<PAGE>

                                   $30,000,000


                      AMENDED AND RESTATED CREDIT AGREEMENT


                                      AMONG


                         HOMESTEAD VILLAGE INCORPORATED,



                            THE LENDERS NAMED HEREIN,


                                       AND


                                 COMMERZBANK AG,
                    NEW YORK BRANCH, AS AGENT FOR THE LENDERS







                           DATED AS OF MARCH 18, 1999


<PAGE>


                      AMENDED AND RESTATED CREDIT AGREEMENT

     AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as of March
18, 1999,  among HOMESTEAD  VILLAGE  INCORPORATED,  a Maryland  corporation (the
"Borrower"), COMMERZBANK AG, LOS ANGELES BRANCH, and the other lenders listed on
Exhibit A attached  hereto,  as amended  from time to time (each a "Lender"  and
collectively,  the "Lenders") and COMMERZBANK AG, NEW YORK BRANCH,  as agent for
the Lenders (the "Agent").

                              W I T N E S S E T H:

     WHEREAS,  the Agent  arranged a revolving  credit  facility in the original
principal  amount of $50,000,000 on behalf of the Borrower  pursuant to a Credit
Agreement dated as of April 24, 1998 among  Borrower,  Agent and certain lenders
named therein (said Agreement, as amended to, but not including,  this date, the
"Original Agreement"); and

     WHEREAS,  the parties  hereto have agreed to amend and restate the Original
Agreement in its entirety,  including all of the letters modifying,  amending or
waiving the terms thereof.

     NOW, THEREFORE, in consideration of the fees, representations,  warranties,
covenants  and  agreements  of the  Borrower  set forth  herein  and in the Loan
Documents, the parties hereto agree as follows:

                                     ARTICLE I

                            DEFINITIONS; CONSTRUCTION

Section 1.1  "Definitions."  As used herein,  the following terms shall have the
following meanings:

         "Accounting Period" means each accounting period of Borrower, the first
two such  periods in any fiscal  quarter  consisting  of four weeks each and the
last such period in any fiscal quarter consisting of five weeks.

         "Acquisition Costs" means the actual purchase price paid by Borrower to
acquire the  property  constituting  a Mortgaged  Property or that  portion of a
Mortgaged  Property (the portion of such actual purchase price allocable to such
portion  of a  Mortgaged  Property  to  be  determined  in a  manner  reasonably
acceptable to Agent) upon which it shall construct an extended stay facility and
ancillary  facilities  which are related to the purpose,  and shall  enhance the
value, of the extended stay facility (the "ancillary facilities"),  as evidenced
by the documentation and certificate of Borrower furnished to Agent,  excluding,
without  limitation,  all fees, costs and expenses  incurred with regard to use,
planning and zoning rules and regulations  relating to such Mortgaged  Property,
but including such other expenses as the Agent approves in its sole discretion.

<PAGE>
         "Adjusted LIBO Rate" means,  with respect to each Interest Period,  the
rate obtained by dividing (i) the LIBO Rate for such  Interest  Period by (ii) a
percentage  equal to one minus the actual  rate  (stated  as a  decimal)  of all
reserves then actually  required to be maintained by each Lender  (provided that
reasonable  evidence of the  imposition  of such  requirement  is  furnished  to
Borrower)  against  "eurocurrency  liabilities" as specified in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest  rate on Advances is determined or any category of extensions
of credit or other assets that includes  loans by a non-United  States office of
the  Agent to  United  States  residents)  or by any  other  Requirement  of Law
relating to reserve or capital adequacy requirements.

         "Adjusted  Property Net  Operating  Income" or "Adjusted  Property NOI"
means,  with  respect to any  period,  NOI  adjusted  for a capital  expenditure
reserve equal to 4% of gross  revenue and a management  fee equal to 4% of gross
revenue.

         "Advance" has the meaning provided in Section 2.1(a).

         "Affiliate"  means,  with  respect  to any  Person,  any  other  Person
directly or indirectly controlling,  controlled by, or under common control with
such Person, whether through the ownership of voting securities, by contract, or
otherwise.  A Person  shall be deemed to control a  corporation  if such  Person
possesses,  directly  or  indirectly,  the  power to (i) vote 50% or more of the
securities  having  ordinary  voting power for the election of directors of such
corporation or (ii) direct or cause the direction of the management and policies
of such corporation,  through the ownership of voting securities, by contract or
otherwise.

