CREDIT AGREEMENT

                                      among

                     HIGHWOODS/FORSYTH LIMITED PARTNERSHIP,
                                   as Borrower

                                       AND

                           HIGHWOODS PROPERTIES, INC.,
     and certain Subsidiaries of the Borrower and Highwoods Properties, Inc.
                                  as Guarantors

                                       AND

                               NATIONSBANK, N.A.,
                              as Agent and a Lender

                                       AND

                  THE OTHER LENDERS IDENTIFIED HEREIN (IF ANY)



                          DATED AS OF December 15, 1997


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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
SECTION 1  DEFINITIONS AND ACCOUNTING TERMS....................................1
1.1 Definitions................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions..............8

SECTION 2  CREDIT FACILITIES. .................................................9
2.1 Revolving Loans............................................................9

SECTION 3  GENERAL PROVISIONS APPLICABLE TO LOANS.............................11
3.1 Interest..................................................................11
3.2 Place and Manner of Payments..............................................11
3.3 Prepayments...............................................................12
3.4 Unused Fees...............................................................12
3.5 Payment in full at Maturity...............................................13
3.6 Computations of Interest and Fees.........................................13
3.7 Pro Rata Treatment........................................................14
3.8 Sharing of Payments.......................................................14
3.9 Capital Adequacy..........................................................15
3.10 Inability To Determine Eurodollar Rate...................................15
3.11 Illegality to Make Eurodollar Loans......................................16
3.12 Changes in Requirements of Law...........................................16
3.13 Taxes....................................................................17
3.14 Indemnity as to Eurodollar Loans.........................................18

SECTION 4  GUARANTY...........................................................19
4.1 Guaranty of Payment.......................................................18
4.2 Obligations Unconditional.................................................19
4.3 Modifications.............................................................19
4.4 Waiver of Rights..........................................................20
4.5 Reinstatement.............................................................20
4.6 Remedies..................................................................20
4.7 Limitation of Guaranty....................................................21

SECTION 5  CONDITIONS PRECEDENT...............................................21
5.1 Closing Conditions........................................................21
5.2 Conditions to All Loans...................................................23

SECTION 6  REPRESENTATIONS AND WARRANTIES.....................................25

SECTION 7  AFFIRMATIVE COVENANTS..............................................25

SECTION 8  NEGATIVE COVENANTS.................................................26

                                       i

<PAGE>


SECTION 9  EVENTS OF DEFAULT..................................................26
9.2 Events of Default.........................................................27
9.3 Acceleration; Remedies....................................................27
9.4 Allocation of Payments After Event of Default.............................28

SECTION 10  AGENCY PROVISIONS.................................................29
10.1 Appointment..............................................................29
10.2 Delegation of Duties.....................................................29
10.3 Exculpatory Provisions...................................................29
10.4 Reliance on Communications...............................................30
10.5 Notice of Default........................................................30
10.6 Non-Reliance on Agent and Other Lenders..................................31
10.7 Indemnification..........................................................31
10.8 Agent in Its Individual Capacity.........................................32
10.9 Successor Agent..........................................................32

SECTION 11 MISCELLANEOUS......................................................33
11.1 Notices..................................................................32
11.2 Right of Set-Off.........................................................33
11.3 Benefit of Agreement.....................................................33
11.4 No Waiver; Remedies Cumulative...........................................35
11.5 Payment of Expenses; Indemnification.....................................35
11.6 Amendments, Waivers and Consents.........................................36
11.7 Counterparts.............................................................36
11.8 Headings.................................................................37
11.9 Defaulting Lender........................................................37
11.10 Survival of Indemnification and
       Representations and Warranties.........................................37
11.11  Governing Law..........................................................37
11.12  Arbitration............................................................37
11.13  Time...................................................................38
11.14  Severability...........................................................38
11.15  Entirety...............................................................38

                                       ii

<PAGE>


SCHEDULES

Schedule 1.1(a)            Commitment Percentages
Schedule 11.1              Notices

EXHIBITS

Exhibit 2.1(b)             Form of Notice of Borrowing
Exhibit 2.1(d)             Form of Notice of Continuation/Conversion
Exhibit 2.1(f)             Form of Revolving Note
Exhibit 7.1(c)             Form of Officer's Certificate
Exhibit 7.16               Form of Joinder Agreement
Exhibit 11.3               Form of Assignment Agreement

                                      iii

<PAGE>


                                CREDIT AGREEMENT

     THIS  CREDIT  AGREEMENT,  dated  as of  December  15,  1997  (this  "Credit
Agreement"), is entered into by and among HIGHWOODS/FORSYTH LIMITED PARTNERSHIP,
a North Carolina limited  partnership (the  "Borrower"),  HIGHWOODS  PROPERTIES,
INC., a Maryland corporation ("Highwoods  Properties") (Highwoods Properties and
certain  Subsidiaries of the Borrower and Highwoods  Properties,  individually a
"Guarantor" and collectively the "Guarantors"),  the Lenders (as defined herein)
and NATIONSBANK, N.A., (the "Bank"), as Agent for the Lenders.

                                 R E C I T A L S

     WHEREAS, the Borrower has requested that the Lenders provide a $150,000,000
credit facility for the purposes hereinafter set forth; and

     WHEREAS,  the Lenders  have agreed to make the  requested  credit  facility
available to the Borrower on the terms and conditions hereinafter set forth.

     NOW,  THEREFORE,  IN  CONSIDERATION  of the  premises  and  other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS

     1.1 Definitions.

     As used  herein,  the  following  terms  shall  have  the  meanings  herein
specified  unless the context  otherwise  requires.  Defined  terms herein shall
include in the singular number the plural and in the plural the singular:

          "Additional  Credit  Party" means each Person that becomes a Guarantor
     under the Related Facility.

          "Adjusted   Base  Rate"  means  the  Base  Rate  plus  the  Applicable
     Percentage.

          "Adjusted   Eurodollar  Rate"  means  the  Eurodollar  Rate  plus  the
     Applicable Percentage.

          "Agent"  means  NationsBank,  N.A. (or any  successor  thereto) or any
     successor administrative agent appointed pursuant to Section 10.


<PAGE>


          "Affiliate" means a Person:  (a) which directly or indirectly  through
     one or more intermediaries controls or is controlled by, or is under common
     control of the Borrower or a Guarantor;  or (b) which  beneficially owns or
     holds  five  percent  (5%) or more of any  class of the  voting  stock of a
     Guarantor or more than five percent  (5%) of the  partnership  interests of
     the Borrower; or (c) of which five percent (5%) or more of the voting stock
     (or in the case of a Person which is not a  corporation,  five percent (5%)
     or  more of the  equity  interest)  is  beneficially  owned  or held by the
     Borrower or a Guarantor.

          "Applicable  Percentage"  means,  at any time, and with respect to all
     Eurodollar  Loans and Base Rate  Loans  then  outstanding,  the  applicable
     percentage as follows:

                   APPLICABLE                  APPLICABLE
                   PERCENTAGE                  PERCENTAGE
                 FOR EURODOLLAR                 BASE RATE
                     LOANS                        LOANS
                     -----                        -----
                     0.90%                         0%

          "Authorized  Officer" means the President,  Chief  Executive  Officer,
     Chief Operating Officer, Chief Financial Officer,  Secretary or Chairman of
     the Board of Highwoods Properties.

          "Bankruptcy  Code" means the Bankruptcy Code in Title 11 of the United
     States Code, as amended, modified, succeeded or replaced from time to time.

          "Base Rate" means,  for any day, the rate per annum (rounded  upwards,
     if necessary,  to the nearest  whole  multiple of 1/100 of 1%) equal to the
     greater of (a) the Federal  Funds Rate in effect on such day plus 1/2 of 1%
     or (b) the Prime  Rate in effect on such day.  If for any  reason the Agent
     shall have  determined  (which  determination  shall be  conclusive  absent
     manifest  error)  that it is unable  after due  inquiry  to  ascertain  the
     Federal  Funds Rate for any reason,  including  the inability or failure of
     the Agent to obtain  sufficient  quotations  in  accordance  with the terms
     hereof,  the Base Rate shall be determined  without regard to clause (a) of
     the first sentence of this definition until the  circumstances  giving rise
     to such  inability  no longer  exist.  Any change in the Base Rate due to a
     change in the Prime Rate or the Federal  Funds Rate shall be  effective  on
     the  effective  date of such change in the Prime Rate or the Federal  Funds
     Rate, respectively.

          "Base Rate Loan" means any Loan bearing  interest at a rate determined
     by reference to the Base Rate.

          "Borrower"  means  Highwoods/Forsyth  Limited  Partnership,   a  North
     Carolina limited  partnership,  together with any permitted  successors and
     assigns.

          "Business  Day"  means any day other  than a  Saturday  or Sunday or a
     legal  holiday in  Charlotte,  North  Carolina,  or a day on which  banking
     institutions are authorized by law or


                                       2
<PAGE>


     other governmental  action to close;  provided,  however, if the applicable
     day relates to the determination of the Eurodollar Rate, such day must also
     be a day upon  which  banks are open for the  transaction  of  business  in
     London,  England and dealings in U.S. dollar deposits are carried on in the
     London interbank market.

          "Closing Date" means the date hereof.

          "Commitments"  means the commitment of each Lender with respect to the
     Revolving Committed Amount.

          "Credit Documents" means, collectively, this Agreement and the Note.

          "Credit  Parties"  means the Borrower and the  Guarantors  and "Credit
     Party" means any one of them.

          "Credit  Party  Obligations"  means,  without  duplication  all of the
     obligations  of the Credit  Parties to the Lenders and the Agent,  whenever
     arising, under this Credit Agreement, the Notes, or any of the other Credit
     Documents to which the Borrower or any Guarantor is a party.

          "Default" means any event, act or condition which with notice or lapse
     of time, or both, would constitute an Event of Default.

          "Defaulting  Lender"  means,  at any time,  any Lender  that,  (a) has
     failed  to make a Loan  required  pursuant  to the  terms  of  this  Credit
     Agreement,  (b) has failed to pay to the Agent or any Lender an amount owed
     by such Lender pursuant to the terms of this Credit Agreement (but only for
     so  long  as such  amount  has not  been  repaid)  or (c) has  been  deemed
     insolvent or has become subject to a bankruptcy or insolvency proceeding or
     to a receiver, trustee or similar official.

          "Dollars"  and "$" means  dollars  in lawful  currency  of the  United
     States of America.

          "Effective  Date" means the date on which the  conditions set forth in
     Section 5.1 shall have been fulfilled (or waived in the sole  discretion of
     the Lenders) and on which the initial Loans shall have been made.

          "Eligible Assignee" means (a) any Lender or Affiliate or subsidiary of
     a  Lender  and  (b)  any  other  commercial  bank,  financial  institution,
     institutional  lender or "accredited  investor" (as defined in Regulation D
     of the  Securities and Exchange  Commission)  with total assets of at least
     $10 billion and with a rating on their long term unsecured debt of at least
     BBB with S&P or its equivalent  and organized  under the laws of the United
     States or a state thereof.

          "Environmental   Claim"  means  any  investigation,   written  notice,
     violation,  written demand,  written allegation,  action, suit, injunction,
     judgment,  order,  consent decree,  penalty,  fine,  lien,  proceeding,  or
     written claim whether administrative, judicial, or private


                                       3
<PAGE>


     in nature  arising (a) pursuant  to, or in  connection  with,  an actual or
     alleged  violation of, any  Environmental  Law, (b) in connection  with any
     Hazardous Material, (c) from any assessment,  abatement, removal, remedial,
     corrective,  or other response action in connection  with an  Environmental
     Law or other order of a  Governmental  Authority  or (d) from any actual or
     alleged  damage,  injury,  threat,  or  harm  to  health,  safety,  natural
     resources, or the environment.

          "Environmental  Laws" means any current or future legal requirement of
     any  Governmental  Authority  pertaining  to (a) the  protection of health,
     safety,  and the  indoor  or  outdoor  environment,  (b) the  conservation,
     management, or use of natural resources and wildlife, (c) the protection or
     use of surface  water and  groundwater,  (d) the  management,  manufacture,
     possession, presence, use, generation, transportation,  treatment, storage,
     disposal, release, threatened release, abatement,  removal,  remediation or
     handling of, or exposure to, any  hazardous or toxic  substance or material
     or  (e)  pollution  (including  any  release  to  land  surface  water  and
     groundwater)   and  includes,   without   limitation,   the   Comprehensive
     Environmental Response, Compensation, and Liability Act of 1980, as amended
     by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et
     seq., Solid Waste Disposal Act, as amended by the Resource Conservation and
     Recovery Act of 1976 and  Hazardous  and Solid Waste  Amendment of 1984, 42
     USC 6901 et seq.,  Federal Water  Pollution  Control Act, as amended by the
     Clean  Water Act of 1977,  33 USC 1251 et seq.,  Clean Air Act of 1966,  as
     amended,  42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC
     2601 et seq.,  Hazardous Materials  Transportation Act, 49 USC App. 1801 et
     seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et
     seq.,  Oil Pollution Act of 1990, 33 USC 2701 et seq.,  Emergency  Planning
     and Community  Right-to-Know  Act of 1986,  42 USC 11001 et seq.,  National
     Environmental  Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water
     Act of 1974, as amended, 42 USC 300(f) et seq., any analogous  implementing
     or successor law, and any amendment, rule, regulation,  order, or directive
     issued thereunder.

          "Eurodollar  Loan"  means  a Loan  bearing  interest  based  at a rate
     determined by reference to the Eurodollar Rate.

          "Eurodollar  Rate" means,  for the Interest Period for each Eurodollar
     Loan  comprising  part  of  the  same  borrowing  (including   conversions,
     extensions and renewals),  a per annum interest rate determined pursuant to
     the following formula:

          Eurodollar Rate = London Interbank Offered Rate
                            ---------------------------------
                            1 - Eurodollar Reserve Percentage

          "Eurodollar  Reserve  Percentage"  means for any day, that  percentage
     (expressed  as a  decimal)  which  is in  effect  from  time to time  under
     Regulation D of the Board of Governors  of the Federal  Reserve  System (or
     any successor),  as such regulation may be amended from time to time or any
     successor  regulation,  as  the  maximum  reserve  requirement  (including,
     without  limitation,  any  basic,  supplemental,   emergency,  special,  or
     marginal reserves)  applicable with respect to Eurocurrency  liabilities as
     that term is defined in  Regulation  D (or  against  any other  category of
     liabilities that includes  deposits by reference to which the interest rate
     of  Eurodollar  Loans  is  determined),  whether  or not a  Lender  has any

                                       4
<PAGE>


     Eurocurrency  liabilities subject to such reserve requirement at that time.
     Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and
     as such shall be deemed subject to reserve requirements without benefits of
     credits for  proration,  exceptions  or offsets that may be available  from
     time  to  time  to  a  Lender.   The  Eurodollar  Rate  shall  be  adjusted
     automatically  on  and as of  the  effective  date  of  any  change  in the
     Eurodollar Reserve Percentage.

          "Event of Default" means any of the events or circumstances  described
     in Section 9.

          "Extension  of Credit"  means the making of any loans  (including  the
     extension of, or conversion into, a Eurodollar Loans).

          "Federal  Funds  Rate"  means for any day the rate per annum  (rounded
     upward,  if necessary,  to the nearest 1/100th of 1%) equal to the weighted
     average of the rates on overnight  Federal funds  transactions with members
     of the Federal  Reserve  System  arranged by Federal  funds brokers on such
     day, as published  by the Federal  Reserve Bank of New York on the Business
     Day  next  succeeding  such  day;  provided  that  (a) if such day is not a
     Business  Day,  the  Federal  Funds Rate for such day shall be such rate on
     such  transactions  on the next  preceding  Business Day and (b) if no such
     rate is so published on such next preceding Business Day, the Federal Funds
     Rate for such day shall be the average rate quoted to the Agent on such day
     on such transactions as determined by the Agent.

          "Fee Letter" means that certain letter agreement,  dated as of Closing
     Date, between the Bank and the Borrower, as amended, modified, supplemented
     or replaced from time to time.

          "GAAP" means generally  accepted  accounting  principles in the United
     States applied on a consistent basis.

          "Governmental  Authority" means any Federal,  state, local, provincial
     or foreign court or  governmental  agency,  authority,  instrumentality  or
     regulatory body.

          "Guarantors" means Highwoods Properties, Inc., a Maryland corporation,
     each of the  Subsidiaries  of Highwoods  Properties and the Borrower (other
     than the Non-Guarantor  Subsidiaries) and each Additional Credit Party that
     has executed a Joinder Agreement.

