EXHIBIT 10.15
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                                 LOAN AGREEMENT

                          Dated as of October 21, 1998

                                     Between

                             180 N. LASALLE, L.L.C.

                                   as Borrower

                                       AND

                       THE CAPITAL COMPANY OF AMERICA LLC

                                    as Lender





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<PAGE>
                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

                                    SCHEDULES
                                    ---------

Schedule 1    -    Matters Regarding Representations
Schedule 2    -    Rent Roll
Schedule 3    -    Required Repairs


                                    EXHIBITS
                                    --------

Exhibit A     -    Form of Guaranty
Exhibit B     -    Form of Note

Exhibit C     -    List of Property Loan Documents
Exhibit D     -    Form of Rate Lock Agreement

























































                                      -2-
<PAGE>
                                 LOAN AGREEMENT
                                 --------------

     LOAN AGREEMENT dated as of October 21, 1998 (the  "Agreement")  between 180
N.  LASALLE,  L.L.C.,  a limited  liability  company duly  organized and validly
existing  under the laws of the State of Delaware  ("Borrower")  and THE CAPITAL
COMPANY OF AMERICA LLC, a limited  liability company organized under the laws of
the State of Delaware  (together  with its  permitted  successors  and  assigns,
"Lender").

     All  capitalized  terms used herein shall have the respective  meanings set
forth in Section 1 hereof.

                              W I T N E S S E T H :
                              ---------------------

     WHEREAS, Borrower desires to obtain the Loan from Lender;

     WHEREAS, Lender is willing to make the Loan to Borrower,  subject to and in
accordance with the terms of this Agreement and the other Loan Documents;

                  NOW, THEREFORE,  in consideration of the making of the Loan by
Lender and the covenants,  agreements,  representations and warranties set forth
in this  Agreement,  the parties hereto hereby  covenant,  agree,  represent and
warrant as follows:

I.   DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     Section 1.1  DEFINITIONS.  For all  purposes of this  Agreement,  except as
otherwise  expressly required or unless the context clearly indicates a contrary
intent:

     "AFFILIATE" shall mean, as to any Person,  any other Person that,  directly
or  indirectly,  is in control of, is controlled  by or is under common  control
with such Person or is a director  or officer of such Person or of an  Affiliate
of such Person.

     "ALTA"  shall  mean  American  Land  Title  Association,  or any  successor
thereto.

     "APPROVED  CAPITAL  EXPENSES" shall mean Capital Expenses incurred by Owner
with respect to the Property which (i) are included in the Operating  Budget for
the Current Month for the Property  which has been approved by Lender,  (ii) are
not included in the Operating  Budget for the Current Month, but are entitled to
be  incurred  by Owner  under  the Cash  Collateral  Account  Agreement  without
Borrower's approval, or (iii) are approved by Lender.

     "APPROVED  OPERATING  EXPENSES" shall mean Operating  Expenses  incurred by
Owner with  respect to the  Property  which (i) are  included  in the  Operating
Budget for the Property for the Current Month which has been approved by Lender,
(ii) are not included in the approved  Operating Budget for the Property for the
Current  Month,  but are  entitled  to be  incurred  by  Owner  under  the  Cash
Collateral Account Agreement without Borrower's approval,  or (iii) are approved
by Lender.

     "ASSIGNMENT OF MANAGEMENT  FEES" shall mean,  with respect to the Property,
that certain first priority  Collateral  Assignment of Rights To Management Fees
and Security Agreement,  dated as of the date hereof, from Manager, as assignor,
to Lender,  as assignee,  assigning  to Lender as security for the Loan,  all of
Manager's  rights pursuant to receiving  payments of any kind or nature pursuant
to the Management Agreement  (including fees received pursuant thereto),  as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

     "ASSIGNMENT OF LOAN  DOCUMENTS"  shall mean,  with respect to the Property,
that certain first priority  Collateral  Assignment of Loan Documents and Pledge
Agreement dated as of the date hereof, from Borrower, as assignor, to Lender, as
assignee,  assigning  to Lender as  security  for the  Loan,  all of  Borrower's
interest  in and to the  Property  Loan  Documents,  as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

     "AWARD" shall have the meaning set forth in Section 7.1.3.

     "BORROWER" shall mean 180 N. LaSalle,  L.L.C.,  together with its permitted
successors and assigns.



                                      -3-
<PAGE>
     "BUSINESS  DAY"  shall mean any day other  than a  Saturday,  Sunday or any
other  day on which  national  banks in New  York or  Illinois  are not open for
business.

     "CAPITAL AMERICA" shall mean The Capital Company of America LLC.

     "CAPITAL  EXPENSES"  shall  mean  capital  expenditures  as  determined  in
accordance with GAAP.

     "CASH  COLLATERAL   ACCOUNT"  shall  mean  that  account   established  and
maintained pursuant to the Cash Collateral Account Agreement.

     "CASH  COLLATERAL  ACCOUNT  AGREEMENT"  shall  mean  that  certain  Account
Assignment, Security and Cash Collateral Agreement dated as of January 30, 1995,
as amended among Borrower (as assignee of Allstate Life Insurance Company),  and
LaSalle Lake Investors, one of the entities comprising Owner, as the same may be
amended,  restated,  replaced,  supplemented or otherwise  modified from time to
time.

     "CASH  COLLATERAL  ACCOUNT BANK" shall mean LaSalle  National  Bank, or any
successor approved by Lender.

     "CASUALTY/CONDEMNATION  PREPAYMENTS"  shall have the  meaning  set forth in
Section 2.3.2.

     "CLOSING DATE" shall mean the date of the funding of the Loan.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended,  and as it
may be further amended from time to time, any successor  statutes  thereto,  and
applicable U.S.  Department of Treasury  regulations  issued pursuant thereto in
temporary or final form.

     "CONDEMNATION" shall have the meaning set forth in Section 7.1.3.

     "CONDEMNATION  RESTORATION"  shall  have the  meaning  set forth in Section
7.1.3.

     "CONTROL"  shall  mean with  respect to any  Person  either  (i)  ownership
directly or through other  entities,  of more than 50% of all beneficial  equity
interest  in such Person or (ii) the power to direct the  management,  operation
and business of such Person.

     "CUSTODY  AGREEMENT" shall mean that certain Custody  Agreement dated as of
January 30, 1995,  among Borrower (as assignee of Allstate  Insurance  Company),
LaSalle  National  Bank,  and  LaSalle  Investors  as the same  may be  amended,
restated, replaced, supplemented or otherwise modified from time to time.

     "CURRENT  MONTH"  shall  mean,  as of the date of  determination,  the then
current calendar month.

     "DEBT"  shall  mean the  outstanding  principal  amount  set forth in,  and
evidenced by, the Note,  together with all interest  accrued and unpaid  thereon
and all other sums due to Lender in respect of the Loan,  including any sums due
under the Note, this Agreement, the Mortgage or in any other Loan Document.

     "DEBT CONSTANT" shall mean at any time the greater of (a) 9.23% and (b) the
Hypothetical Loan Constant.

     "DEBT SERVICE" shall mean,  with respect to any particular  period of time,
scheduled principal and interest payments under the Note.

     "DEBT SERVICE  COVERAGE RATIO" shall mean, as of any date, a ratio in which
(a)  the  numerator  is  the  Net  Operating  Income  for  the  12-month  period
immediately  preceding  such date and (b) the  denominator  is the Debt constant
multiplied by the  outstanding  principal  balance of the loan as of the date of
determination.

     "DEFAULT"  shall mean the  occurrence  of any event  hereunder or under any
other Loan Document  which,  but for the giving of notice or passage of time, or
both, would be an Event of Default.

     "DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum equal
to the lesser of (a) the maximum rate  permitted by  applicable  law or (b) five
percent (5%) above the Interest Rate.

     "DEVELOPMENT  BUDGET"  shall  mean  the   Construction/Development   Budget
delivered to and approved by Lender, as amended from time to time.

                                      -4-
<PAGE>
     "EXCHANGE ACT" shall have the meaning set forth in Section 9.2(a).

     "EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1.

     "FISCAL  YEAR" shall mean each twelve month period  commencing on January 1
and ending on December 31 during each year of the term of the Loan.

     "GAAP" shall mean generally  accepted  accounting  principles in the United
States of America as of the date of the applicable financial report.

     "GOVERNMENTAL  AUTHORITY" shall mean any court, board, agency,  commission,
office or authority of any nature whatsoever for any governmental unit (federal,
state, county, district,  municipal, city or otherwise) whether now or hereafter
in existence having jurisdiction over Borrower or the Property.

     "GUARANTOR" shall mean Prime Group Realty, L.P.

     "GUARANTY" shall mean the Guaranty from Guarantor in the form of Exhibit A.

     "HYPOTHETICAL   LOAN  CONSTANT"  shall  mean  the  mortgage  loan  constant
calculated using a 360-month amortization schedule and an interest rate equal to
the sum of the Treasury Rate plus 2.00%.

     "IMPROVEMENTS" shall mean the improvements located on the Property.

     "including" shall mean "including, without limitation".

     "INDEMNIFIED  LIABILITIES"  shall  have the  meaning  set forth in  Section
10.13(b).

     "INDEPENDENT DIRECTOR" shall have the meaning set forth in Section 4.1(dd).

     "INSURANCE PREMIUMS" shall have the meaning set forth in Section 7.1.1.

     "INSURANCE  PROCEEDS" means the proceeds of any insurance  policies carried
pursuant to the Loan Documents or otherwise with respect to the Property.

     "INSURED CASUALTY" shall have the meaning specified in Section 7.1.1(d).

     "INTEREST RATE" shall mean the rate of interest determined in accordance
with terms of the Note.

     "LEASE" shall mean any lease, sublease or sub-sublease,  letting,  license,
concession  or other  agreement  (whether  written  or oral and  whether  now or
hereafter  in  effect)  pursuant  to which any  Person is  granted a  possessory
interest  in, or right to use or occupy  all or any  portion of any space in the
Property, and every modification,  amendment or other agreement relating to such
lease,  sublease,  sub-sublease,  or other agreement  entered into in connection
with such lease, sublease,  sub-sublease, or other agreement and every guarantee
of the performance and observance of the covenants, conditions and agreements to
be performed and observed by the other party thereto.

     "LEGAL REQUIREMENTS" shall mean, with respect to the Property, all federal,
state, county,  municipal and other governmental statutes,  laws, rules, orders,
regulations,  ordinances,  judgments,  decrees and  injunctions of  Governmental
Authorities affecting the Property or any part thereof or the construction, use,
alteration or operation thereof,  or any part thereof,  whether now or hereafter
enacted  and  in  force,  and  all  permits,  licenses  and  authorizations  and
regulations  relating thereto, and all covenants,  agreements,  restrictions and
encumbrances  contained  in any  instruments,  either  of  record  or  known  to
Borrower,  at any time in force  affecting  the  Property  or any part  thereof,
including any which may (i) require repairs,  modifications or alterations in or
to the  Property  or any  part  thereof  or (ii) in any  way  limit  the use and
enjoyment thereof.

     "LENDER" shall mean The Capital  Company of America LLC,  together with its
successors and assigns.

     "LIABILITIES" shall have the meaning set forth in Section 9.2(b).

     "LICENSES" shall have the meaning set forth in Section 4.1(w).

     "LIEN" shall mean,  with respect to the  Property,  any  mortgage,  deed of
trust, lien, pledge, hypothecation,  assignment, security interest, or any other
encumbrance,  charge or transfer  of, on or  affecting  the Property or Property
Loan or any portion thereof or Borrower, including any conditional sale or other


                                      -5-
<PAGE>
title retention  agreement,  any financing lease having  substantially  the same
economic effect as any of the foregoing,  the filing of any financing statement,
and mechanic's, materialmen's and other similar liens and encumbrances.

     "LOAN"  shall mean the loan made to Borrower by Lender  pursuant  hereto in
the original principal amount of $20,000,000.00  subject to possible increase as
provided in Section 2.7 to an amount no greater than  $45,000,000  and evidenced
by the Note and secured by the other Loan Documents.

     "LOAN DOCUMENTS" shall mean,  collectively,  this Agreement,  the Note, the
Assignment of Loan  Documents,  the Assignment of Management  Fees, the Guaranty
and all other  documents,  agreements and  instruments  evidencing,  securing or
delivered to Lender in connection with the Loan.

     "MANAGEMENT  AGREEMENT"  shall  mean,  with  respect  to  the  Property,  a
management agreement entered into by and between Owner and the Manager, pursuant
to which the Manager is to provide management and other services with respect to
the Property, as the same may be amended, restated, replaced,  supplemented,  or
otherwise modified from time to time.

     "MANAGEMENT  FEE" shall mean the fee  payable  to Manager  pursuant  to the
Management Agreement.

     "MANAGER"  shall  mean  Prime  Group  Realty  Services,  Inc.,  a  Maryland
corporation, or Prime Group Realty, L.P.

     "MATURITY DATE" shall mean the date on which the final payment of principal
of the Note becomes due and payable as therein  provided,  whether at the Stated
Maturity Date by declaration of acceleration, or otherwise.

     "MORTGAGE" shall mean that certain first priority  Mortgage,  Assignment of
Leases and Rents,  Security  Agreement  and  Financing  Statement  executed  and
delivered by Owner and  encumbering  the  Property,  as the same may be amended,
restated, replaced,  supplemented,  consolidated or otherwise modified from time
to time, which is collaterally  assigned to Lender pursuant to the Assignment of
Loan Documents.

     "NET OPERATING INCOME" shall mean, for any period,  the difference  between
all Operating  Income during such period,  minus all Operating  Expenses  during
such period.  Net Operating  Income shall be audited,  or shall be determined in
accordance with agreed-upon procedures determined by Lender.

     "NOTE" shall mean that certain Note of even date herewith, made by Borrower
in favor of Lender,  substantially  in the form of Exhibit B annexed hereto,  as
the same may be  amended,  restated,  replaced,  supplemented,  consolidated  or
otherwise modified from time to time.

     "OFFICERS'  CERTIFICATE"  shall mean a  certificate  delivered to Lender by
Borrower which is signed by a senior executive officer of Borrower.

     "OPERATING  BUDGET" shall mean the budget for the Property delivered to and
approved by Lender, as amended from time to time.

     "OPERATING  EXPENSES" shall mean, as to any period,  all operating expenses
relating to the Property during such period, including the following items:

     (i) all expenses for the  operation  of the Property  including  management
fees in  respect  thereof,  all  insurance  premiums  and  expenses,  accounting
expenses,  advertising  expenses,  expenses  for  architectural  services,  bank
charges, utility charges, expenses for extermination, cleaning and trash removal
services,  expenses  relating  to  window  washing,   landscaping  and  security
services,  reasonable and necessary  legal expenses  incurred in connection with
the operation of the Property, tenant improvements and marketing costs;

     (ii)  impositions,  water  charges,  property and real estate taxes,  sewer
rents,  other than fines,  penalties,  interest on such impositions (or portions
thereof) that are payable by reason of  Borrower's  failure to pay an imposition
timely;

     (iii) the cost of routine  interior and exterior  maintenance,  repairs and
minor alterations, the cost of which can be expensed under GAAP; and

     (iv) wages,  benefits,  payroll taxes,  uniforms and other related expenses
for employees of Borrower of its Affiliates to the extent engaged in the repair,
operation, or maintenance of the Property.



                                      -6-
<PAGE>
Operating  Expenses will not include debt service,  capital  expenses,  non-cash
items such as  depreciation  and  amortization  and any  extraordinary  one-time
expenditures not considered operating expenses under GAAP.

     "OPERATING  INCOME"  shall  mean,  as to any period,  all regular  on-going
revenues  received  by Owner from the  operation  of the  Property  during  such
period,  including  (i)  Rents  and (ii) all  other  amounts  received  which in
accordance  with GAAP are  required  to be or are  included  in  Owner's  annual
financial  statements  as  operating  income  of the  Property;  provided,  that
Operating Income will not include (1) income from non-recurring  income sources;
(2) advance  Rents or other  payments;  (3) deposits or escrows;  (4) any income
otherwise  includable  in  Operating  Income  but  paid to a Person  other  than
Borrower;  (5) proceeds of Casualty  insurance or  Condemnation  Awards;  or (6)
income from a sale, financing or other capital transaction.

     "OTHER  CHARGES"  shall  mean  all  ground  rents,   maintenance   charges,
impositions other than Taxes, and any other charges, including vault charges and
license  fees for the use of vaults,  chutes and  similar  areas  adjoining  the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof.

     "OWNER" shall mean collectively or individually as the context may require,
the owners of fee title to the  Property,  the  lessee's  interest in any ground
lease of the  Property,  and to the extent any of the foregoing are land trusts,
the beneficiaries thereof.

     "PAYMENT  DATE" shall mean the eleventh  (11th) day of each calendar  month
or, if in any month the  eleventh  (11th)  day is not a Business  Day,  then the
Payment Date for such month shall be the first Business Day thereafter.

     "PERMITTED   ENCUMBRANCES"  shall  mean,  with  respect  to  the  Property,
collectively,  (i) the Liens and security interests created by the Property Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance  Policy relating to the Property or any part thereof,  (iii) Liens, if
any, for Taxes or Other Charges not yet payable or delinquent or which are being
protested in accordance with the provisions of Section  5.1(b),  (iv) such other
title and survey  exceptions as Lender has approved or may approve in writing in
Lender's  sole  discretion,  or are hereafter  created in  accordance  with this
Agreement  or the Mortgage  and (v) Liens which  attach in  accordance  with the
provisions of Section 6.1(b).

     "PERMITTED INDEBTEDNESS" shall mean the Debt.

     "PERMITTED INVESTMENTS" shall mean investments permitted under the terms of
the Cash Collateral Account Agreement.

     "PERSON"  shall  mean  any  individual,  corporation,   partnership,  joint
venture, estate, trust, unincorporated  association,  any federal, state, county
or municipal  government  or any bureau,  department  or agency  thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.

     "POLICIES" shall have the meaning specified in Section 7.1.1(c).

     "POOLING  AND  SERVICING  AGREEMENT"  shall  mean the  Servicing  Agreement
entered  into with the Servicer in  connection  with any  Securitization  of the
Loan.

     "PROPERTY" shall mean that certain parcel of real property and improvements
thereon owned by Owner and encumbered by the Property Loan  Documents,  together
with all rights pertaining to such property and  improvements,  and known as 180
N. LaSalle Street, Chicago, Illinois.

     "PROPERTY  LOAN" shall mean that certain loan  evidenced and secured by the
Property Loan Documents.

     "PROPERTY LOAN DOCUMENTS" shall mean the documents  evidencing and securing
a loan to Owner as described on Exhibit C hereto.

     "PROPERTY  VALUE"  shall mean the lesser of (A) the most  recent  appraised
value of the Property determined by an appraisal  satisfactory to Lender and (B)
Net Operating Income of the trailing twelve month period divided by 10%.

     "PROVIDED INFORMATION" shall have the meaning set forth in Section 9.1.





                                      -7-
<PAGE>
     "QUALIFIED  SURVEy"  shall mean a current  title  survey,  certified to the
title company and Lender and their  successors and assigns,  that (A) is in form
and content reasonably satisfactory to Lender, (B) is prepared by a professional
and properly  licensed land surveyor  satisfactory  to Lender in accordance with
the 1997 Minimum Standard Detail  Requirements for ALTA/ACSM Land Title Surveys,
(C) meets the  classification  of an "Urban  Survey" and includes the  following
additional  items  from  the  list  of  "Optional  Survey  Responsibilities  and
Specifications"  (Table  A): 1, 2, 3, 4, 5, 6,  7a-b,  8, 9, 10, 11 and 13,  (D)
reflects  the same legal  description  contained in the Title  Insurance  Policy
relating to the Property, and (E) contains a certification in form and substance
reasonably acceptable to Lender.

     "QUALIFIED  TITLE  INSURANCE  POLICY" shall mean a Title  Insurance  Policy
issued by First  American  Title  Insurance  Company  or another  title  company
acceptable to Lender,  with reinsurance and direct access agreements  acceptable
to Lender, which Title Insurance Policy shall (A) provide coverage in the amount
of the Loan,  (B) insure  Lender that the  Mortgage  creates a valid lien on the
Property  encumbered  thereby of the requisite  priority,  free and clear of all
exceptions  from  coverage  other  than  Permitted   Encumbrances  and  standard
exceptions  and  exclusions  from  coverage  (as  modified  by the  terms of any
endorsements), (C) contain such endorsements and affirmative coverages as Lender
may reasonably request, (D) name Lender as the insured and (E) be assignable.

     "RATING  AGENCY"  shall mean each of  Standard & Poor's  Ratings  Group,  a
division of McGraw-Hill,  Inc., Moody's Investors  Service,  Inc., Duff & Phelps
Credit   Rating   Co.  and  Fitch   Investors   Service,   Inc.   or  any  other
nationally-recognized  statistical  rating  agency  which has been  approved  by
Lender.

     "REGISTRATION  STATEMENT"  shall  have the  meaning  set  forth in  Section
9.2(b).

     "RENTS"  shall  mean,  with  respect  to  the  Property,  all  rents,  rent
equivalents,  moneys payable as damages or in lieu of rent or rent  equivalents,
royalties  (including  all oil and gas or other mineral  royalties and bonuses),
income, receivables,  receipts,  revenues, deposits (including security, utility
and other  deposits),  accounts,  cash,  issues,  profits,  charges for services
rendered, and other consideration of whatever form or nature received by or paid
to or for the account of or benefit of Owner or its agents or employees from any
and all sources  arising from or  attributable  to the  Property,  including all
receivables,  customer  obligations,  installment  payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease,  license,  concession  or  other  grant  of the  right  of the use and
occupancy of the Property and proceeds,  if any, from business  interruption  or
other loss of income insurance.

     "RENT ROLL" shall have the meaning set forth in Section 4.1(aa).

     "REQUIRED RECORDS" shall have the meaning set forth in Section 5.1(k).

     "RESIZING  DATE" shall mean each March 11 and September  11,  commencing on
March 11, 2000.

     "RESTORATION" shall have the meaning set forth in Section 7.1.2(b).

     "SPE MEMBER" shall have the meaning set forth in Section 4.1(dd).

