$100,000,000

                                CREDIT AGREEMENT


                            Dated as of May 19, 2000

                                  by and among

                  FIRST WASHINGTON REALTY LIMITED PARTNERSHIP,
                                  as Borrower,

                      FIRST WASHINGTON REALTY TRUST, INC.,
                                   as Parent,

                           DEUTSCHE BANK ALEX. BROWN,
                              as Syndication Agent,

                         PNC BANK, NATIONAL ASSOCIATION,
                             as Documentation Agent

                                [GRAPHIC OMITTED]
                                 NATIONAL BANK,
                                    as Agent,

                          FIRST UNION SECURITIES, INC.,
                              as Sole Book Manager,
                                       and

                              as Sole Lead Arranger

                                       and

                     THE FINANCIAL INSTITUTIONS PARTY HERETO
                    AND THEIR ASSIGNEES UNDER SECTION 13.5.,

                                   as Lenders


<PAGE>

                               TABLE OF CONTENTS

Article I.      Definitions                                             2
Section 1.1.    Definitions                                             2
Section 1.2.    General; References to Times                           22
Article II.     Credit Facility                                        23
Section 2.1.    Revolving Loans                                        23
Section 2.2.    Letters of Credit                                      24
Section 2.3.    Rates and Payment of Interest on Loans                 27
Section 2.4.    Number of Interest Periods                             28
Section 2.5.    Repayment of Loans                                     28
Section 2.6.    Prepayments                                            28
Section 2.7.    Continuation                                           29
Section 2.8.    Conversion                                             29
Section 2.9.    Notes                                                  30
Section 2.10.   Voluntary Reductions of the Commitment;
                Termination of Commitments From Minimum Borrowing Base 30
Section 2.11.   Extension of Termination Date                          31
Section 2.12.   Expiration or Maturity Date of Letters of Credit Past
                Termination Date                                       31
Section 2.13.   Increase of Commitments                                31
Article III.    Payments, Fees and Other General Provisions            32
Section 3.1.    Payments                                               32
Section 3.2.    Pro Rata Treatment                                     33
Section 3.3.    Sharing of Payments, Etc.                              33
Section 3.4.    Several Obligations                                    34
Section 3.5.    Minimum Amounts                                        34
Section 3.6.    Fees                                                   34
Section 3.7.    Computations                                           35
Section 3.8.    Usury                                                  35
Section 3.9.    Agreement Regarding Interest and Charges               36
Section 3.10.   Statements of Account                                  36
Section 3.11.   Defaulting Lenders                                     36
Section 3.12.   Taxes                                                  37
Article IV.     Borrowing Base Properties                              38
Section 4.1.    Eligibility of Properties                              38
Section 4.2.    Release of Eligible Properties                         40
Section 4.3.    Frequency of Calculations of Borrowing Base            41
Section 4.4.    Additional Appraisals Required under Applicable Law    41
Article V.      Yield Protection, Etc.                                 41
Section 5.1.    Additional Costs; Capital Adequacy                     41
Section 5.2.    Suspension of LIBOR Loans                              43
Section 5.3.    Illegality                                             43
Section 5.4.    Compensation.                                          43
Section 5.5.    Affected Lenders                                       44
Section 5.6.    Treatment of Affected Loans                            45
Section 5.7.    Change of Lending Office                               45
Section 5.8.    Assumptions Concerning Funding of LIBOR Loans          45
Article VI.     Conditions Precedent                                   46
Section 6.1.    Initial Conditions Precedent                           46
Section 6.2.    Conditions Precedent to All Loans and Letters
                of Credit                                              48
Section 6.3.    Conditions Precedent to a Property Becoming A
                Borrowing Base Property if Borrower Not
                Investment Grade                                       49
Article VII.    Representations and Warranties                         51
Section 7.1.    Representations and Warranties                         51
Section 7.2.    Survival of Representations and Warranties, Etc.       56
Article VIII.   Affirmative Covenants                                  57
Section 8.1.    Preservation of Existence and Similar Matters          57
Section 8.2.    Compliance with Applicable Law and Material Contracts  57
Section 8.3.    Maintenance of Property                                57
Section 8.4.    Conduct of Business                                    58
Section 8.5.    Insurance                                              58
Section 8.6.    Payment of Taxes and Claims                            59
Section 8.7.    Visits and Inspections                                 60
Section 8.8.    Use of Proceeds; Letters of Credit                     60
Section 8.9.    Environmental Matters                                  60
Section 8.10.   Books and Records                                      61
Section 8.11.   REIT Status                                            61
Section 8.12.   Exchange Listing                                       61
Section 8.13.   Distributions of Income to the Borrower                61
Section 8.14.   Subordination, Nondisturbance and Attornment
                Agreements                                             61
Section 8.15.   Further Assurances                                     62
Section 8.16.   Additional Guarantors                                  62
Article IX.     Information                                            62
Section 9.1.    Quarterly Financial Statements                         62
Section 9.2.    Year-End Statements                                    63
Section 9.3.    Compliance Certificate                                 63
Section 9.4.    Other Information                                      63
Article X.      Negative Covenants                                     65
Section 10.1.   Financial Covenants                                    65
Section 10.2.   Indebtedness                                           67
Section 10.3.   Certain Permitted Investments                          68
Section 10.4.   Investments Generally                                  68
Section 10.5.   Acquisitions                                           69
Section 10.6.   Liens; Agreements Regarding Liens; Other Matters       69
Section 10.7.   Restricted Payments                                    69
Section 10.8.   Merger, Consolidation and Substantial Sales of Assets  70
Section 10.9.   No Plan Assets                                         70
Section 10.10.  Fiscal Year                                            71
Section 10.11.  Modifications to Material Contracts                    71
Section 10.12.  Transactions with Affiliates                           71
Section 10.13.  Hedging Agreements                                     71
Article XI.     Default                                                71
Section 11.1.   Events of Default                                      71
Section 11.2.   Remedies Upon Event of Default                         75
Section 11.3.   Remedies Upon Default                                  76
Section 11.4.   Allocation of Proceeds                                 76
Section 11.5.   Collateral Account                                     76
Section 11.6.   Performance by Agent                                   77
Section 11.7.   Rights Cumulative                                      78
Section 11.8.   Recission of Acceleration by Requisite Lenders         78
Article XII.    The Agent                                              78
Section 12.1.   Authorization and Action                               78
Section 12.2.   Agent's Reliance, Etc.                                 79
Section 12.3.   Notice of Defaults                                     80
Section 12.4.   First Union as Lender                                  80
Section 12.5.   Approvals of Lenders                                   80
Section 12.6.   Lender Credit Decision, Etc                            81
Section 12.7.   Indemnification of Agent                               81
Section 12.8.   Collateral Matters                                     82
Section 12.9.   Successor Agent                                        83
Section 12.10.  Titled Parties Have No Duties                          83
Article XIII.   Miscellaneous                                          84
Section 13.1.   Notices                                                84
Section 13.2.   Expenses                                               85
Section 13.3.   Setoff                                                 85
Section 13.4.   Waiver of Jury Trial; Arbitration                      86
Section 13.5.   Successors and Assigns                                 88
Section 13.6.   Amendments                                             90
Section 13.7.   Nonliability of Agent and Lenders                      91
Section 13.8.   Confidentiality                                        91
Section 13.9.   Indemnification                                        91
Section 13.10.  Termination; Survival                                  93
Section 13.11.  Severability of Provisions                             93
Section 13.12.  GOVERNING LAW                                          93
Section 13.13.  Counterparts                                           94
Section 13.14.  Obligations with Respect to Loan Parties               94
Section 13.15.  Limitation of Liability                                94
Section 13.16.  Entire Agreement                                       94
Section 13.17.  Construction                                           94
Section 13.18.  Release of Collateral Upon Investment Grade Rating     95
Section 13.19.  NO NOVATION                                            95

SCHEDULE 1.1(A)         List of Material Subsidiaries
SCHEDULE 4.1.           Initial Borrowing Base Properties
SCHEDULE 7.1(b)         Ownership Structure
SCHEDULE 7.1(f)         Title to Properties; Liens
SCHEDULE 7.1(g)         Existing Indebtedness
SCHEDULE 7.1(h)         Material Contracts
SCHEDULE 7.1(i)         Litigation
SCHEDULE 7.1(q)         Environmental Laws
SCHEDULE 10.13          Hedging Agreements


EXHIBIT A               Form of Assignment and Acceptance Agreement
EXHIBIT B               Form of Assignment Leases and Rents
EXHIBIT C               Form of Borrowing Base Certificate
EXHIBIT D               Form of Environmental Indemnity Agreement
EXHIBIT E               Form of Guaranty
EXHIBIT F               Form of Notice of Borrowing
EXHIBIT G               Form of Notice of Continuation
EXHIBIT H               Form of Notice of Conversion
EXHIBIT I               Form of Subordination, Nondisturbance and
                           Attornment Agreement
EXHIBIT J               Form of Security Deed
EXHIBIT K               Form of Revolving Note
EXHIBIT L               Form of Extension Request
EXHIBIT M               Form of Compliance Certificate
EXHIBIT N               Form of Compliance Certificate

<PAGE>



         THIS  CREDIT  AGREEMENT  dated as of May 19,  2000 by and  among  FIRST
WASHINGTON REALTY LIMITED  PARTNERSHIP,  a limited  partnership formed under the
laws of the State of Maryland (the  "Borrower"),  FIRST WASHINGTON REALTY TRUST,
INC.,  a  corporation  organized  under the laws of the State of  Maryland  (the
"Parent"),  FIRST UNION  NATIONAL  BANK, as  contractual  representative  of the
Lenders to the extent and in the manner  provided in Article XII. below (in such
capacity, the "Agent"), FIRST UNION SECURITIES,  INC., as Sole Lead Arranger and
Book Manager,  DEUTSCHE BANK ALEX.  BROWN, as Syndication  Agent,  and PNC BANK,
NATIONAL  ASSOCIATION,  as  Documentation  Agent,  and  each  of  the  financial
institutions initially a signatory hereto together with their assignees pursuant
to Section 13.5.

         WHEREAS,  pursuant to that certain  Revolving Credit Agreement dated as
of January  22, 1998 (as  amended  and in effect  immediately  prior to the date
hereof,  the  "Existing  Credit  Agreement"),  by and  among the  Borrower,  the
financial  institutions party thereto as "Banks" (the "Existing Banks"), and UBS
AG, New York Branch,  successor to Union Bank of Switzerland  (New York Branch),
as Agent (the "Existing Agent"),  the Existing Banks and the Existing Agent made
a $51,000,000 credit facility available to the Borrower;

         WHEREAS,  the Existing  Lenders,  the Existing Agent,  the Borrower and
First Union have entered into that certain  Assignment and Acceptance  Agreement
dated as of the date hereof (the "UBS Assignment  Agreement")  pursuant to which
such  parties  provided  for,  among other  things,  (a) the  assignment  by the
Existing Lenders to First Union of a portion of the Existing Lenders' rights and
obligations  under the Existing  Credit  Agreement  and the Notes and other Loan
Documents (as each such term is defined in the Existing  Credit  Agreement)  and
(b) the replacement of the Existing Agent with the Agent;

         WHEREAS,  First  Union,  the Lenders,  the Agent and the Borrower  have
entered into that certain Assignment  Agreement dated as of the date hereof (the
"First Union Assignment Agreement") pursuant to which such parties provided for,
among other things,  (a) the  assignment by First Union to certain  Lenders of a
proportionate  amount of First Union's rights and obligations under the Existing
Credit  Agreement  and the Notes and other Loan  Documents (as each such term is
defined in the Existing Credit  Agreement) and (b) the amendment and restatement
of the Existing Credit Agreement; and

         WHEREAS,  the parties  hereto  desire to amend and restate the Existing
Credit  Agreement  on the terms and  conditions  contained  herein,  among other
things,  to make  available to the  Borrower a  $100,000,000  secured  revolving
credit facility,  which includes a $5,000,000 letter of credit facility,  on the
terms and conditions contained herein.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency of which are hereby  acknowledged by the parties hereto, the parties
hereto agree that the Existing  Credit  Agreement is amended and restated in its
entirety as follows:

<PAGE>


ARTICLE I.1 Definitions.

         In addition to terms defined  elsewhere  herein,  the  following  terms
shall have the following meanings for the purposes of this Agreement:

         "Accession Agreement" means an Accession Agreement substantially in the
form of Annex I to the Guaranty.

         "Acquisition"  means  the  acquisition  by  the  Parent  directly,   or
indirectly  through the Borrower or any of its other  Subsidiaries,  in one or a
series of related transactions,  and regardless of the form of such transactions
or series of  transactions,  of (a) any assets of  another  Person or (b) Equity
Interest of another Person,  whether by purchase of such Equity Interest or upon
the exercise of an option or warrant for, or conversion of securities into, such
Equity Interest.  For purposes of this definition a series of transactions  will
be  considered  to be  "related" if the  transactions  are in effect a series of
steps in an integrated  transaction or are otherwise  interdependent  steps with
common legal or business significance.

         "Additional Costs" has the meaning given that term in Section 5.1.

         "Adjusted  Eurodollar Rate" means, with respect to each Interest Period
for any LIBOR Loan,  the rate  obtained by dividing (a) LIBOR for such  Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal)  of  all  reserves,   if  any,   required  to  be  maintained   against
"Eurocurrency  liabilities"  as  specified  in  Regulation  D of  the  Board  of
Governors  of the  Federal  Reserve  System (or  against  any other  category of
liabilities  which includes  deposits by reference to which the interest rate on
LIBOR  Loans is  determined  or any  category of  extensions  of credit or other
assets  which  includes  loans by an office of any Lender  outside of the United
States of America to residents of the United States of America).

         "Adjusted Net Operating Income" means, with respect to a Borrowing Base
Property and for a given period, the sum of the following (without duplication):
(a) rents and other revenues received in the ordinary course from operating such
Property (including proceeds of rent loss insurance but excluding pre-paid rents
and revenues and security  deposits except to the extent applied in satisfaction
of tenants' obligations for rent) minus (b) all expenses paid or accrued related
to the  ownership,  operation or  maintenance  of such  Borrowing Base Property,
including  but not  limited to taxes,  assessments  and other  similar  charges,
insurance,   utilities,  payroll  costs,  maintenance,  repair  and  landscaping
expenses,  and on-site marketing expenses minus (c) an imputed management fee in
the amount of two and one-half of one percent (2.5%) of the total gross revenues
for  such  Property  for  such  period  minus  (or  plus  as  appropriate)   (d)
straight-line rent leveling  adjustments  required to be made in accordance with
GAAP with  respect to rents  received  in respect of such  Property  during such
period minus (e) the Reserves for Capital  Expenditures  for such Property as of
the end of such period.

         "Affiliate" means any Person (other than the Agent or any Lender):  (a)
directly or indirectly controlling, controlled by, or under common control with,
the Borrower;  (b) directly or indirectly  owning or holding five percent (5.0%)
or more of any equity  interest in the Borrower;  or (c) five percent  (5.0%) or
more of whose voting stock or other  equity  interest is directly or  indirectly
owned  or held by the  Borrower.  For  purposes  of this  definition,  "control"


                                      - 2 -



<PAGE>



(including with correlative meanings,  the terms "controlling",  "controlled by"
and "under common control with") means the possession  directly or indirectly of
the power to direct or cause the direction of the  management  and policies of a
Person,  whether  through the  ownership of voting  securities or by contract or
otherwise.  The  Affiliates of a Person shall include any officer or director of
such Person.

         "Agent" means First Union National Bank, as contractual  representative
for the Lenders under the terms of this Agreement, and any of its successors and
assigns.

         "Agreement Date" means the date as of which this Agreement is dated.

         "Appraisal"  means,  in respect of any  Property,  an M.A.I.  appraisal
commissioned  by and  addressed  to the Agent  (acceptable  to Agent as to form,
substance and appraisal date),  prepared by a professional  appraiser acceptable
to the  Agent,  having  at  least  the  minimum  qualifications  required  under
Applicable  Law  governing  the Agent and the  Lenders,  including  FIRREA,  and
determining the "as is" market value of such Property as between a willing buyer
and a willing seller.

         "Appraised  Value"  means,  with respect to any  Property,  the "as is"
market value of such Property as reflected in the then most recent  Appraisal of
such Property as the same may have been  reasonably  adjusted by the Agent based
upon its  internal  review  of such  Appraisal  which is based on  criteria  and
factors then generally used and considered by the Agent in determining the value
of similar  properties,  which review shall be conducted  prior to acceptance of
such Appraisal by the Agent.

         "Applicable  Law" means all  applicable  provisions  of  constitutions,
statutes,  rules,  regulations  and  orders of all  governmental  bodies and all
orders and decrees of all courts, tribunals and arbitrators.

         "Applicable Margin" means:

         (a)  during  any  period for which the  Borrower  has not  received  an
Investment Grade Rating from the Rating Agencies,  the percentage rate set forth
below corresponding to the Borrowing Base Leverage Ratio in effect at such time:

        Borrowing Base          Aplicable Margin        Applicable Margin
Level   Leverage Ratio          for Libor Loans         for Base Rate Loans
=====   ==============          ================        ===================

1       Less than or equal              1.35%                   0.0%
        to 0.35 to 1.00

2       Greater than 0.35               1.50%                   0.0%
        to 1.00

The  Applicable  Margin shall be  determined  by the Agent under this clause (a)
from time to time,  based on the Borrowing  Base Leverage  Ratio as set forth in
the Compliance  Certificate most recently  delivered by the Borrower pursuant to
Section 9.3. Any adjustment to the  Applicable  Margin shall be effective (i) in
the case of a Compliance  Certificate  delivered in  connection  with  quarterly
financial  statements of the Borrower  delivered pursuant to Section 9.1., as of
the date 50 days  following  the end of the last  day of the  applicable  fiscal


                                      - 3 -

<PAGE>


period covered by such  ComplianceCertificate,  (ii) in the case of a Compliance
Certificate  delivered in  connection  with annual  financial  statements of the
Parent delivered  pursuant to Section 9.2., as of the date 90 days following the
end of the last day of the applicable  fiscal period covered by such  Compliance
Certificate,  and (iii) in the case of any other Compliance  Certificate,  as of
the date 5 Business  Days  following  the Agent's  request  for such  Compliance
Certificate.  Notwithstanding  the foregoing,  for the period from the Effective
Date  through but  excluding  the date on which the Agent first  determines  the
Applicable  Margin as set forth  above,  the  Applicable  Margin for LIBOR Loans
shall equal 1.35%. Thereafter, the Applicable Margin shall be adjusted from time
to time as set forth above; or

         (b) during any period for which the Borrower has received an Investment
Grade Rating from the Rating Agencies,  the percentage per annum determined,  at
any time, based on the range into which the Borrower's Credit Rating then falls,
in  accordance  with the table set forth  below.  Any  change in the  Borrower's
Credit  Rating  which would  cause it to move to a different  level in the table
shall effect a change in the Applicable  Margin on the Business Day  immediately
following  the date on which such  change  occurs.  During  any period  that the
Borrower has received  Credit  Ratings that are not  equivalent,  the Applicable
Margin shall be determined by the lower of such two Credit Ratings.

        Borrower's Credit Rating     Applicable Margin       Applicable Margin
Level        (S&P/Moody's)           for Libor Loans         for Base Rate Loans
=====   ========================     =================       ===================

1        BBB+/Baa1 (or higher)              1.00%                   0.0%
2        BBB/Baa2                           1.20%                   0.0%
3        BBB-/Baa3                          1.30%                   0.0%

         "Assignee" has the meaning given that term in Section 13.5.(d).

         "Assignment   and  Acceptance   Agreement"   means  an  Assignment  and
Acceptance Agreement among a Lender, an Assignee and the Agent, substantially in
the form of Exhibit A.

         "Assignment  of Leases and  Rents"  means an  Assignment  of Leases and
Rents  executed  by a Loan  Party in favor of the Agent for the  benefit  of the
Lenders,  substantially  in the  form of  Exhibit  B or  otherwise  in form  and
substance satisfactory to the Agent.

         "Base  Rate" means the per annum rate of  interest  announced  publicly
from time to time by the Agent as its "prime rate".  Any change in the Base Rate
resulting  from a change in such prime rate shall  become  effective as of 12:01
a.m. on the  Business Day on which each such change  occurs.  The Base Rate is a
reference rate used by the Agent in determining  interest rates on certain loans
and is not  necessarily  the best or the lowest rate of interest  charged by the
Agent or any Lender on any extension of credit to any debtor.

         "Base Rate Loan" means a Loan  bearing  interest at a rate based on the
Base Rate.

         "Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise  contributed  to by any member of the ERISA
Group.

                                      - 4 -


<PAGE>



         "Borrower"  has the  meaning  set forth in the  introductory  paragraph
hereof and shall include the Borrower's successors and permitted assigns.

         "Borrowing  Base"  means  an  amount  equal  to 60%  of the  sum of the
Borrowing Base Values of the Borrowing Base Properties;  provided,  however,  to
the extent  that the  aggregate  Borrowing  Base  Values of all  Borrowing  Base
Properties owned by Subsidiaries  that are not Wholly Owned  Subsidiaries  would
exceed 20.0% of the Borrowing  Base  (determined  without  giving effect to this
proviso), such excess shall be excluded when determining the Borrowing Base.

         "Borrowing Base  Certificate"  means a report in substantially the form
of Exhibit C, certified by the chief financial  officer or the controller of the
Borrower,  setting  forth the  calculations  required to establish the Borrowing
Base Value for each  Borrowing  Base  Property  and the  Borrowing  Base for all
Borrowing  Base  Properties  as of a  specified  date,  all in form  and  detail
satisfactory to the Agent.

         "Borrowing  Base Leverage  Ratio" means,  at any time, the ratio of (a)
the aggregate principal amount of all outstanding Revolving Loans, together with
the aggregate principal amount of all Letter of Credit  Liabilities,  to (b) the
Borrowing Base at such time.

         "Borrowing  Base  Property"  means a  Property  which the Agent and the
Requisite  Lenders have agreed to include in  calculations of the Borrowing Base
pursuant to Section 4.1. A Property  shall cease to be a Borrowing Base Property
(a) if at any time it  shall  cease to be an  Eligible  Property,  or (b) at all
times during which the Borrower  does not have an  Investment  Grade Rating from
the Rating  Agencies  and either (i) the Agent  shall  cease to hold a valid and
perfected  first priority Lien in such  Borrowing  Base Property,  or (ii) there
shall have  occurred  and be  continuing a default  under the  Security  Deed or
Assignment of Leases and Rents in respect of such Borrowing Base Property.

         "Borrowing  Base  Value"  means,  with  respect  to  a  Borrowing  Base
Property,  (a) from the date on which such  Property  first  becomes a Borrowing
Base Property  through and including the last day of the second  complete fiscal
quarter  of the  Borrower  occurring  after such  date,  an amount  equal to the
Appraised  Value  of  such  Borrowing  Base  Property,  and  (b)  at  all  times
thereafter,  an amount equal to (i) the Adjusted  Net  Operating  Income of such
Borrowing Base Property for the two most recently  ended fiscal  quarters of the
Borrower times (ii) 2 divided by (iii) the Capitalization Rate.

         "Business Day" means (a) any day other than a Saturday, Sunday or other
day on which banks in Charlotte,  North  Carolina are  authorized or required to
close and (b) with reference to a LIBOR Loan, any such day that is also a day on
which  dealings  in Dollar  deposits  are  carried  out in the London  interbank
market.

         "Capital   Expenditures"   means,  with  respect  to  any  Person,  all
expenditures  made and liabilities  incurred for the acquisition of assets which
are not, in  accordance  with GAAP,  treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.

         "Capitalization Rate" means nine and one-half of one percent (9.50%).

                                      - 5 -

<PAGE>


         "Capitalization  Value" means,  at any time, the sum of (a) Capitalized
EBITDA  (except  that  for  purposes  of  this  definition,  (i)  the  aggregate
contribution to Capitalized  EBITDA from leasing  commissions and management and
development fees shall not exceed 5% of Capitalized EBITDA and (ii) all earnings
and  other  components  of  Capitalized  EBITDA  attributable  to any  cash  and
marketable  securities  included in  Capitalization  Value under the immediately
following  clause  (b)  shall be  excluded  from  Capitalized  EBITDA),  (b) the
Parent's beneficial share of unrestricted cash and marketable  securities of the
Parent and its  Consolidated  Businesses and  Unconsolidated  Entities,  at such
time, as is or would be reflected in the  Consolidated  Financial  Statements at
such time, and (c) without  duplication,  the Parent's  beneficial  share of the
cost basis of Properties  Under  Construction of the Parent and its Consolidated
Businesses  and  Unconsolidated  Entities,  as certified by the  Borrower,  such
certificate to be accompanied by all appropriate  documentation  supporting such
figure.

         "Capitalized  EBITDA" means, as of a given date,  (a)(i)(A)  EBITDA for
the two calendar  quarters most  recently  ended times (B) 2 minus (ii) Reserves
for Capital  Expenditures  determined for a 365 day period for all Properties of
the Parent, its Subsidiaries and all Unconsolidated  Entities divided by (b) the
Capitalization Rate.

         "Capitalized  Lease Obligation" means obligations under a lease that is
required to be capitalized for financial  reporting  purposes in accordance with
GAAP. The amount of a Capitalized Lease Obligation is the capitalized  amount of
such obligation determined in accordance with GAAP.

         "Cash Equivalents" means: (a) securities issued,  guaranteed or insured
by the United  States of America or any of its agencies  with  maturities of not
more than one year from the date  acquired;  (b)  certificates  of deposit  with
maturities of not more than one year from the date  acquired  issued by a United
States federal or state chartered commercial bank of recognized standing,  which
has capital and unimpaired surplus in excess of  $500,000,000.00  and which bank
or its holding company has a short-term  commercial paper rating of at least A-2
or the  equivalent  by S&P or at least P-2 or the  equivalent  by  Moody's;  (c)
reverse  repurchase  agreements  with terms of not more than seven days from the
date  acquired,  for  securities  of the type  described in clause (a) above and
entered into only with commercial banks having the  qualifications  described in
clause (b) above; (d) commercial paper issued by any Person  incorporated  under
the laws of the United States of America or any State thereof and rated at least
A-2 or the equivalent  thereof by S&P or at least P-2 or the equivalent  thereof
by Moody's, in each case with maturities of not more than one year from the date
acquired;  and (e)  investments  in money  market  funds  registered  under  the
Investment   Company   Act  of  1940,   which   have  net  assets  of  at  least
$500,000,000.00 and at least 85% of whose assets consist of securities and other
obligations of the type described in clauses (a) through (d) above.

         "Collateral"  means any collateral  security  hereafter  pledged by any
Loan Party to secure the Obligations or any portion thereof.

         "Collateral  Account"  means a  special  non-interest  bearing  deposit
account  maintained  at the  Principal  Office  of the  Agent and under its sole
dominion and control.

         "Collateral  Documents"  means the Security  Deeds,  the Assignments of
Leases and Rents, and all other security agreements,  financing statements,  and
other loan and collateral documents creating,  evidencing and perfecting Agent's
Liens in any of the Collateral.

                                      - 6 -

<PAGE>


         "Commitment" means, as to each Lender, such Lender's obligation to make
Revolving  Loans  pursuant  to  Section  2.1.,  and to issue (in the case of the
Agent) or participate  in (in the case of the other  Lenders)  Letters of Credit
pursuant to Section  2.2.(a) and 2.2.(i)  respectively,  in an amount up to, but
not exceeding  (but in the case of the Agent  excluding the aggregate  amount of
participations  in the Letters of Credit held by other Lenders),  the amount set
forth for such Lender on its signature page hereto as such Lender's  "Commitment
Amount" or as set forth in the applicable  Assignment and Acceptance  Agreement,
as the same may be reduced  from time to time  pursuant to Section  2.10.  or as
appropriate  to  reflect  any  assignments  to or by  such  Lender  effected  in
accordance with Section 13.5.

         "Commitment  Percentage" means, as to each Lender, the ratio, expressed
as a  percentage,  of (a) the  amount  of such  Lender's  Commitment  to (b) the
aggregate amount of the Commitments of all Lenders hereunder; provided, however,
that if at the time of  determination  the  Commitments  have terminated or been
reduced  to  zero,  the  "Commitment  Percentage"  of each  Lender  shall be the
Commitment  Percentage  of such  Lender  in  effect  immediately  prior  to such
termination or reduction.

         "Compliance  Certificate"  has the  meaning  given that term in Section
9.3.

         "Consolidated  Businesses" means,  collectively,  each Affiliate of the
Parent  and the  Borrower  which is or should be  included  in the  Consolidated
Financial Statements in accordance with GAAP.

         "Consolidated   Financial   Statements"   means,   collectively,    the
consolidated  balance sheet and related  consolidated  statement of  operations,
statements of accumulated  deficiency in assets and  shareholder/partner  equity
and  statement of cash flows,  and  footnotes  thereto,  of the Borrower and the
Parent in each case prepared in accordance with GAAP.

         "Consolidated  Outstanding  Indebtedness"  means,  as of any time,  all
Indebtedness of the Parent and the Borrower and all Indebtedness attributable to
the  Parent's  beneficial  interest in its  Consolidated  Businesses,  including
mortgage and other notes payable and all accounts  payable and accrued  expenses
determined  in  accordance  with  GAAP all as is or would  be  reflected  in the
Consolidated Financial Statements at such time.

         "Construction in Process" means,  with respect to any Property which is
Under  Construction,  the aggregate,  good faith  estimated cost of construction
(including land acquisition costs) for such Property.

         "Contingent  Liabilities"  means,  as of any time, the sum of (a) those
liabilities, determined in accordance with GAAP, as is or would be set forth and
quantified as contingent  liabilities in the notes to the Consolidated Financial
Statements  at such  time  and (b)  contingent  liabilities,  other  than  those
described in the immediately preceding clause (a), which represent  Indebtedness
in respect of Guarantees of the Parent or the Borrower;  provided, however, that
Contingent  Liabilities shall exclude contingent liabilities which represent the
"Other  Party's  Share" of  "Duplicated  Obligations"  (as such quoted terms are
hereinafter defined).  "Duplicated Obligations" means,  collectively,  all those
payment  guaranties in respect of  Indebtedness of  Unconsolidated  Entities for
which the Parent or the  Borrower and another  Person are jointly and  severally
liable, where the other Person's Credit

                                      - 7 -

<PAGE>



Rating is BBB- or better by S&P or Baa3 or  better by  Moody's.  "Other  Party's
Share" means such other Person's  fractional  share of the obligation  under the
Unconsolidated Entity in question.

         "Continue",   "Continuation"   and  "Continued"   each  refers  to  the
continuation of a LIBOR Loan from one Interest Period to another Interest Period
pursuant to Section 2.7.

         "Convert",  "Conversion"  and "Converted" each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.8.

         "Credit  Event" means any of the  following:  (a) the making (or deemed
making) of any Loan,  (b) the  Conversion  of a Loan and (c) the  issuance  of a
Letter of Credit.

         "Credit  Rating" means the lowest rating assigned by a Rating Agency to
each series of rated senior unsecured long term indebtedness of the Borrower.

         "Debt Service"  means,  for any period of time, the sum of (a) Interest
Expense  for such  period  plus (b) the  aggregate  of all  scheduled  principal
payments on  Indebtedness  of such Person made by the Parent,  the  Borrower and
each  Affiliate  included  in  the  Consolidated  Business  during  such  period
(excluding balloon,  bullet or similar payments of principal due upon the stated
maturity of Indebtedness).

         "Default" means any of the events  specified in Section 11.1.,  whether
or not there has been satisfied any  requirement  for the giving of notice,  the
lapse of time, or both.

         "Defaulting Lender" has the meaning set forth in Section 3.11.

         "Dollars"  or "$" means the lawful  currency  of the  United  States of
America.

         "EBITDA"  means,  for any period of time,  (a) revenues less  operating
costs before Interest Expense,  income taxes,  depreciation and amortization and
extraordinary items (including, without limitation,  non-recurring items such as
gains or losses from asset sales) and adjusted for non-cash revenue attributable
to straight  lining of rents for the Parent and its  beneficial  interest in its
Consolidated  Businesses,  plus (b) the Parent's beneficial interest in revenues
less operating costs before Interest  Expense,  income taxes,  depreciation  and
amortization   and   extraordinary   items   (including,   without   limitation,
non-recurring  items such as gains or losses from asset  sales) and adjusted for
non-cash revenue  attributable to straight lining of rents and non-cash expenses
associated  with executive stock  compensation  (after  eliminating  appropriate
intercompany amounts) applicable to each of the Unconsolidated  Entities (to the
extent  not  included  above)  in all cases as is or would be  reflected  in the
Consolidated Financial Statements at such time.

         "Effective Date" means the later of:(a) the Agreement Date; and (b) the
the date on which all of the  conditions  precedent  set forth in  Section  6.1.
shall have been fulfilled or waived in writing by the Requisite Lenders.

         "Eligible  Assignee"  means any Person who is: (i)  currently a Lender;
(ii) a commercial bank,  trust company,  insurance  company,  investment bank or
pension fund  organized  under the laws of the United States of America,  or any
state thereof, and having total assets in excess of

                                      - 8 -

<PAGE>

$5,000,000,000;  (iii) a savings and loan  association or savings bank organized
under the laws of the United States of America, or any state thereof, and having
a  tangible  net  worth  of at least  $500,000,000;  or (iv) a  commercial  bank
organized  under  the  laws  of any  other  country  which  is a  member  of the
Organization for Economic Cooperation and Development  ("OECD"),  or a political
subdivision  of  any  such  country,  and  having  total  assets  in  excess  of
$10,000,000,000,  provided  that such bank is acting  through a branch or agency
located in the United  States of  America.  If such  Person is not  currently  a
Lender,  such Person's senior unsecured long term indebtedness must be rated BBB
or higher by S&P,  Baa2 or higher by  Moody's,  or the  equivalent  or higher of
either such rating by another credit rating agency acceptable to the Agent.

         "Eligible  Property"  means  a  Property  which  satisfies  all  of the
following  requirements as confirmed by the Agent: (a) such Property is owned in
fee simple by the  Parent,  the  Borrower  or a  Subsidiary;  (b)  neither  such
Property,  nor any  interest of the  Borrower  or such  Subsidiary  therein,  is
subject to any Lien (other than Permitted Liens) or to any Negative Pledge;  (c)
if such  Property  is owned by a  Subsidiary,  none of the  Parent's  direct  or
indirect  ownership  interest in such  Subsidiary  is subject to any Lien (other
than Permitted Liens) or to any Negative Pledge;  (d) the Parent or the Borrower
directly,  or  indirectly  through  a  Subsidiary,  has the  right  to take  the
following  actions with respect to such Property  without the need to obtain the
consent of any Person:  (i) to create  Liens on such  Property  as security  for
Indebtedness of the Parent,  the Borrower or such Subsidiary,  as applicable and
(ii) to sell,  transfer  or  otherwise  dispose  of such  Property;  (e) if such
Property is owned by a Subsidiary, none of the Parent's or the Borrower's direct
or indirect  ownership interest in such Subsidiary is (i) encumbered by any Lien
other than  Permitted  Liens or (ii)  subject to any  Negative  Pledge;  (f) the
Occupancy Rate of such Property equals or exceeds 75%; provided, however, if the
Occupancy Rate of a Property which is in all other respects an Eligible Property
shall fall below 75%, then such Property  shall remain an Eligible  Property for
purposes of this clause (f) for a period of 90 days  following the date on which
the Occupancy Rate fell below 75%; provided further,  however,  if the Occupancy
Rate of a Property  which is in all other  respects an Eligible  Property  shall
fall below 75% by reason of such Property not being actually occupied by tenants
that are not  Affiliates,  then such Property shall remain an Eligible  Property
for  purposes of this clause (f) for a period not to exceed nine months from the
date on which the Occupancy Rate fell below 75% so long as (i) no other Property
is an Eligible Property as a result of this application of this proviso and (ii)
the tenants of such Property are paying rent with respect to at least 80% of the
net rentable square footage of such Property at market rates pursuant to binding
leases as to which no monetary default has occurred and is continuing;  (g) such
Property is not subject to a ground lease;  and (h) such Property is free of all
structural  defects,  title defects,  environmental  conditions or other adverse
matters except for defects,  conditions or matters  individually or collectively
which do not  materially and adversely  affect the profitable  operation of such
Property as determined by the Agent in its  reasonable  discretion.  The parties
hereto waive the  requirement  contained  in the  immediately  preceding  clause
(d)(ii) with respect to the  limitations on transfer of (x) the Property know as
Woodmoor  Shopping  Center,  contained  in  Section  19(a)  of the  Contribution
Agreement  dated as of  September  3,  1999 by and  between  The G&C  Properties
Corporation  and the  Borrower;  (y) the  Property  know as  Willston  Centre I,
contained in Section 19(a) of the Contribution  Agreement dated as of October 1,
1998 by and between Greenwood Associates and the Borrower;  and (z) the Property
know  as  Spring  Valley  Shopping  Center,  contained  in  Section  7(f) of the
Contribution  Agreement dated as of October 8, 1997 by and between Spring Valley
Joint Venture and the Borrower.

