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<SEC-DOCUMENT>0001171520-06-000023.txt : 20060208
<SEC-HEADER>0001171520-06-000023.hdr.sgml : 20060208
<ACCEPTANCE-DATETIME>20060208093145
ACCESSION NUMBER:		0001171520-06-000023
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20060203
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060208
DATE AS OF CHANGE:		20060208

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FRANKLIN STREET PROPERTIES CORP /MA/
		CENTRAL INDEX KEY:			0001031316
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				042724223
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32470
		FILM NUMBER:		06587304

	BUSINESS ADDRESS:	
		STREET 1:		401 EDGEWATER PL
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880
		BUSINESS PHONE:		7815571300

	MAIL ADDRESS:	
		STREET 1:		401 EDGEWATER PLACE
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FRANKLIN STREET PARTNERS LP
		DATE OF NAME CHANGE:	20010301
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eps1996.txt
<DESCRIPTION>FRANKLIN STREET PROPERTIES CORP.
<TEXT>

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

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

                                    FORM 8-K

                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported): February 3, 2006

                        Franklin Street Properties Corp.
- --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

         Maryland                   001-32470                 04-3578653
- --------------------------------------------------------------------------------
  (State or Other Juris-           (Commission               (IRS Employer
 diction of Incorporation)         File Number)           Identification No.)

    401 Edgewater Place, Suite 200,
        Wakefield, Massachusetts                       01880-6210
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)               (Zip Code)

       Registrant's telephone number, including area code: (781) 557-1300


- --------------------------------------------------------------------------------
         (Former Name or Former Address, if Changed Since Last Report)

      Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

      |_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

      |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

      |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

      |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
<PAGE>

Item 1.01. Entry into a Material Definitive Agreement.

Retention Agreements and Change in Control Plan

Franklin Street Properties Corp. (the "Registrant") is committed to the
long-term growth of its business and increasing the value of its stock for
shareholders. Since our June 2, 2005 listing on the American Stock Exchange,
merger and consolidation activity within the real estate/real estate investment
trust industry has been significant. The Board of Directors of the Registrant
has become concerned about the Registrant's competitive ability to attract and
retain quality employees which, in turn, could interfere with the Registrant's
achievement of its core objectives.

Accordingly, on February 3, 2006, upon the recommendation of the Compensation
Committee of the Board of Directors (the "Committee"), the Board of Directors of
the Registrant approved a form of Retention Agreement to be entered into from
time to time by the Registrant, FSP Investments LLC, a wholly-owned subsidiary
of the Registrant ("FSP Investments"), and the employees of FSP Investments (the
"Retention Agreement"). Under the terms of the Retention Agreement, provided
that an employee is employed by FSP Investments on the closing date of a
transaction constituting a Change in Control of the Registrant (as defined in
the Retention Agreement), the employee will receive a lump-sum payment equal to
(A) the sum of (1) his or her annualized base salary at the time of such closing
and (2) such employee's bonus opportunity, (B) divided by twelve (12) and (C)
multiplied by a number of months that varies depending on the employee's level
within FSP Investments. The bonus opportunity is expressed as a percentage of
annual base salary and ranges from 100% for executive officers (including the
Chief Financial Officer, Chief Operating Officer and President of FSP Property
Management) to 25% for non-officer professionals, managers and staff. The
relevant number of months ranges from 36 months for executive officers to 3
months for non-officer staff. In the case of employees or executive officers who
are Investment Executives (as defined in the Retention Agreement), the party
will instead receive a lump-sum payment equal to his or her annualized draw at
the time of the closing of the Change in Control.

The Board of Directors of the Registrant believes that the Retention Agreement
is comparable to other employee retention plans offered by competitors within
the larger real estate/real estate investment trust industry.

