$40,000,000

                           REVOLVING CREDIT AGREEMENT




                          dated as of January 15, 1997


                                      among



                       UNITED CAPITAL CORP., as Borrower,



                                       and



                          THE CHASE MANHATTAN BANK and
                   FLEET BANK, NATIONAL ASSOCIATION, as Banks



                                       and



                THE CHASE MANHATTAN BANK, as Administrative Agent

                                       and

             FLEET BANK, NATIONAL ASSOCIATION, as Syndication Agent

<PAGE>
                                LIST OF EXHIBITS


EXHIBIT A                 FORM OF NOTE
EXHIBIT B                 FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C                 FORM OF ENVIRONMENTAL INDEMNITY
EXHIBIT D                 FORM OF GUARANTY
EXHIBIT E                 FORM OF SECURITY AGREEMENT
EXHIBIT F                 FORM OF OPINION



<PAGE>
                                                                            Page
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS                                      1

      Section 1.1.  Definitions                                               1

      Section 1.2.  Accounting Terms                                         13


ARTICLE 2. CREDIT FACILITY                                                   13

      Section 2.1.  Loans                                                    13

      Section 2.2.  The Notes                                                13

      Section 2.3.  Use of Proceeds                                          13

      Section 2.4.  Borrowing Procedure for Loans; Rate
                    and Interest Period Selection; Conversions               14

      Section 2.5.  Minimum Amounts of Loan                                  15

      Section 2.6.  Reduction of Commitments                                 15


ARTICLE 3. GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS                      16

      Section 3.1.  Certain Notices                                          16

      Section 3.2.  Prepayments                                              16

      Section 3.3.  Interest on Loans                                        17

      Section 3.4.  Commitment Fee                                           18

      Section 3.5.  Administrative Fee                                       18

      Section 3.6.  Syndication Fee                                          18

      Section 3.7. Payments Generally                                        18

      Section 3.8. Interim Adjustments to Borrowing Base.                    19

ARTICLE 4. YIELD PROTECTION, ETC.                                            20

      Section 4.1.  Certain Compensation                                     20

      Section 4.2.  Additional Costs                                         21

      Section 4.3.  Limitation on Types of Loans                             23

                                       i
<PAGE>
      Section 4.4.  Illegality                                               23

      Section 4.5.  Certain LIBOR Loans
                    Pursuant To Sections 4.2. 4.3 and 4.4                    23

      Section 4.6. Survival                                                  24


ARTICLE 5. CONDITIONS PRECEDENT                                              24

      Section 5.1.  Documentary Conditions Precedent                         24

      Section 5.2.  Additional Conditions Precedent                          27


ARTICLE 6. REPRESENTATIONS AND WARRANTIES                                    28

      Section 6.1.  Incorporation, Good Standing and Due
                    Qualifications; Compliance with Law                      28

      Section 6.2.  Power and Authority; No Conflicts                        28

      Section 6.3.  Legally Enforceable Agreements                           29

      Section 6.4.  Litigation                                               29

      Section 6.5.  Financial Statements; Other Liabilities                  29

      Section 6.6.  Ownership and Liens                                      30

      Section 6.7.  Taxes                                                    30

      Section 6.8.  ERISA                                                    30

      Section 6.9.  Subsidiaries                                             30

      Section 6.10.  Credit Arrangements                                     30

      Section 6.11.  Operation of Business                                   30

      Section 6.12.  Hazardous Substances.                                   31

      Section 6.13.  No Default on Outstanding Judgments or Orders           31

      Section 6.14.  Labor Disputes and Acts of God                          31

      Section 6.15.  Governmental Regulation                                 31

      Section 6.16.  Partnership, Etc.                                       31

      Section 6.17.  No Forfeiture Proceedings                               31

      Section 6.18.  No Default or Event of Default                          32

      Section 6.19.  Solvency                                                32
                                       ii

<PAGE>

      Section 6.20.  Name                                                    32

      Section 6.21.  Other Agreements                                        32

      Section 6.22. Eligible Properties                                      32

      Section 6.23. Title Insurance                                          32


ARTICLE 7. AFFIRMATIVE COVENANTS                                             32

      Section 7.1.  Maintenance of Existence                                 33

      Section 7.2.  Conduct of Business                                      33

      Section 7.3.  Maintenance of Properties                                33

      Section 7.4.  Maintenance of Records                                   33

      Section 7.5.  Maintenance of Insurance                                 33

      Section 7.6.  Compliance with Laws                                     33

      Section 7.7.  Right of Inspection                                      33

      Section 7.8.  Reporting Requirements                                   34

      Section 7.9.  Payment of Obligations                                   37

      Section 7.12.  Condemnation.                                           39

      Section 7.13.  Subsidiaries                                            39


ARTICLE 8. NEGATIVE COVENANTS                                                39

      Section 8.1.  Indebtedness                                             39

      Section 8.2.  Liens                                                    40

      Section 8.3.  Investments                                              41

      Section 8.4.  Sale of Assets                                           41

      Section 8.5.  Transactions with Affiliates                             42

      Section 8.6.  Mergers, Etc.                                            42

      Section 8.7.  Acquisitions                                             42

      Section 8.8.  No Activities Leading to Forfeiture                      42

      Section 8.9.  Corporate Documents; Fiscal Year                         42

                                      iii
<PAGE>
      Section 8.10.  Hazardous Substances; Use of Real Property              42

      Section 8.11.  Dividends, etc.                                         43

      Section 8.12.  Other Material Adverse Change                           43

      Section 8.13.  Sales of Receivables; Sale-Leasebacks                   43

      Section 8.14.  Leases of Eligible Properties                           43

      Section 8.15.  Maintenance of Real Estate Assets.                      43


ARTICLE 9. FINANCIAL COVENANTS                                               43

      Section 9.1. Limitation on Indebtedness.                               44

      Section 9.2. Minimum Equity Value                                      44

      Section 9.3. Minimum Interest Coverage Ratio                           44

      Section 9.4. Minimum Debt Service Coverage Ratio                       44

      Section 9.5. Minimum Eligible Properties Debt Service Coverage Ratio   44

      Section 9.6. Limitation of Capital Expenditures                        44

      Section 9.7. Limitation on Operating Leases                            44

ARTICLE 10. EVENTS OF DEFAULT                                                44

      Section 10.1.  Events of Default                                       44

      Section 10.2.  Remedies                                                46


ARTICLE 11. THE AGENT; RELATIONS AMONG BANKS                                 47

      Section 11.1.  Appointment, Powers and Immunities of Agent             47
 
      Section 11.2.  Reliance by Agent                                       47

      Section 11.3.  Defaults                                                48

      Section 11.4.  Rights of Agent as a Bank                               48

      Section 11.5.  Indemnification of Agent                                48

      Section 11.6.  Documents                                               49

      Section 11.7.  Non-Reliance on Agent and Other Banks                   49

      Section 11.8.  Failure of Agent to Act                                 49

                                       iv
<PAGE>
      Section 11.9.  Resignation or Removal of Agent                         49

      Section 11.10.  Amendments Concerning Agency Function                  50

      Section 11.11.  Liability of Agent                                     50

      Section 11.12.  Transfer of Agency Function                            50

      Section 11.13.   Non-Receipt of Funds by the Agent                     50

      Section 11.14.  Withholding Taxes                                      50

      Section 11.15.  Several Obligations and Rights of Banks                51

      Section 11.16.   Pro Rata Treatment of Loans, Etc.                     51

      Section 11.17.  Sharing of Payments Among Banks                        51


ARTICLE 12. MISCELLANEOUS                                                    52

      Section 12.1.  Amendments and Waivers                                  52

      Section 12.2.  Usury                                                   52

      Section 12.3.  Expenses and Indemnification                            53

      Section 12.4.  Special Provisions Regarding Collateral.                53

      Section 12.5.  Survival                                                54

      Section 12.6.  Assignment; Participation                               54

      Section 12.7.  Notices                                                 54

      Section 12.8.  Setoff                                                  55

      Section 12.9.  Jurisdiction; Immunities                                55

      Section 12.10.  Table of Contents; Headings                            56

      Section 12.11.  Severability                                           56

      Section 12.12.  Counterparts                                           56

      Section 12.13.  Integration                                            56

      Section 12.14.  Governing Law                                          56

      Section 12.15.  Relief from Bankruptcy Stay                            56

                                       v

<PAGE>
         REVOLVING  CREDIT AGREEMENT (the  "Agreement")  dated as of January 15,
1997 among UNITED CAPITAL CORP., a corporation  organized  under the laws of the
State of Delaware  (the  "Borrower")  and THE CHASE  MANHATTAN  BANK, a New York
banking corporation ("Chase") and FLEET BANK, NATIONAL  ASSOCIATION,  a national
bank  association  organized  under the laws of the  United  States  of  America
("FLEET";  collectively  with Chase, the "Banks");  THE CHASE MANHATTAN BANK, as
administrative  agent for the Banks (in such  capacity,  the  "Agent") and FLEET
BANK,  NATIONAL  ASSOCIATION,  as  syndication  agent  (in  such  capacity,  the
"Syndication Agent').

         The Borrower desires each of the Banks to extend credit to the Borrower
and the Banks are willing to extend such credit on the terms and  conditions set
forth herein.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE 1.
                         DEFINITIONS; ACCOUNTING TERMS.

         Section 1.1. Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):

         "Acquisition"  means any transaction  pursuant to which the Borrower or
any of the  Guarantors,  (a)  acquires,  or enters into an agreement to acquire,
equity  securities  (or  warrants,  options  or other  rights  to  acquire  such
securities)  of any  Person  which is not  then a  Subsidiary  of the  Borrower,
pursuant to a solicitation  of tenders  therefor,  or in one or more  negotiated
block,  market  or  other  transactions  not  involving  a  tender  offer,  or a
combination of any of the foregoing,  or (b) makes, or enters into any agreement
to make,  any Person not then a Subsidiary  of the Borrower a Subsidiary  of the
Borrower, or causes any such Person to be merged into the Borrower or any of the
Guarantors,  or vice versa in any case pursuant to a merger,  purchase of assets
or any  reorganization  providing for the delivery or issuance to the holders of
such Person's then outstanding securities,  in exchange for such securities,  of
cash or  securities of the Borrower or any of the  Guarantors,  or a combination
thereof,  or (c)  purchases,  or enters into an agreement  to  purchase,  all or
substantially all of the business or assets of any Person.  For purposes hereof,
the term  "Acquisition"  shall include any  transaction in which the Borrower or
any of its Subsidiaries  makes a loan or otherwise  extends credit secured by an
interest in real property. For purposes hereof, the term "Acquisition" shall not
include  the  formation  by the  Borrower  or any  of  the  Guarantors  of a new
Subsidiary  that does not  involve  any of the  transactions  referred to in the
immediately preceding sentence.

         "Additional Costs" shall have the meaning given to such term in Section
4.2 hereof.

         "Adjusted  Real  Estate   Borrowing   Base"  means,   at  the  time  of
calculation,  80% of the  annualized  and  normalized  actual  year-to-date  Net
Operating Income of Eligible  Properties,

                                       1
<PAGE>
other  than  Eligible  Properties  which are  operated  as day care  facilities,
divided by eleven and one-half percent (11.5%).

         "Administrative  Fee" means the agency fee  payable by the  Borrower to
the Agent pursuant to Section 3.5 hereof.

         "Affiliate"  means, with respect to any Person,  any Person:  (a) which
directly or indirectly controls, or is controlled by, or is under common control
with, such Person;  (b) which directly or indirectly  beneficially owns or holds
25% or more of any class of voting stock of such Person;  (c) 25% or more of the
voting  stock or other  voting  interests  of which is  directly  or  indirectly
beneficially  owned or held by such Person;  (d) which is a partnership in which
such  Person is a general  partner (e) which is a limited  liability  company in
which  such  Person is a member  and in which  such  Person  owns,  directly  or
indirectly,  25% of the  equity of such  Person.  The term  "control"  means the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction  of the  management  and  policies  of a Person,  whether  through the
ownership of voting securities, by contract, or otherwise.

         "Aggregate  Outstandings"  means,  at a particular  time, the aggregate
outstanding principal amount of the Loans at such time.

         "Agreement" means this Agreement,  as amended or supplemented from time
to  time  pursuant  to the  terms  hereof.  References  to  Articles,  Sections,
Exhibits,  Schedules  and the like refer to the  Articles,  Sections,  Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.

         "Amortization"  means  amortization  as  determined  or  calculated  in
accordance with GAAP.

         "Assignment"  means each  Assignment of Leases and Rents dated the date
hereof  and  executed  by the  Borrower  or a  Guarantor  in favor of the  Banks
hereunder.

         "Banking  Day"  means  any  day  on  which  commercial  banks  are  not
authorized  or required to close in New York City,  provided  that whenever such
day relates to a LIBOR Loan or notice with respect to any LIBOR Loan,  such term
shall mean any such day on which  dealings in Dollar  deposits  are also carried
out in the London interbank market.

         "Base Rate" means the rate of  interest  determined  by the Agent to be
the  higher of (i) the  Federal  Funds Rate plus 1/2 of 1% per annum or (ii) the
Prime Rate.

         "Base  Rate  Loan"  means  any  Loan  when and to the  extent  that the
interest rate for such Loan is determined on the basis of the Base Rate.

         "Borrowing  Base" means,  at any time, the sum of (i) the lesser of the
Real Estate  Borrowing Base or the Adjusted Real Estate Borrowing Base plus (ii)
the Non-Real Estate Borrowing Base.

                                       2
<PAGE>
         "Borrowing Base  Certificate"  means a certificate  signed by the Chief
Executive  Officer or the Chief Financial Officer of the Borrower in the form of
Exhibit "B" annexed  hereto with such changes as the Banks may require from time
to time.

         "Capital  Expenditures" means the sum of (a) expenditures for any fixed
assets or improvements, replacements,  substitutions, or additions thereto which
would be treated as capital  expenditures  in  accordance  with GAAP and (b) the
portion of all payments with respect to Capital  Leases which are required to be
capitalized on the balance sheet of the lessee in accordance with GAAP.

         "Capitalization   Value"  means,  at  the  time  of  calculation,   (i)
annualized and normalized actual year to date Consolidated EBITDA capitalized at
10% plus  (ii)  cash and cash  equivalents  on a  consolidated  basis  and (iii)
aggregate  acquisition  costs  for  real  properties  of the  Borrower  and  the
Guarantors  subject to the provisions of the last sentence hereof.  For purposes
hereof,  "acquisition  costs" for any real property  shall mean the  contractual
purchase price for such property and such closing costs as are customarily  paid
by purchasers in real estate  transactions.  For purposes  hereof,  clause (iii)
shall  include  acquisition  costs for any property only until such property has
been owned by the Borrower or any Guarantor for one full fiscal quarter.

         "Capital  Lease" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP.

         "Change in Control"  means any event or condition  which results in any
Person or "group" other than a Person or group that is actively  involved in the
day to day  management  of the Borrower and the  Guarantors  on the date of this
Agreement:  (i)  having  acquired  beneficial  ownership  of 35% or  more of any
outstanding  class of capital  stock of the  Borrower  or any  Guarantor  having
ordinary  voting  power in the  election of  directors  of the  Borrower or such
Guarantor or (ii)  obtaining  the power  (whether or not  exercised)  to elect a
majority of the directors of the Borrower or any Guarantor;  provided,  however,
that any  transfer  from any Person that is actively  involved in the day to day
management  of the  Borrower  and the  Guarantors  to any  Person  in his or her
immediate  family  shall  not  constitute  a  "Change  in  Control"  if the Bank
continues to be satisfied in its sole  discretion,  with the  management  of the
Borrower and the Guarantors after such transfer.

         "Closing  Date" means the date this  Agreement has been executed by the
Borrower and each of the Banks.

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

         "Commitment"  means with respect to each Bank,  the  obligation of such
Bank to extend  credit  to the  Borrower  hereunder  and,  subject  to the terms
hereof,  in the  following  aggregate  amounts as such amounts may be reduced in
accordance with the terms of this Agreement:

                                       3
<PAGE>
          Chase                  $20,000,000
          Fleet                  $20,000,000

         "Commitment  Fee" means the  commitment  fee payable by the Borrower to
each of the Banks pursuant to Section 3.4 hereof

         "Commitment Proportion" means, with respect to each Bank at the time of
determination,   that  proportion  that  its  Commitment   bears  to  the  Total
Commitment.

         "Consolidated  Debt Service"  means,  for any fiscal  period,  interest
expense  (accrued,  paid or capitalized) plus scheduled  principal  amortization
(excluding  balloon  payments due at maturity)  on all (a)  Indebtedness  of the
Borrower and the Guarantors, on a consolidated basis, and (b) the Borrower's and
the  Guarantor's  pro  rata  share of  Indebtedness  from  unconsolidated  joint
ventures  other  than  non-recourse  Indebtedness  on  properties  owned by such
ventures.

         "Consolidated  EBITDA" means,  for any fiscal period,  Consolidated Net
Income of the  Borrower and the  Guarantors,  before  provision  for federal and
state  income  taxes,  minus  all  extraordinary  gains;  plus (i)  Consolidated
Interest  Expense;  plus (ii)  Depreciation  and  Amortization  plus  (iii) cash
distributions  (after debt service) from  unconsolidated  joint  ventures to the
Borrower and the Guarantors,  all on a consolidated basis, and all as determined
in accordance with GAAP.

         "Consolidated  Interest  Expense" means, for a particular  period,  the
consolidated interest expense (accrued, paid or capitalized) of the Borrower and
the Guarantor as reflected in the Borrower's  consolidated  financial statements
for such period and  calculated in  accordance  with GAAP and shall in any event
include,  without limitation,  (i) the amortization of debt discounts,  (ii) the
amortization   of  all  fees  payable  in  connection   with  the  incidence  of
Indebtedness, and (iii) the portion of any Capital Lease obligation allocable to
interest  expense  plus the  Borrower's  and the  Guarantors'  pro rata share of
interest expense on Indebtedness from unconsolidated joint ventures,  other than
non-recourse Indebtedness on properties owned by such ventures.

         "Consolidated  Net  Income"  means,  for  a  particular   period,   the
consolidated  net income of the  Borrower  and the  Guarantors  for such  period
determined in accordance with GAAP.

         "Default"  means any event  which with the giving of notice or lapse of
time, or both, would become an Event of Default.

                                       4
<PAGE>
         "Default  Rate"  means a rate per  annum  equal to 2% above the rate of
interest that would then be applicable to Base Rate Loans under this Agreement.

         "Depreciation"  means  depreciation  as  determined  or  calculated  in
accordance with GAAP.

         "Dividends"  means,  for any period,  dividends  paid by the applicable
Person.

         "Dollars"  and the sign "$" mean lawful  money of the United  States of
America.

         "Eligible  Inventory"  means,  on a  combined  basis for the  Operating
Companies  the gross  amount of the  inventory  less the  following  items:  any
packaging materials and supplies,  supplies (other than supplies held for sale),
damaged or unsalable  goods,  damaged or unsalable goods returned or rejected by
such entities' customers; obsolete goods; goods to be returned to such entities'
suppliers; goods in transit to third parties; consigned inventory.

         "Eligible  Properties"  means,  at any time,  those  properties  of the
Borrower and of the Guarantors which are leased to non-affiliated  third parties
and which are unencumbered or are encumbered by Liens securing debt of less than
10% of the annualized and normalized  year-to-date Net Operating Income for such
property  capitalized  at 11.5%,  together with the property  located in Dallas,
Texas which is leased to the estate of AJ Schecter  and  subleased to a discount
store and the Lowe's Home Centers property in North Charleston,  South Carolina.
In addition, Eligible Properties shall include such additional properties as may
in the  discretion  of the Banks be included on Schedule  1.1 from time to time.
The Agent  shall have the right to  conduct a site  inspection  of any  property
before such property is included as an "Eligible Property" hereunder.  As of the
date  hereof,  "Eligible  Properties"  shall  mean  those  properties  listed on
Schedule  1.1(a)  hereto.  In no  event  will  mortgage  loans  or  any  similar
transactions  between  the  Borrower  or  any  Guarantor  and  any  third  party
constitute an "Eligible Property".

         "Eligible Property EBITDA" means, for any fiscal period, net income, on
a combined basis,  for the Eligible  Properties  before provision for federal or
state income taxes minus all extraordinary  gains; plus interest expense for the
Eligible  Properties,  plus  Depreciation and  Amortization  attributable to the
Eligible Properties, all on a combined basis and all as determined in accordance
with GAAP. For purposes hereof,  Eligible Properties with EBITDA of less than $0
will be assigned a value of $0.

         "Eligible  Receivables"  means, on a combined basis,  the amount of the
accounts  receivable  of the  Operating  Companies  arising  out of sales in the
ordinary  course of  business of the  Operating  Companies  net of any  credits,
rebates or off-sets owed by the Operating  Companies to the  respective  account
debtor and net of any  commissions  payable by the Operating  Companies to third
parties,  which  accounts  receivable  are not in  dispute or subject to credit,
allowance,  defense,  off-set,  counterclaim or adjustment and for which records
are  maintained at a location of the Operating  Companies in the United  States;
provided,  however,  that the  following  items  shall  not be  deemed  Eligible
Receivables:  credit  balances over 90 days' from invoice date;  contra accounts
receivable;  receivables  owing from account debtors  determined by the Agent in
its sole discretion to be  unacceptable  for credit  reasons;  receivables  from
Affiliates;  accounts  receivable  with  respect to which the account  debtor is
subject to any bankruptcy or insolvency  proceeding;  accounts  receivable where
the account debtor's obligation

                                       5
<PAGE>
to pay is conditional or subject to a repurchase  obligation or right of return;
and all current  receivables  due from account debtors of which more than 50% of
the  total  accounts  receivable  from  such  debtors  is more than 90 days from
invoice date.

         "Environmental  Indemnity  Agreement" means that certain  environmental
indemnity agreement substantially in the form of Exhibit C annexed hereto, dated
the date hereof,  and executed by the  Borrower  and each of the  Guarantors  in
favor  of  the  Banks  and  their  respective  directors,  officers,  employees,
affiliates, agents or other representatives.

         "Environmental  Laws"  means  any and all  federal,  state,  local  and
foreign statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental   restrictions   relating  to  the  environment  or  to  emissions,
discharges,  releases  or  threatened  releases  of  pollutants,   contaminants,
chemicals,  or  industrial,  toxic or  hazardous  substances  or wastes into the
environment,  including, without limitation,  ambient air, surface water, ground
water,  or  land,  or  otherwise   relating  to  the  manufacture,   processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,   contaminants,   chemicals,  or  industrial,  toxic  substances  or
Hazardous Substances or wastes.

         "Equity   Value"  means   Capitalization   Value  less  Total  Adjusted
Outstanding Funded Indebtedness.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended  from time to time,  including  any rules  and  regulations  promulgated
thereunder.

         "ERISA Affiliate" means any corporation or trade or business which is a
member of the same  controlled  group of  corporations  (within  the  meaning of
Section 414(b) of the Code) as the Borrower or is under common  control  (within
the meaning of Section 414(c) of the Code) with the Borrower.

         "Event of Default"  shall have the  meaning  given such term in Section
10.01 hereof.

         "Eurocurrency   Reserve  Requirements"  means,  with  respect  to  each
Interest Period for each LIBOR Loan, the aggregate (without  duplication) of the
maximum rates  (expressed as a percentage and rounded upward,  if necessary,  to
the nearest 1/100 of 1%) of reserve requirements current on the date two Banking
Days  prior  to the  beginning  of  such  Interest  Period  (including,  without
limitation,   basic,   supplemental,   marginal  and  emergency  reserves  under
Regulation D or any other  regulations  of the Board of Governors of the Federal
Reserve System or other governmental  authority having jurisdiction with respect
thereto),  as now and/or from time to time  hereafter  in effect,  dealing  with
reserve requirements  prescribed for eurocurrency funding maintained by a member
bank of such system.

         "Existing  Bank Debt"  means  Indebtedness  of the  Borrower  to Fleet,
existing on the date hereof and  arising  pursuant to the terms of that  certain
line letter dated as of August 2,

                                       6
<PAGE>
1995 between Fleet and Metex Corporation and that certain line letter,  dated as
of August 4, 1995 between Fleet and the Borrower,  as each of such documents may
have been amended, supplemented or modified through the date hereof.

         "Facility  Documents" means this Agreement,  the Notes, the Guarantees,
the Assignments, the Security Agreements and all other agreements, documents and
instruments  executed in  connection  herewith or therewith  including,  but not
limited  to, all  documents  and  instruments  executed  by the  Borrower or any
Guarantor,  at any time, in favor of any Bank in connection  with this Agreement
and the Loans made hereunder.

         "Federal  Funds Rate"  means,  for any day, the rate per annum equal to
the weighted average of the rates on overnight  Federal funds  transactions with
members of the Federal  Reserve  System  arranged by Federal funds  brokers,  as
published  for such day (or,  if such  day is not a  Banking  Day,  for the next
preceding Banking Day) by the Federal Reserve Bank of New York, or, if such rate
is not so announced or published for any day which is a Banking Day, the average
of quotations for the day of such transactions  received by the Agent from three
federal funds brokers of recognized standing selected by it.

         "Forfeiture  Proceeding"  means  the  commencement  of  any  action  or
proceeding  affecting  the Borrower or any of the  Guarantors  before any court,
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign  which would result in the seizure or  forfeiture  of any of
their property which would cause a material  adverse effect upon the operations,
business,  properties  or financial  condition of the Borrower or any  Operating
Company or of the Borrower and the Guarantors, taken as a whole.

         "GAAP" means  generally  accepted  accounting  principles in the United
States of America,  as in effect from time to time,  consistently  applied  with
respect  to the  financial  statements  of the  Borrower,  the  Guarantors,  and
Affiliates or any Guarantor which are the subject of Section 6.5 hereof.

         "Guarantees"  means the  guarantees to be delivered on the Closing Date
to the Banks by each of the Guarantors and the guarantees to be delivered to the
Banks from time to time hereafter by Persons that become  Guarantors  subsequent
to the Closing Date, all in the form(s) attached hereto as Exhibit D.

         "Guarantors" means each of the parties listed on Schedule 5.1(a) hereto
and all Post-Closing Guarantors.

         "Hazardous  Substance"  or "Hazardous  Substances"  means any material,
including,  without  limitation,  raw, processed or waste by-product  materials,
which in itself or as found or used, is toxic,  noxious or harmful to the health
or safety of human or animal  life or  vegetation,  regardless  of whether  such
material  be found on or below the  surface  of the  ground,  in any  surface or
underground  water,  or  airborne  in  ambient  air or in the air  inside of any
structure  built or located  upon or below the surface of the ground,  or in any
machinery,  equipment  or  inventory  located  or  used in any  such  structure,
including,  but in no event  limited

                                       7
<PAGE>
to, all hazardous  materials,  hazardous wastes,  toxic  substances,  infectious
wastes,  pollutants and contaminants  from time to time defined or classified as
such under any  Environmental  Law,  regardless  of the  quantity  found,  used,
manufactured or removed from a given location.