         "Agent" means Commerzbank AG, New York Branch, in its capacity as agent
for the Lenders hereunder,  or such successor Agent as may be appointed pursuant
to Section 7.9 of this Agreement.

         "Agreement" means this Agreement, as amended, supplemented, restated or
modified from time to time.

         "Alternate  Rate" means, as of any date of  determination,  a per annum
rate  equal to the  greater  of(a) the Prime  Lending  Rate plus the Prime  Rate
Applicable  Margin,  and (b) the  Federal  Funds  Rate  plus the  Federal  Funds
Applicable Margin.

         "Bankruptcy Code" has the meaning provided in Section 6.1(g).

          "Borrower" has the meaning set forth in the introductory  paragraph to
this Agreement.

         "Borrower's  Authorized  Representative" means any duly elected officer
designated by the Borrower in a written notice to the Agent, as such officer may
be changed from time to time by written notice to the Agent.

<PAGE>
         "Bridge  Facility"  means the credit  facility  governed  by the Credit
Agreement dated as of June 15, 1998, among Borrower,  certain lenders and Agent,
as modified and amended, from time to time.

         "Budget" means,  for any Mortgaged  Property (i) until the Final Budget
for such  Mortgaged  Property is received by Agent,  the Initial Budget for such
Mortgaged  Property,  and (ii) upon and after such time as the Final  Budget for
such  Mortgaged  Property  is  received  by  Agent,  the Final  Budget  for such
Mortgaged Property.

         "Business Day" means any day excluding Saturday,  Sunday, and any other
day on which banks are  required or  authorized  to close in New York City or on
which trading is not carried on by and between  banks in Dollar  deposits in the
applicable interbank Eurodollar market.

         "Capital Stock" means any and all shares, interests,  participation, or
other equivalents  (however  designated) of capital stock of a corporation,  any
and all equivalent ownership interests, including but not limited to partnership
interests,  in a Person (other than a corporation),  and any and all warrants or
options to purchase any of the foregoing.

         "Central  Business  District"  means the  downtown  section  of a city,
generally consisting of retail, office, hotel,  entertainment,  and governmental
land uses with some high density housing.

         "Closing Date" means April 24, 1998.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.

         "Collateral"  means,  collectively,  the Mortgaged  Properties  and all
other  property and  interests  in property now owned or hereafter  acquired and
upon which a Lien has been or is  purported  or intended to have been granted in
favor of the Agent.

         "Commitment" means Thirty Million Dollars ($30,000,000), as reduced  by
any repayments.

         "Construction  Complete" means, with respect to any Mortgaged Property,
that (a) construction of such Mortgaged Property is complete, in accordance with
the Plans and Specifications of such Mortgaged  Property,  (b) final,  permanent
and unconditional certificates of occupancy permitting occupancy of all portions
of such Mortgaged Property as an extended stay facility have been issued and are
in full force and effect,  (c) all portions of such  Mortgaged  Property are, or
may become at any time, without the consent or approval of any Person,  open for
business to the  general  public as an  extended  stay hotel,  and (d) the Agent
shall have received evidence satisfactory to it that the conditions set forth in
(a), (b) and (c) have been satisfied.

         "Contractual Obligation" means as to any Person, any material provision
of any security issued by such Person or of any agreement,  instrument, or other
undertaking  to  which  such  Person  is a party  or by  which  it or any of its
property is bound.

         "Credit Exposure" has the meaning provided in Section 7.17.

<PAGE>
         "Debt Service" means, with respect to any period,  Interest Expense for
such period, excluding financing costs and fees related to:
             (i) Indebtedness which has been incurred before the Effective Date,

             (ii)the Sale Leaseback Facility, or

             (iii)   the Loan,

plus scheduled amortization of all Indebtedness of Borrower and its Subsidiaries
(excluding balloon payments and bullet maturities on loans).

         "Decisions" has the meaning set forth in Section 7.14.

         "Default"  means any condition or event that, with the giving of notice
or the lapse of time or both, would  constitute an "Event of Default"  hereunder
or under the Promissory Notes or the other Loan Documents.

         "Default Rate" has the meaning set forth in Section 2.6(b) hereof.