     "SECONDARY MARKET  TRANSACTION"  shall mean any transaction in which Lender
(i)  sells  the  Loan,  the Note and the  other  Loan  Documents  to one or more
investors as a whole loan, (ii)  participates the Loan to one or more investors,
(iii) deposits the Loan, the Mortgage,  the Note and other Loan Documents with a
trust,  which trust may sell  certificates to investors  evidencing an ownership
interest  in the trust  assets or (iv)  otherwise  sells the Loan or an interest
therein to investors.

     "SECURITIES" shall have the meaning set forth in Section 9.1.

     "SECURITIES ACT" shall have the meaning set forth in Section 9.2(a).

     "SECURITIZATION" shall have the meaning set forth in Section 9.1.

     "SECURITY   AGREEMENT"   shall  have  the  meaning  set  forth  in  Section
2.3.3(vii).

     "SERVICER" shall mean the entity appointed by Lender to service the Loan or
its successor in interest, or if any successor servicer is appointed pursuant to
the Pooling and Servicing Agreement, such successor servicer.

                                      -8-
<PAGE>
     "STATE" shall mean the State of Illinois.

     "STATED  MATURITY DATE" shall mean November 11, 2001,  subject to extension
in accordance with Section 2.3.2.

     "SUBORDINATION  AGREEMENT" shall mean  collectively,  all of the agreements
entered  into in  connection  with  subordinating  the  Subordinate  Loan to the
Property Loan.

     "SUBORDINATE  PROPERTY  LOAN"  shall  mean  the  loan  secured  by a second
mortgage on the Property.

     "SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.3.3(c).

     "SURVEY"  shall mean a survey of the  Property  in  question  prepared by a
surveyor  licensed  in the State and  satisfactory  to Lender and the company or
companies issuing the Title Insurance  Policies,  and containing a certification
of such surveyor satisfactory to Lender.

     "TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in Section
7.3.1.

     "TAXES"   shall  mean  all  real  estate  and  personal   property   taxes,
assessments,  water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.

     "TERM"  shall mean the entire term of this  Agreement,  which shall  expire
upon  repayment  in full of the  Debt  and full  performance  of each and  every
obligation to be performed by Borrower pursuant to the Loan Documents.

     "TITLE INSURANCE POLICY" shall mean, with respect to the Property, the ALTA
mortgagee title insurance  policy in the form (acceptable to Lender) issued with
respect to the Property and  insuring the lien of the Mortgage  encumbering  the
Property.

     "TRANSFER" shall have the meaning set forth in Section 6.1(j).

     "TREASURY RATE" shall mean, at any time of determination,  the yield on the
bid price appear on such date on Telerate  page 500 for the second most recently
issued 10-year, non-callable U.S. Treasury security or, if there is no such U.S.
Treasury security,  the then prevailing yield on the U.S. Treasury security then
being used by Lender to price 10-year fixed rate mortgage loans.

     "UCC" or "UNIFORM  COMMERCIAL CODE" shall mean the Uniform  Commercial Code
as in effect in the State.

     "UNDERWRITER GROUP" shall have the meaning set forth in Section 9.2(b).

     "UNDERWRITTEN NET OPERATING INCOME" for the 12-month period ending with the
most recently completed calendar month, all Operating Income minus all Operating
Expenses  during  such  period,  as  determined  by Lender;  provided  that,  in
determining  Underwritten  Net Operating  Income,  adjustments  shall be made to
reflect  market and  submarket  occupancy  and other  factors  determined  to be
relevant by Lender,  including the following  adjustments:  (i) Operating Income
will be  adjusted  (A) to include  only Rents  based on such  trailing  12 month
period plus credit (as determined by Lender) for  investment  grade credit rated
tenants and other  tenants  approved by Lender which have been in occupancy  for
less  than one year;  (B) to  exclude  Rents  from  temporary  or month to month
tenants; provided, however, that such income will be included only to the extent
it is determined by Lender to be both  stabilized and recurring,  but only in an
amount not to exceed a maximum of 50% of such Rent collected in such trailing 12
month  period;  (C) to exclude  Rents from tenants  operating  under  bankruptcy
protection;  (D) to mark any above market Leases to market rents; (E) to reflect
any  Rent   adjustments  or   cancellation   option  in  any  Leases;   (F)  for
reimbursements  (not in excess of  corresponding  expense  items)  based on such
trailing  12 month  period to the  extent it is  determined  by  Lender,  in its
discretion,  to be both stabilized and recurring; (G) to include other income on
a  case-by-case  basis but only to the extent it is  determined  by Lender to be
both  stabilized and recurring and (H) a vacancy and credit loss allowance equal
to the greater of: (1) actual  historical  vacancy and/or credit loss (2) 10% of
underwritten  gross revenues and (3) market vacancy  allowances as determined by
Lender.  (ii) Operating Expenses will be adjusted to reflect (A) the greater of:
(1) the actual  expenses for such  trailing 12 month period  (except real estate
taxes and  insurance,  which will be  included  at their  stabilized,  recurring
levels),  (2) the average  actual annual  expenses over the past three years but
excluding any  non-recurring  items Capital  Expenses;  and (3) projected annual


                                      -9-
<PAGE>
expenses based on then current occupancy levels; (B) a normalized  allowance for
costs  of free  rent,  downtime,  tenant  improvement  and  leasing  commissions
pursuant to Lender's  standard  underwriting  assumptions and other  assumptions
based on market  information  as determined by Lender during its due  diligence,
without  duplication  for costs deducted under other sections of this definition
and subject to a minimum of $1.25 per occupied  square  foot;  (C) a reserve for
Capital  Expenses  equal to at least $0.25 per square foot of rentable space per
annum (or such higher  amount as is  recommended  in a  third-party  engineering
report);  (D) a management  fee equal to the greater of the Management Fee or 5%
of total  revenues;  and (E) other  adjustments  as  determined by Lender in its
discretion  consistent  with its due diligence  findings and  prevailing  market
conditions.  In determining  Underwritten  Net Operating  Income,  all pro forma
adjustments  to  revenue  and  expenses  shall  be  approved  by  Lender  in its
discretion and shall be subject to Lender's full due diligence.

     "U.S. OBLIGATION" shall mean direct non-callable  obligations of the United
States of America.

     Section  1.2  PRINCIPLES  OF  CONSTRUCTION.  All  references  to  sections,
schedules  and exhibits are to  sections,  schedules  and exhibits in or to this
Agreement unless otherwise  specified.  Unless  otherwise  specified,  the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement  shall refer to this  Agreement  as a whole and not to any  particular
provision of this Agreement. Unless otherwise specified, all meanings attributed
to defined  terms  herein shall be equally  applicable  to both the singular and
plural  forms of the terms so defined.  All  accounting  terms not  specifically
defined herein shall be construed in accordance with GAAP, as modified herein.

II.  GENERAL

     Section 2.1 THE LOAN.

     2.1.1  COMMITMENT.  Subject to and upon the terms and  conditions set forth
herein,  including the  conditions  precedent  set forth in Section 3.1,  Lender
hereby agrees to make the Loan to Borrower on the Closing Date, in the aggregate
original  principal  amount set forth in the Note and which Loan shall mature on
the  Stated  Maturity  Date.  Borrower  hereby  agrees to accept the Loan on the
Closing Date, subject to and upon the terms and conditions set forth herein.

     2.1.2  DISBURSEMENT TO BORROWER.  Borrower may request and receive only one
borrowing  hereunder  in  respect  of the Loan,  except to the  extent  Borrower
qualifies for additional  disbursements  pursuant to Section 2.7. Borrower shall
receive the Loan upon the Closing, subject to the direction given by Borrower as
to the application of Loan proceeds for the uses set forth in Section 2.1.4. Any
amount  borrowed  and  repaid  hereunder  in  respect  of the  Loan  may  not be
reborrowed.

     2.1.3 THE NOTE.  The Loan shall be evidenced by the Note,  in the aggregate
original  principal amount of the Loan. The Note shall bear interest as provided
therein.  The Note shall be subject to  repayment  as provided  in Section  2.3,
shall be entitled to the benefits of this  Agreement and shall be secured by the
Mortgage and the other Loan Documents.

     2.1.4 USE OF PROCEEDS OF LOAN.  Borrower shall use the proceeds of the Loan
(i) to pay costs and  expenses  incurred in  connection  with the Closing of the
Loan, as approved by Lender and (ii) with respect to the  remainder,  if any, as
Borrower directs.

     Section 2.2 INTEREST; MONTHLY PAYMENTS.

     2.2.1 GENERALLY.  Borrower shall pay interest on the outstanding  principal
balance of the Loan in accordance with the terms of the Note.

     2.2.2 DEFAULT RATE.  After the occurrence and during the  continuance of an
Event of Default,  the entire  outstanding  principal  balance of the Loan shall
bear interest at the Default Rate, and shall be payable upon demand from time to
time, to the extent  permitted by applicable  law.  Payment or acceptance of the
increased rates provided for in this  subsection is not a permitted  alternative
to timely  payment and shall not  constitute a waiver of any Default or Event of
Default or an amendment to this  Agreement or any other Loan  Document and shall
not otherwise prejudice or limit any rights or remedies of Lender.

     Section 2.3 LOAN REPAYMENT.





                                      -10-
<PAGE>
     2.3.1  REPAYMENT  AND  EXIT  FEE.  Borrower  shall  repay  any  outstanding
principal  indebtedness  of the Loan in full on the  Maturity  Date of the Loan,
together  with  interest  thereon  to (but  excluding)  the  date of  repayment.
Borrower  shall have the right to prepay all or any portion of Loan at any time.
Any repayment of the Loan  (whether at maturity,  by  acceleration,  pursuant to
Section  2.7, or  otherwise)  shall be  accompanied  by a fee equal to 1% of any
principal portion of the Loan that is repaid prior to the date which is one year
from  the  date  hereof,  and 2% of any  portion  of the  Loan  that  is  repaid
thereafter,  unless such  repayment is from the proceeds of permanent  financing
provided by Lender.

     2.3.2 EXTENSION  OPTION.  The Stated Maturity may be extended for up to two
one-year periods, so long as for each extension: (i) Borrower provides notice to
Lender exercising such one year extension option no later than ninety days prior
to the then  current  Stated  Maturity,  (ii) no Default  exists at the time the
extension is exercised or the time the  extension  period  commences,  (iii) the
Debt Service Coverage Ratio is not less than 1.40:1 at the time the extension is
exercised  and at the  commencement  of the  extension  period,  (iv) no Default
exists under the terms of the Guaranty by the  Guarantor,  and (v) Borrower pays
an  extension  fee to  Lender  of 1% of the  then  outstanding  Loan  amount  in
connection with the first extension  period and .5% of the then outstanding Loan
amount for the second extension period.

     Section  2.4  RELEASE ON PAYMENT IN FULL.  Lender  shall,  upon the written
request and at the expense of Borrower,  upon  payment in full of all  principal
and  interest on the Loan and all other  amounts due and payable  under the Loan
Documents in  accordance  with the terms  thereof,  release the Lien of the Loan
Documents if not theretofore released.

     Section 2.5 PAYMENTS AND COMPUTATIONS.

     2.5.1 MAKING OF PAYMENTS.  Each payment by Borrower  hereunder or under the
Note  shall  be made in  funds  settled  through  the New  York  Clearing  House
Interbank  Payments  System or other funds  immediately  available  to Lender by
11:00 a.m.,  New York City time,  on the date such  payment is due, to Lender by
deposit to such account as Lender may  designate by written  notice to Borrower.
Whenever any payment  hereunder or under the Note shall be stated to be due on a
day  which is not a  Business  Day,  such  payment  shall  be made on the  first
Business Day thereafter.

     2.5.2  COMPUTATIONS.  Interest  payable  hereunder  or  under  the  Note by
Borrower  shall be computed on the basis of the actual number of days elapsed in
a 360-day year.

     2.5.3 LATE PAYMENT CHARGE. If any principal, interest or any other sums due
under the Loan Documents is not paid by Borrower on the date on which it is due,
Borrower  shall pay to Lender upon demand an amount  equal to the lesser of five
percent (5%) of such unpaid sum or the maximum  amount  permitted by  applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Loan Documents.

     Section 2.6 CASH MANAGEMENT ARRANGEMENTS.

     (a) All Rents (other than security  deposits) will be transmitted  directly
into an  account  maintained  by  Owner  but  pledged  to  Borrower  at the Cash
Collateral Account Bank pursuant to the Cash Collateral  Account Agreement.  All
other income or revenue  received by Borrower or Manager in connection  with the
Property  will be  deposited  into the Cash  Collateral  Account  on the date of
receipt.  Any amounts so deposited  into the Cash  Collateral  Account  shall be
applied  and  disbursed  in  accordance  with the terms and  provisions  of this
Agreement and the Cash Collateral Account Agreement.

     (b) Borrower  hereby assigns and pledges to Lender all of its right,  title
and interest in the Cash Collateral  Account Agreement and Custody Agreement and
agrees to notify the Cash Collateral Account Bank of Lender's interest, and that
the Lender shall be entitled to exercise all of Borrower's rights under the Cash
Collateral Account Agreement and Custody Agreement.

     (c) Anything  hereinabove in this Section to the contrary  notwithstanding,
from and after the occurrence and during the continuance of an Event of Default,
Lender shall be entitled to notify the Cash Collateral  Account Bank, subject to
the terms of the Cash Collateral Account Agreement,  to deliver, assign and sell
the Collateral (as defined in the Cash Collateral  Account  Agreement) to Lender
and such  proceeds  shall be applied to the payment of Debt  Service on the Loan
(including, if applicable,  interest at the Default Rate), required reserves and
Approved Operating Expenses and/or to the payment of the principal amount of the
Note, in such order as Lender shall determine in its sole discretion.
                                      -11-
<PAGE>
     Section 2.7  RESIZING.  As of each Resizing  Date,  Lender shall resize the
Loan based upon the following formula. The resized Loan Amount shall be equal to
(a)  Underwritten  Net Operating  Income divided by 1.4, divided by (b) the Debt
Constant.  Borrower,  at its sole cost and expense,  shall  promptly  provide to
Lender upon request all  documentation  and information  determined by Lender in
its sole  discretion  to be necessary to complete its  underwriting  analysis in
connection with the resizing of the Loan, including without limitation,  leases,
rent rolls,  property operating and financial  statements,  and such third party
reports and other  information  and  documents  determined by Lender in its sole
discretion to be necessary to assess the  condition,  operation and value of the
Property.  Borrower shall provide all such information not later than sixty days
prior to the  Resizing  Date.  If any  information  requested  by  Lender is not
provided, then Lender shall be entitled to make its own good faith judgment with
regard to the missing information when making its resizing determination. Lender
agrees to notify  Borrower as to the  Resizing  Amount  thirty days prior to the
Resizing  Date provided it has received the  requested  information  in a timely
fashion.  If the Resized Loan Amount is less than the then  current  outstanding
Loan amount,  Borrower shall repay such  difference on the Resizing Date. If the
resized Loan Amount is greater than the then outstanding  amount of the Loan, as
of any  Resizing  Date  occurring on March 11th,  then Lender  shall  advance to
Borrower on the  Resizing  Date upon  request made by Borrower no later than two
(2) business days prior to the Resizing Date,  the amount  requested by Borrower
for an additional  disbursement  of the Loan so long as (i) such amount does not
increase  the  outstanding  balance  of the Loan to an amount  greater  than the
Resized Loan Amount (or 85% of the outstanding principal balance of the Property
Loan, whichever is less), (ii) no Default has occurred and is continuing,  (iii)
all of Borrower's  representations  and warranties  contained  herein and in the
other Loan  Documents  shall be true and correct in all material  respects as of
the Resizing Date, (iv) the outstanding  principal  balance of the Property Loan
is not more than 70% of the Property  Value,  (v) Borrower  pays a fee to Lender
equal  to 1% of the  incremental  loan  proceeds  advanced,  and  (vi)  Borrower
delivers to Lender a  disbursement  request  that has been  consented to by Lake
Investors, LaSalle Land Partnership, L.P., and LaSalle Mayfair Joint Venture.

III. CONDITIONS PRECEDENT

     Section 3.1  CONDITIONS  PRECEDENT TO THE LOAN. The obligation of Lender to
make the Loan  hereunder is subject to the  fulfillment by Borrower or waiver by
Lender of the following conditions precedent no later than the Closing Date:

     (a)  REPRESENTATION  AND  WARRANTIES;   COMPLIANCE  WITH  CONDITIONS.   The
representations  and warranties of Borrower  contained in this Agreement and the
other Loan Documents  shall be true and correct in all material  respects on and
as of the  Closing  Date with the same effect as if made on and as of such date,
and no Default or Event of Default  shall have occurred and be  continuing;  and
Borrower  shall be in  compliance  in all material  respects  with all terms and
conditions  set forth in this  Agreement  and in each other Loan Document on its
part to be observed or performed.

     (b) LOAN  AGREEMENT  AND NOTE.  Lender  shall have  received a copy of this
Agreement and the Note,  in each case,  duly executed and delivered on behalf of
Borrower.

     (c) DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES.

          (i) Loan  Documents.  Lender shall have received  from Borrower  fully
executed and acknowledged counterparts of the Other Loan Documents.

          (ii) Title  Insurance.  Lender  shall have  received  an update of the
Qualified Title Insurance Policy for the Property Loan.

          (iii) Survey.  Lender shall have  received a Qualified  Survey for the
Property.

          (iv)  Insurance.  Lender shall have  received  valid  certificates  of
insurance  for the policies of insurance  required  hereunder,  satisfactory  to
Lender in its reasonable discretion, and evidence of the payment of all premiums
payable for the existing  policy  period which period shall not be less than one
year in advance.  Lender shall also have  received an  acknowledgement  from the
insurer of Lender's  collateral  assignment of the  Borrower's  right to receive
insurance  proceeds  and  make  decisions  in  connection  with  such  insurance
policies.

          (v) Environmental Reports. Lender shall have received an environmental
report in respect of the Property reasonably satisfactory to Lender.



                                      -12-
<PAGE>
          (vi) Zoning. With respect to the Property, Lender shall have received,
at  Lender's  option,  an ALTA 3.1 zoning  endorsement  for the Title  Insurance
Policy in substance reasonably satisfactory to Lender.

     (d) Related Documents. Each additional document not specifically referenced
herein, but relating to the transactions  contemplated  herein,  shall have been
duly authorized,  executed and delivered by all parties thereto and Lender shall
have received and approved certified copies thereof.

     (e) Delivery of  Organizational  Documents.  On or before the Closing Date,
Borrower  shall deliver or cause to be delivered to Lender (i) copies  certified
by Borrower of all organizational  documentation  related to Borrower and/or the
formation,  structure,  existence,  good  standing  and/or  qualification  to do
business,   as  Lender  may   reasonably   request,   including   good  standing
certificates,  qualifications  to do business in the appropriate  jurisdictions,
resolutions   authorizing   the  entering  into  of  the  Loan  and   incumbency
certificates as may be requested by Lender.

     (f) Opinions of Borrower's Counsel.  Lender shall have received opinions of
Borrower's  counsel  (i) with  respect to  non-consolidation,  true sale or true
contribution,  and  fraudulent  transfer  issues  and (ii) with  respect  to due
execution,  authority,  enforceability  of the Loan  Documents  and  such  other
matters as Lender may reasonably  require,  all such opinions in form, scope and
substance reasonably satisfactory to Lender and Lender's counsel.

     (g) Delivery of Property  Loan  Documents.  Lender shall have  received the
originals of the Property Loan Documents, endorsed or assigned in blank.

     (h) Basic  Carrying  Costs.  Borrower or Owner shall have paid or deposited
into an applicable  reserve fund all deposits  required pursuant to the terms of
the Property Loan Documents.

     (i) Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the  transactions  contemplated by this Agreement
and  other  Loan  Documents  and  all  documents  incidental  thereto  shall  be
satisfactory in form and substance to Lender, and Lender shall have received all
such  counterpart  originals or certified copies of such documents as Lender may
reasonably request.

     (j) Financial  Statements.  Lender shall have received financial statements
prepared in  accordance  with agreed upon  procedures  for the Property for such
periods as Lender may request.

     (k)  Leases,  Rent Roll and  Estoppel  Certificates.  Borrower  shall  have
provided Lender with original executed or certified copies of each of the Leases
in effect as of the date  hereof,  a current rent roll,  and  original  executed
copies of  estoppel  certificates  (or  confirmations  by the tenant of estoppel
certificates  previously  provided) in the form  previously  approved by Lender,
from those tenants as Lender may request.

     (l) Debt Service  Coverage Ratio.  The Debt Service Coverage Ratio shall be
at least 1.10 to 1.

     (m)  Appraisals.  Lender shall have  received an appraisal for the Property
satisfactory to Lender.

     (n)   Engineering   Reports.   Lender  shall  have  received  a  structural
engineering report,  reasonably acceptable to Lender,  identifying,  among other
things, (i) deferred  maintenance for the Property and the cost thereof and (ii)
a ten (10) year schedule of anticipated  capital  expenditures and the per annum
cost thereof.

     (o)  Utility  Service and Tax  Assessment.  Borrower  shall have  delivered
evidence that all utility  services  required for the Property are available and
that the Property is subject to separate tax assessment.

     (p) Absence of Adverse  Changes.  Lender shall have  determined  that there
have been no material  developments  prior to the Closing Date which  could,  in
Lender's sole  judgment,  adversely  affect the operation of the Property or the
ability of  Borrower to repay the Loan or the ability of Borrower to perform any
of its covenants and  agreements  set forth in this Agreement and the other Loan
Documents.

     (q) Fee.  Lender shall have received a structuring  fee in the amount of 1%
of the principal amount of the Loan disbursed.



                                      -13-
<PAGE>
IV.  REPRESENTATIONS AND WARRANTIES

     Section  4.1  BORROWER   REPRESENTATIONS   CONCERNING   BORROWER  AND  LOAN
DOCUMENTS.  Borrower represents and warrants as of the date hereof and as of the
Closing Date that:

     (a) Organization.  Borrower has been duly organized and is validly existing
and in  good  standing  with  requisite  limited  liability  company  power  and
authority to own its  properties  and to transact the  businesses in which it is
now engaged.  Borrower is duly  qualified to do business and is in good standing
in each jurisdiction  where it is required to be so qualified in connection with
its  properties,  businesses  and  operations.  Borrower  possesses  all rights,
licenses,  permits and authorizations,  governmental or otherwise,  necessary to
entitle it to own its  properties  and to transact the businesses in which it is
now engaged  (other than those which the failure to have would not reasonably be
expected to have a material adverse effect on the Borrower,  the Property or the
Loan), and the sole business of Borrower is the ownership of the Property Loan.

