EXHIBIT 10.11
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                              AMENDED AND RESTATED
                                 LOAN AGREEMENT

                          Dated as of October 1, 1998

                                      among

                            PRIME GROUP REALTY, L.P.,
                                   as Borrower
                                       and
                            PRIME GROUP REALTY TRUST

                                       and

                              LASALLE NATIONAL BANK
                                    as Lender




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<PAGE>
                                      INDEX
                                      -----

                                                                        Page No.
                                                                        --------
1.  DEFINITIONS......................................................       1
         1.1    General Terms........................................       1
         1.2    Accounting Terms.....................................       9
         1.3    Certain Matters of Construction......................       9

2.  LOANS; FEES; TERMS OF PAYMENT....................................       9
         2.1    Revolving Credit Facility. ..........................       9
         2.2    Borrowing Procedures.................................      10
         2.3    Payments and Prepayments.............................      10
         2.4    Intentionally Deleted. ..............................      11
         2.5    Interest.............................................      11
         2.6    Fees.................................................      13
         2.7    Payment Dates........................................      14
         2.8    Intentionally Deleted. ..............................      14
         2.9    Renewals; Conversion and Continuation of Loans.......      14
         2.10   Indemnity............................................      15
         2.11   Change in Legality...................................      15
         2.12   Unavailability of Deposits or Inability to
                 Ascertain, or Inadequacy of Libor Rate..............      16
         2.13   Increased Cost and Reduced Return....................      16
         2.14   Discretion of the Lender as to Manner of Funding.....      17

3.  TERM OF THIS AGREEMENT; PREPAYMENTS..............................      17
         3.1    Term.................................................      17
         3.2    Prepayment; Termination..............................      18
         3.3    Mandatory Prepayment.................................      18
         3.4    Collateral Security..................................      18

4.  CONDITIONS PRECEDENT.............................................      19
         4.1    Closing; Conditions to Initial Loan and Closing......      19
         4.2    Condition to All Loans...............................      21

5.  GENERAL CONTINUING WARRANTIES AND REPRESENTATIONS................      22
         5.1    Office...............................................      22
         5.2    Existence............................................      23
         5.3    Authority............................................      23
         5.4    No Breach............................................      23
         5.5    Solvency.............................................      24
         5.6    Compliance With Laws. ...............................      25
         5.7    Actions or Proceedings...............................      25
         5.8    Trademarks, Licenses, etc............................      25
         5.9    Financial Statements.................................      25
































                                      -i-
<PAGE>
                                                                        Page No.
                                                                        --------
         5.10   Conduct of Business..................................      26
         5.11   Environmental Laws...................................      26
         5.12   Permits and Licenses.................................      27
         5.13   ERISA................................................      28
         5.14   Intentionally Deleted................................      28
         5.15   Tax Obligations.  ...................................      28
         5.16   Employee Controversies...............................      29
         5.17   Full Disclosure. ....................................      29
         5.18   Bank Boston Credit Agreement.........................      29

6.  INCORPORATION OF NEGATIVE COVENANTS..............................      29
         6.1-6.9Incorporation of Negative Covenants..................      29
         6.10   Independent Enforcement of Negative Covenants by
                the Lender...........................................      30
         6.11   Leases...............................................      30

7.  INCORPORATION OF AFFIRMATIVE COVENANTS - GENERAL.................      30
         7.1-7.17Incorporation of Affirmative Covenants..............      30
         7.18   Independent Enforcement of Affirmative Covenants
                by the Lender........................................      30
         7.19   Use of Proceeds......................................      31
         7.19   Leases, Lease Approvals..............................      31

8.  AFFIRMATIVE COVENANTS - REPORTING................................      31
         8.1    Reports, Covenant Compliance Certificates............      31
         8.2    Intentionally Deleted................................      31
         8.3    Other Information and Changes........................      31
         8.4    Confidentiality......................................      32

9.  COVENANTS - FINANCIAL............................................      32
         9.1    Incorporation of Financial Covenants.................      32
         9.2    Independent Enforcement of Financial Covenants
                by the Lender........................................      32

10. EVENTS OF DEFAULT................................................      32
         10.1   Payment..............................................      33
         10.2   Breach of Covenants..................................      33
         10.3   Breach of Representation.............................      33
         10.4   Attachment or Levy...................................      33
         10.5   Voluntary Insolvency.................................      33
         10.6   Involuntary Insolvency...............................      33
         10.7   Injunction...........................................      34
         10.8   Governmental Lien....................................      34
         10.9   Judgment.............................................      34
         10.10  Other Indebtedness...................................      34
         10.11  Bank Boston Credit Agreement.........................      34
         10.12  ERISA Reportable Event...............................      34
         10.13  Breach of Covenants..................................      35

11. RIGHTS AND REMEDIES..............................................      35
         11.1   Rights and Remedies Generally........................      35
         11.2   Rights Cumulative....................................      36

12. TAXES AND EXPENSES...............................................      36

13. CERTAIN WAIVERS..................................................      36
         13.1   Application of Payments..............................      36
         13.2   Demand, etc.  .......................................      37

14. NOTICES..........................................................      37

15. CHOICE OF LAW AND VENUE..........................................      38

16. INDEMNITY........................................................      38

17. GENERAL PROVISIONS...............................................      39
         17.1   Acceptance...........................................      39
         17.2   Binding Agreement....................................      39
         17.3   Section Headings.....................................      40
         17.4   Construction.........................................      40
         17.5   Severability.........................................      40
         17.6   Entire Agreement.....................................      40
         17.7   No Fiduciary Relationship or Joint Venture...........      40
         17.8   Publicity............................................      40
         17.9   Counterparts.........................................      40
         17.10  Conflict.............................................      41
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                                                                        Page No.
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18. WAIVER OF JURY TRIAL.............................................      41

19. PARTNER LIABILITY................................................      41
         19.1   Limited Recourse to Company..........................      41
         19.2   Limited Recourse to Partners of Borrower other
                than Company.........................................      41






































































                                     -iii-
<PAGE>
                       AMENDED AND RESTATED LOAN AGREEMENT
                       -----------------------------------

     THIS AMENDED AND RESTATED LOAN AGREEMENT,  dated as of October 1, 1998,  is
entered  into  by  and  between  the  "Lender"  and   "Borrower"  and  "Company"
(hereinafter defined).

                                R E C I T A L S:
                                ----------------

     A. The Lender has made certain revolving financing accommodations available
to the Borrower  pursuant to that certain Loan Agreement dated as of January 28,
1998 between Lender, Borrower and Company ("Existing Agreement"); and

     B. The Borrower has requested that Lender make certain modifications to the
Existing Agreement and the Lender is willing to make such modifications upon the
terms and conditions set forth in this Agreement.

     NOW,  THEREFORE,   in  consideration  of  the  parties'  mutual  agreements
contained  herein,  the parties hereby agree that effective upon the date hereof
the Existing Agreement is amended and restated in its entirety as follows:

1.  DEFINITIONS

1.1 General Terms

     As used in this  Agreement,  the  following  terms shall have the following
definitions:

     "AFFILIATE" shall mean any Person (a) that directly or indirectly,  through
one or more  intermediaries,  controls or is  controlled  by, or is under common
control with  Borrower,  (b) that  directly or  beneficially  owns or holds five
percent (5%) or more of any class of the interests of Borrower, (c) five percent
(5%) or more of whose  voting  stock (or in the case of a Person  which is not a
corporation,  five percent (5%) or more of the equity interest or economic value
of which) is owned  directly or  beneficially  or held by Borrower,  or (d) five
percent  (5%) or more of whose voting stock (or in case of a Person which is not
a  corporation,  five  percent  (5%) or more of the equity  interest or economic
value of which) is owned directly or  beneficially  or held by a Person referred
to in (a), (b) or (c) above.

     "AGREEMENT"  shall mean this Amended and Restated Loan  Agreement,  any and
all exhibits or schedules  thereto,  any and all concurrent or subsequent riders
to  this  Loan   Agreement   and  any   extensions,   supplements,   amendments,
modifications  or restatements to or of this Loan Agreement  and/or to or of any
such rider.

     "ASSIGNMENT  OF LEASES AND RENTS"  shall mean that  certain  Assignment  of
Leases and Rents dated as of January 28, 1998, as amended from time to time from
the  Mortgagor to Lender  pursuant to which the Borrower  shall grant and assign
Lender a security interest and assignment of Mortgagor's interest as lessor with
respect  to all  leases  and rents of all or any part of the  Indiana  Property,
including  without  limitation,  the Indiana Property Lease, as security for the
Obligations.

     "AUTHORIZED  REPRESENTATIVE"  shall  mean W.  Michael  Karnes and any other
corporate officer  designated in writing to Lender by any of the  aforementioned
officers.

     "BANK BOSTON CREDIT  AGREEMENT" shall mean that certain Credit Agreement by
and among Borrower,  Company, Bank Boston, N.A. and Prudential Securities Credit
Corporation  dated November 17, 1997, as amended by that certain First Amendment
to Credit  Agreement  dated as of December 15, 1997,  and by that certain Second
Amendment  to  Credit  Agreement  dated as of March 16,  1998,  as  amended  and
restated by that certain Third  Amendment to Credit  Agreement dated as of March
30, 1998,  and as amended by that certain Fourth  Amendment to Credit  Agreement
dated as of  September  24,  1998 and that  certain  Fifth  Amendment  to Credit
Agreement dated as of October __, 1998, a copy of which Third Amendment,  Fourth
Amendment and Fifth Amendment is attached hereto as Exhibit B.

     "BENEFIT PLAN" shall mean an employee  pension  benefit plan of Borrower or
an ERISA  Affiliate,  as defined in Section  3(2) of ERISA,  which is subject to
Title IV of ERISA.

     "BORROWER"  shall  mean  Prime  Group  Realty,  L.P.,  a  Delaware  limited
partnership,  with its chief executive office and principal place of business at
77 West Wacker Drive, Suite 3900, Chicago, Illinois, 60601.

                                      -1-
<PAGE>
     "BORROWER'S   BOOKS"  shall  mean  all  of  Borrower's  books  and  records
including,  but not limited  to:  minute  books;  ledgers;  records  indicating,
summarizing, or evidencing Borrower's assets,  liabilities,  and all information
relating thereto;  records  indicating,  summarizing,  or evidencing  Borrower's
business operations or financial condition; records indicating,  summarizing, or
evidencing Borrower's compliance with or problems or activities concerning Laws;
and all  computer  programs,  disc or tape  files,  printouts,  runs,  and other
computer prepared  information and the equipment containing such information and
any software necessary to operate the same.

     "BORROWER'S LOAN ACCOUNT" shall mean a loan account maintained by Lender on
its books in which shall be recorded (i) all loans and  advances  made by Lender
to Borrower  pursuant to this  Agreement,  (ii) all payments made by Borrower on
all such loans and advances,  and (iii) all other appropriate debits and credits
as provided in this Agreement,  including, without limitation, all Out-of-Pocket
Fees and  Costs  and  interest;  all such  entries  shall be made by  Lender  in
accordance with Lender's customary  accounting  practices as in effect from time
to time.

     "BUSINESS  DAY" shall mean (a) any day other than a  Saturday,  Sunday,  or
other day on which banks in Illinois are required to be closed, and (b) relative
to the making of  Eurodollar  Loans,  any day on which  dealings  in Dollars are
carried on in the interbank  Eurodollar market which also satisfies the criteria
set forth in (a) above.

     "CAPITAL  EXPENDITURES"  shall  mean,  with  respect  to  any  period,  the
aggregate of all  expenditures  (whether paid in cash or accrued as  liabilities
and including expenditures for capitalized lease obligations) by Borrower during
such period that are required by Generally Accepted Accounting  Principles to be
included in or reflected by the property,  plant,  or equipment or similar fixed
asset accounts in the balance sheet of Borrower.

     "CLOSING" shall have the meaning set forth in Section 4.1 hereof.

     "CODE" shall mean the Uniform  Commercial  Code of the State of Illinois as
in effect from time to time during the term hereof and any and all terms used in
this  Agreement  which are not otherwise  defined  herein but are defined in the
Code  shall  be  construed  and  defined  in  accordance  with the  meaning  and
definition ascribed to such terms under the Code.

     "COMMITMENT"  shall  mean  the  Lender's  commitment  to make  Loans to the
Borrower in an aggregate amount not to exceed the Maximum Facility.

     "COMMON SHARES" shall have the same meaning as set forth in the Bank Boston
Credit Agreement.

     "COMMON  UNITS" shall have the same meaning as set forth in the Bank Boston
Credit Agreement.

     "COMPANY" shall mean Prime Group Realty Trust, a Maryland trust.

     "CONTRIBUTING   SPONSOR"  shall  mean  any  person   described  in  Section
4001(a)(13) of ERISA with respect to a Benefit Plan.

     "DEFAULT RATE" shall have the meaning set forth in Section 2.5(b) hereof.

     "DISTRIBUTION"  shall mean the  declaration  or payment of any  dividend or
distribution of cash or cash equivalents to the holders of any Equity Interests,
or any  distribution  or payment to any  officer,  employee  or  director of the
Borrower or the Company, other than reasonable employee compensation.

     "DOLLAR(S)"  and the sign "$" shall  mean  lawful  currency  of the  United
States of America.

     "EFFECTIVE DATE" shall mean the date on which the conditions  precedent for
initial  Loans under  Section 4 hereof have been  satisfied and the initial Loan
has been made.

     "ENVIRONMENTAL  LAWS"  shall have the  meaning  set forth in  Section  5.11
hereof.

     "ENVIRONMENTAL  REPORTS"  shall  have the same  meaning as set forth in the
Bank  Boston  Credit  Agreement  and in  addition  shall  include  that  certain
Environmental Report dated December 16, 1997, prepared by Carlson Environmental,
Inc. with respect to the Indiana Property.



                                      -2-
<PAGE>
     "EQUITY INTERESTS" shall mean, collectively, all equity ownership interests
in the Borrower or the Company including, without limitation, the Common Shares,
the Preferred Shares, the Common Units and the Preferred Units.

     "EQUITY  PROSPECTUS"  shall have the same  meaning as set forth in the Bank
Boston Credit Agreement.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended,  and all references to sections thereof shall include such sections and
any predecessor and successor provisions thereto.

     "ERISA  AFFILIATE"  shall  mean  each  trade or  business  (whether  or not
incorporated)  which,  together  with  Borrower,  would be  treated  as a single
employer under Section  4001(a)(14) of ERISA or IRC Sections  414(b),  (c), (m),
(n) or (o), as applicable.

     "EURODOLLAR  LOAN" shall mean any Loan with  respect to which the  Borrower
shall have selected an interest rate based on the Libor Rate in accordance  with
the  provisions of Section 2.5(a) of this  Agreement;  provided,  however,  that
there shall not be in excess of four (4) Eurodollar Loans outstanding at any one
time.

     "EVENT OF  DEFAULT"  shall  mean the  occurrence  of any one or more of the
events set forth in Section 10 of this Agreement.

     "EXCESS  INTEREST"  shall  have the  meaning  set forth in  Section  2.5(c)
hereof.

     "FAIR VALUE" shall mean Borrower's  assets and liabilities as determined in
accordance with Generally  Accepted  Accounting  Principles,  except that assets
shall be reflected at present fair saleable value and liabilities  shall reflect
a complete  statement of liabilities,  fixed or contingent,  direct or indirect,
disputed or  undisputed,  whether or not  required to be  reflected on a balance
sheet prepared in accordance with Generally Accepted Accounting Principles.

     "FEDERAL FUNDS EFFECTIVE  RATE" shall mean for any day, a fluctuating  rate
of interest equal for each day during such period to (i) the weighted average of
the rates on overnight  federal funds  transactions  with members of the Federal
Reserve System  arranged by federal funds brokers,  as published for such day by
the Federal  Reserve Bank of New York;  or (ii) if such rate is not so published
for any day,  the average of the  quotations  for such day on such  transactions
received by Lender from three (3) federal funds  brokers of recognized  standing
selected by it.