          "Interest  Payment  Date"  means  (a) as to Base  Rate  Loans,  on the
     fifteenth  (15th) day of each month and on the Revolving Loan Maturity Date
     and (b) as to Eurodollar Loans, on the last day of each applicable Interest
     Period and on the Revolving Loan Maturity Date.

          "Interest  Period"  means,  as to  Eurodollar  Loans,  a period of one
     month's  duration,  commencing,  in each case, on the date of the borrowing
     (including continuations and conversions thereof);  provided,  however, (a)
     if any Interest Period would end on a day which is not a Business Day, such
     Interest  Period  shall be extended  to the next  succeeding  Business  Day
     (except  that  when  the next  succeeding  Business  Day  falls in the next
     succeeding calendar month, then on the next preceding Business Day), (b) no
     Interest


                                       5
<PAGE>


     Period shall extend beyond the  Revolving  Loan Maturity Date and (c) where
     an  Interest  Period  begins  on a day for  which  there is no  numerically
     corresponding  day in the calendar month in which the Interest Period is to
     end,  such  Interest  Period  shall  end on the last  Business  Day of such
     calendar month.

          "Lender"  means any of the  Persons  identified  as a "Lender"  on the
     signature pages hereto,  and any Person which may become a Lender by way of
     assignment  in  accordance  with the  terms  hereof,  together  with  their
     successors and permitted assigns.

          "Lien" means any mortgage, pledge, hypothecation,  assignment, deposit
     arrangement, security interest, encumbrance, lien (statutory or otherwise),
     preference,  priority or charge of any kind, including, without limitation,
     any agreement to give any of the foregoing,  any conditional  sale or other
     title retention agreement, and any lease in the nature thereof.

          "Loan" or "Loans" mean revolving loans made hereunder.

          "London  Interbank Offered Rate" means, with respect to any Eurodollar
     Loan for the Interest Period applicable  thereto,  the rate of interest per
     annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
     on  Telerate  Page 3750 (or any  successor  page) as the  London  interbank
     offered rate for deposits in Dollars at  approximately  11:00 A.M.  (London
     time) two Business Days prior to the first day of such Interest  Period for
     a term comparable to such Interest Period; provided,  however, if more than
     one rate is specified on Telerate Page 3750, the  applicable  rate shall be
     the arithmetic mean of all such rates. If, for any reason, such rate is not
     available,  the term  "London  Interbank  Offered  Rate" shall  mean,  with
     respect to any Eurodollar Loan for the Interest Period applicable  thereto,
     the rate of interest  per annum  (rounded  upwards,  if  necessary,  to the
     nearest  1/100 of 1%)  appearing on Reuters  Screen LIBO Page as the London
     interbank offered rate for deposits in Dollars at approximately  11:00 A.M.
     (London  time) two  Business  Days prior to the first day of such  Interest
     Period for a term comparable to such Interest Period; provided, however, if
     more than one rate is specified on Reuters Screen LIBO Page, the applicable
     rate shall be the arithmetic mean of all such rates.

          "Material  Adverse Effect" means a material  adverse effect on (a) the
     operations, financial condition, business or prospects of the Borrower or a
     Guarantor,  (b) the ability of the  Borrower or a Guarantor  to perform its
     respective  obligations  under this  Credit  Agreement  or any of the other
     Credit  Documents,  or (c) the  validity or  enforceability  of this Credit
     Agreement, any of the other Credit Documents, or the rights and remedies of
     the Lenders hereunder or thereunder taken as a whole.

          "Non-Excluded Taxes" has the meaning set forth in Section 3.13.

          "Non-Guarantor  Subsidiaries"  means AP Southeast  Portfolio Partners,
     L.P.,  AP-GP  Southeast  Portfolio  Partners,   L.P.,  a  Delaware  limited
     partnership,  Highwoods Realty GP Corp., a Delaware limited partnership and
     Forsyth-Carter Brokerage, L.L.C.


                                       6
<PAGE>


          "Note" or "Notes"  means the  Revolving  Loan Notes,  individually  or
     collectively, as appropriate.

          "Notice of Borrowing"  means a request by the Borrower for a Revolving
     Loan, in the form of Exhibit 2.1(b).

          "Notice of Continuation/Conversion" means a request by the Borrower to
     continue an existing Eurodollar Loan to a new Interest Period or to convert
     a  Eurodollar  Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar
     Loan, in the form of Exhibit 2.1(d).

          "Person"  means any  individual,  partnership,  joint  venture,  firm,
     corporation,   limited  liability  company,  association,  trust  or  other
     enterprise (whether or not incorporated), or any Governmental Authority.

          "Prime  Rate"  means the per annum rate of interest  established  from
     time to time  by the  Bank at its  principal  office  in  Charlotte,  North
     Carolina (or such other  principal  office of the Bank as  communicated  in
     writing to the Borrower  and the Lenders) as its Prime Rate.  Any change in
     the interest  rate  resulting  from a change in the Prime Rate shall become
     effective  as of 12:01 a.m. of the Business Day on which each change in the
     Prime Rate is  announced  by the Bank.  The Prime Rate is a reference  rate
     used by the Bank in determining  interest rates on certain loans and is not
     intended  to be the lowest  rate of interest  charged on any  extension  of
     credit to any debtor.

          "Related Credit Agreement" means that certain Credit Agreement between
     the Credit  Parties,  NationsBank,  N.A., as "Agent",  First Union National
     Bank of  North  Carolina,  as  "Documentation  Agent",  and  certain  other
     financial  institutions   identified  therein  as  "Lenders"  dated  as  of
     September  27, 1996,  as amended by (i) that certain  First  Amendment  and
     Restatement  of Credit  Agreement  dated as of May 27, 1997,  and (ii) that
     certain  letter  agreement  among such  parties  dated August 20, 1997 (the
     "Letter Agreement"), and as further amended, modified, extended or replaced
     from time to time.

          "Related Credit  Facilities"  means those credit  facilities  provided
     under the Related Credit Agreement.

          "Related  Credit  Facility  Lenders"  means those lenders party to the
     Related Credit Agreement.

          "Required Lenders" means all Lenders;  provided,  however, that if any
     Lender  shall be a  Defaulting  Lender at such  time  then such  Defaulting
     Lender shall be excluded from the determination of Required Lenders at such
     time.

          "Requirement  of  Law"  means,  as to  any  Person,  the  articles  or
     certificate  of  incorporation  and  by-laws  or  other  organizational  or
     governing documents of such Person, and any law, treaty, rule or regulation
     or final, non-appealable determination of an arbitrator or a court or other
     Governmental  Authority,  in each case  applicable  to or binding upon such
     Person or to which any of its material property is subject.


                                       7
<PAGE>


          "Revolving  Committed  Amount" means ONE HUNDRED FIFTY MILLION DOLLARS
     ($150,000,000).

          "Revolving Loan Commitment  Percentage"  means,  for each Lender,  the
     percentage  identified  as its  Revolving  Loan  Commitment  Percentage  on
     Schedule 1.1(a),  as such percentage may be modified in connection with any
     assignment made in accordance with the provisions of Section 11.3.

          "Revolving Loan Maturity Date" means June 30, 1998.

          "Revolving  Loans"  means the  Revolving  Loans  made to the  Borrower
     pursuant to Section 2.

          "Revolving  Note" or "Revolving  Notes" means the promissory  notes of
     the Borrower in favor of each of the Lenders evidencing the Revolving Loans
     provided   pursuant  to  Section  2,   individually  or  collectively,   as
     appropriate,   as  such   promissory   notes  may  be  amended,   modified,
     supplemented,  extended,  renewed  or  replaced  from  time to time  and as
     evidenced in the form of Exhibit 2.1f.

          "S&P"  means  Standard & Poor's  Ratings  Group,  a division of McGraw
     Hill,  Inc.,  or any successor or assignee of the business of such division
     in the business of rating securities.

          "Subsidiary"  means, as to any Person,  (a) any corporation  more than
     50% of whose  stock of any class or  classes  having  by the terms  thereof
     ordinary  voting  power  to  elect  a  majority  of the  directors  of such
     corporation  (irrespective  of  whether  or not at the  time,  any class or
     classes of such corporation shall have or might have voting power by reason
     of the  happening of any  contingency)  is at the time owned by such Person
     directly  or  indirectly  through  Subsidiaries,  and (b) any  partnership,
     association, joint venture or other entity in which such person directly or
     indirectly through  Subsidiaries has more than a 50% equity interest at any
     time.

          "Unused Commitment" means, for any period, the amount by which (a) the
     then applicable  aggregate Revolving Committed Amount exceeds (b) the daily
     average sum for such period of the outstanding  aggregate  principal amount
     of all Revolving Loans.

          "Unused Fee Percentage" means 0.15% per annum.

     1.2 Computation of Time Periods and Other Definitional Provisions.

     For purposes of computation of periods of time  hereunder,  the word "from"
means  "from and  including"  and the words "to" and  "until"  each mean "to but
excluding." References in this Agreement to "Articles",  "Sections", "Schedules"
or  "Exhibits"  shall be to Articles,  Sections,  Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.


                                       8
<PAGE>


                                    SECTION 2

                                CREDIT FACILITIES

     2.1 Revolving Loans.

     (a) Revolving  Loan  Commitment.  Subject to the terms and  conditions  set
forth  herein,  each Lender  severally  agrees to make  revolving  loans (each a
"Revolving  Loan" and collectively  the "Revolving  Loans") to the Borrower,  in
Dollars, at any time and from time to time, during the period from and including
the Effective  Date to but not  including  the Revolving  Loan Maturity Date (or
such earlier  date if the  Revolving  Committed  Amount has been  terminated  as
provided herein); provided, however, that (i) the sum of the aggregate amount of
Revolving Loans outstanding shall not exceed the Revolving  Committed Amount and
(ii) with  respect to each  individual  Lender,  the  Lender's pro rata share of
outstanding  Revolving  Loans  shall not exceed  such  Lender's  Revolving  Loan
Commitment Percentage of the Revolving Committed Amount. Subject to the terms of
this Credit Agreement  (including  Section 3.3), the Borrower may borrow,  repay
and reborrow Revolving Loans.

     (b) Method of Borrowing  for Revolving  Loans.  By no later than 10:00 a.m.
(i) one Business Day prior to the  requested  borrowing of Revolving  Loans that
will be Base  Rate  Loans or (ii)  two  Business  Days  prior to the date of the
requested  borrowing  of  Revolving  Loans that will be  Eurodollar  Loans,  the
Borrower  shall  submit a written  Notice of  Borrowing  in the form of  Exhibit
2.1(b) to the Agent  (which  notice  may be by  telecopy  with the  original  to
follow) setting forth (A) the amount requested, (B) whether such Revolving Loans
shall accrue interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate,
(C)  how  the  proceeds  from  such  Revolving   Loans  will  be  used  and  (D)
certification that the Borrower has complied in all respects with Section 5;

     (c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing,  the
Agent shall  promptly  inform the Lenders as to the terms  thereof.  Each Lender
shall make its Revolving Loan Commitment  Percentage of the requested  Revolving
Loans available to the Agent by 2:00 p.m. on the date specified in the Notice of
Borrowing by deposit, in Dollars, of immediately  available funds at the offices
of the Agent at its  principal  office in Charlotte,  North  Carolina or at such
other address as the Agent may designate in writing. The amount of the requested
Revolving  Loans will then be made  available  to the  Borrower  by the Agent by
crediting  the account of the Borrower on the books of such office of the Agent,
to the extent  the  amount of such  Revolving  Loans are made  available  to the
Agent.

     No Lender shall be responsible for the failure or delay by any other Lender
in its obligation to make Revolving Loans hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other  Lender of its  obligations  hereunder.  Unless the Agent  shall have been
notified by any Lender  prior to the date of any such  Revolving  Loan that such
Lender  does not  intend  to make  available  to the Agent  its  portion  of the
Revolving  Loans to be made on such date,  the Agent may assume that such Lender
has made such amount available to the


                                       9
<PAGE>


Agent on the date of such Revolving  Loans,  and the Agent in reliance upon such
assumption,  may (in its sole  discretion  but without any  obligation to do so)
make available to the Borrower a  corresponding  amount.  If such  corresponding
amount is not in fact made  available  to the Agent,  the Agent shall be able to
recover such corresponding  amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor,  the Agent
will promptly notify the Borrower,  and the Borrower shall  immediately pay such
corresponding  amount to the Agent.  The Agent shall also be entitled to recover
from  the  Lender  or the  Borrower,  as the  case  may  be,  interest  on  such
corresponding  amount in  respect  of each day from the date such  corresponding
amount  was made  available  by the  Agent  to the  Borrower  to the  date  such
corresponding  amount is recovered by the Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for such Revolving Loan pursuant to the
Notice of Borrowing and (ii) from a Lender at the Federal Funds Rate.

     (d)   Continuations   and   Conversions.   Upon  receipt  of  a  Notice  of
Continuation/Conversion,  the Agent shall promptly  inform the Lenders as to the
terms thereof.  Subject to the terms of Section 5.2, the Borrower shall have the
option,  on any  Business  Day,  to  continue  existing  Eurodollar  Loans for a
subsequent  Interest Period, to convert Base Rate Loans into Eurodollar Loans or
to convert Eurodollar Loans into Base Rate Loans;  provided,  however,  that (i)
each such  continuation or conversion must be requested by the Borrower pursuant
to a written Notice of  Continuation/Conversion,  in the form of Exhibit 2.1(d),
in compliance with the terms set forth below, (ii) except as provided in Section
3.11,  Eurodollar  Loans may only be continued or converted into Base Rate Loans
on the last day of the Interest  Period  applicable  thereto,  (iii)  Eurodollar
Loans may not be continued nor may Base Rate Loans be converted into  Eurodollar
Loans during the existence and continuation of a Default or Event of Default and
(iv) any  request to  continue a  Eurodollar  Loan that fails to comply with the
terms hereof or any failure to request a  continuation  of a Eurodollar  Loan at
the end of an Interest Period shall  constitute a conversion to a Base Rate Loan
on  the  last  day of the  applicable  Interest  Period.  Each  continuation  or
conversion  must be  requested  by the Borrower no later than 11:00 a.m. (A) one
Business Day prior to a requested conversion of a Eurodollar Loan to a Base Rate
Loan or (B) two Business Days prior to the date for a requested  continuation of
a Eurodollar  Loan or  conversion  of a Base Rate Loan to a Eurodollar  Loan, in
each case pursuant to a written Notice of  Continuation/Conversion  submitted to
the Agent.

     (e)  Minimum  Amounts.   Each  request  for  a  borrowing,   conversion  or
continuation  shall be subject to the requirements that (i) each Eurodollar Loan
shall be in a minimum amount of $5,000,000 and in integral multiples of $500,000
in excess thereof,  (ii) each Base Rate Loan shall be in a minimum amount of the
lesser of $1,000,000  (and integral  multiples of $500,000 in excess thereof) or
the remaining amount available under the Revolving Committed Amount and (iii) no
more than five (5) Eurodollar  Loans shall be  outstanding  hereunder at any one
time.


                                       10
<PAGE>


     (f) Notes.  The Revolving Loans made by each Lender shall be evidenced by a
duly executed  promissory note of the Borrower to each applicable  Lender in the
face  amount  of its  Revolving  Loan  Commitment  Percentage  of the  Revolving
Committed Amount in substantially the form of Exhibit 2.1(f).

                                    SECTION 3

                     GENERAL PROVISIONS APPLICABLE TO LOANS

     3.1 Interest.

     (a)  Interest  Rate.  All Base Rate  Loans  shall  accrue  interest  at the
Adjusted  Base  Rate and all  Eurodollar  Loans  shall  accrue  interest  at the
Adjusted Eurodollar Rate.

     (b)  Default  Rate  of  Interest.  Upon  the  occurrence,  and  during  the
continuance,  of an  Event of  Default,  the  principal  of and,  to the  extent
permitted by law, interest on the Loans and any other amounts owing hereunder or
under  the  other  Credit  Documents  (including  without  limitation  fees  and
expenses) shall bear interest,  payable on demand,  at a per annum rate equal to
4%  plus  the  rate  which  would  otherwise  be  applicable  (or if no  rate is
applicable, then the rate for Revolving Loans that are Base Rate Loans plus four
percent (4%) per annum).

     (c) Late  Charges.  In the event any payment of interest  or  principal  is
delinquent  more than fifteen (15) days,  the Borrower will pay to the Agent for
the benefit of the Lenders a late charge of four  percent  (4%) of the amount of
the overdue  payment.  This  provision  for late charges  shall not be deemed to
extend the time for payment or be a "grace  period" or "cure  period" that gives
the Borrower a right to cure a Default or Event of Default.  Imposition  of such
late  charges is not  contingent  upon  giving of any notice or the lapse of any
cure period provided for in the Credit Agreement.

