EXHIBIT 10.9

                        INDEMNITY AND GUARANTY AGREEMENT

     THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"), made as of April
30, 2003 by FIRST STATES GROUP, L.P., a Delaware limited partnership, whose
address is 1725 The Fairway, Jenkintown, PA 19046 ("FSG, LP") and AMERICAN
FINANCIAL REALTY TRUST, a Maryland real estate investment trust, whose address
is 1725 The Fairway, Jenkintown, PA 19046 ("AFRT"; collectively, FSG, LP and
AFRT shall be referred to herein as the "Indemnitors" and each an "Indmenitor"),
in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent (in
such capacity, the "Agent") for the Lenders (as defined in the Credit Agreement
referenced below).

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "Credit Agreement") among First States Investors BAI, LLC, a Delaware
limited liability company (the "Borrower"), the Guarantors (as defined therein),
the Lenders (as defined therein), the Agent and the L/C Issuer (as defined
therein), the Lenders have agreed to make the Loans (as defined therein) and
other extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein (capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Credit Agreement);

     WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
other credit extensions under the Credit Agreement that the Indemnitors shall
have executed and delivered this Agreement to the Agent for the ratable benefit
of the Agent and the Lenders; and

     WHEREAS, FSG, LP is the parent of Borrower and AFRT is the parent of FSG,
LP, the extension of the Loans to Borrower is of substantial benefit to each
Indemnitor and, therefore, each Indemnitor is willing to indemnify the Agent and
the Lenders from and against and guarantee payment to the Agent and the Lenders
of those items referenced herein.

     NOW, THEREFORE, to induce the Lenders to extend the Loans to Borrower and
in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitors hereby covenant and agree for the benefit of the Agent and Lenders,
as follows:

     1.   Indemnity and Guaranty. Each Indemnitor hereby jointly and severally
assumes liability for, hereby guarantees payment to the Agent (for the benefit
of the Agent and each of the Lenders) of, hereby agrees to pay, protect, defend
and save the Agent and each of the Lenders harmless from and against, and hereby
indemnifies the Agent and each of the Lenders from and against any and all
liabilities, obligations, losses, damages, costs and expenses (including,
without limitation, attorneys' fees of the Agent and each of the Lenders),
causes of action, suits, claims, demands and judgments of any nature or
description whatsoever (collectively, "Costs") which may at any time be imposed
upon, incurred by or awarded against the Agent or any Lender as a result of any
of the following (collectively, the "Indemnified Actions"):

     (a)  Proceeds paid to Borrower, any other Loan Party, any Indemnitor, or
any of their respective Affiliates, Subsidiaries, principals, officers, general
partners or members, other any guarantor, any other indemnitor, or any agent or
employee of any such persons under any insurance policies with respect to any
Underlying Property and applied by such Person in contravention of the terms of
the applicable lease agreements, the Credit Agreement or any Loan Document;

     (b)  Proceeds or awards resulting from the condemnation or taking in lieu
of foreclosure of all or any portion of any Underlying Property, paid to
Borrower, any other Loan Party, any Indemnitor, or any of their respective
Affiliates, Subsidiaries, principals, officers, general partners or members,
other any guarantor, any other indemnitor, or any agent or employee of any such
person and applied by such Person in contravention of the terms of the
applicable lease agreements or the Credit Agreement or any Loan Document;



     (c)  All tenant security deposits or other refundable deposits paid to or
held by Borrower or any other person or entity in connection with leases of all
or any portion of any Underlying Property, which are not applied in accordance
with the terms of the applicable lease or other agreement;

     (d)  Rent and other payments received by Borrower, any Indemnitor, or any
of their respective Affiliates, Subsidiaries, principals, officers, general
partners or members, any guarantor, any indemnitor, or any agent or employee of
any such persons from tenants under leases of all or any portion of any
Underlying Property in contravention of the terms of the Credit Agreement, any
Irrevocable Direction or any other Loan Document and not immediately paid to the
Agent for the benefit of the Lenders in accordance with the terms of the Credit
Agreement or the other Loan Documents;

     (e)  Waste committed on any Underlying Property, or damage to any
Underlying Property as a result of the intentional misconduct or gross
negligence of Borrower, any other Loan Party, any Indemnitor, or any of their
respective Affiliates, Subsidiaries, principals, officers, general partners or
members, any guarantor, any indemnitor, or any agent or employee of any such
persons, or any disposal of all or any portion of any Underlying Property in
violation of the terms of the Loan Documents, to the full extent of the losses
or damages incurred by the Agent and Lenders on account of such occurrence;