     "FISCAL  YEAR" shall mean with respect to Borrower,  the fiscal  accounting
period of Borrower each year ending on December 31 of each calendar year.

     "FORMATION  TRANSACTIONS"  shall have the same  meaning as set forth in the
Bank Boston Credit Agreement.

     "GENERALLY ACCEPTED ACCOUNTING  PRINCIPLES" shall mean, with respect to any
date of determination,  generally accepted accounting  principles as used by the
Financial  Accounting Standards Board and/or the American Institute of Certified
Public Accountants consistently applied.

     "GUARANTOR  SUBSIDIARIES"  shall mean the  partnerships,  limited liability
companies and corporations identified on Schedule 1.1 hereto (including, without
limitation,  Mortgagor), and any other partnerships, limited liability companies
or corporations hereafter approved by the Lender which are at least 99% owned by
Borrower  and which  execute and deliver a  Subsidiary  Guaranty in favor of the
Lender.

     "HAZARDOUS  MATERIALS"  shall have the  meaning  set forth in Section  5.11
hereof.

     "INDEBTEDNESS"  shall have the same meaning as set forth in the Bank Boston
Credit Agreement.


     "INDEMNIFIED  PERSONS"  shall  have the  meaning  set forth in  Section  16
hereof.

     "INDIANA  PROPERTY" shall mean that certain tract of real property owned by
Mortgagor  consisting  of  approximately  31 acres,  together with the warehouse
building   comprised  of  approximately   450,000  square  feet  and  all  other
improvements located thereon, located at 475 Superior Avenue, Munster, Indiana.


                                      -3-
<PAGE>
     "INDIANA  PROPERTY  LEASE"  shall mean that  certain  lease for the Indiana
Property dated May 1, 1988 between Mortgagor,  as landlord, and General Electric
Company, as tenant.

     "INSOLVENCY  PROCEEDING"  shall  mean,  with  respect  to any  Person,  any
proceeding  commenced  by or against  such  Person,  under any  provision of the
United  States  Bankruptcy  Code,  as  amended,  or under any other  bankruptcy,
reorganization  or  insolvency  law,  or  any  assignment  for  the  benefit  of
creditors,  formal or informal moratorium,  compositions or extensions with some
or all creditors of such Person.

     "INTEREST  PERIOD" shall mean:  (i) as to any  Eurodollar  Loan, the period
commencing on the date of such Eurodollar Loan and ending on the date thereafter
selected by the  Borrower,  not to exceed in any event 180 days,  and (ii) as to
any Reference  Rate Loan,  the period  commencing on the date of such  Reference
Rate  Loan  and  ending  on the  earlier  of (A) the last  Business  Day of each
calendar month, and (B) the expiration or earlier termination of this Agreement;
provided, however, that (i) if any Interest Period would end on a day that shall
not be a Business  Day,  such  Interest  Period  shall be  extended  to the next
succeeding  Business Day, (ii) no Interest Period with respect to any Loan shall
end later than the  Termination  Date,  and (iii) interest shall accrue from and
including  the first day of an Interest  Period to and excluding the last day of
such Interest Period.

     "IRC" shall mean the  Internal  Revenue Code of 1986,  as amended,  and all
references to sections  thereof shall include such sections and any  predecessor
and successor provisions thereto.

     "JUDICIAL   OFFICER  OR  ASSIGNEE"   shall  mean  any  trustee,   receiver,
controller, custodian, assignee for the benefit of creditors or any other Person
or entity  having powers or duties like or similar to the powers and duties of a
trustee,  receiver,  controller,  custodian,  or  assignee  for the  benefit  of
creditors.

     "LAWS" shall mean all  ordinances,  statutes,  rules,  regulations,  codes,
orders, injunctions, writs or decrees of any government, whether federal, state,
municipal or local, of any political  subdivision or agency  thereof,  or of any
court,  board or  similar  entity  established  by any of the  foregoing  having
jurisdiction over the property, assets, business or operations of a Person.

     "LENDER" shall mean LaSalle National Bank, a national banking  association,
together with its successors and assigns.

     "LIBOR  RATE"  shall  mean,  with  respect to any  Eurodollar  Loan for any
Interest Period,  the interest rate per annum equal to the quotient  obtained by
dividing (x) the rate of interest  determined by Lender to be the average of the
rate per annum at which  deposits in U.S.  dollars are generally  offered in the
London  Interbank  Bank at 11:00 A.M.  London time, two (2) Business Days before
the first  day of such  Interest  Period,  for a period  equal to such  Interest
Period  and  in the  amount  of  the  applicable  Eurodollar  Loan,  by (y)  the
difference  between  one  hundred  percent  (100%)  and any  applicable  reserve
requirements  (rounded  upward to the nearest  whole  multiple of one  hundredth
(1/100) of one  percent  (1%) per annum),  including,  without  limitation,  any
statutory  maximum  requirement  for Lender to hold  reserves for  "Eurocurrency
Liabilities" under Regulation D of the Board of Governors of the Federal Reserve
System (or any similar reserves under any successor regulation or regulations).

     "LIEN" shall have the same  meaning as set forth in the Bank Boston  Credit
Agreement.

     "LOAN  DOCUMENTS"  shall  mean  this  Agreement,  the  Note,  the  Security
Documents,  the Subsidiary  Guaranty,  and all other  agreements,  documents and
instruments now or hereafter  evidencing,  securing or otherwise relating to the
Loans.

     "LOANS" shall have the meaning set forth in Section 2.1 hereof.

     "LOSSES" shall have the meaning set forth in Section 16 hereof.

     "MAJOR  LEASE" shall mean with respect to the Indiana  Property,  any lease
(including,  without  limitation,  the Indiana Property Lease) of 100,000 square
feet or more, and any guaranty of the tenant's obligations under any such lease.

     "MAJOR  TENANTS"  shall mean as to any Major Lease,  those tenants that are
parties to that Major Lease and any  guarantors  of those  tenant's  obligations
thereunder.


                                      -4-
<PAGE>
     "MATERIAL  ADVERSE EFFECT" shall mean a material  adverse effect on (i) any
of the  Mortgaged  Properties,  (ii)  the  business,  result  of  operations  or
financial  condition of the  Borrower,  the Company,  and the Related  Companies
taken as a whole, (iii) the ability of the Borrower, the Company,  Mortgagor, or
any other of the Guarantor  Subsidiaries to perform their  obligations under the
Loan  Documents,  or (iv)  the  validity  or  enforceability  of any of the Loan
Documents or the remedies or material rights of the Lender thereunder.

     "MAXIMUM FACILITY" shall mean $15,000,000.

     "MORTGAGE"  shall  mean that  certain  Mortgage,  Assignment  of Leases and
Rents,  Security Agreement and Financing  Statement dated as of January 28, 1998
as amended from time to time delivered by Mortgagor to Lender  pursuant to which
the Mortgagor shall convey the Indiana Property as security for the Obligations.

     "MORTGAGED PROPERTIES" shall have the same meaning as set forth in the Bank
Boston Credit Agreement,  and in addition,  shall be deemed to include,  without
limitation, the Indiana Property.

     "MORTGAGOR"  shall mean 475 Superior  Avenue,  L.L.C.,  a Delaware  limited
liability company, which is 100% owned by the Borrower.

     "MULTIEMPLOYER  PLAN" shall mean a plan described in Section  4001(a)(3) of
ERISA which covers employees of Borrower or any ERISA Affiliate.

     "NET OFFERING PROCEEDS" shall mean all net cash proceeds received after the
date  hereof by the  Borrower  or the Company as a result of the sale of common,
preferred  or other  classes of stock of the Company or the  issuance of limited
partnership  interests  in the  Borrower  after  deducting  customary  costs and
discounts of issuance paid by the Company or Borrower in connection therewith.

     "NOTE"  shall mean the  Revolving  Loan Note dated as of January  28,  1998
attached hereto as Exhibit A, as amended from time to time.

     "OBLIGATIONS"   shall  mean  all  loans,   advances,   overdrafts,   debts,
liabilities  (including  without  limitation  any and  all  amounts  charged  to
Borrower's  account  pursuant  to any  agreement  authorizing  Lender  to charge
Borrower's Loan Account), obligations, covenants, lease payments, guarantees and
duties owing by Borrower to Lender of any kind or description  (whether advanced
pursuant to or evidenced by this  Agreement,  by the Note,  or by any other Loan
Document),  whether direct or indirect, absolute or contingent, due or to become
due, now existing or  hereafter  arising (or  otherwise as a result of a payment
made by Lender on behalf of Borrower as  permitted  under this  Agreement or any
other Loan Documents) and further including without limitation all interest, all
Out-of-Pocket  Fees and Costs which  Borrower is required to pay or reimburse by
this Agreement or any other Loan Document, by law or otherwise.

     "OUT-OF-POCKET  FEES AND COSTS" shall have the meaning set forth in Section
2.6(b) hereof.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
agency.

     "PARTICIPANT"  shall  mean any  Person  now or from time to time  hereafter
participating  with the  Lender in any of the Loans made or issued by the Lender
to Borrower pursuant to this Agreement.

     "PERMITTED  ACQUISITIONS"  shall have the same  meaning as set forth in the
Bank Boston Credit Agreement.

     "PERMITTED  DEVELOPMENTS"  shall have the same  meaning as set forth in the
Bank Boston Credit Agreement.

     "PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture,   trust,   unincorporated   organization,   association,   corporation,
institution, entity or governmental entity.

     "POTENTIAL DEFAULT" shall mean any event which through the passage of time,
service of notice or both, would mature into an Event of Default.

     "PREFERRED  SHARES"  shall  have the same  meaning as set forth in the Bank
Boston Credit Agreement.

             "PREFERRED  UNITS"  shall have the same meaning as set forth in the
Bank Boston Credit Agreement.



                                      -5-
<PAGE>
             "PROHIBITED  TRANSACTION"  shall mean any transaction  described in
Section 406 of ERISA which is not exempt by reason of Section 408 of ERISA,  and
any  transaction  described in Section 4975(c) of the IRC which is not exempt by
reason of Sections  4975(c)(2)  or (d) of the IRC, and which could result in any
excise tax, fine, penalty or other liability being imposed on Borrower.

     "RATE" shall have the meaning set forth in Section 2.5(a) hereof.

     "REAL  ESTATE"  shall have the same meaning as set forth in the Bank Boston
Credit  Agreement,   and  in  addition  shall  be  deemed  to  include,  without
limitation, the Indiana Property.

     "REAL ESTATE  ASSETS"  shall have the same meaning as set forth in the Bank
Boston Credit  Agreement,  and in addition  shall be deemed to include,  without
limitation, the Indiana Property.

     "REFERENCE  RATE" shall mean the greater of (i) the variable per annum rate
of interest announced from time to time by LaSalle at its corporate headquarters
in Chicago,  Illinois, as its Prime Rate or equivalent rate, or (ii) the Federal
Funds  Effective Rate in effect from time to time,  plus one-half of one percent
(.50%) per annum.  The "Prime Rate" is one of  LaSalle's  index rates and merely
serves as a basis under which  effective  rates of interest are  calculated  for
loans making  reference  thereto and may not be the lowest or best rate at which
LaSalle calculates interest or extends credit.

     "REFERENCE  RATE LOAN" shall mean any Loan with  respect to which  Borrower
shall have selected an interest rate based upon the Reference Rate in accordance
with the provisions of Section 2.5(a) of this Agreement.

     "REGULATORY  AGENCIES" shall mean any national,  federal,  state,  local or
other  government or political  subdivision  or any agency,  authority,  bureau,
commission, department or instrumentality thereof, or any court.

     "RELATED  COMPANIES"  shall have the same  meaning as set forth in the Bank
Boston Credit Agreement.

     "RELEASE" shall have the meaning set forth in Section 5.11 hereof.

     "REPORTABLE  EVENT" shall mean a reportable event described in Section 4043
of ERISA or the  regulations  thereunder,  for which the thirty  (30) day notice
requirement has not been waived.

     "SECURITY  DOCUMENTS"  shall mean the  Mortgage,  Assignment  of Leases and
Rents and all other documents  granting or evidencing  security interests in the
Indiana Property or any portion thereof to secure the Obligations.

     "SUBSIDIARY"  shall mean any corporation,  partnership,  limited  liability
company,  association,  trust or other  business  entity of which the designated
parent  or  other  controlling  Person  shall  at  any  time  own,  directly  or
indirectly,  through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Interests.

     "SUBSIDIARY  GUARANTY"  shall mean that  certain  Guaranty  of Payment  and
Performance  dated as of  January  28,  1998 made and  delivered  by each of the
Guarantor Subsidiaries in favor of the Lender, as modified by that certain First
Amendment to Guaranty dated  February 17, 1998, and as further  modified by that
certain Release and Reaffirmation of Guaranty dated as of the date hereof.

     "TERMINATION DATE" shall have the meaning set forth in Section 2.1.

     "TOTAL  EQUITY  CAPITAL"  shall mean the  Borrower's  total equity  capital
determined  in a  manner  consistent  with  that  used in  preparing  Borrower's
consolidated financial statements for its fiscal year ending December 31, 1997.

     "UNCURED DEFAULT" shall mean an Event of Default which shall be continuing.

     "VOTING  INTERESTS"  shall  have the same  meaning as set forth in the Bank
Boston Credit Agreement.

1.2 ACCOUNTING TERMS.

     Any  accounting  terms used in this  Agreement  which are not  specifically
defined herein shall have the meanings customarily given them in accordance with
Generally Accepted Accounting Principles. In the event that changes in Generally
Accepted  Accounting  Principles  shall be mandated by the Financial  Accounting
Standards Board and/or the American Institute of Certified Public Accountants or
any similar accounting body of comparable  standing,  or shall be recommended by

                                      -6-
<PAGE>
Borrower's  certified public accountants,  to the extent that such changes would
modify such accounting  terms or the  interpretation  or computation  thereof as
contemplated  by this  Agreement at the time of execution  hereof,  then in such
event such  changes  shall be followed in defining  such  accounting  terms only
after the  Borrower  and Lender  shall have  agreed to amend this  Agreement  to
reflect the  original  intent of such terms in light of such  changes,  and such
terms shall  continue to be applied and  interpreted  without  such change until
such agreement.

1.3 CERTAIN MATTERS OF CONSTRUCTION.

     The terms "herein"  "hereof"  and  "hereunder"  and other words of similar
import  refer to this  Agreement as a whole and not to any  particular  section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders.
The section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement.  All
references to statutes and related  regulations  shall include any amendments of
same  and  any  successor  statutes  and  regulations.  All  references  to  any
instruments or agreements,  including, without limitation,  references to any of
the Loan Documents shall include any and all modifications or amendments thereto
and any and all extensions or renewals  thereof.  The Recitals to this Agreement
are  incorporated  into this Agreement in their entirety and deemed to be a part
hereof.  Wherever covenants or definitions from the Bank Boston Credit Agreement
are  incorporated  and/or  restated  in this  Agreement,  any  defined  terms or
references to sections or schedules or exhibits in such covenants or definitions
shall have the same meaning as ascribed to such defined terms in the Bank Boston
Credit  Agreement  and  shall  be  deemed  to be  references  to such  sections,
schedules or exhibits of the Bank Boston Credit Agreement.