     (d)  Interest  Payments.  Interest  on Loans  shall be due and  payable  in
arrears on each Interest  Payment  Date. If an Interest  Payment Date falls on a
date which is not a Business Day, such Interest  Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar Loans
where the next  succeeding  Business Day falls in the next  succeeding  calendar
month, then on the next preceding Business Day.

     3.2 Place and Manner of Payments.

     All payments of principal, interest, fees, expenses and other amounts to be
made by a Credit  Party under this  Agreement  shall be received  not later than
12:00 noon on the date when due, in Dollars and in immediately  available funds,
by the Agent at its offices in  Charlotte,  North  Carolina.  Payments  received
after such time shall be deemed to have been  received on the next Business Day.
The  Borrower  shall,  at the time it makes any  payment  under this  Agreement,
specify to the Agent,  the Loans,  fees or other amounts payable by the Borrower
hereunder to which such payment is to be


                                       11
<PAGE>


applied (and in the event that it fails to specify, or if such application would
be inconsistent with the terms hereof, the Agent shall,  subject to Section 3.7,
distribute  such  payment to the  Lenders  in such  manner as the Agent may deem
appropriate). The Agent will distribute such payments to the Lenders on the date
received if any such  payment is received  prior to 12:00  p.m.;  otherwise  the
Agent  will  distribute  such  payment  to the  Lenders  on the next  succeeding
Business Day.  Whenever any payment hereunder shall be stated to be due on a day
which is not a Business  Day, the due date thereof shall be extended to the next
succeeding  Business Day (subject to accrual of interest and fees for the period
of  such  extension),  except  that  in the  case of  Eurodollar  Loans,  if the
extension  would  cause the  payment to be made in the next  following  calendar
month,  then such payment shall instead be made on the next  preceding  Business
Day. If the Agent fails to timely forward  payment to a Lender it shall pay such
Lender interest at the Federal Funds Rate until such payment is made.

     3.3 Prepayments.

     (a)  Voluntary  Prepayments.  The  Borrower  shall have the right to prepay
Loans  in  whole  or in part  from  time to time  without  premium  or  penalty;
provided, however, that (i) Eurodollar Loans may only be prepaid on two Business
Days' prior written notice to the Agent and any  prepayment of Eurodollar  Loans
will be subject to Section 3.14 and (ii) each such partial  prepayment  of Loans
shall be in the minimum  principal amount of $100,000 and integral  multiples of
$100,000 in excess thereof.

     (b) Mandatory  Prepayments.  If at any time the sum of the aggregate amount
of Revolving  Loans  outstanding  exceeds the Revolving  Committed  Amount,  the
Borrower shall  immediately make a principal  payment to the Agent in the manner
and in an amount necessary to be in compliance with Section 2.1.

     (c) Application of Prepayments. All amounts required to be paid pursuant to
Section 3.3(b) shall be applied first to Base Rate Loans. If the amount required
to be paid under Section 3.3(b) exceeds the aggregate  amount of Base Rate Loans
outstanding,  such  excess  shall be applied  second to  Eurodollar  Loans.  All
prepayments hereunder shall be subject to Section 3.14.

     3.4 Unused Fees.

     In consideration of the Revolving  Committed Amount being made available by
the Lenders hereunder, the Borrower agrees to pay to the Agent, for the pro rata
benefit  of each  applicable  Lender  (based  on each  Lender's  Revolving  Loan
Percentage of the  Revolving  Committed  Amount),  a fee equal to the Unused Fee
Percentage on the Unused Commitment (the "Unused Fees"). The accrued Unused Fees
shall commence to accrue on the Closing Date, shall be calculated as of the last
day of December  1997 and March 1998 and the  Revolving  Loan  Maturity Date and
shall be due and payable in arrears on January 15 and April 15, 1998 (as well as
on the Revolving Loan Maturity Date and on any date that the Revolving Committed
Amount is reduced) for the immediately  preceding  calendar  quarter (or portion
thereof),  beginning  with the first of such  dates to occur  after the  Closing
Date.


                                       12
<PAGE>


     3.5 Payment in full at Maturity.

     On the  Revolving  Loan Maturity  Date,  the entire  outstanding  principal
balance of all Revolving  Loans,  together with accrued but unpaid  interest and
all other sums owing with  respect  thereto,  shall be due and  payable in full,
unless accelerated sooner pursuant to Section 9.

     3.6 Computations of Interest and Fees.

     (a) All  computations  of interest and fees hereunder  shall be made on the
basis of the actual  number of days  elapsed  over a year of 360 days.  Interest
shall  accrue  from  and  include  the date of  borrowing  (or  continuation  or
conversion) but exclude the date of payment.

     (b) It is the intent of the  Lenders  and the Credit  Parties to conform to
and contract in strict compliance with applicable usury law from time to time in
effect.  All agreements  between the Lenders and the Borrower are hereby limited
by the  provisions of this  paragraph  which shall override and control all such
agreements,  whether now  existing or hereafter  arising and whether  written or
oral. In no way, nor in any event or  contingency  (including but not limited to
prepayment  or  acceleration  of the  maturity  of any  obligation),  shall  the
interest taken, reserved, contracted for, charged, or received under this Credit
Agreement,  under the Notes or otherwise,  exceed the maximum nonusurious amount
permissible  under applicable law. If, from any possible  construction of any of
the Credit Documents or any other document,  interest would otherwise be payable
in excess of the maximum  nonusurious  amount,  any such  construction  shall be
subject  to the  provisions  of this  paragraph  and  such  documents  shall  be
automatically   reduced  to  the  maximum  nonusurious  amount  permitted  under
applicable  law,  without the  necessity of  execution  of any  amendment or new
document.  If  any  Lender  shall  ever  receive  anything  of  value  which  is
characterized  as interest on the Loans under  applicable  law and which  would,
apart from this provision,  be in excess of the maximum lawful amount, an amount
equal to the amount  which would have been  excessive  interest  shall,  without
penalty,  be applied to the reduction of the principal amount owing on the Loans
and not to the payment of  interest,  or  refunded to the  Borrower or the other
payor  thereof if and to the extent such amount which would have been  excessive
exceeds such unpaid  principal  amount of the Loans. The right to demand payment
of the Loans or any other indebtedness  evidenced by any of the Credit Documents
does not  include  the right to receive  any  interest  which has not  otherwise
accrued on the date of such  demand,  and the Lenders do not intend to charge or
receive any unearned interest in the event of such demand.  All interest paid or
agreed to be paid to the Lenders with respect to the Loans shall,  to the extent
permitted by  applicable  law, be  amortized,  prorated,  allocated,  and spread
throughout  the full stated term  (including  any renewal or  extension)  of the
Loans so that the amount of  interest on account of such  indebtedness  does not
exceed the maximum nonusurious amount permitted by applicable law.


                                       13
<PAGE>


     3.7 Pro Rata Treatment.

     Except  to  the  extent  otherwise  provided  herein  each  Revolving  Loan
borrowing,  each payment or prepayment of principal and/or interest of any Loan,
each payment of fees (other than the  Administrative  Fees retained by the Agent
for its own account), each reduction of the Revolving Committed Amount, and each
conversion or continuation of any Loan,  shall (except as otherwise  provided in
Section  3.11) be allocated  pro rata among the relevant  Lenders in  accordance
with the respective  Revolving Loan Commitment  Percentages of such Lenders (or,
if the  Commitments  of  such  Lenders  have  expired  or  been  terminated,  in
accordance with the respective  principal  amounts of the  outstanding  Loans of
such  Lenders);  provided  that,  if any  Lender  shall  have  failed to pay its
applicable pro rata share of any Revolving  Loan,  then any amount to which such
Lender would otherwise be entitled pursuant to this subsection (a) shall instead
be payable to the Agent  until the share of such Loan not funded by such  Lender
has been  repaid;  provided  further,  that in the event any amount  paid to any
Lender  pursuant  to this  subsection  (a) is  rescinded  or must  otherwise  be
returned by the Agent, each Lender shall,  upon the request of the Agent,  repay
to the Agent the amount so paid to such  Lender,  with  interest  for the period
commencing  on the date such payment is returned by the Agent until the date the
Agent receives such repayment at a rate per annum equal to, during the period to
but excluding  the date two Business Days after such request,  the Federal Funds
Rate, and thereafter, the Base Rate plus two percent (2%) per annum; and

     3.8 Sharing of Payments.

     The Lenders agree among  themselves  that,  except to the extent  otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any  Loan or any  other  obligation  owing  to such  Lender  under  this  Credit
Agreement  through  the  exercise  of  a  right  of  setoff,  banker's  lien  or
counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy
Code or other  security or interest  arising  from,  or in lieu of, such secured
claim,  received by such Lender under any applicable  bankruptcy,  insolvency or
other similar law or otherwise, or by any other means, in excess of its pro rata
share of such  payment as  provided  for in this Credit  Agreement,  such Lender
shall promptly pay in cash or purchase from the other Lenders a participation in
such  Loans  and  other  obligations  in  such  amounts,  and  make  such  other
adjustments from time to time, as shall be equitable to the end that all Lenders
share  such  payment  in  accordance  with their  respective  ratable  shares as
provided  for  in  this  Credit  Agreement.  The  Lenders  further  agree  among
themselves  that if payment to a Lender  obtained  by such  Lender  through  the
exercise of a right of setoff,  banker's  lien,  counterclaim  or other event as
aforesaid  shall be rescinded or must  otherwise be restored,  each Lender which
shall have shared the  benefit of such  payment  shall,  by payment in cash or a
repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued  interest  payable with respect thereto)
to each Lender whose  payment shall have been  rescinded or otherwise  restored.
The Borrower agrees that any Lender so purchasing  such a participation  may, to
the fullest extent permitted by law,  exercise all rights of payment,  including
setoff,  banker's lien or  counterclaim,  with respect to such  participation as
fully as if such  Lender were a holder of such Loan or other  obligation  in the
amount of such  participation.  Except as otherwise  expressly  provided in this
Credit Agreement,  if any Lender or an Agent shall fail to remit to the Agent or
any other Lender an amount payable by such Lender or such Agent to such Agent or
such other Lender pursuant to this Credit Agreement on the date when such amount
is due, such payments shall be made together with interest thereon for each date
from


                                       14
<PAGE>


the date such  amount is due until the date such amount is paid to such Agent or
such other Lender at a rate per annum equal to the Federal  Funds Rate. If under
any applicable bankruptcy,  insolvency or other similar law, any Lender receives
a secured  claim in lieu of a setoff to which this  Section  3.8  applies,  such
Lender shall, to the extent practicable,  exercise its rights in respect of such
secured claim in a manner  consistent  with the rights of the Lenders under this
Section 3.8 to share in the benefits of any recovery on such secured claim.

     3.9 Capital Adequacy.

     If, after the date hereof,  any Lender has determined  that the adoption or
the becoming  effective of, or any change in, or any change by any  Governmental
Authority,  central bank or comparable agency charged with the interpretation or
administration   thereof  in  the   interpretation  or  administration  of,  any
applicable law, rule or regulation regarding capital adequacy,  or compliance by
such Lender, or its parent corporation,  with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable  agency, has or would have the effect of reducing the
rate of return on such Lender's (or parent corporation's) capital or assets as a
consequence of its  commitments  or obligations  hereunder to a level below that
which such Lender, or its parent  corporation,  could have achieved but for such
adoption,  effectiveness,  change or compliance  (taking into consideration such
Lender's (or parent  corporation's)  policies with respect to capital adequacy),
then,  upon notice  from such  Lender to the  Borrower,  the  Borrower  shall be
obligated  to pay to such  Lender  such  additional  amount or  amounts  as will
compensate  such  Lender  on an  after-tax  basis  (after  taking  into  account
applicable deductions and credits in respect of the amount indemnified) for such
reduction.  Each  determination  by any such Lender of amounts  owing under this
Section shall,  absent  manifest error, be conclusive and binding on the parties
hereto. This covenant shall survive the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.

     3.10 Inability To Determine Eurodollar Rate.

     If prior to the first day of any  Interest  Period,  the Agent  shall  have
determined in good faith (which  determination  shall be conclusive  and binding
upon the  Borrower)  that,  by reason of  circumstances  affecting  the relevant
market,  adequate  and  reasonable  means  do not  exist  for  ascertaining  the
Eurodollar  Rate for such  Interest  Period,  the Agent  shall give  telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as practicable
thereafter,  and will also give prompt  written notice to the Borrower when such
conditions no longer  exist.  If such notice is given (a) any  Eurodollar  Loans
requested to be made on the first day of such  Interest  Period shall be made as
Base Rate Loans, (b) any Loans that were to have been converted on the first day
of such Interest  Period to or continued as Eurodollar  Loans shall be converted
to or  continued  as Base Rate Loans and (c) any  outstanding  Eurodollar  Loans
shall be  converted,  on the first  day of such  Interest  Period,  to Base Rate
Loans.  Until such notice has been withdrawn by the Agent, no further Eurodollar
Loans shall be made or continued as such,  nor shall the Borrower have the right
to convert Base Rate Loans to Eurodollar Loans.


                                       15
<PAGE>


     3.11 Illegality to Make Eurodollar Loans.

     Notwithstanding  any other  provision  herein,  if the  adoption  of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring  after the Closing  Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement,  (a) such
Lender shall promptly give written notice of such  circumstances to the Borrower
and the Agent (which notice shall be withdrawn  whenever such  circumstances  no
longer exist),  (b) the commitment of such Lender  hereunder to make  Eurodollar
Loans,  continue  Eurodollar  Loans  as such and  convert  a Base  Rate  Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such Lender to make or maintain  Eurodollar  Loans,  such
Lender  shall  then  have a  commitment  only to make a Base  Rate  Loan  when a
Eurodollar  Loan is requested and (c) such Lender's  Loans then  outstanding  as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective  last days or the then current  Interest  Periods with respect to
such  Loans or within  such  earlier  period  as  required  by law.  If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current  Interest  Period with respect  thereto,  the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.

     3.12 Changes in Requirements of Law.

     If the  adoption  of or any  change  in  any  Requirement  of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender  with any  request or  directive  (whether or not having the force of
law) from any central bank or other  Governmental  Authority,  in each case made
subsequent  to the  Closing  Date (or,  if later,  the date on which such Lender
becomes a Lender):

          (a) shall subject such Lender to any tax of any kind  whatsoever  with
     respect  to any  Eurodollar  Loans  made  by it or its  obligation  to make
     Eurodollar  Loans,  or change the basis of  taxation  of  payments  to such
     Lender in respect thereof (except for Non-Excluded Taxes covered by Section
     3.13 (including  Non-Excluded Taxes imposed solely by reason of any failure
     of such Lender to comply with its  obligations  under Section  3.13(b)) and
     changes in taxes  measured by or imposed  upon the  overall net income,  or
     franchise  tax (imposed in lieu of such net income tax),  of such Lender or
     its applicable lending office, branch, or any affiliate thereof);

          (b) shall  impose,  modify or hold  applicable  any  reserve,  special
     deposit,  compulsory  loan or similar  requirement  against assets held by,
     deposits or other liabilities in or for the account of, advances,  loans or
     other  extensions of credit by, or any other  acquisition  of funds by, any
     office of such Lender which is not otherwise  included in the determination
     of the Eurodollar Rate hereunder; or

          (c) shall impose on such Lender any other condition (excluding any tax
     of any kind whatsoever);

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar


                                       16
<PAGE>


Loans or to reduce any amount receivable hereunder in respect thereof,  then, in
any such case, upon notice to the Borrower from such Lender,  through the Agent,
in  accordance  herewith,  the Borrower  shall be obligated to promptly pay such
Lender,  upon its demand,  any additional  amounts  necessary to compensate such
Lender on an after-tax  basis (after taking into account  applicable  deductions
and credits in respect of the amount  indemnified)  for such  increased  cost or
reduced  amount  receivable,  provided  that, in any such case, the Borrower may
elect to convert the Eurodollar Loans made by such Lender hereunder to Base Rate
Loans by giving the Agent at least one Business  Day's notice of such  election,
in which case the  Borrower  shall  promptly  pay to such  Lender,  upon demand,
without  duplication,  such  amounts,  if any,  as may be  required  pursuant to
Section 3.14. If any Lender  becomes  entitled to claim any  additional  amounts
pursuant to this Section  3.12, it shall  provide  prompt notice  thereof to the
Borrower,  through the Agent, certifying (x) that one of the events described in
this Section 3.12 has occurred and describing in reasonable detail the nature of
such event,  (y) as to the increased cost or reduced amount  resulting from such
event  and  (z) as to the  additional  amount  demanded  by  such  Lender  and a
reasonably detailed explanation of the calculation  thereof.  Such a certificate
as to any additional  amounts payable pursuant to this Section 3.12 submitted by
such Lender,  through the Agent, to the Borrower shall be conclusive and binding
on the parties  hereto in the absence of manifest  error.  This  covenant  shall
survive the  termination  of this Credit  Agreement and the payment of the Loans
and all other amounts payable hereunder.