         "Indebtedness" means, without duplication,  with respect to any Person,
(a) all  obligations  of such  Person  for  borrowed  money or with  respect  to
deposits or advances made to it of any kind, (b) all  obligations of such Person
evidenced by bonds,  debentures,  notes or other  similar  instruments,  (c) all
obligations  of such  Person for the  deferred  purchase  price of  property  or
services,  (d) all  obligations of such Person under  conditional  sale or other
title retention  agreements  relating to property  purchased by such Person, (e)
all payment obligations of such Person with respect to interest rate or currency
protection  agreements,  (f) all  obligations of such Person as an account party
under any  letter  of credit or in  respect  of  bankers'  acceptances,  (g) all
obligations  of any third  party  secured by  property  or assets of such Person
(regardless  of  whether  or not such  Person is liable  for  repayment  of such
obligations),  (h) all guarantees of such Person and (i) the redemption price of
all redeemable  preferred stock of such Person, but only to the extent that such
stock is  redeemable  at the option of the holder or  requires  sinking  fund or
similar payments at any time prior to the Termination Date.

         "Interest  Period"  means the period  commencing on the date of making,
renewal or conversion of a Loan to a LIBOR Loan and expiring one, two,  three or
six months (as  available)  thereafter,  as  designated  by the  Borrower in the
notice given to the Agent under Section 2.4 hereof; provided that:

         (a) the initial  Interest  Period for any LIBOR Loan shall  commence on
the date of the making of such Loan (including the date of any conversion from a
Base Rate Loan) and each Interest Period occurring thereafter in respect of such
Loan shall  commence  on the date on which the next  preceding  Interest  Period
expires;

         (b) if any Interest Period would otherwise expire on a day which is not
a Banking Day, such Interest Period shall expire on the next succeeding  Banking
Day, provided,  however, that if any Interest Period would otherwise expire on a
day which is not a Banking  Day but is a day of a calendar  month after which no
further Banking Day occurs (in such month), such Interest Period shall expire on
the next preceding Banking Day;

         (c) no Loan shall be  continued  as or  converted to a LIBOR Loan if at
the time of any such continuation or conversion a Default or an Event of Default
exists; and

         (d) no Interest  Period for a Loan shall extend beyond the  Termination
Date.

         "Lending  Office" means, for each Bank, the lending office of such Bank
(or of an  affiliate  of such Bank)  designated  as such on its  signature  page
hereof or such other  office of such Bank (or of an  affiliate  of such Bank) as
such Bank may from time to time  specify to the  Borrower as the office by which
its Loans are to be made and maintained.

                                       8
<PAGE>
         "LIBOR" means, for any LIBOR Loan, the rate per annum (rounded upwards,
if necessary,  to the nearest 1/16 of 1%) at which Dollar deposits approximately
equal in principal  amount to the requested  LIBOR Loan and for a maturity equal
to the requested  Interest Period are offered in immediately  available funds to
the  principal  London  branch  of the  Agent by  leading  banks  in the  London
interbank market for Dollar deposits at approximately 10:00 a.m. London time two
Banking Days prior to the first day of the Interest Period for such Loan.

         "LIBOR  Loan" means any Loan when and to the extent the  interest  rate
therefor is determined on the basis of Reserve Adjusted LIBOR Rate.

         "Lien" means any mortgage,  pledge,  security interest,  hypothecation,
assignment, deposit arrangement,  encumbrance, or preference,  priority or other
security agreement or preferential  arrangement of any kind or nature whatsoever
(including,  without  limitation,  any conditional sale or other title retention
agreement,  any financing lease having substantially the same economic effect as
any of the  foregoing,  and the  filing  of any  financing  statement  under the
Uniform Commercial Code or comparable law of any jurisdiction).

         "Loan"  means any  extension  of credit  made by the Banks  pursuant to
Section 2.1 hereof.

         "Margin"  means,  with respect to LIBOR Loans,  one and  three-quarters
percent (1.75%) per annum.

         "Multiemployer  Plan" means a Plan defined as such in Section 400(a)(3)
of ERISA to which  contributions  have  been made by the  Borrower  or any ERISA
Affiliate and which is covered by Title IV of ERISA.

         "Net  Operating  Income"  means,  with  respect  to any  parcel of real
property,  the rents  received by the  Borrower or any  Guarantor  with  respect
thereto  less any expenses of such  Borrower or  Guarantor  with respect to such
property which are ordinary expenses and are not capitalized expenses, excluding
Depreciation, Amortization, income taxes and debt service.

         "Non-Real  Estate Borrowing Base" means, at any time, the lesser of (i)
$12,000,000 and (ii) the sum of 75% of Eligible  Receivables and 50% of Eligible
Inventory.

         "Notes" means  collectively the promissory notes of the Borrower in the
form of Exhibit A hereto evidencing the Loans made by a Bank hereunder.

         "Obligations"  means  all of the  obligations  of the  Borrower  or any
Guarantor to the Banks under or in relation to this  Agreement,  the Notes,  any
Loans, or any of the other Facility Documents, as such agreements, documents and
instruments  are  originally  executed  or  as  modified,   amended,   restated,
supplemented  or extended from time to time, and all obligations of the Borrower
or any  Guarantor  to the Banks  arising out of any  extension,  refinancing  or
refunding of any of the foregoing obligations,  whether such obligations are now
existing or hereafter acquired or arising, direct or indirect, joint or several,
absolute or contingent,  due or to

                                       9
<PAGE>
become  due,  matured  or  unmatured,  liquidated  or  unliquidated,  arising by
contract, operation of law or otherwise.

         "Operating  Companies"  means the  Borrower's  subsidiaries,  (i) Metex
Corporation,  a Delaware  corporation,  (ii) AFP Transformers,  Inc., a Delaware
corporation;  (iii) Dorne & Margolin, Inc., a Delaware Corporation, and (iv) any
Subsidiary of the Borrower  which is or may hereafter be engaged in any business
other than  holding  Real Estate  Assets and which has assets  having a value in
excess  of  $100,000.   Notwithstanding  the  foregoing,   the  term  "Operating
Companies" shall not include the following  entities provided that they continue
to engage in substantially  the same business as they are engaged in on the date
hereof:   Metex   International   Sales  Corp.,   Metex  Enviroco  Corp.,  Ancom
Electromagnetique Ltd. and Metex Europe S.A.R.L.

         "PBGC" means the Pension  Benefit  Guaranty  Corporation and any entity
succeeding to any or all of its functions under ERISA.

         "Permitted  Investments"  means any of the following  investments:  (I)
obligations  issued or guaranteed by states or municipalities  within the United
States of America; (ii) obligations issued or guaranteed by the United States of
America or any agency or subdivision  thereof;  (iii)  certificates  of deposit,
time deposits, Eurodollar certificates of deposit, bankers acceptances and other
"money  market  instruments"  issued by any bank,  trust  company  or  financial
institution  organized  under the laws of the  United  States of  America or any
state thereof (or, in the case of Eurodollar  certificates of deposit,  a branch
of any such bank,  trust company or financial  institution)  having  capital and
surplus in an aggregate  amount not less than  $1,000,000,000;  (iv)  commercial
paper  rated at least  Prime-1  by Moody's  Investors  Service,  Inc.  or A-1 by
Standard & Poors  Corporation;  (v) securities issued by money market funds with
asset of $2,500,000,000  or more, and (vi) repurchase  agreements with a term of
not more than seven days entered into with any bank,  trust company or financial
institution  organized  under the laws of the  United  States of  America or any
state thereof  having  capital and surplus in an aggregate  amount not less than
$1,000,000,000  and  relating to any of the  obligations  referred to in clauses
(i),  (ii),  (iii) above;  in each case maturing or being due or payable in full
not more than one year after the acquisition thereof such entity.

         "Permitted  Liens"  means those  certain  Liens  defined in Section 8.2
hereof.

         "Person" means an individual, partnership, corporation, business trust,
joint  stock  company,  trust,   unincorporated   association,   joint  venture,
governmental authority or other entity of whatever nature.

         "Plan"  means  any  employee  benefit  or  other  plan  established  or
maintained,  or to which  contributions  have been made,  by the Borrower or any
ERISA  Affiliate  and which is covered by Title IV of ERISA or to which  Section
412 of the Code  applies  provided  that  such  term  shall  not  include  plans
terminated prior to the date hereof.

                                       10
<PAGE>
         "Post-Closing  Guarantor"  means each  Subsidiary of the Borrower or of
any Guarantor which is created after the date of this Agreement and which shall,
simultaneously  with its  creation,  become a Guarantor  hereunder in accordance
with Section 7.13 hereof.

         "Prime Rate" means the rate of interest from time to time  announced by
the Agent at its Principal Office as its prime commercial lending rate.

         "Principal  Office" means, with respect to the Agent and each Bank, its
principal office as announced by such entity from time to time.

         "Real Estate Assets" means,  with respect to any entity,  such entity's
real  properties  for which the fee  interests or, with the prior consent of the
Banks,  ground lease interests,  are wholly-owned plus all loans and other forms
of indebtedness  owing to such entity which are secured by first liens upon real
property.

         "Real Estate Borrowing Base" means, at the time of calculation,  50% of
the  aggregate  annualized  and  normalized  actual  year-to-date  Net Operating
Incomes of the Eligible Properties capitalized at 11.5%.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System as the same may be amended or  supplemented  from time to
time.

         "Regulatory  Change" means,  with respect to any Bank, any change after
the Closing Date in United States federal,  state,  municipal or foreign laws or
regulations  (including  Regulation D) or the adoption or making after such date
of any  interpretations,  directives  or  requests  applying to a class of banks
including  such Bank under any  United  States,  federal,  state,  municipal  or
foreign  laws or  regulations  (whether  or not  having the force of law) by any
court or governmental or monetary  authority charged with the  interpretation or
administration thereof.

         "Reportable Event" means any of the events set forth in Section 4043(c)
of  ERISA  as to  which  events  the  PBGC  by  regulation  has not  waived  the
requirement  of Section  4043(a) of ERISA that it be notified  within 30 days of
the occurrence of such event.

         "Required  Banks" means,  at any time, with respect to any decisions to
be made by the  Banks  hereunder,  Banks  having  at least 66 2/3% of the sum of
aggregate of the Commitments hereunder.

         "Reserve  Adjusted  LIBOR Rate"  means,  with  respect to the  Interest
Period for each LIBOR Loan, the rate per annum  (rounded  upwards to the nearest
whole multiple of 1/100th of one percent) equal to the following:

                                       11
<PAGE>
                                 LIBOR
                           -------------------------------
                    1.00 - Eurocurrency Reserve Requirements.

         "Revolving  Credit  Loan  Debt  Service"  means,  for any  period,  the
interest paid or accrued hereunder for such period.

         "Security  Agreement" means each security  agreement,  substantially in
the form of Exhibit E, to be dated the date hereof and  delivered by each of the
Operating Companies to the Bank.

         "Solvent"  means when used with  respect to any Person on a  particular
date,  that on such date: (a) the fair saleable value of its assets is in excess
of the total  amount of its  liabilities,  including,  without  limitation,  the
reasonably   expected  amount  of  such  Persons  obligations  with  respect  to
contingent  liabilities,  (b) the present fair  saleable  value of the assets of
such  Person  is not less  than the  amount  that  will be  required  to pay the
probable  liability of such Person on its  Indebtedness  as they become absolute
and  matured,  (c) such Person does not intend to, and does not believe  that it
will, incur  Indebtedness or liabilities  beyond such Person's ability to pay as
such  Indebtedness and liabilities  mature and (d) such Person is not engaged in
business or a transaction for which such Person's  property would  constitute an
unreasonably small capital.

         "Subsidiary,"  with  respect to any Person,  means any  corporation  or
other entity of which at least a majority of the  securities or other  ownership
interests  having ordinary  voting power  (absolutely or  contingently)  for the
election of directors or other persons  performing similar functions are, at the
relevant time, owned directly or indirectly by such Person.

         "Syndication  Fee" means the syndication fee payable by the Borrower to
the  Syndication  Agent for the  benefit of the Banks  pursuant  to Section  3.6
hereof.

         "Taxes" means any and all levies due and payable to any federal, state,
municipality or other governmental authority under the laws of the United States
of  America,  any  state of the  United  States  and any  municipality  or other
governmental authority thereof.

         "Termination  Date" means the earlier to occur of (a) the date on which
the Commitments shall terminate hereunder and (b) January 15, 2000.

         "Total Adjusted  Outstanding Funded  Indebtedness"  means, at any time,
the sum of (i) all outstanding  secured and unsecured funded Indebtedness of the
Borrower and the Guarantors on a consolidated basis plus (ii) the Borrower's and
the Guarantor's pro rata share of Indebtedness from unconsolidated joint venture
properties, other than non-recourse indebtedness on such properties.

         "Total   Commitments"   means,  at  any  time,  the  aggregate  of  the
Commitments in effect at such time.

                                       12
<PAGE>
         "Unfunded  Vested  Liabilities"  means,  with respect to any Plan,  the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits,  as
determined on the most recent  valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential  liability of the Borrower
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.

         Section 1.2.  Accounting  Terms.  All accounting terms not specifically
defined  herein shall be construed in  accordance  with GAAP,  and all financial
data required to be delivered  hereunder  shall be prepared in  accordance  with
GAAP.

                                   ARTICLE 2.
                                CREDIT FACILITY.

         Section  2.1.  Loans.  Subject  to the  terms  and  conditions  of this
Agreement,  each Bank severally agrees to make revolving credit loans in Dollars
(the "Loans"),  and all Loans shall be made by the Banks, on a pro-rata basis in
accordance with their respective  Commitment  Proportions,  to the Borrower from
time  to  time,  from  and  including  the  date  hereof  to but  excluding  the
Termination Date, up to but not exceeding at any one time outstanding the amount
of its Commitment;  provided,  that no Loan shall be made if after giving effect
to such Loan the  Aggregate  Outstandings  at the time of such Loan would exceed
the lesser of (i) the Total  Commitments or (ii) the Borrowing Base in effect on
such  date.  The Loans may be  outstanding  as Base Rate  Loans or LIBOR  Loans;
provided,  however,  that during the occurrence  and  continuance of an Event of
Default,  the Borrower may not elect and the Banks shall have no  obligation  to
make LIBOR  Loans.  Subject to the  foregoing  limits,  the Borrower may borrow,
repay and  reborrow,  on or after the date  hereof and prior to the  Termination
Date, all or a portion of the Total  Commitments as Loans hereunder.  Any amount
of any Loan not paid when due (at maturity,  on acceleration or otherwise) shall
bear  interest  thereafter  until paid at the rate set forth in  Section  3.3(c)
hereof.

         Section 2.2. The Notes.  The Loans of each Bank shall be evidenced by a
single  promissory  note in  favor  of such  Bank  substantially  in the form of
Exhibit A hereto with appropriate insertions, duly executed and completed by the
Borrower.  Each Bank is hereby authorized to record the date, type and amount of
each Loan,  the date and amount of each  payment of principal  thereof,  and the
principal  amount subject thereto and interest rate with respect thereto in such
Banks' records and/or on the schedules annexed to and constituting a part of its
Note,  and,  absent  manifest  error,  any  such  recordation  shall  constitute
conclusive evidence of the information so recorded; provided that the failure to
make any such  recordation  shall not in any way  affect the  obligation  of the
Borrower  to repay the  Loans in  accordance  with the  terms of this  Agreement
(without giving effect to any such error made in the Note).  Each Note (a) shall
be dated the date hereof,  (b) be stated to mature on the  Termination  Date and
(c) shall bear interest on the unpaid principal amount thereof from time to time
outstanding as provided herein.

         Section 2.3. Use of Proceeds.

                                       13
<PAGE>
         (a) The  Borrower  shall use the  proceeds  of the Loans on the date of
this  Agreement to repay in full  Existing Bank Debt and may use the proceeds of
the Loans on the date of this Agreement and from time to time  thereafter  prior
to the Termination Date (i) for general  corporate and working capital purposes;
(ii) to finance the  acquisition of Real Estate Assets or to make mortgage loans
or similar loans that constitute Real Estate Assets;  (iii) to repurchase  stock
of the  Borrower  in an amount not to exceed  $2,000,000  in any fiscal  year or
$5,000,000  during the term of this Agreement;  and (iv) to make advances to the
Operating  Companies in an  aggregate  amount not to exceed  $10,000,000  at any
time.  No part of the  proceeds  of any of the  Loans  will be used  (i) for any
purpose which  violates the  provisions of Regulations G, T, U or X of the Board
of  Governors of the Federal  Reserve  System as in effect on the date of making
such Loans or (ii) to permit the  Borrower or any  Guarantor  to acquire  equity
securities in any third party except as permitted  pursuant to the provisions of
Section 8.7 hereof.

         (b) The  Borrower  agrees to indemnify  the Banks and their  respective
directors, officers, employees,  affiliates, agents or other representatives and
hold the Banks and their respective directors, officers, employees,  affiliates,
agents  or  other  representatives,  harmless  from  and  against  any  and  all
liabilities, losses, damages, costs and expenses of any kind (including, without
limitation,  the reasonable  fees and expenses of counsel for any such Person in
connection with any investigative,  administrative, judicial proceeding, whether
or not such Person shall be designated a party thereto) which may be incurred by
any such Person,  relating to or arising out of this  Agreement or any actual or
proposed use of any proceeds of Loans hereunder.

         Section 2.4.  Borrowing  Procedure for Loans;  Rate and Interest Period
Selection; Conversions.

         (a)  The  Borrower  may  request  a  borrowing  under  the  Commitments
hereunder  as  provided  in Section  3.1.  Each Bank will make its share of such
borrowing  available  to Fleet at Fleet's  office  located at 1133 Avenue of the
Americas, 40th Floor, New York, New York 10036 not later than 2:00 p.m. New York
City time on the date of such borrowing in immediately  available funds.  Unless
any  applicable  condition  specified in Article 5 has not been  satisfied,  not
later  than 3:00 p.m.  New York City time on the date of such  borrowing,  Fleet
shall,  through  its  Lending  Office  and  subject  to the  conditions  of this
Agreement,  make the amount of the Loan to be made on such date available to the
Borrower,  in  immediately  available  funds,  by  crediting  an  account of the
Borrower designated by the Borrower and maintained with Fleet.

         (b) In the case of each Loan which is a LIBOR Loan,  the Borrower shall
select an Interest  Period of any duration in accordance  with the definition of
Interest  Period in Section 1. 1,  subject to the  limitations  that no Interest
Period for a LIBOR Loan  shall have a duration  less that one month,  and if any
such proposed  Interest  Period would  otherwise be for a shorter  period,  such
Interest Period shall not be available.

                                       14
<PAGE>
         (c) Upon the  expiration  of an  Interest  Period for any Loan,  or any
portion thereof,  such Loan or portion thereof shall be automatically  continued
as a Base  Rate  Loan  except  to the  extent  that  such  Loan  shall be repaid
hereunder or unless the Borrower  shall have notified the Banks,  as provided in
Section 3.1 hereof, of its intention to select a different  interest rate option
with  respect to such Loan or any  portion  thereof.  Subject  to the  following
conditions and to the terms and conditions of this Agreement, the Borrower shall
have the right to convert  any Loan or portion  thereof to a  different  type of
Loan (i.e., from a Base Rate Loan to a LIBOR Loan or vice versa):

                   (i) if less than all Loans at the time  outstanding  shall be
         converted,  the notice given by the Borrower to the Banks shall specify
         the  aggregate  amount of Loans in each case to be  converted  and such
         conversion  shall be made ratably  among the Banks in  accordance  with
         their respective Commitment Proportions;

                   (ii) in the case of a conversion of less than all outstanding
         Loans,  the aggregate  principal  amount of Loans to be converted shall
         not be less than (1) $200,000 (and if greater in integral  multiples of
         $50,000)  in the  case of  conversions  to or into  LIBOR  Loans or (2)
         $200,000 (and if greater in integral  multiples of $50,000) in the case
         of conversions to or into Base Rate Loans;

                   (iii) no Loan may be  converted to a LIBOR Loan less than one
         month before the Termination Date;

                   (iv) a LIBOR Loan may be  converted  to a  different  type of
         Loan only on the last day of the then  applicable  Interest Period with
         respect thereto; and

                   (v) no Loan or portion  thereof may be  converted  to a LIBOR
         Loan during the occurrence and continuance of an Event of Default.

         Notwithstanding anything to the contrary herein, after giving effect to
any Loan,  unless  consented to by the Required Banks in their sole  discretion,
there  shall not be more than six (6)  different  Interest  Periods in effect in
respect of all Loans then outstanding.

         Section  2.5.  Minimum  Amounts of Loan.  Except for  borrowings  which
involve or utilize the full  remaining  amount of the  Commitments  and payments
which  result in the  prepayment  of all Base Rate  Loans,  each  borrowing  and
payment  of a Base Rate Loan  shall be in an amount at least  equal to  $200,000
and, if greater, integral multiples of $50,000 in excess thereof. Each borrowing
and  payment of a LIBOR Loan  shall be in an amount at least  equal to  $200,000
and, if greater, in integral multiples of $ 50,000 in excess thereof.

         Section 2.6. Reduction of Commitments.

         (a) The Borrower shall have the right to reduce or terminate the amount
of the unused  Commitments  at any time and from time to time provided that: (i)
the  Borrower  shall give notice of each such  reduction or  termination  to the
Banks as provided  in Section  3.1,  and (ii)

                                       15
<PAGE>
each partial  reduction  shall be allocated pro rata between the  Commitments of
each Bank in accordance with their respective  Commitment  Proportions and shall
be in an  aggregate  amount at least  equal to  $3,000,000  or, if  greater,  in
integral multiples of $1,000,000.

         (b) The Commitments, once reduced or terminated may not be reinstated.

                                   ARTICLE 3.
                  GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.

         Section 3.1.  Certain  Notices.  Except as  otherwise  provided in this
Agreement,  notices by the Borrower to the Banks of each  borrowing  pursuant to
Sections  2.4,  each  prepayment  pursuant to Section  3.2,  each  reduction  or
termination of the  Commitments  pursuant to Section 2.6 and each  conversion of
Loans  pursuant to Sections 2.4 shall be  irrevocable  and shall be effective on
the date of receipt  only if received by the Banks by not later than 11:00 a.m.,
New York City time,  and (a) in the case of borrowings  and  prepayments  of (i)
Base Rate Loans,  if given the date thereof and (ii) LIBOR Loans, if given three
(3) Banking Days prior thereto; (b) in the case of reductions or terminations of
the Commitments,  given five (5) Banking Days prior thereto; and (c) in the case
of  conversions  or  continuations  pursuant to Sections 2.4, if given three (3)
Banking Days prior thereto in the case of  conversions  to or  continuations  of
LIBOR Loans and if given on the date thereof in the case of  conversions to Base
Rate Loans. Each such notification which relates to a borrowing, continuation or
conversion  shall specify the amount and the type of Loan (i.e.,  Base Rate Loan
or LIBOR Loan), the date of the proposed borrowing, whether such Loan represents
an additional  borrowing,  a continuation or a conversion,  and in the case of a
LIBOR Loan, the Interest  Period to be used in the  computation of interest with
respect thereto.  Each such notice relating to a reduction or termination of the
Commitments  shall  specify  the  amount of the  Commitments  to be  reduced  or
terminated.

         Section 3.2. Prepayments.

         (a) The Borrower shall have the right at any time and from time to time
to prepay any Base Rate Loan, in whole or in part; provided,  however, that each
such  partial  prepayment  of a Base Rate Loan  shall be in a minimum  aggregate
principal  amount of  $200,000  or, if  greater in  amounts  which are  integral
multiples of $50,000. Except as required by paragraph (b) or (c) below or on the
last day of an Interest Period with respect  thereto,  the Borrower shall not be
permitted to prepay LIBOR Loans.

         (b) In the event that the Aggregate  Outstandings  exceed the lesser of
the Total Commitments or the then applicable Borrowing Base at any time prior to
the  Termination  Date, the Borrower shall promptly pay or prepay so much of the
Loans outstanding as shall be necessary in order that the Aggregate Outstandings
will not exceed the lesser of Total  Commitments  or the Borrowing  Base then in
effect. All prepayments under this subparagraph shall be subject to Section 4.1.

         (c) Unless otherwise agreed by the Banks in writing, the Borrower shall
be required to pay or prepay Loans  outstanding  with (i) 80% of the proceeds of
the issuance by the

                                       16
<PAGE>
Borrower or any Guarantor of additional equity; (ii) 100% of the net proceeds of
the sale by the Borrower or any Guarantor of any Real Estate Assets;  (iii) 100%
of the net proceeds resulting from the repayment of mortgages  constituting Real
Estate  Assets or (iv) such proceeds as may be paid as a result of a casualty or
condemnation,  all in  accord  with  Sections  7.11 or  7.12 of this  Agreement;
provided,  however,  that the Borrower shall have no obligation under clause (i)
above  until  the  aggregate  net  proceeds  of any  and all  additional  equity
issuances during the term of this Agreement shall equal or exceed $1,000,000.00.
All prepayments under this paragraph shall be subject to Section 4.1.

         (d) All payments  required by paragraphs (b) or (c) above shall be made
to the Banks pro rata in accordance with their respective Commitment Proportions
and shall be applied as follows: first, to outstanding Base Rate Loans up to the
full amount thereof and second, to outstanding LIBOR Loans up to the full amount
thereof.

         (e)  All  prepayments  made  pursuant  to this  Section  3.2  shall  be
accompanied by the payment of all accrued  interest on the amount so prepaid and
by all  amounts  required  to be paid  pursuant  to  Section  4.1 in  connection
therewith.

         Section 3.3. Interest on Loans.

         (a) Base Rate Loans. The Borrower shall pay interest on the outstanding
and unpaid  principal amount of each Base Rate Loan made under this Agreement at
a fluctuating rate per annum equal to the Base Rate from time to time in effect.
Each  change in the  interest  rate shall take  effect  simultaneously  with the
corresponding  change in the Prime Rate or the Federal  Funds Rate,  as the case
may be.  Interest  shall be calculated on the basis of the actual number of days
elapsed divided by a year of three hundred sixty (360) days and shall be paid to
the Agent for the account of the Banks quarterly,  in arrears, on March 31, June
30, September 30 and December 31 in each year and on the Termination Date.

         (b) LIBOR Loans The Borrower shall pay interest on the  outstanding and
unpaid  principal  amount of each LIBOR Loan made under this  Agreement for each
Interest  Period  applicable to such LIBOR Loan at a rate per annum equal to the
Reserve  Adjusted  LIBOR Rate in effect with respect  thereto,  plus the Margin.
Interest  shall be  calculated on the basis of the actual number of days elapsed
divided  by a year of three  hundred  sixty  (360) days and shall be paid to the
Banks,  in arrears on the last day of the  Interest  Period  applicable  to such
LIBOR Loan; provided, however, that if such Interest Period is longer than three
months,  interest  shall  be paid on the  last  day of each  three-month  period
following the  commencement  of such Interest Period and on the last day of such
Interest Period.