                                      - 9 -

<PAGE>



         "Environmental  Indemnity  Agreement" means an Environmental  Indemnity
Agreement  executed  by a Loan Party in favor of the Agent and the  Lenders  and
substantially in the form of Exhibit D.

         "Environmental Laws" means any Applicable Law relating to environmental
protection  or the  manufacture,  storage,  disposal or  clean-up  of  Hazardous
Materials  including,  without  limitation,  the  following:  Clean Air Act,  42
U.S.C.ss.7401 et seq.;  Federal Water Pollution Control Act, 33 U.S.C.ss.1251 et
seq.;  Solid  Waste  Disposal  Act,  42  U.S.C.ss.6901  et  seq.;  Comprehensive
Environmental  Response,  Compensation  and Liability Act, 42 U.S.C.ss.  9601 et
seq.; National  Environmental Policy Act, 42 U.S.C.ss.4321 et seq.;  regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial  interpretation  thereof  relating  primarily to the environment or
Hazardous Materials.

         "Equity Interests" means, with respect to any Person, shares of capital
stock of (or other  ownership or profit  interests  in) such  Person,  warrants,
options or other rights for the purchase or other  acquisition  from such Person
of shares of capital stock of (or other  ownership or profit  interests in) such
Person,  securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit  interests in) such Person or warrants,  rights
or options for the purchase or other acquisition from such Person of such shares
(or such other  interests),  and other  ownership  or profit  interests  in such
Person (including,  without limitation,  partnership,  member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options,  rights or other interests are authorized or otherwise  existing on any
date of determination.

         "Equity  Issuance" means any issuance or sale by a Person of any Equity
Interest in such Person.

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

         "ERISA Group" means the Parent, the Borrower,  any other Subsidiary and
all members of a controlled  group of corporations  and all trades or businesses
(whether or not  incorporated)  under common  control  which,  together with the
Parent,  the Borrower or any other Subsidiary,  are treated as a single employer
under Section 414 of the Internal Revenue Code.

         "Event of Default" means any of the events  specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.

         "Exempt  Subsidiary" means any Material Subsidiary of the Parent or the
Borrower  which is  prohibited  from  executing  the  Guaranty  or an  Accession
Agreement,  as applicable,  pursuant to Sections 6.1. and 8.16.  herein,  by (i)
terms of its articles of incorporation, bylaws, operating agreement, partnership
agreement,  declaration of trust or other similar organizational document or the
terms of any indenture,  contract or instrument evidencing  Indebtedness of such
Subsidiary,  which terms  expressly  prohibit  such  Subsidiary  from  providing
Guarantees  of  Indebtedness  of any other  Person or  otherwise  incurring  any
Indebtedness  or (ii) any fiduciary  obligation  owing by such Subsidiary to the
holders of Equity Interest in such Subsidiary and imposed under Applicable Law.

         "Extension Request" has the meaning given that term in Section 2.11.

                                     - 10 -

<PAGE>

         "Fair Market Value" means,  with respect to any asset,  the price which
could be negotiated in an arm's-length transaction,  for cash, between a willing
seller and a willing buyer,  neither of which is under pressure or compulsion to
complete the transaction.  Fair Market Value shall be determined by the Board of
Directors of the Parent acting in good faith and evidenced by a board resolution
thereof  delivered  to the Agent or, with  respect to any asset  valued at up to
$1,000,000,  such  determination may be made by a duly authorized officer of the
Parent evidenced by an officer's certificate delivered to the Agent.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upward 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  succeeding  Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to the
Agent  by  federal  funds  dealers  selected  by the  Agent  on such day on such
transaction as determined by the Agent.

         "Fees"  means the fees and  commissions  provided for or referred to in
Section 3.6.  and any other fees payable by the Borrower  hereunder or under any
other Loan Document.

         "FIRREA"  means  the  Financial   Institution   Recovery,   Reform  and
Enforcement Act of 1989, as amended.

         "First Union" means First Union  National Bank and its  successors  and
assigns.

         "Fixed  Charges"  means,  for any  period of time,  the sum of (a) Debt
Service for such period, plus (b) the aggregate of all dividends paid or accrued
by the Parent or the Borrower or any such  Affiliate in respect of any Preferred
Stock during such period  (except to the extent paid or payable to the Parent or
the Borrower or any other such  Affiliate),  plus (c) the  Interest  Expense and
other items listed in the immediately  preceding  clauses (a) and (b) applicable
to each of the  Unconsolidated  Entities  (to the  extent  not  included  above)
multiplied by the Parent's or the Borrower's  respective beneficial interests in
the Unconsolidated Entities.

         "GAAP" means generally accepted accounting  principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession,  which  are  applicable  to  the  circumstances  as of the  date  of
determination.

         "Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of,  registrations and filings with, and reports to, all
Governmental Authorities.

         "Governmental  Authority" means any national, state or local government
(whether domestic or foreign),  any political  subdivision  thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority,  body, agency, bureau or entity (including,  without limitation,  the


                                     - 11 -

<PAGE>

Federal Deposit  Insurance  Corporation,  the Comptroller of the Currency or the
Federal  Reserve  Board,  any central bank or any  comparable  authority) or any
arbitrator with authority to bind a party at law.

         "Guarantor"  means  any  Person  that is a party to the  Guaranty  as a
"Guarantor"  and in any  event  shall  include  the  Parent  and  each  Material
Subsidiary.

         "Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation
means and  includes:  (a) a guaranty  (other than by  endorsement  of negotiable
instruments  for  collection in the ordinary  course of  business),  directly or
indirectly,  in any  manner,  of any part or all of such  obligation,  or (b) an
agreement,  direct or  indirect,  contingent  or  otherwise,  and whether or not
constituting a guaranty,  the practical effect of which is to assure the payment
or  performance  (or payment of damages in the event of  nonperformance)  of any
part or all of such  obligation  whether by: (i) the purchase of  securities  or
obligations,  (ii) the purchase, sale or lease (as lessee or lessor) of property
or the  purchase or sale of services  primarily  for the purpose of enabling the
obligor with respect to such  obligation to make any payment or performance  (or
payment of damages in the event of  nonperformance) of or on account of any part
or all of such  obligation,  or to assure the owner of such  obligation  against
loss,  (iii) the  supplying of funds to or in any other manner  investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries  of  letters  of  credit,  or (v) the  supplying  of  funds  to or
investing in a Person on account of all or any part of such Person's  obligation
under a Guaranty of any obligation or indemnifying or holding  harmless,  in any
way,  such  Person  against any part or all of such  obligation.  As the context
requires,  "Guaranty"  shall also mean the Guaranty to which the  Guarantors are
parties substantially in the form of Exhibit E.

         "Hazardous Materials" means all or any of the following: (a) substances
that are  defined  or listed  in,  or  otherwise  classified  pursuant  to,  any
applicable Environmental Laws as "hazardous substances",  "hazardous materials",
"hazardous  wastes",  "toxic  substances" or any other  formulation  intended to
define, list or classify substances by reason of deleterious  properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TCLP"  toxicity,  "EP  toxicity";  (b)  oil,  petroleum  or  petroleum  derived
substances,  natural  gas,  natural gas liquids or  synthetic  gas and  drilling
fluids,  produced  waters  and other  wastes  associated  with the  exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any flammable  substances or explosives or any  radioactive  materials;  and (d)
asbestos  in any form or (e)  electrical  equipment  which  contains  any oil or
dielectric fluid  containing  levels of  polychlorinated  biphenyls in excess of
fifty parts per million.

         "Hedging  Agreements"  means,  collectively,  Interest Rate Agreements,
commodity future or option contracts, currency swap agreements,  currency future
or option contracts and other similar agreements.

         "Implied  Mortgage Debt Service"  means,  as of a given date, an amount
equal to the annual  principal  and interest  payment  sufficient to amortize in
full  during  a  25-year  period  the  aggregate   principal  balance  of  Loans
outstanding  as of such date  calculated  using an  interest  rate  equal to the
greater of (i) the yield on a 10 year United  States  Treasury Note at such time
as determined by the Agent plus 2.00% or (ii) 8.00%.

                                     - 12 -

<PAGE>



         "Indebtedness"  means,  with  respect  to a  Person,  at  the  time  of
computation thereof, all of the following (without duplication): (a) obligations
of such  Person in respect of money  borrowed;  (b)  obligations  of such Person
(other than trade debt incurred in the ordinary course of business),  whether or
not for money borrowed (i) represented by notes payable, or drafts accepted,  in
each  case  representing   extensions  of  credit,   (ii)  evidenced  by  bonds,
debentures,  notes or similar instruments,  or (iii) constituting purchase money
indebtedness,  conditional sales contracts,  title retention debt instruments or
other similar  instruments,  upon which interest charges are customarily paid or
that are  issued  or  assumed  as full or  partial  payment  for  property;  (c)
Capitalized Lease Obligations of such Person; (d) all reimbursement  obligations
of such Person  under any letters of credit or  acceptances  (whether or not the
same have been presented for payment); and (e) all Indebtedness of other Persons
which (i) such Person has Guaranteed or is otherwise  recourse to such Person or
(ii) are secured by a Lien on any property of such Person.

         "Intellectual  Property"  has the  meaning  given  that term in Section
7.1.(u).

         "Interest  Expense"  means,  for any period of time,  the  consolidated
interest expense  calculated in accordance with GAAP,  whether paid,  accrued or
capitalized  (without  deduction of consolidated  interest income) of the Parent
and that  attributable to the Parent's  beneficial  interest in its Consolidated
Businesses,  including, without limitation or duplication (or, to the extent not
so included,  with the addition of), (a) the portion of any rental obligation in
respect of any Capitalized  Lease  Obligation  allocable to interest  expense in
accordance with GAAP; (b) the  amortization  of debt discounts or premiums;  (c)
any payments or fees (other than  up-front  fees) with respect to interest  rate
swap or similar  agreements;  and (d) the  interest  expense and items listed in
clauses (a) through (c) above applicable to each of the Unconsolidated  Entities
(to the  extent  not  included  above)  multiplied  by the  Parent's  respective
beneficial interests in the Unconsolidated Entities, in all cases as is or would
be  reflected  in the  applicable  Consolidated  Financial  Statements  for such
period.

         "Interest  Period" means,  with respect to any LIBOR Loan,  each period
commencing  on the  date  such  LIBOR  Loan is made or the  last day of the next
preceding   Interest  Period  for  such  Loan  and  ending  on  the  numerically
corresponding day in the first,  second or third calendar month  thereafter,  as
the  Borrower may select in a Notice of  Borrowing,  Notice of  Continuation  or
Notice of Conversion,  as the case may be, except that each Interest Period that
commences on the last Business Day of a calendar  month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) if any Interest Period would otherwise
end  after  the  Termination  Date,  such  Interest  Period  shall  end  on  the
Termination  Date;  (b) each Interest  Period that would  otherwise end on a day
which is not a Business Day shall end on the next  succeeding  Business Day (or,
if such  next  succeeding  Business  Day falls in the next  succeeding  calendar
month,  on the  next  preceding  Business  Day);  and  (c)  notwithstanding  the
immediately  preceding  clause (a), no Interest  Period for any LIBOR Loan shall
have a duration of less than one month and, if the Interest Period for any LIBOR
Loan would  otherwise  be a shorter  period,  such Loan  shall not be  available
hereunder for such period.

         "Interest  Rate  Agreement"  means any  interest  rate swap  agreement,
interest rate cap  agreement,  interest  rate collar  agreement or other similar
contractual  agreement or arrangement entered into for the purpose of protecting
against fluctuations in interest rates.

                                     - 13 -

<PAGE>


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

         "Investment"  means, with respect to any Person and whether or not such
investment  constitutes a controlling  interest in such Person: (a) the purchase
or other acquisition of any share of capital stock,  evidence of Indebtedness or
other security issued by any other Person; (b) any loan, advance or extension of
credit to, or  contribution  (in the form of money or goods) to the  capital of,
any other Person;  (c) any Guaranty of the Indebtedness of any other Person; and
(d) any commitment or option to make an Investment in any other Person.

         "Investment  Grade  Rating"  means a Credit Rating of BBB- or higher by
S&P,  Baa3 or higher by  Moody's,  or the  equivalent  or higher of either  such
rating by another Rating Agency.

         "L/C Commitment Amount" equals $5,000,000.

         "Lender"  means  each  financial  institution  from time to time  party
hereto as a "Lender",  together  with its  respective  successors  and permitted
assigns.

         "Lending  Office" means, for each Lender and for each Type of Loan, the
office of such Lender  specified as such on its signature  page hereto or in the
applicable  Assignment  and Acceptance  Agreement,  or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.

         "Letter of Credit" has the meaning set forth in Section 2.2.(a).

         "Letter  of Credit  Documents"  means,  with  respect  to any Letter of
Credit,  collectively,  any  application  therefor,  any  certificate  or  other
document  presented in connection with a drawing under such Letter of Credit and
any other agreement, instrument or other document governing or providing for (a)
the rights and  obligations of the parties  concerned or at risk with respect to
such  Letter  of  Credit  or  (b)  any  collateral  security  for  any  of  such
obligations.

         "Letter of Credit Liabilities" shall mean, without duplication,  at any
time and in respect of any Letter of Credit, the sum of (a) the Stated Amount of
such  Letter of Credit plus (b) the  aggregate  unpaid  principal  amount of all
Reimbursement  Obligations  of the  Borrower  at such  time due and  payable  in
respect of all drawings  made under such Letter of Credit.  For purposes of this
Agreement,  a Lender  (other  than the Agent in its  capacity  as such) shall be
deemed  to  hold  a  Letter  of  Credit  Liability  in an  amount  equal  to its
participation  interest in the related  Letter of Credit under Section  2.2.(i),
and the Agent shall be deemed to hold a Letter of Credit  Liability in an amount
equal to its  retained  interest in the related  Letter of Credit  after  giving
effect  to the  acquisition  by the  Lenders  other  than  the  Agent  of  their
participation interests under such Section.

         "LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
rate 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.  If for any
reason such rate is not  available,  the term "LIBOR" shall mean,  for any LIBOR
Loan for any Interest Period therefor,  the rate per annum (rounded upwards,  if


                                     - 14 -

<PAGE>

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.

         "LIBOR Loans" means Loans bearing interest at a rate based on LIBOR.

         "Lien" as applied to the property of any Person means: (a) any security
interest,  encumbrance,  mortgage,  deed to secure debt, deed of trust,  pledge,
lien, charge or lease  constituting a Capitalized Lease Obligation,  conditional
sale or other title retention agreement,  or other security title or encumbrance
of any kind in respect of any  property  of such  Person,  or upon the income or
profits  therefrom;  (b) any  arrangement,  express or implied,  under which any
property of such Person is transferred,  sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other  obligation  in priority to the payment of the  general,  unsecured
creditors of such Person;  (c) the filing of any financing  statement  under the
Uniform  Commercial  Code or its  equivalent  in any  jurisdiction;  and (d) any
agreement  by  such  Person  to  grant,  give  or  otherwise  convey  any of the
foregoing.

         "Loan" means a Revolving Loan.

         "Loan  Document" means this  Agreement,  each Note, the Guaranty,  each
Accession Agreement,  each Collateral  Document,  each Letter of Credit Document
and each other document or instrument now or hereafter executed and delivered by
a Loan Party in connection with, pursuant to or relating to this Agreement.

         "Loan  Party"  means  each  of the  Borrower,  each  other  Person  who
guarantees all or a portion of the Obligations and/or who pledges any collateral
security to secure all or a portion of the Obligations.

         "Material Adverse Effect" means a materially  adverse effect on (a) the
business,  assets,  liabilities,  financial condition,  results of operations or
business  prospects of the Borrower and its  Subsidiaries  taken as a whole, (b)
the ability of the  Borrower or any other Loan Party to perform its  obligations
under  any  Loan  Document  to  which  it  is  a  party,  (c)  the  validity  or
enforceability of any of the Loan Documents,  (d) the rights and remedies of the
Lenders and the Agent under any of such Loan Documents or (e) the timely payment
of the  principal  of or  interest  on the  Loans or other  amounts  payable  in
connection therewith.

         "Material Contract" means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Parent, the Borrower, any
Subsidiary  or  any  other  Loan  Party  is a  party  as to  which  the  breach,
nonperformance,  cancellation  or  failure to renew by any party  thereto  could
reasonably be expected to have a Material Adverse Effect.

         "Material  Plan"  means at any time a Plan or  Plans  having  aggregate
Unfunded Liabilities in excess of $5,000,000.

                                     - 15 -

<PAGE>

         "Material Subsidiary" means any Subsidiary (other than the Borrower) of
the Parent which (a) owns, or otherwise has any interest in, any Borrowing  Base
Property  or any  other  property  or asset  which is taken  into  account  when
calculating  Borrowing Base Value; (b) has total assets greater than or equal to
10%  of  total  assets  of the  Parent  and  its  Subsidiaries  determined  on a
consolidated basis (calculated as of the fiscal quarter most recently ending) or
(c) has net  earnings  greater  than or equal to 10% of the net  earnings of the
Parent and its  Subsidiaries  determined on a consolidated  basis. In any event,
the term  "Material  Subsidiaries"  shall mean and include each  Subsidiary  (or
combination of  Subsidiaries) of the Parent,  which,  together with the Borrower
and the Parent,  account for 75.0% or more of Capitalization Value. If more than
one   combination  of  Subsidiaries   satisfies  such   threshold,   then  those
Subsidiaries so determined to be "Material  Subsidiaries"  shall be specified by
the Parent. The status of a Subsidiary as an Exempt Subsidiary shall not relieve
the Borrower from the obligation resulting from application of the terms of this
definition  that the  Borrower and the  Guarantors  account for 75.0% or more of
Capitalization  Value.  Schedule 1.1.(A) sets forth the Material Subsidiaries as
of the Agreement Date.

         "Moody's" means Moody's Investors Service, Inc.

         "Multiemployer Plan" means at any time an employee pension benefit plan
within the  meaning of  Section  4001(a)(3)  of ERISA to which any member of the
ERISA Group is then making or accruing an  obligation to make  contributions  or
has within the preceding five plan years made contributions, including for these
purposes  any Person  which ceased to be a member of the ERISA Group during such
five year period.

         "Negative  Pledge" means a provision of any agreement  (other than this
Agreement or any other Loan Document) that prohibits the creation of any Lien on
any assets of a Person; provided,  however, that an agreement that establishes a
maximum ratio of unsecured debt to  unencumbered  assets,  or of secured debt to
total assets,  or that otherwise  conditions a Person's  ability to encumber its
assets  upon the  maintenance  of one or more  specified  ratios that limit such
Person's  ability to encumber its assets but that do not generally  prohibit the
encumbrance  of its assets,  or the  encumbrance of specific  assets,  shall not
constitute a "Negative Pledge" for purposes of this Agreement.

         "Net Income" means, with respect to any Person for a given period, such
Person's net income for such period.

         "Net Proceeds"  means with respect to any Equity  Issuance by a Person,
the aggregate amount of all cash and the Fair Market Value of all other property
received  by such Person in respect of such Equity  Issuance  net of  investment
banking  fees,  legal  fees,   accountants  fees,   underwriting  discounts  and
commissions  and other  customary  fees and expenses  actually  incurred by such
Person in connection with such Equity Issuance.

         "Note" means a Revolving Note.

         "Notice  of  Borrowing"  means a notice in the form of  Exhibit F to be
delivered to the Agent  pursuant to Section  2.1.(b)  evidencing  the Borrower's
request for a borrowing of Revolving Loans.

                                     - 16 -

<PAGE>

         "Notice of Continuation"  means a notice in the form of Exhibit G to be
delivered  to the Agent  pursuant  to Section  2.7.  evidencing  the  Borrower's
request for the Continuation of a LIBOR Loan.

         "Notice  of  Conversion"  means a notice in the form of Exhibit H to be
delivered  to the Agent  pursuant  to Section  2.8.  evidencing  the  Borrower's
request for the Conversion of a Loan from one Type to another Type.

         "Obligations" means,  individually and collectively:  (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans, (b) all
Reimbursement  Obligations and all other Letter of Credit  Liabilities,  and (c)
all other indebtedness,  liabilities,  obligations,  covenants and duties of the
Borrower  and the other Loan  Parties  owing to the Agent or any Lender of every
kind,  nature and  description,  under or in respect of this Agreement or any of
the  other  Loan  Documents,   including,   without  limitation,  the  Fees  and
indemnification obligations, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any promissory note.

         "Occupancy  Rate" means,  with  respect to a Property at any time,  the
ratio, expressed as a percentage, of (a) the net rentable square footage of such
Property  actually  occupied by tenants that are not  Affiliates  paying rent at
market  rates  pursuant to binding  leases as to which no  monetary  default has
occurred and is continuing to (b) the aggregate net rentable  square  footage of
such Property.

         "Parent's  Share of  Unconsolidated  Entity  Outstanding  Indebtedness"
means  the  sum of the  Indebtedness  of  each  of the  Unconsolidated  Entities
contributing to Unconsolidated Entity Outstanding Indebtedness multiplied by the
Parent's respective  beneficial fractional interests in each such Unconsolidated
Entity.

         "Participant" has the meaning given that term in Section 13.5.(c).

         "PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.

         "Permitted  Liens" means,  as to any Person:  (a) Liens securing taxes,
assessments  and other charges or levies imposed by any  Governmental  Authority
(excluding  any Lien imposed  pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials,  supplies or rentals  incurred in the  ordinary  course of  business,
which are not at the time required to be paid or discharged  under Section 8.6.;
(b) Liens  consisting  of deposits or pledges  made,  in the ordinary  course of
business,  in  connection  with,  or to secure  payment  of,  obligations  under
workmen's  compensation,  unemployment insurance or similar Applicable Laws; (c)
Liens  consisting  of  encumbrances  in  the  nature  of  zoning   restrictions,
easements,  and rights or  restrictions  of record on the use of real  property,
which do not  materially  detract from the value of such  property or impair the
use thereof in the  business of such  Person;  (d) Liens in  existence as of the
Agreement  Date and set forth in Part II of Schedule  7.1.(f);  and (e) Liens in
favor of the Agent for the benefit of the Lenders.

                                     - 17 -

<PAGE>

         "Person"  means  an  individual,   corporation,   partnership,  limited
liability  company,  association,  trust or  unincorporated  organization,  or a
government or any agency or political subdivision thereof.

         "Plan" means at any time an employee pension benefit plan (other than a
Multiemployer  Plan)  which is  covered  by Title IV of ERISA or  subject to the
minimum  funding  standards  under Section 412 of the Internal  Revenue Code and
either (a) is maintained,  or  contributed  to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (b) has at any time within the
preceding five years been maintained, or contributed to, by any Person which was
at such time a member of the ERISA Group for  employees  of any Person which was
at such time a member of the ERISA Group.

         "Post-Default  Rate" means,  in respect of any principal of any Loan or
any other Obligation that is not paid when due (whether at stated  maturity,  by
acceleration,  by optional or mandatory  prepayment  or  otherwise),  a rate per
annum equal to four percent  (4.0%) plus the Base Rate as in effect from time to
time.

         "Preferred Stock" means, with respect to any Person,  shares of capital
stock of, or other  equity  interests  in,  such  Person  which are  entitled to
preference or priority over any other capital stock of, or other equity interest
in, such Person in respect of the payment of dividends or distribution of assets
upon liquidation or both.

         "Principal  Office"  means the office of the Agent located at One First
Union Center,  Charlotte,  North Carolina,  or such other office of the Agent as
the Agent may designate from time to time.

         "Property"  means a retail shopping center owned and operated by a Loan
Party or an Unconsolidated Entity, as the context may require.

         "Property  Management  Agreement" means,  collectively,  all agreements
entered into by the Parent,  the Borrower or a Subsidiary  pursuant to which the
Parent,  the  Borrower  or such  Subsidiary  engages  a Person to advise it with
respect to the management of a Borrowing Base Property.

         "Rating  Agencies"  means S&P and  Moody's or, if either S&P or Moody's
ceases to monitor  and issue  credit  ratings  generally  for  REITs,  any other
nationally  recognized  securities  rating  agency  selected by the Borrower and
approved of by the Agent and the Requisite Lenders in writing.

         "Register" has the meaning given that term in Section 13.5.(e).

         "Regulatory  Change"  means,  with  respect to any  Lender,  any change
effective  after  the  Agreement  Date  in  Applicable  Law  (including  without
limitation,  Regulation  D of the  Board of  Governors  of the  Federal  Reserve
System)  or the  adoption  or  making  after  such  date of any  interpretation,
directive or request applying to a class of banks,  including such Lender, of or
under any  Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental Authority


                                     - 18 -


<PAGE>

or monetary authority charged with the interpretation or administration  thereof
or  compliance  by any Lender with any request or  directive  regarding  capital
adequacy.

         "Reimbursement  Obligation"  means  the  absolute,   unconditional  and
irrevocable  obligation  of the Borrower to reimburse  the Agent for any drawing
honored by the Agent under a Letter of Credit.

         "REIT"  means a  Person  qualifying  for  treatment  as a "real  estate
investment trust" under the Internal Revenue Code.

         "Requisite  Lenders" means, as of any date, Lenders holding at least 66
2/3% of the aggregate  amount of the  Commitments,  or, if the Commitments  have
been  terminated  or  reduced to zero,  Lenders  holding at least 66 2/3% of the
principal  amount  of the Loans and  Letter of Credit  Liabilities.  In no event
shall a single Lender  constitute the Requisite Lenders unless there is only one
Lender at the time of determination.

         "Reserves  for  Capital  Expenditures"  means,  for any period and with
respect to a Property at the end of such  period,  an amount equal to (a)(i) the
aggregate  leaseable  square footage of all completed  space of such Property or
(ii) the Parent's  percentage  ownership share of the aggregate leaseable square
footage of all completed  space of such Property if such Property is owned by an
Unconsolidated  Entity  times  (b) $0.25  times  (c) the  number of days in such
period divided by (d) 365.

         "Restricted  Payment"  means:  (a) any dividend or other  distribution,
direct or  indirect,  on  account  of any  shares of any class of stock or other
equity  interest  of the  Parent  or any of its  Subsidiaries  now or  hereafter
outstanding,  except a dividend  payable solely in shares of that class of stock
to the  holders  of  that  class;  (b)  any  redemption,  conversion,  exchange,
retirement,  sinking fund or similar payment,  purchase or other acquisition for
value,  direct or indirect,  of any shares of any class of stock or other equity
interest of the Parent or any of its Subsidiaries now or hereafter  outstanding;
(c) any payment or prepayment of principal of, premium,  if any, or interest on,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any  Subordinated  Debt; and (d) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire  shares of any class of stock of the Parent or any of
its Subsidiaries now or hereafter outstanding.

         "Revolving Loan" means a loan made by a Lender to the Borrower pursuant
to Section 2.1.(a).

         "Revolving Note" has the meaning given that term in Section 2.9.(a).

         "Secured   Indebtedness"   means,  with  respect  to  any  Person,  any
Indebtedness of such Person that is secured in any manner by any Lien, and shall
include  without  duplication  such  Person's  pro  rata  share  of the  Secured
Indebtedness of any of such Person's Unconsolidated Affiliates.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.

                                     - 19 -


<PAGE>


         "Security  Deed"  means a deed to secure  debt,  deed of trust or other
mortgage executed by a Loan Party in favor of the Agent and substantially in the
form of Exhibit J.

         "Solvent"  means,  when used with  respect to any Person,  that (a) the
fair value and the fair salable value of its assets  (excluding any Indebtedness
due from any affiliate of such Person) are each in excess of the fair  valuation
of its total liabilities  (including all contingent  liabilities);  and (b) such
Person is able to pay its debts or other  obligations in the ordinary  course as
they mature and (c) that the Person has capital not unreasonably  small to carry
on its business and all business in which it proposes to be engaged.

         "S&P" means  Standard & Poor's Rating Group,  a division of McGraw-Hill
Companies, Inc.

         "Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time,  as such amount may be  increased or
reduced  from  time to time in ac  cordance  with the  terms of such  Letter  of
Credit.

         "Subordinated  Debt"  means  Indebtedness  of the  Parent or any of its
Subsidiaries  of any of the types  described  in clauses  (a) through (c) of the
definition  of  Indebtedness  that is  subordinated  in  right  of  payment  and
otherwise  to the  Loans  and  the  other  Obligations  (or in the  case  of any
Guarantor,  such  Guarantor's  obligations  under  the  Guaranty)  in  a  manner
satisfactory to the Requisite Lenders in their sole and absolute discretion.

         "Subsidiary"  means, for any Person,  any  corporation,  partnership or
other  entity of which at least a majority  of the  Voting  Stock is at the time
directly  or  indirectly  owned  or  controlled  by such  Person  or one or more
Subsidiaries  of such Person or by such Person and one or more  Subsidiaries  of
such Person.

         "Tangible Net Worth" means, (a) the Parent's total consolidated  assets
(excluding any deductions for  depreciation  of real property  assets) minus (b)
the carrying value of all intangible assets (including deferred costs associated
with goodwill, patents,  franchises,  organizational expense and the like) minus
(c) the total  liabilities of the Parent and its  Subsidiaries on a consolidated
basis,  all  determined  in  accordance  with GAAP.  Tangible Net Worth shall be
calculated without adjustments for minority interests.

         "Taxes" has the meaning given that term in Section 3.12.

         "Termination  Date" means May __, 2003, or such later date to which the
Termination Date may be extended pursuant to Section 2.11.

         "Tie-In   Jurisdiction"  means  a  jurisdiction  in  which  a  "tie-in"
endorsement  may be obtained  for a title  insurance  policy  covering  property
located in such  jurisdiction  which  endorsement  effectively  ties coverage to
other  title   insurance   policies   covering   properties   located  in  other
jurisdictions.

         "Total Outstanding Indebtedness" means the sum, without duplication, of
(a)   Consolidated   Outstanding   Indebtedness,   (b)  the  Parent's  Share  of
Unconsolidated Entity Outstanding Indebtedness and (c) Contingent Liabilities.

                                     - 20 -


<PAGE>

         "Type" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.

         "Unconsolidated  Entity"  shall mean,  with respect to the Parent,  any
other Person in whom the Parent holds,  directly or  indirectly,  an Investment,
which  Investment is accounted for in the financial  statements of the Parent on
an  equity  basis  of  accounting  and  whose  financial  results  would  not be
consolidated  under  GAAP  with  the  financial  results  of the  Parent  in the
Consolidated Financial Statements.

         "Unconsolidated Entity Outstanding Indebtedness" means, as of any time,
all Indebtedness of the Unconsolidated Entities, all as is or would be reflected
in the  balance  sheets of each of the  Unconsolidated  Entities  at such  time,
prepared in accordance with GAAP.

         "Under  Construction"  means,  with  respect  to  any  Property,   that
construction of improvements  has begun (as evidenced by foundation  excavation)
on such  Property but has not yet been  completed (as such  completion  shall be
evidenced by the issuance of a certificate of occupancy or its equivalent  after
completion of all budgeted amenities).

         "Unfunded Liabilities" means, with respect to any Plan at any time, the
amount  (if any) by which (a) the value of all  benefit  liabilities  under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for  purposes  of Section  4044 of ERISA,  exceeds  (b) the fair market
value of all Plan assets allocable to such  liabilities  under Title IV of ERISA
(excluding any accrued but unpaid contributions),  all determined as of the then
most  recent  valuation  date for such Plan,  but only to the  extent  that such
excess  represents  a potential  liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

         "Unsecured   Indebtedness"   means,  with  respect  to  a  Person,  all
Indebtedness of such Person that is not Secured Indebtedness.

         "Variable  Rate  Debt"  means all  Indebtedness  of the  Parent and its
Subsidiaries  which bears interest at fluctuating  rates (and in any event shall
include all Loans and other  Indebtedness  of the Borrower under any of the Loan
Documents) and for which the Parent or such Subsidiary has not obtained Interest
Rate Agreements which  effectively cause such variable rates to be equivalent to
fixed rates less than or equal to 9.0% per annum.

         "Voting  Stock"  means  capital  stock  issued  by  a  corporation,  or
equivalent  Equity  Interests  in any other  Person,  the  holders  of which are
ordinarily,  in the absence of contingencies,  entitled to vote for the election
of directors (or persons performing  similar functions) of such Person,  even if
the right so to vote has been suspended by the happening of such a contingency.

         "Wholly Owned Subsidiary" means any Subsidiary of a Person which all of
the equity securities or other ownership interests (other than, in the case of a
corporation,   directors'  qualifying  shares)  are  at  the  time  directly  or
indirectly owned or controlled by such Person or one or more other  Subsidiaries
of such  Person or by such  Person  and one or more other  Subsidiaries  of such
Person.

                                     - 21 -


<PAGE>
Section  2.1  General; References to Times.

         Unless  otherwise   indicated,   all  accounting   terms,   ratios  and
measurements  shall be  interpreted  or determined  in  accordance  with GAAP in
effect as of the Agreement  Date.  References in this  Agreement to  "Sections",
"Articles",  "Exhibits" and "Schedules" are to sections,  articles, exhibits and
schedules  herein and hereto  unless  otherwise  indicated.  References  in this
Agreement  to any  document,  instrument  or  agreement  (a) shall  include  all
exhibits,  schedules  and  other  attachments  thereto,  (b) shall  include  all
documents,  instruments or agreements issued or executed in replacement thereof,
to the extent permitted  hereby and (c) shall mean such document,  instrument or
agreement,  or  replacement or predecessor  thereto,  as amended,  supplemented,
restated or otherwise  modified from time to time to the extent permitted hereby
and  in  effect  at any  given  time.  Wherever  from  the  context  it  appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural,  and pronouns  stated in the masculine,  feminine or neuter
gender  shall  include  the  masculine,  the  feminine  and the  neuter.  Unless
explicitly  set forth to the  contrary,  a  reference  to  "Subsidiary"  means a
Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to
an  "Affiliate"  means a reference  to an  Affiliate  of the Parent.  Titles and
captions of Articles,  Sections,  subsections  and clauses in this Agreement are
for  convenience  only,  and neither  limit nor amplify the  provisions  of this
Agreement.  Unless otherwise indicated, all references to time are references to
Charlotte, North Carolina time.

ARTICLE I.2 Credit Facility

Section 1.2  Revolving Loans.

         (a) Generally.  Subject to the terms and conditions hereof,  during the
period from the  Effective  Date to but  excluding the  Termination  Date,  each
Lender  severally and not jointly agrees to make Revolving Loans to the Borrower
in an  aggregate  principal  amount at any one time  outstanding  up to, but not
exceeding,  the lesser of (i) the amount of such Lender's  Commitment;  and (ii)
such Lender's Commitment  Percentage of the Borrowing Base. Subject to the terms
and conditions of this  Agreement,  during the period from the Effective Date to
but excluding the Termination Date, the Borrower may borrow,  repay and reborrow
Revolving Loans.

         (b)  Requesting  Revolving  Loans.  The  Borrower  shall give the Agent
notice pursuant to a Notice of Borrowing or telephonic  notice of each borrowing
of Revolving  Loans.  Each Notice of  Borrowing  shall be delivered to the Agent
before  11:00 a.m. (a) in the case of LIBOR  Loans,  on the date three  Business
Days prior to the proposed  date of such  borrowing  and (b) in the case of Base
Rate Loans,  on the date one  Business  Day prior to the  proposed  date of such
borrowing.  Any such  telephonic  notice  shall  include all  information  to be
specified in a written  Notice of Borrowing  and shall be promptly  confirmed in
writing by the Borrower  pursuant to a Notice of Borrowing  sent to the Agent by
telecopy on the same day of the giving of such telephonic notice. The Agent will
transmit by telecopy the Notice of Borrowing  (or the  information  contained in
such Notice of  Borrowing)  to each Lender  promptly  upon receipt by the Agent.
Each  Notice  of  Borrowing  or  telephonic  notice of each  borrowing  shall be
irrevocable once given and binding on the Borrower.