         "Development Encumbrances" means:

              (a) all  non-monetary  easements,  restrictions  and  encumbrances
customary and  appropriate  for the  development of property as an extended stay
facility,  including ancillary facilities related thereto, which do not and will
not materially  impair the use of the Mortgaged  Property affected thereby as an
extended  stay  facility  or the  ancillary  facilities  related  thereto or the
expected value of the Mortgaged Property affected thereby and

              (b) all other easements,  restrictions and encumbrances  customary
and  appropriate  for the  development of property as an extended stay facility,
including  ancillary  facilities related thereto,  which (i) are approved by the
Agent and or (ii) do not and will not materially impair the use of the Mortgaged
Property  affected  thereby  as an  extended  stay  facility  or  the  ancillary
facilities  related  thereto or the  expected  value of the  Mortgaged  Property
affected thereby

         "Direct Costs" means, for each Mortgaged Property,  the aggregate costs
of all items  described  under the categories  entitled  "Hard  Costs-Contractor
Costs",  "Hard Costs-Other Hard Costs",  "Hard Costs-Hard Costs Contingency" and
"Hard  Costs-Furniture,  Fixtures & Equipment" in the Budget for such  Mortgaged
Property  actually  paid which are  necessary  for an  extended  stay  facility,
including ancillary facilities related thereto, on such Mortgaged Property to be
Construction  Complete  in  accordance  with the  Plans and  Specifications,  as
evidenced by the documentation and certificate of Borrower furnished to Agent.

         "Dollar"  and the sign "$" each  mean  lawful  currency  of the  United
States of America.

         "Effective Date" means March 18, 1999.

<PAGE>
         "Eligible Costs" means, for each Mortgaged Property,  the lesser of (i)
the  Acquisition  Costs with respect to such  Mortgaged  Property,  and (ii) the
amount budgeted, in the aggregate,  for Acquisition Costs as shown on the Budget
for such Mortgaged  Property  (including any contingency  for Acquisition  Costs
shown on such Budget).

         "Environment" means soil, surface waters,  groundwaters,  land, stream,
sediments, surface or subsurface strata and ambient air.

         "Environmental Discharge" means any discharge of pollutants or effluent
into any aquifer or water source or system (whether  naturally  occurring or man
made),  gaseous  emissions  (including,   without  limitation,  air  emissions),
particulate  emissions  and noise  emissions,  in each case, in violation of any
Relevant Environmental Law.

         "Environmental  Indemnity"  means  the  Environmental  Indemnity  to be
executed  by the  Borrower  in favor  of the  Agent,  substantially  in the form
attached hereto as Exhibit E.

         "Estimated Operating Property Value" or "EOPV" means, as of any date of
determination, the sum of:

              (1) for each Mortgaged Property that is Construction  Complete and
open for  business as an extended  stay  facility but has been so open less than
ten (10) full calendar months as of the end of the calendar quarter ending on or
prior to the date of  determination,  the lower of the  undepreciated  GAAP cost
value or the Stabilized Appraised Value;

              (2) for each Property that is  Construction  Complete and has been
open for business as an extended  stay  facility at least ten (10) full calendar
months as of the end of the calendar  quarter  ending on or prior to the date of
determination,   the  lower  of  (a)  the  estimated   asset  value  derived  by
capitalizing  the appropriate  annualized  Adjusted  Property NOI (as determined
pursuant to the directions set forth below) at 11%, (b) the  undepreciated  GAAP
cost value and (c) only if the property is a Mortgaged Property,  the Stabilized
Appraised Value, plus

              (3) for each  Property  that is not a Mortgaged  Property  and has
been open for  business as an extended  stay  facility but has been so open less
than ten (10) full calendar months as of the end of the calendar  quarter ending
on or prior to the date of determination,  the undepreciated GAAP cost value for
such Property.

<PAGE>
In order to determine  annualized Adjusted Property NOI, for a Property that has
been  open as an  extended  stay  facility  for at least  ten (10) but less than
thirteen (13) full calendar months,  the trailing quarter Adjusted  Property NOI
will be  annualized.  For a  Property  that has been  open as an  extended  stay
facility for at least  thirteen  (13) but less than  sixteen (16) full  calendar
months, the trailing two quarter Adjusted Property NOI will be annualized. For a
Property that has been open as an extended stay facility for sixteen (16) months
but less than nineteen (19) months,  the prior three quarter  Adjusted  Property
NOI will be  annualized.  Once a  Property  has been  open as an  extended  stay
facility for nineteen(19) full calendar months and thereafter, trailing 12-month
Adjusted Property NOI will be utilized.

