REVOLVING CREDIT LOAN AGREEMENT


                         -----------------------

               FIRST WASHINGTON REALTY LIMITED PARTNERSHIP
                      a Maryland limited partnership,
                                 Borrower
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                          CORESTATES BANK, N.A.,
                                  Lender

                          -----------------------


                                $25,000,000
                       Secured Revolving Line of Credit


                           -----------------------


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                                                               January 31, 1997



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                    REVOLVING CREDIT LOAN AGREEMENT


                    THIS AGREEMENT made as of the 31st day of January,  1997, by
and between FIRST  WASHINGTON  REALTY LIMITED  PARTNERSHIP,  a Maryland  limited
partnership  ("Borrower"),   and  CORESTATES  BANK,  N.A.,  a  national  banking
association ("Lender").


                    BACKGROUND

                    Borrower  is  a  limited  partnership  formed  primarily  to
acquire,  improve,  develop, lease, finance,  operate, hold for investment,  and
sell existing  retail  shopping  centers and other income  producing real estate
(the  "Business").  Borrower desires to establish a secured credit facility with
Lender to provide  working capital and to finance the acquisition and renovation
of retail shopping centers.  Lender has agreed to extend such credit facility to
Borrower,  subject to the terms and conditions hereinafter more particularly set
forth.



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                    NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants set forth herein,  the parties hereto,  intending to be legally
bound, agree as follows:

                    ARTICLE 1.
                    DEFINITIONS, CERTAIN RULES OF CONSTRUCTION

                    (a)      Defined Terms.  Each of the terms listed below
shall have the meaning herein ascribed to it for the purposes
hereof and for each of the Loan Documents:

                             "Advance" means the cash which Lender advances to
Borrower under the Revolving Credit including draws under Letters of Credit, all
subject to and in accordance with the provisions of Article 2 hereof.

                             "Affiliate" means and refers to, as applied to any
Person, any other Person directly or indirectly  controlling,  or through one or
more  Persons is  controlled  by,  controlling  or in common  control  with that
Person. "Control" (including with correlative meanings, the terms "controlling,"
"controlled  by" and "under  common  control  with"),  as applied to any Person,
means the


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possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management and/or policies of that Person,  whether through the
ownership of voting securities, by contract, or otherwise.

                             "Agreement" means this Revolving Credit Loan
Agreement,  and  any  schedules,  exhibits,  riders,  extensions,   supplements,
amendments, or modifications to this Revolving Credit Loan Agreement.

                             "Applicable Spread" means one and one-half percent
(1.5%) per annum (that is, 150 "basis  points");  provided that if, on the basis
of Consolidated Financial Statements for the Last Reported Calendar Quarter, (i)
the then current  Commitment Amount is less than fifty five percent (55%) of the
Gross Asset Value of the Collateral and (ii)  Borrower's  Total  Liabilities are
less then fifty percent (50%) of Borrower's  Gross Asset Value,  the  Applicable
Spread  shall be reduced to one and  thirty-five  one-hundredths  of one percent
(1.35%) per annum (that is, 135 "basis points") during the period  commencing on
the last day of the month by which the  Consolidated  Financial  Statements  for
such Last Reported  Calendar  Quarter were due and continuing until the last day
of the month in


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which  the  next  Consolidated  Financial  Statements  are  due  (e.g.,  if  the
Consolidated  Financial Statements for the third Calendar Quarter, which are due
by December 31st,  result in the Applicable  Spread being 1.35%, such Applicable
Spread shall be in effect from  December  31st until the  following  April 30th,
when the Consolidated  Financial  Statements for the fourth Calendar Quarter are
due, and the  Applicable  Spread as determined by such fourth  Calendar  Quarter
statements  would be in effect  from such April 30th  until the  following  June
30th).

                             "Appraisal" means an M.A.I. appraisal indicating
the "market value" of a Property. The appraiser shall be independent of Borrower
and must be acceptable to Lender in good faith;  the Appraisal shall be prepared
in accordance with the Uniform Standards of Professional Appraisal Practice and,
if any Event of Default  or  Unmatured  Event of  Default  exists at the time an
Appraisal  is to be  delivered to Lender,  the  Appraisal  shall be certified to
Lender.

                             "Assignment of Leases" means an assignment of
rents,  leases, and profits encumbering a Property and made by Borrower in favor
of Lender as security for the Indebtedness.


<PAGE>



                             "Authorized Signer" means any of the Persons listed
on the  certificate  to be  delivered  to Lender at Closing in  accordance  with
Section  3.1.21  hereof or any  replacement  certificate  with  respect  thereto
subsequently delivered to Lender at any time.

                             "Bankruptcy Code" means Title 11 of the United
States Code as now or hereafter in effect, or any successor statute.

                             "Borrower" means First Washington Realty Limited
Partnership, a Maryland limited partnership.

                             "Business Day" means any week day except those on
which commercial banks in Philadelphia, Pennsylvania are authorized
by law to close.

                             "Calendar Quarter" means each of the three month
periods  ending on the last day of March,  June,  September and December of each
Calendar Year.



<PAGE>


                             "Calendar Year" means the twelve month period
ending on December 31st of each year.

                             "Capital Lease" means any lease of any property
(real,  personal  or mixed)  which,  in  conformity  with GAAP,  is or should be
accounted for as a capital lease on the balance sheet of the lessee.

                             "Cash" means money, currency or a credit balance in
a Deposit Account.

                             "Closing" and "Closing Date" mean the day on which
all of the conditions set forth in Article III hereof have been
satisfied.

                             "Collateral" means the collateral provided by
Borrower for the Indebtedness as described in Article 3 hereof.

                             "Collateral Assignment" means an assignment of
various contracts,  Governmental Approvals,  and other rights,  privileges,  and
interests  of Borrower  relating to a Property  and made by Borrower in favor of
Lender as security for the Indebtedness.

                             "Commitment Amount" means the amount of Lender's
commitment to lend under the Revolving  Credit,  which amount is  $25,000,000 on
the Closing  Date,  or such  lesser  amount as  Borrower  shall have  determined
pursuant to Section 2.2.8.3 hereof.

                             "Consolidated Financial Statements" means the Forms
10-Q  and  10-K  required  to be  filed by  Guarantor  with  the  United  States
Securities and Exchange Commission, with respect to the operations and financial
condition of Guarantor,  which include  financial  statements  that  consolidate
Guarantor,  Borrower, and each of Guarantor's  subsidiaries during and as of the
last day of each Calendar  Quarter,  prepared and certified by Guarantor's chief
financial officer.

                             "Debt" means for any Person at any date, without
duplication,  (i) all  obligations of such Person for borrowed  money,  (ii) all
obligations  of such  Person  evidenced  by  bonds,  debentures,  notes or other
similar  instruments with an original  maturity in excess of one year, (iii) all
obligations  of such Person to pay the  deferred  purchase  price of property or
services,  except trade accounts payable and accrued  liabilities,  in each case
arising in the ordinary course of business, (iv) all debt of others secured by a
lien on any asset of such Person,  which debt is not assumed by such Person, but
only to the  extent  of the  value of such  asset,  and (v) all  debt of  others
guaranteed by such Person.

                             "Deposit Account" means a demand, time, savings,
passbook  or like  account  with a  federally  insured  bank or savings and loan
association,  other than an account  evidenced  by a negotiable  certificate  of
deposit.

                             "Designated Officer" means Greg A. Hartin or any
other  person  designated  in  writing by Lender as its  representative  for the
purpose of receiving notice hereunder.

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

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

                             "Event of Default" means each of the events set
forth in Section 7.1 hereof.

                           "Funding Date" means the Business Day on which an
Advance is made.

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

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

                           "Gross Asset Value" means, at any time, the quotient
of (i) the aggregate NOI during the period of twelve (12) calendar  months ended
on the last day of the Last Reported Calendar Quarter derived from the operation
of Borrower's income producing real estate divided by (ii) 0.1.

                           "Gross Asset Value of Collateral" means, at any time,
the Gross Asset Value of the Properties that are then encumbered by
a Mortgage.

                           "Guarantor" means First Washington Realty Trust,
Inc., a Maryland corporation.

                           "Guaranty" means a guaranty and suretyship agreement
executed by Guarantor in favor of Lender with respect to the
Indebtedness.

                          "Indebtedness" means all amounts due from Borrower to
Lender pursuant to Article 2 and otherwise  arising out of or in connection with
this Agreement or any other Loan Document.

                          "Interest Expense" means all payments by Borrower
with respect to interest on the Indebtedness or any other obligation of Borrower
on which interest is paid, including the interest portion of Capital Leases.

                          "Interest Period" means that period of time applica
ble to a LIBOR Borrowing as determined pursuant Section 2.2.5 hereof.

                          "Interest Rate Determination Date" means each date
for  determining  the  interest  rate for an  Interest  Period in  respect of an
Advance based on the LIBOR.  The Interest Rate  Determination  Date shall be the
second London Business Day prior to the first day of the related Interest Period
for an LIBOR Loan.

                          "Interest Rate Option" means the Prime Rate or the
LIBOR selected by Borrower for all or any part of the Loans as permitted by this
Agreement.

                          "Investment Entity" means any partnership or joint
venture (i) formed for the purpose of owning, and whose assets consist primarily
of, income  producing  real estate that is wholly owned by such  partnership  or
joint  venture  and (ii) in which  Borrower  has,  directly  or  indirectly,  an
ownership interest.

                          "LIBOR" means (i) the rate per annum at which
deposits  of  Dollars  are  offered  to  Lender  by prime  banks  in the  London
Eurodollar  interbank market at or about 11:00 A.M. local time in such interbank
market,  two  London  Business  Days  prior to the first  day of the  applicable
Interest  Period for a period equal to the period of such Interest  Period in an
amount  substantially  equal to the  principal  amount  requested to be lent as,
maintained as or converted to an LIBOR Loan,  rounded  upwards if necessary,  to
the next higher 1/16 of 1%, divided by (ii) one minus the Reserve Percentage.

                          "LIBOR Borrowings" and "LIBOR Loans" mean Advances
bearing interest at a rate determined with reference to the LIBOR.

                          "Last Reported Calendar Quarter" means, at any time,
the most recently concluded  Calendar Quarter for which  Consolidated  Financial
Statements have been delivered to Lender.

                          "Lender" means CoreStates Bank, N.A.
                          "Lender's Costs" means all costs and expenses of any
kind paid or incurred by Lender in connection with the  preparation,  execution,
delivery,  amendment,  modification,   administration  or  termination  of  this
Agreement or any other Loan Document,  any amendments  thereto,  any transaction
contemplated  herein  or any  existing  or  future  related  agreements  and the
preservation, enforce ment, defense and protection of Lender's rights, remedies,
obliga tions and  liabilities  in any manner  concerning  this  Agreement or any
other Loan  Document,  any  transaction  contemplated  herein or any existing or
future  related  agreements,  including,  but not  limited  to:  (a)  reasonable
attorneys'  fees and other  expenses  paid or incurred  by Lender in  enforcing,
obtaining  legal  advice  in  preparing,  reviewing,   consummating,   amending,
restructuring,  extending,  terminating,  defending, or preserving or protecting
Lender's rights, remedies,  obligations or liabilities in any manner concerning,
this  Agreement,  any Loan Document or any amendments  thereto,  any transaction
contemplated herein or any existing or future related  agreements;  and (b) wire
transfer  charges in such amounts as Lender may from time to time  establish for
such service.

                           "Letter of Credit" means a letter of credit issued
pursuant to Section 2.1.7 hereof.

                           "Loan Documents" means this Agreement, the Note, the
Mortgages, the Assignments of Leases, the Collateral Assignments,  the Guaranty,
and every other document delivered pursuant to this Agreement.

                           "Loan(s)" means the aggregate of all monies advanced
by Lender under the Revolving Credit.

                           "London Business Day" means any Business Day on which
commercial  banks are open for  international  business  (including  dealings in
Dollar deposits) in London and Philadelphia.

                           "Materially Adverse Effect" means, with respect to
Borrower,  a  materially  adverse  effect  upon  Borrower's  ability  to perform
Borrower's  obligations  under  the Loan  Documents  in  accordance  with  their
respective terms, as determined by Lender.

                           "Maximum Available Credit" means (i) prior to the
first  anniversary of the Closing Date,  the  Commitment  Amount and (ii) on and
after the first anniversary of the Closing Date, sixty five percent (65%) of the
Gross Asset Value of  Collateral,  determined as of the end of the Last Reported
Calendar Quarter.

                           "Mortgage" means a mortgage or deed of trust (as
appropriate to the  jurisdiction  in which a Property is located)  encumbering a
Property and granted by Borrower as security for the Indebtedness.

