affect cash available from subsidiaries and therefore MGHI Parent's
financial position, results of operations or liquidity.

      MGI and its subsidiaries anticipate that existing cash, cash equivalents,
marketable securities, funds available from the SAR Account and available
sources of financing will be sufficient to fund their working capital, debt
service and capital expenditure requirements for the next year. With respect to
their long-term liquidity, MGI and its subsidiaries believe that their existing
cash and cash equivalents should provide sufficient funds to meet their debt
service and working capital requirements. However, until such time as Pacific
Lumber has adequate cash flows from operations and/or dividends from Scotia LLC,
there can be no assurance that this will be the case. Furthermore, due to its
highly leveraged condition, MGI is more sensitive than less leveraged companies
to factors affecting its operations, including governmental regulation and
litigation affecting its timber harvesting practices (see "--Trends" below and
Note 8), increased competition from other lumber producers or alternative
building products and general economic conditions.

TRENDS

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See above for cautionary information with respect to such
forward-looking statements.

      The Company's forest products operations are conducted by MGI through
Pacific Lumber and Britt. Regulatory and environmental matters play a
significant role in Pacific Lumber's operations. See Note 8 and Item 1.
"Business--Forest Products Operations--Regulatory and Environmental Factors" of
the Form 10-K for a discussion of these matters. Regulatory compliance and
related litigation have caused delays in obtaining approvals of THPs and delays
in harvesting on THPs once they are approved. This has resulted in a decline in
harvest, an increase in the cost of logging operations, and lower net sales.

      Since the consummation of the Headwaters Agreement on March 1, 1999, there
has been a significant amount of work required in connection with the
implementation of the Environmental Plans. As a result of the implementation
process, 1999 and 2000 were transition years for Pacific Lumber with respect to
the filing and approval of its THPs, principally because government agencies
have failed to approve THPs in a timely manner. The rate of approvals of THPs
during the three months ended June 30, 2001, has improved somewhat over prior
quarters; however, it continues to be below what Pacific Lumber requires to meet
its targeted harvest levels under the SYP. Nevertheless, Pacific Lumber
anticipates that once the Environmental Plans are fully implemented, the process
of preparing THPs will become more streamlined, and the time to obtain approval
of THPs will potentially be shortened.

      There can be no assurance that Pacific Lumber will not continue to
experience difficulties in receiving approvals of its THPs similar to those it
has been experiencing. Furthermore, there can be no assurance that certain
pending legal, regulatory and environmental matters or future governmental
regulations, legislation or judicial or administrative decisions, or adverse
weather conditions, would not have a material adverse effect on the Company's
financial position, results of operations or liquidity. See Part II. Item 1.
"Legal Proceedings" and Note 8 for further information regarding regulatory and
legal proceedings affecting the Company's operations.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for cautionary information with respect to
such forward-looking statements.

      This item is not applicable for the Company and its subsidiaries; however,
Kaiser, the Company's equity investee, utilizes hedging transactions to lock-in
a specified price or range of prices for certain products which it sells or
consumes and to mitigate its exposure to changes in foreign currency exchange
rates. See Item 3. "Quantitative and Qualitative Disclosures about Market Risk"
from Kaiser's Quarterly Report on Form 10-Q filed for the period ended June 30,
2001, included as Exhibit 99.1 to the Form 10-Q, for information relative to
Kaiser's hedging activities.

                           PART II. OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

      Reference is made to Item 3 of the Form 10-K for information concerning
material legal proceedings with respect to the Company. The following material
developments have occurred with respect to such legal proceedings subsequent to
the filing of the Form 10-K.

      TIMBER HARVESTING LITIGATION

      In connection with a February 2001 notice of intent to sue Pacific Lumber,
on July 24, 2001, the Bear Creek lawsuit was filed. The lawsuit alleges that
Pacific Lumber's harvesting and other activities under certain of its approved
and proposed THPs will result in discharges of pollutants in violation of the
CWA. The plaintiff asserts that the CWA requires the defendants to obtain a
permit from the North Coast Water Board before beginning timber harvesting and
road construction activities in the Bear Creek watershed, and is seeking to
enjoin these activities until such permit has been obtained. The plaintiff also
seeks civil penalties of up to $27,000 per day for the defendant's alleged
continued violation of the CWA. The Company believes that the requirements under
the HCP are adequate to ensure that sediment and pollutants from its harvesting
activities will not reach levels harmful to the environment. Furthermore, EPA
regulations specifically provide that such activities are not subject to CWA
permitting requirements. The Company believes that it has strong legal defenses
in this matter; however, there can be no assurance that this lawsuit will not
have a material adverse effect on its consolidated financial condition or
results of operations.

      HUNSAKER ACTION

      With respect to the Hunsaker Action, on July 9, 2001, the U.S. Ninth
Circuit Court of Appeals affirmed the District Court's dismissal of the case.


ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

A.    EXHIBITS:

        4.1     Second Amendment, dated June 15, 2001, to the Scotia LLC Line of
                Credit (incorporated herein by reference to Exhibit 4.1 to the
                Scotia LLC June 2001 Form 10-Q; File No. 333-63825)

      *4.2      Loan Agreement, dated as of June 28, 2001, between Lakepointe
                Assets LLC and Legg Mason Real Estate Services, Inc.

      *4.3      Promissory Note, dated as of June 28, 2001, between Lakepointe
                Assets LLC and Legg Mason Real Estate Services, Inc.

      *10.1     Lease Agreement, dated as of June 28, 2001, between Lakepointe
                Assets LLC and Fluor Enterprises Inc.

      *10.2     Guarantee of Lease dated as of June 28, 2001, between Fluor
                Corporation and Lakepointe Assets LLC

      *99.1     Item 3. to the Kaiser June 2001 Form 10-Q

   * Included with this filing.

B.      REPORTS ON FORM 8-K:

      None.


                                   SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, who have signed this report on behalf of
the Registrant and as the principal financial and accounting officers of the
Registrant, respectively.




                                           MAXXAM GROUP HOLDINGS INC.





Date: August 13, 2001    By:   /S/             PAUL N. SCHWARTZ
                              ----------------------------------------------------
                                                Paul N. Schwartz
                              Vice President, Chief Financial Officer and Director
                                         (Principal Financial Officer)




Date: August 13, 2001    By:   /S/             ELIZABETH D. BRUMLEY
                              ----------------------------------------------------
                                              Elizabeth D. Brumley
                                                   Controller
                                         (Principal Accounting Officer)


                                                                      APPENDIX A


                            GLOSSARY OF DEFINED TERMS


Bear Creek lawsuit: An action entitled Environmental Protection Information
Association v. Pacific Lumber, Scotia Pacific Company LLC (No. C01-2821), filed
July 24, 2001, in the U.S. District Court in the Northern District of California

Britt:  Britt Lumber Co., Inc., an indirect wholly owned subsidiary of MGI

CDF:  California Department of Forestry and Fire Protection

CESA:  California Endangered Species Act

Company:  MAXXAM Group Holdings Inc., a wholly owned subsidiary of MAXXAM

CWA:  Federal Clean Water Act

Environmental Plans:  The HCP and the SYP

EPA:  Environmental Protection Agency

EPIC-SYP/Permits lawsuit: An action entitled Environmental Protection
Information Association, Sierra Club v. California Department of Forestry and
Fire Protection, California Department of Fish and Game, The Pacific Lumber
Company, Scotia Pacific Company LLC, Salmon Creek Corporation, et al. (No.
99CS00639) filed March 31, 1999 in the Superior Court of Sacramento County

Equity Fund Partnership: A partnership investing in equity securities in which
the Company holds a limited partnership interest

ERF lawsuit: An action entitled Ecological Rights Foundation, Mateel
Environmental v. Pacific Lumber (No. 97-0292) which was filed in the U.S.
District Court in the Northern District of California on January 28, 1997

ESA:  The federal Endangered Species Act

Form 10-K: The Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the fiscal year ended December 31, 2000

HCP: The habitat conservation plan covering multiple species approved on March
1, 1999, in connection with the consummation of the Headwaters Agreement

Headwaters Agreement: The September 28, 1996, agreement between Pacific Lumber,
Scotia LLC, Salmon Creek, the United States and California which provided the
framework for the acquisition by the United States and California of the
Headwaters Timberlands

Headwaters Timberlands: Approximately 5,600 acres of Pacific Lumber timberlands
consisting of two forest groves commonly referred to as the Headwaters Forest
and the Elk Head Springs Forest which were sold to the United States and
California on March 1, 1999

Hunsaker Action: An action entitled William Hunsaker, et al. v. Charles E.
Hurwitz, Pacific Lumber, MAXXAM Group Inc., MXM Corp., Federated Development
Company and Does 1-50 (No. C 98-4515) filed in the United States District Court
for the Northern District of California on November 24, 1998

Kaiser: Kaiser Aluminum Corporation, an equity investee of the Company engaged
in aluminum operations

Kaiser Shares: 27,938,250 shares of the common stock of Kaiser, of which
23,443,953 shares are pledged as collateral for the MGHI Notes

Lakepointe Assets: Lakepointe Assets Holdings LLC, a limited liability company,
and its subsidiaries, all of which are indirect wholly owned subsidiaries of the
Company

Lakepointe Notes:  Lakepointe Assets'  $122.5 million of 7.56% notes due June 8, 2021

MAXXAM:  MAXXAM Inc.

MGHI Notes:  12% Senior Secured Notes of the Company due August 1, 2003

MGI:  MAXXAM Group Inc., a wholly owned subsidiary of the Company

North Coast Water Board:  North Coast Regional Water Quality Control Board

Pacific Lumber:  The Pacific Lumber Company, a wholly-owned subsidiary of MGI

Pacific Lumber Credit Agreement: The revolving credit agreement between Pacific
Lumber and a bank which provides for borrowings of up to $60.0 million, all of
which may be used for revolving borrowings, $20.0 million of which may be used
for standby letters of credit and $30.0 million of which may be used for
timberland acquisitions.

Permits: The incidental take permits issued by the United States and California
pursuant to the HCP

Salmon Creek:  Salmon Creek LLC, a wholly owned subsidiary of Pacific Lumber

SAR Account: Funds held in a reserve account to support principal payments on
the Timber Notes

Scheduled Amortization: The amount of principal which Scotia LLC must pay
through each Timber Note payment date in order to avoid prepayment or deficiency
premiums

Scotia LLC: Scotia Pacific Company LLC, a limited liability company wholly owned
by Pacific Lumber

Scotia LLC Line of Credit: The agreement between a group of lenders and Scotia
LLC pursuant to which it may borrow in order to pay up to one year's interest on
the Timber Notes

SFAS No. 133: Statement of Financial Standard No. 133, "Accounting for
Derivative Instruments and Hedging Activities"

SYP: The sustained yield plan approved on March 1, 1999, in connection with the
consummation of the Headwaters Agreement

THP: Timber harvesting plan required to be filed with and approved by the CDF
prior to the harvesting of timber

Timber Notes: Scotia LLC's $867.2 million original aggregate principal amount of
6.55% Series B Class A-1 Timber Collateralized Notes, 7.11% Series B Class A-2
Timber Collateralized Notes and 7.71% Series B Class A-3 Timber Collateralized
Notes due July 20, 2028

Timber Notes Indenture:  The indenture governing the Timber Notes

TMDLs:  Total maximum daily load limits

USWA lawsuit: An action entitled United Steelworkers of America, AFL-CIO, CLC,
and Donald Kegley v. California Department of Forestry and Fire Protection, The
Pacific Lumber Company, Scotia Pacific Company LLC and Salmon Creek Corporation
(No. 99CS00626) filed March 31, 1999 in the Superior Court of Sacramento
County

Wrigley lawsuit: An action entitled Kristi Wrigley, et al. v. Charles Hurwitz,
John Campbell, Pacific Lumber, MAXXAM Group Holdings Inc., Scotia Pacific
Holding Company, MAXXAM Group Inc., MAXXAM Inc., Scotia Pacific Company
LLC and Federated Development Company (No. 9700399) filed December 2, 1997 in
the Superior Court of Humboldt County

EX-4

                                 LOAN AGREEMENT
                                   [FEI Space]



                            dated as of June 28, 2001



                                     between


                             LAKEPOINTE ASSETS LLC,

                                   as Borrower



                                       and



                     LEGG MASON REAL ESTATE SERVICES, INC.,

                                    as Lender




                                 LOAN AGREEMENT


      THIS LOAN AGREEMENT (this "LOAN AGREEMENT"), dated as of June 28, 2001,
between LAKEPOINTE ASSETS LLC, a Delaware limited liability company, having an
address c/o 5847 San Felipe Drive, Suite 2600, Houston, Texas 77057 ("BORROWER")
and LEGG MASON REAL ESTATE SERVICES, INC., a Pennsylvania corporation, having an
address at 100 Light Street, 32nd Floor, Baltimore, Maryland 21202 (the
"LENDER").


                                   BACKGROUND

      A.   Reference is made to the Standard Terms and Conditions for this Loan
Agreement attached as EXHIBIT A hereto (the "STANDARD TERMS AND CONDITIONS").
The terms of this Loan Agreement are set forth in the Standard Terms and
Conditions.

      B.   Lender has made a loan to Borrower in the principal amount of ONE
HUNDRED EIGHTEEN MILLION SEVEN HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SIXTEEN DOLLARS AND THIRTY-FIVE CENTS ($118,734,816.35) (the "LOAN") evidenced
by the Note and secured, in part, by the Security Documents.

      C.   Borrower owns the Mortgaged Property described in the Deed of Trust,
Security Agreement, Assignment of Leases and Rents and Fixture Filing, executed
effective as of the date hereof, from Borrower for the benefit of Lender (the
"INDENTURE").

      D.   Borrower has leased the Mortgaged Property to Tenant pursuant to
the Lease.

      E.   Lender is willing, on the terms and subject to the conditions set
forth in this Loan Agreement, to make the Loan to Borrower.

      NOW, THEREFORE, in consideration of the premises, the agreements
contained in this Loan Agreement, the making of the Loan and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

           Section 1.  Background.   The Background of this Loan Agreement is
incorporated by reference.

           Section 2.  Standard Terms and Conditions. The Standard Terms and
Conditions are incorporated by reference.

                   [SIGNATURES APPEAR ON THE FOLLOWING PAGES]


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

                                  BORROWER:

                                  LAKEPOINTE ASSETS LLC,
                                  a Delaware limited liability company


                                  By: /s/ J. Richard Rosenberg
                                      J. Richard Rosenberg,
                                      Vice President and Chief Financial Officer




                   [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

                                  LENDER:

                                  LEGG MASON REAL ESTATE SERVICES, INC.,
                                  a Pennsylvania corporation


                                  By: /s/ Judith M. Shewbridge
                                      Name:  Judith M. Shewbridge
                                      Title: Assistant Vice president









                                    EXHIBIT A

                                   [FEI SPACE]

- --------------------------------------------------------------------------------







                                 LOAN AGREEMENT
                          STANDARD TERMS AND CONDITIONS









- -------------------------------------------------------------------------------






                                TABLE OF CONTENTS

Article 1 DEFINITIONS AND RULES OF CONSTRUCTION
         Section 1.01          Definitions
         Section 1.02          Resolution of Drafting Ambiguities
Article 2 THE NOTE
         Section 2.01          Form of Note
         Section 2.02          Payment of Debt
         Section 2.03          [Intentionally Omitted]
         Section 2.04          Prepayment of the Note
         Section 2.05          Defeasance of the Note
         Section 2.06          Default Interest and Late Charge
Article 3 OBLIGATIONS SECURED/SECURITY/APPLICATION OF PAYMENTS
         Section 3.01          Obligations Secured
         Section 3.02          Other Security for Payment of the Note
         Section 3.03          Application of Payments
Article 4 COVENANTS
         Section 4.01          Insurance
         Section 4.02          Payment of Taxes and Impositions, etc
         Section 4.03          Escrow Fund
         Section 4.04          Changes in the Legal Requirements Regarding Taxation
         Section 4.05          No Credits on Account of the Debt
         Section 4.06          Documentary Stamps
         Section 4.07          Maintenance of Mortgaged Property
         Section 4.08          Books and Records
         Section 4.09          Performance of Other Agreements
         Section 4.10          ERISA
         Section 4.11          Hazardous Substances
Article 5 TRANSFER
         Section 5.01          Transfer Generally
         Section 5.02          Permitted Transfer of Beneficial Interest
         Section 5.03          Permitted Transfer of Mortgaged Property
         Section 5.04          No Impairment
         Section 5.05          Lender Consent
         Section 5.06          Cost of Transfer
         Section 5.07          No Release of Liability
Article 6 SINGLE PURPOSE ENTITY
         Section 6.01          Separateness Representations and Covenants
Article 7 REPRESENTATIONS AND WARRANTIES
         Section 7.01          Organization
         Section 7.02          Authority
         Section 7.03          Consents
         Section 7.04          No Litigation
         Section 7.05          Agreements
         Section 7.06          Enforceability
         Section 7.07          Disclosure
         Section 7.08          No Default
         Section 7.09          Condemnation
         Section 7.10          Federal Reserve Regulations
         Section 7.11          Utilities and Public Access
         Section 7.12          Not Foreign Person
         Section 7.13          Indenture Liens
         Section 7.14          Assignment of Leases
         Section 7.15          No Adverse Change
         Section 7.16          Lease and Management Agreements
         Section 7.17          Condition, Compliance
         Section 7.18          Related Party Loans
         Section 7.19          Service Contract
         Section 7.20          No Insolvency or Judgment
         Section 7.21          Separateness
         Section 7.22          Subleases
         Section 7.23          Taxes
         Section 7.24          No Broker
         Section 7.25          Investment Company Act
         Section 7.26          Compliance with ERISA and State Statutes on
                               Governmental Plans
         Section 7.27          Hazardous Substances
Article 8 CASUALTY AND CONDEMNATION
         Section 8.01          Notice; Settlement
         Section 8.02          Restoration
         Section 8.03          Claims for Net Award
Article 9 EVENTS OF DEFAULT/REMEDIES
         Section 9.01          Events of Default
         Section 9.02          Remedies Generally
         Section 9.03          Right to Cure Defaults
         Section 9.04          Prepayment After Event of Default
         Section 9.05          Right of Entry
         Section 9.06          Remedies under Security Documents
         Section 9.07          Actions and Proceedings
         Section 9.08          Waiver of Counterclaim
         Section 9.09          Recovery of Sums Required to Be Paid
Article 10 LEASE/LEASE TERMINATION
         Section 10.01         The Lease, Management Agreements, Multi-Party
                               Agreement and Other Leases
         Section 10.02         Permitted Lease Termination Events
Article 11 INDEMNIFICATION
         Section 11.01         General Indemnification
         Section 11.02         Tax Indemnification
Article 12 MISCELLANEOUS
         Section 12.01         Waiver of Notice
         Section 12.02         Remedies of Borrower
         Section 12.03         Sole Discretion of Lender
         Section 12.04         Non-Waiver
         Section 12.05         No Oral Change
         Section 12.06         Liability/Successor and Assigns
         Section 12.07         Unenforceable Provisions
         Section 12.08         Servicer
         Section 12.09         Duplicate Originals
         Section 12.10         Assignments
         Section 12.11         Risk of Loss, etc.
         Section 12.12         Cooperation
         Section 12.13         Recourse Provisions
         Section 12.14         Governing Law; Submission to Jurisdiction
         Section 12.15         Waiver of Jury Trial
         Section 12.16         Consent Specific/No Deemed Waiver
         Section 12.17         No Forfeiture
         Section 12.18         Notices
         Section 12.19         Estoppel Certificates
         Section 12.20         Usury Laws
         Section 12.21         Approval of RVI Insurer

APPENDIX A - Definitions and Rules of Construction

EXHIBITS

A        Form of Note
B        Other Properties
C        Beneficial Owner Instrument of Accession and Assumption
D        Certificate of Compliance and Release
E        Instrument of Accession and Assumption
F        Certificate of Compliance and Release


                                   ARTICLE 1

                      DEFINITIONS AND RULES OF CONSTRUCTION

      Section 1.01 Definitions. For purposes of this Loan Agreement, capitalized
terms used in this Loan Agreement and not otherwise defined in the body of this
Loan Agreement have the meanings ascribed to them in APPENDIX A, unless the
context otherwise requires, and the rules of construction set forth in APPENDIX
A shall apply thereto and hereto.

      Section 1.02 Resolution of Drafting Ambiguities. Each of the parties
hereto acknowledges that it was represented by counsel in connection with the
Loan Documents to which it is a party that it and its counsel reviewed and
revised the Loan Documents and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party will not be employed
in the interpretation of the Loan Documents.

                                   ARTICLE 2

                                    THE NOTE

      Section 2.01 Form of Note. On the Closing Date, Borrower will execute and
deliver the Note to Lender substantially in the form set out in EXHIBIT A.

      Section 2.02 Payment of Debt. Borrower shall duly and punctually pay the
Debt in accordance with the terms hereof and of the Note, as and when due and
payable.

      Section 2.03 [Intentionally Omitted]

      Section 2.04 Prepayment of the Note. The Debt may be prepaid only if and
as permitted by the Note and this Loan Agreement. Borrower may not prepay the
Note, in whole or in part, except on or after February 8, 2021 during which
period Borrower may prepay the Note in whole, but not in part, at par and
without payment of the Prepayment Consideration. In addition, Borrower must
prepay the Note in whole as follows if a Permitted Lease Termination Event
occurs:

             (a) If an event of default occurs under Article 9 of the Lease that
results in a Permitted Lease Termination Event, then Borrower must prepay the
entire outstanding principal balance of the Note, together with accrued and
unpaid interest thereon, Prepayment Consideration and all other amounts due and
owing under the Note, this Loan Agreement and the Security Documents; and

             (b) If a Destruction occurs that results in a Permitted Lease
Termination Event, then Borrower must prepay the entire outstanding principal
balance of the Note, together with accrued and unpaid interest thereon, and all
other amounts due and owing under the Note, this Loan Agreement and the Security
Documents, and if and only if an Event of Default exists following such
Destruction, such prepayment must also include the payment of Prepayment
Consideration.

      Section 2.05 Defeasance of the Note. Borrower may defease the Note in
whole but not in part at any time before the Maturity Date, but only on the
first day of the month after not less than sixty (60) days' prior written notice
to Lender, subject to the following:

             (a) At any time after the Lockout Period, and provided no Event of
Default exists, Borrower may obtain the release of the Mortgaged Property from
the Lien of the Indenture upon the satisfaction of the following conditions
precedent (such release in accordance with the terms hereof is called a
"DEFEASANCE"):

                (i)  not less  than  sixty  (60)  days'  prior  written  notice
to  Lender  of  Borrower's  intent to effect a Defeasance specifying a Release
Date;

                (ii) the payment to Lender of the Monthly Payment due on the
Release Date;

                (iii) the payment to Lender on the Release Date of all other
sums, not including scheduled interest or principal payments, due under the
Note, this Loan Agreement and the Security Documents the amount of which Lender
shall notify Borrower of not less than 5 days before the Release Date;

                (iv)  the payment to Lender on the Release Date of the
Defeasance Deposit; and

                (v)  the delivery to Lender on the Release Date of:

                     (A) a pledge and security agreement, in form and substance
satisfactory to Lender, creating a first priority Lien in favor of Lender on the
Defeasance Deposit and the U.S. Obligations purchased on behalf of Borrower with
the Defeasance Deposit in accordance with the provisions of this paragraph (the
"SECURITY AGREEMENT");

                     (B) a release of the Mortgaged Property from the Lien of
the Indenture (for execution by Lender) in a form appropriate for the
jurisdiction in which the Mortgaged Property is located;

                     (C) a duly executed certificate of Borrower certifying that
the requirements set forth in this subparagraph (a) have been satisfied;

                     (D) an opinion of counsel for Borrower in form
satisfactory, or other documentation satisfactory, to Lender stating, among
other things, that (1) Lender has a perfected first priority security interest
in the Defeasance Deposit and the U.S. Obligations purchased by Lender on behalf
of Borrower, (2) the Security Agreement is enforceable against Borrower in
accordance with its terms, (3) there exist no material adverse tax consequences
to Lender in connection with the Defeasance, and (4) the Defeasance will not
violate or have any adverse consequences under any applicable federal securities
laws;

                     (E) such other certificates, documents or instruments as
Lender may reasonably request; and,

                     (F) payment to Lender by Borrower of all reasonable third
party costs and expenses incurred by Lender in connection with the Defeasance
hereunder including, but not limited to, reasonable fees of attorneys and
accountants.

In connection with the conditions set forth in subparagraph (a)(v) above,
Borrower hereby appoints Lender as its agent and attorney-in-fact to use the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
before, but as close as possible to, all successive scheduled payment dates
after the Release Date upon which Monthly Payments are required under the Note
(including the amounts due on the Maturity Date) and in amounts equal to the
Monthly Payments due on such dates and on the assumed Maturity Date under the
Note (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower, pursuant to the Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations must be made directly to Lender and
applied to satisfy the obligations of Borrower under the Note.

             (b) Upon compliance with the requirements of this Section 2.05,
Lender will release the Mortgaged Property from the Lien of the Indenture, and
the pledged U.S. Obligations will be the sole source of collateral securing the
Note. Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the U.S. Obligations required by subparagraph (a) above and to satisfy
Borrower's obligations under this subparagraph (b) will be remitted to Borrower
with the release of the Mortgaged Property from the Lien of the Indenture. In
connection with such release, Lender will establish or designate a successor
entity (the "SUCCESSOR BORROWER") and Borrower must transfer and assign all
obligations, rights and duties under and to the Note together with the pledged
U.S. Obligations to such Successor Borrower. Such Successor Borrower must assume
the obligations under the Note and the Security Agreement and upon such
assumption Borrower will be relieved of its obligations thereunder. Borrower
must pay $1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement. No other assumption fee
will be payable upon a transfer of the Note in accordance with this paragraph,
but Borrower must pay all reasonable third-party costs and expenses incurred by
Lender, including the reasonable expenses of Lender's attorneys, incurred in
connection with this paragraph.

      Section 2.06 Default Interest and Late Charge. If an Event of Default
exists (including Borrower's failure to pay the Debt in full on the Maturity
Date), Lender will be entitled to receive, and Borrower must pay, interest at
the Default Rate on the entire unpaid principal sum and any other amounts due
under this Loan Agreement, the Note and the Security Documents. The Default Rate
will be computed from the date the default occurs until the earlier of the date
the default is cured or the actual receipt and collection of the Debt. This
charge will be added to the Debt, and will be deemed secured by the Indenture
and other Security Documents. In addition, if any portion of the Debt is not
paid within ten (10) days after it is due, Borrower must pay to Lender, upon
demand, a late fee equal to four percent (4%) or the maximum amount permitted by
applicable law, whichever is less) of such unpaid sum, to defray the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment and such
amount will be secured by the Indenture and the other Security Documents. This
paragraph, however, will not be construed as an agreement or privilege to extend
the date to pay the Debt, nor as a waiver of any other right or remedy accruing
to Lender by reason of the occurrence of any Event of Default.

                                   ARTICLE 3

              OBLIGATIONS SECURED/SECURITY/APPLICATION OF PAYMENTS

      Section 3.01 Obligations Secured.

             (a) The Indenture and the Security Documents and the grants,
assignments and transfers made thereunder to Lender are given to secure the
following, in such order of priority as Lender may determine in its sole
discretion (the "DEBT"):

                (i)  the payment of the principal indebtedness evidenced by the
Note in lawful money of the United States of America;

                (ii) the payment of interest, default interest, late charges,
prepayment premiums and other sums, as provided in the Note, this Loan Agreement
or the Security Documents;

                (iii) the payment of Prepayment Consideration;

                (iv)  the payment of all Protective Advances;

                (v)   the payment of all other monies agreed to or provided to
be paid by Borrower in the Note, this Loan Agreement and the Security Documents;
and

                (vi)  the payment of all other sums advanced and costs and
third-party expenses Lender incurs in connection with the Loan or any part
thereof, any renewal, extension, modification, consolidation, change,
substitution, replacement, restatement or increase of the Loan or any part
thereof, or the acquisition or perfection of the security therefor, whether made
or incurred at Borrower's or Lender's request.

             (b) The Indenture and the Security Documents and the grants,
assignments and transfers made therein are also given to secure the following
(the "OTHER OBLIGATIONS"):

                (i)   the performance of all other obligations of Borrower
contained herein;

                (ii)  the performance of each obligation of Borrower contained
in the Note in addition to the payment of the Debt and of Borrower contained in
this Loan Agreement and the Security Documents; and

                (iii) the performance of each obligation of Borrower contained
in any renewal, extension, modification, consolidation, change, substitution,
replacement for, restatement or increase of all or any part of the Note, this
Loan Agreement or the Security Documents.

      Section 3.02 Other Security for Payment of the Note. The payment and
performance of the Obligations will be secured by the Indenture and the other
Security Documents.

      Section 3.03 Application of Payments. (a) Borrower will direct Tenant to
pay directly to Lender or its designee all Rents due to Borrower under the Lease
when such amounts are due and payable. Lender will apply all such Rents, and
other payments received by it promptly upon receipt, but not less frequently
than monthly, as follows: First, to pay to the Certificate Trustee all amounts
due and payable pursuant to Schedule A of the Note, default interest, late
charges, prepayment premiums, Prepayment Consideration and all other amounts due
on account of the Debt then due and payable under the Note, this Loan Agreement
or the Security Documents other than payments for Protective Advances; Second,
to reimburse Lender for any Protective Advances; Third, to deposit into the
Escrow Fund, all amounts, if any, due and payable under Section 4.03 hereof; and
Fourth, as long as no Event of Default exists, to pay the balance of the funds,
if any, within two (2) Business Days after Lender receives good funds, to
Borrower by wire transfer of immediately available funds to an account
designated by Borrower, which payments to Borrower will be free of the Lien of
the Indenture and Lender's rights under the Loan Documents. If Lender does not
receive any payment Tenant is required to pay directly to Lender, Lender will
use reasonable efforts to promptly notify Borrower of Tenant's failure to make
such payment; however, Lender's failure to provide such notice shall not relieve
or alter Borrower's absolute obligation to pay all amounts due hereunder and
under the other Loan Documents at the time and in the manner required hereunder.

             (a) Notwithstanding the foregoing, any moneys Lender or its
designee receives as Additional Rent shall be applied first for the purposes for
which such moneys were paid pursuant thereto.

                                   ARTICLE 4

                                    COVENANTS

      Section 4.01 Insurance.

             (a) Borrower will satisfy, or will cause Tenant or Manager to
satisfy, the Insurance Requirements. During such time as Tenant or Manager
satisfies the Insurance Requirements, Borrower will be deemed to be in
compliance with the requirements of this Section 4.01. If at any time Tenant or
Manager fails to satisfy the Insurance Requirements, then Borrower must satisfy
the Insurance Requirements and make the Tax and Insurance Reserve Fund Payments
required pursuant to Section 4.03 hereof.

             (b) Borrower acknowledges Lender's right under and pursuant to
Section 9.03 hereof to obtain (either itself or by its agents, servicers,
nominees or attorneys) any Policies required of Borrower should Borrower, Tenant
or Manager fail to do so as required hereunder.

      Section 4.02 Payment of Taxes and Impositions, etc. (a) Borrower will pay
and discharge, or will cause Tenant or Manager to pay and discharge, all Taxes
and Impositions at the time and in the manner required by the Lease. Borrower
will deliver, or will cause Tenant or Manager to deliver, to Lender, promptly
upon Lender's request, receipts (or if receipts are not available, copies of
cancelled checks evidencing payment with receipts to follow promptly after they
become available) showing payment of Taxes and Impositions before the applicable
delinquency date therefor. Borrower will not suffer and will pay within thirty
(30) days of knowledge or will cause Tenant or Manager to pay within thirty (30)
days of knowledge, and discharge any Lien which may be or become a Lien against
the Mortgaged Property, subject to Borrower's contest rights under subsection
4.02(b) hereof.

             (b) After prior written notice to Lender, and provided no Default
(as defined in the Lease) or Event of Default (as defined in the Lease) exists,
Borrower (or, to the extent permitted under the Lease, Tenant), may contest, or
permit to be contested (including through abatement proceedings), in good faith
and at its sole expense, by appropriate legal proceedings, the amount or
validity or application in whole or in part of any of the Taxes or Impositions,
and/or any Legal Requirements affecting the Leased Property, and to postpone
payment of or compliance with the same during the pendency of such contest,
provided that such contest is conducted in accordance with and subject to the
conditions contained in paragraph 6(d) of the Lease.

      Section 4.03 Escrow Fund. At any time after an Event of Default (as
defined in the Lease) has occurred, or if a Credit Rating Downgrade has
occurred, Borrower must pay or must cause Tenant to pay to Lender the Tax and
Insurance Reserve Fund Payment due under the Lease. In addition, during any
period that Borrower is required to maintain Policies pursuant to Section 4.01
hereof, Borrower will also pay monthly to Lender, for deposit into the Escrow
Fund, one-twelfth of an amount which would be sufficient to pay the Insurance
Premiums due on such Policies. Borrower pledges to Lender any and all monies now
or hereafter deposited in the Escrow Fund as additional security to pay the Debt
subject to Tenant's right to such monies, if any, as set forth in subparagraph
13(e) of the Lease. Lender will apply the Escrow Fund to pay Taxes and Insurance
Premiums required to be paid pursuant to Sections 4.01 and 4.02 hereof. If the
amount of the Escrow Fund exceeds the amounts due for Taxes and Insurance
Premiums pursuant to Sections 4.01 and 4.02 hereof, Lender will either return
any excess to Borrower or credit such excess against future payments to be made
to the Escrow Fund. In allocating such excess, Lender may deal with the Person
shown on the records of Lender to be the owner of the Mortgaged Property. If the
Escrow Fund is not sufficient, in Lender's judgment, to pay when due the Taxes
and Insurance Premiums, Borrower must promptly pay, or must cause Tenant to pay
promptly, to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. Subject to Tenant's rights set forth in
subparagraph 13(e) of the Lease, if an Event of Default exists, Lender may apply
any sums then on deposit in the Escrow Fund to pay the following items in any
order in its sole discretion:

                (i)      Taxes and Impositions and Insurance Premiums;

                (ii)     Interest on the unpaid principal balance of the Note;

                (iii)    Amortization of the unpaid principal balance of the
Note; or

                (iv)     All other sums payable pursuant to the Loan Documents,
including, Protective Advances made by Lender.

      Until expended or applied as above provided, any amounts in the Escrow
Fund will constitute additional security for the Debt. The Escrow Fund will not
constitute a trust fund and may be commingled with other monies held by Lender.
No earnings or interest on the Escrow Fund will be payable or credited to
Borrower, except in the case of a Credit Rating Downgrade interest shall be
disbursed according to the terms of the Lease.

      Section 4.04 Changes in the Legal Requirements Regarding Taxation. If any
Legal Requirement is enacted or adopted or amended after the Closing Date which
imposes a tax, either directly or indirectly, on the Debt or Lender's interest
in the Mortgaged Property, Borrower must pay such tax, with interest and
penalties thereon, if any. If Lender is advised by counsel chosen by it that the
payment of such tax or interest and penalties by Borrower would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then in any such event, Lender may, by written notice to Borrower of not less
than ninety (90) days, declare the Debt immediately due and payable without
Prepayment Consideration.

      Section 4.05 No Credits on Account of the Debt. Borrower will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
payment of Taxes or Impositions assessed against the Mortgaged Property and no
deduction shall otherwise be made or claimed from the assessed value of the
Mortgaged Property for real estate tax purposes by reason of the Loan Documents
or the Debt. If such claim, credit or deduction shall be required by law, Lender
may, by written notice to Borrower of not less than ninety (90) days, declare
the Debt immediately due and payable.

      Section 4.06 Documentary Stamps. If at any time any Governmental Authority
requires revenue or other stamps to be affixed to the Note or the Indenture, or
imposes any other tax or charge on the same, Borrower must pay for the same,
with interest and penalties thereon, if any.

      Section 4.07 Maintenance of Mortgaged Property. Borrower will maintain, or
will cause Tenant and Manager to maintain, the Mortgaged Property in accordance
with the requirements and subject to the conditions of (i) the Lease, and (ii)
the Management Agreements. Borrower will comply with, and will cause Tenant and
the Mortgaged Property to comply with, all Legal Requirements, subject in each
case to any contest thereof conducted in accordance with the provisions of
paragraph 6(d) of the Lease. Borrower will not initiate, join in, acquiesce in,
or consent to any change in any Legal Requirements, limiting or defining the
uses which may be made of the Mortgaged Property without the express written
consent of Lender. If under applicable zoning provisions the use of all or any
portion of the Mortgaged Property is or shall become a nonconforming use,
Borrower will not cause or permit such nonconforming use to be discontinued or
abandoned without Lender's express written consent.

      Section 4.08 Books and Records. Borrower will keep adequate books and
records of account in accordance with generally accepted accounting principles
and deliver to Lender: (a) copies of all tax returns, if any, filed by Borrower
within twenty (20) days after the filing thereof; (b) copies of all financial
information received by Borrower under the Lease, and any lease within twenty
(20) days after receipt thereof; (c) within one hundred and ten (110) days after
the close of each fiscal year, an annual operating statement of the Mortgaged
Property; (d) and an annual balance sheet and profit and loss statement of
Borrower certified by Borrower's chief financial officer. Borrower will provide
Lender with such additional financial or management information as Lender may
reasonably request, provided that any such additional information with respect
to Tenant or the Mortgaged Property is in Borrower's possession or is available
to Borrower pursuant to the terms and provisions of the Lease.

      Section 4.09 Performance of Other Agreements. Borrower will observe and
perform or cause Tenant or Manager to observe and perform each and every term to
be observed or performed by Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Mortgaged Property,
including, without limitation, the Lease, the Management Agreements, the
Multi-Party Agreement and any reciprocal easement, operating or similar
agreement, and if Borrower fails to so observe and perform, or caused to be
observed or performed, any such terms, Lender and Servicer and their agents,
employees, contractors, engineers, architects and other representatives may, but
shall not be required to, observe and perform such terms.

      Section 4.10 ERISA.

             (a) Throughout the term of this Loan Agreement, Borrower must not
(i) become an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title 1 of ERISA; (ii) acquire assets that constitute "plan
assets" of one or more plans within the meaning of 29 C.F.R. Section 2510.3-101;
(iii) become a "governmental plan" within the meaning of Section 3(32) of ERISA;
or (iv) enter into any transaction that is subject to state statutes regulating
investments of and fiduciary obligations with respect to governmental plans.

             (b) Borrower will deliver to Lender such certifications or other
evidence from time to time throughout the term of this Loan Agreement, as
reasonably requested by Lender in its sole discretion, that (i) Borrower is not
an "employee benefit plan" or a "governmental plan"; (ii) Borrower is not
subject to state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (iii) one or more of the following
circumstances is true:

                (i)   Equity interests in Borrower are publicly offered
securities,  within the  meaning  of 29 C.F.R. Section 2510.3-101(b)(2);

                (ii)  Less than 25 percent of all equity interests in Borrower
are held by "benefit plan investors" within the meaning of 29 C.F.R. Section
2510.3-101(f)(2);

                (iii) Borrower  qualifies as an "operating  company" or a "real
estate operating  company" within the meaning of 29 C.F.R. Section 2510.3.101(c) or
(e); or an investment company registered under the Investment Company Act of 1940; or

                (iv)  The Loan meets the requirements of PTE 95-60, 90-1, 84-14
or similar exemption.

      Section 4.11 Hazardous Substances.

             (a) Borrower will comply, and will cause Tenant or Manager to
comply, with all applicable Environmental Laws relating to the Mortgaged
Property and the requirements of Article 9 of the Lease. Compliance by Tenant or
Manager with the requirements of Article 9 of the Lease will be deemed to be
compliance by Borrower with this Section 4.11(a).

             (b) Borrower will promptly notify Lender in writing if Borrower
learns of the possible existence of any Hazardous Substances on the Mortgaged
Property or if Borrower learns that the Mortgaged Property is or may be in
direct or indirect violation of any Environmental Laws. Further, immediately
upon receipt of the same, Borrower will deliver to Lender copies of any and all
orders, notices, permits, applications, reports, and other communications,
documents and instruments pertaining to the actual, alleged or potential
presence or existence of any Hazardous Substances at, on, about, under, within,
near or in connection with the Mortgaged Property. Subject to the rights of the
Tenant under the Lease and the SNDA and the rights of tenants under the Superior
Leases, Borrower grants to Lender and its agents and employees access to the
Mortgaged Property and a license to remove any Hazardous Substances and to do
all things Lender deems necessary to cause the Mortgaged Property to comply with
Environmental Laws. Borrower will, at Borrower's sole cost and expense,
indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Lender), and hold the Indemnified Parties
harmless from and against any and all Indemnified Liabilities arising directly
or indirectly from or out of: (i) the presence or release of any Hazardous
Substances on, in, under or affecting all or any portion of the Mortgaged
Property, or any release of Hazardous Substances emanating from the Mortgaged
Property onto any contiguous property; (ii) the violation of any Environmental
Laws relating to or affecting the Mortgaged Property, caused by Borrower or
members of Borrower; (iii) the failure by Borrower to comply fully with the
terms and conditions of this Section 4.11; (iv) the breach of any representation
or warranty contained in Section 7.27 hereof; or (v) the enforcement of this
Section 4.11, including, the cost to assess, contain and/or remove any Hazardous
Substances from the Mortgaged Property or any surrounding areas, the cost of any
actions taken in response to the presence, release or threat of release of any
Hazardous Substances on, in, under or affecting the Mortgaged Property or any
surrounding areas to prevent or minimize such release or threat of release so
that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and the costs incurred
to comply with the Environmental Laws in connection with the Mortgaged Property
or any surrounding areas. This indemnity will survive payment in full of the
Debt or any termination or satisfaction of the Lien of the Indenture or
foreclosure of the Indenture for any Indemnified Liabilities arising or accruing
on or before payment in full of the Debt or any termination or satisfaction of
the Lien of the Indenture or foreclosure of the Indenture.

                              IMPORTANT - READ THIS

BORROWER ACKNOWLEDGES THAT PURSUANT TO THE FOREGOING INDEMNITY IT HAS AGREED TO
INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL
LIABILITIES ARISING BY REASON OF THE ACTS OR OMISSIONS OF ANY OF THE INDEMNIFIED
PARTIES AND OTHERWISE, WHICH LIABILITIES INCLUDE, WITHOUT LIMITATION, EXCEPT AS
PROVIDED ABOVE, SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE, STRICT LIABILITY,
CRIMINAL LIABILITY, STATUTORY LIABILITY, LIABILITY FOR INJURIES NOT COMPENSATED
BY WORKERS' COMPENSATION INSURANCE, OTHER INJURIES OR LOSSES NOT COVERED BY
INSURANCE AND LIABILITY ARISING AS A RESULT OF WAIVERS, EXCULPATIONS,
DISCLAIMERS OR RELEASES. IF SUCH LIABILITY ARISES BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY (OR INDEMNIFIED
PARTIES, AS THE CASE MAY BE) (HEREINAFTER A "RESPONSIBLE INDEMNIFIED PARTY")
THIS INDEMNITY SHALL NOT EXTEND TO ANY SUCH RESPONSIBLE INDEMNIFIED PARTY, BUT
SHALL EXTEND TO ALL OTHER INDEMNIFIED PARTIES.

             (c) Upon Lender's request, and subject to the rights of the Tenant
under the Lease and the SNDA and the rights of tenants under the Superior
Leases, at any time an Event of Default exists or at such other time as Lender
has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on or around the Mortgaged Property or that the
Mortgaged Property may violate the Environmental Laws, Borrower must provide, at
Borrower's sole cost and expense, an inspection or audit of the Mortgaged
Property prepared by a hydrogeologist or environmental engineer or other
appropriate consultant approved by Lender indicating the presence or absence of
Hazardous Substances on the Mortgaged Property or an inspection or audit of the
Improvements prepared by an engineering or consulting firm approved by Lender
indicating the presence or absence of friable asbestos or substances containing
asbestos on the Mortgaged Property. If Borrower fails to provide such inspection
or audit within thirty (30) days after such request, Lender may order the same,
and Borrower hereby grants to Lender and its employees and agents access to the
Mortgaged Property and an irrevocable license to undertake such inspection or
audit, subject to the rights of the Tenant under the Lease and the SNDA, and the
tenants under the Superior Leases. Borrower will pay immediately on demand the
cost of such inspection or audit, together with interest thereon at the Default
Rate from the date incurred by Lender until actually paid by Borrower, and such
costs will be secured by the Indenture and by the other Security Documents
securing all or any part of the Debt.