                                     - 22 -


<PAGE>

         (c) Disbursements of Revolving Loan Proceeds.  No later than 12:00 noon
on the date  specified  in the  Notice  of  Borrowing,  each  Lender  will  make
available for the account of its  applicable  Lending Office to the Agent at the
Principal Office, in immediately  available funds, the proceeds of the Revolving
Loan to be made by such Lender. With respect to Revolving Loans to be made after
the  Effective  Date,  unless the Agent  shall have been  notified by any Lender
prior to the  specified  date of  borrowing  that such Lender does not intend to
make available to the Agent the Revolving Loan to be made by such Lender on such
date,  the Agent may assume  that such  Lender  will make the  proceeds  of such
Revolving Loan available to the Agent on the date of the requested  borrowing as
set  forth in the  Notice  of  Borrowing  and the  Agent  may (but  shall not be
obligated to), in reliance upon such assumption,  make available to the Borrower
the amount of such  Revolving  Loan to be  provided by such  Lender.  Subject to
satisfaction  of the  applicable  conditions  set forth in Article  VI. for such
borrowing,  the Agent will make the proceeds of such borrowing  available to the
Borrower no later than 2:00 p.m. on the date and at the account specified by the
Borrower in such Notice of Borrowing.

Section  2.2  Letters of Credit.

         (a)  Letters of Credit.  Subject  to the terms and  conditions  of this
Agreement,  the Agent, on behalf of the Lenders, agrees to issue for the account
of the Borrower  during the period from and including the Effective Date to, but
excluding,  the date 60 days prior to the  Termination  Date one or more standby
letters of credit  (each a "Letter of  Credit")  denominated  in Dollars up to a
maximum  aggregate  Stated Amount at any one time  outstanding not to exceed the
L/C Commitment Amount.

         (b) Terms of Letters of Credit.  At the time of  issuance,  the amount,
form,  terms and  conditions  of each  Letter of  Credit,  and of any  drafts or
acceptances  thereunder,  shall be  subject  to  approval  by the  Agent and the
Borrower.  Notwithstanding the foregoing, in no event may the expiration date of
any Letter of Credit  extend  beyond  the date 30 days prior to the  Termination
Date, and any Letter of Credit  containing an automatic  renewal provision shall
also contain a provision pursuant to which, notwithstanding any other provisions
thereof,  it shall have a final  expiration  date no later than the date 30 days
prior to the Termination Date.

         (c) Requests for Issuance of Letters of Credit. The Borrower shall give
the Agent written notice (or telephonic notice promptly confirmed in writing) no
later than 9:00 a.m. two Business Days prior to the  requested  date of issuance
of a Letter of Credit, such notice to describe in reasonable detail the proposed
terms of such Letter of Credit and the nature of the transactions or obligations
proposed to be  supported  by such Letter of Credit,  and in any event shall set
forth with  respect to such  Letter of Credit (i) the  proposed  initial  Stated
Amount, (ii) the beneficiary or beneficiaries, and (iii) the proposed expiration
date.  The  Borrower  shall also execute and deliver  such  customary  letter of
credit  application forms as requested from time to time by the Agent.  Provided
the Borrower has given the notice  prescribed by this  subsection and subject to
the other terms and conditions of this Agreement,  including the satisfaction of
any  applicable  conditions  precedent set forth in Article VI., the Agent shall
issue the  requested  Letter of Credit on the  requested  date of issuance.  The
Agent shall promptly provide notice to the Lenders of the issuance of any Letter
of Credit issued  hereunder  which notice shall set forth each Lender's pro rata
share  of (1)  such  Letter  of  Credit  and  (2) all  Letters  of  Credit  then
outstanding.  Upon the written request of the Borrower, the Agent (x) shall make
reasonable  efforts to  deliver  to the  Borrower a copy of any Letter of Credit
proposed  to be issued  hereunder  prior to the  issuance  thereof and (y) shall
deliver

                                     - 23 -

<PAGE>


to the Borrower a copy of each issued Letter of Credit within a reasonable  time
after the date of issuance thereof. To the extent any term of a Letter of Credit
Document is inconsistent with a term of any Loan Document, the term of such Loan
Document shall control.

         (d)  Reimbursement  Obligations.  Upon  receipt  by the Agent  from the
beneficiary of a Letter of Credit of any demand for payment under such Letter of
Credit, the Agent shall promptly notify the Borrower of the amount to be paid by
the Agent as a result of such demand and the date on which payment is to be made
by the Agent to such beneficiary in respect of such demand.  The Borrower hereby
unconditionally  and  irrevocably  agrees to pay and reimburse the Agent for the
amount of each demand for payment under such Letter of Credit on or prior to the
date on which payment is to be made by the Agent to the beneficiary  thereunder,
without  presentment,  demand,  protest or other  formalities of any kind.  Upon
receipt by the Agent of any payment in respect of any Reimbursement  Obligation,
the Agent shall  promptly pay to each Lender that has  acquired a  participation
therein under the second  sentence of Section  2.2.(i) such Lender's  Commitment
Percentage of such payment.

         (e) Manner of  Reimbursement.  Upon its receipt of a notice referred to
in the immediately preceding subsection (d), the Borrower shall advise the Agent
whether  or not  the  Borrower  intends  to  borrow  hereunder  to  finance  its
obligation  to  reimburse  the Agent for the  amount of the  related  demand for
payment and, if it does,  the Borrower shall submit a timely Notice of Borrowing
as provided in Section 2.1.(b). If the Borrower fails to so advise the Agent, or
if the Borrower  fails to reimburse  the Agent for a demand for payment  under a
Letter  of  Credit  by the  date of such  payment,  then  (i) if the  applicable
conditions  contained in Article VI. would permit the making of Revolving Loans,
the Borrower  shall be deemed to have  requested a borrowing of Revolving  Loans
(which  shall be Base Rate  Loans but which  Loans  shall not be  subject to the
limitations  of Section  3.5.) in an amount  equal to the  unpaid  Reimbursement
Obligation  and the Agent shall give each Lender  prompt notice of the amount of
the Revolving Loan to be made by such Lender,  the proceeds of which such Lender
shall  make  available  to the Agent not later  than 3:00 p.m.  and (ii) if such
conditions  would not permit the making of Revolving  Loans,  the  provisions of
subsection (j) of this Section shall apply.

         (f) Effect of Letters of Credit on  Commitments.  Upon the  issuance by
the Agent of any  Letter of Credit and until  such  Letter of Credit  shall have
expired or been terminated,  the Commitment of each Lender shall be deemed to be
utilized for all purposes of this  Agreement in an amount equal to such Lender's
Commitment  Percentage  of the Stated  Amount of such  Letter of Credit plus any
related Reimbursement Obligations then outstanding.

         (g) Agent's Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement  Obligation.  In examining  documents presented in connection with
drawings  under  Letters  of Credit and making  payments  under such  Letters of
Credit against such documents,  the Agent shall use the same standard of care as
it uses in connection  with  examining  documents  presented in connection  with
drawings  under  letters of credit in which it has not sold  participations  and
making payments under such letters of credit.  The Borrower assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, neither the Agent nor any of the Lenders shall be responsible for
(i) the form, validity,  sufficiency,  accuracy, genuineness or legal effects of
any document  submitted by any party in connection  with the application for and


                                     - 24 -

<PAGE>


issuance of or any drawing  honored under any Letter of Credit even if it should
in fact prove to be in any or all respects  invalid,  insufficient,  inaccurate,
fraudulent  or  forged;  (ii) the  validity  or  sufficiency  of any  instrument
transferring  or  assigning  or  purporting  to transfer or assign any Letter of
Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure
of the  beneficiary  of any  Letter of Credit to comply  fully  with  conditions
required in order to draw upon such Letter of Credit;  (iv)  errors,  omissions,
interruptions or delays in trans mission or delivery of any messages, whether by
mail, cable, telex, telecopy or otherwise, whether or not they be in cipher; (v)
errors  in  interpretation  of  technical  terms;  (vi) any loss or delay in the
transmission  or otherwise  of any document  required in order to make a drawing
under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication
by the beneficiary of any such Letter of Credit,  or the proceeds of any drawing
under such  Letter of Credit;  or (viii) any  consequences  arising  from causes
beyond the control of the Agent or the Lenders.  None of the above shall affect,
impair or prevent the vesting of any of the Agent's rights or powers  hereunder.
Any action taken or omitted to be taken by the Agent under or in connection with
any Letter of Credit,  if taken or omitted in the absence of gross negligence or
willful  misconduct,  shall not create  against the Agent any  liability  to the
Borrower or any Lender.  In this  connection,  the obligation of the Borrower to
reimburse  the Agent for any  drawing  made under any Letter of Credit  shall be
absolute,  unconditional  and  ir  revocable  and  shall  be  paid  strictly  in
accordance with the terms of this Agreement under all cir cumstances whatsoever,
including  without  limitation,  the  following  circumstances:  (A) any lack of
validity  or  enforceability  of any  Letter of Credit  Document  or any term or
provisions  therein;  (B) any amendment or waiver of or any consent to departure
from all or any of the  Letter of Credit  Documents;  (C) the  existence  of any
claim,  setoff,  defense or other right which the  Borrower may have at any time
against the Agent,  any  Lender,  any  beneficiary  of a Letter of Credit or any
other  Person,  whether in  connection  with this  Agreement,  the  transactions
contemplated  hereby  or in the  Letter  of Credit  Documents  or any  unrelated
transaction;  (D) any breach of contract or dispute  between the  Borrower,  the
Agent,  any Lender or any other Person;  (E) any demand,  statement or any other
document  presented  under a Letter of Credit proving to be forged,  fraudulent,
invalid  or  insufficient  in any  respect or any  statement  therein or made in
connection  therewith being untrue or inaccurate in any respect whatsoever;  (F)
any  non-application  or misapplication by the beneficiary of a Letter of Credit
of the proceeds of any drawing  under such Letter of Credit;  (G) payment by the
Agent under the Letter of Credit against  presentation of a draft or certificate
which does not strictly  comply with the terms of the Letter of Credit;  and (H)
any other act, omission to act, delay or circumstance whatsoever that might, but
for the provisions of this Section,  constitute a legal or equitable  defense to
or discharge of the Borrower's Reimbursement Obligations.

         (h)  Amendments,  Etc.  The  issuance  by the  Agent of any  amendment,
supplement or other modification to any Letter of Credit shall be subject to the
same conditions  applicable  under this Agreement to the issuance of new Letters
of Credit  (including,  without  limitation,  that the request  therefor be made
through the Agent),  and no such  amendment,  supplement  or other  modification
shall be issued  unless  either  (i) the  respective  Letter of Credit  affected
thereby would have complied with such  conditions had it originally  been issued
hereunder in such amended,  supplemented  or modified form or (ii) the Requisite
Lenders shall have consented  thereto;  provided,  however,  no such  amendment,
supplement or modification  shall result in the extension of the expiration date
of the Letter of Credit without the Requisite Lenders' prior written consent.

         (i)      Lenders' Participation in Letters of Credit.  Immediately upon
the  issuance by the vAgent of any Letter of Credit each Lender  shall be deemed


                                     - 25 -


<PAGE>


to have irrevocably and  unconditionally  purchased and received from the Agent,
without  recourse or warranty,  an undivided  interest and  participation to the
extent of such Lender's Commitment Percentage of the liability of the Agent with
respect  to such  Letter of Credit and each  Lender  thereby  shall  absolutely,
unconditionally  and irrevocably  assume,  as primary obligor and not as surety,
and shall be  unconditionally  obligated to the Agent to pay and discharge  when
due, such Lender's  Commitment  Percentage of the Agent's  liability  under such
Letter of Credit.  In  addition,  upon the making of each payment by a Lender to
the  Agent in  respect  of any  Letter  of Credit  pursuant  to the  immediately
following  subsection  (j),  such Lender  shall,  automatically  and without any
further  action  on  the  part  of the  Agent  or  such  Lender,  acquire  (i) a
participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Agent by the  Borrower in respect of such Letter of Credit and (ii)
a participation in a percentage equal to such Lender's Commitment  Percentage in
any  interest  or other  amounts  payable  by the  Borrower  in  respect of such
Reimbursement  Obligation  (other than the Fees payable to the Agent pursuant to
the second and last sentences of Section 3.6.(c)).

         (j) Payment Obligation of Lenders.  Each Lender severally agrees to pay
to the  Agent on  demand  in  immediately  available  funds  the  amount of such
Lender's  Commitment  Percentage  of each  drawing  paid by the Agent under each
Letter of Credit to the extent such  amount is not  reimbursed  by the  Borrower
pursuant to Section  2.2.(d) and is not available  from funds then on deposit in
the Collateral  Account.  Each such Lender's obligation to make such payments to
the Agent  under this  subsection,  and the  Agent's  right to receive the same,
shall be absolute,  irrevocable and  unconditional  and shall not be affected in
any way by any circumstance  whatsoever,  including without limitation,  (i) the
failure of any other Lender to make its payment under this subsection,  (ii) the
financial condition of the Borrower or any other Loan Party, (iii) the existence
of any Default or Event of Default,  including any Event of Default described in
Section  11.1.(f) or 11.1.(g) or (iv) the termination of the  Commitments.  Each
such  payment  to the  Agent  shall  be  made  without  any  offset,  abatement,
withholding or deduction whatsoever.

         (k) Information to Lenders. Upon the request of any Lender from time to
time, the Agent shall deliver to such Lender information reasonably requested by
such Lender with respect to any Letter of Credit then outstanding. Other than as
set forth in this subsection or in the immediately preceding subsection (c), the
Agent shall have no duty to notify the Lenders  regarding  the issuance or other
matters regarding  Letters of Credit issued hereunder.  The failure of the Agent
to perform its  requirements  under this subsection or such subsection (c) shall
not relieve any Lender from its obligations under Section 2.2.(j).

Section  3.2  Rates and Payment of Interest on Loans.

         (a) Rates. The Borrower promises to pay to the Agent for the account of
each Lender  interest on the unpaid  principal  amount of each Loan made by such
Lender for the period from and  including the date of the making of such Loan to
but  excluding  the date such Loan shall be paid in full,  at the  following per
annum rates:

                  (i) during such  periods as such Loan is a Base Rate Loan,  at
         the Base Rate (as in  effect  from  time to time)  plus the  Applicable
         Margin; and

                  (ii) during such periods as such Loan is a LIBOR Loan,  at the
         Adjusted  Eurodollar  Rate  for  such  Loan  for  the  Interest  Period
         therefor, plus the Applicable Margin.

                                     - 26 -

<PAGE>


Notwithstanding  the foregoing,  during the  continuance of an Event of Default,
the Borrower  shall pay to the Agent for the account of each Lender  interest at
the  Post-Default  Rate on the outstanding  principal amount of any Loan made by
such Lender and on any other amount  payable by the Borrower  hereunder or under
the Notes held by such Lender to or for the  account of such  Lender  (including
without  limitation,  accrued but unpaid interest to the extent  permitted under
Applicable Law).

         (b) Payment of Interest. Accrued interest on each Loan shall be payable
(i) in the case of a Base Rate Loan,  monthly on the first  Business Day of each
calendar  month,  (ii) in the  case of a LIBOR  Loan,  on the  last  day of each
Interest  Period  therefor and (iii) in the case of any Loan,  upon the payment,
prepayment or  Continuation  thereof or the Conversion of such Loan to a Loan of
another Type (but only on the principal  amount so paid,  prepaid or Converted).
Interest payable at the Post-Default  Rate shall be payable from time to time on
demand.  Promptly  after the  determination  of any interest  rate  provided for
herein or any change therein, the Agent shall give notice thereof to the Lenders
to which such interest is payable and to the Borrower. All determinations by the
Agent of an  interest  rate  hereunder  shall be  conclusive  and binding on the
Lenders and the Borrower for all purposes, absent manifest error.

Section  4.  Number of Interest Periods.

         There may be no more than 6 different  Interest Periods  outstanding at
the same time.

Section  5.2  Repayment of Loans.

         The Borrower shall repay the entire  outstanding  principal  amount of,
and all accrued but unpaid  interest on, the Revolving  Loans on the Termination
Date.

Section  6.2  Prepayments.

         (a)      Optional.  Subject to Section 5.4., the Borrower may prepay
any Loan at any time without  premium or penalty.  The  Borrower  shall give the
Agent at least 3 Business  Days prior  written  notice of the  prepayment of any
Loan.

         (b)      Mandatory.

                  (i) Outstandings in Excess of Commitments.  If at any time the
         aggregate principal amount of all outstanding Revolving Loans, together
         with  the   aggregate   principal   amount  of  all  Letter  of  Credit
         Liabilities,  exceeds the aggregate amount of the Commitments in effect
         at such time, the Borrower shall  immediately  pay to the Agent for the
         account of the Lenders the amount of such excess.

                  (ii)  Outstandings in Excess of Borrowing Base. If at any time
         the aggregate outstanding principal balance of Loans, together with the
         aggregate principal amount of all Letter of Credit Liabilities, exceeds
         the  Borrowing  Base,  then the Borrower  shall,  within 10 days of the
         Borrower  obtaining  actual knowledge of the occurrence of such excess,
         send written notice of such excess to the Agent and each of the Lenders
         and eliminate such excess.

                                     - 27 -


<PAGE>

         If such  excess  is not  eliminated  within  45  days  of the  Borrower
         obtaining actual knowledge of the occurrence  thereof,  then the entire
         outstanding  principal  balance of all Loans,  together  with an amount
         equal  to the  aggregate  principal  amount  of all  Letter  of  Credit
         Liabilities, shall be immediately due and payable in full.

All payments under this Section shall be applied to pay all amounts of principal
outstanding  on  the  Loans  and  any  Reimbursement  Obligations  pro  rata  in
accordance with Section 3.2. and the remainder,  if any, shall be deposited into
the Collateral Account for application to any Reimbursement Obligations.  If the
Borrower  is  required  to pay any  outstanding  LIBOR  Loans by  reason of this
Section  prior  to the  end of the  applicable  Interest  Period  therefor,  the
Borrower shall pay all amounts due under Section 5.4.

Section  7.  Continuation.

         So long as no Default or Event of Default  shall have  occurred  and be
continuing,  the  Borrower may on any  Business  Day,  with respect to any LIBOR
Loan,  elect to maintain such LIBOR Loan or any portion  thereof as a LIBOR Loan
by selecting a new Interest Period for such LIBOR Loan. Each new Interest Period
selected  under this Section shall  commence on the last day of the  immediately
preceding Interest Period. Each selection of a new Interest Period shall be made
by the  Borrower  giving to the Agent a Notice of  Continuation  not later  than
11:00 a.m. on the third Business Day prior to the date of any such Continuation.
Such notice by the Borrower of a Continuation shall be by telephone or telecopy,
confirmed  immediately  in writing if by  telephone,  in the form of a Notice of
Continuation,  specifying  (a) the proposed date of such  Continuation,  (b) the
LIBOR  Loans and  portions  thereof  subject  to such  Continuation  and (c) the
duration of the  selected  Interest  Period,  all of which shall be specified in
such manner as is necessary to comply with all limitations on Loans  outstanding
hereunder.  Each Notice of  Continuation  shall be irrevocable by and binding on
the Borrower once given. Promptly after receipt of a Notice of Continuation, the
Agent shall  notify each Lender by telex or telecopy,  or other  similar form of
transmission of the proposed Continuation.  If the Borrower shall fail to select
in a timely  manner a new  Interest  Period for any  borrowing of LIBOR Loans in
accordance with this Section, such Loans will automatically,  on the last day of
the  current   Interest   Period   therefor,   Convert   into  Base  Rate  Loans
notwithstanding failure of the Borrower to comply with Section 2.8.

Section  8.  Conversion.

         So long as no Default or Event of Default  shall have  occurred  and be
continuing,  the Borrower may on any Business Day, upon the Borrower's giving of
a Notice of Conversion  to the Agent,  Convert all or a portion of a Loan of one
Type into a Loan of another  Type.  Any  Conversion  of a LIBOR Loan into a Base
Rate Loan shall be made on, and only on, the last day of an Interest  Period for
such LIBOR Loan and, upon  Conversion of a Base Rate Loan into a LIBOR Loan, the
Borrower  shall pay accrued  interest to the date of Conversion on the principal
amount so  Converted.  Each such Notice of  Conversion  shall be given not later
than 11:00 a.m. on the Business Day prior to the date of any proposed Conversion
into Base Rate  Loans  and on the  third  Business  Day prior to the date of any
proposed  Conversion  into LIBOR Loans.  Promptly  after  receipt of a Notice of
Conversion,  the Agent shall notify each Lender by telex or  telecopy,  or other
similar  form  of  transmission  of  the  proposed  Conversion.  Subject  to the
restrictions  specified  above,  each Notice of Conversion shall be by telephone
(confirmed immediately in writing) or telecopy in the form of

                                     - 28 -

<PAGE>

a Notice of Conversion specifying (a) the requested date of such Conversion, (b)
the Type of Loans to be  Converted,  (c) the portion of such Type of Loans to be
Converted,  (d) the Type of Loans such Loans are to be Converted into and (e) if
such  Conversion  is into LIBOR Loans,  the  requested  duration of the Interest
Period of such Loans.  Each Notice of  Conversion  shall be  irrevocable  by and
binding on the Borrower once given.

Section  9.2  Notes.

         (a) Revolving  Note. The Revolving  Loans made by each Lender shall, in
addition  to this  Agreement,  also be  evidenced  by a  promissory  note of the
Borrower  substantially  in the form of  Exhibit  K (each a  "Revolving  Note"),
payable to the order of such Lender in a principal amount equal to the amount of
its Commitment as originally in effect and otherwise duly completed.

         (b) Records;  Endorsement  on Transfer.  The date,  amount of each Loan
made by each Lender to the  Borrower,  and each  payment  made on account of the
principal  thereof,  shall be  recorded  by such  Lender  on its  books and such
entries shall be binding on the Borrower  absent  manifest  error.  Prior to the
transfer of any Note,  the Lender  shall  endorse such items on such Note or any
allonge  thereof;  provided  that the  failure  of such  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 such Note in
respect of the Loans evidenced by such Note.

Section  10.2 Voluntary Reductions of the Commitment; Termination of Commitments
         From Minimum Borrowing Base.

         The Borrower  shall have the right to terminate or reduce the aggregate
unused amount of the Commitments (for which purpose use of the Commitments shall
be deemed to include the aggregate  amount of Letter of Credit  Liabilities)  at
any time and from time to time  without  penalty or premium upon not less than 5
Business  Days prior  written  notice to the Agent of each such  termination  or
reduction,  which notice shall specify the effective date thereof and the amount
of any such  reduction and shall be  irrevocable  once given and effective  only
upon receipt by the Agent. The Agent will promptly  transmit such notice to each
Lender.  The  Commitments,  once  terminated  or reduced may not be increased or
reinstated;  provided,  however,  that  if  after  giving  effect  to  any  such
reduction,   the  aggregate  amount  of  the  Commitments  would  be  less  than
$80,000,000,  then the  Commitments  shall be  reduced  to zero  and  except  as
otherwise provided herein, the provisions of this Agreement shall terminate.  In
addition,  if  the  aggregate  Borrowing  Base  Values  of  all  Borrowing  Base
Properties  shall be (i) less  than  $100,000,000  at any time or (ii) less than
$120,000,000 but greater than or equal to $100,000,000 for a period in excess of
60 days,  then the  Requisite  Lenders may, by written  notice to the  Borrower,
terminate  all of the  Commitments,  whereupon  all Loans and other  Obligations
shall  become  immediately  due and  payable in full,  and  except as  otherwise
provided herein, the provisions of this Agreement shall terminate. Any reduction
in the  aggregate  amount of the  Commitments  shall  result in a  proportionate
reduction  (rounded to the next lowest integral multiple of $100,000) in the L/C
Commitment Amount.

Section  11.  Extension of Termination Date.

         The  Borrower   may  request  that  the  Lenders   extend  the  current
Termination  Date by one year by executing and  delivering to the Agent at least
30 days but not more than 90 days prior to the date

                                     - 29 -

<PAGE>

(the  "Anniversary  Date") two years  before the  current  Termination  Date,  a
written  request in the form of Exhibit L (an  "Extension  Request").  The Agent
shall forward to each Lender a copy of each Extension  Request  delivered to the
Agent promptly after receipt thereof.  If all of the Lenders shall have notified
the Agent in writing on or prior to the  applicable  Anniversary  Date that they
accept such Extension  Request,  then the Termination Date shall be extended for
one  year.  If any  Lender  shall  not have  notified  the  Agent on or prior to
Anniversary Date that it accepts such Extension Request, the current Termination
Date shall not be extended. The Agent shall promptly notify the Borrower whether
the Extension  Request has been accepted or rejected.  The Borrower  understands
that  this  Section  has been  included  in this  Agreement  for the  Borrower's
convenience in requesting an extension of the Termination  Date and the Borrower
acknowledges  that  none  of the  Lenders  has  promised  (either  expressly  or
impliedly),  nor has any  obligation  or  commitment  whatsoever,  to extend the
Termination  Date  at  any  time.  This  Section  shall  apply  to  the  initial
Termination Date and to any extensions thereof.

Section  12.3  Expiration or Maturity Date of Letters of Credit
               Past Termination Date.

         If on the date (the "Facility  Termination  Date") the  Commitments are
terminated  (whether  voluntarily,  by reason of the  occurrence  of an Event of
Default or otherwise),  there are any Letters of Credit  outstanding  hereunder,
the Borrower shall, on the Facility Termination Date, pay to the Agent an amount
of money equal to the Stated Amount of such Letter(s) of Credit for deposit into
the  Collateral  Account.  If a drawing  pursuant  to any such  Letter of Credit
occurs on or prior to the expiration date of such Letter of Credit, the Borrower
authorizes the Agent to use the monies  deposited in the  Collateral  Account to
make payment to the  beneficiary  with respect to such drawing or the payee with
respect to such presentment.  If no drawing occurs on or prior to the expiration
date of such  Letter of  Credit,  the Agent  shall  pay to the  Borrower  (or to
whomever  else may be legally  entitled  thereto)  the monies  deposited  in the
Collateral Account with respect to such outstanding Letter of Credit as provided
in and subject to the terms of Section 11.5.

Section  13.3  Increase of Commitments.

         The Borrower shall have the right to request increases in the aggregate
amount of the  Commitments  from time to time (provided that after giving effect
to any such increase the aggregate  amount of the  Commitments  would not exceed
$150,000,000)  by providing  written notice to the Agent,  which notice shall be
irrevocable  once given. The Agent shall promptly notify each Lender of any such
request. Each existing Lender shall have the right to increase its Commitment by
an amount so that such Lender's Commitment  Percentage shall not be decreased as
a result of such requested increase in the Commitments. Each Lender shall notify
the Agent within 10 Business  Days after receipt of the Agent's  notice  whether
such Lender wishes to increase the amount of its  Commitment.  If a Lender fails
to deliver  any such  notice to the Agent  within  such time  period,  then such
Lender shall be deemed to have  declined to increase its  Commitment.  No Lender
shall be required to increase its  Commitment  and any new Lender(s)  becoming a
party to this Agreement in connection  with any such requested  increase must be
an  Eligible  Assignee.  In the event a new Lender or Lenders  become a party to
this  Agreement,  or if any existing  Lender agrees to increase its  Commitment,
such Lender shall on the date it becomes a Lender  hereunder  (or  increases its
Commitment,  in the case of an existing  Lender)  (and as a  condition  thereto)
purchase  from  the  other  Lenders  its  Lender's  Commitment   Percentage  (as
determined   after  giving  effect  to  the  increase  of  Commitments)  of  any
outstanding Loans, by making available to the Agent for the account of such

                                     - 30 -

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other Lenders at the Principal Office, in same day funds, an amount equal to the
sum of (A) the portion of the outstanding  principal  amount of such Loans to be
purchased by such Lender plus (B) the  aggregate  amount of payments  previously
made by such Lender under  Section  2.2.(j)  which have not been repaid plus (C)
interest  accrued  and  unpaid  to and as of such  date on such  portion  of the
outstanding  principal  amount  of such  Loans.  Upon any such  assignment,  the
assigning  Lender shall be deemed to represent  and warrant to such other Lender
that such assigning  Lender is the legal and  beneficial  owner of such interest
being assigned by it, but makes no other  representation or warranty and assumes
no responsibility with respect to any Loan being assigned, the Loan Documents or
any Loan  Party.  No  increase of the  Commitments  may be  effected  under this
Section if a Default or Event of Default  shall be in existence on the effective
date of such increase.  In connection with any increase in the aggregate  amount
of the  Commitments  pursuant  to  this  subsection,  the  Borrower  shall  make
appropriate  arrangements  so that  each new  Lender,  and any  existing  Lender
increasing its Commitment,  receives a new or replacement  Note, as appropriate,
in the  amount  of  such  Lender's  Commitment  within  2  Business  Days of the
effectiveness of the applicable increase in the aggregate amount of Commitments.

ARTICLE I.3 Payments, Fees and Other General Provisions

Section 1.3  Payments.

         Except  to the  extent  otherwise  provided  herein,  all  payments  of
principal,  interest  and other  amounts to be made by the  Borrower  under this
Agreement or any other Loan Document  shall be made in Dollars,  in  immediately
available funds, without deduction, set-off or counterclaim, to the Agent at its
Principal  Office,  not later than 2:00 p.m.  on the date on which such  payment
shall  become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding  Business Day).  Prior to making
any such payment,  the Borrower shall give the Agent notice of such payment. The
Borrower  shall,  at the time of making each payment under this Agreement or any
Note,  specify to the Agent the amounts  payable by the  Borrower  hereunder  to
which such payment is to be applied.  Each payment received by the Agent for the
account  of a Lender  under  this  Agreement  or any Note  shall be paid to such
Lender at the  applicable  Lending Office of such Lender no later than 5:00 p.m.
on the date of  receipt.  If the Agent  fails to pay such  amount to a Lender as
provided in the previous  sentence,  the Agent shall pay interest on such amount
until paid at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If the due date of any payment under this Agreement or any other Loan
Document  would  otherwise  fall on a day which is not a Business  Day such date
shall be extended to the next  succeeding  Business  Day and  interest  shall be
payable for the period of such extension.

Section  2.3  Pro Rata Treatment.

         Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section  2.1.(a) shall be made from the Lenders,  each payment
of the Fees under Section  3.6.(a) shall be made for the account of the Lenders,
and each termination or reduction of the amount of the Commitments under Section
2.10. shall be applied to the respective Commitments of the Lenders,

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<PAGE>


in each case, pro rata according to the amounts of their respective Commitments;
(b) each payment or prepayment  of principal of Revolving  Loans by the Borrower
shall be made for the  account of the Lenders  pro rata in  accordance  with the
respective  unpaid  principal  amounts  of the  Revolving  Loans  held by  them,
provided  that if  immediately  prior to giving  effect to any such  payment  in
respect of any Revolving Loans the outstanding principal amount of the Revolving
Loans  shall  not be held by the  Lenders  pro  rata in  accordance  with  their
respective  Commitments  in effect at the time such Loans  were made,  then such
payment shall be applied to the Revolving  Loans in such manner as shall result,
as  nearly  as is  practicable,  in  the  outstanding  principal  amount  of the
Revolving  Loans  being held by the Lenders  pro rata in  accordance  with their
respective  Commitments;  (c) each payment of interest on Revolving Loans by the
Borrower  shall be made for the account of the  Lenders  pro rata in  accordance
with  the  amounts  of  interest  on such  Loans  then  due and  payable  to the
respective  Lenders;  (d) the making,  Conversion and  Continuation of Revolving
Loans of a particular Type (other than Conversions provided for by Section 5.6.)
shall be made pro rata  among the  Lenders  according  to the  amounts  of their
respective  Commitments  (in the case of making  of  Loans) or their  respective
Loans (in the case of  Conversions  and  Continuations  of  Loans)  and the then
current  Interest  Period  for each  Lender's  portion of each Loan of such Type
shall  be  coterminous;  and (e) the  Lenders'  participation  in,  and  payment
obligations  in respect of,  Letters of Credit under Section 2.2.,  shall be pro
rata in accordance with their respective Commitments.

Section  3.3  Sharing of Payments, Etc.

         The Borrower  agrees that, in addition to (and without  limitation  of)
any right of set-off,  banker's lien or  counterclaim  a Lender or the Agent may
otherwise  have,  each  Lender  and the  Agent  shall  be  entitled  during  the
continuance of an Event of Default, at its option, and in the case of any Lender
subject to receipt of the Agent's prior written consent, to offset balances held
by it for the account of the  Borrower at any of such  Lender's (or the Agent's)
offices,  in Dollars or in any other  currency,  against  any  principal  of, or
interest on, any of such Lender's Loans hereunder (or other Obligations owing to
such Lender or the Agent  hereunder)  which is not paid when due  (regardless of
whether such balances are then due to the  Borrower),  in which case such Lender
shall  promptly  notify the Borrower,  all other Lenders and the Agent  thereof;
provided,  however,  such Lender's  failure to give such notice shall not affect
the  validity  of such  offset.  If the Agent  shall not  respond  to a Lender's
written  request  that the Agent  consent to such Lender  exercising  a right of
setoff subject to this Section within 10 Business Days of the Agent's receipt of
such request,  then the Agent shall be deemed to have consented to such request.
If a Lender shall obtain  payment of any  principal of, or interest on, any Loan
made by it to the Borrower under this Agreement,  or shall obtain payment on any
other  Obligation  owing by the  Borrower  or any other Loan Party  through  the
exercise of any right of set-off, banker's lien or counterclaim or similar right
or  otherwise  or through  voluntary  prepayments  directly to a Lender or other
payments  made by the Borrower to a Lender not in  accordance  with the terms of
this Agreement and such payment should be distributed to the Lenders pro rata in
accordance with Section 3.2. or Section 11.4., as applicable,  such Lender shall
promptly pay such amounts to the other  Lenders and make such other  adjustments
from time to time as shall be  equitable,  to the end that all the Lenders shall
share the benefit of such payment (net of any  reasonable  expenses which may be
incurred by such Lender in obtaining  or  preserving  such  benefit) pro rata in
accordance with Section 3.2. or Section 11.4. To such end, all the Lenders shall
make appropriate  adjustments  among themselves (by the resale of participations
sold or otherwise)  if such payment is rescinded or must  otherwise be restored.
Nothing  contained  herein shall require any Lender or the Agent to exercise any
such right or shall affect the right of any Lender or the

                                     - 32 -

<PAGE>

Agent to exercise,  and retain the benefits of  exercising,  any such right with
respect to any other  indebtedness  or  obligation  of the Borrower or any other
Loan Party.

Section  4.2  Several Obligations.

         No Lender shall be  responsible  for the failure of any other Lender to
make a Loan or to perform any other  obligation  to be made or performed by such
other  Lender  hereunder,  and the  failure  of any  Lender to make a Loan or to
perform any other  obligation to be made or performed by it hereunder  shall not
relieve the  obligation  of any other  Lender to make any Loan or to perform any
other obligation to be made or performed by such other Lender.

Section  5.  Minimum Amounts.

         (a) Borrowings.  Each  borrowing  of Base  Rate  Loans  shall be in an
aggregate  minimum  amount of $500,000  and  integral  multiples  of $100,000 in
excess thereof.  Each borrowing of LIBOR Loans, and each Conversion of Base Rate
Loans to LIBOR Loans,  shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.

         (b) Prepayments.  Each voluntary prepayment of Revolving Loans shall be
in an aggregate minimum amount of $1,000,000 and integral  multiples of $500,000
in excess thereof.

         (c) Reductions of Commitments.  Each reduction of the Commitments under
Section  2.10.  shall be in an  aggregate  minimum  amount  of  $10,000,000  and
integral multiples of $1,000,000 in excess thereof.

         (d)  Letters of Credit.  The  initial  Stated  Amount of each Letter of
Credit  shall be at least  $100,000;  provided,  however,  that the Borrower may
request up to four  Letters of Credit  with an initial  Stated  Amount less than
$100,000 but greater than or equal to $25,000.

Section  6.3  Fees.

         (a)  Unused  Commitment  Fee.  During  the  period  commencing  on  the
Agreement Date through but excluding the  Termination  Date, the Borrower agrees
to pay to the Agent for the  account  of the  Lenders an unused  commitment  fee
equal to  one-quarter  of one percent  (0.25%) per annum of the daily  aggregate
unused  portion  of the  Commitments.  Such fee shall be  payable  quarterly  in
arrears on the first day of each January, April, July and October, commencing on
July 1, 2000 and on the Termination Date. For purposes of clarification,  use of
the  Commitments  shall be deemed to include the  aggregate  amount of Letter of
Credit Liabilities.