2.  LOANS; FEES; TERMS OF PAYMENT.

2.1 REVOLVING CREDIT FACILITY.

     Subject to the terms and  provisions of this  Agreement  including  without
limitation,  that no Event of Default or Potential  Default has occurred and all
other  conditions  precedent  to  lending  under  Section  4  hereof  have  been
satisfied,  upon the request of Borrower, made at any time and from time to time
prior to January 31, 1999 (the  "Termination  Date"),  the Lender agrees to make
loans  and  advances  (hereinafter  individually  referred  to as a  "Loan"  and
collectively  as the  "Loans")  to  Borrower  from  time  to time so long as the
aggregate amount of the Revolving Loans  outstanding at any time does not exceed
the Maximum Facility.

     The Loans shall be evidenced by, and repayable in accordance with the Note.

2.2 BORROWING PROCEDURES.

     Lender shall have received,  on or before 11:00 a.m.  Chicago time, one (1)
Business Day prior to the date a Loan is to be made,  if a Reference  Rate Loan,
or  three  (3)  Business  Days  prior  to the  date a Loan is to be  made,  if a
Eurodollar  Loan,  (i) an oral  request  from  Borrower for a Loan in a specific
amount (and a request in writing, which shall be delivered to Lender on the same
Business  Day,  executed by an  Authorized  Representation  of  Borrower),  (ii)
designation  whether the Loan is to be a  Eurodollar  Loan or a  Reference  Rate
Loan,  and if such  Loan is to be a  Eurodollar  Loan,  the  Interest  Period or
Interest Periods with respect  thereto,  and (iii) copies of all other documents
which the Borrower is required to deliver to Lender  hereunder.  If such request
for a Loan is received by Lender one (1) business day before the day a Reference
Rate  Loan is to be  made  or  three  (3)  Business  Days  prior  to the  date a
Eurodollar Loan is to be made, subject to the other terms and conditions of this
Agreement,  Lender will make such Loan on the  applicable day on which such Loan
is to be funded  hereunder,  subject to any delays  beyond  Lender's  reasonable
control, provided that Lender shall not be liable for any damages or liabilities
for the failure to so make any Loan on the day requested unless such failure was
due to Lender's gross negligence or wilful misconduct.  If no election as to the
type of Loan is specified  in any such notice by Borrower,  then such Loan shall
be a Reference  Rate Loan. If no Interest  Period is specified with respect to a
Eurodollar  Loan in such notice,  then Borrower shall be deemed to have selected
an Interest  Period of one month's  duration.  Each request for a Reference Rate
Loan  shall  be  in a  minimum  amount  of  $100,000.  Notwithstanding  anything
contained  in this  Agreement to the  contrary,  Borrower may not have more than
four (4)  Eurodollar  Loans  outstanding at any one time, and each request for a
Eurodollar Loan shall be in a minimum initial increment of $100,000.





                                      -7-
<PAGE>
     2.3 PAYMENTS AND PREPAYMENTS.

     (a)  Notwithstanding  anything to the contrary set forth in this Agreement,
          each Loan  shall be due and  payable  on the  earlier  of (i) 180 days
          after the Lender's  funding  thereof,  or (ii) the  Termination  Date.
          Borrower  shall make each  payment in respect of the  principal of and
          interest on the Loans and any other  payments due under this Agreement
          not  later  than  12:00  p.m.  Chicago  time on the day when  due,  in
          Dollars, to the Lender at the Lender's office in Chicago,  Illinois in
          immediately available funds.

     (b)  After the occurrence of an Event of Default  resulting from failure to
          pay any Obligations hereunder,  Lender may (but shall not be obligated
          to) debit the  amount  of any such  payment  which is not made by such
          time to any ordinary deposit account of Borrower with Lender and shall
          give notice thereof to the Borrower, provided the failure to give such
          notice does not affect the validity of such debit.

     (c)  Borrower  shall,  at the  time  of  making  such  payment  under  this
          Agreement  or the  Note,  specify  to the  Lender  the  Loans or other
          amounts  payable by Borrower  hereunder to which such payment is to be
          applied.  Absent receipt of such notice from the Borrower,  the Lender
          may apply any  payments  received  from the  Borrower  in any order or
          priority determined by the Lender in its sole discretion.

     (d)  Each payment  received by the Lender under this  Agreement or the Note
          shall be deemed paid to Lender on the same  Business Day of receipt by
          Lender if received by 1:00 p.m. Chicago time, or otherwise on the next
          successive Business Day, at the office of the Lender.

     (e)  Except as otherwise provided in Section 2.10 hereof, any prepayment of
          the Obligations by Borrower shall be without premium or penalty, other
          than the imposition of the Default Rate of interest, where applicable.

     (f)  The Lender shall render monthly statements of the Obligations owing by
          Borrower  to  the  Lender,  including  statements  of  all  principal,
          interest,  and Out-of-Pocket Fees and Costs owing, and such statements
          shall  be  prima  facie  evidence  to  be  correct  and  accurate  and
          constitute  an account  stated  between  the  Borrower  and the Lender
          unless, within thirty (30) days after receipt thereof by the Borrower,
          the Borrower  shall  deliver to the Lender,  at the Lender's  place of
          business  indicated in Section 14 hereof,  written  objection  thereto
          specifying  the  error  or  errors,  if  any,  contained  in any  such
          statement. Any balance credited to the Borrower's account, less monies
          remitted,  paid or  otherwise  advanced  by the  Lender  to or for the
          Borrower's  account,  and less any  other  sums due to the  Lender  as
          provided in this Agreement, shall be remitted to the Borrower when all
          Obligations owed by the Borrower to the Lender have been paid in full.

     2.4 INTENTIONALLY DELETED.

     2.5 INTEREST.

     (a)  All Obligations  owed by the Borrower to Lender (except for Eurodollar
          Loans and those Obligations  evidenced by a promissory note other than
          the Note, or covered by any other  Section of this  Agreement or other
          agreement which specifically provides for a rate of interest different
          from that  provided  for herein)  shall bear  interest,  on the unpaid
          principal balance thereof,  at a rate per annum (computed on the basis
          of the actual number of days elapsed over a 360 day year) (the "Rate")
          equal to the Reference  Rate,  payable monthly in arrears on the first
          Business Day of each calendar month.

          Each  Eurodollar  Loan shall  bear  interest  on the unpaid  principal
          balance  thereof  at a rate per  annum  (computed  on the basis of the
          actual  number of days elapsed over a 360-day year) equal to the Libor
          Rate for the  Interest  Period in effect  for such Loan,  plus  1.95%.
          Interest  on  Eurodollar  Loans  shall be  payable  in  arrears on the
          earlier of (i) last day of each calendar  month during the  applicable
          Interest Period, or (ii) on the last day of such Interest Period.

          In addition to  calculations  of the Rate as  provided  above,  in the
          event  that  the  Reference  Rate  announced  is,  from  time  to time
          hereafter,  changed,  adjustment  in the  Rate  shall  be  made on the
          effective  date of such change in the  Reference  Rate.  The Rate,  as
          adjusted,  shall apply to all  Obligations  (except as provided  above


                                      -8-
<PAGE>
          with  respect  to  Eurodollar  Loans or where  otherwise  specifically
          provided)  owed on the date following the date on which the adjustment
          is made and shall  continue to apply to such  Obligations  owed during
          succeeding  months until the Reference Rate is adjusted again.  Lender
          shall use reasonable  efforts to notify Borrower of each change in the
          Reference Rate as soon as  practicable,  but Borrower's  obligation to
          pay all  interest  at the Rate and  Default  Rate as  provided in this
          Agreement  shall  not be  affected  by,  nor  shall  Lender  have  any
          liability for, any failure to so notify Borrower.

     (b)  Notwithstanding  the foregoing,  the Obligations  shall bear interest,
          from and after the  occurrence  of an Event of Default and for so long
          as an Event  of  Default  shall  be an  Uncured  Default  and  without
          constituting  a waiver of any such Event of Default,  on the  balances
          owing  from  time to  time,  at a rate  per  annum  equal  to four (4)
          percentage  points  above the Rate (the  "Default  Rate"),  payable on
          demand.  In  addition,  the  Borrower  shall pay to the  Lender a late
          charge  equal to three (3) percent of any amount of  principal  and/or
          interest and/or charges on the Loans which is not paid within ten (10)
          days of the date when due.

     (c)  It is the  intention of Lender and Borrower to comply with the laws of
          the  State of  Illinois,  and  notwithstanding  any  provision  to the
          contrary  contained  herein or in the other Loan  Documents,  Borrower
          shall not be required to pay,  and Lender  shall not be  permitted  to
          collect,  any  amount  in  excess of the  maximum  amount of  interest
          permitted  by  applicable  law  ("Excess  Interest").  If  any  Excess
          Interest is provided for or  determined to have been provided for by a
          court of  competent  jurisdiction  in this  Agreement or in any of the
          other Loan  Documents,  then in such event (i) the  provisions of this
          Section shall govern and control; (ii) Borrower shall not be obligated
          to pay any Excess Interest;  (iii) any Excess Interest that Lender may
          have received hereunder shall be, at Lender's option, (A) applied as a
          credit against either the outstanding  principal  balance of the Loans
          or accrued  and unpaid  interest  hereon,  (B)  refunded  to the payor
          thereof,  or (C) any  combination of the foregoing;  (iv) the interest
          rate(s)  provided  for herein  shall be  automatically  reduced to the
          maximum rate allowed under  applicable law, and this Agreement and the
          other  Loan  Documents  shall be  deemed to have  been,  and shall be,
          reformed  and  modified to reflect  such  reduction;  and (v) Borrower
          shall not have any action against  Lender for any damages  arising out
          of the payment or collection of any Excess  Interest.  Notwithstanding
          the foregoing,  if any interest payment or other charge or fee payable
          hereunder or under any of the other Loan Documents exceeds the maximum
          amount then permitted by applicable law, then to the extent  permitted
          by law,  Borrower  shall be obligated  to pay the maximum  amount then
          permitted by  applicable  law and Borrower  shall  continue to pay the
          maximum amount from time to time permitted by applicable law until all
          such  interest  payments  and other  charges  and fees  otherwise  due
          hereunder or under any of the other Loan  Documents (in the absence of
          such restraint imposed by applicable law) have been paid in full.

     (d)  Lender  may,  upon  notice to  Borrower,  at its  option,  charge  any
          interest  and fees  payable  hereunder  or under any of the other Loan
          Documents to Borrower's Loan Account, and any amounts so charged shall
          thereupon constitute Obligations hereunder and shall thereafter accrue
          interest as provided for in this Agreement.

     2.6 FEES.

     In consideration of Lender' establishing the Maximum Facility hereunder and
making of the Loans hereunder,  Borrower shall pay to the Lender,  the following
fees and charges:

     (a)  A  facility  fee equal to  $82,500.00,  previous  receipt  of which is
          acknowledged by Lender.

     (b)  All reasonable  out-of-pocket fees, costs and expenses ("Out-of-Pocket
          Fees and Costs"),  incurred by Lender in connection  with (i) any bank
          charges in connection with opening and  maintaining  and  transferring
          funds from any depository  account and depositing funds for collection
          by Lender on account of the  Obligations;  (ii) wire  transfer fees in
          connection with Lender's  forwarding to Borrower the proceeds of Loans
          hereunder;  (iii)  photocopying  and other  mechanical  or  electronic
          reproduction expenses in connection with Lender's rights of inspection
          under this Agreement or any other Loan Document or in connection  with


                                      -9-
<PAGE>
          any  service  utilized  by  Lender to  perform  such  functions;  (iv)
          expenses in connection with the documentation, negotiation and closing
          of the Loans, including without limitation title insurance charges and
          escrow fees  (including any and all amendments or waivers with respect
          hereto), (v) the fees, costs and expenses for attorneys and paralegals
          (A)  incurred  by  Lender  in  connection   with  the   documentation,
          negotiation and Closing of the Loans described  herein, or incurred by
          Lender in  connection  with any and all  amendments  or  waivers  with
          respect thereto entered into at or after the Closing of the Loans, and
          the enforcement of Lender's rights  hereunder and under the other Loan
          Documents,  (B) incurred by the Lender in connection  with any suit by
          or involving  the Lender in enforcing or defending  this  Agreement or
          any portion  hereof,  including  without  limitation,  attorneys'  and
          paralegals'  fees and costs  incurred  in  connection  with  appellate
          proceedings  in any  appeals  court,  and (C)  incurred  by the Lender
          obtaining   advice  and  legal  services  with  respect  to  drafting,
          negotiating,   amending,   restating,   restructuring,    terminating,
          enforcing or defending this Agreement, or any portion hereof or any of
          the other Loan  Documents,  whether or not suit is  brought.  All such
          Out-of-Pocket Fees and Costs shall be part of the Obligations, payable
          on demand.

     2.7 PAYMENT DATES.

     Any payment due under this  Agreement  on any day other than a Business Day
shall be due on the next  succeeding  Business  Day, and such payment shall bear
interest in accordance herewith until actually received.

     2.8 INTENTIONALLY DELETED.

     2.9 RENEWALS; CONVERSION AND CONTINUATION OF LOANS.

     (a)  Upon maturity of any  Eurodollar  Loan,  the Borrower may renew all or
          any part of any  Eurodollar  Loan to it from Lender with a Loan of the
          same or a different  type from Lender,  subject to the  conditions and
          limitations  set forth  herein and  elsewhere in this  Agreement.  Any
          Eurodollar  Loan or part  thereof  so  renewed  shall be  deemed to be
          repaid in  accordance  with this  Section 2 with the proceeds of a new
          borrowing  hereunder  and the proceeds of the new Loan,  to the extent
          such  proceeds do not exceed the  principal  amount of the  Eurodollar
          Loan  being  renewed,  shall not be paid by the  Lender  to  Borrower.
          Nothing in this Section  2.9(a)  shall be deemed a  limitation  on the
          Borrower's obligations under Section 2.3(a) above.

     (b)  The  Borrower  shall  have the right at any time,  upon  notice to the
          Lender  given  in the  manner  and  at the  times  specified  in  this
          Agreement  with  respect  to  the  Loans  into  which   conversion  or
          continuation  is to be made,  to  convert  its  Eurodollar  Loans into
          Reference  Rate  Loans,  to  convert  its  Reference  Rate  Loans into
          Eurodollar  Loans  (specifying  the Interest  Period to be  applicable
          thereto),  to convert the  Interest  Period  applicable  to any of its
          Eurodollar  Loans  to  another  permissible  Interest  Period,  and to
          continue any of its Eurodollar Loans into a subsequent Interest Period
          of any  permissible  duration,  subject to the terms and conditions of
          this Agreement, and to the following:

          (i)  each  conversion  shall be  effected  by Lender by  applying  the
               proceeds of the new Reference  Rate Loan or  Eurodollar  Loan, as
               the case may be, to the Reference  Rate Loan or  Eurodollar  Loan
               (or portion thereof) being converted;  accrued interest on a Loan
               (or portion  thereof) being  converted or continued shall be paid
               by the Borrower at the time of conversion or continuation; and

          (ii) If any  Eurodollar  Loan is  converted at any time other than the
               end of an Interest Period applicable thereto,  the Borrower shall
               make such payments associated  therewith as are required pursuant
               to  Section  2.10 at the  time  such  Eurodollar  Loan  shall  be
               converted to a Reference Rate Loan.

The  Interest  Period  applicable  to  any  Eurodollar  Loan  resulting  from  a
conversion or  continuation  shall be specified by the Borrower in the notice of
conversion or continuation delivered pursuant to this provided, however, that if
no such Interest Period shall be specified, the Borrower shall be deemed to have
selected an Interest Period of one month's duration.




                                      -10-
<PAGE>
     2.10 INDEMNITY.