     (b)  Proceedings.  Borrower has taken all necessary action to authorize the
execution,  delivery  and  performance  of this  Agreement  and the  other  Loan
Documents.  This Agreement and such other Loan Documents have been duly executed
and  delivered  by or on behalf of  Borrower  and  constitute  legal,  valid and
binding obligations of Borrower  enforceable against Borrower in accordance with
their respective terms, subject to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and subject, as to enforceability,
to general principles of equity (regardless of whether  enforcement is sought in
a proceeding in equity or at law).

     (c) No Conflicts. The execution, delivery and performance of this Agreement
and the other Loan  Documents by Borrower  will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default  under,  or
result in the creation or imposition of any lien,  charge or encumbrance  (other
than  pursuant  to the Loan  Documents)  upon any of the  property  or assets of
Borrower pursuant to the terms of any indenture,  mortgage,  deed of trust, loan
agreement,  partnership  agreement  or other  agreement or  instrument  to which
Borrower is a party or by which  Borrower's  property or assets is subject,  nor
will such action result in any violation of the provisions of any statute or any
order,  rule or  regulation of any court or  governmental  agency or body having
jurisdiction  over Borrower or any of its  properties or assets (other than such
actions  described  herein  which  would not  reasonably  be  expected to have a
material  adverse effect on the Borrower,  the Property,  or the Loan),  and any
consent,  approval,  authorization,  order,  registration or qualification of or
with any court or any such regulatory  authority or other governmental agency or
body required for the  execution,  delivery and  performance  by any Borrower of
this  Agreement  or any other Loan  Documents  has been  obtained and is in full
force and effect.

     (d)  Litigation.  There are no actions,  suits or  proceedings at law or in
equity by or before any  Governmental  Authority  or other agency now pending or
threatened against or affecting Borrower,  which actions,  suits or proceedings,
if  determined  against  Borrower  or the  Property,  is  reasonably  likely  to
materially  adversely affect the condition  (financial or otherwise) or business
of Borrower.

     (e)  Agreements.  Borrower is not a party to any agreement or instrument or
subject to any  restriction  which would  reasonably  be expected to  materially
adversely  affect  Borrower,  or  Borrower's  business,  properties  or  assets,
operations or condition,  financial or otherwise.  Borrower is not in default in
any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party or by which it or the Property is bound.

     (f) No Bankruptcy Filing.  Borrower is not contemplating  either the filing
of a petition by it under any state or federal  bankruptcy or insolvency laws or
the  liquidation  of all or a major  portion  of its  assets  or  property,  and
Borrower  has no knowledge  of any Person  contemplating  the filing of any such
petition against it.

     (g) Full and Accurate  Disclosure.  To Borrower's knowledge no statement of
fact made by Borrower in this  Agreement  or in any of the other Loan  Documents
contains any untrue  statement of a material fact or omits to state any material
fact necessary to make  statements  contained  herein or therein not misleading.
There is no  material  fact  presently  known  to  Borrower  which  has not been
disclosed to Lender which adversely affects, nor as far as Borrower can foresee,
might materially  adversely affect, the Property or the business,  operations or
condition (financial or otherwise) of Borrower.


                                      -14-
<PAGE>
     (h) No Plan Assets.  Borrower is not an "employee benefit plan," as defined
in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of
Borrower  constitutes or will constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3-101.

     (i) Financial Information.  All financial data, including the statements of
cash flow and income and operating  expense,  that have been delivered to Lender
by Borrower in respect of the Property (i) are true, complete and correct in all
material  respects,  (ii)  accurately  represent the financial  condition of the
Property as of the date of such  reports and (iii) to the extent  prepared by an
independent  certified public  accounting firm, have been prepared in accordance
with  GAAP  consistently  applied  throughout  the  periods  covered,  except as
disclosed  therein.  Borrower has no  contingent  liabilities,  liabilities  for
taxes,  unusual  forward or long-term  commitments  or unrealized or anticipated
losses  from  any  unfavorable  commitments  that  are  known  to  Borrower  and
reasonably  likely to have a  materially  adverse  effect on the Property or the
operation  thereof,  except  as  referred  to or  reflected  in  said  financial
statements.  Since  the date of such  financial  statements,  there  has been no
materially adverse change in the financial condition,  operations or business of
Borrower from that set forth in said financial statements.

     (j) Federal Reserve  Regulations.  No part of the proceeds of the Loan will
be used for the purpose of purchasing or acquiring any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal  Reserve System
or for any other purpose which would be  inconsistent  with such Regulation U or
any other Regulations of such Board of Governors, or for any purposes prohibited
by Legal  Requirements  or by the terms and  conditions of this Agreement or the
other Loan Documents.

     (k) Not a Foreign  Person.  Borrower is not a "foreign  person"  within the
meaning ofss.1445(f)(3) of the Code.

     (l)  Enforceability.  The Loan  Documents  are not  subject to any right of
rescission,  set-off, counterclaim or defense by Borrower, including the defense
of usury,  nor would the exercise of any of the terms of the Loan Documents,  or
the exercise of any right thereunder,  render the Loan Documents  unenforceable,
and Borrower has not asserted any right of rescission,  set-off, counterclaim or
defense with respect thereto.

     (m)  Single-Purpose.  Borrower  hereby  represents  and  warrants  to,  and
covenants  with,  Lender that,  as of the date hereof and until such time as the
Debt shall be paid in full:

          (i)  Borrower  does not and will not own any asset or  property  other
than (A) the Property Loan and (B) incidental  personal  property  necessary for
the ownership or operation of the Property Loan.

          (ii) Borrower will not engage in any business other than the ownership
of the Property Loan and will in all material  respects  conduct and operate its
business as presently conducted and operated.

          (iii)  Borrower will not enter into any contract or agreement with any
of its  Affiliates  or  constituent  parties,  Guarantor or any Affiliate of any
constituent  party or  Guarantor,  except  upon  terms and  conditions  that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than any such party.

          (iv)  Borrower  has not  incurred,  and Borrower  will not incur,  any
indebtedness,  secured or unsecured,  direct or indirect, absolute or contingent
(including guaranteeing any obligation),  other than the Permitted Indebtedness.
Except as set forth in the immediately preceding sentence, no indebtedness other
than the Debt may be secured (subordinate or pari passu) by the Property Loan.

          (v)  Borrower  has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party,  Guarantor or any
Affiliate of any constituent  party or Guarantor),  except for advances approved
by Lender to pay  redevelopment  costs in connection  with the Property that are
secured by the Property Loan Documents.

          (vi)  Borrower is and will  remain  solvent and will pay its debts and
liabilities  (including employment and overhead expenses) from its assets as the
same shall become due.

          (vii)  Borrower  has done or caused to be done and will do all  things
necessary  to  observe  corporate,  partnership,  or limited  liability  company
formalities, as the case may be, and preserve its existence.


                                      -15-
<PAGE>
          (viii) Borrower will not permit any constituent party or Guarantor to,
amend,  modify or  otherwise  change the  partnership  certificate,  partnership
agreement,  articles of incorporation and bylaws, trust,  operating agreement or
other  organizational  documents  of  Borrower  or  such  constituent  party  or
Guarantor in a manner which would  adversely  affect  Borrower's  existence as a
single purpose entity.

          (ix)  Borrower  will  maintain  books and  records  and bank  accounts
separate from those of its  Affiliates  and any  constituent  party and Borrower
will file its own tax returns.

          (x)  Borrower  will be, and at all times  will hold  itself out to the
public as, a legal entity separate and distinct from any other entity (including
any  Affiliate,  any  constituent  party,  Guarantor  or  any  Affiliate  of any
constituent  party or  Guarantor),  shall  conduct  business in its own name and
shall maintain and utilize separate stationery, invoices and checks.

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

          (xii)  Neither  Borrower  nor any  constituent  party  will  seek  the
dissolution or winding up, in whole or in part, of Borrower.

          (xiii)  Borrower  will not  commingle  its funds and other assets with
those of any Affiliate or constituent party,  Guarantor, or any Affiliate of any
constituent party or Guarantor, or any other person.

          (xiv)  Borrower has and will maintain its assets in such a manner that
it will not be costly or  difficult  to  segregate,  ascertain  or identify  its
individual assets from those of any Affiliate or constituent  party,  Guarantor,
or any Affiliate of any constituent party or Guarantor, or any other Person.

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

          (xvi)  Borrower  shall at all times have one member (the "SPE Member")
who is a "single  purpose entity" and shall at all times comply with each of the
representations,  warranties,  and covenants contained in this Section 4.1 as if
such representation, warranty or covenant was made directly by such SPE Member.

          (xvii) The charter of the SPE Member shall at all times  have at least
one duly appointed member of its board of directors (an "Independent  Director")
reasonably  satisfactory  to Lender  who shall not have been at the time of such
individual's appointment, and may not have been at any time during the preceding
five (5) years (i) a member of, or an officer or employee of, Borrower or any of
its shareholders,  subsidiaries or Affiliates (except as an Independent Director
on any of their boards of directors),  (ii) a customer, or supplier, Borrower or
any of  its  members,  subsidiaries  or  Affiliates  (except  as an  Independent
Director on any of their  boards of  directors),  (iii) a person or other entity
controlling  any such  member,  supplier  or  customer  or (iv) a member  of the
immediate  family  of any  such  shareholder,  officer,  employee,  supplier  or
customer  of any other  director  of the SPE Member.  As used  herein,  the term
"control" means the possession,  directly or indirectly,  of the power to direct
or cause the  direction  of the  management  and policies of a person or entity,
whether through ownership of voting securities, by contract or otherwise.

          (xviii) The board of  directors  of the SPE Member  shall not take any
action which, under the terms of any certificate of incorporation, bylaws or any
voting trust  agreement  with respect to any common stock,  requires the vote of
the board of directors of the SPE Member unless at the time of such action there
shall be at least one member who is an Independent Director.

          (xix) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in that certain  opinion letter dated as of the Closing
Date delivered by Borrower's  counsel in connection  with the Loan shall be true
and correct in all respects.

     (n) Investment Company Act. Borrower is not (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 either a
"holding  company" or a  "subsidiary  company"  within the meaning of the Public
Utility Holding  Company Act of 1935, as amended;  or (iii) subject to any other
federal or state law or  regulation  which  purports to restrict or regulate its
ability to borrow money.


                                      -16-
<PAGE>
     (o) Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder,  delay, or defraud any creditor,  and
Borrower  has  received   reasonably   equivalent  value  in  exchange  for  its
obligations  under  the  Loan  Documents.  Giving  effect  to  the  transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will,  immediately  following the execution and delivery of the Loan
Documents,   exceed  Borrower's  total  liabilities,   including   subordinated,
unliquidated,  disputed or contingent  liabilities.  The fair saleable  value of
Borrower's assets is and will,  immediately following the execution and delivery
of  the  Loan  Documents,  be  greater  than  Borrower's  probable  liabilities,
including the maximum amount of its contingent  liabilities or its debts as such
debts become  absolute and matured.  Borrower's  assets do not and,  immediately
following the execution and delivery of the Loan Documents will not,  constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur  debts  and  liabilities   (including  contingent  liabilities  and  other
commitments)  beyond its ability to pay such debts as they mature  (taking  into
account the timing and amounts to be payable on or in respect of  obligations of
Borrower).

     Section 4.2 BORROWER REPRESENTATIONS  CONCERNING PROPERTY AND PROPERTY LOAN
DOCUMENTS.  Borrower represents and warrants as of the date hereof and as of the
Closing Date.

     (a) The Property Loan Documents are not subject to an assignment or pledge,
and the Borrower has good and marketable title to, and is the sole owner of, the
Property Loan Documents, free and clear of any loan participations,  third party
claims or other Liens.

     (b) The Borrower has full right and authority to sell,  assign and transfer
the Property  Loan and the  collateral  assignment  to the Lender  constitutes a
legal, valid and binding assignment of the Property Loan.

     (c) The Borrower is pledging  the  Property  Loan free and clear of any and
all liens, pledges,  charges or security interests of any nature encumbering the
Property Loan.

     (d) The Property Loan Documents are legal, valid and binding obligations of
the Owner,  enforceable  in accordance  with their terms,  and there is no valid
defense,  counterclaim,  right of  rescission  or right of set-off or  abatement
available to the Owner with respect to such Property Loan Documents.

     (e) The  Property  Loan  Documents  create  a  valid,  collateral  or first
priority  assignment of, or a valid first priority security interest in, certain
rights  under the  Leases,  subject  only to a license  granted  to the Owner to
exercise  certain rights and to perform certain  obligations of the lessor under
such leases,  including the right to operate the Property,  no Person other than
the Owner  owns any  interest  in any  payments  due under such  leases  that is
superior to or of equal priority with the Borrower's interest therein.

     (f) The Property Loan has not been waived,  modified,  altered,  satisfied,
canceled,  subordinated or rescinded and the Property has not been released from
the lien of the Property Loan  Documents in any manner except as provided in the
documents identified in Exhibit C.

     (g) The Property Loan Documents  create a valid and enforceable  first lien
on the  Property,  and the  Property,  is free and clear of any  mechanic's  and
materialmen's  liens  which are prior to or equal with the lien of the  Property
Loan  Documents,  except  those  which are insured  against by a lender's  title
insurance policy (as described below).

     (h) The Borrower has not taken any action, nor has knowledge that the Owner
has taken any action,  that would cause the  representations and warranties made
by the Owner with respect to the Property Loan not to be true.

     (i) The Borrower has no knowledge  that the  representations  an warranties
made by the Owner with respect to the Property Loan are not true in any material
respect.

     (j) The lien created by the Property  Loan  Documents is insured by an ALTA
lender's title insurance  policy, or its equivalent as adopted in the applicable
jurisdiction  issued  by one  or  more  nationally  recognized  title  insurance
companies,  insuring the Borrower as to a valid and first  priority  lien of the
Mortgage in at least the original principal amount of such Loan, subject only to
(a) the lien of current real property taxes, ground rents, water charges,  sewer
rents and  assessments  not yet due and payable,  (b) covenants,  conditions and


                                      -17-
<PAGE>

restrictions,  rights of way,  easements  and other matters of public record set
forth in the Title  Policy,  none of which,  individually  or in the  aggregate,
materially  interferes  with the current use or operation of the Property or the
security intended to be provided by such Mortgage or with the Owner's ability to
pay its obligations  when they become due or the value,  use or operation of the
related  Mortgaged  Property and (c) the  exceptions  (general and specific) set
forth in such insurance policy, none of which, individually or in the aggregate,
materially interferes with the security intended to be provided by such Mortgage
or with the Owner's ability to pay its  obligations  when they become due or the
value, use or operation of the Property; the Borrower and Lender, its successors
or assigns are the sole named  insureds of such  policy as their  interests  may
appear; no claims have been made under such policy and the Borrower has not done
anything (by act or omission),  and the Borrower has no knowledge of any matter,
which would  impair or  diminish  the  coverage  of such policy in any  material
respect.

     (k) The  current  outstanding  principal  balance of the  Property  Loan is
$62,518,231.47. Borrower has no obligation to make any additional advances under
the Property Loan Documents.

     (l) No building or other  improvement  on the Property has been affected in
any material manner or suffered any material loss as a result of any fire, wind,
explosion,  accident or other cause and the  Property is free of any damage that
would  materially and adversely affect the value of the Property as security for
the Property Loan and is in good repair;  there is no proceeding pending for the
total or partial condemnation of the Property.

     (m) To  Borrower's  knowledge  the Owner is in  possession  of all material
licenses,  permits  and  other  authorizations  necessary  and  required  by all
applicable  laws for the conduct of its business and all such licenses,  permits
and authorizations are valid and in full force and effect.

     (n) (i) The  Property is insured by a fire and  extended  perils  insurance
policy, issued by an insurer meeting the requirements under the Property Loan in
an amount not less than the replacement  cost and the amount  necessary to avoid
the operation of any co-insurance provisions with respect to the Property;

          (ii) The Property is covered by business  interruption  insurance (for
at least 18  months  of rent  interruptions)  and the  Property  is  covered  by
comprehensive  general  liability  insurance  in amounts  generally  required by
institutional lenders for similar properties;

          (iii)All premiums on any insurance  policies required to be paid as of
the Closing Date have been paid;

          (iv) The insurance  policies  require at least 30 days prior notice to
the  insured  of  termination  or  cancellation,  and no such  notice  has  been
received; and

          (v) The  Property  Loan  Documents  obligate the Owner to maintain all
such insurance and, at such Owner's failure to do so,  authorize the Borrower to
maintain   such   insurance  at  the  Owner's  cost  and  expense  and  to  seek
reimbursement therefor from such Owner.

     (o)  There is no  default,  breach,  violation  or  event  of  acceleration
existing under the Property Loan Documents and, to the Borrower's knowledge,  no
event that,  with the passage of time or with notice and the  expiration  of any
grace or cure period, would and does constitute a default,  breach, violation or
event of  acceleration  and the  Borrower  has not waived any  default,  breach,
violation or event of acceleration.

     (p) To the best of Borrower's  knowledge,  Owner is not a debtor in a state
or  federal  bankruptcy  or  insolvency  preceding.  To the  best of  Borrower's
knowledge,  the Property, is in material compliance with all applicable federal,
state and local  laws  pertaining  to  environmental  hazards,  and no notice of
violation of such laws has been issued by any governmental  agency or authority;
the Borrower has not taken any action that would cause the Property not to be in
material  compliance  with all  federal,  state and  local  laws  pertaining  to
environmental hazards.

     (q) To Borrower's knowledge the Property is in compliance,  in all material
respects,  with all applicable laws,  zoning  ordinances,  rules,  covenants and
restrictions  affecting the construction,  occupancy,  use and operation of such
Property.  All  inspections,   licenses  and  certificates  required,  including
certificates of occupancy (if applicable), whether by law, ordinance, regulation
or insurance  standards to be made or issued with respect to the Property,  have
been obtained and are in full force and effect.
                                      -18-
<PAGE>
     (r) The  Property is not located in a special  flood hazard area as defined
by the Federal  Insurance  Administration,  or if it is, and flood insurance was
available,  a flood  insurance  policy meeting any  requirements  of the Federal
Insurance Administration is in effect.

     (s) The Property (i) is located on or adjacent to a dedicated  road, or has
access to an irrevocable  easement permitting ingress and egress, (ii) is served
by public utilities, water and sewer (or septic facilities), (iii) is a separate
tax parcel (or has reserved  funds  sufficient to cover taxes for the entire tax
parcel) and (iv) has parking as required under applicable law.

     (t) The  Borrower  has not  advanced  additional  funds for  principal  and
interest or taxes and insurance or knowingly  received any advance of funds from
a party  other  than the Owner for the  payment of any  amount  required  by the
Property.

     (u) The Property Loan Documents contain no provision
limiting the right or ability of the Borrower to assign, transfer and convey the
Property Loan Documents to any other Person.

     (v) Attached  hereto as Schedule 2 is a rent roll (the "Rent Roll") for the
Property.  The Rent Roll is true,  correct and complete in all material respects
with  respect to the  subject  matter  thereof.  The only Leases  affecting  the
Property are those reflected in the Rent Roll. To Borrower's knowledge following
inquiry as a duly diligent  lender,  except as set forth in Schedule 1: (i) each
Lease is in full force and effect;  (ii) except for those Leases with terms that
have not yet commenced, the tenants under the Leases have accepted possession of
and are in occupancy of all of their  respective  demised  premises (unless such
demised premises or portions thereof,  have been subleased),  have commenced the
payment of rent under such Leases and there are no  offsets,  claims or defenses
to the  enforcement  thereof;  (iii) all rents due and payable  under the Leases
have been paid and no portion  thereof  has been paid for any  period  more than
thirty  (30) days in  advance;  (iv) the rent  payable  under  each Lease is the
amount  set forth in the Rent Roll and there is no claim or basis for a claim by
the tenant  thereunder for an adjustment to the rent; (v) no tenant has made any
claim against the landlord under the Leases which remains  outstanding and there
are no  defaults  on the part of the  landlord  under any Lease and no event has
occurred  which,  with the giving of notice or passage of time,  or both,  would
constitute such default;  and (vi) there is no present  material  default by any
tenant  under any Lease.  None of the Leases  contains any option to purchase or
right of first refusal to purchase the Property or any part thereof.  The Leases
have not been assigned or pledged  except to Lender and  Borrower,  and no other
person  whatsoever  has any  interest  therein  except the tenants and  Landlord
thereunder pursuant to the Leases.

     (w) To Borrower's actual knowledge,  the survey for the Property  delivered
to Lender  in  connection  with  this  Agreement  does not fail to  reflect  any
material matter affecting the Property or the title thereto.

     Section 4.3 SURVIVAL OF  REPRESENTATIONS.  Borrower  agrees that all of the
representations  and  warranties  of  Borrower  set  forth  in  Section  4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount  remains  owing to Lender under this  Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements  made in this  Agreement  or in the other Loan  Documents by Borrower
shall  be  deemed  to have  been  relied  upon  by  Lender  notwithstanding  any
investigation heretofore or hereafter made by Lender or on its behalf.

V.   AFFIRMATIVE COVENANTS
     ---------------------

     Section 5.1 BORROWER COVENANTS.  From the date hereof and until payment and
performance in full of all  obligations  of Borrower  under the Loan  Documents,
Borrower hereby covenants and agrees with Lender that:

     (a) Existence;  Compliance  with Legal  Requirements;  Insurance.  Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence,  rights,  licenses,  permits and franchises
and comply with all Legal  Requirements  applicable to it and cause the Owner to
comply with all Legal Requirements applicable to Owner or the Property. Borrower
shall at all times maintain, preserve and protect all franchises and trade names
and preserve all the  remainder of its property used or useful in the conduct of
its  business  and shall cause the Owner to keep the  Property  in good  working
order  and  repair,  and from  time to time  make,  or  cause  to be  made,  all
reasonably   necessary   repairs,   renewals,   replacements,   betterments  and
improvements thereto.