     3.13 Taxes.

     Except as provided  below in this Section  3.13,  all payments  made by the
Borrower under this Credit  Agreement and any Notes shall be made free and clear
of, and without  deduction or  withholding  for or on account of, any present or
future income, stamp or other taxes, levies,  imposts,  duties,  charges,  fees,
deductions  or  withholdings,  now  or  hereafter  imposed,  levied,  collected,
withheld  or  assessed  by any  court,  or  governmental  body,  agency or other
official,  excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes,  branch taxes,  taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable  lending office, or
any  branch or  affiliate  thereof,  in each case  imposed in lieu of net income
taxes: (i) by the jurisdiction  under the laws of which such Lender,  applicable
lending office,  branch or affiliate is organized or is located, or in which its
principal  executive  office  is  located,  or  any  nation  within  which  such
jurisdiction is located or any political  subdivision thereof; or (ii) by reason
of any connection  between the  jurisdiction  imposing such tax and such Lender,
applicable  lending office,  branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its obligations,
or received  payment under or enforced,  this Credit  Agreement or any Notes. If
any such non-excluded taxes, levies, imposts,  duties, charges, fees, deductions
or  withholdings  ("Non-Excluded  Taxes") are  required to be withheld  from any
amounts payable to an Agent or any Lender  hereunder or under any Notes, (A) the
amounts so payable to an Agent or such Lender  shall be  increased to the extent
necessary to yield to an Agent or such Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts  payable  hereunder at the rates or in
the amounts specified in this Credit Agreement and any Notes, provided, however,
that the  Borrower  shall be entitled to deduct and  withhold  any  Non-Excluded
Taxes and shall not be  required  to increase  any such  amounts  payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the  requirements of paragraph
(b) of this Section 3.13 whenever any Non-Excluded Taxes are payable by the

                                       17
<PAGE>


Borrower,  and (B) as promptly as possible  after  requested the Borrower  shall
send to such Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original  official  receipt  received by the
Borrower showing payment thereof.  If the Borrower fails to pay any Non-Excluded
Taxes  when due to the  appropriate  taxing  authority  or fails to remit to the
Agent the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and any Lender for any incremental taxes,  interest or
penalties  that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.

     3.14 Indemnity as to Eurodollar Loans.

     The  Borrower  promises  to  indemnify  each Lender and to hold each Lender
harmless  from any loss or expense  which such  Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of,  conversion
into or continuation  of Eurodollar  Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit  Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar  Loan after
the Borrower has given a notice  thereof in  accordance  with the  provisions of
this Credit  Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto. Such
indemnification  may include an amount equal to (i) the amount of interest which
would have accrued on the amount so prepaid,  or not so  borrowed,  converted or
continued, for the period from the date of such prepayment or of such failure to
borrow,  convert or continue to the last day of the applicable  Interest  Period
(or,  in the case of a failure to  borrow,  convert or  continue,  the  Interest
Period that would have  commenced  on the date of such  failure) in each case at
the applicable  rate of interest for such  Eurodollar  Loans provided for herein
(excluding,  however, the Applicable  Percentage included therein, if any) minus
(ii) the amount of interest (as  reasonably  determined  by such  Lender)  which
would have  accrued to such  Lender on such  amount by  placing  such  amount on
deposit for a comparable  period with leading banks in the interbank  Eurodollar
market.  The  agreements in this Section shall survive the  termination  of this
Credit  Agreement  and the  payment of the Loans and all other  amounts  payable
hereunder.

                                    SECTION 4

                                    GUARANTY

     4.1 Guaranty of Payment.

     Subject to Section 4.7 below,  each of the Guarantors  hereby,  jointly and
severally,  unconditionally  guarantees  to each Lender and the Agent the prompt
payment of the Credit  Party  Obligations  in full when due  (whether  at stated
maturity,  as  a  mandatory  prepayment,  by  acceleration  or  otherwise).  The
Guarantors  additionally,  jointly and severally,  unconditionally  guarantee to
each Lender, and the Agent the timely performance of all other obligations under
the  Credit  Documents.  This  Guaranty  is a  guaranty  of  payment  and not of
collection  and is a  continuing  guaranty  and shall apply to all Credit  Party
Obligations whenever arising.


                                       18
<PAGE>


     4.2 Obligations Unconditional.

     The obligations of the Guarantors hereunder are absolute and unconditional,
irrespective of the value, genuineness,  validity,  regularity or enforceability
of any of the Credit Documents, or any other agreement or instrument referred to
therein, to the fullest extent permitted by applicable law,  irrespective of any
other  circumstance  whatsoever  which  might  otherwise  constitute  a legal or
equitable  discharge or defense of a surety or guarantor.  Each Guarantor agrees
that this  Guaranty may be enforced by the Lenders  without the necessity at any
time of resorting to or exhausting  any other security or collateral and without
the  necessity  at any time of having  recourse to the Notes or any other of the
Credit Documents or any collateral,  if any, hereafter securing the Credit Party
Obligations or otherwise and each Guarantor hereby waives the right  (including,
without  limitation,  any rights under  Section  26-7 et seq. of North  Carolina
General  Statutes) to require the Lenders to proceed against the Borrower or any
other Person  (including a co-guarantor) or to require the Lenders to pursue any
other remedy or enforce any other right.  Each Guarantor  further agrees that it
shall have no right of  subrogation,  indemnity,  reimbursement  or contribution
against the Borrower or any other Guarantor of the Credit Party  Obligations for
amounts paid under this  Guaranty  until such time as the Lenders have been paid
in full, all Commitments  under the Credit Agreement have been terminated and no
Person or  Governmental  Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit  Documents.  Each  Guarantor  further  agrees that nothing  contained
herein  shall  prevent the  Lenders  from suing on the Notes or any of the other
Credit  Documents  or  foreclosing  its  security  interest  in or  Lien  on any
collateral, if any, securing the Credit Party Obligations or from exercising any
other rights available to it under this Credit  Agreement,  the Notes, any other
of the Credit  Documents,  or any other instrument of security,  if any, and the
exercise of any of the aforesaid  rights and the  completion of any  foreclosure
proceedings  shall  not  constitute  a  discharge  of  any  of  any  Guarantor's
obligations  hereunder;  it being the purpose and intent of each  Guarantor that
its obligations hereunder shall be absolute, independent and unconditional under
any and all  circumstances.  Neither  any  Guarantor's  obligations  under  this
Guaranty nor any remedy for the enforcement thereof shall be impaired, modified,
changed or released in any manner  whatsoever  by an  impairment,  modification,
change,  release or  limitation of the liability of the Borrower or by reason of
the bankruptcy or insolvency of the Borrower.  Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Credit Party
Obligations  and  notice of or proof of  reliance  of by any Agent or any Lender
upon  this  Guarantee  or  acceptance  of  this  Guarantee.   The  Credit  Party
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred,  or renewed,  extended,  amended or waived,  in reliance
upon  this  Guarantee.  All  dealings  between  the  Borrower  and  any  of  the
Guarantors,  on the one hand, and the Agent and the Lenders,  on the other hand,
likewise  shall be  conclusively  presumed  to have been had or  consummated  in
reliance upon this Guarantee.

     4.3 Modifications.

     Each  Guarantor  agrees  that  (a) all or any part of the  security  now or
hereafter  held for the Credit  Party  Obligations,  if any,  may be  exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect,  perfect,  secure or insure any such security  interests,
liens or  encumbrances  now or  hereafter  held,  if any,  for the Credit  Party
Obligations or the properties subject thereto;  (c) the time or place of payment
of the Credit Party Obligations may be


                                       19
<PAGE>

changed or extended,  in whole or in part, to a time certain or  otherwise,  and
may be renewed or  accelerated,  in whole or in part;  (d) the  Borrower and any
other  party  liable  for  payment  under the  Credit  Documents  may be granted
indulgences  generally;  (e) any of the  provisions  of the  Notes or any of the
other  Credit  Documents  may be  modified,  amended  or  waived;  (f) any party
(including  any  co-guarantor)  liable for the  payment  thereof  may be granted
indulgences  or be released;  and (g) any deposit  balance for the credit of the
Borrower  or any  other  party  liable  for  the  payment  of the  Credit  Party
Obligations or liable upon any security therefor may be released, in whole or in
part, at, before or after the stated,  extended or  accelerated  maturity of the
Credit  Party  Obligations,  all  without  notice to or  further  assent by such
Guarantor, which shall remain bound thereon,  notwithstanding any such exchange,
compromise,   surrender,   extension,   renewal,   acceleration,   modification,
indulgence or release.

     4.4 Waiver of Rights.

     Each  Guarantor  expressly  waives  to  the  fullest  extent  permitted  by
applicable  law: (a) notice of acceptance of this Guaranty by the Lenders and of
all  extensions of credit to the Borrower by the Lenders;  (b)  presentment  and
demand for payment or  performance of any of the Credit Party  Obligations;  (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit  Agreement)  with  respect to the Credit  Party  Obligations  or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance,  if any, hereafter  securing the Credit Party  Obligations,  or the
Lenders'  subordinating,  compromising,  discharging  or releasing such security
interests,  liens or  encumbrances,  if any; (e) all other notices to which such
Guarantor  might  otherwise be entitled;  and (f) demand for payment  under this
Guaranty.

     4.5 Reinstatement.

     The   obligations  of  the  Guarantors   under  this  Section  4  shall  be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf  of any  Person in  respect  of the  Credit  Party  Obligations  is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations,   whether  as  a  result  of  any   proceedings  in  bankruptcy  or
reorganization  or otherwise,  and each Guarantor  agrees that it will indemnify
the  Agent  and each  Lender on demand  for all  reasonable  costs and  expenses
(including,  without  limitation,  reasonable  fees of counsel)  incurred by the
Agent  or such  Lender  in  connection  with  such  rescission  or  restoration,
including  any such costs and expenses  incurred in defending  against any claim
alleging  that such payment  constituted a  preference,  fraudulent  transfer or
similar payment under any bankruptcy, insolvency or similar law.

     4.6 Remedies.

     The Guarantors agree that, as between the Guarantors,  on the one hand, and
the Agent and the Lenders,  on the other hand, the Credit Party  Obligations may
be declared to be forthwith  due and payable as provided in Section 9 (and shall
be deemed to have  become  automatically  due and  payable in the  circumstances
provided in Section 9) notwithstanding any stay, injunction or other prohibition
preventing such  declaration (or preventing such Credit Party  Obligations  from
becoming automatically due and payable) as against any other Person and that, in
the event of such


                                       20
<PAGE>

declaration  (or such  Credit  Party  Obligations  being  deemed to have  become
automatically due and payable),  such Credit Party  Obligations  (whether or not
due and payable by any other Person) shall  forthwith  become due and payable by
the Guarantors.

     4.7 Limitation of Guaranty.

     Notwithstanding any provision to the contrary contained herein or in any of
the other Credit Documents, to the extent the obligations of any Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including, without
limitation,  because  of  any  applicable  state  or  federal  law  relating  to
fraudulent  conveyances  or transfers)  then the  obligations  of such Guarantor
hereunder  shall be limited to the  maximum  amount  that is  permissible  under
applicable law (whether federal or state and including,  without limitation, the
Bankruptcy Code).

                                    SECTION 5

                              CONDITIONS PRECEDENT

     5.1 Closing Conditions.

     The obligation of the Lenders to enter into this Credit  Agreement and make
the initial  Extension  of Credit is subject to  satisfaction  of the  following
conditions:

          (a) Executed Credit  Documents.  Receipt by the Agent of duly executed
     copies of: (i) this Credit  Agreement;  (ii) the Notes; and (iii) all other
     Credit Documents,  each in form and substance reasonably  acceptable to the
     Agent in its sole discretion.

          (b) Partnership Documents. Receipt by the Agent of the following:

               (i) Certificates of  Authorization.  Certificate of authorization
          of the general  partner of the  Borrower  (and each other Credit Party
          that  is a  partnership)  as of  the  Effective  Date,  approving  and
          adopting the Credit  Documents to be executed by the Borrower (or such
          other  Credit  Party)  and  authorizing  the  execution  and  delivery
          thereof.

               (ii) Partnership  Agreement.  Certified copies of the partnership
          agreement  of the  Borrower  (and each  other  Credit  Party that is a
          partnership), together with all amendments thereto.

               (iii) Certificates of Good Standing or Existence.  Certificate of
          good  standing or existence  for the  Borrower  (and each other Credit
          Party that is a  partnership)  issued as of a recent date by its state
          of  organization  and each other state where the failure to qualify or
          be in good standing could have a Material Adverse Effect.

          (c) Corporate Documents. Receipt by the Agent of the following:


                                       21
<PAGE>

               (i) Charter Documents.  Copies of the articles or certificates of
          incorporation or other charter documents of Highwoods  Properties (and
          each other  Credit Party that is a  corporation)  certified to be true
          and  complete  as of a  recent  date by the  appropriate  Governmental
          Authority of the state or other  jurisdiction of its incorporation and
          certified  by  a  secretary   or  assistant   secretary  of  Highwoods
          Properties  (and each other Credit Party that is a corporation)  to be
          true and correct as of the Effective Date.

               (ii) Bylaws.  A copy of the bylaws of Highwoods  Properties  (and
          each  other  Credit  Party  that  is  a  corporation)  certified  by a
          secretary or assistant  secretary of Highwoods  Properties  to be true
          and correct as of the Effective Date.

               (iii)  Resolutions.   Copies  of  resolutions  of  the  Board  of
          Directors of Highwoods Properties (and each other Credit Party that is
          a corporation) approving and adopting the Credit Documents to which it
          is a party,  the  transactions  contemplated  therein and  authorizing
          execution and delivery thereof,  certified by a secretary or assistant
          secretary of Highwoods Properties (and each other Credit Party that is
          a  corporation)  to be true and  correct and in force and effect as of
          the Effective Date.

               (iv) Good Standing.  Copies of (A) certificates of good standing,
          existence or its equivalent with respect to Highwoods  Properties (and
          each other  Credit  Party  that is a  corporation)  certified  as of a
          recent date by the appropriate  Governmental  Authorities of the state
          or other  jurisdiction of incorporation and each other jurisdiction in
          which the failure to so qualify and be in good  standing  could have a
          Material Adverse Effect and (B) to the extent available, a certificate
          indicating payment of all corporate  franchise taxes certified as of a
          recent date by the appropriate governmental taxing authorities.

               (v) Incumbency. An incumbency certificate of Highwoods Properties
          (and each other  Credit  Party that is a  corporation)  certified by a
          secretary  or  assistant  secretary  to be true and  correct as of the
          Effective Date.

          (d) Financial Statements.  Receipt by the Agent and the Lenders of the
     audited consolidated  financial statements of the Credit Parties,  dated as
     of December 31, 1996, and the unaudited  consolidated  financial statements
     of the Credit Parties dated as of September 30, 1997.

          (e)  Opinion  of  Counsel.  Receipt  by the  Agent of an  opinion,  or
     opinions  (which  shall cover,  among other  things,  authority,  legality,
     validity,  binding effect, and enforceability),  reasonably satisfactory to
     the Agent,  addressed to the Agent on behalf of the Lenders and dated as of
     the Effective Date, from legal counsel to the Credit Parties.

          (f) Evidence of Insurance. Receipt by the Agent of copies of insurance
     policies or  certificates  of  insurance of the Credit  Parties  evidencing
     liability and casualty  insurance


                                       22
<PAGE>

     meeting the requirements set forth in the Credit Documents,  including, but
     not limited to,  naming the Agent as secondary  loss payee on behalf of the
     Lenders  subject only to a first priority loss payee clause relating to the
     Related Credit Facilities.

          (g) Material  Adverse  Effect.  There shall not have occurred a change
     since  December  31, 1996 that has had or could  reasonably  be expected to
     have a Material Adverse Effect.

          (h)  Litigation.  There  shall  not exist any  pending  or  threatened
     action, suit, investigation or proceeding against a Credit Party that would
     have or would reasonably be expected to have a Material Adverse Effect.