     (f)  Failure to pay any valid taxes, assessments, mechanic's liens,
materialmen's liens or other liens which could create liens on any portion of
any Underlying Property or related to any Eligible Lease which would be superior
to the lien or security title of the Assignment of Leases with respect to the
applicable Eligible Lease(s);

     (g)  Fraud, material misrepresentation or failure to disclose a material
fact by Borrower, any other Loan Party or any of their respective principals,
officers, general partners or members, any other guarantor, any indemnitor, or
any agent, employee or other person authorized or apparently authorized to make
statements, representations or disclosures on behalf of Borrower, any Loan
Party, any principal, officer, general partner or member of Borrower or any Loan
Party, or any other guarantor or any indemnitor, to the full extent of any
losses, damages and expenses of the Agent and the Lenders on account thereof;

     (h)  A default by Borrower, any Loan Party or any Indemnitor or any of
their respective Affiliates or Subsidiaries under any of Sections 7.05, 7.11,
7.12, 7.13, 7.14 8.01, 8.03, 8.04, 8.05 or 8.12 of the Credit Agreement;

     (i)  The occurrence of any voluntary bankruptcy or insolvency proceeding of
Borrower or any involuntary bankruptcy or insolvency proceeding of Borrower
which is not dismissed within six (60) days of filing and is not caused or
otherwise consented to by the Agent or Lenders; and

     (j)  Any matters relating to hazardous or toxic substances or radon or
failure of any Underlying Property to comply with environmental laws and
regulations, to the full extent of any losses or damages (including those
resulting from diminution in value of any Underlying Property) incurred by the
Agent or any of the Lenders as a result of the existence of such hazardous or
toxic substances or radon or failure to comply with environmental laws or
regulations.

     It is understood that a portion of the Obligations constitute a revolving
type indebtedness and therefore the actual amount of the indemnity may increase
or decrease from time to time. During the Availability Period, as that term is
defined in the Credit Agreement, and subject to the terms, covenants and
conditions of the Credit Agreement, Grantor may borrow up to $100,000,000, repay
a portion thereof and reborrow up to $100,000,000 The total amount of the
Indebtedness, including future advances, may increase or decrease from time to
time, but shall not exceed a principal amount of $100,000,000 at any one time,
plus interest thereon and disbursements made by Collateral Agent for the payment
of taxes, levies or insurance on the Premises (as defined in each of the
Assignments of Leases), with interest on such disbursements. Each Indemnitor
hereby agrees that (a) all advances made by the Secured Parties from time to
time under the Loan Documents, and all other portions of the Obligations, shall
be covered by this Agreement as if all of the same had been advanced, had arisen
or become owing or performable on the date of this Agreement, (b) no reduction
from time to time (even to zero) of the outstanding principal balance of the
Indebtedness shall extinguish, release or effect the indemnity, rights or
privileges intended, created or arising hereunder or under the other Loan
Documents, and (c) this Agreement shall remain in full force and effect as to
any

                                       2



subsequent advances or subsequently arising portions of the Indebtedness without
loss of priority until all of the Indebtedness is fully paid, all Obligations
fully performed and satisfied, and all agreements and obligations, if any, of
the Lenders to make further advances have been terminated and this Agreement has
been released or canceled in writing by Agent.

     2.   Guaranty of Payment and Performance. This is a guaranty of payment and
performance and not of collection. The liability of each Indemnitor under this
Agreement shall be direct and immediate and not conditional or contingent upon
the pursuit of any remedies against Borrower, any other Loan Party, any other
Indemnitor or any other person (including, without limitation, other guarantors,
if any), nor against the collateral for the Loans. Each Indemnitor waives any
right to require that an action be brought against Borrower, any other Loan
Party, any other Indemnitor or any other person or to require that resort be
made to any collateral for the Loans or to any balance of any deposit account or
credit on the books of the Agent or any Lender in favor of Borrower or any other
person. In the event, on account of the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case law
or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which
may be or become applicable, Borrower and/or any Loan Party shall be relieved of
or fail to incur any debt, obligation or liability as provided in the Loan
Documents, each Indemnitor shall nevertheless be fully liable therefor to the
extent set forth herein. In the event of a Default under the Loan Documents
which is not cured within any applicable grace or cure period, Agent (on behalf
of the Lenders) shall have the right to enforce its rights, powers and remedies
(including, without limitation, foreclosure of all or any portion of the
collateral for the Loans) thereunder or hereunder (to the extent applicable), in
any order, and all rights, powers and remedies available to Agent in such event
shall be non-exclusive and cumulative of all other rights, powers and remedies
provided thereunder or hereunder or by law or in equity. If the indebtedness and
obligations guaranteed hereby are partially paid or discharged by reason of the
exercise of any of the remedies available to Agent, this Agreement shall
nevertheless remain in full force and effect, and each Indemnitor shall remain
liable for all remaining indebtedness and obligations guaranteed hereby, even
though any rights which Indemnitor may have against Borrower or any other Loan
Party may be destroyed or diminished by the exercise of any such remedy.