                                      -19-
<PAGE>
     (b) Taxes and Other  Charges.  Borrower  shall cause Owner to pay all Taxes
and Other  Charges now or  hereafter  levied or assessed or imposed  against the
Property  or any part  thereof as the same  become due and  payable,  other than
those which it is protesting in good faith by appropriate proceedings diligently
pursued  in  accordance  with this  Section.  Borrower  will  deliver  to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then  delinquent no later than thirty
(30) days  prior to the date on which  the  Taxes  and/or  Other  Charges  would
otherwise be delinquent if not paid.  Borrower  shall permit suffer and when due
shall  cause to be paid and  discharged  by owner any lien or charge  whatsoever
which may be or become a lien or charge  against the Property  (other than those
liens  or  charges  which  Owner is  protesting  in good  faith  by  appropriate
proceedings,  diligently  pursued in  accordance  with the terms of the Property
Loan Documents).

     (c) Litigation.  Borrower shall give prompt written notice to Lender of any
litigation or governmental  proceedings  pending or threatened  against Borrower
which is reasonably likely to materially  adversely affect Borrower's  condition
(financial or otherwise) or business or, to Borrower's  knowledge,  the Property
or Owner.

     (d)  Premises.  Borrower  shall  cooperate  with Lender in  exercising  its
inspection   rights  under  the  Property  Loan   Documents  to  permit  agents,
representatives  and  employees  of Lender to inspect  the  Property or any part
thereof at reasonable hours upon reasonable advance notice.

     (e)  Notice  of  Default.  Borrower  shall  promptly  advise  Lender of any
material adverse change in Borrower's or the Property's condition,  financial or
otherwise,  or of the  occurrence  of any  Default  or Event of Default of which
Borrower has knowledge hereunder or under the Property Loan Documents.

     (f) Cooperate in Legal  Proceedings.  Borrower shall  cooperate  fully with
Lender  with  respect  to any  proceedings  before  any  court,  board  or other
Governmental  Authority  which may in any way  materially  adversely  affect the
rights of Lender  hereunder  or any rights  obtained by Lender  under any of the
other Loan  Documents  and,  in  connection  therewith,  permit  Lender,  at its
election, to participate in any such proceedings.

     (g) Perform Loan Documents. Borrower shall observe, perform and satisfy all
the terms,  provisions,  covenants and conditions of, and shall pay when due all
costs,  fees and  expenses  to the  extent  required  under  the Loan  Documents
executed and delivered by Borrower.

     (h) Insurance  Benefits.  Borrower shall cooperate with Lender in obtaining
for Lender the benefits of any Insurance  Proceeds lawfully or equitably payable
in  accordance  with Section 7.1 hereof in  connection  with the  Property,  and
Lender shall be reimbursed  for any expenses  incurred in  connection  therewith
(including attorneys' fees and disbursements, and the expense of an appraisal on
behalf of Lender in case of a fire or other  casualty  affecting the Property or
any part thereof) out of such Insurance Proceeds.

          (i) Further  Assurances.  Borrower  shall, at Borrower's sole cost and
 expense:

               (A)  furnish  to  Lender  all  instruments,  documents,  boundary
surveys, footing or foundation surveys, certificates,  plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document,  certificate,  agreement and instrument furnished to it pursuant
to the terms of the Property Loan Documents.

               (B) execute and  deliver to Lender such  documents,  instruments,
certificates,  assignments and other writings,  and do such other acts necessary
or desirable,  to evidence,  preserve  and/or protect the collateral at any time
securing or  intended to secure its  obligations  under the Loan  Documents,  as
Lender may reasonably  require,  so long as Borrower's  obligations or liability
are not materially increased thereby or any of Borrower's rights or remedies are
not materially diminished thereby; and

               (C) do and execute  all and such  further  lawful and  reasonable
acts,  conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan  Documents,  as
Lender  shall  reasonably  require  from  time to  time,  so long as  Borrower's
obligations  and liability are not materially  increased  thereby and Borrower's
rights and remedies are not materially diminished thereby.




                                      -20-
<PAGE>
     (j) Financial Reporting.

          (i)  Borrower  will cause Owner to keep and  maintain on a Fiscal Year
basis,  in accordance  with GAAP or another  method of  preparation  approved by
Lender,  proper and accurate books,  records and accounts  reflecting all of the
financial  affairs  of the  Property  and all items of  income  and  expense  in
connection  with  the  operation  of the  Property  and in  connection  with any
services,  equipment or furnishings provided in connection with the operation of
the  Property,  whether  such  income or expense be  realized by Owner or by any
other Person  whatsoever,  excepting  lessees unrelated to and unaffiliated with
Owner who have leased from Owner  portions  of the  Property  for the purpose of
occupying  the same.  Lender shall have the right from time to time at all times
during  normal  business  hours upon  reasonable  notice to examine  such books,
records and accounts at the office of Borrower or other Person  maintaining such
books,  records and  accounts  and to make such  copies or  extracts  thereof as
Lender shall desire. After the occurrence and during the continuance of an Event
of  Default,  Borrower  shall pay any costs and  expenses  incurred by Lender to
examine  accounting  records  with  respect  to the  Property,  as Lender  shall
determine to be necessary or appropriate in the protection of Lender's interest.

          (ii)  Borrower  will  furnish  to Lender  promptly  upon  receipt  all
financial reports and other  information and documentation  provided to Borrower
under the Property Loan Documents.  Borrower shall also cause Manager to provide
such  information  regarding the Property as may be requested  from time to time
provided such information is customarily maintained by Borrower.

     (k)  Business  and  Operations.  Borrower  will  continue  to engage in the
business  presently  conducted by it.  Borrower  will qualify to do business and
will remain in good standing under the laws of each  jurisdiction  as and to the
extent the same are required for the conduct of its business.

     (l) Title to the Property  Loan.  Borrower  will warrant and defend (i) the
title to the Property Loan and (ii) the validity and priority of the Lien of the
Assignment  of Loan  Documents,  in each case  against the claims of all Persons
whomsoever.  Borrower shall reimburse Lender for any losses,  costs,  damages or
expenses  (including  reasonable  attorneys'  fees and court costs)  incurred by
Lender if an interest in the Property Loan,  other than as permitted  hereunder,
is claimed by another Person.

     (m) Costs of Enforcement.  In the event (i) that the Loan Documents are put
into the hands of an attorney for collection,  suit,  action or foreclosure,  or
(ii) of the bankruptcy,  insolvency,  rehabilitation or other similar proceeding
in respect of  Borrower or Owner or an  assignment  by Borrower or Owner for the
benefit  of its  creditors,  Borrower,  its  successors  or  assigns,  shall  be
chargeable with and agrees to pay all costs of collection and defense, including
reasonable  attorneys'  fees in connection  therewith and in connection with any
appellate  proceeding or post-judgment  action involved therein,  which shall be
due and payable together with all required service or use taxes.

     (n) Estoppel Statement.

          (i) After  request  by  Lender,  Borrower  shall  within ten (10) days
furnish Lender with a statement, duly acknowledged and certified,  setting forth
(A) the  unpaid  principal  amount of the Note and the  Property  Loan,  (B) the
Interest  Rate of the  Note,  (C)  the  date  installments  of  interest  and/or
principal  were last paid on the Note and  Property  Loan,  (D) any  offsets  or
defenses  to the  payment  of the  Debt,  if any and (E)  that  the  Note,  this
Agreement,  the  Mortgage  and the other Loan  Documents  are  valid,  legal and
binding  obligations  and  have  not  been  modified  or  if  modified,   giving
particulars of such modification.

          (ii) After request by Lender (but no more  frequently than once in any
year),  Borrower  shall within ten (10) days furnish  Lender with a  certificate
reaffirming all  representations and warranties of Borrower set forth herein and
in the other Loan Documents as of the date requested by Lender or, to the extent
of any  changes to any such  representations  and  warranties,  so stating  such
changes.

     (o) Loan Proceeds.  Borrower shall use the proceeds of the Loan received by
it on the Closing Date only for the purposes set forth in Section 2.1.4.

     (p)  Amendments  by  Borrower.  Borrower  shall not enter into or otherwise
suffer  or  permit  any  amendment,  waiver,  supplement,  termination  or other
modification of any Loan Document executed and delivered by Borrower without the
prior written consent of Lender.



                                      -21-
<PAGE>
     (q) Confirmation of  Representations.  In addition to and not in limitation
of the covenants and agreements of Borrower  contained in Section 9.1,  Borrower
shall  deliver,  in  connection  with  any  Secondary  Market  Transaction,  (i)
Officer's Certificates certifying as to the accuracy of all representations made
by  Borrower  in the  Loan  Documents  as of the  date  of the  closing  of such
Secondary  Market  Transaction  (with  such  modification  thereto  to make such
representation  factually  accurate)  and  (ii)  certificates  of  the  relevant
Governmental  Authorities  in all  relevant  jurisdictions  indicating  the good
standing and  qualification  of Borrower as of the date of the Secondary  Market
Transaction.

     (r) Budgets.  Borrower  shall  furnish to Lender  promptly upon receipt all
budgets and other  information  received by Borrower under the terms of the Cash
Collateral Account Agreement or Management Agreement. Borrower shall not approve
any budget or consent to any  disbursement  requiring  its approval  without the
prior consent of Lender.

     (s) No Joint Assessment.  Borrower shall not suffer, permit or initiate the
joint assessment of the Property (i) with any other real property constituting a
tax lot  separate  from the  Property  and (ii) with any portion of the Property
which may be deemed to  constitute  personal  property,  or any other  procedure
whereby the lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to the Property.

     (t) Principal  Place of Business.  Borrower  shall not change its principal
place of business set forth on the first page of this  Agreement  without  first
giving Lender thirty (30) days prior written notice.

     (u)  Interest  Rate  Protection.  Attached  hereto as Exhibit D is Lender's
standard form of forward rate lock  agreement (the "Rate Lock  Agreement").  The
defined terms used in this Section 5.1(x) and not otherwise defined herein shall
have the  meanings set forth in the Rate Lock  Agreement.  If at any time during
the term of the Loan the  hypothetical  loan  constant  determined  by using the
Benchmark  Treasury  Rate,  a loan spread of 200 basis  points,  and  assuming a
thirty year  amortization  schedule  would exceed  9.23%,  then Borrower will be
required  to  immediately  lock an  interest  rate  pursuant  to the  Rate  Lock
Agreement for an Anticipated Loan Amount equal to the outstanding balance of the
Loan, for an effective term of ten years, and for a Rate Lock Period expiring no
earlier  than the Stated  Maturity  Date.  The  "number of months  forward"  for
purposes of the Rate Lock Agreement  shall be the number of months from the time
of the rate lock to the Stated Maturity Date. Borrowers agree to enter execute a
Rate Lock  Agreement  reflecting  the terms of the rate  lock upon  notice  from
Lender but all  references  to a Rate Lock  Deposit  shall be deleted.  Borrower
hereby irrevocably  designates Capital America as its  attorney-in-fact  to lock
its interest rate in accordance  with the foregoing and do all things  necessary
and required in order to effectuate  and  consummate the rate lock and such rate
lock shall be  governed  by the terms of the Rate Lock  Agreement  with the same
effect as if Borrower  and Capital  America had  actually  executed it. Any such
agreement shall be considered a Loan Document  hereunder and shall be secured by
all the Loan  Documents  and  covered  by the  terms of the  Guaranty.  Borrower
acknowledges and agrees that although Lender has the right to unilaterally  lock
the rate at any time the  hypothetical  debt  service  constant  exceeds  9.23%,
Lender  shall have no  liability to Borrower if it does not lock such rate or if
it does not lock the rate at the  lowest  possible  rate  provided  that  Lender
agrees  to act in good  faith to lock the rate at a market  rate at the time the
rate lock occurs. Borrower further acknowledges that the rate locked will affect
the pricing on any  permanent  financing  that may be  available  from Lender in
order to repay this  Facility.  If Borrower  obtains  permanent  financing  from
Lender the hedge  position  pursuant to the Rate Lock  Agreement  can be used in
connection with such permanent  financing.  If Borrower repays the Loan and does
not obtain permanent financing from Lender, then Borrower  acknowledges that the
corresponding  hedge  positions in connection  with the Rate Lock Agreement will
need to be unwound and that any losses incurred shall be the  responsibility  of
Borrower.  If any gains are realized in  connection  with the  unwinding of such
hedge  position,  then such  gains  will be  applied  by  Lender  to reduce  the
outstanding balance of the Loan.

     Section 5.2 SPECIAL COVENANTS REGARDING THE PROPERTY LOAN.

     (a) Notice of  Defaults.  Promptly  upon  becoming  aware of the same,  the
Borrower  shall notify the Lender of any default or event of default  (howsoever
denominated)  under any  Property  Loan  Document  which  continues  beyond  any
applicable  notice or grace  period.  The Borrower  shall deliver to the Lender,
promptly  after  receipt  thereof,  copies  of all  material  notices  and other
material correspondence from Owner.



                                      -22-
<PAGE>
     (b)  Enforcement.  Subject  to the Loan  Documents,  Borrower  shall,  with
Lender's  prior written  consent  (which shall not be  unreasonably  withheld or
delayed),  enforce all of the material  terms,  conditions and provisions of the
Property  Loan  Documents;   provided,  however,  Borrower  will  not  take  any
enforcement  or other  action that could  adversely  affect the  priority of the
Property Loan  Documents.  If an event of default  (however  denominated)  shall
occur under the Property Loan, Borrower shall, at Lender's direction,  take such
lawful  and  appropriate   enforcement  or  other  remedial  actions  as  deemed
reasonably necessary by Lender subject to the Loan Documents. If Lender consents
to Borrower  foreclosing the Mortgage or acquiring the Property by conveyance in
lieu of foreclosure,  then Borrower shall take all steps reasonably necessary so
that upon such foreclosure, Lender shall simultaneously receive a first mortgage
on the  Property  to  secure  the  Loan and such  related  collateral  as may be
customary for Lender to receive in connection with similar first mortgage loans.

     (c)  Subordinate  Loan.  Borrower shall not consent to any  modification or
amendment  of, or waive any of the terms and  conditions  of, the  Subordination
Agreement or any of the documents  evidencing or securing the Subordinate  Loan,
Borrower  shall not consent to the  granting of any  additional  security or any
guaranty for all or any part of the Subordinate Loan.

     (d)  Application  of Funds.  Any funds received or collected by Borrower in
respect of the  Property  Loan in any  manner  whatsoever,  whether by  payment,
prepayment,  foreclosure or otherwise, shall be received and held by Borrower in
accordance  with and subject to the  provisions of this  Agreement and the other
Loan  Documents  and the same shall be paid to such escrow or other  accounts or
over to Lender as required under this Agreement and the other Loan Documents. If
Borrower  receives any  prepayment of principal,  Borrower  shall be required to
prepay a like amount of the outstanding  balance of the Loan. Borrower shall not
modify or attempt to modify the instructions to the Cash Collateral Account Bank
and any such  attempted  modification  shall be  deemed  null and void and of no
force and effect.

     (e) Notice of Casualty or  Condemnation.  Borrower  shall  promptly  notify
Lender of any casualty or the commencement of any condemnation proceedings which
affect any portion of the Property.

     (f) Release or  Amendment.  The Borrower  shall not release any  collateral
securing,  or any Person  liable for, the payment or  performance  of all or any
part of the Property Loan or amend or modify any of the Property Loan  Documents
without the prior  written  consent of Lender.  Without  limiting the  foregoing
Borrower  shall not accept a conveyance  of the Property in lieu of  foreclosure
with Lender's prior written consent.

     (g)  Performance.  Borrower  shall perform all of its material  obligations
under the Property Loan Documents.

     (h)  Management  Agreement.  The Borrower  shall not consent to any waiver,
termination,  amendment or cancellation of any management agreement, without the
Lender's prior written consent.

     (i) Leases. If, under the terms of any of the Property Documents,  Owner is
obligated  to obtain  Borrower's  consent  to any new  Lease or other  occupancy
arrangement  relating to the Property,  or any  amendment to an existing  Lease,
then, prior to granting such consent,  Borrower shall be obligated to provide to
Lender any information provided to Borrower by Owner regarding such Lease and to
obtain Lender's prior written approval of Borrower  granting such consent (which
approval  shall not be  unreasonably  withheld or  delayed)  and shall be deemed
given unless Lender  affirmatively  denies such request within ten (10) Business
Days.

     (j) Consents and Waivers.  Borrower shall not grant any consents or waivers
under the terms of the Property Loan Documents without the prior written consent
of Lender.

VI.  NEGATIVE COVENANTS
     ------------------

     Section 6.1  Borrower's  Negative  Covenants.  From the date  hereof  until
payment and  performance  in full of all  obligations of Borrower under the Loan
Documents,  Borrower  covenants  and  agrees  with  Lender  that it will not do,
directly or indirectly, any of the following:

          (a) Dissolution.  Borrower shall not dissolve,  terminate,  liquidate,
merge with or consolidate into another Person.



                                      -23-
<PAGE>
          (b)  Change In  Business.  Borrower  shall not enter  into any line of
 business other than the ownership and operation of the Property Loan.

          (c) Debt Cancellation.  Borrower shall not cancel or otherwise forgive
or release any claim or debt owed to Borrower by any Person, except for adequate
consideration  and  in  the  ordinary  course  of  Borrower's  business  in  its
reasonable judgment.

          (d)  Affiliate  Transactions.  Borrower  shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the members of
Borrower  except in the ordinary course of business and on terms which are fully
disclosed  to Lender in advance  and are no less  favorable  to Borrower or such
Affiliate than would be obtained in a comparable arms-length transaction with an
unrelated third party.

          (e)  Zoning.  Borrower  shall not  initiate  or  consent to any zoning
reclassification  of any  portion of any of the  Property  or seek any  variance
under any existing  zoning  ordinance or permit the use of any portion of any of
the   Property  in  any  manner  that  could  result  in  such  use  becoming  a
non-conforming  use under any zoning  ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.

          (f)  Debt.  Borrower  shall  not  create,  incur  or  assume  any debt
(including  subordinate debt) other than the Debt. In addition, no Person owning
any interest in Borrower  shall  pledge,  transfer or  otherwise  dispose of its
interest  in Borrower to secure any  financing  for the benefit of such  Person,
Borrower or the Property.

          (g) Transfers.  Borrower shall not,  without the prior written consent
of Lender,  suffer or permit the sale,  assignment  or  transfer  (collectively,
"Transfer")  of (i) all or any  part  of the  Property  Loan,  (ii)  any  direct
interest in  Borrower or (iii) any direct or indirect  interest in any member of
Borrower  other than (A) the  issuance or transfer of  beneficial  interests  in
Prime Group Realty Trust, a Maryland real estate  investment  trust,  so long as
such  issuance or transfer does not result in a change in Control of Prime Group
Realty  Trust and so long as such  issuance  or  transfer  does not  affect  the
non-consolidation  opinion  delivered  by  Borrower,  and  (B) the  issuance  or
transfer of limited  partner  interests  in Prime Group  Realty L.P., a Delaware
limited  partnership,  or a  conversion  of a one  percent  general  partnership
interest owned  beneficially  by The Nardi Group,  L.L.C.  in Prime Group Realty
L.P. into a limited partnership  interest in Prime Group Realty L.P., so long as
such  issuance or transfer does not result in a change in Control of Prime Group
Realty  L.P.  and so long as such  issuance  or  transfer  does not  affect  the
non-consolidation  opinion  delivered by Borrower.  No Transfer  consented to by
Lender  pursuant to clause (ii) or (iii) above shall be permitted  unless Lender
shall have received (a) evidence in writing from the applicable  Rating Agencies
to  the  effect  that  such a  Transfer  will  not  result  in a  qualification,
withdrawal or  downgrading  of the ratings in effect  immediately  prior to such
Transfer for the Securities issued in connection with the  Securitization  which
are then outstanding and (b) a non-consolidation  opinion satisfactory to Lender
from the transferee's counsel. On or before the completion of any such permitted
Transfer,  Borrower  will pay all  reasonable  expenses  of Lender  incurred  in
connection therewith. Notwithstanding anything to the contrary contained in this
clause (j),  holders of  interests  in Borrower  (or holders of interests in any
entity  directly or  indirectly  holding an interest in Borrower) as of the date
hereof (the "Interest  Holders") shall have the right to transfer their interest
in  Borrower  (or any entity  directly  or  indirectly  holding an  interest  in
Borrower) to another  Person who is not an Interest  Holder,  including  without
limitation  immediate  family  members  for estate  planning  purposes,  without
Lender's consent; provided, however, that:

               (i) after  taking into  account any prior  transfers  pursuant to
this sentence, whether to the proposed transferee or otherwise, no such transfer
(or series of transfers) shall result in (A) the proposed  transferee,  together
with all members of his/her immediate family or any affiliates  thereof,  owning
in the aggregate  (directly,  indirectly or  beneficially)  more than 20% of the
interests in Borrower (or any entity directly or indirectly  holding an interest
in  Borrower)  or (B) a  transfer  in the  aggregate  of  more  than  20% of the
interests in Borrower as of the date hereof;

               (ii) no such  transfer  of interest  shall  result in a change of
control of Borrower;

               (iii) Borrower shall give Lender notice of such transfer together
with copies of all  instruments  effecting  such transfer not less than ten (10)
days prior to the date of such transfer;

               (iv) no Event of Default has occurred and remains uncured; and
                                      -24-
<PAGE>
               (v) the legal and  financial  structure  of  Borrower  after such
transfer and its members and the single purpose nature and bankruptcy remoteness
of Borrower and its shareholders,  partners or members  satisfies  Lender's then
current  applicable  underwriting  criteria and requirements,  including without
limitation  the  requirement  at  the  request  of  Lender  to  deliver  written
confirmations from the Rating Agencies that such transfer or series of transfers
will  not  result  in a  qualification,  downgrade  or  withdrawal  of the  then
applicable ratings.

For  purposes of this clause (j),  (A) a change of control of Borrower  shall be
deemed to have occurred if there is any change in the identity of the individual
or entities or group of individuals or entities who have the right, by virtue of
any  partnership  agreement,  articles  of  incorporation,  bylaws,  articles of
organization, operating agreement or any other agreement, with or without taking
any  formative  action,  to cause  Borrower  to take some  action or to prevent,
restrict or impede  Borrower  from taking some  action  which,  in either  case,
Borrower  could take or could  refrain from taking were it not for the rights of
such individuals;  and (B) an "immediate family member" shall mean a spouse or a
child of any Interest Holder.

VII.  CASUALTY; CONDEMNATION; ESCROWS
      -------------------------------

     Section 7.1 INSURANCE; CASUALTY AND CONDEMNATION.