"Estimated  Operating  Property Value of the Mortgaged  Properties" means, as of
any date of  determination,  for all Mortgaged  Properties,  the sum  calculated
pursuant  to the  foregoing  formula,  but only with  respect  to the  Mortgaged
Properties.

         "Event of Default" has the meaning provided in Article VI.

         "Federal Funds  Applicable  Margin" means two hundred fifty (250) basis
points.

         "Federal Funds Rate" means, for any day of determination,  the rate per
annum (rounded  upwards,  if necessary,  to the nearest  1/100th of one percent)
equal to the weighted average of the rates on overnight Federal Funds transacted
with members of the Federal  Reserve System arranged by Federal Funds brokers on
such date, as published by the Federal  Reserve Bank of New York on the Business
Day next  succeeding  such day,  provided that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next  preceding  Business  Day as so  published  on the  next  succeeding
Business  Day, and (ii) if no such rate is so published on such next  succeeding
Business  Day,  the Federal  Funds Rate for such day shall be the  average  rate
quoted to the Agent on such day on such transactions as determined by the Agent.

         "Financing  Statements"  means UCC-1  Financing  Statements made by the
Borrower or a Subsidiary Mortgagor, as debtor, in favor of the Agent, as secured
party, covering all fixtures, equipment and personal property of the Borrower or
such Subsidiary Mortgagor at the Mortgaged Properties.

         "Final Budget" means, for any Mortgaged  Property,  a final budget with
respect to such  Mortgaged  Property in the same form as the Initial  Budget for
such  Mortgaged  Property  (as the form of such final budget may be changed from
time to time by Borrower  upon the prior written  consent of Agent)  showing the
amounts  budgeted  for  the  Total  Costs  (including  contingencies)  for  such
Mortgaged Property, provided that Total Costs (including contingencies) as shown
on such final budget do not exceed,  in the  aggregate,  the amount equal to one
hundred ten percent (110%) of the Total Costs (including contingencies) as shown
on such Initial Budget, in the aggregate.

         "GAAP" means generally accepted  accounting  principles as in effect at
the time of application applied on a consistent basis; provided, however, if any
change is  adopted  after the  Closing  Date in  generally  accepted  accounting
principles  which  either  Borrower or Agent  determines  to be adverse,  and if
either such party notifies the other of such  determination,  then both Borrower
and Agent shall negotiate in good faith the extent to which such change shall be
adopted  with  respect  to the  matters  to which  the  definition  of "GAAP" is
applicable  under the Loan Documents,  and the term "GAAP" shall mean (i) in the
event a written  agreement with respect to such change is executed and delivered
by both  Borrower  and Agent  within  thirty (30) days  following  such  notice,
generally  accepted  accounting  principles applied on a consistent basis giving
effect  to such  agreement,  or  (ii) in any  other  event,  generally  accepted
accounting principles as in effect at the time immediately prior to the adoption
of such change applied on a consistent basis.

<PAGE>
         "Governmental  Authority"  means  any  nation  and any  state  or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial,   regulatory,   or  administrative   functions  of  or  pertaining  to
government,  including,  but not  limited  to, the Federal  Reserve  Board,  any
Federal  Reserve Bank,  any other central  banking  authority,  or any agency or
subdivision thereof.

         "Gross  Asset  Value -- Cost" or "GAV -- Cost"  means  the value of all
cash, cash  equivalents and the value of all Properties owned by Borrower or its
Subsidiaries valued at one hundred percent (100%) of cost.

         "Guarantee  Obligation"  means,  as to any  Person  (the  "Guaranteeing
Person"),  any obligation of (a) the  Guaranteeing  Person or (b) another Person
(including,  without limitation,  any bank under any letter of credit) to induce
the  creation  of which the  Guaranteeing  Person  has  issued a  reimbursement,
counterindemnity,  or  similar  obligation,  in  either  case  guaranteeing  any
Indebtedness,   leases,   dividends,   or  other   obligations   (the   "primary
obligations")  of any other third Person (the "primary  obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation of
the  Guaranteeing  Person,  whether or not contingent,  (i) to purchase any such
primary  obligation  or any property  constituting  direct or indirect  security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary  obligation or (y) to maintain working capital or equity capital of
the primary  obligor or  otherwise  to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property,  securities,  or services primarily
for the  purpose of assuring  the owner of any such  primary  obligation  of the
ability of the primary  obligor to make  payment of such primary  obligation  or
(iv)  otherwise  to  assure  or hold  harmless  the  owner of any  such  primary
obligation  against  loss in respect  thereof;  provided,  however that the term
Guarantee  Obligation shall not include  endorsements of instruments for deposit
or  collection in the ordinary  course of business.  The amount of any Guarantee
Obligation of any Guaranteeing  Person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable  amount of the primary  obligation in
respect of which such  Guarantee  Obligation is made and (b) the maximum  amount
for which such  Guaranteeing  Person may be liable  pursuant to the terms of the
instrument embodying such Guarantee  Obligation,  unless such primary obligation
and the maximum amount for which such Guaranteeing  Person may be liable are not
stated or  determinable,  in which case the amount of such Guarantee  Obligation
shall be such Guaranteeing Person's maximum reasonably  anticipated liability in
respect thereof as determined by the Lenders in good faith.

