REVOLVING CREDIT AGREEMENT
                           --------------------------

                                      among

                             GROVE OPERATING, L.P.,
                              GROVE PROPERTY TRUST

                                       and

                                BANKBOSTON, N.A.

                                       and

                        THE OTHER BANKS WHICH MAY BECOME
                            PARTIES TO THIS AGREEMENT

                                      with

                                BANKBOSTON, N.A.,
                                    AS AGENT

                          BANCBOSTON ROBERTSON STEPHENS
                                   AS ARRANGER

                            FIRST UNION NATIONAL BANK
                              AS SYNDICATION AGENT

                           Dated as of August 11, 1999



<PAGE>



                                Table of Contents
                                -----------------

Section 1.  DEFINITIONS AND RULES OF INTERPRETATION...........................1
            Section 1.1.   Definitions........................................1
            Section 1.2.   Rules of Interpretation............................1
Section 2.  THE REVOLVING CREDIT FACILITY.....................................1
            Section 2.1.   Commitment to Lend.................................1
            Section 2.2.   The Revolving Credit Notes.........................2
            Section 2.3.   Interest on Revolving Credit Loans; Fees...........2
            Section 2.4.   Requests for Revolving Credit Loans................4
            Section 2.5.   Conversion Options.................................7
            Section 2.6.   Funds for Revolving Credit Loans...................8
Section 3.  REPAYMENT OF THE REVOLVING CREDIT LOANS...........................9
            Section 3.1.   Maturity...........................................9
            Section 3.2.   Optional Repayments of Revolving Credit Loans......10
Section 3A. LETTER OF CREDIT FACILITY.........................................10
            Section 3A.1.  Issuance of Letters of Credit Commitments..........10
                           (b)  Letter of Credit Applications.  Each..........11
                           (c)  Terms of Letters of Credit.  Each.............11
            Section 3A.2.  Reimbursement Obligation of the Borrower...........11
            Section 3A.3.  Letter of Credit Payments..........................12
            Section 3A.4.  Obligations Absolute...............................13
            Section 3A.5.  Reliance by Issuer.................................14
            Section 3A.6.  Letter of Credit Fee...............................14
Section 4.  CERTAIN GENERAL PROVISIONS........................................14
            Section 4.1.   Funds for Payments.................................14
            Section 4.2.   Computations.......................................16
            Section 4.3.   Inability to Determine LIBOR Rate..................16
            Section 4.4.   Illegality.........................................16
            Section 4.5.   Additional Costs, Etc..............................17
            Section 4.6.   Capital Adequacy...................................18
            Section 4.7.   Certificate........................................19
            Section 4.8.   Indemnity..........................................19
            Section 4.9.   Interest on Overdue Amounts........................19
Section 5.  BORROWING BASE....................................................19
            Section 5.1.   Additions and Replacements to Eligible Properties..19
            Section 5.2.   Removal from Eligible Properties...................21
            Section 5.3.   Recourse Obligations...............................21
Section 6.  REPRESENTATIONS AND WARRANTIES....................................21
Section 7.  AFFIRMATIVE COVENANTS.............................................24
Section 8.  NEGATIVE COVENANTS................................................27
Section 9.  FINANCIAL COVENANTS...............................................30
Section 10. CONDITIONS TO THE CLOSING DATE....................................31
            Section 10.1.  Loan Documents.....................................31
            Section 10.2.  Certified Copies of Organization Documents.........31




<PAGE>
                                      -ii-








            Section 10.3.  By-Laws; Resolutions...............................32
            Section 10.4.  Incumbency Certificate; Authorized Signers.........32
            Section 10.5.  Survey and Taxes...................................32
            Section 10.6.  Title Insurance; Title Exception Documents.........33
            Section 10.7.  Leases, Service Contracts and Other Documents......33
            Section 10.8.  Estoppel Agreements................................33
            Section 10.9.  Certificates of Insurance..........................33
            Section 10.10. Hazardous Substance Assessments....................33
            Section 10.11. Opinion of Counsel Concerning Organization and
                           Loan Documents.....................................33
            Section 10.12. Structural Condition Assurances....................34
            Section 10.13. Permit Assurances; Compliance......................34
            Section 10.14. Guaranty...........................................34
            Section 10.15. Financial Analysis of Initial Eligible Properties..34
            Section 10.16. Inspection of Eligible Properties..................34
            Section 10.17. Certifications from Government Officials;
                           UCC-11 Reports.....................................34
            Section 10.18. Proceedings and Documents..........................35
            Section 10.19. Fees...............................................35
            Section 10.20. Closing Certificate................................35
Section 11.  CONDITIONS TO ALL BORROWINGS.....................................35
            Section 11.1.  Representations True; No Event of Default;
                           Compliance Certificate.............................35
            Section 11.2.  No Legal Impediment................................35
            Section 11.3.  Governmental Regulation............................36
Section 12.  EVENTS OF DEFAULT; ACCELERATION; ETC.............................36
            Section 12.1.  EVENTS OF DEFAULT; ACCELERATION....................36
            Section 12.2.  Termination of Commitments.........................37
            Section 12.3.  Remedies...........................................38
            Section 12.4.  Distribution of Proceeds...........................38
Section 13.  SETOFF...........................................................39
Section 14.  ENVIRONMENTAL MATTERS............................................40
            Section  14.1. Representations and Warranties.....................40
            Section  14.2. Environmental Indemnity and Covenants..............42
Section 15.  THE AGENT........................................................43
            Section 15.1.  Authorization......................................43
            Section 15.2.  Employees and Agents...............................44
            Section 15.3.  No Liability.......................................44
            Section 15.4.  No Representations.................................44
            Section 15.5.  Payments...........................................45
            Section 15.6.  Holders of Revolving Credit Notes..................46
            Section 15.7.  Indemnity..........................................47
            Section 15.8.  Agent as Bank......................................47
            Section 15.9.  Notification of Defaults and Events of Default.....47
            Section 15.10. Duties in the Case of Enforcement..................47



<PAGE>
                                     -iii-




            Section 15.11. Successor Agent....................................48
            Section 15.12. Notices............................................48
Section 16.  ASSIGNMENT; PARTICIPATIONS; ETC..................................48
            Section 16.1.  Conditions to Assignment by Banks..................48
            Section 16.2.  Certain Representations and Warranties;
                           Limitations; Covenants.............................49
            Section 16.3.  Register...........................................50
            Section 16.4.  New Revolving Credit Notes.........................50
            Section 16.5.  Participations.....................................51
            Section 16.6.  Pledge by Lender...................................51
            Section 16.7.  No Assignment by Borrower..........................51
            Section 16.8.  Disclosure.........................................52
Section 17.  CONSENTS, AMENDMENTS, WAIVERS, ETC...............................52
Section 18.  MISCELLANEOUS....................................................53
Section 19.  WAIVER OF JURY TRIAL.............................................54
Section 20.  PREJUDGMENT REMEDY WAIVER........................................54




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                                      -iv-




                                    EXHIBITS
                                    --------

         A       Form of Revolving Credit Note
         B       Eligible Property Conditions
         C       Form of Lease Summaries
         D       Form of Loan Request
         E       Form of Compliance Certificate
         F       Form of Closing Certificate
         G       Form of Assignment and Assumption Agreement


<PAGE>
                                      -v-




                     Schedules to Revolving Credit Agreement
                     ---------------------------------------

SCHEDULE 1            Banks' Commitments
SCHEDULE 2            Definitions and Rules of Interpretation
SCHEDULE 3            List of Additional Guarantors and Eligible Properties
SCHEDULE 6(b)         Capitalization; Outstanding Securities, Etc.
SCHEDULE 6(c)         Partially Owned Real Estate Holding Entities
SCHEDULE 6(p)         Subsidiaries/Joint Ventures
SCHEDULE 8(a)(vii)    Other Permitted Indebtedness




<PAGE>




                           REVOLVING CREDIT AGREEMENT
                           --------------------------

                    This REVOLVING  CREDIT  AGREEMENT is made as of the 11th day
of  August,  1999,  by and among  GROVE  OPERATING,  L.P.,  a  Delaware  limited
partnership (the "Borrower"), GROVE PROPERTY TRUST, a Maryland corporation which
is the sole general partner of the Borrower (the  "Guarantor"),  each having its
principal place of business at 598 Asylum Avenue,  Hartford,  Connecticut 06105,
BANKBOSTON,  N.A., a national banking  association having its principal place of
business at One BankBoston Plaza, Providence,  Rhode Island 02903, and the other
lending   institutions  which  may  become  parties  hereto  pursuant  to  ss.15
(individually,  a "Bank" and collectively, the "Banks") and BANKBOSTON, N.A., as
agent for itself and each other Bank (in such capacity, the "Agent").

         Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
                    ---------------------------------------

                    Section  1.1.  DEFINITIONS.  Except as  otherwise  expressly
provided  herein,  all capitalized  terms used in this  Agreement,  the exhibits
hereto and any notes,  certificates,  reports or other  documents or instruments
made or delivered  pursuant to or in connection  with this Agreement  shall have
the meanings set forth for such terms in Schedule 2 hereto.


                    Section 1.2.  RULES OF  INTERPRETATION.  Except as otherwise
expressly  provided herein,  the rules of interpretation set forth in Schedule 2
hereto  shall  apply to this  Agreement,  the  exhibits  hereto  and any  notes,
certificates,  reports  or other  documents  or  instruments  made or  delivered
pursuant to or in connection with this Agreement.

         Section 2.  THE REVOLVING CREDIT FACILITY.
                     -----------------------------

                    Section 2.1.  COMMITMENT TO LEND.  Subject to the provisions
of ss.2.4 and the other terms and conditions set forth in this  Agreement,  each
of the Banks  severally  agrees to lend to the  Borrower  and the  Borrower  may
borrow, repay, and reborrow from each Bank from time to time between the Closing
Date and the  Maturity  Date upon  notice by the  Borrower to the Agent given in
accordance with ss.2.4 hereof,  such sums as are requested by the Borrower up to
a maximum  aggregate  principal amount  outstanding  (after giving effect to all
amounts  requested) at any one time equal to such Bank's  Commitment  minus such
Bank's  Commitment  Percentage of the sum of the Maximum  Drawing Amount and all
Unpaid  Reimbursement  Obligations;  provided  that  the sum of the  outstanding
aggregate  amount of the  Revolving  Credit  Loans (after  giving  effect to all
amounts requested) plus the Maximum Drawing Amount and all Unpaid  Reimbursement
Obligations shall not at any time exceed the Borrowing




<PAGE>
                                      -2-






Base at such time.  The Borrower  agrees that it shall be an Event of Default if
at any time the  outstanding  Revolving  Credit  Loans plus the Maximum  Drawing
Amount and all Unpaid  Reimbursement  Obligations  exceed the Borrowing  Base at
such time and such excess is not paid to the Agent on behalf of the Banks within
thirty (30) days of the Agent's request therefor.

                    The  Revolving  Credit  Loans  shall  be  made  pro  rata in
accordance with each Bank's Commitment Percentage.  Each request for a Revolving
Credit Loan made pursuant to ss.2.4 hereof shall constitute a representation and
warranty  by the  Borrower  that the  conditions  set  forth in ss.10  have been
satisfied as of the Closing Date and that the conditions set forth in ss.11 have
been satisfied on the date of such request and will be satisfied on the proposed
Drawdown Date of the requested  Revolving  Credit Loan. No Revolving Credit Loan
shall be required to be made by any Bank unless all of the conditions  contained
in ss.10 have been  satisfied as of the Closing Date and that the conditions set
forth in ss.11 have been met at the time of any request  for a Revolving  Credit
Loan.

                    Section 2.2.  THE  REVOLVING  CREDIT  NOTES.  The  Revolving
Credit Loans shall be  evidenced  by the  Revolving  Credit  Notes.  A Revolving
Credit Note shall be payable to the order of each Bank in an aggregate principal
amount equal to such Bank's Commitment. The Borrower irrevocably authorizes each
Bank to make or cause to be made,  at or about the time of the Drawdown  Date of
any Revolving  Credit Loan or at the time of receipt of any payment of principal
on such Bank's  Revolving  Credit Notes, an appropriate  notation on such Bank's
Revolving Credit Note Record reflecting the making of such Revolving Credit Loan
or (as the case may be) the receipt of such payment.  The outstanding  amount of
the Revolving Credit Loans set forth on such Bank's Revolving Credit Note Record
shall be prima facie  evidence of the principal  amount thereof owing and unpaid
to such Bank, but the failure to record, or any error in so recording,  any such
amount on such Bank's  Revolving Credit Note Record shall not limit or otherwise
affect the obligations of the Borrower  hereunder or under any Revolving  Credit
Note to make payments of principal of or interest on any  Revolving  Credit Note
when due.

                    Section 2.3. INTEREST ON REVOLVING CREDIT LOANS; FEES.
                                 ----------------------------------------

              (a) BASE RATE.  Each Base Rate Loan shall  bear  interest  for the
       period  commencing  with the Drawdown Date thereof and ending on the last
       day of each Interest  Period with respect thereto (unless earlier paid in
       accordance  with  ss.3.2)  at a rate  equal  to the  Base  Rate  plus the
       Applicable Base Rate Margin.




<PAGE>
                                      -3-






              (b) LIBOR RATE.  Each LIBOR Rate Loan shall bear  interest for the
       period  commencing  with the Drawdown Date thereof and ending on the last
       day of each Interest  Period with respect thereto (unless earlier paid in
       accordance  with ss.3.2) at a rate equal to the LIBOR Rate determined for
       such Interest Period plus the Applicable LIBOR Rate Margin.

              (c) INTEREST PAYMENTS.  The Borrower  unconditionally  promises to
       pay interest on each  Revolving  Credit Loan in arrears on each  Interest
       Payment Date with respect thereto.

              (d) CLOSING FEE. The Borrower agrees to pay to the Agent a closing
       fee as set forth in that certain letter  agreement dated as of August 11,
       1999 between the Agent and the Borrower.

              (e) UNUSED FEE.  From and after the date hereof  until the earlier
       of (i) the  Maturity  Date or (ii)  the  date on  which  the  Commitments
       terminate,  the Borrower agrees to pay to the Agent,  for the accounts of
       the Banks in accordance with their respective Commitment Percentages,  an
       unused fee (the "Unused Fee") in an amount equal to (a) twenty hundredths
       of one percent (0.20%) per annum of the Daily Unused Commitment, for each
       day that the  aggregate  outstanding  principal  balance of all Revolving
       Credit  Loans is equal to or more than fifty  percent  (50%) of the Total
       Commitment  and (b)  twenty-five  hundredths  of one percent  (0.25%) per
       annum of the Daily  Unused  Commitment,  for each day that the  aggregate
       outstanding  principal balance of all Revolving Credit Loans is less than
       fifty  percent  (50%) of the Total  Commitment,  in each case  calculated
       during each calendar  quarter (or portion  thereof for the first calendar
       quarter of the term of this  Agreement and the last  calendar  quarter of
       the term of this  Agreement,  if  either  of same is not a full  calendar
       quarter).  The Unused Fee shall be  payable  quarterly  in arrears on the
       fifteenth  (15th) day of each  January,  April,  July and October for the
       immediately  preceding calendar quarter commencing on the first such date
       following  the Closing  Date,  with a final payment on the earlier of (i)
       Maturity  Date or (ii) any earlier  date on which the  Commitments  shall
       terminate.

              (f) AGENT'S FEE. The  Borrowers  shall pay to the Agent an Agent's
       fee as set forth in that certain letter  agreement dated as of August 11,
       1999 between the Agent and the Borrower.




<PAGE>
                                      -4-






                    Section  2.4.  REQUESTS  FOR  REVOLVING  CREDIT  LOANS.  The
following provisions shall apply to each request by the Borrower for a Revolving
Credit Loan:

                (a) The Borrower  shall  submit a Completed  Loan Request to the
            Agent.  The Agent shall  promptly  deliver a duplicate  copy of such
            Completed  Loan  Request  to each Bank which is then a party to this
            Agreement at the time such loan request is made. Except as otherwise
            provided  herein,  each Completed Loan Request shall be in a minimum
            amount of (i)  $250,000  if such Loan  Request  does not  involve an
            Acquisition  Property or a New Eligible Property or (ii) $500,000 if
            such Loan Request involves an Acquisition Property or a New Eligible
            Property.  Each  Completed  Loan Request  shall be  irrevocable  and
            binding on the  Borrower  and shall  obligate the Borrower to accept
            the Revolving  Credit Loans requested from the Banks on the proposed
            Drawdown  Date,  unless such Completed Loan Request is withdrawn (x)
            in the case of a request  for a LIBOR Rate  Loan,  at least five (5)
            Business Days prior to the proposed Drawdown Date for such Revolving
            Credit Loan,  and (y) in the case of a request for a Base Rate Loan,
            at least two (2) Business  Days prior to the proposed  Drawdown Date
            for such Revolving Credit Loan.

                (b)  Each  Completed  Loan  Request  shall be  delivered  by the
            Borrower to the Agent by 10:00 a.m. on any Business Day, and

                              (i) in the case of a loan  request  that  does not
                    involve an Acquisition  Property or a New Eligible Property,
                    such  Completed  Loan Request shall be provided at least one
                    (1) Business Day prior to the proposed  Drawdown Date of any
                    Base Rate  Loan,  and at least two (2) LIBOR  Business  Days
                    prior to the proposed  Drawdown Date of any LIBOR Rate Loan;
                    and

                              (ii) in the  case of a loan  request  involving  a
                    proposed  Acquisition  Property or Properties,  a good faith
                    estimate  of such loan  request  shall be  provided at least
                    fifteen (15)  Business  Days prior to the proposed  Drawdown
                    Date,  with a Completed Loan Request to be provided at least
                    five (5) Business Days prior to the proposed  Drawdown Date;
                    and

                              (iii) in the case of a loan  request  involving  a
                    proposed New  Eligible  Property,  a good faith  estimate of
                    such loan request shall be provided at least thirty




<PAGE>
                                      -5-






                    (30)  days  prior  to the  proposed  Drawdown  Date,  with a
                    Completed  Loan  Request  to be  provided  at least five (5)
                    Business Days prior to the proposed Drawdown Date.

                (c) Each Completed Loan Request shall include:

                              (A) in the case of a loan  request  that  does not
                    involve an Acquisition  Property or a New Eligible Property,
                    a  completed  writing  in  the  form  of  Exhibit  D  hereto
                    specifying: (1) the principal amount of the Revolving Credit
                    Loan  requested,  (2)  the  proposed  Drawdown  Date of such
                    Revolving Credit Loan, (3) the Interest Period applicable to
                    such  Revolving  Credit Loan, (4) the Type of such Revolving
                    Credit  Loan being  requested  and (5) the purpose for which
                    such funds will be used (a "Completed Exhibit D"); and

                              (B) in the  case  of a loan  request  involving  a
                    proposed  Acquisition  Property,  (x) a Completed Exhibit D,
                    and (y)  evidence  that the  proposed  Acquisition  Property
                    meets   the   following   conditions   (collectively,    the
                    "Acquisition Conditions"):

                                        (1) the  proposed  Acquisition  Property
                              when  aggregated with the other Real Estate Assets
                              would  not  violate  the  covenants  contained  in
                              ss.7(e); and

                                        (2) the  proposed  Acquisition  Property
                              does not have  unperformed  or unpaid  remediation
                              costs  that  are  not   budgeted  and  part  of  a
                              remediation plan with costs estimates  approved by
                              the  Agent.   The  Completed  Loan  Request  shall
                              include evidence that the Borrower has performed a
                              hazardous  waste  due  diligence   review  of  the
                              proposed Acquisition  Property,  and have attached
                              to it a copy of an  environmental  site assessment
                              report obtained by the Borrower in connection with
                              the proposed acquisition which contains sufficient
                              information  to  permit  the  above  determination
                              regarding  potential  remediation  costs  or other
                              environmental   liabilities   to  be  made.   Such
                              environmental    site    assessments    shall   be
                              satisfactory  to the  Agent  in all  respects  and
                              shall be submitted to the Agent




<PAGE>
                                      -6-






                              at  least  ten  (10)  Business  Days  prior to the
                              proposed Drawdown Date; and

                              (C) in the case of a loan  request  involving  the
                    addition  of  a  proposed  New  Eligible  Property,   (v)  a
                    Completed  Exhibit D, (w)  evidence  that the  proposed  New
                    Eligible Property meets the Acquisition Conditions,  (x) all
                    of the  documents  and  other  information  relating  to the
                    proposed  New  Eligible  Property  required by the  Eligible
                    Property  Conditions,  (y)  evidence  that the  proposed New
                    Eligible  Property  does  not  have  unperformed  or  unpaid
                    remediation  costs  that  are  not  budgeted  and  part of a
                    remediation plan with costs estimates approved by the Agent,
                    and (z) evidence  that the  proposed  New Eligible  Property
                    when aggregated with the other Eligible Properties would not
                    violate the covenants contained in ss.7(e).

                (d) No Bank shall be obligated to fund any Revolving Credit Loan
            unless:

                              (i) a  Completed  Loan  Request  has  been  timely
                    received by the Agent as provided in  subsection  (b) above;
                    and

                              (ii) both  before and after  giving  effect to the
                    Revolving  Credit Loan to be made  pursuant to the Completed
                    Loan Request, all of the conditions contained in ss.10 shall
                    have been  satisfied  as of the Closing  Date and all of the
                    conditions   set  forth  in  ss.11   shall  have  been  met,
                    including,  without limitation,  the condition under ss.11.1
                    that  there be no  Default  or Event of  Default  under this
                    Agreement; and

                              (iii) the Agent shall have  received a certificate
                    in the  form of  Exhibit  E-1  hereto  signed  by the  chief
                    financial  officer of the  Borrower (in his capacity as such
                    and not in his individual  capacity)  (copies of which shall
                    be  delivered  by the Agent  promptly to the Banks)  setting
                    forth computations  evidencing compliance with the covenants
                    contained in ss.9 on a pro forma basis after  giving  effect
                    to such requested Revolving Credit Loan, and certifying that
                    to the best  knowledge  of such  officer  after due inquiry,
                    both  before  and  after  giving  effect  to such  requested
                    Revolving Credit Loan, no Default or




<PAGE>
                                      -7-






                    Event of Default  exists or will exist under this  Agreement
                    or any other Loan Document; and

                              (iv) in the case of a loan  request not  involving
                    an  Acquisition  Property or a New  Eligible  Property,  the
                    proceeds of the Revolving Credit Loan are to be used for the
                    purposes and meet the  conditions set forth in the Completed
                    Loan Request; and

                              (v) in the  case  of a loan  request  involving  a
                    proposed Acquisition  Property,  the Acquisition  Conditions
                    have been met; and

                              (vi) in the case of a loan request  involving  the
                    acquisition  of an  Acquisition  Property  and its  proposed
                    inclusion as a New Eligible Property,  the Eligible Property
                    Conditions and the Acquisition Conditions have been met.