                           "NOI" means with respect to Borrower, at any time,
its net  operating  income,  which shall be equal to the gross  revenues of real
estate assets that, directly or indirectly, are wholly owned at such time by (a)
Borrower or (b) any Investment Entity in which Borrower's Pro-Rata Share exceeds
fifty  percent  (50%),  minus  operating  and  servicing  expenses  incurred  in
connection with the operation of such real estate assets during, and as shown on
the  financial  statements  for,  the Last  Reported  Calendar  Quarter,  before
Interest Expense,  depreciation and amortization;  provided that (i) there shall
be deducted from gross  revenues as an expense  (regardless  of whether the same
has been  incurred  or  reserved)  a  property  management  fee equal to two and
one-half  percent  (2.5%) of gross  revenues and a replacement  reserve equal to
$.10 per square foot of space within such income  producing  real estate assets,
(ii) if at any time  Borrower  or any such  Investment  Entity  has owned a real
estate asset for less than four (4)  consecutive  Calendar  Quarters,  the gross
revenues  and  expenses  of such  asset  shall  be  appropriately  adjusted  and
calculated  on a proforma  basis,  (iii)  gross  revenues  shall not include the
proceeds of  insurance  (other  than loss of rents  insurance)  or  condemnation
awards and (iv) expenses shall not include the costs of repairs or  replacements
paid with the proceeds of insurance or condemnation awards that are not included
in gross revenues. Borrower's "NOI" shall also include Borrower's Pro-Rata Share
of the amount by which (x) the gross revenues of each Investment Entity in which
Borrower's  Pro-Rata  Share does not exceed fifty percent (50%) exceeds (y) such
Investment Entity's operating costs and expenses, calculated as aforesaid. "NOI"
with respect to a Property  shall be determined as aforesaid on the basis of the
gross revenues and the operating expenses of such Property alone.

                           "Note" means the promissory note, dated the date
hereof,  of  Borrower  in favor  of  Lender  to  evidence  Borrower's  repayment
obligations under this Agreement with respect to the Revolving Credit.

                           "Notice of Borrowing" means a notice substantially in
the form of Schedule 2.2.2 attached hereto and made a part hereof.

                           "Notice of Rate Election" means a notice substan
tially in the form of Schedule 2.2.3 attached hereto and made a part
hereof.

                           "Partnership Agreement" means the First Amended and
Restated  Agreement of Limited  Partnership of First  Washington  Realty Limited
Partnership,  dated as of June 27, 1994,  pursuant to which Borrower was created
and presently operates, as the same may from time to time be amended.

                           "PBGC" means the Pension Benefit Guaranty
Corporation.

                           "Permitted Liens" means (i) liens for taxes, assess
ments or governmental charges or claims which are not overdue or which are being
contested  in good faith by  appropriate  proceedings  promptly  instituted  and
diligently conducted,  if a reserve or other appropriate  provision,  if any, as
shall be required by GAAP,  shall have been made therefor;  (ii) statutory liens
of  landlords  and  liens of  carriers,  warehousemen,  mechanics,  materialmen,
repairmen,  suppliers  and other like liens  incurred in the ordinary  course of
business  for  sums  not yet  delinquent  or being  contested  in good  faith by
appropriate  proceedings  promptly  instituted and  diligently con ducted,  if a
reserve or other  appropriate  provision,  if any, as shall be required by GAAP,
shall have been made  therefor;  (iii)  liens  (other  than any lien  imposed by
ERISA)  incurred  or  deposits  made  in the  ordinary  course  of  business  in
connection with workers' compensation or unemployment  insurance and other types
of  social  security;  (iv)  liens  incurred  or  deposits  made to  secure  the
performance of tenders,  statutory  obligations,  surety and appeal bonds, bids,
leases,  government contracts,  performance and return-of- money bonds and other
similar  obligations  incurred in the ordinary course of business  (exclusive of
obligations for the payment of borrowed money); (v) any judgment lien;  provided
that,  within 60 days  after the entry of the  judgment  secured  thereby,  such
judgment  shall be  discharged  or  execution  thereof  shall be stayed  pending
appeal;  and further  provided that such judgment shall be discharged  within 60
days after the  expiration  of any such stay;  (vi) the rights of tenants  under
leases or subleases not interfering with the ordinary conduct of the Business of
Borrower;  (vii) easements,  rights-of-way,  encroachments,  zoning  provisions,
covenants, conditions,  restrictions and other similar charges, encumbrances and
governmental  restrictions  not  interfering  with the  ordinary  conduct of the
business  of  Borrower  and that have  been  approved  by  Lender to the  extent
required under this Agreement.

                           "Person" means an individual, corporation, partner
ship, joint venture,  trust or unincorporated  organization,  or a government or
any agency or political subdivision thereof.

                           "Prime Rate" means that rate of interest per annum
established  by Lender  from  time to time as its  "prime  rate",  which may not
represent the lowest rate charged by Lender to other borrowers,  or to any class
of borrowers, at any time, or from time to time.

                           "Prime Rate Borrowing" and "Prime Rate Loans" mean
Advances bearing interest at a rate with reference to the Prime Rate.

                           "Pro Forma Debt Service" means, with respect to any
period of time at any time, the aggregate amount of principal
payments and interest during such period on an amount equal to the
Commitment  Amount,  calculated  using the  amount  of  interest  and  principal
payable, based on a 25 year amortization schedule, on such principal amount with
interest at a per annum rate equal to (i) the then-current  yield to maturity of
United States  Treasury  obligations  having a seven (7) year maturity plus (ii)
two percent per annum, as determined by Lender in good faith.

                           "Pro-Rata Share" means, with respect to each
Investment  Entity,  the percentage of the profits,  losses and distributions to
which Borrower, directly or indirectly, is entitled.

                           "Project Specific Information" means an income and
expense statement with respect to the gross rental revenues, operating expenses,
mortgage  interest,  and net operating income of an individual  income producing
real estate asset, including the Properties.

                          "Property" means each of, and "Properties" means all
of, (i) the Newtown Square Shopping  Center,  Newtown Square,  Delaware  County,
Pennsylvania,  (ii) The  Shoppes of  Graylyn,  Wilmington,  New  Castle  County,
Delaware,  (iii) Four Mile Fork Shopping  Center,  Fredericksburg,  Spotsylvania
County,  Virginia,  and (iv)  Centre  Ridge  Marketplace,  Centreville,  Fairfax
County, Virginia.

                           "Reserve Percentage" means for any day that maximum
percentage (expressed as a decimal), whether or not incurred, which is in effect
on such day, as  prescribed  by the Board of  Governors  of the Federal  Reserve
System, for determining the reserve requirement for a member bank of the Federal
Reserve  System  in  Philadelphia  with  respect  to  the  LIBOR   "Eurocurrency
liabilities"  (as such term is  defined in  Regulation  D) (or in respect of any
other category of liabilities  which includes deposits by reference to which the
interest  rate on LIBOR Loans is  determined  or any category of  extensions  of
credit or other assets which includes loans by a nonUnited  States office of any
Lender to United States residents).

                           "Revolving Credit" means the facility under which
Advances may be  borrowed,  repaid and  reborrowed  and Letters of Credit may be
issued  and paid,  in the  maximum  amount  of  $25,000,000,  all as more  fully
described in Article 2 hereof.

                           "RICO" means the Racketeer Influenced and Corrupt
Organization Act, as amended by the Comprehensive  Crime Control Act of 1984, 18
USC ss.ss.1961-68.

                           "Rules" means any law, regulation, or rule of
practice  promulgated  by Persons  other than Lender,  whether or not having the
force of law, by which any Lender is bound or to which it adheres.

                           "Termination Date" means January 31, 2000, or such
extension thereof agreed to in writing by Lender.

                           "Total Liabilities" means, at any time, the sum of
(i) all  liabilities of Borrower,  determined in accordance  with GAAP, (ii) all
Debt of Investment  Entities in which  Borrower's  Pro-Rata  Share exceeds fifty
percent (50%), and (iii) Borrower's Pro-Rata Share of the Debt of all Investment
Entities in which Borrower's Pro- Rata Share does not exceed fifty percent (50%)
(provided  that in  calculating  Total  Liabilities,  the Debt of Borrower or an
Investment  Entity that is  guaranteed  by, or secured by a lien on an asset of,
another Investment Entity or Borrower, the amount of such Debt shall be included
only once in "Total Liabilities").

                           "Unmatured Event of Default" means and refers to any
event,  act or occurrence  which with the passage of time or giving of notice or
both becomes an Event of Default.

                    1.2  Construction of  Definitions.  All terms defined herein
shall be  construed to include the plural or the  singular,  and  references  to
persons  in the  masculine  or  neuter  gender  shall  refer to all  persons  or
entities, as the context requires.

                    1.3  Accounting  Reports and  Principles.  The  character or
amount of any asset, liability,  account or reserve and of any item of income or
expense to be determined,  and any consolidation or other accounting computation
to be made, and the construction of any definition  containing a financial term,
pursuant  to this  Agreement  or any other Loan  Document,  shall be  construed,
determined or made, as the case may be, in  accordance  with GAAP,  consistently
applied,  unless such principles are inconsistent  with any express provision of
this Agreement.

                    1.4 Business Day.  Whenever any payment or other obliga tion
hereunder,  whether  under the Note or under another Loan Docu ment, is due on a
day other than a Business  Day,  such shall be paid or performed on the Business
Day next  following the prescribed  due date,  except as otherwise  specifically
provided  for  herein  to the  contrary,  and such  extension  of time  shall be
included in the compu tation of interest and charges.  Any reference made herein
or in any other  Loan  Document  to an hour of day  shall  refer to the then pre
vailing Philadelphia,  Pennsylvania time, unless specifically provided herein to
the contrary.

                    1.5  Charging  Accounts.  Whenever  Borrower  is  obligated,
pursuant  to  Article  2  hereof,  or  pursuant  to the Note or any  other  Loan
Document,  to make  payments of any nature to Lender,  Lender shall be entitled,
and Borrower hereby  authorizes Lender to draw against any Deposit Account owned
by Borrower at Lender on account of such
fees and expenses or payments due.  Upon such  drawing,  Lender shall deliver to
Borrower a notice setting forth, in reasonable  detail,  the amount of the fees,
expenses and/or payments to be satisfied by such draw, and the name or number of
the account or accounts from which the draw was made.

                    1.6  Lender's  Costs.  Borrower  shall,  upon the request of
Lender,  pay Lender the amount of all unpaid  Lender's  Costs within thirty (30)
days after such notice.  Until paid, all past due Lender's Costs shall be deemed
to be part of the principal  balance of the  appropriate  Loan, bear interest at
the Prime Rate, and be secured by the Collateral.

                    1.7 Other Terms. The words "herein",  "hereof", "here under"
and other words of similar import refer to this Agreement as a whole,  including
the exhibits hereto,  as the same may from time to time be amended,  modified or
supplemented,  and not to any particular section, subsection or clause contained
in this Agreement. Any reference to an "Article", a "Section", an "Exhibit" or a
"Schedule"  shall refer to the relevant  Article of,  Section of,  Exhibit to or
Schedule to this Agreement, unless otherwise specifically indicated.

                                                       ARTICLE 2
                                                       THE LOAN

                    2.1      Revolving Credit.

                    2.1.1   Extension of Revolving Credit.  Provided
that no Event of  Default or  Unmatured  Event of Default  has  occurred  and is
continuing and subject to the terms and conditions set forth herein,  commencing
on the date hereof and expiring on the Termination  Date, Lender shall extend to
Borrower  the  Revolving  Credit,  pursuant to which  Lender shall make Loans to
Borrower up to an aggregate, at any time, of the Maximum Available Credit, which
Borrower may from time to time,  borrow,  repay and reborrow,  on and subject to
the terms and conditions of this Agreement.

                    2.1.2   Payment of Principal.  The entire
outstanding  principal  balance of the Revolving Credit shall be paid in full on
the  Termination  Date.  In the event the  principal  amount of all  outstanding
Advances and the face amount of Letters of Credit issued and  outstanding  under
Section  2.1.7  hereof  at any  time  exceeds,  in the  aggregate,  the  Maximum
Available Credit,  Borrower shall immediately pay such excess to Lender, without
demand or notice.

                    2.1.3   Payment of Interest.  Interest on the
Revolving  Credit shall be payable  monthly,  subject to Section 2.2.9 hereof in
arrears to the last day of each month, with the first
payment  to be  made  on the  first  Business  Day of the  calendar  month  next
following the Closing Date, and continuing  thereafter on the first Business Day
of each month.

                    2.1.4   Revolving Credit Interest Rate Option and
Notice of Rate Election.  Advances  shall bear interest on the unpaid  principal
balance  thereof from the Funding Date to maturity  (whether by  acceleration or
otherwise):  with  respect  to Prime  Rate  Loans at the  Prime  Rate per  annum
(calculated  on the basis of a 360-day year and charged for the actual number of
days  elapsed);  and with  respect to LIBOR  Loans at the LIBOR on the  relevant
Interest Rate  Determination  Date plus the Applicable Spread (calculated on the
basis of a 360-day year and charged for the actual number of days elapsed).  The
applicable  basis for  determining the Interest Rate Option with respect to each
Advance  shall be  selected by  Borrower  at the time a Notice of  Borrowing  or
Notice of Rate Election is given pursuant to Sections 2.2.2, and 2.2.3 hereof.

                     2.1.5   Loan Fees.  Borrower agrees to pay to
Lender the following fees:

                     2.1.5.1           Borrower shall pay to Lender, upon the
execution of this Agreement, a loan commitment fee of $75,000.

                     2.1.5.2           Borrower shall pay to Lender, after
Closing and until the Termination  Date, an unused loan fee, payable in arrears,
at an annual  rate  equal to two tenths of one  percent  (0.2%) per annum of the
amount by which (i) the Commitment  Amount exceeds (ii) the sum of (a) the daily
average  outstanding  principal  balance of all Loans plus (b) the daily average
obligations  of Lender under Letters of Credit that are issued and  outstanding,
such payments to be made first on the last day of the Calendar  Quarter in which
Closing  occurs and  thereafter on the last day of each Calendar  Quarter and on
the  Termination  Date.  The unused loan fee shall be calculated on the basis of
the number of days actually elapsed in a 360 day year.