         "Hazardous Materials" means any substance in quantities and/or form:

     (a) the presence of which requires or shall hereafter require notification,
investigation or remediation under any Relevant Environmental Law; or

<PAGE>
     (b)  which  is  or  becomes  defined  as a  "hazardous  waste",  "hazardous
material"  or  "hazardous   substance"  or  "controlled   industrial  waste"  or
"Pollutant" or "contaminant"  under any Relevant  Environmental  Law,  including
without  limitation,  which contains  gasoline,  diesel fuel or other  petroleum
hydrocarbons or volatile organic  compounds,  or which contains  polychlorinated
biphenyls or asbestos or urea formaldehyde foam insulation, or which contains or
emits radioactive particles, waves or material, including radon gas; or

     (c)  which  is  toxic,   explosive,   corrosive,   flammable,   infectious,
radioactive,  carcinogenic,  mutagenic or otherwise  hazardous and is or becomes
regulated under any Relevant Environmental Law or by any Governmental Authority;
or

     (d) pursuant to applicable  Relevant  Environmental  Laws,  the presence of
which on the Mortgaged Property causes or threatens to cause a nuisance upon the
Mortgaged  Property  or adjacent  properties;  or poses or  threatens  to pose a
hazard to the  Mortgaged  Property  or to the  health or  safety of  persons  or
property on or about the Mortgaged Property.

         "HPT" means HPT HSD Properties  Trust, the  purchaser-lessor  under the
Sale Leaseback Facility.

         "Implied Debt Service" means, as of any determination  date, the annual
debt service of a self-liquidating  loan with an original principal amount equal
to the Maximum  Availability  Amount,  as of such date,  and amortized  over 240
months (20  years)  (pursuant  to  regular  and equal  monthly  installments  of
principal  and  interest) at an annual  interest rate equal to the lesser of (a)
ten percent (10%) and (b) the greater of (i) eight and one half percent  (8.50%)
and (ii) the 10 year  Treasury Rate (as  hereinafter  defined) at such time plus
three and one quarter percent (3.25%). "Treasury Rate" means the annual yield on
the Treasury Constant Maturity Series with maturity equal to ten (10) years, for
the week  prior to the  determination  date,  as  reported  in  Federal  Reserve
Statistical Release H.15 - Selected Interest Rates,  conclusively  determined by
the Agent. In the event Release H.15 is no longer published,  Agent shall select
a comparable publication to determine the Treasury Rate.

         "Indebtedness" of any Person means as of the date of any  determination
thereof, without duplication:

(i) all  obligations  of such  Person for  borrowed  money and for the  deferred
purchase  price of property or  services,  and  obligations  evidenced by bonds,
debentures, notes, or other similar instruments;

(ii) all rental or other  obligations  under leases  required to be  capitalized
under GAAP;

(iii) all Guarantee Obligations of such Person;

(iv) all liabilities in respect of currency or interest rate swap, cap or collar
arrangements  or any  similar  derivative  instrument;  provided  that  if  such
currency  or  interest  rate swap,  cap or collar  arrangements  or any  similar
derivative  instrument  has been  entered into in order to hedge the currency or
interest  rate  exposure  of such  Person in respect of current or  contemplated
Indebtedness,  the amount of any  liability  in respect of such  arrangement  or
instrument shall not be included in the determination of Indebtedness; and
<PAGE>

(v)  Indebtedness  of others  secured  by any Lien upon  property  owned by such
Person, whether or not assumed by such Person.