          (i)   Officer's   Certificates.   The  Agent  shall  have  received  a
     certificate or certificates executed by the general partner of the Borrower
     and the chief  financial  officer  of the  Highwoods  Properties  as of the
     Effective  Date  stating  that  (i)  each  of the  Borrower  and  Highwoods
     Properties  is  in  compliance   with  all  existing   material   financial
     obligations,  (ii) no action, suit,  investigation or proceeding is pending
     or  threatened  in any  court or  before  any  arbitrator  or  governmental
     instrumentality that purports to effect any Credit Party or any transaction
     contemplated by the Credit Documents,  if such action, suit,  investigation
     or proceeding could have or could be reasonably expected to have a Material
     Adverse Effect,  (iii) the financial  statements and information  delivered
     pursuant to Section  5.1(d) are true and accurate in all material  respects
     and (iv) except for the  matters  noted in such  certificates,  immediately
     after giving effect to this Credit  Agreement,  the other Credit  Documents
     and all the  transactions  contemplated  therein to occur on such date, (A)
     each Credit  Party is Solvent,  (B) no Default or Event of Default  exists,
     (C) all  representations  and warranties  contained herein and in the other
     Credit Documents are true and correct in all material respects, and (D) the
     Credit  Parties  are in  compliance  with all  requirements  of the Related
     Credit Facilities.

          (j) Fees and Expenses.  Payment by the Credit  Parties of all fees and
     expenses  owed by them to the  Lenders  and the Agent,  including,  without
     limitation, payment to the Agent of the fees set forth in the Fee Letter.

          (k)  Other.   Receipt  by  the   Lenders  of  such  other   documents,
     instruments,  agreements or information as reasonably and timely  requested
     by any  Lender,  including,  but  not  limited  to,  information  regarding
     litigation, tax, accounting,  labor, insurance, pension liabilities (actual
     or contingent),  real estate leases,  material contracts,  debt agreements,
     property ownership and contingent liabilities of the Credit Parties.

     5.2 Conditions to All Loans.

     In  addition to the  conditions  precedent  stated  elsewhere  herein,  the
Lenders  shall not be  obligated  to make Loans (or  continue or convert  Loans)
unless:

          (a) Notice.  The Borrower  shall have delivered a Notice of Borrowing,
     duly executed and completed, by the time specified in Section 2.1.

                                       23
<PAGE>

          (b) Representations and Warranties. The representations and warranties
     made by the Credit  Parties in any Credit  Document are true and correct in
     all  material  respects  at and as if made as of such  date  except  to the
     extent they expressly relate to an earlier date;

          (c) No  Default.  No  Default or Event of  Default  shall  exist or be
     continuing either prior to or after giving effect thereto;

          (d) No Material  Adverse  Effect.  There shall not have  occurred  any
     Material Adverse Effect;

          (e)  Availability.  Immediately after giving effect to the making of a
     Revolving Loan (and the  application of the proceeds  thereof),  the sum of
     the Revolving Loans outstanding  shall not exceed the Revolving  Commitment
     Amount; and

          (f) Related Facility Conditions. All other conditions precedent to the
     obligation of the Related Facility Lenders to make a loan under the Related
     Credit Facility shall have been and remain satisfied;

provided  that the matters  referred to in the  certificate  required by Section
5.1(i)  hereto  shall not excuse a Lender from its  obligations  hereunder.  The
delivery of each Notice of Borrowing and each Notice of  Continuation/Conversion
shall  constitute  a  representation   and  warranty  by  the  Borrower  of  the
correctness of the matters specified in this Section 5.2.

                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES

     6.1  Incorporation.  The  representations  and warranties  contained in the
Related Credit Agreement (the "Incorporated Representations") as in effect as of
the date  thereof are  incorporated  herein by  reference  as such  Incorporated
Representations  relate to the  Closing  Date,  this  Agreement  and the  credit
facilities  provided  hereunder with the same effect as if stated at length. The
Credit  Parties  affirm and  represent  and warrant to the Agent and the Lenders
that the  Incorporated  Representations  are true and  correct  in all  material
respects  as  of  the  date  hereof,   provided   that  (i)  such   Incorporated
Representations as incorporated  herein shall reflect that they are delivered to
and run in favor of the Agent and the Lenders hereunder,  and references therein
to the "Credit  Agreement" and "Credit  Documents"  shall be deemed for purposes
hereof to  include  this  Credit  Agreement  and the Credit  Documents  relating
hereto,   (ii)   any   amendments   or   modifications   to  such   Incorporated
Representations subsequent to the date hereof must be consented to in writing by
the Lenders hereunder,  and (iii) in the event that the Related Credit Agreement
shall be refinanced or replaced by another credit  agreement or shall  otherwise
expire or terminate, then the Incorporated Representations shall be as in effect
immediately prior to such refinancing,  replacement,  expiration or termination.
All capitalized terms used in such Incorporated  Representations  shall have the
meaning  ascribed thereto in the Related Credit


                                       24
<PAGE>

Agreement,  but as such  meaning  would be  determined  relative  to this Credit
Agreement and the Credit Documents.

     6.2 Material  Adverse  Effect.  The financial  statements  delivered by the
Credit  Parties  pursuant to Section  5.1(d)  accurately  reflect the  financial
condition of the Credit  Parties as of the  respective  dates of such  financial
statements and there has been no material  change in the financial  condition of
the Credit Parties since  September 30, 1997 and no other change in the business
or assets of the Credit Parties which has resulted or could result in a Material
Adverse Effect.

                                    SECTION 7

                              AFFIRMATIVE COVENANTS

     7.1  Incorporation.  The  affirmative  covenants  contained  in the Related
Credit  Agreement  other than those set forth in all of Section 7.10 (other than
Section  7.10(c) which is  incorporated  hereby),  and Section 7.12 thereof (the
"Incorporated  Affirmative  Covenants")  as in effect as of the date thereof are
incorporated  herein by reference  as such  Incorporated  Affirmative  Covenants
relate to the Closing Date,  this Agreement and the credit  facilities  provided
hereunder with the same effect as if stated at length. The Credit Parties affirm
and  represent  and warrant to the Agent and the Lenders  that the  Incorporated
Affirmative  Covenants shall be as binding on the Credit Parties as if fully set
forth  herein,  provided  that (i) such  Incorporated  Affirmative  Covenants as
incorporated herein shall reflect that they are delivered to and run in favor of
the Agent and the  Lenders  hereunder,  and  references  therein to the  "Credit
Agreement" and "Credit Documents" shall be deemed for purposes hereof to include
this  Credit  Agreement  and the  Credit  Documents  relating  hereto,  (ii) any
amendments  or  modifications  to  such   Incorporated   Affirmative   Covenants
subsequent  to the date  hereof must be  consented  to in writing by the Lenders
hereunder,  and (iii) in the event that the Related  Credit  Agreement  shall be
refinanced or replaced by another credit  agreement or shall otherwise expire or
terminate,  then  the  Incorporated   Representations  shall  be  as  in  effect
immediately prior to such refinancing,  replacement,  expiration or termination.
Notwithstanding  the  above,  the prior  waivers  and  consents  affecting  such
Incorporated  Affirmative  Covenants  granted  pursuant to that Letter Agreement
constituting a portion of the Related Credit  Agreement shall also apply to such
Incorporated  Affirmative Covenants under this Credit Agreement. All capitalized
terms used in such  Incorporated  Affirmative  Covenants  shall have the meaning
ascribed thereto in the Related Credit  Agreement,  but as such meaning would be
determined relative to this Credit Agreement and the Credit Documents.





                                       25
<PAGE>

                                    SECTION 8

                               NEGATIVE COVENANTS

     8.1 Incorporation.  The negative covenants  contained in the Related Credit
Agreement (the  "Incorporated  Negative  Covenants") as in effect as of the date
thereof are  incorporated  herein by  reference  as such  Incorporated  Negative
Covenants  relate to the Closing Date, this Agreement and the credit  facilities
provided  hereunder  with the same  effect as if stated at  length.  The  Credit
Parties  affirm and  represent and warrant to the Agent and the Lenders that the
Incorporated  Negative Covenants shall be as binding on the Credit Parties as if
fully set forth herein,  provided that (i) such Incorporated  Negative Covenants
as incorporated herein shall reflect that they are delivered to and run in favor
of the Agent and the Lenders  hereunder,  and references  therein to the "Credit
Agreement" and "Credit Documents" shall be deemed for purposes hereof to include
this  Credit  Agreement  and the  Credit  Documents  relating  hereto,  (ii) any
amendments or modifications to such Incorporated  Negative Covenants  subsequent
to the date hereof must be consented to in writing by the Lenders hereunder, and
(iii) in the event that the Related  Credit  Agreement  shall be  refinanced  or
replaced by another  credit  agreement or shall  otherwise  expire or terminate,
then the Incorporated Negative Covenants shall be as in effect immediately prior
to such refinancing, replacement, expiration or termination. Notwithstanding the
above,  the prior  waivers and consents  affecting  such  Incorporated  Negative
Covenants  granted pursuant to that Letter  Agreement  constituting a portion of
the Related  Credit  Agreement  shall also apply to such  Incorporated  Negative
Covenants  under  this  Credit  Agreement.  All  capitalized  terms used in such
Incorporated  Negative  Covenants shall have the meaning ascribed thereto in the
Related Credit  Agreement,  but as such meaning would be determined  relative to
this Credit Agreement and the Credit Documents.

                                    SECTION 9

                                EVENTS OF DEFAULT

     9.1  Incorporation.  The events of default  contained in the Related Credit
Agreement  (the  "Incorporated  Events of  Default") as in effect as of the date
thereof are  incorporated  herein by  reference as such  Incorporated  Events of
Default  relate to the Closing Date,  this  Agreement and the credit  facilities
provided  hereunder  with the same  effect as if stated at  length.  The  Credit
Parties  acknowledge  and  agree  that the  Incorporated  Events of  Default  as
incorporated herein shall reflect that they are for the benefit of the Agent and
the Lenders  hereunder,  and  references  therein to the "Credit  Agreement" and
"Credit  Documents"  shall be deemed for purposes  hereof to include this Credit
Agreement  and the Credit  Documents  relating  hereto,  (ii) any  amendments or
modifications  to such  Incorporated  Events of Default  subsequent  to the date
hereof must be  consented to in writing by the Lenders  hereunder,  and (iii) in
the event that the Related Credit  Agreement  shall be refinanced or replaced by
another  credit  agreement  or shall  otherwise  expire or  terminate,  then the
Incorporated  Events of Default shall be as in effect  immediately prior to such
refinancing,  replacement, expiration or termination. All capitalized terms used
in such  Incorporated  Events of Default shall have the meaning ascribed thereto
in the  Related  Credit


                                       26
<PAGE>

Agreement,  but as such  meaning  would be  determined  relative  to this Credit
Agreement and the Credit Documents.

     9.2 Additional Events of Default.

     Except as set forth in the  proviso  of  Section  5.2,  an Event of Default
shall exist upon the occurrence of any of the following  specified  events (each
an "Event of Default"):

          (a) Payment. Any Credit Party shall default in the payment within five
     (5) days of when due of (i) any  principal  of any of the Loans or (ii) any
     interest on the Loans or (iii) any fees or other amounts  owing  hereunder,
     under any of the other Credit Documents or in connection herewith.

          (b) Breach of  Representations or Covenants.  (i) Any  representation,
     warranty or statement made or deemed to be made by any Credit Party herein,
     in any of the other Credit  Documents,  or in any statement or  certificate
     delivered  or required to be  delivered  pursuant  hereto or thereto  shall
     prove untrue in any material respect on the date as of which it was made or
     deemed to have been made or (ii) any Credit Party shall  default in the due
     performance  or observance of any covenant or the terms and  conditions set
     forth in the Credit Documents,  and such default shall continue  unremedied
     for the time period,  if any,  provided for in the  Incorporated  Events of
     Default.

          (c) Related Credit Agreement. An Event of Default (as defined therein)
     shall occur under the Related Credit Agreement.

     9.3 Acceleration; Remedies.

     Upon the  occurrence  of an Event of  Default,  and at any time  thereafter
(including  with respect to an Event of Default  under  section  9.2(c) any time
after such Event of Default (as defined therein) may be waived under the Related
Credit  Agreement)  unless and until such  Event of Default  has been  waived in
writing by the  Required  Lenders  hereunder  (or the Lenders as may be required
hereunder),  the Agent  shall,  upon the request and  direction  of the Required
Lenders,  (or if in the reasonable judgment of the Agent there is not sufficient
time to obtain the consent of the  Required  Lenders then on its own) by written
notice to the Borrower,  take any of the following  actions without prejudice to
the rights of the Agent or any Lender to enforce  its claims  against the Credit
Parties, except as otherwise specifically provided for herein:

          (a)  Termination of Commitments.  Declare the  Commitments  terminated
     whereupon the Commitments shall be immediately terminated.

          (b)  Acceleration  of Loans.  Declare the unpaid  principal of and any
     accrued interest in respect of all Loans and any and all other indebtedness
     or  obligations of any and every kind owing by a Credit Party to any of the
     Lenders hereunder to be due whereupon the same shall be immediately due and
     payable without presentment,  demand,  protest or other notice of any kind,
     all of which are hereby waived by the Credit Parties.

                                       27
<PAGE>

          (c)  Enforcement  of Rights.  Enforce any and all rights and interests
     created  and  existing  under  the  Credit  Documents,  including,  without
     limitation,  all rights and remedies  against the Guarantors and all rights
     of set-off.

Notwithstanding  the foregoing,  if an Event of Default specified in Section 9.1
shall occur as a result of the  incorporation  of Section  9.1(f) of the Related
Credit  Agreement,  then the Commitments shall  automatically  terminate and all
Loans, all accrued interest in respect thereof,  all accrued and unpaid fees and
other   indebtedness  or  obligations  owing  to  the  Lenders  hereunder  shall
immediately  become due and  payable  without  the giving of any notice or other
action by the Agent or the  Lenders,  which  notice or other action is expressly
waived by the Credit Parties.

Notwithstanding  the fact that  enforcement  powers  reside  primarily  with the
Agent,  each  Lender has, to the extent  permitted  by law, a separate  right of
payment and shall be considered a separate "creditor" holding a separate "claim"
within  the  meaning  of  Section  101(5)  of the  Bankruptcy  Code or any other
insolvency statute.

     9.4 Allocation of Payments After Event of Default.

     Notwithstanding  any other provisions of this Credit  Agreement,  after the
occurrence  and during  the  continuance  of an Event of  Default,  all  amounts
collected  or  received  by the  Agent  or any  Lender  on  account  of  amounts
outstanding under any of the Credit Documents shall be paid over or delivered as
follows:

          FIRST,  to the  payment  of all  reasonable  out-of-pocket  costs  and
     expenses (including without limitation  reasonable  attorneys' fees) of the
     Agent in  connection  with  enforcing  the rights of the Lenders  under the
     Credit Documents;

          SECOND, to payment of any fees owed to the Agent;

          THIRD,  to the  payment  of all  reasonable  out-of-pocket  costs  and
     expenses,  (including,  without limitation,  reasonable attorneys' fees) of
     each of the  Lenders in  connection  with  enforcing  its rights  under the
     Credit Documents;

          FOURTH, to the payment of all accrued fees and interest payable to the
     Lenders hereunder;

          FIFTH,  to the  payment  of the  outstanding  principal  amount of the
     Loans;

          SIXTH,  to all other  obligations  which  shall  have  become  due and
     payable  under the  Credit  Documents  and not repaid  pursuant  to clauses
     "FIRST" through "FIFTH" above; and

          SEVENTH,  to the  payment of the  surplus,  if any,  to whoever may be
     lawfully entitled to receive such surplus.

In carrying  out the  foregoing,  (a) amounts  received  shall be applied in the
numerical  order  provided  until  exhausted  prior to  application  to the next
succeeding  category;  and (b) each of the Lenders


                                       28
<PAGE>

shall  receive an amount  equal to its pro rata share  (based on the  proportion
that the then outstanding Loans, held by such Lender bears to the aggregate then
outstanding  Loans) of  amounts  available  to be  applied  pursuant  to clauses
"THIRD", "FOURTH," "FIFTH," and "SIXTH" above.