                    Section 2.5. CONVERSION OPTIONS.
                                 ------------------

                (a) The  Borrower  may elect  from time to time to  convert  any
            outstanding  Revolving  Credit  Loan to a  Revolving  Credit Loan of
            another Type,  provided that (i) with respect to any such conversion
            of a LIBOR Rate Loan to a Base Rate Loan, such conversion shall take
            place  automatically  at the end of the applicable  Interest  Period
            unless the Borrower  provides  notice to the Agent of its request to
            continue such Revolving Credit Loan as a LIBOR Rate Loan as provided
            in ss.2.5(b) and ss.2.5(a)(ii);  (ii) subject to the further proviso
            at the end of this  ss.2.5(a)  and subject to ss.2.5(b)  and 2.5(d),
            with respect to any  conversion  of a Base Rate Loan to a LIBOR Rate
            Loan  (or a  continuation  of a LIBOR  Rate  Loan,  as  provided  in
            ss.2.5(b)),  the  Borrower  shall give the Agent at least  three (3)
            LIBOR Business  Days' prior written  notice of such election,  which
            such  notice  must be  received  by the Agent by 10:00  a.m.  on any
            Business  Day; and (iii) no  Revolving  Credit Loan may be converted
            into a LIBOR  Rate Loan when any  Default  or Event of  Default  has
            occurred and is continuing. The Agent shall provide each Bank with a
            copy of such notice promptly after its receipt  thereof.  All or any
            part of  outstanding  Revolving  Credit  Loans  of any  Type  may be
            converted as provided herein,  provided that each Conversion Request
            relating to the  conversion of a Base Rate Loan to a LIBOR Rate Loan
            shall be for an amount equal to $250,000 or an integral  multiple of
            $50,000 in excess thereof and shall be irrevocable by the Borrower.




<PAGE>
                                      -8-






                (b) Any  Revolving  Credit Loan of any Type may be  continued as
            such upon the expiration of the Interest Period with respect thereto
            (i) in the case of Base Rate  Loans,  automatically  and (ii) in the
            case of LIBOR  Rate Loans by  compliance  by the  Borrower  with the
            notice provisions contained in ss.2.5(a)(ii); provided that no LIBOR
            Rate Loan may be  continued  as such when any Event of  Default  has
            occurred and is continuing but shall be automatically converted to a
            Base Rate Loan on the last day of the first Interest Period relating
            thereto ending during the  continuance of any Event of Default.  The
            Agent  shall  notify  the  Banks  promptly  when any such  automatic
            conversion contemplated by this ss.2.5(b) is scheduled to occur.

                (c) In the event that the Borrower  does not notify the Agent of
            its election  hereunder  with respect to any Revolving  Credit Loan,
            such  Revolving  Credit Loan shall be  automatically  converted to a
            Base Rate Loan at the end of the applicable Interest Period.

                (d) The  Borrower  may not  request  or elect a LIBOR  Rate Loan
            pursuant  to  ss.2.4,  elect to  convert a Base Rate Loan to a LIBOR
            Loan  pursuant to  ss.2.5(a)  or elect to continue a LIBOR Rate Loan
            pursuant to ss.2.5(b) if, after giving effect  thereto,  there would
            be greater  than five (5) LIBOR Rate  Loans  then  outstanding.  Any
            Revolving  Credit  Loan  Request  for a LIBOR  Rate Loan that  would
            create greater than five (5) LIBOR Rate Loans  outstanding  shall be
            deemed to be a Loan Request for a Base Rate Loan.

                    Section 2.6. FUNDS FOR REVOLVING CREDIT LOANS.
                                 --------------------------------

                (a) Subject to the other provisions of this ss.2, not later than
            11:00 a.m. on the proposed  Drawdown  Date of any  Revolving  Credit
            Loans,  each of the Banks will make  available to the Agent,  at its
            Head Office,  in  immediately  available  funds,  the amount of such
            Bank's  Commitment   Percentage  of  the  amount  of  the  requested
            Revolving  Credit Loan.  Upon receipt from each Bank of such amount,
            the Agent will make  available to the Borrower the aggregate  amount
            of such  Revolving  Credit Loan made  available  to the Agent by the
            Banks;  all such funds  received  by the Agent by 11:00 a.m.  on any
            Business  Day will be made  available to the Borrower not later than
            2:00 p.m. on the same Business Day.  Funds  received after such time
            will be made  available  by not later than  11:00  a.m.  on the next
            Business  Day. The failure or refusal of any Bank to make  available
            to the Agent at the  aforesaid  time and place on any Drawdown  Date
            the amount of its Commitment




<PAGE>
                                      -9-






            Percentage of the requested  Revolving Credit Loan shall not relieve
            any  other  Bank  from  its  several  obligation  hereunder  to make
            available to the Agent the amount of its  Commitment  Percentage  of
            any requested  Revolving Credit Loan but in no event shall the Agent
            (in its capacity as Agent) have any  obligation  to make any funding
            or shall any Bank be  obligated  to fund  more  than its  Commitment
            Percentage of the requested Revolving Credit Loan or to increase its
            Commitment Percentage on account of such failure or otherwise.

                (b) The Agent may,  unless  notified to the contrary by any Bank
            prior to a Drawdown  Date,  assume that such Bank has made available
            to the  Agent  on such  Drawdown  Date  the  amount  of such  Bank's
            Commitment  Percentage  of the  Revolving  Credit Loan to be made on
            such Drawdown  Date, and the Agent may (but it shall not be required
            to),  in  reliance  upon  such  assumption,  make  available  to the
            Borrower a corresponding  amount. If any Bank makes available to the
            Agent  such  amount on a date after such  Drawdown  Date,  such Bank
            shall pay to the Agent on demand an amount  equal to the  product of
            (i) the average, computed for the period referred to in clause (iii)
            below, of the weighted  average  interest rate paid by the Agent for
            federal funds acquired by the Agent during each day included in such
            period,  multiplied  by (ii) the  amount of such  Bank's  Commitment
            Percentage  of such  Revolving  Credit Loan,  multiplied  by (iii) a
            fraction,  the numerator of which is the number of days that elapsed
            from and  including  such  Drawdown  Date to the  date on which  the
            amount of such Bank's Commitment Percentage of such Revolving Credit
            Loan  shall  become  immediately  available  to the  Agent,  and the
            denominator  of which is 365. A statement of the Agent  submitted to
            such Bank with  respect to any amounts  owing  under this  paragraph
            shall be prima  facie  evidence  of the  amount due and owing to the
            Agent by such Bank.

         Section 3.  REPAYMENT OF THE REVOLVING CREDIT LOANS.
                     ---------------------------------------

                    Section 3.1.  MATURITY.  The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the Maturity
Date,  all unpaid  principal of the Revolving  Credit Loans  outstanding on such
date, together with any and all accrued and unpaid interest thereon,  the unpaid
balance of any fees  accrued  through  such date,  and any and all other  unpaid
amounts due under this Agreement, the Revolving Credit Notes or any other of the
Loan Documents.




<PAGE>
                                      -10-






                    Section 3.2. OPTIONAL  REPAYMENTS OF REVOLVING CREDIT LOANS.
The Borrower shall have the right,  at its election,  to prepay the  outstanding
amount of the Revolving  Credit Loans,  in whole or in part, at any time without
penalty or premium; provided that the outstanding amount of any LIBOR Rate Loans
may not be prepaid  unless the Borrower  pays all amounts due and payable  under
ss.4.8  hereof  for  each  LIBOR  Rate  Loan  so  prepaid  at the  time  of such
prepayment.  The  Borrower  shall give the Agent,  no later than 10:00 a.m.,  at
least five (5) Business Days prior written notice of any prepayment  pursuant to
this ss.3.2 of any  Revolving  Credit  Loans,  specifying  the proposed  date of
prepayment of Revolving Credit Loans and the principal amount to be prepaid. The
Agent  shall  provide  each Bank with a copy of such notice  promptly  after its
receipt  thereof.  Each such partial  prepayment of the  Revolving  Credit Loans
shall be a minimum of  $100,000,  or, if less,  the  outstanding  balance of the
Revolving Credit Loans then being repaid, shall be accompanied by the payment of
all charges  outstanding  on all  Revolving  Credit  Loans so prepaid and of all
accrued interest on the principal  prepaid to the date of payment,  and shall be
applied,  in the absence of instruction by the Borrower,  first to the principal
of Base Rate Loans and then to the principal of LIBOR Rate Loans, at the Agent's
option.

         Section 3A.  LETTER OF CREDIT FACILITY.

                    Section 3A.1. ISSUANCE OF LETTERS OF CREDIT COMMITMENTS.

                (a) Agent's  Discretion to Issue  Letters of Credit.  Subject to
            the terms and  conditions  hereof and the  execution and delivery by
            the  Borrower  of a letter  of  credit  application  on the  Agent's
            customary  form (a  "Letter  of Credit  Application"),  the Agent on
            behalf of the Banks and in reliance  upon the agreement of the Banks
            set forth in ss.3A.1(c) and upon the  representations and warranties
            of the Borrower contained herein, may in its sole discretion, in its
            capacity as a Bank,  issue,  extend and renew for the account of the
            Borrower one or more letters of credit  (individually,  a "Letter of
            Credit"),  in such form as may be requested from time to time by the
            Borrower and agreed to by the Agent; provided,  however, that, after
            giving effect to such request,  (a) the sum of the aggregate Maximum
            Drawing Amount and all Unpaid  Reimbursement  Obligations  shall not
            exceed $5,000,000 at any one time and (b) the sum of (i) the Maximum
            Drawing   Amount  on  all   Letters  of  Credit,   (ii)  all  Unpaid
            Reimbursement  Obligations,  and (iii) the  amount of all  Revolving
            Credit Loans outstanding shall not




<PAGE>
                                      -11-






            exceed the lesser of (A) the Total  Commitment and (B) the Borrowing
            Base.

                (b)  Letter  of  Credit  Applications.  Each  Letter  of  Credit
            Application  shall be completed to the satisfaction of the Agent. In
            the event that any  provision  of any  Letter of Credit  Application
            shall be inconsistent  with any provision of this Credit  Agreement,
            then the provisions of this Credit Agreement shall, to the extent of
            any such inconsistency, govern.

                (c) Terms of Letters of Credit.  Each  Letter of Credit  issued,
            extended or renewed hereunder shall,  among other things (i) provide
            for the payment of sight drafts for honor  thereunder when presented
            in  accordance  with the terms thereof and when  accompanied  by the
            documents  described therein,  and (ii) have an expiry date no later
            than the date  which is  fourteen  (14) days (or,  if the  Letter of
            Credit is confirmed by a confirmer or otherwise  provides for one or
            more nominated persons,  forty-five (45) days) prior to the Maturity
            Date. Each Letter of Credit so issued,  extended or renewed shall be
            subject to the Uniform  Customs or, in the case of a standby  Letter
            of Credit,  either the Uniform Customs or the International  Standby
            Practices.

                (d)  Reimbursement  Obligations  of Banks.  Each Bank  severally
            agrees that it shall be  absolutely  liable,  without  regard to the
            occurrence of any Default or Event of Default or any other condition
            precedent  whatsoever,  to the  extent  of  such  Bank's  Commitment
            Percentage,  to reimburse the Agent on demand for the amount of each
            draft paid by the Agent  under  each  Letter of Credit to the extent
            that such  amount is not  reimbursed  by the  Borrower  pursuant  to
            ss.3A.2  (such  agreement for a Bank being called herein the "Letter
            of Credit Participation" of such Bank).

                (e)  Participations  of Banks.  Each such payment made by a Bank
            shall be treated  as the  purchase  by such Bank of a  participating
            interest in the Borrower's Reimbursement Obligation under ss.3A.2 in
            an amount equal to such payment. Each Bank shall share in accordance
            with  its  participating  interest  in any  interest  which  accrues
            pursuant to ss.3A.2.

                    Section 3A.2.  REIMBURSEMENT  OBLIGATION OF THE BORROWER. In
order to induce the Agent to issue,  extend and renew each  Letter of Credit and
the Banks to participate therein, the Borrower hereby agrees to reimburse or pay
to the Agent, for the account of the Agent or (as the case




<PAGE>
                                      -12-






may be) the Banks,  with  respect to each Letter of Credit  issued,  extended or
renewed by the Agent hereunder:

                (a) except as otherwise  expressly  provided in  ss.3A.2(b)  and
            (c),  on each  date  that any draft  presented  under the  Letter of
            Credit is  honored  by the  Agent,  or the Agent  otherwise  makes a
            payment with respect thereto, (i) the amount paid by the Agent under
            or with respect to such Letter of Credit, and (ii) the amount of any
            taxes, fees, charges or other costs and expenses whatsoever incurred
            by the Agent or any Bank in connection  with any payment made by the
            Agent or any Bank under, or with respect to, such Letter of Credit;

                (b)  upon  any  reduction  (but not  termination)  of the  Total
            Commitment  to an amount less than the Maximum  Drawing  Amount,  an
            amount equal to such  difference,  which amount shall be held by the
            Agent for the benefit of the Banks and the Agent as cash  collateral
            for all Reimbursement Obligations; and

                (c)  upon  the  termination  of  the  Total  Commitment,  or the
            acceleration of the  Reimbursement  Obligations  with respect to all
            Letters of Credit in accordance with ss.12 of the Credit  Agreement,
            an amount equal to the then Maximum Drawing Amount on all Letters of
            Credit,  which  amount shall be held by the Agent for the benefit of
            the  Banks and the Agent as cash  collateral  for all  Reimbursement
            Obligations.

            Each such  payment  shall be made to the Agent at the  Agent's  Head
            Office  in  immediately  available  funds.  Interest  on any and all
            amounts  remaining  unpaid by the Borrower under this ss.3A.2 at any
            time from the date such amounts  become due and payable  (whether as
            stated in this ss.3A.2,  by acceleration or otherwise) until payment
            in full (whether  before or after  judgment) shall be payable to the
            Agent  on  demand  at the  rate  specified  in  ss.4.9  for  overdue
            principal on the Revolving Credit Loans.

                    Section 3A.3. LETTER OF CREDIT PAYMENTS.  If any draft shall
be  presented  or other  demand  for  payment  shall be made under any Letter of
Credit,  the Agent shall notify the Borrower of the date and amount of the draft
presented  or demand for payment and of the date and time when it expects to pay
such draft or honor such demand for payment.  If the Borrower fails to reimburse
the Agent as  provided  in ss.3A.2 on or before the date that such draft is paid
or other  payment  is made by the  Agent,  the Agent may at any time  thereafter
notify the Banks of the amount of any such Unpaid Reimbursement  Obligation.  No
later than 3:00 p.m.  (Rhode Island time) on the Business Day next following the
receipt of such




<PAGE>
                                      -13-






notice, each Bank shall make available to the Agent, at the Agent's Head Office,
in immediately available funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement  Obligation,  together  with an amount equal to the product of (i)
the average,  computed for the period  referred to in clause (iii) below, of the
weighted  average  interest rate paid by the Agent for federal funds acquired by
the Agent during each day  included in such period,  times (ii) the amount equal
to such Bank's Commitment  Percentage of such Unpaid  Reimbursement  Obligation,
times (iii) a fraction, the numerator of which is the number of days that elapse
from and  including  the date the Agent  paid the draft  presented  for honor or
otherwise made payment to the date on which such Bank's Commitment Percentage of
such Unpaid Reimbursement  obligation shall become immediately  available to the
Agent, and the denominator of which is 360. The  responsibility  of the Agent to
the  Borrower  and the  Banks  shall be only to  determine  that  the  documents
(including each draft)  delivered under each Letter of Credit in connection with
such  presentment  shall be in  conformity  in all material  respects  with such
Letter of Credit.

                    Section   3A.4.   OBLIGATIONS   ABSOLUTE.   The   Borrower's
obligations under this ss.3A shall be absolute and  unconditional  under any and
all  circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition  precedent  whatsoever or any setoff,  counterclaim  or
defense to payment  which the  Borrower  may have or have had against the Agent,
any Bank or any beneficiary of a Letter of Credit.  The Borrower  further agrees
with the  Agent  and the  Banks  that  the  Agent  and the  Banks  shall  not be
responsible  for, and the  Borrower's  Reimbursement  Obligations  under ss.3A.2
shall not be affected by, among other  things,  the validity or  genuineness  of
documents or of any endorsements  thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent or forged, or any dispute
between or among the Borrower,  the  beneficiary  of any Letter of Credit or any
financing  institution  or other  party to which any  Letter  of  Credit  may be
transferred  or any claims or defenses  whatsoever  of the Borrower  against the
beneficiary  of any Letter of Credit or any such  transferee.  The Agent and the
Banks  shall  not be  liable  for any  interruption  or delay  in  transmission,
dispatch  or  delivery  of  any  message  or  advice,  however  transmitted,  in
connection with any Letter of Credit.  The Borrower agrees that any action taken
or omitted by the Agent or any Bank under or in  connection  with each Letter of
Credit and the related  drafts and  documents,  if done in good faith,  shall be
binding upon the  Borrower and shall not result in any  liability on the part of
the Agent or any Bank to the Borrower.




<PAGE>
                                      -14-






                    Section  3A.5.   RELIANCE  BY  ISSUER.  To  the  extent  not
inconsistent  with  ss.3A.4,  the Agent shall be entitled to rely,  and shall be
fully  protected  in  relying  upon,  any  Letter  of  Credit,  draft,  writing,
resolution,   notice,  consent,   certificate,   affidavit,  letter,  cablegram,
telegram,  telecopy,  telex  or  teletype  message,  statement,  order  or other
document believed by it to be genuine and correct and to have been signed,  sent
or made by the proper Person or Persons and upon advice and  statements of legal
counsel,  independent  accountants and other experts  selected by the Agent. The
Agent shall be fully  justified  in failing or refusing to take any action under
this Agreement unless it shall first have received such advice or concurrence of
the  Majority  Banks as it  reasonably  deems  appropriate  or it shall first be
indemnified  to its  reasonable  satisfaction  by the Banks  against any and all
liability  and  expense  which  may be  incurred  by it by  reason  of taking or
continuing  to take any  such  action.  The  Agent  shall in all  cases be fully
protected  in acting,  or in  refraining  from acting,  under this  Agreement in
accordance with a request of the Majority Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Banks and all
future  holders  of  the  Revolving  Credit  Notes  or  of a  Letter  of  Credit
Participation.

                    Section 3A.6.  LETTER OF CREDIT FEE. The Borrower  shall, on
the date of issuance or any  extension  or renewal of any Letter of Credit pay a
fee (in each case,  a "Letter of Credit Fee") to the Agent in an amount equal to
two percent (2.00%) per annum (or such other amount  mutually  acceptable to the
Borrower,  the Agent and the Banks) of the face  amount of the Letter of Credit,
of which an amount equal to one-quarter of one percent  (0.25%) per annum of the
face amount of the Letter of Credit shall be for the account of the Agent,  as a
fronting  fee,  and the  balance of which  Letter of Credit Fee shall be for the
accounts  of  the  Banks  in  accordance   with  their   respective   Commitment
Percentages. In respect of each Letter of Credit, the Borrower shall also pay to
the Agent for the  Agent's  own  account,  at such  other  time or times as such
charges  are  customarily  made by the Agent,  the Agent's  customary  issuance,
amendment,  negotiation or document examination and other administrative fees as
in effect from time to time.

         Section 4.  CERTAIN GENERAL PROVISIONS.
                     --------------------------

                    Section 4.1. FUNDS FOR PAYMENTS.

                (a) All payments of  principal,  interest,  fees,  and any other
            amounts due hereunder or under any of the other Loan Documents shall
            be made to the Agent, for the respective accounts of the Banks




<PAGE>
                                      -15-






            or (as the case may be) the Agent,  at the Agent's Head  Office,  in
            each case in Dollars and in immediately available funds.

                (b) All payments by the Borrower  hereunder and under any of the
            other Loan Documents  shall be made without  setoff or  counterclaim
            and free and clear of and without  deduction for any taxes,  levies,
            imposts, duties, charges, fees, deductions, withholdings, compulsory
            liens,  restrictions  or  conditions  of any nature now or hereafter
            imposed or levied by any  jurisdiction or any political  subdivision
            thereof or taxing or other authority  therein unless the Borrower is
            compelled by law to make such deduction or withholding.  If any such
            obligation  is imposed upon the Borrower  with respect to any amount
            payable by it  hereunder  or under any of the other Loan  Documents,
            the Borrower shall pay to the Agent, for the account of the Banks or
            (as the case may be) the Agent,  on the date on which such amount is
            due and payable  hereunder or under such other Loan  Document,  such
            additional  amount in  Dollars as shall be  necessary  to enable the
            Banks to  receive  the same net  amount  which the Banks  would have
            received on such due date had no such  obligation  been imposed upon
            the  Borrower.  The  Borrower  will  deliver  promptly  to the Agent
            certificates  or other valid vouchers for all taxes or other charges
            deducted  from or paid with respect to payments made by the Borrower
            hereunder or under such other Loan Document. The Agent shall provide
            each  Bank with a copy of such  notice  promptly  after its  receipt
            thereof.

                (c) The Agent and the Banks  acknowledge  that the Borrower will
            establish  a demand  deposit  account  with the Agent and intends to
            deposit into such account on a monthly basis an amount not less than
            the amount of interest  due and payable  during such month.  Without
            limiting  anything set forth herein,  the Agent shall be entitled to
            charge such  account of the  Borrower  with the Bank for any sum due
            and payable by the Borrower hereunder or under any of the other Loan
            Documents. Notwithstanding anything to the contrary contained herein
            or in any other Loan Document, if, on any date that a payment is due
            to the  Agent or the  Banks  under  the Loan  Documents,  there  are
            sufficient  funds in such  account to make such payment and there is
            no legal impediment of any kind to Agent's effecting such payment by
            debiting  such account,  then  Borrower  shall have no obligation to
            make  such  payment  (other  than by way of  Agent's  debiting  such
            account in accordance  with the above  provisions of this  paragraph
            (c)) and no late charge or default rate interest  shall accrue,  and
            no Event of Default shall result, from




<PAGE>
                                      -16-






            Borrower's  failure to make such payment while such sufficient funds
            remain in such account to make such payment.