         "Indirect  Costs" means the aggregate  costs of all items  described in
the line items entitled "Title Insurance",  "Commissions", "Closing Costs/Escrow
Fees",  "Property  Taxes",  "Legal" and "Soft Costs  Contingency"  and under the
categories entitled "Soft Costs-Design  Costs", "Soft Costs-Permits & Fees", and
"Soft Costs-Other Soft Costs" in the Budget for such Mortgaged Property actually
paid, in all cases as evidenced by the documentation and certificate of Borrower
furnished to Agent,  it being  understood  that Indirect Costs shall in no event
include,  with respect to any Mortgaged Property,  any portion of the legal fees
for zoning and planning board approval and similar matters.

         "Initial Budget" means, for any Mortgaged Property,  a pro forma budget
with respect to such Mortgaged  Property in the form of Exhibit G annexed hereto
(as the  form of such pro  forma  budget  may be  changed  from  time to time by
Borrower upon the prior written  consent of Agent) showing the amounts  budgeted
for the Total Costs (including contingencies) for such Mortgaged Property.

         "Intellectual Property" has the meaning set forth in Section 4.12.

         "Interest  Expense" means (without  redundancy) the sum of all accrued,
paid or capitalized  interest costs of Borrower and its consolidated  affiliates
(excluding capitalized interest funded from an interest reserve) plus Borrower's
pro rata share  (based on the higher of its  nominal  ownership  interest or the
ownership  percentage  used in the  calculation of Gross Asset Value -- Cost) of
interest  expense in its  Unconsolidated  Affiliates,  plus 100% of any accrued,
paid, or capitalized  interest incurred  (without  redundancy) on any obligation
for which  Borrower is wholly or  partially  liable  under  repayment,  interest
carry, or performance guarantees,  or other relevant liabilities;  minus, to the
extent  included  in the  foregoing,  financing  costs and fees  related  to (i)
Indebtedness  which has been incurred  before the Effective  Date, (ii) the Sale
Leaseback Facility, and (iii) the Loan.

         "Interest Period" has the meaning set forth in Section 2.7.

         "Leases" means all leases,  licenses and other arrangements pursuant to
which any  Person  has the right or option to occupy or use any  portion  of any
Mortgaged  Property,  and shall include all right, title and interest to receive
all rent and other revenue  thereunder,  and shall include all guaranties of the
obligations of all such Persons.

         "Lender" or  "Lenders"  has the  meaning set forth in the  introductory
paragraph of this Agreement, and any successors and assigns.

         "Lending Office" means, with respect to any of the Lenders,  the branch
or  branches  (or  affiliate  or  affiliates)  from  which any of such  Lender's
Advances  are made or  maintained  and for the account of which all  payments of
principal of, and interest on, such Lender's Advances are made, as designated in
writing from time to time to the Agent and the Borrower.

<PAGE>
         "Leverage  Percentage" means the quotient of the outstanding  principal
amount of the Loan,  divided by the aggregate  Eligible  Costs for all Mortgaged
Properties,  expressed  as  a  percentage.  In  no  event  shall  such  Leverage
Percentage be permitted to exceed forty five percent (45%).

         "LIBOR Applicable Margin" means three hundred (300) basis points.

         "LIBO Rate" means,  with respect to any  Interest  Period,  the average
rate of interest per annum (rounded upwards,  if necessary,  to the next highest
1/16th of 1%) at which  deposits in immediately  available  funds in dollars are
offered to Agent (at approximately 12:00 noon (New York time), two Business Days
prior to the first day of such  Interest  Period)  by first  class  banks in the
interbank  Eurodollar  market,  for  delivery on the first day of such  Interest
Period,  such  deposits  being for a period of time equal or  comparable to such
Interest period and in an amount equal to or comparable to the principal  amount
of the Advance to which such Interest Period relates.  Each determination of the
LIBO Rate by the Agent shall,  in absence of  demonstrable  error, be conclusive
and binding.

         "Lien" means with respect to any asset: any mortgage,  pledge, security
interest, encumbrance, lien, charge, or deposit arrangement or other arrangement
having the practical effect of the foregoing and shall include the interest of a
vendor or lessor under any  conditional  sale agreement,  capitalized  lease, or
other  title  retention  agreement  relating  to such asset or the filing of any
financing statement under the UCC or comparable law.

          "Loan" means, collectively,  the loans made by the Lenders pursuant to
the Loan Documents.