         (c)  Post-Default.  If any Default or Event of Default has occurred and
is continuing hereunder,  all Loans, and all interest, fees or other amounts due
hereunder,  to the extent  permitted  by  applicable  law,  shall bear  interest
(payable on demand, and in any event on the last day of each month, and computed
daily on the basis of a 360-day  year for actual days  elapsed) (i) in all cases
other than LIBOR  Loans,  at the Default Rate until paid and (ii) in the case of
LIBOR Loans, at a rate which shall be the greater of (x) the Default Rate or (y)
2% per

                                       17
<PAGE>
annum in excess of the rate applicable to such LIBOR Loan,  until the expiration
of the  Interest  Period  applicable  to such Loan,  at which time the Loan will
automatically  be converted  into a Base Rate Loan,  and until paid,  shall bear
interest at the Default  Rate.  In no event,  however,  shall  interest  payable
hereunder  be in  excess  of  the  maximum  rate  of  interest  permitted  under
applicable  law.  The  obligation  to so pay  interest  upon  any  reimbursement
obligation  of the  Borrower to the Banks shall not be  construed so as to waive
the requirement for  reimbursement  on the same date that payment is made by the
Banks as set forth in this Agreement.

         Section 3.4.  Commitment  Fee. The Borrower  shall pay to the Agent for
the  ratable  benefit  of the Banks a  commitment  fee for the  period  from and
including the date hereof to and excluding the Termination  Date equal to 1/4 of
1% of the  average  daily  unused  portion  of the Total  Commitment  during the
applicable period. The commitment fee shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed.  The  commitment fee shall be
due and payable  quarterly in arrears on the last day of each  calendar  quarter
and on the Termination Date.

         Section 3.5.  Administrative  Fee. The Borrower  shall pay to the Agent
for its own account an annual fee of $25,000.  The  administrative  fee shall be
due and  payable  quarterly  in advance on or before the date hereof and on each
April 1,  July 1,  October  1,  January  1  thereafter  during  the term of this
Agreement.  Any payment made on or before the date hereof shall be pro rated for
the number of days from the date hereof through March 31, 1997.

         Section 3.6. Syndication Fee.. The Borrower shall pay to the Agent, for
the ratable benefit of the Banks, a syndication fee of $100,000.  This fee shall
be due and payable on the Closing Date.

         Section 3.7. Payments Generally.

         (a) All payments  under this  Agreement or the Notes,  shall be made in
Dollars in  immediately  available  funds to the Banks,  in accordance  with the
respective  obligations of the Borrower then due and payable to each of them not
later than 1:00 p.m. New York City time on the relevant  dates  specified  above
(each such payment made after such time on such due date is to be deemed to have
been made on the next succeeding Banking Day), to the Bank's Lending Office. The
Borrower will notify the Banks of any payment pursuant to the provisions of this
Section at the same time it makes any such payment. Each Bank may (but shall not
be obligated  to) debit the amount of any such  payment to any ordinary  deposit
account of the Borrower with such Bank; provided,  however, that the Banks shall
not be  permitted  to debit any funds which are not  available  to the  Borrower
other than on an overdraft basis. The Borrower shall, at the time of making each
payment under this Agreement or the Notes, specify to the Banks the principal or
other amount  payable by the Borrower under this Agreement or the Notes to which
such  payment is to be applied;  provided,  however,  that in the event that the
Borrower  fails to so  specify,  or if an Event of Default has  occurred  and is
continuing,  the Banks shall apply such  payment as they may elect in their sole
discretion.  If the due date of any payment  under this  Agreement  or the Notes
would  otherwise  fall on a day which is not a Banking  Day,  such date shall be
extended to the next  succeeding  Banking Day and interest  shall be payable for
any principal so extended for the

                                       18
<PAGE>
period of such extension.  Except to the extent otherwise provided herein, it is
the  intention of the parties  that all payments  hereunder be made to the Banks
pro rata in accordance with their respective Commitment Proportions.

         (b) All payments made by the Borrower under this  Agreement,  the Notes
or the other  Facility  Documents  shall be made free and clear of, and  without
deduction  or  withholding  for or on account of, any present or future  income,
stamp or other taxes, levies,  imposts,  duties,  charges,  fees,  deductions or
withholdings,  now or hereafter imposed, levied, collected, withheld or assessed
by any governmental or taxing  authority of any jurisdiction  located outside of
the United  States,  excluding,  (x) in the case of each Bank,  income taxes and
franchise  taxes  (imposed  in lieu of income  taxes)  imposed on such Bank as a
result of a  present  or  former  connection  between  the  jurisdiction  of the
government or the taxing authority  imposing such tax and such Bank (excluding a
connection  arising  solely  from  such  Bank  having  executed,  delivered,  or
performed  its  obligations  or  received a payment  under,  or  enforced,  this
Agreement,  the  Notes  or  the  other  Facility  Documents)  or  any  political
subdivision or taxing  authority  thereof or therein,  and (y) taxes  (including
withholding taxes) imposed by reason of the failure of the Agent or any Bank, in
either case that is organized  outside the United States, to comply with Section
3.7(c) hereof (or the inaccuracy at any time of the certificates,  documents and
other evidence  delivered  thereunder)  (all such  non-excluded  taxes,  levies,
imposts,  duties,  charges,  fees, deductions and withholdings being hereinafter
called "Taxes").  If any Taxes are withheld from any amounts payable to any Bank
hereunder or under the Facility  Documents,  the amounts so payable to such Bank
shall be increased to the extent  necessary to yield to such Bank (after payment
of all Taxes) interest or any such other amounts payable  hereunder at the rates
or in the amounts specified in this Agreement,  the Notes and the other Facility
Documents.  Whenever any Taxes are payable by the Borrower,  the Borrower  shall
send to such Bank within 30 days after the date of any payment, a certified copy
of an  original  official  receipt  received  by the  Borrower  showing  payment
thereof.  If the  Borrower  fails to pay any Taxes  when due to the  appropriate
taxing  authority or fails to remit to the Banks the required  receipts or other
required  documentary  evidence,  the Borrower shall indemnify the Banks for any
incremental taxes,  interest or penalties that may become payable by any Bank as
a result of any such failure.  This indemnification shall be made within 30 days
from the date such Bank or the Agent (as the case may be) makes  written  demand
therefor.  If any Bank  receives a refund in respect of any Taxes for which such
Bank has received payment from the Borrower hereunder,  such Bank shall promptly
notify  the  Borrower  of such  refund  and such Bank  shall,  within 30 days of
receipt of a request by the Borrower repay such refund to the Borrower, provided
that the Borrower,  upon the request of such Bank,  agrees to return such refund
(plus any  penalties,  interest or other charges) to such Bank in the event such
Bank is required to repay such refund.  The agreements in this subsection  shall
survive the  termination  of this  Agreement and the Facility  Documents and the
payment of the Notes and all other amounts payable hereunder or thereunder.

         Section 3.8. Interim Adjustments to Borrowing Base.

         (a) The Borrowing Base shall be adjusted periodically as follows:

             The Borrowing Base shall be increased to include:

                                       19
<PAGE>
                   (A) Real  Estate  Assets that are  acquired  by the  Borrower
and/or the Guarantors  and that satisfy the definition of "Eligible  Properties"
hereunder; and

                   (B) Real  Estate  Assets  that do not  qualify  as  "Eligible
Properties" but subsequently satisfy the requirements of "Eligible Properties";

provided,  however,  that in either case with respect to any such property,  the
Agent, on behalf of the Banks,  shall be permitted to conduct such due diligence
investigations as the Banks deem appropriate prior to including such property as
an "Eligible Property" and the Banks shall be satisfied in all respects with the
results of such investigation.

             (ii) Conversely, the Borrowing Base shall be decreased to exclude:

                   (A) Real Estate  Assets that are sold by the  Borrower or any
Guarantor or that become subject to liens securing Indebtedness which exceed 10%
of the annualized and normalized  actual  year-to-date  Net Operating Income for
such property capitalized at 11.5%; and

                   (B) Any Real Estate Asset that  satisfies  the  definition of
"Eligible  Property,"  (i) if the  tenant  at  such  property  has  delivered  a
termination  notice,  or (ii) 60 days prior to the termination of the lease with
respect to such  property or (iii) if the tenant  otherwise  ceases  paying rent
with respect to such property.

         (b)  Upon the  happening  of any of the  events  described  above,  the
Borrower  shall  deliver to the Banks a notice  thereof as required  pursuant to
Section 7.8 hereof.  In addition,  the Borrower shall deliver to the banks a new
Borrowing Base  Certificate  within five (5) Banking Days after the happening of
any such event;  provided,  however,  that in the case of clause (i) above,  the
Borrower shall not deliver a new Borrowing Base  Certificate  including any such
property  until the Agent shall have  completed its due diligence  investigation
and the Banks  shall have been  satisfied  with the results  thereof.  The Agent
agrees  to use all  reasonable  efforts  to  complete  any  such  due  diligence
investigation  within 20 Business  Days of  receiving  notice from the  Borrower
thereof.

                                   ARTICLE 4.
                             YIELD PROTECTION, ETC.

         Section 4.1. Certain Compensation.

         (a) The Borrower  hereby agrees to indemnify the Banks against any loss
or  expense  which  the  Banks  or any one of them  may  sustain  or  incur as a
consequence of any of the following:

                                       20
<PAGE>
                    (i) the receipt or recovery by a Bank,  whether by voluntary
         prepayment,  acceleration  or otherwise,  of all or any part of a LIBOR
         Loan prior to the last day of an Interest Period applicable thereto;

                    (ii) the conversion,  prior to the last day of an applicable
         Interest Period, of a LIBOR Loan into a Base Rate Loan;

                    (iii) the failure by the  Borrower to borrow any LIBOR Loan,
         convert any Base Rate Loan to a LIBOR Loan or  continue  any LIBOR Loan
         on the date of borrowing,  conversion or continuation  set forth in the
         notice  delivered by the Borrower  pursuant to the  provisions  hereof,
         unless such failure to borrow  results from the Banks'  failure to fund
         such  borrowing when the Banks are required to do so under the terms of
         this Agreement; or

                    (iv) the failure by the Borrower to pay,  punctually  on the
         due date thereof, any amount payable by the Borrower with respect to or
         on account of any LIBOR Loan.

         Without limiting the effect of the foregoing,  the amount to be paid by
the  Borrower  to any  Bank in  order  to so  indemnify  such  Bank for any loss
occasioned  by any of the events  described in the preceding  paragraph,  and as
liquidated  damages  therefor,  shall be equal to the excess,  discounted to its
present  value as of the date paid to such Bank,  of (i) the amount of  interest
which  otherwise  would  have  accrued  on the  principal  amount  so  received,
recovered,  converted or not borrowed during the period (the "Indemnity Period")
commencing with the date of such receipt,  recovery,  conversion,  or failure to
borrow to the last day of the applicable  Interest Period for such LIBOR Loan at
the rate of  interest  applicable  to such LIBOR  Loan (or the rate of  interest
agreed to in the case of a failure to  borrow)  provided  for  herein  (prior to
default)  over (ii) the amount of  interest  which  would be earned by such Bank
during the  Indemnity  Period if it invested the  principal  amount so received,
recovered,  converted or not borrowed at the rate per annum  approximately equal
to LIBOR, as the case may be, on an amount approximately equal to such principal
amount for a period of time comparable to such Indemnity Period.

         Any Bank requesting  indemnification pursuant to this Section 4.1 shall
deliver to Agent and to the Borrower a certificate as to any additional  amounts
payable  pursuant  to this  Section  4.1  setting  forth the basis and method of
determining  such amounts shall be conclusive,  absent manifest error, as to the
determination  by each Bank set forth  therein  if made  reasonably  and in good
faith. The Borrower shall pay to each Bank any amounts so certified by such Bank
within 10 days of receipt of any such certificate.  For purposes of this Section
4.1, all references to the "Bank" shall be deemed to include any  participant in
this Agreement and/or the Loans.

         Section 4.2. Additional Costs.

                                       21
<PAGE>
         (a) The Borrower  shall pay to each Bank,  from time to time, on demand
of any such Bank,  such  amounts  as such Bank may  reasonably  determine  to be
necessary to compensate it for any costs which Bank  reasonably  determines  are
attributable to its obligation to make any Loan  hereunder,  or any reduction in
any amount  receivable  by such Bank  hereunder  in respect of any such Loans or
such obligation  (such  increases in costs and reductions in amounts  receivable
being herein called  "Additional  Costs"),  resulting from any Regulatory Change
which:  (i) changes  the basis of  taxation of any amounts  payable to such Bank
under this Agreement or its Note in respect of any such obligations  (other than
taxes imposed on the overall net income of such Bank for any of such obligations
by the  jurisdiction  in which  such Bank has its  principal  office or  Lending
Office or franchise  taxes imposed in lieu of income taxes);  or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment,  minimum
capital,  capital ratio or similar  requirements  relating to any  extensions of
credit or other assets of, or any deposits  with or other  liabilities  of, such
Bank (including any of such Loans or any deposits referred to in the definitions
of  "LIBOR  Loans");  or  (iii)  imposes  any  other  condition  affecting  this
Agreement,  or its Note (or any of such extensions of credit or liabilities) and
such Bank's  obligations with respect  thereto.  Each Bank will notify the Agent
and the Borrower of any event  occurring  after the date of this Agreement which
will  entitle  such Bank to  compensation  pursuant  to this  Section  4.2(a) as
promptly as  practicable  after it obtains  knowledge  thereof and determines to
request such compensation.  Notwithstanding  anything herein to the contrary, no
provision of this Section 4.2(a) shall be deemed to require the Borrower to make
any payment of any amount to the extent that such payment  would  duplicate  any
payment made by the Borrower pursuant to Section 3.7 hereof.

         (b) Without  limiting the effect of the  foregoing  provisions  of this
Section 4.2, in the event that,  by reason of any  Regulatory  Change,  any Bank
either (i) incurs  Additional  Costs based on or measured by the excess  above a
specified level of the amount of a category of deposits or other  liabilities of
such Bank which  includes  deposits by reference  to which the interest  rate on
LIBOR  Loans is  determined  as  provided  in this  Agreement  or a category  of
extensions of credit or other assets of such Bank which  includes LIBOR Loans or
(ii)  becomes  subject  to  restrictions  on the  amount of such a  category  of
liabilities or assets which it may hold,  then, if such Bank so elects by notice
to the Borrower, the obligation of such Bank to make LIBOR Loans hereunder shall
be suspended  until the date such  Regulatory  Change ceases to be in effect (in
which case the provisions of Section 4.5 shall be applicable).

         (c) Without  limiting the effect of the  foregoing  provisions  of this
Section 4.2 (but without duplication),  the Borrower shall pay to each Bank from
time to time on request such amounts as such Bank may reasonably determine to be
necessary to compensate  such Bank for any costs which it reasonably  determines
are  attributable to the maintenance by it or any of its Affiliates  pursuant to
any law or regulation of any  jurisdiction or any  interpretation,  directive or
request  (whether  or not having  the force of law and  whether in effect on the
date of this Agreement or thereafter) of any court or  governmental  or monetary
authority,  of capital in  respect of its Loans or other  obligations  hereunder
(such  compensation  to  include,  without  limitation,  an amount  equal to any
reduction in return on assets or equity of such Bank to a level below that which
it could have achieved but for such law, regulation,  interpretation,  directive
or request).  Each Bank will notify the Agent and the Borrower if it is entitled
to compensation

                                       22
<PAGE>
pursuant to this Section 4.2(c) as promptly as  practicable  after it determines
to request such compensation.

         (d) A  statement  of any Bank  setting  forth such  amount or  amounts,
supported  by  calculations  in  reasonable  detail,  as shall be  necessary  to
compensate  such Bank as specified in paragraphs (a), (b) and (c) above shall be
delivered to the Borrower and shall be conclusive absent demonstrable error. The
Borrower  shall pay each such Bank the amount shown as due on any such statement
within ten (10) days after its receipt of the same.

         (e) Any Bank claiming any additional  amounts payable  pursuant to this
Section  4.2  agrees  to use  reasonable  efforts  (consistent  with  legal  and
regulatory  restrictions) to designate a different  Lending Office if the making
of such a  designation  would  avoid the need for,  or reduce the amount of, any
such additional amounts and would not, in the reasonable  judgment of such Bank,
be otherwise disadvantageous to such Bank.

         Section  4.3.  Limitation  on Types of  Loans.  Anything  herein to the
contrary notwithstanding, if:

         (a) any Bank determines (which  determination shall be conclusive) that
quotations  of  interest  rates for the  relevant  deposits  referred  to in the
definition  of  "LIBOR  Loans" in  Section  1.1 are not  being  provided  in the
relevant amounts or for the relevant  maturities for purposes of determining the
rate of interest for any LIBOR Loans as provided in this Agreement; or

         (b) any Bank determines (which  determination  shall be conclusive) and
notifies the Agent and the Borrower that the relevant rates of interest referred
to in the definition of "LIBOR Loans" in Section 1.1 upon the basis of which the
rate of  interest  for any  type  of  LIBOR  Loans  is to be  determined  do not
adequately  cover the cost to such Bank of making  or  maintaining  such  Loans,
then, such Bank shall as soon as practicable  thereafter give written notice (or
facsimile  notice promptly  confirmed in writing) of such  determination  to the
Agent and the  Borrower,  and any  request by the  Borrower  for the making of a
LIBOR Loan or conversion or  continuation of any Loan into a LIBOR Loan, in each
case,  pursuant to the provisions hereof shall,  until the circumstances  giving
rise to such notice no longer  exist,  be deemed to be a request for a Base Rate
Loan. Each  determination  by a Bank made hereunder  shall be conclusive  absent
manifest error.

         Section 4.4.  Illegality.  Notwithstanding  any other provision in this
Agreement,  in the event that it becomes  unlawful  for any Bank or its  Lending
Office to honor its obligation to make or maintain LIBOR Loans  hereunder,  then
such Bank shall  promptly  notify the Agent and the  Borrower  thereof  and such
Bank's  obligation to make or maintain LIBOR Loans  hereunder shall be suspended
until such time as such Bank may again make and maintain such affected Loans (in
which case the provisions of Section 4.5 shall be applicable).

         Section 4.5. Certain LIBOR Loans Pursuant To Sections 4.2. 4.3 and 4.4.
If an event  referred to in Section 4.2, 4.3 or 4.4 has  occurred,  the affected
Bank  shall be  required  to

                                       23
<PAGE>
make Base Rate Loans in accordance with this  Agreement,  and all LIBOR Loans of
such Bank then outstanding shall be automatically converted into Base Rate Loans
on the date  specified  by such Bank in such  notice  (which  shall be, for each
LIBOR Loan, the last day of the Interest Period  applicable  thereto unless such
Bank  determines  that it is  required  by law to convert  such LIBOR Loan on an
earlier date in which case such  earlier date shall be the date of  conversion),
and, to the extent that LIBOR Loans are so made as (or converted into) Base Rate
Loans, all payments of principal which would otherwise be applied to such Bank's
LIBOR Loans shall be applied instead to its Base Rate Loans. In the event of any
conversion  of any LIBOR Loan to a Base Rate Loan  pursuant to Section 4.5 prior
to the maturity  date with respect to such LIBOR Loan the Borrower  shall pay to
the  relevant  Bank all  amounts  required  to be paid  pursuant  to Section 4.1
hereof.

         Section 4.6. Survival.  The indemnities and other obligations set forth
in this Article 4 shall  survive  payment in full of all Loans or  extensions of
credit made pursuant to this Agreement and the Termination Date.

                                   ARTICLE 5.
                              CONDITIONS PRECEDENT.

         Section 5.1. Documentary  Conditions Precedent.  The obligations of the
Banks  to make the  Loans  on or  after  the  date  hereof  are  subject  to the
conditions precedent that:

         (a) each Bank shall have  received on or before the date hereof each of
the following,  in form and substance  reasonably  satisfactory to such Bank and
its counsel:

                   (i) this  Agreement  and the Note  executed  in favor of such
         Bank duly executed by the Borrower;

                   (ii) a certificate  of the Secretary of the Borrower and each
         of the  Guarantors  listed on Schedule  5.1A,  dated the Closing  Date,
         attesting  to all  corporate  action  taken by such  entity,  including
         resolutions  of its  Board  of  Directors  authorizing  the  execution,
         delivery  and  performance  of the  Facility  Documents  and each other
         document to be  delivered  pursuant to this  Agreement,  together  with
         certified  copies of the certificate or articles of  incorporation  and
         the by-laws of the  Borrower  and each of such  Guarantors;  and,  such
         certificate  shall state that the resolutions  and corporate  documents
         thereby certified have not been amended, modified, revoked or rescinded
         as of the date of such certificate;

                   (iii) a certificate of the Secretary of the Borrower and each
         of the  Guarantors  (which in the case of Guarantors may be in the form
         of an omnibus  certificate),  dated the Closing  Date,  certifying  the
         names and true signatures of the officers of such entity  authorized to
         sign the Facility  Documents and the other documents to be delivered by
         such entity under this Agreement;

                                       24
<PAGE>
                   (iv)  a  certificate  of a  duly  authorized  officer  of the
         Borrower,  dated the Closing Date, stating that the representations and
         warranties  in  Article 6 are true and  correct  on such date as though
         made on and as of such  date  and  that no event  has  occurred  and is
         continuing which constitutes a Default or Event of Default;

                   (v) Guarantees, duly executed by each Guarantor;

                   (vi)  Security  Agreements,  duly  executed  by  each  of the
         Operating  Companies,   together  with  fully  executed  and  completed
         financing  statements  on form UCC-1,  in proper form for filing in all
         jurisdictions  necessary or, in the reasonable discretion of the Agent,
         desirable to perfect the security  interests granted under the Security
         Agreements;

                   (vii) UCC search results identifying all financing statements
         on  file  with  respect  to the  Borrower  or  the  Guarantor  in  such
         jurisdictions as the Agent requires indicating that no party claims any
         interest in the property of the Borrower or the  Guarantors  other than
         the holders of Permitted Liens;

                   (viii)  results  of  title  searches  with  respect  to  such
         properties  of the  Borrower and the  Guarantor  as the Agent  requires
         which shall be satisfactory to the Banks in all respects;

                   (ix) the  Assignments,  duly executed by each of the Borrower
         and the  Guarantors  in proper  form for  filing  in all  jurisdictions
         necessary or in the  reasonable  discretion of the Agent,  desirable to
         record the Banks' interest in the leases on the Real Estate Assets;

                   (x) the Environmental  Indemnity Agreement,  duly executed by
         the Borrower and each Guarantor;

                   (xi) an opinion of counsel for the Borrower  and  Guarantors,
         dated the Closing Date, in substantially the form of Exhibit F;

                   (xii)  satisfactory   evidence  that  the  Borrower  and  the
         Guarantors listed on Schedule 5.1A are duly organized, validly existing
         and in good standing under the laws of their  respective  jurisdictions
         of incorporation;

                   (xiii)  audited  consolidated  balance sheets of the Borrower
         and the  Guarantors as of December 31, 1995,  and  consolidated  income
         statements  and  statements  of  cash  flows  of the  Borrower  and the
         Guarantors  for the fiscal year then ended,  all prepared in accordance
         with GAAP,  together  with the  unqualified  opinion  thereon of Arthur
         Andersen, LLP, independent certified public accountants,  together with
         management prepared consolidating balance sheets, income statements and
         statements  of cash  flows as of the same  date and  covering  the same
         fiscal period,  and unaudited  consolidated and  consolidating  balance

                                       25
<PAGE>
         sheet of the Borrower  and the  Guarantors  as at  September  30, 1996,
         together  with income  statements  and  statements of cash flows of the
         Borrower and the Guarantors for the fiscal quarter ended  September 30,
         1996 and for the period  commencing  at the end of the previous  fiscal
         year and ending with the end of such quarter, each prepared by or under
         the  supervision  of the chief  financial  officer of the  Borrower  in
         accordance with GAAP;

                   (xiv) evidence that the Borrower and the Guarantors  maintain
         such  insurance  with respect to their business and properties as would
         customarily  be  maintained by similar  businesses  which are similarly
         situated;

                   (xv) satisfactory  evidence that neither the Borrower nor any
         Guarantor is in default with respect to any contractual  obligations to
         which it is a party, the effect of which may be material and adverse to
         the  Borrower  or any  Operating  Company,  or  the  Borrower  and  the
         Guarantors,  taken as a whole, or to the ability of the Borrower or any
         Guarantor  to  perform  its  obligations  hereunder  or under the other
         Facility Documents;

                   (xvi) a duly executed  Borrowing Base Certificate  containing
         information   as  of  September   30,  1996,   in  form  and  substance
         satisfactory to the Banks;

                   (xvii)  a  property  cash  flow  analysis  in the form of the
         property  cash  flow  analysis   previously   delivered  to  the  Banks
         confirming  information as of June 1, 1996, which shall in all respects
         be satisfactory to the Banks,  together with a certification  of a duly
         authorized  officer of the Borrower  (A) that no event or  circumstance
         has  occurred  since June 1, 1996 which  would have a material  adverse
         effect on the information  contained in such analysis or (B) describing
         all material changes in such analysis from the date thereof through the
         date hereof;

                   (xviii)  such  other   documents,   instruments,   approvals,
         opinions and evidence as the Banks may reasonably require.

         (b) the  Borrower  shall have paid or caused to be paid to the Banks in
full  all fees and  expenses  required  to be paid  hereunder  or in  connection
herewith,  and  including  all  fees  and  expenses  of the  Banks  incurred  in
connection  with the  preparation,  execution and delivery of this Agreement and
the  other  Facility   Documents  and  the   consummation  of  the  transactions
contemplated  thereby  and  all  expenses  incurred  by the  Agent  pursuant  to
Subparagraph (g) below;

         (c) the Borrower and the  Guarantors  shall have obtained all consents,
permits and approvals  required in connection  with the execution,  delivery and
performance  by the Borrower and the Guarantors of their  obligations  hereunder
and such  consents,  permits  and  approvals  shall  continue  in full force and
effect;

                                       26
<PAGE>
         (d) the Banks shall be satisfied that the proceeds of the initial Loans
hereunder  shall be applied to pay the Borrower's  Existing Bank Debt in full on
the date  hereof,  that all  UCC-1  financing  statements  filed to  secure  the
Borrower's  obligations  with respect to the Existing  Bank Debt shall have been
terminated,  and that all existing  lines of credit in demand  facilities of the
Borrower and the Guarantor shall be terminated;

         (e) the  Agent  shall  have been  provided  with  copies of all  credit
agreements, loan agreements,  indentures, mortgages and other documents relating
to the  extension  of credit to the  Borrower  and shall be  satisfied  with its
review of the foregoing;

         (f) the  Banks  shall be  satisfied  with the form and  content  of all
Schedules  delivered by the Borrower  pursuant to this Agreement or any document
delivered in connection herewith;

         (g) the Agent shall have  conducted a physical  inspection  of no fewer
than twenty (20) Eligible Properties and shall be satisfied that such properties
are  occupied  as  represented  by the  Borrower,  are in good  and  workmanlike
condition  and are otherwise in  conformance  with the Agent's  minimal  lending
requirements;

         (h) the Agent shall have  received  copies of owner's  title  insurance
policies on each of the properties referred to in subparagraph (g) above;

         (i) the Agent shall have verified the nine month Net  Operating  Income
at September 30, 1996 (which shall be annualized and normalized) for each of the
properties  referred to in subparagraph (g) above,  including analysis of future
contractual income stream and verification of revenues and expenses;

         (j) the Agent shall have  completed a review of all leases  relating to
each of the properties referred to in subparagraph (g) above;

         (k) all  legal  matters  in  connection  with this  financing  shall be
reasonably satisfactory to the Banks and their counsel.