     3.   Indemnification Procedures.

     (a)  If any action shall be brought against Agent or any Lender based upon
any of the matters for which Agent and the Lenders are indemnified hereunder,
the applicable party shall notify Indemnitor in writing thereof and the
Indemnitors (jointly and severally) shall promptly assume the defense thereof,
including, without limitation, the employment of counsel acceptable to such
Indemnified Party and the negotiation of any settlement; provided, however, that
any failure of Agent or any Lender to notify Indemnitor of such matter shall not
impair or reduce the obligations of Indemnitor hereunder. Agent and each Lender
shall have the right, at the expense of Indemnitor (which expense shall be
included in Costs), to employ separate counsel in any such action and to
participate in the defense thereof. In the event the Indemnitors shall fail to
discharge or undertake to defend the Agent or any Lender against any claim, loss
or liability for which Agent or such Lender is indemnified hereunder, the
applicable party may, at its sole option and election, defend or settle such
claim, loss or liability. The joint and several liability of the Indemnitors to
the Agent or any Lender hereunder shall be conclusively established by such
settlement, provided such settlement is made in good faith, the amount of such
liability to include both the settlement consideration and the costs and
expenses, including, without limitation, attorneys' fees and disbursements,
incurred by the Agent or the applicable Lender in effecting such settlement. In
such event, such settlement consideration, costs and expenses shall be included
in Costs and the Indemnitors shall pay the same as hereinafter provided. Agent
or an applicable Lender's good faith in any such settlement shall be
conclusively established if the settlement is made on the advice of independent
legal counsel for the Agent or such Lender.

     (b)  No Indemnitor shall, without the prior written consent of the Agent
and/or the applicable Lender(s): (i) settle or compromise any action, suit,
proceeding or claim or consent to the entry of any judgment that does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Agent or the applicable Lender(s) of a full and complete
written release of the Agent or the applicable Lender(s) (in form, scope and
substance satisfactory to Agent and such Lender(s) in their sole discretion)
from all liability in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim; or (ii)
settle or compromise any action, suit, proceeding or claim in any manner that
may adversely affect Agent or any Lender or obligate Agent or any Lender to pay
any sum or perform any obligation as determined by the Agent or the applicable
Lender(s) in their sole discretion.

                                       3



     (c)  All Costs shall be immediately reimbursable to Agent (for its benefit
and, as applicable, for the benefit of the Lenders) when and as incurred and, in
the event of any litigation, claim or other proceeding, without any requirement
of waiting for the ultimate outcome of such litigation, claim or other
proceeding, and the Indemnitors shall pay to Agent (on behalf of the Agent and
the applicable Lender(s)) any and all Costs within ten (10) days after written
notice from Agent or any Lender itemizing the amounts thereof incurred to the
date of such notice. In addition to any other remedy available for the failure
of Indemnitors to periodically pay such Costs, such Costs, if not paid within
said ten-day period, shall bear interest at the Default Rate.

     4.   Reinstatement of Obligations. If at any time all or any part of any
payment made by any Indemnitor or received by the Agent on its behalf or on
behalf of any Lender from such Indemnitor under or with respect to this
Agreement is or must be rescinded or returned for any reason whatsoever
(including, but not limited to, the insolvency, bankruptcy or reorganization of
Indemnitor, Borrower or any Guarantor), then the joint and several obligations
of the Indemnitors hereunder shall, to the extent of the payment rescinded or
returned, be deemed to have continued in existence, notwithstanding such
previous payment made by the applicable Indemnitor, or receipt of payment by
Agent, and the obligations of each Indemnitor hereunder shall continue to be
effective or be reinstated, as the case may be, as to such payment, all as
though such previous payment by the applicable Indemnitor had never been made.