     7.1.1 INSURANCE.

     (a) Borrower,  at no cost to Lender, for the mutual benefit of Borrower and
Lender,  shall cause Owner to keep the Property  insured and obtain and maintain
during  the Term  policies  of  insurance  insuring  against  loss or  damage by
standard, "all-risk" perils in accordance with the Property Loan Documents. Such
insurance  (i) shall be in an amount  equal to the greatest of (A) the then full
replacement  cost of the Property without  deduction for physical  depreciation,
(B) the outstanding  principal  balance of the Loan and (C) such amount that the
insurer  would not deem  Borrower a co-insurer  under said policies and (ii) and
shall have deductibles no greater than five percent (5%) of the full replacement
cost of the  Property.  The premiums for such  policies of insurance  carried in
accordance  with this  paragraph  shall be paid  annually  in advance  and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.

     (b) Borrower,  at no cost to Lender, for the mutual benefit of Borrower and
Lender,  shall  also  cause  Owner to obtain  and  maintain  during the Term the
following policies of insurance:

          (i) Flood  insurance if any part of the Property is located in an area
identified by the Federal Emergency  Management Agency as an area having special
flood  hazards and in which flood  insurance has been made  available  under the
National Flood Insurance  Program in an amount at least equal to the Debt or the
maximum  limit of coverage  available  with respect to the  Property  under said
program, whichever is less.

          (ii)  Commercial  general  liability  insurance,  including broad form
property  damage,  blanket  contractual and personal  injuries  (including death
resulting  therefrom)  coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate for any policy year. In addition,  at
least $10,000,000 excess and/or umbrella  liability  insurance shall be obtained
and maintained  for any and all claims,  including all legal  liability  imposed
upon  Borrower and all court costs and  attorneys'  fees  incurred in connection
with the ownership, operation and maintenance of the Property.

          (iii) Rental loss and/or business interruption  insurance in an amount
equal to the greater of (A) the estimated  gross revenues from the operations of
the  Property  for the next  succeeding  eighteen  (18) month  period or (B) the
projected  operating  expenses  (including Debt Service) for the maintenance and
operation of the Property for the next  succeeding  eighteen  (18) month period.
The amount of such  insurance  shall be  increased  from time to time during the
Term as and when the Rents  increase or the  estimate  of (or the actual)  gross
revenue, as may be applicable, increases.

          (iv)  Insurance  against  loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers,  air  conditioning  equipment,  high
pressure piping, machinery and equipment,  pressure vessels or similar apparatus
now or hereafter  installed in any of the  Improvements  (without  exclusion for
explosions), in an amount at least equal to $2,000,000 for the Property.

          (v) Worker's  compensation  insurance with respect to any employees of
Borrower, as required by any governmental authority or legal requirement.

                                      -25-
<PAGE>
          (vi) During any period of repair or restoration,  builder's "all risk"
insurance  in an amount equal to not less than the full  insurable  value of the
Property against such risks  (including fire and extended  coverage and collapse
of the  Improvements  to agreed  limits)  as  Lender  may  request,  in form and
substance acceptable to Lender.

          (vii)  Coverage  to  compensate  for the  cost of  demolition  and the
increased cost of  construction  for the Property in an amount  satisfactory  to
Lender.

          (viii)  Such other  insurance  as may from time to time be  reasonably
required by Lender in order to protect its interests.

     (c) All policies of insurance (the "Policies") required pursuant to Section
7.1.1(b) shall be issued by companies reasonably approved by Lender and licensed
to do  business  in the State,  with a claims  paying  ability  rating of "A" or
better by Standard & Poor's  Ratings  Group;  (ii) shall name  Borrower  and its
successors  and/or assigns as their interest may appear as the mortgagee;  (iii)
shall  contain a  Non-Contributory  Standard  Lender  Clause and a Lender's Loss
Payable  Endorsement,  or their  equivalents,  naming  Borrower as the person to
which all payments  made by such  insurance  company  shall be paid;  (iv) shall
contain  a waiver  of  subrogation  against  Lender;  (v)  shall  be  maintained
throughout  the Term  without  cost to Lender;  (vi) shall be  assigned  and the
certificates  thereof delivered to Lender; and (vii) shall contain  endorsements
providing  that  neither  Borrower,  Lender  nor  any  other  party  shall  be a
co-insurer  under said  Policies and that Lender  shall  receive at least thirty
(30) days prior written notice of any modification, reduction or cancellation of
any of the Policies;  and (viii) shall be  satisfactory in form and substance to
Lender and shall be  approved  by Lender as to  amounts,  form,  risk  coverage,
deductibles,  loss payees and insureds.  Borrower shall require Owner to pay the
premiums for such Policies (the "Insurance Premiums") as the same become due and
payable  and shall  furnish  to Lender  evidence  of the  renewal of each of the
Policies  with  receipts  for the  payment of the  Insurance  Premiums  or other
evidence of such payment reasonably satisfactory to Lender. If Borrower does not
furnish  such  evidence  and  receipts  at  least  ten  (10)  days  prior to the
expiration  of any expiring  Policy,  then Lender may procure,  but shall not be
obligated to procure,  such insurance and pay the Insurance  Premiums  therefor,
and Borrower agrees to reimburse Lender for the cost of such Insurance  Premiums
promptly on demand.  Within thirty (30) days after  request by Lender,  Borrower
shall  require Owner to obtain,  provided  Borrower has the right to do so under
the Property Loan Documents,  such increases in the amounts of coverage required
hereunder as may be reasonably  requested by Lender,  taking into  consideration
changes in the value of money over time,  changes in liability laws, and changes
in prudent customs and practices.

     (d) If any Property is damaged or  destroyed,  in whole or in part, by fire
or other  casualty (an "Insured  Casualty"),  Borrower  shall give prompt notice
thereof to Lender.  Following the occurrence of an Insured Casualty,  unless the
Loan is repaid in full,  Borrower  shall  cause  Owner to  promptly  proceed  to
restore,  repair,  replace or rebuild the Property to be of at least equal value
and of substantially  the same character as prior to such damage or destruction,
all to be effected in accordance with Legal Requirements.  The expenses incurred
by Lender in the adjustment  and  collection of insurance  proceeds shall become
part of the Debt and be secured  hereby and shall be  reimbursed  by Borrower to
Lender upon demand.

     7.1.2 CASUALTY AND APPLICATION OF PROCEEDS.

     (a) In  case  of  loss  or  damages  covered  by any of the  Policies,  the
following provisions shall apply subject to the terms, provisions and conditions
of the Property Loan Documents:

          (i) If an Insured  Casualty  does not exceed  $200,000,  Borrower  may
settle and adjust (or allow Owner to settle and  adjust)  any claim  without the
consent of Lender;  provided that such  adjustment is carried out in a competent
and timely manner.  In such case,  Borrower is hereby  authorized to collect and
receipt for any such insurance proceeds.

          (ii) If an Insured Casualty shall equal or exceed  $200,000,  Borrower
may settle and adjust (or allow  Owner to settle and  adjust) any claim but only
with the consent of Lender and agree with the insurance  company or companies on
the amount to be paid on the loss,  and the proceeds of any such policy shall be
due and payable  solely to Borrower,  as mortgagee,  but in accordance  with the
terms  hereof  held in escrow  by  Lender  (to the  extent  permitted  under the
Property Loan Documents) and otherwise  pursuant to the Cash Collateral  Account
Agreement and Custody Agreement.


                                      -26-
<PAGE>
     (b) In the event of an Insured  Casualty  where the loss is in an aggregate
amount less than $2,000,000,  and if, in the reasonable  judgment of Lender, the
Property  can be  restored  within six (6) months to an  economic  unit not less
valuable  and not less useful  than the same was prior to the Insured  Casualty,
and after such restoration will adequately  secure the Debt, then, if no Default
or Event of Default shall have occurred and be then continuing,  the proceeds of
insurance  (after  reimbursement  of any expenses  incurred by Lender)  shall be
applied to reimburse  Owner for the cost of restoring,  repairing,  replacing or
rebuilding  the Property or part thereof  subject to the Insured  Casualty  (the
"Restoration"),  in the manner set forth herein.  Borrower hereby  covenants and
agrees to cause Owner to commence and  diligently  prosecute  such  Restoration;
provided  that (i)  Borrower  shall pay all costs  (and if  required  by Lender,
Borrower  shall  deposit  the total  thereof  with  Lender in  advance)  of such
Restoration in excess of the net proceeds of insurance  made available  pursuant
to the terms hereof;  (ii) the Restoration  shall be done in compliance with all
Legal  Requirements;  and (iii) Lender shall have received  evidence  reasonably
satisfactory to it that,  during the period of the  Restoration,  the sum of (A)
income derived from the Property,  as reasonably  determined by Lender, plus (B)
proceeds of rent loss insurance or business interruption  insurance,  if any, to
be paid will  equal or exceed the sum of (I)  expenses  in  connection  with the
operation of the Property and (II) the Debt Service under the Loan.

     (c) Except as provided above, the proceeds of insurance  collected upon any
Insured  Casualty  shall,  at the  option of Lender in its sole  discretion,  be
applied to the  payment of the Debt or applied to allow  Borrower  to  reimburse
Owner for the cost of any  Restoration,  in the manner set forth below.  If such
proceeds are applied to the Debit, no fee pursuant to Section 2.3.1 shall be due
in connection with such payment.

     (d) If Borrower is entitled to reimbursement out of insurance proceeds held
by Lender,  such proceeds shall be disbursed from time to time upon Lender being
furnished  with  (i)  evidence  satisfactory  to it of  the  estimated  cost  of
completion of the  Restoration,  (ii) funds or, at Lender's  option,  assurances
satisfactory to Lender that such funds are available,  sufficient in addition to
the  proceeds of insurance  to complete  the  proposed  Restoration,  (iii) such
architect's certificates,  waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey and such other evidences of cost,
payment and  performance as Lender may  reasonably  require and approve and (iv)
all plans and specifications for such Restoration, such plans and specifications
to be approved by Lender prior to  commencement  of any work.  In  addition,  no
payment  made prior to the final  completion  of the  Restoration  shall  exceed
ninety percent (90%) of the value of the work performed from time to time; funds
other than proceeds of insurance  shall be disbursed  prior to  disbursement  of
such  proceeds;  and at all times,  the  undisbursed  balance  of such  proceeds
remaining in the hands of Lender, together with funds deposited for that purpose
or  irrevocably  committed  to the  satisfaction  of  Lender  by or on behalf of
Borrower  for  that  purpose,  shall be at least  sufficient  in the  reasonable
judgment of Lender to pay for the cost of  completion of the  Restoration,  free
and clear of all liens or claims for lien.  Any surplus  which may remain out of
insurance  proceeds  held by Lender after  payment of such costs of  Restoration
shall be paid to Borrower.

     7.1.3 CONDEMNATION.

     (a) Borrower  shall  promptly give Lender  written  notice of the actual or
threatened  commencement  of  any  condemnation  or  eminent  domain  proceeding
affecting the Property (a "Condemnation")  and shall deliver to Lender copies of
any and all papers served in connection  with such  Condemnation.  Following the
occurrence  of a  Condemnation,  Borrower,  regardless  of  whether  an Award is
available,  shall promptly cause Owner to proceed to restore, repair, replace or
rebuild the Property to the extent practicable to be of at least equal value and
of  substantially  the same character as prior to such  Condemnation,  all to be
effected in accordance with Legal Requirements.

     (b) Lender is hereby irrevocably appointed as Borrower's  attorney-in-fact,
coupled with an interest,  with  exclusive  power to exercise all of  Borrower's
rights to  collect,  receive  and  retain  any award or  payment in respect of a
Condemnation (an "Award") and to make any compromise or settlement in connection
with such  Condemnation,  subject  to the  provisions  of this  Section  and the
Property  Loan  Documents.  Notwithstanding  any  Condemnation  by any public or
quasi-public   authority   (including  any  transfer  made  in  lieu  of  or  in
anticipation of such a Condemnation), Borrower shall continue to pay the Debt at
the time and in the manner  provided for in the Note, in this  Agreement and the
other Loan  Documents  and the Debt  shall not be  reduced  unless and until any
Award  shall have been  actually  received  and applied by Lender to expenses of
collecting  the Award and to discharge of the Debt.  Lender shall not be limited


                                      -27-
<PAGE>
to the  interest  paid on the  Award by the  condemning  authority  but shall be
entitled to receive out of the Award  interest at the rate or rates  provided in
the Note.  Borrower shall cause any Award that is payable to Borrower to be paid
directly to Lender.

     (c) In the event of any  Condemnation  where  the Award is in an  aggregate
amount less than $2,000,000,  and if, in the reasonable  judgment of Lender, the
Property  can be  restored  within six (6) months to an  economic  unit not less
valuable  and not less useful than the same was prior to the  Condemnation,  and
after such restoration  will adequately  secure the Debt, then, if no Default or
Event of Default shall have occurred and be then continuing, the proceeds of the
Award (after  reimbursement of any expenses incurred by Lender) shall be applied
to reimburse Owner for the cost of restoring, repairing, replacing or rebuilding
the  Property  or  part  thereof  subject  to  Condemnation  (the  "Condemnation
Restoration")  in the manner  set forth  below.  Subject to the Loan  Documents,
Borrower  hereby  covenants and agrees to cause Owner to commence and diligently
to prosecute  such  Condemnation  Restoration;  provided that (i) Borrower shall
cause Owner to pay all costs (and if required by Lender,  Borrower shall deposit
the total thereof with Lender in advance) of such  Condemnation  Restoration  in
excess of the Award  made  available  pursuant  to the  terms  hereof;  (ii) the
Condemnation   Restoration   shall  be  done  in   compliance   with  all  Legal
Requirements;   and  (iii)  Lender  shall  have  received  evidence   reasonably
satisfactory to it that, during the period of the Condemnation Restoration,  the
sum of (A) income derived from the Property, as reasonably determined by Lender,
plus (B) proceeds of rent loss insurance or business interruption  insurance, if
any, to be paid will equal or exceed the sum of (I) expenses in connection  with
the operation of the Property and (II) the Debt Service under the Loan.

     (d) Except as provided  above,  the Award  collected upon any  Condemnation
shall, at the option of Lender in its sole discretion, be applied to the payment
of the Debt or applied to allow Borrower to reimburse  Owner for the cost of the
Condemnation  Restoration in the manner set forth below. If the Award is applied
to the Debt, no fee pursuant to Section  2.3.1 shall be due in  connection  with
such payment.

     (e) In the event  Borrower is entitled  to  reimbursement  out of the Award
received by Lender,  such  proceeds  shall be  disbursed  from time to time upon
Lender being  furnished  with (i) evidence  satisfactory  to it of the estimated
cost of completion of the Condemnation  Restoration,  (ii) funds or, at Lender's
option,  assurances  satisfactory  to  Lender  that such  funds  are  available,
sufficient in addition to the proceeds of the Award to complete the Condemnation
Restoration, (iii) such architect's certificates,  waivers of lien, contractor's
sworn statements, title insurance endorsements,  bonds, plats of survey and such
other  evidences  of costs,  payment and  performance  as Lender may  reasonably
require and approve; and (iv) all plans and specifications for such Condemnation
Restoration,  such plans and  specifications  to be approved by Lender  prior to
commencement of work. In addition, no payment made prior to the final completion
of the  restoration,  repair,  replacement  and  rebuilding  shall exceed ninety
percent (90%) of the value of the work  performed  from time to time;  (y) funds
other than  proceeds of the Award shall be disbursed  prior to  disbursement  of
such proceeds;  and (z) at all times,  the undisbursed  balance of such proceeds
remaining in the hands of Lender, together with funds deposited for that purpose
or  irrevocably  committed  to the  satisfaction  of  Lender  by or on behalf of
Borrower  for  that  purpose,  shall be at least  sufficient  in the  reasonable
judgment  of  Lender  to pay for the  costs of  completion  of the  Condemnation
Restoration  free and clear of all liens or claims for lien.  Any surplus  which
may remain out of the Award  received by Lender  after  payment of such costs of
restoration,  repair,  replacement or rebuilding shall, in the sole and absolute
discretion of Lender, be retained by Lender and applied to payment of the Debt.

     Section 7.2 REQUIRED REPAIR; REQUIRED REPAIR FUNDS.

     7.2.1 REQUIRED REPAIRS:  DEPOSITS.  Borrower shall cause the performance of
the repairs, if any, at the Property set forth on Schedule 3 annexed hereto (the
"Required Repairs").  Borrower shall complete each of the Required Repairs on or
before the  deadline  for same set forth on  Schedule  3. On the  Closing  Date,
Borrower shall deposit with Lender or cause to be deposited the amount set forth
on Schedule 3 hereto to perform the Required  Repairs for the Property.  Amounts
so deposited with Lender (the "Required Repair Fund") shall be held by Lender in
an account  (the  "Required  Repair  Account")  in Lender's  name at a financial
institution  selected by Lender in its sole  discretion and shall be invested in
Permitted Investments.

     7.2.2 GRANT OF SECURITY  INTEREST.  Borrower  hereby  pledges,  assigns and
grants a security interest to Lender, as security for payment of all sums due in
respect  of the Loan and the  performance  of all other  terms,  conditions  and


                                      -28-
<PAGE>
covenants of the Loan Documents and this Agreement on Borrower's part to be paid
and  performed,  all of  Borrower's  right,  title  and  interest  in and to the
Required  Repair  Fund and the  Required  Repair  Account.  Borrower  shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security  interest in the Required  Repair Fund or the Required Repair
Account or permit any lien or encumbrance to attach  thereto,  or any levy to be
made thereon, or any UCC-l Financing  Statements,  except those naming Lender as
the secured party, to be filed with respect thereto.

     7.2.3 RELEASE OF REQUIRED  REPAIR FUNDS.  Lender shall disburse to Borrower
all Required  Repair Funds in the Required  Repair Account upon  satisfaction by
Borrower  of each of the  following  conditions:  (a)  Borrower  shall  submit a
written  request  for  payment to Lender at least  thirty (30) days prior to the
date on which  Borrower  requests such payment be made (except in the case of an
emergency repair which requires immediate attention, in which event Borrower may
submit such payment request within ten (10) days),  (b) on the date such request
is  received by Lender and on the date such  payment is to be made,  no Event of
Default  shall  exist and remain  uncured,  (c) Lender  shall have  received  an
Officer's  Certificate from Borrower certifying that all Required Repairs at the
Property for which  disbursement has been requested have been completed (i) in a
good and  workmanlike  manner and (ii) in accordance  with all applicable  Legal
Requirements,  such  certificate  to be  accompanied  by a copy of each license,
permit or other approval, if any, required by any Governmental Authority for the
use or occupancy of the  Property,  (d) Lender shall have  received an Officer's
Certificate from Borrower (i) identifying each Person that supplied materials or
labor in connection with the Required  Repairs for which  disbursement  has been
requested  (ii)  stating  that each such Person has been paid in full or will be
paid in full with the funds  disbursed,  such certificate to be accompanied by a
copy of appropriate  lien waivers or other evidence of payment  satisfactory  to
Lender, (e) at Lender's option, a title search for the Property  indicating that
the  Property  is free  from  all  liens,  claims  and  other  encumbrances  not
previously  approved  by Lender and (f) Lender  shall have  received  such other
evidence as Lender shall  reasonably  request  that the Required  Repairs at the
Property have been  completed and paid for or will be paid for with the proceeds
of such  disbursement.  Lender  shall be required to make only one  disbursement
from the Required Repair Account during a month and such  disbursement  shall be
made only upon  satisfaction of each condition  contained in this Section 7.2.3.
Upon  completion of all Required  Repairs in  accordance  with the terms hereof,
Lender shall  disburse to Borrower  any amounts  then  remaining in the Required
Repair Account.

     7.2.4 FAILURE TO PERFORM REQUIRED REPAIRS.  It shall be an Event of Default
under this  Agreement if (a) Borrower does not complete the Required  Repairs at
the Property by the required deadline for each repair as set forth on Schedule 3
or (b) Borrower  does not satisfy  each  condition  contained  in Section  7.2.3
hereof.  Upon the occurrence of an Event of Default,  Lender, at its option, may
withdraw all Required  Repair Funds from the Required  Repair Account and Lender
may apply  such  funds  either to  completion  of the  Required  Repairs  at the
Property or toward payment of the Debt in such order, proportion and priority as
Lender may  determine  in its sole  discretion.  Lender's  right to withdraw and
apply  Required  Repair  Funds  shall be in  addition  to all other  rights  and
remedies provided to Lender under this Agreement and the other Loan Documents.

     Section 7.3 TAX AND INSURANCE ESCROW FUND.

     7.3.1 TAX AND INSURANCE  ESCROW FUND.  Borrower shall cause to be deposited
in a  subaccount  under the terms of the Custody  Agreement  (a) on each Payment
Date, (i) one-twelfth (1/12) of the Taxes that Lender reasonably  estimates will
be payable  during the next  ensuing  twelve (12) months in order to  accumulate
with  Lender  sufficient  funds to pay all such Taxes at least  thirty (30) days
prior to their respective due dates and (ii) one-twelfth (1/12) of the Insurance
Premiums that Lender  estimates  will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate with
Lender sufficient funds to pay all such Insurance  Premiums at least thirty (30)
days prior to the  expiration  of the Policies and (b) on the Closing  Date,  an
amount which,  when combined with the monthly  deposits  described in (a) above,
shall be sufficient to pay the next  installment  of Taxes and the next required
payment of Insurance  Premiums on the due date therefor (said amounts in (a) and
(b) above hereinafter  called the "Tax and Insurance Escrow Fund").  The Tax and
Insurance  Escrow  Fund,  and the  payments of interest  or  principal  or both,
payable  pursuant to the Note,  shall be added  together and shall be paid as an
aggregate  sum by Borrower to Lender.  Lender will permit the Tax and  Insurance
Escrow Fund to be applied to payments of Taxes and Insurance  Premiums  required
to be made by Borrower  pursuant to Section 5.1 hereof or to reimburse  Borrower
for such  amounts  upon  presentation  of evidence  of payment and an  Officer's
Certificate in form and substance satisfactory to Lender;  subject,  however, to


                                      -29-
<PAGE>
Borrower's  right to contest Taxes in accordance with Section 5.1(b) hereof.  In
authorizing any payment  relating to the Tax and Insurance  Escrow Fund,  Lender
may do so  according  to any  bill,  statement  or  estimate  procured  from the
appropriate  public  office  (with  respect to Taxes) or insurer or agent  (with
respect to Insurance Premiums),  without inquiry into the accuracy of such bill,
statement  or  estimate  or into  the  validity  of any tax,  assessment,  sale,
forfeiture, tax lien or title or claim thereof. If at any time Lender determines
that the Tax and  Insurance  Escrow Fund is not or will not be sufficient to pay
the items set forth in (a) and (b) above,  Lender shall notify  Borrower of such
determination  and Borrower shall increase its monthly payments to Lender by the
amount that Lender reasonably  estimates is sufficient to make up the deficiency
at least thirty (30) days prior to delinquency of the Taxes and/or expiration of
the Policies, as the case may be.