     The Borrower  shall  indemnify  the Lender  against any loss,  fee,  claim,
damage,  liability  or  expense  which  the  Lender  may  sustain  or incur as a
consequence  of (i) any  failure by the  Borrower  to fulfill on the date of any
borrowing of a Eurodollar Loan hereunder the applicable  conditions set forth in
this  Agreement,  (ii) any  failure by the  Borrower to borrow  hereunder  after
notice  of  borrowing  pursuant  to this  Agreement  has been  given,  (iii) any
payment, prepayment or conversion of a Eurodollar Loan required by any provision
of this  Agreement,  or otherwise  made on a date other than the last day of the
applicable  Interest  Period,  or (iv) the  occurrence  of any Event of Default,
including,  but not limited to, any loss or expense  sustained or incurred or to
be sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or  maintain  such Loan or any part  thereof as a  Eurodollar
Loan. Such loss or expense shall include, without limitation, an amount equal to
the  excess,  if any,  as  reasonably  determined  by the  Lender of its cost of
obtaining the funds for the Eurodollar Loan being paid,  prepaid or converted or
not borrowed  (based on the Libor Rate  applicable  thereto) for the period from
the date of such  payment,  prepayment or conversion or failure to borrow to the
last day of the Interest  Period for such  Eurodollar Loan (or, in the case of a
failure to borrow, the Interest Period for such Eurodollar Loan which would have
commenced on the date of such failure to borrow) over the amount of interest (as
reasonably  determined  by the  Lender)  that could be realized by the Lender in
re-employing  during such period the funds so paid,  prepaid or converted or not
borrowed.  A certificate of the Lender setting forth any amount or amounts which
the  Lender is  entitled  to  receive  pursuant  to this  Section  2.10 shall be
conclusive absent manifest error.

     2.11 CHANGE IN LEGALITY.

     (a)  Notwithstanding  anything to the  contrary  herein  contained,  if any
          change in any law or  regulation or in the  interpretation  thereof by
          any  governmental   authority  charged  with  the   administration  or
          interpretation  thereof  shall make it unlawful for the Lender to make
          or maintain any Eurodollar  Loan or to give effect to its  obligations
          as contemplated hereby (an "Illegality"),  or if the Lender determines
          that  maintenance  of  Eurodollar  Loans  would  cause  the  Lender to
          implement  or modify any reserve,  special  deposit or  assessment  or
          other  requirement,  or  impose  any  other  condition  on the  Lender
          affecting  the Loans  (each of the  foregoing  circumstances  called a
          "Regulatory  Action"),  then, by written  notice to the Borrower,  the
          Lender shall:

          (i)  declare that Eurodollar  Loans will not thereafter be made by the
               Lender hereunder, whereupon the Borrower shall be prohibited from
               requesting Eurodollar Loans from the Lender hereunder unless such
               declaration is subsequently withdrawn; provided, however, that if
               after  the date of any such  declaration  there  shall  occur any
               change in law or regulation or in the  interpretation  thereof by
               any  government  authority  charged  with the  administration  or
               interpretation thereof that shall eliminate such Illegality,  the
               Lender  shall as promptly as  reasonably  practicable  notify the
               Borrower of such occurrence and withdraw such declaration; and

          (ii) require that all outstanding  Eurodollar Loans made by the Lender
               be converted to Reference Rate Loans, in which event (1) all such
               Eurodollar  Loans shall be  automatically  converted to Reference
               Rate Loans as of the effective date of such notice as provided in
               paragraph  (b) below and,  (2) all payments  and  prepayments  of
               principal  which would  otherwise  have been applied to repay the
               converted  Eurodollar Loans shall instead be applied to repay the
               Reference  Rate  Loans  resulting  from  the  conversion  of such
               Eurodollar Loans.

     (b)  for  purposes  of this  Section  2.11 a notice to the  Borrower by the
          Lender  pursuant to paragraph (a) above shall be effective on the date
          of receipt by the Borrower.

     2.12 UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR INADEQUACY OF
LIBOR RATE.

     If on or prior to the first day of any Interest Period for any Borrowing of
Eurodollar Loans, the Lender advises the Borrower that deposits in United States
Dollars (in the applicable amounts) are not being offered to it in the off-shore
U.S.  Dollar  interbank  market for such Interest  Period,  whereupon  until the
Lender  notifies  the  Borrower  that  the  circumstances  giving  rise  to such


                                      -11-
<PAGE>
suspension no longer exist,  the  obligations  of the Lender to make  Eurodollar
Loans shall be suspended without liability to the Lender.

     2.13 INCREASED COST AND REDUCED RETURN.

     (a)  If on or after the date hereof,  the adoption of any  applicable  law,
          rule or  regulation,  or any  change  therein,  or any  change  in the
          interpretation   or   administration   thereof  by  any   governmental
          authority,   central  bank  or  comparable  agency  charged  with  the
          interpretation or administration  thereof, or compliance by the Lender
          with any request or directive (whether or not having the force of law)
          of any such authority, central bank or comparable agency:

          (i)  shall  subject the Lender to any tax,  duty or other  charge with
               respect to its  Eurodollar  Loans,  its Note or its obligation to
               make  Eurodollar  Loans, or shall change the basis of taxation of
               payments  to the Lender of the  principal  of or  interest on its
               Eurodollar Loans or any other amounts due under this Agreement in
               respect  of its  Eurodollar  Loans  or  its  obligation  to  make
               Eurodollar  Loans  (except  for changes in the rate of tax on the
               overall net income of the Lender imposed by the  jurisdiction  in
               which the Lender's principal executive office is located);

          (ii) shall  impose,  modify or deem  applicable  any reserve,  special
               deposit or similar  requirement  (including,  without limitation,
               any such  requirement  imposed by the Board of  Governors  of the
               Federal Reserve  System,  against assets of, deposits with or for
               the account of, or credit extended by, the Lender or shall impose
               on the  Lender or on the  interbank  market  any other  condition
               affecting its  Eurodollar  Loans,  its Note or its  obligation to
               make Eurodollar Loans; or

          (iii)shall  impose on the Lender  any other  condition  affecting  the
               Loans;

and the result of any of the  foregoing is to increase the cost to the Lender of
making or maintaining  any  Eurodollar  Loan, or to reduce the amount of any sum
received or receivable by the Lender under this Agreement or under its Note with
respect thereto,  by an amount deemed reasonably and in good faith by the Lender
to be material,  then,  Borrower shall, within fifteen (15) days after demand by
the Lender,  be obligated to pay the Lender such additional amount or amounts as
will  compensate  the  Lender for such  increased  cost or  reduction  (computed
commencing  on the effective  date of any event  mentioned  herein).  The Lender
agrees to use its best efforts to give the Borrower  notice of the occurrence of
any event  mentioned  herein.  In addition,  the Lender may,  upon notice to the
Borrower, elect to increase the interest rate applicable to all Eurodollar Loans
made  subsequent  thereto,  to compensate  the Lender for such increased cost or
reduced yield.

     2.14 DISCRETION OF THE LENDER AS TO MANNER OF FUNDING.

     Notwithstanding any other provision of this Agreement,  the Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood,  however, that for the purposes of this
Agreement  all  determinations  hereunder  shall  be made as if the  Lender  had
actually  funded and  maintained  each  Eurodollar  Loan through the purchase of
deposits  in the  interbank  market  having  a  maturity  corresponding  to such
Eurodollar  Loan's  Interest  Period and bearing an  interest  rate equal to the
Libor Rate for such Interest Period.

     3. TERM OF THIS AGREEMENT; PREPAYMENTS; COLLATERAL SECURITY

     3.1 TERM.

     (a)  This Agreement  shall have a term commencing on the Effective Date and
          expiring on the Termination Date.

     (b)  Notwithstanding  the  foregoing,  upon the  occurrence  of an Event of
          Default,  the  Lender  may,  in  accordance  with  Section  11 of this
          Agreement,  terminate this Agreement, except that this Agreement shall
          terminate automatically upon an Event of Default under Section 10.5 or
          10.6.

     (c)  On the  date of  termination  or  expiration  of this  Agreement,  all
          Obligations  owed by the  Borrower  shall become  immediately  due and
          payable  without  notice or demand and shall be repaid in cash or by a
          wire  transfer  of  immediately   available  funds  and  the  Lender's
          Commitment shall terminate.
                                      -12-
<PAGE>
     3.2 PREPAYMENT; TERMINATION.

     The Borrower may borrow,  repay and reborrow  Loans subject to the terms of
this Agreement.  Subject to the terms of Section 2.10 of this Agreement and this
Section 3.2, Borrower may, at any time, on five (5) days written notice prior to
the end of any month,  prepay in full the Loans and terminate  this Agreement by
paying to the Lender,  in cash or by a wire  transfer of  immediately  available
funds, the Obligations. The Borrower may, at any time, on five (5) day's written
notice  prior to the end of any month,  elect to reduce the Maximum  Facility in
increments  of not less than  $1,000,000.  Upon  receipt  by the  Lender of such
notice,  the  Maximum  Facility  shall be  reduced  by the  requested  increment
effective  the first day of the month  following  the  expiration  of the notice
period.  Notwithstanding any of the foregoing, the Lender shall not be obligated
to refund any portion of the  facility fee  described  in Section  2.6(a) in the
event the Maximum Facility Amount is reduced as set forth in this Section 3.2.

     3.3 MANDATORY PREPAYMENT.

     In the event that at any time before the  termination of this Agreement and
the  repayment  of all  Obligations  hereunder  there  exist  any  Net  Offering
Proceeds,  then subject to the terms of Section 2.10 of this  Agreement and this
Section 3.3: (a) Borrower and Company shall,  within two (2) business days after
receipt  of any Net  Offering  Proceeds,  prepay  the Loans and any  outstanding
Obligations  to the extent of such Net  Offering  Proceeds;  and (b) the Maximum
Facility Amount shall be permanently  reduced dollar for dollar by the amount of
any  Net  Offering  Proceeds,  effective  immediately  upon  receipt  of same by
Borrower or Company.  Notwithstanding any of the foregoing, the Lender shall not
be  obligated  to refund any portion of the  facility  fee  described in Section
2.6(a) in the event the Maximum  Facility Amount is reduced as set forth in this
Section 3.3.

     3.4 COLLATERAL SECURITY.

     The Obligations shall be secured by (i) a perfected first priority lien and
security  interest  to be held by Lender in the  Indiana  Property  and  Indiana
Property Lease, pursuant to the terms of the Mortgage,  Assignment of Leases and
Rents  and  other  Security  Documents,   and  (ii)  the  Subsidiary   Guaranty.
Notwithstanding  the foregoing  collateral,  the  Obligations  are full recourse
obligations of the Borrower (with recourse to its partners limited to the extent
provided  in Section 19 below) and,  to the extent  provided  in the  Subsidiary
Guaranty, of the Guarantor Subsidiaries.

     4. CONDITIONS PRECEDENT

     4.1 CLOSING; CONDITIONS TO INITIAL LOAN AND CLOSING.

     The initial  Loan shall be made upon the  Effective  Date  hereunder at the
offices of the Lender's counsel ("Closing"). In addition to those conditions set
forth   hereunder   with   respect   to  all  Loans   hereunder,   prior  to  or
contemporaneously  with the making of the  initial  Loan  hereunder,  the Lender
shall be satisfied  that all of the following  conditions  precedent  shall have
been satisfied in a manner satisfactory to the Lender.

     (a)  No Material Adverse Change.

          There  shall  have  been  (as  determined  by the  Lender  in its sole
          discretion)  (i) no Material  Adverse Change since  September 30, 1997
          which has occurred in the  operations  (financial or otherwise) of the
          Borrower,  Company  or  their  Subsidiaries,   and  (ii)  no  material
          litigation  or claims that have  occurred  which would have a Material
          Adverse Effect.

     (b)  Required Documents.

          The Lender shall have received all of the following documents, each in
          form and substance  satisfactory  to the Lender and its counsel,  duly
          executed  and dated  the  Effective  Date (or such  other  date  prior
          thereto as shall be satisfactory to the Lender):

          (i)  Agreement.  Multiple copies of this Agreement as requested by the
               Lender.

          (ii) Note. The Note payable to the Lender.

          (iii)Subsidiary   Guaranty.   The  Subsidiary  Guaranty  executed  and
               delivered by the Guarantor Subsidiaries.


                                      -13-
<PAGE>
          (iv) Mortgage,  Assignment  of Leases  and  Rents  and other  Security
               Documents executed and delivered by Mortgagor.

          (v)  Initial Draw Request. A written request for the initial Loan from
               the Borrower in form and substance  reasonably  acceptable to the
               Lender,  with such  supporting  documentation  as the  Lender may
               request in its sole discretion.

          (vi) Certified  Copies  of  Organizational  Documents;  Good  Standing
               Certificates.  (a) A  Certificate  of the Borrower to which there
               shall be  attached  true,  correct  and  complete  copies  of the
               Borrower's Limited  Partnership  Agreement and its Certificate of
               Limited  Partnership,  certified  as  of a  recent  date  by  the
               Secretary of State for the State of Delaware, (b) Certificates of
               Good  Standing for the Borrower  from the  Secretary of State for
               the State of  Delaware  and each State in which the  Borrower  is
               qualified to do business as a foreign limited partnership,  (c) a
               copy of the  Company's  Declaration  of  Trust  certified  by the
               Maryland  Secretary of State,  (d)  Certificates of Good Standing
               for the  Company  from the State of  Maryland  and each  State in
               which the Company is qualified to do business as a foreign trust,
               and (e) certificates of good standing and certified copies of the
               partnership  agreements,  certificates  of  limited  partnership,
               Articles  of   Incorporation   and  By-Laws  and/or  Articles  of
               organization and operating agreements with respect to each of the
               Guarantor   Subsidiaries,   including  without  limitation,   the
               Mortgagor.

          (vii)Authority.  All  action  on the  part  of the  Borrower  and  the
               Company   necessary  for  the  valid   execution,   delivery  and
               performance  by  the  Borrower,  the  Company  and  each  of  the
               Guarantor  Subsidiaries,  including Mortgagor,  of this Agreement
               and the  other  Loan  Documents  to which it is or is to become a
               party shall have been duly and  effectively  taken,  and evidence
               thereof  satisfactory  to the Lender shall have been  provided to
               the Lender.

         (viii)Incumbency  Certificate;  Authorized  Signers.  The Lender  shall
               have received from the Company an incumbency  certificate,  dated
               as of the Effective Date, signed by a duly authorized  officer of
               the Company and giving the name and bearing a specimen  signature
               of each  individual who shall be authorized:  (a) to sign, in the
               name and on behalf of the  Company  (in its own  capacity  and as
               general  partner on behalf of the  Borrower and on behalf of each
               Guarantor  Subsidiary which is a partnership or limited liability
               company ), each of the Loan Documents to which the Borrower,  the
               Company or any  Guarantor  Subsidiary is or is to become a party;
               (b) to make loan  requests and  conversion  requests;  and (c) to
               give  notices and to take other  action on behalf of the Borrower
               under the Loan Documents.

          (ix) Legal  Opinion.  Legal  opinions  of  Winston &  Strawn,  special
               counsel for the Borrower and Company, Maryland counsel, Tennessee
               counsel and Indiana counsel.

          (x)  Officer's  Certificate.  A  certificate  executed  by  the  chief
               executive officer or chief financial  officer of the Company,  as
               general  partner on behalf of the  Borrower in his  capacity as a
               corporate  officer,  stating  that to the best  knowledge of such
               officer  after  diligent  inquiry and  investigation  no Event of
               Default or Potential Default has occurred and is continuing.

          (xi) The Lender  shall have  received  the  facility  fee  pursuant to
               Section 2.6(a) hereof.

          (xii)The  Borrower  shall  deliver  to  Lender  a copy  of  all  "Loan
               Documents"  (as  defined  in the Bank  Boston  Credit  Agreement)
               delivered  by  the  Borrower,   the  Company  and  the  Guarantor
               Subsidiaries in connection with the Bank Boston Credit  Agreement
               which are requested by the Lender.