                    Section 4.2.  COMPUTATIONS.  All computations of interest on
the  Revolving  Credit Loans and of commitment or other similar fees (if any) to
the extent  applicable  shall be based on a 360-day year and paid for the actual
number of days elapsed.  Except as otherwise  provided in the  definition of the
term  "Interest  Period"  with  respect to LIBOR Rate Loans,  whenever a payment
hereunder or under any of the other Loan Documents  becomes due on a day that is
not a Business  Day, the due date for such payment shall be extended to the next
succeeding  Business Day, and interest shall accrue during such  extension.  The
outstanding  amount of the Revolving  Credit Loans as reflected on the Revolving
Credit Note Record from time to time shall  constitute  prima facie  evidence of
the principal amount thereof.

                    Section  4.3.  INABILITY  TO  DETERMINE  LIBOR RATE.  In the
event,  prior to the  commencement  of any Interest Period relating to any LIBOR
Rate Loan,  the Agent shall  reasonably  determine  that adequate and reasonable
methods  do not  exist for  ascertaining  the LIBOR  Rate that  would  otherwise
determine  the rate of interest to be  applicable  to any LIBOR Rate Loan during
any Interest Period (and the rate of interest applicable to all indebtedness due
and owing to the Agent by any Person to the extent that the principal  amount of
such  indebtedness  was intended to bear interest at the LIBOR Rate),  the Agent
shall forthwith give notice of such determination (which shall be conclusive and
binding on the  Borrower) to the  Borrower and the Banks.  In such event (a) any
Completed  Loan Request with respect to LIBOR Rate Loans shall be  automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each LIBOR Rate
Loan will  automatically,  on the last day of the then current  Interest  Period
thereof,  become a Base Rate Loan, and (c) the  obligations of the Banks to make
LIBOR Rate Loans shall be suspended until the Agent  reasonably  determines that
the circumstances giving rise to such suspension no longer exist,  whereupon the
Agent shall so notify the Borrower and the Banks.

                    Section   4.4.   ILLEGALITY.   Notwithstanding   any   other
provisions herein, if any present or future law, regulation, treaty or directive
or in the  interpretation or application  thereof shall make it unlawful for any
Bank to make or maintain LIBOR Rate Loans, such Bank shall forthwith give notice
of such  circumstances  to the Borrower and thereupon (a) the Commitment of such
Bank to make LIBOR  Rate  Loans or  convert  Base Rate Loans to LIBOR Rate Loans
shall  forthwith be suspended  and (b) such Bank's  Commitment  Percentage  of a
LIBOR Rate Loans then




<PAGE>
                                      -17-






outstanding shall be converted  automatically to Base Rate Loans on the last day
of each  Interest  Period  applicable  to such LIBOR  Rate Loans or within  such
earlier period as may be required by law, all until such time as it is no longer
unlawful for such Bank to make or maintain LIBOR Rate Loans. The Borrower hereby
agrees promptly to pay the Agent for the account of such Bank, upon demand,  any
additional amounts necessary to compensate such Bank for any out-of-pocket costs
incurred by such Bank in making any conversion  required by this ss.4.4 prior to
the last day of an Interest Period with respect to a LIBOR Rate Loan,  including
any interest or fees payable by such Bank to lenders of funds  obtained by it in
order to make or maintain its LIBOR Rate Loans hereunder.

                    Section 4.5. ADDITIONAL COSTS, ETC. If any present or future
applicable law, which expression,  as used herein, includes statutes,  rules and
regulations thereunder and interpretations  thereof by any competent court or by
any  governmental  or  other  regulatory  body  or  official  charged  with  the
administration  or  the   interpretation   thereof  and  requests,   directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise  issued to any Bank by any central bank or other  fiscal,  monetary or
other  authority  (whether or not having the force of law, but if not having the
force of law,  then  generally  applied  by the Banks  with  respect  to similar
loans), shall:

                (a) subject any Bank to any tax,  levy,  impost,  duty,  charge,
            fee,  deduction  or  withholding  of any nature with respect to this
            Agreement,  the other Loan Documents,  such Bank's Commitment or the
            Revolving  Credit  Loans (other than taxes based upon or measured by
            the income or profits of such Bank), or

                (b) materially  change the basis of taxation (except for changes
            in  taxes on  income  or  profits)  of  payments  to any Bank of the
            principal  of or the interest on any  Revolving  Credit Loans or any
            other amounts  payable to the Agent or any Bank under this Agreement
            or the other Loan Documents, or

                (c) impose or increase or render  applicable  (other than to the
            extent  specifically  provided for elsewhere in this  Agreement) any
            special deposit, reserve, assessment, liquidity, capital adequacy or
            other similar requirements  (whether or not having the force of law)
            against  assets  held by, or  deposits  in or for the account of, or
            loans by, or commitments of an office of any Bank, or

                (d) impose on any Bank any other conditions or requirements with
            respect to this Agreement,  the other Loan Documents,  the Revolving
            Credit Loans, such Bank's Commitment,




<PAGE>
                                      -18-






            or any class of loans or  commitments  of which any of the Revolving
            Credit Loans or such Bank's Commitment forms a part;

            and the result of any of the foregoing is

                              (i) to  increase  the cost to such Bank of making,
                    funding, issuing, renewing,  extending or maintaining any of
                    the  Revolving  Credit  Loans,  any Letter of Credit or such
                    Bank's Commitment, or

                              (ii) to reduce the amount of  principal,  interest
                    or other amount payable to such Bank hereunder on account of
                    such Bank's  Commitment or any of the Revolving Credit Loans
                    or any Letter of Credit, or

                              (iii) to require  such Bank to make any payment or
                    to forego any interest or other sum payable  hereunder,  the
                    amount of which payment or foregone interest or other sum is
                    calculated  by  reference  to the  gross  amount  of any sum
                    receivable or deemed received by such Bank from the Borrower
                    hereunder,

                then, and in each such case, the Borrower will, upon demand made
            by such  Bank at any time and from  time to time and as often as the
            occasion  therefor  may  arise,  pay to such  Bank  such  additional
            amounts as such Bank shall  determine in good faith to be sufficient
            to compensate such Bank for such additional cost, reduction, payment
            or  foregone  interest  or other  sum,  provided  that  such Bank is
            generally  imposing similar charges on its other similarly  situated
            borrowers.

                    Section   4.6.   CAPITAL   ADEQUACY.   If  any  future  law,
governmental rule,  regulation,  policy,  guideline or directive (whether or not
having  the force of law,  but if not having  the force of law,  then  generally
applied  by the Banks  with  respect  to  similar  loans) or the  interpretation
thereof  by a court or  governmental  authority  with  appropriate  jurisdiction
affects the amount of capital  required or expected to be maintained by banks or
bank holding  companies and any Bank or the Agent  determines that the amount of
capital  required  to be  maintained  by it is  increased  by or based  upon the
existence of Revolving  Credit Loans made or deemed to be made pursuant  hereto,
then such Bank or the  Agent may  notify  the  Borrower  of such  fact,  and the
Borrower shall pay to such Bank or the Agent from time to time on demand,  as an
additional  fee payable  hereunder,  such amount as such Bank or the Agent shall
determine  in good faith and certify in a notice to the Borrower to be an amount
that will adequately  compensate such Bank in light of these  circumstances  for
its increased costs of


<PAGE>
                                      -19-






maintaining  such  capital.  Each Bank and the Agent  shall  allocate  such cost
increases among its customers in good faith and on an equitable  basis, and will
not charge the Borrower unless it is generally  imposing a similar charge on its
other similarly situated borrowers.

                    Section 4.7.  CERTIFICATE.  A certificate  setting forth any
additional  amounts payable pursuant to ss.ss.4.5 or 4.6 and a brief explanation
of such  amounts  which  are  due,  submitted  by any  Bank or the  Agent to the
Borrower, shall be prima facie evidence that such amounts are due and owing.

                    Section 4.8. INDEMNITY.  In addition to the other provisions
of this Agreement  regarding such matters,  the Borrower agrees to indemnify the
Agent  and each  Bank and to hold the  Agent  and each  Bank  harmless  from and
against  any  loss,  cost or  expense  (but  excluding  any loss of  anticipated
profits)  that the Agent or such Bank may sustain or incur as a  consequence  of
(a) the failure by the Borrower to pay any  principal  amount of or any interest
on any LIBOR Rate Loans as and when due and payable,  including any such loss or
expense  arising  from  interest  or fees  payable  by the Agent or such Bank to
lenders of funds  obtained by it in order to maintain its LIBOR Rate Loans,  (b)
the failure by the Borrower to make a borrowing or conversion after the Borrower
has given a Completed Loan Request for a LIBOR Rate Loan or a Conversion Request
for a LIBOR Rate Loan, and (c) the making of any payment of a LIBOR Rate Loan or
the making of any  conversion of any such  Revolving  Credit Loan to a Base Rate
Loan on a day that is not the last day of the  applicable  Interest  Period with
respect  thereto,  including  interest or fees payable by the Agent or a Bank to
lenders of funds obtained by it in order to maintain any such LIBOR Rate Loans.

                    Section 4.9. INTEREST ON OVERDUE AMOUNTS.  Overdue principal
and (to the extent permitted by applicable law) interest on the Revolving Credit
Loans and all other overdue amounts payable  hereunder or under any of the other
Loan Documents  shall bear interest  payable on demand at a rate per annum equal
to four percent (4%) above the Base Rate until such amount shall be paid in full
(after as well as before judgment).  In addition,  the Borrower shall pay a late
charge  equal to three  percent  (3%) of any  amount of  principal  (other  than
principal  due on the Maturity  Date) and/or  interest  charges on the Revolving
Credit Loans which is not paid within ten (10) days of the date when due.

         Section 5.  BORROWING BASE.
                     --------------

                    Section  5.1.   ADDITIONS  AND   REPLACEMENTS   TO  ELIGIBLE
PROPERTIES. From time to time during the term of the Revolving


<PAGE>
                                      -20-






Credit Loans, due to the fact that the Borrower may wish to enter into financial
transactions  involving certain Eligible  Properties,  or for other reasons, the
Borrower  may request in writing to the Banks to replace or add to the  Eligible
Properties to be used in  calculating  the Borrowing  Base. Any such request for
replacement  or addition  may be approved by the Agent,  which  approval  may be
given or withheld by the Agent in its sole discretion,  as hereinafter provided.
The Agent shall approve or deny such request in writing  within thirty (30) days
of receipt,  provided that the Agent has  received,  at the time such request is
made,  all of the  information  regarding  the Real Estate Asset  proposed to be
added to the Eligible  Properties to be used in  calculating  the Borrowing Base
required by the Eligible  Property  Conditions.  Any property so approved by the
Agent  as a  replacement  of or  addition  to the  Eligible  Properties  (a "New
Eligible  Property")  shall  thereafter  be included in computing  the Borrowing
Base.  The  Borrower  shall  reimburse  the Agent for its  reasonable  costs and
expenses  (including  reasonable  attorneys'  fees and  expenses  of the Agent's
counsel) in evaluating  the proposed New Eligible  Property.  Without in any way
limiting the absolute  discretion of the Agent to approve or deny any request to
include a property as a New Eligible Property,  before a property shall become a
New Eligible Property,  the Borrower shall have, in any case,  satisfied each of
the following conditions (the "Additional Eligible Property Conditions"):

                (a) The Acquisition Conditions have been met with respect to the
            Property  (whether or not the proposed New Eligible Property is then
            owned by the  Borrower or an  Additional  Guarantor or is a proposed
            Acquisition Property);

                (b) The  Borrower or an  Additional  Guarantor  (as  applicable)
            shall satisfy,  with respect to the proposed New Eligible  Property,
            to the satisfaction of the Agent (in its sole  discretion),  each of
            the Eligible  Property  Conditions with respect to each New Eligible
            Property;

                (c) No  Default  or Event of  Default  shall  exist  under  this
            Agreement or any other Loan  Document at the time of any  acceptance
            of a New Eligible Property,  unless such Default or Event of Default
            would be cured  thereby  and the  Borrower  shall have  delivered  a
            compliance certificate in the form of Exhibit E-2 to the Agent (with
            copies for each Bank) to such effect;

                (d) The New Eligible  Property shall be 100% owned in fee simple
            by the Borrower or an Additional  Guarantor (as  applicable) and the
            title thereof shall be unencumbered by any mortgage, deed


<PAGE>
                                      -21-






            of trust,  security  agreement or other lien  (whether  voluntary or
            involuntary)  except for liens  permitted by Section 8(b)(v) hereof;
            and

                (e) The Agent shall,  in its sole  discretion,  have approved in
            writing the addition of the property as a New Eligible  Property for
            inclusion in the Borrowing Base.

                    Section 5.2. REMOVAL FROM ELIGIBLE PROPERTIES.  From time to
time during the term of the  Revolving  Credit  Loans,  due to the fact that the
Borrower  may  wish to  enter  into  financial  transactions  involving  certain
Eligible  Properties,  or for other reasons, the Borrower may request in writing
that the Banks allow the Borrower to remove an Eligible Property from being used
in calculating  the Borrowing Base. The Agent shall approve or deny such request
in writing within thirty (30) days of receipt.  If within such thirty-day period
the Agent does not approve or deny the removal and if all of the  conditions set
forth in clauses  (i) and (ii) below have been and remain  satisfied,  then such
removal shall be deemed approved. The Borrower shall reimburse the Agent for its
reasonable costs and expenses (including reasonable attorneys' fees and expenses
of the Agent's  counsel) in  evaluating  the proposed  removal.  The Agent shall
approve the removal so long as: (i) the Borrower  demonstrates to the Agent that
any such removal shall in no way affect any of the  Borrower's  representations,
warranties,  or  covenants  hereunder,   including,  but  not  limited  to,  the
Borrower's  covenants regarding the Borrowing Base, and (ii) no Default or Event
of Default shall have occurred and be continuing hereunder.

                    Section  5.3.  RECOURSE  OBLIGATIONS.   Notwithstanding  the
foregoing,  the Obligations are full recourse  obligations of the Borrower,  the
Guarantor and the Additional  Guarantors and all of their respective  assets and
properties shall be available for the payment in full in cash and performance of
the Obligations.

         Section  6.  REPRESENTATIONS  AND  WARRANTIES.  The  Borrower  and  the
Guarantor  represent  and warrant to the Agent and the Banks on the date hereof,
on the date of any  Revolving  Loan  Request,  and on each  Drawdown Date of any
Revolving  Credit Loan that:  (a) each of the  Borrower,  the Guarantor and each
Additional Guarantor is duly formed or organized,  validly existing, and in good
standing  under  the  laws  of its  jurisdiction  of  organization  and is  duly
qualified and in good standing in every other  jurisdiction where it is required
to be so qualified,  and the execution,  delivery and performance by each of the
Borrower,  the Guarantor and each Additional Guarantor of the Loan Documents (i)
are


<PAGE>
                                      -22-





within its trust, partnership, limited liability company or corporate authority,
(ii) have been duly  authorized,  (iii) do not conflict with or  contravene  its
Charter Documents; (b) the outstanding equity of the Borrower on the date hereof
is comprised of a general partner interest and limited partner interests, all of
which have been duly issued and are outstanding and fully paid and, with respect
to limited partner interests,  nonassessable,  all as set forth in Schedule 6(b)
hereto;  (c) each of the direct or  indirect  interests  of the  Borrower in any
Partially-Owned  Real Estate Holding Entity is set forth on Schedule 6(c) hereto
(as updated from time to time in accordance  with the terms  hereof),  including
the type of entity in which the interest is held, the percentage  interest owned
by the  Borrower in such entity,  the  capacity in which the Borrower  holds the
interest,  and the Borrower's  ownership  interest therein;  provided,  that the
Borrower  agrees to update (at the end of each  calendar  quarter) such Schedule
6(c) in connection with any additional  Investment in any  Partially-Owned  Real
Estate  Holding  Entity  after the date  hereof that is  permitted  by the terms
hereof;  (d) upon  execution  and delivery  thereof,  each Loan  Document  shall
constitute  the  legal,  valid  and  binding  obligation  of the  Borrower,  the
Guarantor  or the  Additional  Guarantors,  as the case may be,  enforceable  in
accordance  with its terms;  (e) each of the  Borrower,  the  Guarantor and each
Additional  Guarantor has good and marketable  title to all Eligible  Properties
and other material properties,  subject only to Permitted Liens and possesses or
has the  legal  right  to use all  assets,  including  intellectual  properties,
franchises  and  Consents  adequate  for  the  conduct  of its  business  as now
conducted,  without known  conflict with any rights of others;  (f) the Borrower
has provided to the Agent and the Banks its unaudited pro forma Financials as of
December 31, 1998 and for the period then ended,  and such pro forma  Financials
are  complete and correct in all  material  respects  and have been  prepared in
accordance with GAAP  consistently  applied;  (g) since December 31, 1998, there
has been no materially  adverse  change of any kind in the Borrower  which would
have a Materially  Adverse  Effect;  (h) the Guarantor has provided to the Agent
and the Banks  (i) the pro forma  condensed  consolidated  balance  sheet of the
Guarantor and its Subsidiaries (including,  without limitation, the Borrower) as
of December 31, 1998 and their related consolidated statements of operations for
the fiscal year ended December 31, 1998 and (ii) the SEC Filings which contain a
summary of information  relating to the Real Estate Assets and such  information
is true and correct in all material respects; (i) since December 31, 1998, there
has been no materially  adverse change of any kind in the Guarantor  which would
have a Materially Adverse Effect; (j) each Additional Guarantor has delivered to
the Agent and the Banks its  unaudited  operating  statements as at December 31,
1998 and for the period then ended and such  operating  statements  are complete
and correct


<PAGE>
                                      -23-





in all  material  respects;  (k)  since  December  31,  1998,  there has been no
materially  adverse change of any kind in any Additional  Guarantor  which would
have a Materially Adverse Effect; (l) there are no legal or other proceedings or
investigations  pending or, to the best knowledge of the Borrower, the Guarantor
or any Additional Guarantor,  threatened against the Borrower,  the Guarantor or
such Additional  Guarantor  before any court,  tribunal or regulatory  authority
which would,  if  adversely  determined,  alone or  together,  have a Materially
Adverse Effect; (m) the execution, delivery, performance of its obligations, and
exercise of its rights under the Loan  Documents by the Borrower,  the Guarantor
and each Additional  Guarantor,  including borrowing under this Agreement (i) to
the best knowledge of the Borrower and the Guarantor  after due inquiry,  do not
require  any  Consents;  and (ii) are not and  will not be in  conflict  with or
prohibited or prevented by (A) any Requirement of Law, (B) any Charter Document,
trust  minute  or  resolution,  or  (C)  in any  material  respect,  instrument,
agreement  or  provision  thereof,  in each case  binding on the  Borrower,  the
Guarantor or any Additional Guarantor or affecting any property of the Borrower,
the  Guarantor  or any  Additional  Guarantor;  (n) neither the  Guarantor,  the
Borrower  nor any  Additional  Guarantor  is in  violation  of (A)  any  Charter
Document,  trust minute or resolution,  (B) any instrument or agreement, in each
case binding on it or affecting its property,  or (C) any Requirement of Law, in
a manner  which  could have a  Materially  Adverse  Effect,  including,  without
limitation,  all applicable  federal and state tax laws, ERISA and Environmental
Laws; (o) none of the Eligible  Properties  shall be subject to or encumbered by
any mortgage,  deed of trust,  security  agreement,  lien or  encumbrance of any
kind,  except for  Permitted  Liens;  (p) except as set forth on  Schedule  6(p)
attached hereto and other Investments  expressly  permitted by the terms hereof,
neither the Guarantor nor the Borrower has any  Subsidiaries  and is not a party
to any  partnership  or joint venture;  (q) the Guarantor  qualifies and has not
taken any action that would  prevent it from  qualifying  as a REIT  pursuant to
ss.856-860  of the  Code and the  related  regulations  for its tax  year  ended
December  31, 1998 and all  subsequent  years  during the term of the  Revolving
Credit  Loans;  (r) the  Borrower  has provided the Agent on behalf of the Banks
with Lease  Summaries and  information  packages  regarding each of the Eligible
Properties,  and such information packages fairly represent the position of each
of the  Eligible  Properties  on the date  hereof or as of the date of  delivery
thereof (if applicable); (s) neither the Borrower, the Guarantor or any of their
respective  Subsidiaries is an "investment  company", or an "affiliated company"
or a  "principal  underwriter"  of an  "investment  company",  as such terms are
defined  in the  Investment  Company  Act of 1940;  and (t) no  security  of the
Guarantor  traded on a National  Securities  Exchange  has been  suspended  from
trading or de-listed, except that the


<PAGE>
                                      -24-





securities  of the  Guarantor  may have been  suspended  from  trading for brief
periods  of time  due to  various  public  offerings  of the  securities  of the
Guarantor.