         Section 5.2. Additional  Conditions  Precedent.  The obligations of the
Banks to make any Loan  shall be  subject to the  further  conditions  precedent
(which shall be in addition to, and shall not be deemed to limit or modify,  any
of the other terms and conditions  hereunder)  that on the date of such Loan the
Banks shall have received the following:

         (a) a certificate  executed by the Chief Financial Officer or the Chief
Executive  Officer of the Borrower  dated as of such date,  stating that (i) the
representations and warranties contained in Article 6 hereof, which for purposes
of this Section, shall be deemed to relate to the Borrower and to each Guarantor
as if each Person where the subject of each such  representation  and  warranty,
are true and correct in all material respects on and as of the date of such Loan
as  though  made on and as of such date  (except  when  such  representation  or
warranty by its terms relates to the date hereof or another  specific date; (ii)
no Default or Event of Default has  occurred

                                       27
<PAGE>
and is  continuing  or would result from any such Loan,  (iii) since the date of
the most recent  Borrowing Base  Certificate  there has been no material adverse
change  in the  Borrowing  Base;  and (iv)  since  the  date of the most  recent
financial  statements  delivered  hereunder  there has been no material  adverse
change in the business,  properties,  prospects, financial or other condition of
the Borrower or any Guarantor;

         (b) a certificate  executed by the Chief Financial Officer or the Chief
Executive Officer of the Borrower,  dated as of such date, in form and substance
satisfactory  to the Banks  stating  that after  giving  effect to the  proposed
borrowing,  Aggregate Outstandings,  will not exceed the lesser of (i) the total
Commitments or (ii) the Borrowing Base then in effect; and

         (c) a copy of the Borrower's  most recent  Borrowing  Base  Certificate
delivered pursuant to Section 7.8 hereof.

                                   ARTICLE 6.
                         REPRESENTATIONS AND WARRANTIES.

         The Borrower and, where applicable,  each Guarantor,  hereby represents
and warrants that:

         Section  6.1.  Incorporation,  Good  Standing  and Due  Qualifications;
Compliance   with  Law.  Each  of  the  Borrower  and  the  Guarantors  is  duly
incorporated,  validly  existing  and in good  standing  under  the  laws of its
respective jurisdiction of incorporation,  has the corporate power and authority
to own its assets and to  transact  the  business  in which it is now engaged or
presently proposes to be engaged, and is duly qualified as a foreign corporation
and in good  standing  under the laws of each other  jurisdiction  in which such
qualification is required except where the failure to so qualify would not cause
a material adverse effect upon the operations, business, properties or financial
condition  of the Borrower or any  Operating  Company or of the Borrower and the
Guarantors,  taken  as a  whole.  In  addition,  the  Borrower  and  each of the
Guarantors is in compliance  in all material  respects with all laws,  treaties,
rules or  regulations,  and  determinations  or orders of or with respect to all
arbitrators, courts or other governmental authorities applicable to it.

         Section 6.2. Power and Authority; No Conflicts. The execution, delivery
and  performance  by the  Borrower  and the  Guarantors  of each of the Facility
Documents  to which it is a party  have been duly  authorized  by all  necessary
corporate action and do not and will not: (a) require any consent or approval of
the  stockholders of the Borrower or any of the  Guarantors;  (b) contravene the
charter or by-laws of the  Borrower  or any of the  Guarantors;  (c) violate any
provision of, or require any filing,  registration,  consent or approval  under,
any law, rule,  regulation  (including,  without  limitation,  the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal  Reserve system
as in effect from time to time),  order,  writ,  judgment,  injunction,  decree,
determination or award presently in effect having applicability to the Borrower;
(d) result in a breach of or  constitute a default or require any consent  under
any indenture or loan agreement or any other  agreement,  lease or instrument to
which the Borrower or any of the Guarantors is a party or by which properties of
the Borrower or any of the

                                       28
<PAGE>
Guarantors  may be bound or  affected;  (e) result in or require the creation or
imposition of any Lien upon or with respect to any of the  properties  now owned
or hereafter  acquired by the Borrower or any of the Guarantors  except in favor
of the  Banks as  herein  provided;  or (f)  cause  the  Borrower  or any of the
Guarantors  to be in  default  under any such  rule,  regulation,  order,  writ,
judgment,  injunction,  decree,  determination  or award or any such  indenture,
agreement, lease or instrument.

         Section 6.3. Legally Enforceable Agreements. Each Facility Document is,
or when  delivered  under this  Agreement  will be, a legal,  valid and  binding
obligation  of the  Borrower and each  Guarantor  (if such entity or Person is a
party thereto)  enforceable  against such entities or Person in accordance  with
its  terms,  except  to the  extent  that such  enforcement  may be  limited  by
applicable bankruptcy,  insolvency, fraudulent conveyance and other similar laws
affecting  creditors' rights generally or by the effect of general principles of
equity  which may limit the  availability  of equitable  remedies  (whether in a
proceeding at law or in equity).

         Section 6.4.  Litigation.  There are no actions,  suits or  proceedings
pending or, to the knowledge of the Borrower,  threatened,  against or affecting
the Borrower or any of the Guarantors before any court,  governmental  agency or
arbitrator,  which  would,  in any  one  case  or in the  aggregate,  materially
adversely affect the financial condition, operations,  properties or business of
the  Borrower or any of the  Guarantors,  or the ability of the  Borrower or any
Guarantor to perform its obligations hereunder.

         Section 6.5. Financial Statements;  Other Liabilities. The consolidated
balance sheet of the Borrower and the  Guarantors  as at December 31, 1995,  and
the related  income  statements  and statements of cash flow of the Borrower and
the  Guarantors  for the fiscal year then  ended,  and the  accompanying  notes,
together  with  the  unqualified  opinion  thereon  of  Arthur  Andersen,   LLP,
independent  certified public accountants,  and the interim financial statements
of the  Borrower  and  the  Guarantors  as at and as of (as  the  case  may  be)
September  30, 1996,  copies of which have been  furnished to each of the Banks,
fairly present the financial  condition of the Borrower and the Guarantors as at
such dates and the results of the  operations of the Borrower and the Guarantors
for the  periods  covered  by  such  statements,  all in  accordance  with  GAAP
consistently applied (subject, in the case of interim financial  statements,  to
year-end  adjustments  and  except,  in  the  case  of  such  interim  financial
statements,  for the absence of notes thereto prepared in accordance with GAAP).
As of the date hereof,  there are no  liabilities or obligations of the Borrower
or any of the Guarantors , whether  direct or indirect,  absolute or contingent,
or matured or  unmatured,  other than (a) as  disclosed  or provided  for in the
financial  statements and notes thereto which are referred to above or which are
not required to be so disclosed,  or (b) which are  disclosed  elsewhere in this
Agreement  or in the  Schedules  hereto  or  which  are  not  required  to be so
disclosed,  or (c) arising in the ordinary course of business since December 31,
1995 or (d) created by this  Agreement.  The written  information,  exhibits and
reports  furnished  by  the  Borrower  to  the  Banks  in  connection  with  the
negotiation of this Agreement are complete and correct in all material respects.
No event has occurred  which would  constitute a material  adverse change in the
business,  financial  or other  condition  or  prospects of the Borrower and the
Guarantors taken as a whole.

                                       29
<PAGE>
         Section 6.6.  Ownership and Liens. The Borrower and the Guarantors have
title to, or valid  leasehold  interests in, all of its  properties  and assets,
real and personal,  including the properties and assets, and leasehold interests
reflected in the  financial  statements  referred to in Section 6.5, and none of
the properties and assets owned by the Borrower or the  Guarantors,  and none of
their  respective  leasehold  interests  is  subject  to any  Lien,  except  for
Permitted Liens.

         Section 6.7. Taxes.  The Borrower and each of the Guarantors have filed
all tax  returns  (foreign,  federal,  state  and  local)  required  to be filed
(including, without limitation, with respect to payroll and sales taxes) and the
Borrower  and each of the  Guarantors  have paid all taxes  (including,  without
limitation,  all payroll and sales taxes),  assessments and governmental charges
and levies shown thereon to be due, including interest and penalties, other than
taxes,  assessments and governmental  charges and levies being contested in good
faith by appropriate  proceedings and with respect to which adequate reserves in
conformity  with GAAP shall have been  provided on the books of the Borrower and
the Guarantors.

         Section 6.8. ERISA.  As of the date hereof,  the Borrower and its ERISA
Affiliates  are in  compliance  in all  material  respects  with all  applicable
provisions of ERISA. No Reportable  Event has occurred with respect to any Plan;
no notice of intent  to  terminate  a Plan has been  filed nor has any Plan been
terminated;  no circumstance exists which constitutes grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate,  or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the  Borrower,  nor any ERISA  Affiliate  has  completely  or  partially
withdrawn  under Sections 4201 or 4204 of ERISA from a  Multiemployer  Plan; the
Borrower  and each of its  ERISA  Affiliates  have  met  their  minimum  funding
requirements  under  ERISA with  respect to all of their  Plans and there are no
Unfunded  Vested  Liabilities,  and neither the Borrower nor any ERISA Affiliate
has incurred any material liability to the PBGC under ERISA.

         Section 6.9.  Subsidiaries.  As of the date  hereof,  Schedule 6.9 is a
complete and correct list of all Subsidiaries of the Borrower.

         Section  6.10.  Credit  Arrangements.  Schedule  6.10 is a complete and
correct list of all agreements,  indentures,  purchase  agreements,  guaranties,
Capital Leases and other  investments,  agreements and arrangements in effect on
the date of this Agreement  providing for or relating to extensions of credit in
the  aggregate  amounts  of  $250,000  or  more  to the  Borrower  or any of the
Guarantors for borrowed money  (including  agreements and  arrangements  for the
issuance  of  letters  of  credit  or for  acceptance  financing  but  excluding
indebtedness which is non-recourse to the Borrower or the Guarantors) in respect
of which the  Borrower  or any of the  Guarantors  is in any manner  directly or
contingently obligated;  and the maximum principal or face amounts of the credit
in question, outstanding and which can be outstanding, are correctly stated, and
all Liens of any nature  given or agreed to be given as  security  therefor  are
correctly described or indicated in such Schedule.

         Section 6.11.  Operation of Business.  The Borrower and the  Guarantors
possess all licenses, permits, franchises,  patents, copyrights,  trademarks and
trade  names,  or  rights  thereto,  to  conduct  their  respective   businesses
substantially as now conducted and as presently

                                       30
<PAGE>
proposed to be conducted except where the failure to obtain any of the foregoing
would not result in a material  adverse  effect upon the  operations,  business,
properties,  or financial  condition of the Borrower or any Operating Company or
of the Borrower and the Guarantors, taken as a whole.

         Section  6.12.  Hazardous  Substances.   Except  as  disclosed  in  the
Borrower's most recent report on Form 10-K (a copy of which has been provided to
the Banks), (i) the Borrower and the Guarantors are in material  compliance with
all applicable  Environmental Laws, and have obtained all necessary licenses and
permits required to be issued pursuant to any applicable  Environmental  Law and
(ii) as of the date hereof,  neither the Borrower nor any of the  Guarantors has
received any notice or communication  from any governmental  agency with respect
to (a) any Hazardous Substance relative to its operations,  property or acts, or
(b)  any  investigation,   demand  or  request  pursuant  to  or  enforcing  any
Environmental  Law relating to it or its operations,  properties or acts, and no
such  investigation  is pending  or, to the  knowledge  of the  Borrower  or any
Guarantor, threatened.

         Section 6.13. No Default on  Outstanding  Judgments or Orders.  Each of
the Borrower and the Guarantors has satisfied all judgments,  orders, notices of
violation  and decrees and neither the Borrower nor any of the  Guarantors is in
default  with  respect to any  judgment,  writ,  injunction,  decree,  notice of
violation,  rule or  regulation  of any court,  arbitrator  or  federal,  state,
municipal or other governmental authority,  commission, board, bureau, agency or
instrumentality, domestic or foreign applicable to it.

         Section  6.14.  Labor  Disputes and Acts of God. As of the date hereof,
neither the business nor the properties of the Borrower or any of the Guarantors
are affected by any fire, explosion,  accident,  strike,  lockout or other labor
dispute, drought, storm, hail, earthquake,  embargo, act of God or of the public
enemy or other casualty  (whether or not covered by  insurance),  materially and
adversely  affecting  such  business  or  properties  or the  operations  of the
Borrower and the Guarantors  taken as a whole, or the ability of the Borrower or
any Guarantor to perform its obligations  hereunder (in each case,  after giving
effect to insurance).

         Section 6.15. Governmental Regulation.  Neither the Borrower nor any of
the Guarantors is subject to regulation under the Public Utility Holding Company
Act of  1935,  the  Investment  Company  Act of 1940  or any  other  statute  or
regulation  limiting  its ability to incur  indebtedness  for money  borrowed as
contemplated hereby.

         Section 6.16.  Partnership,  Etc. Except as disclosed in Schedule 6.16,
neither the Borrower  nor any  Guarantor  is a partner in any  partnership  or a
member in any limited liability partnership or company.

         Section 6.17. No Forfeiture  Proceedings.  Neither the Borrower nor any
of the  Guarantors is engaged in or proposes to be engaged in the conduct of any
business or activity which is likely to result in a Forfeiture  Proceeding,  and
no  Forfeiture  Proceeding  against  any of  them is  pending  or,  to the  best
knowledge of the Borrower and the Guarantors as of the date hereof, threatened.

                                       31
<PAGE>
         Section  6.18.  No Default or Event of Default.  No Default or Event of
Default has occurred and is continuing under this Agreement.

         Section 6.19. Solvency. Without giving effect to any Guarantee executed
in connection  with this  Agreement,  each of the Borrower and the Guarantors is
Solvent.  After  giving  effect  to any such  Guarantee,  the  Borrower  and the
Guarantors, taken as a whole, are Solvent.

         Section 6.20.  Name.  Except as set forth on Schedule 6.20,  during the
five years prior to the making of this  Agreement,  neither the Borrower nor any
Guarantor has been known under, or transacted  business using, any name or trade
style  except  for the name set forth  above  such  entity's  signature  on this
Agreement.

         Section 6.21. Other Agreements. Neither the Borrower nor any Guarantor,
is a party to any  indenture,  loan or  credit  agreement  or any lease or other
agreement or instrument or subject to any charter or corporate restriction which
would,  in any case or in the aggregate  have a material  adverse  effect on its
ability to carry out its obligations  hereunder or under the Facility Documents.
Neither the Borrower, nor any of the Guarantors, is in default in any respect in
the performance,  observance or fulfillment of any of the obligations, covenants
or conditions  contained in any agreement or instrument material to its business
to which it is a party.

         Section 6.22. Eligible Properties.  The Borrower and the Guarantors own
each of the  Eligible  Properties  free and clear of all  liens or  encumbrances
other than liens or encumbrances that secure  indebtedness  aggregating,  in the
case  of any  such  Eligible  Property,  less  than  10% of the  annualized  and
normalized  year-to-date Net Operating  Income for such property  capitalized at
11.5% at the time of determination. The Borrower has provided to the Banks true,
correct and complete copies of all leases applicable to the Eligible  Properties
and neither  the  Borrower,  nor any  Guarantor,  knows of any  present  default
(whether monetary or non-monetary)  under or with respect to any of such leases.
Each of such  leases is in full force and effect  and has not been  modified  or
otherwise amended.

         Section 6.23.  Title  Insurance.  The Borrower and the Guarantors  have
with respect to each Real Property  Asset that is an owned property a fully paid
owner's title insurance policy and with respect to each Real Property Asset that
is a loan  secured by a mortgage  on real  property a fully paid  owner's  title
insurance  policy and with  respect to each Real  Property  Asset that is a loan
secured by a mortgage on real property a fully paid mortgagee's  title insurance
policy.

                                   ARTICLE 7.
                              AFFIRMATIVE COVENANTS

         So long as any of the  Notes  or any  other  Obligations  shall  remain
unpaid or any Bank shall have any  Commitment  hereunder,  the Borrower and each
Guarantor shall:

                                       32
<PAGE>
         Section 7.1. Maintenance of Existence.  Except as otherwise provided in
this Agreement, preserve and maintain its corporate existence and remain in good
standing  in the  jurisdiction  of its  organization,  and  qualify  and  remain
qualified,  as  a  foreign  corporation  in  each  jurisdiction  in  which  such
qualification is required.

         Section 7.2. Conduct of Business. Continue to engage principally in the
principal businesses conducted by it on the date hereof.

         Section 7.3.  Maintenance of Properties.  Maintain,  keep and preserve,
all of its  properties  (tangible  and  intangible)  necessary  or useful in the
proper  conduct of its business in good working  order and  condition,  ordinary
wear and tear excepted.

         Section 7.4.  Maintenance of Records.  Keep, adequate records and books
of account, in which complete entries,  reflecting all financial transactions of
such Person, will be made.

         Section 7.5. Maintenance of Insurance.

         (a) With respect to each Operating Company, maintain insurance covering
its assets and its  business  with  financially  sound and  reputable  insurance
companies or  associations  properly  licensed to do business in New York and in
the other  jurisdictions where inventory is located in such amounts and covering
such risks (including,  without  limitation,  products liability) as are usually
carried by companies  engaged in the same or a similar  business  and  similarly
situated  and as are  required by the Facility  Documents.  The  Borrower  shall
provide  the Banks  notice that such  policies  have been paid in full and shall
deliver  certified  copies  of the  policy  or  policies  of such  insurance  or
certificates of insurance to the Banks if the Banks so request.

         (b)  With  respect  to the  Borrower  or any  Guarantor  that is not an
Operating  Company,  provide  copies of  evidence of  insurance  provided by any
tenant of a Real Estate Asset as required by the lease relating to such property
and, if any tenant is in default of its  obligation to maintain  insurance or if
any Real Estate Asset becomes vacant, the Borrower or the Guarantor, as the case
may be, shall maintain such insurance as is required by Section 7.11 hereof.

         Section 7.6.  Compliance with Laws. Comply and cause each tenant of the
Eligible  Properties to comply with all applicable laws, rules,  regulations and
orders.

         Section 7.7. Right of Inspection. (a) Subject to the terms of any lease
relating to any Real Estate Asset, at any reasonable time upon reasonable notice
during  normal  business  hours and from time to time,  permit  any Agent or any
agent or  representative  thereof,  to make  physical  inspections  of each Real
Estate Asset and to examine and make copies and  abstracts  from the records and
books of account of, and visit the properties of, such Person and to discuss the
affairs,  finances  and  accounts of such Person  with any of its  officers  and
directors and such entity's independent accountants.  In addition, if during the
course  of any  such  examination  hereunder,  anything  comes  to  the  Agent's
attention  which  causes  the  Agent  to  be  concerned  that  there  may  be an
environmental  condition at any Real Estate Asset that is an Eligible  Property,
the

                                       33
<PAGE>
Agent may require the Borrower to permit the Agent to conduct such environmental
inspections  as the Agent shall deem  necessary with respect to such property at
the Borrower's expense;  provided, however that the Borrower may, within 10 days
of receipt of notice from the Agent of its intention to so inspect such Eligible
Property,  elect not to permit the Agent to conduct  such  examination  in which
event such Real Estate Asset shall no longer be considered an Eligible  Property
for purposes of calculating the Borrowing Base;

         (b) In  addition  to the  inspection  rights of the Agent  pursuant  to
subparagraph (a) of this Section, the Agent shall be permitted to conduct annual
due  diligence  investigations  (which  may  include  site  inspections)  of the
Eligible Properties. The scope of such investigations shall be determined by the
Agent and the costs of such  investigations  up to  $15,000  per year,  shall be
borne by the Borrower and shall be paid out of the Administrative Fee.

         Section 7.8.  Reporting  Requirements.  Furnish directly to each of the
Banks:

         (a) (1) as soon as available  and in any event within 90 days after the
end of  each  fiscal  year  of the  Borrower,  audited,  consolidated  financial
statements of the Borrower and the Guarantors,  which shall include consolidated
balance  sheets of the Borrower and the  Guarantors as of the end of such fiscal
year,  together with consolidated income statements and statements of cash flows
of the Borrower and the Guarantors for such fiscal year and as of the end of and
for the prior fiscal year, all prepared in accordance  with GAAP and accompanied
by an  unqualified  opinion  on  such  consolidated  financial  statements  by a
nationally  recognized   independent  certified  public  accountants  reasonably
acceptable  to  the  Banks,  together  with  management  prepared  corresponding
consolidating financial statements,  all prepared by or under the supervision of
the Chief Financial Officer of the Borrower in accordance with GAAP;

         (b) as soon as available  and in any event within 45 days after the end
of each of the  first,  second and third  quarters  of each  fiscal  year of the
Borrower,  Consolidated and Consolidating  financial  statements of the Borrower
and the Guarantors,  which shall include consolidated and consolidating  balance
sheets of the Borrower and the  Guarantors  as of the end of each such  quarter,
together with consolidated and consolidating income statements and statements of
cash flows of the Borrower and the Guarantors for each such quarterly period and
for the period commencing at the end of the previous fiscal year and ending with
the end of such  quarter,  all in reasonable  detail and stating in  comparative
form  the  respective  figures  for the  corresponding  date and  period  in the
previous  fiscal year and all prepared by or under the  supervision of the chief
financial  officer of the Borrower in accordance  with GAAP (subject to year-end
adjustments  and except for the absence of notes thereto  prepared in accordance
with GAAP);

         (c)  simultaneously  with  the  delivery  of  the  financial  reporting
statements  referred  to in (a)  and  (b)  above,  a  certificate  of the  Chief
Executive  Officer or the Chief  Financial  Officer of the Borrower,  certifying
that to the  best of his  knowledge  (i) no  Default  or Event  of  Default  has
occurred and is continuing or, if a Default or Event of Default has occurred and
is  continuing,  a statement  as to the nature  thereof and the action  which is
proposed  to be taken with  respect  thereto,  with  computations  demonstrating
compliance (or non-compliance,  as the case

                                       34
<PAGE>
may be) with the  covenants  contained  in  Article  9, and (ii) such  financial
statements have been prepared in accordance  with GAAP (subject,  in the case of
interim statements,  to year end adjustments and except for the absence of notes
thereto prepared in accordance with GAAP);

         (d) simultaneously with the delivery of the annual financial statements
referred to in Section  7.8(a) above, a certificate  of the  independent  public
accountants  who  audited  such  statements  to the effect  that,  in making the
examination  necessary for the audit of such  statements,  they have obtained no
knowledge  of any  condition  or event which  constitutes  a Default or Event of
Default,  or if such  accountants  shall  have  obtained  knowledge  of any such
condition or event,  specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;

         (e) Quarterly,  as soon as available and, in any event,  not later than
the dates financial  statements are required to be delivered pursuant to (a) and
(b) above, a Borrowing Base Certificate;

         (f) Annually,  not later than February 15 of each year,  the Borrower's
business  plan and  projections  of  financial  statements  for the  immediately
succeeding year illustrating the projected income statements, balance sheets and
statement of cash flows, each in form and substance satisfactory to the Banks;

         (g) Quarterly,  as soon as available and, in any event,  not later than
the dates financial  statements are required to be delivered pursuant to (a) and
(b) above, a report  detailing the performance of all operations of the Borrower
and the Guarantors by business  segment,  in form and substance  satisfactory to
the Banks;

         (h) Property  financial  information in a form consistent with the form
of information provided on Schedule 7.8(h) hereto;

         (i) promptly  after the Borrower or any Guarantor  becomes aware of the
commencement thereof,  notice of (a) all actions,  suits, and proceedings before
any court or  governmental  department,  commission,  board,  bureau,  agency or
instrumentality,  domestic or foreign,  affecting the Borrower or any Guarantor,
including,  without  limitation,  any such  proceeding  relating  to any alleged
violation of any Environmental Law and including any proceedings relating to any
matter if a  determination  adverse to the Borrower and the  Guarantors  in such
proceeding would have a material  adverse effect upon the operations,  business,
properties or financial condition of the Borrower or any Operating Company or of
the Borrower and the Guarantors, taken as a whole or (b) default under any lease
or mortgage  with  respect to any Real Estate  Asset which would have a material
adverse effect upon the operations,  business, properties or financial condition
of the Borrower or any Operating  Company or on the Borrower and the Guarantors,
taken as a whole;

         (j)  immediately  after the Borrower or any  Guarantor has knowledge of
any Default or Event of Default has occurred, a written notice setting forth the
details of such  Default

                                       35
<PAGE>

or Event of Default and the action which is proposed to be taken by the Borrower
with respect thereto;

         (k) as soon as possible and in any event within five Banking Days after
the Borrower  knows that any of the events or  conditions  specified  below with
respect to any Plan or  Multiemployer  Plan have occurred or exist,  a statement
signed by a Chief  Executive  Officer  or the  Chief  Financial  Officer  of the
Borrower  setting  forth  details  respecting  such event or  condition  and the
action, if any, which the Borrower or its ERISA Affiliate  proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA  Affiliate  with respect to such event
or condition):

                   (i) any Reportable Event;

                   (ii) the filing  under  Section  4041 of ERISA of a notice of
         intent to terminate any Plan or the termination of any Plan;

                   (iii) the  institution by PBGC of  proceedings  under Section
         4042 of ERISA for the  termination  of, or the appointment of a trustee
         to  administer,  any Plan,  or the receipt by the Borrower or any ERISA
         Affiliate  of a notice from a  Multiemployer  Plan that such action has
         been taken by PBGC with respect to such Multiemployer Plan;

                   (iv)  receipt by the  Borrower or ERISA  Affiliate  of notice
         from a Multiemployer  Plan of the complete or partial withdrawal by the
         Borrower or any ERISA  Affiliate  under  Section  4201 or 4204 of ERISA
         from a Multiemployer Plan imposing withdrawal liability (as of the date
         of  such   notification)   exceeding  $250,000  or  requiring  payments
         exceeding $250,000 per annum;

                   (v) receipt by the Borrower or any ERISA  Affiliate of notice
         from a Multiemployer  Plan that it is in  reorganization  or insolvency
         pursuant  to  Section  4241 or  4245 of  ERISA  or that it  intends  to
         terminate  or has  terminated  under  Section  4041A  of  ERISA  if the
         aggregate annual contributions of the Borrower and all ERISA Affiliates
         to all  Multiemployer  Plans which are then in  reorganization or being
         terminated  have been  increased  by over amounts  contributed  to such
         Multiemployer  Plans for the plan year  immediately  preceding the plan
         year in which the  reorganization  or  termination  occurs by an amount
         exceeding $250,000; and

                   (vi) the  institution  of a proceeding  by a fiduciary or any
         Multiemployer  Plan  against  the  Borrower or any ERISA  Affiliate  to
         enforce Section 515 of ERISA for delinquent  contributions in excess of
         $100,000 which proceeding is not dismissed within 30 days;

         (l) annually,  not later than June 1 of each year, a property cash flow
analysis  for the  Borrower  and the  Guarantors,  which  shall  be in form  and
substance satisfactory to the Banks;

                                       36
<PAGE>
         (m) upon the  request  of the  Banks,  promptly  after  the  furnishing
thereof, copies of any reports or records required to be filed with or furnished
to any  insurance  carriers or  governmental  authorities  relating to Hazardous
Substances  located on any of real properties  owned or occupied by the Borrower
or any Guarantor ;

         (n)  promptly  after  the  Borrower  or  any  Guarantor  knows  of  the
commencement or threat thereof, notice of any Forfeiture Proceeding;

         (o) promptly after such judgment, decree or order is entered, notice of
any  judgment,  decree  or order  entered  against  the  Borrower  or any of the
Guarantors;

         (p) promptly and, in any event,  within 5 Banking  Days,  notice of any
event which would (i) require an interim  adjustment  of $500,000 or more to the
Borrowing  Base in accordance  with the provisions of Section 3.8 hereof or (ii)
would require an interim adjustment of the Borrowing Base, regardless of amount,
if as a result  of such  adjustment  Aggregate  Outstandings  would  exceed  the
Borrowing Base; and

         (q) such other  information  respecting  the  condition or  operations,
financial  or  otherwise  of the  Borrower  or any of the  Guarantors  or  ERISA
Affiliates, including copies of other reports filed from time to time within the
Securities  and  Exchange  Commission,  as the  Banks  may  from  time  to  time
reasonably request.