             (d) Without limiting the foregoing, and subject to Tenant's rights
under the Lease and the tenants' rights under the Superior Leases, where
recommended by a "PHASE I" or "PHASE II" assessment or otherwise required by
Lender, Borrower will establish and will comply with an operations and
maintenance program relative to the Mortgaged Property, in form and substance
acceptable to Lender, prepared by an environmental consultant acceptable to
Lender, which program will address any Hazardous Substances (including asbestos
containing material or lead based paint) that may now or in the future be
detected on the Mortgaged Property. Without limiting the generality of the
preceding sentence, Lender may require, subject to Tenant's rights under the
Lease and the SNDA and the tenants' rights under the Superior Leases, (a)
periodic notices or reports to Lender in form, substance and at such intervals
as Lender may specify; (b) an amendment to such operations and maintenance
program to address changing circumstances, laws or other matters; (c) following
any Event of Default or at such time as Lender has reasonable grounds to believe
that Hazardous Substances are or have been released, stored or disposed of on or
around the Mortgaged Property or that the Mortgaged Property may violate the
Environmental Laws, then at Borrower's sole expense, supplemental examination of
the Mortgaged Property by consultants specified by Lender; (d) access to the
Mortgaged Property, by Lender, its agents or servicer, to review and assess the
environmental condition of the Mortgaged Property and Borrower's compliance with
any operations and maintenance program; and (e) variation of the operations and
maintenance program in response to the reports provided by any such consultants.

                                   ARTICLE 5

                                    TRANSFER

      Section 5.01 Transfer Generally.

             (a) Except as otherwise permitted in accordance with Sections 5.02
and 5.03 hereof, Borrower shall not directly or indirectly, without the prior
written consent of Lender, which consent may be withheld in Lender's sole
discretion, Transfer the Mortgaged Property or any interest therein, or permit
the Transfer of the Mortgaged Property or any interest therein. The Term
"TRANSFER" means, for any Person, any transactions in which such Person,
directly or indirectly, transfers, sells, conveys, alienates, mortgages,
encumbers or pledges the Mortgaged Property or any interest therein, including;

                 (i)  an  installment sales agreement wherein Borrower agrees to
sell the Mortgaged Property or any part thereof for a price to be paid in
installments;

                 (ii) an agreement by Borrower leasing all or a substantial part
of the Mortgaged Property for other than actual occupancy by a space lessee
thereunder or sale, assignment or other transfer of, or the grant of a security
interest in, Borrower's right, title and interest in and to the Lease or any
Rents;

                 (iii) any divestiture of Borrower's title to the Mortgaged
Property or any interest therein in any manner or way, whether voluntary or
involuntary, or Borrower's merger, consolidation, or dissolution;

                 (iv) if Borrower is a corporation, the voluntary or involuntary
sale, conveyance or transfer of any of such corporation's stock or the creation
or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not stockholders as of the Closing Date or any change
in the control of such corporation directly or indirectly;

                 (v) if Borrower or any general partner of Borrower is a limited
or general partnership, joint venture or limited liability company, (A) the
change, removal, resignation or addition of a general partner, managing partner
or managing member, or (B) the transfer of any interests of any general partner,
managing partner or managing member, or (C) the transfer of any interests of any
partner, joint venturer or member of Borrower; and

                 (vi) if Borrower is a business trust, the voluntary or
involuntary conveyance or transfer of any portion of the beneficial or economic
interest in Borrower.

      Section 5.02 Permitted Transfer of Beneficial Interest.

             (a) Any Beneficial Owner may Transfer all but not less than all of
the beneficial interest in Borrower to an Acceding Beneficial Owner, without
Lender's consent, upon the satisfaction of each of the following terms and
conditions (a "PERMITTED TRANSFER OF BENEFICIAL INTEREST"):

                 (i) the Acceding Beneficial Owner must assume all obligations
of the affected Beneficial Owner under any agreement, instrument or document
executed by the Beneficial Owner on its own behalf (and not as a signatory on
behalf of Borrower), which wholly or partially evidences, secures or guarantees
the Debt or otherwise evidences an obligation of Beneficial Owner to Lender
(including, the Guaranty Agreement) from and after the date of Transfer and must
make the representations and warranties as applicable to the Acceding Beneficial
Owner, under and pursuant to the Beneficial Owner Instrument of Accession and
Assumption in substantially the form attached hereto as EXHIBIT C;

                 (ii) no default or Event of Default may exist under the Loan
Documents at the time of or immediately after such Transfer;

                 (iii) the documents governing Borrower must permit such
Transfer;

                 (iv) the Acceding Beneficial Owner must provide Lender with
such certificates and legal opinions which were delivered by Beneficial Owner or
its counsel in connection with the closing of the Loan, as may be reasonably
requested by Lender in connection with such Transfer, including, an opinion
containing the same conclusions as the Non-Consolidation Opinion provided to
Lender by Borrower on the Closing Date, all substantially in the same form and
content as those delivered to Lender in connection with the closing of the Loan;

                 (v) each of the provisions of Article 6 hereof are and/or
continue to be satisfied;

                 (vi) Borrower must pay Lender, concurrently with the closing of
such Transfer, all of Lender's costs and expenses described in Section 5.06
hereof; and

                 (vii) Borrower must satisfy or cause to be satisfied the
provisions of Section 5.07 hereof.

             (b) Upon compliance with each of the terms and conditions described
above, and upon the execution and delivery of the Beneficial Owner Instrument of
Accession and Assumption in substantially the form attached hereto as Exhibit C,
the Acceding Beneficial Owner will thereafter become the Beneficial Owner for
all purposes of the Note, the Indenture and the other Security Documents, and
Lender will promptly release the affected Beneficial Owner from and after the
date of such Transfer of its obligations as Beneficial Owner to the extent
provided in a Certificate of Compliance and Release substantially in the form
attached hereto as EXHIBIT D to be delivered by Lender to Beneficial Owner;
provided that in no event will any such Transfer waive or release the Beneficial
Owner for fraudulent or willful misconduct engaged in by Beneficial Owner or for
any liability on account of any breach by Beneficial Owner of any
representation, warranty, agreement or obligation of Beneficial Owner in its own
capacity set forth in this Loan Agreement or the Security Documents before or in
connection with such Transfer. Other than expenses set forth in Section 5.06
hereof, no assumption fee or other fee is due or payable in connection with such
Permitted Transfer of Beneficial Interest.

             (c) Notwithstanding the foregoing, however, (1) (x) the ownership
interests in the Person which owns the beneficial or economic ownership
interests in Borrower, or (y) any ownership interest, direct or indirect, in any
trustee or manager of any beneficial owner of Borrower may be freely
transferable without compliance with the terms of this Section 5.02 and the
removal and replacement of any trustee or manager of Borrower may be
accomplished, without compliance with the terms of this Section 5.02, and (2)
any involuntary transfer caused by the death of any general partner,
shareholder, joint venturer, trustee, manager, member, or beneficial owner of
any Person holding any interest in Borrower, any beneficial owner of Borrower or
any trustee or manager of Borrower, or if Borrower is a partnership, any limited
partner thereof, will not require compliance with the terms of this Section 5.02
so long as Borrower is reconstituted, as required by Borrower's organizational
documents, following such death and so long as those Persons responsible for the
management of the Mortgaged Property remain unchanged as a result of such death
or any replacement management is approved by Lender and so long as reconstituted
Borrower is fully liable for all of Borrower's obligations.

      Section 5.03 Permitted Transfer of Mortgaged Property.

             (a) A Transferor may Transfer the Mortgaged Property to a
Transferee upon 30 days prior written notice to Lender and, without Lender's
consent, upon the satisfaction of each of the following terms and conditions (a
"PERMITTED TRANSFER OF MORTGAGED PROPERTY"):

                 (i) no default or Event of Default may exist under the Loan
Documents at the time of such Transfer;

                 (ii) Borrower or Transferee pays or causes to be paid to
Lender, concurrently with the closing of such Transfer, a non-refundable
assumption fee in an amount equal to $10,000.00, together with all of Lender's
costs and expenses described in Section 5.06 hereof;

                 (iii) Transferee, in writing, (y) assumes and agrees to pay
(subject to the non-recourse provisions of Section 12.13 hereof) the Debt and to
perform all Other Obligations, and (z) as of the date of Transfer makes those
representations of Borrower which are applicable to Transferee as are contained
in the Loan Documents (or the assumption or assignment agreements delivered with
respect thereto). Before or concurrently with the closing of such Transfer,
Transferee or an affiliate thereof, Transferor, Beneficial Owner and the owner
of the beneficial interest in Transferee or such other new indemnitor as may be
acceptable to Lender execute, without any cost or expense to Lender, a Borrower
Instrument of Accession and Assumption substantially in the form thereof
attached hereto as EXHIBIT E, together with such documents and agreements as
Lender may reasonably require to evidence and effectuate said assumption, and
deliver such legal opinions as Lender may reasonably require;

                 (iv) Transferor and Transferee execute, without any cost or
expense to Lender, new financing statements or financing statement assignments
or amendments;

                 (v) Transferee and Transferor execute a Lease assignment and
assumption agreement reasonably acceptable to Lender;

                 (vi) Tenant or Transferor provides Lender with written evidence
(including a legal opinion, if necessary) satisfactory to Lender in its
reasonable discretion, that such Transfer is permitted under or is not
prohibited by the Lease;

                 (vii) Transferor or Transferee causes to be delivered to
Lender, without any cost or expense to Lender, such endorsements to Lender's
title insurance policy, hazard insurance endorsements or certificates and other
similar materials as Lender may deem necessary at the time of the Transfer, all
in form and substance reasonably satisfactory to Lender, including, an
endorsement or endorsements to Lender's title insurance policy, insuring the
Lien of the Indenture, extending the effective date of such policy to the date
of execution and delivery (or, if later, of recording) of the Borrower
Instrument of Accession and Assumption with no additional exceptions added to
such policy not previously approved by Lender or permitted by the Lease and
insuring that fee simple title to the Mortgaged Property is vested in
Transferee, or, in lieu thereof, such other documents or evidence as Lender may
reasonably require in order to confirm that such policy is unaffected by the
Transfer;

                 (viii) Transferor executes and delivers to Lender, without any
cost or expense to Lender, a release of Lender, its successors and assignees,
their officers, directors, employees and agents, from all claims and liability
relating to the transactions evidenced by the Loan Documents through and
including the date of the closing of the Transfer, which agreement shall be in
form and substance reasonably satisfactory to Lender and shall be binding upon
the Transferee;

                 (ix) Lender receives such certificates and legal opinions which
were delivered in connection with the closing of the Loan by Transferor or its
counsel as may be reasonably requested by Lender in connection with such
Transfer in substantially the same form and content as such items were delivered
in connection with the closing of the Loan, including, the secretarial and
officer certificates, opinions of counsel (including, local counsel) for
Borrower regarding the authorization, execution and enforceability of the Loan
Documents (or of the assumption or assignment agreements delivered with respect
thereto) and any other documents executed by or binding upon Borrower and
delivered in connection with such Transfer and a substantive non-consolidation
bankruptcy opinion in substantially the same form as the Non-Consolidation
Opinion; the parties intend that all such certificates and opinions delivered
with respect to Borrower in connection with the making of the Loan hereunder are
to be delivered, executed or otherwise provided with respect to Transferee and
Lender's rights under and with respect to the Loan Documents will not to be
diminished or affected by such Transfer;

                 (x) Transferee is a corporation, partnership, limited
partnership or a limited liability company which complies with the provisions of
Article 6 hereof;

                 (xi) Transferor and Transferee and their respective beneficial
owners and Indemnitors, comply with any provisions of Section 5.02 which are
applicable and are not satisfied as a result of any such Person's compliance
with the provisions of this Section 5.03 at the time of the Transfer; and

                 (xii) The RVI Policy and the "cut-through agreement", if
applicable, issued with respect to the Mortgaged Property shall remain in full
force and effect after giving effect to such Transfer.

             (b) Upon compliance with each of the terms and conditions described
above, Lender will promptly release the Transferor and the Beneficial Owner of
the Transferor from and after the date of such Transfer of its respective
obligations as Borrower and Beneficial Owner and will deliver to such entities a
Certificate of Compliance and Release substantially in the form attached hereto
as EXHIBIT F; provided that in no event will any such Transfer waive or release
such Transferor or the Beneficial Owner of such Transferor for any liability on
account of any breach of any representation, warranty, agreement or obligation
set forth in this Loan Agreement or under any Security Documents or for any
fraudulent or willful misconduct, in each case which were made or occurred
before or in connection with such Transfer.

      Section 5.04 No Impairment. Lender will not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon any Transfer of the
Mortgaged Property without Lender's consent or as otherwise expressly permitted
herein. This provision applies to every Transfer of the Mortgaged Property
regardless of whether voluntary or not, or whether or not Lender has consented
to any prior Transfer of the Mortgaged Property.

      Section 5.05 Lender Consent. Lender's consent to a Transfer of the
Mortgaged Property or of any interest in Borrower in connection with a Transfer
which does not comply with the terms and conditions of Sections 5.02 or 5.03,
will not be deemed to be a waiver of Lender's right to require such consent to
any future Transfer of the Mortgaged Property or of any interest in Borrower.
Any Transfer of the Mortgaged Property or Transfer of Beneficial Interest made
in contravention of this Article 5 will be null and void and of no force and
effect.

      Section 5.06 Cost of Transfer. Borrower must pay or reimburse Lender on
demand for all reasonable out-of-pocket third party expenses (including,
reasonable attorneys' fees and disbursements, title search costs and title
insurance endorsement premiums) incurred by Lender and counsel to the
Certificate Holders in connection with the review, approval and documentation of
each Transfer of the Mortgaged Property or Transfer of Beneficial Interest.

      Section 5.07 No Release of Liability. Except as provided in this Section
5.07 and in the applicable Certificate of Compliance and Release executed and
delivered by Lender in connection with a Transfer, no Transfer, whether or not a
Permitted Transfer, will relieve from liability the Beneficial Owner or any
other Person or Persons who has provided any guaranty or indemnity or otherwise
become liable for any of the obligations of Borrower under the Note, this Loan
Agreement or the Security Documents (such Person a "CURRENT INDEMNITOR" and such
liabilities arising or accruing before the Transfer, "INDEMNITY OBLIGATIONS").
If as a result of a Transfer, Current Indemnitor is no longer an affiliate of
Borrower, Current Indemnitor may offer a new indemnitor ("NEW INDEMNITOR"), as a
substitute, to assume any Indemnity Obligations of the Current Indemnitor
arising after the date of the Transfer. Lender may, in its reasonable
discretion, approve or disapprove such substitution. If Lender approves any such
substitution, the approval will become effective upon the execution and delivery
by New Indemnitor, without any cost or expense to Lender, of a guaranty
substantially the same as the Guaranty Agreement executed by Beneficial Owner in
connection with the Loan evidencing each New Indemnitor's agreement to be liable
for the Indemnity Obligations (each a "NEW INDEMNITY AGREEMENT"), arising from
and after the date of the Transfer, whereupon Lender will release the Current
Indemnitor from its Indemnity Obligations arising after the date of such
Transfer. Notwithstanding the foregoing, Current Indemnitor will be released
from its Indemnity Obligations under the Loan upon a Permitted Transfer if the
New Indemnitor enters into a New Indemnity Agreement.

                                   ARTICLE 6

                              SINGLE PURPOSE ENTITY

      Section 6.01 Separateness Representations and Covenants. Borrower
represents and warrants to, and agrees with, Lender that as of the Closing Date
and until such time as the Debt is paid in full:

             (a) Borrower does not own and will not own any asset or property
other than (i) its interests in the Mortgaged Property, and (ii) incidental
personal property necessary for the ownership or operation of the Mortgaged
Property.

             (b) [Intentionally Omitted]

             (c) Borrower will not engage in any business other than the
ownership, leasing, management and operation of the Mortgaged Property and any
Replacement Property, and Borrower will conduct and operate its business as
presently conducted and operated.

             (d) Except for the Aetna SPE Lease, MCI SPE Lease, the Management
Agreements and the Multi-Party Agreement Borrower will not enter into any
contract or agreement with any affiliate of Borrower or any constituent party of
Borrower, the owner of any beneficial interest in Borrower or any affiliate of
any constituent party (a "CONSTITUENT PARTY") or Indemnitor, except upon terms
and conditions that are intrinsically fair and substantially similar to those
that would be available on an arms-length basis with third parties other than
any such party.

             (e) Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, and (ii) unsecured trade
debt customarily payable within thirty (30) days.

             (f) Borrower has not made and will not make any loans or advances
to any third party (including any affiliate or Constituent Party, any Indemnitor
or any affiliate of any Constituent Party or Indemnitor), and shall not acquire
obligations or securities of its affiliates.

             (g) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due, subject, however, to
Borrower's contest rights under Section 4.02(b).

             (h) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will not, nor will Borrower permit any Constituent Party to, amend,
modify or otherwise change the articles of organization, operating agreement,
partnership certificate, partnership agreement, articles of incorporation and
bylaws, trust or other organizational documents of Borrower without the prior
written consent of Lender, nor will Borrower permit any Constituent Party or
Indemnitor to amend, modify or otherwise change the articles of organization,
operating agreement, articles or organization, operating agreement, partnership
certificate, partnership agreement, articles of incorporation and bylaws, trust
certificate and agreement or other organizational documents of such Constituent
Party or Indemnitor without consent of Lender, if any such amendment,
modification or other change (i) would adversely affect the bankruptcy remote
nature of Borrower; or (ii) would cause any of the assumptions upon which the
Non-Consolidation Opinion is based to become inaccurate or untrue in any
respect; or (iii) would adversely affect Lender's interest in the Loan.

             (i) Borrower will maintain books, records, financial statements and
bank accounts separate from those of its affiliates and any constituent party.
Borrower shall maintain its books, records, resolutions and agreements as
official records.

             (j) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any affiliate of Borrower or any Constituent Party of Borrower, any Indemnitor
or any affiliate of any constituent party or Indemnitor), and shall conduct
business in its own name and shall maintain and utilize separate invoices and
checks. Borrower shall correct any known misunderstanding regarding its status
as a separate entity.

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

             (l) Neither Borrower nor any Constituent Party will seek or effect
the liquidation, dissolution, winding up, consolidation or merger, in whole or
in part, of Borrower.

             (m) Borrower will not commingle the funds of Borrower with those of
any affiliate or Constituent Party, any Indemnitor, or any affiliate of any
Constituent Party or Indemnitor, or any other Person.

             (n) Borrower has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any affiliate or Constituent Party, any
Indemnitor, or any affiliate of any Constituent Party or Indemnitor, or any
other Person.

             (o) Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any other Person.

             (p) If Borrower is (i) a limited partnership, general partnership
or limited liability company, at least one partner or manager, as the case may
be, must be a Person with no interest in Borrower and which must at all times
qualify as an Independent Manager or (ii) a corporation or business trust, it
must have at all times a director or trustee who has no interest in Borrower and
which qualifies as an Independent Manager (in either case, the "SPE MANAGER"),
and such SPE Manager will at all times comply with, and SPE Manager shall not
consent to or approve any action which would cause a violation of, any
representations, warranties, and agreements contained in this Section 6.01 as if
such representation, warranty or agreement was made directly by such SPE
Manager.

             (q) "INDEPENDENT MANAGER" means a Person reasonably satisfactory to
Lender, who shall not have been at the time of such Person's appointment, shall
not have been at any time during the preceding five years, and shall not be at
any time while serving as an Independent Manager, (i) a shareholder of, or an
officer, director, partner or employee of, Borrower or any of its shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to, Borrower or any
of its shareholders, subsidiaries or affiliates (other than a customer or
supplier that does not derive more than five percent (5%) of its revenues from
its activities with Borrower, its members or any affiliate thereof), (iii) a
Person controlling or under common control with any such shareholder, partner,
supplier or customer, or (iv) a member of the immediate family of any such
shareholder, officer, director, partner, employee, supplier or customer. As used
herein, the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

             (r) Borrower will not cause or permit the board of directors of the
SPE Manager to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires the vote of the board of directors of the SPE Manager, unless at
the time of such action there is at least one member who is an Independent
Manager.

             (s) Borrower will conduct its business so that the assumptions made
with respect to Borrower, and its existence as a Delaware limited liability
company in the Non-Consolidation Opinion are and remain true and correct in all
respects for the term of the Note.

                                   ARTICLE 7

                         REPRESENTATIONS AND WARRANTIES

      Borrower represents and warrants:

      Section 7.01 Organization. Borrower (i) is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) has the necessary power and authority, and all necessary
Permits to own the Mortgaged Property and to carry on its business as now being
conducted; (iii) has the necessary power, authority and legal right to acquire,
own and lease the Mortgaged Property, to transact the business contemplated by
this Loan Agreement, and to execute, deliver and perform its obligations under
the Lease, the Aetna SPE Lease, the MCI SPE Lease, the Management Agreements,
the Multi-Party Agreement, the SNDA, this Loan Agreement, the Note and the other
Security Documents to which it is a party; and (iv) is duly qualified to do
business in every jurisdiction where the conduct of its business requires such
qualification and is duly licensed or qualified and is in good standing, as a
foreign entity in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary.

      Section 7.02 Authority. The signatory hereto has full power and authority
to execute the Lease, the Aetna SPE Lease, the MCI SPE Lease, the Management
Agreements, the Multi-Party Agreement, the SNDA and this Loan Agreement on
Borrower's behalf as well as the Note and the other Security Documents. The
execution and delivery by Borrower of each of the Transaction Documents to which
it is a party, Borrower's performance of its obligations thereunder and the
creation of the security interests and Liens provided for in the Note and the
Security Documents to which it is a party have been duly authorized by all
requisite action on the part of Borrower, including the consent of the holder(s)
of ownership interests in Borrower where required. The Transaction Documents to
which Borrower is a party have been duly authorized, executed and delivered by
it. Borrower has all requisite power and authority to perform its obligations
under the Transaction Documents to which it is a party.

      Section 7.03 Consents. Borrower is not required to obtain any Permit from,
or to file or register any declaration or statement with, any Governmental
Authority in connection with or as a condition to the valid execution, delivery,
performance or enforceability of any of the Transaction Documents, or if
required the same has been duly obtained and is in full force and effect.

      Section 7.04 No Litigation. There are no actions, suits or proceedings at
law or in equity in or by or before any Governmental Authority now pending or,
to Borrower's knowledge, threatened against or affecting Borrower, any member of
Borrower or, to Borrower's knowledge, the Mortgaged Property or which, in any
way, could adversely affect the validity or enforceability of the Lease, the
Aetna SPE Lease, the Aetna Lease, the MCI SPE Lease, the MCI Lease the SNDA or
any of the other Transaction Documents, or which, if decided against Borrower or
any affiliate of Borrower, would have a material adverse effect on the business,
operations or financial condition of Borrower.

      Section 7.05 Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction (other than any exception shown in the
mortgagee title policy approved by Lender) which might materially adversely
affect the Mortgaged Property, Borrower's ability to perform its obligations
under the Transaction Documents, or Borrower's business, properties, assets,
operations or condition, financial or otherwise. Borrower is not in default
beyond applicable grace periods in the performance, observance or fulfillment of
any of the material obligations (including payment obligations), agreements or
conditions contained in any agreement or instrument to which it is a party or by
which Borrower or the Mortgaged Property is bound.

      Section 7.06 Enforceability. Each of the Transaction Documents executed by
Borrower and delivered to Lender has been duly executed and delivered by
Borrower, is an original, executed document, and each is the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, subject to bankruptcy, insolvency and other laws of general
application affecting the rights of creditors and subject to the effect of
general principles of equity regardless of whether enforcement is sought in a
proceeding at law or in equity. As of the Closing Date, the Note, the Indenture
and the other Transaction Documents executed by Borrower are not subject to any
right of rescission, set-off, abatement, diminution, counterclaim or defense by
Borrower, including the defense of usury, and Borrower has not asserted any
right of rescission, set-off, abatement, diminution, counterclaim or defense
with respect thereto.

      Section 7.07 Disclosure. No statement of fact made by or on behalf of
Borrower herein or in any of the other Transaction Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no fact of
which Borrower has knowledge which has not been disclosed to Lender which
materially and adversely affects, or as far as Borrower reasonably foresees,
would materially and adversely affect the Mortgaged Property or the business,
properties, assets, operations or condition, financial or otherwise, of
Borrower.

      Section 7.08 No Default. The execution, delivery and to Borrower's
knowledge, the performance of the obligations imposed on Borrower under any of
the Transaction Documents will not violate any provision of any Legal
Requirements, the articles of organization or operating agreement of Borrower or
any indenture, agreement or other instrument to which Borrower is a party, or by
which Borrower is bound, or be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, or
(except as may be provided in the Indenture or in any of the other Transaction
Documents) result in the creation or imposition of any Lien of any nature
whatsoever upon any of the property or assets of Borrower pursuant to, any Legal
Requirements, articles of organization, operating agreement, indenture,
agreement or instrument. No default by Borrower exists under the Transaction
Documents and no act has occurred and no condition exists which, with the giving
of notice or the passage of time, or both, could constitute a default under any
of the Transaction Documents.

      Section 7.09 Condemnation. To Borrower's knowledge, no Condemnation has
been commenced or has been announced as being contemplated with respect to all
or any portion of the Mortgaged Property or for the relocation of roadways
providing access to the Mortgaged Property.

      Section 7.10 Federal Reserve Regulations. The proceeds of the Loan will be
used to acquire the Mortgaged Property, to pay expenses of the transaction
contemplated hereby and to distribute any remaining balance to Borrower's
beneficial owners. No part of the proceeds of the Loan will be used, directly or
indirectly, for the purpose (whether immediate, incidental or ultimate) of
buying or carrying any "margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulation U, or used, directly or indirectly,
in violation of any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Loan Agreement.

      Section 7.11 Utilities and Public Access To Borrower's knowledge, the
Mortgaged Property has adequate rights of access to dedicated public ways (and
the Mortgaged Property makes no material use of any means of access or egress
that is not pursuant to such dedicated public ways or recorded, irrevocable
rights-of-way or easements) and is served by adequate water, sewer, sanitary
sewer and storm drain facilities. To Borrower's knowledge: (i) all public
utilities necessary for the full use and enjoyment of the Mortgaged Property are
located in the public right-of-way or in or through a recorded irrevocable
easement in favor of the Mortgaged Property, and (ii) all such utilities are
connected so as to serve the Mortgaged Property without passing over other
property, except to the extent that such utilities are accessible to the
Mortgaged Property by virtue of a recorded, irrevocable easement or similar
agreement or right. To Borrower's knowledge, all roads necessary for the full
utilization of the Mortgaged Property for its current purpose have been
completed and Borrower has no knowledge that such roads have not been dedicated
to public use and accepted by all Governmental Authorities.

      Section 7.12 Not Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Internal Revenue Code.

      Section 7.13 Indenture Liens. The Indenture and the other Loan Documents
are intended by Borrower to create a legal, valid, fully perfected and
enforceable first priority Lien on the Mortgaged Property, and in any personalty
owned by Borrower described in the Loan Documents, as security for the repayment
of the Loan, subject only to any exceptions shown in the mortgagee title policy
approved by Lender. To Borrower's knowledge, the Mortgaged Property is free and
clear of any mechanics' and materialmen's Liens which are before or equal with
the Lien of the Indenture, except those which are insured against in the
mortgagee title policy.

      Section 7.14 Assignment of Leases.

      (a) Assignment of Lease. Pursuant to the Indenture and the Assignment of
Lease, Lender is the assignee of Borrower's interest under (i) the Lease, (ii)
the Lease Guaranty, (iii) the Management Agreements, (iv) the Guaranty of
Management Agreements, (v) the Multi-Party Agreement, (vi) the Guaranty of
Multi-Party Agreement, and (vii) the Other Leases (the items identified at
subparagraphs (i) through (vii) herein shall collectively be referred to as the
"ASSIGNED DOCUMENTS"). Except as provided in paragraph 7.14(b) below, Borrower
has made no prior assignments of the Assigned Documents, or otherwise assigned,
pledged or hypothecated the Rents or any other income due and payable or to
become due and payable with regard to the Lease or the Management Agreements.
The Assignment of Lease creates a valid, collateral, first priority assignment
of, and a valid first priority security interest in, Borrower's right to receive
all payments due under the Lease and the Management Agreements, and no other
Person owns any interest in the Lease.

             (a) Assignment of Aetna Lease and MCI Lease.

                 (i) Aetna Lease. The Aetna Lease has been assigned by Borrower
to the Aetna SPE.


                 (ii) MCI Lease. The MCI Lease has been assigned by Borrower to
the MCI SPE.

      Section 7.15 No Adverse Change. There has been no material adverse change
in the representations made or information heretofore supplied to Lender by or
on behalf of Borrower in connection with the Transaction Documents as to (a) the
composition or structure of Borrower (except as heretofore disclosed in writing
to Lender) or, finances, business operations, credit, prospects or financial
condition of Borrower or any owner of Borrower; (b) the rental income, condition
or ownership of the Mortgaged Property; or (c) any other features of the
transaction contemplated under the Transaction Documents.

      Section 7.16 Lease and Management Agreements. (a) The Lease, the Lease
Guaranty, the Management Agreements, the Guaranty of Management Agreements, the
Multi-Party Agreement and the Guaranty of Multi-Party Agreement are in full
force and effect; (b) a true and correct copy of the Lease, the Lease Guaranty,
the Management Agreement, the Guaranty of Management Agreements, the Multi-Party
Agreement and the Guaranty of Multi-Party Agreement as amended to the Closing
Date have been delivered to Lender; (c) no default by Borrower and, to
Borrower's knowledge, no default exists by (i) Tenant under the Lease, (ii)
Manager under the Management Agreements, (iii) Lease Guarantor under the Lease
Guaranty, (iv) Management Agreement Guarantor under the Guaranty of Management
Agreements, (v) Tenant, the Aetna SPE or the MCI SPE under the Multi-Party
Agreement, or (vi) Multi-Party Agreement Guarantor under the Guaranty of
Multi-Party Agreement; (d) Borrower has not delivered or received any notice of
default under the Lease, Lease Guaranty or Management Agreements or Guaranty of
Management Agreements; (e) all Rents due and payable under the Lease have been
paid in full and Borrower has not accepted or received any advance payments of
Rent from Tenant; and (f) to Borrower's knowledge, there exist no rights of
offset or defenses to pay any portion of the Rents.

      Section 7.17 Condition, Compliance. To Borrower's knowledge, the Mortgaged
Property is (a) in good condition, free of any material damage or waste that
would affect the value of the Mortgaged Property and free of structural defects
and all building systems contained therein are in good working order; (b)
lawfully occupied by (i) Tenant under the Lease, (ii) Aetna under the Aetna
Lease, and (iii) MCI under the MCI Lease; and (c) in compliance with all
existing Legal Requirements (except that the parking is a legal non-conforming
use thereunder) and all agreements and restrictions affecting the Mortgaged
Property, occupancy, use or operation of such Mortgaged Property. To Borrower's
knowledge, all permits, inspections, approvals, licenses, franchises,
certificates and other authorizations required by Legal Requirements or by
insurance standards or otherwise to be made or issued with respect to the lawful
ownership, use and occupancy of the Mortgaged Property have been made or will be
obtained from the appropriate authorities and are or will be valid and in full
force and effect.

      Section 7.18 Related Party Loans. There are no loans payable by Borrower
or any affiliate of Borrower to Lender except for (i) the Loan evidenced by the
Loan Documents, (ii) the leasehold mortgage loan dated as of the Closing Date
from the Aetna Leasehold Lender to the Aetna SPE, and (iii) the leasehold
mortgage loan dated as of the Closing Date from the MCI Leasehold Lender to the
MCI SPE. There are no loans payable by Borrower to any affiliate of Borrower or
any affiliate of any Person having any interest in Borrower. For purposes of the
foregoing, the term "affiliates" includes all entities that would be included by
the definitions of affiliate set forth in Section 15 of the Securities Act of
1933 or Section 20 of the Securities Exchange Act of 1934.

      Section 7.19 Service Contract. To Borrower's knowledge, except for the
Management Agreements and except as disclosed on Schedule 7.19, there are no
equipment leases, service contracts, maintenance contracts or similar agreements
with respect to the Mortgaged Property to which Borrower is a party or by which
it is bound.

      Section 7.20 No Insolvency or Judgment. Neither Borrower, nor to
Borrower's knowledge, any affiliate or member of Borrower, is (a) the subject of
or a party to any state or federal bankruptcy or insolvency proceeding, or (b)
the subject of any judgment unsatisfied of record or docketed in any court of
the state in which the Mortgaged Property is located or in any other court
located in the United States. Borrower is not contemplating either the filing of
a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it. After giving effect to the transactions contemplated
hereby, as of the Closing Date the fair saleable value of Borrower's assets
exceeds Borrower's total liabilities, including without limitation subordinated,
unliquidated, disputed and contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the making of the Loan, be
greater than Borrower's probable liabilities, including the maximum amount of
its contingent liabilities on its Loans as such Loans become absolute and
matured. Borrower's assets do not and, immediately following the making of the
Loan, will not constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Borrower does not intend to, and
does not believe that it will, incur loans and liabilities (including,
contingent liabilities and other commitments) beyond its ability to pay such
indebtedness as it matures (taking into account the timing and amounts of cash
to be received by Borrower and the amounts to be payable on or in respect of
obligations of Borrower).

      Section 7.21 Separateness. The representations and warranties concerning
Borrower made in Borrower's Certificate to, and relied on by, counsel rendering
the Non-Consolidation Opinion are true, complete and correct, are incorporated
herein by reference and may be relied upon by Lender and its successors and
assigns.

      Section 7.22 Subleases. Except for (i) the Aetna Lease, (ii) the Aetna SPE
Lease, (iii) the MCI Lease, (iv) the MCI SPE Lease, and (v) those leases
disclosed on the rent roll delivered by Tenant to Borrower (a copy of which rent
roll is attached as Exhibit C to the Estoppel Certificate delivered by Tenant to
Borrower and Lender, and dated as of the Closing Date), to Borrower's knowledge,
there are no leases, subleases or other occupancy agreements affecting all or
any portion of the Mortgaged Property in existence on the Closing Date, and no
Person has any possessory interest in, or right to occupy, the Mortgaged
Property except pursuant to the Lease, and the leases described in subparagraphs
(i) through (v) herein.

      Section 7.23 Taxes. All Taxes and Impositions which would be a Lien on the
Mortgaged Property, and that before the Closing Date were due and owing in
respect of the Mortgaged Property, have been paid, or the Tenant is required to
pay such Taxes and Impositions.

      Section 7.24 No Broker. There are no third-party brokers or investment
bankers except for Legg Mason Mortgage Capital Corporation involved in
connection with the financing contemplated by the instant transaction or who may
in any way claim or be entitled to compensation on account hereof.

      Section 7.25 Investment Company Act. Borrower is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; or (b) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Act of 1935, as amended. Its sole
business is the ownership, operation and maintenance of the Mortgaged Property.

      Section 7.26 Compliance with ERISA and State Statutes on Governmental
Plans. (a) Borrower is not an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA; (b) the assets of Borrower do
not constitute "plan assets" of one or more plans within the meaning of 29
C.F.R. Section 2510.3-101; (c) Borrower is not a "governmental plan" within the
meaning of Section 3(32) of ERISA; and (d) transactions by or with Borrower are
not subject to state statutes regulating investments of and fiduciary
obligations with respect to governmental plans.

      Section 7.27 Hazardous Substances. Except as otherwise disclosed by the
Environmental Site Assessment (as defined in the Lease), which Borrower
furnished to Lender before the Closing Date, Borrower has received no written
notice or other communication from any Person and has no actual knowledge (a)
that the Mortgaged Property is in direct or indirect violation of any
Environmental Laws; (b) that Hazardous Substances are located on or have been
handled, generated, stored, processed or disposed of on or released or
discharged from the Mortgaged Property (including underground contamination)
except for those Hazardous Substances used by Borrower or Tenant in the ordinary
course of its business and in compliance with all Environmental Laws; (c) that
the Mortgaged Property is subject to any actual or threatened Lien or notice or
action by any Governmental Authority relating to Hazardous Substances; (d) of
any existing or closed underground storage tanks or other underground storage
receptacles for Hazardous Substances located on the Mortgaged Property; (e) of
any investigation, action, proceeding or claim by any Governmental Authority or
by any third party which could result in any liability, penalty, sanction or
judgment under any Environmental Laws with respect to any condition, use or
operation of the Mortgaged Property nor does Borrower know of any basis for such
a claim; or (f) of any claim by any party that any use, operation or condition
of the Mortgaged Property has caused any violation of Environmental Laws on any
other property nor does Borrower know of any basis for such a claim.

                                   ARTICLE 8

                            CASUALTY AND CONDEMNATION

      Section 8.01 Notice; Settlement. If Borrower has knowledge of a Casualty
or an actual or threatened Condemnation with respect to the Mortgaged Property,
Borrower will give or cause to be given prompt notice thereof to Lender which
notice will set forth in reasonable detail the facts or circumstances known to
it with respect to each such Casualty or Condemnation, and which will include,
for any Condemnation copies of any papers Borrower has received in connection
with such proceeding. Except as otherwise permitted in the Lease, Borrower will
not settle or adjust or permit the settlement or adjustment of any insurance
claim or Condemnation award, compensation or other payment without Lender's
prior written consent. Notwithstanding any Destruction, Borrower must continue
to pay the Debt at the time and in the manner provided for its payment in the
Note and the Debt will not be reduced until Lender has actually received any Net
Award and applied it to the discharge of the Debt. Lender will not be limited to
the interest paid on the award by the Governmental Authority but may receive out
of the Net Award interest at the rate or rates provided herein and in the Note.
Borrower will cause the award, compensation or other payment made in any
Condemnation which is payable to Borrower, to be paid directly to Lender.

      Section 8.02 Restoration. The Net Award required pursuant to the Lease,
the Aetna Lease or the MCI Lease to be applied to restore the Mortgaged Property
will be disbursed in accordance with and subject to the conditions set forth in
Article 12 of the Lease. The Net Award that is not required to be disbursed to
Restore the Mortgaged Property pursuant to the provisions of the Lease will,
subject to Tenant's rights to receive that portion of the Net Award allocated to
Lessee's Loss (as defined in the Lease), be delivered to Lender. If no Event of
Default exists, the excess portion of the Net Award, with the prior written
consent of the insured under the RVI Policy, shall be remitted to the Borrower.
Lender will deliver any such excess portion of the Net Award to Borrower free of
the Lien created by the Indenture. If an Event of Default exists Lender may
apply the excess portion of the Net Award to pay the Debt in such order as
Lender may elect in its discretion.

      Section 8.03 Claims for Net Award. If the Mortgaged Property is sold,
through foreclosure or otherwise, before Lender receives any Net Award, Lender
may, whether or not a deficiency judgment on the Note has been sought, recovered
or denied, receive said Net Award, or a portion thereof sufficient to pay the
Debt. Borrower will file and prosecute or cause to be filed and prosecuted its
claim or claims for any such Net Award in good faith and with due diligence and
subject to terms of the Lease cause the same to be paid over to Lender. Borrower
irrevocably authorizes and empowers Lender, in Borrower's name or otherwise, to
collect and receipt for any such Net Award and to file and prosecute such claim
or claims. Although Borrower expressly agrees that any further assignments or
other instruments are not necessary, Borrower will, upon demand of Lender, make,
execute and deliver any and all assignments and other instruments sufficient to
assign any such Net Award to Lender, free and clear of any Liens of any kind or
nature whatsoever.

                                   ARTICLE 9

                           EVENTS OF DEFAULT/REMEDIES

      Section 9.01 Events of Default. The Debt shall become immediately due and
payable at the option of Lender, without notice or demand, upon any one or more
of the following events or occurrences ("EVENTS OF DEFAULT"):

             (a) if any portion of the Debt is not paid when due;

             (b) if the Lease is terminated before the end of the term thereof
for any reason or is in any way amended or modified (except as expressly
provided for herein or therein) or is hypothecated without Lender's prior
written consent;

             (c) if any representation or warranty of Borrower made in this Loan
Agreement or in any certificate, report or other financial statement or other
instrument or document delivered pursuant hereto, or any notice, certificate,
demand or request delivered to Lender pursuant to this Loan Agreement, the
Security Documents, or any of the other Transaction Documents proves to be false
or misleading in any material and adverse respect as of the time when the same
is made;

             (d) if Borrower violates or does not comply with the provisions of
subsections 6(d), (e), (f), (g), (j) or (k) of the Assignment of Lease,
subsection 10.01(c) hereof, the Transfer prohibitions of Article 5 hereof, or
the separateness covenants of Article 6 hereof;

             (e) if Borrower consummates a transaction which would cause this
Loan Agreement or any exercise of Lender's rights under the Transaction
Documents to constitute a non-exempt prohibited transaction under ERISA or to
violate a state statute regulating governmental plans, or otherwise subject
Lender to liability for violation of ERISA or such state statute;

             (f) if any final judgment for the payment of money which is not
fully covered by insurance is rendered against Borrower and Borrower does not
discharge the same or cause it to be discharged or vacated within one hundred
twenty (120) days from the entry thereof, or does not appeal therefrom or from
the order, decree or process upon which or pursuant to which said judgment was
granted, based or entered, and does not secure a stay of execution pending such
appeal within one hundred twenty (120) days after the entry thereof;

             (g) subject to the provisions of subsection 4.02(b) hereof, if any
of the Taxes or Impositions are not paid before delinquency;

             (h) if the Policies are not kept in full force and effect in
accordance with the Insurance Requirements;

             (i) if Borrower makes an assignment for the benefit of creditors or
if Borrower generally does not pay its debts as they become due;

             (j) if a receiver, liquidator or trustee of Borrower is appointed
or if Borrower is adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, is filed by or against, consented to, or
acquiesced in, by Borrower or if any proceeding for the dissolution or
liquidation of Borrower is instituted; however, if such appointment,
adjudication, petition or proceeding is involuntary and is not consented to by
Borrower, upon the same not being discharged, stayed or dismissed within 120
days;

             (k) if Borrower defaults under any other mortgage or security
agreement covering any part of the Mortgaged Property whether it be superior or
junior in Lien to the Indenture and the same is accelerated as a result of such
default;

             (l) subject to the provisions of subparagraph 4.02 hereof, if the
Mortgaged Property becomes subject to any mechanic's, materialman's or other
Lien (other than for Taxes which are not then due and payable) and such Lien
remains undischarged of record (by payment, bonding or otherwise) for a period
of forty-five (45) days;

             (m) except for specific defaults set forth in this Section 9.01, if
Borrower defaults in the observance or performance of any other term, agreement
or condition of this Loan Agreement, and Borrower fails to remedy such default
within thirty (30) days after notice by Lender to Borrower of such default, or,
if such default is of such a nature that it cannot with due diligence be cured
within said thirty (30) day period, if Borrower fails, within said thirty (30)
days, to commence all steps necessary to cure such default, and fails to
complete such cure within two hundred forty (240) days after the end of such
thirty (30) day period (or, if the obligation giving rise to such default is
also an obligation of Tenant under the Lease, such longer cure period as Tenant
is allowed under the Lease to perform such obligation);

             (n) except for specific defaults set forth in this Section 9.01, if
Borrower defaults in the observance or performance of any term, agreement or
condition of the Note or any of the Security Documents, and such default
continues after the end of any applicable cure period provided for therein and
if no cure period is provided, then after thirty (30) days notice and
opportunity to cure, provided, that if any default not otherwise described in
this Section 9.01 occurs under the Assignment of Lease solely as a result of a
Lease Default then such default shall be governed by the provisions of Section
9.01(o) hereof. Notwithstanding anything to the contrary in this Loan Agreement,
a default under the Multi-Party Agreement (except for any default under Section
5 [Aetna Lease and MCI Lease] and/or Section 9 [No Amendment] thereunder) shall
not be an Event of Default hereunder;

             (o) if one or more Lease Defaults exist and if no other Event of
Default exists hereunder or under the other Loan Documents, Borrower may cure
such Lease Defaults on Tenant's behalf and, upon such cure, such Lease Defaults
will not be an Event of Default hereunder; provided, however, that Borrower's
right to cure such Lease Defaults will be limited to (i) a thirty (30) day
period for Tenant's failure to (1) pay Basic Rent or Additional Rent, and
provided, however, that Borrower will not have a right to cure Tenant's failure
to pay Basic Rent or Additional Rent after the ninth (9th) consecutive month of
such failure, or at any time after there has been a total at any time of
twenty-four (24) such failures, (2) maintain Policies in accordance with the
Insurance Requirements, or (3) pay Taxes and Impositions in accordance with
Paragraph 6 of the Lease, and (ii) a ninety (90) day period for any other Lease
Defaults; and thereafter such Lease Defaults will be an Event of Default
hereunder;

             (p) if the Lease is canceled, terminated, abridged, modified,
surrendered or rejected in bankruptcy;

             (q) if any event of default (as defined in paragraph 20 of the
Lease) occurs under subparagraphs 20(a)(iii), (iv), (v), or (vii) of the Lease;
and

             (r) if any of the following exist uncured for forty-five days
following written notice; (i) the failure of any representation or warranty made
by Borrower under Section 7.26 to be true and correct in all respects, or (ii)
Borrower fails to provide Lender with the written certifications and evidence
referred to in Section 4.11(b).

      Section 9.02 Remedies Generally. If any Event of Default occurs, Lender
may declare all or any portion of the Debt to be immediately due and payable and
may take such other actions, without notice or demand, as it deems necessary to
protect and enforce its rights against Borrower and against the Mortgaged
Property, including the right to exercise the powers and remedies available
under the Security Documents.