                                   SECTION 10

                                AGENCY PROVISIONS

     10.1 Appointment.

     Each Lender hereby  designates and appoints  NationsBank,  N.A. as Agent of
such Lender to act as specified herein and the other Credit Documents,  and each
such Lender hereby  authorizes the Agent, as the agent for such Lender,  to take
such action on its behalf under the provisions of this Credit  Agreement and the
other Credit  Documents  and to exercise  such powers and perform such duties as
are expressly  delegated by the terms hereof and of the other Credit  Documents,
together  with  such  other  powers  as  are  reasonably   incidental   thereto.
Notwithstanding  any provision to the contrary elsewhere herein and in the other
Credit  Documents,  the  Agent  shall not have any  duties or  responsibilities,
except  those  expressly  set  forth  herein  and  therein,   or  any  fiduciary
relationship   with  any   Lender,   and  no   implied   covenants,   functions,
responsibilities,  duties,  obligations or  liabilities  shall be read into this
Credit Agreement or any of the other Credit Documents,  or shall otherwise exist
against the Agent.  The provisions of this Section are solely for the benefit of
the Agent and the Lenders and none of the Credit  Parties  shall have any rights
as a third  party  beneficiary  of the  provisions  hereof.  In  performing  its
functions and duties under this Credit Agreement and the other Credit Documents,
the Agent  shall act solely as an agent of the  Lenders  and does not assume and
shall not be deemed to have assumed any obligation or  relationship of agency or
trust with or for any Credit Party.

     10.2 Delegation of Duties.

     The Agent may execute any of its duties hereunder or under the other Credit
Documents  by or through  agents or  attorneys-in-fact  and shall be entitled to
advice of counsel  concerning all matters  pertaining to such duties.  The Agent
shall not be  responsible  for the  negligence  or  misconduct  of any agents or
attorneys-in-fact selected by it with reasonable care.

     10.3 Exculpatory Provisions.

     Neither the Agent nor any of its officers,  directors,  employees,  agents,
attorneys-in-fact  or  affiliates  shall be (a) liable  for any action  lawfully
taken  or  omitted  to be  taken by it or such  Person  under  or in  connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful  misconduct) or (b) responsible
in  any  manner  to  any  of  the   Lenders   for  any   recitals,   statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial  statement or other written or oral statement  referred to or provided
for in, or received by an Agent under or in connection herewith or in connection
with the other Credit Documents,  or  enforceability or sufficiency  therefor of
any of the other Credit Documents, or for


                                       29
<PAGE>

any failure of the Borrower to perform its obligations  hereunder or thereunder.
The  Agent  shall  not be  responsible  to any  Lender  for  the  effectiveness,
genuineness,  validity,  enforceability,  collectibility  or sufficiency of this
Credit   Agreement,   or  any  of  the  other   Credit   Documents  or  for  any
representations,  warranties,  recitals or statements  made herein or therein or
made by the Borrower or any Credit Party in any written or oral  statement or in
any financial or other  statements,  instruments,  reports,  certificates or any
other  documents in  connection  herewith or therewith  furnished or made by the
Agent to the  Lenders or by or on behalf of the  Credit  Parties to the Agent or
any Lender or be  required  to  ascertain  or inquire as to the  performance  or
observance of any of the terms, conditions,  provisions, covenants or agreements
contained  herein or therein or as to the use of the proceeds of the Loans or of
the  existence  or possible  existence  of any Default or Event of Default or to
inspect the properties,  books or records of the Credit Parties.  The Agent is a
not trustee for the Lenders and owes no fiduciary duty to the Lenders. The Agent
shall administer the facility evidenced by the Credit Documents similar to other
credits in which the Agent holds 100% of the credit exposure.

     10.4 Reliance on Communications.

     The  Agent  shall be  entitled  to rely,  and shall be fully  protected  in
relying,  upon any note,  writing,  resolution,  notice,  consent,  certificate,
affidavit,  letter,  cablegram,  telegram,  telecopy, telex or teletype message,
statement,  order or other document or conversation believed by it to be genuine
and  correct  and to have  been  signed,  sent or made by the  proper  Person or
Persons and upon advice and  statements  of legal  counsel  (including,  without
limitation,  counsel to any of the Credit Parties,  independent  accountants and
other experts  selected by the Agent with reasonable  care).  The Agent may deem
and treat the Lenders as the owner of its  interests  hereunder for all purposes
unless a written  notice of assignment,  negotiation  or transfer  thereof shall
have been filed with the Agent in  accordance  with Section  11.3(b).  The Agent
shall be fully  justified  in failing or refusing to take any action  under this
Credit  Agreement  or under any of the other  Credit  Documents  unless it shall
first  receive such advice or  concurrence  of the Required  Lenders as it deems
appropriate or it shall first be indemnified to its  satisfaction by the Lenders
against any and all  liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting,  hereunder or under any
of the other  Credit  Documents  in  accordance  with a request of the  Required
Lenders  (or to the  extent  specifically  provided  in  Section  11.6,  all the
Lenders)  and such  request  and any action  taken or  failure  to act  pursuant
thereto shall be binding upon all the Lenders  (including  their  successors and
assigns).

     10.5 Notice of Default.

     An Agent shall not be deemed to have  knowledge or notice of the occurrence
of any Default or Event of Default  hereunder (other than Section 9.1(a)) unless
such Agent has received  notice from a Lender or a Credit Party referring to the
Credit  Document,  describing  such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent  receives such
a notice,  the Agent shall give prompt notice thereof to the Lenders.  The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.



                                       30
<PAGE>

     10.6 Non-Reliance on Agent and Other Lenders.

     Each Lender  expressly  acknowledges  that  neither the Agent,  NationsBanc
Montgomery  Securities,  Inc.  ("NMSI")  nor any of their  officers,  directors,
employees, agents,  attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent,  NMSI or any affiliate thereof
hereinafter  taken,  including  any review of the  affairs of any Credit  Party,
shall be deemed to  constitute  any  representation  or warranty by the Agent or
NMSI to any Lender.  Each Lender  represents  to the Agent and NMSI that it has,
independently  and without  reliance upon the Agent or NMSI or any other Lender,
and based on such documents and information as it has deemed  appropriate,  made
its own appraisal of and investigation  into the business,  assets,  operations,
property, financial and other conditions,  prospects and creditworthiness of the
Credit  Parties and made its own decision to make its Loans  hereunder and enter
into  this  Credit  Agreement.   Each  Lender  also  represents  that  it  will,
independently and without reliance upon the Agent, NMSI or any other Lender, and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own credit  analysis,  appraisals  and  decisions in
taking or not  taking  action  under  this  Credit  Agreement,  and to make such
investigation as it deems necessary to inform itself as to the business, assets,
operations,   property,   financial   and  other   conditions,   prospects   and
creditworthiness of the Credit Parties.  The Agent shall promptly provide to the
Lenders  (a)  copies of all  notices of  Defaults  or Events of Default or other
notices  received in accordance  with Section 11.1,  (b) copies of all financial
statements,  certificates  and  other  information  sent  to it by the  Borrower
pursuant to Article 7, (c) any written  information  it receives  regarding  the
unsecured debt rating of Highwoods  Properties  and (d) such other  documents or
notices  received  by the Agent  pursuant to this  Agreement  and  requested  in
writing by a Lender.  Except for notices,  reports and other documents expressly
required to be  furnished to the Lenders by the Agent  hereunder,  the Agent and
NMSI shall not have any duty or  responsibility  to provide  any Lender with any
credit  or  other  information  concerning  the  business,  operations,  assets,
property,  financial or other conditions,  prospects or  creditworthiness of the
Credit Parties which may come into the  possession of the Agent,  NMSI or any of
their officers, directors, employees, agents, attorneys-in-fact or affiliates.

     10.7 Indemnification.

     The Lenders agree to indemnify the Agent in its capacity as such but not in
its  capacity  as a Lender (to the extent not  reimbursed  by the  Borrower  and
without limiting the obligation of the Borrower to do so), ratably  according to
their  respective  Commitments  (or if the  Commitments  have  expired  or  been
terminated,  in accordance with the respective  principal amounts of outstanding
Loans of the Lenders),  from and against any and all  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements  of any kind whatsoever  which may at any time (including  without
limitation  at  any  time  following   payment  in  full  of  the  Credit  Party
Obligations)  be imposed on,  incurred  by or  asserted  against an Agent in its
capacity as such in any way relating to or arising out of this Credit  Agreement
or the other Credit  Documents or any documents  contemplated  by or referred to
herein or  therein  or the  transactions  contemplated  hereby or thereby or any
action  taken or  omitted  by an Agent  under or in  connection  with any of the
foregoing;  provided  that no Lender  shall be  liable  for the  payment  of any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, costs, expenses or disbursements (i) resulting from the gross
negligence  or willful  misconduct  of the Agent,  (ii)  arising


                                       31
<PAGE>

solely from an internal or regulatory  matter relating only to the Agent (i.e. a
legal lending limit  violation by the Agent) or (iii) resulting from and related
solely to a dispute  between  the Agent and one or more  Lenders  in which it is
reasonably determined that the Agent did not prevail. If any indemnity furnished
to the Agent for any purpose shall, in the reasonable  judgment of the Agent, be
insufficient or become impaired, the Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section shall survive the payment
of the Credit Party  Obligations  and all other  amounts  payable  hereunder and
under the other Credit Documents.

     10.8 Agent in Its Individual Capacity.

     The Agent and its  affiliates  may make loans to, accept  deposits from and
generally  engage in any kind of business  with the Borrower or any other Credit
Party as though  the Agent  were not the Agent  hereunder.  With  respect to the
Loans made and all obligations owing to it, the Agent shall have the same rights
and powers  under this Credit  Agreement as any Lender and may exercise the same
as though they were not the Agent,  and the terms  "Lender" and "Lenders"  shall
include the Agent in its individual capacity.

     10.9 Successor Agent.

     The Agent  may,  at any time,  resign  upon 20 days  written  notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor  Agent;  provided that if no successor Agent shall have been
appointed by the Required  Lenders,  and shall have accepted  such  appointment,
within 45 days after the notice of  resignation,  then the retiring  Agent shall
select a successor  Agent.  In either  case,  whether  selected by the  Required
Lenders or the retiring  Agent,  the successor  Agent must be either an existing
Lender  hereunder or a commercial  bank  organized  under the laws of the United
States of America or of any State  thereof and have total assets of at least $25
billion and a long term  unsecured  debt rating of at least BBB+ with S&P or its
equivalent.  Upon the acceptance of any  appointment as the Agent hereunder by a
successor,  such successor  Agent shall  thereupon  succeed to and become vested
with all the rights,  powers,  privileges and duties of the retiring Agent,  and
the retiring  Agent shall be discharged  from its duties and  obligations as the
Agent,  as  appropriate,  under  this  Credit  Agreement  and the  other  Credit
Documents and the  provisions of this Section 10.9 shall inure to its benefit as
to any  actions  taken or omitted to be taken by it while it was the Agent under
this Credit Agreement.

                                   SECTION 11

                                  MISCELLANEOUS

     11.1 Notices.

     Except as  otherwise  expressly  provided  herein,  all  notices  and other
communications  shall  have been duly  given  and  shall be  effective  (a) when
delivered by hand, (b) when transmitted via telecopy (or other facsimile device)
to the number set out below, (c) the Business Day following the day on which the
same has been delivered  prepaid to a reputable  national  overnight air courier
service,  or (d) the third  Business Day  following the day on which the same is
sent by certified  or


                                       32
<PAGE>

registered mail, postage prepaid,  in each case to the respective parties at the
address or telecopy numbers set forth on Schedule 11.1, or at such other address
as such party may specify by written notice to the other parties hereto.

     11.2 Right of Set-Off.

     In addition to any rights now or hereafter  granted under applicable law or
otherwise,  and not by way of limitation of any such rights, upon the occurrence
of an Event of Default and the  commencement  of remedies  described  in Section
9.3,  each  Lender  is  authorized  at any time and from  time to time,  without
presentment,  demand,  protest or other  notice of any kind (all of which rights
being hereby expressly waived),  to set-off and to appropriate and apply any and
all deposits (general or special) and any other indebtedness at any time held or
owing by such  Lender  (including,  without  limitation,  branches,  agencies or
Affiliates of such Lender wherever  located) to or for the credit or the account
of any Credit Party against  obligations and liabilities of such Credit Party to
the Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective  of  whether  the Agent or the  Lenders  shall have made any demand
hereunder and although such obligations,  liabilities or claims, or any of them,
may be  contingent  or  unmatured,  and any such set-off shall be deemed to have
been made  immediately  upon the  occurrence  of an Event of Default even though
such charge is made or entered on the books of such Lender  subsequent  thereto.
The Credit Parties hereby agree that any Person  purchasing a  participation  in
the Loans and  Commitments  hereunder  pursuant  to  Section  11.3(c) or 3.8 may
exercise  all rights of set-off with  respect to its  participation  interest as
fully as if such Person were a Lender hereunder.

     11.3 Benefit of Agreement.

          (a) Generally.  This Credit  Agreement shall be binding upon and inure
     to the  benefit of and be  enforceable  by the  respective  successors  and
     assigns of the parties hereto; provided that none of the Credit Parties may
     assign and transfer any of its interests  without the prior written consent
     of the  Lenders;  and  provided  further  that the rights of each Lender to
     transfer,  assign or grant  participation in its rights and/or  obligations
     hereunder shall be limited as set forth below in subsections (b) and (c) of
     this Section 11.3.  Notwithstanding the above (including anything set forth
     in  subsections  (b) and (c) of this Section  11.3),  nothing  herein shall
     restrict,  prevent or  prohibit  any  Lender  from (A)  pledging  its Loans
     hereunder to a Federal  Reserve Bank in support of borrowings  made by such
     Lender from such  Federal  Reserve  Bank,  or (B) granting  assignments  or
     participation  in such Lender's Loans and/or  Commitments  hereunder to its
     parent  company  and/or to any  Affiliate of such Lender or to any existing
     Lender or Affiliate  thereof.  No action  permitted by this Section 11.3(a)
     shall require a fee to be paid to the Agent.

          (b) Assignments.  In addition to the assignments  permitted in Section
     11.3(a), each Lender may, with the prior written consent of the Agent which
     shall not be unreasonably  withheld,  assign all or a portion of its rights
     and obligations hereunder pursuant to an assignment agreement substantially
     in the form of Exhibit  11.3 to one or more  Eligible  Assignees;  provided
     that (i) any such  assignment  shall be in a  minimum  aggregate  amount of
     $10,000,000  of the  Commitments  and in integral  multiples of  $1,000,000
     above such  amount (or the  remaining  amount of  Commitments  held by such

                                       33
<PAGE>

     Lender) and (ii) each such assignment shall be of a constant,  not varying,
     percentage of all of the assigning  Lender's rights and  obligations  under
     the Commitment being assigned.  Any assignment hereunder shall be effective
     upon  satisfaction  of the  conditions  set forth above and delivery to the
     Agent of a duly executed assignment  agreement together with a transfer fee
     of $3,500 payable to the Agent for its own account.  Upon the effectiveness
     of any such  assignment,  the  assignee  shall  become a  "Lender"  for all
     purposes of this Credit  Agreement and the other Credit  Documents  and, to
     the extent of such  assignment,  the assigning  Lender shall be relieved of
     its  obligations  hereunder  to the  extent  of the  Loans  and  Commitment
     components  being assigned.  Along such lines the Borrower agrees that upon
     notice of any such  assignment  and  surrender of the  appropriate  Note or
     Notes, it will promptly provide to the assigning Lender and to the assignee
     separate  promissory  notes in the  amount  of their  respective  interests
     substantially  in the form of the original Note or Notes (but with notation
     thereon  that  it is  given  in  substitution  for and  replacement  of the
     original Note or Notes or any replacement notes thereof).