         Section  7.  AFFIRMATIVE  COVENANTS.  The  Borrower  and the  Guarantor
jointly and severally agree that until the termination of the Commitment and the
payment and  satisfaction in full of all the  Obligations,  the Borrower and the
Guarantor will comply with their respective  obligations as set forth throughout
this  Agreement and will, and will cause each of their  respective  Subsidiaries
to:

                (a)  furnish  the Agent on behalf of the  Banks:  (i) as soon as
            available  but in any event within  ninety (90) days after the close
            of each fiscal year,  the  Guarantor's  audited  Financials for such
            fiscal year, certified by the Guarantor's  accountants;  (ii) within
            ninety   (90)  days  after  the  close  of  each   fiscal  year  (or
            contemporaneously  with the filing  thereof with the SEC),  the Form
            10-K (or with respect to the 1998 fiscal year of the Guarantor,  the
            Form 10-K) filed by the Guarantor  with the SEC with respect to such
            fiscal  year;  (iii) as soon as  available  but in any event  within
            forty-five  (45) days  after the end of each  fiscal  quarter of the
            Guarantor, the Guarantor's unaudited financials with respect to such
            fiscal  quarter;  (iv) as soon as available  but in any event within
            forty-five  (45) days  after the end of each  fiscal  quarter of the
            Guarantor  the Form  10-Q  statement  (or with  respect  to the 1998
            fiscal year of the Guarantor,  the Form 10-QSB  statement)  filed by
            the Guarantor with the SEC with respect to such fiscal quarter,  (v)
            together with the quarterly unaudited and annual audited Financials,
            a certificate  of the Borrower and the  Guarantor (in  substantially
            the form attached to Exhibit E-3 hereto) setting forth  computations
            demonstrating  compliance  with the Borrower's  and the  Guarantor's
            financial covenants set forth in ss.9 hereof, and certifying that no
            Default or Event of Default has occurred,  or if it has, the actions
            taken by the Borrower or the Guarantor  with respect  thereto;  (vi)
            contemporaneously  with the filing,  mailing or  issuances  thereof,
            copies of all  material of a financial  nature filed with the SEC or
            sent to the  owners/stockholders or partners of the Guarantor or the
            Borrower  and  copies  of all press  and news  releases  made by the
            Borrower, the Guarantor or any Additional Guarantor;  (vii) promptly
            after its receipt thereof,  annual financial  information  regarding
            commercial  tenants in the Eligible  Properties  as  applicable  and
            available  and  (viii)  if a  Default  or an Event of  Default  or a
            materially  adverse change in any of the Eligible  Properties  shall
            have occurred, Appraisals (or updates thereof if


<PAGE>
                                      -25-






            required) of the Eligible  Properties  within thirty (30) days after
            the request of the Agent therefor;  (ix) from time to time, upon the
            request  of the  Agent or the  Bank,  operating  statements  for all
            Eligible Properties,  in form and substance reasonably  satisfactory
            to the  Agent  or  Banks,  as  applicable;  (x)  evidence  as may be
            required  by the Agent or the Banks with  regard to the  Guarantor's
            compliance  with  its  status  as a  REIT,  in  form  and  substance
            reasonably  satisfactory to the Agent or Banks, as applicable;  (xi)
            from time to time,  upon  request  of the Agent or the  Banks,  such
            other  financial  data  and  information  about  the  Borrower,  the
            Guarantor, the Additional Guarantors, their respective Subsidiaries,
            the Real Estate Assets and as the Agent may reasonably request,  and
            which  is  prepared  by such  Person  in the  normal  course  of its
            business  or is  required  for  securities  and tax law  compliance,
            including  without  limitation,   pro  forma  financial  statements,
            complete  rent rolls and summary rent rolls,  existing  governmental
            reports,   surveys,   title   insurance   policies   and   insurance
            certificates with respect to the Real Estate Assets.

                (b) keep true and accurate  books of account in accordance  with
            GAAP  and to  permit  the  Agent  or  any  Bank  or  its  designated
            representatives  during normal  business  hours and upon  reasonable
            prior  notice  (unless,  in each case, a Default or Event of Default
            has occurred  whereupon no such notice shall be required) to inspect
            the  Borrower's  or the  Guarantor's  premises and to examine and be
            advised as to such or other business records upon the request of the
            Agent or such Bank;

                (c)  maintain  in good  operating  condition  its  business  and
            assets,  to keep its  business  and assets  adequately  insured,  to
            maintain  its  chief  executive  office  in the  United  States,  to
            continue to engage in the same lines of business, and to comply with
            all Requirements of Law, including ERISA and Environmental Laws;

                (d) notify the Agent on behalf of the Banks  promptly in writing
            of (i) the  occurrence of any Default or Event of Default,  (ii) any
            noncompliance  with ERISA or any  Environmental Law or proceeding in
            respect thereof which could have a Materially Adverse Effect,  (iii)
            any  change  of name or  address,  (iv) any  threatened  or  pending
            litigation  or  similar  proceeding  affecting  the  Borrower,   the
            Guarantor  or any  Additional  Guarantor  or  any  of  the  Eligible
            Properties  which  could  have a  Materially  Adverse  Effect or any
            material  change in any such  litigation  or  proceeding  previously
            reported and (v) claims against any assets or properties of the


<PAGE>
                                      -26-






            Borrower  or the  Guarantor  which could have a  Materially  Adverse
            Effect;

                (e) use the  proceeds of the  Revolving  Credit  Loans solely to
            finance acquisitions by the Borrower or Subsidiaries of the Borrower
            of Real Estate  Assets and to pay  reasonable  and  customary  costs
            associated  with  such  acquisitions  in  accordance  with the terms
            hereof and for the repair and  improvement  of presently  owned Real
            Estate Assets and such acquired Real Estate Assets,  and not for the
            carrying of "margin  security" or "margin  stock" within the meaning
            of  Regulations  U and X of the Board of  Governors  of the  Federal
            Reserve  System,  12  C.F.R.  Parts  221 and  224;  provided,  that,
            notwithstanding the foregoing,  the Borrower may use the outstanding
            principal  amount of the Revolving  Credit Loans for general working
            capital purposes of the Borrower;

                (f)  cooperate  with the Agent and the Banks,  take such action,
            execute such  documents,  and provide such  information as the Agent
            and the  Banks  may from time to time  reasonably  request  in order
            further to effect the transactions  contemplated by and the purposes
            of the Loan Documents;

                (g) do or cause to be done all things  necessary (i) to preserve
            and keep in full force and effect the  existence of the Guarantor as
            a Maryland real estate investment trust and its election to be taxed
            as a REIT under the  provisions of Sections  856-860 of the Code, or
            such  other  laws as may be  applicable  in  order to  maintain  the
            current material  characteristics  of the Guarantor as an investment
            vehicle and tax entity,  and (ii) to preserve and keep in full force
            and effect the  listing of the  Guarantor  on a National  Securities
            Exchange,  (iii) to cause the  Guarantor to continue to operate as a
            fully-integrated,  self-administered  and self-managed  REIT, which,
            together  with  its  Subsidiaries  owns  and  operates  an  improved
            property  portfolio  comprised  primarily  of  apartment  and retail
            properties,  (iv)  to  cause  the  Guarantor  not to  engage  in any
            business  other than the business of acting as a REIT and serving as
            the general  partner and limited  partner of the  Borrower  and as a
            member,  partner or stockholder  of other Persons,  (v) to cause the
            Guarantor  to  conduct  all or  substantially  all  of its  business
            operations through the Borrower or through  subsidiary  partnerships
            or  other  entities  in  which  (x) the  Borrower  or the  Guarantor
            directly or  indirectly  owns or controls as least 51% of the voting
            interests as well being  entitled to at least 51% of the profits and
            losses distributions and (y) the Borrower or the Guarantor


<PAGE>
                                      -27-






            directly or indirectly (through  wholly-owned  Subsidiaries) acts as
            sole general partner or managing member;

                (h) maintain at least one operating  account of the Borrower and
            the Guarantor with the Agent;

                (i) take all  steps  reasonably  necessary  to cause any and all
            payments due to any third party under any  management fee agreements
            with respect to the Eligible  Properties to be  subordinated in full
            in writing to the prior payment of the Revolving Credit Loans during
            the  continuance of a Default or an Event of Default,  each on terms
            and conditions  reasonably  satisfactory  the Agent in all respects;
            and

                (j) notify the Agent on behalf of the Banks  prior to any single
            transaction or series of transactions  for the sale of, the granting
            of a Lien (as security  for any borrowed  money) on, or the transfer
            of any property or partnership or other  ownership  interest  (other
            than  any  sale  or  transfer  to the  Guarantor  or a  consolidated
            subsidiary   of  the  Borrower  or  the   redemption   of  operating
            partnership  units by the  Borrower)  and  furnish  to the  Agent on
            behalf of the Banks prior thereto a certificate  of the Borrower and
            the  Guarantor  (in  substantially  the form attached as Exhibit E-3
            hereto) setting forth computations demonstrating compliance with the
            Borrower's and the Guarantor's financial covenants set forth in ss.9
            hereof,  and  certifying  that no Default  or Event of  Default  has
            occurred  or will occur,  all after  giving  effect to the  proposed
            transaction or transactions.

         Section 8. NEGATIVE  COVENANTS.  The Borrower and the Guarantor jointly
and severally agree that until the termination of the Commitment and the payment
and satisfaction in full of all the Obligations,  the Borrower and the Guarantor
will not, and will not permit any of their respective Subsidiaries to,:

                (a)  create,  incur or assume  any  Indebtedness  other than (i)
            Indebtedness  to the  Agent  and the  Banks  arising  under the Loan
            Documents,  (ii)  Indebtedness  in  respect  of the  acquisition  of
            personal property which does not exceed $500,000 in aggregate amount
            for the Borrower,  the Guarantor and their respective  Subsidiaries,
            (iii)  current  liabilities  not incurred  through the  borrowing of
            money or the  obtaining of credit  except  credit on an open account
            customarily extended, (iv) Indebtedness in respect of taxes or other
            governmental  charges  contested  in good  faith and by  appropriate
            proceedings; (v) Indebtedness of the Borrower or any of


<PAGE>
                                      -28-






            its  Subsidiaries,  the payment of which is without  recourse to the
            Borrower  or  such  Subsidiary,  incurred  in  connection  with  the
            acquisition   of  Real  Estate   Assets  (other  than  the  Eligible
            Properties)  or  the  financing  or  refinancing  of  any  permitted
            Indebtedness  secured  by liens on such  Real  Estate  Assets;  (vi)
            Recourse Indebtedness permitted under Section 9(g) hereof; and (vii)
            Indebtedness  not  included  above and listed on Schedule  8(a)(vii)
            hereto;

                (b) create or incur any Liens on any  property  or assets of the
            Borrower,  the  Guarantor  or any of their  respective  Subsidiaries
            except (i) Liens securing the Obligations; (ii) Liens securing taxes
            or other governmental charges not yet due; (iii) deposits or pledges
            made in connection with social security  obligations;  (iv) Liens of
            carriers,  warehousemen,  mechanics and  materialmen,  less than 120
            days   old  as  to   obligations   not  yet  due;   (v)   easements,
            rights-of-way,  zoning  restrictions  and similar  minor Liens which
            individually  and in the aggregate do not have a Materially  Adverse
            Effect;  (vi) purchase money security interests in personal property
            securing purchase money Indebtedness  permitted by Section 8(a)(ii),
            covering  only the  personal  property so acquired;  (vii)  mortgage
            liens on,  pledges of and security  interests in (A) the Real Estate
            Assets other than the Eligible Properties acquired with Indebtedness
            permitted  by Section  8(a)(v),  (B) any  personal  property  of the
            Borrower,  the  Guarantor  or such  Subsidiary  directly  related or
            appurtenant  to such Real Estate Assets and (C) if, and only if, the
            applicable  Subsidiary that incurs such permitted  Indebtedness  and
            grants  such liens on such Real Estate  Assets and related  personal
            property is a special  purpose entity that owns only the Real Estate
            Assets and personal  property that secure the  applicable  permitted
            Indebtedness,  the outstanding  equity interests of such Subsidiary,
            in each case that secure such  Indebtedness  and cover only the Real
            Estate Assets and personal  property directly related or appurtenant
            to such Real Estate  Assets so acquired  and equity  interests;  and
            (viii)  liens  securing  the payment of  Indebtedness  permitted  by
            ss.8(a)(vi) hereof that encumber only the Real Estate Asset acquired
            with the initial proceeds of such Indebtedness;

                (c)  make  any  Investments   other  than   investments  in  (i)
            marketable  obligations of the United States maturing within one (1)
            year, (ii) certificates of deposit,  bankers'  acceptances and time,
            money market and demand  deposits of United States Federal and state
            chartered  banks having  total  assets in excess of  $1,000,000,000,
            (iii) as long as no Default or Event of Default shall


<PAGE>
                                      -29-






            have  occurred  and  be   continuing   or  would  result   therefrom
            Investments  consisting  of (A) all of the  issued  and  outstanding
            capital  stock of,  or  equity  interests  in, a  Subsidiary  of the
            Borrower  or  (B) a  majority  of the  capital  stock  of or  equity
            interests in a Partially-Owned  Real Estate Holding Entity, (iv) any
            other  investments  made by the Guarantor in the ordinary  course of
            the Guarantor's  business in a manner  consistent with past practice
            if such investments  qualify under Section  856(c)(5)(A) of the Code
            (or any successor regulation thereto),  for purposes of inclusion in
            the "75% asset test" relating to the  Guarantor's  status as a REIT;
            provided,  that the Guarantor may not make any  investments in other
            REITs,  unless  such  Investment  in any single REIT does not exceed
            more than fifteen  percent  (15%) of the  Guarantor's  total assets,
            determined in accordance with GAAP and provided,  further,  that the
            aggregate  value of all Investments  under this  subsection  (c)(iv)
            shall  not  exceed  at any time  thirty  percent  (30%) of the total
            assets of the Guarantor,  determined in accordance with the Code and
            the regulations promulgated  thereunder,  (v) investments in respect
            of  Acquisition  Properties or other Real Estate Assets  acquired by
            the Borrower  after the date hereof in accordance  with the terms of
            this Agreement;  (vi) intercompany loans provided by the Borrower to
            the   Guarantor   solely  in   connection   with  stock   repurchase
            arrangements of the Guarantor;  and (vii) such other  investments as
            the Agent may from time to time approve in writing;

                (d) become party to a merger,  or to effect any  disposition  of
            any properties or assets other than by the  Guarantor,  the Borrower
            or any of their  respective  Subsidiaries  in the ordinary course of
            their respective  businesses as a REIT or as a Subsidiary of a REIT,
            or  to  purchase  or  otherwise   acquire   assets  other  than  the
            acquisition of Acquisition Properties or other Real Estate Assets or
            the making of  Investments  in accordance  with the terms hereof and
            the purchase of personal  property in the  ordinary  course of their
            respective businesses;

                (e)  (i)  in  the  case  of  the   Borrower,   make  (A)  annual
            Distributions in excess of seventy-five  percent (75%) of Funds from
            Operations or (B) any Distributions during any period when any Event
            of Default has occurred and is continuing or would result therefrom;
            provided,   however,  that  the  Borrower  may  at  all  times  make
            Distributions to the extent (after taking into account all available
            funds of the Guarantor from all other sources)  required in order to
            enable the Guarantor to continue to qualify as a REIT;  and (ii) the
            case of the Guarantor, during any period when any Event of


<PAGE>
                                      -30-






            Default has occurred and is continuing,  make any  Distributions  in
            excess of the Distributions  required to be made by the Guarantor in
            order to maintain its status as a REIT;

                (f)  cause or  permit  (a) the  occupancy  for all  Units in the
            Eligible  Properties  (under valid and enforceable  Leases with bona
            fide,  third party  tenants) to be less than ninety percent (90%) of
            all such Units at any time or (b) the occupancy for all Units in any
            individual  Eligible  Property (under valid and  enforceable  Leases
            with bona fide,  third party tenants) to be less than eighty percent
            (80%) of all such Units at any time; or

                (g) at any time cause or permit any of the Partnership Documents
            to be modified,  amended or supplemented in any respect  whatsoever,
            without (in each case) the express prior written consent or approval
            of the Agent,  if such  changes  would affect the  Guarantor's  REIT
            status or otherwise  materially  adversely  affect the rights of the
            Agent and the Banks hereunder or under any other Loan Document.

         Section 9. FINANCIAL COVENANTS.  The Borrower and the Guarantor jointly
and severally agree that until the termination of the Commitment and the payment
and satisfaction in full of all the Obligations,  the Borrower and the Guarantor
will not at any time:

                (a)  cause or permit  the  outstanding  principal  amount of the
            Revolving  Credit  Loans to exceed sixty  percent  (60%) of the Fair
            Market Value of Eligible  Properties;  provided,  that, the Borrower
            shall  have  the  right  to  either  (i) pay  down  the  outstanding
            principal  amount of the Revolving  Credit Loans, or (ii) request in
            writing  to  the  Agent  to  add to  the  Eligible  Properties  from
            additional Real Estate Assets on which all real estate due diligence
            requirements referred to in ss.2 hereof have been met and subject to
            the right of the  Agents to approve or  disapprove  such  request in
            accordance  with  ss.5  hereof,  in each  case in  order to cure the
            Borrower's  failure  to comply  with this  ss.9(a)  within  the time
            period referred to in ss.12.1(c) hereof;

                (b) cause or  permit  the ratio of  Adjusted  EBITDA  calculated
            solely with  respect to the  Eligible  Properties  to Pro Forma Debt
            Service Charges to be less than 1.75 to 1.0;

                (c)  cause or  permit  the  ratio of  EBITDA  to Total  Interest
            Expense of the Guarantor to be less than 2.0 to 1.0;




<PAGE>
                                      -31-






                (d) cause or permit  the ratio of  Operating  Cash Flow to Total
            Debt Service for the Guarantor to be less than 1.70 to 1.0;

                (e) cause or permit  Consolidated  Total  Liabilities  to exceed
            sixty percent (60%) of Consolidated Total Adjusted Asset Value;

                (f) cause or permit Secured Indebtedness to exceed forty percent
            (47%) of Consolidated Total Adjusted Asset Value;

                (g)  cause  or  permit   Recourse   Indebtedness   (other   than
            Indebtedness  to the  Agent  and the  Banks  arising  under the Loan
            Documents or Indebtedness  listed on Schedule  8(a)(vii)  hereto) to
            exceed ten percent (10%) of Consolidated Total Adjusted Asset Value;

                (h) cause or permit  Tangible  Net Worth to be less than the sum
            of (a)  $90,000,000  plus (b) ninety  percent (90%) of the aggregate
            proceeds  received  by the  Guarantor  (net  of  fees  and  expenses
            customarily  incurred in  transactions  of such type) in  connection
            with  any  offering  of  stock,   stock   equivalents,   partnership
            interests, or other, similar investment interests in the Guarantor;

                (i) cause or permit the aggregate  Budgeted  Renovation Costs of
            all  Renovations  to exceed  fifteen  percent (15%) of  Consolidated
            Total Adjusted Asset Value; or

                (j)  cause  or  permit  the  value  of  Unhedged  Variable  Rate
            Indebtedness  to exceed thirty percent (30%) of  Consolidated  Total
            Adjusted Asset Value.

         Section 10.  CONDITIONS TO THE CLOSING  DATE.  The  obligations  of the
Banks to enter into this Agreement  shall be subject to the  satisfaction of the
following conditions precedent on or prior to the Closing Date:

                    Section 10.1.  LOAN  DOCUMENTS.  Each of the Loan  Documents
shall have been duly executed and delivered by the  respective  parties  thereto
and shall be in full force and effect.

                    Section 10.2.  CERTIFIED  COPIES OF ORGANIZATION  DOCUMENTS.
The Agent shall have  received (i) from the  Borrower a copy,  certified as of a
recent date by a duly  authorized  officer of the Guarantor,  in its capacity as
general  partner of the Borrower,  to be true and complete,  of the Agreement of
Limited Partnership of the Borrower and any other agreement governing the rights
of the partners of the Borrower, (ii) from the Guarantor a copy, certified as of
a recent date by the appropriate


<PAGE>
                                      -32-






officer of the State of Maryland to be true and correct,  of the  declaration of
trust of the Guarantor and (iii) from each Additional  Guarantor  copies of such
Additional  Guarantor's  Charter  Documents,  in each case  along with any other
organization  documents  of the  Borrower  or the  Guarantor  or the  Additional
Guarantors,  as the  case  may be,  and  each as in  effect  on the date of such
certification.

                    Section 10.3. BY-LAWS;  RESOLUTIONS.  All action on the part
of the Borrower,  the Guarantor and the Additional  Guarantors necessary for the
valid execution, delivery and performance by the Borrower, the Guarantor and the
Additional  Guarantors of this  Agreement and the other Loan  Documents to which
any of them is or is to become a party  shall  have  been  duly and  effectively
taken, and evidence  thereof  satisfactory to the Banks shall have been provided
to the Agent.  The Agent shall have received from the Guarantor,  for itself and
in  its  capacity  as  general  partner  of  the  Borrower  and  the  Additional
Guarantors,  true copies of its by-laws and the resolutions adopted by its board
of directors  authorizing the  transactions  described herein and evidencing the
due  authorization,  execution  and  delivery of the Loan  Documents to which it
and/or the Borrower or the Additional  Guarantors is a party,  each certified by
the secretary as of a recent date to be true and complete.

                    Section 10.4.  INCUMBENCY  CERTIFICATE;  AUTHORIZED SIGNERS.
The Agent  shall  have  received  from the  Guarantor  for itself and as general
partner  of  the  Borrower  and  the   Additional   Guarantors,   an  incumbency
certificate,  dated as of the Closing Date, signed by a duly authorized  officer
of the  Guarantor  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 Borrower, the Guarantor and the Additional  Guarantors,  as the case may be,
each of the Loan  Documents to which the Borrower or the Guarantor or any of the
Additional  Guarantors  is or is to  become  a  party;  (b)  to  make  Loan  and
Conversion  Requests on behalf of the  Borrower;  and (c) to give notices and to
take other action on behalf of the Borrower or the  Guarantor or the  Additional
Guarantors, as applicable, under the Loan Documents.

                    Section  10.5.  SURVEY  AND  TAXES.  The  Agent  shall  have
received (a) a Survey of each of the Initial Eligible Properties,  together with
the applicable Surveyor Certificate,  bearing dates acceptable to the Agent, and
in form and substance  acceptable  to the Agent,  and (b) evidence of payment of
real estate taxes and municipal charges on the Initial Eligible Properties which
are or will become due and payable on or before the Closing Date.




<PAGE>
                                      -33-






                    Section 10.6.  TITLE INSURANCE;  Title Exception  Documents.
The Agent shall have received the Title Policies.  The Agent shall have received
true and accurate copies of all documents  listed as exceptions under each Title
Policy.

                    Section 10.7. LEASES, SERVICE CONTRACTS AND OTHER DOCUMENTS.
The Agent shall have received from the Borrower  Lease  Summaries,  all material
Service Agreements, and all Partnership Documents.

                    Section  10.8.  ESTOPPEL  AGREEMENTS.  The Agent  shall have
received Estoppel Agreements in form and substance satisfactory to the Agent, in
each case from each of the commercial tenants under the Leases which occupy more
than 5,000 square feet of gross rentable area of any of the Eligible Properties.