     5.   Waivers by Indemnitor. To the extent permitted by law, each Indemnitor
hereby waives and agrees not to assert or take advantage of:

     (a)  Any right to require the Agent or the Lenders to proceed against
Borrower, any Guarantor or any other person or to proceed against or exhaust any
security held by the Agent or the Lenders at any time or to pursue any other
remedy in the Agent's or the Lenders' power or under any other agreement before
proceeding against Indemnitor hereunder;

     (b)  Any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or the failure of
the Agent or the Lenders to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other person or
persons;

     (c)  Demand, presentment for payment, notice of nonpayment, protest, notice
of protest and all other notices of any kind, or the lack of any thereof,
including, without limiting the generality of the foregoing, notice of the
existence, creation or incurring of any new or additional indebtedness or
obligation or of any action or non-action on the part of Borrower, any
Guarantor, the Agent, any Lender, any endorser or creditor of Borrower, of any
Guarantor or of any Indemnitor or on the part of any other person whomsoever
under this or any other instrument in connection with any obligation or evidence
of indebtedness held by the Agent and Lenders;

     (d)  Any defense based upon an election of remedies by the Agent or any
Lender;

     (e)  Any right or claim or right to cause a marshalling of the assets of
such Indemnitor;

     (f)  Any principle or provision of law, statutory or otherwise, which is or
might be in conflict with the terms and provisions of this Agreement;

     (g)  Any duty on the part of the Agent or any Lender to disclose to
Indemnitor any facts such party may now or hereafter know about Borrower, any
Guarantor or any property owned by any of them, regardless of whether the Agent
or any such Lender has reason to believe that any such facts materially increase
the risk beyond that which Indemnitor intends to assume or has reason to believe
that such facts are unknown to such Indemnitor or has a reasonable opportunity
to communicate such facts to such Indemnitor, it being understood and agreed
that each Indemnitor is fully responsible for being and keeping informed of the
financial condition of Borrower and the Guarantors, of the condition of the
property owned by such entities and of any and all circumstances bearing on the
risk that liability may be incurred by such Indemnitor hereunder;

     (h)  Any lack of notice of disposition or of manner of disposition of any
collateral for the Loans;

                                       4



     (i)  Any invalidity, irregularity or unenforceability, in whole or in part,
of any one or more of the Loan Documents;

     (j)  Any lack of commercial reasonableness in dealing with the collateral
for the Loans;

     (k)  Any deficiencies in the collateral for the Loans or any deficiency in
the ability of the Agent or Lenders to collect or to obtain performance from any
persons or entities now or hereafter liable for the payment and performance of
any obligation hereby guaranteed;

     (l)  An assertion or claim that the automatic stay provided by 11 U.S.C.
(S)362 (arising upon the voluntary or involuntary bankruptcy proceeding of
Borrower or any Guarantor) or any other stay provided under any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of the Agent and/or the Lenders to enforce any of
its rights, whether now or hereafter required, which the Agent or the Lenders
may have against any Indemnitor or the collateral for the Loans;

     (m)  Any modifications of the Loan Documents or any obligation of Borrower
or any Guarantor relating to the Loans by operation of law or by action of any
court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law or otherwise)
of any jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

     (n)  Any action, occurrence, event or matter consented to by such
Indemnitor under Section 7(h) hereof, under any other provision hereof, or
otherwise.

     6.   Representation and Warranty. FSG, LP hereby represents, warrants and
covenants that (a) FSG, LP's net worth (as calculated in accordance with
generally accepted accounting principles) is, and, at all times while this
Agreement shall be in effect, shall be, not less than $50,000,000.00; and (b) as
of the Closing Date, FSG, LP and its Subsidiaries own substantially all of the
assets which are held by AFRT and its Subsidiaries.

     7.   General Provisions.

     (a)  Recourse Limitations. All of the terms and provisions of this
Agreement are joint and several recourse obligations of each Indemnitor and not
restricted by any limitation on personal liability set forth in any of the other
Loan Documents; provided, however, that notwithstanding the foregoing or
anything else to the contrary contained herein, the maximum aggregate amount of
the Indemnitors' aggregate liability hereunder shall not exceed the Obligations.

     (b)  Unsecured Obligations. Each Indemnitor hereby acknowledges that the
Lenders would not make the Loans but for the unsecured personal liability
undertaken by each such Indemnitor herein.