On February 3, 2006, as recommended by the Committee, the Board of Directors
also approved the Change in Control Discretionary Plan of FSP Investments (the
"Plan"). Under the Plan, immediately prior to a Change in Control of the
Registrant (as defined in the Plan), the Board of Directors of the Registrant
may establish a discretionary pool of funds to be allocated to the employees of
FSP Investments designated as participants of the Plan, equal to 1% of the
market capitalization of the Registrant immediately prior to a Change in
Control, reduced by the payments under the Retention Agreements described above.

The foregoing descriptions of the form of Retention Agreement and the Plan do
not purport to be complete and are qualified in their entirety by reference to
the full text of the form of Retention Agreement and the Plan, which are filed
with this report as Exhibit 99.1 and Exhibit 99.2, respectively, and
incorporated herein by reference.

Executive Compensation

Also on February 3, 2006, as recommended by the Committee, the Board of
Directors approved (i) the salary levels of certain of the Registrant's named
executive officers in the amounts set forth below opposite the name of the
executive officer under the heading "2006 Salary" and (ii) cash bonus payments
to certain of the Registrant's named executive officers in the amounts set forth
below opposite the name of the executive officer under the heading "2005 Bonus."
The Registrant's other named executive officers, R. Scott MacPhee and William W.
Gribbell, are Investment Executives whose compensation consists primarily of
commissions earned on the sale of interests in the Sponsored REITs that are
syndicated by the Registrant.
<PAGE>

                                   2006 Salary                2005 Bonus
                                   -----------                ----------

George J. Carter,                    $225,000                  $300,000
President and Chief
Executive Officer

Barbara Fournier, Vice               $200,000                  $275,000
President, Chief Operating
Officer, Treasurer and
Secretary

John Demeritt, Chief                 $180,000                  $235,000
Financial Officer

The bonuses set forth above were determined based on the Registrant's
performance and the officer's performance during the year.

Item 9.01. Financial Statements and Exhibits

      (d)   Exhibits

            See Exhibit Index attached hereto.
<PAGE>

                                    SIGNATURE

      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 hereunto duly authorized.

                                  FRANKLIN STREET PROPERTIES CORP.


Date: February 8, 2006            By: /s/ George J. Carter
                                      -------------------------------------
                                      President and Chief Executive Officer
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.                     Description
- -----------                     -----------

99.1                            Form of Retention Agreement.

99.2                            Change in Control Discretionary Plan.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>ex99-1.txt
<TEXT>

                                                                    Exhibit 99.1


                               RETENTION AGREEMENT

      RETENTION AGREEMENT (the "Agreement") made and entered into as of this __
day of ______________, 2006 by and between FSP INVESTMENTS LLC, a Massachusetts
limited liability company (the "Employer"), FRANKLIN STREET PROPERTIES CORP., a
Maryland corporation ("FSP") and [INSERT EMPLOYEE NAME], an individual resident
of the [State] [Commonwealth] of [Insert State Name] [Massachusetts]
("Employee").

      WHEREAS, the Employer is a wholly-owned subsidiary of FSP;

      WHEREAS, the Employer recognizes that, as is generally the case with
publicly-held corporations, the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions that it may raise among
employees, may result in the departure or distraction of such employees to the
detriment of the Employer and FSP and FSP's stockholders; and

      WHEREAS, the Employer intends for this Agreement to provide protection for
its employees, for so long as such employees remain in the employment of the
Employer, against the exigencies of a Change in Control, but not to otherwise
provide assurance of or rights to continued employment; and

      WHEREAS, should the possibility of a Change in Control arise, in addition
to the Employee's regular duties, the Employee may be called upon to assist in
the assessment of such possible Change in Control, to advise management and the
Board as to whether such Change in Control would be in the best interests of FSP
and to take such other actions as the Board might determine to be appropriate;
and

      WHEREAS, this Agreement is not intended to alter the rights of the
Employee in the absence of a Change in Control with respect to his or her
employment by the Employer, including without limitation his or her compensation
and benefits in connection with such employment, and accordingly this Agreement,
although taking effect as provided above, will be operative only upon a Change
in Control.

      NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained, the parties hereto hereby agree as follows:

      1. Definitions.

      For purposes of this Agreement, the following terms shall have the
following meanings:

      1.1 "Annualized Draw" shall mean the annualized draw that Employees who
      are Investment Executives receive as base salary which is in effect at the
      time of the closing of a transaction constituting a Change in Control
      under this Agreement.
<PAGE>

      1.2 Board" shall mean the Board of Directors of FSP.

      1.3 "Change in Control" shall mean a change in ownership or effective
control of FSP or a change in ownership of a substantial portion of the assets
of FSP, in each case as defined in Proposed Treasury Regulation Section
1.409A-3(g)(5) or any successor regulations; provided, however, that any
potential future mergers of the Sponsored REITs into FSP shall not be deemed to
be a Change in Control.

      1.4 "Employee's Base Salary" shall mean the annualized base salary of the
Employee in effect at the time of the closing of a transaction constituting a
Change in Control under this Agreement.

      1.5 "Employee's Bonus Opportunity" shall mean an amount equal to __% of
the Employee's Base Salary.

      1.6 "FSP Companies" shall mean FSP and any subsidiaries thereof including,
without limitation, the Employer and FSP Property Management LLC, a
Massachusetts limited liability company.

      1.7 "Investment Executives" shall mean any and all NASD licensed Employees
who are paid in the form of an Annualized Draw.

      1.8 Sponsored REITs" shall mean any and all real estate investment trusts
managed and controlled by the FSP Companies but not wholly owned by FSP.

      2. Payment Upon Change in Control.

      2.1 Provided that the Employee is employed by the Employer on the closing
of any transaction constituting a Change in Control, then the Employer shall pay
to the Employee a lump sum in an amount equal to the [USE FOR INVESTMENT
EXECUTIVES ONLY: Annualized Draw of the Investment Executive][USE FOR ALL OTHER
EMPLOYEES: (I) sum of (a) Employee's Base Salary and (b) Employee's Bonus
Opportunity, (II) divided by twelve (12) and (III) multiplied by [INSERT
APPLICABLE NUMBER].

      2.2 The amount set forth in Section 2.1 shall be paid to the Employee as
soon as practicable following the closing of the Change in Control, but in no
event more than thirty (30) days following the closing of the Change in Control.

      2.3 Neither the Employer nor the Employee may accelerate delivery of any
payment that may be required to be made pursuant to this Agreement to a date
earlier than the date set forth in this Section 2. Neither the Employer nor the
Employee may defer delivery of any payment that may be required to be made
pursuant to this Agreement unless such deferral complies in all respects with
the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, and any successor provision thereto (the "Code"), and any applicable
guidance and Treasury Regulations issued thereunder ("Section 409A").


                                       -2-
<PAGE>

      2.4 Notwithstanding anything to the contrary in this Agreement, any
payment under this Agreement shall be made without regard to whether the
deductibility of such payment (or any other "parachute payments," as that term
is defined in Section 280G of the Code, to or for the Employee's benefit) would
be limited or precluded by Section 280G and without regard to whether such
payment (or any other "parachute payments" as so defined) would subject the
Employee to the federal excise tax levied on certain "excess parachute payments"
under Section 4999 of the Code; provided, however, that if the total of all
"parachute payments" to or for the Employee's benefit, after reduction for all
federal, state and local taxes (including the tax described in Section 4999 of
the Code, if applicable) with respect to such payments (the "Total After-Tax
Payments"), would be increased by the limitation or elimination of any payment
under this Agreement or any "parachute payments" under other agreements or
arrangements between the Employee and the Employer or FSP or any successor
entity, then the amount payable under this Agreement (or the "parachute payment"
under such other agreement or arrangement as the Employer and the Employee shall
mutually determine) shall be reduced to the extent, and only to the extent,
necessary to maximize the Total After-Tax Payments. The determination as to
whether and to what extent any payment under this Agreement (or the "parachute
payment" under such other agreement or arrangement) are required to be reduced
in accordance with the preceding sentence shall be made at the Employer's
expense by a nationally recognized accounting firm retained by the Employer. In
the event of any underpayment or overpayment under this Agreement (or such other
agreement or arrangement) as determined by the accounting firm, the amount of
such underpayment or overpayment shall forthwith be paid to the Employee or
refunded to the Employer, as the case may be, with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.