     7.3.2 GRANT OF SECURITY  INTEREST.  Borrower  hereby  pledges,  assigns and
grants a security  interest to Lender,  as security  for payment of all sums due
under the Loan and the performance of all other terms, conditions and provisions
of the Loan  Documents  and this  Agreement  on  Borrower's  part to be paid and
performed,  of all  Borrower's  right,  title and interest in and to the Tax and
Insurance Escrow Fund.  Borrower shall not, without  obtaining the prior written
consent of Lender,  further pledge, assign or grant any security interest in the
Tax and  Insurance  Escrow  Fund,  or permit any lien or  encumbrance  to attach
thereto,  or any levy to be made  thereon,  or any UCC-1  Financing  Statements,
except  those  naming  Lender as the  secured  party,  to be filed with  respect
thereto.

     7.3.3 APPLICATION OF TAX AND INSURANCE ESCROW FUND. Upon the occurrence and
during the  continuance of an Event of Default,  Lender may direct that any sums
then present in the Tax and  Insurance  Escrow Fund be applied to the payment of
the  following  items in any order in its sole  discretion:  (a) Taxes and Other
Charges; (b) Insurance Premiums; (c) interest on the unpaid principal balance of
the Note; (d) amortization of the unpaid  principal  balance of the Note; or (e)
all other sums payable pursuant to this Agreement and the other Loan Documents.

     Section 7.4 CAPITAL RESERVE FUND.

     7.4.1  CAPITAL  RESERVE  FUND.  Borrower  shall cause to be  deposited in a
subaccount  under the terms of the Custody  Agreement  on each  Payment  Date an
amount equal to one-twelfth (1/12th) of the product obtained by multiplying $.25
by the aggregate  amount of square feet of rentable  space in the Property (said
amounts  hereinafter called the "Capital Reserve Fund").  Lender will consent to
the application the Capital Reserve Fund to payment of Approved Capital Expenses
pursuant to the terms  hereof;  provided,  however,  if the Loan shall have been
accelerated or if there is an Event of Default which is continuing,  then Lender
may direct that such Capital  Reserve  Fund be applied  against the Debt in such
priority and  proportions  as Lender in its sole and absolute  discretion  shall
deem  proper.  

     7.4.2 GRANT OF SECURITY  INTEREST.  Borrower  hereby pledges and assigns to
Lender,  and grants to Lender a security interest in all Borrower's right, title
and interest in and to the Capital  Reserve Fund, as security for payment of all
sums due under the Loan and the  performance of all other terms,  conditions and
provisions  of the Loan  Documents and this  Agreement on Borrower's  part to be
paid and  performed.  Borrower  shall not,  without  obtaining the prior written
consent of Lender,  further pledge, assign or grant any security interest in the
Capital  Reserve Fund, or permit any lien or encumbrance to attach  thereto,  or
any levy to be made thereon,  or any UCC-1  Financing  Statements,  except those
naming  Lender as the secured  party,  to be filed with  respect  thereto.  This
Agreement  is,  among  other  things,  intended  by the parties to be a security
agreement for purposes of the Illinois Uniform Commercial Code.

     7.4.3  APPLICATION OF CAPITAL  RESERVE FUND. Upon the occurrence and during
the  continuance  of an Event of  Default,  Lender may direct that any sums then
present in the Capital  Reserve Fund be applied to the payment of the  following
items in any order in its sole discretion: (a) Capital Expenses; (b) interest on
the  unpaid  principal  balance  of the Note;  (c)  amortization  of the  unpaid
principal  balance of the Note;  or (d) all other sums payable  pursuant to this
Agreement and the other Loan Documents.

     7.4.4 PAYMENT OF CAPITAL  EXPENSES.  Funds held in the Capital Reserve Fund
may be used for Approved  Capital  Expenses in accordance  with the terms of the
Cash Collateral Account Agreement.

     Section 7.5 COLLATERAL SHORTFALL RESERVE FUND.

     7.5.1  COLLATERAL  SHORTFALL  RESERVE  FUND.  Borrower  shall  cause  to be
deposited  with Lender the amount of the  "Collateral  Shortfall  Deposit" (said

                                      -30-
<PAGE>
amount  hereinafter  called the  "Collateral  Shortfall  Reserve Fund") required
pursuant to the terms of that certain Standstill  Agreement dated as of December
15, 1997 by and between Mayfair Joint Venture,  LaSalle Land Partnership,  L.P.,
LaSalle Lake Investors, and Borrower (as assignee of Prime Group Realty, L.P.).

     7.5.2 GRANT OF SECURITY  INTEREST.  Borrower  hereby pledges and assigns to
Lender,  and grants to Lender a security interest in all Borrower's right, title
and interest in and to the Collateral Shortfall Reserve, as security for payment
of all  sums  due  under  the  Loan  and the  performance  of all  other  terms,
conditions and provisions of the Loan Documents and this Agreement on Borrower's
part to be paid and performed.  Borrower shall not, without  obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in the Collateral  Shortfall  Reserve Fund, or permit any lien or encumbrance to
attach  thereto,  or  any  levy  to be  made  thereon,  or any  UCC-1  Financing
Statements,  except those naming Lender as the secured  party,  to be filed with
respect thereto. This Agreement is, among other things,  intended by the parties
to be a security agreement for purposes of the Illinois Uniform Commercial Code.

     7.5.3  APPLICATION  OF  COLLATERAL  SHORTFALL  RESERVE.  Funds  held in the
Collateral Shortfall Reserve Fund shall be used for payment of Debt Service upon
presentation to Lender of evidence  satisfactory to Lender that sufficient funds
for payment of such Debt Service are not  available in the account held pursuant
to the Custody  Agreement for such purpose provided that upon the occurrence and
during the  continuance of an Event of Default,  Lender may direct that any sums
present in the  Collateral  Shortfall  Reserve Fund be applied to the payment of
all sums payable  pursuant to this Agreement and any other Loan Document in such
order as Lender may determine.

     Section 7.6 PAYMENT OF APPROVED OPERATING EXPENSES.  Funds held in the Cash
Collateral  Account may be used for Approved  Operating  Expenses in  accordance
with the terms of the Cash Collateral Account Agreement,  provided that such use
shall be in Lender's  discretion if an Event of Default has occurred and remains
uncured. VIII. DEFAULTS

     Section 8.1 EVENT OF DEFAULT.

     (a) Each of the  following  events  shall  constitute  an event of  default
hereunder (each, an "Event of Default"):

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

          (ii) if any of the Taxes or Other  Charges  are not paid when the same
are due and payable,  subject to the right to contest Taxes and Other Charges in
accordance  with Section 5.1(b) hereof,  provided that such event shall not have
been cured within five (5) days;

          (iii) if  insurance  on the  Property  is not kept in full  force  and
effect in  accordance  with the terms of this  Agreement  and the Property  Loan
Documents,  or if the  certificates  are not delivered to Lender within five (5)
Business Days following request;

          (iv)  if,  without  Lender's  prior  written  consent,   (A)  Borrower
transfers or encumbers all or any portion of the Property Loan or (B) any direct
or indirect  interest in Borrower is transferred or assigned except as expressly
permitted under Section 6.1(j) hereof;

          (v) if any  representation  or warranty made by Borrower  herein or in
any other Loan Document, or in any report,  certificate,  financial statement or
other instrument, agreement or document furnished by Borrower in connection with
this Agreement or any other Loan  Document,  shall be false or misleading in any
material respect as of the date the representation or warranty was made;

          (vi) if Borrower or Owner shall make an assignment  for the benefit of
creditors,  or if Borrower or Owner shall  generally  not be paying its debts as
they become due;

          (vii) if a receiver,  liquidator  or trustee  shall be  appointed  for
Borrower or Owner or if Borrower  or Owner  shall be  adjudicated  a bankrupt or
insolvent,  or if any petition for  bankruptcy,  reorganization  or  arrangement
pursuant to federal  bankruptcy  law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Borrower or Owner, or
if any  proceeding  for the  dissolution  or  liquidation  of Borrower  shall be
instituted;  and if such appointment,  adjudication,  petition or proceeding was
involuntary  and  not  consented  to by  Borrower  or  Owner,  the  same  is not
discharged, stayed or dismissed within sixty (60) days;



                                      -31-
<PAGE>
          (viii) if Borrower attempts to assign its respective rights under this
Agreement  in  contravention  of the Loan  Documents  or any of the  other  Loan
Documents or any interest herein or therein;

          (ix) if Borrower defaults in any of its negative  covenants  contained
in Section 6.1 or any covenant contained in Section 4.1(dd) hereof;

          (x) if an Event of Default as defined or described in any of the other
Loan Documents occurs,  whether as to Borrower or the Property,  or if any other
such event shall occur or condition  shall exist, if the effect of such event or
condition is to accelerate  the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt;

          (xi) if an Event of Default occurs under the Property Loan Documents;

          (xii) if  Borrower  shall be in default  under any term,  covenant  or
provision set forth herein which  specifically  contains a notice requirement or
grace  period  after the giving of such notice or the  expiration  of such grace
period;  or (xiii) if Borrower  shall continue to be in Default under any of the
other  terms,  covenants  or  conditions  of this  Agreement  not  specified  in
subsections  (i) to (xii) above,  for fifteen (15) days after notice to Borrower
from Lender,  in the case of any Default  which can be cured by the payment of a
sum of money,  or for thirty  (30) days after  notice from Lender in the case of
any other  Default;  provided,  however,  that if such  non-monetary  Default is
susceptible of cure but cannot reasonably be cured within such 30-day period and
provided  further that Borrower shall have commenced to cure such Default within
such 30-day period and thereafter diligently and expeditiously  proceeds to cure
the same, such 30-day period shall be extended for an additional  period of time
as is reasonably necessary for Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed sixty (60) days.

     (b) Upon the  occurrence  of an Event of  Default  (other  than an Event of
Default  described  in  clauses  (vi),  (vii) or (viii)  above)  and at any time
thereafter Lender may, in addition to any other rights or remedies  available to
it  pursuant  to this  Agreement  and the other Loan  Documents  or at law or in
equity, take such action,  without notice or demand, that Lender deems advisable
to protect and enforce its rights  against  Borrower  and in and to the Property
Loan Documents,  including declaring the Debt to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or remedies provided
in the Loan Documents against Borrower and the Property, including all rights or
remedies  available at law or in equity; and upon any Event of Default described
in clauses (vi),  (vii) or (viii) above,  the Debt and all other  obligations of
Borrower  hereunder and under the other Loan  Documents  shall  immediately  and
automatically  become due and payable,  without  notice or demand,  and Borrower
hereby expressly waives any such notice or demand,  anything contained herein or
in any other Loan Document to the contrary notwithstanding.

     Section 8.2 REMEDIES.

     (a) Upon the  occurrence of an Event of Default,  all or any one or more of
the rights,  powers,  privileges and other remedies  available to Lender against
Borrower under this  Agreement or any of the other Loan  Documents  executed and
delivered  by Borrower or at law or in equity may be  exercised by Lender at any
time  and  from  time to time,  whether  or not all or any of the Debt  shall be
declared due and payable,  and whether or not Lender  shall have  commenced  any
foreclosure  proceeding  or other action for the  enforcement  of its rights and
remedies under any of the Loan Documents. Any such actions taken by Lender shall
be  cumulative  and  concurrent  and  may  be  pursued  independently,   singly,
successively,  together or  otherwise,  at such time and in such order as Lender
may determine in its sole  discretion,  to the fullest extent  permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.  Without  limiting the generality of the foregoing,  Borrower  agrees
that if an Event of Default is continuing  (i) Lender is not subject to any "one
action"  or  "election  of  remedies"  law or rule and (ii) all  liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies.

     (c) Subject to the  Property  Loan  Documents,  Lender shall have the right
from  time to time to sever the Note and the other  Loan  Documents  into one or
more  separate   notes,   mortgages  and  other   security   documents  in  such
denominations  as Lender shall  determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies  provided  hereunder.  Borrower
shall  execute  and  deliver  to Lender  from time to time,  promptly  after the
request of Lender,  a severance  agreement  and such other  documents  as Lender
shall  request  in order to effect  the  severance  described  in the  preceding


                                      -32-
<PAGE>
sentence,  all in form and substance  reasonably  satisfactory to Lender. In the
event Borrower fails to execute within five (5) days, Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest,  in its name and stead to make and execute all documents  necessary or
desirable to effect the  aforesaid  severance,  Borrower  ratifying all that its
said attorney shall do by virtue thereof.

     Section 8.3 REMEDIES CUMULATIVE.  The rights, powers and remedies of Lender
under this  Agreement  shall be cumulative and not exclusive of any other right,
power  or  remedy  which  Lender  may have  against  Borrower  pursuant  to this
Agreement  or the  other  Loan  Documents,  or  existing  at law or in equity or
otherwise.   Lender's  rights,  powers  and  remedies  may  be  pursued  singly,
concurrently  or  otherwise,  at such  time  and in such  order  as  Lender  may
determine  in Lender's  sole  discretion.  No delay or omission to exercise  any
remedy,  right or power  accruing upon an Event of Default shall impair any such
remedy,  right or power or shall be construed as a waiver thereof,  but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed  expedient.  A waiver of one Default or Event of Default  with respect to
Borrower  shall not be  construed  to be a waiver of any  subsequent  Default or
Event of Default by Borrower or to impair any remedy,  right or power consequent
thereon.

IX.  SPECIAL PROVISIONS
     ------------------

     Section 9.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.

     9.1.1 COOPERATION.  At Lender's request (to the extent not already required
to be provided  by  Borrower  under this  Agreement),  Borrower,  at no cost and
expense  to  Borrower,  shall use  reasonable  efforts  to  satisfy  the  market
standards  to  which  Lender  customarily  adheres  or which  may be  reasonably
required in the  marketplace or by the Rating Agencies in connection with one or
more  sales  or   assignments   of  the  Note  or   participations   therein  or
securitizations  of rated single or  multiclass  securities  (the  "Securities")
secured by or evidencing  ownership interests in the Note and the Mortgage (each
such sale, assignment,  participation and/or securitization, a "Secondary Market
Transaction"). Without limiting the generality of the foregoing, Borrower shall,
at the request of Lender in connection with any Secondary Market Transaction, at
no cost and expense to Borrower and so long as the Loan is still outstanding:

     (a) (i) provide such  financial and other  information  with respect to the
Property,  Borrower and its Affiliates,  Manager and any tenants of the Property
in Borrower's  possession,  (ii) provide  business plans and budgets relating to
the Property and (iii) subject to the Property Loan Documents  perform or permit
or cause to be performed or permitted such site inspection, appraisals, surveys,
market   studies,   environmental   reviews  and  reports  (Phase  I's  and,  if
appropriate,   Phase  II's),   engineering   reports  and  other  due  diligence
investigations of the Property, as may be reasonably requested from time to time
by Lender or the  Rating  Agencies  or as may be  necessary  or  appropriate  in
connection with a Secondary Market Transaction or Exchange Act requirements (the
items  provided  to Lender  pursuant  to this  paragraph  (a) being  called  the
"Provided Information"),  together, if customary,  with appropriate verification
of and/or  consents to the Provided  Information  through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the Rating
Agencies;

     (b)  at  Borrower's  expense,  cause  counsel  to  render  opinions  as  to
non-consolidation,  fraudulent  conveyance,  true sale and true contribution and
any other opinion customary in  securitization  transactions with respect to the
Property,  Borrower and its  Affiliates,  which  counsel and  opinions  shall be
reasonably satisfactory to Lender and the Rating Agencies;

     (c) make such  representations and warranties as of the closing date of any
Secondary Market Transaction with respect to the Property, Borrower and the Loan
Documents  as  are  customarily  provided  in  such  transactions  and as may be
reasonably  requested by Lender or the Rating  Agencies and consistent  with the
facts covered by such  representations  and warranties as they exist on the date
thereof,   including  the  representations  and  warranties  made  in  the  Loan
Documents;

     (d) provide current  certificates of good standing and  qualification  with
respect to Borrower from appropriate Governmental Authorities; and

     (e)  execute  such   amendments  to  the  Loan   Documents  and  Borrower's
organizational  documents,  enter into a lock-box  or similar  arrangement  with
respect  to the  Rents and  establish  and fund such  reserve  funds  (including
reserve  funds for  deferred  maintenance  and capital  improvements)  as may be

                                      -33-
<PAGE>
requested  by Lender or the Rating  Agencies or  otherwise to effect a Secondary
Market Transaction, provided that nothing contained in this subsection (e) shall
result in a material economic change in the transaction.

Lender  shall pay all  reasonable  third  party costs and  expenses  incurred by
Lender in connection with a Secondary Market Transaction

     9.1.2 USE OF INFORMATION.  Borrower  understands that all or any portion of
the Provided  Information and the Required Records may be included in disclosure
documents  in  connection  with a  Secondary  Market  Transaction,  including  a
prospectus or private placement  memorandum (each, a "Disclosure  Document") and
may also be included in filings  with the  Securities  and  Exchange  Commission
pursuant to the Securities Act of 1933, as amended (the  "Securities  Act"),  or
the  Securities and Exchange Act of 1934, as amended (the  "Exchange  Act"),  or
provided  or  made  available  to  investors  or  prospective  investors  in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market  Transaction.  In the event that the Disclosure Document
is required to be revised,  Borrower shall cooperate with Lender in updating the
Provided  Information  or  Required  Records  for  inclusion  or  summary in the
Disclosure  Document or for other use reasonably  required in connection  with a
Secondary Market Transaction by providing all current information  pertaining to
Borrower,  Manager and the Property  necessary to keep the  Disclosure  Document
accurate  and complete in all material  respects  with respect to such  matters.
Such  disclosure  may  include  the  opinion or  judgment  of Lender or Servicer
concerning  the Provided  Information  or other matters  disclosed,  and despite
reasonable good faith efforts by Lender and/or  Servicer,  the disclosure may be
erroneous  or  incomplete.   Borrower  hereby  consents  to  any  and  all  such
disclosures of such information.

     9.1.3 BORROWER OBLIGATIONS  REGARDING DISCLOSURE  DOCUMENTS.  In connection
with a Disclosure Document, Borrower shall:

     (a) if requested by Lender,  certify in writing that Borrower has carefully
examined those portions of such Disclosure Document, pertaining to Borrower, the
Property,  the  Manager  and the  Loan,  including  applicable  portions  of the
sections  entitled  "Special  Considerations",  "Description  of the Mortgages",
"Description of the Mortgage Loans and Mortgaged Property",  "The Manager", "The
Borrower" and "Certain  Legal Aspects of the Mortgage  Loan",  and such portions
(and  portions of any other  sections  reasonably  requested  and  pertaining to
Borrower,  the  Property,  the  Manager or the Loan) do not  contain  any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances  under which they
were made, not misleading;

     (b)  indemnify (i) any  underwriter,  syndicate  member or placement  agent
(collectively,  the  "Underwriters")  retained by Lender or its issuing  company
affiliate (the "Issuer") in connection with a Secondary Market Transaction, (ii)
Lender  and  (iii)  the  Issuer  that is named  in the  Disclosure  Document  or
registration   statement   relating  to  a  Secondary  Market  Transaction  (the
"Registration  Statement"),  and  each of the  Issuer's  directors,  each of its
officers who have signed the  Registration  Statement  and each person or entity
who  controls  the Issuer or the Lender  within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"CCA Group"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively,  the "Underwriter  Group") for any losses,
claims,  damages or liabilities  (the  "Liabilities")  to which Lender,  the CCA
Group or the Underwriter Group may become subject (including  reimbursing all of
them for any  legal or other  expenses  actually  incurred  in  connection  with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue  statement  or alleged  untrue  statement of any
material  fact  contained  in  any  of  the  Required  Records  or in any of the
applicable  portions of such sections of the Disclosure  Document  applicable to
Borrower,  Manager,  the Property  (but only to the extent such  information  is
supplied  by  Borrower)  or the  Loan,  or arise  out of or are  based  upon the
Borrower's  omission  or  alleged  omission  to state  therein a  material  fact
required to be stated in the  applicable  portions of such sections or necessary
in order to make the statements in the  applicable  portions of such sections in
light  of  the  circumstances   under  which  they  were  made,  not  materially
misleading,  provided, however, that Borrower shall not be required to indemnify
Lender for any  Liabilities  relating to untrue  statements  or omissions  which
Borrower  identified to Lender in writing at the time of Borrower's  examination
of such Disclosure Document; and

     (c) reimburse  any member of the CCA Group for any legal or other  expenses
reasonably incurred by such member in connection with investigating or defending
the Liabilities.

                                      -34-
<PAGE>
Borrower's  Liability  under  clause  (a) or  (b)  above  shall  be  limited  to
Liabilities arising out of or based upon any such materially untrue statement or
omission  made  therein in  reliance  upon and in  conformity  with  information
furnished  to  Lender  by or on  behalf  of  Borrower  in  connection  with  the
preparation of those portions of the Disclosure Document pertaining to Borrower,
Manager,  the Property (but only to the extent such  information  is supplied by
Borrower)  or the Loan or in  connection  with  the  underwriting  of the  debt,
including financial statements of Borrower, operating statements, rent rolls and
other  Required  Records,  environmental  site  assessment  reports and property
condition reports with respect to the Property.  The foregoing indemnity will be
in addition to any liability which Borrower may otherwise have.