         "Loan Documents" means,  collectively,  this Agreement,  the Promissory
Notes, all Mortgages, all Financing Statements, the Environmental Indemnity, all
Subsidiary   Mortgagor   Guaranties  and  all  other  documents,   certificates,
affidavits and other instruments  executed and delivered by the Borrower and its
Affiliates pursuant thereto or in connection therewith,  as each of the same may
be amended, modified or otherwise supplemented from time to time.

         "Loss" has the meaning provided in Section 7.16(c).

         "Market  Studies"  means,  for  any  Mortgaged  Property,  all  of  the
following with respect to such Mortgaged Property in the form of the examples of
the following  attached  hereto as Exhibit H: (i) a target  submarket  overview,
(ii) a comparison with the Borrower's  acquisition criteria,  (iii) an area map,
(iv) a neighborhood map, (v) an aerial photograph,  (vi) a contextual site plan,
(vi) a  preliminary  site plan,  (vii) a map  indicating  retail and  restaurant
support, (viii) the identity of and information respecting demand generators and
area employers, (ix) a demand location map, (x) a competitive survey, and (xi) a
competitive survey map.

         "Material Adverse Change" means any change, event or circumstance which
has or is reasonably likely to have a material adverse effect on (i) the ability
of the Borrower and its  Subsidiaries  to perform their  respective  obligations
under this Agreement or any of the other Loan  Documents,  or (ii) the business,
condition  (financial  or otherwise) or results of operation of the Borrower and
its Subsidiaries when taken as a whole.

<PAGE>
          "Maturity Date" means the earlier of December 31, 2000  or   the  date
that the Suburban Facility is satisfied. "Maximum Availability Amount" means, as
of any date of determination, the least of:

              (a) the Commitment,

              (b) forty five percent  (45%) of the Eligible  Costs of all of the
Mortgaged Properties.

         "Mortgaged  Properties"  means,  collectively,   the  Property  of  the
Borrower  or any  Subsidiary  Mortgagor  which is located in a Central  Business
District  and  which  is (and  for so long as same is)  mortgaged  to the  Agent
pursuant to the terms hereof,  and shall include all of the "Property",  as such
term is defined in the Mortgages.

         "Mortgages"  means those certain deeds of trust,  deeds to secure debt,
mortgages and security agreements with assignments of leases,  rents,  operating
agreements  and  management  agreements  and fixture  filings  delivered  by the
Borrower or any  Subsidiary  Mortgagor  in favor of the Agent and  covering  the
Mortgaged   Properties  (which  such  Mortgages  are  recorded  or  unrecorded),
substantially  (i.e., with such  modifications as may be required by, or, in the
Agent's  reasonable  judgment,  appropriate  for,  the  jurisdiction  in which a
particular Mortgaged Property is located) in the form attached hereto as Exhibit
N, as the same may be amended,  modified, or otherwise supplemented from time to
time.

         "Net Operating  Income" or "NOI" means, with respect to any appropriate
period and any  Properties,  the gross  revenues from such  Properties  for such
period less all direct operating expenses of such Properties, including, without
limitation,  expenses  for the  following  to the  extent  same  relate  to such
Properties: personnel, landscaping,  contracts, utilities, housekeeping, repairs
and maintenance,  marketing,  administrative  duties,  insurance and real estate
taxes for such period (other than interest expense,  depreciation,  amortization
and expenditures capitalized in accordance with GAAP).

         "Non-public   Information"  means  any  information  delivered  by  the
Borrower to the Agent or the Lenders (in their  capacities as such)  pursuant to
this  Agreement  which is not publicly  disclosed  or known,  or which cannot be
readily derived from information which is publicly disclosed or known.

         "Notice of Borrowing"  means the written  notice given by Borrower that
it desired to receive an Advance hereunder.

         "Notifying Lender" has the meaning provided in Section 2.13.

         "Participant" has the meaning provided in Section 7.17.

<PAGE>
         "Payment  Office"  means the  office of the  Agent  located  at 2 World
Financial Center, New York, New York 10281-1050.

         "Percentage" means each Lender's  percentage share of the Commitment as
set forth on Exhibit A hereto.

         "Period  Fraction"  means,  with  respect  to any  period  of  time,  a
fraction,  the  numerator of which is the actual  number of days in such period,
and the denominator of which is 360.

         "Permissible Assumed Indebtedness" has the meaning provided in Section
5.3(a)(iv).