3. Miscellaneous.

      3.1 Arbitration: Dispute Resolution.

            (a) Arbitration Procedure. Any disagreement, dispute, controversy or
claim arising out of or relating to this Agreement or the interpretation of this
Agreement or any arrangement relating to this Agreement or contemplated in this
Agreement or the breach, termination or invalidity thereof, shall be settled by
final and binding arbitration in Boston, Massachusetts in accordance with the
National Rules for the Resolution of Employment Disputes (the "Arbitration
Rules") of the American Arbitration Association (the "AAA"), provided that
nothing contained herein shall be deemed to prohibit either party from applying
to a court of competent jurisdiction for temporary or preliminary equitable
relief. The arbitral tribunal shall consist of one arbitrator. In making any
decision, the arbitrator shall apply and follow the substantive law of
Massachusetts without reference to the conflicts of law provisions thereof. The
parties to the arbitration shall directly appoint such arbitrator within thirty
(30) calendar days of the initiation of arbitration. If the parties fail to
appoint such arbitrator, an arbitrator shall be appointed by the AAA as provided
in the Arbitration Rules. The Employee and the Employer agree that the decision
of the arbitrator shall be final, that the arbitral award may be enforced
against the parties to the arbitration proceeding or their assets wherever they
may be found and that a judgment upon the arbitral award may be entered in any


                                       -3-
<PAGE>

court having jurisdiction thereof. Any claim or controversy not submitted to
arbitration in accordance with this section shall be waived, and thereafter no
arbitrator, tribunal or court shall have the power to rule or make any award on
any such disagreement, dispute, controversy or claim. Each party shall be
responsible for its and his or her own attorneys' fees and expenses associated
with any arbitration. Both the Employer and the Employee expressly waive any
right that any party either has or may have to a jury trial of any dispute
arising out of or in any way related to this Agreement.

            (b) Compensation During Dispute. The Employee shall not be entitled
to any payments under this Agreement until any disagreement, dispute,
controversy or claim arising out of or relating to this Agreement has been
settled. If the dispute is resolved in the Employee's favor, promptly after
final resolution of the dispute, the Employer shall pay to the Employee the sum
that was withheld during the period of the dispute plus interest at the rate
provided in Section 1274(d) of the Code, compounded quarterly.

      3.2 Authority; No Restrictions. Each party represents and warrants that it
and he or she has full power and authority to execute and deliver this Agreement
and that this Agreement is the legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms. Each party further
represents and warrants that no consent, approval or agreement of any person,
party, court, government or entity is required to be obtained by either party in
connection with the execution and delivery of this Agreement, that neither party
is subject to any agreement, restriction, lien, encumbrance or right, title or
interest in anyone or anything limiting in any way the scope of this Agreement
or in any way inconsistent herewith, and that neither party will hereafter grant
anyone or anything the same.

      3.3 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts, applied without regard to conflict of law
principles.

      3.4 Waiver. The waiver of the breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of the
same or other provision hereof.

      3.5 Section 409A. This Agreement is intended to comply with, or be exempt
from, the requirements of Section 409A and shall be construed and interpreted
consistently therewith.

      3.6 Liability. Each of FSP and the Employer shall be jointly and severally
liable for the payments to be made pursuant to this Agreement.

      3.7 Entire Agreement; Modifications. Except as otherwise provided herein,
this Agreement represents the entire understanding between the parties with
respect to the subject matter hereof, and this Agreement supersedes any and all
prior understandings, agreements, plans and negotiations, whether written or
oral, with respect to the subject matter hereof; provided, however, that this
Agreement shall not effect the Employee's eligibility to participate in the FSP
Investments LLC Change in Control Discretionary Plan (the "Plan"), as determined
in the sole discretion of the Administrator (as defined in the Plan). All
modifications to this Agreement must be made in writing and signed by the party
against whom enforcement of such modification is sought.