     9.1.4 BORROWER  INDEMNITY  REGARDING  FILINGS.  In connection  with filings
under the Exchange Act, Borrower shall (i) indemnify  Lender,  the CCA Group and
the Underwriter Group for any Liabilities to which Lender,  the CCA Group or the
Underwriter  Group may become subject insofar as the Liabilities arise out of or
are based  upon the  Borrower's  omission  or alleged  omission  to state in the
Provided  Information or Required  Records a material fact required to be stated
by Borrower in the Provided Information or Required Records in order to make the
statements  in the Provided  Information  or Required  Records,  in light of the
circumstances  under  which  they were made not  misleading  and (ii)  reimburse
Lender,  the CCA Group or the Underwriter  Group for any legal or other expenses
actually  incurred by Lender,  CCA Group or the Underwriter  Group in connection
with defending or investigating the Liabilities.

     9.1.5 INDEMNIFICATION  PROCEDURE.  Promptly after receipt by an indemnified
party under Section 9.1.3 or 9.1.4 of notice of the  commencement  of any action
for which a claim  for  indemnification  is to be made  against  Borrower,  such
indemnified party shall notify Borrower in writing of such commencement, but the
omission to so notify the Borrower will not relieve  Borrower from any liability
that it may have to any indemnified  party  hereunder  except to the extent that
failure to notify causes prejudice to Borrower.  In the event that any action is
brought  against  any  indemnified  party,  and  it  notifies  Borrower  of  the
commencement  thereof,  Borrower  will  be  entitled,  jointly  with  any  other
indemnifying  party, to participate therein and, to the extent that it (or they)
may elect by written notice  delivered to the  indemnified  party promptly after
receiving the aforesaid  notice of  commencement,  to assume the defense thereof
with counsel  satisfactory to such  indemnified  party in its discretion.  After
notice  from  Borrower  to such  indemnified  party  under this  Section  9.1.5,
Borrower shall not be responsible  for any legal or other expenses  subsequently
incurred by such indemnified  party in connection with the defense thereof other
than reasonable costs of investigation;  provided, however, if the defendants in
any  such  action  include  both  Borrower  and an  indemnified  party,  and any
indemnified  party  shall  have  reasonably  concluded  that there are any legal
defenses  available to it and/or other  indemnified  parties that are  different
from or additional to those available to Borrower, then the indemnified party or
parties  shall have the right to select  separate  counsel to assert  such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Borrower shall not be liable for the expenses
of more than one separate  counsel unless there are legal defenses  available to
it  that  are  different  from or  additional  to  those  available  to  another
indemnified party.

     9.1.6 CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnity  agreement provided for in Section 9.1.3
or 9.1.4 is for any reason held to be unenforceable  by an indemnified  party in
respect of any  Liabilities (or action in respect  thereof)  referred to therein
which would otherwise be  indemnifiable  under Section 9.1.3 or 9.1.4,  Borrower
shall  contribute  to the amount paid or payable by the  indemnified  party as a
result of such Liabilities (or action in respect  thereof);  provided,  however,
that no Person  guilty of  fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
Person not  guilty of such  fraudulent  misrepresentation.  In  determining  the
amount of  contribution  to which  the  respective  parties  are  entitled,  the
following  factors  shall be  considered:  (i) the CCA  Group's  and  Borrower's
relative knowledge and access to information  concerning the matter with respect
to which the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations  appropriate
in the  circumstances.  Lender  and  Borrower  hereby  agree  that it may not be
equitable if the amount of such  contribution were determined by pro rata or per
capita allocation.

     9.1.7  RATING  SURVEILLANCE.  Lender  will  retain the Rating  Agencies  to
provide rating  surveillance  services on  Securities.  The pro rata expenses of
such  surveillance  will  be  paid  for by  Borrower  based  on  the  applicable
percentage  of  such  expenses  determined  by  dividing  the  then  outstanding
Principal by the then  aggregate  outstanding  amount of the pool created in the
Secondary Market Transaction which includes the Loan.
                                      -35-
<PAGE>
     Section 9.2 RESERVED.

     Section 9.3 RESERVED.

     Section 9.4 EXCULPATION.  Subject to the qualifications below, Lender shall
not enforce the liability and  obligation of Borrower to perform and observe the
obligations contained in the Note, this Agreement or the other Loan Documents by
any  action or  proceeding  wherein  a money  judgment  shall be sought  against
Borrower,  except that subject to the provisions of the Loan Documents governing
remedies,  Lender  may  bring a  foreclosure  action,  an  action  for  specific
performance  or any other  appropriate  action or proceeding to enable Lender to
enforce and realize upon its interest  under the Note,  this  Agreement  and the
other Loan Documents,  or any other  collateral  given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any  judgment  in any such action or  proceeding  shall be  enforceable  against
Borrower only to the extent of  Borrower's  interest in the Property  Loan,  the
Property,  in the Rents and in any other collateral given to Lender, and Lender,
by accepting the Note, the Mortgage and the other Loan Documents, agrees that it
shall not sue for, seek or demand any deficiency  judgment  against  Borrower in
any such action or  proceeding  under or by reason of or under or in  connection
with the Note,  this  Agreement or the other Loan  Documents.  The provisions of
this section shall not, however, (a) constitute a waiver,  release or impairment
of any obligation evidenced or secured by any of the Loan Documents;  (b) impair
the right of Lender to name Borrower as a party  defendant in any action or suit
for foreclosure  and sale under the Loan  Documents;  (c) affect the validity or
enforceability of or any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder;  (d) constitute a prohibition  against
Lender commencing any other appropriate action or proceeding in order for Lender
to fully  realize  the  security  granted by the  Mortgage  or to  exercise  its
remedies against the Property; or (e) constitute a waiver of the right of Lender
to enforce the  liability  and  obligation  of  Borrower,  by money  judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability, claim or
other  obligation  incurred  by  Lender  (including  attorneys'  fees and  costs
reasonably incurred) arising out of or in connection with the following:

     (i) fraud or intentional  misrepresentation by Borrower or any guarantor in
connection with the Loan;

     (ii) the gross negligence or willful misconduct of Borrower;

     (iii) the  misapplication  or  conversion  by Borrower of (A) any insurance
proceeds paid by reason of any loss, damage or destruction to the Property,  (B)
any awards or other amounts  received in connection with the condemnation of all
or a portion of the  Property,  or (C) any Rents  following an Event of Default;
and

     (iv) Borrower's indemnification of Lender set forth in Section 9.2.

Notwithstanding  anything to the  contrary in this  Agreement or any of the Loan
Documents,  (x) Lender shall not be deemed to have waived any right which Lender
may have under Sections 506(a),  506(b),  1111(b) or any other provisions of the
U.S.  Bankruptcy Code to file a claim for the full amount of the Debt secured by
the Mortgage or to require that all  collateral  shall continue to secure all of
the Debt owing to Lender in accordance with the Loan Documents, and (y) the Debt
shall be fully  recourse  to  Borrower  in the event  that:  (aa) the first full
monthly  payment of principal and interest  under the Note is not paid when due;
(bb) Borrower  fails to permit on site  inspections  of the  Property,  fails to
provide financial information,  fails to maintain its status as a single purpose
entity or fails to appoint a new  property  manager  upon the  request of Lender
after an Event of Default, each as required by, and in accordance with the terms
and provisions of, this Loan  Agreement;  (cc) Borrower fails to obtain Lender's
prior  written  consent to any  subordinate  financing or other  voluntary  lien
encumbering  the Property Loan; or (dd) Borrower fails to obtain  Lender's prior
written consent to any assignment,  transfer, or conveyance of the Property Loan
or any interest therein.

     Section 9.5  TERMINATION OF MANAGER.  If an Event of Default is continuing,
Borrower  shall,  at the request of Lender,  use good faith efforts to cause the
termination of the Management  Agreement and the replacement of the Manager with
a manager approved by Lender on terms and conditions satisfactory to Lender.

     Section 9.6 RETENTION OF SERVICER.  Lender reserves the right to retain the
Servicer  to act as its agent  hereunder  with such  powers as are  specifically
delegated  to the  Servicer  by Lender,  whether  pursuant  to the terms of this
Agreement,  the Pooling and Servicing  Agreement or the Cash Collateral  Account
Agreement  or  otherwise,  together  with such  other  powers as are  reasonably


                                      -36-
<PAGE>
incidental  thereto.  Borrower shall pay any reasonable fees and expenses of the
Servicer  in  connection  with an  assumption  or  modification  of the  Loan or
enforcement of the Loan Documents.

X.   MISCELLANEOUS
     -------------

     Section  10.1  SURVIVAL.  This  Agreement  and all  covenants,  agreements,
representations  and warranties  made herein and in the  certificates  delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note,  and shall continue in full force and effect
so long as all or any of the Debt is  outstanding  and unpaid (but the  accuracy
thereof shall be determined as of the Closing Date).  Whenever in this Agreement
any of the parties  hereto is referred  to,  such  reference  shall be deemed to
include the legal  representatives,  successors  and assigns of such party.  All
covenants,  promises and agreements in this  Agreement  made by Borrower,  shall
inure to the benefit of the  respective  legal  representatives,  successors and
assigns of Lender.

     Section 10.2  LENDER'S  DISCRETION.  Whenever  pursuant to this  Agreement,
Lender  exercises  any  right  given  to it to  approve  or  disapprove,  or any
arrangement or term is to be satisfactory  to Lender,  the decision of Lender to
approve  or  disapprove  or  to  decide  whether   arrangements   or  terms  are
satisfactory  or not  satisfactory  shall  (except as is otherwise  specifically
herein  provided)  be in the sole  discretion  of Lender  and shall be final and
conclusive.

     Section 10.3 GOVERNING LAW.

     (a) THIS  AGREEMENT WAS  NEGOTIATED  IN THE STATE OF ILLINOIS,  AND MADE BY
LENDER AND  ACCEPTED BY BORROWER IN THE STATE OF  ILLINOIS,  AND THE PROCEEDS OF
THE NOTE  DELIVERED  PURSUANT  HERETO WERE DISBURSED FROM THE STATE OF ILLINOIS,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL  RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING  TRANSACTION  EMBODIED HEREBY, AND IN ALL RESPECTS,  INCLUDING
MATTERS OF  CONSTRUCTION,  VALIDITY  AND  PERFORMANCE,  THIS  AGREEMENT  AND THE
OBLIGATIONS  ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,  THE LAWS OF THE  STATE  OF  ILLINOIS  APPLICABLE  TO  CONTRACTS  MADE AND
PERFORMED IN SUCH STATE AND ANY  APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT  THAT AT ALL TIMES  THE  PROVISIONS  FOR THE  CREATION,  PERFECTION,  AND
ENFORCEMENT  OF THE LIENS AND SECURITY  INTERESTS  CREATED  PURSUANT  HERETO AND
PURSUANT  TO THE  OTHER  LOAN  DOCUMENTS  SHALL  BE  GOVERNED  BY AND  CONSTRUED
ACCORDING  TO THE LAW OF THE STATE IN WHICH THE  PROPERTY IS  LOCATED,  IT BEING
UNDERSTOOD  THAT, TO THE FULLEST EXTENT  PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF ILLINOIS SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS  ARISING HEREUNDER
OR  THEREUNDER.  TO  THE  FULLEST  EXTENT  PERMITTED  BY  LAW,  BORROWER  HEREBY
UNCONDITIONALLY  AND IRREVOCABLY  WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE.

     (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN CHICAGO,  ILLINOIS,  AND BORROWER AND LENDER WAIVE ANY OBJECTION  WHICH
THEY MAY NOW OR HEREAFTER  HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,  ACTION
OR  PROCEEDING,  AND  BORROWER  AND  LENDER  HEREBY  IRREVOCABLY  SUBMIT  TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  BORROWER DOES
HEREBY  DESIGNATE AND APPOINT CT CORPORATION,  AS ITS AUTHORIZED AGENT TO ACCEPT
AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN CHICAGO,
ILLINOIS, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN  NOTICE OF SAID  SERVICE OF BORROWER  MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON  BORROWER,  IN ANY SUCH SUIT,  ACTION OR PROCEEDING IN THE STATE OF
ILLINOIS. BORROWER (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED  AGENT  HEREUNDER,  (ii) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A  SUBSTITUTE  AUTHORIZED  AGENT WITH AN OFFICE IN  CHICAGO,  ILLINOIS
(WHICH  OFFICE  SHALL BE  DESIGNATED  AS THE ADDRESS FOR SERVICE OF PROCESS) AND
(iii) SHALL PROMPTLY  DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES
TO HAVE AN  OFFICE  IN  CHICAGO,  ILLINOIS  OR IS  DISSOLVED  WITHOUT  LEAVING A
SUCCESSOR.

     Section 10.4 MODIFICATION,  WAIVER IN WRITING. No modification,  amendment,
extension, discharge,  termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan  Document,  nor consent to any departure by
Borrower therefrom,  shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought,  and then such
waiver or consent shall be effective only in the specific instance,  and for the


                                      -37-
<PAGE>
purpose,  for which given.  Except as otherwise  expressly  provided herein,  no
notice to, or demand on Borrower,  shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.

     Section  10.5 DELAY NOT A WAIVER.  Neither any failure nor any delay on the
part of Lender in  insisting  upon strict  performance  of any term,  condition,
covenant or  agreement,  or  exercising  any right,  power,  remedy or privilege
hereunder,  or under  the Note or under any other  Loan  Document,  or any other
instrument given as security  therefor,  shall operate as or constitute a waiver
thereof,  nor shall a single or  partial  exercise  thereof  preclude  any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular,  and not by way of limitation, by accepting payment after the due
date of any  amount  payable  under this  Agreement,  the Note or any other Loan
Document,  Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement,  the Note
or the other  Loan  Documents,  or to  declare a default  for  failure to effect
prompt payment of any such other amount.

     Section  10.6  NOTICES.  All  notices,  consents,  approvals  and  requests
required or permitted  hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand  delivered or sent by
(a) certified or registered United States mail, postage prepaid or (b) expedited
prepaid  delivery  service,  either  commercial or United States Postal Service,
with proof of attempted delivery, addressed as follows (or at such other address
and person as shall be designated from time to time by any party hereto,  as the
case may be, in a  written  notice to the  other  parties  hereto in the  manner
provided for in this Section):

                  If to Lender:

                           The Capital Company of America
                           c/o The Capital Company of America
                           Client Services, LLC
                           600 East Colinas Blvd., Suite 1300
                           Irving, Texas  75639
                           Attention:  Legal Department

                  with copies to:

                           The Capital Company of America
                           311 S. Wacker Drive, Suite 5400
                           Chicago, Illinois  60606
                           Attention:  David Murdoch, Jr.

                           Sonnenschein Nath & Rosenthal
                           8000 Sears Tower
                           Chicago, Illinois  60606
                           Attention:  Steven R. Davidson

                  If to Borrower:

                           c/o Prime Group Realty Trust
                           77 West Wacker Drive, Suite 3900
                           Chicago, Illinois 60601
                           Attention: Louis Conforti

                  with copies to:

                           Prime Group Realty Trust
                           77 West Wacker Drive, Suite 3900
                           Chicago, Illinois 60601
                           Attention:  James F. Hoffman, Esq.

                           Winston & Strawn
                           35 W. Wacker Drive
                           Chicago, Illinois 60601

                           Attention:  Wayne D. Boberg

                  and

                           Mayfair Joint Venture
                           LaSalle Land Partnership, L.P.
                           LaSalle Lake Investors
                           180 N. LaSalle St.
                           Chicago, Illinois 60601


                                      -38-
<PAGE>

A notice shall be deemed to have been given:  in the case of hand  delivery,  at
the  time of  delivery;  in the  case of  registered  or  certified  mail,  when
delivered or the first  attempted  delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy,  upon the first attempted delivery on a
Business Day.

     Section 10.7 WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER HEREBY AGREE NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE  TRIABLE  OF RIGHT BY JURY,  AND WAIVE ANY
RIGHT TO TRIAL BY JURY  FULLY TO THE  EXTENT  THAT ANY SUCH  RIGHT  SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION  THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER,  AND IS INTENDED
TO ENCOMPASS  INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A TRIAL BY JURY WOULD  OTHERWISE  ACCRUE.  LENDER AND  BORROWER  ARE EACH HEREBY
AUTHORIZED  TO FILE A COPY OF THIS  PARAGRAPH IN ANY  PROCEEDING  AS  CONCLUSIVE
EVIDENCE OF THIS WAIVER.

     Section 10.8 HEADINGS. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

     Section  10.9  SEVERABILITY.  Wherever  possible,  each  provision  of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions of this Agreement.

     Section 10.10  PREFERENCES.  Lender shall have the continuing and exclusive
right to apply or reverse and  reapply  any and all  payments by Borrower to any
portion of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
or  required  to be repaid to a trustee,  receiver  or any other party under any
bankruptcy  law, state or federal law, common law or equitable  cause,  then, to
the extent of such payment or proceeds  received,  the obligations  hereunder or
part  thereof  intended to be  satisfied  shall be revived and  continue in full
force and  effect,  as if such  payment or  proceeds  had not been  received  by
Lender.

     Section  10.11  WAIVER OF NOTICE.  Borrower  shall not be  entitled  to any
notices of any nature  whatsoever from Lender except with respect to matters for
which this  Agreement or the other Loan  Documents  specifically  and  expressly
provide for the giving of notice by Lender to Borrower  and except with  respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted  to waive the  giving  of  notice.  To the  extent  permitted  by law,
Borrower  hereby  expressly  waives the right to receive  any notice from Lender
with respect to any matter for which this  Agreement or the other Loan Documents
do not specifically and expressly  provide for the giving of notice by Lender to
Borrower.

     Section  10.12  REMEDIES  OF  BORROWER.  In  the  event  that  a  claim  or
adjudication is made that Lender or its agents,  including Servicer,  have acted
unreasonably  or  unreasonably  delayed acting in any case where by law or under
this Agreement or the other Loan  Documents,  Lender or such agent,  as the case
may be, has an obligation to act  reasonably or promptly,  Borrower  agrees that
neither  Lender  nor its  agents,  including  Servicer,  shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking  injunctive  relief or declaratory  judgment.  The parties hereto
agree  that any  action or  proceeding  to  determine  whether  Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.

     Section 10.13 EXPENSES; INDEMNITY.

     (a) Except as otherwise provided in this Agreement,  Borrower covenants and
agrees to  reimburse  Lender (or the  holder of the Loan,  as  applicable)  upon
receipt of written notice from such holder for all reasonable costs and expenses
(including reasonable  attorneys' fees and disbursements)  incurred by Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the  consummation of the transactions
contemplated  hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Property);  (ii)  Borrower's  ongoing  performance  of and  compliance  with
Borrower's  respective  agreements and covenants contained in this Agreement and


                                      -39-
<PAGE>
the other Loan  Documents on its part to be performed or complied with after the
Closing Date, including  confirming  compliance with environmental and insurance
requirements;  (iii)  Lender's  ongoing  performance  and  compliance  with  all
agreements  and  conditions  contained  in this  Agreement  and the  other  Loan
Documents on its part to be performed or complied  with after the Closing  Date;
(iv) the negotiation, preparation, execution, delivery and administration of any
consents,  amendments,  waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Lender; (v)
Borrower  complying  with any  requests  made  pursuant  to  Section  9.1 hereof
(subject to the  limitations  contained  in such  section);  (vi) the filing and
recording fees and expenses, title insurance and reasonable fees and expenses of
counsel for providing to Lender all required legal  opinions,  and other similar
expenses  incurred  in  creating  and  perfecting  the  Liens in favor of Lender
pursuant to this  Agreement  and the other Loan  Documents;  (vii)  enforcing or
preserving any rights,  in response to third party claims or the  prosecuting or
defending of any action or proceeding or other litigation, in each case against,
under or affecting  Borrower,  this  Agreement,  the other Loan  Documents,  the
Property,  or any other security  given for the Loan;  and (viii)  enforcing any
obligations  of  or  collecting  any  payments  due  from  Borrower  under  this
Agreement,  the other  Loan  Documents  or with  respect to the  Property  or in
connection  with any  refinancing or  restructuring  of the credit  arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings;  provided, however, that Borrower shall not be liable
for the  payment of any such costs and  expenses to the extent the same arise by
reason of the gross  negligence,  illegal acts,  fraud or willful  misconduct of
Lender. Any costs and expenses due and payable to Lender hereunder which are not
paid by Borrower  within ten (10) days after demand may be paid from any amounts
in the Cash Collateral Account, with notice thereof to Borrower.

     (b) Borrower shall  indemnify and hold harmless Lender from and against any
and all other liabilities,  obligations,  losses, damages,  penalties,  actions,
judgments,  suits,  claims,  costs,  expenses and  disbursements  of any kind or
nature  whatsoever  (including the reasonable fees and  disbursements of counsel
for Lender in  connection  with any  investigative,  administrative  or judicial
proceeding commenced or threatened,  whether or not Lender shall be designated a
party thereto),  that may be imposed on, incurred by, or asserted against Lender
in any manner  relating  to or arising  out of (i) any breach by Borrower of its
obligations  under, or any material  misrepresentation  by Borrower contained in
this Agreement or the other Loan Documents,  (ii) the use or intended use of the
proceeds of the Loan or (iii) any information provided by Borrower, or contained
in any  documentation  approved  by  Borrower  and in any  way  relating  to the
issuance,  offering and sale of the Securities  (collectively,  the "Indemnified
Liabilities"); provided, however, that Borrower shall not have any obligation to
Lender hereunder to the extent that such Indemnified  Liabilities arise from the
gross  negligence,  illegal acts, fraud or willful  misconduct of Lender. To the
extent that the  undertaking  to  indemnify  and hold  harmless set forth in the
preceding  sentence may be  unenforceable  because it violates any law or public
policy,  Borrower shall  contribute the maximum  portion that it is permitted to
pay and satisfy  under  applicable  law to the payment and  satisfaction  of all
Indemnified Liabilities incurred by Lender.

     Section 10.14 EXHIBITS INCORPORATED. The Exhibits annexed hereto are hereby
incorporated  herein as a part of this  Agreement with the same effect as if set
forth in the body hereof.

     Section 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of Lender's
interest in and to this  Agreement,  the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated  to such  documents  which  Borrower  may  otherwise  have against any
assignor of such documents,  and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such  documents and any such right to interpose or assert any
such unrelated offset,  counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

     Section 10.16 NO JOINT VENTURE OR  PARTNERSHIP.  Borrower and Lender intend
that the  relationships  created hereunder and under the other Loan Documents be
solely that of borrower  and  lender.  Nothing  herein or therein is intended to
create  a  joint  venture,  partnership,  tenancy-in-common,  or  joint  tenancy
relationship between Borrower and Lender nor to grant Lender any interest in the
Property other than that of mortgagee or lender.