         Section  7.9.  Payment of  Obligations.  Pay,  discharge  or  otherwise
satisfy at or before maturity or before they become delinquent,  as the case may
be, all material Indebtedness and other material obligations of whatever nature.

         Section 7.10. Payment of Taxes.

         (a) From time to time when the same shall become due and  payable,  pay
and  discharge  all taxes of every kind and  nature,  all  general  and  special
assessments,  levies, permits,  inspection and license fees, all water and sewer
rents and charges,  and all other public charges  whether of a like or different
nature,  imposed upon or assessed against the Eligible  Properties,  or any part
thereof, or upon the revenues, rents, issues, income and profits of the Eligible
Properties,  or any part thereof, or arising in respect of the occupancy, use of
possession  thereof  unless  such  claims are being  contested  in good faith by
appropriate  proceedings provided that adequate reserves in conformity with GAAP
shall have been provided on the books of the Borrower and/or such  Guarantor(s).
Borrower and each Guarantor shall, upon the request of the Agent, deliver to the
Agent receipts  evidencing the payment of all such taxes,  assessments,  levies,
fees,  rents and other  public  charges  imposed  upon or  assessed  against the
Eligible Properties or any part thereof, or the revenues,  rents, issues, income
or profits thereof.

         (b) Pay from time to time when the same shall  become  due,  all lawful
claims and demands of mechanics,  materialmen, laborers and others, which claims
and  demands,  if unpaid,  might result in, or permit the creation of, a lien on
the Eligible Properties or any part

                                       37
<PAGE>
thereof,  or  on  the  revenues,  rents,  issues,  income  and  profits  arising
therefrom,  unless such claims are being  contested in good faith by appropriate
proceedings provided that adequate reserves in conformity in the GAAP shall have
been provided on the books of the Borrower and/or the Guarantors.

         Section 7.11. Insurance

         (a) Keep or enforce the  obligation of tenants to keep, the Real Estate
Assets insured  against damage by fire and other hazards covered by the standard
extended  coverage  insurance  policy.  Subject  to the terms of the  applicable
leases,  all  insurance  policies  and  endorsements  required  pursuant to this
Section shall be fully paid for,  nonassessable  and contain such provisions and
expiration  dates and be in such form and amounts  and issued by such  insurance
companies  satisfactory  to the Banks.  In addition,  after the occurrence of an
Event  of  Default  hereunder,  the  Banks  may  require  the  Borrower  and the
Guarantors to carry or to require their  respective  tenants to carry such other
insurance on the Real Estate  Assets  including oil storage tank  insurance,  in
such  amounts as may from time to time be  required  by  institutional  lenders,
against  insurable  casualties which at the time are commonly insured against in
the case of premises similarly situated.

         (b)  Subject to the terms of the  applicable  leases,  if any  Eligible
Property or any part thereof, is located in an area which has been identified by
the  Secretary of housing and Urban  Development  as a flood  hazard  area,  the
Borrower and the  Guarantors  shall keep, or cause their  respective  tenants to
keep, for as long as any  Indebtedness  remains unpaid,  such Eligible  Property
covered by flood  insurance in an amount at least equal to the value assigned to
such Eligible Property in the Borrowing Base.

         (c) The Borrower  shall give the Agent prompt notice of any loss to any
Real Estate Asset covered by insurance if such loss would  decrease the value of
such Real Estate Asset by $500,000 or more or (ii) would have a material adverse
affect on the  Borrowing  Base or upon the  Borrower and its  Subsidiaries  on a
consolidated  basis.  For so long as no Event of  Default  has  occurred  and is
continuing,  (i) the Borrower shall have the sole right to adjust losses covered
by insurance,  (ii) the proceeds from any adjusted insurance claim shall be paid
to the  Borrower,  which  proceeds  shall  be  used  by  the  Borrower  for  the
restoration,  rebuilding,  renovation and/or repair of the property so requiring
same.  If, at the time of any loss,  an Event of  Default  has  occurred  and is
continuing,  (i) the  Borrower  shall not  adjust  said loss  without  the prior
written consent of the Banks;  and (ii) any and all insurance  proceeds shall be
paid to the Agent and the Agent,  with the consent of the Required Banks, in its
sole discretion, may use such proceeds to either (i) repay all or any portion of
the Loans or (ii) restore, rebuild, renovate and/or repair the damaged property.
In the event the Agent makes the insurance  proceeds  available to the Borrower,
the Borrower agrees to promptly commence and diligently  continue to perform the
repairs, restoration,  renovation or rebuilding of the damaged property so as to
restore such  property to be in full  compliance  with all laws and so that such
property  shall be at least equal in value and general  utility as prior to such
damage or  destruction.  All  provisions  of this Section  7.11(c) and the Banks
rights and remedies  hereunder  are subject to the  insurance  provisions of the
applicable leases on the Real Estate Assets.

                                       38
<PAGE>
         Section 7.12.  Condemnation.  The Borrower,  immediately upon obtaining
knowledge of the institution of any  proceedings for the  condemnation of any of
the Real Estate Assets or any part of any Real state Assets that may  materially
effect the value of the Borrowing Base or that may materially  adversely  effect
the Borrower and its  Subsidiaries,  on a  consolidated  basis,  will notify the
Agent of the  pendency  of such  proceeding.  Subject to the  provisions  of the
applicable leases,  after the occurrence of an Event of Default  hereunder,  the
Agent may  participate  in any such  proceeding  and the Borrower,  from time to
time, will deliver to the Agent all  instruments  requested by it to permit such
participation. In the event of such condemnation proceeding after the occurrence
of an Event of Default  hereunder,  the award or compensation  payable is hereby
assigned  to and  shall  be paid to the  Agent.  The  Agent  shall  be  under no
obligation to question the amount of any such award or compensation. In any such
condemnation  proceedings after the occurrence of an Event of Default hereunder,
the Agent may be  represented  by counsel  selected by the Agent.  The Borrower,
upon  request  by the  Agent,  shall  make,  execute  and  deliver  any  and all
instruments  requested  for the  purpose of  confirming  the  assignment  of the
aforesaid  awards  and  compensation  to the Agent  free and clear of any liens,
charges or encumbrances of any kind or nature whatsoever. All provisions of this
Section  7.12 and the Banks  rights and  remedies  hereunder  are subject to the
condemnation provisions of the applicable leases on the Real Estate Assets.

         Section 7.13.  Subsidiaries.  Simultaneously with their creation, cause
all Subsidiaries to become Guarantors  hereunder and, in connection therewith to
execute and deliver to the Banks, Guarantees.

                                   ARTICLE 8.
                               NEGATIVE COVENANTS.

         So long as any of the Notes or other Obligations shall remain unpaid or
any Bank shall have any  Commitment  hereunder,  neither  the  Borrower  nor any
Guarantor shall:

         Section 8.1. Indebtedness. Create, incur, assume or suffer to exist, or
permit  any  Subsidiary  to  create,  incur,  assume  or  suffer  to  exist  any
Indebtedness, except for any of the following types of Indebtedness:

         (a) Indebtedness of the Borrower under this Agreement or the Notes;

         (b)  Indebtedness  described  in  Schedule  8.1 and any other  existing
Indebtedness  of any  Guarantor  relating to  extensions  of credit of less than
$250,000  that is  non-recourse  to the Borrower or any other  Guarantor and any
refinancing of any such Indebtedness  secured by a mortgage on any real property
of the  Borrower  or any  Guarantor  provided  that  such  refinancing  does not
increase the principal amount of such Indebtedness;

         (c)  Provided  that no Event of  Default  then  exists or would  result
therefrom,  Indebtedness  of the  Borrower,  or any such  Guarantor,  secured by
purchase  money Liens  permitted by Section 8.2 provided that the maximum amount
of such  Indebtedness  incurred

                                       39
<PAGE>
during any fiscal  year  (excluding  non-recourse  indebtedness  secured by real
property) shall not exceed $500,000 provided, however, that no provision of this
Section 8.1(c) shall prohibit the Borrower from entering into an operating lease
for  computer  equipment  having a value  of up to  $1,500,000  during  1997 and
provided  that  the  obligations  of the  Borrower  under  such  lease  shall be
permitted  in  addition  to the  $500,000  annual  limit  provided  for in  this
subsection;

         (d) unsecured trade  indebtedness and customer deposits incurred in the
ordinary course of business;

         (e) in the case of the  Guarantors  the  guarantees of the  Obligations
pursuant to the Guarantees; and

         (f)  Indebtedness  of any  Post-Closing  Guarantor  provided  that such
Indebtedness is non-recourse to the Borrower or to any other Guarantor.

         Section 8.2. Liens. Create,  incur, assume or suffer to exist or permit
any  Subsidiary  to  create,  incur or suffer  to  exist,  any Lien upon or with
respect to any of its properties,  now owned or hereafter acquired,  or grant to
any third party any rights to enforce a "negative  pledge"  with  respect to its
properties or assets, except the following liens ("Permitted Liens"):

         (a) Liens in favor of the Banks  securing the  Obligations  pursuant to
the provisions hereof;

         (b) Liens for  taxes or  assessments  or other  government  charges  or
levies  if not yet due and  payable  or if due and  payable  if they  are  being
contested in good faith by  appropriate  proceedings  and for which  appropriate
reserves are maintained in conformity with GAAP;

         (c)  Liens   imposed  by  law,  such  as   mechanic's,   materialmen's,
landlord's,  warehousemen's  and  carrier's  Liens,  and  other  similar  Liens,
securing  obligations  incurred in the ordinary course of business which are not
past due for more than 30 days,  or which are being  contested  in good faith by
appropriate  proceedings and for which  appropriate  reserves in accordance with
GAAP have been established,  including,  without limitation, any landlord's lien
which is being contested in good faith by appropriate  proceedings and for which
appropriate reserves in accordance with GAAP have been established;

         (d) Liens under workers' compensation,  unemployment insurance,  social
security or similar legislation (other than ERISA);

         (e) Liens,  deposits  or pledges  to secure  the  performance  of bids,
tenders,  contracts  (other than  contracts  for the payment of money),  leases,
public or statutory obligations, surety, stay, appeal, indemnity, performance or
other similar bonds, or other similar obligations arising in the ordinary course
of business;

                                       40
<PAGE>
easements, rights-of-way,  restrictions and other similar encumbrances which, in
the  aggregate,  do not  materially  interfere  with  the  occupation,  use  and
enjoyment by the Borrower of the  property or assets  encumbered  thereby in the
normal  course of its  business or  materially  impair the value of the property
subject thereto;

         (g) judgment and other similar Liens securing  claims  aggregating  not
more than $250,000 arising in connection with court  proceedings;  provided that
the execution or other  enforcement of such Liens is effectively  stayed and the
claims  secured  thereby  are  being  actively  contested  in good  faith and by
appropriate proceedings;

         (h) subject to the provisions of Section  8.1(c)  hereof,  (i) purchase
money Liens on any property  heretofore or hereafter  acquired or the assumption
of any Lien on any property existing at the time of such acquisition,  or (ii) a
Lien incurred in connection with any  conditional  sale or other title retention
agreement  or a Capital  Lease;  provided,  that in the case of any of  (i)-(ii)
above,  (i) the  creation  or  occurrence  of any such Lien shall not  otherwise
result  in a  Default  or Event of  Default  with  respect  to any of the  other
provisions of this Agreement,  (ii) the Indebtedness  secured by such Lien shall
not exceed  100% of the fair market  value of the  property  encumbered  by such
Lien,  and (iii) such Lien shall not  encumber  any property of the Borrower and
their Subsidiaries other than the property so acquired;

         (i) Liens  arising by virtue of any  statutory or common law  provision
relating to banker's liens,  rights of set off or similar rights with respect to
deposit accounts of the Borrower or any Subsidiary; and

         (j) Liens securing Indebtedness permitted by Section 8.1 hereof.

         Section 8.3.  Investments.  Make or permit any  Subsidiary  to make any
loan or advance to any Person or  purchase  or  otherwise  acquire or permit any
Subsidiary to purchase or otherwise acquire,  any capital stock,  obligations or
other  securities of, make any capital  contribution to, or otherwise invest in,
or acquire any interest in any Person (each of the foregoing,  an "Investment"),
except (i) Permitted  Investments;  (ii) Investments permitted under Section 8.7
hereof;  the  Borrower  may make loans or  advances to the  Operating  Companies
provided that the  outstanding  principal  balance of such loans or advances may
not exceed  $10,000,000  at any one time; and (iii) subject to the provisions of
Section 8.7 hereof,  the Borrower or any  Subsidiary  may make loans  secured by
mortgages on real property in the ordinary  course of their business  consistent
with past practices.

         Section 8.4. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose  of or  permit  any  Subsidiary  to sell,  lease,  assign,  transfer  or
otherwise  dispose of any of its now owned or hereafter  acquired assets (except
to the Borrower),  except for: (a) assets  disposed of in the ordinary course of
business (it being  understood  that the Borrower and the  Guarantors  sell Real
Estate  Assets in the  ordinary  course of  business);  or (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business.

                                       41
<PAGE>
         Section 8.5.  Transactions  with  Affiliates.  Enter into or permit any
Subsidiary to enter into any transaction,  including,  without  limitation,  the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate,  except (unless elsewhere restricted  hereunder) (a) for transactions
between  the  Borrower  and any  Subsidiary  or any  Subsidiary  with any  other
Subsidiary,  (b) upon fair and reasonable  terms,  in the ordinary course of and
pursuant to the reasonable  requirements of, the relevant  Person's business and
upon fair and  reasonable  terms no less  favorable to the relevant  Person than
would  obtain in a  comparable  arm's  length  transaction  with a Person not an
Affiliate; provided that, after giving effect to any such transaction (i.e., any
of the transactions referred to in any of (a)-(b) above), no Default or Event of
Default shall have occurred.

         Section 8.6. Mergers,  Etc. Merge or consolidate with, or sell, assign,
lease or otherwise  dispose of or permit any  Subsidiary to merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions)  all or substantially all of its assets (whether
now  owned  or  hereafter   acquired)  to,  any  Person,  or  acquire,   all  or
substantially  all of the assets or the business of any Person,  except that any
Guarantor may merge with or into any other Guarantor or the Borrower  hereunder,
provided  that,  in the case of a transaction  that  involves the Borrower,  the
Borrower is the surviving entity, and provided further that, after giving effect
to any such transaction, no Default or Event of Default shall have occurred.

         Section 8.7. Acquisitions. Make an Acquisition or permit any Subsidiary
to make an  Acquisition,  except  that (i) the  Borrower  or any  Guarantor  may
acquire Real Estate Assets provided that the aggregate  consideration paid or to
be paid (in the case of a purchase),  including all indebtedness  assumed by the
Borrower or any Guarantor in connection with such  Acquisition,  or advanced (in
the case of a loan) in connection  with any such  transaction,  shall not exceed
$15,000,000;  and (ii) the  Borrower or any  Guarantor  may acquire  property or
assets other than Real Estate Assets  provided that the aggregate  consideration
paid in connection with any such transaction shall not exceed $5,000,000 and the
aggregate  consideration paid in connection with all such transactions permitted
by this clause (ii) during the term hereof shall not exceed $10,000,000.

         Section 8.8. No Activities Leading to Forfeiture.  Engage or permit any
Subsidiary  to engage in the conduct of any business or activity  which would be
reasonably likely to result in a Forfeiture Proceeding.

         Section  8.9.  Corporate  Documents;  Fiscal  Year.  Amend,  modify  or
supplement  or  permit  any  Subsidiary  to  amend,  modify  or  supplement  its
certificate  or  articles  of  incorporation  or by-laws  or, in the case of any
partnership,  its  partnership  agreement,  in any way  which  would  materially
adversely  affect the ability of the Borrower or any  Subsidiary  to perform its
obligations hereunder or change its fiscal year.

         Section  8.10.  Hazardous  Substances;  Use of Real  Property.  Use, or
permit the use of, or permit any  Subsidiary  to use or permit the use of any of
its real properties for conducting any manufacturing,  industrial, commercial or
retail  business  which  involves  in any

                                       42
<PAGE>
way the  introduction,  manufacture,  generation,  processing  or storage of any
Hazardous  Substance in violation,  in any material  respect,  of any applicable
Environmental Law.

         Section  8.11.  Dividends,  etc.  Declare or pay any  dividends  on its
capital  stock or  purchase,  redeem,  retire or  otherwise  acquire  any of its
capital stock at any time  outstanding,  except that any Subsidiary wholly owned
by the Borrower may declare and pay dividends to the  Borrower,  and except that
the  Borrower  may  repurchase  its  capital  stock  in  amounts  not to  exceed
$2,000,000 in any fiscal year or $5,000,000 during the term of this Agreement.

         Section 8.12. Other Material Adverse Change. Suffer or permit any other
material  adverse  change  in the  business,  properties,  financial  condition,
prospects or  operations  of the Borrower or any  Subsidiary;  in the  business,
properties, financial condition, prospects or operations of the Borrower and the
Guarantors  taken as a whole; or in the ability of the Borrower or any Guarantor
to perform its  obligations  under this  Agreement  or under any of the Facility
Documents.

         Section 8.13. Sales of Receivables;  Sale-Leasebacks. Sell, discount or
otherwise  dispose of or permit any  Subsidiary  to sell,  discount or otherwise
dispose of notes, accounts receivable or other obligations owing to such entity,
with or without  recourse,  except for  purposes of  collection  in the ordinary
course of business;  or sell or permit any Subsidiary to sell any asset pursuant
to an arrangement to thereafter lease such asset from the purchaser thereof.

         Section  8.14.  Leases of Eligible  Properties.  Enter into leases with
respect  to  Eligible   Properties  on  terms  and  conditions   which  are  not
commercially reasonable within the markets in which such properties are located.

         Section 8.15.  Maintenance of Real Estate Assets.  Subject to the terms
of any leases  with  respect to any Real  Estate  Assets,  commit any waste,  or
permit  any tenant to commit any waste on the Real  Estate  Assets,  or any part
thereof, or make any change, or permit any tenant to make any change, in the use
of the Real Estate Assets or any part  thereof,  which shall in any way increase
any ordinary fire or other hazard arising out of construction or operation.  The
Borrower and the Guarantors  shall, at all times,  maintain or cause any tenants
to maintain the Real Estate  Assets in good  operating  order and  condition and
shall  promptly  make or cause  any  tenants  to make,  from  time to time,  all
repairs,  renewals,  replacements,  additions  and  improvements  in  connection
therewith which are needful or desirable to such end.

                                   ARTICLE 9.
                              FINANCIAL COVENANTS.


         So long as any of the Notes or other  Obligations  shall remain unpaid,
or any Bank shall have any Commitment under this Agreement, the Borrower and the
Guarantors shall:

                                       43
<PAGE>
         Section 9.1.  Limitation  on  Indebtedness.  Not permit Total  Adjusted
Outstanding  Funded  Indebtedness  of the  Borrower  and  the  Guarantors,  on a
consolidated  basis, to exceed 50% of the  Capitalization  Value of the Borrower
and the Guarantors, on a consolidated basis.

         Section 9.2. Minimum Equity Value. Maintain, on a consolidated basis, a
minimum Equity Value of $60,000,000.

         Section 9.3. Minimum Interest Coverage Ratio. Maintain quarterly,  on a
consolidated basis, a ratio of (i) annualized and normalized Consolidated EBITDA
to (ii) annualized and normalized Consolidated Interest Expense of not less than
2.00:1.00.

         Section 9.4. Minimum Debt Service Coverage Ratio.  Maintain  quarterly,
on a consolidated  basis, a ratio of (i) annualized and normalized  Consolidated
EBITDA less gains from the sale of properties and other non-recurring  income to
(ii)  annualized  an  normalized  Consolidated  Debt  Service  of not less  than
1.10:1.00.

         Section 9.5. Minimum  Eligible  Properties Debt Service Coverage Ratio.
Maintain  quarterly,  on a  consolidated  basis,  a ratio of (i)  annualized and
normalized  Eligible  Property EBITDA to (ii) Revolving Credit Loan Debt Service
of not less than 2.25:1.00.

         Section  9.6.  Limitation  of Capital  Expenditures.  Not make  Capital
Expenditures,  excluding expenditures for the acquisition of Real Estate Assets,
in excess of $3,000,000 in any fiscal year on a consolidated basis.

         Section 9.7.  Limitation on Operating  Leases Not enter into  operating
leases  requiring the Borrower and the  Guarantors to make more than $500,000 in
lease payments in any calendar year, on a consolidated basis.


                                   ARTICLE 10.
                               EVENTS OF DEFAULT.

         Section 10.1.  Events of Default.  Any of the following events shall be
an "Event of Default":

         (a) The Borrower  shall (A)(i) fail to pay the principal of or interest
on any  Loan or Note as and when  due and  payable  fail to pay any fee or other
amount  due  hereunder  as and  when  due and  payable;  or (B) fail to make any
required  prepayment as and when due and payable in accordance with the terms of
this Agreement;

         (b) Any  representation or warranty made or deemed made by the Borrower
or by any Guarantor in this Agreement or in any other Facility Document or which
is contained in any certificate, document, opinion, financial or other statement
furnished to the Banks at any

                                       44
<PAGE>
time pursuant to any Facility Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;

         (c) The  Borrower  shall:  (i) fail to  perform  or  observe  any term,
covenant  or  agreement  contained  in Section  2.3,  in  Articles  4, 8 or 9 or
Sections  7.7  (subject  to the  provisions  of the leases  relating to the Real
Estate Assets), 7.8 or 12.3; or (ii) fail to perform any other term, covenant or
agreement  on its part to be  performed  or  observed  (other  than  obligations
specifically  referred to in Section  10.1(a)) in any Facility  Document and, in
the  case  of  this  clause  (ii)  only,  such  failure  shall  continue  for 10
consecutive business days;

         (d) The Borrower or any of the Guarantors  shall: (i) fail to make when
due any payments with respect to any Indebtedness,  including but not limited to
indebtedness for borrowed money (other than the payment obligations described in
Section 10.1 (a) above), of the Borrower or such Subsidiary, as the case may be,
or any interest or premium  thereon,  when due  (whether by scheduled  maturity,
required prepayment, acceleration, demand or otherwise) or, if such Indebtedness
has no stated due date,  before an action for  collection is commenced;  or (ii)
fail to perform or observe  any term,  covenant or  condition  on its part to be
performed  or  observed  under  any  agreement  or  instrument  relating  to any
Indebtedness  when  required to be performed or observed,  if the effect of such
failure to perform or observe is to  accelerate,  or to permit the  acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
Indebtedness,  whether or not such failure to perform or observe shall be waived
by the holder of such  Indebtedness  (unless  such waiver  shall be absolute and
unconditional);  or  (iii)  any  Indebtedness  shall be  declared  to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment)  prior to the stated  maturity  thereof;  provided,  however that it
shall  not  constitute  an Event  of  Default  hereunder  unless  the  aggregate
principal amount of the Indebtedness  referred to in clauses (i), (ii) and (iii)
above equals or exceeds (x) $500,000 in the case of recourse Indebtedness of the
Borrower or in the case of Indebtedness  relating to Eligible  Properties or (y)
$1,000,000 in the case of Indebtedness of any Guarantors that is non-recourse to
the Borrower or any other  Guarantor which relates to assets other than Eligible
Properties;  provided, however, that it shall not constitute an Event of Default
hereunder  if any of the events  described  above  occurs  with  respect to that
certain promissory note of D&M/Chiu  Technology,  Inc. (the "Maker") dated as of
May 7, 1992 and payable to Ivan M. Faigen, as representative  for so long (x) as
the Maker is contesting its obligations with respect to such note by appropriate
proceedings  (y) adequate  reserves in conformity with GAAP shall be provided in
the books of the  Maker and (z) no  judgment  has been  entered  in favor of the
holder of such note;

         (e) The Borrower or any of the Guarantors  (i) shall  generally not, or
be unable to, or shall  admit in writing its or their  inability  to, pay its or
their debts as such debts become due; or (ii) shall make an  assignment  for the
benefit  of  creditors,  petition  or apply to any  court or  otherwise  for the
appointment of a custodian,  receiver or trustee for it or a substantial part of
its  assets;  or (iii)  shall,  as debtor,  commence  any  proceeding  under any
bankruptcy,  reorganization,  arrangement,  readjustment of debt, dissolution or
liquidation  law or statute of any  jurisdiction,  whether now or  hereafter  in
effect;  or (iv) shall have had any such  petition or  application  filed or any
such  proceeding  shall have been  commenced,  against  it or them,  in which an
adjudication  or  appointment  is made or order for relief is entered,  or which
petition,  application or proceeding

                                       45
<PAGE>
remains  undismissed  for a  period  of 30  days or  more;  or (v) by any act or
omission shall indicate its or their consent to,  approval of or acquiescence in
any such  petition,  application  or  proceeding  or  order  for  relief  or the
appointment of a custodian,  receiver or trustee for all or any substantial part
of its  property;  (vi) shall  suffer any such  custodianship,  receivership  or
trusteeship to continue  undischarged  for a period of 30 days or more; or (vii)
on a consolidated basis, shall cease to be Solvent;

         (f) One or more  judgments,  decrees or orders for the payment of money
in excess of  $250,000  in the  aggregate  in respect of  uninsured  or unbonded
claims shall be rendered against the Borrower, or any of the Guarantors and such
judgments,  decrees or orders  shall  continue  unsatisfied  and in effect for a
period of 30 consecutive  days without being vacated,  discharged,  satisfied or
stayed or bonded pending appeal;

         (g) An event or  condition  specified  in Section  7.8(k)  hereof shall
occur or exist with respect to any Plan or  Multiemployer  Plan and, as a result
of such event or condition,  together with all other such events or  conditions,
the  Borrower or any ERISA  Affiliate  shall incur or in the opinion of the Bank
shall be reasonably likely to incur a liability to a Plan, a Multiemployer  Plan
or PBGC (or any combination of the foregoing) which is, in the  determination of
the Bank, material in relation to the financial condition,  operations, business
or prospects of the Borrower or any Subsidiary;

         (h) Any Forfeiture Proceeding shall have been commenced with respect to
the Borrower or any Subsidiary;

         (i) Any of the Assignments, the Security Agreements or Guarantees shall
at any time after its execution and delivery and for any reason,  cease to be in
full force and effect or shall be  declared  null and void,  or the  validity or
enforceability  thereof shall be contested by the Borrower or the  Guarantors or
any of them, or any of the Borrower or the Guarantors shall deny that it has any
further liability or obligation under an Assignment,  a Security  Agreement or a
Guarantee to which it is a party,  or any of such parties  shall fail to perform
any of its material obligations under any such document; or

         (j) a Change in Control shall occur.