                                       -4-
<PAGE>

      3.7 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed duly given (a) when delivered, or (b)
two (2) calendar days after being mailed by first class mail, certified or
registered with return receipt requested, or (c) one (1) calendar day after
being mailed through an overnight delivery service, or (d) upon confirmation of
transmission via facsimile, each to the following addresses:

      If to the Employer:    FSP Investments LLC
                             401 Edgewater Place, Suite 200
                             Wakefield, Massachusetts  01880
                             Attn: In-house Counsel

      If to FSP:             Franklin Street Properties Corp.
                             401 Edgewater Place, Suite 200
                             Wakefield, Massachusetts  01880
                             Attn: In-house Counsel
                             Fax: 781-246-2807

      If to the Employee:    [INSERT EMPLOYEE NAME]
                             [INSERT EMPLOYEE STREET ADDRESS]
                             [INSERT EMPLOYEE CITY, STATE AND ZIP CODE]

Any party may change such party's address for notices by notice duly given
pursuant to this Section 3.7.

      3.8 Headings. The Section headings are intended for reference and shall
not by themselves determine the construction or interpretation of this
Agreement.

      3.9 Severability. Should a court or other body of competent jurisdiction
determine that any provision of this Agreement is excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather than
voided, if possible, and all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.

      3.10 Successors and Assigns. This Agreement may not be assigned by the
Employee without the prior written consent of the Employer. This Agreement may
be assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employee, the Employer, and the successors and assigns of each. The
Employer will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Employer to assume expressly and agree to perform this
Agreement in the same manner and to the extent that the Employer would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Employer" shall mean the Employer as herein before defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.

      3.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
agreement.


                                       -5-
<PAGE>

      3.12 Withholdings. All compensation and benefits provided to the Employee
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law. The Employee agrees
to pay all federal, state and local taxes owed by him or her in connection with
this Agreement.

                   [Signatures appear on the following page.]


                                       -6-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.


EMPLOYER:                           FSP INVESTMENTS LLC


                                    ------------------------------------
                                    Name:
                                    Title:


FSP:                                FRANKLIN STREET PROPERTIES CORP.


                                    ------------------------------------
                                    Name:
                                    Title:


EMPLOYEE:
                                    ------------------------------------
                                    [INSERT EMPLOYEE NAME]


                                      -7-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>ex99-2.txt
<TEXT>

                                                                    Exhibit 99.2


                               FSP INVESTMENTS LLC

                      CHANGE IN CONTROL DISCRETIONARY PLAN

1.    PURPOSES.

      (a) The Employer recognizes that, as is generally the case with
publicly-held corporations, the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions that it may raise among
employees, may result in the departure or distraction of such persons to the
detriment of the Employer and FSP and FSP's stockholders; and

      (b) The Employer intends for this Plan to provide protection for its
employees, for so long as such persons remain in the employ of the Employer,
against the exigencies of a Change in Control, but not to otherwise provide
assurance of, or rights to, continued employment with the Employer; and

      (c) The Employer recognizes that, should the possibility of a Change in
Control arise, its employees, in addition to their regular duties, may be called
upon to assist in the assessment of such possible Change in Control, to advise
management and the Board as to whether such Change in Control would be in the
best interests of FSP, and to take such other actions as the Board might
determine to be appropriate; and

      (d) This Plan is not intended to alter the rights of any employee in the
absence of a Change in Control with respect to his or her employment by the
Employer, including without limitation his or her compensation and benefits in
connection with such employment, and accordingly this Plan, although taking
effect on the Effective Date (as defined below), will be operative only upon a
Change in Control.

2.    DEFINITIONS.

      (a) "Administrator" means (1) prior to the Closing, the Board, and (2) on
or after the Closing, the Board as it was comprised immediately prior to the
Closing.