     By executing and delivering an assignment agreement in accordance with this
     Section  11.3(b),   the  assigning  Lender   thereunder  and  the  assignee
     thereunder  shall be deemed to confirm to and agree with each other and the
     other parties hereto as follows: (i) such assigning Lender warrants that it
     is the legal and beneficial  owner of the interest  being assigned  thereby
     free and clear of any adverse claim and the assignee warrants that it is an
     Eligible  Assignee;  (ii)  except as set forth in clause  (i)  above,  such
     assigning  Lender  makes no  representation  or  warranty  and  assumes  no
     responsibility   with   respect   to   any   statements,    warranties   or
     representations made in or in connection with this Credit Agreement, any of
     the other Credit  Documents or any other  instrument or document  furnished
     pursuant  hereto  or  thereto,  or  the  execution,   legality,   validity,
     enforceability, genuineness, sufficiency or value of this Credit Agreement,
     any of the other  Credit  Documents  or any other  instrument  or  document
     furnished  pursuant  hereto or thereto or the  financial  condition  of any
     Credit Party or the performance or observance by any Credit Party of any of
     its  obligations  under  this  Credit  Agreement,  any of the other  Credit
     Documents or any other instrument or document  furnished pursuant hereto or
     thereto;  (iii) such  assignee  represents  and warrants that it is legally
     authorized  to enter into such  assignment  agreement;  (iv) such  assignee
     confirms  that it has received a copy of this Credit  Agreement,  the other
     Credit  Documents and such other documents and information as it has deemed
     appropriate to make its own credit analysis and decision to enter into such
     assignment  agreement;  (v) such  assignee will  independently  and without
     reliance upon the Agent,  such  assigning  Lender or any other Lender,  and
     based on such documents and information as it shall deem appropriate at the
     time,  continue  to make its own credit  decisions  in taking or not taking
     action under this Credit  Agreement  and the other Credit  Documents;  (vi)
     such assignee  appoints and authorizes the Agent to take such action on its
     behalf and to exercise such powers under this Credit Agreement or any other
     Credit  Document  as are  delegated  to the  Agent by the  terms  hereof or
     thereof,  together with such powers as are reasonably  incidental  thereto;
     and (vii) such  assignee  agrees that it will  perform in  accordance  with
     their terms all the obligations which by the terms of this Credit Agreement
     and the other  Credit  Documents  are  required to be  performed by it as a
     Lender.

                                       34
<PAGE>

          (c) Participations.  Each Lender may sell,  transfer,  grant or assign
     participations  in  all  or  any  part  of  such  Lender's   interests  and
     obligations hereunder; provided that (i) such selling Lender shall remain a
     "Lender"  for all  purposes  under  this  Credit  Agreement  (such  selling
     Lender's  obligations under the Credit Documents  remaining  unchanged) and
     the  participant  shall not  constitute  a Lender  hereunder,  (ii) no such
     participant  shall have, or be granted,  rights to approve any amendment or
     waiver  relating to this Credit  Agreement  or the other  Credit  Documents
     except to the  extent  any such  amendment  or waiver  would (A) reduce the
     principal  of or rate of  interest  on or fees in  respect  of any Loans in
     which the participant is  participating  or increase any  Commitments  with
     respect  thereto,  (B) postpone the date fixed for any payment of principal
     (including  the extension of the final  maturity of any Loan or the date of
     any mandatory  prepayment),  interest or fees in which the  participant  is
     participating, or (C) release all or substantially all of the collateral or
     guaranties   (except  as  expressly   provided  in  the  Credit  Documents)
     supporting  any of the Loans or  Commitments  in which the  participant  is
     participating,  (iii)  sub-participations  by the participant (except to an
     Affiliate,  parent  company  or  Affiliate  of  a  parent  company  of  the
     participant) shall be prohibited and (iv) any such participations  shall be
     in a minimum  aggregate  amount of  $10,000,000 of the  Commitments  and in
     integral multiples of $1,000,000 in excess thereof. In the case of any such
     participation,  the participant shall not have any rights under this Credit
     Agreement or the other Credit Documents (the  participant's  rights against
     the selling Lender in respect of such  participation  to be those set forth
     in  the   participation   agreement   with  such   Lender   creating   such
     participation)  and all amounts payable by the Borrower  hereunder shall be
     determined  as if such  Lender had not sold such  participation;  provided,
     however,  that such  participant  shall be entitled  to receive  additional
     amounts under Sections 3.9, 3.12, 3.13 and 3.14 to the same extent that the
     Lender from which such  participant  acquired  its  participation  would be
     entitled to the benefit of such cost protection provisions.

     11.4 No Waiver; Remedies Cumulative.

     No failure or delay on the part of an Agent or any Lender in exercising any
right,  power or privilege  hereunder or under any other Credit  Document and no
course of dealing  between the Borrower or any Credit Party and the Agent or any
Lender  shall  operate  as a waiver  thereof;  nor shall any  single or  partial
exercise of any right,  power or  privilege  hereunder or under any other Credit
Document  preclude any other or further  exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any  Lender  would  otherwise  have.  No notice to or demand on any
Credit Party in any case shall  entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights  of the  Agent or the  Lenders  to any  other or  further  action  in any
circumstances without notice or demand.

     11.5 Payment of Expenses; Indemnification.

     The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs and
expenses  of  (i)  the  Agent  and  the  Lenders  in  connection  with  (A)  the
negotiation,  preparation,  execution  and delivery and  administration  of this
Credit   Agreement  and  the  other  Credit  Documents  and  the  documents  and
instruments referred to therein (including,  without limitation,  the reasonable
fees


                                       35
<PAGE>

and expenses of Moore & Van Allen, PLLC, special counsel to the Agent); provided
that  reimbursement  to any Lender  (other than the Agent) for fees and expenses
shall be limited to $7,500 per Lender and (B) any  amendment,  waiver or consent
relating hereto and thereto including,  but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out,  renegotiation or
restructure  relating to the performance by the Credit Parties under this Credit
Agreement and (ii) the Agent and the Lenders in connection  with (A) enforcement
of the Credit  Documents and the documents and instruments  referred to therein,
including,  without  limitation,  in connection with any such  enforcement,  the
reasonable fees (at standard hourly rates) and  disbursements of counsel for the
Agent and each of the Lenders,  and (B) any bankruptcy or insolvency  proceeding
of a Credit Party; provided that the Credit Parties shall not be responsible for
the legal fees of the Agent and the Lenders in connection with any proceeding in
which a  Credit  Party  is the  prevailing  party  as  determined  by a court of
competent  jurisdiction,  and (b)  indemnify  the Agent,  and each  Lender,  its
officers, directors, employees, representatives and agents from and hold each of
them  harmless  against  any and all  losses,  liabilities,  claims,  damages or
expenses  incurred  by any of them as a result of, or arising  out of, or in any
way  related  to,  or by  reason  of,  any  investigation,  litigation  or other
proceeding  (whether or not any Agent or Lender is a party  thereto)  related to
(i) the entering into and/or  performance  of any Credit  Document or the use of
proceeds of any Loans (including  other  extensions of credit)  hereunder or the
consummation  of any other  transactions  contemplated  in any Credit  Document,
including,  without limitation, the reasonable fees and disbursements of counsel
incurred  in  connection  with  any  such  investigation,  litigation  or  other
proceeding  (but  excluding  any such losses,  liabilities,  claims,  damages or
expenses  to the  extent  incurred  by reason  of gross  negligence  or  willful
misconduct on the part of the Person to be indemnified),  (ii) any Environmental
Claim and (iii) any claims for Non-Excluded Taxes.

     11.6 Amendments, Waivers and Consents.

     Neither this Credit  Agreement nor any other Credit Document nor any of the
terms  hereof  or  thereof  may  be  amended,  changed,  waived,  discharged  or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Agent, the Required Lenders and the Credit Parties.

Notwithstanding  the fact that the  consent of all the  Lenders is  required  in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans, and each
Lender  acknowledges  that the  provisions of Section  1126(c) of the Bankruptcy
Code  supersedes the unanimous  consent  provisions set forth herein and (y) the
Required  Lenders may consent to allow a Credit Party to use cash  collateral in
the context of a bankruptcy or insolvency proceeding.

     11.7 Counterparts.

     This Credit Agreement may be executed in any number of  counterparts,  each
of which where so executed and delivered shall be an original,  but all of which
shall  constitute  one and the same  instrument.  It shall not be  necessary  in
making  proof of this Credit  Agreement  to produce or account for more than one
such counterpart.



                                       36
<PAGE>

     11.8 Headings.

     The  headings of the  sections  and  subsections  hereof are  provided  for
convenience  only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

     11.9 Defaulting Lender.

     Each Lender  understands  and agrees  that if such  Lender is a  Defaulting
Lender  then  notwithstanding  the  provisions  of Section  11.6 it shall not be
entitled to vote on any matter  requiring the consent of the Required Lenders or
to object to any matter  requiring  the  consent of all the  Lenders;  provided,
however,  that all other  benefits and  obligations  under the Credit  Documents
shall apply to such Defaulting Lender.

     11.10 Survival of Indemnification and Representations and Warranties.

     All  indemnities  set forth herein and all  representations  and warranties
made herein shall survive the  execution and delivery of this Credit  Agreement,
the  making  of the  Loans  and other  obligations  and the  termination  of the
commitments hereunder.

     11.11 Governing Law.

     THIS  AGREEMENT  AND  THE  OTHER  CREDIT   DOCUMENTS  AND  THE  RIGHTS  AND
OBLIGATIONS  OF THE PARTIES  HEREUNDER AND  THEREUNDER  SHALL BE GOVERNED BY AND
CONSTRUED  AND  INTERPRETED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.

     11.12 Arbitration.

     Any controversy or claim between or among the parties hereto including, but
not limited to,  those  arising  out of or  relating  to this  Agreement  or any
related agreements or instruments,  including any claim based on or arising from
an alleged tort,  shall be determined by binding  arbitration in accordance with
the Federal  Arbitration Act (or if not applicable,  the applicable  state law),
the Rules of Practice and Procedure for the  Arbitration of Commercial  Disputes
of  Judicial  Arbitration  and  Mediation  Services,  Inc.  (J.A.M.S.),  and the
"Special Rules" set forth below. In the event of any inconsistency,  the Special
Rules shall control.  Judgment upon any arbitration  award may be entered in any
court  having  jurisdiction.  Any party to this  Agreement  may bring an action,
including  a summary  or  expedited  proceeding,  to compel  arbitration  of any
controversy  or  claim to which  this  Agreement  applies  in any  court  having
jurisdiction over such action.

          (a) Special Rules.  The arbitration  shall be conducted in the city of
     the  Borrower's  domicile  at  time  of  this  Agreement's   execution  and
     administered  by J.A.M.S.  who will appoint an arbitrator;  if J.A.M.S.  is
     unable or legally precluded from  administering  the arbitration,  then the
     American Arbitration  Association will serve. All arbitration hearings will
     be  commenced  within  ninety  (90)  days of the  demand  for  arbitration;
     further,  the arbitrator  shall only, upon a showing of cause, be permitted
     to extend the  commencement  of such hearing for up to an additional  sixty
     (60) days.



                                       37
<PAGE>

          (b) Reservations of Rights.  Nothing in this Agreement shall be deemed
     to (i) limit the  applicability  of any  otherwise  applicable  statutes of
     limitation or repose and any waivers  contained in this Agreement;  or (ii)
     be a waiver by the  Lenders of the  protection  afforded to it by 12 U.S.C.
     Section 91 or any  substantially  equivalent  state law; or (iii) limit the
     right of the Lenders (A) to exercise  self help  remedies  such as (but not
     limited  to)  setoff,  or (B) to  foreclose  against  any real or  personal
     property collateral, or (C) to obtain from a court provisional or ancillary
     remedies such as (but not limited to) injunctive  relief or the appointment
     of a receiver.  The Lenders may exercise  such self help rights,  foreclose
     upon such  property,  or obtain  such  provisional  or  ancillary  remedies
     before, during or after the pendency of any arbitration  proceeding brought
     pursuant to this Agreement.  At the Lenders' option,  foreclosure under the
     Credit  Documents may be accomplished by the exercise of a power of sale or
     a judicial  sale under the Credit  Documents  or by  judicial  foreclosure.
     Neither  the  exercise  of  self  help  remedies  nor  the  institution  or
     maintenance  of an action  for  foreclosure  or  provisional  or  ancillary
     remedies shall constitute a waiver of the right of any party, including the
     claimant in any such action,  to arbitrate the merits of the controversy or
     claim occasioning resort to such remedies.

     11.13 Time.

     All references to time herein shall be references to Eastern  Standard Time
or Eastern Daylight time, as the case may be, unless specified otherwise.

     11.14 Severability.

     If any  provision  of  any of the  Credit  Documents  is  determined  to be
illegal,  invalid or unenforceable,  such provision shall be fully severable and
the  remaining  provisions  shall  remain in full  force and effect and shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

     11.15 Entirety.

     This Credit Agreement  together with the other Credit  Documents  represent
the entire agreement of the parties hereto and thereto,  and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or  correspondence  relating to the Credit Documents or the transactions
contemplated herein and therein.




                  [remainder of page intentionally left blank]



                                       38
<PAGE>

     Each of the  parties  hereto  has  caused  a  counterpart  of  this  Credit
Agreement to be duly executed and delivered as of the date first above  written,
the Credit Parties doing so under seal.

BORROWER:
                               HIGHWOODS/FORSYTH LIMITED PARTNERSHIP,
                               a North Carolina limited partnership
ATTEST:
                               By:  Highwoods Properties, Inc.,
By:___________________              a Maryland corporation, its sole general
                                    partner
Title:_______________
                               By: __________________________________________
  [CORPORATE SEAL]             Name: ________________________________________
                               Title: _______________________________________




GUARANTORS:                    HIGHWOODS PROPERTIES, INC.,
                               a Maryland corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]



                               HIGHWOODS SERVICES, INC.,
                               a North Carolina corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


                               SOUTHEAST REALTY OPTIONS CORP.,
                               a Delaware corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


<PAGE>

                               HIGHWOODS/FLORIDA GP CORP.,
                               a Delaware corporation
ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


                               HIGHWOODS/FLORIDA HOLDINGS GP, L.P.,
                               a Delaware corporation

                               By:  Highwoods/Florida GP Corp.,
                                    a Delaware corporation, its sole
                                    general partner

AATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/FLORIDA HOLDINGS L.P.,
                               a Delaware corporation

                               By:  Highwoods/Florida Holdings GP, L.P.,
                                    a Delaware limited
                                    partnership, its sole general partner

                               By:  Highwoods/Florida GP Corp.,
                                    a Delaware corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]




<PAGE>

                               HIGHWOODS/TENNESSEE PROPERTIES,
                               a Tennessee corporation

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/TENNESSEE HOLDINGS GP, L.P.,
                               a Tennessee limited partnership

                               By:  Highwoods/Tennessee Properties, Inc.,
                                    a Tennessee corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]

                               HIGHWOODS/TENNESSEE HOLDINGS L.P.,
                               a Tennessee limited partnership

                               By:  Highwoods/Tennessee Holdings GP, L.P.,
                                    a Tennessee limited
                                    partnership, its sole general partner

                               By:  Highwoods/Tennessee Properties, Inc.,
                                    a Delaware corporation, its sole
                                    general partner

ATTEST:
                               By: __________________________________________
By:__________________          Name: ________________________________________
Title:________________         Title: _______________________________________

  [CORPORATE SEAL]


<PAGE>


LENDERS:

                               NATIONSBANK, N.A.,
                               individually in its capacity as a
                               Lender and in its capacity as Agent


                               By: __________________________________________
                               Name: ________________________________________
                               Title: _______________________________________


<PAGE>



                                 Schedule 1.1(a)

                              COMMITMENT PERCENTAGE
                                                                      Revolving
                                         Revolving                   Commitment
Lender                               Committed Amount                Percentage
------                               ----------------                ----------
NationsBank, N.A.,                     $ 150,000,000                    100%






<PAGE>


                                  Schedule 11.1

                                     Notices



Lender                                       Address for All Notices
------                                       -----------------------

NationsBank, N.A.                            NationsBank, N.A.
                                             One Hannover Square, Suite 301
                                             Raleigh, NC  27611-7287
                                             Attn: Patty Gardenhire
                                             Ph: (919) 829-6683
                                             Fax: (919) 829-6713

                                             with a copy to:

                                             Mark S. Cagley
                                             Senior Vice President
                                             NationsBank
                                             Real Estate Banking Group
                                             100 N. Tryon Street
                                             11th Floor
                                             NC1-007-11-07
                                             Charlotte, NC   28255
                                             Phone: (704) 386-7449
                                             Fax: (704) 388-0617


<PAGE>


                                 Exhibit 2.1(b)

                           FORM OF NOTICE OF BORROWING

TO:               NATIONSBANK, N.A., as Agent
                  NATIONSBANK CORPORATE CENTER
                  CHARLOTTE, NORTH CAROLINA  28255

RE:               Credit   Agreement  dated  as  of  December  ___,  1997  among
                  Highwoods/Forsyth   Limited   Partnership   (the   "Borrower")
                  Highwoods  Properties,  Inc., the Subsidiaries of the Borrower
                  and Highwoods Properties,  Inc., NationsBank,  N.A., as Agent,
                  and the  Lenders  party  thereto  (as the same may be amended,
                  modified,  extended or restated from time to time, the "Credit
                  Agreement")

DATE:    _____________, 199__

________________________________________________________________

1.       This Notice of  Borrowing  is made  pursuant to the terms of the Credit
         Agreement.  All capitalized  terms used herein unless otherwise defined
         shall have the meanings set forth in the Credit Agreement.