                      2.1.6   Note.  To evidence Borrower's obligations
under the Revolving Credit, Borrower shall execute and deliver the
Note to Lender.

                      2.1.7   Letters of Credit.  Upon receipt of a
properly  executed Notice of Borrowing  submitted by Borrower to Lender at least
five (5) Business Days before the date of issuance,  Lender shall issue a Letter
or Letters of Credit to a beneficiary designated by Borrower, for the purpose of
collateralizing such of Borrower's obligations as are requested to be secured by
a Letter of Credit.  The aggregate face amount of issued Letters of Credit under
this  subsection  2.1.7  shall not exceed  $10,000,000  at any time.  Letters of
Credit may provide for automatic renewal absent termination by
Lender, provided, however, no Letter of Credit hereunder shall be issued with an
expiration  date exceeding one year and no Letter of Credit shall be issued with
an  expiration  date later than one (1) year after the  Termination  Date.  Each
Letter of Credit  shall be  subject  to the terms  and  conditions  of  Lender's
standard  unsecured  application  and  agreement  in  effect  at the time of the
issuance of the Letter of Credit,  the current form of which is attached  hereto
as Schedule 2.1.7.

                    2.1.7.1           Letter of Credit Fee.  Borrower agrees
to pay to Lender a letter of credit fee at an annual rate of one percent  (1.0%)
per annum of the principal face amount of each issued Letter of Credit,  payable
upon the issuance of such Letter of Credit and on each anniversary thereof.

                    2.1.7.2           Reduction of Available Revolving
Credit.  Letters  of  Credit  shall  reduce,  dollar-for-dollar,  the  available
borrowings under the Revolving Credit and, upon the termination  thereof,  shall
increase the available borrowings, up to the Maximum Available Credit.

                    2.1.7.3           Draws under Letter of Credit.  All
draws  under  Letters of Credit  shall be deemed to be  Advances to be repaid in
accordance  with  the  provisions  of  subsection  2.1.2  hereof.  All  Advances
resulting  from draws made under  Letters of Credit after the  Termination  Date
shall be payable by Borrower upon written demand.

                     2.1.7.4           Other Documents.  Borrower agrees to
execute and deliver such  documents  and  instruments  as Lender may  reasonably
require in connection with each Letter of Credit.

                     2.1.7.5           Security.  If on the Termination Date
any Letters of Credit are  outstanding,  Borrower shall  establish with Lender a
Deposit  Account in the amount of the aggregate face amounts of all such Letters
of Credit,  which  Deposit  Account  shall be pledged to Lender as security  for
Borrower's  obligation to repay  Advances  resulting  from draws made under such
Letters of Credit.  No  withdrawal  may be made by  Borrower  from such  Deposit
Account if, as a result  thereof,  the balance in such Deposit  Account would be
less than the aggregate face amounts of all Letters of Credit then-outstanding.

                     2.2      General Provisions.

                     2.2.1   Maximum Available Credit.  Notwithstanding
anything  herein to the  contrary,  the maximum  amount of the Loans to Borrower
that may be outstanding  at any one time shall not exceed the Maximum  Available
Credit, less the face amount of all outstanding Letters of Credit.

                     2.2.2   Notice of Borrowing.  Subject to the provi
sions of this  Article  2,  whenever  Borrower  desires  to  borrow  under  this
Agreement, Borrower shall deliver by telecopy to Lender a properly completed and
executed Notice of Borrowing with respect to (i) LIBOR Loans no later than 11:00
A.M. at least two (2) London  Business  Days in advance of the proposed  Funding
Date,  or (ii) Prime Rate Loans no later than 11:00 A.M.  at least one  Business
Day in advance of the  proposed  Funding  Date.  The Notice of  Borrowing  shall
specify (i) the proposed  Funding Date (which shall be a Business Day), (ii) the
amount of the  proposed  Advance,  (iii)  whether  such  Advance is initially to
consist of a Prime Rate Loan, LIBOR Loans or a combination  thereof, and (iv) if
such  Advance,  or any portion  thereof,  is  initially  to be one or more LIBOR
Loans, the amounts thereof and the initial Interest Periods  therefor;  provided
that the minimum  amount of Advances  shall be $100,000 for Prime Rate Loans and
$500,000 for LIBOR Loans.  Advances may be continued as or converted  into LIBOR
Loans in the manner  provided in Section  2.2.3  hereof upon the  submission  to
Lender of a properly completed and executed Notice of Rate Election.

                    A Notice of  Borrowing  or a Notice of Rate  Election  for a
LIBOR  Loan  shall  be  irrevocable  on and  after  the  related  Interest  Rate
Determination  Date, and Borrower and Lender shall be bound to make, continue or
convert an Advance in accordance therewith.

                    2.2.3   Notice of Rate Election; Failure to Give
Notice. Whenever Borrower desires to change or continue the Interest Rate Option
on an Advance,  Borrower  shall deliver to Lender a Notice of Rate Election with
respect to LIBOR Loans no later than 11:00 A.M. at least two (2) London Business
Days in  advance  of the  proposed  change or  continuation.  The Notice of Rate
Election shall specify:  (i) the proposed date of change or continuation  (which
shall be a Business Day); (ii) the type of Advance and amount thereof  affected;
(iii) whether such interest rate change or continuation is to consist of a Prime
Rate Loan, LIBOR Loans or a combination  thereof;  and (iv) the Interest Periods
therefor, if applicable.  If at the termination of any Interest Period, Borrower
has failed to submit a Notice of Rate Election,  as aforesaid,  to convert or to
continue  LIBOR  Loans,  then  such  portions  of  the  Revolving  Credit  shall
automatically  be and  become  Prime  Rate  Loans as of the  termination  of the
relevant Interest Period.

                    Upon the  expiration  of any Interest  Period  applicable to
portions of the  Revolving  Credit  bearing  interest  based on the LIBOR,  such
portions of the Revolving  Credit shall be deemed repaid and reborrowed upon the
submission  to  Lender  of a  properly  completed  and  executed  Notice of Rate
Election  pertaining  thereto within the requi site time periods for a change or
continuation of an Interest Rate Option,  and the succeeding  Interest Period(s)
of such continued
portions of the Revolving Credit shall commence on the first day of the Interest
Period of the  portions of the  Revolving  Credit  deemed to be  reborrowed  and
continued.

                    LIBOR Loans may be  converted  into Prime Rate Loans only on
the expiration date of an Interest Period applicable  thereto.  In addition,  no
outstanding  portions  of the  Revolving  Credit  may  be  continued  as,  or be
converted  into LIBOR  Loans when any Event of  Default  or  Unmatured  Event of
Default has occurred and is continuing.

                    If on any  day  portions  of the  Revolving  Credit  are out
standing with respect to which a Notice of Rate Election has not been  delivered
to Lender in accordance  with the terms of this  Agreement  specifying the basis
for  determining  the Interest Rate Option,  then such portions of the Revolving
Credit shall automatically be and become Prime Rate Loans as of such date.

                     2.2.4   Funding.  Upon satisfaction of the
conditions  precedent  specified  in  Sections  3.1 (in the case of the  initial
Advances) and 3.2 (in the case of all subsequent Advances), not later than 11:00
A.M. on the Funding Date specified in the Notice of Borrowing  relating thereto,
Lender shall cause such Advances to be made available to Borrower on the Funding
Date  pertaining  thereto by  depositing  the amount  thereof in the  designated
account of  Borrower  with  Lender or by wire  transfer  to such  other  Deposit
Account as Borrower may from time to time designate in writing.

                     2.2.5   Interest Periods.  In connection with each
LIBOR Loan,  Borrower  shall elect an Interest  Period to be  applicable to such
Loan,  which  Interest  Period shall be either a one, two or three month period;
provided that:

                     2.2.5.1           the first Interest Period for any
Advance shall commence on the Funding Date of such Advance;

                     2.2.5.2           except as provided in subsection
2.2.5.3 hereof,  if an Interest Period would otherwise  expire on a day which is
not a Business  Day, such  Interest  Period shall expire on the next  succeeding
Business Day;

                     2.2.5.3           any Interest Period in respect of a
LIBOR Loan which:  (i) begins on the last Business Day of a calendar month (or a
day for which there is no numerically corresponding day in the calendar month at
the end of such  Interest  Period)  shall  end on the last  Business  Day of the
relevant  calendar  month, or (ii) would expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in that
month, such Interest Period shall end on the last Business Day of the month;

                     2.2.5.4           no Interest Period shall extend beyond
the Termination Date; and

                     2.2.5.5           there shall be no more than five (5)
LIBOR Loans outstanding at any time.

                     2.2.6   Post-Maturity Interest.  Any principal pay
ments on the Loans not paid when due and, to the extent  permitted by applicable
law, any  interest  payment on the Loans not paid when due, and any other amount
due to Lender under this Agreement or any other Loan Document not paid when due,
in any case whether at stated maturity, by notice of prepayment, by acceleration
or otherwise,  shall  thereafter  bear interest,  until such overdue  payment is
made,  payable  upon  demand  at a rate  which is 2% per  annum in excess of the
applicable  interest rate then being  charged  until the  expiration of the then
applicable  Interest  Period  and after the  expiration  of the then  applicable
Interest Period, at a rate which is 2% per annum in excess of the Prime Rate.

                     2.2.7   LIBOR and Prime Rate.

                     2.2.7.1           Lender shall give Borrower prompt
notice of the LIBOR  determined  for an  Interest  Period,  and absent  manifest
error,  each  determination  of such  rates by Lender  shall be  conclusive  and
binding on Lender and Borrower for all purposes hereof.

                     2.2.7.2           If Borrower requests that all or any
portion of the  outstanding  Revolving  Credit  bear  interest  at the LIBOR and
Lender  determines  that,  by reason of  circumstances  affecting  the interbank
Eurodollar  market  generally,  deposits  in U.S.  Dollars  (in  the  applicable
amounts) are not being offered to banks in the interbank  Eurodollar  market for
the selected Interest Period, or that the relevant rates of interest referred to
in the  definition  of LIBOR do not  accurately  reflect  the cost to  Lender of
making or maintaining LIBOR Loans for the Interest Periods therefor, then Lender
shall forthwith give notice thereof to Borrower, whereupon until Lender notifies
Borrower that the circumstances  giving rise to such suspension no longer exist,
(a) the  obligation  of Lender to permit  applicable  portions of the  Revolving
Credit  to  bear  interest  at the  LIBOR  shall  be  suspended  so long as such
circumstances  exist,  and (b) Borrower  shall convert the interest rates on the
applicable  portions of the outstanding  Revolving Credit to Prime Rate Loans or
the  available  LIBOR on the last day of the then current  Interest  Period,  as
Borrower may elect.

                      2.2.7.3           If, after the date of this Agreement,
the  adoption  of or any change in Rules,  or change in the  interpreta  tion or
administration thereof, by a governmental authority,  central bank or comparable
agency charged with the interpretation or adminis tration thereof, or compliance
by Lender with any request or directive (whether or not having the force of law)
of any such
authority,  central  bank  or  comparable  agency  shall  make  it  unlawful  or
impossible  for Lender to make or  maintain  or fund loans at the LIBOR,  Lender
shall promptly notify Borrower and the interest rates on the applicable portions
of the  outstanding  Revolving  Credit shall be deemed to have been converted to
the Prime Rate, or the LIBOR, whichever is available, on either (i) the last day
of the then current Interest Period if Lender may lawfully  continue to maintain
loans at the LIBOR to such day, or (ii)  immediately  if Lender may not lawfully
continue  to maintain  loans at the LIBOR to such day.  Lender will use its best
efforts to  designate a  different  lending  office if such office may  lawfully
continue to  maintain  loans at the LIBOR  through  the end of the then  current
Interest  Period.  After  Borrower's  receipt  of  notice of the  illegality  or
impossibility for Lender to make, maintain or fund loans at the LIBOR,  Borrower
shall not request  future LIBOR Loans until Lender shall have notified  Borrower
of the absence or removal of such illegality or impossibility.

                      2.2.7.4           If, after the date of this Agreement,
any governmental authority,  central bank or other comparable authority shall at
any time  impose,  modify or deem  applicable  any reserve  (including,  without
limitation,  any imposed by the Board of Governors of the Federal Reserve System
that is not reflected in the Reserve  Percentage),  any tax  (including  without
limitation,  any United States interest  equalization tax or similar tax however
named  applicable  to the  acquisition  or holding of debt  obligations  and any
interest or penalties  with respect  thereto),  duty,  charge,  fee,  deduction,
withholding,  special deposit or similar requirement against assets of, deposits
with, or for the account of, or credit  extended by, Lender,  or shall impose on
Lender or the interbank Eurodollar market any other condition affecting loans at
the LIBOR,  and the result of any of the  foregoing  is to increase  the cost to
Lender of making or maintaining  the interest rate at the LIBOR or to reduce the
amount of any sum received or receivable  by Lender under this  Agreement or the
Note by an amount  deemed by Lender in good faith to be  material,  then  within
five days after demand by Lender,  Borrower shall pay to Lender such  additional
amount or amounts as will  compensate  such  Lender for such  increased  cost or
reduction.  Lender will  promptly  notify  Borrower of any event of which it has
knowledge  occurring  after  the date  hereof,  which  will  entitle  Lender  to
compensation  pursuant  to this  subsection  2.2.7.4.  A  certificate  of Lender
claiming  compensation  under this  subsection  2.2.7.4  and  setting  forth the
additional  amount or amounts to be paid to Lender hereunder shall be conclusive
in the absence of manifest error.