     (c)  Survival. This Agreement shall be deemed to be continuing in nature
and shall remain in full force and effect and shall survive the exercise of any
remedy by the Agent or any Lender under any Loan Document, including, even if,
as a part of such remedy, the Loans are paid or satisfied in full.

     (d)  No Subrogation; No Recourse Against Lender. Notwithstanding the
satisfaction by the Indemnitors of any liability hereunder, no Indemnitor shall
have any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or property
of Borrower or any Guarantor or to any collateral for the Loans. In connection
with the foregoing, each Indemnitor expressly waives any and all rights of
subrogation to the Agent and the Lenders against Borrower or any Guarantor, and
Indemnitor hereby waives any rights to enforce any remedy which the Agent or the
Lenders may have against Borrower or any Guarantor and any right to participate
in any collateral for the Loans. In addition to and without in any way limiting
the foregoing, each Indemnitor hereby subordinates any and all indebtedness of
Borrower or any Guarantor now or hereafter owed to Indemnitor to all
indebtedness of Borrower or any such Guarantor to the Agent and the Lenders
under the Loan Documents, and agrees with the Agent (on its behalf and on behalf
of the Lenders) that such Indemnitor shall not demand or accept any payment of
principal or interest from Borrower or any

                                       5



Guarantor, shall not claim any offset or other reduction of such Indemnitor's
obligations hereunder because of any such indebtedness and shall not take any
action to obtain a release of any of the collateral for the Loans. Further, no
Indemnitor shall have any right of recourse against the Agent or any Lender by
reason of any action the Agent or any Lender may take or omit to take under the
provisions of this Agreement or under the provisions of any of the Loan
Documents.

     (e)  Reservation of Rights. Nothing contained in this Agreement shall
prevent or in any way diminish or interfere with any rights or remedies,
including, without limitation, the right to contribution, which the Agent or any
Lender may have against Borrower, any Guarantor, any Indemnitor or any other
party under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (codified at Title 42 U.S.C. (S)9601 et seq.), as it may be amended
from time to time, or any other applicable federal, state or local laws, all
such rights being hereby expressly reserved.

     (f)  Financial Statements. Each Indemnitor hereby agrees, as a material
inducement to the Agent and the Lenders to make the Loans to Borrower, to
furnish to the Agent promptly upon demand by Agent current and dated financial
statements detailing the assets and liabilities of Indemnitor, certified by or
on behalf of such Indemnitor, in form and substance acceptable to the Agent.
Each Indemnitor hereby warrants and represents unto the Agent that any and all
balance sheets, net worth statements and other financial data which have
heretofore been given or may hereafter be given to Agent with respect to such
Indemnitor did or will at the time of such delivery fairly and accurately
present the financial condition of such Indemnitor.

     (g)  Rights Cumulative; Payments. The Agent's rights (and the Lenders'
rights through the Agent) under this Agreement shall be in addition to all
rights of the Agent and Lenders under the Loan Documents. FURTHER, PAYMENTS MADE
BY ANY INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE IN ANY RESPECT
BORROWER'S OR ANY GUARANTOR'S OBLIGATIONS AND LIABILITIES UNDER THE LOAN
DOCUMENTS EXCEPT WITH RESPECT TO, AND TO THE EXTENT OF, BORROWER'S OR SUCH
GUARANTOR'S OBLIGATION AND LIABILITY FOR THE PAYMENT MADE BY SUCH INDEMNITOR.