      (b) "Board" means the Board of Directors of FSP.

      (c) "Change in Control" shall mean a change in ownership or effective
control of FSP or a change in ownership of a substantial portion of the assets
of FSP, in each case as defined in Proposed Treasury Regulation Section
1.409A-3(g)(5) or any successor regulations; provided, however, that any
potential future mergers of the Sponsored REITs into FSP shall not be deemed to
be a Change in Control.

      (d) "Closing" means the closing of a transaction constituting a Change in
Control.
<PAGE>

      (e) "Discretionary Pool" means an amount equal to (1) one percent (1%) of
the Market Capitalization of FSP immediately prior to a Change in Control (as
determined in good faith by the Administrator), reduced by (2) the total
obligations of FSP and the Employer under the Retention Agreement in the form
attached as Exhibit A between FSP and the Employer and the employees of the
Employer. For purposes of this Plan, Market Capitalization means the average of
the closing trading prices for the FSP stock on the American Stock Exchange for
the ten trading days preceding the Closing.

      (f) "Distribution Date" means the date that is thirty (30) days following
the date on which the Closing occurs.

      (g) "Employer" means FSP Investments LLC, a Massachusetts limited
liability company.

      (h) "FSP" means Franklin Street Properties Corp., a Maryland corporation.

      (i) "FSP Companies" means FSP and any subsidiaries thereof including,
without limitation, the Employer and FSP Property Management LLC, a
Massachusetts limited liability company.

      (j) "Participant" means any employee of the Employer designated by the
Administrator as eligible to participate in the Plan.

      (k) "Plan" means this Change in Control Discretionary Plan.

      (l) "Sponsored REITs" means any and all real estate investment trusts
managed and controlled by the FSP Companies but not wholly owned by FSP.

3.    ADMINISTRATION.

      (a) This Plan will be interpreted and administered by the Administrator,
whose actions will be final and binding on all persons, including Participants.

      (b) The Administrator, in its sole discretion, will have the power,
subject to, and within the limitations of, the express provisions of this Plan:

            (1) To determine whether or not a transaction or related series of
transactions results in a Change in Control.

            (2) To establish, change and adjust, in its sole discretion, except
to the extent specified in this Plan, the size of the Discretionary Pool.

            (3) To determine which employees of the Employer shall be
Participants in this Plan, provided, however, that an employee must be
performing services for the Employer immediately prior to the Closing in order
to be selected as a Participant.

            (4) To allocate the amount of the Discretionary Pool payable to each
Participant.


                                       -2-
<PAGE>

4.    ESTABLISHMENT OF DISCRETIONARY POOL; ALLOCATION OF DISCRETIONARY POOL.

      (a) Immediately prior to a Change in Control, the Administrator will
determine the size of the Discretionary Pool and will allocate the Discretionary
Pool among the persons whom the Administrator designates as Participants.
Management of the Employer shall make recommendations regarding which employees
shall be designated as Participants and the amount of the Discretionary Pool
payable to each Participant; provided, however, that the final decision as to
both shall be made by the Administrator in its sole discretion. The
Administrator may allocate the Discretionary Pool in any manner it deems
appropriate, using any methodology it deems appropriate.

      (b) Upon the Closing, the Administrator will establish the Discretionary
Pool in the amount set forth above. The Administrator will notify each
Participant of his or her allocation as soon as practicable following the
Closing.

5.    DISTRIBUTIONS.

      (a) If the conditions for distribution set forth in this Plan are
satisfied, then as soon as practicable following the Closing but in no event
later than the Distribution Date, the Employer or FSP or a successor entity will
distribute to each Participant an amount equal to his or her allocation of the
Discretionary Pool, as determined by the Administrator.

      (b) An employee must be providing services to the Employer immediately
prior to the Closing in order to receive an allocation of the Distribution Pool.