         (b) Eligible  Property  Review Fee.  The Borrower  agrees to pay to the
Agent for the  account  of the  Lenders a fee equal to $250 per  Lender for each
Property  which the  Borrower has  requested  become a Borrowing  Base  Property
(excluding the  Properties  initially  designated as Borrowing  Base  Properties
under Section 4.1.(a)). Such fee shall be payable upon the Borrower's receipt of
notice that the Agent is prepared to proceed with acceptance of such Property as
a Borrowing  Base  Property  and shall be payable  only to each Lender which has
approved (or is deemed to have approved) of the  designation of such Property as
a Borrowing Base Property.

                                     - 33 -

<PAGE>



         (c) Letter of Credit  Fees.  In respect of each  Letter of Credit,  the
Borrower  agrees  to pay to the  Agent for  account  of each  Lender a letter of
credit  fee  (determined  on a per annum  basis)  in an amount  equal to (i) the
initial Stated Amount of such Letter of Credit times the  Applicable  Margin for
LIBOR  Loans  determined  as of the date of  issuance  of such  Letter of Credit
calculated for the period from and including the date of issuance of such Letter
of Credit to and  including the initial date such Letter of Credit is to expire,
and (ii) in the case of the  extension of the  expiration  date of any Letter of
Credit (whether as a result of the operation of an automatic extension clause or
otherwise),  the Stated Amount of such Letter of Credit on the effective date of
such extension times the Applicable Margin for LIBOR Loans determined as of such
date  calculated for the period from but excluding the previous  expiration date
to and including the extended  expiration date. In addition,  the Borrower shall
pay to the  Agent for its own  account  and not the  account  of any  Lender,  a
fronting fee in respect of each Letter of Credit at the rate equal to one-eighth
of one percent (0.125%) per annum on the initial Stated Amount of such Letter of
Credit  calculated  for the  same  such  period.  The fees  provided  for in the
immediately  preceding two  sentences  shall be  nonrefundable  upon and due and
payable in full on the date of issuance of the applicable Letter of Credit.  The
Borrower  shall  pay  directly  to the Agent  from  time to time on  demand  all
commissions,  charges,  costs and expenses in the amounts customarily charged by
the Agent from time to time in like  circumstances with re spect to the issuance
of each Letter of Credit,  drawings,  amendments and other transactions relating
thereto.

Section  7.3  Computations.

         Unless  otherwise  expressly set forth herein,  any accrued interest on
any Loan, any Fees or other  Obligations  due hereunder shall be computed on the
basis of a year of 360 days and the actual number of days elapsed.

Section  8.3  Usury.

         In no event shall the amount of interest due or payable on the Loans or
other Obligations  exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective  Lender in writing that the Borrower  elects to have
such  excess sum  returned  to it  forthwith.  It is the  express  intent of the
parties  hereto that the Borrower not pay and the Lenders not receive,  directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower under Applicable Law.

Section  9.3  Agreement Regarding Interest and Charges.

         The parties  hereto  hereby  agree and  stipulate  that the only charge
imposed upon the Borrower for the use of money in connection with this Agreement
is and shall be the interest  specifically  described in Section  2.3.(a)(i) and
(a)(ii).  Notwithstanding  the  foregoing,  the parties hereto further agree and
stipulate that all agency fees, syndication fees, unused commitment fees, letter
of credit fees,  underwriting  fees, default charges,  late charges,  funding or
"breakage"  charges,  increased cost charges,  attorneys' fees and reimbursement
for costs and expenses  paid by the Agent or any Lender to third  parties or for
damages incurred by the Agent or any Lender,  are charges made to compensate the
Agent or any such Lender for underwriting or  administrative  services and costs
or losses performed or incurred,  and to be performed or incurred,  by the Agent
and the Lenders in connection

                                     - 34 -


<PAGE>


with this Agreement and shall under no circumstances be deemed to be charges for
the use of money.  All charges  other than charges for the use of money shall be
fully earned and nonrefundable when due.

Section  10.3  Statements of Account.

         The Agent will  account to the  Borrower  monthly  with a statement  of
Loans,  Letters of Credit,  accrued interest and Fees, charges and payments made
pursuant  to this  Agreement  and the other  Loan  Documents,  and such  account
rendered by the Agent shall be deemed  conclusive  upon Borrower absent manifest
error.  The failure of the Agent to deliver such a statement  of accounts  shall
not relieve or discharge the Borrower from any of its obligations hereunder.

Section  11.  Defaulting Lenders.

         (a)  Generally.  If for any reason any Lender (a  "Defaulting  Lender")
shall fail or refuse to perform any of its  obligations  under this Agreement or
any other Loan Document to which it is a party within the time period  specified
for performance of such  obligation or, if no time period is specified,  if such
failure or refusal  continues  for a period of 2 Business Days after notice from
the Agent, then, in addition to the rights and remedies that may be available to
the  Agent  or the  Borrower  under  this  Agreement  or  Applicable  Law,  such
Defaulting  Lender's right to participate  in the  administration  of the Loans,
this Agreement and the other Loan Documents,  including without limitation,  any
right to vote in respect  of, to consent to or to direct any action or  inaction
of the Agent or to be taken into  account in the  calculation  of the  Requisite
Lenders, shall be suspended during the pendency of such failure or refusal. If a
Lender is a Defaulting  Lender  because it has failed to make timely  payment to
the Agent of any  amount  required  to be paid to the Agent  hereunder  (without
giving  effect to any notice or cure  periods),  in addition to other rights and
remedies  which  the  Agent or the  Borrower  may  have  under  the  immediately
preceding  provisions or  otherwise,  the Agent shall be entitled (i) to collect
interest from such Defaulting  Lender on such delinquent  payment for the period
from the date on which the  payment  was due until the date on which the payment
is made at the Federal  Funds  Rate,  (ii) to withhold or setoff and to apply in
satisfaction  of the  defaulted  payment and any related  interest,  any amounts
otherwise  payable to such  Defaulting  Lender under this Agreement or any other
Loan  Document  and  (iii) to bring an action or suit  against  such  Defaulting
Lender in a court of competent  jurisdiction to recover the defaulted amount and
any  related  interest.  Any  amounts  received  by the  Agent in  respect  of a
Defaulting  Lender's Loans shall not be paid to such Defaulting Lender and shall
be held uninvested by the Agent and either applied against the purchase price of
such Loans under the following  subsection (b) or paid to such Defaulting Lender
upon the Defaulting Lender's curing of its default.

         (b) Purchase of Defaulting Lender's Commitment. Any Lender who is not a
Defaulting  Lender  shall have the right,  but not the  obligation,  in its sole
discretion,  to acquire  all of a  Defaulting  Lender's  Commitment.  Any Lender
desiring to exercise such right shall give written  notice  thereof to the Agent
no sooner than 2 Business  Days and not later than 10  Business  Days after such
Defaulting Lender became a Defaulting  Lender. If more than one Lender exercises
such right,  each such Lender  shall have the right to acquire an amount of such
Defaulting  Lender's  Commitment in proportion to the  Commitments  of the other
Lenders exercising such right. Upon any such purchase,  the Defaulting  Lender's
interest in the Loans and its rights hereunder (but not its liability in respect
thereof or under the Loan  Documents  or this  Agreement  to the extent the same
relate to the period

                                     - 35 -

<PAGE>


prior to the  effective  date of the  purchase)  shall  terminate on the date of
purchase,  and the  Defaulting  Lender  shall  promptly  execute  all  documents
reasonably  requested to surrender  and transfer  such interest to the purchaser
thereof,  including an  appropriate  Assignment  and  Acceptance  Agreement and,
notwithstanding  Section  13.5.(d),  shall pay to the Agent an assignment fee in
the amount of $6,000.  The  purchase  price for the  Commitment  of a Defaulting
Lender  shall be equal to the  amount  of the  principal  balance  of the  Loans
outstanding and owed by the Borrower to the Defaulting Lender.  Prior to payment
of such  purchase  price to a Defaulting  Lender,  the Agent shall apply against
such  purchase  price any  amounts  retained  by the Agent  pursuant to the last
sentence of the  immediately  preceding  subsection  (a). The Defaulting  Lender
shall be entitled to receive  amounts owed to it by the Borrower  under the Loan
Documents  which  accrued  prior to the date of the  default  by the  Defaulting
Lender,  to the extent the same are  received  by the Agent from or on behalf of
the Borrower. There shall be no recourse against any Lender or the Agent for the
payment of such sums except to the extent of the  receipt of  payments  from any
other party or in respect of the Loans.

Section  12.3  Taxes.

         (a) Taxes Generally.  All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without  deduction for any present or future  excise,  stamp or other taxes,
fees,  duties,  levies,  imposts,  charges,  deductions,  withholdings  or other
charges of any nature whatsoever imposed by any taxing authority,  but excluding
(i) franchise taxes,  (ii) any taxes (other than  withholding  taxes) that would
not be  imposed  but for a  connection  between  the  Agent or a Lender  and the
jurisdiction  imposing  such taxes  (other than a connection  arising  solely by
virtue of the  activities of the Agent or such Lender  pursuant to or in respect
of this  Agreement or any other Loan  Document),  (iii) any taxes  imposed on or
measured by any Lender's assets, net income, receipts or branch profits and (iv)
any taxes arising after the Agreement Date solely as a result of or attributable
to a Lender  changing its  designated  Lending Office after the date such Lender
becomes a party  hereto  (such  non-excluded  items  being  collectively  called
"Taxes").  If any  withholding  or deduction  from any payment to be made by the
Borrower  hereunder  is  required  in  respect  of  any  Taxes  pursuant  to any
Applicable Law, then the Borrower will:

                   (i)  pay  directly  to the  relevant  Governmental  Authority
         the full amount required to be so withheld or deducted;

                  (ii)     promptly forward to the Agent an official receipt or
         other documentation satisfactory to the Agent evidencing such payment
         to such Governmental Authority; and

                  (iii) pay to the Agent for its  account or the  account of the
         applicable  Lender,  as the  case may be,  such  additional  amount  or
         amounts as is necessary to ensure that the net amount actually received
         by the Agent or such  Lender  will equal the full amount that the Agent
         or such Lender would have received had no such withholding or deduction
         been required.

         (b)      Tax Indemnification.  If the Borrower fails to pay any Taxes
when  due to the  appropriate  Governmental  Authority  or fails to remit to the
Agent, for its account or the account of the respective  Lender, as the case may
be, the required receipts or other required documentary  evidence,  the Borrower
shall indemnify the Agent and the Lenders for any incremental Taxes, interest or

                                     - 36 -

<PAGE>

penalties  that may become payable by the Agent or any Lender as a result of any
such failure.  For purposes of this  Section,  a  distribution  hereunder by the
Agent or any  Lender  to or for the  account  of any  Lender  shall be  deemed a
payment by the Borrower.

         (c) Tax  Forms.  Prior  to the  date  that any  Lender  or  participant
organized under the laws of a jurisdiction  outside the United States of America
becomes a party hereto,  such Person shall deliver to the Borrower and the Agent
such  certificates,  documents  or other  evidence,  as required by the Internal
Revenue Code or Treasury Regulations issued pursuant thereto (including Internal
Revenue Service Forms W-8ECI or W-8BEN, as applicable,  or appropriate successor
forms), properly completed, currently effective and duly executed by such Lender
or  participant  establishing  that payments to it hereunder and under the Notes
are (i) not subject to United States Federal backup  withholding tax or (ii) not
subject to United  States  Federal  withholding  tax under the Code because such
payment is either  effectively  connected  with the  conduct  by such  Lender or
participant  of a trade or business in the United States or totally  exempt from
United  States  Federal  withholding  tax by  reason of the  application  of the
provisions  of a treaty to which the United  States is a party or such Lender is
otherwise exempt.

ARTICLE I.3 Borrowing Base Properties

Section  1.  Eligibility of Properties.

     (a) As of the  Agreement  Date,  the Lenders have approved for inclusion in
calculations  of the Borrowing Base the Properties  identified on Schedule 4.1.,
as well  as the  Borrowing  Base  Value  initially  attributable  to  each  such
Property.  Upon  satisfaction  of the conditions set forth in Section 6.3., such
Properties shall become Borrowing Base Properties.

     (b) If, after the  Agreement  Date,  the Borrower  desires that the Lenders
include any  additional  Property in  calculations  of the Borrowing  Base,  the
Borrower shall so notify the Agent in writing.  No Property will be evaluated by
the Lenders unless it is an Eligible Property, and unless and until the Borrower
delivers to the Agent the following,  in form and substance  satisfactory to the
Agent:

                   (i) a  description  of such  Property,  such  description  to
         include  the age, location, size and Occupancy Rate of such Property;

                  (ii) an operating  statement and a rent roll for such Property
         for the two prior fiscal years, for the current fiscal year through the
         fiscal quarter most recently ending and for the current fiscal quarter,
         certified  by a  representative  of the  Borrower  to the  best of such
         representative's  knowledge  as being true and correct in all  material
         respects  provided  that,  with respect to any period such Property was
         not owned by a Loan Party,  such information  shall only be required to
         be delivered to the extent reasonably available to the Borrower;

                 (iii) an operating budget for such Property with respect to the
         current fiscal year;


                                     - 37 -


<PAGE>

                 (iv) copies of all  engineering,  mechanical,  structural  and
         maintenance  studies  performed  with respect to such Property not more
         than twelve months old;

                  (v) a "Phase I" environmental  assessment of such Property not
         more than 12 months old prepared by an  environmental  engineering firm
         acceptable to the Agent,  and any additional  environmental  studies or
         assessments  available to the Borrower  performed  with respect to such
         Property;

                 (vi) a copy of the most  recent ALTA  Owner's  Policy of Title
         Insurance (or if such policy has not been issued, a binding  commitment
         to issue such  policy)  relating  to such  Property  showing fee simple
         title being vested in the  Borrower or a Subsidiary  and all matters of
         record;

                (vii) evidence that such Property complies with applicable
         zoning and land use laws;

               (viii) copies of any leases covering 5,000 square feet or more of
         such Property;

                 (ix) copies of (A) all Property Management  Agreements and all
         other  material  contracts,  if any,  which  will  relate  to the  use,
         occupancy,  operation,  maintenance,  enjoyment  or  ownership  of such
         Property,  and (B) if such Property is not yet owned by the Borrower or
         a Subsidiary,  the purchase agreement pursuant to which the Borrower or
         a Subsidiary is to acquire such Property; and

                  (x) such other information the Agent or Lenders may reasonably
         request in order to evaluate such Property.

         (c) If,  after  receipt  and  review  of the  foregoing  documents  and
information,  the Agent is prepared to proceed with  acceptance of such Property
as a Borrowing  Base  Property,  the Agent will so notify the  Borrower and each
Lender within 10 Business Days after receipt of all of the information  provided
above,  and the Agent will  obtain an  Appraisal  of such  Property  in order to
determine the Appraised Value thereof. After obtaining such Appraisal, the Agent
will promptly  submit the foregoing  documents  and  information,  including the
Appraisal and the Appraised Value, to the Lenders, for approval by the Requisite
Lenders within 10 Business Days  thereafter.  Each Lender shall notify the Agent
whether it  approves of the  designation  of such  Property as a Borrowing  Base
Property  within  10  Business  Days  of  receipt  of  all  such  documents  and
information.  If a Lender  shall fail to so notify the Agent,  then such  Lender
shall be  deemed  to have  approved  of such  Property.  Upon  approval  of such
Property by the Requisite Lenders, and upon execution and delivery of all of the
following, such Property shall become a Borrowing Base Property:

(i)  if at such time the Borrower does not have an Investment  Grade Rating from
     the Rating  Agencies,  all of the documents  required to be provided  under
     Section 6.3. if not previously delivered to the Agent; and

(ii) such other items or documents as may be appropriate under the circumstances
     as reasonably requested by the Agent.

                                     - 38 -


<PAGE>

Section  2.  Release of Eligible Properties.

         From time to time the Borrower may request,  upon not less than 30 days
prior  written  notice to the Agent,  that a  Borrowing  Base  Property  that is
subject to a Security  Deed be released  from the Liens created by such Security
Deed and the other Collateral Documents  applicable thereto,  which release (the
"Property  Release") shall be effected by the Agent if the Agent  determines all
of the  following  conditions  are  satisfied  as of the  date of such  Property
Release:

         (a) no Default or Event of Default has occurred and is then  continuing
or will occur after giving effect to such Property  Release and the reduction in
the Borrowing Base by reason of the release of such Borrowing Base Property;

         (b) the Borrower  shall have  delivered  to the Agent a Borrowing  Base
Certificate  reflecting  the Borrowing Base after giving effect to such Property
Release;

         (c) the Borrower  shall have  delivered to the Agent all  documents and
instruments  reasonably  requested by the Agent in connection with such Property
Release including, without limitation, the following:

(i)  the quitclaim  deed or other  instrument to be used to effect such Property
     Release; and

(ii) an  appropriate  endorsement  to the mortgagee  title  insurance  policy in
     effect  with  respect  to  the  affected   Borrowing   Base  Property  (and
     appropriate  corrective  endorsements  with respect to any other  mortgagee
     policies of title insurance on Borrowing Base Properties  which have tie-in
     clauses which are affected by the release); and

         (d) Agent shall have determined that the outstanding  principal balance
of the Loans,  together  with the  aggregate  principal  amount of all Letter of
Credit  Liabilities,  will not exceed the Borrowing  Base after giving effect to
such Property Release and any prepayment to be made and/or the acceptance of any
Property  pursuant to Section 4.1. which is to be given  concurrently  with such
Property Release as an additional or replacement Borrowing Base Property.

Section  3.1.4.  Frequency of Calculations of Borrowing Base.

         Initially,  the Borrowing Base shall be the amount set forth as such in
the Borrowing Base  Certificate  delivered  under Section 6.1.  Thereafter,  the
Borrowing  Base  shall be the  amount  set forth as such in the  Borrowing  Base
Certificate  delivered from time to time under Section  9.4.(b) or 4.2.(b).  Any
increase  in the  Borrowing  Base Value of an  Eligible  Property  shall  become
effective as of the next determination of the Borrowing Base as provided in this
Section,  provided that prior to such date of  determination  (a) the applicable
Borrowing Base Certificate  substantiates  such increase and (b) if at such time
such  Borrowing  Base  Property  is  subject to a Security  Deed,  the  Borrower
delivers  to  the  Agent  (i)  if  the  Property  is  not  located  in a  Tie-In
Jurisdiction, an endorsement to the title insurance policy in favor of the Agent
with respect to such Property  increasing the coverage amount thereof as related
to such  Property  to not less than 100% of the  Borrowing  Base  Value for such
Property  and (ii) if the  Property  is  located  in a Tie-In  Jurisdiction,  an
endorsement to the title insurance  policy in favor of the Agent with respect to
such Property

                                     - 39 -

<PAGE>

increasing  the coverage  amount thereof as related to such Property to not less
than the Borrowing Base Value of such Property,  as well as  endorsements to all
other existing title insurance  policies issued to the Agent with respect to all
other Properties located in Tie-In  Jurisdictions  reflecting an increase in the
aggregate  insured amount under the "tie-in"  endorsements to an amount equal to
the  aggregate  amount  of the  Borrowing  Base  Values  of all such  Properties
(including the Property which  experienced the increase in Borrowing Base Value)
but  in no  event  in an  amount  in  excess  of  the  aggregate  amount  of the
Commitments.

Section  4.  Additional Appraisals Required under Applicable Law.

         If under  FIRREA or any other  Applicable  Law, a Lender is required to
obtain an Appraisal of any Eligible  Property  subject to a Mortgage in addition
to any  other  Appraisal  previously  obtained  with  respect  to such  Eligible
Property  pursuant  to this  Agreement,  the Agent shall have the right to cause
such an  Appraisal  to be  prepared  at the  Borrower's  cost and  expense.  The
Borrowing Base Value of such Eligible  Property shall only be  redetermined as a
result of delivery of any such new  Appraisal if  Applicable  Law requires  such
redetermination,  in which case such Borrowing Base Value shall be  redetermined
in the manner required under such Applicable Law.

ARTICLE I.4 Yield Protection, Etc.

Section 1.3  Additional Costs; Capital Adequacy.

         (a) Additional  Costs. The Borrower shall promptly pay to the Agent for
the  account  of a Lender  from time to time such  amounts  as such  Lender  may
reasonably  determine to be necessary  to  compensate  such Lender for any costs
incurred by such Lender that it  determines  are  attributable  to its making or
maintaining  of any  LIBOR  Loans  or its  obligation  to make any  LIBOR  Loans
hereunder,  any  reduction  in any amount  receivable  by such Lender under this
Agreement or any of the other Loan  Documents in respect of any of such Loans or
such  obligation or the  maintenance by such Lender of capital in respect of its
Loans or its  Commitments  (such  increases in costs and  reductions  in amounts
receivable  being  herein  called  "Additional   Costs"),   resulting  from  any
Regulatory Change that: (i) changes the basis of taxation of any amounts payable
to such  Lender  under  this  Agreement  or any of the other Loan  Documents  in
respect of any of such Loans or its Commitments  (other than taxes imposed on or
measured by the  overall net income of such Lender or of its Lending  Office for
any of such Loans by the  jurisdiction  in which such  Lender has its  principal
office or such Lending Office); or (ii) imposes or modifies any reserve, special
deposit  or  similar  requirements  (other  than  Regulation  D of the  Board of
Governors of the Federal Reserve System or other reserve requirement utilized in
the determination of the Adjusted Eurodollar Rate for such Loan) relating to any
extensions  of  credit  or  other  assets  of,  or any  deposits  with or  other
liabilities  of, such  Lender,  or any  commitment  of such  Lender  (including,
without limitation,  the Commitments of such Lender hereunder);  or (iii) has or
would have the effect of  reducing  the rate of return on capital of such Lender
to a level below that which such Lender could have achieved but

                                     - 40 -


<PAGE>

for such Regulatory  Change (taking into  consideration  such Lender's  policies
with respect to capital adequacy).

         (b) Lender's Suspension of LIBOR Loans.  Without limiting the effect of
the provisions of the immediately  preceding subsection (a), if by reason of any
Regulatory  Change,  any Lender either (i) incurs  Additional  Costs based on or
measured by the excess  above a  specified  level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the  interest  rate on LIBOR  Loans is  determined  as provided in this
Agreement or a category of  extensions  of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes  subject to restrictions on the amount
of such a category  of  liabilities  or assets that it may hold,  then,  if such
Lender  so elects by notice  to the  Borrower  (with a copy to the  Agent),  the
obligation  of such Lender to make or Continue,  or to Convert any other Type of
Loans into,  LIBOR Loans  hereunder  shall be  suspended  until such  Regulatory
Change  ceases to be in effect (in which  case the  provisions  of Section  5.6.
shall apply).

         (c) Additional Costs in Respect of Letters of Credit.  Without limiting
the obligations of the Borrower under the preceding  subsections of this Section
(but  without  duplication),  if as a result  of any  Regulatory  Change  or any
risk-based capital guideline or other requirement heretofore or hereafter issued
by any  Governmental  Authority  there  shall be  imposed,  modified  or  deemed
applicable  any tax,  reserve,  special  deposit,  capital  adequacy  or similar
requirement  against or with  respect to or measured by  reference to Letters of
Credit and the result  shall be to increase the cost to the Agent of issuing (or
any Lender purchasing participations in) or maintaining its obligation hereunder
to issue (or  purchase  participations  in) any  Letter of Credit or reduce  any
amount  receivable by the Agent or any Lender hereunder in respect of any Letter
of Credit, then, upon demand by the Agent or such Lender, the Borrower shall pay
immediately  to the Agent for its  account  or the  account of such  Lender,  as
applicable,  from  time to time as  specified  by the  Agent or a  Lender,  such
additional amounts as shall be sufficient to compensate the Agent or such Lender
for such increased costs or reductions in amount.

         (d) Notification and  Determination  of Additional  Costs.  Each of the
Agent and each Lender agrees to notify the Borrower of any event occurring after
the Agreement Date entitling the Agent or such Lender to compensation  under any
of the  preceding  subsections  of this  Section  as  promptly  as  practicable;
provided,  however,  the  failure of the Agent or any Lender to give such notice
shall not release the Borrower from any of its obligations hereunder.  The Agent
and or such Lender agrees to furnish to the Borrower a certificate setting forth
the  basis  and  amount  of  each  request  by the  Agent  or  such  Lender  for
compensation  under this Section.  Determinations  by the Agent or any Lender of
the effect of any  Regulatory  Change shall be  conclusive,  provided  that such
determinations are made on a reasonable basis and in good faith.

Section  2.2  Suspension of LIBOR Loans.

         Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:

                  (a)  the  Agent  determines  (which   determination  shall  be
         conclusive)  that by reason of  circumstances  affecting  the  relevant
         market, adequate and reasonable means do not exist for ascertaining the
         Adjusted Eurodollar Rate for such Interest Period, or

                                     - 41 -

<PAGE>


                  (b)  the  Agent  determines  (which   determination  shall  be
         conclusive)  that the Adjusted  Eurodollar Rate will not adequately and
         fairly reflect the cost to the Lenders of making or  maintaining  LIBOR
         Loans for such Interest Period;

then the Agent shall give the Borrower  and each Lender  prompt  notice  thereof
and, so long as such condition remains in effect,  the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans,  Continue LIBOR Loans
or Convert  Loans into LIBOR Loans and the  Borrower  shall,  on the last day of
each current Interest Period for each outstanding  LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.

Section  3.  Illegality.

         Notwithstanding  any other provision of this  Agreement,  if it becomes
unlawful for any Lender to honor its  obligation to make or maintain LIBOR Loans
hereunder,  then such Lender shall promptly notify the Borrower  thereof (with a
copy to the Agent)  and such  Lender's  obligation  to make or  Continue,  or to
Convert Loans of any other Type into,  LIBOR Loans shall be suspended until such
time as such Lender may again make and  maintain  LIBOR Loans (in which case the
provisions of Section 5.6. shall be applicable).

Section  4.2  Compensation.

         The  Borrower  shall pay to the Agent for the  account of each  Lender,
upon the  request of such Lender  through  the Agent,  such amount or amounts as
shall be sufficient (in the reasonable  opinion of such Lender) to compensate it
for any loss, cost or expense that such Lender determines is attributable to:

                  (a) any payment or prepayment  (whether mandatory or optional)
         of a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for
         any reason  (including,  without  limitation,  acceleration)  on a date
         other than the last day of the Interest Period for such Loan; or

                  (b) any  failure by the  Borrower  for any reason  (including,
         without  limitation,  the failure of any of the  applicable  conditions
         precedent  specified in Article VI. to be  satisfied) to borrow a LIBOR
         Loan from such Lender on the date for such  borrowing,  or to Convert a
         Base  Rate  Loan  into a LIBOR  Loan or  Continue  a LIBOR  Loan on the
         requested date of such Conversion or Continuation,

such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest that  otherwise  would have accrued on the
principal  amount so paid,  prepaid or  Converted or not borrowed for the period
from the date of such  payment,  prepayment,  Conversion or failure to borrow or
Convert to the last day of the then current  Interest  Period for such Loan (or,
in the case of a failure to borrow or Convert, the Interest Period for such Loan
that  would  have  commenced  on  the  date  specified  for  such  borrowing  or
Conversion) at the applicable rate of interest for such Loan provided for herein
plus such Lender's normal  administrative  charges, if any, associated with such
payment,  prepayment,  Conversion  or failure to borrow  over (ii) the amount of
interest that otherwise  would have accrued on such  principal  amount at a rate
per annum equal to LIBOR at such time for an amount comparable to such principal
amount and for a maturity

                                     - 42 -

<PAGE>

comparable to such period (as  reasonably  determined by such Lender).  Upon the
Borrower's request, any Lender requesting  compensation under this Section shall
provide the Borrower  with a statement  setting  forth the basis for  requesting
such  compensation  and the method for determining the amount thereof.  Any such
statement shall be conclusive absent manifest error.

Section  5.  Affected Lenders.

         If any Lender requests  compensation pursuant to Section 3.12. or 5.1.,
or the  obligation  of any  Lender to make  LIBOR  Loans or to  Continue,  or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
5.1.(b), 5.2. or 5.3., then, so long as there does not then exist any Default or
Event of Default,  the  Borrower  may demand  that such  Lender  (the  "Affected
Lender"),  and upon such demand the Affected Lender shall  promptly,  assign its
Commitments  to an  Eligible  Assignee  subject  to and in  accordance  with the
provisions  of Section  13.5.(d)  for a purchase  price  equal to the  aggregate
principal  balance of Loans then owing to the  Affected  Lender plus any accrued
but unpaid  interest  thereon and accrued but unpaid fees owing to the  Affected
Lender. Each of the Agent and the Affected Lender shall reasonably  cooperate in
effectuating the replacement of such Affected Lender under this Section,  but at
no time shall the Agent,  such Affected Lender nor any other Lender be obligated
in any way  whatsoever to initiate any such  replacement or to assist in finding
an Eligible  Assignee.  The  exercise by the  Borrower of its rights  under this
Section  shall be at the  Borrower's  sole cost and  expenses  and at no cost or
expense to the Agent, the Affected Lender or any of the other Lenders. The terms
of this Section shall not in any way limit the  Borrower's  obligation to pay to
any Affected  Lender  compensation  owing to such  Affected  Lender  pursuant to
Section 3.12. or 5.1.

Section  6.  Treatment of Affected Loans.

         If the obligation of any Lender to make LIBOR Loans or to Continue,  or
to Convert  Base Rate Loans into,  LIBOR Loans  shall be  suspended  pursuant to
Section  5.1.(b),  5.2.  or  5.3.,  then  such  Lender's  LIBOR  Loans  shall be
automatically  Converted  into  Base Rate  Loans on the last  day(s) of the then
current  Interest  Period(s)  for LIBOR Loans (or,  in the case of a  Conversion
required by Section  5.1.(b) or 5.3.,  on such  earlier  date as such Lender may
specify to the  Borrower  with a copy to the Agent)  and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 5.1., 5.2. or 5.3. that gave rise to such Conversion no longer exist:

                  (a) to the extent that such Lender's  LIBOR Loans have been so
         Converted,  all  payments  and  prepayments  of  principal  that  would
         otherwise  be applied to such  Lender's  LIBOR  Loans  shall be applied
         instead to its Base Rate Loans; and

                  (b) all Loans that would  otherwise  be made or  Continued  by
         such Lender as LIBOR Loans shall be made or  Continued  instead as Base
         Rate Loans, and all Base Rate Loans of such Lender that would otherwise
         be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion
of such  Lender's  LIBOR Loans  pursuant to this  Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding,

                                     - 43 -

<PAGE>

then such  Lender's  Base Rate Loans shall be  automatically  Converted,  on the
first day(s) of the next  succeeding  Interest  Period(s)  for such  outstanding
LIBOR Loans, to the extent necessary so that,  after giving effect thereto,  all
Loans held by the  Lenders  holding  LIBOR Loans and by such Lender are held pro
rata (as to principal  amounts,  Types and Interest  Periods) in accordance with
their respective Commitments.

Section  7.  Change of Lending Office.

         Each Lender agrees that it will use reasonable  efforts to designate an
alternate  Lending  Office  with  respect  to any of its Loans  affected  by the
matters or circumstances described in Sections 3.12., 5.1. or 5.3. to reduce the
liability of the Borrower or avoid the results provided  thereunder,  so long as
such  designation  is not  disadvantageous  to such Lender as determined by such
Lender in its sole discretion,  except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.

Section  8.  Assumptions Concerning Funding of LIBOR Loans.

         Calculation  of all amounts  payable to a Lender  under this Article V.
shall be made as though such Lender had actually  funded LIBOR Loans through the
purchase  of  deposits  in the  relevant  market  bearing  interest  at the rate
applicable  to such  LIBOR  Loans in an amount  equal to the amount of the LIBOR
Loans  and  having  a  maturity  comparable  to the  relevant  Interest  Period;
provided,  however,  that each  Lender  may fund each of its LIBOR  Loans in any
manner  it  sees  fit and the  foregoing  assumption  shall  be  used  only  for
calculation of amounts payable under this Article V.

ARTICLE  I.4 Conditions Precedent

Section  1.4  Initial Conditions Precedent.

         The  obligation  of the  Lenders to make the initial  Loans  hereunder,
whether  as the making of any  Revolving  Loans or the  issuance  of a Letter of
Credit, is subject to the following conditions precedent:

         (a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:

(i)  counterparts of this Agreement executed by each of the parties hereto;

(ii) Revolving  Notes  executed  by the  Borrower,  payable  to each  Lender and
     complying with the terms of Section 2.9.;

(iii)the  Guaranty  executed by each of the  Guarantors  initially to be a party
     thereto;


                                     - 44 -

<PAGE>

(iv) favorable  UCC, tax,  judgment and lien search  reports with respect to the
     Borrower in all necessary or appropriate  jurisdictions and under all legal
     and appropriate trade names indicating that there are no prior liens on any
     of the assets of the  Borrower  other than  Permitted  Liens or Liens which
     were terminated prior to the Effective Date;

(ix) an  opinion of  Ballard  Spahr  Andrews &  Ingersoll,  LLP,  counsel to the
     Parent, the Borrower and the other Loan Parties, and addressed to the Agent
     and the Lenders in substantially the form of Exhibit M;

(x)  An opinion of  Manning,  Fulton and  Skinner,  counsel to the  Parent,  the
     Borrower  and the  other  Loan  Parties,  addressed  to the  Agent  and the
     Lenders,  regarding the  enforceability of the Agreement and the other Loan
     Documents  under the laws of the State of North  Carolina,  and such  other
     matters of North Carolina law as the Agent may reasonably request;

(xi) the  Certificate of Limited  Partnership of the Borrower  certified as of a
     recent date by the State  Department  of  Assessments  and  Taxation of the
     State of Maryland;

(xii)a Certificate of Good Standing with respect to the Borrower  issued as of a
     recent date by the State  Department  of  Assessments  and  Taxation of the
     State of Maryland and certificates of qualification to transact business or
     other comparable  certificates  with respect to the Borrower issued by each
     Secretary of State (and any state department of taxation, as applicable) of
     each state in which the Borrower is required to be so qualified;

(xiii) a  certificate  of  incumbency  signed  by  the  Secretary  or  Assistant
     Secretary  of the Parent with respect to each of the officers of the Parent
     authorized to execute and deliver Loan Documents to which the Parent or the
     Borrower is a party and to execute  and  deliver on behalf of the  Borrower
     Notices of Borrowing, Notices of Conversion and Notices of Continuation and
     to request the issuance of Letters of Credit;

(xiv)a certified copy (certified by the Secretary or Assistant  Secretary of the
     Parent) of the agreement of limited  partnership of the Borrower and of all
     necessary  action taken by the Parent to authorize the execution,  delivery
     and  performance  of the Loan Documents to which the Parent or the Borrower
     is a party;

(xv) the  certificate or articles of  incorporation,  articles of  organization,
     certificate  of  limited   partnership,   declaration  of  trust  or  other
     comparable  organizational instrument (if any) of the Parent and each other
     Loan Party  certified as of a recent date by the  Secretary of State of the
     State of formation of such Person;

(xvi)a  Certificate  of Good  Standing or  certificate  of similar  meaning with
     respect to the Parent and each other Loan Party  issued as of a recent date
     by the Secretary of State of the State of formation of each such Person and
     certificates  of  qualification  to transact  business or other  comparable
     certificates issued by each Secretary of State (and any state department of
     taxation,  as applicable) of each state in which such Person is required to
     be so qualified;

                                     - 45 -


<PAGE>

(xvii) copies  certified by the  Secretary or Assistant  Secretary of the Parent
     and  each  other  Loan  Party  (or  other  individual   performing  similar
     functions)  of (i)  the  by-laws  of such  Person,  if a  corporation,  the
     operating  agreement,  if a  limited  liability  company,  the  partnership
     agreement,  if a  limited  or  general  partnership,  or  other  comparable
     document  in the  case of any  other  form of  legal  entity  and  (ii) all
     corporate,  partnership,  member or other  necessary  action  taken by such
     Person to authorize the  execution,  delivery and  performance  of the Loan
     Documents to which it is a party;

(xviii) the UBS Assignment  Agreement and the First Union  Assignment  Agreement
     executed and delivered by the respective parties thereto;

(xix)a Borrowing Base  Certificate  calculated as of the Effective  Date,  which
     Borrowing Base  Certificate  shall indicate that the Borrower has borrowing
     capacity  hereunder in an amount at least equal to the aggregate  amount of
     the obligations outstanding under the Existing Credit Agreement immediately
     prior to the effectiveness of this Agreement;

(xx) a Compliance Certificate calculated on a pro forma basis as of December 31,
     1999, except for the calculation of the Borrowing Base Leverage Ratio which
     shall be calculated as of the Effective  Date,  assuming the  occurrence of
     the initial Credit Event; and

(xxi)such other  documents and  instruments as the Agent,  or any Lender through
     the Agent, may reasonably request; and

         (b)      In the good faith judgment of the Agent:

(i)  There shall not have  occurred or become  known to the Agent or the Lenders
     any event, condition, situation or status since the date of the information
     contained in the financial  and business  projections,  budgets,  pro forma
     data and forecasts  concerning  the Parent,  the  Borrower,  and other Loan
     Party or any of the  other  Subsidiaries  delivered  to the  Agent  and the
     Lenders  prior to the  Agreement  Date that has had or could  reasonably be
     expected to have a Material Adverse Effect;

(ii) No   litigation,   action,   suit,   investigation   or   other   arbitral,
     administrative or judicial  proceeding shall be pending or threatened which
     could  reasonably be expected to (A) result in a Material Adverse Effect or
     (B) restrain or enjoin,  impose  materially  burdensome  conditions  on, or
     otherwise  materially  and adversely  affect the ability of the Borrower or
     any other Loan Party to fulfill its obligations under the Loan Documents to
     which it is a party;

(iii)The Parent,  the Borrower,  each other Loan Party and each other Subsidiary
     of the Parent shall have received all approvals,  consents and waivers, and
     shall  have made or given all  necessary  filings  and  notices as shall be
     required to consummate  the  transactions  contemplated  hereby without the
     occurrence  of any default  under,  conflict  with or  violation of (A) any
     Applicable  Law or (B) any  agreement,  document or instrument to which any
     such  Person  is a party  or by which it or its  respective  properties  is
     bound, except for such approvals,  consents,  waivers,  filings and notices
     the  receipt,  making or giving of which,  or the failure to make,  give or
     receive which, would not reasonably be likely to (1) have a Material

                                     - 46 -

<PAGE>



     Material  Adverse  Effect,  or (2)  restrain or enjoin,  impose  materially
     burdensome  conditions on, or otherwise materially and adversely affect the
     ability of the Borrower or any other Loan Party to fulfill its  obligations
     under the Loan Documents to which it is a party; and

(iv) There shall not have occurred or exist any material disruption of financial
     or capital  markets that could  reasonably  be expected to  materially  and
     adversely affect the transactions contemplated by the Loan Documents.