     (h)  No Limitation on Liability. Each Indemnitor hereby consents and agrees
that Agent and, to the extent applicable, the Lenders may at any time and from
time to time without further consent from such Indemnitor do any of the
following events, and the liability of such Indemnitor under this Agreement
shall be unconditional and absolute and shall in no way be impaired or limited
by any of the following events, whether occurring with or without notice to such
Indemnitor or with or without consideration: (i) any extensions of time for
performance required by any of the Loan Documents or extension or renewal of any
or all of the Notes; (ii) any foreclosure of the Agent's and Lenders' rights
under the Assignments of Leases (or any of them), any sale or assignment of any
of the Notes or any of the other Loan Documents or any sale or transfer of any
property of the Borrower or any Guarantor; (iii) any change in the composition
of Borrower, any Guarantor or any other Indemnitor, including, without
limitation, the withdrawal or removal of Indemnitor from any current or future
position of ownership, management or control of Borrower, any such Guarantor or
any such Indmenitor; (iv) the accuracy or inaccuracy of the representations and
warranties made by either Indemnitor herein or by Borrower or any Guarantor in
any of the Loan Documents; (v) the release of Borrower, any Guarantor or of any
other person or entity from performance or observance of any of the agreements,
covenants, terms or conditions contained in any of the Loan Documents by
operation of law, Agent's or the Lenders' voluntary act or otherwise; (vi) the
release or substitution in whole or in part of any security for the Loans; (vii)
the Agent's failure to record the Assignments of Leases or to file any financing
statement (or the Agent's improper recording or filing thereof) or to otherwise
perfect, protect, secure or insure any lien or security interest given as
security for the Loans; (viii) the modification of the terms of any one or more
of the Loan Documents; or (ix) the taking or failure to take any action of any
type whatsoever. No such action which the Agent or the Lenders shall take or
fail to take in connection with the Loan Documents or any collateral for the
Loans, nor any course of dealing with Borrower, any Guarantor or any other
person, shall limit, impair or release any Indemnitor's obligations hereunder,
affect this Agreement in any way or afford any Indemnitor any recourse against
the Agent or any of the Lenders. Nothing contained in this Section shall be
construed to require the Agent or any Lender to take or refrain from taking any
action referred to herein.

     (i)  Entire Agreement; Amendment; Severability. This Agreement contains the
entire agreement between the parties respecting the matters herein set forth and
supersedes all prior agreements, whether written or

                                       6



oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and executed
by the parties hereto. A determination that any provision of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision, and any determination that the application of any provision of
this Agreement to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.

     (j)  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE AGENT AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

     (k)  Binding Effect; Waiver of Acceptance. This Agreement shall bind each
Indemnitor and their respective heirs, personal representatives, successors and
assigns and shall inure to the benefit of the Agent, the Lenders and the
officers, directors, shareholders, agents and employees of the Agent and each
Lender and their respective heirs, successors and assigns. Notwithstanding the
foregoing, no Indemnitor shall assign any of its rights or obligations under
this Agreement without the prior written consent of the Agent, which consent may
be withheld by the Agent in its sole discretion. Each Indemnitor hereby waives
any acceptance of this Agreement by Agent, and this Agreement shall immediately
be binding upon such Indemnitor.

     (l)  Notice. Notices and other communications shall be effective, and duly
given, (i) when received if personally delivered, (ii) when transmitted by
telecopy or other facsimile device to the numbers set out below if transmitted
before 5:00 p.m. on a Business Day (as defined hereinafter in this Section 18),
or otherwise on the next following Business Day, (iii) the Business Day
following the Business Day on which delivered prepaid to a reputable national
overnight air courier service, or (iv) the third Business Day following the day
sent by certified or registered mail postage prepaid, to the address shown
below, or such other address as may be specified by written notice to the other
parties in accordance with the provisions of this section:

     if to FSG, LP:

     if to AFRT:

     if to the Agent (and the Lenders):

Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given as herein required shall be deemed
to be receipt of the notice, demand or request sent. By giving to the other
party hereto at least fifteen (15) days' prior written notice thereof in
accordance with the provisions hereof, the parties hereto shall have the right
from time to time to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America.

     (m)  No Waiver; Time of Essence; Business Day. The failure of any party
hereto to enforce any right or remedy hereunder, or to promptly enforce any such
right or remedy, shall not constitute a waiver thereof nor give rise to any
estoppel against such party nor excuse any of the parties hereto from their
respective obligations hereunder. Any waiver of such right or remedy must be in
writing and signed by the party to be bound. This Agreement is subject to
enforcement at law or in equity, including actions for damages or specific
performance. Time is of the essence hereof.

     (n)  Captions for Convenience. The captions and headings of the sections
and paragraphs of this Agreement are for convenience of reference only and shall
not be construed in interpreting the provisions hereof.

     (o)  Reasonable Attorney's Fees. In the event it is necessary for the Agent
to retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, each Indemnitor (jointly and
severally) agrees to pay to the Agent any and all costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred by the Agent or the
Lenders as a result thereof and such costs, fees and expenses shall be included
in Costs.

                                       7



     (p)  Successive Actions. A separate right of action hereunder shall arise
each time Agent or the Lenders acquire knowledge of any matter indemnified or
guaranteed by the Indemnitors under this Agreement. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at any
time and from time to time. No action hereunder shall preclude any subsequent
action, and each Indemnitor hereby waives and covenants not to assert any
defense in the nature of splitting of causes of action or merger of judgments.