         Section  10.2.  Remedies.  Upon the  occurrence of any Event of Default
hereunder,  the Required  Banks may, by notice to the Borrower,  (i) declare the
Commitments to be terminated,  whereupon the same shall forthwith terminate, and
(ii) declare the outstanding  principal of the Notes,  all interest  thereon and
all other Obligations to be forthwith due and payable,  whereupon the Notes, all
such  interest  and all such  amounts  shall  become  and be  forthwith  due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided that, in the case
of an Event of Default  referred to in Section 10.1(e) or Section 10.1(h) above,
the Commitments  shall be immediately  terminated,  and the Notes,  all interest
thereon and all other amounts payable under this Agreement or the Notes shall be
immediately  due and payable  without notice,  presentment,

                                       46
<PAGE>
demand,  protest  or other  formalities  of any kind,  all of which  are  hereby
expressly waived by the Borrower.

                                   ARTICLE 11.
                        THE AGENT; RELATIONS AMONG BANKS.

         Section 11.1.  Appointment,  Powers and Immunities of Agent.  Each Bank
hereby  irrevocably  (but subject to removal by the Required  Banks  pursuant to
Section 11.9) appoints and  authorizes  the Agent to act as its agent  hereunder
and under any  other  Facility  Document  with such  powers as are  specifically
delegated  to the Agent by the terms of this  Agreement  and any other  Facility
Document,  together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or  responsibilities  except those  expressly set
forth in this Agreement and any other Facility Document, and shall not by reason
of this  Agreement be a trustee for any Bank. The Agent shall not be responsible
to the Banks for any recitals, statements, representations or warranties made by
the Borrower,  or any officer or official of the  Borrower,  or any other Person
contained  in  this  Agreement  or  any  other  Facility  Document,  or  in  any
certificate or other  document or instrument  referred to or provided for in, or
received by any of them under, this Agreement or any other Facility Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency  of this  Agreement  or any  other  Facility  Document  or any other
document or instrument referred to or provided for herein or therein, or for the
failure  by  the  Borrower  to  perform  any  of its  obligations  hereunder  or
thereunder.  The Agent may employ agents and  attorneys-in-fact and shall not be
responsible,  except as to money or securities  received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither the Agent nor any of its directors,
officers,  employees  or agents  shall be liable or  responsible  for any action
taken or omitted to be taken by it or them hereunder or under any other Facility
Document or in  connection  herewith or  therewith,  except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed to
by the Borrower and the Agent with respect to the Agent's services hereunder.

         Section  11.2.  Reliance by Agent.  The Agent shall be entitled to rely
upon any certification,  notice or other communication (including any thereof by
telephone,  telefax,  telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper  Person or
Persons,   and  upon  advice  and  statements  of  legal  counsel,   independent
accountants  and other  experts  selected  by the Agent.  The Agent may deem and
treat each Bank as the holder of the Loans  made by it for all  purposes  hereof
unless and until a notice of the assignment or transfer thereof  satisfactory to
the Agent  signed by such Bank  shall have been  furnished  to the Agent but the
Agent  shall  not be  required  to deal  with  any  Person  who has  acquired  a
participation in any Loan from a Bank. As to any matters not expressly  provided
for by this  Agreement or any other  Facility  Document,  the Agent shall in all
cases be fully protected in acting,  or in refraining from acting,  hereunder in
accordance with instructions signed by the Required Banks, and such instructions
of the Required  Banks and any action  taken or failure to act pursuant  thereto
shall be binding on all of the Banks and any other  holder of all or any portion
of any Loan.

                                       47
<PAGE>
         Section 11.3. Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default  (other than the  non-payment
of  principal  of or  interest  or fees on the Loans to the  extent  the same is
required to be paid to the Agent for the account of the Banks)  unless the Agent
has received notice from a Bank or the Borrower specifying such Default or Event
of Default. In the event that the Agent receives such a notice of the occurrence
of a Default or Event of Default,  the Agent shall give prompt notice thereof to
the Banks (and shall give each Bank prompt notice of each such non-payment). The
Agent  shall  (subject to Section  11.8) take such  action with  respect to such
Default or Event of Default  which is  continuing  as shall be  directed  by the
Required  Banks;  provided that,  unless and until the Agent shall have received
such  directions,  the Agent may take such  action,  or refrain from taking such
action,  with  respect  to such  Default  or Event of  Default  as it shall deem
advisable in the best interest of the Banks; and provided further that the Agent
shall not be required to take any such action which it determines to be contrary
to law.

         Section 11.4. Rights of Agent as a Bank. With respect to its Commitment
and the Loans made by it, the Agent in its  capacity as a Bank  hereunder  shall
have the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as the Agent,  and the term  "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its capacity
as a Bank.  The Agent or any Bank and their  respective  Affiliates may (without
having to account  therefor to any other Bank) accept  deposits from, lend money
to (on a secured or  unsecured  basis as  otherwise  permitted  hereunder),  and
generally  engage in any kind of  banking,  trust or other  business  with,  the
Borrower or any of the Guarantors (and any of their Affiliates).  In the case of
the Agent, it may do so as if it were not acting as the Agent, and the Agent may
accept fees and other  consideration  from the Borrower or any of the Guarantors
for services in connection  with this  Agreement or otherwise  without having to
account  for the  same to the  Banks.  Although  the  Agent  or a Bank or  their
respective  Affiliates may in the course of such relationships and relationships
with  other  Persons  acquire  information  about  the  Borrower  or  any of the
Guarantors or Affiliates and such other Persons, neither the Agent nor such Bank
shall have any duty to disclose  such  information  to the other Banks except as
otherwise required pursuant to Facility Documents.

         Section 11.5.  Indemnification  of Agent.  The Banks agree to indemnify
the  Agent  (to the  extent  not  reimbursed  under  Section  12.3 or under  the
applicable  provisions of any other Facility Document,  but without limiting the
obligations of the Borrower under Section 12.3 or such  provisions),  ratably in
accordance with the respective  Obligations of the Borrower then due and payable
to each of them  (or,  if no  Loans  are at the  time  outstanding,  ratably  in
accordance  with their  respective  Commitments),  for any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted  against the Agent in any way relating to or arising
out of this  Agreement,  any other  Facility  Document  or any  other  documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby  (including,  without  limitation,  the  costs  and  expenses  which the
Borrower  is  obligated  to pay  under  Section  12.3 or  under  the  applicable
provisions of any other  Facility  Document but  excluding,  unless a Default or
Event  of  Default  has  occurred,  normal  administrative  costs  and  expenses
incidental to the performance of its agency duties hereunder) or the enforcement
of any

                                       48
<PAGE>

of the terms hereof or thereof or of any such other  documents  or  instruments;
provided  that no Bank  shall be liable for any of the  foregoing  to the extent
they arise from the gross  negligence  or willful  misconduct of the party to be
indemnified.

         Section 11.6. Documents.  The Agent will forward to each Bank, promptly
after  the  Agent's  receipt  thereof,  a copy of each  report,  notice or other
document  required  by this  Agreement  or any  other  Facility  Document  to be
delivered to the Agent for such Bank.

         Section 11.7.  Non-Reliance on Agent and Other Banks.  Each Bank agrees
that it has,  independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed  appropriate,  made
its own credit analysis of the Borrower and the Guarantors and decision to enter
into this Agreement and that it will,  independently  and without  reliance upon
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  analysis  and
decisions  in taking or not  taking  action  under this  Agreement  or any other
Facility Document. The Agent shall not be required to keep itself informed as to
the  performance  or observance  by the Borrower of this  Agreement or any other
Facility  Document or any other  document  referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary.
Except for  notices,  reports  and other  documents  and  information  expressly
required to be  furnished to the Banks by the Agent  hereunder,  the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information  concerning  the  affairs,  financial  condition  or business of the
Borrower or any Subsidiary (or any of their  Affiliates) which may come into the
possession of the Agent or of its Affiliates. The Agent shall not be required to
file this Agreement,  any other Facility  Document or any document or instrument
referred to herein or therein, for record or give notice of this Agreement,  any
other  Facility  Document or any  document or  instrument  referred to herein or
therein, to anyone.

         Section  11.8.  Failure of Agent to Act.  Except  for action  expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder  unless it shall have  received  further
assurances   (which  may  include  cash   collateral)  of  the   indemnification
obligations  of the Banks under Section 11.5 in respect of any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.

         Section  11.9.   Resignation  or  Removal  of  Agent.  Subject  to  the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof at least thirty Banking Days
prior  thereto  to the Banks and the  Borrower,  the Agent may be removed at any
time with cause by the  Required  Banks and the Agent may be removed at any time
without  cause by the Required  Banks if with the prior  written  consent of the
Borrower;  provided  that the  Borrower  and the other  Banks  shall be promptly
notified thereof. Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor  Agent.  If no successor  Agent shall have
been so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring  Agent,  then the retiring Agent may, on
behalf of the Banks,  appoint a  successor  Agent,  which  shall be a Bank.  The
Required  Banks  or

                                       49
<PAGE>
the  retiring  Agent,  as the  case may be,  shall  upon  the  appointment  of a
Successor  Agent  promptly so notify the Borrower and the other Banks.  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 Agent,  and the retiring
Agent  shall be  discharged  from its  duties  and  obligations  hereunder.  The
retiring Agent shall execute all documents or instruments of assignment as shall
be necessary  to vest in the  successor  Agent all rights of the retiring  Agent
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the  provisions  of this Article 11 shall  continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.

         Section 11.10.  Amendments Concerning Agency Function.  The Agent shall
not be  bound by any  waiver,  amendment,  supplement  or  modification  of this
Agreement or any other Facility  Document which affects its duties  hereunder or
thereunder unless it shall have given its prior consent thereto.

         Section  11.11.  Liability  of  Agent.  The  Agent  shall  not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to  perform  its  obligations  hereunder  or to any Bank on  account of the
failure of the Borrower to perform its obligations  hereunder or under any other
Facility Document.

         Section 11.12. Transfer of Agency Function.  Without the consent of the
Borrower  or any Bank,  the Agent may at any time or from time to time  transfer
its  functions  as  Agent  hereunder  to any of its  offices  wherever  located,
provided  that the  Agent  shall  promptly  notify  the  Borrower  and the Banks
thereof.

         Section  11.13.  Non-Receipt  of Funds by the  Agent.  Unless the Agent
shall have been  notified by a Bank or the Borrower  (either one as  appropriate
being  the  "Payor")  prior to the date on which  such  Bank is to make  payment
hereunder  to the Agent of the  proceeds  of a Loan or the  Borrower  is to make
Payment to the Agent,  as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required  Payment to the Agent, the Agent may assume that the
Required  Payment has been made and may, in reliance upon such  assumption  (but
shall not be required  to),  make the amount  thereof  available to the intended
recipient  on such  date and,  if the  Payor  has not in fact made the  Required
Payment to the Agent,  the recipient of such payment shall, on demand,  repay to
the Agent the amount made available to it together with interest thereon for the
period  commencing  on the date such amount was so made  available  by the Agent
until the date the Agent  recovers  such amount at a rate per annum equal to the
Federal  Funds Rate for such day (when the Agent  recovers  such  amount  from a
Bank) or equal to the rate of interest  applicable  to such Loan (when the Agent
recovers such amount from the  Borrower)  and, if such  recipient  shall fail to
make such payment promptly,  the Agent shall be entitled to recover such amount,
on demand, from the Payor, with interest as aforesaid.

         Section  11.14.  Withholding  Taxes.  Each Bank  represents  that it is
entitled  to  receive  any  payments  to be made  to it  hereunder  without  the
withholding of any tax and will

                                       50
<PAGE>
furnish to the Agent such forms, certifications,  statements and other documents
as the Agent may  request  from time to time to evidence  such Bank's  exemption
from the  withholding  of any tax imposed by any  jurisdiction  or to enable the
Agent to  comply  with any  applicable  laws or  regulations  relating  thereto.
Without  limiting  the effect of the  foregoing,  if any Bank is not  created or
organized  under the laws of the United States of America or any state  thereof,
in the event that the payment of  interest  by the  Borrower is treated for U.S.
income tax  purposes as derived in whole or in part from sources from within the
U.S.,  such Bank will furnish to the Agent,  no less  frequently  than annually,
Form 4224 or Form 1001 of the  Internal  Revenue  Service,  or such other forms,
certifications,  statements  or  documents,  duly executed and completed by such
Bank as evidence of such Bank's  exemption from the withholding of U.S. tax with
respect thereto. The Agent shall not be obligated to make any payments hereunder
to such Bank in respect of any Loan or such  Bank's  Commitment  until such Bank
shall have furnished to the Agent the requested form,  certification,  statement
or document.

         Section 11.15.  Several Obligations and Rights of Banks. The failure of
any Bank to make any Loan to be made by it on the date specified  therefor shall
not relieve any other Bank of its  obligation to make its Loan on such date, but
no Bank shall be responsible for the failure of any other Bank to make a Loan to
be made by such other Bank.  The amounts  payable at any time  hereunder to each
Bank shall be a separate and  independent  debt, and each Bank shall be entitled
to protect and enforce its rights  arising out of this  Agreement,  and it shall
not be necessary for any other Bank to be joined as an  additional  party in any
proceeding for such purpose.

         Section 11.16.  Pro Rata Treatment of Loans,  Etc. Except to the extent
otherwise provided: (a) each borrowing under Section 2.4 or Section 3.1 shall be
made  from the  Banks,  each  reduction  or  termination  of the  amount  of the
Commitments  under Section 2.8 shall be applied to the Commitments of the Banks,
and each payment of the fees  referenced in Article 3, shall be made by and held
for the  account  of the Banks,  pro rata in  accordance  with their  respective
Commitment  Proportions;  (b) each  prepayment  and payment of  principal  of or
interest on Loans of a particular type and a particular Interest Period shall be
made to the Agent for the  account of the Banks  holding  Loans of such type and
Interest  Period pro rata in accordance  with the  respective  unpaid  principal
amounts of such Loans of such Interest Period held by such Banks.

         Section 11.17.  Sharing of Payments Among Banks. If a Bank shall obtain
payment of any  principal  of or  interest  on any Loan made by it  through  the
exercise of any right of setoff,  banker's lien,  counterclaim,  or by any other
means, it shall promptly  purchase from the other Banks a  participation  in the
Loans made by the other Banks in such amounts,  and make such other  adjustments
from  time to time as shall be  equitable  to the end that all the  Banks  shall
share the benefit of such payment (net of any expenses  which may be incurred by
such Bank in obtaining or preserving  such benefit) pro rata in accordance  with
the unpaid principal and interest on the Loans held by each of them. To such end
the Banks shall make appropriate  adjustments among themselves (by the resale of
any such  participation  sold or otherwise) if such payment is rescinded or must
otherwise  be  restored.  The  Borrower  agrees  that any Bank so  purchasing  a
participation  in the Loans  made by other  Banks  may  exercise  all  rights of
setoff,  banker's  lien,

                                       51
<PAGE>
counterclaim  or similar  rights  with  respect to such  participation.  Nothing
contained  herein  shall  require any Bank to  exercise  any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of the Borrower.


                                   ARTICLE 12.
                                 MISCELLANEOUS.

         Section 12.1.  Amendments  and Waivers.  Except as otherwise  expressly
provided in this  Agreement,  any provision of this  Agreement may be amended or
modified  only by an  instrument  in  writing  signed  by the  Borrower  and the
Required  Banks,  and any  provision  of this  Agreement  may be  waived  by the
Borrower and by an instrument  signed by the Required  Banks (if such  provision
requires performance by the Borrower),  including, but not limited to, any Event
of Default; provided that no amendment,  modification or waiver shall, unless by
an  instrument  signed by all of the Banks:  (a) increase or extend the term, or
extend the time or waive any  requirement for the reduction or termination of or
otherwise  change the  Commitment  or the  obligation  to make Term Loans of any
Bank,  (b) extend the date fixed for the payment of  principal of or interest on
any Loan, (c) reduce the amount of any payment of principal  thereof or the rate
at which interest is payable thereon or any fee payable hereunder, (d) alter the
terms of this  Section  12.1,  (e) change the fees payable to any Bank except as
expressly  otherwise  provided  herein,  (f) permit the Borrower,  or any of the
Guarantors,  to transfer or assign any of its obligations hereunder or under the
Facility  Documents,  (g)  release the  security  interest in and Lien on or the
right to a security interest in and Lien, any collateral securing the Borrower's
obligations  thereunder,  or (h) change  the  definition  of the term  "Required
Banks."  No  failure  on the  part of any  Bank to  exercise,  and no  delay  in
exercising,  any right  hereunder  shall operate as a waiver thereof or preclude
any other or further  exercise  thereof or the exercise of any other right.  The
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law.

         Section 12.2. Usury.  Anything herein to the contrary  notwithstanding,
the  Obligations  shall be subject to the  limitation  that payments of interest
shall not be required to the extent that  receipt  thereof  would be contrary to
provisions of law  applicable to a Bank limiting  rates of interest which may be
charged or collected by such Bank.  If any of the  above-referenced  payments of
interest,  together  with any other  charges  or fees  deemed  in the  nature of
interest,  exceed the maximum legal rate, then the Banks shall have the right to
make such  adjustments  as are necessary to reduce any such  aggregate  interest
rate (based on the foregoing aggregate amount) to the maximum legal rate, and if
any Bank ever receives,  collects or applies any such excess, it shall be deemed
a partial  repayment of principal and treated as such;  and if principal is paid
in full,  any remaining  excess shall be refunded to the Borrower.  The Borrower
waives any right to prior notice of such  adjustment and further agrees that any
such  adjustment may be made by the Banks  subsequent to  notification  from the
Borrower that such aggregate interest charged exceeds the maximum legal rate.

                                       52
<PAGE>
         Section  12.3.  Expenses  and   Indemnification.   The  Borrower  shall
reimburse  each of the Banks on demand for all  reasonable  costs,  expenses and
charges  (including,  without  limitation,  reasonable  fees and charges of such
Banks' special  counsel,  Rivkin,  Radler & Kremer up to a cap of $45,000,  plus
disbursements  of such counsel up to a cap of $15,000,  incurred by such Bank in
connection  with  the  preparation,  review,  execution  and  delivery  of  this
Agreement and the Facility  Documents.  Without  limiting the  generality of the
foregoing,  the Borrower  shall pay all recording fees and charges and recording
taxes  incurred by any of the Banks  hereunder  or in  connection  herewith.  In
addition, the Borrower shall reimburse each Bank for all of its reasonable costs
and expenses  incurred  from and after the  occurrence of an Event of Default in
connection with the perfection,  protection,  enforcement or preservation of any
rights under this  Agreement,  the Notes or the other  Facility  Documents.  The
Borrower agrees to indemnify each Bank and their respective directors, officers,
employees,  representatives  and  agents  from,  and hold each of them  harmless
against,  any and all losses,  liabilities,  claims,  damages or expenses of any
kind (including, without limitation, the reasonable fees and expenses of counsel
for such Person in connection with any investigative, administrative or judicial
proceeding,  whether or not such Person  shall be  designated  a party  thereto)
incurred  by any of them  arising  out of or by reason of any  investigation  or
litigation or other  proceedings  (including  any  threatened  investigation  or
litigation or other  proceedings)  relating to or arising out of this Agreement,
any actual or proposed use by the  Borrower of the proceeds of the Loans,  or to
the failure of the Borrower to perform or observe any of the terms, covenants or
conditions on its part to be performed or observed under this Agreement or under
any of the Facility Documents.  The indemnity provided in this Section shall not
extend to any such losses, liabilities,  claims, damages or expenses incurred by
reason of the gross negligence, willful misconduct or bad faith of the Person to
be indemnified.

         Section 12.4. Special Provisions Regarding  Collateral.  Simultaneously
with  the  execution  and  delivery  of this  Agreement,  the  Borrower  and the
Guarantors  have  deposited  with the Agent,  for the benefit of the Banks,  the
Assignments  duly  executed  and in  proper  form for  recording  in each of the
jurisdictions where Eligible Properties are located. In addition,  the Operating
Companies  have  deposited  with the  Agent  for the  benefit  of the  Banks the
Security  Agreements,  together  with  UCC-1  financing  statements,  each  duly
executed and in proper form for recording in each of the  jurisdictions in which
the Operating Companies maintain assets. The Agent agrees to hold such documents
and not to file or record such  documents  unless and until any Event of Default
shall occur  hereunder.  The Agent further  agrees that upon the happening of an
Event of  Default  hereunder,  other  than an Event of  Default  referred  to in
Section 10.1 (e) hereof (in which case no notice shall be  required),  the Agent
shall  give the  Borrower  fourteen  (14)  days'  prior  written  notice  before
recording any of such  documents.  The costs incurred after the occurrence of an
Event of Default in connection  with  recording any such document shall be borne
by the Borrower  whether or not any such  document is recorded by the Agent.  If
any of the Assignments or financing  statements require amendment,  re-execution
or any revision prior to being in a form acceptable to be recorded, the Borrower
shall be responsible  for all costs incurred from and after the occurrence of an
Event of Default in connection with such amendment, re-execution or revision and
the Borrower shall do all things  necessary at the request of the Agent in order
to  permit  such  documents  to be filed  or  recorded  whether  or not any such
documents are

                                       53
<PAGE>
filed or  recorded.  To the extent that the Agent or any Bank incurs any of such
costs directly, such costs shall be reimbursed by the Borrower on demand.

         Section 12.5.  Survival.  The obligations of the Borrower under Section
2.3(b),  Article 4 and Section 12.3 shall survive the repayment of the Loans and
the  Termination  Date  for a period  corresponding  to the  maximum  applicable
statute of limitations in effect in the State of New York from time to time.

         Section  12.6.  Assignment;  Participation.  This  Agreement  shall  be
binding  upon,  and shall inure to the benefit of Borrower,  the Banks and their
respective  successors  and assigns,  except that the Borrower may not assign or
transfer its rights or obligations hereunder.  Each Bank may sell participations
in or,  with the  prior  written  consent  of the  Borrower  which  shall not be
unreasonably  withheld and which shall not be required during the occurrence and
continuance  of an  Event  of  Default,  assign  all or any  part of any Loan to
another bank or other entity,  in which event (a) in the case of an  assignment,
upon notice thereof by the Bank to the Borrower, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein),  the same rights,
benefits and obligations (including, without limitation, a ratable assumption of
the assigning Bank's Commitment and Commitment Proportion hereunder) as it would
have if it were a Bank hereunder;  and (b) in the case of a  participation,  the
participant  shall have no rights under the Facility  Documents  and all amounts
payable by the Borrower  under  Articles 2 and 3 shall be  determined as if such
Bank had not sold such  participation.  Such Bank may  furnish  any  information
concerning  the  Borrower  in the  possession  of such Bank from time to time to
assignees and participants  (including  prospective assignees and participants);
provided  that such Bank shall  require  any such  prospective  assignee or such
participant  (prospective  or  otherwise)  to agree in writing to  maintain  the
confidentiality  of such  information.  There shall be no limit on the number of
assignments or participants that may be granted by any Bank. Notwithstanding any
such  assignment,  any rights and  remedies  available  to the  Borrower for any
breaches by an assigning Bank of its obligations hereunder while a Bank shall be
preserved  after  such  assignment  and such Bank shall not be  relieved  of any
liability to the  Borrower due to such breach.  Each Bank will have the right to
pledge and assign as  collateral  to a Federal  Reserve Bank all or a portion of
its interests hereunder.

         Section  12.7.  Notices.  Unless  the  party to be  notified  otherwise
notifies the other party in writing as provided in this  Section,  and except as
otherwise provided in this Agreement,  notices shall be given to the Borrower by
certified or registered  mail or by recognized  overnight  delivery  services to
such party at its address on the signature page of this Agreement.  In addition,
notices of borrowing  pursuant to Section 2.4 may be  delivered  by  telecopier,
provided that such telecopied notices shall be confirmed by sending the original
signed copy of such notice to the Banks by  certified or  registered  mail or by
recognized overnight delivery services.  Initially, notice shall be delivered to
each party  hereto at the  addresses  set forth on the  signature  page  hereof.
Notices  shall be effective:  (a) if given by  registered or certified  mail, 72
hours after deposit in the mails with postage  prepaid,  addressed as aforesaid;
or (b) if given by recognized  overnight  delivery  service,  on the Banking Day
following deposit with such service  addressed as aforesaid;  or (c) if given by
telecopy,  when the telecopy is transmitted to the telecopy  number as aforesaid
and confirmed with a confirmation receipt.