         (xiii)Consent of the Agent and  Lenders  (as such terms are  defined in
               the Bank Boston Credit  Agreement)  as may be required  under the
               Bank Boston Credit  Agreement to any matters related to the Loans
               and Loan Documents  which require consent of the Agent and/or the
               Lenders under the Bank Boston Credit Agreement.


                                      -14-
<PAGE>
          (xiv)Lender's  title  insurance  policy  and a  survey  regarding  the
               Indiana Property in form and substance satisfactory to Lender.

          (xv) A copy of the  Indiana  Property  Lease,  certified  as true  and
               complete by the Borrower.

          (xvi)Tenant Estoppel Certificate  addressed to Lender, from the tenant
               under  the  Indiana   Property   Lease,  in  form  and  substance
               satisfactory to Lender.

        (xvii) Reliance letters  addressed to Lender for the  environmental  and
               engineering  reports  regarding the Indiana  Property  previously
               delivered to Lender.

        (xviii)Evidence  of  insurance  regarding  the Indiana  Property  naming
               Lender  as  mortgagee  and  loss  payee  and  otherwise  in  form
               satisfactory to Lender.

          (xix)Other.  Such  other  documents  as the  Lender  shall  reasonably
               request.

     (c)  Out-of-Pocket   Fees  and  Costs.   The  Lender  shall  have  received
          reimbursement  for all  Out-of-Pocket  Fees and Costs  which then have
          been paid or accrued by the Lender,  and Lender shall advise  Borrower
          as to the amount of the same.

     4.2 CONDITION TO ALL LOANS.

     Notwithstanding  any other  provisions  contained  in this  Agreement,  the
making of each Loan provided for in this Agreement shall be conditioned upon the
satisfaction  of the matters set forth in this  Section 4.2, and each request by
the Borrower for a Loan shall  constitute  a  representation  to the Lender that
each such condition set forth below has been met or satisfied.

     (a)  Warranties and Representations.

          All of the warranties and representations  contained in this Agreement
          or any other Loan  Document  shall be true and correct in all material
          respects  on and as of the date of such  Loan as if made on such  date
          and each request for a Loan shall  constitute  an  affirmation  by the
          Borrower that such  warranties and  representations  are then true and
          correct in all material respects.

     (b)  No Default.

          As determined by the Lender in its reasonable discretion, no Potential
          Default shall have occurred or will result from such Loan and no Event
          of Default  shall have occurred  which shall be an Uncured  Default or
          will result from such Loan.

     (c)  No Litigation.

          (i) Except as set forth on Schedule 5.7 no  litigation,  investigation
          or proceeding before any court or other  governmental  authority shall
          be pending or threatened  against the Borrower,  the Company or any of
          their respective  Subsidiaries,  including Mortgagor,  or any officer,
          director,  or  employee of the  Borrower,  the Company or any of their
          respective Subsidiaries, including Mortgagor, which, in the reasonable
          opinion of the Lender,  is likely to have a Material  Adverse  Effect;
          and (ii) no injunction,  writ, restraining order, judgment, decree, or
          other  order of any  nature  which  could  reasonably  have a Material
          Adverse  Effect shall have been issued or  threatened  by any court or
          other governmental authority.

     (d)  Other Requirements and Other Documents.

          The  Lender  shall have  received,  in form and  substance  reasonably
          satisfactory  to Lender,  all  certificates,  orders,  authorizations,
          consents, affidavits, schedules, instruments and other documents which
          are  provided  for  hereunder,  or which  the  Lender  may at any time
          reasonably  request,  including,   without  limitation,  an  Officer's
          Certificate as set forth in Subsection 4.1(b)(x) above.

     5. GENERAL CONTINUING WARRANTIES AND REPRESENTATIONS.

As of the Effective  Date and as of the date hereof,  the Borrower  warrants and
represents to Lender as follows, and to the extent that the following warranties

                                      -15-
<PAGE>
and representations  relate to the Company,  the Company represents and warrants
to Lender as follows:

     5.1 OFFICE.

     The chief  executive  office or principal place of business of the Borrower
is at the address indicated in Section 14 hereof and the Borrower  covenants and
agrees  that it will  not,  during  the term of this  Agreement,  without  prior
written  notification  to the Lender,  relocate such chief  executive  office or
principal place of business.

     5.2 EXISTENCE.

     The Borrower is a limited partnership,  duly formed and validly existing as
a limited partnership under the laws of the State of Delaware and has all powers
and all material governmental licenses,  authorizations,  consents and approvals
required  to own its  property  and  assets  and  carry on its  business  as now
conducted or as it presently proposes to conduct and has been duly qualified and
is in good  standing  in  every  jurisdiction  in  which  the  failure  to be so
qualified  and/or in good standing is likely to have a Material  Adverse Effect.
Company is a real estate investment trust, duly formed,  validly existing and in
good standing as a real estate  investment  trust under the laws of the State of
Maryland   and  has  all  powers  and  all   material   governmental   licenses,
authorizations,  consents and approvals  required to own its property and assets
and carry on its  business  as now  conducted  or as it  presently  proposes  to
conduct  and  has  been  duly  qualified  and  is  in  good  standing  in  every
jurisdiction in which the failure to be so qualified  and/or in good standing is
likely to have a  Material  Adverse  Effect.  Mortgagor  is a limited  liability
company,  duly formed and existing as a limited liability company under the laws
of the  State of  Delaware  and has all  powers  and all  material  governmental
licenses,  authorizations,  consents and approvals  required to own its property
and  assets  and  carry on its  business  as now  conducted  or as it  presently
proposes to conduct and has been duly qualified and is in good standing in every
jurisdiction in which the failure to be so qualified  and/or in good standing is
likely to have a Material Adverse Effect.

     5.3 AUTHORITY.

     The Borrower has the  partnership  power and authority to execute,  deliver
and carry out the terms and provisions of each of the Loan Documents to which it
is a party and has taken all necessary  partnership action, if any, to authorize
the execution and delivery on behalf of the Borrower and the  performance by the
Borrower of such Loan  Documents.  The  Borrower,  the Company and the Guarantor
Subsidiaries,  including  Mortgagor,  each have duly executed and delivered each
Loan  Document  to  which  it is a party in  accordance  with the  terms of this
Agreement,  and each such Loan Document constitutes the legal, valid and binding
obligation of the Borrower, the Company and each Guarantor Subsidiary, including
Mortgagor,  enforceable in accordance with its terms,  except as  enforceability
may be limited by  applicable  insolvency,  bankruptcy  or other laws  affecting
creditors  rights  generally,  or general  principles  of equity,  whether  such
enforceability  is  considered  in a proceeding in equity or at law. The Company
and each Guarantor Subsidiary,  including Mortgagor, has the power and authority
to execute,  deliver and carry out the terms and  provisions of each of the Loan
Documents to which it is a party and has taken all necessary action to authorize
the execution,  delivery and performance of such Loan Documents. The Company has
the  power  and  authority  to  execute,  deliver  and  carry  out the terms and
provisions of each of the Loan  Documents on behalf of the Borrower to which the
Borrower  is a party  and has  taken  all  necessary  action  to  authorize  the
execution  and  delivery on behalf of the Borrower  and the  performance  by the
Borrower of such Loan Documents.

     5.4 NO BREACH.

     (a) Neither the  execution,  delivery or performance by or on behalf of the
Borrower of the Loan  Documents to which it is a party,  nor  compliance  by the
Borrower  with the terms and  provisions  thereof  nor the  consummation  of the
transactions  contemplated  by the  Loan  Documents,  (i)  will  contravene  any
provision of any law, statute,  rule,  regulation,  order,  writ,  injunction or
decree  of any  court or  governmental  instrumentality,  as  applicable  to the
Borrower,  (ii) will materially conflict with or result in any breach of, any of
the terms,  covenants,  conditions  or  provisions  of, or  constitute a default
under,  or result in the creation or imposition of (or the  obligation to create
or impose) any Lien upon any of the property or assets of the Borrower or any of
its  Subsidiaries  pursuant  to the terms of any  indenture,  mortgage,  deed of
trust, or other agreement or other instrument,  including,  without  limitation,
the Bank Boston Credit  Agreement,  to which the Borrower (or of any partnership


                                      -16-
<PAGE>
of which the Borrower is a partner) or any of its  Subsidiaries is a party or by
which it or any of its  property  or assets  is bound or to which it is  subject
(except for such breaches and defaults under loan  agreements  which the lenders
thereunder have agreed to forbear pursuant to valid forbearance agreements),  or
(iii) will cause a default by the Borrower under any organizational  document of
any Person in which the Borrower has an interest,  or cause a default  under the
Borrower's agreement or certificate of limited partnership,  the consequences of
which  conflict,  breach or default  would have a Material  Adverse  Effect,  or
result in or require the creation or imposition of any Lien  whatsoever upon any
property.

     (b) Neither the  execution,  delivery or  performance by the Company or the
Guarantor  Subsidiaries  (including without  limitation,  Mortgagor) of the Loan
Documents  to which  they are a party,  nor  compliance  by the  Company  or the
Guarantor   Subsidiaries   with  the  terms  and  provisions   thereof  nor  the
consummation of the transactions contemplated by the Loan Documents to which any
of them are a party,  (i) will  contravene  any  provision of any law,  statute,
rule, regulation, order, writ, injunction or decree of any court or governmental
instrumentality, as applicable to the Company or the Guarantor Subsidiaries (ii)
will  materially  conflict  with or result in any  breach  of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or  imposition  of (or the  obligation  to create or impose) any
Lien upon any of the property or assets of the Company, any Guarantor Subsidiary
or any of their respective  Subsidiaries pursuant to the terms of any indenture,
mortgage,  deed of trust,  or other  agreement or other  instrument to which the
Company (or of any partnership of which the Company is a partner), any Guarantor
Subsidiary or any of their respective Subsidiaries is a party or by which any of
them or any of their  respective  property or assets is bound or to which any of
them are subject  (except for such breaches and defaults  under loan  agreements
which  the  lenders   thereunder  have  agreed  to  forbear  pursuant  to  valid
forbearance  agreements),  or (iii) will  cause a default by the  Company or any
Guarantor  Subsidiary under any  organizational  document of any Person in which
the Company or any Guarantor  Subsidiary has an interest,  the  consequences  of
which  conflict,  breach or default  would have a Material  Adverse  Effect,  or
result in or require the creation or imposition of any Lien  whatsoever upon any
property.

     5.5 SOLVENCY.

     On the Effective Date both prior to and after the transactions contemplated
in connection with the Closing,  and at all times thereafter,  the Fair Value of
the Borrower's assets is and shall be greater than its liabilities; the Borrower
is and shall be able to pay its debts as they mature and the  Borrower  does not
and will not have an unreasonably small amount of capital.  The Borrower has and
at all times hereafter will have sufficient capital to carry on its business and
transactions as now conducted and as planned to be conducted in the future.

     5.6 COMPLIANCE WITH LAWS.

     The Borrower,  the Company and each Guarantor Subsidiary (including without
limitation,  Mortgagor) is in  compliance  in all respects  with all  applicable
Laws,  including without limitation,  Laws imposed by any Regulatory Agencies or
other governmental authority, including but not limited to the Securities Act of
1933,  the  Securities  Exchange  Act of 1934,  the Fair  Labor  Standards  Act,
Environmental  Laws,  laws relating to income,  unemployment,  payroll or social
security taxes and employee  benefit plans (as defined in Section 3(3) of ERISA)
as required by ERISA, except for those laws, rules and regulations the violation
of which would not have a Material Adverse Effect.

     5.7 ACTIONS OR PROCEEDINGS.

     Except as disclosed on Schedule  5.7,  there are no actions or  proceedings
pending by or against  the  Borrower,  the Company or any  Guarantor  Subsidiary
(including  without  limitation,  Mortgagor)  before any  court,  administrative
agency  or  other  governmental  entity  including,   without  limitation,   any
Regulatory  Agency which could have a Material  Adverse  Effect and the Borrower
and Company have no knowledge of any pending, threatened or imminent litigation,
governmental  investigations  or claims,  complaints,  actions  or  prosecutions
involving the  Borrower,  the Company or any  Guarantor  Subsidiary  (including,
without  limitation,  Mortgagor),  or any  breaches  by the  Borrower,  Company,
Mortgagor or any other Person of any agreement to which the  Borrower,  Company,
or  Mortgagor  is  a  party,  except  for  actions,   proceedings,   litigation,
investigations,  claims,  complaints,  actions,  prosecutions  and breaches that
would not have a Material Adverse Effect.




                                      -17-
<PAGE>
     5.8 TRADEMARKS, LICENSES, ETC.

     Borrower,  Company  and  each  Guarantor  Subsidiary  (including,   without
limitation,  Mortgagor) owns or possesses  rights to use all licenses,  patents,
patent  applications,  copyrights,  service  marks,  trademarks  and trade names
required  to  continue  to conduct  its  business  as  heretofore  or  presently
conducted.   All  such  licenses,   patents,   patent  applications,   copyright
registrations,  service marks, trademarks and trade names are listed on Schedule
5.8. To the best of the Borrower's  knowledge,  after diligent inquiry,  no such
license or trademark  has been  declared  invalid,  been limited by order of any
governmental  authority or by agreement,  or is the subject of any infringement,
interference  or similar  proceeding or challenge,  except for those licenses or
trademarks which if challenged,  limited or rendered  invalid,  would not have a
Material Adverse Effect.

     5.9 FINANCIAL STATEMENTS.

             All financial statements relating to the Borrower,  Company and the
Guarantor  Subsidiaries  which have been or may  hereafter  be  delivered by the
Borrower to the Lender fairly  present the financial  condition of the Borrower,
Company  and  their  Subsidiaries  and have been  prepared  in  accordance  with
Generally Accepted Accounting  Principles,  subject to year-end  adjustments and
the absence of footnotes with respect to interim financial statements, and there
has been no material adverse change in the financial  condition of the Borrower,
Company  and  the  Guarantor   Subsidiaries   (including   without   limitation,
Mortgagor), either individually or on a consolidated basis, since the submission
of such financial information to the Lender.

     5.10 CONDUCT OF BUSINESS.

     Since September 30, 1997,  except as set forth in the Equity  Prospectus or
as set forth in Schedule  5.10,  neither the  Borrower  nor the Company has: (i)
incurred  any  debts,  obligations,   or  liabilities  (absolute,   accrued,  or
contingent and whether due or to become due) except current liabilities incurred
in the  ordinary  course  of  business,  none of which  (individually  or in the
aggregate)  materially  and adversely  affects the business or properties of the
Borrower;  (ii) paid any obligation or liability other than current  liabilities
in the ordinary  course of business,  or  discharged  or satisfied  any liens or
encumbrances other than those securing current liabilities,  in each case in the
ordinary  course  of  business;  (iii)  declared  or  made  any  payment  to  or
distribution  to its  partners  as such,  or  obligated  itself  to do so;  (iv)
mortgaged,  pledged,  or  subjected  to any Lien any of its assets  (tangible or
intangible);  (v) sold,  transferred  or leased any of its assets  except in the
usual and ordinary  course of  business;  (vi)  suffered  any  physical  damage,
destruction  or loss  (whether  or not  covered  by  insurance)  materially  and
adversely  affecting the  properties or business of the Borrower;  (vii) entered
into any transaction other than in the usual and ordinary course of business and
other than as contemplated hereby;  (viii) encountered any labor difficulties or
labor union organizing activities; (ix) issued or sold any securities or granted
any options or similar rights with respect  thereto other than pursuant  hereto;
or (x) agreed to do any of the foregoing other than pursuant  hereto.  There has
been no Material Adverse Change in the business, financial condition, operations
or results of operations  of either the Borrower or the Company since  September
30, 1997.