      Section 9.03 Right to Cure Defaults. If an Event of Default exists, Lender
and/or Servicer may (themselves or by their agents, employees, contractors,
engineers, architects, nominees, attorneys or other representatives), but
without any obligation to do so and without Notice to Borrower and without
releasing Borrower from any obligation hereunder, cure the Event of Default in
such manner and to such extent as Lender and/or Servicer may deem necessary to
protect the security hereof. Subject to Tenant's rights under the Lease and the
SNDA and the tenants' rights under the Superior Leases, Lender and Servicer (and
their agents, employees, contractors, engineers, architects, nominees, attorneys
or other representatives) are authorized to enter upon the Mortgaged Property to
cure such Event of Default, and Lender and/or Servicer are authorized to appear
in, defend, or bring any action or proceeding reasonably necessary to maintain,
secure or otherwise protect the Mortgaged Property or the priority of the Lien
granted by the Indenture, or to foreclose the Indenture or collect the Debt,
including the right to make Protective Advances. All Protective Advances will be
immediately due and payable upon demand by Lender or Servicer therefor and will
bear interest at the Default Rate, for the period after notice from Lender
and/or Servicer that such cost or expense was incurred to the date of payment in
full of such Protective Advances to Lender and/or Servicer.

      Section 9.04 Prepayment After Event of Default. If an Event of Default
exists, and Borrower tenders payment of an amount sufficient to satisfy the Debt
at any time before a sale of the Mortgaged Property either through foreclosure
or the exercise of other remedies available to Lender under this Loan Agreement
and the Security Documents, such tender by Borrower will be deemed to be a
voluntary prepayment under the Note and this Loan Agreement, in the amount
tendered. If such tender occurs during the Lockout Period, Borrower must, in
addition to the outstanding principal balance of the Note, also pay to Lender a
sum equal to (a) interest accrued and unpaid on the principal balance of the
Note to the date of such tender; (b) an amount equal to the Prepayment
Consideration calculated from the date of such tender; and (c) all other amounts
due under the Loan Documents. If such tender occurs after the Lockout Period,
Borrower must, in addition to the outstanding principal balance due under the
Note, also pay to Lender a sum equal to the amounts set forth in clauses (a) and
(c) above as well as the applicable Prepayment Consideration. Borrower
acknowledges that the Prepayment Consideration represents the reasonable
estimate by Borrower and Lender of the fair compensation for the loss that
Lender may sustain due to the payment of the Note before the due date thereof
and is not a penalty. Subject to Section 12.20, such Prepayment Consideration
will be paid without prejudice to Lender's right to collect any other amounts
provided to be paid under the Loan Documents.

      Section 9.05 Right of Entry. Subject to (i) the rights of Tenant under the
Lease and the SNDA, and (i) any of the tenants under the Superior Leases, Lender
and its agents may at any time during normal business hours enter and inspect
the Mortgaged Property.

      Section 9.06 Remedies under Security Documents. If any Event of Default
exists, Lender may, to the extent permitted by Legal Requirements, exercise any
or all of the rights and powers and pursue any or all of the remedies set forth
herein and in the Security Documents.

      Section 9.07 Actions and Proceedings. Lender may appear in and defend any
action or proceeding brought with respect to the Mortgaged Property and may
bring any action or proceeding, in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Mortgaged Property. Lender shall, at its option, be subrogated to the Lien
of any mortgage or other security instrument discharged in whole or in part by
the Debt, and any such subrogation rights shall constitute additional security
for the payment of the Debt.

      Section 9.08 Waiver of Counterclaim. All amounts due under the Loan
Documents are payable without setoff, counterclaim or any deduction whatsoever.
Borrower waives the right to assert a setoff, counterclaim (other than a
mandatory or compulsory counterclaim) or deduction in any action or proceeding
brought against it by Lender.

      Section 9.09 Recovery of Sums Required to Be Paid. Lender may from time to
time take action to recover any sum or sums which constitute a part of the Debt
as the same become due, without regard to whether or not the balance of the Debt
shall be due, and without prejudice to the right of Lender thereafter to bring
an action of foreclosure, or any other action, for a default or defaults by
Borrower existing at the time such earlier action was commenced.

                                   ARTICLE 10

                             LEASE/LEASE TERMINATION

      Section 10.01 The Lease, Management Agreements, Multi-Party Agreement and
Other Leases. (a) Borrower, by the Indenture and the Assignment of Lease, has
absolutely and unconditionally assigned to Lender, all of Borrower's right,
title and interest in the Assigned Documents and the Rents, it being intended by
Borrower that such assignment constitutes a present, absolute assignment.
Notwithstanding the foregoing, it is understood that the assignment of the
Borrower's interest in the Assigned Documents, as it relates to the Aetna Lease
and the MCI Lease, is subject to (i) the prior assignment by the Borrower to the
Aetna SPE and the MCI SPE, respectively, and (ii) the immediately subsequent
assignments thereof, by the Aetna SPE and the MCI SPE to the Aetna Leasehold
Lender and the MCI Leasehold Lender, respectively. Additionally, the Aetna SPE
and the MCI SPE have assigned their respective interests in the Aetna Lease and
the MCI Lease to the Tenant, which such assignments are effective upon the
expiration of the "Primary Term" of each of the Aetna Lease and the MCI Lease
(as such term is defined therein). Upon the payment of the Obligations in full,
and the performance and observance of the provisions of the Loan Documents,
Lender will, at the request and at the sole expense of Borrower, deliver to
Borrower, an instrument in recordable form canceling the Assignment of Lease and
the Indenture and reassigning the Borrower's interest in the Assigned Documents
without recourse, representation or warranty, to Borrower.

             (a) Borrower may, with Lender's prior written consent and upon
satisfaction of the conditions contained in Section 21 of the Lease, permit
Tenant to grant easements which provide utility or access to the Mortgaged
Property, and other licenses, rights-of-way, and other rights and privileges in
the nature of easements for such purposes.

             (b) Upon Lender's request, Borrower will request and use reasonable
efforts to obtain, with respect to the Lease, or the Mortgaged Property,
separate estoppel certificates from (i) Tenant, (ii) the tenant under the Aetna
Lease, and (iii) the tenant under the MCI Lease, in substantially the form
required by the Lease or if not so required, in form and substance reasonably
satisfactory to Lender.

             (c) Subject to the provisions of Section 10.02, Borrower will not
exercise its option to reject Tenant's Rejectable Offer arising under
subparagraphs 9(h) or 12(c) of the Lease without Lender's prior written consent.

      Section 10.02 Permitted Lease Termination Events. (a) At Borrower's
election, with Lender's prior written consent, Borrower may require Tenant to
make a Rejectable Offer if a Permitted Lease Termination Event occurs, provided
the terms of this Section 10.02 shall apply. Additionally, as set forth at
Section 12(c) of the Lease, under certain circumstances after a Destruction the
Tenant may make a Rejectable Offer, provided that the terms of this Section
10.02 shall apply.

             (a) If a Permitted Lease Termination Event results from an "event
of default" under Article 9 of the Lease and Tenant is deemed to have made a
Rejectable Offer at the Article 9 Purchase Price, Borrower must, at its option,
either (i) accept the Rejectable Offer, in which event Borrower will cause the
Article 9 Purchase Price paid by Tenant to be paid to Lender to apply in
accordance with the terms of the Note, or (ii) with Lender's prior written
consent, reject such Rejectable Offer of the Article 9 Purchase Price, provided,
that if Borrower elects to reject the Rejectable Offer of the Article 9 Purchase
Price, it must prepay the entire outstanding principal balance of the Note,
together with accrued and unpaid interest and charges thereunder and Prepayment
Consideration and all other amounts due hereunder at the time and in the manner
provided below. If Borrower fails to accept or reject Tenant's Rejectable Offer
of the Article 9 Purchase Price within the period provided under paragraph 9(h)
of the Lease, Borrower will be deemed to have accepted such Rejectable Offer. If
Borrower fails to accept or reject Tenant's Rejectable Offer of the Article 9
Purchase Price within seventy (70) days after Tenant's giving of the Rejectable
Offer of the Article 9 Purchase Price, then Lender may notify Tenant that
Borrower and Lender elect to accept Tenant's Rejectable Offer of the Article 9
Purchase Price, which notice of acceptance by Lender will be as fully binding on
Borrower as if Borrower had joined in such acceptance. If Borrower desires to
reject the Rejectable Offer of the Article 9 Purchase Price, then within seventy
(70) days after Tenant's giving of the notice of the Rejectable Offer of the
Article 9 Purchase Price and before delivering notice of such rejection to
Tenant, Borrower shall deliver to Lender either (I) cash in an amount equal to
the Prepayment Amount, accrued and unpaid interest and charges thereon and all
amounts due hereunder and Prepayment Consideration, or (II) a Letter of Credit
having a stated maturity at least one hundred eighty (180) days after the
termination of the Lease, in an amount equal to the sum of (x) the Prepayment
Amount, accrued and unpaid interest and charges under the Note through the next
debt service payment date (the "ARTICLE 9 FIRST DRAW DATE") and all amounts due
hereunder and Prepayment Consideration calculated as if the settlement date is
the date of delivery of such Letter of Credit, and (y) all debt service payments
due through and including the debt service payment date immediately succeeding
the Article 9 First Draw Date. Such Letter of Credit shall provide that on the
Article 9 First Draw Date, if the payment due on such date is not paid by
Borrower, Lender may draw on the Letter of Credit in an amount equal to such
payment, and if Borrower does not pay in full the Debt due under the Note before
the next debt service payment date immediately following the Article 9 First
Draw Date, Lender may draw on such Letter of Credit on such debt service payment
date in an amount equal to the Prepayment Amount, accrued and unpaid interest
and charges under the Note and all amounts due hereunder and Prepayment
Consideration. Borrower agrees to bear and will pay or reimburse Lender on
demand for all reasonable third party expenses (including, reasonable attorneys'
fees and disbursements) incurred by Lender in connection with the review and
approval of such Letter of Credit and any drawing thereunder. In addition, the
Lien of the Indenture on the Mortgaged Property will not be released until cash
in an amount equal to the Prepayment Amount, accrued and unpaid interest and
charges under the Note and all amounts due hereunder and Prepayment
Consideration have been paid in full to Lender. If the conditions precedent set
forth in subsections (I) or (II) of this subsection 10.02(b) to Borrower's
election to reject the Rejectable Offer of the Article 9 Purchase Price are
satisfied within the time period set forth therein, then Lender will consent to
Borrower's election to reject such Rejectable Offer. If the conditions precedent
set forth in this subsection 10.02(b) to the election by Borrower of the option
provided in subsection 10.02(b)(ii) are not satisfied by Borrower, then Borrower
shall be deemed to have elected the option provided in subsection 10.02(b)(i).
Upon request of Borrower and provided that Lender has elected not to accept
Tenant's Rejectable Offer of the Article 9 Purchase Price, Lender will provide
Tenant with written notice within seventy-five (75) days after the giving of
Tenant's notice of Rejectable Offer of the Article 9 Purchase Price that Lender
elects not to accept Tenant's Rejectable Offer of the Article 9 Purchase Price
and such election not to accept Tenant's Rejectable Offer shall be fully binding
upon Borrower as if Borrower had joined such election not to accept.

             (b) if a Permitted Lease Termination Event results from a
Destruction and Tenant makes or is deemed to have made a Rejectable Offer at the
Article 12 Purchase Price, Borrower must, at its option, either (i) accept the
Rejectable Offer, in which event Borrower will cause the Article 12 Purchase
Price paid by Tenant to be paid to Lender to apply in accordance with the terms
of the Note, or (ii) with Lender's prior written consent, reject such Rejectable
Offer of the Article 12 Purchase Price, provided, that if Borrower elects to
reject the Rejectable Offer of the Article 12 Purchase Price, it must prepay the
entire outstanding principal balance of the Note, together with accrued and
unpaid interest and charges thereunder and Prepayment Consideration (provided
that Prepayment Consideration will only be payable if an Event of Default exists
at the time of such Destruction) and all other amounts due hereunder at the time
and in the manner provided below. If Borrower fails to accept or reject Tenant's
Rejectable Offer of the Article 12 Purchase Price within the period provided
under paragraph 12(c) of the Lease, Borrower will be deemed to have accepted
such Rejectable Offer. If Borrower fails to accept or reject Tenant's Rejectable
Offer of the Article 12 Purchase Price within seventy (70) days after Tenant's
giving of the Rejectable Offer of the Article 12 Purchase Price, then Lender may
notify Tenant that Borrower and Lender elect to accept Tenant's Rejectable Offer
of the Article 12 Purchase Price, which notice of acceptance by Lender shall be
as fully binding on Borrower as if Borrower had joined in such acceptance. If
Borrower desires to reject the Rejectable Offer of the Article 12 Purchase
Price, then within seventy (70) days after Tenant's giving of the notice of
Rejectable Offer of the Article 12 Purchase Price and before delivering notice
of such rejection to Tenant, Borrower shall deliver to Lender either (I) cash in
an amount equal to the Prepayment Amount, accrued and unpaid interest and
charges thereon and, if an Event of Default exists, Prepayment Consideration, or
(II) a Letter of Credit, in an amount equal to the sum of (x) the Prepayment
Amount, accrued and unpaid interest and charges under the Note through the next
debt service payment date (the "ARTICLE 12 FIRST DRAW DATE") and all amounts due
hereunder and, if an Event of Default exists, Prepayment Consideration
calculated as if the settlement date is the date of delivery of such Letter of
Credit, and (y) all debt service payments due through and including the debt
service payment date immediately succeeding the Article 12 First Draw Date. Such
Letter of Credit shall provide that on the Article 12 First Draw Date, if the
payment due on such date is not paid by Borrower, Lender may draw on the Letter
of Credit in an amount equal to such payment, and if Borrower does not pay in
full the Debt due under the Note before the next debt service payment date
immediately following the Article 12 First Draw Date, Lender may draw on such
Letter of Credit on such debt service payment date in an amount equal to the
Prepayment Amount, accrued and unpaid interest and charges under the Note and
all amounts due hereunder and Prepayment Consideration (if an Event of Default
exists). Borrower agrees to bear and will pay or reimburse Lender on demand for
all reasonable expenses (including, reasonable attorneys' fees and
disbursements) incurred by Lender in connection with the review and approval of
such Letter of Credit and any drawing thereunder. In addition, the Lien of the
Indenture on the Mortgaged Property will not be released until cash in an amount
equal to the Prepayment Amount, accrued and unpaid interest and charges under
the Note and all amounts due hereunder and Prepayment Consideration (if an Event
of Default exists) have been paid in full to Lender. If the conditions precedent
set forth in this subsection in subsections (I) or (II) of this subsection
10.02(c) to Borrower's election to reject the Rejectable Offer of the Article 12
Purchase Price are satisfied within the time period set forth therein, then
Lender will consent to Borrower's election to reject such Rejectable Offer. If
the conditions precedent set forth in subsection 10.02(c)(ii) are not satisfied
by Borrower, then Borrower shall be deemed to have elected the option provided
in subsection 10.02(c)(i). Upon request of Borrower and provided that Lender has
elected not to accept Tenant's Rejectable Offer of the Article 12 Purchase
Price, Lender will provide Tenant with written notice within seventy-five (75)
days after the giving of Tenant's notice of Rejectable Offer of the Article 12
Purchase Price that Lender elects not to accept Tenant's Rejectable Offer of the
Article 12 Purchase Price and such election not to accept Tenant's Rejectable
Offer shall be fully binding upon Borrower as if Borrower had joined such
election not to accept. Notwithstanding anything to the contrary contained in
this subsection 10.02(c), if an Event of Default exists and no event of default
(as defined in Section 20 of the Lease) exists under the Lease, then Borrower
may elect to accept the Rejectable Offer of the Article 12 Purchase Price only
if Borrower delivers to Lender either cash or a Letter of Credit in an amount
equal to the Prepayment Consideration within seventy (70) days after Tenant's
giving of notice of the Rejectable Offer of the Article 12 Purchase Price. If
Borrower fails to deliver cash or a Letter of Credit equal to the Prepayment
Consideration within such seventy (70) day period, then Lender may exercise on
Borrower's behalf the right to reject such Rejectable Offer which notice of
rejection by Lender shall be fully binding on Borrower as if Borrower had joined
in such rejection.

                                   ARTICLE 11

                                 INDEMNIFICATION

      Section 11.01 General Indemnification. In addition to any other
indemnifications provided herein, or in the Security Documents, Borrower will,
at its sole cost and expense protect, defend, indemnify and save harmless each
of the Indemnified Parties from and against all Indemnified Liabilities (except
to the extent caused by the negligence or willful misconduct of such Indemnified
Party) by reason of (i) ownership of the Loan Documents, the Mortgaged Property
or any interest therein or receipt of any Rents; (ii) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Mortgaged Property or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (iii) any use, non-use or condition in,
on or about the Mortgaged Property or on adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (iv) any failure on
Borrower's part to perform or comply with any of the terms of the Transaction
Documents; (v) the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property; (vi) to the
extent not covered by insurance, any personal injury (including wrongful death)
or property damage (real or personal) arising out of or related to Hazardous
Substances or asbestos; (vii) the Mortgaged Property's failure to comply with
any Legal Requirements; (viii) the occupation, condition, operation, service,
design, maintenance or management of the Mortgaged Property; (ix) any tax, duty,
assessment or other charge imposed by any Governmental Authority on the making
and recording of the Indenture or any other Security Document; and (x) a
violation under Section 4.11 hereof, including Indemnified Liabilities incurred,
directly or indirectly, by Lender to correct any prohibited transaction, to sell
a prohibited loan, or to obtain any individual prohibited transaction exemption
under ERISA that may be required, in Lender's sole discretion, as a result of
such a violation. Any Indemnified Liabilities payable to any of the Indemnified
Parties by reason of the application of this Section 11.01 will be secured by
the Indenture and will become immediately due and payable and will bear interest
at the Default Rate from the date such Indemnified Liability is sustained by any
of the Indemnified Parties until paid. Borrower's obligations and liabilities
under this Section 11.01 will survive any termination, satisfaction or
assignment of the Loan Documents and the exercise by Lender of any of its rights
or remedies under the Loan Documents including, the acquisition of the Mortgaged
Property by foreclosure or a conveyance in lieu of foreclosure as to events
occurring prior thereto only.

      Section 11.02 Tax Indemnification. Borrower hereby assumes liability for,
hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend
and save the Indemnified Parties harmless from and against, and hereby
indemnifies the Indemnified Parties from and against any Indemnified Liabilities
and increased or additional tax liability as a result of the occurrence of any
action whatsoever taken by the Borrower or any Beneficial Owner or member of
Borrower, including, any amendment, modification, revision or alteration to the
Loan Documents, or, any trust agreement entered into by any of the Indemnified
Parties with respect to the Loan or the certificates issued thereunder, to the
extent requested by either the Borrower or any Beneficial Owner or member of
Borrower, that alter, affect, change or modify the tax treatment, tax
characterization, state law characterization, or in any other way alter, affect,
change or modify the nature of the trust so created (as defined in the
above-mentioned trust agreement or the certificates) including, taxes imposed on
the trustee thereof as a result of such trust not being treated as a grantor
trust for federal income tax purposes (assuming that prior to such change such
tax treatment was valid), to the extent such taxes exceed the amount that would
be otherwise payable by to a lender if the trust were treated as a grantor
trust.

                              IMPORTANT - READ THIS

BORROWER ACKNOWLEDGES THAT PURSUANT TO THE FOREGOING INDEMNITY (IN SECTION 11.01
AND SECTION 11.02) IT HAS AGREED TO INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED
PARTIES FROM AND AGAINST ANY AND ALL LIABILITIES ARISING BY REASON OF THE ACTS
OR OMISSIONS OF ANY OF THE INDEMNIFIED PARTIES AND OTHERWISE, WHICH LIABILITIES
INCLUDE, WITHOUT LIMITATION, EXCEPT AS PROVIDED ABOVE, SOLE NEGLIGENCE,
CONCURRENT NEGLIGENCE, STRICT LIABILITY, CRIMINAL LIABILITY, STATUTORY
LIABILITY, LIABILITY FOR INJURIES NOT COMPENSATED BY WORKERS' COMPENSATION
INSURANCE, OTHER INJURIES OR LOSSES NOT COVERED BY INSURANCE AND LIABILITY
ARISING AS A RESULT OF WAIVERS, EXCULPATIONS, DISCLAIMERS OR RELEASES. IF SUCH
LIABILITY ARISES BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AN
INDEMNIFIED PARTY (OR INDEMNIFIED PARTIES, AS THE CASE MAY BE) (HEREINAFTER A
"RESPONSIBLE INDEMNIFIED PARTY") THIS INDEMNITY SHALL NOT EXTEND TO ANY SUCH
RESPONSIBLE INDEMNIFIED PARTY, BUT SHALL EXTEND TO ALL OTHER INDEMNIFIED
PARTIES.


                                   ARTICLE 12

                                  MISCELLANEOUS

      Section 12.01 Waiver of Notice. Borrower will not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Loan Agreement specifically and expressly provides for the giving of
notice by Lender to Borrower and except with respect to matters for which Lender
is required by applicable Legal Requirements to give notice, and Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Loan Agreement does not specifically and expressly provide
for the giving of notice by Lender to Borrower.

      Section 12.02 Remedies of Borrower. If a claim or adjudication is made
that Lender has acted unreasonably or unreasonably delayed acting in any case
where by law or under the Loan Documents, it has an obligation to act reasonably
or promptly, Lender will not be liable for any monetary damages, and Borrower's
remedies will be limited to injunctive relief or declaratory judgment.

      Section 12.03 Sole Discretion of Lender. Wherever pursuant to this Loan
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory will be in the sole discretion of Lender and
will be final and conclusive, except as may be otherwise expressly and
specifically provided herein.

      Section 12.04 Non-Waiver. Lender's failure to insist upon strict
performance of any term hereof will not be deemed to be a waiver of any term of
this Loan Agreement. Borrower will not be relieved of Borrower's obligations
hereunder by reason of (i) Lender's failure to comply with any request of
Borrower to take any action to foreclose the Indenture or otherwise enforce any
of the provisions hereof or of the Note or the Security Documents, (ii) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property, or of any Person liable for the Debt or any portion thereof, or (iii)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of the Note, this Loan Agreement
or the Security Documents.

      Section 12.05 No Oral Change. This Loan Agreement, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

      Section 12.06 Liability/Successor and Assigns. If Borrower consists of
more than one Person, the obligations and liabilities of each such Person
hereunder shall be joint and several. This Loan Agreement will be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and assigns forever.

      Section 12.07 Unenforceable Provisions. If any term, agreement or
condition of the Note or this Loan Agreement is held to be invalid, illegal or
unenforceable in any respect, the Note and this Loan Agreement will be construed
without such provision.

      Section 12.08 Servicer. Lender may, at Borrower's sole cost and expense,
from time to time appoint a Servicer. The Servicer will have the power and
authority to exercise all of the rights and remedies of Lender and to act as
agent of Lender hereunder.

      Section 12.09 Duplicate Originals. This Loan Agreement may be executed in
any number of duplicate originals and each such duplicate original will be
deemed to be an original.

      Section 12.10 Assignments. Lender may assign or transfer its rights under
this Loan Agreement without limitation. Any assignee or transferee will be
entitled to all the benefits afforded Lender hereunder. Section 12.11 Risk of
Loss, etc.

             (a) The risk of loss or damage to the Mortgaged Property is on
Borrower, and Lender will have no liability whatsoever for a decline in the
Mortgaged Property's value, for a failure to maintain the Policies, or for a
failure to determine whether insurance in force is adequate as to the amount of
risks insured. Possession by Lender will not be deemed an election of judicial
relief, if any such possession is requested or obtained, against any Mortgaged
Property or collateral not in Lender's possession.

             (b) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender may take action to recover the Debt, or any portion thereof,
or to enforce any agreement hereof without prejudice to the right of Lender
thereafter to foreclose the Indenture. The rights and remedies of Lender under
the Indenture are separate, distinct and cumulative and none will be given
effect to the exclusion of the others. No act of Lender will be construed as an
election to proceed under any one provision under the Indenture to the exclusion
of any other provision. Lender will not be limited exclusively to the rights and
remedies stated in the Indenture but will be entitled to every right and remedy
now or hereafter afforded at law or in equity.

      Section 12.12 Cooperation.

             (a) Borrower acknowledges that Lender may (i) sell, transfer or
assign this Loan Agreement, the Note and Security Documents to a trust or to one
or more investors as a whole loan in a rated or unrated public offering or
private placement; (ii) grant participation interests in the Loan to one or more
investors in a rated or unrated public offering or private placement; (iii)
deposit this Loan Agreement, the Note and Security Documents with a trust, which
trust may sell certificates to investors evidencing an ownership interest in the
trust assets in a rated or unrated public offering or private placement; or (iv)
otherwise sell the Loan or interests therein to investors in a rated or unrated
public offering or private placement (the transactions referred to in clauses
(i) through (iv) are hereinafter referred to as "SECONDARY MARKET
TRANSACTIONS"). Borrower shall cooperate in good faith with Lender (but shall
not be obligated to incur any out-of-pocket expense) to effect any such
Secondary Market Transaction and to implement all requirements imposed by any
NSRO involved in any Secondary Market Transaction, including:

                 (i) making available to Lender all readily available
information concerning Borrower's business and operations which Lender may
reasonably request, including financial information relating to the Mortgaged
Property and such other information and documents relating to Borrower, the
Lease, the Management Agreements, the Multi-Party Agreement or the Mortgaged
Property as Lender may reasonably request;

                 (ii) at Lender's cost and expense and subject to the rights of
Tenant, performing or permitting or causing to be performed or permitted such
site inspections, appraisals, market studies, environmental reviews and reports
(Phase I's and, if appropriate, Phase II's, subject to the provisions of the
Lease), engineering reports and other due diligence investigations of any
Mortgaged Property, as Lender may request or as may be necessary or appropriate
in connection with the Secondary Market Transaction; and

                 (iii) at Lender's cost and expense making all structural or
other changes to the Loan, modifying any documents evidencing or securing the
Loan, modifying the organizational documents of Borrower, using reasonable
efforts to cause the modification of the Lease, delivering opinions of counsel
acceptable to the Rating Agencies and addressing such matters as the Rating
Agencies may require; provided, however, that Borrower will not be required to
modify the amortization schedule of the Loan, alter Borrower's contingent
liabilities, alter the Rents payable under the Lease, alter the Termination
Values computed pursuant to Schedule C of the Lease, or modify any material term
of the Loan if such modification would adversely affect Borrower in any material
respect nor be required to modify the provisions of Article 5, or Sections 9.01,
this Section 12.12 or Section 12.13 hereof.

Subject to the conditions of paragraph 35 of the Lease, Borrower must provide,
at its expense, such information and documents as are in Borrower's possession,
custody, or control or which Borrower may obtain without unreasonable effort
relating to Borrower, any guarantor, the Mortgaged Property, the Lease and
Tenant (provided that Borrower shall not be obligated to provide information
which is the subject of a confidentiality agreement with a third party) as
Lender or any Rating Agency may reasonably request in connection with a
Secondary Market Transaction. Lender may provide to prospective investors any
information in its possession, including, financial statements relating to
Borrower, the Mortgaged Property and Tenant, and Lender may share such
information with the investment banking firms, Rating Agencies, accounting
firms, law firms and other third-party advisory firms involved with the Loan or
the Secondary Market Transaction. It is understood that the information provided
by Borrower to Lender may ultimately be incorporated into the offering documents
for the Secondary Market Transaction and thus such information may be disclosed
to various investors in connection with the Secondary Market Transaction. Lender
may rely on the information supplied by or on Borrower's behalf.

             (b) If any Secondary Market Transaction includes the preparation of
a preliminary and final private placement memorandum, offering circular or
prospectus, Borrower agrees to provide in connection with such Secondary Market
Transaction, at the reasonable cost and expense of Lender, a certificate
certifying to Lender that Borrower has carefully examined the portion of such
memorandum, offering circular or prospectus relating to the Mortgaged Property,
the Lease, the Loan and Borrower and that such sections will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in the light of the circumstances under
which they were made, not misleading with respect to the Mortgaged Property, the
Lease, the Loan or Borrower. Further, if any Secondary Market Transaction
includes the preparation of such memorandum, offering circular or prospectus
which requires disclosure about the Mortgaged Property, the Lease or the Loan,
BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY INDEMNIFIES THE INDEMNIFIED
PARTIES FROM AND AGAINST ANY INDEMNIFIED LIABILITIES TO WHICH THE INDEMNIFIED
PARTIES MAY BECOME SUBJECT (INCLUDING, ANY LEGAL OR OTHER EXPENSES REASONABLY
INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH
INDEMNIFIED LIABILITY) TO THE EXTENT ANY SUCH INDEMNIFIED LIABILITY IS BASED
UPON ANY UNTRUE STATEMENT OF ANY MATERIAL FACT CONTAINED IN SUCH SECTIONS
REVIEWED AND CERTIFIED BY BORROWER OR IS BASED UPON THE OMISSION TO STATE
THEREIN A MATERIAL FACT REQUIRED TO BE STATED IN SUCH SECTIONS OR NECESSARY IN
ORDER TO MAKE THE STATEMENTS IN SUCH SECTIONS, IN LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE, NOT MISLEADING; provided, however, that Borrower
will be liable in any such case under the preceding indemnification only to the
extent that any such Indemnified Liability is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with
information furnished to Lender by or on behalf of Borrower. Nothing contained
herein shall impose liability upon Borrower for any Indemnified Liability
arising out of or based upon an untrue statement of any material fact contained
in any statement, report or document provided to Lender on behalf of Borrower by
a party who is not an affiliate of Borrower (a "THIRD PARTY REPORT") or arising
out of or based upon the omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, unless Borrower
has actual knowledge that such Third Party Report contains such untrue statement
or omission. This indemnity agreement is in addition to any liability which
Borrower may otherwise have, and shall survive payment in full of the Debt or
any termination or satisfaction of the Lien of the Indenture or foreclosure of
the Indenture.

      The provisions of this Section 12.12 do not apply to the initial sale of
the Loan which is expected to occur immediately after the closing of the Loan.
The liability of Borrower under this Section 12.12 is limited in accordance with
the provisions of Section 12.13 hereof.

                              IMPORTANT - READ THIS

BORROWER ACKNOWLEDGES THAT PURSUANT TO THE FOREGOING INDEMNITY IT HAS AGREED TO
INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL
LIABILITIES ARISING BY REASON OF THE ACTS OR OMISSIONS OF ANY OF THE INDEMNIFIED
PARTIES AND OTHERWISE, WHICH LIABILITIES INCLUDE, WITHOUT LIMITATION, EXCEPT AS
PROVIDED ABOVE, SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE, STRICT LIABILITY,
CRIMINAL LIABILITY, STATUTORY LIABILITY, LIABILITY FOR INJURIES NOT COMPENSATED
BY WORKERS' COMPENSATION INSURANCE, OTHER INJURIES OR LOSSES NOT COVERED BY
INSURANCE AND LIABILITY ARISING AS A RESULT OF WAIVERS, EXCULPATIONS,
DISCLAIMERS OR RELEASES. IF SUCH LIABILITY ARISES BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY (OR INDEMNIFIED
PARTIES, AS THE CASE MAY BE) (HEREINAFTER A "RESPONSIBLE INDEMNIFIED PARTY")
THIS INDEMNITY SHALL NOT EXTEND TO ANY SUCH RESPONSIBLE INDEMNIFIED PARTY, BUT
SHALL EXTEND TO ALL OTHER INDEMNIFIED PARTIES.

      Section 12.13 Recourse Provisions. Subject to the qualifications below,
Lender will not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in this Loan Agreement, the Note or in any of
the Security Documents (other than the Guaranty Agreement) by any action or
proceeding wherein a money judgment or personal liability is sought against
Borrower or any other Released Parties, except that Lender may bring a
foreclosure action, an action for specific performance or in any other
appropriate action or proceeding to enable Lender to enforce and realize upon
its interests under the Note, this Loan Agreement or the Security Documents or
in the Mortgaged Property, or in any other collateral given to Borrower pursuant
to this Loan Agreement and the Security Documents; provided, however, that,
except as specifically provided herein, any judgment in any such action or
proceeding will be enforceable against Borrower only to the extent of Borrower's
interest in the Mortgaged Property, and Lender, by accepting this Loan
Agreement, the Note and the Security Documents, agrees that it will not sue for,
seek or demand any deficiency judgment against Borrower or any of the other
Released Parties in any such action or proceeding under, or by reason of, or in
connection with this Loan Agreement, the Note or the Security Documents. The
provisions of this section do not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by the Note, this Loan
Agreement or any of the Security Documents; (b) impair Lender's right to name
Borrower as a party defendant in any action or suit for foreclosure and sale
under the Indenture; (c) affect the validity or enforceability of any guaranty
made in connection with the Debt or any of the rights and remedies of Lender
thereunder; (d) impair Lender's right to obtain the appointment of a receiver;
(e) impair the enforcement of the Assignment of Lease; or (f) constitute a
waiver of Lender's right to enforce the liability and obligation of Borrower, by
money judgment or otherwise but only to the extent of Borrower's interest in the
Mortgaged Property, to the extent Lender incurs any loss, damage, cost, expense,
liability, claim or other obligation (including, attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following:

                 (i) Borrower's failure to account for Tenant's security
deposits, if any, for Rents or any other payment collected by Borrower from
Tenant under the Lease in accordance with the provisions of the Loan Documents;

                 (ii) after an Event of Default, Borrower's failure to apply
100% of Basic Rent and Additional Rent (other than Excepted Rights and Payments)
received by Borrower to repay the Debt;

                 (iii) fraud or a material misrepresentation made by Borrower,
or the holders of beneficial or ownership interests in Borrower, in connection
with the financing evidenced by the Loan Documents;

                 (iv) any attempt by Borrower to divert or otherwise cause to be
diverted any amounts payable to Lender or Servicer for Lender's benefit in
accordance with the Loan Documents;

                 (v) the misappropriation or misapplication by Borrower of any
insurance proceeds or Condemnation awards relating to the Mortgaged Property;

                 (vi) Borrower's failure to maintain its existence as a special
purpose, "bankruptcy remote" entity, in good standing, as required by Article 6
hereof;

                 (vii) a Transfer in violation of Section 5.02 hereof; or

                 (viii) any environmental matter(s) affecting the Mortgaged
Property which is introduced or caused by Borrower or any member of Borrower.

      Notwithstanding anything to the contrary in the Loan Documents, (i) Lender
shall not be deemed to have waived any right which Lender may have under
Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code
to file a claim for the full amount of the Debt or to require that all
collateral shall continue to secure all of the Debt owing to Lender, and (ii)
the Debt will become fully recourse to Borrower (but not any member, partner or
beneficiary thereof) if: (A) Borrower fails to provide financial information in
accordance with the provisions of, this Loan Agreement; (B) Borrower fails to
obtain Lender's prior written consent to any Transfer as required by this Loan
Agreement; or (C) Borrower fails to satisfy the provisions of Section 4.01
hereof.

      SECTION 12.14 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS LOAN
AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN
THE STATE OF TEXAS. BORROWER, AND EACH ENDORSER HEREBY SUBMITS TO PERSONAL
JURISDICTION IN SAID STATE AND THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA LOCATED IN SAID STATE (AND ANY APPELLATE COURTS TAKING APPEALS
THEREFROM) FOR THE ENFORCEMENT OF SUCH BORROWER'S, ENDORSER'S OBLIGATIONS
HEREUNDER, UNDER THE NOTE, AND THE OTHER SECURITY DOCUMENTS, AND WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAW OF ANY OTHER STATE TO OBJECT TO JURISDICTION
WITHIN SUCH STATE FOR THE PURPOSES OF SUCH ACTION, SUIT, PROCEEDING OR
LITIGATION TO ENFORCE SUCH OBLIGATIONS OF BORROWER OR ENDORSER. BORROWER AND
EACH ENDORSER HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT,
THE NOTE, OR ANY OF THE SECURITY DOCUMENTS, (A) THAT IT IS NOT SUBJECT TO SUCH
JURISDICTION OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS
NOT MAINTAINABLE IN THOSE COURTS OR THAT THIS LOAN AGREEMENT, THE NOTE, AND/OR
ANY OF THE SECURITY DOCUMENTS MAY NOT BE ENFORCED IN OR BY THOSE COURTS OR THAT
IT IS EXEMPT OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, (C) THAT THE VENUE OF THE ACTION, SUIT OR
PROCEEDING IS IMPROPER OR (D) THAT LENDER IS BARRED FROM FILING SUIT DUE TO ITS
NOT HAVING QUALIFIED TO DO BUSINESS IN THE STATE WHERE THE MORTGAGED PROPERTY IS
LOCATED. IF ANY SUCH ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED,
BORROWER OR ENDORSER AGREE THAT SERVICE OF PROCESS MAY BE MADE, AND PERSONAL
JURISDICTION OVER BORROWER OR ENDORSER OBTAINED, BY SERVICE OF A COPY OF THE
SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO COMMENCE SUCH LITIGATION UPON
BORROWER OR ENDORSER AT BORROWER'S ADDRESS FIRST ABOVE WRITTEN.

      SECTION 12.15 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW,
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE, THIS LOAN
AGREEMENT, OR THE SECURITY DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
ARISING IN CONNECTION WITH THIS LOAN AGREEMENT, THE NOTE, ANY OF THE SECURITY
DOCUMENTS OR THE DEBT. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

      Section 12.16 Consent Specific/No Deemed Waiver. Any consent or approval
by Lender in any single instance will not be deemed or construed to be Lender's
consent or approval in any like matter arising at a subsequent date, and
Lender's failure to promptly exercise any right, power, remedy, consent or
approval provided herein or at law or in equity shall not constitute or be
construed as a waiver of the same nor shall Lender be estopped from exercising
such right, power, remedy, consent or approval at a later date. Any consent or
approval requested of and granted by Lender pursuant hereto shall be narrowly
construed to be applicable only to Borrower and the matter identified in such
consent or approval and no third party may claim any benefit by reason thereof,
other than the party to whom such consent or approval was given or reasonably
intended to benefit, and any such consent or approval shall not be deemed to
constitute Lender a venturer or partner with Borrower nor shall privity of
contract be presumed to have been established with any such third party.

      Section 12.17 No Forfeiture. Borrower represents and warrants to Lender
that, as of the Closing Date, Borrower has not committed any act or omission
affording any Governmental Authority the right of forfeiture against the
Mortgaged Property or any monies paid in performance of Borrower's obligations
under the Loan Documents. Borrower agrees not to commit, permit or suffer to
exist any act, omission or circumstance affording such right of forfeiture. In
furtherance thereof, Borrower indemnifies Lender and agrees to defend and hold
Lender harmless from and against any Costs by reason of the breach of the
agreements or the representations and warranties set forth in this paragraph.

      Section 12.18 Notices. All communications herein provided for or made
pursuant hereto shall be in writing and shall be sent by (i) registered or
certified mail, return receipt requested, and the giving of such communication
shall be deemed complete on the third Business Day (as such term is defined in
the Lease) after the same is deposited in a United States Post Office with
postage charges prepaid, (ii) reputable overnight delivery service with
acknowledgment receipt returned, and the giving of such communication shall be
deemed complete on the immediately succeeding Business Day after the same is
timely deposited with such delivery service, or (iii) hand delivery by reputable
delivery service:

      If to Lender:


                  Legg Mason Real Estate Services, Inc.
                  Miami Regional Office
                  15050 N.W. 79th Court, Suite 101
                  Miami Lakes, Florida 33016
                  Attention:  Servicing Department

                  with a copy concurrently to:

                  Ballard Spahr Andrews & Ingersoll, LLP
                  300 East Lombard Street, Suite 1900
                  Baltimore, Maryland 21202
                  Attention:  Fred Wolf, III, Esquire

      If to Borrower:


                  Lakepointe Assets LLC
                  5847 San Felipe Drive, Suite 2600
                  Houston, Texas 77057
                  Attention:  Erik Eriksson, Esq., General Counsel

                  with a copy concurrently to:

                  Lakepointe Assets LLC
                  5847 San Felipe Drive, Suite 2600
                  Houston, Texas 77057
                  Attention:  J. Richard Rosenberg, Vice President and Chief
                              Financial Officer

                  and a copy concurrently to:

                  Day, Berry & Howard LLP
                  260 Franklin Street
                  Boston, Massachusetts 02110
                  Attention:  Lewis Burleigh, Esq.

      Section 12.19 Estoppel Certificates. (a) After request by Lender, Borrower
will within ten (10) days furnish Lender with a statement, duly acknowledged and
certified, setting forth (i) the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, (vi) that the Loan
Documents are valid, legal and binding obligations and have not been modified or
if modified, giving particulars of such modification, and (vii) such other
matters as Lender shall reasonably request.

             (a) After request by Borrower, Lender will within ten (10) days
furnish Borrower with a statement, duly acknowledged and certified, setting
forth (i) the original principal amount of the Note, (ii) the unpaid principal
amount of the Note, and (iii) the date installments of interest and/or principal
were last paid.

      Section 12.20 Usury Laws. It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with the applicable Texas
law governing the maximum rate or amount of interest payable on the Note or the
Debt evidenced by the Note and by the other Loan Documents (or, to the extent it
would permit a greater rate or amount of interest on the Note or the Debt
evidenced by the Note and by the other Loan Documents, applicable United States
federal law) to the end that neither Borrower nor Lender shall have contracted
for, and Lender shall not charge, take, reserve or receive, and Borrower shall
not pay, a greater amount of interest than under Texas law or applicable United
State federal law. If (i) the applicable law is ever judicially interpreted so
as to render usurious any amount called for under the Note or under any of the
other Loan Documents, or contracted for, charged, taken, reserved or received
with respect to the Debt, or (ii) Lender's exercise of any remedy hereunder or
under the other Loan Documents, including the option herein contained to
accelerate the maturity of the Note, or any prepayment by Borrower, results in
Lender having charged, taken, reserved or received, and Borrower having paid,
any interest in excess of that permitted by applicable law, then it is
Borrower's and Lender's express intent that (A) all amounts theretofore
collected by Lender in excess of the maximum amount of interest allowed by
applicable law be credited on the principal balance of the Note (or, if the Note
has been or would thereby be paid in full, refunded to Borrower), and (B) the
provisions of the Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter payable, chargeable or collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder
which does not exceed the maximum amount of interest allowed by applicable law.
All sums paid or agreed to be paid to Lender for the use, forbearance and
detention of the Debt evidenced by the Note and by the other Loan Documents
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Debt until payment in full
so that the rate or amount of interest on account of such Debt does not exceed
the usury ceiling from time to time in effect and applicable to such Debt for so
long as debt is outstanding. To the extent that Lender is relying on Chapter
303, as amended, of the Texas Finance Code to determine the Maximum Lawful Rate
(hereafter defined) payable on such Debt, Lender will utilize the weekly rate
ceiling from time to time in effect as provided in such Chapter 303, as amended.
To the extent United States federal law permits Lender to contract for, charge
or receive a greater amount of interest than Texas law, Lender will rely on
United States federal law instead of such Chapter 303, as amended, for the
purpose of determining the Maximum Lawful Rate and the maximum amount permitted
by applicable Law. Additionally, to the extent permitted by applicable law now
or hereafter in effect and the Loan Documents, Lender may, at its option and
from time to time, implement any other method of computing the Maximum Lawful
Rate under such Chapter 303, as amended, or under other applicable law by giving
notice, if required, to Borrower as provided by applicable law now or hereafter
in effect. In no event shall the provisions of Chapter 346 of the Texas Finance
Code (which regulates certain revolving credit loan accounts and revolving
triparty accounts) apply to the Debt evidenced by the Note. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration. "MAXIMUM LAWFUL RATE" shall mean the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with the applicable laws of the
State of Texas (or applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges
(hereafter defined) made in connection with the loan evidenced by the Note and
the Loan Documents. "CHARGES" shall mean all fees and charges, if any,
contracted for, charged, received, taken or reserved by Lender in connection
with the transactions relating to the Note and the Debt evidenced by the Note or
by the Loan Documents which are treated as interest under applicable law. The
term "APPLICABLE LAW" as used in this Section 12.20 shall mean the laws of the
State of Texas or the laws of the United States, whichever allows the greater
rate or amount of non-usurious interest to be contracted for, charged, taken,
reserved or received with respect to the Debt evidenced by the Note and the
other Loan Documents, as such laws now exist or may be changed or amended or
come into effect in the future.

      Section 12.21 Approval of RVI Insurer. Notwithstanding anything contained
herein or any of the other Loan Documents to the contrary (including, without
limitation, anything contained in the definition of Excepted Rights and Excepted
Payments) (i) the Loan Documents may not be amended, modified, changed, waived,
discharged or terminated in any manner that would materially adversely affect
the "Fair Market Value of the Property" (as described in the RVI Policy), or
which would materially impair the Lender's ability to realize upon the Mortgaged
Property and/or any other collateral for the Loan, and (ii) the Lease and/or the
Lease Guaranty may not be amended, modified, changed, waived, assigned or
terminated in any manner that materially adversely affects the Fair Market Value
of the Property (as described in the RVI Policy), without the prior written
consent of the insurer under the RVI Policy, all as required by Section 21 of
that certain Additional Named Insured Endorsement (the "RVI ENDORSEMENT") issued
to Lender concurrently with the issuance of the RVI Policy. Additionally, as set
forth in Section 21 of the RVI Endorsement, the parties agree that any
modification of the Loan Documents shall be in writing.