Section  2.4  Conditions Precedent to All Loans and Letters of Credit.

         The  obligation  of the  Lenders  to make any Loans and of the Agent to
issue any Letter of Credit is subject to the further  condition  precedent that:
(a) no Default or Event of Default  shall have  occurred and be continuing as of
the date of the  making  of such  Loan or date of  issuance  of such  Letter  of
Credit,  or would exist  immediately  after  giving  effect  thereto,  including
without  limitation,  a Default  resulting  from the  existence of the condition
referred to in Section 2.6.(b)(ii);  (b) the representations and warranties made
or deemed made by the Borrower  and each other Loan Party in the Loan  Documents
to which any of them is a party, shall be true and correct on and as of the date
of the making of such Loan or date of issuance of such Letter of Credit with the
same  force and  effect as if made on and as of such date  except to the  extent
that such  representations and warranties  expressly relate solely to an earlier
date (in which case such representations and warranties shall have been true and
accurate  on and as of such  earlier  date) and  except  for  changes in factual
circumstances  specifically and expressly permitted hereunder; (c) the aggregate
outstanding principal balance of Loans together with the aggregate amount of all
Letter of Credit  Liabilities  does not exceed the Borrowing Base as of the date
of the making of such Loan or issuance of such Letter of Credit or would  exceed
the Borrowing Base immediately after giving effect thereto ; and (d) in the case
of the  borrowing of  Revolving  Loans,  the Agent shall have  received a timely
Notice of Borrowing.  Each Credit Event shall  constitute a certification by the
Borrower to the effect set forth in the preceding  sentence (both as of the date
of the giving of notice  relating to such Credit Event and,  unless the Borrower
otherwise  notifies the Agent prior to the date of such Credit Event,  as of the
date of the occurrence of such Credit Event). In addition,  if such Credit Event
is the  making of a Loan or the  issuance  of a Letter of Credit,  the  Borrower
shall be deemed to have represented to the Agent and the Lender at the time such
Loan is made or Letter of Credit is issued that all  conditions to the making of
such Loan or  issuance of such  Letter of Credit  contained  in Article VI. have
been satisfied.

Section  3.1.5.  Conditions Precedent to a Property Becoming A Borrowing Base
                 Property if Borrower Not Investment Grade.

         No Property  shall become a Borrowing Base Property if at such time the
Borrower does not have an Investment Grade Rating from the Rating Agencies until
the Borrower  shall have (or shall have caused to be) executed and  delivered to
the Agent and the  Lenders  all  documents  and  instruments  required  to be so
executed and  delivered  under Section  4.1.,  the Requisite  Lenders shall have
approved of such  Property as provided in such Section,  and the Borrower  shall
have (or  shall  have  caused to be)  executed  and  delivered  to the Agent the
following  instruments,  documents and  agreements in respect of such  Property,
each to be in form and substance satisfactory to the Agent:

                                     - 47 -

<PAGE>

         (a) a Security Deed encumbering such Property in favor of the Agent for
the benefit of the  Lenders,  the form of such  Security  Deed to be modified as
appropriate to conform to the Applicable Laws of the  jurisdiction in which such
Property is located;

         (b) an Assignment of Leases and Rents,  the form of such  Assignment of
Leases and Rents to be modified as appropriate to conform to the Applicable Laws
of the jurisdiction in which such Property is located;

         (c)      an Environmental Indemnity Agreement;

         (d) if  requested  by the Agent,  collateral  assignments  of the other
Material Contract and any other rights or benefits of such Property, relating to
the use,  occupancy,  operation,  maintenance,  enjoyment  or  ownership of such
Property;

         (e) an ALTA  1992 Form  mortgagee's  Policy  of Title  Insurance  (with
deletion of the  creditor's  rights  exclusion  and  deletion  of the  mandatory
arbitration  provision)  or other form  acceptable  to the Agent in favor of the
Agent for the benefit of the Lenders  with respect to such  Property,  including
endorsements  with  respect to such items of  coverage  as the Agent may request
(and which  endorsements are available in the applicable  state),  in a coverage
amount  equal to no less  than  100% of the  Appraised  Value  of such  Property
(excluding the value of any personal property located at such Property),  issued
by a title  insurance  company  acceptable to the Agent and with  coinsurance or
reinsurance  (with direct  access  agreements)  with title  insurance  companies
acceptable  to  the  Agent,  showing  the  fee  simple  title  to the  land  and
improvements described in the applicable Security Deed as vested in the Borrower
or a  Subsidiary,  and insuring that the Lien granted by such Security Deed is a
valid  first  priority  Lien  against  such  Property,   subject  only  to  such
restrictions,  encumbrances, easements and reservations as are acceptable to the
Agent;

         (f) copies of all documents of record reflected in Schedule B of such
Policy of Title Insurance;

         (g) if such Property is located in a Tie-In Jurisdiction,  endorsements
to all other existing title insurance  policies issued to the Agent with respect
to all other Properties located in Tie-In  Jurisdictions  reflecting an increase
in the aggregate  insured  amount under the "tie-in"  endorsements  to an amount
equal  to the  aggregate  amount  of  the  Borrowing  Base  Values  of all  such
Properties  (including the Property to be included as a Borrowing Base Property)
but  in no  event  in an  amount  in  excess  of  the  aggregate  amount  of the
Commitments;

         (h) a current or currently  certified survey of such Property certified
by a surveyor  licensed in the  jurisdiction  where such  Property is located to
have been prepared in accordance with the then effective Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys,  and if not adequately covered by
the  survey  certification,  a  certificate  from a licensed  engineer  or other
professional  satisfactory  to the Agent that such  Property is not located in a
Special Flood Hazard Area as defined by the Federal Insurance Administration;

         (i) UCC,  tax,  judgment  and lien search  reports  with respect to the
Borrower (or if the Property is owned by a Subsidiary, such Subsidiary) and such
Property in all necessary or appropriate  jurisdictions  and under all legal and
appropriate trade names indicating that there are no

                                     - 48 -

<PAGE>

Liens of record on such Property or any of the Collateral relating thereto other
than  Permitted  Liens  or  Liens  to be  terminated  prior  to such  Property's
acceptance as a Borrowing Base Property;

         (j) estoppel certificates from each tenant leasing in 5,000 square feet
or more of such Property as may be reasonably requested by the Agent;

         (k) an opinion of counsel  admitted to practice law in the jurisdiction
in which such Property is located and acceptable to the Agent,  addressed to the
Agent and each Lender covering such legal matters  relating to the  transactions
contemplated hereby as the Agent may reasonably request;

         (l) an opinion of counsel  admitted to practice law in the jurisdiction
in which the Borrower is formed (and if the  Property is owned by a  Subsidiary,
also in the  jurisdiction  where such  Subsidiary  is formed)  acceptable to the
Agent,  addressed  to the Agent and each  Lender  covering  such  legal  matters
relating  to the  formation  and  existence  and power of the  Person  executing
documents,  and the due authorization,  execution and delivery of the Collateral
Documents and other documents for  consummating  the  transactions  contemplated
hereby as the Agent may reasonably request;

         (m) a Borrowing Base Certificate calculated giving effect to the
inclusion of such Property as a Borrowing Base Property;

         (n) if such  Property  is owned by a  Subsidiary  that is not already a
Guarantor,  all of the items required to be delivered to the Agent under Section
8.16.;

         (o) final certificates of occupancy relating to such Property, if
 available;

         (p) evidence that the insurance required for such Property under
Section 8.5. is then in effect;

         (q) if  requested by the Agent,  a  subordination,  nondisturbance  and
attornment  agreement  from each tenant  selected by the Agent and which  leases
5,000 square feet or more of such Property,  such subordination,  nondisturbance
and  attornment  agreement  to be  substantially  in the  form of  Exhibit  I or
otherwise in a form reasonably satisfactory to the Agent;

         (r) if requested by the Agent, a  subordination  agreement with respect
to any Property Management Agreement to which such Property is subject, executed
by the applicable property manager; and

         (s)  such  other  due  diligence  materials,  instruments,   documents,
agreements,  financing statements,  certificates,  opinions and other Collateral
Documents as the Agent may reasonably request.


                                     - 49 -


<PAGE>


ARTICLE I.5 Representations and Warranties

Section 1.5  Representations and Warranties.

         In order to  induce  the  Agent  and each  Lender  to enter  into  this
Agreement and to make Loans and issue Letters of Credit, the Borrower represents
and warrants to the Agent and each Lender as follows:

         (a)  Organization;  Power;  Qualification.  Each  of  the  Parent,  the
Borrower,  the other Loan Parties and each other  Subsidiary  of the Parent is a
corporation,  partnership  or other  legal  entity,  duly  organized  or formed,
validly   existing  and  in  good  standing  under  the   jurisdiction   of  its
incorporation  or  formation,  has the power and  authority  to own or lease its
respective  properties and to carry on its respective  business as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign  corporation,  partnership or other legal entity, and authorized to
do business,  in each  jurisdiction  in which the character of its properties or
the nature of its business  requires such  qualification  or  authorization  and
where the failure to be so qualified or authorized would have, in each instance,
a Material Adverse Effect.

         (b) Ownership  Structure.  Part I of Schedule 7.1.(b) is a complete and
correct list of all  Subsidiaries of the Parent  (including all  Subsidiaries of
the Borrower)  setting forth for each such  Subsidiary,  (a) the jurisdiction of
organization of such Subsidiary, (b) each Person holding any Equity Interests in
such Subsidiary (except in the case of the Borrower, each Person holding 5.0% or
more of the  outstanding  Equity Interest of the Borrower) and (c) the nature of
the  Equity  Interests  held by each  such  Person  and  (d) the  percentage  of
ownership of such  Subsidiary  represented by such Equity  Interests.  Except as
disclosed  in such  Schedule (i) each of the Parent and its  Subsidiaries  owns,
free and  clear  of all  Liens,  and has the  unencumbered  right  to vote,  all
outstanding  Equity  Interests  in each  Person  shown  to be held by it on such
Schedule,  (ii) all of the issued  and  outstanding  capital  stock of each such
Person   organized  as  a  corporation  is  validly   issued,   fully  paid  and
nonassessable  and  (iii)  there  are  no  outstanding  subscriptions,  options,
warrants,  commitments,  preemptive rights or agreements of any kind (including,
without  limitation,  any  stockholders'  or voting  trust  agreements)  for the
issuance, sale, registration or voting of, or outstanding securities convertible
into,  any  additional  shares of capital stock of any class,  or partnership or
other ownership  interests of any type in, any such Person.  Part II of Schedule
7.1.(b)  correctly  sets  forth  all  Unconsolidated  Entities  of  the  Parent,
including the correct legal name of such Person,  the type of legal entity which
each such Person is, and all Equity  Interests  in such Person held  directly or
indirectly by the Parent.

         (c)  Authorization of Agreement,  Notes, Loan Documents and Borrowings.
The  Borrower  has the right and power,  and has taken all  necessary  action to
authorize it, to borrow hereunder.  The Parent, the Borrower and each other Loan
Party has the right and power,  and has taken all necessary  action to authorize
it, to execute,  deliver and perform each of the Loan Documents to which it is a
party  in  accordance  with  their   respective  terms  and  to  consummate  the
transactions  contemplated  hereby and thereby.  The Loan Documents to which the
Parent,  the Borrower or other Loan Party is a party have been duly executed and
delivered  by the duly  authorized  officers of such Person and each is a legal,
valid and binding obligation of such Person  enforceable  against such Person in
accordance with its respective terms.

                                     - 50 -
<PAGE>

         (d) Compliance of Agreement,  Notes,  Loan Documents and Borrowing with
Laws, etc. The execution,  delivery and performance of this Agreement, the Notes
and the other Loan Documents to which the Parent, the Borrower or any other Loan
Party is a party in accordance  with their  respective  terms and the borrowings
hereunder do not and will not, by the passage of time, the giving of notice,  or
both:  (i) require any  Governmental  Approval  or violate  any  Applicable  Law
(including all  Environmental  Laws) relating to the Parent,  the Borrower,  any
other Loan Party or any other  Subsidiary  of the Parent;  (ii)  conflict  with,
result  in  a  breach  of  or   constitute  a  default  under  the  articles  of
incorporation or the bylaws of Parent, the Borrower, any other Loan Party or any
other Subsidiary of the Parent, or any indenture,  agreement or other instrument
to which Parent,  the Borrower,  any other Loan Party or any other Subsidiary of
the Parent is a party or by which it or any of its respective  properties may be
bound; or (iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter  acquired by Parent,  the
Borrower,  any other Loan Party or any other Subsidiary of the Parent other than
in favor of the Agent for the benefit of the Lenders.

         (e)  Compliance  with Law;  Governmental  Approvals.  The  Parent,  the
Borrower,  each other Loan Party and each other  Subsidiary  of the Parent is in
compliance with each  Governmental  Approval  applicable to it and in compliance
with all other Applicable Law relating to such Person except for  noncompliances
which,  and  Governmental  Approvals  the failure to possess  which,  would not,
individually or in the aggregate,  cause a Default or Event of Default or have a
Material Adverse Effect.

         (f) Title to Properties;  Liens.  As of the Agreement  Date,  Part I of
Schedule  7.1.(f)  sets  forth all of the real  property  owned or leased by the
Parent,  the  Borrower,  each other Loan Party and each other  Subsidiary of the
Parent and the  applicable  Occupancy  Rate  thereof.  Each of the  Parent,  the
Borrower,  each other Loan  Party and each  other  Subsidiary  of the Parent has
good,  marketable  and legal  title to, or a valid  leasehold  interest  in, its
respective  assets.  As of the  Agreement  Date,  there are no Liens against any
assets of the Parent, the Borrower, any other Loan Party or any other Subsidiary
except for Permitted Liens.

         (g) Existing Indebtedness.  Other than the Obligations hereunder and as
set forth on Schedule 7.1.(g),  neither the Parent, the Borrower, any other Loan
Party,  any of the other  Subsidiaries  of the  Parent,  nor any  Unconsolidated
Entities has any Indebtedness.  The Parent, the Borrower, each other Loan Party,
each of such other Subsidiaries, and each Unconsolidated Entities have performed
and  are in  compliance  with  all of the  terms  of such  Indebtedness  and all
instruments and agreements relating thereto, and no default or event of default,
or event or  condition  which with the giving of  notice,  the lapse of time,  a
determination  of  materiality,  the  satisfaction of any other condition or any
combination  of the  foregoing,  would  constitute  such a  default  or event of
default, exists with respect to any such Indebtedness.

         (h) Material Contracts.  Schedule 7.1.(h) is, as of the Agreement Date,
a true,  correct and  complete  listing of all Material  Contracts.  Each of the
Parent,  the Borrower,  the other Loan Parties and the other Subsidiaries of the
Parent  that are  parties  to any  Material  Contract  has  performed  and is in
compliance  with all of the terms of such Material  Contract,  and no default or
event of default by the Borrower,  any other Loan Party or any other Subsidiary,
or event or  condition  which with the giving of  notice,  the lapse of time,  a
determination  of  materiality,  the  satisfaction of any other condition or any
combination  of the  foregoing,  would  constitute  such a  default  or event of

                                     - 51 -

<PAGE>



default by the Borrower,  any other Loan Party or any other  Subsidiary,  exists
with respect to any such Material Contract.

         (i) Litigation.  Except as set forth on Schedule 7.1.(i),  there are no
actions,  suits or  proceedings  pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings  threatened,  nor is there any basis
therefor)  against or in any other way relating  adversely  to or affecting  the
Parent,  the Borrower,  any other Loan Party, any other Subsidiary of the Parent
or any of their respective property in any court or before any arbitrator of any
kind or  before or by any  other  Governmental  Authority  which,  if  adversely
determined,  could reasonably be expected to have a Material Adverse Effect, and
there are no strikes,  slow  downs,  work  stoppages  or walkouts or other labor
disputes in progress or threatened  relating to the Parent,  the  Borrower,  any
other Loan Party or any other Subsidiary.

         (j) REIT Status.  The Parent is in compliance with all requirements and
conditions  imposed  under the  Internal  Revenue  Code to allow  the  Parent to
maintain its status as a REIT.

         (k) Borrowing Base Properties.  Each of the Borrowing Base Properties
is an Eligible Property.

         (l) Taxes. All federal, state and other tax returns of the Borrower and
any  Subsidiary or Loan Party  required by Applicable  Law to be filed have been
duly  filed,  and all  federal,  state and other  taxes,  assessments  and other
governmental  charges or levies upon the Borrower,  any Subsidiary and each Loan
Party and its respective  properties,  income,  profits and assets which are due
and  payable  have been paid,  except any such  nonpayment  which is at the time
permitted under Section 8.6. None of the United States income tax returns of the
Borrower,  its  Subsidiaries  or any Loan Party are under  audit.  All  charges,
accruals and reserves on the books of the Borrower and each of its  Subsidiaries
in respect of any taxes or other  governmental  charges are in  accordance  with
GAAP.

         (m)  Financial  Statements.  The Borrower has  furnished to each Lender
copies of (i) the audited Consolidated  Financial Statements for the fiscal year
ending December 31, 1998,  with the opinion  thereon of  PricewaterhouseCoopers,
LLP, and (ii) the unaudited Consolidated Financial Statements the fiscal quarter
ending  September 30, 1999.  Such financial  statements  (including in each case
related  schedules  and notes) are complete and correct and present  fairly,  in
accordance with GAAP consistently  applied throughout the periods involved,  the
consolidated   financial   position  of  the  Borrower   and  its   consolidated
Subsidiaries as at their  respective dates and the results of operations and the
cash flow for such  periods  (subject,  as to  interim  statements,  to  changes
resulting from normal year-end audit adjustments).  Neither the Borrower nor any
of  its  Subsidiaries  has  on  the  Agreement  Date  any  material   contingent
liabilities,   liabilities,   liabilities   for  taxes,   unusual  or  long-term
commitments  or unrealized or forward  anticipated  losses from any  unfavorable
commitments,  except  as  referred  to or  reflected  or  provided  for in  said
financial statements.

         (n) No Material Adverse Change. Since December 31, 1998, there has been
no material adverse change in the consolidated  financial condition,  results of
operations,  business or prospects of the Parent,  the Borrower and the Parent's
other  consolidated  Subsidiaries  taken as a  whole.  Each of the  Parent,  the
Borrower, its Subsidiaries and the other Loan Parties is Solvent.

                                     - 52 -


<PAGE>

         (o) ERISA.  Each  member of the ERISA Group is in  compliance  with its
obligations  under the  minimum  funding  standards  of ERISA  and the  Internal
Revenue Code with respect to each Plan and is in  compliance  with the presently
applicable  provisions  of ERISA and the  Internal  Revenue Code with respect to
each Plan, except in each case for noncompliances  which could not reasonably be
expected to have a Material Adverse Effect.  As of the Agreement Date, no member
of the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal  Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any  Benefit  Arrangement,  or made  any  amendment  to any  Plan or  Benefit
Arrangement,  which has resulted or could result in the  imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii)  incurred any liability  under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.

         (p) Absence of Defaults.  Neither the Parent,  the Borrower,  any other
Loan  Party or any  other  Subsidiary  of the  Parent  is in  default  under its
articles  of  incorporation,  bylaws,  partnership  agreement  or other  similar
organizational  documents,  and no  event  has  occurred,  which  has  not  been
remedied,  cured or  waived:  (i) which  constitutes  a  Default  or an Event of
Default;  or (ii)  which  constitutes,  or which with the  passage of time,  the
giving of notice,  a  determination  of  materiality,  the  satisfaction  of any
condition, or any combination of the foregoing,  would constitute,  a default or
event of  default  by any such  Person  under  any  agreement  (other  than this
Agreement)  or judgment,  decree or order to which any such Person is a party or
by which any such Person or any of its respective  properties may be bound where
such default or event of default could, individually or in the aggregate, have a
Material Adverse Effect.

         (q) Environmental  Laws. To the best of the Borrower's  knowledge after
due inquiry and except as set forth on Schedule 7.1.(q), (i) each of the Parent,
the Borrower,  each other Loan Party and each other Subsidiary of the Parent has
obtained all Governmental  Approvals which are required under Environmental Laws
and is in  compliance  with  all  terms  and  conditions  of  such  Governmental
Approvals  which the  failure to obtain or to comply  with could  reasonably  be
expected  to have a Material  Adverse  Effect and (ii) each of the  Parent,  the
Borrower,  each other Loan Party and each other Subsidiary of the Parent is also
in compliance with all other limitations,  restrictions,  conditions, standards,
prohibitions,  requirements, obligations, schedules, and timetables contained in
the  Environmental  Laws which the  failure to comply with could  reasonably  be
expected  to have a Material  Adverse  Effect.  Except for any of the  following
matters that could not be reasonably  expected to have a Material Adverse Effect
and except as set forth on such Schedule,  the Borrower is not aware of, and has
not  received  notice  of,  any past,  present,  or future  events,  conditions,
circumstances,  activities,  practices, incidents, actions, or plans which, with
respect  to the  Parent,  the  Borrower,  each  other  Loan Party and each other
Subsidiary of the Parent,  may interfere with or prevent compliance or continued
compliance with Environmental  Laws, or may give rise to any common-law or legal
liability,  or  otherwise  form the basis of any claim,  action,  demand,  suit,
proceeding,  hearing,  study,  or  investigation,  based  on or  related  to the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transport, or handling or the emission, discharge, release or threatened release
into the environment,  of any pollutant,  contaminant,  chemical, or industrial,
toxic,  or other  Hazardous  Material;  and  there  is no  civil,  criminal,  or
administrative  action, suit, demand, claim, hearing,  notice, or demand letter,
notice of violation,  investigation, or proceeding pending or, to the Borrower's
knowledge after due inquiry, threatened, against the Parent, the Borrower, each

                                     - 53 -

<PAGE>



other Loan Party and each other  Subsidiary of the Parent relating in any way to
Environmental Laws.

         (r) Investment  Company;  Public Utility Holding  Company.  Neither the
Parent, the Borrower, any other Loan Party or any other Subsidiary of the Parent
is (i) an  "investment  company"  or a company  "controlled"  by an  "investment
company"  within the meaning of the Investment  Company Act of 1940, as amended,
(ii) a "holding company" or a "subsidiary company" of a "holding company", or an
"affiliate"  of a "holding  company" or of a "subsidiary  company" of a "holding
company",  within the meaning of the Public Utility Holding Company Act of 1935,
as  amended,  or (iii)  subject to any other  Applicable  Law which  purports to
regulate  or  restrict  its  ability  to  borrow  money  or  to  consummate  the
transactions  contemplated by this Agreement or to perform its obligations under
any Loan Document to which it is a party.

         (s) Margin  Stock.  Neither the Parent,  the  Borrower,  any other Loan
Party or any other Subsidiary of the Parent is engaged principally, or as one of
its important  activities,  in the business of extending credit for the purpose,
whether immediate,  incidental or ultimate, of buying or carrying "margin stock"
within the  meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve System.

         (t) Affiliate Transactions.  Except as permitted by Section 10.12.,
neither the Parent,  the Borrower,  any other Loan Party or any other Subsidiary
of the Parent is a party to or bound by any  agreement or  arrangement  (whether
oral or written) to which any Affiliate of the Borrower, any Subsidiary or other
Loan Party is a party.

         (u) Intellectual  Property.  The Parent, the Borrower,  each other Loan
Party and each  other  Subsidiary  of the  Parent  owns or has the right to use,
under valid license  agreements or otherwise,  all material  patents,  licenses,
franchises,  trademarks, trademark rights, trade names, trade name rights, trade
secrets and copyrights  (collectively,  "Intellectual Property") necessary to or
used in the conduct of its  businesses as now conducted and as  contemplated  by
the Loan Documents,  without known conflict with any patent, license, franchise,
trademark,  trade secret, trade name,  copyright,  or other proprietary right of
any other Person. All such Intellectual  Property is fully protected and/or duly
and  properly  registered,  filed  or  issued  in  the  appropriate  office  and
jurisdictions for such registrations, filing or issuances. No material claim has
been  asserted  by  any  Person  with  respect  to the  use of any  Intellectual
Property,  or challenging or questioning  the validity or  effectiveness  of any
Intellectual Property.

         (v)  Business.   As  of  the  Agreement  Date,  the  Borrower  and  its
Subsidiaries  are  engaged  in the  business  of  acquiring,  owning,  managing,
leasing, renovating and developing principally supermarket-anchored neighborhood
shopping centers.

         (w) Accuracy and Completeness of Information.  All written information,
reports and other  papers and data  furnished  to the Agent or any Lender by, on
behalf of, or at the  direction of, the  Borrower,  any  Subsidiary or any other
Loan Party were, at the time the same were so furnished, complete and correct in
all material respects,  to the extent necessary to give the recipient a true and
accurate  knowledge  of the  subject  matter,  or,  in  the  case  of  financial
statements,  present  fairly,  in  accordance  with  GAAP  consistently  applied
throughout the periods involved,  the financial position of the Persons involved
as at the date thereof and the results of operations for such periods. No fact

                                     - 54 -

<PAGE>

is known to the Borrower which has had, or may in the future have (so far as the
Borrower can reasonably  foresee),  a Material Adverse Effect which has not been
set forth in the financial  statements referred to in Section 7.1.(m) or in such
information,  reports or other papers or data or otherwise  disclosed in writing
to the Agent and the Lenders prior to the Effective Date. No document  furnished
or  written  statement  made to the Agent or any Lender in  connection  with the
negotiation, preparation of execution of this Agreement or any of the other Loan
Documents  contains or will contain any untrue  statement of a fact  material to
the creditworthiness of the Borrower,  any Subsidiary or any other Loan Party or
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements contained therein not misleading.

Section  2.5  Survival of Representations and Warranties, Etc.

         All statements  contained in any  certificate,  financial  statement or
other  instrument  delivered by or on behalf of the Borrower,  any Subsidiary or
any other  Loan Party to the Agent or any Lender  pursuant  to or in  connection
with this  Agreement  or any of the other  Loan  Documents  (including,  but not
limited  to, any such  statement  made in or in  connection  with any  amendment
thereto or any statement  contained in any certificate,  financial  statement or
other  instrument  delivered  by or on  behalf  of  the  Borrower  prior  to the
Agreement  Date and  delivered  to the Agent or any  Lender in  connection  with
closing the transactions  contemplated hereby) shall constitute  representations
and warranties  made by the Borrower under this Agreement.  All  representations
and warranties  made under this Agreement and the other Loan Documents  shall be
deemed to be made at and as of the Agreement Date, the Effective Date and at and
as of the date of the occurrence of any Credit Event,  except to the extent that
such  representations and warranties  expressly relate solely to an earlier date
(in which  case such  representations  and  warranties  shall have been true and
accurate  on and as of such  earlier  date) and  except  for  changes in factual
circumstances  specifically  permitted  hereunder.  All such representations and
warranties shall survive the effectiveness of this Agreement,  the execution and
delivery of the Loan  Documents  and the making of the Loans and issuance of any
Letter of Credit.

ARTICLE I.6 Affirmative Covenants

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise consent in the manner provided for in Section 13.6., the Borrower,  or
the Parent, as applicable, shall comply with the following covenants:

Section 1.6  Preservation of Existence and Similar Matters.

         Except as otherwise  permitted  under Section 10.8.,  the Parent shall,
and shall cause the Borrower,  each other Loan Party,  and each other Subsidiary
of the Parent to,  preserve  and  maintain  its  respective  existence,  rights,
franchises,  licenses and privileges in the jurisdiction of its incorporation or
formation and qualify and remain qualified and authorized to do business in each
jurisdiction  in which the  character  of its  properties  or the  nature of its


                                     - 55 -


<PAGE>


business requires such  qualification and authorization and where the failure to
be so authorized and qualified  could  reasonably be expected to have a Material
Adverse Effect.

Section  2.6  Compliance with Applicable Law and Material Contracts.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and each other  Subsidiary of the Parent to, comply with (a) all Applicable Law,
including the obtaining of all Governmental Approvals, if the failure with which
to comply could  reasonably be expected to have a Material  Adverse Effect,  and
(b) all terms and conditions of all Material Contracts to which it is a party.

Section  3.6  Maintenance of Property.

         In addition to the requirements of any of the other Loan Documents, the
Parent shall, and shall cause the Borrower, each other Loan Party and each other
Subsidiary  of the  Parent  to (a)  protect  and  preserve  all of its  material
properties,  including,  but not  limited  to, all  Intellectual  Property,  and
maintain in good repair,  working order and  condition all tangible  properties,
ordinary wear and tear excepted,  and (b) from time to time, make or cause to be
made, all needed and appropriate repairs,  renewals,  replacements and additions
to such properties,  so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.

Section  4.6  Conduct of Business.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and each other Subsidiary of the Parent to, carry on at all times its respective
businesses as described in Section  7.1.(v) and not enter into, and prohibit the
Borrower,  each other Loan Party and each other  Subsidiary  of the Parent  from
entering into, any field of business not otherwise  engaged in by such Person as
of the Agreement Date.

Section  5.6  Insurance.

         (a) Generally. In addition to the requirements of any of the other Loan
Documents,  the Parent shall, and cause the Borrower,  each other Loan Party and
each other  Subsidiary of the Parent to,  maintain  insurance  with  financially
sound and reputable  insurance  companies against such risks and in such amounts
customarily  maintained  by Persons  engaged in similar  businesses or as may be
required by Applicable Law. Such insurance companies,  insured risks and insured
amounts  shall,  in any  event,  be  acceptable  to the Agent in its  reasonably
discretion. The Parent shall deliver to the Agent or any Lender upon its request
a detailed  list,  together with copies of all policies of the insurance then in
effect,  stating the names of the insurance companies,  the amounts and rates of
the insurance,  the dates of the expiration thereof and the properties and risks
covered thereby.

         (b) Insurance  for  Borrowing  Base  Properties.  Without  limiting the
foregoing,  the Parent  shall,  and cause the Borrower and each other Loan Party
owning a Borrowing  Base Property to,  maintain for the benefit of the Agent and
the Lenders  original paid up insurance  policies or certified copies of paid up
insurance policies (or, if there is blanket coverage, the Agent shall require an
underlier  policy with the  applicable  Borrowing  Base Property  identified and
specifically  allocated amounts shown) in such amounts, form and substance,  and
with such expiration dates, as are

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<PAGE>


acceptable to the Agent,  and  containing  non-contributory  standard  mortgagee
clauses (naming "First Union National Bank, as the Agent, its successors  and/or
assigns" as first mortgagee), their equivalent, or a satisfactory mortgagee loss
payable  endorsement in favor of the Agent,  and being  addressed to First Union
National Bank, Attention:  Insurance Department, P. O. Box 700308, Dallas, Texas
75370,  providing the following  types of insurance on the applicable  Borrowing
Base Property:

                   (i) During any periods of  construction,  non-reporting  form
         "all risk"  Builder's  Risk  Insurance  (including  hazard and material
         stockpile  clauses),  without  co-insurance,  in an amount  equal to at
         least 100% of the replacement cost of the improvements. The policy term
         must concur with the applicable  construction period.  Thereafter,  the
         policy must then be converted to a Standard Fire Insurance  Policy with
         Extended Coverage Endorsement;

                  (ii) Standard   Fire   Insurance   with   Extended   Coverage
         Endorsement   including  Vandalism  and  Malicious  Mischief,   without
         co-insurance,  in an amount  equal to at least 100% of the  replacement
         cost of the improvements;

                (iii)  Coverage for the peril of Sprinkler Leakage;

                 (iv)  Boiler and Machinery Insurance to cover the sudden and
         accidental breakdown of specific types of equipment as required by the
         Agent;

                  (v)  Comprehensive Plate Glass Insurance;

                 (vi)  Rental Loss Insurance and Business Interruption Insurance
         in an amount equal to the greater of (A) an amount  sufficient to cover
         debt service,  real estate taxes, and insurance  premiums  allocable to
         the applicable  Borrowing Base Property for a period of at least twelve
         (12) months, or (B) the rents and other amounts due under all leases of
         the subject  Borrowing  Base  Property  for a period of at least twelve
         (12) months;

                (vii)  If any  improvements  are or will be located in an area
         identified by the U.S.  Department of Housing and Urban  Development as
         an area having  "special flood  hazards",  flood insurance in an amount
         equal to the  lesser  of the  applicable  Borrowing  Base  Value of the
         Borrowing  Base  Property  or the maximum  limit of coverage  available
         under the National  Flood  Insurance  Act of 1968,  the Flood  Disaster
         Protection Act of 1973, and the Housing and Community  Development Acts
         of 1974 and 1977, all as amended;

               (viii)  Single limit comprehensive  general liability insurance
         in an amount satisfactory to the Agent against claims and liability for
         bodily  injury or property  damage to persons or property  occurring on
         the applicable Borrowing Base Property; and

                 (ix)  Such other insurance on each Borrowing Base Property or
         any replacements or  substitutions  therefor and in such amounts as may
         from time to time be  reasonably  required by the Agent  against  other
         insurable  casualties which at the time are commonly insured against in
         the case of premises similarly situated,  due regard being given to the
         type  of the  improvements,  their  construction,  location,  use,  and
         occupancy, or any replacements or substitutions therefor.

                                     - 57 -

<PAGE>

Section  6.6  Payment of Taxes and Claims.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and each other  Subsidiary of the Parent to, pay and discharge  when due (a) all
taxes,  assessments and  governmental  charges or levies imposed upon it or upon
its income or profits or upon any properties belonging to it, and (b) all lawful
claims of  materialmen,  mechanics,  carriers,  warehousemen  and  landlords for
labor, materials,  supplies and rentals which, if unpaid, might become a Lien on
any properties of such Person;  provided,  however,  that this Section shall not
require the payment or discharge of any such tax,  assessment,  charge,  levy or
claim which is being  contested in good faith by appropriate  proceedings  which
operate to suspend the collection  thereof and for which adequate  reserves have
been  established on the books of the Parent,  the Borrower,  such Subsidiary or
such other Loan Party, as applicable, in accordance with GAAP.