2.       Please be advised that the Borrower is  requesting  Revolving  Loans in
         the amount of  $__________ to be funded on  ____________,  199__ at the
         interest rate option set forth in paragraph 3 below.  Subsequent to the
         funding of the  requested  Revolving  Loans,  the  aggregate  amount of
         outstanding  Revolving Loans will be $_________,  which is less than or
         equal to the Revolving Committed Amount.

3.       The interest rate option  applicable to the requested  Revolving  Loans
         shall be:

         a.    ________ the Adjusted Base Rate

         b.    ________ the Adjusted Eurodollar Rate for an Interest Period
                        of one (1) month

4.       The   proceeds   from   the   Revolving   Loans   shall   be  used  for
         ________________________________________  which is in  compliance  with
         Section 7 of the Credit Agreement.

5.       The  representations  and warranties  made by the Credit Parties in the
         Credit  Documents are true and correct in all material  respects at and
         as if made on the date  hereof  except  to the  extent  they  expressly
         relate to an earlier date.


<PAGE>



6.       As of the date hereof,  no Default or Event of Default has occurred and
         is continuing or would be caused by this Notice of Borrowing.

7.       No Material Adverse Effect has occurred since the Closing Date.

8.       The  Borrower is in  compliance  with all  requirements  of the Related
         Credit  Agreement.  In  furtherance  of  this  certification,  Borrower
         represents  that the ratio of (a) Total  Liabilities (as defined in the
         Related Credit Agreement) to (b) Market  Capitalization  (as defined in
         the Related Credit Agreement) is less than or equal to 0.45 to 1.0.


                     HIGHWOODS/FORSYTH LIMITED PARTNERSHIP

                     By:   Highwoods Properties, Inc., its sole general partner

                     By:____________________________
                     Name:__________________________
                     Title:_________________________



<PAGE>



                                 Exhibit 2.1(d)

                    FORM OF NOTICE OF CONTINUATION/CONVERSION

TO:               NATIONSBANK, N.A., as Agent
                  NATIONSBANK CORPORATE CENTER
                  CHARLOTTE, NORTH CAROLINA  28255

RE:               Credit  Agreement  dated  as  of  December  ____,  1997  among
                  Highwoods/Forsyth   Limited   Partnership   (the   "Borrower")
                  Highwoods  Properties,  Inc., the Subsidiaries of the Borrower
                  and Highwoods Properties,  Inc., NationsBank,  N.A., as Agent,
                  and the  Lenders  party  thereto  (as the same may be amended,
                  modified,  extended or restated from time to time, the "Credit
                  Agreement")

DATE:    _____________, 199__

____________________________________________________________

1.       This Notice of Continuation/Conversion is made pursuant to the terms of
         the  Credit  Agreement.   All  capitalized  terms  used  herein  unless
         otherwise  defined  shall  have the  meanings  set forth in the  Credit
         Agreement.

2.       Please be advised that the Borrower is requesting that a portion of the
         current  outstanding  Revolving  Loans  in the  amount  of  $__________
         currently accruing interest at _________ be extended or converted as of
         _____________  at the  interest  rate  option set forth in  paragraph 3
         below.

3.       The interest  rate option  applicable to the extension or conversion of
         all or part of the existing Revolving Loans shall be:

         a.   ________ the Adjusted Base Rate

         b.   ________ the Adjusted Eurodollar Rate for an Interest Period
                       of one (1) month

4.       The  representations  and warranties  made by the Credit Parties in the
         Credit  Documents are true and correct in all material  respects at and
         as if made on the date  hereof  except  to the  extent  they  expressly
         relate to an earlier date.

5.       As of the date hereof,  no Default or Event of Default has occurred and
         is    continuing    or   would   be   caused   by   this    Notice   of
         Continuation/Conversion.

6.       No Material Adverse Effect has occurred since the Closing Date.



<PAGE>

7.       The  Borrower is in  compliance  with all  requirements  of the Related
         Credit  Agreement.  In  furtherance  of  this  certification,  Borrower
         represents  that the ratio of (a) Total  Liabilities (as defined in the
         Related Credit Agreement) to (b) Market  Capitalization  (as defined in
         the Related Credit Agreement) is less than or equal to .45 to 1.0.




                  HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
                  By: Highwoods Properties, Inc., its sole general partner

                  By:____________________________
                  Name:__________________________
                  Title:_________________________


<PAGE>


                                 Exhibit 2.1(f)

                                     FORM OF
                                 REVOLVING NOTE


$____________                                                 _______ ____, 1997

     FOR VALUE RECEIVED, Highwoods/Forsyth Limited Partnership, a North Carolina
limited  partnership,  (the "Borrower"),  hereby promises to pay to the order of
___________________  (the  "Lender"),  at the office of  NationsBank,  N.A. (the
"Agent") as set forth in that certain Credit  Agreement dated as of December 15,
1997 between the Borrower,  Highwoods Properties,  Inc., the Subsidiaries of the
Borrower and Highwoods  Properties,  Inc., the Lenders named therein  (including
the Lender),  and NationsBank,  N.A., as Agent (as modified and supplemented and
in effect  from time to time,  the "Credit  Agreement"),  the  principal  sum of
$______________  (or such  lesser  amount as shall  equal the  aggregate  unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit  Agreement),  in lawful money of the United  States of America and in
immediately  available funds, on the dates and in the principal amounts provided
in the Credit  Agreement,  and to pay interest on the unpaid principal amount of
each such  Revolving  Loan,  at such  office,  in like money and funds,  for the
period  commencing on the date of such  Revolving Loan until such Revolving Loan
shall be paid in full,  at the rates per annum and on the dates  provided in the
Credit Agreement.

     This Note is one of the Revolving Notes referred to in the Credit Agreement
and evidences  Revolving Loans made by the Lender thereunder.  Capitalized terms
used in this Revolving Note and not otherwise  defined shall have the respective
meanings  assigned to them in the Credit  Agreement and the terms and conditions
of the  Credit  Agreement  are  expressly  incorporated  herein  and made a part
hereof.

     The Credit  Agreement  provides for the acceleration of the maturity of the
Revolving  Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of  collection  costs in connection  therewith)  and for
prepayments of Revolving Loans upon the terms and conditions  specified therein.
In the  event  this  Revolving  Note  is not  paid  when  due at any  stated  or
accelerated  maturity,  the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.

     The date, amount,  type,  interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower,  and each
payment  made on account of the  principal  thereof,  shall be  recorded  by the
Lender on its books;  provided  that the  failure of the Lender to make any such
recordation or endorsement  shall not affect the  obligations of the Borrower to
make a payment  when due of any amount owing  hereunder or under this  Revolving
Note in respect of the Revolving  Loans to be evidenced by this Revolving  Note,
and each such  recordation or endorsement  shall be prima facie evidence of such
information.



<PAGE>

     THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.

     IN WITNESS  WHEREOF,  the  Borrower  has caused this  Revolving  Note to be
executed as of the date first above written.


                        HIGHWOODS/FORSYTH LIMITED PARTNERSHIP

                        By: Highwoods Properties, Inc., its sole general partner

                        By:____________________________
                        Name:__________________________
                        Title:_________________________



<PAGE>


                                 Exhibit 7.1(c)


                          FORM OF OFFICER'S CERTIFICATE

             For the fiscal quarter ended _________________, 19___.

     I, ______________________, chief financial officer of Highwoods Properties,
Inc., the sole general partner of  Highwoods/Forsyth  Limited  Partnership  (the
"Borrower")  hereby certify on behalf of the Borrower that, with respect to that
certain  Credit  Agreement  dated as of December 15, 1997 (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all of
the  capitalized  terms  herein  shall have the meanings set forth in the Credit
Agreement)  among the  Borrower,  the other Credit  Parties party  thereto,  the
Lenders party thereto and NationsBank, N.A., as Agent:

          a.  Attached  hereto  as  Schedule  1 are  calculations  demonstrating
     compliance by the Credit Parties with the financial  covenants contained in
     Section 7.2 of the  Related  Credit  Agreement  as of the end of the fiscal
     period referred to above.

          b. No  Default  or Event of  Default  has  occurred  under the  Credit
     Agreement(1).

          c. The quarterly financial statements which accompany this certificate
     fairly  present in all  material  respects the  financial  condition of the
     Credit  Parties,  on a  consolidated  basis,  and  have  been  prepared  in
     accordance  with GAAP,  subject to changes  resulting from normal  year-end
     audit adjustments.

     This ______ day of ___________, 19__.


                                  HIGHWOODS PROPERTIES, INC.,

                                  sole general partner of Highwoods/Forsyth
                                  Limited Partnership



                                  By:_________________________________
                                  Name:_______________________________
                                  Title: Chief Financial Officer


-----------------
(1)  If a Default or Event of Default shall have occurred an explanation of such
     Default or Event of Default  shall be provided on a separate  page together
     with an  explanation  of the action  taken or  proposed  to be taken by the
     Credit Parties with respect thereto.



<PAGE>


                                  Exhibit 7.16


                            FORM OF JOINDER AGREEMENT

     THIS JOINDER AGREEMENT (this "Agreement"), dated as of _____________, 199_,
is entered into between  _____________________,  a ___________________ (the "New
Subsidiary") and NATIONSBANK, N.A., in its capacity as Agent (the "Agent") under
that  certain  Credit   Agreement,   dated  as  of  December  15,  1997,   among
Highwoods/Forsyth  Limited Partnership (the "Borrower"),  Highwoods  Properties,
Inc.,  the  Subsidiaries  of the Borrower and Highwoods  Properties,  Inc.,  the
Lenders  party  thereto  and the  Agent (as the same may be  amended,  modified,
extended or restated from time to time, the "Credit Agreement"). All capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Credit Agreement.

     The New  Subsidiary and the Agent,  for the benefit of the Lenders,  hereby
agree as follows:

     1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this  Agreement,  the New Subsidiary  will be deemed to be a Credit
Party  under the Credit  Agreement  and a  "Guarantor"  for all  purposes of the
Credit Agreement and shall have all of the obligations of a Guarantor thereunder
as if it had executed the Credit Agreement.  The New Subsidiary hereby ratifies,
as of the date hereof,  and agrees to be bound by, all of the terms,  provisions
and conditions  contained in the Credit Agreement,  including without limitation
(a) all of the representations and warranties of the Credit Parties set forth in
Section 6 of the  Credit  Agreement,  (b) all of the  affirmative  and  negative
covenants  set forth in Sections 7 and 8 of the Credit  Agreement and (c) all of
the guaranty obligations set forth in Section 4 of the Credit Agreement. Without
limiting the  generality  of the  foregoing  terms of this  paragraph 1, the New
Subsidiary,  subject to the  limitations  set forth in Section 4.7 of the Credit
Agreement,  hereby guarantees,  jointly and severally with the other Guarantors,
to the Agent and the Lenders,  as provided in Section 4 of the Credit Agreement,
the prompt payment and performance of the Credit Party  Obligations in full when
due (whether at stated maturity, as a mandatory  prepayment,  by acceleration or
otherwise)  strictly in accordance with the terms thereof and agrees that if any
of the  Credit  Party  Obligations  are not paid or  performed  in full when due
(whether at stated  maturity,  as a mandatory  prepayment,  by  acceleration  or
otherwise),  the New Subsidiary  will,  jointly and severally  together with the
other  Guarantors,  promptly  pay and  perform  the same,  without any demand or
notice  whatsoever,  and that in the case of any extension of time of payment or
renewal of any of the Credit Party  Obligations,  the same will be promptly paid
in full when due (whether at extended maturity,  as a mandatory  prepayment,  by
acceleration  or otherwise) in  accordance  with the terms of such  extension or
renewal.

     2. The address of the New  Subsidiary  for  purposes of Section 11.1 of the
Credit Agreement is as follows:

                          ____________________________
                          ____________________________
                          ____________________________
                          ____________________________

<PAGE>

     3. The New Subsidiary hereby waives acceptance by the Agent and the Lenders
of the  guaranty  by the New  Subsidiary  under the  Credit  Agreement  upon the
execution of this Agreement by the New Subsidiary.

     4. This  Agreement may be executed in any number of  counterparts,  each of
which when so executed  and  delivered  shall be an  original,  but all of which
shall constitute one and the same instrument.

     5. THIS AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE PARTIES  HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND  INTERPRETED IN ACCORDANCE  WITH THE LAWS
OF THE STATE OF NORTH CAROLINA.

     IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed  by its  authorized  officer,  and the  Agent,  for the  benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

                                              [NEW SUBSIDIARY]

                                              By:___________________________
                                              Name:_________________________
                                              Title:________________________

                                              Acknowledged and accepted:

                                              NATIONSBANK, N.A., as Agent

                                              By:___________________________
                                              Name:_________________________
                                              Title:________________________



<PAGE>


                                  Exhibit 11.3

                                     FORM OF
                              ASSIGNMENT AGREEMENT

     Reference is made to that certain Credit Agreement dated as of December 15,
1997 (as the same may be amended,  modified,  extended or restated  from time to
time, the "Credit Agreement") among  Highwoods/Forsyth  Limited Partnership (the
"Borrower"),  Highwoods  Properties,  Inc., the Subsidiaries of the Borrower and
Highwoods Properties, Inc. the Lenders identified therein and NationsBank, N.A.,
as Agent. All capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.

     1. The  Assignor  (as defined  below)  hereby  sells and  assigns,  without
recourse,  to the Assignee (as defined below), and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective as of effective date
of the assignment as designated below (the "Effective  Date"), the interests set
forth below (the "Assigned  Interest") in the Assignor's  rights and obligations
under the Credit Agreement, including, without limitation, (a) the interests set
forth below in the Revolving Loan  Commitment  Percentage of the Assignor on the
Effective  Date and (b) the Loans owing to the Assignor in  connection  with the
Assigned  Interest which are  outstanding on the Effective Date. The purchase of
the Assigned Interest shall be at par and periodic payments made with respect to
the Assigned  Interest  which (i) accrued prior to the  Effective  Date shall be
remitted to the Assignor and (ii) accrue from and after the Effective Date shall
be remitted to the Assignee. From and after the Effective Date, the Assignee, if
it is not already a Lender under the Credit  Agreement,  shall become a "Lender"
for all purposes of the Credit  Agreement and the other Credit Documents and, to
the extent of such  assignment,  the  assigning  Lender shall be relieved of its
obligations under the Credit Agreement.

     2. The Assignor  represents  and  warrants to the  Assignee  that it is the
holder of the  Assigned  Interest and the Loans  related  thereto and it has not
previously transferred or encumbered such Assigned Interest or Loans.

     3. The  Assignee  represents  and  warrants to the  Assignor  that it is an
Eligible Assignee.

     4. This Assignment shall be effective only upon (a) to the extent required,
the consent of the Agent under Section  11.3(b) of the Credit  Agreement and (b)
delivery to the Agent of this  Assignment  Agreement  together with the transfer
fees, if applicable, set forth in Section 11.3(b) of the Credit Agreement.

     5. The Assignor  and the Assignee  confirm to and agree with each other and
the other parties to the Credit Agreement as to the terms set forth in paragraph
2 of Section 11.3(b) of the Credit Agreement.

     6. This  Assignment  shall be governed by and construed in accordance  with
the laws of the State of North Carolina.


<PAGE>


     7. Terms of Assignment

         (a)      Date of Assignment                           _________________

         (b)      Legal Name of Assignor                       _________________

         (c)      Legal Name of Assignee                       _________________

         (d)      Effective Date of Assignment                 _________________

         (e)      Revolving Loan Commitment
                  Percentage assigned                          _________________

         (f)      Total Revolving Loans
                  outstanding as of Effective Date            $_________________

         (g)      Principal Amount of Revolving
                  Loans assigned on Effective Date
                  (the amount set forth in (f)
                  multiplied by the
                  percentage set forth in (e))                $_________________

         (h)      Revolving Committed
                  Amount                                      $_________________

         (i)      Principal Amount of Revolving
                  Committed Amount Assigned on the
                  Effective Date (the amount set forth
                  in (h) multiplied by
                  the percentage set forth in (e))            $_________________


<PAGE>




The terms set forth above
are hereby agreed to:

_______________________, as Assignor


By:____________________________________
Name:__________________________________
Title:_________________________________


____________________, as Assignee


By:____________________________________
Name:__________________________________
Title:_________________________________



                                        CONSENTED TO (if applicable):



                                        NATIONSBANK, N.A., as Agent

                                        By:____________________________________
                                        Name:__________________________________
                                        Title:_________________________________