                        2.2.7.5           The LIBOR shall be adjusted
automatically on and as of the effective day of any change in the
relevant Reserve Percentage.

                        2.2.7.6           Promptly upon notice from Lender to
Borrower,  Borrower  will  pay,  prior  to the date on  which  penalties  attach
thereto,  all present and future stamp,  documentary  and other  similar  taxes,
levies, or costs and charges whatsoever imposed,  assessed,  levied or collected
on or in  respect  of the Loans  solely as a result of the  interest  rate being
determined  by reference to the LIBOR and/or the  provisions  of this  Agreement
relating to the LIBOR and/or the recording, registration,  notarization or other
formalization  of any thereof  and/or  payments of principal,  interest or other
amounts made on or in respect of a Loan when the interest  rate is determined by
reference to the LIBOR (all such taxes,  levies,  costs and charges being herein
collectively  called  "Eurodollar  Rate Tax").  Promptly after the date on which
payment of any such  Eurodollar  Rate Tax is due  pursuant  to  applicable  law,
Borrower will, at the request of Lender, furnish to Lender evidence, in form and
substance  satisfactory  to Lender,  that Borrower has met its obligation  under
this subsection 2.2.7.6.  Borrower will indemnify Lender against,  and reimburse
Lender on demand for, any  Eurodollar  Rate Tax, as  determined by Lender in its
good faith discretion.  Lender shall provide Borrower with appropriate  receipts
for any payments or reimbursements  made by Borrower pursuant to this subsection
2.2.7.6.  A  certificate  of Lender as to any amount  payable  pursuant  to this
Section shall,  absent manifest  error, be final,  conclusive and binding on all
parties hereto.

                         2.2.7.7           If Lender shall reasonably determine
that (i) any current  Rule,  law,  regulation,  or  guideline,  the adop tion or
imposition of any Rules, law, regulation,  or guideline any change in any Rules,
law,  regulation  or  guideline,  or the  adoption,  imposition or change in the
interpretation or administration  thereof by a governmental  authority,  central
bank or comparable  agency charged with the  interpretation  and  administration
thereof,  or (ii)  compliance  by Lender (or any  lending  office or any holding
company of Lender)  with any request,  guideline or directive by a  governmental
authority,  central bank or comparable agency whether or not having the force of
law regarding special deposit,  capital adequacy, risk based capital, capital or
reserve  maintenance,  capital ratio, or similar  requirements  against loans or
loan  commitments or any  commitments to extend credit or other assets of or any
deposits or other  liabilities  taken or entered into by Lender  (including  the
capital adequacy guidelines promulgated by the Board of Governors of the Federal
Reserve  System) and the result of any event  referred to in clauses (i) or (ii)
above (x) shall be to increase the cost to Lender of making or  maintaining,  or
to impose upon Lender or increase any capital requirement applicable as a result
of the  making  or  maintenance  of,  the  Loan or the  obligation  of  Borrower
hereunder  or (y) has or would have the effect of reducing the rate of return or
amounts  receivable  hereunder on any Loan as a consequence  of its  obligations
pursuant to this  Agreement  or Loan made by Lender  pursuant  hereto to a level
below that which Lender (or Lender's  hold ing company)  could have achieved but
for such adoption, imposition,
change or  compliance  (taking  into  consideration  Lender's  policies  and the
policies of Lender's  holding  company with  respect to capital  adequacy) by an
amount  deemed by such  holder in good  faith to be  material  (which  adoption,
imposition,  change, or increase in capital requirements or reduction in amounts
receivable may be determined by Lender's reasonable  allocation of the aggregate
of such cost increase,  capital  increase or imposition or reductions in amounts
receivable resulting from such events),  then, from time to time, Borrower shall
pay to Lender, on demand by Lender as set forth below, such additional amount or
amounts as will be  necessary  to restore  the rate of return to Lender from the
date of such  change,  together  with  interest  on such  amount  from  the date
demanded until payment  thereof in full at the rate provided in this  Agreement.
Lender (or Lender's holding company) shall be entitled to compensation  pursuant
to this subsection 2.2.7.7. A certificate of Lender claiming  compensation under
this  subsection  2.2.7.7 and setting  forth the  increased  cost,  reduction in
amounts receivable,  additional amount or amounts necessary to compensate Lender
(or Lender's holding company) hereunder shall be delivered to Borrower and shall
be conclusive in the absence of manifest  error.  Borrower  shall pay Lender the
amount shown as due on any such  certificate  delivered by Lender within 20 days
after  Borrower's  receipt of same. If Lender  demands  compensation  under this
Section,  Borrower may, upon 20 Business Days' prior notice to Lender, prepay in
full, in accordance  with subsection  2.2.8 hereof,  the then  outstanding:  (1)
Prime  Rate  Loans  together  with  accrued  interest  thereon  to the  date  of
prepayment without penalty;  and (ii) LIBOR Loans together with accrued interest
thereon to the date of prepayment along with the respective  prepayment  premium
as provided in subsection 2.2.8.1 hereof, in each case payable to Lender.

                    2.2.7.8           Failure on the part of Lender to
demand  compensation for any increased costs or reduction in amounts received or
receivable  or  reduction  in return on capital with respect to any period shall
not constitute a waiver of Lender's right to demand compensation with respect to
such period or any other period.  The  protection of this Section 2.2.7 shall be
available to Lender for a period of one (1) year after the Indebtedness has been
paid  in  full  regardless  of any  possible  contention  of the  invalidity  or
inapplicability  of the law,  rule,  regulation,  guideline  or other  change or
condition which shall have occurred or been imposed.

                    2.2.7.9           The Prime Rate shall be determined and
adjusted daily.

                    2.2.8   Prepayment; Repayments; Prepayment Premium.

                    2.2.8.1           Voluntary Prepayments.  In connection
with each voluntary prepayment of Loans:

                                         (a)      Borrower shall provide Lender
with at least one (1)  Business  Day prior  notice of its  intention  to prepay,
specifying the amount and date of such payment.

                                          (b)      Each prepayment of principal
shall be in an amount equal to at least Five Hundred Thousand Dollars
($500,000).

In the event Borrower makes a prepayment (whether voluntary or mandatory) of any
portion of the Loans  bearing  interest  at a rate  based on the LIBOR  during a
specified  Interest  Period  on a day other  than the last day of such  Interest
Period, Borrower will pay to Lender, upon demand any cost or expense incurred by
Lender as a result of such  prepayment.  Lender shall certify the amount of such
cost or  expense to  Borrower  and  provide  Borrower  with a written  statement
setting  forth  the  cost  or  expense  claimed  and  the  calculations  used in
determining such loss and expense,  which  certification  and statement shall be
conclusive in the absence of manifest error.

Prepayments  shall be applied first to principal with respect to the portions of
the Loans  accruing  interest at a rate based upon the Prime  Rate,  and then to
principal  with respect to those  portions of the Loans  accruing  interest at a
rate  based  upon the  LIBOR,  and among  such  portions  of the Loans  accruing
interest  at rates  based  upon the  LIBOR to such  portions  with the  earliest
expiring Interest Periods.

                         2.2.8.2      Funding Losses.  If the Borrower fails
to borrow any LIBOR Loan after a Notice of Borrowing or Notice of Rate
Election has been given to Lender as provided in this Article 2, Borrower shall
reimburse Lender on demand for any  resulting  loss or expense  incurred  by it
(or by any existing or prospective  participant in the related  Loan),
including  (without limitation)  any loss incurred in obtaining,  liquidating
 or employing  deposits from third parties,  provided that Lender shall have
delivered to the Borrower a certificate  as to the  amount  of  such  loss or
expense  and  specifying  the calculation  thereof,  which  certificate
shall be conclusive in the absence of manifest error.

                          2.2.8.3           Termination or Reduction in
Commitment.  Borrower shall have the right without premium or penalty
except as provided in subsection 2.2.8.1 hereof, upon not less than
three (3) Business Days' prior written notice to Lender, to reduce or
terminate any or all of the commitments of Lender regarding the
Revolving Credit on and as of the last day of any Calendar Quarter.
Any voluntary termination or reduction in the Commitment Amount shall
permanently reduce the Commitment Amount.  No such reduction in
Commitment Amount shall be in an amount less than $1,000,000.  If
Borrower  desires to terminate  or reduce the  Commitment  Amount as  aforesaid,
Borrower shall execute and deliver to Lender such  documents and  instruments as
Lender shall reasonably require.

                         2.2.9   Manner and Time of Payment.  All payments
of  principal,  interest and fees  hereunder and under the Note shall be made by
Borrower without notice,  set off or counterclaim  and in immediately  available
same day funds and delivered to Lender not later than 12:00 noon on the date due
at its office located at Broad and Chestnut Streets, Philadelphia, Pennsylvania,
19101;  funds  received  by Lender  after that time shall be deemed to have been
paid by Borrower on the next succeeding Business Day.

                        2.2.10           Use of Proceeds.  The Revolving Credit
shall be used solely by Borrower for its working capital purposes and to acquire
and rehabilitate retail shopping centers.

                   2.2.11           Conditional Payment.  Borrower agrees that
checks and other instruments  received by Lender in payment or on account of the
Indebtedness  constitute only conditional  payment until such items are actually
paid to Lender.

                        2.2.12           Postponement of Termination Date.  If
Borrower  desires to postpone the  Termination  Date,  Borrower shall deliver to
Lender a written request  therefor not earlier than January 1 and not later than
June  30th of any  year  after  1997.  Any  request  shall  be to  postpone  the
Termination  Date by 12 months.  If such a request is made,  Lender shall advise
Borrower in writing  whether  Lender has approved such request  within eight (8)
weeks after the later of (i)  Lender's  receipt of such request or (ii) the date
Lender  receives  Guarantor's  10-K  report  with  respect  to  the  immediately
preceding  Calendar Year as required by Section  5.1.3  hereof.  The approval of
Borrower's requests shall be in Lender's sole and absolute discretion. If Lender
approves such request,  the  Termination  Date shall be postponed for 12 months,
Borrower and Lender shall  promptly  execute and deliver such  documentation  as
Lender may reasonably  require to evidence such  postponement and Borrower shall
pay to Lender a loan extension fee equal to one-eighth of one percent (.125%) of
the amount that Lender  specifies in writing to be the Commitment  Amount during
the 12  months  period of the  approved  postponement.  If Lender  does not give
Borrower written notice of Lender's approval of the requested postponement,  the
then-current Termination Date shall remain unchanged.


                                                       ARTICLE 3
                                                 CONDITIONS PRECEDENT

                    The   performance  by  Lender  of  any  of  its  obligations
hereunder is subject to the following conditions precedent:

                    3.1 Execution of this  Agreement.  Borrower shall deliver or
cause to be  delivered  to Lender  on the  Closing  Date  (except  as  otherwise
indicated herein), in form and substance satisfactory to Lender and its counsel,
in addition to this Agreement,  the following  documents and instruments and the
following transactions shall have been consummated:

                             3.1.1   The Note;

                             3.1.2   A Mortgage encumbering each Property;

                             3.1.3   An Assignment of Leases with respect to
each Property;

                             3.1.4   A Collateral Assignment with respect to
each Property;

                             3.1.5   UCC-1 Financing Statements with respect to
each Property;

                             3.1.6   An Environmental Indemnity Agreement with
respect to the Properties;

                             3.1.7   The Guaranty;

                             3.1.8   A policy of title insurance, issued by
Commonwealth Land Title Insurance Company insuring each Mortgage as a first lien
against the Property that it encumbers, subject only to Permitted Liens;

                             3.1.9   A current rent-roll of each Property and
copies of such leases as Lender may request;

                        3.1.10           An "as-built" survey of each Property,
certified to Lender and Commonwealth Land Title Insurance Company;

                             3.1.11           An Appraisal of each Property;

                       3.1.12           A "Phase I" environmental audit of each
Property  prepared in accordance with Lender's  environmental  study protocol by
EMG, Inc., which audit is acceptable to Lender in all respects;

                       3.1.13           Evidence, in form acceptable to Lender,
that  all  Governmental  Approvals  required  for the  lawful  operation  of the
Property as it is presently  being used have been obtained and are in full force
and effect;

                       3.1.14           Evidence, in form acceptable to Lender,
that each Property complies, in all material respects, with all
applicable statutes, ordinances, laws, rules, and regulations;

                       3.1.15           Evidence, in form acceptable to Lender,
that Borrower maintains policies of insurance with respect to
Borrower and the Properties as required by Section 5.1.11 hereof;

                    3.1.16           A copy of the Partnership Agreement and of
all amendments and modifications thereto and thereof, certified as
true, correct and complete by an Authorized Signer;

                    3.1.17           A copy of the filed Certificate of Limited
Partnership of Borrower;

                    3.1.18           A good standing certificate, issued by the
Maryland  Secretary  of State with  respect to  Borrower as of a date no earlier
than thirty (30) days prior to the Closing Date;

                    3.1.19           A partnership borrowing authorization with
respect to the Revolving Credit, executed by the general partner of
Borrower;

                   3.1.20           A copy of resolutions adopted by the Board
of  Directors  of  Guarantor,  (i)  authorizing  the  execution,   delivery  and
performance  of this  Agreement by Guarantor as general  partner of Borrower and
(ii)  authorizing  the  execution,  delivery and  performance  of the  Guaranty,
certified  by an  officer  of  Guarantor  to be true and  correct  copies of the
originals and to be in full force and effect as of the date hereof;

                     3.1.21           An incumbency and signature certificate
with respect to the officers of Guarantor authorized to execute and deliver this
Agreement  as  general  partner  of  Borrower  and to execute  and  deliver  the
Guaranty;

                          3.1.22           A copy of Guarantor's articles of
incorporation certified by an officer of Guarantor to be a true and
correct copy of the original and to be in full force and effect as of
the Closing Date;

                     3.1.23           A certification by the Maryland Secretary
of State,  evidencing  that Guarantor is in good standing under the laws of such
state, as of a date no earlier than thirty (30) days prior to the Closing Date;

                     3.1.24           The opinion of Borrower's and Guarantor's
counsel, in form and substance acceptable to Lender;

                    3.1.25           A Notice of Borrowing with respect to any
Advances requested as of the Closing Date;

                   3.1.26           Such additional documents or instruments as
may be required by this Agreement or as Lender may reasonably
require.