                    Section 10.9.  CERTIFICATES  OF  INSURANCE.  The Agent shall
have received (a) current  certificates  of insurance as to all of the insurance
maintained  by Borrower  on the Initial  Eligible  Properties  (including  flood
insurance if necessary)  from the insurer or an  independent  insurance  broker,
identifying insurers, types of insurance, insurance limits, and policy terms and
insurance  binders  naming the Agent as  Mortgagee,  loss  payee and  additional
insured;  (b) certified  copies of all policies  evidencing  such  insurance (or
certificates  therefor signed by the insurer or an agent  authorized to bind the
insurer);  and (c) such further information and certificates from Borrower,  its
insurers and insurance brokers as the Agent may reasonably request.

                    Section 10.10.  HAZARDOUS SUBSTANCE  ASSESSMENTS.  The Agent
shall have received  hazardous waste site assessment reports running in favor of
the Agent and the Banks concerning  Hazardous Substances (or the threat thereof)
and asbestos with respect to the Initial Eligible Properties, dated as of a date
satisfactory to the Banks, from environmental engineers acceptable to the Agent,
such reports to be in form and substance  satisfactory  to the Agent and each of
the Banks.  The Agent shall have the right to obtain  third-party  review of the
reports at the Borrower's expense.

                    Section 10.11.  OPINION OF COUNSEL  CONCERNING  ORGANIZATION
AND  LOAN  DOCUMENTS.  Each of the  Banks  and the  Agent  shall  have  received
favorable  opinions  addressed to the Banks and the Agent in form and  substance
satisfactory  to the Banks and the  Agent  from  counsel  to the  Borrower,  the
Guarantor, the Additional Guarantors and their respective subsidiaries.




<PAGE>
                                      -34-






                    Section 10.12.  STRUCTURAL CONDITION  ASSURANCES.  The Agent
and each of the Banks shall have received evidence satisfactory to the Agent and
each of the Banks as to the good  physical  condition of the  Buildings and that
utilities  and public  water and sewer  service is available at the lot lines of
the Initial Eligible Properties and connected directly to the Buildings with all
necessary Permits.

                    Section  10.13.  PERMIT  ASSURANCES;  COMPLIANCE.  The Agent
shall have received evidence  reasonably  satisfactory to the Agent that (i) all
activities  being  conducted on the Initial  Eligible  Properties  which require
federal,  state or local  Permits have been duly  licensed and that such Permits
are in full force and effect,  and (ii) the Initial  Eligible  Properties are in
compliance  with all  zoning,  land use,  environmental,  architectural  access,
historical and building laws.

                    Section 10.14.  GUARANTY.  The Guaranty shall have been duly
executed and delivered by the Guarantor.  The Additional  Guaranties  shall have
been duly executed and delivered by the Additional Guarantors.

                    Section  10.15.   FINANCIAL  ANALYSIS  OF  INITIAL  ELIGIBLE
PROPERTIES.  Each of the Banks  shall  have  completed  to its  satisfaction,  a
financial  analysis of each Initial  Eligible  Property,  which  analysis  shall
include,  without  limitation,  a review,  with respect to each Initial Eligible
Property,  of (i) the most recent rent rolls, (ii) three (3) year historical and
projected  operating  statements,  (iii)  cash flow  projections,  (iv)  capital
expenditure  budgets  (which shall be subject to the review and approval of each
of the Banks),  (v) market data, (vi) Lease  Summaries,  (vii) tenant  financial
statements,  to the extent available for commercial tenants, and (viii) an aging
of rent payments and rent payment histories for each tenant.

                    Section 10.16. INSPECTION OF ELIGIBLE PROPERTIES.  The Agent
and each Bank shall have  completed to its  satisfaction  an  inspection  of the
Initial Eligible Properties at the Borrower's expense.

                    Section 10.17.  CERTIFICATIONS  FROM  GOVERNMENT  OFFICIALS;
UCC-11 REPORTS. The Agent shall have received (i) long-form  certifications from
government officials  evidencing the legal existence,  good standing and foreign
qualification  of the  Borrower,  the  Guarantor  and  each  of  the  Additional
Guarantors,   along  with  a  certified  copy  of  the  certificate  of  limited
partnership  of the Borrower and the Additional  Guarantors,  all as of the most
recent  practicable  date; and (ii) UCC-11 search  results from the  appropriate
jurisdictions for the Borrower, the Guarantor and the Additional Guarantors.




<PAGE>
                                      -35-






                    Section 10.18. PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the transactions  contemplated by this Agreement, the other Loan
Documents  and  all  other  documents   incident  thereto  shall  be  reasonably
satisfactory  in form and  substance  to each of the  Banks  and to the  Agent's
counsel,  and the Agent,  each of the Banks and such counsel shall have received
all information and such  counterpart  originals or certified or other copies of
such documents as the Agent may reasonably request.

                    Section  10.19.  FEES.  The Borrower  shall have paid to the
Agent, for the accounts of the Banks or for its own account, as applicable,  all
reasonable  fees and expenses that are due and payable as of the Closing Date in
accordance with this Agreement.

                    Section  10.20.  CLOSING  CERTIFICATE.  The Borrower and the
Guarantor shall have delivered a Closing  Certificate to the Agent,  the form of
which is attached hereto as Exhibit F.

         Section 11. CONDITIONS TO ALL BORROWINGS.  The obligations of the Banks
to make any Revolving  Credit Loan,  whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:

                    Section  11.1.  REPRESENTATIONS  TRUE;  NO EVENT OF DEFAULT;
COMPLIANCE  CERTIFICATE.  Each  of the  representations  and  warranties  of the
Borrower,  the  Guarantor  and  the  Additional  Guarantors  contained  in  this
Agreement,  the other Loan Documents or in any document or instrument  delivered
pursuant to or in connection with this Agreement shall be true as of the date as
of which  they  were  made and  shall  also be true at and as of the time of the
making of each Revolving  Credit Loan, with the same effect as if made at and as
of that time  (except  to the  extent of  changes  resulting  from  transactions
contemplated or not prohibited by this Agreement or the other Loan Documents and
changes  occurring in the ordinary course of business,  and except to the extent
that such  representations  and warranties relate expressly to an earlier date);
and no Default or Event of Default under this Agreement  shall have occurred and
be  continuing  on the date of any Loan Request or on the  Drawdown  Date of any
Revolving  Credit Loan.  Each of the Banks shall have received a certificate  of
the  Borrower  signed by an  authorized  officer of the  Borrower as provided in
ss.2.4(d)(iii).

                    Section  11.2.  NO LEGAL  IMPEDIMENT.  No change  shall have
occurred in any law or regulations thereunder or interpretations thereof that in
the  reasonable  opinion of the Agent or any Bank would make it illegal  for any
Bank to make such Loan.




<PAGE>
                                      -36-






                    Section 11.3. GOVERNMENTAL REGULATION.  Each Bank shall have
received such statements in substance and form  reasonably  satisfactory to such
Bank as such  Bank  shall  require  for  the  purpose  of  compliance  with  any
applicable  regulations  of the  Comptroller  of the  Currency  or the  Board of
Governors of the Federal Reserve System.

         Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
                     ------------------------------------

                    Section 12.1. EVENTS OF DEFAULT; ACCELERATION. If any of the
following  events ("Events of Default") shall occur: (a) the Borrower shall fail
to pay (i) when due and payable any  principal  of or interest on the  Revolving
Credit Loans or any Reimbursement Obligation or (ii) any other sum due under any
of the Loan Documents within five (5) days following  written demand for payment
of the same;  (b) the Borrower or the Guarantor  shall fail to perform any term,
covenant or  agreement  contained  in ss.8 or ss.9 (other than the  covenant set
forth in ss.9(a)  hereof);  (c) the Borrower  shall fail to perform the covenant
set forth in ss.9(a) hereof and such failure shall continue for thirty (30) days
after the Bank has given written notice of such failure to the Borrower pursuant
to ss.18 hereof;  (d) the Borrower or the Guarantor or any Additional  Guarantor
shall fail to perform any other term,  covenant or  agreement  contained  in the
Loan  Documents and such failure  shall  continue for thirty (30) days after the
Bank has given written notice of such failure to the Borrower; provided, that if
any such failure is of a nature that it cannot be  corrected  within such thirty
(30) day period but is capable of being  corrected  within an  additional  sixty
(60) day period, such failure shall not constitute an Event of Default hereunder
so long as (i) the Borrower or the Guarantor or such  Additional  Guarantor,  as
applicable, institutes reasonable curative action within such initial period and
diligently  pursues such action to  completion  and (ii) such  failure  shall be
fully cured within such additional sixty (60) day period; (e) any representation
or warranty of the Borrower or the Guarantor or any Additional  Guarantor in any
of the Loan  Documents  or in any  certificate  or  notice  given in  connection
therewith  shall have been false or  misleading  in any material  respect at the
time made or deemed to have been made;  (f) the Borrower or the Guarantor or any
Additional Guarantor shall be in default beyond the expiration of any applicable
grace period under any environmental, financial or payment covenant set forth in
any agreement or  agreements  evidencing  Indebtedness  owing to the Bank or any
affiliates  of the  Bank or  other  Indebtedness  in  excess  of  $1,000,000  in
aggregate  principal  amount,  or shall fail to pay such  Indebtedness when due,
subject to any applicable  period of grace;  (g) any of the Loan Documents shall
cease to be in full force and  effect;  (h) the  Borrower,  the  Guarantor,  any
Additional Guarantor or any of their respective Subsidiaries (i) shall make an


<PAGE>
                                      -37-






assignment for the benefit of creditors,  (ii) shall be adjudicated  bankrupt or
insolvent,  (iii) shall seek the  appointment  of, or be the subject of an order
appointing,  a trustee,  liquidator or receiver as to all or part of its assets,
(iv) shall  commence,  approve or consent to, any case or  proceeding  under any
bankruptcy,  reorganization  or similar law and,  in the case of an  involuntary
case or proceeding,  such case or proceeding is not dismissed within thirty (30)
days following the commencement thereof, or (v) shall be the subject of an order
for relief in an involuntary case under federal bankruptcy law; (i) the Borrower
or the Guarantor or any Additional Guarantor shall be unable to pay its debts as
they mature; (j) there shall remain undischarged for more than ten (10) days any
final (beyond any applicable appeal period) judgment or execution action against
the  Borrower or the  Guarantor  or any  Additional  Guarantor  (not  covered by
insurance  reasonably  satisfactory  to the  Agent)  that,  together  with other
outstanding  claims (not covered by  insurance  reasonably  satisfactory  to the
Agent) and  execution  actions  against the  Borrower or the  Guarantor  or such
Additional  Guarantor exceeds $1,000,000 in the aggregate;  or (k) the Guarantor
shall cease to be the general partner of the Borrower at any time:

         then, and in any such event, so long as the same may be continuing, the
Agent  may,  and upon the  request of the  Majority  Banks  shall,  by notice in
writing  to the  Borrower,  declare  all  amounts  owing  with  respect  to this
Agreement,  the Revolving  Credit Notes and the other Loan  Documents to be, and
they shall  thereupon  forthwith  become,  immediately  due and payable  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby expressly waived by the Borrower and the Guarantor;  provided that in the
event of any Event of Default  specified  in  ss.12.1(h)  or  12.1(i),  all such
amounts shall become  immediately due and payable  automatically and without any
requirement  of notice from any of the Banks or the Agent or action by the Banks
or the Agent.

                    Section 12.2. TERMINATION OF COMMITMENTS. If any one or more
Events of Default  specified in ss.12.1(h) or ss.12.1(i) shall occur, any unused
portion of the Commitments  hereunder  shall  forthwith  terminate and the Banks
shall be relieved  of all  obligations  to make  Revolving  Credit  Loans to the
Borrower.  If any other Event of Default shall have occurred and be  continuing,
the Majority Banks may, by notice to the Borrower,  terminate the unused portion
of the Total Commitment hereunder,  and upon such notice being given such unused
portion of the Total Commitment shall terminate  immediately and the Banks shall
be relieved of all further  obligations to make Revolving  Credit Loans. No such
termination of the Total Commitment  hereunder shall relieve the Borrower of any
of the


<PAGE>
                                      -38-






Obligations  or any of its existing  obligations to any Bank arising under other
agreements or instruments.

                    Section 12.3. REMEDIES. In the event that one or more Events
of Default shall have occurred and be continuing, whether or not the Banks shall
have accelerated the maturity of the Revolving Credit Loans pursuant to ss.12.1,
the  Majority  Banks may direct the Agent to proceed to protect  and enforce the
rights  and  remedies  of the Agent  and the Banks  under  this  Agreement,  the
Revolving  Credit  Notes,  any or  all of the  other  Loan  Documents  or  under
applicable law by suit in equity, action at law or other appropriate  proceeding
(including for the specific  performance of any covenant or agreement  contained
in this  Agreement  or the other Loan  Documents or any  instrument  pursuant to
which the  Obligations  are  evidenced  and,  to the full  extent  permitted  by
applicable law, the obtaining of the ex parte  appointment of a receiver),  and,
if any amount shall have become due, by  declaration  or  otherwise,  proceed to
enforce the payment  thereof or any other legal or equitable  right or remedy of
the Agent and the Banks under the Loan  Documents or  applicable  law. No remedy
herein  conferred  upon the  Banks or the Agent or the  holder of any  Revolving
Credit Note or purchaser of any Letter of Credit Participation is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative  and
shall be in addition to every other remedy  given  hereunder or under any of the
other Loan  Documents  or now or  hereafter  existing  at law or in equity or by
statute or any other provision of law.

                    Section 12.4.  DISTRIBUTION OF PROCEEDS.  In the event that,
following the occurrence  and during the  continuance of any Default or Event of
Default,  the  Agent or any Bank,  as the case may be,  receives  any  monies in
connection with the Revolving Credit Loans, such monies shall be distributed for
application as follows:

                (a)  First,  to the  payment  of,  or (as the  case  may be) the
            reimbursement  of,  the Agent for or in  respect  of all  reasonable
            costs,  expenses,  disbursements  and losses  which  shall have been
            incurred or sustained by the Agent in connection with the collection
            of such  monies  by the  Agent,  for  the  exercise,  protection  or
            enforcement  by the  Agent  of all or any of the  rights,  remedies,
            powers and privileges of the Agent or the Banks under this Agreement
            or any of the other Loan Documents or in support of any provision of
            adequate  indemnity to the Agent against any taxes or liens which by
            law shall have,  or may have,  priority over the rights of the Agent
            to such monies;




<PAGE>
                                      -39-






                (b)  Second,  to all other  Obligations  pro rata based upon the
            amount of the Obligations  due each of the Agent and the Banks;  and
            provided,  further, that the Agent may in its discretion make proper
            allowance  to take into  account  any  Obligations  not then due and
            payable;

                (c)  Third,  upon  payment  and  satisfaction  in full or  other
            provisions for payment in full satisfactory to the Majority Banks of
            all of the Obligations,  to the payment of any obligations  required
            to be paid pursuant to ss.9-504(1)(c) of the Uniform Commercial Code
            of the State of Connecticut or any similar law; and

                (d)  Fourth,  the  excess,  if any,  shall  be  returned  to the
            Borrower or to such other Persons as are entitled thereto.

         Section 13. SETOFF. Without demand or notice, during the continuance of
any Event of Default, any deposits in any account (general or specific,  time or
demand, provisional or final, regardless of currency, maturity, or the branch at
which such deposits are held) in the  possession  of the Agent or a Bank,  other
than those  accounts in the possession of First Union National Bank which relate
to any currently existing secured financing between the Borrower and First Union
National  Bank,  may be  applied  to or  set  off  against  the  payment  of the
Obligations.  Each of the Banks agrees with each other Bank that (a) if pursuant
to any agreement  between such Bank and the Borrower  (other than this Agreement
or any  other  Loan  Document,  an  amount  to be set  off is to be  applied  to
Indebtedness  of the  Borrower  to such  Bank,  other  than with  respect to the
Obligations, such amount shall be applied ratably to such other Indebtedness and
to the  Obligations,  and (b) if such  Bank  shall  receive  from the  Borrower,
whether by  voluntary  payment,  exercise of the right of setoff,  counterclaim,
cross action, enforcement of the Obligations by proceedings against the Borrower
at  law  or in  equity  or  by  proof  thereof  in  bankruptcy,  reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Revolving  Credit Note or Revolving Credit Notes
held by, and  Reimbursement  Obligations owed to, such Bank any amount in excess
of its ratable portion of the payments received by all of the Banks with respect
to the Revolving  Credit Notes held by, and  Reimbursement  Obligations owed to,
all of the Banks, such Bank will make such disposition and arrangements with the
other Banks with  respect to such  excess,  either by way of  distribution,  pro
tanto  assignment of claims,  subrogation or otherwise,  as shall result in each
Bank  receiving  in  respect  of the  Revolving  Credit  Notes  held  by it,  or
Reimbursement  Obligations owed to it, its proportionate payment as contemplated
by this Agreement;


<PAGE>
                                      -40-






provided that if all or any part of such excess payment is thereafter  recovered
from such Bank,  such  disposition and  arrangements  shall be rescinded and the
amount  restored  to  the  extent  of  such  recovery,   but  without  interest.
Notwithstanding the foregoing,  no Bank shall exercise a right of setoff if such
exercise  would  limit or  prevent  the  exercise  of any other  remedy or other
recourse against the Borrower.

         Section 14. ENVIRONMENTAL MATTERS.
                     ---------------------

                    Section 14.1.  REPRESENTATIONS AND WARRANTIES. The Borrower,
the Guarantor,  and each Additional Guarantor represent and warrant to the Agent
and the Banks on the date hereof,  on the date of any Revolving Loan Request and
on each  Drawdown  Date of any  Revolving  Credit  Loan that the  Borrower,  the
Guarantor and each Additional Guarantor has caused environmental  assessments to
be  conducted  and/or  taken  other  steps to  investigate  the past and present
environmental  condition and usage of the Real Estate Assets and the  operations
conducted thereon. Except as disclosed in the environmental assessments provided
to the Agent  pursuant  to  ss.10.10  and based  upon  such  assessments  and/or
investigation,  the  Borrower,  the  Guarantor  and  each  Additional  Guarantor
represent and warrant,  to the best of their  knowledge,  that:  (a) none of the
Borrower,  the Guarantor,  any  Additional  Guarantor,  any of their  respective
Subsidiaries or any operator of the Real Estate or any portion  thereof,  or any
operations thereon is in violation,  or alleged violation,  of any Environmental
Law, which  violation or alleged  violation (in writing) has, or its remediation
would  have,  by itself or when  aggregated  with all such other  violations  or
alleged violations,  a Materially Adverse Effect, (b) none of the Borrower,  the
Guarantor,  the Additional Guarantor or any of their respective Subsidiaries has
received  notice  from any  third  party,  including,  without  limitation,  any
federal, state or local governmental authority,  (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.6903(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
Substances")  which it has generated,  transported or disposed of has 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  Guarantor,  any  Additional
Guarantor  or  any  of  their   respective   Subsidiaries   conduct  a  remedial
investigation,  removal or other response action  pursuant to any  Environmental
Law, or (iii) that it


<PAGE>
                                      -41-






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
Substances;  which event  described  in any such notice  would have a Materially
Adverse Effect, (c) (i) no portion of the Real Estate Assets has been used, from
the  time  of  ownership  by  the  Borrower,  the  Guarantor,  or an  Additional
Guarantor, as the case may be, for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable Environmental Laws;
and no underground tank or other  underground  storage  receptacle for Hazardous
Substances  is  located  on any  portion  of any Real  Estate  Asset  except  in
accordance  with  applicable  Environmental  Laws,  (ii)  in the  course  of any
activities conducted by the Borrower,  the Guarantor,  any Additional Guarantor,
their respective  Subsidiaries or to the knowledge of the Borrower,  without any
independent  inquiry other than as set forth in the  environmental  assessments,
the operators of the Real Estate  Assets,  or any ground or space tenants on any
Real Estate Asset, no Hazardous Substances have been generated or are being used
on such Real Estate Asset except in  accordance  with  applicable  Environmental
Laws,  (iii)  there has been no present or past  releasing,  spilling,  leaking,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
disposing or dumping (a "Release") or threatened Release of Hazardous Substances
on, upon,  into or from the Real Estate Assets from the time of ownership by the
Borrower, the Guarantor or an Additional Guarantor,  as the case may be, (iv) to
the knowledge of the Borrower without any independent  inquiry other than as set
forth in the  environmental  assessments,  there have been no Releases on, upon,
from or into any real  property in the vicinity of any of the Real Estate Assets
which, through soil or groundwater contamination, may have come to be located on
such  Real  Estate  Assets,  and (v) any  Hazardous  Substances  that  have been
generated by the Borrower,  the Guarantor or any Additional  Guarantor or any of
their  respective  Subsidiaries  at any of the  Real  Estate  Assets  have  been
transported off-site only by carriers having an identification  number issued by
the EPA,  treated  or  disposed  of only by  treatment  or  disposal  facilities
maintaining valid permits as required under applicable  Environmental  Laws; any
of which  events  described  in  clauses  (i)  through  (v) above  would  have a
Materially  Adverse  Effect,  (d) by virtue of the use of the  Revolving  Credit
Loans proceeds  contemplated  hereby,  or as a condition to the effectiveness of
any of the Loan Documents,  none of the Borrower, the Guarantor,  any Additional
Guarantor or any of the Real Estate is subject to any  applicable  Environmental
Law requiring the performance of Hazardous  Substances site assessments,  or the
removal or remediation of Hazardous Substances, or the giving of notice to any


<PAGE>
                                      -42-






governmental  agency  or the  recording  or  delivery  to  other  Persons  of an
environmental disclosure document or statement.