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                                   APPENDIX A

                      DEFINITIONS AND RULES OF CONSTRUCTION

      As used herein, unless otherwise specified or the context otherwise
requires:

             (a) any term defined in this Appendix by reference to another
instrument or document shall continue to have the meaning ascribed thereto
whether or not such other instrument or document remains in effect;

             (b) words which include a number of constituent parts, things or
elements, shall be construed as referring separately to each constituent part,
thing or element thereof, as well as to all of such constitute parts, things or
elements as a whole;

             (c) references to any Person include such Person and its successors
and permitted assigns and in the case of an individual, the word "successors"
includes such Person's heirs, devisees, legatees, executors, administrators and
personal representatives;

             (d) singular words connote the plural as well as the singular, and
vice versa as may be appropriate;

             (e) words importing a gender include any gender;

             (f) the words "consent", "approve", "agree" and "request", and
derivations thereof or words of similar import, mean the prior written consent,
approval, agreement or request of the Person in question.

             (g) a reference to any statute, regulation, proclamation, ordinance
or law includes all statutes, regulations, proclamations, ordinances or laws
varying, consolidating or replacing them, and a reference to a statute includes
all regulations, proclamations, and ordinances issued or otherwise applicable
under that statute;

             (h) a reference to a document includes an amendment or supplement
to, or replacement or novation of, that document;

             (i) the words "including" and "includes", and words of similar
import, shall be deemed to be followed by the phrase "without limitation";

             (j) the words "herein", "hereof", "hereunder", "thereof", and
"thereunder" and words of similar import, when used with respect to a document,
shall be deemed to refer to the document as a whole and not to the specific
section or provision where such word appears unless so stated;

             (k) unless the context shall otherwise require, a reference to the
"Mortgaged Property" or "Improvements" shall be deemed to be followed by the
phrase "or a portion thereof";

             (l) the Schedules, Exhibits and Appendices to the Loan Documents
are incorporated therein by reference;

             (m) the titles and headings of Articles, Sections, Schedules,
Exhibits, subsections, paragraphs and clauses are inserted as a matter of
convenience to the Loan Documents and shall not affect the construction of the
Loan Documents;

             (n) references to any Loan Documents include all amendments,
supplements, consolidations, replacements, restatements, extensions, renewals
and other modifications thereof, in whole or in part; and

             (o) the terms "agree" and "agreements" contained herein are
intended to include and mean "covenant" and "covenants".

"ACCEDING BENEFICIAL OWNER" means a Person to whom a Beneficial Owner Transfers
its interest in Borrower.

"ADDITIONAL RENT" is defined in paragraph 3(b) of the Lease.

"AETNA LEASE" means that certain Lease Agreement dated as of October 22, 1993
between The Prudential Insurance Company of America ("PRUDENTIAL") as lessee,
and Fluor Daniel, Inc. (now known as Fluor Enterprises, Inc., d/b/a Fluor
Signature Services) ("FEI") as lessor, as amended by that certain Second
Amendment to Lease Agreement dated January 1, 1995; as the lessee's interest
with respect to the same has been assigned by Prudential (effective December 16,
1999) to Prudential Health Care Plan, Inc. ("AETNA"), and as the lessor's
interest with respect to the same has been assigned (as of the Closing Date) by
FEI to Borrower, then immediately subsequent thereto by Borrower to the Aetna
SPE.

"AETNA LEASEHOLD LENDER" means Legg Mason Real Estate Services, Inc., a
Pennsylvania corporation, its successors and assigns.

"AETNA MANAGEMENT AGREEMENT" means that certain Management Agreement [Aetna
Space] dated as of the Closing Date between Tenant as manager and the Aetna SPE
as landlord, with respect to the property covered by the Aetna SPE Lease.

"AETNA SPE" means Lakepointe Assets AET LLC, a Delaware limited liability
company.

"AETNA SPE LEASE" means that certain Lease Agreement dated as of the Closing
Date between Borrower as lessor and the Aetna SPE as lessee, with respect to the
property covered by the Aetna Lease.

"ALTERATIONS" is defined in paragraph 10(c) of the Lease.

"ARTICLE 9 PURCHASE PRICE" means the purchase price offered pursuant to a
Rejectable Offer made upon the occurrence of an event of default under Article 9
of the Lease, which will be determined in accordance with Article 9 of the
Lease.

"ARTICLE 12 PURCHASE PRICE" means the purchase price offered pursuant to a
Rejectable Offer made upon the occurrence of a Destruction under the Lease,
which will be determined in accordance with Article 12 of the Lease.

"ASSIGNED DOCUMENTS" is defined in the Assignment of Leases

"ASSIGNMENT OF LEASE" means that certain Assignment of Leases, Rents and
Management Agreements, dated as of the Closing Date, given by Borrower to Lender
to secure the Obligations.

"BANKRUPTCY CLAIMS" means the power and authority to exercise or assert
Borrower's rights and claims to the payment of damages arising from any
rejection by a tenant of the Lease or any of the Other Leases under the
Bankruptcy Code.

"BANKRUPTCY CODE" means 11 U.S.C. Section 101 et seq. as the same may be
amended from time to time.

"BASIC RENT" is defined in paragraph 3(a) of the Lease.

"BENEFICIAL OWNER" means the owner of any membership interest in the beneficial
or other economic interest in Borrower.

"BORROWER" is as defined in the first paragraph of the Loan Agreement.

"BORROWER'S CERTIFICATE" means that certain certificate dated as of the Closing
Date executed by Borrower and delivered to Lender in connection with the closing
of the Loan.

"BUSINESS DAY" means any day other than a Saturday, Sunday or the days on which
commercial banks located in the State of New York are required or authorized to
be closed.

 "CASUALTY" is defined in paragraph 12(a) of the Lease.

"CERTIFICATE OF COMPLIANCE AND RELEASE" is as described in Section 5.02(b) of
the Loan Agreement.

"CERTIFICATE HOLDERS" means, as of any particular day, the holders of the
certificates under the Trust Agreement.

"CERTIFICATE TRUSTEE" means Wells Fargo Bank Northwest, National Association,
and each successor trustee, as trustee under the Trust Agreement.

"CLOSING DATE" means the date of the Loan Agreement, as shown on the cover page
of the Loan Agreement.

"CONDEMNATION" means a "Taking" as defined in paragraph 12(a) of the Lease.

"CONSTITUENT PARTY" is as defined in Section 6.01(d) of the Loan Agreement.

"CONTROL" (including the correlative meanings of the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.

"CREDIT RATING" is defined in Appendix I of the Lease.

"CREDIT RATING DOWNGRADE" is defined in Appendix I of the Lease.

"CURRENT INDEMNITOR" is as defined in Section 5.07 of the Loan Agreement.

"DEBT" is as defined in Section 3.01(a) of the Loan Agreement.

"DEFAULT RATE" means a rate of interest equal to 9.560% per annum, but in no
event greater than the maximum rate permitted by applicable Legal Requirements.

"DEFEASANCE" is as defined in Section 2.05(a) of the Loan Agreement.

"DEFEASANCE DEPOSIT" means an amount which Lender will determine (in sole
reliance upon a verification report delivered by a nationally recognized
independent certified public accountant or firm of nationally recognized
certified public accountants) is sufficient to pay the Scheduled Defeasance
Payments, any costs and expenses (including the reasonable fees and expenses of
such accountant or firm of accountants) incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments
and any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Note or otherwise required to
accomplish the agreements of Section 2.05 of the Loan Agreement, which taxes
Lender will cause to be paid to the appropriate taxing authority on the Release
Date.

"DESTRUCTION" is as defined in paragraph 12(a) of the Lease.

"DISCOUNTED VALUE" means, with respect to the Prepayment Amount of the Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Prepayment Amount from their respective scheduled due dates to the
Settlement Date with respect to such Prepayment Amount, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Note is payable) equal to the
Reinvestment Yield with respect to such Prepayment Amount.

"DOLLARS" and "$" mean lawful currency of the United States of America.

"ENVIRONMENTAL LAWS" means and includes but shall not be limited to the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as amended by
the Hazardous and Solid Waste Amendments of 1984, the Comprehensive

Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), as amended by the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean Water Act (33 U.S.C.
Section 1251 et seq.) the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. Section 136 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) and all applicable federal, state and local environmental
laws, including obligations under the common law, ordinances, rules, regulations
and publications, as any of the foregoing may have been or may be from time to
time amended, supplemented or supplanted, and any other Legal Requirements, now
or hereafter existing relating to regulation or control of Hazardous Substances
or environmental protection, health and safety.

"EQUIPMENT" means all machinery, equipment, fixtures (including, all heating,
air conditioning, plumbing, lighting, communications and elevator fixtures) and
other property of every kind and nature, whether tangible or intangible,
whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land, or appurtenant thereto, and
usable in connection with the present or future construction, operation and
occupancy of the Land and all building equipment, materials and supplies of any
nature whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land, or appurtenant thereto, or
usable in connection with the present or future construction, operation,
enjoyment and occupancy of the Land.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated there under from
time to time in effect.

"ESCROW FUND" means the "Tax and Insurance Reserve Fund" as defined in paragraph
13(e) of the Lease.

"EVENTS OF DEFAULT" is as defined in Section 9.01 of the Loan Agreement.

"EXCEPTED RIGHTS AND EXCEPTED PAYMENTS" means the following described
properties, payments, amounts, rights, interests and privileges:

         (i) all payments to Borrower by Tenant pursuant to any indemnity under
         the Lease which by the terms thereof are payable to Borrower or its
         successors, permitted assigns, employees, officers, directors,
         shareholders, members, servants, agents and affiliates thereof;

         (ii) any insurance proceeds to the extent payable under general public
         liability policies maintained by Tenant pursuant to paragraph 13 of the
         Lease, which, by the terms of such policies, are solely for the benefit
         of and payable directly to Borrower or its successors, permitted
         assigns, employees, officers, directors, shareholders, members,
         servants, agents and affiliates thereof, in each such case for their
         own respective accounts;

         (iii) so long as no Event of Default exists, Borrower's right, in
         addition to Lender's right, (A) to receive from Tenant, Manager, Lease
         Guarantor, Management Agreement Guarantor and Multi-Party Agreement
         Guarantor certificates and other documents and information that Tenant,
         Manager, Lease Guarantor, Management Agreement Guarantor and
         Multi-Party Agreement Guarantor are required to give or furnish to
         Borrower pursuant to the Lease, the Lease Guaranty, the Management
         Agreements, the Guaranty of Management Agreements, the Multi-Party
         Agreement or the Guaranty of Multi-Party Agreement (B) to inspect the
         Mortgaged Property and all records relating thereto, and (c) to
         undertake repairs and maintenance of the Mortgaged Property;

         (iv) so long as no Event of Default exists, Borrower's right to send
         Notices of default by Tenant or Manager to pay (A) any amount due under
         clauses (i) and (ii) hereof, and (B) any other amount, other than Basic
         Rent, due under the Lease or the Management Agreements to be paid to a
         third party such as Taxes and Impositions, Insurance Premiums, utility
         charges and similar payments (any payments due under clauses (i) and
         (ii) and this clause (iv) are called collectively, the "EXCEPTED
         PAYMENTS");

         (v) so long as no Event of Default exists, Borrower's right to (A) sue
         for damages resulting from any failure by Tenant or Lease Guarantor to
         pay any Excepted Payments, and (B) enforce performance or observance by
         (i) Tenant under the Lease, (ii) Lease Guarantor under the Lease
         Guaranty, (iii) Manager under the Management Agreements, (iv)
         Management Agreement Guarantor under the Guaranty of Management
         Agreements, (v) Tenant, the Aetna SPE or the MCI SPE under the
         Multi-Party Agreement, or (vi) Multi-Party Agreement Guarantor under
         the Guaranty of Multi-Party Agreement of the applicable covenants and
         terms of the Lease, the Lease Guaranty, the Management Agreements, the
         Guaranty of Management Agreements, the Multi-Party Agreement or the
         Guaranty of Multi-Party Agreement, as allowed by law, equity; provided,
         however, Borrower may not (x) accelerate the payment of Rent, or (y)
         give any Notice, sue or take any other action relating to Tenant's or
         Manager's failure to pay such Excepted Payment that might have the
         effect of terminating the Lease and/or the Management Agreement,
         dispossessing Tenant, declaring the Lease or Management Agreement
         forfeited, terminating or reducing any obligations of Tenant, Lease
         Guarantor, Manager, Management Agreement Guarantor, Multi-Party
         Agreement Guarantor, the Aetna SPE or the MCI SPE under the Lease, the
         Lease Guaranty, the Management Agreements, the Guaranty of Management
         Agreements, the Multi-Party Agreement, the Guaranty of Multi-Party
         Agreement or pursuing any comparable remedy without in each instance
         Lender's prior written approval which Lender may grant or withhold in
         its sole discretion; and

         (vi) so long as no Event of Default exists where Lender's approval or
         consent is not required by the terms of the Lease or the Management
         Agreements, Borrower may (A) determine Tenant's compliance with the
         provisions of the Lease and the Manager's compliance with the
         Management Agreements, and (B) provide any approval, consent or waiver
         under or pursuant to the Lease and the Management Agreements; provided,
         however, if the Lease or the Management Agreements give a concurrent
         right to Lender to determine compliance or to grant any approval,
         consent or waiver, then Lender's determination or Lender's approval,
         consent or waiver shall be final, regardless of Borrower's
         determination, approval, consent or waiver, and; provided, further, in
         the instance of (A) and (B) Borrower may not make any determination or
         provide any approval, consent or waiver or take any other action under
         or pursuant to the Lease or the Management Agreements that might
         adversely affect (i) Borrower's rights under the Lease, (ii) the Lease
         Guarantor's rights under the Lease Guaranty, (iii) Manager's rights
         under the Management Agreements, (iv) Management Agreement Guarantor's
         rights under the Guaranty of Management Agreements, (v) Tenant's, the
         Aetna SPE's or the MCI SPE's rights under the Multi-Party Agreement,
         (vi) Multi-Party Agreement Guarantor's rights under the Guaranty of
         Multi-Party Agreement, (vii) the value of the Mortgaged Property, or
         (viii) Lender's rights under the Loan Documents.

"GOVERNMENTAL AUTHORITY" means any federal, state, county, municipal or other
governmental or regulatory, arbitrator, board, body, commission, court,
instrumentality, or other administrative, judicial, quasi-governmental or
quasi-judicial tribunal, authority or agency of competent authority (or private
entity in lieu thereof).

"GUARANTY AGREEMENT" means that certain Indemnity and Guaranty Agreement dated
as of the Closing Date from Beneficial Owner to Lender (as the same may be
replaced from time to time by an Acceding Beneficial Owner).

"GUARANTY OF MANAGEMENT AGREEMENTS" means, collectively, the Guaranty of
Management Agreement [MCI Space] dated as of the Closing Date by Management
Agreement Guarantor and the Guaranty of Management Agreement [Aetna Space] dated
as of the Closing Date by Management Agreement Guarantor.

"GUARANTY OF MULTI-PARTY AGREEMENT" means that certain Guaranty of Multi-Party
Agreement dated as of the Closing Date by the Multi-Party Agreement Guarantor.

"HAZARDOUS SUBSTANCES" means (i) those substances (whether solid, liquid or
gas), included within the definitions of or identified as "hazardous
substances", "hazardous materials", or "toxic substances" in or pursuant to,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) (CERCLA), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100 Stat.
1613) (SARA), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.,
Section 6901 et seq.) (RCRA), the Occupational Safety and Health Act of 1970 (29
U.S.C. s. 651 et seq.) (OSHA), and the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801 et seq., and in the regulations promulgated pursuant to
said laws, all as amended; (ii) those substances listed in the United States
Department of Transportation Table (40 CFR 172.101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); (iii) any material, waste,
substance, pollutant or contamination which is or contains (A) petroleum, its
derivatives, by-products and other hydrocarbons, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos and/or asbestos-containing materials in any form that is
or could become friable, (C) polychlorinated biphenyls, (D) designated as
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section 1251 et seq., (33 U.S.C. Section 1321) or listed pursuant to Section 307
of the Clean Water Act (33 U.S.C. Section 1317); (E) flammable explosives; (F)
radioactive materials; and (iv) such other substances, materials, wastes,
pollutants and contaminants which are or become regulated as hazardous, toxic or
"special wastes" under applicable local, state or federal law, or the United
States government, or which are classified as hazardous, toxic or as "special
wastes" under any Legal Requirements.

"IMPROVEMENTS" is defined in Article 1 of the Lease.

"INDEMNIFIED LIABILITIES" is defined in paragraph 8(a) of the Lease.

"INDEMNIFIED PARTIES" means Lender, each Certificate Holder and the Certificate
Trustee, their respective successors and assigns, the beneficial owners of any
of the foregoing and the trustees, beneficiaries, partners, shareholders,
officers, directors, agents or employees of Lender, each Certificate Holder and
the Certificate Trustee, or any such successor or assign or beneficial owner.

"INDEMNITY OBLIGATIONS" is as defined in Section 5.07 of the Loan Agreement.

"INDENTURE" is as defined in Background recital C of the Loan Agreement.

"INDEPENDENT MANAGER" is as defined in Section 6.01(q) of the Loan Agreement.

"INSURANCE PREMIUMS" are defined in paragraph 13(e) of the Lease.

"INSURANCE REQUIREMENTS" are defined in paragraph 13(a) of the Lease.

"KNOWLEDGE" by Borrower with respect to any matter means the present actual
knowledge of such matter by an Executive Officer (as defined in the Lease) of
Borrower after reasonable investigation and inquiry. Knowledge shall be presumed
conclusively as to the content of any notice to Borrower made in accordance with
the Loan Documents.

"LAND" is as defined in the Indenture.

"LEASE" means that certain Lease Agreement dated as of the Closing Date between
Borrower as Landlord and Tenant as tenant, demising the Mortgaged Property,
including, all deemed amendments thereto as provided therein, extended terms,
and extensions and renewals of the term thereof.

"LEASE DEFAULT" means the occurrence under the Lease of an event of default (as
defined in paragraph 20 of the Lease) other than an event of default under
subparagraphs 20(a)(iii), (iv), (v), or (vii) of the Lease.

"LEASE GUARANTOR" means Fluor Corporation, a Delaware corporation, its permitted
successors and assigns.

"LEASE GUARANTY" means that certain Guaranty of Lease dated as of the Closing
date by Lease Guarantor, including all amendments thereto.

"LEGAL REQUIREMENTS" means (i) all present and future applicable laws, statutes,
treaties, rules, orders, ordinances, codes, regulations, requirements, Permits,
and interpretations by, and applicable judgments, decrees, injunctions, writs,
orders and like action of any Governmental Authority (including, without
limitation, those pertaining to the environment), whether or not such are within
the present contemplation of Borrower or Tenant, and (ii) any reciprocal
easement agreement, development agreement, deed restriction, or similar
agreement, relating to the Mortgaged Property, or the Improvements, or the
facilities or equipment thereon or therein, or the streets, sidewalks, vaults,
vault spaces, curbs and gutters adjoining the Leased Mortgaged, or the
appurtenances to the Leased Mortgaged, or the franchises and privileges
connected therewith.

"LETTER OF CREDIT" means a clean, irrevocable, unconditional transferable letter
of credit payable on sight draft only, in form acceptable to Lender, in favor of
Lender and entitling Lender to draw thereon, issued by a domestic bank or the
U.S. agency or branch of a foreign bank having an office in New York, New York,
at which presentation and payment of the Letter of Credit may occur, having a
long-term unsecured debt rating at the time of issuance and at all times
thereafter of "A" or better by Standard & Poor's, "A2" or better by Moody's or
an equivalent rating by any other NSRO and having capital, surplus and undivided
profits aggregating at least $250,000,000. Any Letter of Credit must expressly
provide that it is freely transferable to any successor or assign of Lender.

"LIEN" is defined in paragraph 7(a) of the Lease.

"LOAN" is as defined in Recital B of the Loan Agreement.

"LOAN AGREEMENT" means that certain Loan Agreement dated the Closing Date
between Lender and Borrower relating to the Mortgaged Property and pursuant to
which the Loan evidenced by the Note and secured by the Security Documents was
made to Borrower.

"LOAN DOCUMENTS" means, collectively, the Note, the Loan Agreement and the
Security Documents.

"MANAGEMENT AGREEMENT GUARANTOR" means Fluor Corporation, a Delaware
Corporation, its permitted successors and assigns.

"MANAGEMENT AGREEMENTS" mean, collectively, the Aetna Management Agreement and
the MCI Management Agreement, including all amendments thereto.

"MANAGER" means Fluor Enterprises Inc., a California Corporation, its permitted
successors and assigns.

"MCI" means, collectively, MCI Telecommunications Corporation (now known as MCI
WORLDCOM Network Services, Inc.) and MCI WorldCom Communications, Inc., a
Delaware corporation.

"MCI LEASE" means that certain Lease Agreement dated as of November 14, 1994
between MCI as lessee, and Fluor Daniel, Inc. (now known as Fluor Enterprises,
Inc., d/b/a Fluor Signature Services) ("FEI") as lessor; as the lessor's
interest with respect to the same has been assigned (as of the Closing Date) by
FEI to Borrower, then immediately subsequent thereto by Borrower to the MCI SPE.

"MCI LEASEHOLD LENDER" means Legg Mason Real Estate Services, Inc., a
Pennsylvania corporation, its successors and assigns.

"MCI MANAGEMENT AGREEMENT" means that certain Management Agreement [MCI Space]
dated as of the Closing Date between Tenant as manager and the MCI SPE as
landlord, with respect to the property covered by the MCI SPE Lease.

"MCI SPE" means Lakepointe Assets WCOM LLC, a Delaware limited liability
company.

"MCI SPE LEASE" means that certain Lease Agreement dated as of the Closing Date
between Borrower as lessor and the MCI SPE as lessee, with respect to the
property covered by the MCI Lease.

"MATURITY DATE" is as defined in the Note.

"MONTHLY PAYMENT" means the monthly payment of principal and interest due under
the Note.

"MOODY'S" means Moody's Investors Services, Inc., and its successors in interest.

"MORTGAGED PROPERTY" is as defined in the Indenture.

"MULTI-PARTY AGREEMENT" means that certain Multi-Party Agreement dated as of the
Closing Date by and among Tenant, the Aetna SPE, the MCI SPE and Borrower,
including all amendments thereto.

"MULTI-PARTY AGREEMENT GUARANTOR" means Fluor Corporation, a Delaware
corporation, its permitted successors and assigns.

"NET AWARD" is defined in Appendix I of the Lease. "NEW INDEMNITOR" is as
defined in Section 5.07 of the Loan Agreement.

"NEW INDEMNITY AGREEMENT" is as defined in Section 5.07 of the Loan Agreement.

"NON-CONSOLIDATION OPINION" means that certain opinion letter dated as of the
Closing Date delivered by Day, Berry & Howard LLP in connection with the Loan.

"NOTE" means that certain Note in the amount of the Loan dated the date of the
Loan Agreement made by Borrower to Lender.

"NOTICE" means any demand, statement, request, consent, approval or other notice
given under the Loan Documents.

"NSRO" means a nationally recognized statistical rating organization, which as
of the Closing Date would include Moody's, Standard & Poor's, Fitch IBCA, Inc.
and Duff & Phelps Credit Rating Corp.

"OBLIGATIONS" means collectively Borrower's obligations to pay the Debt and to
perform the Other Obligations.

"OTHER LEASES" means any leases, licenses and subleases (including, all
guarantees thereof) and other agreements affecting the use, enjoyment or
occupancy of the Land and Improvements other than the Lease.

"OTHER OBLIGATIONS" is as defined in Section 3.01(b) of the Loan Agreement.

"PERMITS" means all licenses, authorizations, certificates (including
certificates of occupancy), variances, concessions, grants, registrations,
consents, permits and other approvals issued by a Governmental Authority now or
hereafter pertaining to the ownership, management, occupancy, use, operation,
Alteration or Restoration of the Mortgaged Property.

"PERMITTED EXCEPTIONS" mean the exceptions to title set forth in Schedule B of
the Title Policy issued to Lender.

"PERMITTED LEASE TERMINATION EVENT" means the occurrence of either an "Event of
Default" (as defined in the Lease) under Article 9 of the Lease and Tenant has
the right to make a Rejectable Offer under, and Tenant has complied with the
terms of paragraph 9(h) of, the Lease, or a Destruction, and in each instance
Borrower has accepted or rejected Tenant's Rejectable Offer in accordance with
the terms of Section 10.02, with Lender's prior written consent, Tenant's
Rejectable Offer.

"PERMITTED TRANSFER" means, collectively, a Permitted Transfer of Beneficial
Interest or a Permitted Transfer of Mortgaged Property.

"PERMITTED TRANSFER OF BENEFICIAL INTEREST" is as defined in Section 5.02(a) of
the Loan Agreement.

"PERMITTED TRANSFER OF MORTGAGED PROPERTY" is as defined in Section 5.03(a) of
the Loan Agreement.

"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, trustee of a
trust, unincorporated organization, Governmental Authority, or other entity.

"POLICIES" are defined in paragraph 13(a) of the Lease.

"PREPAYMENT AMOUNT" means the outstanding principal balance of the Note that (1)
is to be prepaid pursuant to Section 10.02 of the Loan Agreement following a
Permitted Lease Termination Event, or (2) has become or is declared to be
immediately due and payable pursuant to Section 9.02 of the Loan Agreement, as
the context requires.

"PREPAYMENT CONSIDERATION" means an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the
Prepayment Amount of the Note over the amount of such Prepayment Amount,
provided that the Prepayment Consideration may in no event be less than zero.

"PROTECTIVE ADVANCES" means any costs or expenses Lender and/or Servicer advance
or incur in accordance with the terms of the Loan Documents to maintain, manage,
secure, remediate or otherwise protect the Mortgaged Property or the priority of
the Lien granted by the Indenture, including, any costs or expenses advanced or
incurred (i) to appear in, defend, or bring any action or proceeding necessary
to collect the Debt or enforce the Loan Documents, including, reasonable
attorneys' fees and disbursements incurred whether or not suit is brought; (ii)
to protect Lender's interest in the Mortgaged Property; (iii) to pay the
salaries, fees and wages of a managing agent and such other employees as Lender
deems necessary or desirable to manage and secure the Mortgaged Property; (iv)
to pay the cost of all Alterations and all expenses incident to taking and
retaining possession of the Mortgaged Property; (v) to foreclose the Indenture;
(vi) subject to the terms of the Lease and the Loan Documents, to cause the
Mortgaged Property to comply with any Legal Requirements applicable to Borrower
or Tenant, or to the Mortgaged Property, or which may govern or regulate the
ownership, use or operation of the Mortgaged Property; (vii) to pay Taxes,
Impositions and/or Insurance Premiums; (viii) to reimburse, protect or defend
Lender from or against any of the matters described in Section 4.11 of the Loan
Agreement; or (ix) for any actions taken to prevent waste to the Mortgaged
Property.

"RATING AGENCIES" means Moody's and Standard & Poor's, or at Lender's election,
another NSRO.

"REINVESTMENT YIELD" means, with respect to the Prepayment Amount of the Note,
the yield to maturity implied by:

(i)   calculating the yield for a hypothetical U.S. Treasury security having a
      maturity equal to the Remaining Average Life of such Prepayment Amount as
      of such Settlement Date by interpolating linearly between (1) the "on the
      run" current U.S. Treasury security with the maturity closest to and
      greater than the Remaining Average Life and (2) the "on the run" current
      U.S. Treasury security with the maturity closest to and less than the
      Remaining Average Life, both as reported by Bloomberg Financial Markets as
      of 10:00 A.M. (New York City time) on the second Business Day preceding
      the Settlement Date with respect to such Prepayment Amount; OR,

(ii)  if such yields are not reported as of such time or the yields reported as
      of such time are not ascertainable (including by way of interpolation),
      the Treasury Constant Maturity Series Yields reported, for the latest day
      for which such yields have been so reported as of the second Business Day
      preceding the Settlement Date with respect to such Prepayment Amount, in
      Federal Reserve Statistical Release H.15 (519) (or any comparable
      successor publication) for actively traded U.S. Treasury securities having
      a constant maturity equal to the Remaining Average Life of such Prepayment
      Amount as of such Settlement Date. Such implied yield will be determined,
      if necessary, by (a) converting U.S. Treasury bill quotations to
      bond-equivalent yields in accordance with accepted financial practice and
      (b) interpolating linearly between (1) the on the run U.S. Treasury
      security with the maturity closest to and greater than the Remaining
      Average Life and (2) the on the run U.S. Treasury security with the
      maturity closest to and less than the Remaining Average Life.

"REJECTABLE OFFER" means an offer by Tenant to purchase the Mortgaged Property
in accordance with the applicable provisions of Articles 9 or 12 of the Lease.

"RELEASE DATE" means the regularly scheduled Monthly Payment Date on which the
Defeasance is to occur.

"RELEASED PARTIES" means Borrower, any partner or member of Borrower and any
member or any officers, shareholders, directors or partners thereof.

"REMAINING AVERAGE LIFE" means, with respect to any Prepayment Amount, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Prepayment Amount into (ii) the sum of the products obtained
by multiplying (a) the principal component of each Remaining Scheduled Payment
with respect to such Prepayment Amount by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Prepayment Amount and the scheduled due date of such Remaining
Scheduled Payment.

"REMAINING SCHEDULED PAYMENTS" means, with respect to the Prepayment Amount of
the Note, all payments of such Prepayment Amount and interest thereon that would
be due after the Settlement Date with respect to such Prepayment Amount if no
payment, purchase or acceleration of such Prepayment Amount were made before its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Note, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant hereto.

"RENTS" means all Basic Rent, Additional Rent and all other amounts paid under
the Lease, including, any income, revenues, issues, profits, moneys, security
deposits, and damages payable or receivable under the Lease or pursuant to any
of the provisions of the Lease (including, all oil and gas or other mineral
royalties and bonuses), whether payable as rents or in connection with a
termination of the Lease and whether paid or accruing before or after the filing
by or against Borrower of any petition for relief under the Bankruptcy Code.

"RESTORE" or "RESTORATION" is defined in Appendix I to the Lease.

"RVI POLICY" means that certain residual value insurance policy issued by
Financial Structures Limited for the benefit of the Lender.

 "SCHEDULED DEFEASANCE PAYMENTS" is as defined in Section 2.05 of the Loan
Agreement.

"SECONDARY MARKET TRANSACTION" is as defined in Section 12.12 of the Loan
Agreement.

"SECURITY AGREEMENT" is as defined in Section 2.05 of the Loan Agreement.

"SECURITY DOCUMENTS" means the Indenture, the Assignment of Lease, the UCC
Financing Statements, the Guaranty Agreement, the Multi-Party Agreement, the
Four-Party Agreement and any other guaranty, agreement, instrument or document
other than the Note and the Loan Agreement now or hereafter executed or
authorized by Borrower and/or others and by or in favor of Lender, which wholly
or partially relate to or evidence, secure or guaranty all or any portion of the
payment of the Debt or otherwise is executed and/or delivered in connection with
the Note.

"SERVICER" means the servicer or servicers appointed from time to time by
Lender, to administer the Loan or otherwise perform certain functions in
connection with the Loan.

"SETTLEMENT DATE" means for the Prepayment Amount of the Note, (i) the date on
which such Prepayment Amount is paid pursuant to Section 10.02 of the Loan
Agreement, or (ii) the date on which such Prepayment Amount has become or is
declared to be immediately due and payable pursuant to Section 9.04 of the Loan
Agreement.

"SNDA" means the Subordination, Non-Disturbance and Attornment Agreement dated
as of the Closing Date by and among Lender, Borrower and Tenant relating to the
Mortgaged Property.

"SPE MANAGER" is as defined in Section 6.01(p) of the Loan Agreement.

"STANDARD & POOR'S" means Standard & Poor's Rating Services, a division of The
McGraw - Hill Companies, Inc., and its successors in interest.

"STATE" means the State or Commonwealth in which the Mortgaged Property is
located.

"SUCCESSOR BORROWER" is as defined in Section 2.05(b) of the Loan Agreement.

"SUPERIOR LEASES" means, collectively, the Aetna Lease, the MCI Lease and any
other lease which is superior to the Lien of the Indenture.

"TAXES AND IMPOSITIONS" is defined in paragraph 6(a) of the Lease.

"TENANT" means Fluor Enterprises Inc., a California Corporation, its permitted
successors and assigns.

"THIRD PARTY REPORT" is as defined in Section 11.12 of the Loan Agreement.

"TITLE COMPANY" means Chicago Title Insurance Company.

"TITLE POLICY" means the lender's policy of title insurance dated as of the
Closing Date issued by the Title Company to lender covering the Mortgaged
Property.

"TRANSACTION DOCUMENTS" means, collectively, the Loan Documents, the Lease, the
Aetna SPE Lease, the Aetna Lease, the Aetna Management Agreement, MCI SPE Lease,
the MCI Lease, the MCI Management Agreement and the Multi-Party Agreement.

"TRANSFER" is as defined in Section 5.01(a) of the Loan Agreement.

"TRANSFEREE" means the Person to whom a Transferor Transfers the Mortgaged
Property.

"TRANSFEROR" means Borrower, or a successor to Borrower, in its capacity as the
transferor of the Mortgaged Property.

"TRUST AGREEMENT" means that certain Certificate Pass-Through Trust Agreement
dated as of the Closing Date among Certificate Trustee, as trustee, and the
Certificate Holders.

"U.S. OBLIGATIONS" means direct non-callable obligations of the United States of
America (i.e. UNITED States Treasury Bills, Notes or Bonds).

"UCC" means the Uniform Commercial Code as adopted and enacted by the State or
States where any of the Mortgaged Property is located.

"UCC FINANCING STATEMENTS" means those certain UCC financing statements executed
by Borrower and intended to be filed in the appropriate recording offices to
perfect the security interests in the collateral described therein.

EX-4

Sugar Land, Texas
[FEI Space]

                             7.560% PROMISSORY NOTE



$118,734,816.35                                           Dated:  June 28, 2001
                                                      Effective:  June 28, 2001


         FOR VALUE RECEIVED, and intending to be legally bound, LAKEPOINTE
ASSETS LLC, a Delaware limited liability company having an office c/o 5847 San
Felipe Drive, Suite 2600, Houston, Texas 77057 (hereinafter called "BORROWER"),
promises to pay to the order of LEGG MASON REAL ESTATE SERVICES, INC., a
Pennsylvania corporation, having an address at 100 Light Street, 32nd Floor,
Baltimore, Maryland 21202 (hereinafter called "LENDER") or at such place as the
holder hereof may from time to time designate in writing, the principal sum of
ONE HUNDRED EIGHTEEN MILLION SEVEN HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SIXTEEN DOLLARS AND THIRTY-FIVE CENTS ($118,734,816.35) in lawful money of the
United States of America with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the rate of 7.560% per annum
(the "APPLICABLE RATE") from the date hereof and to be paid in installments as
follows:

         1.       A payment of interest only on the date hereof representing
                  interest from and including such date to and including
                  July 7, 2001; and

         2.       Consecutive monthly payments of principal and interest, as set
                  forth on Schedule A, beginning on the First Amortization
                  Payment Date, set forth on Schedule A, up to and including the
                  payment date immediately before the Final Payment Date set
                  forth on Schedule A, each of such payments to be applied (a)
                  to the payment of interest computed at the Applicable Rate;
                  and (b) the balance applied toward the reduction of the
                  principal sum.

And the balance of said principal sum, together with all accrued and unpaid
interest thereon, shall be due and payable on the Final Payment Date set forth
on Schedule A (the "MATURITY DATE"). Interest on the principal sum of this Note
shall be calculated on the basis of a three hundred sixty (360) day year
consisting of twelve (12) months of thirty (30) days each.

It is expressly stipulated and agreed to be the intent of Borrower and Lender at
all times to comply with the applicable Texas law governing the maximum rate or
amount of interest payable on this Note or the Debt evidenced by this Note and
by the other Loan Documents (or, to the extent it would permit a greater rate or
amount of interest on this Note or the Debt evidenced by this Note and by the
other Loan Documents, applicable United States federal law) to the end that
neither Borrower nor Lender shall have contracted for, and Lender shall not
charge, take, reserve or receive, and Borrower shall not pay, a greater amount
of interest than under Texas law or applicable United State federal law. If (i)
the applicable law is ever judicially interpreted so as to render usurious any
amount called for under this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect to the Debt,
or (ii) Lender's exercise of any remedy hereunder or under the other Loan
Documents, including the option herein contained to accelerate the maturity of
this Note, or any prepayment by Borrower, results in Lender having charged,
taken, reserved or received, and Borrower having paid, any interest in excess of
that permitted by applicable law, then it is Borrower's and Lender's express
intent that (A) all amounts theretofore collected by Lender in excess of the
maximum amount of interest allowed by applicable law be credited on the
principal balance of this Note (or, if this Note has been or would thereby be
paid in full, refunded to Borrower), and (B) the provisions of this Note and the
other Loan Documents immediately be deemed reformed and the amounts thereafter
payable, chargeable or collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder which does not exceed the maximum amount of
interest allowed by applicable law. All sums paid or agreed to be paid to Lender
for the use, forbearance and detention of the Debt evidenced by this Note and by
the other Loan Documents shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such Debt
until payment in full so that the rate or amount of interest on account of such
Debt does not exceed the usury ceiling from time to time in effect and
applicable to such Debt for so long as debt is outstanding. To the extent that
Lender is relying on Chapter 303, as amended, of the Texas Finance Code to
determine the Maximum Lawful Rate (hereafter defined) payable on such Debt,
Lender will utilize the weekly rate ceiling from time to time in effect as
provided in such Chapter 303, as amended. To the extent United States federal
law permits Lender to contract for, charge or receive a greater amount of
interest than Texas law, Lender will rely on United States federal law instead
of such Chapter 303, as amended, for the purpose of determining the Maximum
Lawful Rate and the maximum amount permitted by applicable Law. Additionally, to
the extent permitted by applicable law now or hereafter in effect and the Loan
Documents, Lender may, at its option and from time to time, implement any other
method of computing the Maximum Lawful Rate under such Chapter 303, as amended,
or under other applicable law by giving notice, if required, to Borrower as
provided by applicable law now or hereafter in effect. In no event shall the
provisions of Chapter 346 of the Texas Finance Code (which regulates certain
revolving credit loan accounts and revolving triparty accounts) apply to the
Debt evidenced by this Note. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of Lender
to accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration. "MAXIMUM LAWFUL RATE" shall mean the maximum lawful rate of
interest which may be contracted for, charged, taken, received or reserved by
Lender in accordance with the applicable laws of the State of Texas (or
applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (hereafter defined) made in
connection with the loan evidenced by this Note and the Loan Documents.
"CHARGES" shall mean all fees and charges, if any, contracted for, charged,
received, taken or reserved by Lender in connection with the transactions
relating to this Note and the Debt evidenced by this Note or by the Loan
Documents which are treated as interest under applicable law. The term
"APPLICABLE LAW" as used in this paragraph shall mean the laws of the State of
Texas or the laws of the United States, whichever allows the greater rate or
amount of non-usurious interest to be contracted for, charged, taken, reserved
or received with respect to the Debt evidenced by this Note and the other Loan
Documents, as such laws now exist or may be changed or amended or come into
effect in the future.

         This Note and the Debt evidenced hereby is made pursuant to a Loan
Agreement, dated the Closing Date, between the Lender and Borrower (the "LOAN
AGREEMENT") and is secured by the Indenture and the other Security Documents.

         All capitalized terms used in this Note and not otherwise defined
herein shall have the meanings ascribed to them in Appendix A to the Loan
Agreement and the rules of construction set forth in Appendix A to the Loan
Agreement shall also apply to this Note. A copy of the Loan Agreement is on file
and available for inspection at the corporate trust office of the Certificate
Trustee in Salt Lake City, Utah. Reference is made to the Loan Agreement for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of Borrower and Lender.

         If an Event of Default exists, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Prepayment Consideration) and with the effect provided
in the Loan Agreement. All of the terms, conditions and agreements contained in
the Loan Agreement and the Security Documents are hereby made part of this Note
to the same extent and with the same force as if they were fully set forth
herein.

         This Note is not subject to prepayment, in whole or in part, except in
accordance with and subject to and as more fully set forth in Section 2.04 of
the Loan Agreement.

         This Note may be defeased in whole but not in part in accordance with
and subject to and as more fully set forth in Section 2.05 of the Loan
Agreement.

         This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

         Borrower and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest, notice of protest, notice of non-payment,
and notice of intent to accelerate the maturity hereof (and of such
acceleration); such waiver of notices, however, shall not apply to notices
specifically required under the Loan Documents. No release of any security for
the Debt or extension of time for payment of this Note or any installment
hereof, and no alteration, amendment or waiver of any provision of this Note or
the other Loan Documents made by agreement between Lender and any other person
or party shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, and any other Person who may
become liable to pay all or any part of the Debt, under the Loan Documents.

         Notwithstanding anything to the contrary contained in this Note, the
liability of Borrower and the other Released Parties to pay the Debt and perform
the Other Obligations are limited as set forth in Section 12.13 of the Loan
Agreement, the terms and provisions of which Section are incorporated into this
Note by reference.

         Upon the transfer of this Note, (i) Borrower hereby waives notice of
any such transfer; (provided, however, unless and until Lender delivers written
notice to Borrower of such transfer, together with the name, address and such
other relevant payment information as is necessary, any and all amounts due and
payable under the Loan Documents shall continue to be remitted to the payee last
identified by Lender), (ii) Lender may deliver all of the collateral mortgaged,
granted, pledged or assigned pursuant to the Indenture and the other Security
Documents, or any part thereof, to the transferee who shall thereupon become
vested with all the rights therein or under applicable law given to Lender with
respect thereto, and (iii) Lender shall thereafter forever be relieved and fully
discharged from any liability or responsibility in the matter; but Lender shall
retain all rights given to it under this Note, the Loan Agreement or the
Security Documents with respect to any liabilities and the collateral not so
transferred.

         All Notices required or permitted to be given pursuant hereto shall be
given in the manner specified in the Loan Agreement directed to the parties at
their respective addresses as provided therein.

         This Note shall be governed by and construed in accordance with the
laws of the State of Texas and the applicable laws of the United States of
America.

         Time is of the essence.

         Schedule A attached hereto is made a part hereof and incorporated
herein in its entirety by reference.





                    [SIGNATURE APPEARS ON THE FOLLOWING PAGE]


         IN WITNESS WHEREOF, Borrower has duly executed this Note the day and
year first above written.

                                 BORROWER:

                                 LAKEPOINTE ASSETS LLC,
                                 a Delaware limited liability company



                                 By: /s/ J. Richard Rosenberg
                                     J. Richard Rosenberg,
                                     Vice President and Chief Financial Officer

EX-10

                                 LEASE AGREEMENT

                                     between



                              LAKEPOINTE ASSETS LLC

                                    as Lessor

                                       and

                             FLUOR ENTERPRISES INC.,

                         d/b/a Fluor Signature Services

                                    as Lessee

                                   Dated as of

                                  June 28, 2001






                                TABLE OF CONTENTS

1.   Demise; Title; Condition; True Lease

2.   Term

3.   Rent

4.   Use

5.   Net Lease; No Termination

6.   Taxes and Impositions; Law and Agreements; Space Leases

7.   Liens; Subordination

8.   Indemnification; Fees and Expenses

9.   Environmental Matters

10.  Maintenance and Repair; Additions

11.  Trade Fixtures

12.  Condemnation and Casualty

13.  Insurance

14.  Financial Statements; Certificates

15.  Purchase Procedure

16.  Quiet Enjoyment

17.  Survival

18.  Subletting; Assignment

19.  Advances by Lessor

20.  Conditional Limitations -- Events of Default and Remedies

21.  Granting of Easements, Etc.

22.  Restriction of Lessor Transfers; Release

23.  Telecommunication Equipment

24.  Notices

25.  Estoppel Certificates

26.  No Merger

27.  Surrender

28.  Separability

29.  Signs; Showing

30.  Waiver of Trial by Jury

31.  Recording

32.  Miscellaneous

33.  Right of First Offer

34.  Building Name and Signage

35.  Disclosure of Information

36.  Limitation on Damages



APPENDIX I Definitions

SCHEDULE A        Description of Leased Property
SCHEDULE A-1      Site Plan
SCHEDULE B        Lease Data
SCHEDULE B-1      Basic Rent
SCHEDULE C        Certain Definitions
SCHEDULE C-1      Termination Value Table
SCHEDULE D        Permitted Encumbrances
SCHEDULE E        Subordination, Non-Disturbance and Attornment Agreement
SCHEDULE F        Estoppel Certificate
SCHEDULE G        Market Rent
SCHEDULE H        Trade Fixtures
SCHEDULE I        Conditions of Non-Disturbance for Sublessees


         THIS LEASE, dated as of June 28, 2001 (as amended from time to time
this "LEASE"), between Lakepointe Assets LLC, a Delaware limited liability
company ("LESSOR"), as Lessor, having an office at 5847 San Felipe Drive, Suite
2600, Houston, Texas 77057, and Fluor Enterprises Inc., a California corporation
d/b/a Fluor Signature Services (herein, together with any entity succeeding
thereto by consolidation, merger or acquisition of its assets substantially as
an entirety, called "LESSEE"), having an address at One Enterprise Drive, Aliso
Viejo, California 92656, both parties intending to be legally bound.