                    3.2 All Loan Fundings. On the Funding Date of any Advance or
issuance  date of any Letter of Credit:  (a) Lender shall have received a Notice
of  Borrowing  as  required  by  Section  2.2.2;  (b)  the  representations  and
warranties  set forth in Article 4 hereof shall be true and correct on and as of
such date, with the same effect as though made on and as of such date, except to
the extent such  representations  and  warranties  relate to an earlier  date or
changes  have been  disclosed  to Lender and not  objected to by Lender;  (c) no
Event of  Default or  Unmatured  Event of Default  shall  have  occurred  and be
continuing;  and (d) Borrower  shall be in compliance  with all of the terms and
conditions hereof, of the Note, and of all other Loan Documents, in each case on
and as of the date of the performance of such obligations by Lender.

                    Each  Advance and  issuance  of a Letter of Credit  shall be
deemed to constitute a representation and warranty by Borrower on the respective
Funding Date or issuance date as to the matters specified in paragraphs (b), (c)
and (d) of this Section.  Continuations and conversions of outstanding  portions
of the Revolving Credit shall not be deemed to be new borrowings for purposes of
this Section.


                                                       ARTICLE 4
                                            REPRESENTATIONS AND WARRANTIES.

                    4.1      Borrower represents and warrants to Lender as
follows:

                             4.1.1   Good Standing.  Borrower is a limited
partnership  duly  organized and in good standing under the laws of the State of
Maryland;  has the power and authority to own and operate the Properties and its
other real estate assets and to carry on its  respective  business  where and as
contemplated;  is duly  qualified to do business in, and is in good standing in,
every  jurisdiction  where  the  nature of  Borrower's  business  requires  such
qualification.

                             4.1.2   Power and Authority.  The making,
execution, issuance and performance by Borrower of this Agreement, the Note, the
Mortgages,  and the other Loan  Documents  executed by  Borrower  have been duly
authorized by all necessary  official  action and will not violate any provision
of law or  regulation  or of the  Partnership  Agreement;  will not  violate any
agreement, trust or other
indenture or instrument to which Borrower is a party or by which Borrower or any
of its assets is bound, so that this Agreement, the Note, the Mortgages, and the
other Loan  Documents  when executed and delivered by Borrower will be valid and
binding obligations of Borrower  enforceable in accordance with their respective
terms.

                             4.1.3   Financial Condition.  The balance sheet of
Borrower and Guarantor,  together with income and surplus statements,  contained
in  Guarantor's  10-Q report  filed for the periods  ending  September  30, 1996
heretofore  furnished to Lender are complete and correct in all  respects,  have
been prepared in accordance with GAAP,  consistently applied, and fairly present
the  financial  condition  of Borrower  and  Guarantor  as of said dates and the
results of  Borrower's  and  Guarantor's  operations  for the period then ended.
Except as set forth on such financial statements, neither Borrower nor Guarantor
has any fixed,  accrued  or  contingent  obligation  or  liability  for taxes or
otherwise  that is not  disclosed  or reserved  against on its  balance  sheets.
Borrower  and  Guarantor  have filed all  federal,  state and local tax  returns
required  to be filed by them with any taxing  authority.  Since  September  30,
1996,  there has been no material  adverse change in the condition of Borrower's
or  Guarantor's  financial  position  or  otherwise  from  that set forth in the
balance sheet as of said date.  Borrower does not believe,  and has no reason to
believe,  that there has been or will be a change  relating  to the  Business of
Borrower that would cause a Materially Adverse Effect on Borrower.

                             4.1.4   No Litigation.  Except as set forth on
Schedule  4.1.4 hereto,  there are no suits or proceedings  pending,  or, to the
knowledge of Borrower,  threatened against or affecting Borrower,  Guarantor, or
any Property, and Borrower is not in default in the performance of any agreement
to which Borrower may be a party or by which Borrower is bound,  or with respect
to any order,  writ,  injunction,  or any decree of any court,  or any  federal,
state,  municipal or other  government  agency or  instrumentality,  domestic or
foreign, which could have a Materially Adverse Effect on Borrower.

                             4.1.5   Compliance.  Borrower has all Governmental
Approvals  necessary for the conduct of Borrower's business and the operation of
each Property, and the conduct of Borrower's Business is not and has not been in
violation of any such Governmental  Approvals or any applicable federal or state
law, rule or regulation, the failure of which to obtain or to comply with would,
in any such case,  have a Materially  Adverse Effect on Borrower.  Borrower does
not require any  Governmental  Approvals to enter into, or perform  under,  this
Agreement, the Note, the Mortgages or any other Loan Document.

                             4.1.6   Compliance with Regulations T, U and X.
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meanings of Regulations T, U and
X of the Board of Governors of the Federal Reserve System).

                             4.1.7   ERISA.  With respect to each employee
pension benefit plan (within the meaning of Section 3(2) of ERISA other than any
"multiemployer plan" within the meaning of Section 3(37) of ERISA) (hereinafter,
a "Plan"),  maintained  for  employees  of  Borrower or of any trade or business
(whether  or not  incorporated)  which is under  common  control  with  Borrower
(within the meaning of Section 4001(b)(1) of ERISA), (i) there is no accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the  Code),  as of the  last  day of the  most  recent  plan  year of such  Plan
heretofore ended,  taking into account  contributions  made or to be made within
the time  prescribed by Section  412(c)(10) of the Code; (ii) each such Plan has
been maintained in accordance with its terms and ERISA; and (iii) there has been
no  "reportable  event"  within the  meaning  of  Section  4043 of ERISA and the
regulations  thereunder  for which the 30-day  notice  requirement  has not been
waived.  Borrower has not incurred any liability to the PBGC other than required
insurance  premiums,  all of which,  that have become due as of the date hereof,
have been paid. Borrower is not a party to any multi-employer plan.

                             4.1.8   Environmental.

                    Except as set forth in  Schedule  4.1.8 or where  failure to
comply  would not have or result in a Materially  Adverse  Effect on Borrower or
the conduct of Borrower's Business:

                                4.1.8.1           Borrower has, to the best of
Borrower's  knowledge,  in the conduct of Borrower's  Business and the ownership
and use of the  Properties,  complied,  in all  material  re  spects,  with  all
federal,  state and local,  laws,  rules,  regulations,  judicial  decisions and
decrees  pertaining to the use,  storage or disposal of hazardous waste or toxic
materials.

                           4.1.8.2           Except as reflected in the reports
delivered to Lender pursuant to Section 3.1.12 hereof, to the best of Borrower's
knowledge: (i) no Hazardous Substance is present on any of the Properties in any
quantity in excess of those  allowed by  applicable  law;  (ii) Borrower has not
been identified in any litiga tion, administrative  proceedings or investigation
as a responsible party for any liability under any Environmental  Law; (iii) all
mate  rials that are  located on any of the  Properties  in lawful  amounts  are
properly stored and maintained in containers  appropriate for such purposes. For
purposes  of this  Agreement,  the term  "Environmental  Law"  means any and all
applicable Federal,  State and local environ mental statutes,  laws, ordinances,
rules and regulations,  whether now existing or hereafter enacted, together with
all amendments, modifications, and supplements thereto, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), 42 U.S.C. ss.9601, as amended by the Superfund
Amendments and Re-authorization Act of 1986 (Pub. L. No. 99-499, 100 Stat. 1613
(1986) (SARA) or 40 CFR Part 261, whichever is applicable) and the
term "Hazardous Substance" means all contaminants, hazardous sub
stances, pollutants, hazardous waste, residual waste, solid waste, or
similar substances or wastes which are the subject of any
Environmental Law.

                             4.1.9   Other Contractual Obligations.  The
execution and delivery of this Agreement do not, and the performance by Borrower
of its  obligations  and  covenants  under  this  Agreement  and the other  Loan
Documents  to which  Borrower is bound will not,  violate any other  contractual
obligation of Borrower.

                             4.1.10           Investment Company Act.
Borrower is not an Investment Company within the meaning of the Investment
Company Act of 1940.

                             4.1.11     Public Utility Holding Company Act.
Borrower  is not a Public  Utility  Holding  Company  within the  meaning of the
Public Utility Holding Company Act.

                        4.1.12           RICO.  Borrower has not engaged in any
conduct or taken or omitted to take any action which violates RICO.

                             4.1.13           Lease Information.  All rent-rolls
heretofore  delivered to Lender with respect to the Properties are true, correct
and  complete as of the  respective  dates  thereof and the copies of all leases
delivered to Lender with  respect to any  Property  are complete  copies of such
leases and of all  amendments,  modifications,  addenda,  riders and supplements
thereto.

                    4.2      Accuracy of Representations; No Default.  The
                             ---------------------------------------
information set forth herein and on each of the Schedules hereto, in
the Note, the Mortgages, the other Loan Documents and each document
heretofore or concurrently delivered to Lender in connection herewith
is complete and accurate and contains full and true disclosure of
pertinent financial and other information in connection with the
Loans.  To the best of Borrower's knowledge, none of the foregoing
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the information contained herein or
therein not misleading or incomplete.  To the best of Borrower's
knowledge, no Event of Default or Unmatured Event of Default
hereunder, under the Note, any Mortgage, or any of the other Loan
Documents, has occurred.


                                                       ARTICLE 5
                                                 AFFIRMATIVE COVENANTS

                    5.1  Borrower's   Covenants.   As  long  as  this  Agreement
continues in effect or any portion of the Indebtedness  remains  outstanding and
unpaid,  Borrower  covenants  and agrees that,  in the absence of prior  written
consent of Lender, Borrower shall:

                             5.1.1   Maintain the ratio of the aggregate NOI of
all Properties then encumbered by a Mortgage to Pro Forma Debt
Service at no less than 1.5 to 1 at all times;

                             5.1.2   Deliver to Lender, within 10 days after the
same is  filed,  but not later  than 55 days  after the end of each of the first
three (3) Calendar  Quarters of each Calendar Year, (i) Guarantor's  10-Q report
for such Calendar  Quarter,  (ii) an income and expense  statement and rent-roll
for each Property,  and (iii) such other Project Specific  Information as Lender
may  reasonably  request,  the  information  required  by (ii)  and  (iii) to be
certified by Guarantor's chief financial officer;

                             5.1.3   Deliver to Lender, within 10 days after the
same is  filed,  but not later  than 100 days  after  each  Calendar  Year,  (i)
Guarantors  10-K  report for such  Calendar  Year,  (ii) an income  and  expense
statement  and  rent-roll  for each  Property,  and (iii)  such  other  Property
Specific  Information as Lender may reasonably request, the information required
by (ii) and (iii) to be certified by Guarantor's chief financial officer;

                             5.1.4   Deliver to Lender at the time each request
for a postponement of the Termination  Date is requested,  such Project Specific
Information  with respect to Borrower's  income  producing real estate assets as
Lender may reasonably request, certified by Guarantor's chief financial officer;

                             5.1.5   Deliver to Lender, at the time each
financial  statement is required to be delivered  pursuant to Sections 5.1.2 and
5.1.3 hereof, a certification of Borrower,  signed by a senior executive officer
of  Guarantor,  in the form of Schedule  5.1.5  attached  hereto,  certifying to
Lender that there  exists no breach of any of the  covenants  contained  in this
Article 5 or in Article 6 hereof;

                             5.1.6   With reasonable promptness furnish to
Lender  such  additional  information  and  data  concerning  the  business  and
financial condition of Borrower as may be reasonably requested by Lender; afford
Lender or its  agents  reasonable  access to the  financial  books and  records,
computer records and Properties of Borrower at all reasonable  times, and permit
Lender or its agents to
make copies and abstracts of same and to remove such copies;  and abstracts from
Borrower's  premises  and  permit  Lender or its  agents  the right to  converse
directly  with the  independent  accounting  firm then  engaged by  Borrower  to
prepare  its  audited  financial  statements;  Lender  agrees  that it shall not
disclose any non-public  information obtained by Lender pursuant to this Section
5.1.6 to any Person in violation of applicable law;