Section  7.6  Visits and Inspections.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and each other Subsidiary of the Parent to, permit  representatives or agents of
the  Agent  or any  Lender,  from  time to time,  as often as may be  reasonably
requested,  but only during  normal  business  hours,  and at the expense of the
Borrower to: (a) visit and inspect all  properties of the Parent,  the Borrower,
such  Subsidiary  or such other Loan Party;  (b) inspect and make  extracts from
their  respective  relevant  books and  records,  including  but not  limited to
management letters prepared by independent accountants; and (c) discuss with its
principal  officers,  and its  independent  accountants,  its business,  assets,
liabilities, financial conditions, results of operations and business prospects.
If requested  by the Agent,  the Parent shall  execute an  authorization  letter
addressed to its accountants  authorizing the Agent or any Lender to discuss the
financial  affairs  of the  Parent and any  Subsidiary  of the  Parent  with its
accountants.

Section  8.6  Use of Proceeds; Letters of Credit.

         The Borrower shall use the proceeds of Revolving  Loans and all Letters
of Credit only for general corporate purposes,  including but not limited to the
acquisition and redevelopment of neighborhood  shopping center  properties,  and
the refinancing of existing Indebtedness.  The Borrower shall not, and shall not
permit any Loan Party or any other  Subsidiary to, use any part of such proceeds
or Letters of Credit to purchase or carry,  or to reduce or retire or  refinance
any credit  incurred to purchase or carry,  any margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal  Reserve  System) or to
extend  credit to others for the  purpose of  purchasing  or  carrying  any such
margin  stock  except for  purchases  of the common  stock of the Parent made in
compliance with such Regulation and other Applicable Law.

Section  9.6  Environmental Matters.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and each other Subsidiary of the Parent to, comply with all  Environmental  Laws
the failure with which to comply could reasonably be expected to have a Material
Adverse Effect. If the Parent,  the Borrower,  any other Loan Party or any other
Subsidiary  of the Parent  shall (a) receive  notice that any  violation  of any
Environmental  Law may have been  committed  or is about to be committed by such
Person,

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<PAGE>


(b) receive notice that any  administrative  or judicial  complaint or order has
been filed or is about to be filed  against such Person  alleging  violations of
any  Environmental Law or requiring such Person to take any action in connection
with the  release of  Hazardous  Materials  or (c)  receive  any  notice  from a
Governmental  Authority or private party  alleging that such Person is or may be
liable or responsible  for costs  associated  with a response to or cleanup of a
release  of a  Hazardous  Materials  or any  damages  caused  thereby,  and such
notices,  individually or in the aggregate, could reasonably be expected to have
a Material  Adverse Effect,  the Borrower shall provide the Agent with a copy of
such  notice  within 30 days  after  the  receipt  thereof  by the  Parent,  the
Borrower,  such other Loan Party or such other  Subsidiary,  as the case may be.
The Parent shall,  and shall cause the Borrower,  each other Loan Party and each
other  Subsidiary  of the Parent to,  take  promptly  all actions  necessary  to
prevent  the  imposition  of any  Liens  on any of their  respective  properties
arising out of or related to any Environmental Laws.

Section  10.6  Books and Records.

         The Parent shall,  and shall cause the Borrower,  each other Loan Party
and  each  other  Subsidiary  of the  Parent  to,  maintain  books  and  records
pertaining  to its  business  operations  in such  detail,  form and scope as is
consistent with good business practice in accordance with GAAP.

Section  11.  REIT Status.

         The Parent shall at all times maintain its status as a REIT.

Section  12.  Exchange Listing.

         The Parent  shall  maintain at least one class of common  shares of the
Parent having trading  privileges on the New York Stock Exchange or the American
Stock   Exchange   or  which  is  the  subject  of  price   quotations   in  the
over-the-counter  market as reported by the National  Association  of Securities
Dealers Automated Quotation System.

Section  13.  Distributions of Income to the Borrower.

         The  Borrower  shall  cause  all  of  its  Subsidiaries  to  distribute
(directly or indirectly  through any intermediate  Subsidiaries) to the Borrower
and pro rata to  holders  of Equity  Interests  in such  Subsidiaries,  not less
frequently than once each fiscal quarter of the Borrower and whether in the form
of dividends,  distributions or otherwise, all profits, proceeds or other income
relating  to or  arising  from  its  Subsidiaries'  use,  operation,  financing,
refinancing, sale or other disposition of their respective assets and properties
after (a) the payment by each Subsidiary of its applicable portion of total debt
service and  operating  expenses for such quarter and (b) the  establishment  of
reasonable reserves for the payment of operating expenses not paid on at least a
quarterly basis and capital  improvements to be made to such Subsidiary's assets
and properties  approved by such  Subsidiary in the ordinary  course of business
consistent with its past practices.

Section  14.  Subordination, Nondisturbance and Attornment Agreements.

         Within  10  Business  Days of the  Agent's  receipt  of the  Borrower's
written  request and at the  Borrower's  cost and  expense,  the Agent agrees to
execute and deliver to the Borrower a

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<PAGE>

subordination, nondisturbance and attornment agreement with respect to any lease
of 2,500 square feet or more of any Borrowing Base Property, if requested by the
tenant  thereunder,  provided  that (a) such tenant is not an  Affiliate  of the
Parent,  the  Borrower or any  Guarantor,  (b) the form of  applicable  lease is
reasonably  satisfactory to the Agent, (c) the leasing  parameters in respect of
such Borrowing Base Property are reasonably  satisfactory to the Agent,  (d) the
Borrower  shall promptly  return to Agent a counterpart  of such  subordination,
nondisturbance  and attornment  agreement,  fully executed on behalf of Borrower
and  such  tenant,  and (e) the  terms  of such  subordination,  attornment  and
nondisturbance  agreement  are in  substantially  the form of  Exhibit  I or are
otherwise  acceptable to the Agent.  The Lenders  authorize the Agent to execute
and deliver any subordination, attornment and nondisturbance agreements provided
for  hereunder.   The   requirement   that  the  Agent  execute  and  deliver  a
subordination,  attornment and nondisturbance agreement under this Section shall
apply only to Borrowing  Base  Properties  on which the Agent has a Lien under a
Security Deed.

Section  15.  Further Assurances.

         At the  Borrower's  cost and expense,  upon  request of the Agent,  the
Parent and the Borrower shall execute and deliver,  or cause to be duly executed
and   delivered,   to  the  Agent  such  further   instruments,   documents  and
certificates,  and do and  cause  to be  done  such  further  acts  that  may be
reasonably  necessary  or advisable  in the  reasonable  opinion of the Agent to
carry out more effectively the provisions and purposes of this Agreement and the
other Loan Documents.

Section  16.6  Additional Guarantors.

         Within 5 Business Days of any Person (other than an Exempt  Subsidiary)
becoming a Material  Subsidiary  after the Agreement Date,  deliver to the Agent
each of the following in form and substance  satisfactory  to the Agent:  (a) an
Accession  Agreement executed by such Material Subsidiary and (b) the items that
would have been delivered under Sections 6.1.(a)(ix),  (x), (xiii), (xv) through
(xvii) and (xx) if such Material  Subsidiary had been one on the Agreement Date;
provided,  however,  promptly (and in any event within 5 Business Days) upon any
Exempt  Subsidiary  ceasing to be subject to the restriction  which prevented it
from delivering an Accession Agreement pursuant to this Section, such Subsidiary
shall comply with the provisions of this Section.

ARTICLE I.7 Information

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise  consent in the manner set forth in Section 13.6.,  the Borrower shall
furnish to each  Lender (or to the Agent if so  provided  below) at its  Lending
Office:



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Section 1.7  Quarterly Financial Statements.

         As soon as available and in any event within 50 days after the close of
each of the  first,  second  and third  fiscal  quarters  of the  Borrower,  the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such period and the related consolidated  statements of income and cash flows of
the Borrower and its Subsidiaries for such period, setting forth in each case in
comparative  form the  figures  for the  corresponding  periods of the  previous
fiscal year, all of which shall be certified by the chief  financial  officer of
the Borrower, in his or her opinion, to present fairly, in accordance with GAAP,
the consolidated  financial  position of the Borrower and its Subsidiaries as at
the date  thereof and the  results of  operations  for such  period  (subject to
normal year-end audit adjustments).

Section  2.7  Year-End Statements.

         As soon as available and in any event within 100 days after end of each
fiscal year of the Borrower,  the consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year and the related  consolidated
statements of income,  retained  earnings and cash flows of the Borrower and its
Subsidiaries for such fiscal year, setting forth in comparative form the figures
as at the end of and  for the  previous  fiscal  year,  all of  which  shall  be
certified  by (a) the chief  financial  officer of the  Borrower,  in his or her
opinion,  to present fairly, in accordance with GAAP, the financial  position of
the  Borrower  and its  Subsidiaries  as at the date  thereof  and the result of
operations for such period and (b) independent  certified public  accountants of
recognized  national  standing  acceptable  to  the  Requisite  Lenders,   whose
certificate shall be unqualified and in scope and substance  satisfactory to the
Requisite  Lenders and who shall have  authorized  the  Borrower to deliver such
financial  statements  and  certification  thereof to the Agent and the  Lenders
pursuant to this Agreement.

Section  3.7  Compliance Certificate.

         At the time the quarterly or annual financial  statements are furnished
pursuant to Sections  9.1. and 9.2.,  and within 5 Business  Days of the Agent's
request with respect to any other fiscal period, a certificate  substantially in
the  form of  Exhibit  N (a  "Compliance  Certificate")  executed  by the  chief
financial  officer of the Parent:  (a) setting forth in reasonable  detail as at
the end of such  quarterly  accounting  period,  fiscal  year,  or other  fiscal
period,  as the case may be, the calculations  required to establish  whether or
not the Parent and the Borrower were in compliance with the covenants  contained
in Sections 10.1., as well as a calculation of the Borrowing Base Leverage Ratio
as of the end of the applicable fiscal period, and (b) stating that, to the best
of his or her knowledge,  information and belief, no Default or Event of Default
exists, or, if such is not the case, specifying such Default or Event of Default
and its nature,  when it occurred,  whether it is continuing and the steps being
taken by the Borrower with respect to such event, condition or failure.

Section  4.7  Other Information.

         (a) Securities Filings.  Within 10 Business Days of the filing thereof,
copies of all  registration  statements  (excluding the exhibits thereto and any
registration  statements on Form S-8 or its equivalent),  reports on Forms 10-K,
10-Q and 8-K (or their  equivalents)  and all other  periodic  reports which the
Parent,  the Borrower,  any other Loan Party or any other  Subsidiary shall file
with the  Securities  and Exchange  Commission  (or any  Governmental  Authority
substituted therefor) or any national securities exchange.

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<PAGE>

         (b) Borrowing Base  Certificate.  As soon as available and in any event
within 50 days after the end of each fiscal quarter of the Borrower, a Borrowing
Base Certificate setting forth the information to be contained therein as of the
last day of such fiscal quarter.

         (c) Quarterly Operating Summaries. Within 50 days after the end of each
fiscal  quarter of the  Borrower,  an  operating  summary  with  respect to each
Borrowing  Base  Property,   including  without  limitation,   a  quarterly  and
year-to-date statement of total revenues,  expenses, net operating income and an
occupancy  status  report  together  with a  current  rent  roll for  each  such
Property.

         (d) Annual Operating  Statements.  Within 45 days after the end of each
fiscal  year  of  the  Borrower,  an  operating  summary  with  respect  to  all
Properties,  including without  limitation,  an annual statement of Adjusted Net
Operating Income.

         (e) Quarterly Property  Schedules.  No later than 45 days after the end
of each fiscal  quarter of the Borrower,  a schedule of all of the real property
owned or leased by the  Parent,  the  Borrower,  each  other Loan Party and each
other Subsidiary of the Parent and the applicable  Occupancy Rate thereof,  such
schedule certified by the chief financial officer or chief accounting officer of
the Parent as true,  correct  and  complete as of the date such  information  is
delivered.

         (f) ERISA Notices.  If and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable  event" (as defined
in  Section  4043 of ERISA)  with  respect to any Plan  which  might  constitute
grounds for a  termination  of such Plan under Title IV of ERISA,  or knows that
the plan  administrator  of any Plan has given or is  required to give notice of
any such reportable  event, a copy of the notice of such reportable  event given
or required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal  liability  under Title IV of ERISA or notice that any  Multiemployer
Plan is in reorganization,  is insolvent or has been terminated,  a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate,  impose  liability  (other than for premiums under Section 4007 of
ERISA) in respect  of, or appoint a trustee to  administer  any Plan,  a copy of
such notice;  (iv) applies for a waiver of the minimum  funding  standard  under
Section 412 of the Internal Revenue Code, a copy of such application;  (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such  notice and other  information  filed with the PBGC;  (vi) gives  notice of
withdrawal  from any Plan  pursuant  to  Section  4063 of ERISA,  a copy of such
notice;  or (vii)  fails  to make any  payment  or  contribution  to any Plan or
Multiemployer  Plan or in  respect  of any  Benefit  Arrangement  or  makes  any
amendment to any Plan or Benefit  Arrangement which has resulted or could result
in the  imposition  of a Lien or the  posting  of a bond or  other  security,  a
certificate of the  controller of the Borrower  setting forth details as to such
occurrence and action,  if any,  which the Borrower or applicable  member of the
ERISA Group is required or proposes to take.

         (g) Litigation and Governmental Proceedings. To the extent the Borrower
is aware of the same,  prompt notice of the  commencement  of any  proceeding or
investigation  by or  before  any  Governmental  Authority  and  any  action  or
proceeding in any court or other tribunal or before any arbitrator against or in
any other way relating  adversely to, or adversely  affecting,  the Parent,  the
Borrower,  any  other  Loan  Party  or any  other  Subsidiary  or  any of  their
respective  properties,  assets or businesses  which,  if determined or resolved
adversely  to such  Person,  could  reasonably  be  expected  to have a Material
Adverse Effect, and prompt notice of the receipt of notice that any

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<PAGE>

United States income tax returns of the Borrower or any of its  Subsidiaries are
being audited.

         (h) Modification of  Organizational  Documents.  A copy of any material
amendment to the declaration of trust, certificate or articles of incorporation,
bylaws,  partnership agreement or other similar organizational  documents of the
Parent,  the  Borrower,  any other Loan Party or any other  Subsidiary  within 5
Business Days of the effectiveness thereof.

         (i) Material Adverse Change.  Prompt notice of any other Loan Party and
any change in the business, assets, liabilities, financial condition, results of
operations or business  prospects of the Borrower,  any  Subsidiary or any other
Loan  Party  which has had or could  reasonably  be  expected  to have  Material
Adverse Effect.

         (j) Default. Prompt notice of the occurrence of any Default or Event of
Default  or the  occurrence  of any event  which  constitutes  or which with the
passage of time, the giving of notice, or otherwise,  would constitute a default
or  event of  default  by the  Borrower,  any  other  Loan  Party  or any  other
Subsidiary under any Material Contract to which any such Person is a party or by
which any such Person or any of its respective properties may be bound.

         (k) Material Contracts.  Promptly upon entering into any Material
Contract after the Agreement Date, a copy to the Agent of such Material
Contract.

         (l) Calculation of Ownership Share of Subsidiaries  and  Unconsolidated
Entities.  Promptly  upon the request of the Agent,  evidence of the  Borrower's
calculation  of its  ownership  percentage  with respect to a  Subsidiary  or an
Unconsolidated  Entity,  such evidence to be in form and detail  satisfactory to
the Agent and the Requisite Lenders.

         (m) Other  Information,  Etc.  From time to time and promptly upon each
request,  such data,  certificates,  reports,  statements,  opinions of counsel,
documents or further information  regarding the business,  assets,  liabilities,
financial  condition,  results  of  operations  or  business  prospects  of  the
Borrower,  any other  Loan  Party or any other  Subsidiary  as the Agent (or any
Lender through the Agent) may reasonably request.

ARTICLE I.8 Negative Covenants

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise  consent in the manner set forth in Section 13.6., the Borrower or the
Parent, as applicable, shall comply with the following covenants:

Section  1.8  Financial Covenants.

         (a)  Financial Covenants Applicable When Not Investment Grade.  The
Parent and the Borrower shall comply with the following covenants so long as the
Borrower has not received an Investment Grade Rating from the Rating Agencies:

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<PAGE>

                  (i) Leverage.  The Parent and the Borrower shall not permit at
         any time (x)  Total  Outstanding  Indebtedness  of the  Parent  and its
         Subsidiaries at such time determined on a consolidated  basis to exceed
         (y) 60.0% of Capitalization Value at such time.

                  (ii) Interest Coverage.  The Parent and the Borrower shall not
         permit  at any time the  ratio of (x)  EBITDA  for the two  consecutive
         fiscal  quarter  period most recently  ended minus Reserves for Capital
         Expenditures  for such  two-quarter  period for all  Properties  of the
         Parent,  its  Subsidiaries  and  its  Unconsolidated  Entities  to  (y)
         Interest  Expense for such two- fiscal quarter period,  to be less than
         1.80 to 1.00.

                  (iii) Cash Flow  Coverage.  The Parent and the Borrower  shall
         not permit at any time the ratio of (x) EBITDA for the two  consecutive
         fiscal  quarter  period most recently  ended minus Reserves for Capital
         Expenditures  for such  two-quarter  period for all  Properties  of the
         Parent, its Subsidiaries and its  Unconsolidated  Entities to (y) Fixed
         Charges for such  two-fiscal  quarter  period,  to be less than 1.50 to
         1.00.

                  (iv)  Borrowing  Base Cash Flow  Coverage.  The Parent and the
         Borrower shall not permit at any time the ratio of (x) the Adjusted Net
         Operating  Income  for all  Borrowing  Base  Properties  for the fiscal
         quarter most  recently  ended to (y) Implied  Mortgage Debt Service for
         such fiscal quarter determined on a consolidated basis, to be less than
         1.50 to 1.00.

                  (v) Variable Rate Debt.  The Parent and the Borrower shall not
         permit at any time the ratio of (x) the aggregate outstanding principal
         amount  of  Variable  Rate  Debt of the  Parent  and  its  Subsidiaries
         determined on a consolidated basis to (y) the  Capitalization  Value at
         such time, to be greater than 0.25 to 1.00.

         (b) Financial  Covenants  Applicable While Investment Grade. The Parent
and Borrower  shall comply with the  following  covenants at all times after the
Borrower  shall have first  received an Investment  Grade Rating from the Rating
Agencies and whether or not the Borrower  shall maintain such  Investment  Grade
Rating:

                  (i) Interest  Coverage.  The Parent and the Borrower shall not
         permit  at any time the  ratio of (x)  EBITDA  for the two  consecutive
         fiscal  quarter  period most recently  ended minus Reserves for Capital
         Expenditures  for such  two-quarter  period for all  Properties  of the
         Parent,  its  Subsidiaries  and  its  Unconsolidated  Entities  to  (y)
         Interest  Expense for such two- fiscal quarter period,  to be less than
         2.20 to 1.00.

                  (ii) Cash Flow Coverage. The Parent and the Borrower shall not
         permit  at any time the  ratio of (x)  EBITDA  for the two  consecutive
         fiscal  quarter  period most recently  ended minus Reserves for Capital
         Expenditures  for such  two-quarter  period for all  Properties  of the
         Parent, its Subsidiaries and its  Unconsolidated  Entities to (y) Fixed
         Charges for such two-fiscal  quarter  period,  to be less than 1.750 to
         1.00.

                  (iii)  Leverage.  The Parent and the Borrower shall not permit
         at any time (x) Total  Outstanding  Indebtedness  of the Parent and its
         Subsidiaries at such time determined on a consolidated  basis to exceed
         (y) 50.0% of Capitalization Value at such time.

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<PAGE>

                  (iv) Unsecured Leverage. The Parent and the Borrower shall not
         permit  at any time  the  ratio  of (x) the sum of the  Borrowing  Base
         Values of all Eligible Properties to (y) all Unsecured  Indebtedness of
         the Parent and its Subsidiaries  determined on a consolidated basis, to
         be less than 2.00 to 1.00.

                  (v)  Unencumbered  Cash  Flow  Coverage.  The  Parent  and the
         Borrower shall not permit at any time the ratio of (x) the Adjusted Net
         Operating  Income for all Eligible  Properties  for the fiscal  quarter
         most  recently  ended  to (y) Debt  Service  for  such  fiscal  quarter
         determined on a consolidated basis, to be less than 2.00 to 1.00 at the
         end of such fiscal quarter.

                  (vi)     Secured Debt.  The Parent and the Borrower shall not
         permit at any time the ratio of (i) Secured Indebtedness of the Parent
         and its Subsidiaries determined on a consolidated basis to (ii)
         Capitalization Value, to be greater than 0.35 to 1.00.

     (c) Financial Covenants Applicable  Regardless of Credit Rating. The Parent
and the Borrower shall at all times (regardless of the Borrower's Credit Rating)
comply with the following covenant:

                  (i)  Occupancy Rate.  The Parent and the Borrower shall not
         permit the aggregate Occupancy Rate of all Borrowing Base Properties to
         be less than 80% at any time.

                  (ii) Minimum Net Worth.  The Parent and the Borrower shall not
         permit at any time Tangible Net Worth to be less than (x)  $305,000,000
         plus (y) 80% of the Net  Proceeds of all Equity  Issuances  effected by
         the Parent or any of its Consolidated  Subsidiaries to any Person other
         than the  Parent or any of its  Consolidated  Subsidiaries  at any time
         after September 30, 1999.

                  (iii)  Development.  The  Parent  and the  Borrower  shall not
         permit  at any time (x)  Construction  in  Process  at such  time to be
         greater than (y) 15.0% of Capitalization Value at such time.

Section  2.8  Indebtedness.

         The  Parent  shall  not,  and shall not  permit  any of the other  Loan
Parties or any other  Subsidiaries of the Parent to, create,  incur,  assume, or
permit or suffer to exist, any Indebtedness other than the following:

         (a) the Obligations;

         (b) Indebtedness set forth on Schedule 7.1.(g);

         (c) Subordinated Debt;

         (d) intercompany  Indebtedness  among the Borrower and its Wholly Owned
Subsidiaries;  provided,  however,  that the obligations of each obligor of such
Indebtedness  shall be subordinate to the Obligations on terms acceptable to the
Agent in its sole discretion;

                                     - 65 -


<PAGE>

         (e) Indebtedness   incurred  in  connection  with  revolving   credit
facilities not to exceed $15,000,000 in aggregate  outstanding  principal at any
time and which  facilities  mature  by their  terms on dates  subsequent  to the
Termination Date from time to time in effect; or

         (f) any  other  Indebtedness  of a type  not  described  above  in this
Section and created,  incurred or assumed  after the  Agreement  Date so long as
immediately  prior  to  the  creation,  incurring  or  assumption  thereof,  and
immediately  thereafter and after giving effect thereto,  no Default or Event of
Default is or would be in existence,  including without limitation, a Default or
Event of Default resulting from a violation of any of the covenants contained in
Section 10.1.

Section  3. Certain Permitted Investments.

         The Parent and the  Borrower  shall not, and shall not permit any other
Subsidiary  of the  Parent  to,  make any  Investment  in or  otherwise  own the
following  items which would cause the  aggregate  value of such holdings of the
Parent,  the  Borrower  and such other  Subsidiaries  to exceed  the  applicable
percentage of Capitalization Value at such time:

                  (a)  Investments  in  partnerships,  joint  ventures and other
         Persons which are not corporations and which  Investments are accounted
         for on an equity basis in accordance with GAAP, such that the aggregate
         book value of such Investments  exceeds 15.0% of Capitalization  Value;
         and

                  (b) Unimproved real estate, such that the aggregate book value
         of all such  unimproved  real  estate  exceeds  5.0% of  Capitalization
         Value.

Section  4.  Investments Generally.

         The Parent  shall not, and shall not permit any other Loan Party or any
other Subsidiary to, acquire,  make or purchase, or permit any Investment of the
Parent, the Borrower,  any such Subsidiary or other Loan Party to be outstanding
on and after the Agreement Date, other than the following:

     (a)  Investments  in  Subsidiaries  in existence on the Agreement  Date and
disclosed on Part I of Schedule 7.1.(b);

     (b)  Investments to acquire  Equity  Interests of a Subsidiary or any other
Person who after giving effect to such  acquisition  would be a  Subsidiary,  so
long as in each case (i) immediately prior to such Investment,  and after giving
effect  thereto,  no Default or Event of Default is or would be in existence and
(ii) if such  Subsidiary  is (or after giving  effect to such  Investment  would
become) a Material  Subsidiary,  the terms and  conditions  set forth in Section
8.16. are satisfied;

     (c) Investments permitted under Section 10.3.;

     (d) Investments in Cash Equivalents;

     (e) intercompany  indebtedness among the Parent, the Borrower and the other
Subsidiaries  provided  that  such  indebtedness  is  permitted  by the terms of
Section 10.2.;

                                     - 66 -


<PAGE>

     (f) acquisitions by the Borrower of Equity Interest in the Parent; and

     (g) loans and advances to employees for moving,  entertainment,  travel and
other similar  expenses in the ordinary course of business  consistent with past
practices.

Section  5.  Acquisitions.

         Notwithstanding  any other  term of this  Agreement  or any other  Loan
Document,  the Parent  shall not, and shall not permit the  Borrower,  any other
Loan  Party or any  other  Subsidiary  to,  make any  Acquisition  in which  the
aggregate  amount of  consideration  paid  (whether  by way of  payment of cash,
issuance of capital  stock,  assumption  of  Indebtedness,  or otherwise) by the
Parent,  the  Borrower,  and its other  Subsidiaries  equals or  exceeds  30% of
Capitalization Value as of the end of the fiscal quarter most recently ended.

Section  6.8  Liens; Agreements Regarding Liens; Other Matters

         The Parent  shall not, and shall not permit any other Loan Party or any
of its other Subsidiaries to, do any of the following:

         (a) Create,  assume,  incur or permit or suffer to exist any Lien upon
any Borrowing Base Property other than Permitted Liens;

         (b) Enter into or assume any agreement  (other than the Loan Documents)
containing,  or otherwise  becoming bound by, a Negative  Pledge with respect to
any of the Borrowing Base Properties; or

         (c) Create or  otherwise  cause or suffer to exist or become  effective
any  consensual  encumbrance  or  restriction  of any kind on the ability of any
Subsidiary to: (i) pay dividends or make any other  distribution  on any of such
Subsidiary's  Equity  Interests  owned by the Borrower or any  Subsidiary of the
Borrower;  (ii) pay any  Indebtedness  owed to the Borrower or any Subsidiary of
the Borrower; (iii) make loans or advances to the Borrower or any Subsidiary; or
(iv) transfer any of its property or assets to the Borrower or any Subsidiary of
the Borrower.

Section  7.8  Restricted Payments.

         If a Default or an Event of Default under Sections  11.1.(a),  (b), (f)
or (g) shall have  occurred and be continuing  neither the Parent,  the Borrower
nor any  Subsidiary  (other than Wholly Owned  Subsidiaries)  shall  directly or
indirectly  declare or make,  or incur any  liability  to make,  any  Restricted
Payments.  If an Event of Default under Section  11.1.(c)(i) shall have occurred
and be continuing,  neither the Parent,  the Borrower nor any Subsidiary  (other
than Wholly Owned Subsidiaries) shall directly or indirectly declare or make, or
incur any liability to make, any Restricted Payments except, the Parent may make
cash  distributions to its equity holders,  and the Borrower and each Subsidiary
may make cash distributions to holders of their respective Equity Interests,  in
the minimum amount necessary to maintain compliance with Section 8.11.


                                     - 67 -

<PAGE>

Section  8.8  Merger, Consolidation and Substantial Sales of Assets.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any other  Subsidiary of the Parent to: (a) enter into any  transaction
of merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution);  or (c) convey, sell, lease, sublease, transfer
or otherwise dispose of, in one transaction or a series of transactions,  all or
any substantial part of its business or assets, or the capital stock of or other
equity  interests  in any of its  Subsidiaries,  whether now owned or  hereafter
acquired; provided, however, that:

(i)  any Subsidiary of the Borrower may merge or  consolidate  with the Borrower
     or a Wholly Owned Subsidiary of the Borrower;

(ii) any  Subsidiary  or other Loan Party may sell,  transfer  or dispose of its
     assets to the Borrower or a Wholly Owned Subsidiary which is a Guarantor;

(iii)a Wholly Owned Subsidiary may liquidate  provided that immediately prior to
     such  liquidation  and  immediately  thereafter  and  after  giving  effect
     thereto, no Default or Event of Default is or would be in existence;

(iv) a Subsidiary  that is not a Material  Subsidiary,  does not own a Borrowing
     Base Property and is not a Guarantor (an "Excluded Subsidiary"),  may merge
     or consolidate  with another Person,  so long as immediately  prior to such
     merger or consolidation, and immediately thereafter and after giving effect
     thereto, no Default or Event of Default is or would be in existence; and

(v)  an Excluded Subsidiary may sell all or substantially all of its business or
     assets,  and the  Borrower  or any  Excluded  Subsidiary  may  sell  all or
     substantially  all of the capital stock of or other equity interests in any
     Subsidiary  that is itself an Excluded  Subsidiary,  so long as immediately
     prior to any such sale, and immediately  thereafter and after giving effect
     thereto, no Default or Event of Default is or would be in existence.

Section  9.  No Plan Assets.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any other Subsidiary to, permit any of its respective  assets to become
or be deemed to be "plan  assets"  within  the  meaning of ERISA,  the  Internal
Revenue Code and the respective regulations promulgated thereunder.

Section  10.8  Fiscal Year.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any other  Subsidiary  to change its fiscal year from that in effect as
of the Agreement Date.

Section  11.8  Modifications to Material Contracts.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any other Subsidiary to enter into any amendment or modification to any
Material  Contract which could reasonably be expected to have a Material Adverse
Effect or permit any Material Contract to be canceled or terminated prior to its
stated maturity.

                                     - 68 -


<PAGE>

Section  12.8  Transactions with Affiliates.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any other  Subsidiary to permit to exist or enter into any  transaction
(including  the  purchase,  sale,  lease  or  exchange  of any  property  or the
rendering of any service) with any  Affiliate or with any  director,  officer or
employee of any Affiliate, except for transactions in the ordinary course of and
pursuant to the reasonable  requirements  of the business of the Borrower or any
of its Subsidiaries and upon fair and reasonable terms and are no less favorable
to the Borrower or such Subsidiary than would be obtained in a comparable  arm's
length transaction with a Person that is not an Affiliate.

Section  13.8  Hedging Agreements.

         The Parent shall not, and shall not permit the Borrower, any other Loan
Party or any  other  Subsidiary  to,  create,  incur  or  suffer  to  exist  any
obligations in respect of Hedging  Agreements other than (a) Hedging  Agreements
existing on the date hereof and described in Schedule  10.13.;  and (b) interest
rate  Hedging  Agreements  entered  into from time to time after the date hereof
with counterparties that are nationally  recognized,  investment grade financial
institutions;  provided that, no Hedging Agreement otherwise permitted hereunder
may be speculative in nature.

ARTICLE I.9 Default

Section 1.9  Events of Default.

         Each of the following  shall  constitute an Event of Default,  whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable  Law or pursuant to any judgment or order of
any Governmental Authority:

         (a) Default in Payment of  Principal.  The  Borrower  shall fail to pay
when due  (whether  upon  demand,  at  maturity,  by reason of  acceleration  or
otherwise) the principal of any of the Loans.

         (b) Default in Payment of Interest and Other Obligations.  The Borrower
shall fail to pay when due any  interest on any of the Loans or any of the other
payment Obligations owing by the Borrower under this Agreement or any other Loan
Document,  or any  other  Loan  Party  shall  fail to pay when  due any  payment
Obligation  owing by such Loan Party  under any Loan  Document  to which it is a
party and such failure  shall  continue for a period of 2 days after the earlier
of (i) the date upon which the Borrower or such Loan Party obtains  knowledge of
such  failure  or (ii) the date upon which the  Borrower  has  received  written
notice of such failure from the Agent.

         (c) Default in  Performance.  (i) The Borrower shall fail to perform or
observe any term, covenant,  condition or agreement contained in Section 9.4.(j)
or Article X. or (ii) the Borrower or any other Loan Party shall fail to perform
or  observe  any  term,  covenant,  condition  or  agreement  contained  in this
Agreement or any other Loan Document (other than any Security Deed or any

                                     - 69 -


<PAGE>

Assignment  of  Leases  and  Rents)  to  which it is a party  and not  otherwise
mentioned  in this Section and in the case of this clause (ii) only such failure
shall  continue  for a period of 45 days after the  earlier of (x) the date upon
which the Borrower or such Loan Party  obtains  knowledge of such failure or (y)
the date upon which the  Borrower has  received  written  notice of such failure
from the Agent.

         (d)  Misrepresentations.   Any  written  statement,  representation  or
warranty  made or deemed made by or on behalf of the  Borrower or any other Loan
Party  under this  Agreement  or under any other Loan  Document  (other than any
Security Deed or any Assignment of Leases and Rents), or any amendment hereto or
thereto,  or in any other writing or statement at any time  furnished or made or
deemed made by or on behalf of the Borrower or any other Loan Party to the Agent
or any Lender,  shall at any time prove to have been  incorrect or misleading in
any material respect when furnished or made.

     (e)  Indebtedness  Cross-Default.  (i) The Borrower or any other Loan Party
shall fail to pay when due and payable  the  principal  of, or interest  on, any
Indebtedness  (other than the Loans) having an aggregate  outstanding  principal
amount of  $5,000,000  or more;  or (ii) the  maturity of any such  Indebtedness
shall  have (x) been  accelerated  in  accordance  with  the  provisions  of any
indenture,  contract or instrument evidencing,  providing for the creation of or
otherwise  concerning  such  Indebtedness  or (y) been required to be prepaid or
repurchased prior to the stated maturity thereof; or (iii) any other event shall
have occurred an be continuing  which,  with or without the passage of time, the
giving of notice,  a  determination  of  materiality,  the  satisfaction  of any
condition  or any  combination  of the  foregoing,  would  permit  any holder or
holders of such  Indebtedness,  any  trustee  or agent  acting on behalf of such
holder or holders or any other Person,  to  accelerate  the maturity of any such
Indebtedness or require any such Indebtedness to be prepaid or repurchased prior
to its stated maturity.

     (f) Voluntary Bankruptcy  Proceeding.  The Borrower or any other Loan Party
shall:  (i)  commence a voluntary  case under the  Bankruptcy  Code of 1978,  as
amended or other federal  bankruptcy laws (as now or hereafter in effect);  (ii)
file a petition seeking to take advantage of any other Applicable Laws, domestic
or foreign, relating to bankruptcy, insolvency,  reorganization,  winding-up, or
composition  or adjustment  of debts;  (iii) consent to, or fail to contest in a
timely and appropriate  manner,  any petition filed against it in an involuntary
case  under  such  bankruptcy  laws or other  Applicable  Laws or consent to any
proceeding or action  described in the immediately  following  subsection;  (iv)
apply for or consent to, or fail to contest in a timely and appropriate  manner,
the  appointment  of, or the taking of  possession  by, a  receiver,  custodian,
trustee,  or  liquidator  of itself or of a  substantial  part of its  property,
domestic or foreign; (v) admit in writing its inability to pay its debts as they
become due; (vi) make a general  assignment for the benefit of creditors;  (vii)
make a conveyance fraudulent as to creditors under any Applicable Law; or (viii)
take any corporate or partnership action for the purpose of effecting any of the
foregoing.

     (g) Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be
commenced  against the Borrower,  any Subsidiary or any other Loan Party, in any


                                     - 70 -


<PAGE>

court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code of
1978,  as amended  or other  federal  bankruptcy  laws (as now or  hereafter  in
effect) or under any other  Applicable  Laws,  domestic or foreign,  relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian,  liquidator
or the like of such  Person,  or of all or any  substantial  part of the assets,
domestic or foreign,  of such Person, and such case or proceeding shall continue
undismissed  or unstayed for a period of 60  consecutive  calendar  days,  or an
order  granting the remedy or other relief  requested in such case or proceeding
against the Borrower or such Subsidiary (including, but not limited to, an order
for relief under such  Bankruptcy  Code or such other federal  bankruptcy  laws)
shall be entered.

         (h)  Litigation.  The  Borrower or any other Loan Party shall  disavow,
revoke or terminate,  or attempt to do any of the foregoing with respect to, any
Loan Document to which it is a party or shall otherwise  challenge or contest in
any action, suit or proceeding in any court or before any Governmental Authority
or arbitral body the validity or enforceability  of this Agreement,  any Note or
any other Loan Document.