Capitalized terms not otherwise defined when they first appear are defined in
Appendix I.

1.  Demise; Title; Condition; True Lease. Lessor hereby leases to Lessee, and
Lessee hereby leases from Lessor, subject to the terms hereof, all of Lessor's
right, title and interest in (i) the parcel of land (the "LAND"), all as more
particularly described in Schedule A hereto, (ii) all buildings, facilities,
structures, additions, extensions and other improvements now or hereafter
existing on the Land and fixtures appurtenant thereto and any and all
replacements and restorations thereof, which improvements at the date hereof are
comprised of (a) the "Shared Services Building" combined with a separate
maintenance building and separate cooling tower, (b) "Building A" which is
subject to the Aetna Lease hereinafter mentioned and which is linked, for
purposes of this Lease, with a separate parking structure, (c) "Building B",
which includes certain components of the central plant for all of the buildings
described in this paragraph, including chilled and hot water and water for the
sprinkler system, (d) "Building C" which is leased in part pursuant to the MCI
Lease hereinafter referred to, and (e) "Building D", all as more particularly
shown on the site plan attached hereto as Schedule A-1 (collectively, the
"IMPROVEMENTS") and (iii) all easements, rights and appurtenances thereto (all
of Lessor's right, title and interest in and to the Land, Improvements and all
such easements, rights and appurtenances collectively called the "LEASED
PROPERTY" subject to the qualification set forth later in this paragraph). A
portion of the Leased Property is subject to the Lease Agreement dated as of the
date hereof between Lessor and Lakepointe Assets WCOM LLC (the "WCOM LEASE") and
the Lease Agreement effective November 14, 1994 between Fluor Daniel, Inc.
(predecessor in interest of Lakepointe Assets WCOM LLC) as landlord and MCI
Telecommunications Corporation (now known as MCI WORLDCOM Network Services,
Inc.; together with MCI WorldCom Communications, Inc., hereinafter "MCI") as
tenant (the "MCI LEASE") and to the Lease Agreement dated as of the date hereof
between Lessor and Lakepointe Assets AET LLC (the "AET LEASE") and the Lease
Agreement effective October 22, 1993, as amended by First Amendment to Lease
Agreement dated as of January 6, 1994 and Second Amendment to Lease Agreement
dated as of January 1, 1995, each between Fluor Daniel, Inc. (predecessor in
interest of Lakepointe Assets AET LLC), as landlord, and The Prudential
Insurance Company of America (predecessor in interest of Prudential Health Care
Plan, Inc.) as tenant (the "AETNA LEASE"; the MCI Lease and the Aetna Lease are
collectively called the "EXISTING LEASES"). Lessor does not grant possession of
the space subject to each Existing Lease (the "EXISTING LEASED SPACE") to Lessee
until the applicable expiration or termination of the primary term of the
applicable Existing Lease related to such Existing Leased Space, nor does Lessee
assume responsibility hereunder for such space (other than capital repairs and
replacements, including roof, structure and Building Systems) until such
expiration or termination; until such expiration or termination, in whole or in
part, each Existing Leased Space shall not be deemed part of the Leased
Property. Upon the expiration or termination of the primary term of the Existing
Lease with respect to any of the Existing Leased Space (whether or not the term
of either Existing Lease is extended beyond the applicable Duration Limit, as
hereinafter defined), the applicable Existing Leased Space shall automatically
become subject to this Lease and all the terms of this Lease shall apply to such
Existing Leased Space, without any increase in Basic Rent.

         The Leased Property is leased in its present condition without
representation or warranty by Lessor. Lessee has examined the Leased Property
and Lessor's title thereto, and has found the same to be satisfactory. Lessee
shall, on behalf of Lessor, forever warrant and defend Lessor's title to the
Leased Property against any and all claims whatsoever, subject to the Permitted
Encumbrances and any Liens or other encumbrances created by Lessor or its
successors or assigns, or any Affiliate of Lessor (collectively, the "Lessor
Liens"). The foregoing warranty of title shall survive the foreclosure of the
Mortgage and shall inure to the benefit of and be enforceable by the Lessor's
Mortgagee if the Lessor's Mortgagee acquires title to the Leased Property. Under
no circumstances shall any third party, including any title insurer, be a
beneficiary of the representation and warranty made in this paragraph.

LESSOR LEASES THE LEASED PROPERTY TO THE LESSEE, AND THE LESSEE ACCEPTS THE
LEASED PROPERTY "AS IS", AND LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY OR THE LOCATION, USE,
DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR A PARTICULAR PURPOSE,
CONDITION OR DURABILITY THEREOF, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN OR ENVIRONMENTAL CONDITION THEREOF; AND ALL RISKS INCIDENTAL TO THE
LEASED PROPERTY SHALL BE BORNE BY LESSEE. LESSOR SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT TO ANY DEFECT OR DEFICIENCY OF ANY
NATURE IN THE LEASED PROPERTY OR ANY PORTION THEREOF, WHETHER PATENT OR LATENT
AND LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY FOR ANY DIRECT OR
INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING THEREFROM OR FOR LESSEE'S LOSS
OF USE OF THE LEASED PROPERTY OR ANY PORTION THEREOF OR ANY INTERRUPTION IN
LESSEE'S BUSINESS CAUSED BY LESSEE'S INABILITY TO USE THE LEASED PROPERTY OR ANY
PORTION THEREOF FOR ANY REASON WHATSOEVER. THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION BY
LESSOR OF, AND LESSOR DOES HEREBY DISCLAIM, AND LESSEE DOES HEREBY WAIVE, ANY
AND ALL WARRANTIES BY LESSOR, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED
PROPERTY OR ANY PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

2.  Term.

    (a)  Subject to the provisions hereof, Lessee shall have and hold the Leased
Property for a term (the "BASIC TERM") which shall begin on the commencement
date specified in Item 4 of Schedule B (the "COMMENCEMENT DATE") and end at
midnight on the basic term expiration date set forth in Item 5 of Schedule B
(the "BASIC TERM EXPIRATION DATE") unless sooner terminated or extended as
hereinafter expressly provided.

    (b)  So long as no Event of Default exists on the last day of the Basic Term
or any Renewal Term, Lessee may elect to extend and renew the Term for an
aggregate of 4 additional terms of 5 years each (each a "RENEWAL TERM", and
collectively the "RENEWAL TERMS"). If Lessee does not renew this Lease as to any
portion of the Leased Property at the specified time, there shall be no right to
renew this Lease as to that portion of the Leased Property thereafter. Each such
election shall be exercised by Lessee not less than 18 months before the
expiration of the then current Term, by written notice to Lessor. The election
shall specify whether the renewal relates to the entire Leased Property, to the
Shared Services Building plus two or three of Buildings A, B, C and/or D as
described in Article I, or to the Shared Services Building plus one other of
Buildings A, B, C or D (there being no other permissible renewal combinations),
it being understood that the maintenance building is inseparable from the Shared
Services Building and that the parking structure is inseparable from Building A.
Upon such election by Lessee the fair market rent with respect to such renewal
shall be determined in accordance with Schedule G of this Lease. Either party,
upon request of the other, shall execute and acknowledge, in form suitable for
recording and reasonably acceptable to both parties, an instrument confirming
any such extension. If this Lease is renewed with respect to less than the
entire Leased Property, Lessor and Lessee shall promptly negotiate in good faith
the terms of reciprocal easement agreements relating to matters such as ingress,
egress, parking, common areas, shared services, separate metering of utilities
at Lessee's sole expense, use of the Shared Services Building amenities, cost
sharing arrangements (it being understood that operating expenses and common
area maintenance charges associated with the Shared Services Building will not
be allocated to property with respect to which the Lease is not renewed), real
estate taxes (if the portion of the Leased Property as to which this Lease is
renewed does not constitute a separate tax parcel) and similar matters so that
each building originally forming a part of the Leased Property will be a
functional economic unit; it being understood that subsequent tenants of
portions of the Leased Property as to which this Lease is not renewed shall be
responsible for paying their proportionate share of operating expenses and
common area maintenance charges (based on square footage) associated with the
Shared Services Building and the central plant facilities in Building B to the
extent that services benefiting such portions of the Leased Property (e.g., HVAC
services) are provided to such portions of the Leased Property from the Shared
Services Building.

3.  Rent.

    (a)  During the Term, Lessee shall pay the rent provided in Item 6 of
Schedule B ("BASIC RENT") to Lessor (or to such other party as Lessor may from
time to time specify in writing at least ten Business Days before payment is
due) by bank wire transfer of immediately available federal funds before 11:00
A.M., Eastern Time, at such place, within the continental United States, as
Lessor may from time to time designate to Lessee in writing at least ten
Business Days before payment is due. Basic Rent shall be payable by Lessee in
installments in the amounts set forth in Item 6 of Schedule B and (except for
the first payment of Basic Rent which shall be due and payable on the date of
commencement of the Basic Term) shall be due and payable on the dates specified
in Item 6 of Schedule B ("INSTALLMENT PAYMENT DATES") and shall constitute Basic
Rent for the periods specified in said Item 6. If any Installment Payment Date
falls on a day which is not a Business Day, Basic Rent shall be due and payable
on the immediately prior Business Day.

    (b)  All amounts which Lessee is required to pay or discharge pursuant to
this Lease in addition to Basic Rent (including, without limitation, (i) amounts
payable as the purchase price for the Leased Property in connection with a
purchase of the Leased Property by Lessee as provided herein, (ii) any amounts
payable as liquidated damages hereunder, and (iii) amounts representing
reasonable costs, expenses, liabilities and obligations due to or incurred by or
on behalf of Lessor as a result of or in connection with the enforcement of any
remedy or the exercise of any right by or on behalf of Lessor), and all amounts
representing all other obligations of Lessee hereunder which could be discharged
by Lessee with the payment of money (including, by way of example, pursuant to a
contract for performance of such obligation with a third party) as reasonably
determined by or on behalf of Lessor, and after any applicable notice and/or
cure periods whether or not Lessor or any other person has incurred any expense
in connection therewith in the exercise of any right by or on behalf of Lessor,
together with every penalty, overdue interest and cost which may be added
pursuant to the other provisions of this Lease for nonpayment or late payment of
any of the foregoing, shall constitute additional rent hereunder ("ADDITIONAL
RENT"). If Lessee fails to perform any obligation hereunder within the time
required hereunder which could be discharged by Lessee by the payment of money
(including, by way of example, pursuant to a contract for performance of such
obligation with a third party) as reasonably determined by or on behalf of
Lessor, and after any applicable notice and/or cure periods then, whether or not
Lessor or any other person has incurred any expense in connection therewith in
the exercise of any right by or on behalf of Lessee, immediately upon demand by
Lessor, Lessee shall owe, as Additional Rent hereunder, the amount required to
discharge such obligation as reasonably determined by or on behalf of Lessor,
which amount shall be immediately due and payable. Lessee shall, unless
otherwise requested by Lessor, pay Additional Rent directly to the Person
entitled thereto. Lessee also covenants to pay to Lessor on demand as Additional
Rent, interest at a rate (the "OVERDUE RATE"), calculated on the basis of a
360-day year of twelve equal months, equal to 200 basis points over the then
current rate of interest on the Note (or, if there is no Note, then equal to 200
basis points over the prime lending rate of major United States money center
banks), but in no event greater than the maximum rate permitted by applicable
Legal Requirements, on (i) all overdue installments of Basic Rent from the due
date thereof until paid in full, (ii) all overdue amounts of Additional Rent,
arising out of obligations which Lessor shall have paid on behalf of Lessee
pursuant hereto from the date of such payment by Lessor until paid in full, and
(iii) each other sum required to be paid by Lessee hereunder which is overdue,
from the date such sum was due until the date received by the Person entitled
thereto. Lessee also covenants to pay to Lessor on demand as Additional Rent, a
late fee equal to five percent (5%) of any Basic Rent or Additional Rent which
has not been paid within 10 days after the same is due, but in no event to
exceed the maximum late charge permitted by applicable Legal Requirements. In no
event shall the total of interest at the Overdue Rate and such late fee together
exceed the maximum amount permitted by applicable Legal Requirements. If any
Basic Rent or Additional Rent is collected by or through an attorney, Lessee
agrees to pay as Additional Rent all reasonable costs of collection, including,
but not limited to reasonable attorney's fees and to reimburse Lessor for any
reasonable costs of collection.

    4.  Use. Lessee may use the Leased Property for general office use and any
other legally permitted uses compatible with uses then being permitted in
comparable office development projects in the greater Houston, Texas
metropolitan area (including all uses made by existing tenants as of the date of
delivery hereof in comparable space in the Leased Property). Any other use will
be subject to the approval of Lessor, such approval shall not be unreasonably
withheld, delayed or conditioned, provided that such other use (i) is consistent
with the business uses of other comparable office development projects located
in the greater Houston, Texas metropolitan area, (ii) does not result in, or
increase the likelihood of, a decline in the value of the Leased Property or
increase the risk of loss to Lessor (such as by an increase in the potential
exposure to hazardous waste issues), (iii) is not contrary to any Legal
Requirements, (iv) does not violate any Permitted Encumbrances, and (v) does not
make it impossible for Lessee to obtain the insurance required to be maintained
by Lessee hereunder. Lessee shall not fail to continuously use and operate the
Leased Property for the use permitted hereunder if the Leased Property relies at
any time upon so-called "grandfathering" under applicable zoning or similar land
use laws and such failure is reasonably likely to jeopardize the right to use
the Leased Property in the future for the use permitted hereunder or the right
to Restore the Improvements to their then-current condition after a Casualty.

5.  Net Lease; No Termination.

    (a)  Lessee expressly acknowledges that this Lease is an absolutely
"bondable net lease" and Lessee must pay all Basic Rent and Additional Rent,
without counterclaim, set-off, deduction, or defense, and without abatement,
suspension, deferment, diminution or reduction, free from any charges,
assessments, impositions, expenses or deductions of any and every kind or nature
whatsoever. All costs, expenses and obligations of every kind and nature
whatsoever relating to the Leased Property and the appurtenances thereto and the
use and occupancy thereof by Lessee or anyone claiming by, through or under
Lessee as Lessee hereunder which may arise or become due during or with respect
to the Term shall be paid by Lessee. Lessee assumes the sole responsibility for
the condition, use, operation, maintenance and management of the Leased Property
and Lessor shall have no responsibility in respect thereof and shall have no
liability for damage to the property of Lessee or any sublessee of Lessee or
anyone claiming by, through or under Lessee for any reason whatsoever, unless
such damage is caused by the negligence or willful misconduct of Lessor or
Lessor's agents, contractors, invitees or employees, provided, that such
negligence or willful misconduct shall not entitle Lessee to abate, suspend,
defer, diminish or reduce the payment of Basic Rent and Additional Rent. Lessee
agrees that all Basic Rent will be payable without notice or demand, and that
(except as otherwise expressly provided herein) all Additional Rent shall be
paid without notice or demand.

    (b)  Without limiting the generality of the foregoing, during the Term of
this Lease, Lessee shall perform all of the obligations of the sublessor under
any subleases affecting all or any part of the Leased Property which Lessee may
hereinafter enter into as sublessor to the extent that Lessee's failure to
perform such obligations is reasonably likely to result in either an Event of
Default under this Lease or a material adverse effect on the Leased Property.
Lessee shall not be deemed to be the sublessor of the Existing Leases as to the
Existing Leased Space, but shall be the sublessor of any additional space
hereafter covered by an Existing Lease and shall be the sublessor of Existing
Leased Space after the applicable Duration Limit described in the next sentence
without any increase in the Basic Rent payable under this Lease. In addition, if
the MCI Lease is extended beyond February 28, 2005 (which date is herein
referred to as the "MCI DURATION LIMIT") and/or the Aetna Lease is extended
beyond March 31, 2004 (which date is herein referred to as the "AETNA DURATION
LIMIT"), Lessor will cause the landlord under such Existing Lease to assign the
landlord's interest thereunder to Lessee. Lessee shall thereupon have all the
benefits and burdens of landlord under such Existing Lease(s). Lessee will use
commercially reasonable efforts (which shall not require the commencement of
legal proceedings or the payment of consideration) to cause such Existing
Lease(s) to be subordinated to this Lease. Except for expenses relating to
capital investment, structural repairs and environmental compliance, Lessee, in
its capacity as Lessee hereunder, shall not be obligated to pay rent or other
amounts due under the Existing Leases. Lessee acknowledges and agrees that its
obligations hereunder, including, without limitation, its obligations to pay
Basic Rent and Additional Rent, are unconditional and irrevocable under any and
all circumstances and are not subject to cancellation, modification or
repudiation by Lessee. Except as expressly provided in paragraph (h) of Article
9, paragraph (c) of Article 12 and Article 20, this Lease shall not terminate.
Except as expressly provided in paragraph (c) of Article 12, Lessee has no right
to terminate or cancel this Lease, and Lessee shall perform all obligations
hereunder, including the payment of all Basic Rent and Additional Rent, without
counterclaim, set-off, deduction, defense or recoupment, and without abatement,
suspension, deferment, diminution or reduction for any reason, including,
without limitation, any past, present or future claims which Lessee may have
against the Lessor, Lessor's Mortgagee, their respective successors and assigns
or any other Person for any reason whatsoever; any defect in the Leased Property
or any portion thereof, or in the title, condition, design, construction,
durability or fitness for a particular use thereof; any Casualty to all or part
of the Leased Property; any restriction, deprivation (including eviction) or
prevention of, or any interference with or interruption of, any use or occupancy
of the Leased Property (whether due to any defect in or failure of Lessor's
title to the Leased Property, any Lien or otherwise); any Taking of the use,
occupancy or title to the Leased Property; any action, omission or breach on the
part of Lessor under this Lease or under any other agreement between Lessor and
Lessee, or any other indebtedness or liability, howsoever and whenever arising,
of Lessor, any assignee of Lessor, or Lessee to any other Person, or by reason
of insolvency, bankruptcy or similar proceedings by or against Lessor, or any
assignee of Lessor, or Lessee; the inadequacy or inaccuracy of the description
of the Leased Property or the failure to demise and let to Lessee the property
intended to be leased hereby; Lessee's acquisition of ownership of the Leased
Property (as to any obligation arising before or incident to such acquisition
and any obligation intended to survive such acquisition including, without
limitation, the payment of the full purchase price in strict accordance with the
terms hereof); any sale or other disposition of the Leased Property; the
impossibility or illegality of performance by Lessor or Lessee or both; the
failure of Lessor to deliver possession of the Leased Property or the Existing
Leased Property; any action of any Governmental Authority; or any other cause,
whether similar or dissimilar to the foregoing, any present or future Legal
Requirements notwithstanding. The parties hereto intend that all Basic Rent and
Additional Rent payable by Lessee hereunder shall continue to be payable in all
events and in the manner and at the times herein provided, unless the obligation
to pay the same shall be terminated pursuant to the express provisions of this
Lease.

    (c)  Lessee will remain obligated under this Lease in accordance with its
terms, and will not take any action to terminate, rescind or avoid this Lease
for any reason, notwithstanding any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting Lessor, or any assignee
of Lessor, or any action with respect to this Lease which may be taken by any
receiver, trustee or liquidator, or any assignee of Lessor or by any court in
any such proceeding. Lessee waives all rights at any time conferred by statute,
to the extent that such rights are waivable, or otherwise to quit, terminate or
surrender this Lease or the Leased Property or to any abatement, reduction,
deferment or set-off of any Basic Rent, Additional Rent or other sum payable
hereunder, or for damage, loss or expense suffered by Lessee on account of any
cause referred to in this Article 5 or otherwise.

6.  Taxes and Impositions; Law and Agreements; Space Leases.

    (a)  Except with respect to Taxes and Impositions specifically allocable to
the Existing Leased Space until the Duration Limit of such Existing Lease,
Lessee shall pay and discharge, on or before the tenth (10th) day prior to which
the same may be paid without interest or penalty, all taxes, including any tax
based upon or measured by gross rentals or receipts from the Leased Property,
assessments and special assessments, and shall pay and discharge on or before
the last day on which the same may be paid without interest or penalty all
levies, fees, water and sewer rents, utility charges, and other governmental and
similar charges or taxes, including, without limitation, any payments in lieu of
taxes, maintenance charges, vault charges, and license fees for the use of the
vaults, chutes and similar areas adjoining the Land, and other governmental
impositions and charges, general and special, ordinary or extraordinary,
foreseen and unforeseen, of any kind or nature whatsoever, and whether or not
the same shall have been within the express contemplation of the parties hereto
(including, without limitation, any taxes assessed against any real property
other than the Leased Property which is included within the tax parcel which
includes the Leased Property), and any interest and penalties thereon, which are
levied or assessed or are otherwise due during the Term ("TAXES" and
"IMPOSITIONS") against (i) Lessor and which relate to Lessor's ownership of the
Leased Property, the use, occupancy, operation or possession of the Leased
Property or any part thereof or the transactions contemplated by this Lease,
including, if applicable, (A) state franchise or doing business taxes or the
like but only those (1) relating to or resulting solely from Lessor's ownership
of the Leased Property and not any other property or any other activity of
Lessor, and (2) imposed as a substitute for or in lieu of taxes otherwise
payable by Lessee hereunder as described in the second succeeding sentence, and
(B) transfer taxes relating solely to the conveyance of the Leased Property to
or from Lessee or its Affiliates or in connection with the exercise of Lessor's
or Lessor's Mortgagee's remedies after an Event of Default occurs hereunder, (to
the extent described in the second succeeding sentence), (ii) the Leased
Property or this Lease or the interest of Lessee or Lessor therein or herein,
(iii) Basic Rent or Additional Rent or other sums payable by Lessee hereunder,
(iv) the use, occupancy, construction, repair or Restoration of the Leased
Property or any portion thereof, or (v) gross receipts from the Leased Property
(but excluding Lessor's net income tax). If any Taxes levied or assessed against
the Leased Property may legally be paid in installments, Lessee may pay such
Taxes in installments; provided, however, that upon the termination of the Term
Lessee shall pay any such Taxes which it has been paying in installments in
full, at least ten (10) days prior to such termination date. Nothing in this
Lease shall require Lessee to pay any franchise, estate, inheritance,
succession, transfer (other than as set forth above), net income or profits
taxes of Lessor (other than any gross receipts or similar taxes imposed or
levied upon, assessed against or measured only by the Basic Rent or Additional
Rent payable by Lessee hereunder or levied upon or assessed against the Leased
Property), any withholding taxes of Lessor, any taxes imposed by any state or
local government on, or measured by, the net income or capital structure of
Lessor, unless any such tax is in lieu of or a substitute for any other tax or
assessment upon or with respect to the Leased Property that would otherwise be
payable by Lessee hereunder. Lessee shall furnish Lessor and Lessor's Mortgagee
with receipts (or if receipts are not available, with copies of cancelled checks
evidencing payment with receipts to follow promptly after they become available)
showing payment of Taxes and Impositions before the applicable due date therefor
set forth above. If a Credit Rating Downgrade occurs, Lessee shall cause a tax
service acceptable to Lessor and Lessor's Mortgagee to provide Lessor and
Lessor's Mortgagee timely evidence of the payment by Lessee of such Taxes and
Impositions. Except for Taxes paid by Lessee in installments as set forth above,
Taxes and other governmental charges which are payable by Lessee shall be
apportioned between Lessor and Lessee as of the date on which this Lease
terminates.

         Lessee shall establish and maintain the Tax and Insurance Reserve Fund
at the times required by and pursuant to the terms of Article 13.

    (b)  Lessee shall pay all charges for utility, communication and other
services to the extent rendered or used during the Term on or about the Leased
Property (exclusive of charges specifically attributable to the Existing Leased
Space only until the Duration Limit of such Existing Lease), whether or not
payment therefor shall become due after the Term.

    (c)  At Lessee's cost and expense, Lessee shall perform and comply and cause
the Leased Property and Improvements to comply (i) with all Legal Requirements
(other than those exclusively relating to the Existing Leased Space until the
MCI Duration Limit or Aetna Duration Limit, as applicable but including parking
requirements applicable to the Improvements), whether or not such Legal
Requirements necessitate structural changes or improvements (including
structural changes or improvements to the Existing Leased Space), interfere with
Lessee's use and enjoyment of the Leased Property, or require replacements or
repairs, extraordinary as well as ordinary, (ii) with the terms of any easement
granted or released pursuant to Article 21, (iii) with the provisions of all
contracts, agreements, instruments and restrictions affecting the Leased
Property or any part thereof or its ownership, occupancy, use, operation or
possession, including without limitation the Declaration of Covenants,
Conditions and Restrictions for First Colony, as amended from time to time (and
Lessee shall pay as Additional Rent all obligations of Lessor under such
documents during the term of this Lease), (iv) with the obligations of the
landlord or licensor under all presently existing leases (other than the MCI
Lease and the Aetna Lease prior the their respective Duration Limits, which are
the subject of other agreements) of any portion of the Leased Property (the
"OTHER LEASES"), except to the extent non-compliance is not likely to have a
material adverse effect on the interest of Lessor or Lessor's Mortgagee, and (v)
with the terms and obligations under any consent of Lessee to any assignment of
Lessor's interest in this Lease to Lessor's Mortgagee. In the event the tenant
under any Other Lease seeks to renew the term thereof or to expand the space
covered thereby and Lessee is prepared to accommodate such request, Lessee shall
cause the extension or expansion to be a sublease, subject to the terms hereof,
and not a continuation of the Other Lease.

     (d)  Notwithstanding the provisions of this Article 6 and Articles 7 and 9,
if no Event of Default exists, and following written notice to Lessor and
Lessor's Mortgagee, Lessee may contest (including through abatement
proceedings), in good faith and at its sole expense, by appropriate legal
proceedings, any Taxes or Impositions, and/or any Legal Requirement affecting
the Leased Property, and postpone payment of or compliance with the same during
the pendency of such contest, provided that (i) the commencement and
continuation of such proceedings shall suspend the collection thereof from, and
suspend the enforcement thereof against, Lessor and the Leased Property, (ii) no
part of the Leased Property nor any Basic Rent or Additional Rent or this Lease
shall be interfered with or shall be in danger of being sold, forfeited,
attached, terminated, cancelled or lost, (iii) Lessee shall promptly and
diligently prosecute such contest to a final settlement or conclusion, (iv)
there shall be no risk of the imposition of civil or criminal liability or
penalty on Lessor or Lessor's Mortgagee for failure to comply therewith, (v)
Lessee shall satisfy any Legal Requirements, including, if required, that the
Taxes and Impositions be paid in full before being contested, (vi) the residual
value insurance policy applicable to the Leased Property will not be cancelled
or reduced in amount as a result of the contest, and (vii) at Lessor's option,
Lessee shall have furnished Lessor with such security as Lessor shall reasonably
request to insure payment of Taxes and Impositions and compliance with Legal
Requirements, and any interest and penalties thereon. Lessee shall pay any and
all judgments, decrees and costs (including all attorneys' fees and expenses) in
connection with any such contest and shall, promptly after the final
determination of such contest, fully pay and discharge the amounts which shall
be levied, assessed, charged or imposed or be determined to be payable therein
or in connection therewith, together with all penalties, fines, interest, costs
and expenses thereof or in connection therewith, if any, and perform all acts
the performance of which shall be ordered or decreed as a result thereof.

7.  Liens; Subordination.

    (a)  Subject to the provisions of paragraph (d) of Article 6, Lessee will
promptly, but in any event no later than 30 days after its Actual Knowledge of
the filing thereof but in any event before the enforcement of the same, at its
own expense remove and discharge of record, by bond or otherwise, any charge,
pledge, lien, security interest or encumbrance of any kind or any other
preferential arrangement that has the practical effect of creating a security
interest (a "LIEN") in or upon the Leased Property, upon any Basic Rent, or upon
any Additional Rent which arises for any reason (except for Lessor Liens),
including all Liens which arise out of Lessee's possession, use, operation and
occupancy of the Leased Property, but not including any Permitted Encumbrances.
Nothing contained in this Lease shall be construed as constituting the consent
or request of Lessor, express or implied, to or for the performance by any
contractor, laborer, materialman, or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to the Leased Property or any part thereof. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, the tenant under the MCI Lease, the
tenant under the Aetna Lease or to anyone holding an interest in the Leased
Property or any part thereof through or under Lessee or a tenant under an
Existing Lease, and that no mechanic's or other Liens for any such labor,
services or materials shall attach to or affect the interest of Lessor in and to
the Leased Property. If Lessee shall fail to discharge any Lien that Lessee is
obligated to discharge pursuant to this Lease within the time period permitted
by this Lease, Lessor may discharge the same by payment or bond or both, and
Lessee will repay to Lessor, upon demand, any and all amounts paid therefor, or
by reason of any liability on such bond, and also any and all reasonable
incidental expenses, including reasonable attorneys' fees, incurred by Lessor in
connection therewith together with interest on all such amounts calculated at
the Overdue Rate from the date of payment thereof until repaid by Lessee.

    (b)  This Lease shall be subject and subordinate to all present and future
mortgages, deeds of trust, deeds to secure debt or other similar Lien
instruments, and as the same be renewed, amended, modified, consolidated,
replaced or extended (individually, a "MORTGAGE") on the fee interest in the
Leased Property and to all advances made upon the security thereof, provided
that the holder of the Mortgage shall execute and deliver to Lessee a
subordination, attornment and non-disturbance agreement ("SNDA"), in form
substantially similar to Schedule E hereto, providing that if a foreclosure or
deed in lieu of foreclosure occurs such new owner will recognize this Lease and
not disturb Lessee's possession of the Leased Property if no Event of Default
exists; and concurrently therewith Lessee shall execute and deliver an estoppel
certificate in form substantially similar to Schedule F hereto. Lessee agrees,
upon receipt of such SNDA, to execute such further reasonable instrument(s) as
may be necessary to subordinate this Lease to the Lien of any such Mortgage and
to evidence its attornment to such new owner, and also to execute such
instrument(s) recognizing the assignment of this Lease or the Basic Rent,
Additional Rent and other sums payable by Lessee hereunder to the holder of any
such Mortgage, provided that no such instrument shall adversely affect Lessee's
rights under the SNDA.

    (c)  Lessee agrees to attorn, from time to time, to the holder of each
Mortgage and/or the holder of such subsequent mortgage, or any purchaser or
transferee of the Leased Property (including without limitation a transferee in
foreclosure or pursuant to a deed in lieu of foreclosure), pursuant to an SNDA
for the remainder of the Term, provided that such holder or such purchaser or
transferee shall then be entitled to possession of the Leased Property subject
to the provisions of this Lease. The provisions of this subsection shall inure
to the benefit of such holder or such purchaser or transferee, shall apply
notwithstanding that, as a matter of law, this Lease may terminate upon the
foreclosure of the Mortgage (in which event the parties shall execute a new
lease for the remainder of the Term on the same terms set forth herein), shall
be self-operative upon any such demand, and no further instrument shall be
required to give effect to said provisions. Each such party, however, upon
demand of the other, hereby agrees to execute, from time to time, instruments in
confirmation of the foregoing provisions hereof, reasonably satisfactory to both
parties acknowledging such subordination, non-disturbance and attornment as are
provided herein and setting forth the terms and conditions of its tenancy.

8.  Indemnification; Fees and Expenses.

    (a)  Lessee shall protect, defend and indemnify Lessor, Lessor's Mortgagee,
each Certificate Holder and the Indenture Trustee, their respective successors
and assigns, the beneficial owners of any of the foregoing and the trustees,
beneficiaries, partners, shareholders, officers, directors, agents or employees
of Lessor, Lessor's Mortgagee, each Certificate Holder and the Indenture
Trustee, or any such successor or assign or beneficial owner (each an
"INDEMNIFIED PARTY" and collectively, the "INDEMNIFIED PARTIES"), from and
against and hold the Indemnified Parties harmless from all Liens (including,
without limitation, lien removal and bonding costs), liabilities, losses,
damages, claims, obligations, suits or other proceedings (including, by way of
example, causes of action, suits, litigation and defenses), settlement proceeds,
fines, penalties, assessments, citations, directives, judgments, fees, costs,
disbursements or other expenses of any kind or of any nature whatsoever
(including, without limitation, reasonable attorneys', consultants', and
experts' fees and disbursements actually incurred in investigating, defending,
settling or prosecuting any claim, suit or other similar proceeding) which may
be imposed on, incurred by or asserted or awarded against such Indemnified Party
("INDEMNIFIED LIABILITIES") (i) arising or alleged to arise from or in
connection with the condition, use, operation, maintenance, Restoration,
subletting and management of the Leased Property; (ii) relating to the Leased
Property and the appurtenances thereto and the use and occupancy thereof by
Lessee or anyone claiming by, through or under Lessee; or (iii) arising or
alleged to arise from or in connection with any of the following: (A) any
accident, injury to, or death of, any person or any damage to or loss of
property on or adjacent to the Leased Property or growing out of or directly or
indirectly connected with, ownership (during the period ending on the expiration
or earlier termination of this Lease provided that Lessee and its Affiliates
return the Leased Property to Lessor in the condition required by Article 27
hereof), use, nonuse, occupancy, operation, possession, condition, construction,
repair or Restoration of the Leased Property or adjoining property, sidewalks,
streets or ways or resulting from the condition of any thereof; (B) any claims
by third parties resulting from any violation or alleged violation by Lessee of
(1) any provision of this Lease, or (2) any Legal Requirement, or (3) any other
sublease or agreement relating to the Leased Property (including, without
limitation, that certain Multi-Party Agreement of even date herewith) and
including breach of the landlord's obligations under the MCI Lease and/or the
Aetna Lease (including, without limitation, the failure or alleged failure of
Lessee to honor (aa) the right of first offer set forth at Section 53 of the MCI
Lease, and/or the right of first offer set forth at Exhibit J, Section I of the
Aetna Lease, (bb) any properly exercised right of first refusal set forth at
Section 54 of the MCI Lease, and/or any properly exercised right of first
refusal set forth at Exhibit J, Section II of the Aetna Lease, (cc) any properly
exercised right to lease additional space, or right of relocation as set forth
at Exhibit J, Section III of the Aetna Lease, or (dd) any properly exercised
renewal option as set forth at Section 51 of the MCI Lease, and/or any properly
exercised renewal option as set forth at Exhibit H of the Aetna Lease, (4) any
contract or agreement to which Lessee is a party affecting the Leased Property
or the ownership, use, nonuse, occupancy, condition, operation, possession,
construction, repair or rebuilding thereof or of adjoining property, sidewalks,
streets or ways; (C) any contest permitted by Article 6; (D) Lessee's failure to
pay in accordance with the terms and provisions hereof any item of Additional
Rent or other sums payable by Lessee hereunder; or (E) loss occasioned by any
misrepresentation made by Lessee herein or in any certificate or other writing
delivered to Lessor in connection herewith. Notwithstanding the foregoing,
Lessee shall not be liable in any case to any Indemnified Party for any
Indemnified Liabilities to the extent that they result from the gross negligence
or willful misconduct of such Indemnified Party, nor shall Lessee be liable to
any of the Indemnified Parties for any Lessor Liens. If Lessor, Lessor's
Mortgagee, or any agent of Lessor or Lessor's Mortgagee, or any other
Indemnified Party, shall be made a party to any such litigation commenced
against Lessee, and if Lessee, at its expense, shall fail to provide Lessor or
Lessor's Mortgagee or its agent or other Indemnified Party with counsel
reasonably approved by such party, Lessee shall pay all reasonable costs and
reasonable attorney's fees and expenses incurred or paid by Lessor or Lessor's
Mortgagee or its agent or other Indemnified Party in connection with such
litigation. So long as no Event of Default has occurred and is continuing
hereunder, Lessee shall control any such litigation and settlement discussions
relating thereto. Notwithstanding anything in this Article 8, so long as (v) no
Event of Default has occurred and is continuing hereunder, (w) neither Lessor
nor Lessor's Mortgagee would be subject to any risk of criminal or material
civil liability, (x) there is no risk of Lessor losing the Leased Property or
Lessor's Mortgagee losing the priority of its Lien, (y) no Credit Rating
Downgrade exists, and (z) the residual value insurance policy applicable to the
Leased Property will not be cancelled or reduced in amount as a result thereof,
Lessor will not agree to any settlement of any claim covered by this Article 8
without Lessee's prior consent.

IMPORTANT--READ THIS

LESSEE ACKNOWLEDGES THAT PURSUANT TO THE FOREGOING INDEMNITY IT HAS AGREED TO
INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL
LIABILITIES ARISING BY REASON OF THE ACTS OR OMISSIONS OF ANY OF THE INDEMNIFIED
PARTIES AND OTHERWISE, WHICH LIABILITIES INCLUDE, WITHOUT LIMITATION, EXCEPT AS
PROVIDED ABOVE, SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE, STRICT LIABILITY,
CRIMINAL LIABILITY, STATUTORY LIABILITY, LIABILITY FOR INJURIES NOT COMPENSATED
BY WORKERS' COMPENSATION INSURANCE, OTHER INJURIES OR LOSSES NOT COVERED BY
INSURANCE, AND LIABILITY ARISING AS A RESULT OF WAIVERS, EXCULPATIONS,
DISCLAIMERS OR RELEASES. IF SUCH LIABILITY ARISES BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY (OR INDEMNIFIED
PARTIES, AS THE CASE MAY BE)(HEREINAFTER A "RESPONSIBLE INDEMNIFIED PARTY") THIS
INDEMNITY SHALL NOT EXTEND TO ANY SUCH RESPONSIBLE INDEMNIFIED PARTY, BUT SHALL
EXTEND TO ALL OTHER INDEMNIFIED PARTIES.

    (b)  The representations, warranties and obligations of Lessee, and the
rights and remedies of each Indemnified Party under this Article 8, are in
addition to and not in limitation of any other representations, warranties,
obligations, rights and remedies provided in this Lease or otherwise at law or
in equity, and shall survive the expiration or termination of this Lease.

9.  Environmental Matters.

    (a)  Lessee represents and warrants and covenants to the Indemnified Parties
that, except as disclosed on Exhibit K:

         (i)  At all times during the Term of this Lease (A) the Leased Property
(other than the Existing Leased Space so long as it is not part of the Leased
Property), Lessee, all sublessees and any assignees of Lessee (other than MCI
and Aetna so long as the Existing Leased Space is not part of the Leased
Property), and all other parties claiming by, through, or under Lessee (other
than Lessor and parties other than Lessee and its Affiliates claiming by,
through or under Lessor [collectively, "LESSOR PARTIES"]), shall comply with all
applicable Environmental Laws; (B) Lessee shall have obtained, and shall cause
all sublessees and any assignees of Lessee (other than MCI and Aetna for so long
as the Existing Leased Space is not part of the Leased Property), and all other
parties claiming by, through, or under Lessee (other than Lessor Parties), to
obtain all Permits required to conduct its or their operations at the Leased
Property that are required under all applicable Environmental Laws and Lessee
shall be in compliance and shall cause all sublessees and any assignees of
Lessee (other than MCI and Aetna so long as the Existing Leased Space is not
part of the Leased Property) to be in compliance, and shall cause all other
parties claiming by, through, or under Lessee (other than Lessor Parties) to be
in compliance with the same; and (C) Lessee shall remove and dispose or shall
cause the removal and disposal of any Hazardous Substances present on the Leased
Property that are not in compliance with applicable Environmental Laws;

         (ii)  To Lessee's Actual Knowledge, and except as disclosed by the
Environmental Site Assessment, the Leased Property complies in all material
respects with applicable Environmental Laws; no Hazardous Substances are or have
been discharged, generated, handled, treated, disposed of, or stored on,
incorporated in, or released, discharged, removed or transported from the Leased
Property (including underground contamination) except in compliance with
applicable Environmental Laws or as disclosed in the Environmental Site
Assessment. No written notices, complaints or orders of violation or
non-compliance of any nature whatsoever regarding alleged violations of, or
strict liability under, Environmental Laws have been received by Lessee or, to
Lessee's Actual Knowledge, by any Person regarding the Leased Property, and
Lessee has no Actual Knowledge that any environmental investigation by any
Governmental Authority, or any legal action by a private party, is pending or
threatened, in each case with regard to the Leased Property or any use thereof
or any alleged violation of applicable Environmental Laws with regard to the
Leased Property; to Lessee's Actual Knowledge, and based upon the Environmental
Site Assessment, no liens have been placed upon the Leased Property in
connection with any actual or alleged liability under any applicable
Environmental Laws;

         (iii)  The Leased Property has not been used by Lessee, Lessee's
predecessors or Affiliates, or, to Lessee's Actual Knowledge, by any other
Person, and will not be used by Lessee or any person under Lessee's control
during the Term of this Lease to generate, manufacture, refine, produce or
process any Hazardous Substance or to store, handle, treat, dispose, transfer or
transport any Hazardous Substance other than uses of such Hazardous Substances
in the routine course of Lessee's operation and in compliance with applicable
Environmental Laws which activities have not had and will not have any material
adverse effect upon the Leased Property;

         (iv)  To Lessee's Actual Knowledge, and except as disclosed by the
Environmental Site Assessment, no pits, lagoons, ponds, or other surface
impoundments, above ground tanks or other containment structures have been or
will be constructed, operated or maintained in or on the Leased Property in
violation of applicable Environmental Laws and no underground storage tanks or
fuel systems are or will be constructed, operated or maintained in or on the
Leased Property; to Lessee's Actual Knowledge, there is presently no friable
asbestos nor friable asbestos-containing material nor any PCB-containing
equipment, including PCB-containing transformers, located in, on, at or under
the Leased Property nor will any of the foregoing be located in, on, at or under
the Leased Property at any time during the Term of this Lease. Lessee shall
develop, maintain and implement a written asbestos-containing material
operations and maintenance program for any identified or presumed
asbestos-containing materials, such written program to be in form and content
required by applicable Environmental Laws;

          (v)  To Lessee's Actual Knowledge, and except as disclosed by the
Environmental Site Assessment, other than lawful quantities in connection with
Lessee's use of the Leased Property in compliance with Environmental Laws, the
Leased Property is free of Hazardous Substances at, in, on, over or under the
Leased Property, regardless of the source of any such Hazardous Substances; and

         (vi)  To Lessee's Actual Knowledge, the Environmental Site Assessment
is true, correct and complete, and contains no misstatement of fact or omission
of any fact which would make the statements contained therein untrue, incomplete
or misleading in any material respect.

    (b)  Promptly upon obtaining Actual Knowledge thereof, Lessee shall give to
Lessor and Lessor's Mortgagee notice of the occurrence of any of the following,
in each case relating to the Leased Property or the use, occupancy or operation
thereof in respect of any applicable Environmental Law: (i) the failure of the
Leased Property, Lessee, any sublessee or assignee of Lessee or invitee of
Lessee, or any other party claiming by, through, or under Lessee (other than
Lessor Parties), to comply therewith in any manner whatsoever; (ii) the issuance
to Lessee, or any sublessee or assignee of Lessee, or any other party claiming
by, through, or under Lessee (other than Lessor Parties), of any written notice,
complaint or order of violation or non-compliance therewith of any nature
whatsoever; (iii) any written notice of a pending or threatened investigation
thereunder; (iv) any written notice from any Governmental Authority requiring
any corrective action with respect to the Leased Property thereunder; or (v) any
written notice from any Governmental Authority or private party relating to an
alleged violation of applicable Environmental Laws, including the actual or
potential presence or existence of any Hazardous Substances at, on, adjacent to
or upon the Leased Property in violation of applicable Environmental Laws.