      (c) Notwithstanding anything to the contrary in this Plan, any payment
under this Plan shall be made without regard to whether the deductibility of
such payment (or any other "parachute payments," as that term is defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), to
or for a Participant's benefit) would be limited or precluded by Section 280G
and without regard to whether such payment (or any other "parachute payments" as
so defined) would subject a Participant to the federal excise tax levied on
certain "excess parachute payments" under Section 4999 of the Code; provided,
however, that if the total of all "parachute payments" to or for a Participant's
benefit, after reduction for all federal, state and local taxes (including the
tax described in Section 4999 of the Code, if applicable) with respect to such
payments (the "Total After-Tax Payments"), would be increased by the limitation
or elimination of any payment under this Plan or any "parachute payments" under
other agreements or arrangements between a Participant and the Employer or FSP
or any successor entity, then the amount payable under this Plan (or the
"parachute payment" under such other agreement or arrangement as the Employer
and the Participant shall mutually determine) shall be reduced to the extent,
and only to the extent, necessary to maximize the Total After-Tax Payments. The
determination as to whether and to what extent any payment under this Plan (or
the "parachute payment" under such other agreement or arrangement) are required
to be reduced in accordance with the preceding sentence shall be made at the
Employer's expense by a nationally recognized accounting firm retained by the
Employer. In the event of any underpayment or overpayment under this Plan (or
such other agreement or arrangement) as determined by the accounting firm, the
amount of such underpayment or overpayment shall forthwith be paid to the
Participant or refunded to the Employer, as the case may be, with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the Code.

      (d) In the event that the amount of the Discretionary Pool initially
allocated by the Administrator to a Participant is reduced pursuant to Section
5(c), then the Administrator shall have the discretion either to reallocate such
amount to other Participants or to not distribute such amount.


                                       -3-
<PAGE>

      (e) Notwithstanding anything else to the contrary contained herein, no
distributions will be made from the Discretionary Pool to the extent that such
distributions would violate the laws of the State of Maryland and the
Commonwealth of Massachusetts, as applicable.

6.    AMENDMENT OR TERMINATION OF THIS PLAN.

      (a) The Administrator may, at any time prior to the Closing, amend or
terminate this Plan.

      (b) Notwithstanding the foregoing, this Plan will automatically terminate
upon a Closing and completion of all payments under the terms of this Plan.

7.    NO GUARANTEE OF FUTURE SERVICE.

      Nothing in this Plan will provide any Participant with any guarantee or
promise of continued employment with the Employer, FSP or a successor entity or
act to modify the at-will nature of any Participant's employment. The Employer
retains the right to terminate the employment of any Participant at any time,
with or without cause, for any reason or no reason, except as may be restricted
by law or contract.

8.    TAX WITHHOLDING.

      The Employer will withhold from any distributions under this Plan any
amount required to satisfy the Employer's income and employment tax withholding
obligations under federal, state and local law.

9.    SECTION 409A.

      This Plan is intended to comply with, or be exempt from, the requirements
of Section 409A of the Code and all guidance and Treasury Regulations issued
thereunder and shall be interpreted consistently therewith.

10.   LIABILITY.

      Each of FSP and the Employer shall be jointly and severally liable for the
payments to be made pursuant to this Plan.

11.   CHOICE OF LAW.

      All questions concerning the construction, validity and interpretation of
this Plan will be governed by the law of the Commonwealth of Massachusetts,
exclusive of the conflict of laws provisions thereof.


                                      -4-
<PAGE>

12.   HEADINGS.

      The headings in this Plan are inserted for convenience only and will not
be deemed to constitute a part hereof nor to affect the meaning hereof.

      This Plan is adopted by the Board of Directors of the Employer and the
Board of Directors of FSP and is effective as of [DATE] (the "Effective Date").

                                          FSP Investments LLC

                                          By:
                                              -----------------------------

                                          Print Name:
                                                      ---------------------


                                          Franklin Street Properties Corp.


                                          By:
                                              -----------------------------

                                          Print Name:
                                                      ---------------------


                                       -5-










</TEXT>
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