     (q)  Joint and Several Liability. Notwithstanding anything to the contrary
contained herein, the representations, warranties, covenants and agreements made
by the Indemnitors herein, and the liability of each such Indemnitor hereunder,
is joint and several.

     (r)  Reliance. The Lenders would not make the Loans to Borrower without
this Agreement. Accordingly, each Indemnitor intentionally and unconditionally
enters into the covenants and agreements as set forth above and understands
that, in reliance upon and in consideration of such covenants and agreements,
the Loans shall be made and, as part and parcel thereof, specific monetary and
other obligations have been, are being and shall be entered into which would not
be made or entered into but for such reliance.

     (s)  Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.

     (t)  SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF NORTH
CAROLINA OR IN NEW YORK, NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE INDEMNITORS AND THE Agent HEREBY CONSENT, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE INDEMNITORS AND THE Agent HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER
DOCUMENT RELATED HERETO. EACH OF THE INDEMNITORS AND THE Agent HEREBY WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

     EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     (u)  Waiver by Indemnitor. Each Indemnitor hereby covenants and agrees
that, upon the commencement of a voluntary or involuntary bankruptcy proceeding
by or against Borrower or any Guarantor or any other Indemnitor, such Indemnitor
shall not seek or cause Borrower, any Guarantor, any Indmenitor or any other
person or entity to seek a supplemental stay or other relief, whether injunctive
or otherwise, pursuant to 11 U.S.C. (S)105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law,
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in

                                       8



effect, which may be or become applicable, to stay, interdict, condition, reduce
or inhibit the ability of the Agent or the Lenders to enforce any rights of the
Agent or the Lenders against such Indemnitor or the collateral for the Loans by
virtue of this Agreement or otherwise.

     (v)  SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS
AGREEMENT INCLUDES INDEMNIFICATION PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES,
COULD INCLUDE AN INDEMNIFICATION BY THE INDEMNITORS OF THE AGENT AND/OR THE
LENDERS FROM CLAIMS OR LOSSES ARISING AS A RESULT OF THE AGENT'S OR ANY SUCH
LENDER'S OWN NEGLIGENCE.

     (w)  Decisions. Wherever pursuant to this Agreement (i) Agent or any Lender
exercises any right given to it to approve or disapprove, (ii) any arrangement
or term is to be satisfactory or acceptable to Agent or the Lenders, or (iii)
any other decision or determination is to be made by Agent or any Lender, the
decision of the Agent or such Lender to approve or disapprove or to accept or
not accept, all decisions that arrangements or terms are satisfactory or not
satisfactory and all other decisions and determinations made by the Agent or
such Lender, shall be in the sole and absolute discretion of such party and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.

     (x)  Costs. Wherever pursuant to this Agreement it is provided that the
Indemnitors shall pay any costs and expenses, such costs and expenses shall
include, but not be limited to, reasonable legal fees and disbursements of the
Agent and the Lenders.

     (y)  Dissemination of Information. If Agent or any Lender determines at any
time to sell, transfer or assign any of their respective rights under any Loan
Documents, and any or all servicing rights with respect thereto, or to grant
participations therein (the "Participations") or issue certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"), such Person may forward to
each purchaser, transferee, assignee, servicer, participant, investor, or their
respective successors in such Participations and/or Securities (collectively,
the "Investor") or any rating agency rating such Securities, each prospective
Investor and each of the foregoing's respective counsel, all documents and
information which such Person now has or may hereafter acquire relating to the
Loans and to Borrower, any Guarantor, any Indemnitor and the property owned by
any of them, which shall have been furnished by Borrower, any Guarantor or any
Indemnitor as such Person determines necessary or desirable.

             [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       9



     IN WITNESS WHEREOF, each of the Indemnitors has executed this Agreement as
of the day and year first written above.



                                 INDEMNITORS:

                                 FIRST STATES GROUP, L.P.,
                                 a Delaware limited partnership

                                     By:  FIRST STATES GROUP, LLC,
                                          a Delaware limited liability company,
                                          its general partner


                                     By:________________________________________
                                     Name:  Sonya A. Huffman
                                          --------------------------------------
                                     Title: Senior Vice President - Operations
                                           -------------------------------------


                                 AMERICAN FINANCIAL REALTY TRUST,
                                 a Maryland real estate investment trust


                                 By:____________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                      A-1