    (c)  At any time (i) if an adverse change in the environmental condition of
the Leased Property has occurred or been discovered, and if Lessee shall not (A)
diligently commence to cure such condition, to the extent necessary to satisfy
applicable Environmental Laws, and to prevent a material diminution in the fair
market value of the Leased Property related to the environmental condition,
within 30 days after Lessee has Actual Knowledge of such adverse change (or such
shorter period as may be required by law or if an emergency exists) and (B)
thereafter diligently prosecute to completion such cure, or (ii) an Event of
Default exists under this Lease, or (iii) if Lessor or Lessor's Mortgagee has
reasonable cause to believe that Lessee is in Default or has permitted a Default
under this Article 9, Lessor or Lessor's Mortgagee may cause to be performed or
direct Lessee to cause to be performed an environmental compliance audit or site
assessment of the Leased Property and the then uses thereof reasonable in scope
under the circumstances, and following receipt of such audit or assessment may
take such actions as it may deem necessary to cure such condition or to cause
the Leased Property to comply with applicable Environmental Laws. Such
environmental compliance audit or site assessment shall be performed by an
engineer qualified by law and experience to perform the same and satisfactory to
Lessor and Lessor's Mortgagee, shall include as reasonably necessary under the
circumstances a review of the uses of the Leased Property and compliance of the
same with applicable Environmental Laws, and shall include an estimate of the
cost to cure any Default in Lessee's covenants hereunder. If recommended by an
environmental site assessment or if required by Lessor's Mortgagee, Lessee will
establish and, at its sole expense, comply with any operations and maintenance
program to address Hazardous Substances (including without limitation asbestos
containing materials and lead-based paint) in form and substance reasonably
acceptable to Lessor and Lessor's Mortgagee and prepared by an environmental
consultant acceptable to Lessor and Lessor's Mortgagee. All reasonable costs and
expenses actually incurred by Lessor or Lessor's Mortgagee in connection with
such environmental compliance audit or assessment and any remediation of the
Leased Property required under applicable Environmental Laws shall constitute
Additional Rent and shall be immediately due and payable by Lessee upon demand,
and shall bear interest at the Overdue Rate from the date Lessor notifies Lessee
that such cost or expense is incurred until it is paid. Such audit or assessment
shall be addressed to Lessor and Lessor's Mortgagee and shall provide expressly
that they can rely on its findings.

    (d)  Subject to the provisions of paragraph (d) of Article 6 hereof, in the
event of a violation of or the discovery of a violation of any Environmental
Law, Lessee shall promptly perform all remedial actions as shall be necessary or
desirable to clean up, contain, or remove any Hazardous Substances on, under or
in the Leased Property in accordance with, and as required by, applicable
Environmental Laws, Legal Requirements and Permitted Encumbrances to restore the
Leased Property to a condition the same or better than its pre-contamination
condition and otherwise to cure any such violation of any Environmental Law, all
at Lessee's sole cost and expense, including, without limitation, all
investigative, monitoring, removal, containment and remedial actions in
accordance with applicable Environmental Laws. Lessee shall commence all such
required remedial actions within 30 days after obtaining Actual Knowledge of any
such violation and shall complete all such actions within 180 days following the
date that the nature and scope of such required remedial actions are identified,
provided that if such remedial actions cannot be completed with diligence within
such 180 day period, and so long as Lessee is performing such remedial actions
with due diligence, the time within which such remedial actions may be completed
shall be extended for such period as may be reasonably necessary to complete
such remedial action with diligence, provided the same shall be subject to
Lessor's approval (which shall not be unreasonably withheld, conditioned or
delayed) and consistent with the requirements of applicable Legal Requirements.
If Lessee fails to perform the necessary remedial actions as required hereby
within the time periods set forth herein, Lessor or Lessor's Mortgagee may, but
shall not be obligated to, cause the Leased Property to be brought into
compliance with applicable Environmental Laws and any reasonable costs and
expenses actually incurred by Lessor or Lessor's Mortgagee in connection
therewith, together with interest at the Overdue Rate from the date Lessor
notifies Lessee that such cost was incurred until actually paid by Lessee, shall
constitute Additional Rent and shall be immediately due and payable on demand.
Lessee grants to Lessor and Lessor's Mortgagee access to the Leased Property and
a license to remove any Hazardous Substances as provided in this Article 9 and
to do all things Lessor or Lessor's Mortgagee deems necessary to bring the
Leased Property into compliance with the applicable Environmental Laws. If, as a
result of a violation of any Environmental Laws, a Lien attaches to the Leased
Property that takes priority over the Lien of the Mortgage, Lessee shall
promptly, and in any event within 30 days after written notice of the attachment
of any such Lien, discharge or contest such Lien in accordance with paragraph
(d) of Article 6 and post a bond or deposit an irrevocable letter of credit with
Lessor's Mortgagee, in either event satisfactory in form and substance and with
a surety or obligor satisfactory to Lessor's Mortgagee and in an amount
sufficient to discharge such Lien.

    (e)  In addition to, and not in limitation of, any indemnity contained in
Article 8, Lessee agrees to indemnify, defend and hold harmless each Indemnified
Party from and against any and all Indemnified Liabilities which may be imposed
upon, suffered or incurred by, or asserted or awarded against such Indemnified
Party to the extent arising directly or indirectly out of (i) the use, storage,
transportation, disposal, treatment, release, threatened release, discharge,
emission, generation or presence of any Hazardous Substances at, from, on, over,
under or in the Leased Property, regardless of whether occurring before, during
or after the Term of this Lease (but only to the extent attributable to the
period ending on the expiration or earlier termination of this Lease, provided
that Lessee and its Affiliates return the Leased Property to Lessor in the
condition required by Article 27) and regardless of the source of any such
Hazardous Substances, (ii) the breach of any representation or warranty
contained in this Article 9, (iii) any Default in the performance of any
obligation under this Article 9, (iv) any violation of any Environmental Law
with respect to the Leased Property or by Lessee or any other Person (other than
Lessor Parties affirmatively acting in violation of Environmental Law), or
resulting from Lessee's failure to comply with this Article 9, or (v) the
enforcement of this Article 9.

IMPORTANT--READ THIS

LESSEE ACKNOWLEDGES THAT PURSUANT TO THE FOREGOING INDEMNITY IT HAS AGREED TO
INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL
LIABILITIES ARISING BY REASON OF THE ACTS OR OMISSIONS OF ANY OF THE INDEMNIFIED
PARTIES AND OTHERWISE, WHICH LIABILITIES INCLUDE, WITHOUT LIMITATION, EXCEPT AS
PROVIDED ABOVE, SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE, STRICT LIABILITY,
CRIMINAL LIABILITY, STATUTORY LIABILITY, LIABILITY FOR INJURIES NOT COMPENSATED
BY WORKERS' COMPENSATION INSURANCE, OTHER INJURIES OR LOSSES NOT COVERED BY
INSURANCE, AND LIABILITY ARISING AS A RESULT OF WAIVERS, EXCULPATIONS,
DISCLAIMERS OR RELEASES. IF SUCH LIABILITY ARISES BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY (OR INDEMNIFIED
PARTIES, AS THE CASE MAY BE)(HEREINAFTER A "RESPONSIBLE INDEMNIFIED PARTY") THIS
INDEMNITY SHALL NOT EXTEND TO ANY SUCH RESPONSIBLE INDEMNIFIED PARTY, BUT SHALL
EXTEND TO ALL OTHER INDEMNIFIED PARTIES.

    (f)  The representations, warranties and obligations of Lessee, and the
rights and remedies of each Indemnified Party under this Article 9, are in
addition to and not in limitation of any other representations, warranties,
obligations, rights and remedies provided in this Lease or otherwise at law or
in equity.

    (g)  Lessee's obligations and liabilities with respect to each Indemnified
Party, actual or contingent, under this Article 9 and relating to the period
through the end of the Term of this Lease, whether arising before, during or
after the Term (but only to the extent attributable to the period ending on the
expiration or earlier termination of this Lease, provided that Lessee and its
Affiliates return the Leased Property to Lessor in the condition required by
Article 27), shall survive such termination of this Lease or the abandonment of
the Leased Property by Lessee, or any acquisition or disposition of the Leased
Property, except for events and circumstances resulting solely from the acts of
any Person other than Lessee, any Affiliate of Lessee, or any Person claiming by
or through Lessee or any such Affiliate (other than Lessor Parties affirmatively
acting in violation of Environmental Law) and occurring after the foreclosure of
the Lien of the Mortgage and the sale of the Leased Property pursuant to such
foreclosure.

    (h)  If an Event of Default occurs under this Article 9, and such Event of
Default is likely to result in either a diminution in the value of the Leased
Property or civil or criminal liability of Lessor or Lessor's Mortgagee, then in
addition to and not in limitation of all other rights of Lessor hereunder,
Lessor may (if consented to in writing by Lessor's Mortgagee), by written notice
to Lessee which makes specific reference to the offer provisions hereafter
provided for in this Article 9, require Lessee to make, and Lessee shall be
deemed to have made, a rejectable offer to Lessor to purchase the Leased
Property and the Existing Leased Space in the manner and under the terms of
Article 15. Lessor shall have ninety (90) days after such offer to accept or
reject such offer and if it fails to act, it shall be deemed to have accepted
such offer. No rejection of such offer shall be effective unless consented to by
Lessor's Mortgagee. If Lessor accepts such offer, then Lessee shall purchase the
Leased Property and the Existing Leased Space on an Installment Payment Date
specified by Lessor not less than 30 nor more than 90 days after Lessor's
acceptance of such offer, for a purchase price equal to the Termination Value as
of the date of such purchase plus the Reinvestment Premium on said Termination
Value.

10.  Maintenance and Repair; Additions.

    (a)  Lessee will, at its cost and expense, keep and maintain the Leased
Property (other than any portion thereof covered by an Existing Lease until the
Duration Limit thereof) in good order and safe condition and repair in the
condition of the Leased Property on the date of delivery hereof , and as other
comparable office development projects are maintained in the greater Houston,
Texas metropolitan area, including the Improvements and any altered, Restored,
additional or substituted buildings and other improvements, in the condition as
on the date of this Lease, in each case with ordinary wear and tear excepted,
and (except as otherwise provided in paragraph (c) of Article 12) will make all
structural and non-structural, and ordinary and extraordinary changes, repairs
and replacements, foreseen or unforeseen, which may be required, whether or not
caused by its act or omission, to be made upon or in connection with the
improvements to the Leased Property in order to keep the same in such condition,
including taking action necessary to maintain the Leased Property in compliance
with all Legal Requirements; subject, however to any contest of applicable Legal
Requirements conducted in accordance with the provisions of paragraph (d) of
Article 6. Lessee shall keep the Leased Property orderly and free and clear of
rubbish, and shall not commit or suffer any waste of the Leased Property. Lessor
shall not be required to maintain, alter, repair, rebuild or replace any
improvements on the Leased Property or to maintain the Leased Property, and
Lessee expressly waives the right to make repairs at the expense of Lessor or to
terminate this Lease because of Lessor's failure to so maintain or repair
pursuant to any Legal Requirements at any time in effect. Lessor shall have no
obligation to incur any expense of any kind or character in connection with the
management, operation or maintenance of the Leased Property during the Term of
the Lease. Lessee shall use and operate the Leased Property or cause it to be
used and operated only by personnel authorized by Lessee and Lessee shall use
reasonable precautions to prevent loss or damage to the Leased Property from
Casualty.

    (b)  If any Improvements shall encroach upon any property, street or
right-of-way adjoining or adjacent to the Leased Property, or shall violate any
restrictive covenant affecting the Leased Property or any part thereof, or shall
impair the rights of others under or obstruct any easement or right-of-way to
which the Leased Property is subject (excluding, however, covenants, easements
or rights-of-way granted by Lessor after commencement of the Term without the
consent of Lessee), then, promptly after the written request of Lessor or any
Person affected by any such encroachment, violation, impairment or obstruction,
Lessee shall, at its expense, either (i) obtain effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation, impairment or obstruction or (ii) make such changes in the
Improvements and take such other action as shall be necessary to remove such
encroachments or obstructions and to end such violations or impairments,
including, if necessary, the alteration or removal of any Improvement. Any such
alteration or removal shall be made to the same extent as if such alteration or
removal were an alteration under the provisions of paragraphs (c) or (d) of this
Article 10 and there shall be no abatement of rent by reason of such alteration
or removal. Lessor shall not grant any easements, restrictive covenants or
rights-of-way which would adversely affect the value of the Leased Property
without Lessee's written consent which will not be unreasonably withheld or
delayed; provided if an Event of Default exists Lessor may grant easements,
restrictive covenants and rights-of-way without Lessee's consent.

    (c)  Except as hereinafter provided, upon Lessor's prior written consent,
Lessee may, at its sole expense, make alterations, installations, demolitions,
modifications, replacements, improvements, changes or additions which are
consistent with Lessee's use of the Leased Property, do not diminish the fair
market value of the Leased Property as unencumbered by this Lease, which do not
affect the structural elements or Building Systems of the Leased Property, and
which are not otherwise prohibited by this Lease ("ALTERATIONS").
Notwithstanding the foregoing, at any time that Guarantor has the Credit Rating
and no Event of Default exists hereunder, Lessee may make any Alterations to the
Leased Property, the cost of which in any instance is $5,000,000 (increased by
$1 million every five years after the Commencement Date) or less (a "MINOR
ADDITION") without Lessor's consent. Lessor's prior written consent shall always
be required for any alterations, installations, demolitions, modifications,
replacements, improvements, changes or additions that are structural in nature,
made to the exterior of any building, or which could adversely affect the
Improvement's Building Systems, or the useful life or Fair Market Value of the
Leased Property (a "MAJOR ALTERATION"). Lessee shall construct all Alterations
and Major Alterations in a good and workmanlike manner using a quality of
material and workmanship at least as good as to the original work or
installation of the Improvements and in compliance with all applicable Legal
Requirements and will complete the Alterations and Major Alterations in a
commercially reasonable time period. Each Alteration and Major Alteration shall
be made at the sole cost and expense of Lessee, may not be encumbered by Lessee
and (other than Trade Fixtures) shall become the property of Lessor and subject
to this Lease. No Minor Addition, Major Alteration or any other Alterations
which do not satisfy all of the foregoing requirements of this subparagraph (c)
shall be made without Lessor's written consent in Lessor's sole discretion. If
Lessee determines to construct surface parking on unpaved portions of the Land
located to the west of the existing office buildings and adjacent to the eastern
boundary of the Proposed Roadway Easement (Tract 7), as shown on the survey of
the Land delivered to Lessor at the time of delivery of this Lease, Lessee may
grade, pave and otherwise appropriately develop such portion of the Land into
surface parking without the prior consent of Lessor.

    (d)  If Lessee proposes to have a new building or buildings constructed on
land adjacent to the Land and have such building or buildings physically
connected to the Leased Property (each such new building being herein called a
"NEW CONNECTED BUILDING"), Lessee will provide Lessor with artist's renderings,
architectural elevations and similar information prior to commencing
construction, and Lessor shall have thirty (30) days in which to approve the
exterior appearance of such proposed New Connected Building, such approval not
to be unreasonably withheld. Such approval shall be based solely on the
compatibility of the exterior appearance of the proposed New Connected Building
with the exterior appearance of the Leased Property. Lessee shall have the
right, at its sole cost and expense (including expenses reasonably incurred by
Lessor and Lessor's Mortgagee) to physically connect any New Connected Building
to the Leased Property during the Term hereof, which connections shall be made
in compliance with paragraph (c) of this Article 10. To the extent such
connections provide for pedestrian passage between the two buildings, upon
Lessor's request, Lessee will, at its sole expense, cause the pedestrian
connections to be rendered unusable (by creating a barrier which is
aesthetically and functionally acceptable to Lessor or by removing the
connections, as Lessee shall elect) no later than thirty (30) days prior to the
expiration of the Term hereof. If any such connection is to be made, Lessor and
Lessee shall first negotiate in good faith the terms of reciprocal easement
agreements relating to matters such as ingress, egress, parking, shared
utilities and services, use of the Shared Services Building amenities, cost
sharing arrangements and similar matters so that each building originally
forming a part of the Leased Property will remain a functional self-sufficient
economic unit, provided that the Leased Premises shall have a prior claim to
limited resources such as water, sewer, power and HVAC capacity.

    (e)  All work done in accordance with this Article 10 shall comply with the
requirements of all Policies required to be maintained by Lessee hereunder and
with the residual value insurance policy applicable to the Leased Property.

    (f)  Lessee agrees that all of the Improvements shall be deemed real
property and fixtures owned by Lessor. In furtherance of the foregoing, Lessee
hereby grants, conveys and transfers to Lessor any and all of Lessee's right,
title and interest in and to the Improvements (other than Trade Fixtures)
(whether now existing or hereafter constructed). Lessee agrees that any and all
Improvements of whatever nature at any time constructed, placed or maintained
upon any part of the Land shall be and remain the property of Lessor (except as
otherwise expressly provided in writing at the time Lessor's consent therefor is
obtained), subject to Lessee's rights under this Lease. Lessee agrees to
execute, acknowledge and deliver and file all documents reasonably necessary or
appropriate, in form reasonably satisfactory to both parties, to effect the
purpose of this paragraph 10(f).

11.  Trade Fixtures.  Lessor acknowledges and agrees that the items of trade
fixtures, machinery and equipment that are designed to be removable without
materially damaging the Improvements, including without limitation those items
described on Schedule H hereof (but specifically excluding Improvements,
Building Systems and other replacements of fixtures, machinery and equipment
which are the property of Lessor) ("TRADE FIXTURES") are and shall remain the
property of Lessee and be treated as "trade fixtures" for the purposes of this
Lease and Lessee may remove the same from the Leased Property at any time before
the termination of this Lease, provided that Lessee shall repair any damage to
the Leased Property resulting from such removal. Lessee may, at its own cost and
expense, install or place or reinstall or replace upon or remove from the Leased
Property any such Trade Fixtures. Any such Trade Fixtures shall not become the
property of Lessor (except as provided in paragraph 27(a)). Lessee's
replacements of fixtures, machinery and equipment that are property of the
Lessor shall be of at least equal quality to the replaced fixtures, machinery
and equipment when the replaced items were new.

12.  Condemnation and Casualty.

    (a)  Lessee hereby assumes all risk of loss, damage or destruction, whether
(i) by fire, earthquake, flood, hurricane, windstorm, environmental
contamination, radiation or other casualty, war, civil unrest, strike or similar
event or the theft of all or any portion of the Leased Property and/or the
Existing Leased Space (a "CASUALTY") or (ii) by condemnation, seizure,
confiscation, requisition or other taking or sale of the use, occupancy or title
of all or any portion of the Leased Property and/or the Existing Leased Space,
whether permanent or temporary, by or on account of the exercise of the right of
eminent domain or other action by any Governmental Authority or other Person
legally vested with such powers or any transfer in lieu or in anticipation
thereof (a "TAKING"; a Taking and a Casualty are each sometimes called a
"DESTRUCTION"). Lessee hereby assigns to Lessor's Mortgagee, if any, and
otherwise to Lessor any award or insurance or other payment to which Lessee may
become entitled by reason of its interest in the Leased Property (other than any
award or insurance or other payment made to Lessee specifically made for
interruption of business, moving expenses or Trade Fixtures; hereinafter called
"LESSEE'S LOSS") if the Leased Property, or any portion thereof, is damaged,
destroyed, lost or taken in a Taking or a Casualty. If a Destruction occurs, the
Lessee shall give Lessor and Lessor's Mortgagee prompt written notice thereof,
and describe in reasonable detail in each case the facts or circumstances of the
Destruction and the damage to or loss or destruction of the Leased Property. So
long as no Event of Default exists, Lessee shall at its cost and expense, in the
name and on behalf of the Lessor, Lessee, Lessor's Mortgagee or otherwise,
appear in any such proceeding or other action, negotiate, accept and prosecute
any claim for any award, compensation, insurance proceeds or other payment on
account of any such Destruction and, subject to paragraph (b) below, cause each
such award, compensation, insurance proceeds or other payment to be paid to
Lessor's Mortgagee, if any, and otherwise, to Lessor. Lessee shall use
commercially reasonable efforts to achieve the maximum award or other recoveries
obtainable under the circumstances. Any negotiated awards, settlement or
recoveries shall be subject to Lessor's and Lessor's Mortgagee's prior written
approval. Lessee shall promptly inform Lessor of all settlement offers. Lessor
and Lessor's Mortgagee may appear in any such proceeding or other action in a
manner consistent with the foregoing and the costs and expenses of any such
appearance shall be borne by Lessee and payable to Lessor as Additional Rent. If
an Event of Default exists, Lessor's Mortgagee (or if there be none, Lessor)
shall have the exclusive right at Lessee's cost to negotiate, adjust and settle
awards, settlements and recoveries without Lessee's approval.

    (b)  After giving notice of a Destruction under the provisions of paragraph
(a) of this Article 12, Lessee shall, at Lessee's own cost and expense, proceed
with diligence and promptness (i) to carry out any work necessary to make the
Leased Property safe and secure, and (ii) to Restore the Improvements. All
Restoration shall be undertaken and completed in the same manner as if the same
were undertaken pursuant to paragraphs (c) and (d) of Article 10, and shall be
subject to the reasonable requirements of Lessor and Lessor's Mortgagee as
provided for in clause (ii) below. The foregoing obligations of Lessee to
Restore the Improvements shall not be applicable (but the obligation of Lessee
to make the Leased Property safe and secure shall be applicable) if Lessee has
made an offer to purchase the Leased Property and the Existing Leased Space
pursuant to paragraph (c) below. Basic Rent and Additional Rent shall not abate
or be reduced hereunder by reason of any Destruction affecting the Leased
Property and/or the Existing Leased Space, and this Lease shall continue in full
force and effect and Lessee shall continue to perform and fulfill all of
Lessee's obligations, covenants and agreements hereunder notwithstanding such
Destruction.

The Net Award shall be applied to effect compliance with Lessee's obligations
hereunder. If the Net Award is less than the estimated hard and soft costs to
Restore the Improvements to the condition required in this paragraph (b), as
reasonably determined by Lessor at Lessee's expense, then, unless such estimated
cost is less than the Restoration Threshold Amount, Lessee shall deposit the
amount by which such estimated cost to Restore exceeds the Net Award with the
Depositary (as defined below) or shall post an equivalent bond or other security
satisfactory in form and substance to Lessor and Lessor's Mortgagee issued by a
surety, bank or other Person satisfactory to Lessor and Lessor's Mortgagee,
whereupon such deposit or bonded amount shall be part of the Net Award for
purposes of paragraph (c) of this Article 12. If the Net Award does not exceed
$1,000,000 (the "RESTORATION THRESHOLD AMOUNT"), then provided no Event of
Default exists, the Net Award shall be promptly paid to Lessee to be applied to
the Restoration required by this paragraph (b). If the Net Award exceeds the Net
Restoration Threshold Amount then provided no Event of Default exists:

          (i)  The full amount thereof shall be paid to a depositary (the
"DEPOSITARY"). The Depositary shall be Lessor's Mortgagee or a servicer of the
loan held thereby, or a bank or trust company, selected by Lessor and approved
by Lessor's Mortgagee, the long-term unsecured debt obligations of which are
rated at least "A" and "A2", respectively, by S&P or Moody's (or any successor
to either entity). The Depositary shall have no affirmative obligation to
prosecute a determination of the amount of, or to effect the collection of, any
insurance proceeds or condemnation award or awards. Moneys so received by the
Depositary shall be held by the Depositary in trust in a separate interest
bearing account (the interest on which will become a part of the Net Award) for
the uses and purposes provided in this Lease. To the extent not available to be
paid from the Net Award, fees and expenses payable to the Depositary shall be
paid by Lessee as Additional Rent.

          (ii)  Payments of the Net Award for the actual costs and expenses
incurred by Lessee in connection with such Restoration shall be made
periodically to Lessee from time to time as work progresses by the Depositary
after written notice to the Depositary, with a copy to Lessor, setting forth in
reasonable detail and with reasonable supporting materials all of such costs and
expenses actually incurred by Lessee. Lessee shall comply with the reasonable
requirements of Lessor and Lessor's Mortgagee, if any, with respect to the
distribution of any Net Award by the Depositary, including without limitation
that no Event of Default exists hereunder, that Lessee proceeds promptly after
the Net Award is delivered to the Depositary to Restore the Improvements in
accordance with the requirements of this Article 12 and paragraphs (c) and (d)
of Article 10, that all plans and specifications for the Restoration shall have
been reviewed and approved by Lessor and Lessor's Mortgagee, and that
disbursements by the Depositary shall be not more frequently than monthly in an
amount not exceeding the hard and soft costs of restoration and repair incurred
since the previous disbursement and shall be conditioned upon, inter alia, the
delivery to the Depositary of lien waivers, architect's certificates and title
insurance endorsements. Any amount of the Net Award (for purposes of this
sentence, not including any supplemental amount deposited by Lessee) remaining
after completion of such Restoration shall be paid to Lessor's Mortgagee, or if
there is no Lessor's Mortgagee, to Lessor.

    (c)  Notwithstanding the foregoing, (x) if the Destruction affects all or a
substantial portion of the Leased Property and the Existing Leased Space, such
that the remainder cannot be used for its intended purpose even after
Restoration (as evidenced by an Officer's Certificate of Guarantor), or (y) if
such Destruction occurs in the last thirty-six months of the then current term,
and in Lessor's reasonable opinion such Destruction entails the loss of more
than 25% of the value of the Improvements immediately prior to such Destruction,
and the time to effect restoration is reasonably expected to leave less than
twenty-four months of the then current term after completion of restoration,
then in either such case Lessee may make an irrevocable rejectable offer to
Lessor to purchase the Leased Property and the Existing Leased Space, together
with any Net Award not actually paid to Lessee or paid upon Lessee's order or
received by Lessor or Lessor's Mortgagee, in the manner and under the terms of
Article 15 on the Installment Payment Date first occurring thirty (30) days
after Lessor's acceptance of such offer, for a purchase price equal to the
Termination Value as of the date of purchase plus, if either clause (ii) or
(iii) below applies, the Reinvestment Premium, less in all events the portion,
if any, of the Net Award actually received by Lessor's Mortgagee (or if there is
not then a Lessor's Mortgagee, by Lessor), and provided further, that if the
offer is occasioned by the situation described in clause (y) above, the purchase
price will be the greater of the Termination Value as of the date of purchase or
the fair market value of the Leased Property and the Existing Leased Space
immediately prior to such Destruction. Lessor shall have ninety (90) days after
receipt of such offer in which to accept or reject such offer. No rejection of
such offer shall be effective unless consented to in advance in writing by
Lessor's Mortgagee, if any, and if such consent to rejection is not delivered
within such 90 day period such offer shall be deemed accepted within such 90 day
period. If (A) there is any Destruction , (B) Lessee does not exercise the right
set forth in the immediately preceding sentence, and (C) any of the three
following conditions exists: (i) in Lessor's reasonable opinion such Destruction
entails the loss of more than 50% of the value of the Improvements immediately
prior to such Destruction, (ii) at the time of any Destruction or at any time
thereafter until the Restoration of the Improvements is completed pursuant to
this Article 12, an Event of Default exists under this Lease, or (iii) after any
Destruction Lessee fails to Restore the Improvements by the Outside Restoration
Date (hereafter defined), then in any of such events, at the option of Lessor
(with the prior written consent of Lessor's Mortgagee), upon notice from Lessor
of any such event which makes reference to this Article 12(c) and the invocation
of the offer provisions hereafter provided for, Lessor may require Lessee to
make, and Lessee shall be deemed to have made, a rejectable offer to Lessor to
purchase the Leased Property and the Existing Leased Space, together with any
Net Award not actually paid to Lessee or paid upon Lessee's order or received by
Lessor or Lessor's Mortgagee, in the manner and under the terms of Article 15 on
the Installment Payment Date first occurring thirty (30) days after Lessor's
acceptance of such offer, for a purchase price equal to the Termination Value as
of the date of purchase, plus, if either or both of clause (ii) or clause (iii)
above applies, the Reinvestment Premium, less in all events the Net Award
actually received by Lessor's Mortgagee, if any, or otherwise Lessor. Lessor
shall have ninety (90) days after such offer to accept or reject it, and if it
fails to act, it shall be deemed to have accepted such offer. No rejection of
such offer shall be effective unless consented to in advance in writing by
Lessor's Mortgagee, and if such consent to rejection is not delivered in such 90
day period, such offer shall be deemed accepted. If Lessor rejects such offer,
this Lease shall terminate on the Installment Payment Date first occurring
thirty (30) days after such rejection, and Lessor or Lessor's Mortgagee, as the
case may be, shall retain the entire Net Award.

     The "OUTSIDE RESTORATION DATE" shall mean 36 months after the Destruction
occurs, subject to extension by Lessor of not more than 12 months to the extent
that Restoration is delayed due to acts of God, strikes, unavailability of
materials, or further Destruction, but if such Destruction occurs during the
Basic Term in no event later than the Basic Term Expiration Date.

    (d)  Notwithstanding any other provision to the contrary contained in this
Article 12, if a temporary Taking occurs, this Lease shall remain in full force
and effect (including without limitation the obligation of Lessee to continue to
pay without reduction Basic Rent and Additional Rent) and the Lessee shall be
obligated to continue to pay Basic Rent and Additional Rent and Lessee shall be
entitled to the entire Net Award paid for such temporary Taking; except that any
portion of the Net Award allocable to the time period after the expiration or
termination of the Term shall be paid to Lessor. The provisions of this Article
12 shall supersede any contrary provisions in any statute or law.

13.  Insurance.

    (a)  Lessee shall, at its cost and expense, maintain or cause to be
maintained valid and enforceable insurance of the following character and shall
cause to be delivered to Lessor and Lessor's Mortgagee annual certificates of
the insurers as to such coverage and shall comply with the requirements of this
Article 13 ("INSURANCE REQUIREMENTS"):

         (i)  "All Risks of Physical Loss" property insurance including boiler
and machinery insurance (without exclusion for explosion) and the like and
covering the Leased Property and all replacements and additions thereto, and all
building materials and other property which constitute part of the Leased
Property in a manner consistent with insurance maintained by Lessee on
properties similar to the Leased Property and in any event in amounts not less
than one hundred percent (100%) of the full replacement value of the Leased
Property less Land and other uninsurable items, together with an endorsement
providing for law and ordinance coverage in an amount equal to at least
$10,000,000, all of such insurance to have a deductible not greater than
$100,000.00.

         (ii)  Commercial general liability insurance covering legal liability
on an "occurrence" basis against claims for bodily injury, death or property
damage, occurring on, in or about the Leased Property and the adjoining land,
streets, sidewalks or ways occurring as a result of construction and use and
occupancy of facilities located on the Leased Property or as a result of the
construction thereof or the use of products or materials manufactured,
processed, constructed or sold, or services rendered, on the Leased Property, in
the minimum amount of $5,000,000 (or such higher amount as Lessor may reasonably
require from time to time) with respect to any one occurrence, accident or
disaster or incidence of negligence and with a maximum deductible of
$500,000.00, subject to increase only with the consent of Lessor and Lessor's
Mortgagee, which may be withheld in their sole discretion.

         (iii)  Worker's compensation insurance (or other similar insurance or
self insurance program permitted and in compliance with the Legal Requirements
of the state in which the Leased Property is located) covering all Persons
employed in connection with any work done on or about the Leased Property with
respect to which claims for death or bodily injury could be asserted against
Lessor, Lessee or the Leased Property, complying with the Legal Requirements of
the state in which the Leased Property is located.

         (iv)  If any portion of the Leased Property is located in an area
designated by the Federal Emergency Management Agency as having special flood
and mudslide hazards, flood insurance in the maximum available amount under the
Flood Disaster Protection Act of 1973, as amended from time to time, and
otherwise meeting the requirements of the Federal Insurance Administration.

         (v)  At any time when Guarantor has a Credit Rating Downgrade and such
insurance is available on commercially reasonable terms, business interruption
insurance in amounts sufficient to compensate Lessor for all Basic Rent,
Additional Rent or other amounts payable hereunder during a period not less than
twenty-four (24) months, the amount of such coverage to be adjusted annually to
reflect the Basic Rent, Additional Rent and other amounts payable during the
succeeding twenty-four (24) month period.

         (vi)  At all times during which construction, repairs, Restoration or
Alterations are being made with respect to the Improvements, the insurance
provided for in subsection (i) shall be written on a so-called builder's risk
completed value form on a non-reporting basis, including permission to occupy
the Leased Property, and with an agreed-amount endorsement waiving co-insurance
provisions.

         (vii)  Intentionally omitted.

         (viii) Such other insurance, in such amounts, against such risks, and
with such other provisions as is customarily and generally maintained by
operators of similar properties including war risk insurance (at and during such
times as war risk insurance is commonly obtained in the case of property similar
to the Leased Property), when and to the extent obtainable from the United
States Government or any agency thereof.

All policies of insurance required hereunder (the "POLICIES") shall be written
by domestic insurance companies having an insurance company claims paying rating
from S&P and Moody's of "A-" or better and be considered equivalent to a NAIC 1
or other rating designation acceptable to the Securities Valuation Office of the
National Association of Insurance Commissioners. To the extent necessary for the
policies to be enforceable against the insurance company in Texas, all such
insurance companies shall be legally qualified to issue such insurance in Texas,
and otherwise be reasonably satisfactory to Lessor and Lessor's Mortgagee.

Insurance certificates evidencing the coverage required by the Policies shall be
deposited with the Lessor by Lessee on the date hereof and thereafter no less
frequently than annually. With respect to the Policies described under
subparagraphs (i), (ii), (iv), (v), (vi), (vii), the Lessee also shall deliver
insurance certificates evidencing the coverage required under said subparagraphs
to the Lessor's Mortgagee, also naming the Lessor's Mortgagee as the certificate
holder. The form and substance of such certificates shall be reasonably
satisfactory to Lessor and Lessor's Mortgagee (it being agreed that Acord 27
form certificates are satisfactory in form) and shall be issued by the insurer.
Furthermore, the Lessee shall deliver to Lessor and Lessor's Mortgagee
certificates evidencing the coverage required by the Policies at least thirty
(30) days before the earlier of the expiration of the existing insurance period
or the due date for all premiums for the renewal of such Policies.

All Policies of property insurance shall name the Lessor as loss payee and
Lessor's Mortgagee as loss payee, mortgagee and additional insured, as its
interest may appear, and all liability Policies shall name the Lessor and the
Lessor's Mortgagee as additional insured, as their respective interests may
appear and the policies required under subparagraphs (i), (ii), (iv), (v), (vi)
and (vii) above shall identify the Lessor as the owner of the Leased Property.
In addition, all Policies shall contain a standard New York lender or equivalent
"non-contributory Mortgagee" endorsement naming the Lessor's Mortgagee as loss
payee, mortgagee and additional insured; and any provisions in such property
insurance for risk retention by Lessee shall be subject to the approval of
Lessor and Lessor's Mortgagee. All Policies and endorsements shall be fully
prepaid and nonassessable. The Lessee shall not obtain any separate or
additional insurance which is contributing in the event of loss unless the
Lessor and the Lessor's Mortgagee are each insured thereunder (as their
interests may appear) and the policies therefor are reasonably satisfactory to
the Lessor and the Lessor's Mortgagee.

    (b)  Any Net Award remaining after Lessee has Restored the Leased Property
pursuant to Article 12 shall be paid to Lessor subject to the terms of any
Mortgage.

    (c)  All Policies shall (i) provide that the insurance evidenced thereby
shall not be canceled or modified without at least thirty (30) days' prior
written notice from the insurance carrier to the Lessor and the Lessor's
Mortgagee, (ii) provide that the issuer waives all rights of subrogation against
Lessor, any successor to Lessor's interests in the Leased Property and Lessor's
Mortgagee, (iii) provide that 30 days' advance written notice of cancellation,
material modification (which modification will not, in any event, result in a
Policy not complying with the terms of this Lease), termination or lapse of
coverage will be given to Lessor and Lessor's Mortgagee, (iv) provide that such
insurance, as to the interest of Lessor and Lessor's Mortgagee, will not be
invalidated by any act or neglect of Lessor, Lessor's Mortgagee, Lessee or any
party, nor by any foreclosure or any other proceedings relating to the Leased
Property, nor by any change in the title ownership of the Leased Property, nor
by use or occupation of the Leased Property for purposes more hazardous than are
permitted by such Policy, (v) provide that no claims shall be paid under
Policies maintained pursuant to subparagraphs (i), (iv), (v), (vi), (vii) and
(viii) of paragraph 13(a) without ten (10) days' advance written notice to the
Lessee, the Lessor and the Lessor's Mortgagee, (vi) be primary and without right
or provision of contribution as to any other insurance carried by Lessor or any
other interested party, and (vii) if any insuring company is not domiciled
within the United States of America, include a United States Service of Suit
clause (providing any actions against the insurer by the named insured or Lessor
are conducted within the jurisdiction of the United States of America).

    (d)  Lessee shall comply, at its sole expense, with all of the terms and
conditions of all Policies.

    (e)  Any time after an Event of Default has occurred, or if a Credit Rating
Downgrade has occurred, Lessee shall on demand pay to Lessor's Mortgagee, if
any, or otherwise to Lessor, on the same day of each month that Basic Rent is
due hereunder a monthly payment in such amount as Lessor or Lessor's Mortgagee
determines to be necessary to create and maintain a reserve fund from which to
pay before they become due all Taxes and Impositions during the next ensuing
twelve (12) months, and sufficient to pay all premiums ("INSURANCE PREMIUMS")
that are due for the renewal or replacement of the coverage afforded by the
Policies (the "TAX AND INSURANCE RESERVE FUND PAYMENT"). The Tax and Insurance
Reserve Fund Payment shall be held in escrow (the "TAX AND INSURANCE RESERVE
FUND") by Lessor or Lessor's Mortgagee. In the event of a Credit Rating
Downgrade only, interest shall be payable on the amounts in the Tax and
Insurance Reserve Fund to Lessee annually in arrears (provided that the Tax and
Insurance Reserve Fund is projected to have adequate funds to pay the following
year's Taxes, Impositions and Insurance Premiums), and if held by Lessor's
Mortgagee may be commingled with other funds. In the event of an Event of
Default, no interest on the amount in the Tax and Insurance Reserve Fund shall
be payable to Lessee. In the event of a Credit Rating Downgrade and an Event of
Default, no interest on such Tax and Insurance Reserve Fund shall be paid to
Lessee. Any excess reserve shall be credited against subsequent Tax and
Insurance Reserve Fund Payments required hereunder, and any deficiency shall be
paid by Lessee upon demand and shall bear interest at the Overdue Rate if unpaid
five (5) days after such demand, but shall be paid in no event later than five
(5) days before the date when such Taxes and Impositions and Insurance Premiums
shall become delinquent. To the extent that adequate funds for Taxes and
Impositions and for Insurance Premiums have been paid to create a Tax and
Insurance Reserve Fund and provided no Event of Default exists, Lessor (or
Lessor's Mortgagee if the Tax and Insurance Reserve Fund is held by Lessor's
Mortgagee) shall, on not less than 15 days' written request of Lessee, cause the
same to be applied to Taxes and Impositions and Insurance Premiums payable by
Lessee hereunder; provided, Lessee shall not be liable to pay such Taxes and
Impositions and Insurance Premiums, as the case may be, if Lessor (or Lessor's
Mortgagee if the Tax and Insurance Reserve Fund is held by Lessor's Mortgagee)
fails to apply such funds to Taxes and Impositions and Insurance Premiums
following Lessee's written request and no Event of Default exists. If an Event
of Default exists, then the Tax and Insurance Reserve Fund may be applied to any
Rent then due and unpaid and Lessee shall remain liable to pay such Taxes and
Impositions and Insurance Premiums to the extent not paid out of the Tax and
Insurance Reserve Fund.

         Any unapplied portion of the Tax and Insurance Reserve Fund shall be
returned to Lessee within thirty (30) days after the expiration of the Term or
termination of this Lease, provided there exists no Event of Default by Lessee.
Upon the occurrence and during the continuance of any Event of Default by Lessee
hereunder, Lessee agrees that Lessor may apply all or any portion of the Tax and
Insurance Reserve Fund to any obligation of Lessee hereunder. If all or any
portion of the Tax and Insurance Reserve Fund is applied to any obligation of
Lessee hereunder, Lessee shall immediately upon request of Lessor restore the
Tax and Insurance Reserve Fund to its original amount, with interest at the
Overdue Rate on such amounts five (5) days after such request. Lessee shall not
have the right to call upon Lessor to apply all or any portion of the Tax and
Insurance Reserve Fund to cure any Default or fulfill any obligation of Lessee
hereunder, but such use shall be solely in the discretion of Lessor. Upon any
conveyance of the Leased Property by Lessor, Lessor's right in the Tax and
Insurance Reserve Fund shall be transferred by Lessor to Lessor's transferee,
and upon such transfer and the assumption and acknowledgement by the transferee
of Lessor's obligations hereunder Lessee releases Lessor herein named of any and
all liability with respect to the fund, its application and return, and Lessee
agrees to look solely to such transferee with respect thereto. Lessor will
notify Lessee of any such transfer; and Lessor shall cause such transferee to
assume liability for performance of and acknowledge in writing that it consents
to the provisions of the previous sentence and the provisions of the previous
sentence shall also apply to subsequent transferees.

    14.  Financial Statements; Certificates. Lessee will cause to be delivered
to Lessor and Lessor's Mortgagee the financial statements of Guarantor required
by Section 10 of the Guaranty. At any time that Lessee's financial statements
are not consolidated into Guarantor's financial statements or at any time when
Guarantor is not a United States Person, Lessee will deliver to Lessor and
Lessor's Mortgagee:

         (i)  As soon as practicable but in no event later than five (5)
Business Days after the date of filing with Securities and Exchange Commission
or other Governmental Authority, copies of all such financial statements, proxy
statements, notices, other communications, and reports as Lessee shall send to
its shareholders and other information generally made available to banks and
other lenders (exclusive of proprietary information), provided that Lessee need
not make such delivery so long as such financial information is posted on EDGAR,
Guarantor's Home Page or other electronic resource generally available to the
public without charge and Guarantor emails notice to Lessor and any Lessor's
Mortgagee (at email addresses supplied by such parties) of the availability of
such information within five (5) Business Days of its posting, and will provide
paper copies of such information upon request and, in any event, before such
information is removed from the above-named electronic resources;

         (ii)  For any period that Lessee is a public company, as soon as
practicable, copies of all regular, current or periodic reports (including
reports on Form 10-K, Form 8-K and Form 10-Q) which Lessee is or may be required
to file with the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions of the Securities and Exchange Commission,
provided that Lessee need not make such delivery so long as such financial
information is posted on EDGAR, Guarantor's Home Page or other electronic
resource generally available to the public without charge and Guarantor emails
notice to Lessor and any Lessor's Mortgagee (at email addresses supplied by such
parties) of the availability of such information within five (5) Business Days
of its posting, and will provide paper copies of such information upon request
and, in any event, before such information is removed from the above-named
electronic resources;

         (iii)  For any period that Lessee is not a public company required to
file such reports with the Securities and Exchange Commission then within 120
days after the end of each fiscal year, and within 60 days after the end of any
other fiscal quarter, a consolidated statement of earnings, and a consolidated
statement of changes in financial position, a consolidated statement of
stockholders' equity, and a consolidated balance sheet of such entity as of the
end of each such year or fiscal quarter, setting forth in each case in
comparative form the corresponding consolidated figures from the preceding
annual audit or corresponding fiscal quarter in the prior fiscal year, as
appropriate, all in reasonable detail and satisfactory in scope to Lessor and
Lessor's Mortgagee, and certified as to the annual consolidated statements by
independent public accountants of recognized national standing selected by
Lessee, whose certificate shall be based upon an examination conducted in
accordance with generally accepted auditing standards and the application of
such tests as said accountants deem necessary under the circumstances; and

         (iv)  Whether or not Lessee is consolidated with another entity for
financial reporting purposes, within ninety (90) days of the end of each
calendar year, an annual statement setting forth the gross revenues derived by
Lessee from the subleasing, licensing or otherwise providing space in the Leased
Property, operating expenses and the cost of capital improvements and repairs
made to the Leased Property and the Existing Leased Space, together with a
projection of such capital improvements and repairs for the next calendar year,
such statement to be certified as true and correct in all material respects by
the Chief Financial Officer of Lessee.

Concurrently with the delivery of annual financial statements pursuant to
subparagraph (iii) of this Article 14, Lessee will cause to be delivered to
Lessor and Lessor's Mortgagee a certificate by an Executive Officer of Guarantor
(i) that to the best of such officer's Actual Knowledge based on reasonable
inquiry, there exists no Default or Event of Default under this Lease or if any
such Default or Event of Default exists, specifying the nature thereof, the
period of existence thereof and what action Lessee proposes to take with respect
thereto and (ii) detailing capital improvements made to the Leased Property
during the prior calendar year and a projection of such matters for the next
calendar year. In addition, Lessee agrees upon prior written request to meet
with Lessor and Lessor's Mortgagee during normal business hours at mutually
convenient times, from time to time, to discuss this Lease and such information
about Lessee's business and financial condition reasonably requested by Lessor.

    Any non-public information delivered to the Lessor pursuant to this Article
14, or otherwise, shall be deemed to be confidential. Lessor may share the
information delivered pursuant to this Article 14 with Lessor's Mortgagee, the
Certificate Holders, potential mortgagees, rating agencies, servicers, potential
transferees of the Certificate Holders, potential purchasers of the Leased
Property or a beneficial interest therein and all other parties having a
legitimate business purpose for reviewing the same; provided, such parties agree
to hold any non-public information in confidence; and provided, further, Lessor
may disclose such non-public information to regulatory authorities and in
accordance with any judicial or governmental order, or if required by any law,
regulation or stock exchange rule.

    Notwithstanding anything to the contrary contained herein, Lessee and
Guarantor shall not be obligated to provide or disclose to Lessor, Lessor's
Mortgagee, any prospective purchaser or mortgagee, or any other Person, any
information relating to Lessee's or Guarantor's financial condition or
operations which has not already been publicly disclosed if Lessee or Guarantor
is then subject to the filing requirements of the Securities and Exchange Act of
1934, as amended, and reasonably believes that providing or disclosing such
information would require a separate filing of such information with the
Securities and Exchange Commission.