     5.11 ENVIRONMENTAL COMPLIANCE.

     The Borrower has  delivered  to the Lender the  Environmental  Reports with
respect to the Mortgaged  Properties,  which are listed on Schedule 5.11. Except
as may be set forth in the  Environmental  Reports with respect to the Mortgaged
Properties,  or as described on Schedule 5.11 or in the Equity  Prospectus  with
respect  to  the  other  Real  Estate  Assets,   Borrower  makes  the  following
representations and warranties:

     (a) To the best of Borrower's knowledge, none of the Borrower, the Company,
any of the Guarantor Subsidiaries (including, without limitation,  Mortgagor) or
any  operator  of the Real  Estate or any  portion  thereof,  or any  operations
thereon is in violation, or alleged material violation, of any judgment, decree,
order, law,  license,  rule or regulation  pertaining to environmental  matters,
including without limitation,  those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive  Environmental  Response,  Compensation
and Liability Act of 1980 as amended  ("CERCLA"),  the Superfund  Amendments and
Reauthorization  Act of 1986 ("SARA"),  the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances  Control Act, or any state or local statute,
regulation,  ordinance,  order or  decree  relating  to  health,  safety  or the
environment,   including,   without  limitation,   the  environmental  statutes,


                                      -18-
<PAGE>
regulations,  orders and  decrees of the States in which any of the Real  Estate
may be  located  (hereinafter  collectively  referred  to as the  "Environmental
Laws"), which violation either involves the Mortgaged Properties,  or would have
a Material Adverse Effect.

     (b)  None  of the  Borrower,  the  Company  or the  Guarantor  Subsidiaries
(including, without limitation,  Mortgagor) has received written notice from any
third  party  including,   without  limitation  any  federal,   state  or  local
governmental authority with respect to any of the Mortgaged Properties,  or with
respect  to any other Real  Estate if the same  would  have a  Material  Adverse
Effect,  (i) that it has been  identified  by the  United  States  Environmental
Protection  Agency ("EPA") as a potentially  responsible party under CERCLA with
respect to a site listed on the National  Priorities  List,  40 C.F.R.  Part 300
Appendix B (1986);  (ii) that any  hazardous  waste,  as defined by 42 U.S.C. ss
9601(5),  any  hazardous  substances  as defined by 42 U.S.C.  ss 9601(14),  any
pollutant  or  contaminant  as  defined  by 42 U.S.C.  ss 9601(33)  or any toxic
substances,  oil  or  hazardous  materials  or  other  chemicals  or  substances
regulated  by  any  Environmental  Laws  ("Hazardous  Materials")  which  it has
generated,  transported  or  disposed  of have been found at any site at which a
federal, state or local agency or other third party has conducted or has ordered
that the Borrower, the Company or any of the Guarantor Subsidiaries  (including,
without  limitation,  Mortgagor)  conduct a remedial  investigation,  removal or
other response action pursuant to any Environmental  Law; or (iii) that it is or
shall be a named  party to any claim,  action,  cause of action,  complaint,  or
legal or  administrative  proceeding  (in each case,  contingent  or  otherwise)
arising  out of any  third  party's  incurrence  of costs,  expenses,  losses or
damages of any kind  whatsoever  in  connection  with the  release of  Hazardous
Materials.

     (c) (i) To the best of  Borrower's  knowledge no portion of the Real Estate
has been used for the  handling,  processing,  storage or disposal of  Hazardous
Materials except in material compliance with applicable  Environmental Laws; and
no  underground  tank or other  underground  storage  receptacle  for  Hazardous
Materials  is  located  on any  portion of the Real  Estate  except in  material
compliance  with applicable  Environmental  Laws; (ii) to the best of Borrower's
knowledge,  in the  course of any  activities  conducted  by the  Borrower,  the
Company, any of the Guarantor  Subsidiaries or the operators of any Real Estate,
any ground or space tenants on any Real Estate, no Hazardous Materials have been
generated  or are being used on the Real Estate  except in  material  compliance
with applicable  Environmental Laws, which in the case of Real Estate other than
the Mortgaged  Properties would have a Material Adverse Effect;  (iii) there has
been  no  present,  or to the  best of  Borrower's  knowledge  past,  releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping,  disposing or dumping (a "Release") or threatened Release of Hazardous
Materials  on, upon,  into or from the Mortgaged  Properties,  or the other Real
Estate,  which  Release  in the case of Real  Estate  other  than the  Mortgaged
Properties  would  have a  Material  Adverse  Effect  and;  (iv) to the  best of
Borrower's  knowledge,  there have been no Releases on,  upon,  from or into any
real property in the vicinity of any of the Real Estate  which,  through soil or
groundwater contamination,  may have come to be located on, and which would have
a Material  Adverse  Effect;  and (v)  notwithstanding  that any  representation
contained  herein may be  limited to the  knowledge  of the  Borrower,  any such
limitation shall not affect the covenants specified in Section 7.11 or elsewhere
in this Agreement.

     5.12 PERMITS AND LICENSES.

     To the  best  of the  Borrower's  knowledge  after  diligent  inquiry,  the
Borrower, the Company and each of the Guarantor Subsidiaries  (including without
limitation, Mortgagor) has been and is current and in good standing with respect
to all governmental approvals,  permits,  certificates,  licenses,  inspections,
consents and franchises (collectively,  the "Licenses") necessary to continue to
conduct  its  business  and  to own or  lease  and  operate  its  properties  as
heretofore conducted, owned, leased or operated, except where failure to hold or
maintain such Licenses would not have a Material Adverse Effect.

     5.13 ERISA.

     To the best of the Borrower's knowledge after diligent inquiry: neither the
Borrower,  the Company,  any ERISA Affiliate of the Borrower or the Company, nor
any  Benefit  Plan  is in  violation  in  any  material  respect  of  any of the
provisions of ERISA or any of the  qualification  requirements of Section 401(a)
of the IRC; no material Prohibited  Transaction or Reportable Event has occurred
with respect to any Benefit Plan, nor has any Benefit Plan been the subject of a
waiver of the minimum funding standard under Section 412 of the IRC; nor has any
Benefit Plan experienced an accumulated  funding deficiency under Section 412 of


                                      -19-
<PAGE>
the IRC; nor has any lien been imposed upon the Borrower or any ERISA  Affiliate
of the Borrower  under Section  412(n) of the IRC; nor has any Benefit Plan been
amended in such a way that the security  requirements  of Section  401(a)(29) of
the IRC  apply;  no  notice  of intent  to  terminate  a  Benefit  Plan has been
distributed to affected  parties or filed with the PBGC under Section 4041(c) of
ERISA,  nor has any Benefit Plan been terminated under Section 4041(e) of ERISA;
the PBGC has not instituted  proceedings  to terminate,  or appoint a trustee to
administer,  a Benefit Plan and no event has occurred or condition  exists which
might constitute  grounds under Section 4042 of ERISA for the termination of, or
the  appointment  of a trustee to  administer,  any  Benefit  Plan;  neither the
Borrower nor any ERISA  Affiliate of the Borrower would be liable for any amount
pursuant to Sections 4062, 4063 or 4064 of ERISA if all Benefit Plans terminated
as of the  most  recent  valuation  dates of such  Benefit  Plans;  neither  the
Borrower nor any ERISA Affiliate of the Borrower  maintains any employee welfare
benefit plan, as defined in Section 3(1) of ERISA,  which  provides any benefits
to an employee or the  employee's  dependents  with  respect to claims  incurred
after the employee  separates  from service other than is required by applicable
law;  and neither the  Borrower  nor any ERISA  Affiliate  of the  Borrower  has
incurred or expects to incur any withdrawal liability to any Multiemployer Plan.

     5.14 INTENTIONALLY DELETED.

     5.15 TAX OBLIGATIONS.

             Borrower,  the Company and each of the Guarantor  Subsidiaries  has
filed  complete  and  correct  federal,  state and local tax reports and returns
required to be filed by it,  prepared in accordance  with any applicable laws or
regulations,  and except for extensions duly obtained,  has either duly paid all
taxes, duties and charges owed by it, or made adequate provision for the payment
thereof,  unless the  Borrower,  the  Company or such  Guarantor  Subsidiary  is
contesting in good faith, by appropriate  proceedings,  the validity,  amount or
imposition of such tax, duty or charge while  maintaining  adequate  reserves to
cover such tax,  duty or charge and where such contest would not have a Material
Adverse Effect.  There are no material unresolved questions or claims concerning
any  tax  liability  of the  Borrower,  the  Company  or  any  of the  Guarantor
Subsidiaries.  None  of  the  transactions  contemplated  hereby  or  under  any
agreements  referred to hereunder  will result in any material tax liability for
the Borrower,  the Company or any of the Guarantor Subsidiaries or result in any
other material  adverse tax consequence for the Borrower,  the Company or any of
the Guarantor Subsidiaries.

     5.16 EMPLOYEE CONTROVERSIES.

     There are no strikes,  work stoppages or  controversies  pending or, to the
best of the  Borrower's  knowledge  after  diligent  inquiry and  investigation,
threatened,  between  either the  Borrower,  the Company or any of the Guarantor
Subsidiaries and any of their employees,  other than employee grievances arising
in the  ordinary  course of  business  which  will not,  individually  or in the
aggregate, have a Material Adverse Effect.

     5.17 FULL DISCLOSURE.

     To  the  best  of  Borrower's  knowledge,  this  Agreement,  the  financial
statements  delivered  in  connection  herewith,  and  the  representations  and
warranties of the Borrower  herein and in any other document  delivered or to be
delivered  by or on  behalf of the  Borrower,  do not and will not  contain  any
untrue  statement of a material fact or omit a material  fact  necessary to make
the statements  contained therein or herein, in light of the circumstances under
which they were made, not misleading. To the best of Borrower's knowledge, there
is no  material  fact  which the  Borrower  has not  disclosed  to the Lender in
writing  which  materially  and  adversely  affects  or, so far as the  Borrower
reasonably foresees, could materially and adversely affect the assets, business,
prospects,  profits, or condition  (financial or otherwise) of the Borrower,  or
Company, the rights of the Lender or the ability of the Borrower to perform this
Agreement.

     5.18 BANK BOSTON CREDIT AGREEMENT.

     The Bank  Boston  Credit  Agreement  attached  hereto as Exhibit B is true,
correct and  complete,  is in full force and effect,  and no Default or Event of
Default  (as  each  such  term  is  defined  thereunder)  has  occurred  and  is
continuing,  nor has any event which,  with the passage of time or the giving of
notice, or both, could give rise to a Default or Event of Default under the Bank
Boston Credit Agreement (as each such term is defined thereunder). Except as set
forth in Exhibit  B, the Bank  Boston  Credit  Agreement  has not been  amended,
modified or supplemented.


                                      -20-
<PAGE>
     6. INCORPORATION OF NEGATIVE COVENANTS.

     The Borrower  covenants  and agrees,  and to the extent that the  following
covenants  relate to the Company,  the Company  covenants  and agrees,  that the
following  covenants  contained  in the Bank Boston  Credit  Agreement  shall be
incorporated herein by this reference, and made a part hereof, for all purposes,
as if more fully set forth herein and shall be for the direct benefit of Lender:
Sections  8.1,  8.2,  8.3,  8.4, 8.5, 8.6, 8.7 and 8.9 of the Bank Boston Credit
Agreement in the form attached hereto as Exhibit B.

     6.1 INCORPORATION OF NEGATIVE COVENANTS.

     The  foregoing  Sections  8.1,  8.2, 8.3, 8.4, 8.5, 8.6, 8.7 and 8.9 of the
Bank Boston Credit  Agreement  are by this  reference  hereby  restated in their
entirety and incorporated herein respectively as Sections 6.2 through 6.9 hereof
and shall run to the direct  benefit of Lender,  and all  references  therein to
"Lenders",  "Requisite  Lenders",  "Lead  Lenders" or "Agent" shall be deemed to
instead mean the Lender hereunder.

     6.10 INDEPENDENT ENFORCEMENT OF NEGATIVE COVENANTS BY THE LENDER.

     The  foregoing  Sections  6.2  through  6.9  hereof  shall  be  independent
obligations of the Borrower and, as applicable, the Company hereunder, and shall
be  enforceable by the Lender  hereunder  notwithstanding  (i) the  termination,
maturity  or further  amendment,  modification  or renewal of the Bank of Boston
Credit  Agreement,  or (ii) the waiver of the Borrower's or Company's failure to
perform,  keep or observe  any of the  foregoing  affirmative  covenants  by the
"Agent",  "Requisite Lenders",  "Lead Lenders" or the "Lenders" (each as defined
in the Bank Boston Credit Agreement).

     6.11 LEASES.

     Neither Borrower nor Mortgagor will (i) enter into any Major Leases or (ii)
materially  amend,  supplement or otherwise  materially  modify, or terminate or
cancel,  or accept the  surrender  of, or grant any material  concessions  to or
waive  the  material  performance  of any of the Major  Tenants  under the Major
Leases, in each case without the prior approval of Lender as provided in Section
7.20 below.

     7. INCORPORATION OF AFFIRMATIVE COVENANTS - GENERAL.

     The Borrower  covenants  and agrees,  and to the extent that the  following
covenants  relate to the Company,  the Company  covenants  and agrees,  that the
following  covenants  contained  in the Bank Boston  Credit  Agreement  shall be
incorporated herein by this reference, and made a part hereof, for all purposes,
as if more fully set forth herein and shall be for the direct benefit of Lender:
Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10,  7.14,  7.15,  7.16,
7.18,  7.19,  7.20 and  7.22 of the Bank  Boston  Credit  Agreement  in the form
attached hereto as Exhibit B.

     7.1 INCORPORATION OF AFFIRMATIVE COVENANTS.

     The foregoing  Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9,  7.10,
7.14,  7.15, 7.16, 7.18, 7.19, 7.20 and 7.22 of the Bank Boston Credit Agreement
are by this reference hereby restated in their entirety and incorporated  herein
respectively  as Sections 7.2 through  7.18 hereof,  and shall run to the direct
benefit of Lender, and all references therein to "Lenders", "Requisite Lenders",
"Lead Lenders" or "Agent" shall be deemed instead to mean the Lender hereunder.

     7.19 INDEPENDENT ENFORCEMENT OF AFFIRMATIVE COVENANTS BY THE LENDER.

     The  foregoing  Sections  7.2  through  7.18  hereof  shall be  independent
obligations of the Borrower and, as applicable, the Company hereunder, and shall
be  enforceable by the Lender  hereunder  notwithstanding  (i) the  termination,
maturity  or further  amendment,  modification  or renewal of the Bank of Boston
Credit  Agreement,  or (ii) the waiver of the Borrower's or Company's failure to
perform,  keep or observe  any of the  foregoing  affirmative  covenants  by the
"Agent",  "Requisite Lenders",  "Lead Lenders" or the "Lenders" (each as defined
in the Bank Boston Credit Agreement).

     7.20 USE OF PROCEEDS.

     Subject to the provisions of Section 2.2 hereof,  the proceeds of the Loans
shall  be  used  by  the  Borrower  for  Permitted  Acquisitions  and  Permitted
Developments,  for refinancing  other  Indebtedness  and for working capital and
other purposes consistent with the covenants contained herein.


                                      -21-
<PAGE>
     7.21 LEASES; LEASE APPROVALS.

     Mortgagor will at all times  exercise or enforce its material  rights under
the Indiana Property Lease and any other leases for the Indiana Property. During
the  continuance  of an Event of Default,  Lender shall have the right,  and the
Borrower (on behalf of  Mortgagor)  hereby  authorizes  Lender,  to  communicate
directly with any of the tenants or guarantors for any purpose  contemplated  by
this Agreement or any of the Security Documents.  Any proposed lease which would
be a Major  Lease  shall  be  submitted  to and  approved  by  Lender  prior  to
execution,  along with the most recent  financial  statements  of such  proposed
tenant and any guarantor. The Mortgagor will not terminate,  accept surrender of
or  materially  adversely  amend the Indiana  Property  Lease or any other Major
Lease or release any Major Tenant or waive the material  performance  of a Major
Lease by a Major Tenant, in each case without prior approval of the Lender.  The
Lender  shall not  unreasonably  withhold  its  approval  of any Major  Lease or
amendment  thereof.  If Lender fails to respond  within five (5)  business  days
after  receipt of any proposed  Major Lease or  amendment of a Major Lease,  the
same shall be deemed to be approved.