                    Section 14.2. ENVIRONMENTAL INDEMNITY AND COVENANTS.
                                  -------------------------------------

                (a) The Borrower,  the Guarantor,  and each Additional Guarantor
            jointly and  severally  agree that they will  indemnify and hold the
            Agent  and  each  Bank,  and each of  their  respective  Affiliates,
            harmless from and against any and all claims, expense,  damage, loss
            or  liability  incurred  by the  Agent  or any Bank  (including  all
            reasonable  costs of legal  representation  incurred by the Agent or
            any Bank in connection  with any  investigative,  administrative  or
            judicial  proceeding,  whether or not the Agent or any Bank is party
            thereto,  but excluding,  as applicable for the Agent or a Bank, any
            claim,  expense,  damage,  loss or liability as a result of: (x) the
            gross negligence or willful  misconduct of the Agent or such Bank or
            any of their respective  Affiliates,  or (y) any of the below events
            which first occur  following the transfer or sale of the  applicable
            Real Estate Asset to a party indemnified hereunder or to a bona fide
            third party purchaser;  and the indemnity set forth herein shall not
            apply to any claim or loss  arising  after the date of purchase of a
            Real Estate Asset from the Borrower, the Guarantor, or an Additional
            Guarantor  (as the case may be) by a subsequent  owner who purchases
            such Real Estate  Asset with the proceeds of loans made by the Agent
            or any Bank,  unless such claim or loss was  directly or  indirectly
            caused by the Borrower,  the Guarantor or the Additional  Guarantor)
            relating  to (a) any  Release or  threatened  Release  of  Hazardous
            Substances   on  any  Real   Estate;   (b)  any   violation  of  any
            Environmental  Laws with respect to conditions at any Real Estate or
            the  operations   conducted   thereon;   (c)  the  investigation  or
            remediation  of  off-site  locations  at  which  the  Borrower,  the
            Guarantor,  any  Additional  Guarantor  or any of  their  respective
            Subsidiaries or their  predecessors  are alleged to have directly or
            indirectly  disposed  of  Hazardous  Substances;  or (d) any action,
            suit, proceeding or investigation brought or threatened with respect
            to  any  Hazardous   Substances   relating  to  Real  Estate  Assets
            (including,  but not  limited to,  claims  with  respect to wrongful
            death, personal injury or damage to property). In litigation, or the
            preparation  therefor,  the Bank and the Agent  shall be entitled to
            select  their  own  counsel  and  participate  in  the  defense  and
            investigation of such claim, action or proceeding,  and the Borrower
            shall bear the expense of such separate counsel of the Agent and the
            Bank if (i) in the  written  opinion of counsel to the Agent and the
            Banks, use of counsel of the Borrower's choice could reasonably be


<PAGE>
                                      -43-






            expected to give rise to a conflict of  interest,  (ii) the Borrower
            shall not have employed counsel reasonably satisfactory to the Agent
            and the  Lenders  within  a  reasonable  time  after  notice  of the
            institution  of any such  litigation  or  proceeding,  or (iii)  the
            Borrower  authorizes  the  Agent  and the  Bank to  employ  separate
            counsel at the Borrowers' expense.  It is expressly  acknowledged by
            the Borrower and the Guarantor that this covenant of indemnification
            shall  survive  the  payment  of the Loans  and  shall  inure to the
            benefit of the Agent and the Banks and their respective  Affiliates,
            their respective successors,  and their respective assigns under the
            Loan Documents permitted under this Agreement.

                (b) If the  Agent  has  reasonable  grounds  to  believe  that a
            Release has occurred with respect to any Eligible Property,  whether
            or not a Default or an Event of Default  shall  have  occurred,  the
            Agent may obtain  (provided  the Borrower  refuses to so obtain upon
            request of the Agent with a qualified  consultant or expert approved
            by the Agent)  one or more  environmental  assessments  or audits of
            such Eligible Property prepared by a hydrogeologist,  an independent
            engineer or other  qualified  consultant  or expert  approved by the
            Agent, which approval will not be unreasonably withheld, to evaluate
            or confirm  (i)  whether any  Release of  Hazardous  Substances  has
            occurred  in the soil or water at such  Eligible  Property  and (ii)
            whether the use and operation of such Eligible  Property  materially
            complies  with  all  Environmental   Laws.  All  such  environmental
            assessments  shall be at the sole cost and expense of the Borrowers,
            provided,  however,  such costs and expenses  shall be reasonable in
            all respects.

                (c) The Borrower,  the Guarantor and each  Additional  Guarantor
            covenants  and agrees that if any  Release or disposal of  Hazardous
            Substances  shall  occur  or shall  have  occurred  on any  Eligible
            Properties  owned by it or any of its  Subsidiaries,  such Borrower,
            Guarantor or Additional  Guarantor will cause the prompt containment
            and removal of such  Hazardous  Substances  and  remediation of such
            Eligible  Properties  as necessary to comply with all  Environmental
            Laws.

         Section 15. THE AGENT.
                     ---------

                    Section 15.1. AUTHORIZATION.

                (a) The Agent is  authorized  to take  such  action on behalf of
            each of the Banks and to exercise  all such powers as are  hereunder
            and under any of the other Loan Documents and any related


<PAGE>
                                      -44-






            documents  delegated to the Agent,  together with such powers as are
            reasonably   incident   thereto,   provided   that  no   duties   or
            responsibilities  not expressly  assumed  herein or therein shall be
            implied to have been assumed by the Agent. The relationship  between
            the Agent and the Banks is and shall be that of agent and  principal
            only,  and nothing  contained in this  Agreement or any of the other
            Loan  Documents  shall be  construed  to  constitute  the Agent as a
            trustee or fiduciary for any Bank.

                (b) The  Borrower,  without  further  inquiry or  investigation,
            shall,  and is hereby  authorized  by the Banks to,  assume that all
            actions taken by the Agent hereunder and in connection with or under
            the Loan Documents are duly authorized by the Banks. The Banks shall
            notify  Borrower of any  successor  to Agent by a writing  signed by
            Majority Banks,  which  successor shall be reasonably  acceptable to
            the Borrower.

                    Section 15.2.  EMPLOYEES AND AGENTS.  The Agent may exercise
its powers and execute its duties by or through employees or agents and shall be
entitled  to take,  and to rely on,  advice of counsel  concerning  all  matters
pertaining  to its  rights and duties  under this  Agreement  and the other Loan
Documents.  The Agent may utilize the  services of such  Persons as the Agent in
its sole  discretion  may  reasonably  determine,  and all  reasonable  fees and
expenses of any such Persons shall be paid by the Borrower.

                    Section 15.3. NO  LIABILITY.  Neither the Agent,  nor any of
its  shareholders,  directors,  officers  or  employees  nor  any  other  Person
assisting  them in their  duties  nor any agent or  employee  thereof,  shall be
liable for any waiver, consent or approval given or any action taken, or omitted
to be taken,  in good  faith by it or them  hereunder  or under any of the other
Loan Documents,  or in connection  herewith or therewith,  or be responsible for
the consequences of any oversight or error of judgment  whatsoever,  except that
the  Agent may be liable  for  losses  due to its  willful  misconduct  or gross
negligence.

                    Section  15.4.  NO  REPRESENTATIONS.  The Agent shall not be
responsible for the execution or validity or  enforceability  of this Agreement,
the Revolving Credit Notes, any of the other Loan Documents or any instrument at
any time constituting,  or intended to constitute,  collateral  security for the
Revolving Credit Notes, or for the value of any such collateral  security or for
the validity,  enforceability  or  collectibility of any such amounts owing with
respect to the  Revolving  Credit  Notes,  or for any  recitals  or  statements,
warranties or representations made herein or


<PAGE>
                                      -45-






in any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Guarantor or the Borrower or any of their
respective  Subsidiaries,  or be  bound  to  ascertain  or  inquire  as  to  the
performance  or  observance  of any  of  the  terms,  conditions,  covenants  or
agreements in this  Agreement,  the other Loan Documents or in any instrument at
any time constituting,  or intended to constitute,  collateral  security for the
Obligations.  The Agent  shall not be bound to  ascertain  whether  any  notice,
consent,  waiver or request  delivered to it by the Borrower or the Guarantor or
any holder of any of the Revolving  Credit Notes shall have been duly authorized
or is true,  accurate and complete.  The Agent has not made nor does it now make
any  representations or warranties,  express or implied,  nor does it assume any
liability  to the Banks,  with  respect to the credit  worthiness  or  financial
condition of the Borrower or any of its  Subsidiaries or the Guarantor or any of
the  Subsidiaries  or any tenant  under a Lease or any other  entity.  Each Bank
acknowledges  that it has,  independently and without reliance upon the Agent or
any other Bank, and based upon such  information  and documents as it has deemed
appropriate,  made its own  credit  analysis  and  decision  to enter  into this
Agreement.

                    Section 15.5. PAYMENTS.

                (a) A payment by the  Borrower to the Agent  hereunder or any of
            the  other  Loan  Documents  for  the  account  of  any  Bank  shall
            constitute a payment to such Bank. The Agent agrees to distribute to
            each Bank such  Bank's pro rata share of  payments  received  by the
            Agent for the account of the Banks,  as provided herein or in any of
            the other Loan  Documents.  All such  payments  shall be made on the
            date  received,  if before 2:00 p.m., and if after 2:00 p.m., on the
            next Business  Day. If payment is not made on the day received,  the
            funds shall be invested by the Agent in overnight  obligations,  and
            interest thereon paid pro rata to the Banks.

                (b) If in the reasonable  opinion of the Agent the  distribution
            of any amount received by it in such capacity  hereunder,  under the
            Revolving  Credit  Notes or under  any of the other  Loan  Documents
            might involve it in material  liability,  it may refrain from making
            distribution  until its right to make  distribution  shall have been
            adjudicated by a court of competent jurisdiction,  provided that the
            Agent  shall  invest any such  undistributed  amounts  in  overnight
            obligations  on behalf of the Banks and  interest  thereon  shall be
            paid pro rata to the  Banks.  If a court of  competent  jurisdiction
            shall adjudge that any amount  received and distributed by the Agent
            is to be repaid, each Person to whom any


<PAGE>
                                      -46-






            such  distribution  shall have been made shall  either  repay to the
            Agent its proportionate share of the amount so adjudged to be repaid
            or shall pay over the same in such  manner  and to such  Persons  as
            shall be determined by such court.

                (c)  Notwithstanding  anything to the contrary contained in this
            Agreement  or any of the other Loan  Documents,  any Bank that fails
            (i) to make  available  to the  Agent  its  pro  rata  share  of any
            Revolving   Credit  Loan  or  to  purchase   any  Letter  of  Credit
            Participation  or (ii) to comply with the  provisions  of ss.13 with
            respect  to  making  dispositions  and  arrangements  with the other
            Banks,  where such Bank's share of any payment received,  whether by
            setoff or  otherwise,  is in  excess  of its pro rata  share of such
            payments due and payable to all of the Banks,  in each case as, when
            and to the full extent required by the provisions of this Agreement,
            or to adjust promptly such Bank's outstanding  principal and its pro
            rata  Commitment  Percentage as provided in ss.2.1,  shall be deemed
            delinquent  (a  "Delinquent  Bank") and shall be deemed a Delinquent
            Bank until such time as such delinquency is satisfied.  A Delinquent
            Bank shall be deemed to have assigned any and all payments due to it
            from the  Borrower,  whether  on account  of  outstanding  Revolving
            Credit Loans, Unpaid Reimbursement  Obligations,  interest,  fees or
            otherwise,  to the remaining nondelinquent Banks for application to,
            and  reduction  of,  their   respective   pro  rata  shares  of  all
            outstanding   Revolving   Credit  Loans  and  Unpaid   Reimbursement
            Obligations.  The  Delinquent  Bank hereby  authorizes  the Agent to
            distribute such payments to the nondelinquent Banks in proportion to
            their respective pro rata shares of all outstanding Revolving Credit
            Loans. If not previously  satisfied directly by the Delinquent Bank,
            a  Delinquent  Bank  shall be  deemed  to have  satisfied  in full a
            delinquency  when and if, as a result of application of the assigned
            payments  to  all   outstanding   Revolving   Credit  Loans  of  the
            nondelinquent  Banks,  the Banks'  respective pro rata shares of all
            outstanding   Revolving   Credit  Loans  and  Unpaid   Reimbursement
            Obligations  have returned to those in effect  immediately  prior to
            such delinquency and without giving effect to the nonpayment causing
            such delinquency.

                    Section 15.6.  HOLDERS OF REVOLVING  CREDIT NOTES. The Agent
may deem and treat the payee of any Revolving Credit Notes as the absolute owner
or purchaser  thereof for all purposes hereof until it shall have been furnished
in  writing  with a  different  name by such  payee or by a  subsequent  holder,
assignee or transferee.




<PAGE>
                                      -47-






                    Section  15.7.  INDEMNITY.  The Banks  ratably and severally
agree hereby to indemnify  and hold  harmless the Agent from and against any and
all  claims,  actions  and suits  (whether  groundless  or  otherwise),  losses,
damages,  costs,  expenses  (including  any expenses for which the Agent has not
been reimbursed by the Borrower as required by ss.18),  and liabilities of every
nature and character arising out of or related to this Agreement,  the Revolving
Credit  Notes,  or  any  of  the  other  Loan  Documents  or  the   transactions
contemplated  or  evidenced  hereby or  thereby,  or the Agent's  actions  taken
hereunder  or  thereunder,  except to the  extent  that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.

                    Section 15.8. AGENT AS BANK. In its individual capacity as a
Bank,  BankBoston,  N.A.  shall have the same  obligations  and the same rights,
powers and  privileges in respect to its  Commitment  and the  Revolving  Credit
Loans made by it, and as the holder of any of the Revolving Credit Notes and any
Letter of Credit Participation, as it would have were it not also the Agent.

                    Section  15.9.   NOTIFICATION  OF  DEFAULTS  AND  EVENTS  OF
DEFAULT.  Each Bank hereby  agrees  that,  upon  learning of the  existence of a
default,  Default or an Event of Default, it shall (to the extent notice has not
previously been provided)  promptly  notify the Agent thereof.  The Agent hereby
agrees  that upon  receipt of any notice  under this  ss.15.9 it shall  promptly
notify the other Banks of the  existence  of such  default,  Default or Event of
Default.

                    Section 15.10.  DUTIES IN THE CASE OF  ENFORCEMENT.  In case
one of more Events of Default have occurred and shall be continuing, and whether
or not acceleration of the Obligations shall have occurred,  the Agent shall, if
(a) so requested by the  Majority  Banks and (b) the Banks have  provided to the
Agent  such  additional   indemnities  and  assurances   against   expenses  and
liabilities  as the  Agent  may  reasonably  request,  proceed  to  enforce  the
provisions of this Agreement. The Majority Banks may direct the Agent in writing
as to the method and the extent of any such sale or other disposition, the Banks
(including any Bank which is not one of the Majority  Banks) hereby  agreeing to
ratably and severally indemnify and hold the Agent harmless from all liabilities
incurred  in respect of all  actions  taken or omitted in  accordance  with such
directions,  provided that the Agent need not comply with any such  direction to
the extent that the Agent reasonably  believes the Agent's  compliance with such
direction  to  be  unlawful  or  commercially  unreasonable  in  any  applicable
jurisdiction.




<PAGE>
                                      -48-






                    Section 15.11.  SUCCESSOR  AGENT.  BankBoston,  N.A., or any
successor  Agent,  may  resign  as Agent at any time by  giving  written  notice
thereof to the Banks and to the Borrower.  In addition,  the Majority  Banks may
remove  the  Agent  in the  event of the  Agent's  willful  misconduct  or gross
negligence.  Any such resignation or removal shall be effective upon appointment
and  acceptance of a successor  Agent,  as hereinafter  provided.  Upon any such
resignation  or removal,  the  Majority  Banks shall have the right to appoint a
successor  Agent,  provided that,  unless a Default or an Event of Default shall
have occurred and be  continuing,  the Borrower  shall have the right to approve
any successor Agent, which approval shall not be unreasonably  withheld.  If, in
the case of a resignation  by the Agent,  no successor  Agent shall have been so
appointed by the Majority  Banks and  approved by the  Borrower,  and shall have
accepted such  appointment,  within thirty (30) days after the retiring  Agent's
giving of notice of  resignation,  then the retiring Agent may, on behalf of the
Banks,  appoint  any one of the  other  Banks  as a  successor  Agent.  Upon the
acceptance of any  appointment  as Agent  hereunder by a successor  Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights, powers,  privileges and duties of the retiring or removed Agent, and the
retiring  or removed  Agent  shall be  discharged  from all  further  duties and
obligations  as Agent under this  Agreement.  After any Agent's  resignation  or
removal  hereunder  as Agent,  the  provisions  of this ss.15 shall inure to its
benefit as to any actions  taken or omitted to be taken by it while it was Agent
under  this  Agreement.  The Agent  agrees  that it shall not  assign any of its
rights or duties as Agent to any other Person.

                    Section  15.12.  NOTICES.  Any notices or other  information
required  hereunder  to be provided to the Agent shall be forwarded by the Agent
to each of the Banks on the same day (if  practicable)  and, in any case, on the
next Business Day following the Agent's receipt thereof.  The Agent's receipt of
such  notice  shall be deemed  to  constitute  receipt  by the Banks of any such
notice.

         Section 16.  ASSIGNMENT; PARTICIPATIONS; ETC.
                      -------------------------------

                    Section 16.1.  CONDITIONS TO ASSIGNMENT BY BANKS.  Except as
provided herein, each Bank may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a  portion  of its  Commitment  Percentage  and  Commitment  and the same
portion of the Revolving  Credit Loans at the time owing to it and the Letter of
Credit  Participations  held by it) and the  Revolving  Credit Notes held by it;
provided  that (a) the Agent and,  unless a Default or an Event of Default shall
have occurred and be continuing,


<PAGE>
                                      -49-






the Borrower each shall have the right to approve any Eligible  Assignee,  which
approval shall not be unreasonably  withheld, it being agreed that the Agent and
the Borrower must approve or reject a proposed  Eligible  Assignee  within seven
(7) days of receiving a written  request from any Bank for such  approval and if
the Agent or the  Borrower  fails to respond  within  such seven (7) day period,
such request for approval shall be deemed approved by the Agent or the Borrower,
or both,  as the case may be, (b) each such  assignment  shall be of a constant,
and not a varying, percentage of all the assigning Bank's rights and obligations
under this Agreement,  (c) subject to the provisions of ss.2.2 hereof, each Bank
shall have at all times an amount of its Commitment of not less than  $8,000,000
and (d) the parties to such  assignment  shall execute and deliver to the Agent,
for  recording in the Register  (as  hereinafter  defined),  an  assignment  and
assumption,  substantially  in the form of Exhibit G hereto (an  "Assignment and
Assumption"),   together  with  any  Revolving  Credit  Notes  subject  to  such
assignment.  Upon such execution,  delivery,  acceptance and recording, from and
after the effective date  specified in each  Assignment  and  Assumption,  which
effective  date shall be at least  five (5)  Business  Days after the  execution
thereof,  (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Assumption, have the rights and obligations of a
Bank hereunder and thereunder,  and (ii) the assigning Bank shall, to the extent
provided in such  assignment  and upon payment to the Agent of the  registration
fee  referred  to in  ss.16.3,  be  released  from its  obligations  under  this
Agreement.  Any such  Assignment and Assumption  shall run to the benefit of the
Borrower and a fully executed copy of any such  Assignment and Assumption  shall
be delivered by the Assignor to the Borrower.

                    Section  16.2.  CERTAIN   REPRESENTATIONS   AND  WARRANTIES;
LIMITATIONS;   COVENANTS.   By  executing  and   delivering  an  Assignment  and
Assumption,  the parties to the assignment  thereunder confirm to and agree with
each  other  and the  other  parties  hereto  as  follows:  (a)  other  than the
representation  and warranty  that it is the legal and  beneficial  owner of the
interest  being  assigned  thereby  free and  clear of any  adverse  claim,  the
assigning Bank makes no representation or warranty and assumes no responsibility
with respect to any  statements,  warranties  or  representations  made in or in
connection   with  this   Agreement  or  the  execution,   legality,   validity,
enforceability,  genuineness,  sufficiency or value of this Agreement, the other
Loan Documents or any other  instrument or document  furnished  pursuant hereto;
(b) the  assigning  Bank makes no  representation  or  warranty  and  assumes no
responsibility  with respect to the financial  condition of the Borrower and its
Subsidiaries  or the  Guarantor  or any other Person  primarily  or  secondarily
liable in respect of any of the Obligations, or the performance


<PAGE>
                                      -50-






or observance by the Borrower and its Subsidiaries or the Guarantor or any other
Person  primarily or secondarily  liable in respect of any of the Obligations of
any of their obligations under this Agreement or any of the other Loan Documents
or any other instrument or document  furnished  pursuant hereto or thereto;  (c)
such assignee  confirms that it has received a copy of this Agreement,  together
with copies of such other documents and information as it has deemed appropriate
to make its own credit  analysis and decision to enter into such  Assignment and
Assumption;  (d) such assignee will, independently and without reliance upon the
assigning  Bank,  the Agent or any other  Bank and based on such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking action under this Agreement;  (e) such
assignee  represents  and  warrants  that it is an Eligible  Assignee;  (f) such
assignee  appoints and  authorizes the Agent to take such action as agent on its
behalf and to  exercise  such  powers  under this  Agreement  and the other Loan
Documents as are delegated to the Agent by the terms hereof or thereof, together
with such powers as are reasonably  incidental thereto; (g) such assignee agrees
that it will perform in accordance with their terms all of the obligations  that
by the terms of this Agreement are required to be performed by it as a Bank; and
(h) such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Assumption.

                    Section 16.3.  REGISTER.  The Agent shall maintain a copy of
each  Assignment and  Assumption  delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the Banks and
the  Commitment  Percentages  of, and principal  amount of the Revolving  Credit
Loans owing to, the Banks from time to time.  The entries in the Register  shall
be conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this  Agreement.  The Register  shall be available
for  inspection  by the Borrower and the Banks at any  reasonable  time and from
time to time upon  reasonable  prior  notice.  Upon each such  recordation,  the
assigning  Bank  agrees  to pay to the  Agent a  registration  fee in the sum of
$2,500.