15.  Purchase Procedure.

     (a)  If Lessee purchases Lessor's interest in the Leased Property and the
Existing Leased Space pursuant to any provision of this Lease, the terms and
conditions of this Article 15 shall apply.

     (b)  On the Installment Payment Date ("Termination Date") fixed for the
closing of the purchase by Lessee of Lessor's interest in the Leased Property
and the Existing Leased Space:

          (i)  Lessee shall pay to Lessor, or as Lessor directs, in lawful money
of the United States in immediately available funds, at Lessor's address herein
stated or at any other place in the United States which Lessor may designate, an
amount equal to the purchase price described in such provision;

          (ii)  Lessor shall execute and deliver to Lessee a special warranty
deed, sufficient to convey fee simple title to the Leased Property and the
Existing Leased Space, and an assignment and such other instrument or
instruments as may be appropriate and customary in accordance with prevailing
local conveyancing practices, which shall transfer all of Lessor's interest in
the Leased Property and the Existing Leased Space (and in the Existing Leases if
their primary terms have not expired), in each case free and clear of any
Mortgage (unless, in the case of a sale pursuant to Article 33, the offer is to
purchase subject to the Mortgage), but subject to (A) any Liens (other than
Liens created by Lessor or its successors or assigns, or any Affiliate of
Lessor, without the written consent of Lessee) existing on the first day of the
Term, (B) Permitted Encumbrances (other than any Mortgage, the WCOM Lease and
the AET Lease), (C) all Liens attaching to the Leased Property after the
beginning of the Term (other than as a result of an act of Lessor or Lessor
Parties without the express written consent of Lessee), and (D) all Legal
Requirements. Lessor shall either (1) credit the Net Award, if any, actually
received by Lessor and not credited to or at the direction of Lessee to the
purchase price or (2) pay the same to or at the direction of Lessee and assign
to Lessee all rights to any award not yet received;

          (iii)  Lessee shall pay all charges incident to such transfer or the
termination of the Lease which are incurred by Lessor, Lessor's Mortgagee or
Lessee, including but not limited to all transfer taxes, recording fees, escrow
fees, prepayment fees or premiums, title insurance premiums and federal, state
and local taxes (except for any franchise taxes, withholding taxes and net
income or profit taxes of Lessor or Lessor's Mortgagee), and reasonable
attorneys' fees and expenses of Lessor's counsel and counsel to Lessor's
Mortgagee;

          (iv)  Lessee shall pay to Lessor all Basic Rent, Additional Rent and
other sums payable by Lessee under this Lease, due and payable through and
including the date Lessee completes the purchase of Lessor's interest in the
Leased Property; and

          (v)  Except for those warranties contained in the warranty deed
described in subparagraph (b)(ii) of this Article 15, Lessor's transfer of its
ownership in the Leased Property shall be on an as-is basis, without any
representation or warranty, either express or implied, as to the design,
condition, quality, capacity, merchantability, habitability, durability,
suitability or fitness of the Leased Property for any particular purpose, or any
other matter concerning the Leased Property or any portion thereof.

16.  Quiet Enjoyment. So long as no Event of Default exists under this Lease,
Lessor covenants that Lessee shall and may at all times peaceably and quietly
have, hold and enjoy the Leased Property during the Term of this Lease free from
any claim by, through, or under Lessor other than Permitted Encumbrances.
Notwithstanding the preceding sentence, (a) Lessor may exercise its rights and
remedies under Article 20, (b) Lessor, Lessor's Mortgagee, representatives of a
residual value insurer, and their respective agents may enter upon and inspect
the Leased Property, during normal business hours after reasonable prior notice
and with the minimum disruption reasonably practicable to Lessee's occupancy,
all reasonable expenses of such exercise, entry and inspection to be borne
solely by Lessee (x) once every three years while Guarantor has the Credit
Rating, (y) once each year during a Credit Rating Downgrade, and (z) during the
last year of the Basic Term, two times, and (c) Lessor and Lessor's Mortgagee
may, at their sole expense, enter upon and inspect the Leased Property at any
time during the term of this Lease, during normal business hours after
reasonable prior notice and with the minimum disruption reasonably practicable
to Lessee's occupancy. In addition to its rights under paragraph 29, Lessor
shall have the right at any time, at its sole cost and expense and upon
reasonable advance notice to Lessee, to show the Leased Property to any
prospective purchaser or mortgagee of the Leased Property during normal buisness
hours, provided such showing shall be conducted so as not to unreasonably
interfere with Lessee's business. Any failure by Lessor to comply with the
foregoing warranty shall not give Lessee any right to cancel or terminate this
Lease, or to abate, reduce or make deduction from or offset against any Basic
Rent or Additional Rent or other sum payable under this Lease, or to fail to
perform or observe any other covenant, agreement or obligation hereunder or to
recover any damages against Lessor resulting therefrom. Subject to the foregoing
sentence, Lessee may obtain injunctive or other relief against Lessor for breach
of the aforesaid covenant of peaceful and quiet possession and enjoyment of the
Leased Property. If requested by Lessor or Lessor's Mortgagee (upon 30 days'
prior written notice), Lessee shall at its own expense provide Lessor and
Lessor's Mortgagee with certificates every year during the Term of this Lease
(except the last year of the Term, during which year the Lessee shall provide
such certificate each fiscal quarter of Lessee) certifying that the Leased
Property is in the condition required by Article 10; provided, that the Lessee
shall be required to deliver the certificates required by this sentence once
each fiscal quarter of Lessee if required by the Lessor's Mortgagee. One (1)
year before the Expiration Date, if requested by Lessor or Lessor's Mortgagee,
Lessee shall at its own expense cause the Leased Property to be inspected by a
qualified independent inspector, the results of which shall be made available to
Lessee, Lessor and Lessor's Mortgagee not less than eleven (11) months before to
the end of the Term, to determine whether the condition of the Leased Property
complies with the requirements set forth in the residual value insurance policy
applicable to the Leased Property.

17.  Survival. If this Lease is terminated as herein provided, Lessee's
obligations and liabilities, actual or contingent, under this Lease which arose
at or before such termination shall survive such termination.

18.  Subletting; Assignment.

     (a)  Lessee shall have the right, upon notice to Lessor but without
Lessor's consent, to assign this Lease to any Affiliate of Lessee, or to any
entity succeeding to Lessee by way of merger or consolidation. Guarantor shall
remain liable for the payment and performance of the obligations of Lessee
hereunder notwithstanding such assignment.

     (b)  Lessee shall have the right, with the prior written consent of Lessor
(which shall not be unreasonably withheld, conditioned or delayed) to assign
this Lease to an unaffiliated person, provided that Lessee shall remain liable
hereunder as a principal and not as a guarantor or surety, as if no such
assignment has been made and provided that Guarantor shall remain liable under
the Guaranty notwithstanding such assignment.

     (c)  Lessee may, without Lessor's consent, sublet the Leased Property or
any portion thereof during the Basic Term and up to 50% of the square footage of
the Improvements then subject to this Lease during any exercised Renewal Term,
provided that:

          (i)  No Event of Default exists under this Lease on the date of such
sublease or assignment;

          (ii)  Each sublease or assignment shall expressly be made subject and
subordinate to the provisions hereof;

          (iii)  No sublease may extend beyond the Basic Term, unless Lessee has
exercised its right to renew pursuant to paragraph (b) of Article 2 and then not
beyond the term hereof as so extended;

          (iv)  The value of the Leased Property will not be decreased by reason
of the activities of the sublessee (it being understood that the value of the
Leased Property shall not be considered to be decreased by reason of a sublessee
having a lower credit rating than the Lessee).

    (d)  No such sublease or assignment shall affect or reduce any obligations
of Lessee or Guarantor, or the rights of Lessor hereunder, and all obligations
of Lessee hereunder shall continue in full effect as the obligations of a
principal and not of a guarantor or surety, as though no subletting or
assignment had been made.

    (e)  Neither this Lease nor the Term of this Lease shall be mortgaged by
Lessee, nor shall Lessee mortgage or pledge the interest of Lessee in and to any
sublease of the Leased Property or any portion thereof or the rental payable
thereunder, provided, however, that Lessee may mortgage or pledge Lessee's
leasehold interest and Lessee's interest in and to any sublease of the Leased
Property and the rent payable thereunder, provided that any such mortgage or
pledge is subject and subordinate to the rights of Lessor hereunder and Lessor's
Mortgagee. Any such mortgage or pledge, and any sublease or assignment not
permitted by this Article 18, shall be void.

    (f)  Lessee shall pay as Additional Rent to Lessor on demand all reasonable
costs and expenses of Lessor, Lessor's Mortgagee and the Certificate Holders
(including in-house or outside counsel attorneys' reasonable fees and expenses)
in reviewing or executing any instrument pursuant to this Article 18.

    (g)  Lessee shall deliver to Lessor and Lessor's Mortgagee a copy of any
assignment or sublease not requiring Lessor's prior consent within ten (10) days
after its execution and delivery, which shall include the full name and address
of such sublessee or assignee.

    (h)  Any profit arising from a permitted sublease or assignment shall be the
exclusive property of Lessee.

         (i)  In the circumstances outlined in Schedule I, Lessor is obligated
to give a non-disturbance agreement to sublessees (a "Sublessee SNDA"). The form
of Sublessee SNDA shall contain customary mortgagee provisions for similar
transactions and shall be mutually approved by Lessor, Lessee, Lessor's
Mortgagee and the sublessee, such approval not to be unreasonably withheld,
delayed or conditioned.

19.  Advances by Lessor. If Lessee shall fail to make or perform any payment or
act required by this Lease, then, upon ten (10) Business Days' notice to Lessee
(or upon shorter notice or no notice, to the extent necessary to meet an
emergency or a governmental limitation), Lessor may at its option pay or perform
such act for the account of Lessee, and Lessor shall not thereby be deemed to
have waived any Default or released Lessee from any obligation hereunder.
Amounts so paid by Lessor and all incidental costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with such
payment or performance shall constitute Additional Rent and shall be paid by
Lessee to Lessor on demand and shall bear interest at the Overdue Rate from the
date of Lessor's payment until the date of Lessee's reimbursement.

20.  Conditional Limitations -- Events of Default and Remedies.

     (a)  Any of the following occurrences or acts shall constitute an "EVENT
OF DEFAULT" under this Lease:

         (i)  If Lessee (A) fails to pay any installment of Basic Rent and such
failure continues for five (5) days after notice thereof, (B) fails to pay
Additional Rent and such failure continues for ten (10) days after notice
thereof, (C) fails to keep in full force and effect any insurance coverage
required to be maintained by Lessee hereunder, (D) Defaults in its obligation to
purchase the Leased Property when required to do so by any provision of this
Lease, or

         (ii)  If Lessee fails to perform any other covenant, agreement or
obligation on the part of Lessee to be performed under this Lease and such
failure continues for a period of 30 days after notice thereof; provided,
however, that in the case of a Default which Lessee is able to remedy with
reasonable diligence, but not within a period of 30 days, if Lessee commences
within such period of 30 days to remedy the Default and thereafter prosecutes
the remedying of such Default with all reasonable diligence, the period of time
after notice of Default within which to remedy the Default shall be extended for
such period not to exceed an additional 240 days as may be reasonable to remedy
the same with all reasonable diligence; or

         (iii)  If Lessee or any guarantor of Lessee's obligations under the
Lease ("GUARANTOR") files a petition of bankruptcy or for reorganization or for
an arrangement pursuant to the Bankruptcy Code, or is adjudicated a bankrupt or
becomes insolvent or makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become due,
or is dissolved, or suspends payment of its obligations, or takes any corporate
action in furtherance of any of the foregoing; or

         (iv)  If a petition or answer is filed proposing the adjudication of
Lessee or any Guarantor as a bankrupt, or its reorganization pursuant to the
Bankruptcy Code, and (A) Lessee or such Guarantor consents to the filing
thereof, or (B) such petition or answer is not discharged or denied within 90
days after the filing thereof; or

         (v)  If a receiver, trustee or liquidator (or other similar official)
is appointed for or takes possession or charge of Lessee or any Guarantor, or
Lessee's estate or interest in the Leased Property, and is not discharged within
90 days thereafter, or if Lessee or any Guarantor consents to or acquiesces in
such appointment; or

         (vi)  If Guarantor fails to perform any covenant, agreement or
obligation on the part of Guarantor to be performed under the terms of any
guaranty of the Lease or any guaranty of a management agreement relating to any
portion of the Leased Property (including without limitation either Management
Agreement) beyond applicable grace or cure periods, if any; or

         (vii)  If any Guarantor disavows, repudiates or rejects any such
guaranty or any or all of its obligations thereunder, or otherwise claims or
asserts that it is no longer bound by any such guaranty in whole or in part or
that any or all of its obligations thereunder are not enforceable against it in
whole or in part; or

         (viii)  Any representation by Lessee or Guarantor contained herein, in
the Guaranty, any other agreement with Lessor, or in any certificate delivered
to Lessor or Lessor's Mortgagee shall be incorrect or misleading in a material
and adverse way at the time it was made; or

         (ix)  An Event of Default exists under a Management Agreement.

    (b)  If an Event of Default shall occur and be continuing, Lessor shall have
the option to do any one or more of the following without any notice or demand,
in addition to and not in limitation of any other remedies permitted by law or
by this Lease (including without limitation, seeking to recover damages,
including consequential and incidental damages to the extent provided for in
Article 36 of this Lease, against Lessee):

              (i)  Decline to repossess the Leased Property, and elect to
         maintain the Lease in full force and effect. In this event, Lessor
         shall have the right to sue Lessee for the recovery of monthly Basic
         Rent and/or Additional Rent as such Rent becomes due for and during the
         entire unexpired portion of the Term of the Lease. If it is necessary
         for Lessor to bring suit against Lessee in order to collect such sums,
         Lessor has the right to allow monthly Basic Rent and/or Additional Rent
         charges to accumulate and to bring an action on several or all of the
         accrued monthly Basic Rent and/or Additional Rent charges due at any
         one time. Any such suit shall not prejudice the right of Lessor to
         bring a similar action for any subsequent monthly Basic Rent and/or
         Additional Rent as it falls due.

              (ii)  Treat the Event of Default as an anticipatory repudiation,
         terminate Lessee's rights under this Lease (but not its obligations),
         and repossess the Leased Property. In such event, Lessor shall have the
         right to immediate possession of the Leased Property and may re-enter
         the Leased Property, change the locks and remove all persons and
         property therefrom without being guilty in any manner of trespass or
         otherwise; and any and all damages to Lessee, or persons holding under
         Lessee, by reason of such re-entry are hereby expressly waived; and any
         such termination of Lessee's rights under the Lease or re-entry on the
         part of Lessor shall be without prejudice to any remedy available to
         Lessor for arrears of Basic Rent and/or Additional Rent, breach of
         contract, damages or otherwise, nor shall the termination of Lessee's
         rights under this Lease by Lessor acting under this subsection be
         deemed in any manner to relieve Lessee from the obligation to pay
         the Basic Rent and/or Additional Rent due or to become due as provided
         in this Lease for and during the entire unexpired portion (or what
         would have been the entire unexpired portion) of the Term. In the event
         of termination of Lessee's rights under this Lease and repossession by
         Lessor as provided in this subsection, Lessor shall have the further
         right, but not the obligation, to:

                           (1) Relet the Leased Property upon such terms,
                  conditions and covenants as are deemed proper by Lessor for
                  the account of Lessee and in such event Lessee shall remain
                  liable for the full Basic Rent and Additional Rent for the
                  remainder of the Term of this Lease, and in addition Lessee
                  shall pay to Lessor Lessee's Share (as hereinafter defined) of
                  all costs of renovating and/or altering the Leased Property
                  (or any portion thereof) for a new lessee or lessees
                  (including all out-of-pocket expenses incurred by Lessor,
                  including incentives, allowances and inducements) and all
                  brokerage and/or legal fees incurred in connection therewith.
                  Lessor shall have the right to sue Lessee to collect Lessee's
                  Share of all costs of renovating and/or altering the Leased
                  Property (or any portion thereof) for a new lessee or lessees
                  (including all out-of-pocket expenses incurred by Lessor,
                  including incentives, allowances and inducements) and all
                  brokerage and/or legal fees incurred in connection therewith,
                  as well as the difference for the entire unexpired portion (or
                  what would have been the entire unexpired portion) of the Term
                  of this Lease between the Basic Rent and Additional Rent under
                  this Lease versus the monthly rent and other charges collected
                  or to be collected under the new Lease. In no event shall
                  Lessee be entitled to any excess rent received by Lessor on
                  account of such reletting(s). As used herein, "Lessee's Share"
                  shall mean the ratio, the numerator of which is the number of
                  months from the date that Lessee's rights under this Lease are
                  terminated as provided above until the date that the Term
                  hereof would have expired, and the denominator of which is the
                  number of rent-paying months in the primary term of the lease
                  entered into by Lessor pursuant to such reletting; but in no
                  event shall Lessee's Share exceed 100%;

                           (2) Alternatively, at the election of Lessor
                  (provided that no such election shall be effective unless
                  consented to in advance in writing by Lessor's Mortgagee, if
                  any), Lessee shall pay as damages to Lessor, upon any such
                  termination of Lessee's rights under this Lease, such sum as
                  at the time of such termination of Lessee's rights equals the
                  amount of the excess, if any, of the then present value of all
                  the Basic Rent and Additional Rent which would have been due
                  and payable hereunder during the entire unexpired portion (or
                  what would have been the entire unexpired portion) of the Term
                  of this Lease over and above the then present rental value of
                  the Leased Property (in its AS IS condition) for the same
                  period. For purposes of present value calculations, Lessor and
                  Lessee stipulate and agree to a discount rate equal to five
                  and three-quarters percent (5.75%) per annum, as of the date
                  Lessee's rights under this Lease, is or are terminated.

                           (3) Alternatively, at the option of Lessor exercised
                  at any time while an Event of Default in the payment of Basic
                  Rent or Additional Rent is continuing, Lessor shall be
                  entitled to recover from Lessee, five (5) days after written
                  notice to Lessee, as liquidated damages, in addition to any
                  other proper claims but in lieu of and not in addition to any
                  amount which would thereafter have become payable under other
                  provisions of this clause (ii), the Termination Value as set
                  forth in Schedule C hereto, plus any Reinvestment Premium,
                  provided that, if Lessee shall so request, Lessor shall at the
                  time of such payment assign and convey the Leased Property and
                  the Existing Leased Space to Lessee, without further
                  consideration, in accordance with the terms and provisions of
                  Article 15 hereof.

              (iii) Send written notice, signed by Lessor and consented to
         in writing by Lessor's Mortgagee, declaring the Lease forfeited and
         expressly advising Tenant that it is relieved of all further rights and
         obligations under the Lease (except those obligations which are
         intended to survive expiration or termination of the Lease). Absent
         such written notice, signed by Lessor and consented to in writing by
         Lessor's Mortgagee, repossession by Lessor and/or expulsion of Lessee
         from the Leased Property shall in no way be construed as a termination
         of the Lease or Tenant's obligations thereunder.

    (c)  In the event, and only in the event, that applicable law requires
Lessor to attempt to mitigate damages following the termination of Lessee's
rights under this Lease as provided in (ii) above, Lessor shall use reasonable
efforts to the extent required by applicable law to relet the Leased Property on
such terms and conditions as Lessor in its sole good faith judgment may
determine (including without limitation a term different than the Term, rental
concessions, alterations and repair of the Leased Property), provided, however,
that (A) Lessor shall not be obligated to relet the Leased Property before
leasing other vacant space owned or operated by Lessor, (B) Lessor reserves the
right to refuse to lease the Leased Property to any potential tenant which does
not meet Lessor's reasonable standards and criteria for leasing any other
comparable space owned or operated by Lessor, and (C) Lessor shall not be
obligated to undertake any greater efforts to relet the Leased Property than
Lessor utilizes to lease any other vacant space owned or operated by Lessor. In
any proceeding in which Lessor's efforts to mitigate damages and/or its
compliance with this subsection is at issue, Lessor shall be presumed to have
used reasonable efforts to mitigate damages, Lessee shall bear the burden of
proof to establish that such reasonable efforts were not used, and Lessor and
Lessee agree that the following shall conclusively be deemed reasonable efforts
to mitigate damages: (i) if Lessor does not have in-house leasing staff, listing
the Leased Property for lease with a licensed commercial real estate broker
experienced in leasing comparable office development projects in the greater
Houston, Texas metropolitan area, (ii) advertising the availability of the
Leased Property for lease in a suitable trade journal or newspaper at least once
a month; and (iii) if a qualified prospect expresses a desire to inspect the
Leased Property, showing the Leased Property to such prospect or its agent.

    (d)  In the event that Lessor has either repossessed the Leased Property or
has terminated this Lease pursuant to the foregoing provisions of this Lease,
Lessor has the right to enter upon the Leased Property by use of a master key, a
duplicate key, or other peaceable means, and change, alter, and/or modify the
door locks on all entry doors of the Leased Property, thereby permanently
excluding Lessee, and its officers, principals, agents, employees,
representatives and invitees therefrom. Lessor shall not thereafter be obligated
to provide Lessee with a key to the Leased Property at any time, regardless of
any amounts subsequently paid by Lessee; provided, however, that in any such
instance, during Lessor's normal business hours and at the convenience of
Lessor, and upon receipt of written request from Lessee accompanied by such
written waivers and releases as Lessor may require, Lessor will either (at
Lessor's option) (A) escort Lessee or its authorized personnel to the Leased
Property to retrieve any personal belongings or other property of Lessee not
subject to any applicable Lessor's lien or security interest, or (B) obtain a
list from Lessee of such personal property as Lessee intends to remove,
whereupon Lessor shall remove such property and make it available to Lessee at a
time and place designated by Lessor. However, if Lessor elects option (B),
Lessee shall pay, in cash in advance, all costs and expenses estimated by Lessor
to be incurred in removing such property and making it available to Lessee and
all moving and/or storage charges theretofore incurred by Lessor with respect to
such property (plus an additional fifteen (15) percent thereof, to cover
Lessor's administrative costs). If Lessor elects to exclude Lessee from the
Leased Property without repossessing or terminating pursuant to the foregoing
provisions of this Lease, then Lessor shall not be obligated to provide Lessee a
key to re-enter the Leased Property until such time as all delinquent Basic Rent
and Additional Rental have been paid in full and all other defaults, if any,
have been completely cured to Lessor's satisfaction (if such cure occurs prior
to any actual repossession or termination), and Lessor has been given assurance
reasonably satisfactory to Lessor evidencing Lessee's ability to satisfy its
remaining obligations under this Lease. To the extent permitted by law, the
foregoing provision shall override and control any conflicting provisions of any
applicable statute governing the right of a lessor to change the door locks of
commercial Lessees.

    (e)  No receipt of moneys by Lessor from Lessee after a termination of this
Lease or of Lessee's rights under this Lease by Lessor shall reinstate, continue
or extend the Term of this Lease or affect any notice theretofore given to
Lessee, or operate as a waiver of the right of Lessor to enforce the payment of
Basic Rent and/or Additional Rent, and any related amounts to be paid by Lessee
to Lessor then due or thereafter falling due, it being agreed that after the
commencement of suit for possession of the Leased Property, or after final order
or judgment for the possession of the Leased Property, Lessor may demand,
receive and collect any moneys due or thereafter falling due without in any
manner affecting such suit, order or judgment, all such moneys collected being
deemed payments on account of the use and occupation of the Leased Property or,
at the election of Lessor, on account of Lessee's liability hereunder. Lessee
hereby waives any and all rights of redemption provided by any law, statute or
ordinance now in effect or which may hereafter be enacted.

    (f)  The word "re-enter", as used in this Lease, shall not be restricted to
its technical legal meaning, but is used in the broadest sense. No such taking
of possession of the Leased Property by Lessor shall constitute an election to
terminate this Lease and relieve Lessee of any obligations hereunder unless and
to the extent Lessor gives express written notice thereof to Lessee signed by
Lessor and consented to in writing by Lessor's Mortgagee, if any, declaring the
Lease forfeited and expressly advising Tenant that it is relieved of all further
rights and obligations under the Lease.

    (g)  If Lessor brings an action to enforce any provision of this Lease in
which it is found that an Event of Default has occurred, Lessee shall pay to
Lessor all reasonable costs and other expenses which may become payable as a
result thereof, including reasonable attorneys' fees and expenses.

    (h)  No right or remedy herein conferred upon or reserved to Lessor is
intended to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to any other legal or equitable right
or remedy given hereunder, or at any time existing. The failure of Lessor to
insist upon the strict performance of any provision or to exercise any option,
right, power or remedy contained in this Lease shall not be construed as a
waiver or a relinquishment thereof for the future. Receipt by Lessor of any
Basic Rent or Additional Rent or any other sum payable hereunder with knowledge
of the breach of any provision contained in this Lease shall not constitute a
waiver of such breach, and no waiver by Lessor of any provision of this Lease
shall be deemed to have been made unless made under signature of an authorized
representative of Lessor.

    (i)  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, DURING ANY PERIOD THAT
ANY EVENT OF DEFAULT EXISTS, LESSOR, ITS AGENTS AND EMPLOYEES SHALL BE LIABLE
ONLY FOR THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR, ITS AGENTS OR
EMPLOYEES, AND LESSEE WAIVES ALL OTHER CLAIMS.

    (j)  If Lessee shall hold over after the expiration or termination of the
Term of this Lease, without derogating from any of Lessor's rights hereunder and
without granting any rights of possession to Lessee, Lessee shall be liable to
Lessor for a use and occupancy fee, in an amount equal to 125% of the Basic Rent
payable immediately before such expiration or termination for such period of
holdover, plus all Additional Rent Lessee would have been liable for hereunder
had such expiration or termination not occurred. In addition, Lessee hereby
indemnifies Lessor against all loss, cost and damage arising from Lessee's
failure to surrender the Leased Property in accordance with the terms hereof.
Any such period of holding over may be terminated by either party upon fifteen
(15) days prior written notice to the other.

    (k)  Notwithstanding anything contained herein to the contrary and without
limitation of anything contained herein, if a petition is filed by or against
Lessee for relief under Title 11 of the United States Code, as amended (the
"Bankruptcy Code"), and Lessee (including for purposes of this Section, Lessee's
successor in bankruptcy, whether a trustee or Lessee as debtor in possession)
assumes and proposes to assign, or proposes to assume and assign, this Lease
pursuant to the provisions of the Bankruptcy Code to any person or entity who
has made or accepted a bona fide offer to accept an assignment of this Lease on
terms acceptable to Lessee, then notice of the proposed assignment setting forth
(i) the name and address of the proposed assignee, (ii) all of the terms and
conditions of the offer and proposed assignment, (iii) adequate protection of
Lessor's interest in the Leased Property, and (iv) the adequate assurance to be
furnished by the proposed assignee of its future performance under the Lease,
shall be given to Lessor by Lessee no later than twenty (20) days after Lessee
has made or received such offer, but in no event later than ten (10) days prior
to the date on which Lessee applies to a court of competent jurisdiction for
authority and approval to enter into the proposed assignment. Lessor shall have
the prior right and option, to be exercised by notice to Lessee given at any
time prior to the date on which the court order authorizing such assignment is
entered, to receive an assignment of this Lease upon the same terms and
conditions, and for the same consideration, if any, as the proposed assignee,
less any brokerage commissions which may otherwise be payable out of the
consideration to be paid by the proposed assignee for the assignment of this
Lease. Lessor and Lessee agree that "adequate assurance of future performance"
by Lessee and/or any assignee of Lessee pursuant to Bankruptcy Code Section 365
will include (but not be limited to) payment of a security deposit in the amount
of three (3) times the then current monthly Basic Rent and Additional Rent
payable hereunder. In addition, if this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, Lessor (1) may require from the assignee a
deposit or other security for the performance of its obligations under this
Lease in an amount substantially the same as would have been required by Lessor
upon the initial leasing to a lessee similar to the assignee and (2) shall
receive, as additional Basic Rent and/or Additional Rent, any and all sums and
other consideration of whatever nature paid to Lessee for or by reason of the
assignment for the value of this Lease, including any amounts paid to Lessee for
all or part of Lessee's assets in the Leased Property, to the extent in excess
of the reasonable fair market value of such assets, less Lessee's reasonable
direct costs of brokerage commissions, if any, and inducements, if any, paid to
or for the benefit of the assignee. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed,
without further act or documentation, to have assumed all of the Lessee's
obligations arising under this Lease on and after the date of such assignment.
Any such assignee shall, upon demand, execute and deliver to Lessor an
instrument confirming such assumption. No provision of this Lease shall be
deemed a waiver of Lessor's rights or remedies under the Bankruptcy Code to
oppose any assumption and/or assignment of this Lease, to require a timely
performance of Lessee's obligations under this Lease, or to regain possession of
the Leased Property if this Lease has neither been assumed or rejected within
sixty (60) days after the date of the order for relief or within such additional
time as a court of competent jurisdiction may have fixed. Notwithstanding
anything in this Lease to the contrary, all amounts payable by Lessee to or on
behalf of Lessor under this Lease, whether or not expressly denominated as Basic
Rent or Additional Rent, shall constitute "rent" for the purposes of Section
502(b)(6) of the Bankruptcy Code. To the extent permitted by law, Lessor and
Lessee agree that this Lease is a contract under which applicable law excuses
Lessor from accepting performance from (or rendering performance to) any person
or entity other than Lessee within the meaning of Sections 365(c) and 365(e) (2)
of the Bankruptcy Code.

21.  Granting of Easements, Etc. If no Event of Default exists, Lessee may from
time to time in writing request Lessor to join with Lessee (at Lessee's cost and
expense), to (i) grant easements, licenses, rights of way and other rights and
privileges in the nature of easements for the purposes of providing utilities
and the like to the Leased Property or property adjoining the Leased Property
owned by Lessee or an Affiliate of Lessee, (ii) release existing easements and
appurtenances relating to the provision of utilities and the like to the Leased
Property or property adjoining the Leased Property owned by Lessee or an
Affiliate of Lessee and (iii) execute and deliver any instrument, in form and
substance reasonably acceptable to Lessor, necessary or appropriate to make or
confirm such grants or releases to any Person, with or without consideration;
provided that an Executive Officer of Lessee shall have certified to Lessor and
Lessor's Mortgagee that such grant or release does not materially interfere
with, is not materially detrimental to the conduct of business on, and does not
adversely affect the utility, useful life or Fair Market Value of, the Leased
Property, and was made for no or only nominal consideration. Notwithstanding the
foregoing, Lessor and/or Lessor's Mortgagee may condition its consent to such
action on being provided evidence satisfactory to each in its sole discretion
that such action presents no material risk of liability, expense or adverse tax
consequences to Lessor or Lessor's Mortgagee and that the Executive Officer's
certificate referred to in the preceding sentence is true. Lessee shall pay as
Additional Rent to Lessor on demand all reasonable costs and expenses of Lessor
and Lessor's Mortgagee (including in-house and outside counsel attorneys' fees
and expenses) in reviewing or executing any instrument pursuant to this Article
21.

22.  Restriction of Lessor Transfers; Release. So long as Lessee or an Affiliate
of Lessee occupies any portion of the Leased Property pursuant to this Lease,
and no Event of Default has occurred and is continuing hereunder, Lessor will
not transfer (by sale, lease, exchange, merger, consolidation or otherwise) its
interest in the Leased Property, or any interest therein, to an entity which, or
any Affiliate of which, derives $100 million or more of its gross annual
revenues from the engineering, procurement and construction business. The
foregoing restriction shall not apply to Lessor's Mortgagee upon foreclosure or
any Person who acquires the Leased Property at a foreclosure sale or by deed in
lieu of foreclosure. Upon any transfer of the Leased Property, the transferring
lessor is automatically released from all liability in respect of this Lease or
the Leased Property thereafter accruing.

23.  Telecommunication Equipment. Lessee may during the term hereof, at its sole
cost and expense but without payment of rent to Lessor in respect thereof, other
than Rent set forth herein, but subject to compliance with the terms of this
Lease and with applicable laws, continue to use the roof of the buildings then
comprising a part of the Leased Property for the operation, repair and
replacement of telecommunication equipment, including antennae and satellite
dishes. Lessee may install additional telecommunication equipment on the Leased
Property, provided such installation complies with the requirements of Article
10 hereof.

24.  Notices. All communications herein provided for or made pursuant hereto
shall be in writing and shall be sent by (i) registered or certified mail,
return receipt requested, and the giving of such communication shall be deemed
complete on the third Business Day after the same is deposited in a United
States Post Office with postage charges prepaid, (ii) reputable overnight
delivery service with acknowledgment receipt returned, and the giving of such
communication shall be deemed complete on the immediately succeeding Business
Day after the same is timely deposited with such delivery service, or (iii) hand
delivery by reputable delivery service:

    (a)  If to Lessor, at the address set forth in Item 7 of Schedule B.

    (b)  If to Lessee, at the address set forth in Item 8 of Schedule B.

Lessor shall give notice to Lessee of the name and address of Lessor's
Mortgagee, and Lessee shall deliver (in the manner described above) to such
Lessor's Mortgagee at such address a copy of any notice given by Lessee to
Lessor. No notice by Lessee to Lessor pursuant to the provisions of this Lease
shall be deemed effective unless and until such notice is also so delivered to
such Lessor's Mortgagee; and no notice by Lessor to Lessee pursuant to the
provisions of this Lease shall be deemed effective unless and until such notice
is joined in or consented to in writing by Lessor's Mortgagee. Either party, and
Lessor's Mortgagee, may change the address where notices are to be sent by
giving the other party (or parties) and Lessor's Mortgagee ten (10) days' prior
written notice of such change.

25.  Estoppel Certificates. Each party hereto agrees that at any time and from
time to time during the term of this Lease, it will promptly, but in no event
later than ten (10) Business Days after request by the other party hereto or
Lessor's Mortgagee, execute, acknowledge and deliver to such other party (and,
on request, to any current or prospective mortgagee or prospective purchaser) a
certificate stating, to such party's Actual Knowledge, (a) that this Lease is
unmodified and in force and effect (or if there have been modifications, that
this Lease is in force and effect as modified, and setting forth any
modifications); (b) the date to which Basic Rent, Additional Rent and other sums
payable hereunder have been paid; (c) whether or not there is an existing
Default by Lessee in the payment of Basic Rent, Additional Rent or any other sum
required to be paid hereunder, and whether or not there is any other existing
Default by Lessee with respect to which a notice of Default has been served or
of which the signer has Actual Knowledge, and, if there is any such Default,
specifying the nature and extent thereof; (d) whether or not there are any
setoffs, defenses or counterclaims against enforcement of the obligations to be
performed hereunder existing in favor of the party executing such certificate;
(e) stating that Lessee is in possession of the Leased Property or setting forth
the parties in possession and identifying the instruments pursuant to which they
took possession; (f) stating such other information with respect to the Leased
Property and/or this Lease as may be reasonably requested, and (g) no material
adverse event has occurred since the date of the last financial statements
provided in accordance with this Lease. Without limiting the foregoing, Lessee
shall execute an estoppel certificate in the form of Schedule F hereof.

26.  No Merger. Lessee agrees that there shall be no merger of this Lease or of
any sublease under this Lease or of any leasehold or subleasehold estate hereby
or thereby created with the fee or any other estate or ownership interest in the
Leased Property or any part thereof by reason of the fact that the same entity
may acquire or own or hold, directly or indirectly, (a) this Lease or any
sublease or any leasehold or subleasehold estate created hereby or thereby or
any interest in this Lease or any such sublease or in any such leasehold or
subleasehold estate and (b) the fee estate or other estate or ownership interest
in the Leased Property or any part thereof.

27.  Surrender.

    (a)  Upon the expiration or earlier termination of the Term of this Lease,
Lessee shall peaceably leave and surrender the Leased Property to Lessor in the
same condition in which the Leased Property was originally received from Lessor
on the Commencement Date, except for repairs, Alterations, or Restoration
required by or permitted by any provision of this Lease (ordinary wear and tear,
and the consequences of any Destruction resulting in the termination of this
Lease pursuant to Article 12(c) excepted). Lessee shall remove from the Leased
Property on or before such expiration or within thirty (30) days after an
earlier termination all property situated thereon which is not the property of
Lessor, and shall repair any damage caused by such removal. Property not so
removed shall become the property of Lessor, and Lessor may cause such property
to be removed from the Leased Property and disposed of, and Lessee shall pay the
cost of any such removal and disposition and of repairing any damage caused by
such removal.

    (b)  Except for surrender upon the expiration or earlier termination of the
Term hereof, no surrender to Lessor of this Lease or of the Leased Property
shall be valid or effective unless agreed to and accepted in writing by Lessor.
If Lessee holds over beyond the scheduled expiration or termination date of this
Lease, the provisions of Article 20(e) shall apply.

28.  Separability. Each provision contained in this Lease shall be separate and
independent and the breach of any such provision by Lessor shall not discharge
or relieve Lessee from its obligation to perform each obligation of this Lease
to be performed by Lessee. If any provision of this Lease or the application
thereof to any Person or circumstance shall to any extent be invalid and
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and enforceable to the extent permitted by law.

29.  Signs; Showing. During the eighteen-month period preceding the date on
which the then current Term of this Lease shall expire without timely renewal
as to the entire Leased Property, Lessor may (a) place signs of a size and
design, and at locations reasonably acceptable to Lessee on the grounds in front
of the Leased Property advertising that the same will be available for rent or
purchase, and (b) upon not less than twenty-four (24) hours notice to Lessee,
show the Leased Property to prospective lessees, purchasers or mortgagees and
their respective representatives during normal business hours as Lessor may
elect.

30.  Waiver of Trial by Jury. To the extent permitted by law, Lessor and Lessee
hereby waive trial by jury in any litigation brought by either against the other
on any matter arising out of or in connected with this Lease or the Leased
Property.

31.  Recording. Lessor and Lessee shall execute, acknowledge, deliver and cause
to be recorded or filed or, at Lessee's expense, registered and re-recorded,
refiled or re-registered in the manner and place required by any present or
future law, a lease memorandum thereof, and all other instruments, including,
without limitation, releases and instruments of similar character, which are
reasonably requested by Lessor or Lessee as being necessary or appropriate in
order to protect their respective interests in the Leased Property.

32.  Miscellaneous. This Lease shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns permitted hereunder. Except as set forth in Article 22,
nothing herein shall restrict the right of Lessor to convey the Leased Property
or interests therein or interests in Lessor without the consent of Lessee.
Recourse for the breach of any obligation of Lessor hereunder shall be limited
to Lessor's interest in the Leased Property (including, subject to the rights of
Lessor's Mortgagee, the proceeds of any sale or other disposition of the Leased
Property), and in no event shall Lessee have recourse to Lessor personally, or
its members, managers, trustees or beneficiaries or to any other assets of
Lessor. Concurrently with the execution and delivery of this Lease, Lessee shall
cause to be delivered to Lessor and Lessor's Mortgagee an opinion of counsel to
Lessee, reasonably satisfactory in form and substance to Lessor and Lessor's
Mortgagee, as to the due authorization, execution and delivery of this Lease by
Lessee and the validity, binding effect and enforceability as to Lessee of this
Lease and such other matters relating to Lessee and this Lease as Lessor or
Lessor's Mortgagee may reasonably request. To the extent Lessor or Lessor's
Mortgagee, acting in a commercially reasonable manner, should at any time during
the Term of this Lease require any additional documents to be executed by Lessee
to further document or affirm compliance with Lessee's agreements hereunder or
under any related documents, the Lessee shall promptly comply with said request
and execute such documents, provided no such documents shall change the terms
and conditions of this Lease or the rights and obligations of Lessee and
Guarantor relating to the Leased Property. Without limiting the generality of
the foregoing, in the event Lessor's Mortgagee shall sell or syndicate all or
any interest in its loan to Lessor in a so-called "secondary market
transaction", Lessee shall at its expense cooperate with the financial advisors
and rating agencies involved in such transaction, and provide any information
reasonably necessary for such transaction and in Lessee's possession concerning
the financial condition of the Lessee and/or Guarantor (subject to paragraph 35)
or the condition of the Leased Property, provided that Lessee shall not be
obligated to provide information which is the subject of a confidentiality
agreement with a third party. Lessee shall, as Additional Rent, pay any
reasonable in-house or outside counsel attorneys' fees and expenses incurred by
Lessor's Mortgagee and Lessor in connection with said matters, or if Lessee
shall request any modifications, waiver or other action hereunder (without
implying any obligation on Lessor's part to consent to the same). This Lease may
not be amended, changed, waived, discharged or terminated in whole or in part in
any manner other than by an instrument in writing specifically duly executed by
the party against whom enforcement thereof is sought. No failure, delay,
forbearance or indulgence on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, or as an
acquiescence in any breach, nor shall any single or partial exercise of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. This Lease and the
rights and obligations in respect hereof shall be governed by, and construed and
interpreted in accordance with, the laws of the state within which the Leased
Property is located. All headings are for reference only and shall not be
considered as part of this Lease. This Lease may be executed in any number of
counterparts, each of which shall be an original, and such counterparts together
shall constitute but one and the same instrument. TIME IS OF THE ESSENCE as to
the time periods set forth pursuant to each provision of this Lease. Under no
circumstance shall Lessor be deemed to have acted negligently, grossly
negligently or willfully merely by Lessor's ownership of the Leased Property,
and in no event shall any occurrence relating to the Leased Property, whether
negligent or willful, be imputed to Lessor by reason of Lessor's interest in the
Leased Property, it being understood that all obligations with respect to the
Leased Property are the responsibility of Lessee under this Lease. In order to
have acted negligently, grossly negligently or willfully, Lessor must have
committed an affirmative act. Whenever Lessor is allowed or required to give its
consent or approval of any matter under this Lease or to deliver any estoppel or
other instrument, Lessee's sole remedy for Lessor's failure to give such consent
or approval or instrument in accordance with the applicable provision of this
Lease shall be to compel such approval or delivery. In no event and under no
circumstance shall Lessee be entitled to any monetary damages for such failure
or to terminate or otherwise modify this Lease. Lessor and Lessee agree that
this Lease is a true lease and does not represent a financing arrangement and
that it is their intent that this Lease be treated as an operating lease for
financial accounting purposes. Each party shall reflect the transaction
represented hereby in all applicable books, records and reports (including tax
filings and financial reports) in a manner consistent with "true lease"
treatment rather than "financing" treatment.

33.  Right of First Offer. Lessee shall have a right of first offer with respect
to the Leased Property (including, for purposes of this Article 33, the Existing
Leased Space during the primary terms of the Existing Leases) as hereinafter set
forth. If at any time this Lease is in full force and effect with respect to any
portion of the Leased Property, Lessor wishes to sell the Leased Property or any
portion thereof to which the Lease then applies, Lessor shall deliver to Lessee
a statement of the terms on which it is prepared to sell the Leased Property or
such portion (the "Offer Notice"). In no event may any Offer Notice contain any
terms or provisions which either (i) would require Lessee, in order to accept
such offer, to purchase any property that was never subject to this Lease (other
than Existing Leased Space), or (ii) by their nature would effectively negate
the Lessee's ability to accept such offer, such as requiring a form of
consideration that Lessee could not provide or requiring compliance with side
agreements with which Lessee is not capable of complying. The delivery of the
Offer Notice to Lessee shall constitute a written offer by Lessor to sell the
Leased Property or such portion to Lessee upon the terms and conditions as set
forth in the Offer Notice. Provided that no Event of Default has occurred and is
continuing, Lessee may, within sixty (60) days after receipt of the Offer
Notice, elect to purchase the Leased Property or such portion on the same terms
and conditions as those set forth in the Offer Notice by delivering to Lessor
within said sixty (60) days a written acceptance of such offer together with a
non-refundable deposit equal to five percent (5%) of the gross purchase price.
In no event may Lessee elect to purchase less than the property which is the
subject of the Offer Notice, even if such property includes property to which
this Lease does not then apply so long as this Lease once applied to such
property or is the Existing Leased Space. If Lessee accepts the offer, Lessor
shall convey the Leased Property or such portion to Lessee in accordance with
the provisions of Article 15 (except that if the Offer Notice contemplates a
sale subject to the Mortgage or other Lien, the deed shall also be subject to
the Mortgage or such other Lien) and Lessee shall pay to Lessor the purchase
price and other consideration as set forth in the Offer Notice. If Lessee fails
to accept the offer within the time period herein specified, Lessee's right of
first offer under this Lease shall terminate and be null and void and Lessor
shall be free, subject to Article 22, to, but not obligated to, complete the
proposed sale of the Leased Property or such portion, provided that the terms on
which such sale is consummated are not more favorable to the purchaser (except
in de minimis respects, specifically including a purchase price no lower than
95% of the price set forth in the Offer Notice and the purchaser may have a due
diligence period and grounds to terminate its offer for due diligence reasons,
neither of which features shall be available to Lessee) than the terms offered
to Lessee pursuant to the Offer Notice. If Lessor does not complete the sale
which was the subject of an Offer Notice within 180 days of the Offer Notice,
the right of first offer shall be reinstated and shall thereafter shall apply to
each proposed sale of Lessor's interest in the Leased Property, except as
hereinafter set forth. The term, "the right of first offer" in this paragraph
shall be inapplicable to a transfer to any person controlling, controlled by or
under common control with Lessor. The provisions of this paragraph shall not
apply to or prohibit: (i) any mortgaging, subjection to deed of trust or other
hypothecation of Lessor's interest in the Leased Property; (ii) any sale of the
Leased Property pursuant to a private power of sale, under, or judicial
foreclosure of, any mortgage, deed of trust or other security instrument or
devise to which Lessor's interest in the Leased Property is now or hereafter
subject; (iii) any transfer of Lessor's interest in the Leased Property to a
mortgagee, beneficiary under deed of trust or other holder of a security
interest therein by deed in lieu of foreclosure; or (iv) any transfer of the
Leased Property to any governmental or quasi-governmental agency with power of
condemnation. Any sale subject to the lien of the Mortgage pursuant to this
Article must comply with the terms of the Mortgage, including without limitation
"special purpose entity" requirements.