     Section 10.17  PUBLICITY.  All news  releases,  publicity or advertising by
Borrower or their  Affiliates  through  any media  intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, CCA, the Loan purchaser,  the Servicer or the trustee in a
Securitization shall be subject to the prior written approval of Lender.

                                      -40-
<PAGE>
     Section  10.18  WAIVER OF  MARSHALLING  OF ASSETS.  To the  fullest  extent
Borrower may legally do so,  Borrower  waives all rights to a marshalling of the
assets of Borrower,  Borrower's  partners,  if any, and others with interests in
Borrower,  and of  Borrower's  properties,  or to a sale  in  inverse  order  of
alienation in the event of  foreclosure  of the interests  hereby  created,  and
agrees not to assert any right under any laws  pertaining to the  marshalling of
assets,  the sale in  inverse  order of  alienation,  homestead  exemption,  the
administration  of estates of  decedents,  or any other  matters  whatsoever  to
defeat,  reduce or affect the right of Lender under the Loan Documents to a sale
of the Property for the collection of the related indebtedness without any prior
or different resort for collection,  of the right of Lender or any deed of trust
trustee to the payment of the related  indebtedness  out of the net  proceeds of
the Property in preference to every other claimant whatsoever.

     Section 10.19 WAIVER OF  COUNTERCLAIM.  Borrower hereby waives the right to
assert a counterclaim,  other than a compulsory  counterclaim,  in any action or
proceeding brought against it by Lender or its agents, including Servicer.

     Section 10.20  CONFLICT;  CONSTRUCTION  OF  DOCUMENTS.  In the event of any
conflict  between the  provisions  of this  Agreement  and any of the other Loan
Documents,  the provisions of this Agreement  shall control.  The parties hereto
acknowledge  that  they were  represented  by  counsel  in  connection  with the
negotiation  and  drafting of the Loan  Documents  and that such Loan  Documents
shall not be subject to the  principle of construing  their meaning  against the
party which drafted same.

     Section 10.21 BROKERS AND  FINANCIAL  ADVISORS.  Borrower and Lender hereby
each  represents  to the other  that it has dealt  with no  financial  advisors,
brokers,  underwriters,  placement agents,  agents or finders in connection with
the  transactions  contemplated  by this  Agreement.  Borrower and Lender hereby
agree to  indemnify  and hold the other  harmless  from and  against any and all
claims,  liabilities,  costs and  expenses of any kind in any way relating to or
arising  from a claim by any  Person  that  such  Person  acted on behalf of the
indemnifying party in connection with the transactions  contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the repayment of the Debt.

     Section 10.22 NO THIRD PARTY  BENEFICIARIES.  This  Agreement and the other
Loan  Documents  are solely for the benefit of Lender and  Borrower  and nothing
contained  in this  Agreement  or the other  Loan  Documents  shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or to
enforce the performance or observance of any of the obligations contained herein
or  therein.  All  conditions  to the  obligations  of  Lender  to make the Loan
hereunder are imposed  solely and  exclusively  for the benefit of Lender and no
other Person shall have standing to require  satisfaction  of such conditions in
accordance  with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a beneficiary of such
conditions,  any or all of which  may be  freely  waived  in whole or in part by
Lender if, in Lender's sole  discretion,  Lender deems it advisable or desirable
to do so.

     Section 10.23 PRIOR AGREEMENTS. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions  contemplated hereby and thereby, and all prior agreements among or
between such parties,  whether oral or written,  are  superseded by the terms of
this Agreement and the other Loan Documents.

     Section 10.24 INTERPRETATION.  Notwithstanding  anything to the contrary in
this  Agreement  or the  other  Loan  Documents,  all  references  in this  Loan
Agreement  and the  other  Loan  Documents  to "the  continuance  of an Event of
Default  until  cured" or  analogous  language  shall  specifically  require the
acceptance  by Lender,  in its sole  discretion,  of such cure for such Event of
Default to be deemed cured.

                    [signatures contained on following page]












                                      -41-
<PAGE>

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

                   BORROWER: 180 N. LASALLE, L.L.C.
                   --------
                             By: Prime Group Realty, L.P., a Delaware limited
                                 partnership, as Administrative Member

                                 By:  Prime Group Realty Trust, a Maryland real
                                      estate investment trust, as managing
                                      general partner

By: /s/ Louis Conforti
----------------------                Name: Louis Conforti
                                      Title:  Senior Vice President

                   LENDER:   THE CAPITAL COMPANY OF AMERICA LLC, a
                   -------   Delaware limited liability company,

                             By:/s/ John Burke
                                ------------------------
                                Name:  John Burke
                                Title:  Director





















































                                      -42-
<PAGE>
                                   SCHEDULE 1
                                   ----------

                        Matters Regarding Representations
                        ---------------------------------

                                      None.







































































                                      -43-
<PAGE>
                                   SCHEDULE 2
                                   ----------

                                    Rent Roll
                                    ---------

                               [Exhibit Omitted]







































































                                      -44-
<PAGE>
                                   SCHEDULE 3
                                   ----------

                                Required Repairs
                                ----------------

     Borrower shall complete the repairs described on the pages attached to this
Schedule 3 within one (1) year after the date of  execution  of this  Agreement.
Borrower  shall not be required to deposit or cause to be deposited  with Lender
any sums in connection with said repairs.

                                    EXHIBIT A
                                    ---------

                                Form of Guaranty
                                ----------------

                                    EXHIBIT B
                                    ---------

                                  Form of Note
                                  ------------
























































                                      -45-
<PAGE>
                                    EXHIBIT C
                                    ---------

                         List of Property Loan Documents
                         -------------------------------

                               [Exhibit Omitted]































                                      -46-
<PAGE>
                                    EXHIBIT D
                                    ---------

                           Form of Rate Lock Agreement
                           ---------------------------

                                    Date

Name Title
BorSponsor
Address1 Address2
City, State   PostalCode

                  Re:  Interest Rate Lock Agreement
                       ----------------------------

Gentlemen:

     BorSponsor  ("Borrower's  Sponsor") and The Capital  Company of America LLC
("Lender")  have entered into a Commitment  Letter dated as of  CmtLtrDate  (the
"Commitment Letter") whereby Lender intends, subject to the conditions set forth
therein,  to make a fixed rate permanent mortgage loan (the "Loan") to a special
purpose entity (the  "Borrower") in the  anticipated  principal  amount of up to
$PermLoanAmt  (the  "Anticipated  Loan Amount") secured by the real property and
other  assets  (the  "Property")  set  forth in the  Commitment  Letter  with an
effective  maturity  of  EffTerm  years.  Prior  to the  closing  of  the  Loan,
Borrower's Sponsor has requested Lender to rate lock (the "Rate Lock") an amount
equal to the  Anticipated  Loan Amount and to lock an interest rate (the "Locked
Loan Rate") for the Loan prior to Lender's  completion  of due  diligence on the
Property and prior to the  satisfaction of other conditions to closing set forth
in the  Commitment  Letter.  In  order to grant  Borrower's  Sponsor's  request,
Borrower's Sponsor and Lender agree as follows:

1.   Terms not otherwise defined herein or on Annex A attached hereto shall have
     the meaning set forth in the Commitment Letter.

2.   Borrower's Sponsor shall deposit with Lender an amount equal to two percent
     (2%) of the  Anticipated  Loan Amount (the  "Initial  Rate Lock  Deposit").
     Hereinafter,  the term "Rate Lock Deposit" shall mean the Initial Rate Lock
     Deposit  and any  Additional  Rate Lock  Deposit  as  hereinafter  defined.
     Subject to the  conditions  set forth  below,  the Locked  Loan Rate on the
     Anticipated  Loan Amount shall be set at (i) LoanSpread% the (" Loan Spread
     ") plus (ii) the "Benchmark  Treasury Rate". The "Benchmark  Treasury Rate"
     shall be equal to the Benchmark  Swap Rate minus the Benchmark Swap Spread.
     The "Benchmark  Swap Spread" shall be the then  prevailing bid side forward
     swap spread for EffTerm year interest rate swaps MonthsFwd  months forward.
     The  "Benchmark  Swap Rate"  shall be the then  prevailing  offer rate on a
     forward  interest  rate  swap  beginning   onExpClosDate  and  maturing  on
     EffMaturDate versus 3 month LIBOR assuming  semi-annual payments calculated
     on a 30/360  basis.  The Rate Lock shall be  executed  upon (i)  Borrower's
     Sponsor's  deposit of the Initial  Rate Lock Deposit and (ii) a request via
     telephone by  Borrower's  Sponsor to Lender  requesting  Lender to lock the
     interest rate in accordance with the terms of this Agreement.  Lender shall
     within three  business  days confirm in writing to  Borrower's  Sponsor the
     Locked Loan Rate, the Benchmark  Treasury Rate, the Benchmark Swap Rate and
     the Benchmark  Swap Spread.  The Locked Loan Rate shall be applicable  with
     respect to the  Anticipated  Loan  Amount only if the Loan is funded at any
     time from the date hereof  through the earlier of (i) 12:00 p.m.  (New York
     Time)  ExpClosDate or (ii) the  termination  of the Commitment  Letter (the
     "Rate  Lock  Period").  In  addition,  during  the term of this  Agreement,
     Borrower's Sponsor shall pay Lender in advance, a fee each month equal to 8
     basis points multiplied by the Anticipated Loan Amount.

3.   (a) If, in the good faith  opinion of Lender,  at any time  during the Rate
     Lock Period,  Lender determines that there are Losses hereunder equal to or
     greater  than 50% of the Rate  Lock  Deposit,  Borrower's  Sponsor  will be
     required,  no later  than 1:00 p.m.  (New York  Time) on the  business  day
     following  notice of any such Losses (the "Losses Payment Date") to deposit
     with Lender (by wire transfer of immediately available funds) the amount of
     such  Losses  which  amount  shall  be known as an  "Additional  Rate  Lock
     Deposit".  Borrower's  Sponsor's  failure to pay Lender the Additional Rate
     Lock Deposit by 1:00 p.m.  (New York Time) on the Losses  Payment Date will
     result in a default  hereunder and under the  Commitment  Letter and Lender
     may, at its sole  discretion,  at any time  thereafter  fully or  partially
     terminate the Rate Lock.

                  (b) If, in the good faith  opinion of Lender,  at any time, it
appears  that the  actual  principal  amount  of the Loan  will be less than the
Anticipated Loan Amount (such reduced amount, the "Revised Loan Amount"), Lender
may break the Rate Lock with respect to the difference  between the  Anticipated
Loan Amount and the Revised  Loan  Amount.  In such event,  the Locked Loan Rate
will not be applicable  to such amount,  and, in the event that there are Losses
on account of such  breakage,  Borrower's  Sponsor shall pay to Lender  Lender's
Expenses,  if any, via wire transfer within two business days following delivery
of notice by Lender of such Losses.  Failure of  Borrower's  Sponsor to pay such
Lender's  Expenses will result in a default  hereunder and under the  Commitment
Letter and/or the Loan Documents.

4.   In the event  that the Loan is  funded  in an amount at least  equal to the
     Anticipated  Loan  Amount  on or prior to the  expiration  of the Rate Lock
     Period,  neither  Borrower,  Borrower's  Sponsor  nor Lender  will have any
     obligation to the other with respect to the Rate Lock,  other than Lender's
     obligation to either return the Rate Lock Deposit to Borrower's  Sponsor or
     apply it to pay fees and expenses  associated with the closing of the Loan.
     In the event  that the Loan is  funded in an amount  which is less than the
     Anticipated  Loan  Amount,  Lender may break the Rate Lock with  respect to
     such Breakage Principal and shall apply the Rate Lock Deposit to Losses, if
     any,  which may result  therefrom and then to fees and expenses  associated
     with  closing  the Loan.  In the event  that (i) the Rate Lock  Period  has
     expired  and Lender has not yet funded the Loan or (ii) there shall exist a
     default  hereunder,  under  the  Commitment  Letter  and/or  under the Loan
     Documents,  Lender  may  break  the  entire  Rate  Lock and  Lender's  only
     obligation to Borrower's  Sponsor  and/or  Borrower  shall be to return the
     Rate Lock Deposit  after  setting off Lender's  Expenses.  If the Rate Lock
     Deposit is not sufficient to pay Lender's  Expenses  hereunder,  Borrower's
     Sponsor shall pay Lender the difference  within two business days following
     termination  of the  Rate  Lock.  Lender's  right  to  fully  or  partially
     terminate  the Rate Lock pursuant to the terms of the Agreement is absolute
     and is not  conditioned  upon the  giving  of any  notice  to  Borrower  or
     Borrower's Sponsor.

     In the event that the Loan is funded in an amount which is greater than the
Anticipated  Loan Amount,  the Locked Loan Rate will not be  applicable  to such
excess amount and the final  interest rate on the Loan will be determined as set
forth in the Commitment Letter and/or Loan Documents.



                                      -47-
<PAGE>
5.   Borrower's  Sponsor  acknowledges  that Losses,  if any,  sustained  due to
     breaking the Rate Lock will be related,  to a large extent, to movements in
     the Breakage  Benchmark  Treasury Rate, as well as general movements in the
     U.S. Treasury and related swap markets and any related changes to the yield
     curve.  Changes in the Breakage  Benchmark Treasury Rate will be subject to
     the then prevailing conditions of the U.S. Treasury market and related swap
     markets   which  is  subject  to   potentially   rapid  and  extreme  price
     fluctuations and varying levels of liquidity.  Therefore,  any action taken
     by Lender with  respect to breaking  the Rate Lock shall be taken by Lender
     as  promptly  as   practicable   after   taking  into   consideration   the
     circumstances  surrounding the break of the Rate Lock,  including,  but not
     limited to, the then prevailing  conditions in the U.S. Treasury market and
     the related swap markets. Because of the potentially volatile nature of the
     U.S. Treasury market and the related swap markets,  Lender has been granted
     rights to act (or not act) in its sole discretion.  Borrower's  Sponsor and
     Borrower  acknowledge  and accept Lender's right to act (or not act) in its
     sole  discretion as provided herein and waives any potential claim or cause
     of action Borrower and/or  Borrower's  Sponsor may have against Lender with
     respect  to any  action  taken (or not  taken) by  Lender  pursuant  to the
     provisions  set forth  herein.  Borrower's  Sponsor  and  Borrower  further
     acknowledge  that based upon market  conditions,  there can be no degree of
     certainty as to the rate of the Breakage  Benchmark  Treasury  Rate used to
     calculate Losses until the Rate Lock is actually  terminated by Lender.  In
     addition,  Borrower's Sponsor and Borrower acknowledge that the Anticipated
     Loan Amount is not a commitment  by Lender  regarding the final size of the
     Loan.  Such  amount  will  be  determined  according  to the  terms  of the
     Commitment Letter and/or Loan Documents.

6.   The obligations of Borrower's Sponsor and Lender pursuant to this Agreement
     are  independent of their  obligations  pursuant to the Commitment  Letter,
     even in the event of a termination of the Rate Lock.  This Agreement  shall
     in no way be  construed to be a  commitment  by Lender or any  affiliate to
     fund the Loan or purchase  or sell any  securities  on behalf of  Borrower,
     Borrower's  Sponsor  and/or any third party.  In addition,  this  Agreement
     shall in no way be construed to reduce Borrower's Sponsor and/or Borrower's
     obligations pursuant to the Commitment Letter.

7.   This  Agreement  shall  terminate upon the earlier of (i) the expiration or
     termination of the Rate Lock Period,  (ii) any event which causes  Lender's
     commitment  to fund the Loan to terminate,  as set forth in the  Commitment
     Letter,  (iii) any event which causes  Lender to terminate the Rate Lock or
     (iv) upon notice to Borrower  and/or  Borrower's  Sponsor by Lender that it
     does not  intend to proceed  with the Loan;  provided,  however,  that this
     Agreement  shall survive until all  obligations  of the parties hereto have
     been fully satisfied.

8.   This  Agreement  shall be construed in accordance  with and governed by the
     laws of the  State  of New York  applicable  to  agreements  made and to be
     performed therein, notwithstanding any choice-of-law rules to the contrary.
     The  parties  hereto  hereby  waive any and all right to a trial by jury in
     connection with any and all matters relating hereto.

9.   This Agreement may be executed in any number or counterparts, each of which
     when so  executed  shall  be  deemed  to be an  original,  but all of which
     together shall constitute one and the same instrument.

10.  Borrower's  Sponsor and Borrower may not, without the prior written consent
     of Lender,  assign,  transfer or set over to another,  in whole or in part,
     all  or  any  part  of  their  benefits,  rights,  duties  and  obligations
     hereunder.

11.  This Agreement may be amended,  changed or modified by Borrower's  Sponsor,
     Borrower  and Lender only by an  instrument  in writing  setting  forth the
     terms of such change, modification or amendment, and signed by each party.

12.  All  notices,  demands,  consents or requests  that are either  required or
     desired to be given or furnished hereunder shall be in writing and shall be
     sent to the appropriate party at the following address:  (i) if to Borrower
     and/or  Borrower's  Sponsor,  at the  address  set forth on the first  page
     hereof, Attention:   Name   and (ii) if to Lender, at the address set forth
     on the first page hereof, Attention:   Banker  with a copy of such notice
     to the same address,  Attention:  Barry M. Funt, Esq., General Counsel. Any
     such notice sent by means of telecopy shall be deemed to be received on the
     day such telecopy is sent once orally confirmed by sender by telephone.




                                      -48-
<PAGE>
13.  This  Agreement   constitutes  the  entire  and  final  agreement   between
     Borrower's  Sponsor and/or  Borrower and Lender with respect to the subject
     matter  hereof,   and  there  are  no  other  agreements,   understandings,
     undertakings,  representations  or warranties among the parties hereto with
     respect to the subject matter hereof except as set forth herein.

14.  Each of Borrower's Sponsor and Borrower agrees to indemnify and hold Lender
     and each of its affiliates  (including its officers,  directors,  partners,
     employees and agents) harmless against any and all losses,  claims damages,
     costs,  expenses or liabilities in connection with,  arising out of or as a
     result of the  transactions and matters referred to or contemplated by this
     Agreement,  except to the extent that it is finally  judicially  determined
     that any such loss,  claim,  damage,  cost,  expense or  liability  results
     primarily from the gross negligence or bad faith of such indemnified  party
     or any of its agents or representatives.

     If the foregoing is in accordance with your understanding of our Agreement,
please sign and return to the undersigned a counterpart  hereof,  whereupon this
Agreement and your acceptance  shall represent a binding  agreement by and among
Borrower's Sponsor, Borrower and Lender.

                                         Very truly yours,

                                         THE CAPITAL COMPANY OF AMERICA LLC

                                         By:___________________________
                                            Name:
                                            Title:

The  foregoing  Agreement is hereby  confirmed and accepted as of the date first
written above.

BorSponsor
on behalf if itself and Borrower

By:______________________
    Name:
    Title:








































                                      -49-
<PAGE>
                                     Annex A
                                     -------

     "BENCHMARK  SWAP SPREAD" shall mean, at the time of the Rate Lock, the then
prevailing  bid side forward swap spread for EffTerm  year  interest  rate swaps
MonthsFwd months forward.

     "BENCHMARK SWAP RATE" shall mean, at the time of the Rate
Lock, the then prevailing  offer rate on a forward  interest rate swap beginning
on  ExpClosDate  and  maturing  on  EffMaturDate  versus  3 month  LIBOR
assuming semi-annual payments calculated on a 30/360 basis.

     "BENCHMARK  TREASURY  RATE"  shall mean the  Benchmark  Swap Rate minus the
Benchmark Swap Spread.

     "BREAKAGE  AMOUNT" means an amount equal to the product of (i) the Breakage
Principal and (ii) the Price Difference.

     "BREAKAGE  BENCHMARK TREASURY RATE" shall mean the Spot Swap Rate minus the
Spot Swap Spread.

     "BREAKAGE  PRINCIPAL"  means at the time of calculation,  (A) in connection
with breakage associated with reductions to the Anticipated Loan Amount pursuant
to  Section  3(b),  the  amount of such  reductions  or (B) in  connection  with
breakage associated with the closing of the Permanent Loan or the termination of
the Rate Lock, the difference of (i) the Anticipated  Loan Amount minus (ii) any
reductions to the  Anticipated  Loan Amount pursuant to Section 3(b) minus (iii)
the Permanent Loan Amount.

     "INTENDED  PAYMENTS" means, for the purpose of the calculation of the Price
Difference,  each and every payment of principal and/or interest that would have
been made with  respect to the Loan had the Loan closed with a principal  amount
equal to the Anticipated  Loan Amount on the date breakage is calculated with an
interest  rate equal to the Locked  Loan Rate  assuming  that the  principal  is
repaid  in full in  EffTerm  years  and  assuming  that  the  Loan is  otherwise
consistent with the terms of the Commitment Letter.

     "LENDER'S  EXPENSES"  means  the sum of (a)  Losses,  plus  (b)  all  fees,
commissions and other expenses (including  reasonable  attorneys' fees) incurred
by Lender in  connection  with the closing out of all or any portion of the Rate
Lock or otherwise in connection with this Agreement.

     "LOCKED LOAN RATE" means the Benchmark Treasury Rate plus the Loan Spread.

     "LOSSES"  means the Breakage  Amount if the  Breakage  Amount is a positive
number.

     "PRICE  DIFFERENCE"  means, as of the time of  calculation,  the difference
obtained by  subtracting  (i) 1 from (ii) the quotient  obtained by dividing (1)
the present value (as determined below) of the Intended Payments,  determined as
if the Loan were funded on the day of calculation,  by (2) the Anticipated  Loan
Amount.  The present  value of the  Intended  Payments  shall be  calculated  by
discounting the Intended Payments by the Breakage  Benchmark  Treasury Rate plus
the Loan Spread. The Price Difference can be either positive or negative.

     "PERMANENT LOAN AMOUNT" means the actual funded amount of the Loan.

     "SPOT SWAP SPREAD" means, at the time of  calculation,  the then prevailing
offer side swap spread for EffTerm year interest rate swaps.

     "SPOT SWAP RATE" means, at the time of calculation, the then prevailing bid
rate on a EffTerm year interest rate swap versus 3 month LIBOR.












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