                    Section 16.4. NEW REVOLVING  CREDIT NOTES.  Upon its receipt
of an  Assignment  and  Assumption  executed by the parties to such  assignment,
together with each Revolving Credit Notes subject to such assignment,  the Agent
shall (a) record the information contained therein in the Register, and (b) give
prompt  notice  thereof to the Borrower and the Banks (other than the  assigning
Bank). Within five (5) Business Days after receipt of such notice, the Borrower,
at its own expense, shall execute and deliver to


<PAGE>
                                      -51-






the Agent,  in exchange  for each  surrendered  Revolving  Credit  Notes,  a new
Revolving Credit Notes to the order of such Eligible Assignee in an amount equal
to the amount assumed by such Eligible  Assignee pursuant to such Assignment and
Assumption  and,  if  the  assigning  Bank  has  retained  some  portion  of its
obligations  hereunder,  a new  Revolving  Credit  Notes  to  the  order  of the
assigning Bank in an amount equal to the amount  retained by it hereunder.  Such
new  Revolving  Credit Notes shall  provide that they are  replacements  for the
surrendered  Revolving Credit Notes,  shall be in an aggregate  principal amount
equal to the aggregate  principal  amount of the  surrendered  Revolving  Credit
Notes,  shall be dated the effective date of such  Assignment and Assumption and
shall otherwise be in  substantially  the form of the assigned  Revolving Credit
Notes. The surrendered  Revolving Credit Notes shall be canceled and returned to
the Borrower.

                    Section   16.5.   PARTICIPATIONS.   Each   Bank   may   sell
participations  to one or more  banks or other  entities  in all or a portion of
such  Bank's  rights and  obligations  under this  Agreement  and the other Loan
Documents;  provided that (a) unless a Default or an Event of Default shall have
occurred and be continuing,  the Borrower  shall have approved such  participant
(such approval not to be  unreasonably  withheld),  (b) each such  participation
shall  be in an  amount  of not  less  than  $8,000,000  (c)  any  such  sale or
participation  shall not  affect  the  rights  and  duties of the  selling  Bank
hereunder to the Borrower and the Agent and the Bank shall  continue to exercise
all  approvals,  disapprovals  and  other  functions  of  a  Bank,  and  (d)  no
participant  shall have the right to grant further  participations or assign its
rights,  obligations  or interests  under such  participation  to other  Persons
without the prior written consent of the Agent.

                    Section 16.6.  PLEDGE BY LENDER.  Notwithstanding  any other
provision of this Agreement, any Bank at no cost to the Borrower may at any time
pledge  all or any  portion of its  interest  and  rights  under this  Agreement
(including  all or any  portion  of its  Revolving  Credit  Notes) to any of the
twelve Federal Reserve Banks organized under ss.4 of the Federal Reserve Act, 12
U.S.C.  ss.341.  No such pledge or the  enforcement  thereof  shall  release the
pledgor  Bank from its  obligations  hereunder  or under  any of the other  Loan
Documents.

                    Section 16.7. NO ASSIGNMENT BY BORROWER.  The Borrower shall
not assign or transfer  any of its rights or  obligations  under any of the Loan
Documents without prior Unanimous Bank Approval.




<PAGE>
                                      -52-






                    Section  16.8.  DISCLOSURE.  The Borrower  agrees  that,  in
addition to disclosures made in accordance with standard banking practices,  any
Bank may, after written notice to the Borrower, disclose information obtained by
such Bank pursuant to this Agreement to assignees or participants  and potential
assignees or participants  hereunder.  Any such disclosed  information  shall be
treated by any assignee or participant with the same standard of confidentiality
set forth herein.

         Section 17.  CONSENTS,  AMENDMENTS,  WAIVERS,  ETC. Except as otherwise
expressly  provided  in this  Agreement,  any  consent or  approval  required or
permitted by this  Agreement may be given,  and any term of this Agreement or of
any other of the other Loan  Documents may be amended,  and the  performance  or
observance  by the Borrower or the  Guarantor of any terms of this  Agreement or
the other Loan Documents or the continuance of any default,  Default or Event of
Default may be waived (either  generally or in a particular  instance and either
retroactively or prospectively)  with, but only with, the written consent of the
Majority Banks.

         Notwithstanding  the  foregoing,   Unanimous  Bank  Approval  shall  be
required for any amendment, modification or waiver of this Agreement that:

                              (i)  reduces  or  forgives  any  principal  of any
                    unpaid   Revolving  Credit  Loan  or  any  interest  thereon
                    (including  any interest  "breakage"  costs) or any fees due
                    any Bank hereunder,  or permits any prepayment not otherwise
                    permitted hereunder; or

                              (ii)  changes the unpaid  principal  amount of, or
                    the rate of interest on, any Revolving Credit Loan; or

                              (iii)  changes  the date fixed for any  payment of
                    principal  of or  interest  on  any  Revolving  Credit  Loan
                    (including,   without  limitation,   any  extension  of  the
                    Maturity Date) or any fees payable hereunder; or

                              (iv)  changes the amount of any Bank's  Commitment
                    (other  than  pursuant  to  an  assignment  permitted  under
                    ss.16.1  hereof)  or  increases  the  amount  of  the  Total
                    Commitment; or

                              (v) amends or otherwise  changes the definition of
                    the  Borrowing  Base,  or the  method  of  calculating  such
                    Borrowing Base; or




<PAGE>
                                      -53-






                              (vi) amends any of the covenants contained in ss.9
                    hereof; or

                              (vii)  releases  or reduces the  liability  of the
                    Guarantor pursuant to the Guaranty; or

                              (viii)  modifies  any  provision  herein or in any
                    other Loan  Document  which by the terms  thereof  expressly
                    requires Unanimous Bank Approval; or

                              (ix)  amends  any  of  the  provisions   governing
                    funding contained in ss.2 hereof; or

                              (x) changes the rights,  duties or  obligations of
                    the  Agent  specified  in  ss.15  hereof  (provided  that no
                    amendment  or  modification  to  such  ss.15  or to the  fee
                    payable  to the  Agent  under  this  Agreement  may be  made
                    without the prior written consent of the Agent); or

                              (xi) changes the  definitions of Majority Banks or
                    Unanimous Bank Approval.

         No waiver shall extend to or affect any obligation not expressly waived
or impair  any right  consequent  thereon.  No  course  of  dealing  or delay or
omission  on the part of the  Agent or the Banks or any Bank in  exercising  any
right shall  operate as a waiver  thereof or  otherwise be  prejudicial  to such
right or any other rights of the Agent or the Banks. No notice to or demand upon
the Borrower  shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.

         Section 18.  MISCELLANEOUS.  The Borrower and the Guarantor jointly and
severally  agree to indemnify  and hold harmless the Agent and the Banks against
all claims and losses of every kind arising out of the Loan Documents, including
without  limitation against those in respect of the application of Environmental
Laws to the Borrower.  The Borrower and the Guarantor shall pay to the Agent and
the Banks  promptly on demand all reasonable  costs and expenses  (including any
taxes and legal appraisal,  engineering and other professional fees, syndication
fees and fees of its commercial  finance examiner) incurred by the Agent and the
Banks in connection with the  preparation,  negotiation,  execution,  amendment,
syndication or enforcement of any of the Loan Documents. Any communication to be
made  hereunder  shall  (a) be  made  in  writing  and by  hand  delivery  or by
registered  or certified  first class mail,  and (b) be made or delivered to the
address of the party  receiving  notice which is  identified  with its signature
below (unless such party has by five (5) days'


<PAGE>
                                      -54-






written  notice  specified  another  address),  and  shall  be  deemed  made  or
delivered,  when dispatched,  left at that address, or five (5) days after being
mailed,  postage prepaid, to such address.  This Agreement shall be binding upon
and inure to the  benefit of each party  hereto and its  successors  and assigns
(but neither the Guarantor nor the Borrower may assign its rights or obligations
hereunder) and the Guarantor and the Borrower agree to cooperate and execute and
deliver any and all agreements, documents and instruments reasonably required in
connection with the terms hereof, including,  without limitation,  any documents
reasonably  required by any Bank in connection  with the assignment by such Bank
of any of its rights and  remedies  hereunder.  No failure or delay by the Agent
and the Banks to exercise any right hereunder shall operate as a waiver thereof,
nor shall any  single or  partial  exercise  of any  right,  power or  privilege
preclude any other right,  power or privilege.  The provisions of this Agreement
are  severable  and if any  one  provision  hereof  shall  be  held  invalid  or
unenforceable  in  whole  or in part in any  jurisdiction,  such  invalidity  or
unenforceability  shall affect only such  provision in such  jurisdiction.  This
Agreement, together with all Exhibits and Schedules hereto, expresses the entire
understanding  of the  parties  with  respect to the  transactions  contemplated
hereby.  This  Agreement  and any  amendment  hereby may be  executed in several
counterparts,  each of  which  shall  be an  original,  and all of  which  shall
constitute one agreement.  In proving this Agreement,  it shall not be necessary
to produce more than one such  counterpart  executed by the party to be charged.
THIS  AGREEMENT  AND THE  NOTE ARE  CONTRACTS  UNDER  THE  LAWS OF THE  STATE OF
CONNECTICUT AND SHALL BE CONSTRUED IN ACCORDANCE THEREWITH AND GOVERNED THEREBY.
THE  BORROWER  AGREES  THAT  ANY  SUIT  FOR THE  ENFORCEMENT  OF ANY OF THE LOAN
DOCUMENTS  MAY BE  BROUGHT  IN THE  COURTS  OF THE STATE OF  CONNECTICUT  OR ANY
FEDERAL COURT SITTING THEREIN.

         Section 19. WAIVER OF JURY TRIAL. THE BORROWER AND THE GUARANTOR, AS AN
INDUCEMENT TO THE AGENT AND THE BANKS TO ENTER INTO THIS AGREEMENT, HEREBY WAIVE
ALL RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION ARISING IN CONNECTION WITH
ANY LOAN DOCUMENT.

         Section 20.  PREJUDGMENT  REMEDY WAIVER. THE BORROWER AND THE GUARANTOR
ACKNOWLEDGE  THAT THE  FINANCING  EVIDENCED  HEREBY IS A COMMERCIAL  TRANSACTION
WITHIN THE MEANING OF CHAPTER  903a OF THE  CONNECTICUT  GENERAL  STATUTES.  THE
BORROWER AND THE GUARANTOR


<PAGE>
                                      -55-






HEREBY WAIVE THEIR RIGHT TO NOTICE AND PRIOR COURT  HEARING OR COURT ORDER UNDER
CONNECTICUT  GENERAL STATUTES  SECTIONS 52-278a ET. SEQ. AS AMENDED OR UNDER ANY
OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT  REMEDIES THE
AGENT AND THE BANKS MAY EMPLOY TO ENFORCE  THEIR RIGHTS AND REMEDIES  HEREUNDER.
MORE  SPECIFICALLY,  THE  BORROWER  ACKNOWLEDGE  THAT THE BANK'S AND THE AGENT'S
ATTORNEY  MAY,  PURSUANT  TO CONN.  GEN.  STAT.  ss.52-278F,  ISSUE A WRIT FOR A
PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER. THE BORROWER  ACKNOWLEDGE AND
RESERVE THEIR RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT
FOR PREJUDGMENT  REMEDY AS AFORESAID AND THE AGENT AND THE BANKS ACKNOWLEDGE THE
BORROWER'S AND THE GUARANTOR'S RIGHT TO SAID HEARING  SUBSEQUENT TO THE ISSUANCE
OF SAID WRIT.




<PAGE>
                                      -56-





         IN WITNESS  WHEREOF,  the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.


                                            GROVE OPERATING, L.P.

                                            By: Grove Property Trust



                                            By: /s/ Joseph LaBrosse
                                               ---------------------------------
                                               Name:  Joseph LaBrosse
                                               Title:  Treasurer
                                               Address:  598 Asylum Avenue
                                               Hartford, Connecticut  06105
                                               Telephone:  (860) 520-4789
                                               Telecopy:   (860) 947-6960



                                            GROVE PROPERTY TRUST



                                            By: /s/ Joseph LaBrosse
                                               ---------------------------------
                                               Name:  Joseph LaBrosse
                                               Title:  Treasurer
                                               Address:  598 Asylum Avenue
                                               Hartford, Connecticut  06105
                                               Telephone:  (860) 520-4789
                                               Telecopy:   (860) 947-6960






<PAGE>
                                      -57-





                                            BANKBOSTON, N.A.
                                            individually and as Agent



                                            By: /s/ James F. St. Thomas
                                               ---------------------------------
                                               Name:  James F. St. Thomas
                                               Title:    Vice President
                                               Address:  One BankBoston Plaza
                                                         Providence, RI 02903
                                               Telephone:  (401) 278-7416
                                               Telecopy:   (401) 278-8006


                                            CITIZENS BANK OF RHODE ISLAND



                                            By: /s/ Craig E. Schermerhorn
                                               ---------------------------------
                                               Name:  Craig E. Schermerhorn
                                               Title: Vice President
                                               Address:   One Citizens Plaza
                                                          Providence, RI  02903
                                               Telephone: (401) 455-5425
                                               Telecopy:  (401) 282-4485





<PAGE>
                                      -58-





                                            FIRST UNION NATIONAL BANK



                                            By: /s/ David Hoagland
                                               ---------------------------------
                                               Name:   DAVID HOAGLAND
                                               Title:  VICE PRESIDENT
                                               Address:  Real Estate Capital
                                                         Markets Group
                                                         One First Union Center
                                                         6th Floor
                                                         Charlotte, NC  28288
                                               Telephone:  704  374-4809
                                               Telecopy:  (704) 383-6205



<PAGE>


                                    Exhibit A
                                    ---------

                              Revolving Credit Note
                              ---------------------

             $                                                            Dated:
              ----------------
                                                                ----------------

                                               --------------, -----------------

         FOR VALUE RECEIVED,  the undersigned GROVE OPERATING,  L.P., a Delaware
limited  partnership,  with a business  address at 598 Asylum Avenue,  Hartford,
Connecticut 06105 (hereinafter  referred to as "Maker"),  promises to pay to the
order of                             , a                            (hereinafter
         ----------------------------    -------------------------
referred to as "Payee",  Payee and any and all other  holders of this Note being
hereinafter  collectively  referred  to as  "Holder"),  at the  head  office  of
BANKBOSTON, N.A. (the "Agent") at One BankBoston Plaza, Providence, Rhode Island
("Head  Office"),   the  principal  sum  of                                (U.S.
                                              ---------------------------
$                  ),  or so much of the  aggregate  Revolving  Credit Loans (as
 -----------------
hereinafter  defined by reference) as may be advanced hereunder pursuant to that
certain  Revolving  Credit  Agreement  (hereinafter  referred  to as  the  "Loan
Agreement") of even date herewith made among Maker, Payee, the Agent and certain
other financial  institutions,  together with interest as provided in this Note,
as follows:

         From  and  after  the  date  hereof  (until   maturity  or  default  as
hereinafter  provided),  interest  shall accrue on the principal  amount of this
Note which is outstanding  from time to time at the rates per annum provided for
in the Loan  Agreement.  Interest  shall be  computed  on the daily  outstanding
principal balance hereunder on the basis of a 360 day year, but shall accrue and
be payable for the actual number of days during which funds are outstanding.

         The entire  outstanding  principal balance of this Note,  together with
all accrued but unpaid  interest  thereon and all other sums due under this Note
and the Loan Agreement,  shall be due and payable in full, unless sooner due and
payable hereunder or under the Loan Agreement,  on the Maturity Date (as defined
by reference below).

         Notwithstanding  any  provisions  in this  Note,  or in any  instrument
securing  this Note,  the total  liability  for  payments  legally  regarded  as
interest shall not exceed the maximum limits imposed by the laws of the State of
Connecticut  in effect on the date hereof,  and any payment of same in excess of
the amount allowed thereby shall, as of the date of such payment,  automatically
be deemed to have been applied to the payment of


<PAGE>
                                      -2-






the principal  indebtedness evidenced hereby, or, if same has been fully repaid,
shall be deemed to be held by Holder as  additional  security for all  remaining
indebtedness  of Maker to Holder and shall be repaid to Maker upon demand  after
all of such  indebtedness  has been fully paid. Any notation or record of Holder
with  respect  to such  required  application  which  is  inconsistent  with the
provisions of this paragraph shall be disregarded for all purposes and shall not
be binding upon the Maker or Holder.

         All sums payable under this Note shall be paid in immediately available
funds in lawful  money of the  United  States of  America  which  shall be legal
tender for public and private purposes at the time of such payment.

         All payments under this Note shall be made to Holder without set-off or
counterclaim  and free and clear of and without  deduction  on account of taxes,
levies, fees, deductions, withholdings, restrictions or conditions of any nature
now or hereafter  imposed or levied by any country or any political  subdivision
thereof  unless  Maker is required by law to make such  deductions.  If any such
obligation  is  imposed  upon Maker  with  respect  to any amount  payable by it
hereunder,  it will pay to Holder,  on the date on which such amount becomes due
and payable  hereunder,  such additional  amount as shall be necessary to enable
Holder to receive the same net amount  which it would have  received on such due
date had no such obligation been imposed upon Maker.

         At the option of the Majority  Banks (as defined  herein by reference),
the entire  principal  amount  outstanding  under this Note,  together  with all
accrued  interest  thereon  and all other  sums due under this Note and the Loan
Agreement,  shall,  without  notice  or  demand,  subject  to  ss.12 of the Loan
Agreement,  become  immediately  due and  payable  in full,  if any  payment  of
principal  or interest due under this Note is not paid when due, or if any other
default  or breach  shall  occur  and  continue  beyond  the  expiration  of any
applicable  grace or notice  period under the terms or  conditions of this Note,
the Loan  Agreement  or any  other  document,  instrument  or  agreement  now or
hereafter evidencing, securing or relating to the loan evidenced by this Note or
affecting the Eligible Properties (as hereinafter  defined by reference),  which
terms and  conditions  are hereby  incorporated  herein  with the same force and
effect as if herein set forth at length.  Failure to exercise  such option shall
not  constitute  a waiver of the right to  exercise  such  option if Maker is in
default hereunder.  In the event of any default in the payment of this Note, and
if the same is referred to an attorney at law for  collection or suit is brought
hereon,


<PAGE>
                                      -3-






Maker shall pay Holder,  in either case,  all expenses and costs of  collection,
including, but not limited to, reasonable attorney's fees.

         If any payment of principal or interest due under this Note is not paid
when due (whether at stated maturity, acceleration or otherwise) or if any Event
of Default (as defined in the Loan Agreement) shall occur which, by the terms of
this  Note,  would  entitle  the  Majority  Banks  to  declare  this  Note to be
immediately  due any payable  (whether or not the Majority  Banks exercise their
option to so declare this Note to be  immediately  due and  payable),  then each
such overdue payment or the entire unpaid principal balance of this Note, as the
case may be, shall bear  interest,  from the date on which such overdue  payment
shall have become due and payable by Maker until payment in full (whether before
or after  judgment) or from the date of the  occurrence of such Event of Default
until such Event of Default is cured,  at the interest  rate set forth in ss.4.9
of the  Loan  Agreement,  or if  such  increased  rate  of  interest  may not be
collected under applicable law, then at the maximum  increased rate of interest,
if any, which may be collected from Maker under applicable law.

         Maker shall have the right to prepay this Note,  in full or in part, in
accordance with the Loan Agreement.

         From time to time,  without  affecting  the  obligation of Maker or any
sureties, guarantors,  endorsers,  accommodation parties or other persons liable
or to become  liable on this Note to pay the  outstanding  principal  balance of
this Note and observe the covenants of Maker  contained  herein,  without giving
notice to or obtaining  the consent of Maker or any such  sureties,  guarantors,
endorsers,  accommodation parties or other persons, and without liability on the
part of Holder, Holder may, at the option of Holder, extend the time for payment
of said outstanding principal balance,  interest or any part thereof, reduce the
payments  thereon,  release anyone liable on any of said  outstanding  principal
balance,  accept a renewal of this Note, modify the terms and time of payment of
said  outstanding  principal  balance or join in any extension or  subordination
agreement,  and agree in writing  with Maker to modify the rate of  interest  or
period  of  amortization  of this  Note or  change  the  amount  of the  monthly
installments payable hereunder.  No one or more of such actions shall constitute
a novation.

         Presentment,  notice of  dishonor,  protest  and notice of protest  are
hereby  waived  by  the  Maker  and  all  sureties,  guarantors,  endorsers  and
accommodation parties hereof and all other persons liable or to become liable on
this Note. The Maker further waives any and all homestead and


<PAGE>
                                      -4-






exemption  rights  under  the laws and  constitutions  of the  United  States of
America,  the State of Connecticut  and any other state.  This Note shall be the
joint  and  several  obligation  of the  Maker  and  all  sureties,  guarantors,
endorsers,  accommodation  parties  and all  other  persons  liable or to become
liable on this  Note,  and shall be  binding  upon them and their  heirs,  legal
representatives, successors and assigns, as applicable.

         All capitalized  terms used herein without  definition that are defined
in the Loan Agreement shall have the same meanings herein as therein.

         THE  MAKER  ACKNOWLEDGES  THAT  THE  FINANCING  EVIDENCED  HEREBY  IS A
COMMERCIAL  TRANSACTION  WITHIN THE MEANING OF CHAPTER  903a OF THE  CONNECTICUT
GENERAL  STATUTES.  THE MAKER HEREBY  WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT
HEARING OR COURT ORDER UNDER  CONNECTICUT  GENERAL STATUTES SECTIONS 52-278a ET.
SEQ. AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH  RESPECT TO ANY AND
ALL  PREJUDGMENT  REMEDIES  THE  HOLDER  MAY  EMPLOY TO  ENFORCE  ITS RIGHTS AND
REMEDIES HEREUNDER. MORE SPECIFICALLY,  THE MAKER ACKNOWLEDGES THAT THE HOLDER'S
ATTORNEY  MAY,  PURSUANT  TO CONN.  GEN.  STAT.  ss.52-278F,  ISSUE A WRIT FOR A
PREJUDGMENT  REMEDY WITHOUT SECURING A COURT ORDER.  THE MAKER  ACKNOWLEDGES AND
RESERVES ITS RIGHT TO NOTICE AND A HEARING  SUBSEQUENT TO THE ISSUANCE OF A WRIT
FOR  PREJUDGMENT  REMEDY AS AFORESAID  AND THE HOLDER  ACKNOWLEDGES  THE MAKER'S
RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT.

         This Note shall be governed and construed in  accordance  with the laws
of the State of Connecticut.