34.  Building Name and Signage. So long as this Lease is in effect, the Leased
Property shall be known as "Lake Pointe Plaza", which name may be changed by
Lessee with Lessor's prior written consent, which shall not be unreasonably
withheld, delayed or conditioned. Subject to applicable law, Lessee may retain
all signage identifying Lessee as an occupant of the Leased Property which
existed on September 29, 2000 so long as each building on which such signage
exists continues to be subject to this Lease. There shall be no signage on the
exterior of any building on the Leased Property identifying any occupant other
than Lessee (except that which existed on September 29, 2000, and except any
other occupant which Lessee may approve in writing, such approval not to be
unreasonably withheld, delayed or conditioned, and in all event subject to
applicable law). Subject to applicable law and the terms of this Lease, Lessee
shall have the right to display signage of its own design in the interior of any
building on the Leased Property, and the exclusive right (subject to existing
signage and Lessor's consent as provided above) to display signage of its design
on the exterior of the Leased Property, including at the entrance to Fluor
Daniel Drive and over the entrances to the Leased Property. Lessee's rights
under this paragraph may be assigned to the same person to whom Lessee assigns
its interest in this Lease, as permitted by Article 18.

35.  Disclosure of Information. Notwithstanding anything to the contrary
contained herein,, Lessee and Guarantor shall not be obligated to provide or
disclose to Lessor, Lessor's Mortgagee, any prospective purchaser or mortgagee,
or any other Person, any information relating to the Lessee's or Guarantor's
financial condition or operations which has not already been publicly disclosed
if Lessee or Guarantor reasonably believes that providing or disclosing such
information would require a separate filing of such information with the
Securities and Exchange Commission.

36.  Limitation on Damages. To the extent permitted by applicable law, both
parties hereto waive any right to punitive damages and to speculative damages.
The foregoing waiver shall not limit either party's right to prove actual
damages caused by the act or omission of the other, such as, by way of example
only, Lessor's liability to its lender for premiums or penalties resulting from
an Event of Default hereunder, the loss or reduction in coverage of a residual
value insurance policy because Lessee failed to maintain the Leased Property in
accordance with the terms of the Lease, or liability to governmental agencies or
private litigants arising out of environmental contamination which was in
violation of this Lease.

         IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly
executed and delivered as of the date first written above.

                                     LESSOR:

                                     LAKEPOINTE ASSETS LLC




                                     By: /s/ J. Richard Rosenberg
                                     Name:   J. Richard Rosenberg
                                     Title:  Vice President and Chief Financial
                                             Officer


                                     LESSEE:


                                     FLUOR ENTERPRISES INC.
                                     d/b/a Fluor Signature Services


                                     By: /s/ W.M. Torrence
                                     Name:   W.M. Torrence
                                     Title:  Senior Vice President



                                   APPENDIX I

                                   DEFINITIONS



         Actual Knowledge by the Lessee with respect to any matter means the
present actual knowledge of such matter by an Executive Officer after reasonable
investigation and inquiry. Actual Knowledge shall be presumed conclusively as to
the content of any notice to Lessee made in accordance with the provisions of
this Lease.

         Additional Rent is defined in paragraph (b) of Article 3.

         Affiliate of any Person means, at any time, any other Person directly
or indirectly controlling, controlled by or under common control with, such
Person. For purposes of this definition, the, "control" (including the
correlative meanings of the terms "controlling" controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

         Alterations is defined in paragraph (c) of Article 10.

         Bankruptcy Code means Title 11 of the United States Code or any other
Federal or state bankruptcy, insolvency or similar law, now or hereafter in
effect in the United States.

         Basic Rent is defined in paragraph (a) of Article 3.

         Basic Term is defined in paragraph (a) of Article 2.

         Basic Term Expiration Date is defined in paragraph (a) of Article 2.

         Business Day means any day except Saturdays, Sundays or the days on
which commercial banks located in the State of New York are authorized or
required to be closed.

         Building Systems means the mechanical, electrical, computer, plumbing,
security, and safety systems of the Improvements.

         Casualty is defined in paragraph (a) of Article 12.

         Certificate Holder means, as of any particular date, any holder of
interests that evidence ownership interests in the assets of a trust that is
holding a loan secured by a Mortgage or that is holding participation interests
in a loan secured by a Mortgage.

         CMBS is defined in the definition of Lessor's Mortgagee.

         Credit Rating means a long term senior unsecured debt rating of "BBB-"
or better from S&P and "Baa3" or better from Moody's.

         Credit Rating Downgrade means at any time during the Term if Guarantor
fails to maintain the Credit Rating.

         Default means any event, condition or failure the occurrence or
existence of which, with notice or lapse of time or both, would become an Event
of Default.

         Depositary is defined in paragraph (b) of Article 12.

         Destruction is defined in paragraph (a) of Article 12.

         Duration Limit shall mean the MCI Duration Limit or Aetna Duration
Limit (as applicable) as defined in paragraph (b) of Article 5.

         EDGAR means the Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval system, and any successor system that is
available to the public without charge.

         Environmental Laws means and includes but shall not be limited to the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), as amended by the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Toxic Substances Control Act (15 U.S.C.Section 2601 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean Water Act (33 U.S.C.
Section 1251 et seq.) the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. Section 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.) and all applicable federal, state and local
environmental laws, including obligations under the common law, ordinances,
rules and regulations, as any of the foregoing may have been or may be from time
to time amended, supplemented or supplanted, now or hereafter existing relating
to regulation or control of Hazardous Substances or environmental protection,
the impact of environmental quality on human health and environmental safety.

         Environmental Site Assessment is defined in Schedule B.

         Event of Default is defined in paragraph (a) of Article 20.

         Existing Leases has the meaning specified in Article 1.

         Existing Leased Space has the meaning specified in Article 1.

         Executive Officer means the President, Executive Vice President, Senior
Vice President, Treasurer, Assistant Treasurer, Chief Financial Officer,
Director of Real Estate or if such office does not exist, its closest
equivalent.

         Fair Market Value means the fair market value of the Leased Property,
considered as unencumbered by this Lease, as determined by the agreement of
Lessor and Lessee. If Lessor and Lessee are unable to agree on a Fair Market
Value within ten (10) business days, then Fair Market Value will be determined
in the same manner as Market Rent as provided in Schedule G.

         Governmental Authority means any federal, state, county, municipal or
other governmental or regulatory, arbitrator, board, body, commission, court,
instrumentality, or other administrative, judicial, quasi-governmental or
quasi-judicial tribunal, authority or agency of competent authority (or private
entity in lieu thereof) having jurisdiction over the Leased Property or over
Lessor, Lessee or Guarantor insofar as the property is concerned or could be
affected, as applicable.

         Guarantor is defined in Article 20(a)(iii).

         Guarantor's Home Page means Guarantor's internet website home page,
located at www.fluor.com, and any successor equivalent electronic site of which
Lessor and Lessor's Mortgagee have been notified in writing and which is
available without charge.

         Guaranty means the Guaranty of Lease, dated as of the date hereof, by
Guarantor of the Lease.

         Hazardous Substances means (i) those substances (whether solid, liquid
or gas),included within the definitions of or identified as "hazardous
substances", "hazardous materials", or "toxic substances" in or pursuant to,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) (CERCLA), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100 Stat.
1613) (SARA), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.,
Section 6901 et seq.) (RCRA), the Occupational Safety and Health Act of 1970 (29
U.S.C. Section 651 et seq.) (OSHA), and the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 et seq., and in the regulations promulgated pursuant
to said laws, all as amended; (ii) those substances listed in the United States
Department of Transportation Table (40 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) any material,
waste, substance, pollutant or contamination which is or contains (A) petroleum,
its derivatives, by-products and other hydrocarbons, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos and/or asbestos-containing materials in any form that is
or could become friable, (C) polychlorinated biphenyls, (D) designated as
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section 1251 et seq., (33 U.S.C. Section 1321) or listed pursuant to Section 307
of the Clean Water Act (33 U.S.C. Section 1317); (E) flammable explosives; (F)
radioactive materials; and (iv) such other substances, materials, wastes,
pollutants and contaminants which are or become regulated as hazardous, toxic or
"special wastes" under applicable local, state or federal law, or the United
States government, or which are classified as hazardous, toxic or as "special
wastes" under any Legal Requirements.

         Improvements is defined in Article 1.

         Indemnified Liabilities is defined in paragraph (a) of Article 8.

         Indemnified Parties is defined in paragraph (a) of Article 8.

         Indenture Trustee means Wells Fargo Bank Northwest, N.A., and each
successor indenture trustee, as indenture trustee under any trust for the
benefit of the Certificate Holders.

         Installment Payment Dates is defined in paragraph (a) of Article 3.

         Insurance Premiums is defined in paragraph (e) of Article 13.

         Insurance Requirements is defined in paragraph (a) of Article 13.

         Land is defined in Article 1.

         Leased Property is defined in Article 1.

         Legal Requirements means (i) all present and future applicable laws,
statutes, treaties, rules, orders, ordinances, codes, regulations, requirements,
Permits, and interpretations by, and applicable judgments, decrees, injunctions,
writs, orders and like action of any Governmental Authority (including, without
limitation, those pertaining to the environment, parking requirements and the
Americans with Disabilities Act), whether or not such are within the present
contemplation of Lessor or Lessee, and (ii) any reciprocal easement agreement,
development agreement, deed restriction, or similar agreement, relating to the
Leased Property, or the Improvements, or the facilities or equipment thereon or
therein, or the streets, sidewalks, vaults, vault spaces, curbs and gutters
adjoining the Leased Property, or the appurtenances to the Leased Property, or
the franchises and privileges connected therewith.

         Lessee's Loss is defined in paragraph (a) of Article 12.

         Lessor Liens is defined in Article 1.

         Lessor's Mortgagee means any lender holding a Lien granted by Lessor on
the Leased Property. The term "LESSOR'S MORTGAGEE" shall include the servicer
and/or trustee with respect to the pool of collateral for any commercial
mortgage-backed securities or mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (collectively, "CMBSS") into which pool Lessor's
Mortgage or other Lien instrument covering the Leased Property or interest in
Lessor's Mortgagee or other Lien instrument has been sold, assigned, transferred
or pledged and also the issuer of such CMBSs. Any references in this Lease to
Lessor's Mortgagee at a time, if any, when there is no Lessor's Mortgagee shall
be construed to mean "Lessor's Mortgagee, if any."

         Lessor Parties has the meaning specified in paragraph (a)(i) of Article
9.

         Lien is defined in paragraph (a) of Article 7.

         Management Agreement means either or both of (i) the Management
Agreement dated as of the date hereof between Lakepointe Assets WCOM LLC and
Lessee, and (ii) the Management Agreement dated as of the date hereof between
Lakepointe Assets AET LLC and Lessee, as the same may from time to time be
amended or replaced.

         Market Rent is defined in Schedule G.

         Minor Addition is defined in paragraph (e) of Article 10.

         Moody's means Moody's Investor Services, Inc., and any successor
thereto.

         Mortgage is defined in paragraph (b) of Article 7.

         Net Award shall mean the entire award, compensation, insurance proceeds
or other payment, if any, by reason of or on account of any Destruction (other
than for Lessee's Loss), less any expenses reasonably incurred by Lessor or
Lessor's Mortgagee in obtaining such award, compensation, insurance proceeds or
other payment and any cost and expense of either in connection with the
administration of the distribution of the same and not already paid (or
reimbursed to Lessor or Lessor's Mortgage), plus any investment income earned
with respect to the foregoing amounts.

         Note means the Note (or Notes) of Lessor secured by any "MORTGAGE"
issued on the Leased Property from time to time.

         Officer's Certificate means a certificate executed by an Executive
Officer of Lessee.

         Outside Restoration Date is defined in paragraph (c) of Article 12.

         Overdue Rate is defined in paragraph (b) of Article 3.

         Permitted Encumbrances means, with respect to the Leased Property: (a)
rights reserved to or vested in any municipality or public authority to condemn,
appropriate, recapture or designate a purchaser of the Leased Property; (b) any
liens thereon for taxes, assessments and other governmental charges and any
liens of mechanics, materialmen and laborers for work or services performed or
material furnished in connection with the Leased Property, which are not due and
payable, or the amount or validity of which are being contested as permitted by
Article 6 hereof; (c) easements, rights-of-way, servitudes, zoning laws, use
regulations, and other similar reservations, rights and restrictions and other
minor defects and irregularities in the title to the Leased Property existing on
the Term Commencement Date or granted in accordance with Article 21 hereof; (d)
the Existing Leases, (e) the WCOM Lease and the AET Lease, (f) the Lien of any
Mortgage and any assignment of this Lease as further security for the Note
secured by such Mortgage; and (g) all other matters affecting title existing on
the date of this Lease as set forth in Schedule D.

         Permits means all licenses, authorizations, certificates (including
certificates of occupancy), variances, concessions, grants, registrations,
consents, permits and other approvals issued by a Governmental Authority now or
hereafter pertaining to the ownership, management, occupancy, use, operation,
Alteration or Restoration of the Leased Property.

         Person means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee of a trust, unincorporated
organization or Governmental Authority.

         Policies are defined in paragraph (a) of Article 13.

         Rating Agencies mean S&P and Moody's.

         Reinvestment Premium means the amount computed in accordance with
Schedule C.

         Renewal Term is defined in paragraph (b) of Article 2.

         Restore or Restoration means if the Leased Property suffers a
Destruction by a Casualty or a Taking, to restore, repair, replace, rebuild
and/or improve the Leased Property, as nearly as practicable, to a condition not
less than the condition required to be maintained under this Lease and a Fair
Market Value of not less than the Fair Market Value of the Leased Property
immediately before such Destruction.

         Restoration Threshold Amount is defined in paragraph (b) of Article 12.

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

         Shared Services Building means the building constituting a part of the
Leased Property and designated on the site plan as the Shared Services Building.

         SNDA is defined in paragraph (b) of Article 7.

         Sublessee SNDA has the meaning specified in paragraph (i) of Article
18.

         Taking is defined in paragraph (a) of Article 12.

         Tax and Insurance Reserve Fund is defined in paragraph (e) of Article
13.

         Tax and Insurance Reserve Fund Payment is defined in paragraph (e) of
Article 13.

         Taxes and Impositions is defined in paragraph (a) of Article 6.

         Term means the Basic Term, plus any Renewal Term or Terms.

         Termination Value means the amount computed in accordance with Schedule
C.

         Trade Fixtures is defined in Article 11.

EX-10

                               GUARANTY OF LEASE


            Guaranty of Lease, dated as of June 28, 2001, by Fluor Corporation,
a Delaware corporation, herein, together with any entity succeeding thereto by
consolidation, merger or acquisition of its assets substantially as an entirety,
called "Guarantor".

            Lakepointe Assets LLC, a Delaware limited liability company (herein
together with its successors and assigns as owner of the property hereinafter
described, called "Landlord"), is about to acquire the land described on
Schedule A hereto and the improvements located on said land (collectively, the
"Property") and to lease the Property to Fluor Enterprises, Inc., a California
corporation d/b/a Fluor Signature Services ("Tenant"), pursuant to a lease
between Landlord and Tenant dated as of June 28, 2001 (the "Lease"). Landlord is
unwilling to acquire the Property or enter into the Lease unless the Guarantor
enters into this agreement. Guarantor directly or indirectly owns all the stock
of Tenant. The acquisition by Landlord of the Property and the lease of the
Property to Tenant is of direct benefit to the Guarantor. This Guaranty
reasonably may be expected to benefit, directly or indirectly, Guarantor.
Capitalized terms not otherwise defined herein shall have the meanings given
them in the Lease.

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor, intending to be
legally bound, covenants and agrees with Landlord as follows:

            1. The Guarantor unconditionally and irrevocably guarantees to
Landlord that (a) all Basic Rent, Additional Rent and all other sums stated in
the Lease to be payable by the Tenant, whether due by acceleration or otherwise,
including reasonable costs and expenses of collection (collectively, the
"Monetary Obligations") will be promptly paid in full when due, in accordance
with the provisions thereof, and (b) Tenant will perform and observe each and
every covenant, agreement, term and condition of Tenant in the Lease (the
"Performance Obligations"). If for any reason any Monetary Obligation shall not
be paid promptly when due, Guarantor shall, immediately upon demand, pay the
same to Landlord with interest due thereon as stated in the Lease. In addition
to the foregoing, the Guarantor hereby becomes surety to Landlord for the due
and punctual payment and performance of the Monetary Obligations and the
Performance Obligations and the Guarantor hereby waives all defenses of any
nature that may be available to Guarantor as a surety and guarantor or otherwise
other than the defenses of payment of the Monetary Obligations and performance
of the Performance Obligations.

            2. Upon the occurrence of an Event of Default under the Lease,
Landlord may enforce this Guaranty without first having recourse against Tenant
or exhausting its rights or remedies under the Lease; provided, that nothing
herein shall prohibit Landlord from exercising its rights against both Guarantor
and Tenant simultaneously. Specifically, but without limitation, Guarantor
hereby waives joinder of Tenant or any other obligor in any suit or action to
enforce this Guaranty, and without in any way limiting the foregoing, Guarantor
hereby waives any right (including, without limitation, each right created by
the provisions of Chapter 34 of the Texas Business & Commerce Code, Chapter 17
of the Texas Civil Practice and Remedies Code, Rule 31 of the Texas Rules of
Civil Procedure or other applicable law) to require Landlord or any other party
entitled to enforce the obligations of Guarantor under this Guaranty to file
suit against Tenant or any other obligor or take any other action against Tenant
or any other obligor as a prerequisite to Landlord's or such other party's
taking any action or bringing any suit against Guarantor under this Guaranty.
This Guaranty and the obligations of the Guarantor hereunder are present,
primary, direct, continuing, unconditional, irrevocable and absolute and
independent of any obligations of Tenant. This Guaranty constitutes the
agreement to pay money and to act in the first instance and is not to be
construed as a contract of indemnity or as a guaranty of collectability.

            3. The obligations, covenants, agreements and duties of the
Guarantor under this Guaranty shall in no way be discharged, affected or
impaired by any of the following and Landlord may at any time and from time to
time, with or without consideration, without prejudice to any claim against
Guarantor hereunder, without in any way changing, releasing or discharging
Guarantor from its liabilities and obligations hereunder and without notice to
or the consent of Guarantor waive, release or consent to any of the following:

               (a)  the waiver by Landlord of the performance or observance by
Tenant of any of the agreements, covenants, terms or conditions contained in
the Lease;

               (b)  the extension, in whole or in part, of the time for payment
by Tenant of any sums owing or payable under the Lease, or of any other sums or
obligations of Tenant under or arising out of or on account of the Lease, or the
renewal or extension of the Lease;

               (c)  any sublease of any or all of the Property by Tenant to any
other person;

               (d)  any assumption by any person of any or all of Tenant's
obligations under, or Tenant's assignment of any or all of its interest in the
Lease;

               (e)  the waiver or release or modification or amendment (whether
material or otherwise) of any provision of the Lease, and Guarantor hereby
consents to any such waivers, releases, modifications and amendments and to any
future terms or agreements heretofore or hereafter made by Landlord and Tenant
in accordance with the terms of the Lease, provided that Guarantor shall not be
responsible for any increase in the obligations of a tenant under the Lease
resulting solely from an amendment to the Lease made by a tenant which was not,
at the time of such amendment, an affiliate of Guarantor;

               (f)  any failure, omission or delay on the part of Landlord to
enforce, assert or exercise any right, power or remedy conferred on or available
to Landlord in or by the Lease or this Guaranty, or any action on the part of
Landlord granting indulgence or extension in any form whatsoever;

               (g)  the voluntary or involuntary liquidation, dissolution, sale
of all or substantially all of the assets, marshaling of assets and liabilities,
receivership, conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization or other similar proceeding affecting
Landlord, Tenant or Guarantor or any of their assets or any impairment,
modification, release or limitation of liability of Landlord, Tenant or
Guarantor or any of their estates in bankruptcy or of any remedy for the
enforcement of such liability resulting from the operation of any present or
future provision of the U.S. Bankruptcy Code or other similar statute or from
the decision of any court;

               (h)  the power or authority or lack thereof of Tenant to execute,
acknowledge or deliver the Lease;

               (i)  the legality, validity or invalidity of the Lease;

               (j)  any defenses whatsoever that Tenant may or might have to the
payment of the Monetary Obligations except for the payment thereof actually
received by Landlord or at Landlord's direction, by Lessor's Mortgagee,
Guarantor acknowledging that the Tenant has agreed to pay the Monetary
Obligations under the Lease without setoff;

               (k)  the existence or non-existence of Tenant as a legal entity
or the existence or non-existence of any corporate or other business
relationship between Tenant and Guarantor;

               (l)  any sale or assignment by Landlord of this Guaranty and/or
the Lease (including any assignment by Landlord to Lessor's Mortgagee;

               (m)  any default by Guarantor under this Guaranty or any right of
setoff or counterclaim or defense (other than payment in full of the Monetary
Obligations in accordance with the terms of the Lease) that Guarantor may or
might have to its respective undertakings, liabilities and obligations
hereunder, each and every such defense being hereby waived by Guarantor; or

               (n) any other cause, whether similar or dissimilar to any of the
foregoing, that might constitute a legal or equitable discharge of Guarantor
(whether or not Guarantor shall have knowledge or notice thereof) other than
payment in full of the Monetary Obligations.

               Without in any way limiting the generality of the foregoing,
Guarantor specifically agrees that if Tenant's obligations under the Lease are
modified or amended with the express written consent of Landlord, this Guaranty
shall extend to such obligations as so amended or modified but shall not extend
to any increase in the obligations of Tenant under the Lease if such
modification or amendment was made by a tenant which was not, at the time of
such modification or amendment, an Affiliate of Guarantor and if Guarantor did
not consent to such modification or amendment.

            4. Guarantor hereby waives notice (other than any notice required by
the terms of the Lease), demand, presentment, protest and notice of protest.

            5. Guarantor agrees that, in the event of the rejection or
disaffirmance of the Lease by Tenant or Tenant's trustee in bankruptcy pursuant
to bankruptcy law or any other law affecting creditors rights, the Guarantor
shall, if Landlord so requests, assume all obligations and liabilities of Tenant
under the Lease, to the same extent as if the Guarantor was a party to such
document and there had been no such rejection or disaffirmance; and the
Guarantor shall confirm such assumption in writing at the request of Landlord
upon or after such rejection or disaffirmance. The Guarantor, upon such
assumption, shall have all rights of Tenant under the Lease (to the extent
permitted by law). Guarantor further agrees that, to the extent that Tenant or
Guarantor makes a payment or payments to Landlord, which payment or payments or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Tenant or Guarantor or
their respective estates, trustees, receivers or any other party under any
bankruptcy law or any other law affecting creditors' rights, then to the extent
of such payment or repayment, this Guaranty and the advances or part thereof
which have been paid, reduced or satisfied by such amount shall be reinstated
and shall continue in full force and effect as of the date such initial payment,
reduction or satisfaction occurred.

            6. The following events following the expiration of the applicable
cure periods, in this Paragraph are sometimes referred to as an "Event of
Default":

               a.  If default shall be made in the payment of any sum required
to be paid by Guarantor under this Guaranty;

               b.  If default shall be made in the observance or performance of
any of the other covenants in this Guaranty (as opposed to obligations under the
Lease which may be imposed on Guarantor pursuant to this Guaranty) which the
Guarantor is required to observe and perform and such default shall continue for
thirty (30) days after written notice to the Guarantor;

               c.  If any representation or warranty made by Guarantor herein
or in any certificate, demand or request proves to be incorrect in any material
respect when made and the representation or warranty continues to be incorrect
for a period of thirty (30) days after written notice from Landlord, or if the
facts cannot be changed so as to make the representation or warranty correct
within such thirty day period, Guarantor fails to provide Landlord with
protection (including, by way of example, additional collateral or letters of
credit) against loss arising from breach of such representation or warranty,
such protection to be satisfactory to Landlord in its sole discretion;

               d.  If Guarantor files a petition of bankruptcy or for
reorganization or for an arrangement pursuant to the Bankruptcy Code, or is
adjudicated a bankrupt or becomes insolvent or makes an assignment for the
benefit of its creditors, or admits in writing its inability to pay its debts
generally as they become due, or is dissolved, or suspends payment of its
obligations, or takes any corporate action in furtherance of any of the
foregoing; or

               e.  If a petition or answer is filed proposing the adjudication
of Guarantor as a bankrupt, or its reorganization pursuant to the Bankruptcy
Code, and (A) Guarantor consents to the filing thereof, or (B) such petition or
answer is not discharged or denied within 90 days after the filing thereof;

               f.  If a receiver, trustee or liquidator (or other similar
official) is appointed for or takes possession or charge of Guarantor, or if
Guarantor consents to or acquiesces in such appointment;

               g.  If an Event of Default occurs and is continuing under the
Lease; or

               h.  If an Event of Default occurs and is continuing under a
Management Agreement.

Upon the occurrence of any such Event of Default, Landlord shall have whatever
rights at law or equity it might have to enforce this Guaranty.

            7.  Guarantor agrees that any claim or claims or liens or security
interests it may now have or may in the future have against Tenant are or shall
be subordinate to Tenant's obligations to Landlord under the Lease. Guarantor
waives all rights of subrogation against Tenant for any amounts expended by
Guarantor under this Guaranty.

            8.  If Landlord incurs any expenses in the enforcement of this
Guaranty, including reasonable attorneys' fees and disbursements, whether or not
legal action be instituted, the Guarantor shall pay the same immediately upon
demand by Landlord which shall be accompanied by evidence of such expenses and
any amount due and payable hereunder to Landlord which is not paid when due
shall bear interest from the due date thereof at the Overdue Rate.

            9. Landlord shall not by any act of omission or commission be deemed
to waive any of its rights or remedies hereunder unless such waiver be in
writing and signed by Landlord, and then only to the extent specifically set
forth therein; a waiver on one event shall not be construed as continuing or as
a bar to or waiver of such right or remedy on a subsequent event.

            10. Guarantor shall deliver to Landlord and Lessor's Mortgagee:

               (i)  As soon as practicable but in no event later than five (5)
Business Days after the date of filing with Securities and Exchange Commission
or other Governmental Authority, copies of all such financial statements, proxy
statements, notices, other communications, and reports as Guarantor shall send
to its shareholders and other information generally made available to banks and
other lenders (exclusive of proprietary information), provided that Guarantor
need not make such delivery so long as such financial information is posted on
EDGAR, Guarantor's Home Page or other electronic resource generally available to
the public without charge and Guarantor emails notice to Landlord and any
Lessor's Mortgagee (at email addresses supplied by such parties) of the
availability of such information within five (5) Business Days of its posting,
and will provide paper copies of such information upon request and, in any
event, before such information is removed from the above-named electronic
resources;

               (ii)  For any period that Guarantor is a public company, as soon
as practicable, copies of all regular, current or periodic reports (including
reports on Form 10-K, Form 8-K and Form 10-Q) which Guarantor is or may be
required to file with the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions of the Securities and Exchange Commission,
provided that Guarantor need not make such delivery so long as such financial
information is posted on EDGAR, Guarantor's Home Page or other electronic
resource generally available to the public without charge and Guarantor emails
notice to Landlord and any Lessor's Mortgagee (at email addresses supplied by
such parties) of the availability of such information within five (5) Business
Days of its posting, and will provide paper copies of such information upon
request and, in any event, before such information is removed from the
above-named electronic resources;

               (iii)  For any period that Guarantor is not a public company
required to file such reports with the Securities and Exchange Commission then
within 120 days after the end of each fiscal year, and within 60 days after the
end of any other fiscal quarter, a consolidated statement of earnings, and a
consolidated statement of changes in financial position, a consolidated
statement of stockholders' equity, and a consolidated balance sheet of such
entity as of the end of each such year or fiscal quarter, setting forth in each
case in comparative form the corresponding consolidated figures from the
preceding annual audit or corresponding fiscal quarter in the prior fiscal year,
as appropriate, all in reasonable detail and satisfactory in scope to Landlord
and Lessor's Mortgagee, and certified as to the annual consolidated statements
by independent public accountants of recognized national standing selected by
Guarantor, whose certificate shall be based upon an examination conducted in
accordance with generally accepted auditing standards and the application of
such tests as said accountants deem necessary under the circumstances; and

               (iv)  Within ninety (90) days of the end of each calendar year,
an annual statement setting forth the gross revenues derived by Lessee from the
sublease of space in the Leased Property and the Existing Leased Space, the
operating expenses of the Leased Property and the Existing Leased Space, capital
improvement made to the Leased Property and the Existing Leased Property,
together with a projection of such capital improvements for the next calendar
year, such statement to be certified as true and correct in all material
respects by an Executive Officer of Lessee.

Concurrently with the delivery of annual financial statements pursuant to
subparagraph (iii) of this paragraph 10, Guarantor will deliver to Landlord and
Lessor's Mortgagee a certificate by an Executive Officer of Guarantor that to
such officer's Actual Knowledge based on reasonable inquiry, there exists no
Default or Event of Default under the Lease or if any such Default or Event of
Default exists, specifying the nature thereof, the period of existence thereof
and what action Guarantor proposes to take with respect thereto. In addition,
Guarantor agrees upon prior written request to meet with Landlord and its
mortgagee during normal business hours at mutually convenient times, from time
to time, to discuss the Lease and such information about Guarantor's business
and financial condition reasonably requested by Landlord.

Any non-public information delivered to the Landlord pursuant to this paragraph
10, or otherwise, shall be deemed to be confidential. Landlord may share the
information delivered pursuant to this paragraph 10 with Lessor's Mortgagee, the
Certificate Holders, potential mortgagees, potential transferees of the
Certificate Holders, rating agencies, servicers, potential purchasers of the
Leased Property or a beneficial interest therein and all other parties having a
legitimate business purpose for reviewing the same; provided, such parties agree
to hold any non-public information in confidence; and provided, further,
Landlord may disclose such non-public information to regulatory authorities and
in accordance with any judicial or governmental order, or if required by any
law, regulation or stock exchange rule.

Notwithstanding anything to the contrary contained herein, Tenant and Guarantor
shall not be obligated to provide or disclose to Landlord, Lessor's Mortgagee,
any prospective purchaser or mortgagee, or any other Person, any information
relating to Tenant's or Guarantor's financial condition or operations which has
not already been publicly disclosed if Tenant or Guarantor reasonably believes
that providing or disclosing such information would require a separate filing
with the Securities and Exchanges Commission.

            11. All communications herein provided for or made pursuant hereto
shall be in writing and shall be sent by (i) registered or certified mail,
return receipt requested, and the giving of such communication shall be deemed
complete on the third Business Day after the same is deposited in a United
States Post Office with postage charges prepaid, (ii) reputable overnight
delivery service with acknowledgment receipt returned, and the giving of such
communication shall be deemed complete on the immediately succeeding Business
Day after the same is timely deposited with such delivery service, or (iii) hand
delivery by reputable delivery service:

                               To Guarantor:


                               Fluor Corporation
                               One Enterprise Drive
                               Aliso Viejo, CA  92656
                               Attention: Director of Corporate Real Estate


                               With a copy to:

                               Fluor Corporation
                               One Enterprise Drive
                               Aliso Viejo, CA  92656
                               Attention: General Counsel


                               To Landlord:

                               Lakepointe Assets LLC
                               5847 San Felipe Drive, Suite 2600
                               Houston, Texas 77057
                               Attention: J. Richard Rosenberg

                               With a copy to:

                               Lakepointe Assets LLC
                               5847 San Felipe Drive, Suite 2600
                               Houston, Texas 77057
                               Attention: Erik Eriksson, Jr., Esq.


                               With a copy to:

                               Day, Berry & Howard LLP
                               260 Franklin Street
                               Boston, Massachusetts 02110
                               Attention: Lewis A. Burleigh, Esq.

                               With a copy to:

                               Legg Mason Mortgage Capital Corporation
                               100 Light Street
                               Baltimore, Maryland 21202
                               Attention: W. Kyle Gore

            Any notice, demand, request, approval or consent given in accordance
with the provisions of this paragraph 11 shall be effective on the date of
receipt or delivery or when proper delivery is refused by the addressee.

            12. Notice of acceptance of this Guaranty by Landlord and notice of
any obligations or liabilities contracted or incurred by any Tenant under the
Lease are hereby waived by the Guarantor.

            13. If Landlord proposes to refinance any mortgage of the Property,
Guarantor shall permit Landlord and the proposed mortgagee, at their expense, to
meet with officers of Guarantor at Guarantor's offices and to discuss the
Guarantor's business and finances. On request of Landlord, Guarantor agrees to
provide any such prospective mortgagee the information to which Landlord is
entitled hereunder, provided that if any such information is not publicly
available, such nonpublic information shall be made available on a confidential
basis substantially equivalent to the basis set forth at the end of Section
10(a) above. Guarantor agrees to execute, acknowledge and deliver, at Landlord's
expense, documents reasonably requested by the prospective mortgagee (such as a
consent to the financing (without encumbering Guarantor's or Tenant's assets), a
consent to assignment of lease and of this Guaranty, estoppel certificate, and a
subordination, non-disturbance and attornment agreement), customary for tenants
under leases such as the Lease and their guarantors to sign in connection with
mortgage loans to landlords, so long as such documents are in form then
customary among institutional lenders (provided the same do not materially and
adversely change Tenant's rights or obligations under the Lease and any related
documents or materially and adversely change Guarantor's rights and obligations
under this Guaranty).

            14. This Guaranty shall be governed by and construed in accordance
with the laws of the State of Texas, other than its doctrine regarding conflicts
of laws. Guarantor consents to jurisdiction of the courts of the State of Texas
and of the Federal courts situated in Texas, and consents to venue in Texas, and
Guarantor waives any right to stay, remove, or otherwise directly or indirectly
interfere with such action based on such jurisdiction. The Guarantor hereby
waives any option or objection that it may now or hereafter have to the laying
of venue of any action or proceeding arising under or relating to this Guaranty
in any court located in the State of Texas, waives the right to bring any form
of declaratory judgment action with respect to the subject matter hereof in any
other jurisdiction, and hereby further waives any claim that a court located in
the State of Texas is not a convenient forum for any such action or proceeding.

            15. This Guaranty may not be modified or amended except by a written
agreement duly executed by Guarantor and Landlord and Landlord's first mortgagee
from time to time, if any. This Guaranty shall be binding upon the Guarantor and
shall inure to the benefit of Landlord and its successors and assigns as
permitted hereunder, including, without limitation, any mortgagee of Landlord's
interest in the Property. In the event any one or more of the provisions
contained in this Guaranty shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Guaranty, but this Guaranty shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein. As used herein the term "Tenant" includes its successors
and assigns with respect to the Lease.

            16. The rights of Landlord under this Guaranty may be assigned in
whole or in part by Landlord, its successors and assigns, whether directly or by
way of a grant of a security interest herein, without the consent of Guarantor.

            17. Within 15 days after request by Landlord, Guarantor shall
deliver a certificate confirming that this Guaranty is in full force and effect
and unamended (or, if amended, specifying such amendment), and whether, to the
knowledge of Guarantor (without investigation other than inquiry of Tenant), any
Event of Default exists under the Lease or under this Guaranty.

            18. Without the prior written consent of Landlord (which may be
granted or withheld in Landlord's sole discretion), Guarantor will not, directly
or indirectly, consolidate with or merge into any corporation, association,
partnership or other business organization or permit any corporation,
association, partnership or other business organization to consolidate with or
merge into it, or sell or otherwise transfer all or substantially all of its
properties and assets, or acquire all or substantially all of the assets of any
corporation, association, partnership or other business organization or
individual, unless (i) the Guarantor shall be the entity surviving such
consolidation, merger or other action, or the surviving entity or transferee
shall enter into an assumption this Guaranty in form and substance reasonably
satisfactory to Landlord (together with an opinion of independent counsel in
form and substance reasonably satisfactory to Landlord and Lessor's Mortgagee
relating to the due authorization, execution, delivery and enforceability of
such assumption); and (ii) immediately prior to such action, no Event of Default
shall have occurred and be continuing.

                            [SIGNATURE PAGE FOLLOWS]



            IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and its corporate seals to be hereunto affixed and attested by its
officers thereunto duly authorized.


                                      Fluor Corporation


                                      By:    /s/ J.O. Rollins
                                      Name:  J.O. Rollins
                                      Title: Group Executive

EX-99

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This section contains forward-looking statements that involve risk and
uncertainties. Actual results could differ materially from those projected in
these forward-looking statements.

The Company's operating results are sensitive to changes in the prices of
alumina, primary aluminum, and fabricated aluminum products, and also depend to
a significant degree upon the volume and mix of all products sold. As discussed
more fully in Notes 1 and 8 of Notes to Interim Consolidated Financial
Statements, KACC utilizes hedging transactions to lock-in a specified price or
range of prices for certain products which it sells or consumes in its
production process and to mitigate KACC's exposure to changes in foreign
currency exchange rates. The following sets forth the impact on future earnings
of adverse market changes related to KACC's hedging positions with respect to
commodity, foreign exchange and energy contracts described more fully in Note 8
of Notes to Interim Consolidated Financial Statements.

Alumina and Primary Aluminum. Alumina and primary aluminum production in excess
of internal requirements is sold in domestic and international markets, exposing
the Company to commodity price opportunities and risks. KACC's hedging
transactions are intended to provide price risk management in respect of the net
exposure of earnings resulting from (i) anticipated sales of alumina, primary
aluminum and fabricated aluminum products, less (ii) expected purchases of
certain items, such as aluminum scrap, rolling ingot, and bauxite, whose prices
fluctuate with the price of primary aluminum. On average, before consideration
of hedging activities, any fixed price contracts with fabricated aluminum
products customers, variations in production and shipment levels, and timing
issues related to price changes, the Company estimates that each $.01 increase
(decrease) in the market price per price-equivalent pound of primary aluminum
increases (decreases) the Company's annual pre-tax earnings by approximately
$10.0 - $15.0 million, based on recent fluctuations in operating levels.

Based on the average July 2001 London Metal Exchange ("LME") cash price for
primary aluminum of approximately $.64 per pound, the Company estimates that it
would realize approximately $19.0 million of net aggregate pre-tax benefits from
its hedging positions and fixed price customer contracts during the remainder of
2001 and the period 2002 through 2003. The Company estimates that a hypothetical
$.10 increase from the above stated July 2001 price would result in a net
aggregate pre-tax reduction in operating income of approximately $46.0 million
being realized during the remainder of 2001 and the period 2002 through 2003
from KACC's hedging positions and fixed price customer contracts. Conversely,
the Company estimates that a hypothetical $.10 decrease from the above stated
July 2001 price level would result in an aggregate pre-tax increase in operating
income of approximately $159.0 million being realized during the remainder of
2001 and the period 2002 through 2003 from KACC's hedging positions and fixed
price customer contracts. Both of the foregoing hypothetical amounts are versus
what the Company's results would have been without the derivative commodity
contracts and fixed price customer contracts discussed above. It should be
noted, however, that, since the hedging positions and fixed price customer
contracts lock-in a specified price or range of prices, increases or decreases
in earnings attributable to KACC's hedging positions or fixed price customer
contracts are significantly offset by a decrease or increase in the proceeds to
be realized on the underlying physical transactions.

As stated in Note 8 of Notes to Interim Consolidated Financial Statements, KACC
has certain hedging positions which do not qualify for treatment as a "hedge"
under current accounting guidelines and thus must be marked-to-market each
period. Fluctuations in forward market prices for primary aluminum would likely
result in additional earnings volatility as a result of these positions. The
Company estimates that a hypothetical $.10 change in spot market prices from the
July 31, 2001, LME cash price of $.63 per pound would, depending on the shape of
the forward curve, result in additional aggregate mark-to-market impacts of
between $10.0 - $30.0 million during any period through 2003.

In addition to having an impact on the Company's earnings, a hypothetical
$.10-per-pound change in primary aluminum prices would also impact the Company's
cash flows and liquidity through changes in possible margin advance
requirements. At July 31, 2001, KACC had received margin advances of $20.7
million. Increases in primary aluminum prices subsequent to July 31, 2001, could
result in KACC having to refund and, depending on the amount of the increase,
make margin advances and such amounts could be significant. If primary aluminum
prices increased by $.10 per pound (from the July 31, 2001 price) by December
31, 2001 and the forward curve were as described above, it is estimated that
KACC could be required to pay in the range of $40.0 to $60.0 million in respect
of both refunds of margin advances from brokers and to make margin advances to
the brokers. Management considers credit risk related to possible failure of the
counterparties to perform their obligations pursuant to the derivative contracts
to be minimal.

Foreign Currency. KACC enters into forward exchange contracts to hedge material
cash commitments for foreign currencies. KACC's primary foreign exchange
exposure is related to KACC's Australian Dollar (A$) commitments in respect of
activities associated with its 28.3%-owned affiliate, Queensland Alumina
Limited. The Company estimates that, before consideration of any hedging
activities, a US $0.01 increase (decrease) in the value of the A$ results in an
approximate $2 million (decrease) increase in the Company's annual pre-tax
operating income.

Based on the July 31, 2001 US$ to A$ exchange rate of $.51, KACC's foreign
currency hedges would result in a net aggregate pre-tax reduction of operating
income of approximately $10.0 million for the remainder of 2001 and for the
period 2002 through 2005. The Company estimates that a hypothetical 10%
decrease in the A$ exchange rate would result in the Company recognizing a net
aggregate pre-tax reduction of operating income of approximately $12.0 million
for the remainder of 2001 and for the period 2002 through 2005 from KACC's
foreign currency hedging positions. Conversely, the Company estimates that a
hypothetical 10% increase in the A$ exchange rate (from $.51) would result in
the Company realizing a net pre-tax aggregate reduction of operating income of
approximately $5.0 million during the remainder of 2001 and for the period 2002
through 2005. These hypothetical impacts are versus what the Company's results
would have been without the Company's derivative foreign currency contracts. It
should be noted, however, that, since the hedging positions lock-in specified
rates, increases or decreases in earnings attributable to currency hedging
instruments would be significantly offset by a corresponding decrease or
increase in the value of the hedged commitments.

Energy. KACC is exposed to energy price risk from fluctuating prices for natural
gas, fuel oil and diesel oil consumed in the production process. The Company
estimates that each $1.00 change in natural gas prices (per mcf) impacts the
Company's pre-tax operating results by approximately $20.0 million. Further, the
Company estimates that each $1.00 change in fuel oil prices (per barrel) impacts
the Company's pre-tax operating results by approximately $3.0 million.

KACC from time to time in the ordinary course of business enters into hedging
transactions with major suppliers of energy and energy related financial
instruments. As of July 31, 2001, KACC held option and swap contracts hedging
for a majority of its August 2001 to October 2001 natural gas requirements and a
portion of its November 2001 to March 2002 natural gas requirements. Based on
an average July 2001 settlement price (per mcf) of approximately $3.17, the
Company expects to realize a pre-tax reduction of operating income of
approximately $1.2 million for the period from August 2001 through March 2002
associated with these hedging positions. The Company estimates that a
hypothetical $1.00 decrease in the average July 2001 settlement price would
result in the Company recognizing a net aggregate pre-tax reduction of operating
income of $3.3 million for the period from August 2001 through March 2002
associated with these hedging positions. Conversely, the Company estimates that
a hypothetical $1.00 increase in the average July 2001 settlement price would
result in the Company realizing a net pre-tax aggregate increase of operating
income of approximately $1.6 million for the period August 2001 through March
2002. These hypothetical impacts are versus what the Company's results would
have been without the Company's derivative natural gas contracts. It should be
noted, however, that, since the hedging positions lock-in specified rates,
increases or decreases in earnings attributable to currency hedging instruments
would be significantly offset by a corresponding decrease or increase in the
value of the hedged commitments.

As of July 31, 2001, KACC also held option and swap contracts hedging a majority
of its August 2001 through December 2001 fuel oil requirements. Based on the
average July 2001 settlement price (per barrel) of approximately $17.38, the
Company estimates the hedges would not have a material net aggregate pre-tax
impact on its operating income.