     7.22 YEAR 2000 PROBLEM.

     The Borrower shall promptly  conduct a comprehensive  review and assessment
of its computer  applications  and make inquiry of its  property  managers  with
respect to the "Year 2000 Problem"  (i.e.,  the risk that computer  applications
may not be able to properly perform date-sensitive  functions after December 31,
1999) and, based on that review and inquiry,  take appropriate actions to assure
that the Year 2000 Problem will not result in a Material Adverse Effect.

     8. AFFIRMATIVE COVENANTS - REPORTING.

     Borrower  shall  furnish,  or  cause  to be  furnished  to the  Lender  the
following:

     8.1 REPORTS, COVENANT COMPLIANCE CERTIFICATES.

     As soon as practicable, and in any event, within the time periods set forth
in Sections 7.4 and 7.5 of the Bank Boston Credit  Agreement for delivery to the
Agent or Lenders  thereunder,  the  Borrower  shall  provide the Lender with all
certificates, affidavits, financial statements, balance sheets, notices, reports
and other  instruments  described  in  Sections  7.4 and 7.5 of the Bank  Boston
Credit  Agreement  in  effect  as  of  the  date  hereof,   notwithstanding  the
termination,  maturity or further amendment, modification or renewal of the Bank
Boston Credit Agreement.

     8.2 INTENTIONALLY DELETED.

     8.3 OTHER INFORMATION AND CHANGES.

     Borrower  shall  promptly  supply  the Lender  with such other  information
concerning its or its Subsidiaries' affairs as the Lender may reasonably request
from  time to time  hereafter,  and  shall  promptly  notify  the  Lender of any
material  adverse  change  in  the  Borrower's  or  any  Subsidiary's  financial
condition  and of any  condition  or event which  constitutes  a breach of or an
Event of Default under this Agreement.

     8.4 CONFIDENTIALITY.

     Lender  understands  that in the course of its  exercise  of the rights set
forth in this  Section 8, the Lender may obtain  information  which  relating to
Borrower or the Company or the Guarantor  Subsidiaries  which is confidential in
nature (the "Confidential Information").  Lender agrees that it will not, at any
time, divulge,  publish or disclose,  or authorize or permit any other person to
do so, to any  other  Person,  any of the  Confidential  Information,  provided,
however, that the Confidential Information may be disclosed by Lender (a) to its
officers,  attorneys,  and  accountants,  (b)  to  any  Participant,  (c) to any
regulator  or other  governmental  agency with  supervisory  authority  over the
business of Lender, (d) to any other Person to the extent required by applicable
law or regulation,  and (e) to the extent that such Confidential  Information is
otherwise publicly available from sources other than Lender.

     9. COVENANTS - FINANCIAL.

     The Borrower covenants and agrees that the following covenants contained in
the Bank Boston Credit Agreement shall be incorporated herein by this reference,
and made a part hereof, for all purposes,  as if more fully set forth herein and
shall be for the direct  benefit of Lender  Sections 9.1, 9.2, 9.3, 9.4, 9.5 and
9.6 of the Bank Boston Credit  Agreement in the form attached  hereto as Exhibit
B.
                                      -22-
<PAGE>
     9.1 INCORPORATION OF FINANCIAL COVENANTS.

     The  foregoing  Sections 9.1, 9.2, 9.3, 9.4, 9.5 and 9.6 of the Bank Boston
Credit  Agreement are by this  reference  hereby  restated in their entirety and
incorporated   herein   respectively   as  Sections   9.2  through  9.7  hereof.
Notwithstanding anything to the contrary set forth in this Agreement the parties
hereto  acknowledge  and  agree  that  the  provisions  of  Section  9.4 of this
Agreement  shall be deemed to have been amended  effective  as of September  30,
1998.

     9.8 INDEPENDENT ENFORCEMENT OF FINANCIAL COVENANTS BY THE LENDER.

     The  foregoing  Sections  9.2  through  9.7  hereof  shall  be  independent
obligations  of the Borrower  hereunder,  and shall be enforceable by the Lender
hereunder  notwithstanding  (i) the termination,  maturity or further amendment,
modification  or renewal  of the Bank of Boston  Credit  Agreement,  or (ii) the
waiver  of the  Borrower's  failure  to  perform,  keep  or  observe  any of the
foregoing  affirmative  covenants by the  "Agent",  "Requisite  Lenders",  "Lead
Lenders" or the "Lenders" (each as defined in the Bank Boston Credit Agreement).

     10. EVENTS OF DEFAULT.

     Any one or more of the following shall constitute an Event of Default under
this Agreement:

     10.1 PAYMENT.

     If the Borrower  fails to pay when due and payable or when declared due and
payable, all or any portion of the principal amount on any of the Loans owing to
the  Lender,  or if the  Borrower  fails  to pay when  due and  payable  or when
declared due and payable,  all or any portion of the  Obligations  owning to the
Lender (other than  payments of  principal)  within five (5) days after the same
shall be due and payable.

     10.2 BREACH OF CERTAIN COVENANTS.

     If the  Borrower  or  Company  shall  fail  to  comply  with  any of  their
respective  covenants contained in Section 6, Section 7.6, the first sentence of
Section  7.7,  the first  sentence of Section  7.8 (with  respect to the Indiana
Property), Section 7.17 or Section 9 hereof.

     10.3 BREACH OF REPRESENTATION.

     If any representation,  warranty, statement, report, or certificate made or
delivered by the Borrower,  the Company or any Guarantor  Subsidiary,  or any of
their  officers,  partners,  employees or agents on behalf of the Borrower,  the
Company or any Guarantor Subsidiary, to the Lender is false or misleading in any
material respect when made or deemed to be made.

     10.4 ATTACHMENT OR LEVY.

     If all or any of the Borrower's  assets in excess of  $5,000,000.00  in the
aggregate are attached,  seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any Judicial Officer or assignee for
the  benefit  of  creditors  unless,  with  respect  to any  such  assets,  such
attachment,  seizure,  writ,  warrant or levy shall be  dismissed,  released  or
stayed within thirty (30) days of issuance thereof.

     10.5 VOLUNTARY INSOLVENCY.

     If an Insolvency  Proceeding  is commenced by the Borrower,  the Company or
any Guarantor Subsidiary, including, without limitation, the Mortgagor.

     10.6 INVOLUNTARY INSOLVENCY.

     If an Insolvency Proceeding is commenced against the Borrower,  the Company
or any of their  Subsidiaries,  including,  without  limitation,  the Mortgagor,
except  that  if the  Borrower,  the  Company  or any  Guarantor  Subsidiary  is
contesting such Proceeding in good faith,  such Insolvency  Proceeding shall not
constitute  an  Event  of  Default  unless  such  Insolvency  Proceeding  is not
dismissed  within  ninety  (90)  days of the  commencement  of  such  Insolvency
Proceedings.

     10.7 INJUNCTION.

     If the  Borrower,  the  Company  or any  Guarantor  Subsidiary,  including,
without  limitation,  the  Mortgagor,  is  enjoined,  restrained  or in any  way

                                      -23-
<PAGE>
prevented by court order from  continuing to conduct all or any material part of
its business affairs.

     10.8 GOVERNMENTAL LIEN.

     If a notice of lien, levy or assessment in excess of  $5,000,000.00  in the
aggregate, is filed of record with respect to any or all of the Borrower's,  the
Company's or any Guarantor  Subsidiary's assets by the United States Government,
or any department,  agency or instrumentality  thereof, or by any state, county,
municipal or other  governmental  agency,  or if any taxes or debts owing at any
time hereafter to any one or more of such entities in excess of $5,000,000.00 in
the aggregate,  becomes a Lien, whether choate or otherwise,  upon any or all of
the Borrower's,  the Company's or any Guarantor Subsidiary's assets and the same
is not paid on the payment date thereof.

     10.9 JUDGMENT.

     If a judgment or other claim in excess of  $5,000,000.00  individually,  or
$10,000,000.00  in  the  aggregate,  becomes  a  Lien  upon  any  or  all of the
Borrower's, the Company's or any Guarantor Subsidiary's assets.

     10.10 OTHER INDEBTEDNESS.

     If there is a default in any  agreement  with  respect to  Indebtedness  in
excess of  $5,000,000.00  to which the  Borrower,  the Company or any  Guarantor
Subsidiary is a party with another Person resulting in a right by such Person to
accelerate the maturity of such  Indebtedness  or to exercise any other right or
remedy.

     10.11 BANK BOSTON CREDIT AGREEMENT.

     If there is an 'Event of Default'  under the Bank Boston  Credit  Agreement
(as such term is defined  therein) which has not been waived or cured within the
time periods provided therein, if any.

     10.12 ERISA REPORTABLE EVENT.

     If (a) any Reportable Event which the Lender determines constitutes grounds
for the  termination  of any Benefit Plan by the PBGC or for the  appointment by
the appropriate United States District Court of a trustee to administer any such
Plan,  shall have  occurred  and be  continuing  thirty (30) days after  written
notice of such  determination  shall  have  been  given to the  Borrower  by the
Lender, or any such Benefit Plan shall be terminated within the meaning of Title
IV of ERISA,  or a trustee shall be appointed by the  appropriate  United States
District  Court  to  administer  any such  Plan,  or the  PBGC  shall  institute
proceedings  to  terminate  any  Benefit  Plan;  and (b) in  case  of any  event
described  above in this Section 10.12,  the aggregate  amount of the Borrower's
liability  under Sections  4062,  4063 or 4064 of ERISA shall exceed one percent
(1%) of the Borrower's Total Equity Capital;  or (c) there shall be a withdrawal
from any  Multiemployer  Plan as a result of which the  aggregate  amount of the
Borrower's  liability in relation  thereto  shall exceed one percent (1%) of the
Borrower's Total Equity Capital.

     10.13 BREACH OF COVENANTS.

     If the Borrower,  the Company or any Guarantor Subsidiary fails or neglects
to perform, keep or observe any term, provision,  condition, covenant, agreement
contained in this Agreement  (other than as set forth in any other subsection of
this  Section  10),  any other  Loan  Document,  or any other  present or future
agreement between the Borrower, the Company or any such Guarantor Subsidiary and
the Lender and/or evidencing  and/or securing the Obligations,  and such failure
remains unremedied for a period of thirty (30) days after written notice of such
breach from the Lender to the Borrower. Provided, however, that if the condition
or event  giving  rise to such breach is not  reasonably  capable of being cured
within  such thirty (30) day  period,  Borrower  shall be granted an  additional
sixty (60) day period to cure the  condition or event giving rise to the breach,
provided  further that  Borrower has commenced  cure of such  condition or event
within thirty (30) days after written  notice of such breach from the Lender and
continuously and diligently pursues the cure of such condition or event.

     Notwithstanding  anything  contained in this Section 10 or contained in any
other  provision of this  Agreement or the other Loan Documents to the contrary,
in the event of the institution of Insolvency  Proceedings against the Borrower,
the Company or any  Guarantor  Subsidiary,  the Lender shall not be obligated to
make  advances to the  Borrower  during the ninety (90) day grace  period  under
Section 10.6.


                                      -24-
<PAGE>
     11. RIGHTS AND REMEDIES.

     11.1 RIGHTS AND REMEDIES GENERALLY.

     Upon the  occurrence  of an Event of Default by the Borrower or the Company
under this Agreement and notice thereof by the Lender to the Borrower, except as
hereinafter provided, The Lender may do any one or more of the following, all of
which are authorized by the Borrower and Company:

     (a)  Declare all Obligations,  whether evidenced by this Agreement,  by the
          Note, or otherwise,  immediately due and payable;  provided,  that all
          Obligations  shall be  immediately  due and payable  without notice or
          demand upon an Event of Default under Section 10.5 or 10.6;

     (b)  Cease advancing money or extending credit to or for the benefit of the
          Borrower  under this  Agreement,  or any other  agreement  between the
          Borrower and the Lender;

     (c)  Terminate this  Agreement as to any future  liability or obligation of
          the Lender but  without  affecting  the  Lender's  rights and  without
          affecting the Obligations owing by the Borrower to the Lender;

     (d)  Commerce suit for  collection of the  Obligations  or pursue any other
          right or remedy available under the other Loan Documents, or

     (e)  Borrower  shall  pay all  Out-of-Pocket  Fees and  Costs  incurred  in
          connection  with the Lender's  enforcement  and exercise of any of its
          rights  and  remedies  as  herein  provided,  whether  or not  suit is
          commenced by the Lender.

     11.2 RIGHTS CUMULATIVE.

     The Lender's  rights and remedies  under this  Agreement and all other Loan
Documents  shall be  cumulative.  The  Lender  shall  have all other  rights and
remedies not inconsistent herewith as provided by law, or in equity. No exercise
by the Lender of one right or remedy shall be deemed an election,  and no waiver
by the Lender of any default on the Borrower's part shall be deemed a continuing
waiver.  No  delay  by  the  Lender  shall  constitute  a  waiver,  election  or
acquiescence by it.

     12. TAXES AND EXPENSES.

     If the Borrower fails to pay promptly when due to any other Person,  monies
which  the  Borrower  is  required  to pay by reason  of any  provision  in this
Agreement  (including without limitation for any tax, expense or with respect to
any Lien), or to promptly contest same by proper proceedings diligently pursued,
the Lender may,  but need not,  pay the same and charge the  Borrower's  account
therefor,  and the Borrower shall promptly  reimburse the Lender.  All such sums
shall become additional  Obligations owing to the Lender and shall bear interest
at the  Default  Rate  hereunder.  Any  payments  made by the  Lender  shall not
constitute:  (i) agreement by the Lender to make similar payments in the future,
or (ii) a waiver by the Lender of any Event of Default under this Agreement. the
Lender need not inquire as to, or contest the validity of, any such expense, tax
or Lien and the receipt of the usual  official  notice for the  payment  thereof
shall be conclusive  evidence  that the same was validly due and owing,  and the
receipt of any other notice with respect to all other such monies due  hereunder
shall be prima facia evidence that the same was validly due and owing.

     13. CERTAIN WAIVERS.

     13.1 APPLICATION OF PAYMENTS.

     Except as expressly provided in this Agreement with respect to payments and
prepayments  on  the  Loans,  the  Borrower  waives  the  right  to  direct  the
application of any and all payments at any time or times  hereafter  received by
the Lender on account of any Obligations owed by the Borrower,  and the Borrower
agrees that the Lender shall have the  continuing  exclusive  right to apply and
reapply  such  payments  in  any  manner  as  the  Lender  may  deem  advisable,
notwithstanding any entry by the Lender upon its books.

     13.2 DEMAND, ETC.

     Except as expressly provided in this Agreement, the Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment,  notice of any default, notice of nonpayment at maturity,  notice of
intent to accelerate, and notice of acceleration.


                                      -25-
<PAGE>
     14. NOTICES.