                             5.1.7   Cause the prompt payment and discharge of
all taxes,  governmental  charges and assessments levied and assessed or imposed
upon Borrower's  assets and pay all other claims which, if unpaid,  might become
liens or charges upon Borrower's assets, provided, however, that nothing in this
Section  shall  require  Borrower to pay any such taxes,  claims or  assessments
which  are not  overdue  or which  are  being  contested  in good  faith  and by
appropriate  proceedings,  with adequate  reserves  therefor being  available or
having been set aside;

                             5.1.8   Maintain in good standing the existence as
a limited partnership of Borrower and all necessary foreign
qualifications;

                             5.1.9   Promptly defend all actions, proceedings or
claims  which would have a  Materially  Adverse  Effect on Borrower and promptly
notify  Lender  of the  institution  of,  or any  change  in,  any such  action,
proceeding or claim if the same is in excess of $500,000 for any single  action,
proceeding or claim and  $1,000,000 in the aggregate  (other than claims covered
by insurance in the ordinary course of business and booked on Borrower's balance
sheet), or would have a Materially Adverse Effect on the financial  condition of
Borrower or any of the Properties if adversely determined;

                      5.1.10           Promptly give written notice to Lender of
the  occurrence  or  imminent  occurrence  of any  event  which  causes or would
imminently cause any  representation  or warranty made in Article 4 hereof to be
untrue in any material  respect at any time or which would cause  Borrower to be
in default hereunder,  under the Note, any Mortgage,  or any other Loan Document
for any other  reason,  or the  occurrence  of an Event of Default or  Unmatured
Event of Default;

                    5.1.11           Maintain and keep in force, throughout the
term of this Agreement, policies of insurance on the following terms:

                      5.1.11.1          Policies of insurance insuring each
Property  against  such perils and  hazards,  and in such  amounts and with such
limits,  as Lender  may from time to time in good  faith  require,  and,  in any
event, including:

                       (a)      Insurance against loss to each Property on
an "all risk" policy form, covering insurance risks no less broad
than those  covered  under a Standard  Multi  Peril  (SMP)  policy  form,  which
contains the most recent Commercial ISO "Causes of Loss-Special  Form," and such
other risks as Lender may  reasonably  require,  including,  but not limited to,
insurance  covering the cost of demolition of undamaged  portions of any portion
of a Property  when  required by code or  ordinance  and the  increased  cost of
reconstruction  to conform  with  current  code or  ordinance  requirements,  in
amounts  equal to the full  replacement  cost of the Property  (other than land,
foundations  and  other  uninsurable   improvements),   including  fixtures  and
equipment, and the cost of debris removal, with an agreed amount endorsement and
deductibles of not more than $10,000.

                                   (b)      Rent and rental value/extra expense
insurance in amounts  sufficient  to pay,  during any period in which a Property
may be damaged or  destroyed,  all rents for a period of twelve  (12)  months or
such greater time as Lender may in good faith deem appropriate.

                                     Broad form boiler and machinery insurance
including  rent  and  rental  value  insurance,  on all  equipment  and  objects
customarily  covered by such insurance and/or involved in the heating,  cooling,
electrical  and  mechanical  systems of each Property (if any are located at the
Property),  providing for full repair and replacement  cost coverage,  and other
insurance of the types and in amounts as Lender may reasonably require.

                               (d)      During the making of any alterations or
improvements to a Property,  (i) insurance  covering claims based on the owner's
or employer's  contingent  liability  not covered by the  insurance  provided in
clause (f) of this Section  5.1.11.1 and (ii)  workers'  compensation  insurance
covering all persons engaged in such alterations or improvements.

                             (e)      Insurance against loss or damage by flood
or mud slide in compliance  with the Flood  Disaster  Protection Act of 1973, as
amended from time to time, if a Property is on the relevant  Closing Date, or at
any time during the term of this Agreement  shall be, situated in any area which
an appropriate governmental authority designates as a special flood hazard area,
in amounts equal to the full replacement  value of all above grade structures on
such Property.

                                   (f)      Commercial general public liability
insurance, with the location of each Property designated thereon, against death,
bodily injury and property  damage  arising on, about or in connection  with the
Properties,  with  Borrower  listed as the named  insured,  with such  limits as
Lender may reasonably require (but in no event less than $1,000,000) and written
on the most recent  Standard  "ISO"  occurrence  basis form or equivalent  form,
excess umbrella
liability  coverage with such limits as the Lender may reasonably require but in
no event less than  $2,000,000,  and, if any  construction  of new  improvements
occurs after the date hereof,  completed operations coverage for a period of one
year after construction of the improvements has been completed.

                                  (g)      Such other insurance relating to the
Properties  and the uses and operation  thereof as Lender may, from time to time
require in the exercise of good faith,  including,  but not limited to, workers'
compensation insurance.

                         5.1.11.2          All insurance shall:  (a) be carried
in companies with a Rating of A or better and a Financial Size Category of Class
VII or higher,  as set forth in the most  recently  published  Best's Key Rating
Guide,  or  otherwise  acceptable  to Lender;  (b) be in form and  content  that
conform to industry  standards or are  acceptable to Lender;  (c) provide thirty
(30) days' advance  written notice to Lender before any  cancellation,  material
modification or notice of  non-renewal;  and (d) provide that no claims shall be
paid  thereunder  without ten (10) days' advance  written notice to Lender.  All
physical damage policies and renewals shall contain a mortgage clause acceptable
to Lender naming Lender as mortgagee,  which clause shall  expressly  state that
any breach of any  condition  or warranty by Borrower  shall not  prejudice  the
rights of Lender under such insurance. No additional parties shall appear in the
mortgagee or loss payable clause without  Lender's  prior written  consent.  All
deductibles  shall be in  amounts  acceptable  to  Lender.  In the  event of the
foreclosure  of the  applicable  Mortgage  or any other  transfer  of title to a
Property in full or partial satisfaction of the indebtedness secured hereby, all
right,  title and  interest  of Borrower in and to all  insurance  policies  and
renewals  thereof then in force shall pass to such purchaser or grantee.  If the
insurance, or any part thereof, shall expire, or be withdrawn, or become void or
unsafe by reason of Borrower's breach of any condition  thereof,  or become void
or unsafe by reason of the value or  impairment of the capital of any company in
which the insurance may then be carried, Borrower shall place new insurance that
satisfies the requirements of this Section 5.1.11.

                      5.1.11.3          The insurance required by this Section
5.1.11 shall be evidenced by the original policy or a true and certified copy of
the  original  policy or an Evidence of  Property  Insurance,  or in the case of
liability  insurance,  a  Certificate  of  Insurance.   Borrower  shall  deliver
originals  of such  policies  or  certificates  to Lender at least ten (10) days
before  the  expiration  of  existing  policies.  If  Lender  has  not  received
satisfactory  evidence of such renewal or substitute insurance in the time frame
specified  herein,  Lender  shall have the  right,  but not the  obligation,  to
purchase such insurance for Lender's  interest as mortgagee only. Any amounts so
disbursed by Lender pursuant to this
Section  5.1.11  shall be a part of the  Indebtedness  and shall be  immediately
payable by the Borrower to Lender and shall bear interest at the rate that is 2%
per annum in excess of the Prime Rate.
Nothing  contained in this Section  5.1.11.3  shall require  Lender to incur any
expense or take any action  hereunder,  and  inaction  by Lender  shall never be
considered  a waiver of any right  accruing to Lender on account of this Section
5.1.11.

                     5.1.12           Comply in all material respects with the
requirements  of ERISA  applicable to any employee  pension benefit plan (within
the meaning of Section 3(2) of ERISA),  sponsored  by Borrower.  With respect to
any such plan,  other  than any  "multiemployer  plan"  (within  the  meaning of
Section 3(37) of ERISA), in the case of a "reportable  event" within the meaning
of Section  4043 of ERISA and the  regulations  thereunder  for which the 30-day
notice  requirement  has not been  waived,  or in the case of any other event or
condition  which presents a material risk of the termination of any such plan by
action of the PBGC or Borrower,  Borrower  shall furnish to Lender a certificate
of the chief financial officer of Guarantor identifying such reportable event or
such other  event or  condition  and  setting  forth the  action,  if any,  that
Borrower intends to take or has taken with respect thereto, together with a copy
of any notice of such  reportable  event or such other event or condition  filed
with the PBGC or any notice  received by Borrower from the PBGC  evidencing  the
intent of the PBGC to institute  proceedings  to terminate  any such plan.  Such
certificate of the chief financial  officer or such other notice to be furnished
to Lender in accordance with the preceding sentence shall be given in the manner
provided for in Section 8.4 hereof:  (i) within 30 days after the Borrower knows
of such  reportable  event or such  other  event or  condition;  (ii) as soon as
possible  upon receipt of any such notice from the PBGC;  or (iii)  concurrently
with the  filing  of any such  notice  with the  PBGC,  as the case may be.  For
purposes  of this  Section,  Borrower  shall be  deemed  to have  all  knowledge
attributable to the administrator of any such plan;

                        5.1.13           Immediately notify Lender of: (i) the
occurrence or imminent  occurrence of any event which causes or would imminently
cause (A) any material  adverse  change in the financial  condition of Borrower,
(B) any  representation  or warranty  made by Borrower  hereunder  to be untrue,
incomplete or misleading, or (C) the occurrence of any other Event of Default or
Unmatured  Event of  Default  hereunder;  and (ii) the  institution  of,  or the
issuance of any order,  judgment,  decree or other  process in, any  litigation,
investigation,  prosecution,  proceeding  or other  action  by any  governmental
authority or other Person against  Borrower and that does, or could,  materially
affect Borrower;

                   5.1.14           Cause Guarantor to maintain its corporate
existence and all necessary foreign qualifications in good standing;
and
                    5.1.15           Continue to comply with all applicable
statutes,  rules and  regulations  with  respect to the  conduct  of  Borrower's
Business  to the extent the same are  material  to the  financial  condition  of
Borrower or the conduct of Borrower's Business; maintain such necessary licenses
and permits required for the conduct of Borrower's Business, in each case if the
failure  to  maintain  or  comply  would  have a  Materially  Adverse  Effect on
Borrower.

                    5.2 Indemnification.  Borrower hereby indemnifies and agrees
to protect,  defend, and hold harmless Lender and Lender's directors,  officers,
employees,  agents,  attorneys  and  shareholders  from and  against any and all
losses,  damages,  expenses  or  liabilities  of any kind or nature and from any
suits,  claims,  or demands,  including all reasonable  counsel fees incurred in
investigating,  evaluating or defending such claim,  suffered by any of them and
caused by, relating to, arising out of,  resulting from, or in any way connected
with this Agreement,  the Note, the Mortgages,  the other Loan Documents and any
transaction contemplated herein or therein including, but not limited to, claims
based  upon  any  act or  failure  to act by  Lender  in  connection  with  this
Agreement, the Note, the Mortgages, the other Loan Documents and any transaction
contemplated herein or therein;  provided, that Borrower shall not be liable for
any portion of such losses, damages,  expenses or liabilities arising out of (i)
Lender's breach of its  obligations to Borrower under this Agreement,  the Note,
the  Mortgage  or any other Loan  Document or (ii) gross  negligence  or willful
misconduct  or that of Lender's  officers,  directors,  employees or agents.  If
Borrower  shall have  knowledge  of any claim or  liability  hereby  indemnified
against,  it shall promptly give written notice thereof to Lender. THIS COVENANT
SHALL SURVIVE PAYMENT OF THE INDEBTEDNESS.

                             5.2.1   Lender shall promptly give Borrower written
notice of all suits or actions  instituted  against Lender with respect to which
Borrower has indemnified Lender, and Borrower shall timely proceed to defend any
such suit or action. Lender shall also have the right, at the reasonable expense
of Borrower,  to participate in or, at Lender's election,  assume the defense or
prosecution  of such  suit,  action,  or  proceeding,  and in the  latter  event
Borrower may employ counsel and participate therein. Lender shall have the right
to adjust,  settle,  or compromise any claim,  suit, or judgment after notice to
Borrower,  unless Borrower desires to litigate such claim,  defend such suit, or
appeal such  judgment and  simultaneously  therewith  deposits  with Lender such
amount of collateral  sufficient to secure the payment of any judgment rendered,
with interest,  costs, reasonable legal fees and expenses, as Lender may in good
faith require,  giving  consideration  to Borrower's  then-current net worth and
available insurance proceeds; and the right of Lender to indem
nification  under  this  Agreement  shall  extend to any money paid by Lender in
settlement or compromise of any such claims, suits, and judgments in good faith,
after notice to Borrower.

                             5.2.2   If any suit, action, or other proceeding is
brought  by Lender  against  Borrower  for  breach  of  Borrower's  covenant  of
indemnity  herein  contained,  separate suits may be brought as causes of action
accrue,  without  prejudice  or bar to the bringing of  subsequent  suits on any
other cause or causes of action, whether theretofore or thereafter accruing.