                                       54
<PAGE>
         Section  12.8.  Setoff.  The Borrower  agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option without any prior
notice to the Borrower (any such notice being  expressly  waived by the Borrower
to the extent  permitted by  applicable  law),  to offset  balances  (general or
special, time or demand, provisional or final) held by it for the account of the
Borrower at any offices of such Bank or any of its Affiliates,  in Dollars or in
any other  currency,  against  any amount  payable by the  Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due  (regardless
of whether such balances are then due to the  Borrower),  in which case it shall
promptly notify the Borrower thereof;  provided that such Bank's failure to give
such notice  shall not affect the  validity  thereof.  Payments by the  Borrower
thereof hereunder shall be made without setoff or counterclaim.

         Section 12.9. Jurisdiction; Immunities.

         (a) THE BORROWER HEREBY IRREVOCABLY  SUBMITS TO THE JURISDICTION OF ANY
NEW YORK STATE OR UNITED STATES  FEDERAL  COURT  SITTING IN NEW YORK,  NASSAU OR
SUFFOLK  COUNTIES  OVER ANY ACTION OR  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE NOTES, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR  PROCEEDING  MAY BE HEARD AND  DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER  IRREVOCABLY  CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR  PROCEEDING  BY THE MAILING
(BY CERTIFIED OR  REGISTERED  MAIL) OF COPIES OF SUCH PROCESS TO THE BORROWER AT
THE ADDRESS SPECIFIED IN SECTION 12.6. THE BORROWER AGREES THAT A FINAL JUDGMENT
(INCLUDING  ANY  APPLICABLE  APPEALS) IN ANY SUCH ACTION OR PROCEEDING  SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER  PROVIDED BY LAW. THE BORROWER  FURTHER WAIVES ANY OBJECTION
TO VENUE IN SUCH  STATE AND ANY  OBJECTION  TO AN ACTION OR  PROCEEDING  IN SUCH
STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY
ACTION OR PROCEEDING  BROUGHT AGAINST ANY BANK SHALL BE BROUGHT ONLY IN NEW YORK
STATE OR UNITED  STATES  FEDERAL  COURT  SITTING IN NEW YORK,  NASSAU OR SUFFOLK
COUNTY. EACH OF THE BANKS AND THE BORROWER WAIVE ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH RESPECT TO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS.

         (b) NOTHING IN THIS  SECTION 12.8 SHALL AFFECT THE RIGHT OF ANY BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR AFFECT THE RIGHT OF
ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER, OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTIONS.

                                       55
<PAGE>
         (c) TO THE EXTENT THAT THE BORROWER  HAS OR  HEREAFTER  MAY ACQUIRE ANY
IMMUNITY FROM  JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION  OR  OTHERWISE)  WITH  RESPECT  TO ITSELF OR ITS  PROPERTY,  IT HEREBY
IRREVOCABLY  WAIVES  SUCH  IMMUNITY  IN  RESPECT OF ITS  OBLIGATIONS  UNDER THIS
AGREEMENT AND THE NOTES.

         Section 12.10. Table of Contents;  Headings.  Any table of contents and
the headings  and  captions  hereunder  are for  convenience  only and shall not
affect the interpretation or construction of this Agreement.

         Section  12.11.  Severability.  The  provisions  of this  Agreement are
intended to be  severable.  If for any reason any  provision  of this  Agreement
shall be held invalid or unenforceable in whole or in part in any  jurisdiction,
such provision shall, as to such  jurisdiction,  be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability  thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

         Section  12.12.  Counterparts.  This  Agreement  may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument,  and any party hereto may execute this Agreement by signing any
such counterpart.

         Section 12.13. Integration. The Facility Documents set forth the entire
agreement  among the parties hereto  relating to the  transactions  contemplated
thereby and  supersede any prior oral or written  statements or agreements  with
respect to such transactions.

         Section 12.14.  Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York.

         Section 12.15.  Relief from Bankruptcy  Stay. The Borrower agrees that,
in the event that such Borrower,  any Guarantor or any of the persons or parties
constituting  the  Borrower  or a Guarantor  shall (i) file with any  bankruptcy
court of competent jurisdiction or be the subject of any petition under Title 11
of the U.S.  Code, as amended  ("Bankruptcy  Code"),  (ii) be the subject of any
order for relief issued under the Bankruptcy  Code, (iii) file or be the subject
of  any  petition   seeking  any   reorganization,   arrangement,   composition,
readjustment,  liquidation,  dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,  insolvency, or other
relief for  debtors,  (iv) have  sought or  consented  to or  acquiesced  in the
appointment of any trustee, receiver,  conservator, or liquidator, or (v) be the
subject  of any order,  judgment,  or decree  entered by any court of  competent
jurisdiction approving a petition filed against such readjustment,  liquidation,
dissolution,  or similar relief under any present or future federal or state act
or law relating to  bankruptcy,  insolvency,  or relief for  debtors,  the Banks
shall thereupon be entitled and the Borrower  irrevocably  consents to immediate
and  unconditional  relief from  automatic stay by Section 362 of the Bankruptcy
Code, or otherwise  available to the Banks as provided for herein, in the Notes,
other  Facility  Documents  delivered  in  connection  herewith and as otherwise
provided by law, and the Borrower hereby  irrevocably

                                       56
<PAGE>
waives any right to object to such relief and will not contest any motion by the
Banks  seeking  relief from the automatic  stay and the Borrower will  cooperate
with the Banks, in any manner requested by the Banks, in their efforts to obtain
relief from any such stay or other prohibition.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective  officers  thereunto duly authorized as of the date
first above written.

                                    UNITED CAPITAL CORP.

                                    By: _______________________
                                    Name:  Anthony J. Miceli
                                    Title:    Vice President

                  Address for Notices: _______________
                                       United Capital Corp.
                                       United Capital Building
                                       9 Park Place
                                       Great Neck, N.Y.  11021
                                       Telephone No.:  (516) 466-6464
                                       Telefax No.:      (516) 829-4301

BANKS:

                                    THE CHASE MANHATTAN BANK

                                    By:  _____________________
                                    Name:  William A. DeMilt, Jr.
                                    Title:  Assistant Vice President

                                    Lending Office and Address for Notices:
                                    The Chase Manhattan Bank
                                    395 North Service Road
                                    Melville, New York  11747
                                    Attention:  William A. DeMilt, Jr.
                                    Telephone: (516) 755-5066
                                    Telefax: (516) 755-5144

                                       57
<PAGE>
                                    FLEET BANK, NATIONAL ASSOCIATION

                                    By:  _____________________
                                    Name:  David T. Sunderwirth
                                    Title:  Vice President

                                    Lending Office and Address for Notices:
                                    Fleet Bank, National Association
                                    1133 Avenue of the Americas, 40th Floor
                                    New York, New York  10036
                                    Attention:  David T. Sunderwirth,
                                    Vice President
                                    Telephone No.: (212) 703-1707
                                    Telefax No.: (212) 703-1724




<PAGE>

                          AMENDMENT, WAIVER AND RELEASE

         This Agreement (this "Agreement") is made the __ day of December,  1997
by and among:

         UNITED  CAPITAL,  CORP., a corporation  organized under the laws of the
State of Delaware (the "Borrower"), and

         THE CHASE MANHATTAN BANK, a New York banking corporation  ("Chase") and
FLEET BANK, N.A., a national banking association organized under the laws of the
United States of America ("Fleet"  collectively with Fleet, the "Banks"), on the
other hand.

                                    RECITALS:

         (A) The  Borrower  and the  Banks are  parties  to a  Revolving  Credit
Agreement dated as of January 15, 1997 (the "Credit Agreement");

         (B) The Borrower has entered into a Stock Purchase Agreement,  dated as
of  November  20,  1997 and  executed  by and among AIL  Systems,  Inc.  and the
Borrower and Metex Corporation (the "Stock Purchase Agreement");

         (C) The Borrower has requested the Banks to consent to the transactions
contemplated  by the Stock  Purchase  Agreement  pursuant to which,  among other
things, the stock of the Borrower's subsidiary,  Dorne & Margolin,  Inc. will be
sold to AIL Systems, Inc. for a cash purchase price of $16,000,000;

         (D) In addition,  the Borrower has requested that the Credit  Agreement
and the  Facility  Documents  be amended to release  Dorne & Margolin,  Inc. and
Ancom Electromagnetique, Ltd. from their respective obligations thereunder;

         (E) The Banks are  willing  to  consent  to such  transactions  and are
willing to amend the Credit Agreement as set forth herein.

         (F) Any  capitalized  terms not defined  herein shall have the meanings
ascribed thereto in the Credit Agreement.

         NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
                                   ARTICLE 1.
                    Amendments to Revolving Credit Agreement.

         This  Agreement  shall  be  deemed  to be an  amendment  to the  Credit
Agreement and shall not be construed in any way as a  replacement  or substitute
therefore.  All of the  terms  and  provisions  of  this  Agreement  are  hereby
incorporated  by  reference  into the  Credit  Agreement  as if such  terms  and
provisions were set forth in full herein.

         Section  1.1.  Subject to the  provisions  of Section  1.2,  the Credit
Agreement  is hereby  amended by deleting all  references  to "Dorne & Margolin,
Inc.,  a  Delaware  corporation,"  to  "Dorne  &  Margolin,  Inc"  or to  "Ancom
Electromagnetique Ltd."

         Section  1.2.  The  amendment  provided for in Section 1.1 hereof shall
become effective in consummation of the  transactions  contemplated by the Stock
Purchase Agreement.

                                   ARTICLE 2.
                                    Release.

         Section 2.1. Subject to the provisions of Section 2.2 hereof, the Banks
hereby release each of Dorne & Margolin, Inc. and Ancom Electromagnetique,  Ltd.
from all of their obligations under the Credit Agreement and each other Facility
Document to which it is a party.

         Section  2.2.  The release  provided  for in Section  2.1 hereof  shall
become effective upon consummation of the transactions contemplated by the Stock
Purchase Agreement.

                                   ARTICLE 3.
                                     Waiver.

         Section 3.1. The Banks hereby waive  compliance  with the provisions of
Section 8.4 and Section 8.6 of the Credit Agreement only to the extent necessary
to permit the sale of the stock of Dorne & Margolin,  Inc. pursuant to the terms
of the Stock Purchase Agreement

         Section  3.2.  This  Waiver does not  constitute  a waiver of any other
provision  of the  Credit  Agreement  or a waiver of any other  right,  power or
privilege  of the Banks or of any future or other  present  breach of the Credit
Agreement. Furthermore, this Waiver shall not entitle the Borrower to any future
waiver,  whether similar in nature to the waiver granted herein or otherwise and
the Banks  specifically  reserve the right to withhold any such waivers that may
be requested in the future.

                                       2
<PAGE>
                                   ARTICLE 4.
                         Representations and Warranties.

         The Borrower hereby represents and warrants to the Banks that:

         Section 4.1. Each and every one of the  representations  and warranties
set forth in the Credit  Agreement is true as of the date hereof with respect to
the  Borrower  with the same  effect as though made on the date  hereof,  and is
hereby  incorporated  herein in full by reference as if fully restated herein in
its entirety.

         Section  4.2. No Default or Event of Default,  as defined in the Credit
Agreement now exists.

         Section  4.3.  The  Borrower  is not in  default  with  respect  to any
agreement to which it is a party or by which it is bound.

         Section 4.4. No  representation,  warranty or statement by the Borrower
contained  herein or in any other  document to be  furnished  by the Borrower in
connection  herewith  contains,  or at the time of delivery shall  contain,  any
untrue  statement of material  fact,  or omits or at the time of delivery  shall
omit to state a material fact necessary to make such representation, warranty or
statement not misleading.

         Section  4.5.  Except  as  explicitly  terminated  hereby,  each of the
Facility Documents,  including,  without limitation, the Security Agreements and
the  Guarantees,  continue to be in full force and effect and secure all payment
and other obligations of the Borrower under the Agreement.  The Borrower has not
located  assets in any new  locations  since the  execution  and delivery of the
Security Agreements.

                                   ARTICLE 5.
                                 Miscellaneous.

         Section  5.1.  This  Amendment  shall be governed by and  construed  in
accordance with the laws of the State of New York.

         IN WITNESS  WHEREOF,  each of the undersigned has executed or caused to
be duly executed this  Amendment,  Waiver and Release as of the date first above
written.

                                            UNITED CAPITAL CORP.



                                            By: /s/ Anthony Miceli
                                                ------------------------------
                                            Name:  Anthony Miceli
                                            Title: VP & CEO

                                       3
<PAGE>
                                            THE CHASE MANHATTAN BANK



                                            By:________________________________
                                            Name:
                                            Title: Vice President


                                            FLEET BANK, N.A.



                                            By:________________________________
                                            Name:
                                            Title:   Vice President

                                       4
<PAGE>











                            THE CHASE MANHATTAN BANK

                                     -with-

                              UNITED CAPITAL CORP.


                      AMENDMENT NO. 1 TO CREDIT AGREEMENT











                                             Respectfully Submitted,

                                             RIVKIN, RADLER & KREMER
                                             EAB Plaza
                                             Uniondale, New York
<PAGE>
                             INDEX TO DOCUMENTATION
                             ----------------------


I.   FINANCING DOCUMENTATION                                            DOCUMENT
     -----------------------                                              NUMBER
                                                                          ------

Amendment No. 1 to Credit Agreement with
Exhibits attached thereto...................................................1

$20,000,000 Substitute Revolving Credit
Note - The Chase Manhattan Bank.............................................2

$3,500,000 Term Promissory Note - The 
Chase Manhattan Bank........................................................3

$20,000,000 Substitute Revolving Credit
Note - The Fleet Bank, N.A..................................................4

$3,500,000 Term Promissory Note - Fleet
Bank, N.A...................................................................5

Guarantor's Affirmation and Ratification....................................6

Security Agreement Affirmation of Metex
Corporation.................................................................7

Security Agreement of AFP Transformers,
Inc.........................................................................8

Security Agreement Affirmation of Dorne &
Margolin, Inc...............................................................9

II.  MISCELLANEOUS DOCUMENTATION
     ---------------------------

Secretary's Certificate together with Board of
Director's Resolution of United Capital 
Corp.......................................................................10

Opinion Letter of Reid & Priest LLP........................................11



                                       i
<PAGE>
                  AMENDMENT NO. 1 TO REVOLVING CREDIT AGREEMENT


         This  Agreement  (this  "Agreement")  is made the 5th day of September,
1997 by and among:

         UNITED  CAPITAL CORP.,  a corporation  organized  under the laws of the
State of Delaware (the "Borrower"); and

         THE CHASE MANHATTAN BANK, a New York banking corporation  ("Chase") and
FLEET BANK, N.A., a national banking association organized under the laws of the
United States ("Fleet"); collectively with Chase, the "Banks").

         (A) The  Borrower  and the  Banks are  parties  to a  Revolving  Credit
Agreement dated as of January 15, 1997 (the "Credit Agreement");

         (B) The Borrower has requested that the Banks extend a $7,000,000  Term
Loan to the Borrower and that Credit  Agreement be amended to  incorporate  such
Term Loan and in certain  other  respects as  provided  herein and the Banks are
willing to extend such Term Loan amend the Credit Agreement as set forth herein;

         (C) Any  capitalized  terms not defined  herein shall have the meanings
ascribed thereto in the Credit Agreement.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

              ARTICLE 1. AMENDMENTS TO REVOLVING CREDIT AGREEMENT.

         This  Agreement  shall  be  deemed  to be an  amendment  to the  Credit
Agreement and shall not be construed in any way as a  replacement  or substitute
therefore.  All of the  terms  and  provisions  of  this  Agreement  are  hereby
incorporated  by  reference  into the  Credit  Agreement  as if such  terms  and
provisions were set forth in full herein.

         SECTION 1.1.  Section 1.1 of the Credit  Agreement is hereby amended by
inserting the following definitions therein in alphabetical order:

         "Aggregate  Revolving Credit Outstandings" means, at a particular time,
the aggregate  outstanding  principal  amount of Revolving  Credit Loans at such
time.

         "Aggregate Term Loan  Outstandings"  means,  at a particular  time, the
aggregate outstanding principal amount of Term Loans at such time.

         "Revolving Credit Loan" means any extension of credit made by the Banks
pursuant to Section 2.1 hereof.


<PAGE>
         "Revolving Credit Notes" means,  collectively,  the promissory notes of
the Borrower in the form of Exhibit A hereto  evidencing  the  Revolving  Credit
Loans made by a Bank hereunder.

         "Revolving  Credit  Termination Date" means the earlier to occur of (a)
the date on which the commitments shall terminate hereunder; and (b) January 15,
2000.

         "Term Loan" means the $7,000,000 Term Loan advanced by the Banks to the
Borrower pursuant to the provisions of Section 2-A.1 hereof.

         "Term Loan Maturity Date" means September 30, 2002 or such earlier date
on which the  Borrower's  obligations  pursuant  to Article 2-A hereof have been
paid in full.

         "Term Note" means each promissory  note of the Borrower,  substantially
in the form of Exhibit  A-1 hereto,  evidencing  the Term Loan made by each Bank
hereunder.

         SECTION  1.2.  The  definition  of the  term  "Aggregate  Outstandings"
contained in Section 1.1 of the Credit  Agreement  is hereby  amended to read in
its entirety as follows:

         "Aggregate  Outstandings"  means the sum of Aggregate  Revolving Credit
Outstandings and Aggregate Term Loan Outstandings.

         SECTION 1.3. The definition of the term  "Commitment" is hereby amended
by deleting  the phrase  "the  obligation  of such Bank to extend  credit to the
Borrower hereunder"  therefrom and substituting the following in its place: "the
obligation  of such  Bank to  extend  Revolving  Credit  Loans  to the  Borrower
pursuant to Article 2 hereof".

         SECTION 1.4. The definition of the term "Loan" contained in Section 1.1
of the Credit Agreement is hereby amended to read in its entirety as follows:

         "Loan" means any Revolving Credit Loan or any Term Loan.

         SECTION 1.5. The  definition of the term "Margin"  contained in Section
1.1 of the  Credit  Agreement  is  hereby  amended  to read in its  entirety  as
follows:

         "Margin"  means (i) with  respect  to LIBOR  Loans  that are  Revolving
         Credit Loans, one and three quarters percent (1.75%) per annum and (ii)
         with respect to LIBOR Loans that are Term Loans, 1.40% per annum.

         SECTION 1.6. The  definition  of the term "Notes"  contained in Section
1.1 of the  Credit  Agreement  is  hereby  amended  to read in its  entirety  as
follows:

         "Notes"  means,  collectively,  the Revolving Credit Notes and the Term
          Notes.

                                       2
<PAGE>

         SECTION 1.7.  Article 2 of the Credit  Agreement is hereby  amended and
restated in its entirety to provide as follows:

         ARTICLE 2.  REVOLVING CREDIT FACILITY.

                  SECTION 2.1. REVOLVING CREDIT LOANS.  Subject to the terms and
         conditions  of this  Agreement,  each  Bank  severally  agrees  to make
         revolving credit loans in Dollars (the "Revolving  Credit Loans"),  and
         all  Revolving  Credit Loans shall be made by the Banks,  on a pro-rata
         basis in accordance with their respective  Commitment  Proportions,  to
         the Borrower  from time to time,  from and including the date hereof to
         but  excluding  the Revolving  Credit  Termination  Date, up to but not
         exceeding  at any one time  outstanding  the amount of its  Commitment;
         PROVIDED,  that no Revolving  Credit Loan shall be made if after giving
         effect to such Loan the Aggregate  Revolving Credit Outstandings at the
         time of such Revolving  Credit Loan would exceed the Total  Commitments
         or if the Aggregate  Outstandings  would exceed the  Borrowing  Base in
         effect on such date.  The Revolving  Credit Loans may be outstanding as
         Base Rate Loans or LIBOR  Loans;  provided,  however,  that  during the
         occurrence and continuance of an Event of Default, the Borrower may not
         elect and the Banks  shall  have no  obligation  to make  LIBOR  Loans.
         Subject to the  foregoing  limits,  the Borrower may borrow,  repay and
         reborrow, on or after the date hereof and prior to the Revolving Credit
         Termination  Date,  all  or a  portion  of  the  Total  Commitments  as
         Revolving  Credit Loans  hereunder.  Any amount of any Revolving Credit
         Loan not paid when due (at  maturity,  on  acceleration  or  otherwise)
         shall  bear  interest  thereafter  until  paid at the rate set forth in
         Section 3.3(c) hereof.

                  SECTION 2.2. THE REVOLVING  CREDIT NOTES. The Revolving Credit
         Loans of each Bank shall be  evidenced by a single  promissory  note in
         favor of such Bank  substantially  in the form of Exhibit A hereto with
         appropriate  insertions,  duly  executed and completed by the Borrower.
         Each Bank is hereby  authorized to record the date,  type and amount of
         each  Revolving  Credit  Loan,  the date and amount of each  payment of
         principal  thereof,  and  the  principal  amount  subject  thereto  and
         interest rate with respect thereto in such Banks' records and/or on the
         schedules  annexed to and  constituting a part of its Revolving  Credit
         Note, and, absent manifest error, any such recordation shall constitute
         conclusive  evidence of the information so recorded;  provided that the
         failure  to make any such  recordation  shall not in any way affect the
         obligation  of the  Borrower  to repay the  Revolving  Credit  Loans in
         accordance  with the terms of this Agreement  (without giving effect to
         any such error  made in the  Revolving  Credit  Note).  Each  Revolving
         Credit Note (a) be stated to mature on the Revolving Credit Termination
         Date and (b) shall bear interest on the unpaid principal amount thereof
         from time to time outstanding as provided herein.

                                       3
<PAGE>

         SECTION 2.3.      USE OF PROCEEDS.

                  (a) The  Borrower  shall  use the  proceeds  of the  Revolving
         Credit Loans on the date of this  Agreement  to repay in full  Existing
         Bank Debt and may use the proceeds of the Revolving Credit Loans on the
         date of this  Agreement and from time to time  thereafter  prior to the
         Revolving Credit Termination Date (i) for general corporate and working
         capital purposes; (ii) to finance the acquisition of Real Estate Assets
         or to make mortgage loans or similar loans that  constitute Real Estate
         Assets;  (iii) to repurchase  stock of the Borrower in an amount not to
         exceed  $2,000,000 in any fiscal year or $5,000,000  during the term of
         this Agreement; and (iv) to make advances to the Operating Companies in
         an aggregate  amount not to exceed  $10,000,000 at any time. No part of
         the proceeds of any of the Revolving  Credit Loans will be used (i) for
         any purpose which  violates the  provisions of Regulations G, T, U or X
         of the Board of Governors of the Federal Reserve System as in effect on
         the date of making  such  Loans or (ii) to permit the  Borrower  or any
         Guarantor  to acquire  equity  securities  in any third party except as
         permitted pursuant to the provisions of Section 8.7 hereof.

                  (b) The  Borrower  agrees  to  indemnify  the  Banks and their
         respective directors, officers, employees,  affiliates, agents or other
         representatives  and hold the  Banks and  their  respective  directors,
         officers,  employees,  affiliates,  agents  or  other  representatives,
         harmless  from and against any and all  liabilities,  losses,  damages,
         costs and  expenses of any kind  (including,  without  limitation,  the
         reasonable  fees  and  expenses  of  counsel  for any  such  Person  in
         connection with any investigative, administrative, judicial proceeding,
         whether or not such Person shall be designated a party  thereto)  which
         may be incurred by any such Person,  relating to or arising out of this
         Agreement  or any actual or proposed  use of any  proceeds of Revolving
         Credit Loans hereunder.

         SECTION 2.4.      BORROWING PROCEDURE FOR REVOLVING CREDIT LOANS; RATE 
                           AND INTEREST PERIOD SELECTION; CONVERSIONS.

                  (c) The Borrower may request a borrowing under the Commitments
         hereunder as provided in Section 3.1.  Each Bank will make its share of
         such  borrowing  available to Fleet at Fleet's  office  located at 1185
         Avenue of the Americas,  3rd Floor,  New York, New York 10036 not later
         than 2:00 p.m.  New York  City  time on the date of such  borrowing  in
         immediately  available funds. Unless any applicable condition specified
         in Article 5 has not been satisfied,  not later than 3:00 p.m. New York
         City  time on the date of such  borrowing,  Fleet  shall,  through  its
         Lending  Office and subject to the conditions of this  Agreement,  make
         the  amount  of the  Loan  to be made on  such  date  available  to the
         Borrower,  in immediately  available  funds, by crediting an account of
         the Borrower designated by the Borrower and maintained with Fleet.

                                       4
<PAGE>

                  (d) In the case of each Revolving Credit Loan which is a LIBOR
         Loan, the Borrower  shall select an Interest  Period of any duration in
         accordance  with the  definition  of  Interest  Period in Section 1. 1,
         subject to the  limitations  that no  Interest  Period for a LIBOR Loan
         shall have a duration  less that one  month,  and if any such  proposed
         Interest Period would otherwise be for a shorter period,  such Interest
         Period shall not be available.

                  (e)  Upon  the  expiration  of  an  Interest  Period  for  any
         Revolving  Credit Loan, or any portion  thereof,  such Revolving Credit
         Loan or portion thereof shall be automatically continued as a Base Rate
         Loan  except to the extent  that such  Revolving  Credit  Loan shall be
         repaid  hereunder or unless the Borrower shall have notified the Banks,
         as  provided  in  Section  3.1  hereof,  of its  intention  to select a
         different  interest rate option with respect to such  Revolving  Credit
         Loan or any portion thereof. Subject to the following conditions and to
         the terms and conditions of this Agreement, the Borrower shall have the
         right to convert  any  Revolving  Credit  Loan or portion  thereof to a
         different type of Loan (i.e.,  from a Base Rate Loan to a LIBOR Loan or
         VICE VERSA):

                           (i) if less than all  Revolving  Credit  Loans at the
                  time outstanding  shall be converted,  the notice given by the
                  Borrower to the Banks shall  specify the  aggregate  amount of
                  Loans in each case to be converted and such  conversion  shall
                  be made  ratably  among the  Banks in  accordance  with  their
                  respective Commitment Proportions;

                           (ii) in the  case of a  conversion  of less  than all
                  outstanding  Revolving Credit Loans,  the aggregate  principal
                  amount of Revolving  Credit Loans to be converted shall not be
                  less than (1) $200,000  (and if greater in integral  multiples
                  of $50,000) in the case of  conversions to or into LIBOR Loans
                  or (2)  $200,000  (and if greater  in  integral  multiples  of
                  $50,000)  in the  case of  conversions  to or into  Base  Rate
                  Loans;

                           (iii) no Loan may be  converted  to a LIBOR Loan less
                  than one month before the Revolving Credit Termination Date;

                           (iv) a LIBOR  Loan may be  converted  to a  different
                  type  of Loan  only on the  last  day of the  then  applicable
                  Interest Period with respect thereto; and

                           (v) no Loan or portion  thereof may be converted to a
                  LIBOR Loan during the occurrence  and  continuance of an Event
                  of Default.