     Except as  otherwise  expressly  provided  herein,  any notice  required or
desired  to be served,  given or  delivered  hereunder  shall be in the form and
manner  specified  below,  and shall be addressed to the party to be notified as
follows:

    If to the Lender at:      LaSalle National Bank
                              135 South LaSalle Street, Suite 510
                              Chicago, Illinois 60603
                              Attention: John C. Hein
                              Facsimile: 312/904-6467

    With a Copy to:           Jenner & Block
                              One IBM Plaza
                              Chicago, Illinois  60611
                              Attention:  Donald I. Resnick, Esq.
                              Facsimile:  312/840-7656

    If to Borrower at:        Prime Group Realty, L.P.
                              77 West Wacker Drive
                              Suite 3900
                              Chicago, Illinois 60601
                              Attention: Chief Financial Officer
                              Facsimile:  (312) 917-0460

    With a copy to:           Winston & Strawn
                              35 West Wacker Drive
                              Chicago, Illinois 60601
                              Attention: Wayne D. Boberg, Esq.
                              Telecopy: (312) 558-5700

or to such other address as each party  designates to the other by notice in the
manner  herein  prescribed.  Notice  shall  be  deemed  given  hereunder  if (i)
delivered  personally  or otherwise  actually  received,  (ii) sent by overnight
delivery  service,  (iii) mailed by  first-class  United  States  mail,  postage
prepaid,  registered or certified,  with return receipt requested,  or (iv) sent
via  telecopy  machine  with a  duplicate  signed  copy  sent on the same day as
provided in clause (ii) above.  Notice  mailed as provided in clause (iii) above
shall be effective  upon the  expiration  of three (3)  Business  Days after its
deposit in the United States mail,  and notice  telecopied as provided in clause
(iv) above shall be  effective  upon receipt of such  telecopy if the  duplicate
signed copy is sent under clause  (iii) above.  Notice given in any other manner
described in this  section  shall be  effective  upon  receipt by the  addressee
thereof;  provided,  however, that if any notice is tendered to an addressee and
delivery  thereof is refused by such  addressee,  such notice shall be effective
upon such tender unless expressly set forth in such notice.

     15. CHOICE OF LAW AND VENUE.

     This  Agreement and each of the other Loan  Documents  (except as otherwise
specifically provided therein) shall be deemed to have been made in the State of
Illinois and the validity of this Agreement and the other Loan Documents,  their
construction,   interpretation  and  enforcement,  shall  be  determined  under,
governed by and construed in accordance  with the laws of the State of Illinois.
The parties agree that all actions or  proceedings  arising in  connection  with
this  Agreement  and each of the  other  Loan  Documents  (except  as  otherwise
specifically  provided  therein)  shall be tried and litigated only in the state
and  federal  courts  located  in the  County of Cook,  State of  Illinois.  The
Borrower  waives  any  right it may have to  assert  the  doctrine  of forum non
conveniens  or to object to such venue and hereby  consents to any court ordered
relief.  The  Borrower  consents  that all service of process upon it be made by
registered mail or messenger  directed to it at the address set forth in Section
14 above and that  service  so made  shall be deemed  to be  completed  upon the
earlier of actual  receipt or three (3) Business  Days after the same shall have
been  posted to the  Borrower's  address  by the  Borrower's  agent as set forth
below. Nothing contained in this Section 15 shall affect the right of the Lender
to serve legal process in any other manner  permitted by law or affect the right
of the Lender to bring any action or proceeding against the Borrower, Company or
any  Guarantor  Subsidiaries  or  their  property  in the  courts  of any  other
jurisdiction.  Without  limiting  the  foregoing,  in  addition to the state and
federal courts of Illinois,  the Lender may bring action(s) for enforcement on a
non-exclusive  basis in the state or federal  courts of Indiana  with respect to
the  Security  Documents,  and the  Borrower  consents  (on behalf of itself and
Mortgagor) to the  non-exclusive  jurisdiction of such courts and the service of
process  in any  such  suit  being  made  upon the  Mortgagor  and  Borrower  by
registered mail or messenger at the address specified in Section 14 above.

                                      -26-
<PAGE>
     16. INDEMNITY.

     Borrower  shall  indemnify,  hold  harmless  and  defend the Lender and its
directors,  officers, agents, counsel and employees ("Indemnified Persons") from
and  against  all losses,  claims,  damages,  costs,  expenses  and  liabilities
("Losses"),  whether  such  Losses  arise or notice  thereof is  received by the
Lender during the term of this Agreement or after termination of this Agreement,
incurred  by  any  of  them  arising  principally  out of or  relating  to  this
Agreement,  the  Loans,  the  other  Loan  Documents  or any  other  transaction
contemplated  hereby or thereby,  other than  arising  out of any  intercreditor
relationship  between the Lender and any Participant or subordinated debt holder
and  except  for any such  losses  caused by the  gross  negligence  or  willful
misconduct of such Indemnified  Persons, and shall reimburse the Lender and each
other  Indemnified  Person for any  expenses  including in  connection  with the
investigation of,  preparation for or defense of any actual or threatened claim,
action or proceeding  arising therefrom  (including any such costs of responding
to  discovery  requests or  subpoenas),  regardless  of whether any  Indemnified
Person is a party thereto.  Except as set forth below,  each Indemnified  Person
may select its own  counsel  with  respect to any  Losses,  in  addition  to any
Borrower's counsel, and shall be indemnified therefor hereunder.  In litigation,
or the preparation therefor, the Indemnified Persons shall be entitled to select
their own separate counsel to the extent that their  representation  by the same
counsel  would  present such  counsel  with a conflict of interest,  or would be
inappropriate  due to the actual or  potential  differing  interests  or because
there may be defenses  available to the other Persons to be  represented by such
counsel and, in addition to the foregoing indemnity,  the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. In the event that any
Indemnified Persons are made a party to any litigation against the Borrower, the
Company or any  Guarantor  Subsidiary  relating to or arising from the Formation
Transactions,  the Borrower,  the Company or any Guarantor Subsidiary may, or if
requested by such Indemnified Persons shall,  assume primary  responsibility for
the defense thereof with counsel  reasonably  satisfactory  to such  Indemnified
Persons, subject to the right of such Indemnified Persons to separate counsel to
the extent provided in the preceding sentence. The provisions of this Section 16
shall  survive  the  termination  of  this  Agreement  and/or  repayment  of the
Obligations.

     17. GENERAL PROVISIONS.

     17.1 ACCEPTANCE.

     This Agreement  shall be binding and deemed  effective when executed by the
Borrower and Company and accepted and executed by the Lender.

     17.2 BINDING AGREEMENT.

     This  Agreement  shall  bind and  inure to the  benefit  of the  respective
successors  and  assigns of each of the  parties;  provided,  however,  that the
Borrower  and  Company  may not assign this  Agreement  or any rights  hereunder
without the Lender's prior written consent and any prohibited  assignment  shall
be absolutely  void. No consent to an assignment by the Lender shall release the
Borrower  or the  Company  from  their  obligations  to the  Lender.  Except  as
otherwise  provided herein,  the Lender may assign this Agreement and its rights
and duties  hereunder,  and the Borrower and Company  shall  execute and deliver
such documents in connection  with such  assignment as they or such assignee may
reasonably  request.  Except as otherwise  provided  herein,  Lender reserve the
right to sell, assign, transfer, negotiate or grant participations in all or any
part of, or any  interest  in their  rights and  benefits  hereunder;  provided,
however,  the Lender shall not assign all of its interest hereunder to any other
Person  without  the prior  consent  of the  Borrower,  which  consent  will not
unreasonably  be  withheld,  provided  further  that  the  Lender  shall  not be
restricted in making  partial  assignments or granting  participation  interests
hereunder.  Notwithstanding  anything to the contrary in this Agreement,  Lender
shall not assign, transfer or grant any participation in its rights and benefits
hereunder to any assignee,  transferee, or Participant which is not domiciled in
the United States, and no such participation  shall require Borrower to give any
notice,  deliver any report or  certificate,  obtain any  consent,  or otherwise
treat any  Participant  as a Lender  hereunder or pay any amount,  including any
amount under Sections 2.13 or 16 of this Agreement in excess of the amount which
would have been payable by Borrower to Lender  hereunder had such  participation
not occurred. In connection therewith, the Lender may disclose all documents and
information  which the Lender now or hereafter may have relating to the Borrower
or the Borrower's business,  but shall use all reasonable efforts to ensure that
the  recipient  of  such  information  maintains  the  confidentiality  of  such
information.



                                      -27-
<PAGE>
     17.3 SECTION HEADINGS.

     Section  headings  and  section  numbers  have  been set forth  herein  for
convenience  only.  Unless the contrary is compelled by the context,  everything
contained in each paragraph applies equally to this entire Agreement.

     17.4 CONSTRUCTION.

     Neither this  Agreement nor any  uncertainty  or ambiguity  herein shall be
construed or resolved against the Lender or the Borrower, whether under any rule
of construction or otherwise.  On the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted  according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of the parties hereto.

     17.5 SEVERABILITY.

     Each  provision  of this  Agreement  shall be  severable  from every  other
provision  of  this  Agreement  for  the  purpose  of   determining   the  legal
enforceability of any specific provision.

     17.6 ENTIRE AGREEMENT.

     This  Agreement  cannot  be  changed  or  terminated   orally.   All  prior
agreements,  understandings,  representations,  warranties, and negotiations, if
any, are merged into this  Agreement.  This  Agreement  may be amended only by a
written  agreement  signed by duly  authorized  officers  of the  Borrower,  the
Company and the Lender.

     17.7 NO FIDUCIARY RELATIONSHIP OR JOINT VENTURE.

     No provision  herein or in any of the other Loan Documents and no course of
dealing  between  the  parties  hereto  shall be deemed to create any  fiduciary
relationship  between the Lender and the Borrower nor to create any  partnership
or joint venture between the Lender and the Borrower.

     17.8 PUBLICITY.

     Borrower hereby consents to the issuance or  dissemination by Lender to the
public of information describing the credit accommodations entered into pursuant
to this Agreement (as it may be amended,  modified and supplemented from time to
time) to the extent such  information is available to the public pursuant to any
filing  made by the  Borrower  with any  Regulatory  Agency,  including  without
limitation,  the name and address of the Borrower,  a general description of the
Borrower's  business and the use of the  Borrower's  name and logo in connection
therewith.

     17.9 COUNTERPARTS.

     This Agreement may be executed in two or more  counterparts,  each of which
shall be deemed an original but all of which shall  together  constitute one and
the same instrument.

     17.10 CONFLICT.

     In the event of a  conflict  between  the terms of this  Agreement  and the
terms of the Note or other Loan Documents,  the terms of this Agreement shall be
controlling.

     17.11 EFFECTIVENESS OF LOAN DOCUMENTS.

     The Borrower  hereby  confirms  that each of the Security  Documents  shall
continue to secure payment and performance of all of the Obligations  under this
Agreement and the  Borrower's  obligations  under the Security  Documents  shall
continue to be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Agreement.  Every reference  contained in the
Loan  Documents  to the Loan  Agreement  shall mean and be a  reference  to this
Agreement  and  as  the  Loan  Agreement  may  be  further  amended.  Except  as
specifically  amended by this Agreement each of the Loan Documents  shall remain
in full force and effect and are hereby ratified and confirmed.

18.      WAIVER OF JURY TRIAL.

             BORROWER  AND THE LENDER  ACKNOWLEDGE  THAT THE RIGHT TO A TRIAL BY
JURY IS A CONSTITUTIONAL  RIGHT, BUT THAT THE RIGHT MAY BE WAIVED.  THE BORROWER
AND THE LENDER EACH KNOWINGLY,  VOLUNTARILY,  IRREVOCABLY AND WITHOUT  COERCION,


                                      -28-
<PAGE>
WAIVE ALL RIGHTS TO TRIAL BY JURY OF ALL  DISPUTES  BETWEEN  THEM.  NEITHER  THE
LENDER NOR THE  BORROWER  SHALL BE DEEMED TO HAVE  GIVEN UP THIS  WAIVER OF JURY
TRIAL UNLESS THE PARTY  CLAIMING  THAT THIS WAIVER HAS BEEN  RELINQUISHED  HAS A
WRITTEN  INSTRUMENT  SIGNED BY THE OTHER PARTY STATING THAT THIS WAIVER HAS BEEN
GIVEN UP.

     19. PARTNER LIABILITY.

     19.1 LIMITED RECOURSE TO COMPANY.

     Notwithstanding  anything  expressed or implied to the  contrary  contained
herein,  the  Company  shall not be  liable  hereunder  or under the  Subsidiary
Guaranty or under any legal or equitable proceeding or by virtue of any statute,
regulation or other  applicable law for (i) any payment of principal or interest
on, or any other amounts due under, any of the Loans, or (ii) to repay any other
indebtedness of Borrower or any Guarantor  Subsidiary,  provided,  however, that
nothing herein shall be construed to prevent the Lender from recovering from the
Company,  or limit the  Lender's  recourse  against  the Company for any losses,
damages or costs  (including  without  limitation,  reasonable  legal expenses),
incurred by the Lender in connection with the Company's  breach of the Company's
own covenants and agreements  herein, or in connection with the Company's fraud,
misappropriation  of funds  (whether due to the Company's  failure to contribute
Net Offering  Proceeds to the Borrowers,  as required by Section 7.17 hereof, or
its  receipt of  Distributions  from the  Borrower in  violation  of Section 6.8
hereof,  or  otherwise)  or any  misrepresentation  made by or on  behalf of the
Company hereunder or in connection with the transactions contemplated hereby.

     19.2 LIMITED RECOURSE TO PARTNERS OF BORROWER OTHER THAN THE COMPANY.

     With  respect to all partners of the  Borrower  other than the Company,  no
personal deficiency judgment or any other judgment shall be asserted or enforced
against any such partner for payment of any amount  hereunder or for  observance
or  performance  of any of the  obligations  of the Borrower  contained  herein,
except as  expressly  set forth in this  Agreement  or any  other  agreement  or
instrument or document as an  obligation of such partner in connection  herewith
(including  without limitation the Subsidiary  Guaranty),  and provided that the
foregoing  shall not affect the liability  which any of such other  partners may
have for any fraud,  misappropriation of funds or intentional  misrepresentation
made  hereunder  by or on  behalf  of the  Borrower  or in  connection  with the
transactions contemplated hereby.

     IN WITNESS  WHEREOF,  the Borrower and Company have  executed and delivered
this Agreement.

                                       "BORROWER"

                                       PRIME GROUP REALTY, L.P.

                                       By:  PRIME GROUP REALTY TRUST,
                                            its general partner

                                            By:  /s/ Roy P. Rendino
                                               --------------------------------
                                                     Roy P. Rendino
                                               --------------------------------
                                            Its: Senior Vice President
                                               --------------------------------



                                       "COMPANY"

                                       PRIME GROUP REALTY TRUST


                                            By:  /s/ Roy P. Rendino
                                               --------------------------------
                                                     Roy P. Rendino
                                               --------------------------------
                                            Its: Senior Vice President
                                               --------------------------------







                                      -29-
<PAGE>
     ACCEPTED this 1st day of October,  1998, at Lender's  place of business in
the City of Chicago, State of Illinois.

                                       LASALLE NATIONAL BANK, a national banking
                                       association

                                       By: /s/ John C. Hein
                                          -------------------------------------
                                       Title: First Vice President 
                                             ----------------------------------
                                       Address:    135 S. LaSalle Street
                                                   Chicago, Illinois 60603
                                                   Attn: John C. Hein
                                                   Fax No. (312) 904-6467
































































                                      -30-
<PAGE>
                                    EXHIBIT A
                                    ---------

                                      Note

                               [Exhibit Omitted]
<PAGE>


                                    EXHIBIT B
                                    ---------

                          Bank Boston Credit Agreement

                               [Exhibit Omitted]
<PAGE>
                                  SCHEDULE 1.1
                                  ------------

                         List of Guarantor Subsidiaries

NASHVILLE OFFICE BUILDING I, LTD.
OLD KINGSTON PROPERTIES, LTD.
PROFESSIONAL PLAZA, LTD.
CENTRE SQUARE II, LTD.
TRIAD PARKING COMPANY, LTD.
475 SUPERIOR AVENUE, L.L.C.