         (i)  Judgment.  A judgment  or order for the  payment of money shall be
entered against the Borrower,  any other Loan Party, any other Subsidiary by any
court or other  tribunal  and (i) such  judgment or order shall  continue  for a
period of 30 days  without  being paid stayed or dismissed  through  appropriate
appellate  proceedings  and (ii) either (A) the amount of such judgment or order
for which  insurance  has not been  acknowledge  in  writing  by the  applicable
insurance  carrier (or the amount as to which the insurer has denied  liability)
exceeds,  individually  or  together  with all other  such  judgments  or orders
entered against the Borrower, the other Loan Party, and such other Subsidiaries,
$5,000,000  in  amount  or (B) in the case of a  judgment  could  reasonably  be
expected to have a Material Adverse Effect.

         (j)  Attachment.  A warrant,  writ of attachment,  execution or similar
process  shall be issued  against any property of the Borrower or any other Loan
Party which  exceeds,  individually  or together  with all other such  warrants,
writs,  executions and processes,  $5,000,000 in amount and such warrant,  writ,
execution or process shall not be  discharged,  vacated,  stayed or bonded for a
period of 30 days; provided, however, that if a bond has been issued in favor of
the claimant or other Person obtaining such warrant, writ, execution or process,
the issuer of such bond shall  execute a waiver or  subordination  agreement  in
form and  substance  satisfactory  to the Agent  pursuant to which the issuer of
such bond subordinates its right of  reimbursement,  contribution or subrogation
to the Obligations and waives or subordinates any Lien it may have on the assets
of any Loan Party.

         (k) ERISA.  Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall have become
liable to pay  under  Title IV of ERISA;  or  notice  of intent to  terminate  a
Material  Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan  administrator or any combination of the foregoing;  or the PBGC
shall  institute  proceedings  under Title IV of ERISA to  terminate,  to impose
liability  (other than for premiums  under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to  administer  any  Material  Plan;  or a
condition  shall exist by reason of which the PBGC would be entitled to obtain a
decree  adjudicating  that any Material Plan must be terminated;  or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section  4219(c)(5) of ERISA, with respect to, one or more  Multiemployer  Plans
which  could  cause one or more  members  of the ERISA  Group to incur a current
payment obligation in excess of $5,000,000.

                                     - 71 -

<PAGE>

     (l) Loan  Documents.  An Event of Default (as defined  therein) shall occur
under any of the other  Loan  Documents  (other  than any  Security  Deed or any
Assignment of Leases and Rents).

     (m) Change of Control; Change in Management.

                  (i) Any  "person"  or  "group"  (as  such  terms  are  used in
         Sections  13(d) and 14(d) of the  Securities  Exchange Act of 1934,  as
         amended (the "Exchange Act")) is or becomes the "beneficial  owner" (as
         defined in Rules 13d-3 and 13d-5 under the Exchange Act,  except that a
         Person will be deemed to have "beneficial  ownership" of all securities
         that  such  Person  has the right to  acquire,  whether  such  right is
         exercisable immediately or only after the passage of time), directly or
         indirectly,  of more than 25.0% of the total  voting  power of the then
         outstanding Voting Stock of the Borrower;

                  (ii) During any twelve-month  period (commencing either before
         or after the Agreement  Date),  a majority of the Board of Directors of
         the Parent  shall no longer be  composed  of  individuals  (x) who were
         members of such Board of  Directors  on the first date of such  period,
         (y)  whose  election  or  nomination  to such  Board of  Directors  was
         approved by individuals referred to in clause (x) above constituting at
         the time of such  election  or  nomination  at least a majority of such
         Board of Directors or (z) whose election or nomination to such Board of
         Directors  was approved by  individuals  referred to in clauses (x) and
         (y) above  constituting  at the time of such  election or nomination at
         least a majority of such Board of Directors;

                  (iii) If any two of Stuart D. Halpert, James G. Blumenthal and
         William  J.  Wolfe  shall  cease  for any  reason  (including  death or
         disability)  to occupy the  positions  of  Chairman,  President,  Chief
         Executive  Officer or Chief  Financial  Officer  (or other more  senior
         office) of the  Parent,  and such  individuals  have not been  replaced
         within  120 days with  other  individuals  having  comparable  industry
         experience; or

                  (iv) Neither the Parent nor a Wholly Owned  Subsidiary  of the
         Parent shall be the general partner of the Borrower having the sole and
         exclusive  power  to  exercise  all  management  and  control  over the
         Borrower.

     (n)  Failure  of  Security.  The  Agent  shall  cease  to have a valid  and
perfected  first  priority  security  interest  in the  Collateral  (subject  to
Permitted  Liens),  in each case,  for any reason  other than the failure of the
Agent to take any action within its control.

Section  2.9  Remedies Upon Event of Default.

         Upon the  occurrence  of an Event of Default the  following  provisions
shall apply:

         (a)      Acceleration; Termination of Facilities.

(i)  Automatic. Upon the occurrence of an Event of Default specified in Sections
     11.1.(f) or 11.1.(g), (A)(i) the principal of, and all accrued interest on,
     the Loans and the Notes at the time  outstanding,  (ii) an amount  equal to
     the Stated Amount of all Letters of Credit then outstanding,  and (iii) all
     of the other Obligations of the Borrower, including,

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<PAGE>

     but not  limited  to, the other  amounts  owed to the Lenders and the Agent
     under this  Agreement,  the Notes or any of the other Loan Documents  shall
     become  immediately  and  automatically  due and  payable  by the  Borrower
     without presentment,  demand,  protest, or other notice of any kind, all of
     which are expressly  waived by the Borrower and (B) the Commitments and the
     obligation of the Lenders to make Loans  hereunder  shall  immediately  and
     automatically terminate.

(ii) Optional.  If any  other  Event  of  Default  shall  have  occurred  and be
     continuing,  the Agent may, and at the direction of the  Requisite  Lenders
     shall: (I) declare (1) the principal of, and accrued interest on, the Loans
     and the Notes at the time  outstanding,  (2) an amount  equal to the Stated
     Amount of all Letters of Credit then  outstanding  and (3) all of the other
     Obligations,  including,  but not limited to, the other amounts owed to the
     Lenders and the Agent under this  Agreement,  the Notes or any of the other
     Loan  Documents to be forthwith  due and payable,  whereupon the same shall
     immediately become due and payable without presentment,  demand, protest or
     other notice of any kind, all of which are expressly waived by the Borrower
     and (II)  terminate the  Commitments  and the  obligation of the Lenders to
     make Loans hereunder.

     (b) Loan Documents.  The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise any and all of its rights under any and all
of the other Loan Documents.

     (c) Applicable Law. The Requisite  Lenders may direct the Agent to, and the
Agent if so directed  shall,  exercise all other rights and remedies it may have
under any Applicable Law.

     (d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Agent and the Lenders shall be entitled to the appointment of a receiver for the
assets and  properties of the Borrower and its  Subsidiaries,  without notice of
any kind  whatsoever  and without regard to the adequacy of any security for the
Obligations  or the  solvency  of any  party  bound  for  its  payment,  to take
possession  of  all  or  any  portion  of the  Collateral  and/or  the  business
operations  of the Borrower and its  Subsidiaries  and to exercise such power as
the court shall confer upon such receiver.

Section  3.  Remedies Upon Default.

         Upon the  occurrence  of a Default  specified  in Sections  11.1.(f) or
11.1.(g),  the Commitments,  and the obligation of the Agent to issue Letters of
Credit, shall immediately and automatically terminate.

Section  4.  Allocation of Proceeds.

         If a Default or Event of Default  shall have occurred and be continuing
and  maturity  of any of the  Obligations  has been  accelerated,  all  payments
received  by the  Agent  under  any of the Loan  Documents,  in  respect  of any
principal of or interest on the  Obligations or any other amounts payable by the
Borrower  hereunder or thereunder,  shall be applied in the following  order and
priority:

(a)  amounts  due to the Agent and the  Lenders in respect of Fees and  expenses
     due under Section 13.2.;


                                     - 73 -


<PAGE>

(b)  payments of interest on Loans and Reimbursement Obligations,  to be applied
     for the ratable benefit of the Lenders;

(c)  payments of principal of Loans and Reimbursement Obligations, to be applied
     for the ratable benefit of the Lenders;

(d)  payments of cash amounts to the Agent in respect of outstanding  Letters of
     Credit pursuant to Section 2.12.;

(e)  amounts due to the Agent and the Lenders  pursuant  to Sections  12.7.  and
     13.9.;

(f)  payments of all other amounts due under any of the Loan Documents,  if any,
     to be applied for the ratable benefit of the Lenders; and

(g)  any amount remaining after application as provided above,  shall be paid to
     the Borrower or whomever else may be legally entitled thereto.

Section  5.  Collateral Account.

         (a) As collateral  security for the prompt  payment in full when due of
all Letter of Credit Liabilities,  the Borrower hereby pledges and grants to the
Agent,  for the  benefit of the Agent and the  Lenders  as  provided  herein,  a
security  interest  in  all of  its  right,  title  and  interest  in and to the
Collateral  Account and the balances from time to time in the Collateral Account
(including the investments and  reinvestments  therein provided for below).  The
balances  from  time to time in the  Collateral  Account  shall  not  constitute
payment  of any  Letter  of Credit  Liabilities  until  applied  by the Agent as
provided  herein.  Anything in this  Agreement to the contrary  notwithstanding,
funds held in the  Collateral  Account  shall be subject to  withdrawal  only as
provided in this Section and in Section 2.12.

         (b) Amounts on deposit in the Collateral  Account shall be invested and
reinvested by the Agent in such Cash Equivalents as the Agent shall determine in
its sole discretion. All such investments and reinvestments shall be held in the
name of and be under the sole dominion and control of the Agent. The Agent shall
exercise  reasonable  care in the custody and  preservation of any funds held in
the  Collateral  Account and shall be deemed to have exercised such care if such
funds are accorded  treatment  substantially  equivalent to that which the Agent
accords other funds deposited with the Agent, it being understood that the Agent
shall not have any  responsibility  for taking any  necessary  steps to preserve
rights  against any  parties  with  respect to any funds held in the  Collateral
Account.

         (c) If an Event of Default shall have occurred and be  continuing,  the
Agent may (and, if instructed by the Requisite Lenders, shall) in its (or their)
discretion  at any time  and  from  time to time  elect  to  liquidate  any such
investments and  reinvestments and credit the proceeds thereof to the Collateral
Account and apply or cause to be applied such proceeds and any other balances in
the Collateral Account to the payment of any of the Letter of Credit Liabilities
due and payable.

                                     - 74 -


<PAGE>


         (d)  If (i)  no  Default  or  Event  of  Default  has  occurred  and is
continuing  and (ii) all of the Letter of Credit  Liabilities  have been paid in
full,  the Agent  shall,  from time to time,  at the  request  of the  Borrower,
deliver to the Borrower,  against receipt but without any recourse,  warranty or
representation  whatsoever,  such of the balances in the  Collateral  Account as
exceed the aggregate  amount of Letter of Credit  Liabilities at such time. When
all of the  Obligations  shall  have been paid in full and no  Letters of Credit
remain  outstanding,  the Agent shall promptly deliver to the Borrower,  against
receipt but without any recourse,  warranty or  representation  whatsoever,  the
balances remaining in the Collateral Account.

         (e) The Borrower  shall pay to the Agent from time to time such fees as
the Agent normally  charges for similar  services in connection with the Agent's
administration  of the Collateral  Account and investments and  reinvestments of
funds therein.

Section  6.9  Performance by Agent.

         If the Borrower  shall fail to perform any covenant,  duty or agreement
contained  in any of the Loan  Documents,  the Agent may  perform  or attempt to
perform such  covenant,  duty or  agreement on behalf of the Borrower  after the
expiration  of any cure or grace periods set forth  herein.  In such event,  the
Borrower shall, at the request of the Agent,  promptly pay any amount reasonably
expended by the Agent in such performance or attempted performance to the Agent,
together with interest thereon at the applicable Post-Default Rate from the date
of such expenditure until paid. Notwithstanding the foregoing, neither the Agent
nor any Lender shall have any  liability or  responsibility  whatsoever  for the
performance  of any obligation of the Borrower under this Agreement or any other
Loan Document.

Section  7.9  Rights Cumulative.

         The  rights  and  remedies  of the Agent  and the  Lenders  under  this
Agreement  and each of the other  Loan  Documents  shall be  cumulative  and not
exclusive of any rights or remedies  which any of them may otherwise  have under
Applicable Law. In exercising their respective rights and remedies the Agent and
the Lenders may be selective  and no failure or delay by the Agent or any of the
Lenders in  exercising  any right shall operate as a waiver of it, nor shall any
single or partial  exercise of any power or right  preclude its other or further
exercise or the exercise of any other power or right.

Section  8.9  Recission of Acceleration by Requisite Lenders.

         If at any time after  acceleration of the maturity of the  Obligations,
the  Borrower  shall pay all arrears of interest  and all payments on account of
principal  of the  Obligations  which  shall have become due  otherwise  than by
acceleration  (with  interest  on  principal  and,  to the extent  permitted  by
Applicable Law, on overdue  interest,  at the rates specified in this Agreement)
and all Events of Default and Defaults  (other than  nonpayment  of principal of
and accrued  interest  on the  Obligations  due and payable  solely by virtue of
acceleration)  shall be remedied or waived to the  satisfaction of the Requisite
Lenders,  then by written  notice to the  Borrower,  the  Requisite  Lenders may
elect,  in the sole discretion of such Requisite  Lenders,  to rescind and annul
the  acceleration  and its  consequences;  but such action  shall not affect any
subsequent  Default or Event of Default or impair any right or remedy consequent
thereon. The provisions of the preceding sentence are intended merely to bind

                                     - 75 -


<PAGE>

merely to bind the  Lenders to a decision  which may be made at the  election of
the Requisite Lenders;  they are not intended to benefit the Borrower and do not
give the  Borrower  the right to  require  the  Lenders  to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are satisfied.

ARTICLE I.10 The Agent

Section 1.10  Authorization and Action.

         Each  Lender  hereby  appoints  and  authorizes  the Agent to take such
action as  contractual  representative  on such Lender's  behalf and to exercise
such  powers  under  this   Agreement  and  the  other  Loan  Documents  as  are
specifically  delegated to the Agent by the terms  hereof and thereof,  together
with such powers as are reasonably  incidental thereto.  Nothing herein shall be
construed to deem the Agent a trustee or fiduciary  for any Lender nor to impose
on the Agent  duties or  obligations  other than those  expressly  provided  for
herein. Not in limitation of the foregoing, each Lender confirms and agrees that
the Agent has no fiduciary obligations to such Lender under this Agreement,  any
other Loan  Document or  otherwise.  At the request of a Lender,  the Agent will
forward to such Lender copies or, where appropriate,  originals of the documents
delivered to the Agent pursuant to this  Agreement or the other Loan  Documents.
The Agent will also furnish to any Lender,  upon the request of such  Lender,  a
copy of any  certificate or notice  furnished to the Agent by the Borrower,  any
other  Loan  Party or any other  affiliate  of the  Borrower,  pursuant  to this
Agreement  or any other Loan  Document  not already  required to be delivered to
such  Lender  pursuant  to the terms of this  Agreement  or any such  other Loan
Document.  As to any matters not  expressly  provided for by the Loan  Documents
(including,  without  limitation,  enforcement  or  collection  of  any  of  the
Obligations), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Requisite  Lenders (or all of the Lenders if explicitly  required  under any
other provision of this Agreement),  and such instructions shall be binding upon
all Lenders and all holders of any of the Obligations;  provided, however, that,
notwithstanding  anything in this Agreement to the contrary, the Agent shall not
be required to take any action (a) which is  contrary to this  Agreement  or any
other Loan Document or Applicable  Law or (b) if the Agent  reasonably  believes
that such action would expose it to personal  liability and, in the case of this
clause (b), is not provided,  upon its request  therefor,  written  confirmation
from the Requisite  Lenders that the Agent's  indemnity by the Lenders contained
in Section 12.7.  would apply without  exception for such directed  action.  The
Agent  shall not  exercise  any right or remedy it or the Lenders may have under
any Loan Document upon the occurrence of a Default or an Event of Default unless
the  Requisite  Lenders  have so directed  the Agent to  exercise  such right or
remedy.

Section  2.10  Agent's Reliance, Etc.

         Notwithstanding  any other  provisions  of this  Agreement or any other
Loan Documents,  neither the Agent nor any of its directors,  officers,  agents,
employees or counsel shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement,

                                     - 76 -

<PAGE>

except to the extent  found in a final,  non-appealable  judgment  by a court of
competent  jurisdiction to have resulted from its or their own gross  negligence
or willful  misconduct.  Without  limiting the generality of the foregoing,  the
Agent: (a) may treat the payee of any Note as the holder thereof until the Agent
receives  written  notice of the  assignment or transfer  thereof signed by such
payee and in form  satisfactory to the Agent; (b) may consult with legal counsel
(including  its own  counsel or counsel  for the  Borrower  or any Loan  Party),
independent public accountants and other experts selected by it and shall not be
liable  for any  action  taken or  omitted  to be  taken in good  faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or  representation  to any Lender or any other  Person and shall not be
responsible to any Lender or any other Person for any statements,  warranties or
representations  made by any Person in or in connection  with this  Agreement or
any other Loan Document;  (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any of this Agreement or any other Loan Document or the  satisfaction  of any
conditions  precedent  under this  Agreement or any Loan Document on the part of
the Borrower or other Persons or inspect the  property,  books or records of the
Borrower or any other Person; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this  Agreement or any other Loan  Document,  any other  instrument  or
document  furnished  pursuant  thereto or any Collateral  covered thereby or the
perfection  or  priority  of any  Lien in favor of the  Agent on  behalf  of the
Lenders in any such  Collateral;  and (f) shall incur no  liability  under or in
respect of this  Agreement or any other Loan Document by acting upon any notice,
consent,  certificate or other  instrument or writing (which may be by telephone
or  telecopy)  believed  by it to be genuine  and  signed,  sent or given by the
proper party or parties.

Section  3.  Notice of Defaults.

         The  Agent  shall  not be  deemed  to have  knowledge  or notice of the
occurrence of a Default or Event of Default unless the Agent has received notice
from a Lender  (excluding First Union as a Lender) or the Borrower  referring to
this Agreement,  describing with reasonable specificity such Default or Event of
Default and stating  that such  notice is a "notice of  default."  If any Lender
becomes aware of any Default or Event of Default,  it shall promptly send to the
Agent such a "notice of default." Further,  if the Agent receives such a "notice
of default", the Agent shall give prompt notice thereof to the Lenders.

Section  4.10  First Union as Lender.

         First Union,  as a Lender,  shall have the same rights and powers under
this  Agreement and any other Loan Document as any other Lender and may exercise
the same as though it were not the Agent;  and the term  "Lender"  or  "Lenders"
shall, unless otherwise expressly indicated, include First Union in each case in
its individual capacity. First Union and its affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of  business  with the  Borrower,  any other Loan Party or any other
affiliate  thereof as if it were any other bank and  without any duty to account
therefor to the other Lenders.  Further,  the Agent and any affiliate may accept
fees and other  consideration  from the Borrower for services in connection with
this Agreement and otherwise without having to account for the same to the other
Lenders.

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<PAGE>

Section  5.  Approvals of Lenders.

         Except as specifically provided otherwise in this Agreement,  including
without limitation,  the approval provisions  contained in Sections 2.11., 2.13.
and 4.1.,  all  communications  from the  Agent to any  Lender  requesting  such
Lender's determination,  consent,  approval or disapproval (a) shall be given in
the form of a written  notice to such  Lender,  (b)  shall be  accompanied  by a
description  of the  matter or issue as to which such  determination,  approval,
consent  or  disapproval  is  requested,  or  shall  advise  such  Lender  where
information,  if any, regarding such matter or issue may be inspected,  or shall
otherwise  describe the matter or issue to be resolved,  (c) shall  include,  if
reasonably requested by such Lender and to the extent not previously provided to
such  Lender,  written  materials  provided to the Agent by the  Borrower or the
Parent in respect of the matter or issue to be resolved,  and (d) shall  include
the Agent's  recommended  course of action or  determination in respect thereof.
Each Lender shall reply  promptly,  but in any event within 10 Business Days (or
such lesser period as may be required  under the Loan Documents for the Agent to
respond). Unless a Lender shall give written notice to the Agent that it objects
to the  recommendation  or  determination  of the Agent (together with a written
explanation of the reasons  behind such  objection)  within the applicable  time
period for reply, such Lender shall be deemed to have  conclusively  approved of
or consented to such recommendation or determination.

Section  6.10  Lender Credit Decision, Etc.

         Each Lender  expressly  acknowledges  and agrees that neither the Agent
nor   any   of   its   officers,   directors,    employees,   agents,   counsel,
attorneys-in-fact or other affiliates has made any representations or warranties
as to the financial condition, operations,  creditworthiness,  solvency or other
information  concerning the business or affairs of the Borrower,  any other Loan
Party,  any  Subsidiary  or other  Person to such  Lender and that no act by the
Agent  hereafter  taken,  including  any review of the affairs of the  Borrower,
shall be deemed to constitute any such  representation  or warranty by the Agent
to any Lender. Each Lender  acknowledges that it has,  independently and without
reliance  upon the Agent,  any other  Lender or counsel to the Agent,  or any of
their respective  officers,  directors,  employees and agents,  and based on the
financial  statements of the Borrower,  the  Subsidiaries or any other Affiliate
thereof,  and inquiries of such Persons,  its  independent  due diligence of the
business and affairs of the Borrower,  the Loan Parties,  the  Subsidiaries  and
other Persons, its review of the Loan Documents,  the legal opinions required to
be  delivered  to it  hereunder,  the advice of its own  counsel  and such other
documents and information as it has deemed appropriate,  made its own credit and
legal  analysis and decision to enter into this  Agreement  and the  transaction
contemplated  hereby. Each Lender also acknowledges that it will,  independently
and without reliance upon the Agent, any other Lender or counsel to the Agent or
any of their respective officers, directors,  employees and agents, and based on
such review,  advice,  documents and information as it shall deem appropriate at
the time,  continue  to make its own  decisions  in taking or not taking  action
under the Loan  Documents.  Except for notices,  reports and other documents and
information expressly required to be furnished to the Lenders by the Agent under
this Agreement or any of the other Loan Documents,  the Agent shall have no duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning the business, operations,  property, financial and other condition or
creditworthiness  of the Borrower,  any other Loan Party or any other  Affiliate
thereof  which may come  into  possession  of the Agent or any of its  officers,
directors, employees, agents, attorneys-in-fact or other Affiliates. Each Lender
acknowledges  that the Agent's legal counsel in connection with the transactions
contemplated by this Agreement is only acting as counsel to the Agent and is not
acting as counsel to such Lender.

                                     - 78 -


<PAGE>

Section  7.10  Indemnification of Agent.

         Each Lender agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower and without  limiting the  obligation  of the Borrower to do so)
pro rata in accordance with such Lender's respective Commitment Percentage, from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever which may at any time be imposed on, incurred by, or asserted
against  the Agent  (in its  capacity  as Agent but not as a Lender)  in any way
relating to or arising out of the Loan Documents,  any transaction  contemplated
hereby or  thereby or any  action  taken or omitted by the Agent  under the Loan
Documents (collectively,  "Indemnifiable Amounts");  provided,  however, that no
Lender  shall be liable  for any  portion of such  Indemnifiable  Amounts to the
extent  found  in a  final  non-appealable  judgment  by a  court  of  competent
jurisdiction  to have  resulted  from the Agent's  gross  negligence  or willful
misconduct  or if the  Agent  fails  to  follow  the  written  direction  of the
Requisite  Lenders  unless such  failure is pursuant to the advice of counsel of
which the Lenders have received  notice.  Without limiting the generality of the
foregoing,  each Lender agrees to reimburse  the Agent  promptly upon demand for
its ratable share of any out-of-pocket  expenses  (including counsel fees of the
counsel(s) of the Agent's own choosing) incurred by the Agent in connection with
the preparation,  execution,  administration, or enforcement of, or legal advice
with respect to the rights or  responsibilities  of the parties under,  the Loan
Documents,  any suit or action  brought by the Agent to enforce the terms of the
Loan Documents  and/or collect any Obligations,  any "lender  liability" suit or
claim  brought  against  the Agent  and/or  the  Lenders,  and any claim or suit
brought  against the Agent and/or the Lenders  arising  under any  Environmental
Laws,  to the extent that the Agent is not  reimbursed  for such expenses by the
Borrower. Such out-of-pocket expenses (including counsel fees) shall be advanced
by the  Lenders  on the  request  of the  Agent  notwithstanding  any  claim  or
assertion  that the Agent is not  entitled  to  indemnification  hereunder  upon
receipt of an undertaking by the Agent that the Agent will reimburse the Lenders
if it is actually and finally  determined  by a court of competent  jurisdiction
that the Agent is not so entitled to  indemnification.  The  agreements  in this
Section  shall  survive the payment of the Loans and all other  amounts  payable
hereunder  or  under  the  other  Loan  Documents  and the  termination  of this
Agreement.  If the  Borrower  shall  reimburse  the Agent for any  Indemnifiable
Amount  following  payment  by any  Lender  to the  Agent  in  respect  of  such
Indemnifiable  Amount  pursuant  to this  Section,  the Agent  shall  share such
reimbursement on a ratable basis with each Lender making any such payment.

Section  8.10  Collateral Matters.

         (a) The Agent is  authorized  on behalf of all of the Lenders,  without
the necessity of any notice to or further consent from any Lender,  from time to
time  prior to an Event of  Default,  to take any  action  with  respect  to any
Collateral  or Loan  Documents  which may be  necessary  to perfect and maintain
perfected  the Liens upon the  Collateral  granted  pursuant  to any of the Loan
Documents.

         (b) The Lenders  hereby  authorize the Agent,  at its option and in its
discretion,  to  release  any  Lien  granted  to or held by the  Agent  upon any
Collateral (i) upon  termination of the Commitments and payment and satisfaction
of all of the  Obligations  at any  time  arising  under or in  respect  of this
Agreement  or the Loan  Documents  or the  transactions  contemplated  hereby or
thereby;  or (ii) as required or permitted  by Section 4.2.  Upon request by the
Agent at any time, the Lenders will confirm in writing the Agent's  authority to
release particular types or items of

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Collateral pursuant to this Section or any other applicable  provision of any of
the other Loan Documents.

         (c) Upon  any  sale  and  transfer  of  Collateral  which is  expressly
permitted pursuant to the terms of this Agreement,  and upon at least 5 Business
Days'  prior  written  request by the  Borrower,  the Agent shall (and is hereby
irrevocably  authorized by all of the Lenders to) execute such  documents as may
be necessary  to evidence the release of the Liens  granted to the Agent for the
benefit of the Lenders herein or pursuant  hereto upon the  Collateral  that was
sold or transferred; provided, however, that (i) the Agent shall not be required
to execute any such  document on terms  which,  in the  Agent's  opinion,  would
expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty; and (ii) such
release shall not in any manner  discharge,  affect or impair the Obligations or
any Liens upon (or  obligations of the Borrower or any Loan Party in respect of)
all interests  retained by the Borrower or any  Subsidiary,  including  (without
limitation)  the proceeds of the sale, all of which shall continue to constitute
part of the Collateral.  In the event of any sale or transfer of Collateral,  or
any  foreclosure  with  respect  to any of the  Collateral,  the Agent  shall be
authorized to deduct all of the expenses  reasonably  incurred by the Agent from
the proceeds of any such sale, transfer or foreclosure.

         (d) The Agent shall have no obligation  whatsoever to the Lenders or to
any  other  Person  to  assure  that the  Collateral  exists  or is owned by the
Borrower or any  Subsidiary  or is cared for,  protected  or insured or that the
Liens  granted to the Agent  herein or  pursuant  hereto  have been  properly or
sufficiently  or  lawfully  created,  perfected,  protected  or  enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care,  disclosure  or fidelity  any of
the rights,  authorities  and powers  granted or  available to the Agent in this
Section or in any of the Loan Documents,  it being understood and agreed that in
respect of the Collateral,  or any act,  omission or event related thereto,  the
Agent may act in any  manner it may deem  appropriate,  in its sole  discretion,
given the Agent's own interest in the  Collateral as one of the Lenders and that
the Agent shall have no duty or liability  whatsoever to the Lenders,  except to
the extent  found in a final  non-appealable  judgment  by a court of  competent
jurisdiction  to have  resulted  from the Agent's  gross  negligence  or willful
misconduct.

Section  9.10  Successor Agent.

         The Agent may resign at any time as Agent under the Loan  Documents  by
giving written notice thereof to the Lenders and the Borrower.  The Agent may be
removed for cause by all of the Lenders (excluding the Agent as a Lender) giving
the Agent written notice of such removal.  Upon any such resignation or removal,
the Requisite  Lenders  shall have the right to appoint a successor  Agent which
appointment  shall,  provided no Default or Event of Default shall have occurred
and be continuing,  be subject to the Borrower's approval,  which approval shall
not be unreasonably  withheld or delayed.  If no successor Agent shall have been
so appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the resigning  Agent's  giving of notice of  resignation or
the Lenders giving notice of removal,  as the case may be, then the resigning or
removed Agent may, on behalf of the Lenders,  appoint a successor  Agent,  which
shall be a Lender,  if any Lender shall be willing to serve, and otherwise shall
be a commercial bank having total combined  assets of at least  $50,000,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor  Agent,
such successor Agent shall thereupon succeed to and become vested with all the

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<PAGE>

rights, powers, privileges and duties of the resigning or removed Agent, and the
retiring  Agent shall be discharged  from its duties and  obligations  under the
Loan Documents.  After any resigning Agent's resignation  hereunder as Agent, or
any Agent's removal as Agent, the provisions of this Article XII. shall inure to
its  benefit as to any  actions  taken or omitted to be taken by it while it was
Agent under the Loan Documents.

Section  10.10  Titled Parties Have No Duties.

         Neither the Book Manager, the Lead Arranger,  the Syndication Agent nor
the  Documentation  Agent (each in such capacity,  a "Titled Party") assumes any
responsibility  or obligation  hereunder,  including,  without  limitation,  for
servicing,  enforcement or collection of any of the Loans,  nor any duties as an
agent  hereunder for Lenders.  The titles of "Lead  Arranger,"  "Book  Manager,"
"Syndication Agent," and "Documentation Agent" are solely honorific and imply no
fiduciary  responsibility  on the part of the Titled  Parties to the Agent,  the
Borrower  or any Lender and the use of such titles does not impose on the Titled
Parties any duties or obligations greater than those of any other Lender.

ARTICLE I.11 Miscellaneous

Section 1.11  Notices.

         Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:

         If to the Borrower:

                  First Washington Realty Limited Partnership
                  c/o First Washington Realty Trust, Inc.
                  4350 East-West Highway, Suite 400
                  Bethesda, Maryland  20814
                  Attention: President
                  Telecopy Number:(301) 907-7800
                  Telephone Number:(301) 907-4911

         If to the Agent:

                  First Union National Bank
                  One First Union Center, DC-6
                  301 South College Street
                  Charlotte, North Carolina  28288-0166
                  Attention: John A. Schissel
                  Telecopy Number:(704) 383-6205
                  Telephone Number:(704) 383-1967

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<PAGE>

         If to a Lender:

                  To such Lender's  address or telecopy  number,  as applicable,
                  set forth on its  signature  page hereto or in the  applicable
                  Assignment and Acceptance Agreement.

or, as to each party at such other  address as shall be designated by such party
in a written  notice to the other  parties  delivered  in  compliance  with this
Section.  All such notices and other  communications  shall be effective  (i) if
mailed, when received;  (ii) if telecopied,  when transmitted;  or (iii) if hand
delivered,  when delivered.  Notwithstanding the immediately preceding sentence,
all notices or communications to the Agent or any Lender under Article II. shall
be effective only when actually received. Neither the Agent nor any Lender shall
incur any  liability to the Borrower (nor shall the Agent incur any liability to
the Lenders) for acting upon any telephonic notice referred to in this Agreement
which the Agent or such  Lender,  as the case may be,  believes in good faith to
have been given by a Person  authorized  to deliver such notice or for otherwise
acting in good faith hereunder.

Section  2.11  Expenses.

         The Borrower  agrees (a) to pay or  reimburse  the Agent for all of its
reasonable  out-of-pocket  costs and expenses  incurred in  connection  with the
preparation,  negotiation  and  execution of, and any  amendment,  supplement or
modification  to,  any  of the  Loan  Documents,  and  the  consummation  of the
transactions   contemplated   thereby,   including  the   reasonable   fees  and
disbursements of counsel to the Agent and all costs and expenses of the Agent in
connection  with the review of Properties for inclusion in  calculations  of the
Borrowing Base and the Agent's other activities under Article IV., including the
reasonable fees and disbursements of counsel to the Agent relating thereto,  (b)
to pay or  reimburse  the Agent and the Lenders for all their costs and expenses
incurred in connection  with the enforcement or preservation of any rights under
the Loan  Documents,  including the reasonable fees and  disbursements  of their
respective  counsel  (including  the  allocated  fees and  expenses of in- house
counsel) and any payments in indemnification or otherwise payable by the Lenders
to the Agent pursuant to the Loan Documents,  (c) to pay, indemnify and hold the
Agent and the Lenders  harmless  from any and all  recording and filing fees and
any and all liabilities with respect to, or resulting from any failure to pay or
delay in paying,  documentary,  stamp,  excise and other similar taxes,  if any,
which  may be  payable  or  determined  to be  payable  in  connection  with the
execution  and delivery of any of the Loan  Documents,  or  consummation  of any
amendment,  supplement or modification  of, or any waiver or consent under or in
respect of, any Loan  Document and (d) to the extent not already  covered by any
of the preceding  subsections,  to pay the fees and  disbursements of counsel to
the Agent and any Lender incurred in connection with the  representation  of the
Agent or such Lender in any matter  relating to or arising out of any bankruptcy
or other  proceeding  of the type  described  in Sections  11.1.(f) or 11.1.(g),
including, without limitation (i) any motion for relief from any stay or similar
order, (ii) the negotiation, preparation, execution and delivery of any document
relating to the  Obligations  and (iii) the  negotiation  and preparation of any
debtor-in-possession  financing or any plan of reorganization of the Borrower or
any other Loan Party,  whether  proposed by the Borrower,  such Loan Party,  the
Lenders or any other  Person,  and whether  such fees and  expenses are incurred
prior  to,  during  or  after  the   commencement  of  such  proceeding  or  the
confirmation or conclusion of any such proceeding.

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<PAGE>

Section  3.11  Setoff.

         Subject to Section  3.3. and in addition to any rights now or hereafter
granted  under  Applicable  Law and not by way of limitation of any such rights,
the  Agent,  each  Lender  and each  Participant  is  hereby  authorized  by the
Borrower, at any time or from time to time during the continuance of an Event of
Default,  without notice to the Borrower or to any other Person, any such notice
being  hereby  expressly  waived,  but subject to receipt of the  Agent's  prior
written  consent to set-off and to appropriate and to apply any and all deposits
(general or special,  including,  but not limited to, indebtedness  evidenced by
certificates   of  deposit,   whether   matured  or  unmatured)  and  any  other
indebtedness  at any  time  held or  owing  by the  Agent,  such  Lender  or any
affiliate of such the Agent or such Lender,  to or for the credit or the account
of the Borrower against and on account of any of the  Obligations,  irrespective
of  whether or not any or all of the Loans and all other  Obligations  have been
declared  to be, or have  otherwise  become,  due and  payable as  permitted  by
Section 11.2., and although such Obligations shall be contingent or unmatured.

Section  4.11  Waiver of Jury Trial; Arbitration.

         (a) EACH PARTY  HERETO  ACKNOWLEDGES  THAT ANY  DISPUTE OR  CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT  AND  COMPLEX  ISSUES  OF LAW AND FACT AND  WOULD  RESULT IN DELAY AND
EXPENSE TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE  LENDERS,  THE AGENT AND THE BORROWER  HEREBY  WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR  PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR
TRIBUNAL  IN WHICH AN ACTION MAY BE  COMMENCED  BY OR AGAINST  ANY PARTY  HERETO
ARISING OUT OF THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION  WITH
ANY  COLLATERAL  OR ANY LIEN OR BY REASON OF ANY OTHER SUIT,  CAUSE OF ACTION OR
DISPUTE  WHATSOEVER  BETWEEN  OR AMONG  THE  BORROWER,  THE  AGENT OR ANY OF THE
LENDERS OF ANY KIND OR NATURE.