                                       5
<PAGE>
                  Notwithstanding  anything to the contrary herein, after giving
         effect  to  any  Revolving  Credit  Loan,  unless  consented  to by the
         Required Banks in their sole  discretion,  there shall not be more than
         six  (6)  different  Interest  Periods  in  effect  in  respect  of all
         Revolving Credit Loans then outstanding.

         SECTION 2.5.      MINIMUM AMOUNTS OF REVOLVING CREDIT LOAN.

                  Except  for  borrowings  which  involve  or  utilize  the full
         remaining  amount of the  Commitments  and payments which result in the
         prepayment of all Base Rate Loans, each borrowing and payment of a Base
         Rate Loan  shall be in an amount at least  equal to  $200,000  and,  if
         greater,   integral  multiples  of  $50,000  in  excess  thereof.  Each
         borrowing  and  payment  of a LIBOR Loan shall be in an amount at least
         equal to $200,000 and, if greater, in integral multiples of $ 50,000 in
         excess thereof.

         SECTION 2.6.      REDUCTION OF COMMITMENTS.

                  (f) The  Borrower  shall have the right to reduce or terminate
         the amount of the unused  Commitments at any time and from time to time
         provided  that:  (i) the  Borrower  shall  give  notice  of  each  such
         reduction or  termination  to the Banks as provided in Section 3.1, and
         (ii) each partial  reduction  shall be  allocated  PRO RATA between the
         Commitments of each Bank in accordance with their respective Commitment
         Proportions  and  shall be in an  aggregate  amount  at least  equal to
         $3,000,000 or, if greater, in integral multiples of $1,000,000.

                  (g) The  Commitments,  once reduced or  terminated  may not be
         reinstated.

         SECTION 1.8. The Credit  Agreement is hereby  amended by inserting  the
following Article 2-A therein immediately before Article 3 thereof:

                           ARTICLE 2-A. THE TERM LOAN.

         SECTION 2-A.1.   THE TERM LOAN.

                  Subject to the terms and conditions  hereof,  each Bank agrees
         to make the Term Loan to the  Borrower  on  September  30, 1997 and the
         Term Loan shall be made by the Banks on a pro-rata  basis in accordance
         with their respective Commitment Proportions.

         SECTION 2-A.2.   THE TERM NOTES

                  The Term Loan made by each Bank  hereunder  shall be evidenced
         by a single  promissory note  substantially  in the form of Exhibit A-1
         hereto, with appropriate insertions,  payable to the order of such Bank
         and  representing  the  obligation  of the  Borrower  to pay the unpaid
         principal  balance of such Term 


                                       6
<PAGE>
         Loan,  with interest  thereon as provided  herein.  Each Bank is hereby
         authorized  to record the date or amount of each payment or  prepayment
         of  principal  thereof  and the  date and  amount  of each  payment  of
         interest  thereon in the Bank's records and/or on a schedule annexed to
         its Term Note and, absent manifest error,  any such  recordation  shall
         constitute  conclusive  evidence of the accuracy of the  information so
         recorded;   PROVIDED,   however,   that  the  failure  to  record  such
         information  shall not affect the  Borrower's  obligations to repay the
         Term  Loans.  Each Term Note (a) shall be dated the date such Term Loan
         is made (b) shall be stated to mature on the Term Loan  Maturity  Date,
         (c) shall bear  interest  for a period  from the date such Loan is made
         until it is paid in full on the unpaid  principal amount thereof at the
         applicable rates per annum specified herein.

         SECTION 2-A.3.       USE OF PROCEEDS.

                  (a) The  Borrower  shall use the  proceeds of the Term Loan to
         repay existing  indebtedness owing to the Banks under Article 2 of this
         Agreement  and for general  working  capital  purposes.  No part of the
         proceeds  of any of the Term Loans will be used for any  purpose  which
         violates the  provisions  of  Regulations  G, T, U or X of the Board of
         Governors  of the  Federal  Reserve  System as in effect on the date of
         making such Loans.

                  (b) The  Borrower  agrees  to  indemnify  the  Banks and their
         respective directors, officers, employees,  affiliates, agents or other
         representatives  and hold the  Banks and  their  respective  directors,
         officers,  employees,  affiliates,  agents  and other  representatives,
         harmless  from and against any and all  liabilities,  losses,  damages,
         costs and  expenses of any kind  (including,  without  limitation,  the
         reasonable  fees  and  expenses  of  counsel  for any  such  Person  in
         connection  with  any   investigative,   administrative,   or  judicial
         proceeding,  whether or not such  Person  shall be  designated  a party
         thereto)  which may be  incurred  by any such  Person,  relating  to or
         arising  out of this  Agreement  or any actual or  proposed  use of any
         proceeds of Term Loan hereunder.

         SECTION 2-A.4.   AMORTIZATION OF TERM LOANS.

                  The Term Loan  made  hereunder  shall  have a term of five (5)
         years.  The  principal  balance of the Term Loan shall be paid in equal
         consecutive  quarterly  installments of $350,000 commencing on the last
         day of  December  1997 and  continuing  on the last day of each  March,
         June,  September,  and December  thereafter with the final  installment
         thereof being due on the Term Loan Maturity Date. All  installments  of
         principal  on the Term Loan shall be paid to the Agent for the  ratable
         benefit  the  Banks in  accordance  with  their  respective  Commitment
         Proportions.

                                       7
<PAGE>

         SECTION 2-A.5.   BORROWING  PROCEDURE FOR TERM LOANS; INTEREST RATE AND
                          INTEREST PERIOD SELECTION.

                  (a) Each Bank shall make its share of the Term Loan  available
         to Fleet at Fleet's office located at 1185 Avenue of the Americas,  3rd
         Floor, New York, New York 10036, not later than 2:00 p.m. New York City
         time on September 30, 1997 in immediately  available funds.  Unless any
         applicable condition specified in Article 5 has not been satisfied, not
         later  than 3:00 p.m.  New York City time on such  date,  Fleet  shall,
         through its  lending  officer  and  subject to the  conditions  of this
         Agreement,  make the amount of the Term Loan  available to the Borrower
         in immediately  available funds by crediting on account of the Borrower
         designated by the Borrower and maintained with Fleet.

                  (b) The Term  Loan  shall  initially  be made as a LIBOR  Loan
         having an Interest  Period of three (3) months.  Upon expiration of any
         Interest Period applicable to the Term Loan, the Borrower shall pay the
         next  installment of principal on the Term Loan, and the balance of the
         Term Loan shall be  continued  as a LIBOR Loan having a three (3) month
         Interest Period.  Notwithstanding the foregoing,  the Term Loan may not
         be continued as a LIBOR Loan during the occurrence  and  continuance of
         an Event of Default.

         SECTION 1.9.  Article 3 of the Agreement is hereby amended and restated
in its entirety to provide as follows:

         ARTICLE 3.  GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.

         SECTION 3.1.      CERTAIN NOTICES.

                  Except as otherwise provided in this Agreement, notices by the
         Borrower to the Banks of each borrowing  pursuant to Sections 2.4, each
         prepayment  pursuant to Section 3.2, each  reduction or  termination of
         the  Commitments  pursuant  to  Section  2.6  and  each  conversion  of
         Revolving  Credit Loans  pursuant to Sections 2.4 shall be  irrevocable
         and shall be  effective  on the date of receipt only if received by the
         Banks by not later than 11:00 a.m.,  New York City time, and (a) in the
         case of borrowings and prepayments of (i) Base Rate Loans, if given the
         date  thereof and (ii) LIBOR  Loans,  if given  three (3) Banking  Days
         prior  thereto;  (b) in the case of reductions or  terminations  of the
         Commitments,  given five (5) Banking Days prior thereto; and (c) in the
         case of conversions or continuations pursuant to Sections 2.4, if given
         three (3) Banking Days prior thereto in the case of  conversions  to or
         continuations  of LIBOR  Loans and if given on the date  thereof in the
         case of conversions to Base Rate Loans.  Each such  notification  which
         relates to a borrowing,  continuation  or conversion  shall specify the
         amount and the type of Revolving  Credit Loan (i.e.,  Base Rate Loan or
         LIBOR Loan), the date of the proposed borrowing, whether such Revolving
         Credit Loan  represents an additional  borrowing,  a continuation  or a
         conversion,  

                                       8
<PAGE>
         and in the case of a LIBOR Loan, the Interest  Period to be used in the
         computation of interest with respect thereto. Each such notice relating
         to a reduction or  termination  of the  Commitments  shall  specify the
         amount of the Commitments to be reduced or terminated.

         SECTION 3.2.      PREPAYMENTS.

                  (a) The  Borrower  shall  have the  right at any time and from
         time to time to  prepay  any  Base  Rate  Loan,  in  whole  or in part;
         PROVIDED,  however,  that each such partial  prepayment  of a Base Rate
         Loan shall be in a minimum  aggregate  principal amount of $200,000 or,
         if greater in amounts which are integral  multiples of $50,000.  Except
         as  required  by  paragraph  (b) or (c)  below or on the last day of an
         Interest  Period  with  respect  thereto,  the  Borrower  shall  not be
         permitted to prepay LIBOR Loans.

                  (b) In the event that the  Aggregate  Outstandings  exceed the
         then  applicable  Borrowing  Base  or the  Aggregate  Revolving  Credit
         Outstandings  exceed  the Total  Commitments  at any time  prior to the
         Revolving Credit  Termination  Date, the Borrower shall promptly pay or
         prepay so much of the Revolving  Credit Loans  outstanding  as shall be
         necessary in order that the Aggregate  Outstandings will not exceed the
         Borrowing   Base  then  in  effect  and  Aggregate   Revolving   Credit
         Outstandings  will not exceed  the Total  Commitment.  All  prepayments
         under this subparagraph shall be subject to Section 4.1.

                  (c)  Unless  otherwise  agreed  by the Banks in  writing,  the
         Borrower  shall be required  to pay or prepay  Revolving  Credit  Loans
         outstanding  with  (i)  80% of the  proceeds  of  the  issuance  by the
         Borrower or any  Guarantor of additional  equity;  (ii) 100% of the net
         proceeds  of the  sale by the  Borrower  or any  Guarantor  of any Real
         Estate  Assets;  (iii)  100% of the net  proceeds  resulting  from  the
         repayment of  mortgages  constituting  Real Estate  Assets or (iv) such
         proceeds as may be paid as a result of a casualty or condemnation,  all
         in  accord  with  Sections  7.11 or 7.12 of this  Agreement;  provided,
         however,  that the Borrower  shall have no obligation  under clause (i)
         above until the aggregate net proceeds of any and all additional equity
         issuances  during  the term of this  Agreement  shall  equal or  exceed
         $1,000,000.00. All prepayments under this paragraph shall be subject to
         Section 4.1.

                  (d) All payments required by paragraphs (b) or (c) above shall
         be made to the  Banks  PRO RATA in  accordance  with  their  respective
         Commitment  Proportions  and shall be applied  as  follows:  first,  to
         outstanding  Revolving  Credit Loans that are Base Rate Loans up to the
         full amount thereof; second, to outstanding Revolving Credit Loans that
         are LIBOR  Loans up to the full amount  thereof;  and,  third,  to Term
         Loans.

                                       9
<PAGE>

                  (e) All prepayments made pursuant to this Section 3.2 shall be
         accompanied  by the  payment of all  accrued  interest on the amount so
         prepaid and by all amounts  required to be paid pursuant to Section 4.1
         in connection therewith.

         SECTION 3.3.      INTEREST OF LOANS.

                  (f) BASE RATE LOANS.  The  Borrower  shall pay interest on the
         outstanding  and  unpaid  principal  amount of each Base Rate Loan made
         under this Agreement at a fluctuating  rate per annum equal to the Base
         Rate from time to time in  effect.  Each  change in the  interest  rate
         shall take effect  simultaneously with the corresponding  change in the
         Prime Rate or the  Federal  Funds  Rate,  as the case may be.  Interest
         shall be  calculated  on the basis of the actual number of days elapsed
         divided by a year of three  hundred  sixty (360) days and shall be paid
         to the Agent for the account of the Banks  quarterly,  in  arrears,  on
         March 31, June 30, September 30 and December 31 in each year and on the
         Termination Date.

                  (g)  LIBOR  LOANS  The  Borrower  shall  pay  interest  on the
         outstanding and unpaid  principal  amount of each LIBOR Loan made under
         this Agreement for each Interest  Period  applicable to such LIBOR Loan
         at a rate per annum equal to the Reserve  Adjusted LIBOR Rate in effect
         with respect thereto, plus the Margin.  Interest shall be calculated on
         the basis of the  actual  number of days  elapsed  divided by a year of
         three  hundred  sixty  (360)  days and shall be paid to the  Banks,  in
         arrears on the last day of the Interest Period applicable to such LIBOR
         Loan;  PROVIDED,  however,  that if such Interest Period is longer than
         three  months,  interest  shall  be  paid  on  the  last  day  of  each
         three-month  period  following the commencement of such Interest Period
         and on the last day of such Interest Period.

                  (h)  POST-DEFAULT.  If any  Default  or Event of  Default  has
         occurred and is continuing hereunder, all Loans, and all interest, fees
         or other amounts due hereunder,  to the extent  permitted by applicable
         law,  shall bear interest  (payable on demand,  and in any event on the
         last day of each month,  and  computed  daily on the basis of a 360-day
         year for actual days  elapsed) (i) in all cases other than LIBOR Loans,
         at the Default Rate until paid and (ii) in the case of LIBOR Loans,  at
         a rate which shall be the greater of (x) the Default Rate or (y) 2% per
         annum in excess of the rate  applicable  to such LIBOR Loan,  until the
         expiration  of the Interest  Period  applicable  to such Loan, at which
         time the Loan will  automatically  be converted  into a Base Rate Loan,
         and until paid,  shall bear  interest at the Default Rate. In no event,
         however,  shall interest payable  hereunder be in excess of the maximum
         rate of interest  permitted under  applicable law. The obligation to so
         pay interest upon any  reimbursement  obligation of the Borrower to the
         Banks  shall  not be  construed  so as to  waive  the  requirement  for
         reimbursement on the same date that payment is made by the Banks as set
         forth in this Agreement.

                                       10
<PAGE>

         SECTION 3.4.      COMMITMENT FEE.

                  The Borrower shall pay to the Agent for the ratable benefit of
         the Banks a commitment  fee for the period from and  including the date
         hereof to and excluding the Revolving Credit  Termination Date equal to
         1/4 of 1% of the average daily unused  portion of the Total  Commitment
         during the applicable period. The commitment fee shall be calculated on
         the basis of a year of 360 days for the actual  number of days elapsed.
         The commitment fee shall be due and payable quarterly in arrears on the
         last  day  of  each  calendar  quarter  and  on  the  Revolving  Credit
         Termination Date.

         SECTION 3.5.      ADMINISTRATIVE FEE.

                  The  Borrower  shall pay to the Agent for its own  account  an
         annual fee of $25,000.  The administrative fee shall be due and payable
         quarterly  in advance on or before the date hereof and on each April 1,
         July 1,  October  1,  January  1  thereafter  during  the  term of this
         Agreement.  Any payment  made on or before the date hereof shall be pro
         rated for the  number of days from the date  hereof  through  March 31,
         1997.

         SECTION 3.6.      SYNDICATION FEE.

                  The Borrower shall pay to the Agent,  for the ratable  benefit
         of the Banks, a syndication fee of $100,000.  This fee shall be due and
         payable on the Closing Date.

         SECTION 3.7.      PAYMENTS GENERALLY.

                  (a) All payments under this  Agreement or the Notes,  shall be
         made in  Dollars  in  immediately  available  funds  to the  Banks,  in
         accordance with the respective obligations of the Borrower then due and
         payable to each of them not later than 1:00 p.m.  New York City time on
         the relevant dates  specified  above (each such payment made after such
         time on such due date is to be  deemed  to have  been  made on the next
         succeeding  Banking Day), to the Bank's  Lending  Office.  The Borrower
         will notify the Banks of any payment pursuant to the provisions of this
         Section at the same time it makes any such payment.  Each Bank may (but
         shall not be obligated  to) debit the amount of any such payment to any
         ordinary  deposit  account of the  Borrower  with such Bank;  provided,
         however, that the Banks shall not be permitted to debit any funds which
         are not available to the Borrower other than on an overdraft basis. The
         Borrower shall, at the time of making each payment under this Agreement
         or the  Notes,  specify  to the Banks  the  principal  or other  amount
         payable by the Borrower under this Agreement or the Notes to which such
         payment is to be applied; provided, however, that in the event that the
         Borrower  fails to so specify,  or if an Event of Default has  occurred
         and is continuing, the Banks shall apply such payment as they may elect
         in their 


                                       11
<PAGE>
         sole discretion. If the due date of any payment under this Agreement or
         the Notes  would  otherwise  fall on a day which is not a Banking  Day,
         such date shall be  extended  to the next  succeeding  Banking  Day and
         interest  shall be payable for any principal so extended for the period
         of such extension.  Except to the extent otherwise  provided herein, it
         is the intention of the parties that all payments  hereunder be made to
         the Banks  PRO RATA in  accordance  with  their  respective  Commitment
         Proportions.

                  (b) All payments  made by the Borrower  under this  Agreement,
         the Notes or the other Facility  Documents shall be made free and clear
         of, and  without  deduction  or  withholding  for or on account of, any
         present  or  future  income,  stamp or other  taxes,  levies,  imposts,
         duties,  charges,  fees,  deductions or withholdings,  now or hereafter
         imposed, levied, collected, withheld or assessed by any governmental or
         taxing  authority  of any  jurisdiction  located  outside of the United
         States,  excluding,  (x) in the case of each  Bank,  income  taxes  and
         franchise  taxes (imposed in lieu of income taxes) imposed on such Bank
         as a result of a present or former connection  between the jurisdiction
         of the  government or the taxing  authority  imposing such tax and such
         Bank  (excluding  a  connection  arising  solely  from such Bank having
         executed, delivered, or performed its obligations or received a payment
         under,  or enforced,  this  Agreement,  the Notes or the other Facility
         Documents) or any political  subdivision or taxing authority thereof or
         therein, and (y) taxes (including  withholding taxes) imposed by reason
         of the  failure  of the  Agent or any  Bank,  in  either  case  that is
         organized  outside the United  States,  to comply with  Section  3.7(c)
         hereof (or the  inaccuracy at any time of the  certificates,  documents
         and other evidence delivered  thereunder) (all such non-excluded taxes,
         levies,  imposts,  duties,  charges,  fees, deductions and withholdings
         being hereinafter  called "Taxes").  If any Taxes are withheld from any
         amounts payable to any Bank hereunder or under the Facility  Documents,
         the  amounts so payable to such Bank shall be  increased  to the extent
         necessary to yield to such Bank (after  payment of all Taxes)  interest
         or any such  other  amounts  payable  hereunder  at the rates or in the
         amounts  specified in this Agreement,  the Notes and the other Facility
         Documents. Whenever any Taxes are payable by the Borrower, the Borrower
         shall send to such Bank within 30 days after the date of any payment, a
         certified copy of an original official receipt received by the Borrower
         showing  payment  thereof.  If the Borrower fails to pay any Taxes when
         due to the appropriate  taxing authority or fails to remit to the Banks
         the  required  receipts or other  required  documentary  evidence,  the
         Borrower shall indemnify the Banks for any incremental taxes,  interest
         or  penalties  that may  become  payable by any Bank as a result of any
         such failure.  This  indemnification  shall be made within 30 days from
         the date such  Bank or the  Agent  (as the case may be)  makes  written
         demand therefor.  If any Bank receives a refund in respect of any Taxes
         for which such Bank has received  payment from the Borrower  hereunder,
         such Bank shall  promptly  notify the  Borrower of such refund and such
         Bank  shall,  within 30 days of receipt  of a request  by the  Borrower
         repay such refund to the Borrower, provided that the Borrower, upon the
         request of such Bank, agrees to 

                                       12
<PAGE>
         return such refund (plus any  penalties,  interest or other charges) to
         such Bank in the event such Bank is required to repay such refund.  The
         agreements in this  subsection  shall survive the  termination  of this
         Agreement  and the Facility  Documents and the payment of the Notes and
         all other amounts payable hereunder or thereunder.

         SECTION 3.8.      INTERIM ADJUSTMENTS TO BORROWING BASE.

                  (a) The  Borrowing  Base  shall be  adjusted  periodically  as
         follows:

                           (i) The Borrowing Base shall be increased to include:

                                    (A) Real Estate  Assets that are acquired by
         the Borrower  and/or the  Guarantors and that satisfy the definition of
         "Eligible Properties" hereunder; and

                                    (B) Real  Estate  Assets that do not qualify
         as "Eligible  Properties" but subsequently  satisfy the requirements of
         "Eligible Properties";

         PROVIDED,  HOWEVER,  that in  either  case  with  respect  to any  such
         property,  the Agent,  on behalf of the Banks,  shall be  permitted  to
         conduct such due diligence investigations as the Banks deem appropriate
         prior to  including  such  property as an "Eligible  Property"  and the
         Banks  shall be  satisfied  in all  respects  with the  results of such
         investigation.

                           (i) Conversely, the Borrowing Base shall be decreased
                  to exclude:

                                    (A) Real Estate  Assets that are sold by the
         Borrower  or any  Guarantor  or that become  subject to liens  securing
         Indebtedness  which exceed 10% of the annualized and normalized  actual
         year-to-date  Net  Operating  Income for such property  capitalized  at
         11.5%; and

                                    (B) Any Real Estate Asset that satisfies the
         definition of "Eligible  Property,"  (i) if the tenant at such property
         has  delivered  a  termination  notice,  or (ii) 60 days  prior  to the
         termination  of the lease with respect to such property or (iii) if the
         tenant otherwise ceases paying rent with respect to such property.

         Upon the happening of any of the events  described  above, the Borrower
         shall  deliver to the Banks a notice  thereof as  required  pursuant to
         Section 7.8 hereof.  In  addition,  the Borrower  shall  deliver to the
         banks a new  Borrowing  Base  Certificate  within five (5) Banking Days
         after the happening of any such event;  PROVIDED,  HOWEVER, that in the
         case of  clause  (i)  above,  the  Borrower  shall  not  deliver  a new
         Borrowing Base Certificate  including any such property until the Agent
         shall have  completed  its due  diligence  investigation  and the Banks
         shall 

                                       13
<PAGE>
         have been satisfied with the results  thereof.  The Agent agrees to use
         all reasonable efforts to complete any such due diligence investigation
         within 20 Business Days of receiving notice from the Borrower thereof.

         SECTION 1.10. The Agreement is hereby amended (i) by deleting Exhibit A
therefrom  and by  substituting  Exhibit  A  hereto  in its  place  and  (ii) by
inserting Exhibit A-1 hereto as a new Exhibit A-1 to the Agreement.

         ARTICLE 2.  CONDITIONS PRECEDENT.

         SECTION 2.1.      CONDITIONS TO EFFECTIVENESS.

         The amendments to the Credit Agreement described in Article 1 above are
subject to the following  conditions precedent and shall have no force or effect
until the following conditions are satisfied:

         (a) each Bank shall have  received each of the  following,  in form and
substance reasonably satisfactory to such Bank and its counsel:

                  (i)      its Substitute Revolving Credit Note substantially in
                           the form of Exhibit A hereto,  duly  executed  by the
                           Borrower;

                  (ii)     its Term Note, duly executed by the Borrower;

                  (iii)    a  certificate  of  the  Secretary  of  the  Borrower
                           attesting  to all  corporate  action  taken  by  such
                           entity,   including   resolutions  of  its  Board  of
                           Directors  authorizing  the  execution,  delivery and
                           performance of this Amendment and each other document
                           to be  executed  by  such  entity,  together  with  a
                           certification  that  copies  of  the  certificate  or
                           articles  of  incorporation  and the  by-laws of such
                           entity  that  were  delivered  to  the  Banks  on the
                           Closing Date have not been amended, modified, revoked
                           or rescinded as of the date of such certificate;

                  (iv)     a  certificate  of  the  Secretary  of  the  Borrower
                           certifying  the  names  and  true  signatures  of the
                           officers  of such  entity  authorized  to  sign  this
                           Amendment  and other  documents  to be signed by such
                           entity hereunder;

                  (v)      satisfactory  evidence  that  the  Borrower  is  duly
                           organized,  validly  existing  and in  good  standing
                           under the laws of its  jurisdiction of  incorporation
                           and each other  jurisdiction  where  qualification is
                           necessary;

                  (vi)     Guarantee   Affirmations,   duly   executed  by  each
                           Guarantor;

                                       14
<PAGE>

                  (vii)    Security  Agreement  Affirmations,  duly  executed by
                           each of the operating companies;

                  (viii)   an  opinion  of  counsel  for  the  Borrower  and the
                           Guarantors  as to  such  matters  as the  Banks  deem
                           necessary; and

                  (ix)     such other documents instruments, approvals, opinions
                           and evidence as the Banks reasonably require.


                    ARTICLE 3. REPRESENTATION AND WARRANTIES.

         The Borrower hereby represents and warrants to the Banks that:

         SECTION 3.1. Each and every one of the  representations  and warranties
set forth in the Credit  Agreement is true as of the date hereof with respect to
the Borrower and the Guarantors  with the same effect as though made on the date
hereof,  and is  hereby  incorporated  herein in full by  reference  as if fully
restated herein in its entirety.

         SECTION  3.2. No Default or Event of Default,  as defined in the Credit
Agreement now exists.

         SECTION 3.3. No  representation,  warranty or statement by the Borrower
or the Guarantors  contained  herein or in any other document to be furnished by
the Borrower or the Guarantors in connection  herewith contains,  or at the time
of delivery shall contain, any untrue statement of material fact, or omits or at
the time of delivery  shall omit to state a material fact necessary to make such
representation, warranty or statement not misleading.

         SECTION  3.4.  Each of the Facility  Documents  continues to be in full
force and effect and secure all payment and other  obligations  of the  Borrower
under the Credit Agreement.

                            ARTICLE 4. MISCELLANEOUS.

         SECTION  4.1.  This  Amendment  shall be governed by and  construed  in
accordance with the laws of the State of New York.

         SECTION  4.2.  Except  as  specifically   amended  hereby,  the  Credit
Agreement shall remain in full force and effect.

                                       15
<PAGE>
         IN WITNESS  WHEREOF,  each of the undersigned has executed or caused to
be duly executed this Amendment as of the date first above written.

                                  UNITED CAPITAL CORP.

                                  By:      /s/____________________
                                  Name:    _______________________
                                  Title:   _______________________


                                  THE CHASE MANHATTAN BANK

                                  By:      /s/_____________________
                                  Name:    ________________________
                                  Title:   Vice President


                                  FLEET BANK, N.A.

                                  By:      /s/_____________________
                                  Name:    ________________________
                                  Title:   Vice President