         The  Maker  hereby  irrevocably  and  unconditionally  (a)  submits  to
personal  jurisdiction  in the State of  Connecticut  over any  suit,  action or
proceeding  arising out of or relating to this Note,  and (b) waives any and all
personal  rights under the laws of any state (i) to the right,  if any, to trial
by jury, or (ii) to object to  jurisdiction  within the State of  Connecticut or
venue in any particular forum within the State of Connecticut.  The Maker agrees
that,  in  addition  to any  methods of service  of process  provided  for under
applicable  law, all service of process in any such suit,  action or  proceeding
may be  made  by  hand  or by  certified  or  registered  mail,  return  receipt
requested,  directed to the Maker at the address set forth above, and service so
made shall be complete when delivered or


<PAGE>
                                      -5-






when  delivery of the same is refused by the Maker.  Nothing  contained  herein,
however,  shall prevent  Holder from bringing any suit,  action or proceeding or
exercising  any rights  against any security and against the Maker,  and against
any property of the Maker, in any other state.  Initiating such suit,  action or
proceeding  or taking such action in any state  shall in no event  constitute  a
waiver  of the  agreement  contained  herein  that  the  laws  of the  State  of
Connecticut  shall  govern  the  rights  and  obligations  of Maker  and  Holder
hereunder or the  submission  herein made by the Maker to personal  jurisdiction
within the State of Connecticut.

         This  Note may not be  amended,  modified,  or  changed,  nor shall any
waiver of any  provision  hereof be  effective,  except only by an instrument in
writing signed by the party against whom  enforcement of any waiver,  amendment,
change, modification or discharge is sought.

         Whenever used herein, the words "Maker" and "Holder" shall be deemed to
include their respective heirs, legal  representatives,  successors and assigns,
as applicable.

         IN WITNESS  WHEREOF,  the Maker has executed this Note under seal as of
the date first above written.

                                        GROVE OPERATING, L.P.

                                        By:  GROVE PROPERTY TRUST,
                                             Its general partner duly authorized


                                             By:
                                                --------------------------------
                                                Joseph LaBrosse
                                                Its Treasurer



<PAGE>


                                    Exhibit B
                                    ---------

                          Eligible Property Conditions
                          ----------------------------

     If the Borrower  requests the Banks to consider any (proposed)  Real Estate
Asset as an Eligible  Property,  the Borrower shall furnish or make available to
the  Banks,  for  purposes  of the Banks'  consideration  of such  request,  the
following:

        (1)   At the time that the Borrower makes such request:

          (a) FINANCIAL  ANALYSIS.  Adequate  information to permit the Banks to
     conduct a complete financial analysis of each proposed property,  including
     a review of each such  property's  (i) most recent  rent roll,  (ii) 3-year
     historical  operating  statements,  if available after reasonable  efforts,
     (iii) cash flow projections,  (iv) capital expenditure  budgets, (v) market
     data, (vi) leases or other agreements that would  constitute  Leases if the
     property  were an Eligible  Property,  including  any  separate  agreements
     regarding  concessions to or options for tenants,  and lease  summaries (in
     substantially the form of the Lease Summaries  attached as Exhibit C to the
     Revolving  Credit  Agreement  or in such other form as shall be  reasonably
     acceptable to the Agent), (vii) commercial tenant financials, if available,
     and (viii) if available after  reasonable  efforts,  aging of rent payments
     and rent payment histories for each commercial tenant if such property were
     an Eligible Property.

          (b) INSPECTION. The opportunity to inspect each proposed property.

          (c) ENVIRONMENTAL  SITE ASSESSMENTS.  An environmental site assessment
     report running in favor of the Banks, at the Borrower's  sole expense,  for
     each  proposed   property,   such  report  to  be  in  form  and  substance
     satisfactory  to the Agent and each of the Banks.  The  environmental  site
     assessment report must be dated no earlier than six (6) months prior to the
     date on which the property is proposed to become an Eligible Property.

          (d) CAPITAL  EXPENDITURE  BUDGET. A capital expenditure budget for the
     proposed property.

          (e) INSPECTING  ENGINEER'S/ARCHITECT'S  REPORT;  STRUCTURAL  CONDITION
     ASSURANCES.  Unless  such  request is waived by the Agent,  a  satisfactory
     third party  engineer's or  architect's  report  prepared at the Borrower's
     expense in favor of the Banks for each proposed


<PAGE>
                                      -2-






     property  dated no earlier  than six (6) months  prior to the date on which
     the property is proposed to become an Eligible Property.

        (2) Prior to  the  proposed  property  being  accepted as a New Eligible
     Property (except as otherwise  provided in clause (c)(ii) below),  and as a
     condition to any funding in connection therewith,  such other due diligence
     items  (or  satisfaction  of other  conditions)  as the  Agent or the Banks
     reasonably require, including, without limitation:

          (a)  If  applicable,   an  Additional  Guaranty  from  the  applicable
     Additional Guarantor in the form attached hereto as Schedule 1;

          (b) A copy of the Title  Policy for such New  Eligible  Property  and,
     upon the request of the Agent,  a then current Title Policy  Endorsement if
     such Title Policy was issued more than 90 days prior to the  acceptance  of
     the proposed property;

          (c) Evidence of compliance  reasonably  satisfactory to the Agent with
     respect to zoning and land use regulation  compliance,  including,  without
     limitation, an opinion of counsel as required by the Agent.

          (d)  Estoppel   certificates,   in  form  and   substance   reasonably
     satisfactory  to the Agent,  from each  commercial  tenant under the Leases
     which occupies more than 5,000 square feet of gross rentable area; and

          (e) The items  required to be delivered or  conditions  required to be
     met set forth in ss.10.2 and ss.10.3  (as to the Charter  Documents  of the
     applicable Additional Guarantor and the resolutions adopted by the Borrower
     or  the  applicable   Additional  Guarantor  authorizing  the  transactions
     relating to the  proposed New  Eligible  Property and the valid  execution,
     delivery  and  performance  by the Borrower of the  documents  delivered in
     connection  therewith),   ss.10.4,   ss.10.5,  ss.10.6,  ss.10.7,  ss.10.8,
     ss.10.9,  ss.10.10,  ss.10.11,  ss.10.12,  ss.10.16  and  ss.10.17  of  the
     Agreement, with respect to the proposed New Eligible Property.

     The items referred to in this  paragraph (2), or copies or drafts  thereof,
as  appropriate,  shall be  delivered  to the Agent  and the Banks a  reasonable
period of time prior to the  requested  funding date so as to afford the Banks a
reasonable  period of time in which to review the same,  and in which to address
to the Banks' satisfaction any issues raised therein or thereby.




<PAGE>
                                      -3-






     Unless otherwise defined herein,  the terms used in this Exhibit B have the
meanings described in the Revolving Credit Agreement to which it is an exhibit.



<PAGE>



                             Schedule 1 to Exhibit B
                             -----------------------

                               UNLIMITED GUARANTY
                               ------------------

         GUARANTY,     dated    as    of                                      by
                                            ---------     ----,      ------
                           , a                        with a business address at
---------------------------    ----------------------
                                           (the   "Guarantor"),   in   favor  of
----------------------------------------
BANKBOSTON,  N.A. and certain other financial  institutions  (collectively,  the
"Banks")  and  BankBoston,  N.A.,  as agent  for  certain  of the Banks (in such
capacity,  the "Agent"). In consideration of the Agent and the Banks' giving, in
its discretion,  time,  credit or banking  facilities or accommodations to Grove
Operating,  L.P. and its successors and assigns (collectively,  the "Customer"),
the Guarantor agrees as follows:

         1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor hereby guarantees
to the Agent and the Banks the full and  punctual  payment  when due (whether at
maturity,   by  acceleration  or  otherwise),   and  the  performance,   of  all
liabilities,  agreements  and other  obligations of the Customer to the Agent or
the Banks, whether direct or indirect,  absolute or contingent, due or to become
due,  secured or  unsecured,  now  existing  or  hereafter  arising or  acquired
(whether  by way of  discount,  letter of  credit,  lease,  loan,  overdraft  or
otherwise)  arising under or in connection with the Revolving  Credit  Agreement
dated           ,  1999 among the  Customer,  certain of the Banks and the Agent
       ---------
(the "Credit  Agreement") or any document,  agreement and instrument executed in
connection  therewith  (collectively,  the  "Obligations").  This Guaranty is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance of the Obligations and not of their  collectibility  only and is
in no way  conditioned  upon any  requirement  that the Agent or the Banks first
attempt to collect  any of the  Obligations  from the  Customer or resort to any
security or other means of obtaining their payment.  Should the Customer default
in the payment or performance of any of the Obligations,  the obligations of the
Guarantor  hereunder  shall become  immediately due and payable to the Agent and
the Banks,  without  demand or notice of any nature,  all of which are expressly
waived by the Guarantor.  Payments by the Guarantor hereunder may be required by
the Agent and the Banks on any number of occasions.

         2. GUARANTOR'S  AGREEMENT TO PAY. The Guarantor  further agrees, as the
principal  obligor  and not as a  guarantor  only,  to pay to the  Agent and the
Banks, on demand,  all costs and expenses  (including court costs and reasonable
legal  expenses)  incurred or  expended by the Agent or the Banks in  connection
with the Obligations, this Guaranty and


<PAGE>
                                      -2-






the enforcement  thereof,  together with interest on amounts  recoverable  under
this  Guaranty  from the time such  amounts  become  due until  payment,  at the
interest rate set forth in the Credit Agreement; provided, that if such interest
exceeds the maximum amount  permitted to be paid under applicable law, then such
interest shall be reduced to such maximum permitted amount.

         3. UNLIMITED  GUARANTY.  The liability of the Guarantor hereunder shall
be unlimited.

         4. WAIVERS BY GUARANTOR;  BANKS'  FREEDOM TO ACT. The Guarantor  agrees
that the  Obligations  will be paid and performed  strictly in  accordance  with
their  respective  terms  regardless  of any law,  regulation  or  order  now or
hereafter  in  effect in any  jurisdiction  affecting  any of such  terms or the
rights of the Banks with respect  thereto.  The  Guarantor  waives  presentment,
demand,  protest,  notice of acceptance,  notice of Obligations incurred and all
other notices of any kind,  all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any  right to  require  the  marshalling  of  assets  of the  Customer,  and all
suretyship defenses generally. Without limiting the generality of the foregoing,
the Guarantor agrees to the provisions of any instrument evidencing, securing or
otherwise  executed  in  connection  with any  Obligation  and  agrees  that the
obligations of the Guarantor  hereunder shall not be released or discharged,  in
whole or in part,  or otherwise  affected by (i) the failure of the Agent or any
Bank to assert any claim or demand or to enforce any right or remedy against the
Customer;  (ii)  any  extensions  or  renewals  of  any  Obligation;  (iii)  any
rescissions,  waivers,  amendments  or  modifications  of any of  the  terms  or
provisions  of any  agreement  evidencing,  securing  or  otherwise  executed in
connection with any Obligation;  (iv) the  substitution or release of any entity
primarily  or  secondarily  liable  for  any  Obligation   (including,   without
limitation,  the release of the  Guarantor);  (v) the adequacy of any rights the
Agent or any Bank may have  against any  collateral  or other means of obtaining
repayment of the Obligations; (vi) the impairment of any collateral securing the
Obligations, including without limitation the failure to perfect or preserve any
rights the Agent or any Bank might have in such collateral or the  substitution,
exchange,  surrender,  release,  loss or destruction of any such collateral;  or
(vii) any other act or omission  which might in any manner or to any extent vary
the risk of the Guarantor or otherwise  operate as a release or discharge of the
Guarantor, all of which may be done without notice to the Guarantor.




<PAGE>
                                      -3-






         5.  UNENFORCEABILITY OF OBLIGATIONS AGAINST CUSTOMER. If for any reason
the Customer has no legal existence or is under no legal obligation to discharge
any of the Obligations,  or if any of the Obligations have become  irrecoverable
from such  Customer by operation of law or for any other  reason,  this Guaranty
shall  nevertheless  be binding on the  Guarantor  to the same  extent as if the
Guarantor at all times had been the principal  obligor on all such  Obligations.
In the event that  acceleration  of the time for payment of the  Obligations  is
stayed upon the insolvency, bankruptcy or reorganization of the Customer, or for
any other reason,  all such amounts otherwise subject to acceleration  under the
terms of any agreement evidencing,  securing or otherwise executed in connection
with any Obligation shall be immediately due and payable by the Guarantor.

         6.  SUBROGATION;  SUBORDINATION.  Until the payment and  performance in
full of all  Obligations  and any and all  obligations  of the  Customer  to any
affiliate of the Agent or any Bank, the Guarantor  shall not exercise any rights
against the Customer arising as a result of payment by the Guarantor  hereunder,
by way of subrogation or otherwise,  and will not prove any claim in competition
with the Agent or any Bank or its affiliates in respect of any payment hereunder
in  bankruptcy or insolvency  proceedings  of any nature;  until the payment and
performance  of all of the  Obligations  and  any  and  all  Obligations  of the
Customer to any affiliate of the Agent or any Bank, the Guarantor will not claim
any set-off or counterclaim  against the Customer in respect of any liability of
the Guarantor to the Customer;  and the Guarantor  waives any benefit of and any
right to  participate  in any  collateral  which may be held by the Agent or any
Bank or any such  affiliate.  The payment of any amounts due with respect to any
indebtedness  of the Customer now or hereafter  held by the  Guarantor is hereby
subordinated  to the prior  payment in full of the  Obligations.  The  Guarantor
agrees that the  Guarantor  will not  demand,  sue for or  otherwise  attempt to
collect  any such  indebtedness  of the  Customer  to the  Guarantor  until  the
Obligations  shall have been paid in full.  If,  notwithstanding  the  foregoing
sentence, the Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness,  such amounts shall be collected, enforced and received by
the  Guarantor  as  trustee  for the Agent and the Banks and be paid over to the
Agent on behalf of the Banks on account of the Obligations  without affecting in
any manner the  liability of the  Guarantor  under the other  provisions of this
Guaranty.

         7. SECURITY;  SET-OFF. The Guarantor hereby grants to the Agent and the
Banks,  as security for the full and  punctual  payment and  performance  of the
Guarantor's obligations hereunder, a continuing lien


<PAGE>
                                      -4-






on and security  interest in all securities or other  property  belonging to the
Guarantor  now or  hereafter  held by the Agent or any Bank and in all  deposits
(general  or  special,  time or  demand,  provisional  or final)  and other sums
credited  by or due from the Agent or any Bank to the  Guarantor  or  subject to
withdrawal by the Guarantor; and regardless of the adequacy of any collateral or
other means of obtaining  repayment of the Obligations,  the Agent and each Bank
are hereby  authorized at any time and from time to time during the  continuance
of a Default or an event of Default,  without  notice to the Guarantor (any such
notice  being  expressly  waived by the  Guarantor)  and to the  fullest  extent
permitted by law, to set off and apply such  deposits and other sums against the
obligations of the Guarantor  under this Guaranty,  whether or not the Agent and
the Banks  shall have made any demand  under this  Guaranty  and  although  such
obligations may be contingent or unmatured.

         8. FURTHER  ASSURANCES.  The Guarantor agrees to do all such things and
execute  all  such  documents,  including  financing  statements,  which  may be
reasonably  necessary or  desirable to give full effect to this  Guaranty and to
protect and preserve the rights and powers of the Agent and the Banks hereunder.

         9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
and effect until the payment in full of the  Obligations.  This  Guaranty  shall
continue to be  effective  or be  reinstated  if at any time any payment made or
value  received with respect to an Obligation is rescinded or must  otherwise be
returned  by  the  Agent  or  any  Bank  upon  the  insolvency,   bankruptcy  or
reorganization of any Customer, or otherwise, all as though such payment had not
been made or value received.

         10.  SUCCESSORS  AND ASSIGNS.  This Guaranty  shall be binding upon the
Guarantor, and its respective heirs, trustees, successors and assigns, and shall
inure to the  benefit of and be  enforceable  by the  Agent,  the Bank and their
respective successors,  transferees and assigns. Without limiting the generality
of the  foregoing  sentence,  the  Agent and any Bank may  assign  or  otherwise
transfer any agreement or any note held by it evidencing,  securing or otherwise
executed in  connection  with the  Obligations,  or sell  participations  in any
interest therein, to any other person or entity, and such other person or entity
shall  thereupon  become  vested,  to the  extent  set  forth  in the  agreement
evidencing such assignment,  transfer or  participation,  with all the rights in
respect thereof granted to the Agent and such Bank herein.




<PAGE>
                                      -5-






         11. AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor  therefrom  shall be
effective  unless the same  shall be in writing  and signed by the Agent and the
Banks. No failure on the part of the Agent or any Bank to exercise, and no delay
in exercising,  any right hereunder shall operate as a waiver thereof; nor shall
any single or partial  exercise  of any right  hereunder  preclude  any other or
further exercise thereof or the exercise of any other right.

         12. NOTICES. All notices and other communications  called for hereunder
shall be made in writing and, unless  otherwise  specifically  provided  herein,
shall be  deemed  to have  been  duly  made or  given  when  delivered  by hand,
overnight  mail or mailed first class  certified  mail postage  prepaid,  return
receipt requested, addressed as follows: if to the Guarantor, at the address set
forth  beneath  its  respective  signature  hereto,  and if to the Agent and the
Banks, at One BankBoston Plaza, Providence, Rhode Island 02903, Attention: James
F. St. Thomas, or at such address as either party may designate in writing.

         13.  GOVERNING  LAW;  CONSENT TO  JURISDICTION.  This Guaranty shall be
governed  by,  and  construed  in  accordance  with,  the  laws of the  State of
Connecticut.  The  Guarantor  agrees that any suit for the  enforcement  of this
Guaranty may be brought in the courts of the State of Connecticut or any Federal
Court sitting  therein and consents to the  non-exclusive  jurisdiction  of such
court and to service  of process in any such suit being made upon the  Guarantor
by mail at the addresses  specified in Section 12 hereof.  The Guarantor  hereby
waives any objection  that it may now or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.

         14.  MISCELLANEOUS.  This Guaranty  constitutes the entire agreement of
the  Guarantor  with  respect to the  matters set forth  herein.  The rights and
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law or any other  agreement,  and this Guaranty shall be in addition
to any other guaranty of the Obligations.  The invalidity or unenforceability of
any one or more  sections  of this  Guaranty  shall not affect the  validity  or
enforceability  of its  remaining  provisions.  Captions  are  for  the  ease of
reference only and shall not affect the meaning of the relevant provisions.  The
meanings of all defined terms used in this Guaranty shall be equally  applicable
to the singular and plural forms of the terms defined.

         15. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. The Guarantor hereby
waives the Guarantor's right to


<PAGE>
                                      -6-






a jury trial with respect to: (i) any action or claim arising out of any dispute
in connection  with this Guaranty,  any rights or  obligations  hereunder or the
performance  of such  rights  and  obligations;  and,  (ii) any  action or claim
arising  out of any  dispute  in  connection  with the Credit  Agreement  or any
document,   agreement   or   instrument   executed   in   connection   therewith
(collectively,   with  the  Credit  Agreement  and  this  Guaranty,   the  "Loan
Documents").  Except as prohibited by law, the Guarantor hereby waives any right
the Guarantor may have to claim or recover in any litigation  referred to in the
preceding sentence any special, exemplary,  punitive or consequential damages or
any damages  other than, or in addition to,  actual  damages.  The Guarantor (a)
certifies that no representative, agent or attorney of the Agent or any Bank has
represented,  expressly or otherwise,  that the Agent or such Bank would not, in
the  event  of  litigation,  seek  to  enforce  the  foregoing  waivers  and (b)
acknowledges  that the Agent and the Banks have been  induced to give  credit to
such Customer by, among other things, the waivers and  certifications  contained
herein.

         The Guarantor  hereby  further  agrees that the following  courts:  (i)
State  Court-any  state or local  court of the  State of  Connecticut;  and (ii)
Federal  Court-United States District Court for the District of Connecticut,  or
at the option of the Banks and the  Agent,  any court in which the Banks and the
Agent shall initiate legal or equitable proceedings and which has subject matter
and personal jurisdiction over the matter and parties in controversy, shall have
exclusive  jurisdiction to hear and determine any claims or disputes between the
undersigned and the Banks and the Agent pertaining directly or indirectly to the
Loan  Documents or to any matter  arising  therefrom.  The  Guarantor  expressly
submits and consents in advance to such jurisdiction in any action or proceeding
commenced in such courts,  hereby  waiving  personal  service of the summons and
complaint,  or other process or papers issued therein, and agreeing that service
of such  summons  and  complaint,  or other  process or  papers,  may be made by
registered  or  certified  mail,  return  receipt  requested,  addressed  to the
undersigned at the address set forth below.  Should the Guarantor fail to appear
or answer any summons, complaint, process or papers so served within thirty (30)
days after the mailing thereof,  the Guarantor shall be deemed in default and an
order and/or judgment may be entered against the Guarantor as demanded or prayed
for in such summons, complaint, process or papers.

         The exclusive  choice of forum set forth in this Guaranty  shall not be
deemed to preclude the enforcement of any judgment obtained in such forum or the
taking  of any  action  under  the Loan  Documents  to  enforce  the same in any
appropriate jurisdiction.

         16.   PREJUDGMENT   REMEDY  WAIVER;   OTHER   WAIVERS.   THE  GUARANTOR
ACKNOWLEDGES THAT THIS GUARANTY IS PART OF A COMMERCIAL  TRANSACTION  WITHIN THE
MEANING


<PAGE>
                                      -7-






OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES. THE GUARANTOR HEREBY WAIVES
THE  GUARANTOR'S  RIGHT TO NOTICE AND PRIOR  COURT  HEARING OR COURT ORDER UNDER
CONNECTICUT  GENERAL STATUTES  SECTIONS 52-278a ET. SEQ. AS AMENDED OR UNDER ANY
OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT  REMEDIES THE
BANK MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER. MORE SPECIFICALLY,
THE  GUARANTOR  ACKNOWLEDGES  THAT THE  AGENT'S  AND THE  BANK'S  ATTORNEY  MAY,
PURSUANT TO CONN.  GEN. STAT.  SECTION  52-278F,  ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT SECURING A COURT ORDER.  THE GUARANTOR  ACKNOWLEDGES AND RESERVES
THE  GUARANTOR'S  RIGHT TO NOTICE AND A HEARING  SUBSEQUENT TO THE ISSUANCE OF A
WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT AND THE BANK ACKNOWLEDGES
THE GUARANTOR'S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT.

         IN WITNESS  WHEREOF,  the  Guarantor  has caused  this  Guaranty  to be
executed and delivered as of the date first appearing above.



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