         (b) EACH OF THE BORROWER,  THE AGENT AND EACH LENDER HEREBY AGREES THAT
ANY FEDERAL DISTRICT COURT IN NORTH CAROLINA OR, AT THE OPTION OF THE AGENT, ANY
STATE COURT LOCATED IN CHARLOTTE,  NORTH  CAROLINA,  SHALL HAVE  JURISDICTION TO
HEAR AND  DETERMINE ANY CLAIMS OR DISPUTES  BETWEEN OR AMONG THE  BORROWER,  THE
AGENT  OR ANY  OF  THE  LENDERS,  PERTAINING  DIRECTLY  OR  INDIRECTLY  TO  THIS
AGREEMENT,  THE  LOANS,  THE NOTES OR ANY OTHER LOAN  DOCUMENT  OR TO ANY MATTER
ARISING  HEREFROM OR THEREFROM OR THE  COLLATERAL.  THE BORROWER AND EACH OF THE
LENDERS  EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH  JURISDICTION IN ANY
ACTION OR PROCEEDING  COMMENCED IN SUCH COURTS.  EACH PARTY  FURTHER  WAIVES ANY
OBJECTION  THAT IT MAY NOW OR HEREAFTER  HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION  SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF


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<PAGE>

ANY  ACTION BY THE AGENT OR ANY  LENDER OR THE  ENFORCEMENT  BY THE AGENT OR ANY
LENDER  OF  ANY  JUDGMENT  OBTAINED  IN  SUCH  FORUM  IN ANY  OTHER  APPROPRIATE
JURISDICTION.

         (c) UPON  DEMAND  OF ANY PARTY  HERETO,  WHETHER  MADE  BEFORE OR AFTER
INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CLAIM OR CONTROVERSY ARISING OUT OF,
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS  ("DISPUTES")  BETWEEN
OR AMONG ANY SUCH  PARTIES  SHALL BE RESOLVED BY BINDING  ARBITRATION  CONDUCTED
UNDER AND GOVERNED BY THE COMMERCIAL  FINANCIAL DISPUTES  ARBITRATION RULES (THE
"ARBITRATION RULES") OF THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") AND THE
FEDERAL ARBITRATION ACT. DISPUTES MAY INCLUDE, WITHOUT LIMITATION,  TORT CLAIMS,
COUNTERCLAIMS, DISPUTES AS TO WHETHER A MATTER IS SUBJECT TO ARBITRATION, CLAIMS
BROUGHT AS CLASS ACTIONS, AND CLAIMS ARISING FROM LOAN DOCUMENTS EXECUTED IN THE
FUTURE.  A  JUDGMENT  UPON  THE  AWARD  MAY  BE  ENTERED  IN  ANY  COURT  HAVING
JURISDICTION. NOTWITHSTANDING THE FOREGOING, THIS ARBITRATION PROVISION DOES NOT
APPLY TO DISPUTES  UNDER OR RELATED TO  INTEREST  RATE  AGREEMENTS  TO WHICH ANY
LENDER IS A PARTY.  ALL  ARBITRATION  HEARINGS  SHALL BE CONDUCTED IN CHARLOTTE,
NORTH  CAROLINA.  A HEARING SHALL BEGIN WITHIN 90 DAYS OF DEMAND FOR ARBITRATION
AND ALL  HEARINGS  SHALL  CONCLUDED  WITHIN 120 DAYS OF DEMAND FOR  ARBITRATION.
THESE  TIME  LIMITATIONS  MAY NOT BE  EXTENDED  UNLESS A PARTY  SHOWS  CAUSE FOR
EXTENSION  AND THEN NO MORE THAN A TOTAL  EXTENSION  OF 60 DAYS.  THE  EXPEDITED
PROCEDURES  SET FORTH IN RULE 51 ET.  SEQ.  OF THE  ARBITRATION  RULES  SHALL BE
APPLICABLE  TO CLAIMS OF LESS THAN  $1,000,000.  ARBITRATORS  SHALL BE  LICENSED
ATTORNEYS  SELECTED FROM THE COMMERCIAL  FINANCIAL DISPUTE  ARBITRATION PANEL OF
THE AAA. THE PARTIES DO NOT WAIVE ANY APPLICABLE LAWS EXCEPT AS PROVIDED HEREIN.
NOTWITHSTANDING THE PRECEDING BINDING ARBITRATION PROVISIONS,  THE PARTIES AGREE
TO PRESERVE,  WITHOUT  DIMINUTION,  THE FOLLOWING REMEDIES THAT THE AGENT OR THE
LENDERS  MAY  EXERCISE  BEFORE OR AFTER AN  ARBITRATION  PROCEEDING  IS BROUGHT.
SUBJECT TO THE OTHER  TERMS  HEREOF,  THE AGENT AND THE  LENDERS  SHALL HAVE THE
RIGHT TO PROCEED IN ANY COURT OF PROPER JURISDICTION OR BY SELF-HELP TO EXERCISE
OR PROSECUTE THE FOLLOWING REMEDIES, AS APPLICABLE:  (I) ALL RIGHTS TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF
SALE OR UNDER APPLICABLE LAW BY JUDICIAL  FORECLOSURE  INCLUDING A PROCEEDING TO
CONFIRM THE SALE; (II) ALL RIGHTS OF SELF-HELP  INCLUDING PEACEFUL OCCUPATION OF
REAL  PROPERTY AND  COLLECTION  OF RENTS,  SET-OFF,  AND PEACEFUL  POSSESSION OF
PERSONAL PROPERTY;  (III) OBTAINING  PROVISIONAL OR ANCILLARY REMEDIES INCLUDING
INJUNCTIVE  RELIEF,  SEQUESTRATION,   GARNISHMENT,  ATTACHMENT,  APPOINTMENT  OF
RECEIVER  AND  FILING  AN  INVOLUNTARY  BANKRUPTCY  PROCEEDING;  AND  (IV)  WHEN
APPLICABLE,  A JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY WITH
REGARD TO PARTIES ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE.  THE PARTIES HERETO
ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED
ANY RIGHT THEY MAY HAVE TO A JURY TRIAL WITH REGARD TO A DISPUTE.

         (d) THE  PROVISIONS OF THIS SECTION HAVE BEEN  CONSIDERED BY EACH PARTY
WITH  THE  ADVICE  OF  COUNSEL  AND  WITH A  FULL  UNDERSTANDING  OF  THE  LEGAL
CONSEQUENCES  THEREOF,  AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE  HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION
OF THIS AGREEMENT.



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Section  5.  Successors and Assigns.

         (a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective  successors and permitted
assigns,  except that the Borrower  may not assign or otherwise  transfer any of
its  rights  under  this  Agreement  without  the prior  written  consent of all
Lenders.

         (b) Any  Lender  may make,  carry or  transfer  Loans at, to or for the
account  of, any of its branch  offices  or the office of an  affiliate  of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.

         (c) Any  Lender  may at any time  grant  to one or more  banks or other
financial  institutions  (each a "Participant")  participating  interests in its
Commitment or the Obligations owing to such Lender;  provided,  however, (i) any
such participating  interest must be for a constant and not a varying percentage
interest,  and (ii) after giving effect to any such  participation  by a Lender,
the amount of its Commitment,  or if the Commitments have been  terminated,  the
aggregate outstanding principal balance of Notes held by it, in which it has not
granted  any  participating  interests  must be at least  $5,000,000.  Except as
otherwise  provided in Section 13.3.,  no  Participant  shall have any rights or
benefits under this  Agreement or any other Loan  Document.  In the event of any
such grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations  hereunder,  and
the Borrower and the Agent shall  continue to deal solely and directly with such
Lender in  connection  with such  Lender's  rights  and  obligations  under this
Agreement.  Any  agreement  pursuant  to  which  any  Lender  may  grant  such a
participating  interest  shall  provide  that such Lender  shall retain the sole
right and  responsibility  to enforce the obligations of the Borrower  hereunder
including, without limitation, the right to approve any amendment,  modification
or waiver of any provision of this Agreement; provided, however, such Lender may
agree  with  the  Participant  that it will  not,  without  the  consent  of the
Participant,  agree to (i)  increase,  or extend  the term or extend the time or
waive any  requirement  for the  reduction  or  termination  of,  such  Lender's
Commitment,  (ii)  extend the date  fixed for the  payment  of  principal  of or
interest on the Loans or portions thereof owing to such Lender, (iii) reduce the
amount of any such payment of principal,  (iv) reduce the rate at which interest
is  payable  thereon  or (v)  any  release  of all or  substantially  all of the
Collateral. An assignment or other transfer which is not permitted by subsection
(d) below  shall be given  effect for  purposes  of this  Agreement  only to the
extent of a  participating  interest  granted in accordance with this subsection
(c).  The selling  Lender shall notify the Agent and the Borrower of the sale of
any participation hereunder and the terms thereof.

         (d) Any Lender may, with the prior written consent of the Agent, assign
to one or more Eligible  Assignees  (each an "Assignee") all or a portion of its
Commitment  and its other rights and  obligations  under this  Agreement and the
Notes; provided,  however, (i) no such consent by the Borrower shall be required
(x) in the case of any  assignment  to another  Lender or any  affiliate of such
Lender or another  Lender or (y) if an Event of Default or Default shall then be
existing;  (ii) any partial  assignment  shall be in an amount at least equal to
$10,000,000  and after giving effect to such  assignment  the  assigning  Lender
retains a Commitment,  or if the Commitments have been  terminated,  holds Notes
having an aggregate  outstanding  principal  balance,  of at least  $10,000,000;
(iii) each such  assignment  shall be  effected  by means of an  Assignment  and
Acceptance  Agreement and (iv) the Agent, in its capacity as a Lender, shall not
effect any assignment of its  Commitment,  if after giving effect  thereto,  the
amount of such  Commitment  would be less than the amount of any other  Lender's
Commitment.  Upon execution and delivery of such  instrument and payment by such
Assignee to such  transferor  Lender of an amount  equal to the  purchase  price


                                     - 85 -


<PAGE>

agreed between such transferor Lender and such Assignee,  such Assignee shall be
deemed to be a Lender party to this  Agreement as of the  effective  date of the
Assignment  and  Acceptance   Agreement  and  shall  have  all  the  rights  and
obligations  of a Lender with a Commitment as set forth in such  Assignment  and
Acceptance  Agreement,  and the  transferor  Lender  shall be released  from its
obligations  hereunder  to a  corresponding  extent,  and no further  consent or
action by any party shall be required.  Upon the  consummation of any assignment
pursuant  to this  subsection  (d),  the  transferor  Lender,  the Agent and the
Borrower shall make appropriate arrangements so that new Notes are issued to the
Assignee and such transferor Lender, as appropriate. In connection with any such
assignment,  the transferor Lender shall pay to the Agent an administrative  fee
for processing such assignment in the amount of $3,000.

         (e) The Agent  shall  maintain at the  Principal  Office a copy of each
Assignment  and  Acceptance  Agreement  delivered  to and  accepted  by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment  of each Lender from time to time (the  "Register").  The Agent shall
give each Lender and the Borrower  notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower,  the Agent and the Lenders
may treat  each  Person  whose  name is  recorded  in the  Register  as a Lender
hereunder  for all purposes of this  Agreement.  The Register and copies of each
Assignment  and  Acceptance  Agreement  shall be available for inspection by the
Borrower  or any  Lender  at any  reasonable  time  and from  time to time  upon
reasonable  prior  notice to the Agent.  Upon its receipt of an  Assignment  and
Acceptance  Agreement  executed by an assigning Lender,  together with each Note
subject to such assignment (the  "Surrendered  Note"),  the Agent shall, if such
Assignment and Acceptance Agreement has been completed and if the Agent receives
the processing  and recording fee described in subsection (d) above,  (i) accept
such Assignment and Acceptance Agreement,  (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.

         (f) In addition to the assignments and  participations  permitted under
the foregoing  provisions of this Section,  any Lender may assign and pledge all
or any  portion  of its  Loans  and its  Notes to any  Federal  Reserve  Bank as
collateral  security pursuant to Regulation A and any Operating  Circular issued
by such  Federal  Reserve  Bank,  and  such  Loans  and  Notes  shall  be  fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.

         (g) A Lender may furnish any information  concerning the Borrower,  any
other Loan Party or any of their  respective  Subsidiaries  in the possession of
such  Lender  from  time  to  time  to  Assignees  and  Participants  (including
prospective Assignees and Participants) subject to compliance with Section 13.8.

         (h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or  participate  any interest in any Loan held by it hereunder to the
Borrower,  any  other  Loan  Party  or any of  their  respective  Affiliates  or
Subsidiaries.

         (i) Each Lender agrees that,  without the prior written  consent of the
Borrower and the Agent, it will not make any assignment  hereunder in any manner
or under any circumstances that would require  registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws United States of America or of any other jurisdiction.

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<PAGE>

Section  6.11  Amendments.

         Except as otherwise  expressly provided in this Agreement,  any consent
or approval  required or permitted by this  Agreement or in any Loan Document to
be given by the Lenders may be given,  and any term of this  Agreement or of any
other Loan  Document may be amended,  and the  performance  or observance by the
Borrower or any Loan Party or Subsidiary of any terms of this  Agreement or such
other Loan Document or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite Lenders
(and, in the case of an amendment to any Loan Document,  the written  consent of
the Borrower).  Notwithstanding the foregoing,  no amendment,  waiver or consent
shall, unless in writing,  and signed by all of the Lenders (or the Agent at the
written  direction of the Lenders),  do any of the  following:  (i) increase the
Commitments of the Lenders  (except as contemplated by Section 2.13.) or subject
the Lenders to any  additional  obligations;  (ii) reduce the  principal  of, or
interest  rates that have  accrued  or that will be  charged on the  outstanding
principal amount of, any Loans or other Obligations;  (iii) reduce the amount of
any Fees payable hereunder;  (iv) postpone any date fixed for any payment of any
principal  of,  interest  on, or Fees with  respect  to,  any Loans or any other
Obligations;  (v) change the Commitment  Percentages  (except as contemplated by
Section  2.13.);  (vi) amend this Section or amend the  definitions of the terms
used in this Agreement or the other Loan Documents  insofar as such  definitions
affect the  substance of this Section;  (vii) modify the  definition of the term
"Requisite  Lenders" or modify in any other manner the number or  percentage  of
the Lenders required to make any determinations or waive any rights hereunder or
to  modify  any  provision  hereof;   (viii)  release  any  Guarantor  from  its
obligations  under the Guaranty;  (ix) modify the pro rata provisions of Section
3.2.; (x) release all or  substantially  all of the  Collateral;  (xi) amend the
definitions of "Eligible Property" or "Borrowing Base" (and the definitions used
in such  definition  and  the  percentages  and  rates  used in the  calculation
thereof);  or (xii) waive any Default or Event of Default which  occurred  under
Section  11.1.(m)(iii)  within 180 days after the Borrower or the Parent was the
subject  of any  transaction  covered  by  Section  10.8.  (whether  or not  the
Requisite  Lenders  shall  have  consented  to such  transaction).  Further,  no
amendment,  waiver or  consent  unless in writing  and  signed by the Agent,  in
addition to the Lenders required  hereinabove to take such action,  shall affect
the rights or duties of the Agent under this  Agreement or any of the other Loan
Documents.  Further, no Collateral shall be released or disposed of by the Agent
unless all of the Lenders so direct the Agent or unless  released or disposed of
as permitted by, and in accordance with, Section 12.8. No waiver shall extend to
or affect any  obligation  not expressly  waived or impair any right  consequent
thereon and any  amendment,  waiver or consent  shall be  effective  only in the
specific  instance and for the specific purpose set forth therein.  No course of
dealing  or  delay  or  omission  on the  part of the  Agent  or any  Lender  in
exercising  any  right  shall  operate  as a  waiver  thereof  or  otherwise  be
prejudicial  thereto.  Except as otherwise  explicitly provided for herein or in
any other Loan Document,  no notice to or demand upon the Borrower shall entitle
the  Borrower  to  other  or  further  notice  or  demand  in  similar  or other
circumstances.

Section  7.11  Nonliability of Agent and Lenders.

         The  relationship  between the  Borrower  and the Lenders and the Agent
shall be solely  that of borrower  and lender.  Neither the Agent nor any Lender
shall have any  fiduciary  responsibilities  to the Borrower and no provision in
this Agreement or in any of the other Loan  Documents,  and no course of dealing
between  or among any of the  parties  hereto,  shall be  deemed  to create  any
fiduciary

                                     - 87 -


<PAGE>

duty  owing  by the  Agent  or any  Lender  to any  Lender,  the  Borrower,  any
Subsidiary or any other Loan Party.  Neither the Agent nor any Lender undertakes
any  responsibility  to the  Borrower  to review or inform the  Borrower  of any
matter in connection with any phase of the Borrower's business or operations.

Section  8.11  Confidentiality.

         Except as  otherwise  provided by  Applicable  Law,  the Agent and each
Lender  shall  utilize  all  non-public  information  obtained  pursuant  to the
requirements  of this Agreement  which has been  identified as  confidential  or
proprietary  by the Borrower in  accordance  with its  customary  procedure  for
handling confidential information of this nature and in accordance with safe and
sound  banking  practices  but in any event may make  disclosure:  (a) to any of
their respective  affiliates (provided they shall agree to keep such information
confidential  in accordance  with the terms of this Section);  (b) as reasonably
required  by  any  bona  fide  Assignee,  Participant  or  other  transferee  in
connection with the  contemplated  transfer of any Commitment or  participations
therein  as  permitted  hereunder  (provided  they  shall  agree  to  keep  such
information  confidential in accordance with the terms of this Section);  (c) as
required by any Governmental  Authority or representative thereof or pursuant to
legal  process;  (d) to the Agent's or such  Lender's  independent  auditors and
other professional advisors (provided they shall be notified of the confidential
nature  of the  information);  and  (e)  after  the  happening  and  during  the
continuance of an Event of Default,  to any other Person, in connection with the
exercise  by the Agent or the  Lenders of rights  hereunder  or under any of the
other Loan Documents.

Section  9.11  Indemnification.

         (a) The Borrower shall and hereby agrees to indemnify,  defend and hold
harmless the Agent, any affiliate of the Agent and each of the Lenders and their
respective  directors,  officers,  shareholders,  agents,  employees and counsel
(each referred to herein as an "Indemnified Party") from and against any and all
losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses
of  every  kind and  nature  (including,  without  limitation,  amounts  paid in
settlement,  court costs and the fees and  disbursements  of counsel incurred in
connection with any litigation, investigation, claim or proceeding or any advice
rendered in connection  therewith)  (the  foregoing  items referred to herein as
"Claims and  Expenses")  incurred by an  Indemnified  Party in connection  with,
arising out of, or by reason of, any suit, cause of action, claim,  arbitration,
investigation  or settlement,  consent decree or other proceeding (the foregoing
referred  to herein as an  "Indemnity  Proceeding")  which is in any way related
directly or indirectly  to: (i) this Agreement or any other Loan Document or the
transactions  contemplated  thereby; (ii) the making of any Loans or issuance of
Letters of Credit hereunder; (iii) any actual or proposed use by the Borrower of
the proceeds of the Loans or Letters of Credit; (iv) the Agent's or any Lender's
entering into this  Agreement;  (v) the fact that the Agent and the Lenders have
established the credit facility evidenced hereby in favor of the Borrower;  (vi)
the fact that the Agent and the Lenders are  creditors  of the Borrower and have
or are alleged to have information regarding the financial condition,  strategic
plans or business  operations  of the Borrower and the  Subsidiaries;  (vii) the
fact that the Agent and the Lenders are  material  creditors of the Borrower and
are alleged to  influence  directly or  indirectly  the  business  decisions  or
affairs of the  Borrower  and the  Subsidiaries  or their  financial  condition;
(viii) the  exercise  of any right or remedy the Agent or the  Lenders  may have
under this Agreement or the other Loan Documents including,  but not limited to,


                                     - 88 -

<PAGE>

the foreclosure upon, or seizure of, any Collateral or the exercise of any other
rights of a secured  party;  provided,  however,  that the Borrower shall not be
obligated to indemnify any  Indemnified  Party for any acts or omissions of such
Indemnified  Party in  connection  with matters  described in this clause (viii)
that constitute  gross negligence or willful  misconduct;  (ix) any violation or
non-compliance  by  the  Borrower  or  any  Subsidiary  of  any  Applicable  Law
(including any Environmental  Law) including,  but not limited to, any Indemnity
Proceeding  commenced  by (A) the  Internal  Revenue  Service  or  state  taxing
authority  or  (B)  any  Governmental   Authority  or  other  Person  under  any
Environmental   Law,   including  any  Indemnity   Proceeding   commenced  by  a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower or its  Subsidiaries  (or its respective  properties) (or the Agent
and/or the Lenders as successors to the Borrower) to be in compliance  with such
Environmental Laws.

         (b) The Borrower's indemnification obligations under this Section shall
apply to all Indemnity  Proceedings arising out of, or related to, the foregoing
whether  or  not an  Indemnified  Party  is a  named  party  in  such  Indemnity
Proceeding.  In this connection,  this indemnification shall cover all costs and
expenses of any  Indemnified  Party in  connection  with any  deposition  of any
Indemnified  Party or  compliance  with any  subpoena  (including  any  subpoena
requesting the production of documents). This indemnification shall, among other
things,  apply to any Indemnity  Proceeding  commenced by other creditors of the
Borrower or any  Subsidiary,  any  shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity  Proceeding in their
individual  capacity or  derivatively  on behalf of the  Borrower),  any account
debtor of the Borrower or any Subsidiary or by any Governmental Authority.

         (c)  This  indemnification  shall  apply  to any  Indemnity  Proceeding
arising during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.

         (d) All  out-of-pocket  fees and  expenses  of, and all amounts paid to
third-persons  by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party  notwithstanding any claim or assertion by the
Borrower  that  such  Indemnified  Party  is  not  entitled  to  indemnification
hereunder  upon receipt of an undertaking  by such  Indemnified  Party that such
Indemnified  Party will  reimburse  the  Borrower if it is actually  and finally
determined by a court of competent  jurisdiction  that such Indemnified Party is
not so entitled to indemnification hereunder.

         (e) An Indemnified  Party may conduct its own investigation and defense
of,  and may  formulate  its own  strategy  with  respect  to,  any  Indemnified
Proceeding  covered  by this  Section  and,  as  provided  above,  all costs and
expenses  incurred by the Indemnified Party shall be reimbursed by the Borrower.
No action taken by legal counsel chosen by an Indemnified Party in investigating
or defending against any such Indemnified Proceeding shall vitiate or in any way
impair the  obligations  and duties of the Borrower  hereunder to indemnify  and
hold harmless each such Indemnified Party;  provided,  however,  that (i) if the
Borrower is required to indemnify an Indemnified  Party pursuant hereto and (ii)
the Borrower has provided evidence  reasonably  satisfactory to such Indemnified
Party  that  the  Borrower  has the  financial  wherewithal  to  reimburse  such
Indemnified  Party for any amount paid by such Indemnified Party with respect to
such  Indemnified  Proceeding,  such  Indemnified  Party  shall  not  settle  or
compromise any such Indemnified  Proceeding without the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed).

                                     - 89 -


<PAGE>

         (f) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution  to the  payment  and  satisfaction  of such  obligations  which is
permissible under Applicable Law.

         (g) The Borrower's  obligations hereunder shall survive any termination
of this  Agreement  and the other Loan  Documents and the payment in full of the
Obligations,  and are in addition to, and not in  substitution  of, any other of
their  obligations  set forth in this  Agreement  or any other Loan  Document to
which it is a party.

Section  10.11  Termination; Survival.

         At such time as (a) all of the Commitments  have been  terminated,  (b)
none of the Lenders is  obligated  any longer  under this  Agreement to make any
Loans,  (c) the Agent is no longer  obligated any longer under this Agreement to
issue any Letters of Credit, (d) no Letters of Credit remain outstanding and (e)
all  Obligations  (other  than  obligations  which  survive as  provided  in the
following  sentence) have been paid and satisfied in full,  this Agreement shall
terminate.  Notwithstanding  any termination of this Agreement,  or of the other
Loan Documents,  the indemnities to which the Agent and the Lenders are entitled
under the provisions of Sections 12.7.,  13.2. and 13.9. and any other provision
of this  Agreement and the other Loan  Documents,  and the provisions of Section
13.4.,  shall  continue in full force and effect and shall protect the Agent and
the Lenders against events arising after such termination as well as before.

Section  11.11  Severability of Provisions.

         Any provision of this Agreement which is prohibited or unenforceable in
any  jurisdiction  shall, as to such  jurisdiction,  be ineffective  only to the
extent  of  such  prohibition  or  unenforceability   without  invalidating  the
remainder  of such  provision  or the  remaining  provisions  or  affecting  the
validity or enforceability of such provision in any other jurisdiction.

Section  12.11  GOVERNING LAW.

         THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE.

Section  13.11  Counterparts.

         This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of  counterparts  and by different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all of which counterparts together shall constitute but
one and the same instrument.

Section  14.11  Obligations with Respect to Loan Parties.

         The  obligations  of the  Borrower to direct or prohibit  the taking of
certain actions by the other Loan Parties as specified  herein shall be absolute
and not subject to any defense the Borrower may have that the Borrower  does not
control such Loan Parties.

                                     - 90 -

<PAGE>

Section  15.11  Limitation of Liability.

         Neither the Agent nor any Lender, nor any affiliate, officer, director,
employee,  attorney,  or  agent  of the  Agent  or any  Lender,  shall  have any
liability with respect to, and the Borrower hereby waives,  releases, and agrees
not to sue any of them upon, any claim for any special, indirect, incidental, or
consequential  damages  suffered or incurred by the Borrower in connection with,
arising out of, or in any way related  to,  this  Agreement  or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of  the  other  Loan  Documents,   except  to  the  extent  found  in  a  final,
non-appealable  judgment by a court of competent  jurisdiction  to have resulted
from its or their own gross  negligence  or  willful  misconduct.  The  Borrower
hereby waives, releases, and agrees not to sue the Agent or any Lender or any of
the  Agent's  or  any  Lender's  affiliates,   officers,  directors,  employees,
attorneys,  or agents for punitive damages in respect of any claim in connection
with,  arising out of, or in any way related  to, this  Agreement  or any of the
other Loan Documents, or any of the transactions  contemplated by this Agreement
or  financed  hereby,  except  to the  extent  found in a final,  non-appealable
judgment by a court of competent jurisdiction to have resulted from its or their
own gross negligence or willful misconduct.

Section  16.11  Entire Agreement.

         This  Agreement,  the Notes,  and the other Loan Documents  referred to
herein embody the final, entire agreement among the parties hereto and supersede
any and all prior commitments, agreements,  representations, and understandings,
whether  written or oral,  relating to the subject  matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties  hereto.  There are no oral  agreements
among the parties hereto.

Section  17.11  Construction.

         The Agent,  the Borrower,  the Parent and each Lender  acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an  opportunity  to review this  Agreement and the other Loan Documents
with its legal  counsel  and that this  Agreement  and the other Loan  Documents
shall be construed as if jointly drafted by the Agent, the Borrower,  the Parent
and each Lender.

Section  18.  Release of Collateral Upon Investment Grade Rating.

         Upon the Borrower  receiving an  Investment  Grade Rating by the Rating
Agencies,  the Agent shall release the Collateral Documents with respect to each
of the  Borrowing  Base  Properties so long as (a) the Agent shall have received
the  Borrower's  written  request  for  such  release  accompanied  by  evidence
satisfactory  to the Agent  regarding  such  Investment  Grade  Ratings;  (b) no
Default or Event of Default shall have occurred and be continuing or would occur
after giving  effect to such  release;  and (c) the Agent shall have  received a
Compliance  Certificate  calculated  on a pro forma  basis as of the  Borrower's
fiscal quarter most recently ended establishing that the Parent and the Borrower
would have been in compliance with the covenants  contained in Sections 10.1.(b)
as of the end of such quarter.



                                     - 91 -
<PAGE>

Section  19.  NO NOVATION.

         THE  EXISTING  CREDIT  AGREEMENT  IS BEING  AMENDED AND RESTATED IN ITS
ENTIRETY BY THIS AGREEMENT FOR THE  CONVENIENCE  OF THE PARTIES.  THIS AGREEMENT
MERELY  AMENDS,   MODIFIES  AND  RESTATES  THE  INDEBTEDNESS,   LIABILITIES  AND
OBLIGATIONS  EVIDENCED  BY THE  EXISTING  CREDIT  AGREEMENT  AND THE OTHER  LOAN
DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT) AND DOES NOT CONSTITUTE,
AND IT IS THE EXPRESS  INTENT OF THE PARTIES HERETO THAT THIS AGREEMENT DOES NOT
EFFECT,  A NOVATION OF THE EXISTING  INDEBTEDNESS,  LIABILITIES  AND OBLIGATIONS
OWING BY THE  BORROWER  PURSUANT  TO THE  EXISTING  CREDIT  AGREEMENT.  ALL SUCH
INDEBTEDNESS,  LIABILITIES  AND OBLIGATIONS  CONTINUE TO REMAIN  OUTSTANDING AND
EVIDENCED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

                         [Signatures on Following Pages]


                                     - 92 -


<PAGE>



         IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Credit
Agreement to be executed by their authorized officers all as of the day and year
first above written.

                                    BORROWER:

                                    FIRST WASHINGTON REALTY LIMITED PARTNERSHIP

                                    By: FIRST WASHINGTON REALTY TRUST, INC., its
                                        sole general partner

                                           /s/
                                        By:_____________________________________
                                           Name:
                                          Title:


                                    PARENT:

                                    FIRST WASHINGTON REALTY TRUST, INC.

                                       /s/
                                    By:_________________________________________
                                       Name:
                                      Title:

                       [Signatures Continued on Next Page]


                                     - 93 -


<PAGE>


                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]


                             FIRST UNION NATIONAL BANK, as Agent and as a Lender


                                /s/
                             By:________________________________________________
                                Name:
                               Title:

                             Commitment Amount:

                             $16,000,000

                             Lending Office (all Types of Loans):

                             First Union National Bank
                             REIT Banking Group
                             One First Union Center, 6th Floor
                             301 South College Street
                             Charlotte, North Carolina  28288
                             Attn: Joy Auten
                             Telecopier:       (704) 383-7989
                             Telephone:        (704) 715-1381







                       [Signatures Continued on Next Page]


                                     - 94 -


<PAGE>

                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]



                                   ALLFIRST BANK


                                      /s/
                                   By:__________________________________________
                                      Name:
                                     Title:

                                   Commitment Amount:

                                   $15,000,000

                                   Lending Office (all Types of Loans) and
                                   Address for Notices:

                                   Allfirst Bank
                                   25 South Charles Street, Mail Code 101-747
                                   Baltimore, Maryland 21201
                                   Attn:  Robert S. Palmer
                                   Telecopier:       (410) 545-2385
                                   Telephone:        (410) 545-2426












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                                     - 95 -


<PAGE>
                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]



                                      CRESTAR BANK


                                         /s/
                                      By:_______________________________________
                                         Name:
                                        Title:

                                      Commitment Amount:
                                      $15,000,000

                                      Lending Office (all Types of Loans) and
                                      Address for Notices:

                                      Crestar Bank
                                      8245 Boone Blvd., Suite 820
                                      Vienna, Virginia 22182
                                      Attn:  Gregory T. Horstman
                                      Telecopier:       (703) 902-9245
                                      Telephone:        (703) 902-9384










                       [Signatures Continued on Next Page]


                                     - 96 -


<PAGE>

                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]


                                   PNC BANK, NATIONAL ASSOCIATION

                                        /s/
                                     By:________________________________________
                                   Name:
                                   Title:

                                   Commitment Amount:

                                   $14,000,000

                                   Lending Office (all Types of Loans):

                                   PNC Bank

                                   249 Fifth Avenue, Mailstop P1-P0PP-19-2
                                   Pittsburgh, Pennsylvania  15222
                                   Attn:  Barbara Burzio
                                   Telecopier: (412) 768-5754
                                   Telephone:  (412) 762-7924

                                   Address for Notices:

                                   PNC Bank

                                   249 Fifth Avenue, Mailstop P1-P0PP-19-2
                                   Pittsburgh, Pennsylvania  15222
                                   Attn:  Barbara Burzio
                                   Telecopier: (412) 768-5754
                                   Telephone:  (412) 762-7924

                                   and

                                   PNC Bank

                                   1401 Eye Street, N.W., Suite 200
                                   Washington, D.C.  20005
                                   Attn:  Ashley Smith
                                   Telecopier: (202) 393-1545
                                   Telephone:  (202) 393-2752



                       [Signatures Continued on Next Page]

                                     - 97 -



<PAGE>



                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]

                                     AMSOUTH BANK


                                        /s/
                                     By:________________________________________
                                        Name:
                                        Title:

                                     Commitment Amount:

                                     $10,000,000

                                     Lending Office (all Types of Loans) and
                                     Address for Notices:

                                     AmSouth Bank
                                     1900 5th Avenue North
                                     AST - 9th Floor
                                     Birmingham, Alabama  35203
                                     Attn:  Katherine Allen/ Crystal Cassels
                                     Telecopier:  (205) 326-4075
                                     Telephone:   (205) 326-4783

















                       [Signatures Continued on Next Page]


                                     - 98 -



<PAGE>



                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]



                                     BANKERS TRUST COMPANY

                                        /s/
                                     By:________________________________________
                                     Name:
                                     Title:

                                     Commitment Amount:

                                     $10,000,000

                                     Lending Office (all Types of Loans) and
                                     Address for Notices:

                                     Bankers Trust Company
                                     130 Liberty Street, 25th Floor
                                     New York, New York  10006
                                     Attn:  Amy Sinensky
                                     Telecopier: (212) 669-0735
                                     Telephone:  (212) 250-2617

















                       [Signatures Continued on Next Page]


                                     - 99 -



<PAGE>



                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]



                                      BRANCH BANKING & TRUST COMPANY


                                            /s/
                                        By:_____________________________________
                                      Name:
                                     Title:

                                      Commitment Amount:

                                      $10,000,000

                                      Lending Office (all Types of Loans) and
                                      Address for Notices:

                                      Branch Banking & Trust Company
                                      1909 K Street, N.W.
                                      Washington, D.C.  20006
                                      Attn:  Ron Gudbrandsen/ Carolyn Brown
                                      Telecopier:  (202) 835-9287
                                      Telephone:   (202) 835-9226

















                       [Signatures Continued on Next Page]


                                     - 101 -


<PAGE>



                 [Signature Page to Credit Agreement dated as of
         May 19, 2000 with First Washington Realty Limited Partnership]



                                     CHEVY CHASE BANK, FSB


                                          /s/
                                       By:______________________________________
                                     Name:
                                     Title:

                                     Commitment Amount:

                                     $10,000,000

                                     Lending Office (all Types of Loans) and
                                     Address for Notices:

                                     Chevy Chase Bank
                                     8401 Connecticut Avenue, 9th Floor
                                     Chevy Chase, Maryland  20815
                                     Attn:  Jordan O'Neill
                                     Telecopier:  (301) 986-7516
                                     Telephone:   (301) 986-7003




                                     - 102 -


<PAGE>

                                 SCHEDULE 1.1(A)
                             Material Subsidiaries
                            =======================


F-W Bryans Road Limited Partnership
Branchwood Apartments Limited Partnership

<PAGE>

EXHIBIT J      Form of Security Deed
EXHIBIT K      Form of Revolving Note
EXHIBIT L      Form of Extension Request


                                  SCHEDULE 4.1.

                        Initial Borrowing Base Properties

                                                           Initial Borrowing
Property                        Location                   Base Value
=========                       ========                   =================

Shoppes of Graylyn              Wilmington, Delaware
Spring Valley Shopping Center   Washington, DC
Riverside Square                Chicago, Illinois
Bryans Road Shopping Center     Bryans Road, Maryland
Watkins Park Plaza              Mitchellville, Maryland
Woodmoor                        Silver Spring, Maryland
Takoma Park                     Takoma Park, Maryland
Newtown Square                  Newtown Square, Pennsylvania
Kenhorst Plaza                  Reading, Pennsylvania
Kamp Washington                 Fairfax, Virginia
Willston Centre I               Falls Church, Virginia
Brafferton Center               Garrisonville, Virginia
The Village Shopping Center     Richmond, Virginia


<PAGE>