                                                       ARTICLE 6
                                                  NEGATIVE COVENANTS

                    6.1 Borrower's Negative Covenants. As long as this Agreement
continues in effect or any portion of the Indebtedness  shall remain outstanding
and unpaid, Borrower shall not:

                             6.1.1   Change the general character of Borrower's
Business from that in which it is currently  engaged;  enter into proceedings in
total or partial  dissolution;  merge or consolidate with or into any entity, or
acquire all or substantially all of the assets or securities of any other Person
(excluding  transactions,  the primary  purpose of which is to obtain  direct or
indirect  ownership and control of income  producing real estate);  or otherwise
take any action or omit to take any action which would have a Materially Adverse
Effect on Borrower;

                             6.1.2   Use any part of the proceeds of any Loan to
purchase or carry,  or to reduce,  retire or  refinance  any credit  incurred to
purchase or carry,  any margin stock (within the meaning of Regulations T, U and
X of the Board of Governors of the Federal  Reserve  System) or to extend credit
to others for the  purpose of  purchasing  or  carrying  any  margin  stock.  If
requested by Lender, Borrower shall furnish Lender statements in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation;

                             6.1.3   Use, generate, treat, store, dispose of, or
otherwise  introduce  any  hazardous   substances,   pollutants,   contaminants,
hazardous waste, residual waste or solid waste (as defined above) into or on any
of the Properties and will not  intentionally  or knowingly  cause,  suffer,  or
permit any other Person to do so in violation  of any  applicable  Environmental
Law;

                             6.1.4   Engage in any conduct or take or fail to
take any action which will, or would, if the facts and circumstances
relative thereto were discovered, violate RICO;

                             6.1.5   Terminate the Partnership Agreement.

                                                       ARTICLE 7
                                                        DEFAULT

                    7.1 Events of Default.  The occurrence of any one or more of
the  following  events,  conditions  or states of affairs,  shall  constitute an
"Event of Default" hereunder,  under the Note, the Mortgages,  and under each of
the other Loan  Documents,  provided  however,  that  nothing  contained in this
Article 7 shall be deemed to enlarge or extend any grace period  provided for in
the Note, any Mortgage, or any other Loan Document:

                             7.1.1   Failure of Borrower to pay the Indebtedness
or any portion  thereof within ten (10) days after written notice from Lender of
the amount  that is due  (except  that no such  notice  shall be  required  with
respect to the payment due on the Termination Date);

                             7.1.2   Failure by Borrower to observe or perform
any agreement,  condition,  undertaking or covenant in this Agreement, the Note,
or the other  Loan  Documents,  which  failure,  if it does not  consist  of the
failure to pay money to such Lender and is  susceptible  to being cured,  is not
cured within thirty (30) days after written notice from such Lender (but if such
failure  cannot  reasonably  be cured  within such thirty (30) day period,  such
shall not be an Event of Default if Borrower has commenced such cure within such
thirty  (30) day  period  and  thereafter  diligently  pursues  such cure to its
completion,  but in no event shall the period to cure exceed one hundred  twenty
(120) days);  provided that the notice and grace period provided in this Section
7.1.2 shall not apply to the breach by Borrower of any  covenants  contained  in
Sections 5.1.1,  5.1.8 (with respect to which  Borrower's  available cure period
shall be ten (10) days after  Borrower  receives  written  notice of such breach
from any  governmental  authority),  5.1.14  (with  respect to which  Borrower's
available  cure period shall be ten (10) days after  Borrower  receives  written
notice of such breach from any  governmental  authority),  or 6.1.1 hereof,  and
provided further that the grace period with respect to a breach of the covenants
contained  in Section  5.1 hereof  that  pertain  to the  delivery  to Lender of
financial  information shall be limited to thirty(30) days after delivery of any
Lender's written notice of such breach;

                             7.1.3   Any representation or warranty of the
Borrower,  or to the extent  specifically  provided in this  Agreement is deemed
made,  in this  Agreement,  the Note,  any  Mortgage,  or any of the other  Loan
Documents, or any statement or information in any report, certificate, financial
statement or other instrument furnished by Borrower in connection with making of
this  Agreement or the making of the Loans  hereunder or in compliance  with the
provisions hereof or any other Loan Document shall have been false or misleading
in any material respect when so made or so deemed made or furnished;
                             7.1.4   Borrower or Guarantor shall become
insolvent  or  unable  to pay its  debts  as they  mature,  or file a  voluntary
petition or proceeding seeking liquidation,  reorganization or other relief with
respect  to  itself  under any  provision  of the  Bankruptcy  Code or any state
bankruptcy or insolvency statute, or make an assignment or any other transfer of
assets  for the  benefit  of its  creditors,  or  apply  for or  consent  to the
appointment  of a receiver  for its  assets,  or suffer the filing  against  its
property of any attachment or garnishment or take any action to authorize any of
the foregoing;  or an involuntary  case or other  proceeding  shall be commenced
against  Borrower or  Guarantor  seeking  liquidation,  reorganization  or other
relief  with  respect  to its  debts  under  the  Bankruptcy  Code or any  other
bankruptcy,  insolvency or similar law now or hereafter in effect or seeking the
appointment  of a trustee,  receiver,  liquidator,  custodian  or other  similar
official of it or any  substantial  part of its property,  and such  involuntary
case or other proceeding  shall remain  undismissed and unstayed for a period of
sixty (60) days (it being  understood  that no delay period applies with respect
to any default arising under this Section by reason of the filing of a voluntary
petition  by  Borrower  or  Guarantor  under  the  Bankruptcy  Code or any state
bankruptcy  or  insolvency  statute  or the  making  of an  assignment  or other
transfer of assets for the benefit of  Borrower's  Guarantor's  creditors  or by
reason of Borrower or Guarantor applying for or consenting to the appointment of
a receiver for Borrower's or Guarantor's  assets);  or an order for relief shall
be  entered  against  the  Borrower  or  Guarantor  under any  provision  of the
Bankruptcy  Code  or  any  state  bankruptcy  or  insolvency  statute  as now or
hereafter in effect;

                             7.1.5   The occurrence of any "Event of Default" as
defined in the Note, Mortgage, or other Loan Document;

                             7.1.6   The occurrence of any default by Borrower
or Guarantor (after expiration of any applicable grace period therein contained)
under any note or  instrument  evidencing  indebtedness  for  borrowed  money in
excess of $1,000,000, the liability for which is not limited to real estate that
was mortgaged to the creditor as security for such indebtedness;

                             7.1.7   Borrower shall cease to conduct its
Business substantially in the manner described in the Background portion of this
Agreement or Borrower shall change the nature of its Business;

                             7.1.8   Entry of a final judgment or judgments
against Borrower or Guarantor by a court of law in an amount
exceeding an aggregate of $1,000,000 outstanding at any one time: (i)
which is not fully or unconditionally covered by insurance; or (ii)
for which Borrower or Guarantor has not established a cash or cash
equivalent reserve in the amount of such judgment or judgments that were entered
by a court of record against Borrower or Guarantor; or (iii) enforcement of such
judgment or judgments  has not been stayed or such  judgment or judgments  shall
continue in effect for a period of 30  consecutive  days without being  vacated,
discharged, satisfied or bonded pending appeal;

                             7.1.9   Regardless of the intent or knowledge of
Borrower,  if the validity,  binding  nature or  enforceability  of any material
term, provision,  condition,  covenant or agreement contained in this Agreement,
any other Loan  Document or in any other  existing or future  agreement  between
Borrower  and Lender  shall be  wrongfully  disputed by, on behalf of, or in the
right or name of Borrower or if any such material  term,  provision,  condition,
covenant or  agreement  shall be found or  declared to be invalid,  non-binding,
unenforceable  or  avoidable  by any  governmental  authority  or court  and the
parties cannot agree upon substitutions therefor within 30 days; or

then, and in every such event,  Lender may (i) by notice to Borrower,  terminate
Lender's  obligations under this Agreement,  and they shall thereupon terminate,
and (ii) declare the Note (together with accrued interest  thereupon) to be, and
the  Note  shall   thereupon   become,   immediately  due  and  payable  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by Borrower.

                    7.2      Remedies on Default.

                             7.2.1   Upon the occurrence and continuation of any
Event  of  Default,   Lender  may  forthwith  declare  all  Indebtedness  to  be
immediately due and payable,  without protest, demand or other notice (which are
hereby expressly waived by Borrower) and, in addition to the rights specifically
granted  hereunder or now or hereafter  existing in equity, at law, by virtue of
statute or otherwise (each of which rights may be exercised at any time and from
time to time),  Lender may exercise the rights and remedies  available to Lender
at law or in equity or under this Agreement, the Note, the Mortgages, and any of
the other Loan  Documents  or any other  agreement  by or between  Borrower  and
Lender in accordance with the respective provisions thereof.

                             7.2.2   In addition to the remedies described in
Section  7.2.1  hereof,  Lender may  exercise  all of Lender's  rights under the
Guaranty.

                    7.3  Set-Off  Rights  Upon  Default.  Upon  and  during  the
continuance  of any Event of Default,  Lender,  in addition to any  remedies set
forth  above,  shall  have the right at any time and from  time to time  without
notice to  Borrower,  to the  extent  permitted  by law (any such  notice  being
expressly  waived by Borrower and to the fullest extent  permitted by applicable
Rules) to set off, to exercise
any banker's lien or any right of attachment  or  garnishment  and apply any and
all balances, credits, deposits (general or special, time or demand, provisional
or final),  accounts or monies at any time held by Lender and other indebtedness
at any time owing by Lender to or for the  account of  Borrower  against any and
all Indebtedness  for which Borrower is liable or other  obligations of Borrower
now or hereafter existing under this Agreement,  the Note, any Mortgage,  or any
other  Loan  Document,  whether  or not any  Lender  shall  have made any demand
hereunder or thereunder.

                    7.4      Singular or Multiple Exercise; Non-Waiver.  The
                             -----------------------------------------
remedies provided herein, in the Note, the Mortgages, and in the
other Loan Documents or otherwise available to Lender at law or in
equity and any warrants of attorney therein contained, shall be
cumulative and concurrent, and may be pursued singly, successively or
together at the sole discretion of Lender, and may be exercised as
often as occasion therefor shall occur; and the failure to exercise
any such right or remedy shall in no event be construed as a waiver
or release of the same.


                                                       ARTICLE 8
                                                     MISCELLANEOUS

                    8.1  Integration.  This Agreement,  the Note, the Mortgages,
and the other Loan  Documents  shall be construed as one  agreement,  and in the
event of any  inconsistency,  the  provisions of the Note shall control over the
provision of this  Agreement or any other Loan  Document,  and the provisions of
this  Agreement  shall control over the  provisions of any other Loan  Document.
This Agreement,  the Note, the Mortgages,  and the other Loan Documents  contain
all the  agreements of the parties  hereto with respect to the subject matter of
each  thereof  and  supersede  all  prior  or  contemporaneous  discussions  and
agreements with respect to such subject matter.

                    8.2      Modification.  Modifications or amendments of or to
the provisions of this Agreement shall be effective only if set forth
in a written instrument signed by Lender and Borrower.

                    8.3      Amendments and Waivers.  Any provision of this
Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by Borrower and Lender.

                    8.4 Notices.  Any notice or other communication by one party
hereto to the other shall be in writing and shall be deemed to have been validly
given upon receipt if by hand delivery,  or by overnight  delivery service or by
telecopier,  or two days after  mailing if mailed,  first  class  mail,  postage
prepaid, return receipt requested, addressed as follows:

                             If to Borrower:

                                     4350 East West Highway
                                     Suite 400
                                     Bethesda, MD  20814
                                     Attn:  James G. Blumenthal
                                     Telecopier: (301) 907-4911

                             All with a copy to:

                                     Jeffrey S. Distenfeld, Esq.
                                     4350 East West Highway
                                     Suite 400
                                     Bethesda, MD  20814
                                     Telecopier:  (301) 907-4911

                             If to the Lender:

                                     CoreStates Bank, N.A.
                                     10th Floor, Widener Building
                                     FC1-8-10-67
                                     1339 Chestnut Street
                                     P.O. Box 7618
                                     Philadelphia, PA  19101-7618
                                     Attn:  Greg A. Hartin, Vice President

                                     Telecopier:  215-786-6381

                             With a copy to:

                                     Kenneth I. Rosenberg, Esquire
                                     Mesirov Gelman Jaffe Cramer & Jamieson
                                     1735 Market Street, 38th Floor
                                     Philadelphia, PA  19103-7598
                                     Telecopier:  215-994-1111

                    8.5   Survival.   The  terms  of  this   Agreement  and  all
agreements,  representations,  warranties  and covenants made by Borrower in any
other Loan Document shall survive the issuance and payment of the Note and shall
continue as long as any portion of the Indebtedness shall remain outstanding and
unpaid;  provided,  however,  that the covenants set forth in Sections 5.2, 8.8,
and 8.9 hereof and all other  covenants of Borrower to indemnify  Lender and the
Lender  shall  survive  the  payment  of  the   Indebtedness.   Borrower  hereby
acknowledges that Lender has relied upon the foregoing in making the Loans.

                    8.6 Closing. Closing hereunder shall occur at the offices of
Mesirov  Gelman  Jaffe  Cramer &  Jamieson,  1735  Market  Street,  38th  Floor,
Philadelphia,  Pennsylvania  19103-7598  or at such  other time and place as the
parties hereto may determine.
                    8.7 Successors  and Assigns;  Governing Law. This Agree ment
shall be binding upon and inure to the benefit of the respective  successors and
assigns of the parties hereto; provided,  however that Borrower shall not assign
this Agreement,  or any rights or duties arising hereunder,  without the express
prior  written  consent  of Lender  and that  subject to the right to enter into
participation  arrangements under Section 8.10 hereof, Lender may not assign its
rights or duties arising  hereunder without the express prior written consent of
Borrower.  This Agreement shall be construed and enforced in accordance with the
internal laws of the  Commonwealth of Pennsylvania  for contracts made and to be
performed in Pennsylvania.

                    8.8  Consent  to  Jurisdiction   and  Venue.  In  any  legal
proceeding  involving,  directly  or  indirectly,  any matter  arising out of or
related to this Agreement or any relationship evidenced hereby,  Borrower hereby
irrevocably  submits to the  nonexclusive  jurisdiction  of any state or federal
court located in any county in the  Commonwealth  of  Pennsylvania  where Lender
maintains an office and agrees not to raise any  objection to such  jurisdiction
or to the  laying or  maintaining  of the venue of any such  proceeding  in such
county.  Borrower  agrees that service of process in any such  proceeding may be
duly  effected upon it by mailing a copy thereof,  by registered  mail,  postage
prepaid, to Borrower.

                  8.9      Waiver of Jury Trial.  BORROWER AND LENDER EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTIONS BROUGHT BY ANY PARTY
WITH RESPECT TO THIS AGREEMENT OR THE INDEBTEDNESS.

                    8.10Participation.  Lender may in its sole discretion  enter
into one or more  participation  arrangement(s)  with  respect to the  Revolving
Credit and may provide all information in its possession relating to Borrower to
any current or prospective participating lender.

                    8.11Excess  Payments.  If  Borrower  shall pay any  interest
under the terms of the Note at a rate higher than the  maximum  rate  allowed by
applicable  law,  then  such  excess  payment  shall  be  credited  against  the
Indebtedness  unless  Borrower  notifies  Lender in writing to return the excess
payment to Borrower.

                    8.12Partial  Invalidity.  If any provision of this Agreement
shall for any reason be held to be invalid or unenforce able, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable  provision had never been
contained herein.

                    8.13Compliance  with Rules.  Lender shall not be required by
operation or effect of any provision of this Agreement to violate any statute or
regulation under state or federal law, including all Rules.
                    8.14Headings.   The   heading  of  any  Article  or  Section
contained in this  Agreement is for  convenience of reference only and shall not
be deemed to  amplify,  limit,  modify  or give  full  notice of the  provisions
thereof.

                    8.15Counterparts.   This   Agreement   may  be   signed   in
counterparts  each of which shall be deemed to be an  original  and all of which
together shall constitute one and the same agreement.

                    8.16Retention  of  Documents.   Unless  otherwise   provided
herein, any documents,  schedules,  invoices or other papers delivered to Lender
may be destroyed  or  otherwise  disposed of by Lender six (6) months after they
are delivered to or received by Lender,  unless Borrower  requests the return of
such documents,  schedules,  invoices or other papers and makes arrangements, at
Borrower's expense, for their return.

                    IN WITNESS  WHEREOF,  Borrower and Lender have executed this
Agreement  under seal,  intending to be legally bound hereby,  as of the day and
year first above written.

                                                       BORROWER:

                         FIRST WASHINGTON REALTY LIMITED
                         PARTNERSHIP, a Maryland limited
                        partnership, by its sole general
                                    partner:

                                     FIRST WASHINGTON REALTY TRUST, INC.


                                     By:__________________________________
                                        William J. Wolfe, President

                                     Attest: _____________________________
(Corporate Seal)                             , Secretary


                                     LENDER:

                                     CORESTATES BANK, N.A.


                                     By:__________________________________
                                        Greg A. Hartin, Vice President




<PAGE>



                                                    Schedule 2.2.2
                                                  Notice of Borrowing
                                                          By
                                    First Washington Realty Limited Partnership


CoreStates Bank, N.A.
F.C. 1-8-12-1
1345 Chestnut Street
P.O. Box 7618
Philadelphia, PA  19101-7618
Attention: _________________

                                                              __________, 19__

                    This  Notice  of   Borrowing   ("Notice")   is  provided  to
CoreStates  Bank,  N.A.  ("Lender")  to evidence the desire of First  Washington
Realty Limited Partnership  ("Borrower") to borrow funds in the form of Advances
pursuant to Section 2.2 of the  Revolving  Credit  Loan  Agreement,  dated as of
___________  __,  1997,  by and  between  Borrower  and the  Lender  (the  "Loan
Agreement").  All  capitalized  terms not  defined  herein  shall  have the same
meaning as provided in the Loan Agreement unless the context clearly requires to
the contrary.

                    Borrower desires to borrow $___________ to be funded on
_____________, 19__ (the "Funding Date").  This Loan shall initially
consist of:

$__________         Prime Rate Loans; this Notice is provided to Lender
                           by 11:00 a.m. at least one Business Day prior to the
                             Funding Date;

$__________                  LIBOR  Loans  with an  initial  Interest  Period of
                             _____________  months;  this  Notice is provided to
                             Lender by 11:00 a.m.  least three  London  Business
                             Days prior to the Funding Date.

                    Borrower  hereby  requests Lender to open a Letter of Credit
in   the   face    amount    of    $_________________________    in   favor   of
_____________________  with an  expiration  date of  ____________  to be paid in
accordance with the notation attached hereto.

This Notice, if for LIBOR Loans,  shall be irrevocable on and after the Interest
Rate Determination Date applicable to the Funding Date specified herein.

                    The  undersigned  hereby  certifies that: (i) the representa
tions and  warranties  contained in Article 4 of the Loan Agreement are true and
correct as of the date  hereof,  except to the extent such  representations  and
warranties  relate to an earlier date or such changes have been disclosed to and
agreed to by Lender;  and (ii) to the best  knowledge  of  Borrower  no Event of
Default or Unmatured  Event of Default under the Loan Agreement has occurred and
is continuing.

                         FIRST WASHINGTON REALTY LIMITED
                         PARTNERSHIP, a Maryland limited
                         partnership


                         By:________________________________
                         Authorized Signer


<PAGE>



                                                    Schedule 2.2.3
                                                Notice of Rate Election
                                                          By
                                    First Washington Realty Limited Partnership


CoreStates Bank, N.A.
F.C. 1-8-12-1
1345 Chestnut Street
P.O. Box 7618
Philadelphia, PA  19101-7618
Attention: _________________

                                                                _________, 19__

                    This  Notice of Rate  Election  ("Notice")  is  provided  to
CoreStates  Bank,  N.A.  ("Lender")  to evidence the desire of First  Washington
Realty  Limited  Partnership  ("Borrower")  to  continue or change the basis for
determining  the interest rate on Loans  pursuant to the  Revolving  Credit Loan
Agreement, dated as of _______ __, 1997, by and between Borrower and Lender (the
"Loan Agreement").  All capitalized terms not defined herein shall have the same
meaning as provided in the Loan Agreement unless the context clearly requires to
the contrary.

                    Borrower  desires to  (change)  (continue)  $___________  of
outstanding  Advances  for which  (there is no  present  Interest  Period)  (the
Interest Period expires on _________) (to) (as) LIBOR Loans as follows:

$__________                  LIBOR   Loans   with   an   Interest    Period   of
                             _____________  months;  this  Notice is provided to
                             Lender by 11:00 a.m. at least three London Business
                             Days  prior  to  the  first  day of  such  Interest
                             Period,   which  day  is  hereby  requested  to  be
                             ________.

                    This Notice shall be  irrevocable  on and after the Interest
Rate Determination Date applicable to the Interest Period requested herein.

                    The  undersigned  hereby  certifies  that,  to the  best  of
Borrower's  knowledge,  no Event of Default or Unmatured  Event of Default under
the Loan Agreement has occurred and is continuing.

                         FIRST WASHINGTON REALTY LIMITED
                         PARTNERSHIP, a Maryland limited
                         partnership

                        By:_____________________________
                           Authorized Signer


<PAGE>



                                                    Schedule 5.1.5
                                        Form of Covenant Compliance Certificate

                                            For the Calendar Quarter ended
                                                _________________, 19__


                    I, ____________________________,  Chief Financial Officer of
First  Washington  Realty  Trust,  Inc.,  certify that the following is true and
correct as of ____________________________:


                                           [Financial Covenant calculations]

                    The  undersigned  hereby  certifies  that  to be best of the
undersigned's knowledge, no Event of Default or Unmatured Event of Default under
the  Loan  Agreement  dated  ___________________,   199_  has  occurred  and  is
continuing.




                                               --------------------------------






<PAGE>



                                                    LOAN AGREEMENT

                                                   TABLE OF CONTENTS

                                                                          Page


ARTICLE 1 DEFINITIONS, CERTAIN RULES OF CONSTRUCTION
<TABLE>
<S>        <C>     <C>                                                      <C>
           1.1     Defined Terms.....................................       1
           1.2     Construction of Definitions.......................       10
           1.3     Accounting Reports and Principles.................       10
           1.4     Business Day......................................       10
           1.5     Charging Accounts.................................       11
           1.6     Lender's Costs....................................       11
           1.7     Other Terms.......................................
</TABLE>

ARTICLE 2 THE LOAN

<TABLE>
<S>        <C>     <C>                                                      <C>
           2.1      Revolving Credit.................................       11
           2.1.1    Extension of Revolving Credit....................       11
           2.1.2    Payment of Principal.............................       11
           2.1.3    Payment of Interest..............................       12
           2.1.4    Revolving Credit Interest Rate Option and
                               Notice of Rate Election...............       12
           2.1.5    Loan Fees........................................       12
           2.1.6    Note.....                                               12
           2.1.7    Letters of Credit................................       12
           2.2               General Provisions......................       14
           2.2.1    Maximum Available Credit.........................       14
           2.2.2    Notice of Borrowing..............................       14
           2.2.3    Notice of Rate Election; Failure to
                               Give Notice...........................       14
           2.2.4    Funding..........................................       15
           2.2.5    Interest Periods.................................       15
           2.2.6    Post-Maturity Interest...........................       16
           2.2.7    LIBOR and Prime Rate.............................       16
           2.2.8    Prepayment.......................................       20
           2.2.9    Manner and Time of Payment.......................       21
           2.2.10   Use of Proceeds..................................       21
           2.2.11   Conditional Payment..............................       21
           2.2.12   Postponement of Termination Date.................       21
</TABLE>


ARTICLE 3 CONDITIONS PRECEDENT

<TABLE>
<S>        <C>     <C>                                                      <C>
           3.1      Execution of this Agreement......................       22
           3.2      All Loan Fundings................................       24
</TABLE>


<PAGE>



ARTICLE 4 REPRESENTATIONS AND WARRANTIES
<TABLE>
<S>        <C>      <C>                                                     <C>
           4.1.1    Good Standing....................................       24
           4.1.2    Power and Authority..............................       24
           4.1.3    Financial Condition..............................       25
           4.1.4    No Litigation....................................       25
           4.1.5    Compliance.......................................       25
           4.1.6    Compliance with Regulations T, U and X...........       26
           4.1.7    ERISA............................................       26
           4.1.8    Environmental....................................       26
           4.1.9    Other Contractual Obligations....................       27
           4.1.10   Investment Company Act...........................       27
           4.1.11   Public Utility Holding Company Act...............       27
           4.1.12   RICO.............................................       27
           4.1.13   Lease Information................................       27
           4.2      Accuracy of Representations; No Default..........       27
</TABLE>


ARTICLE 5 AFFIRMATIVE COVENANTS

<TABLE>
<S>        <C>     <C>                                                      <C>
           5.1      Borrower's Covenants.............................       28
           5.2      Indemnification..................................       33
</TABLE>

ARTICLE 6 NEGATIVE COVENANTS

<TABLE>
<S>        <C>     <C>                                                      <C>
           6.1      Borrower's Negative Covenants....................       34
</TABLE>

ARTICLE 7 DEFAULT

<TABLE>
<S>        <C>     <C>                                                      <C>
           7.1      Events of Default................................       35
           7.2      Remedies on Default..............................       37
           7.3      Set-Off Rights Upon Default......................       38
           7.4      Singular or Multiple Exercise; Non-Waiver........       38
</TABLE>

ARTICLE 8 MISCELLANEOUS

<TABLE>
<S>        <C>     <C>                                                      <C>
           8.1      Integration......................................       38
           8.2      Modification.....................................       38
           8.3      Amendments and Waivers...........................       38
           8.4      Notices..........................................       39
           8.5      Survival.........................................       39
           8.6      Closing..........................................       40
           8.7      Successors and Assigns; Governing Law............       40
           8.8      Jurisdiction.....................................       40
           8.9      Waiver of Jury Trial.............................       40
           8.10     Participation....................................       40
           8.11     Excess Payments..................................       40
</TABLE>


<PAGE>

<TABLE>
<S>        <C>     <C>                                                      <C>
           8.12    Partial Invalidity................................       41
           8.13    Compliance with Rules.............................       41
           8.14    Headings..........................................       41
           8.15    Counterparts......................................       41
           8.16    Retention of Documents............................       41
</TABLE>


Schedules

<TABLE>
<S>        <C>     <C>                                                      <C>
           2.1.7    Form of Application and Agreement for
                    Irrevocable Standby Letter of Credit
           2.2.2    Notice of Borrowing
           2.2.3    Notice of Rate Election
           5.1.5    Form of Compliance Certificate
</TABLE>




<PAGE>