         "Permitted  Encumbrances"  means, with respect to each of the Mortgaged
Properties,  (i) all  exceptions  to title  insurance  coverage set forth in the
title  insurance   policies  insuring  the  Mortgages  covering  such  Mortgaged
Properties, other than standard printed exceptions, as of the date such policies
are issued, (ii) all liens for real estate taxes and assessments provided either
(x) that the last day by which such taxes or assessments may be paid without the
imposition of any interest,  fine or penalty has not occurred, or (y) the amount
or validity of such taxes or  assessments  are being  contested in good faith by
appropriate  proceedings  which  have  the  effect  of  staying  enforcement  or
execution  of such  liens  and  with  respect  to  which  adequate  reserves  in
conformity  with  GAAP  have  been  provided  on the  books of  Borrower,  (iii)
Development Encumbrances, (iv) mechanics' and materialmen's liens, the existence
of which do not constitute or create a Material Adverse Change, and which remain
unsatisfied,  unbonded or unstayed  for no more than thirty (30) days other than
those the  amount or  validity  of which are being  contested  in good  faith by
appropriate  proceedings  which  have  the  effect  of  staying  enforcement  or
execution  of such  liens  and  with  respect  to  which  adequate  reserves  in
conformity with GAAP have been provided on the books of Borrower, and (v) Leases
which are subordinate to the lien of the Mortgages.

         "Permitted Purpose" means reimbursement to the Borrower of a portion of
the Total Costs with respect to each  Mortgaged  Property,  and general  working
capital purposes (other than the purchase of Capital Stock.)

         "Person"  means  any  individual,   partnership,   firm,   corporation,
association,   joint  venture,  joint  stock  company,   trust,   unincorporated
organization or other entity,  or any  governmental or political  subdivision or
agency, department, or instrumentality thereof.

         "Plans  and  Specifications"  means,  with  respect  to  any  Mortgaged
Property, the final plans and specifications for the construction of an extended
stay facility, including ancillary facilities related thereto, on such Mortgaged
Property.

         "Presence"  means,  when used in connection  with Hazardous  Materials,
treatment,   use,   storage,   handling,   repair,   encapsulation,    disposal,
transportation, spill, discharge and release.

         "Prime  Lending Rate" means the rate at which the Agent  announces from
time to time as its prime  lending  rate,  as in effect  from time to time.  The
Prime Lending Rate is a reference  rate and does not  necessarily  represent the
lowest or best rate actually charged to any customer by the Agent or any Lender.
The Agent and each Lender may make  commercial  loans or other loans at rates of
interest at, above or below the Prime Lending Rate.

<PAGE>
         "Prime Rate Applicable Margin" means two hundred (200) basis points.

         "Proforma  Operating  Statement" means, for any Mortgaged  Property,  a
completed pro forma operating  statement with respect to such Mortgaged Property
in the  form of  Exhibit  I  attached  hereto,  accurate  as of the date of such
statement,  and containing the information required to complete such schedule in
the manner and detail contemplated by such Exhibit, which shall be acceptable in
form and substance to the Agent in its sole discretion.

         "Project Cost Report" means,  for any Mortgaged  Property,  a completed
project  cost  report  with  respect to such  Mortgaged  Property in the form of
Exhibit J attached hereto,  accurate as of the date of such form, and containing
the  information  required  to complete  such  schedule in the manner and detail
contemplated by such Exhibit,  and including,  without  limitation,  the current
actual and projected Total Costs with respect to such Mortgaged Property and the
deviations of same (on line-item by line-item  basis) from the Budget  furnished
to Agent with respect to such Mortgaged Property.

         "Promissory  Notes" means the promissory  notes made by the Borrower to
each Lender substantially in the form annexed hereto as Exhibit C.

         "Properties"  means all land  owned or leased by the  Borrower  and its
Subsidiaries, all buildings, structures,  improvements,  fixtures and equipment,
and parking  areas  located  thereon and  therein,  and all  easements,  rights,
interests, privileges and other appurtenances thereto, of any nature whatsoever.
An  individual  "Property"  is a portion of land owned or leased by the Borrower
and/or its  Subsidiaries  which is bound by a perimeter that does not containing
any land not  owned by  Borrower  and/or  its  Subsidiaries,  together  with all
buildings,  structures,  improvements  and parking areas  fixtures and equipment
located  thereon,  and all easements,  rights,  interests,  privileges and other
appurtenances thereto, of any nature whatsoever.

         "Purchasing Lender" has the meaning provided in Section 7.18.

         "Regulation D" and  "Regulation U" mean  Regulation D and Regulation U,
respectively,  of the Board of Governors of the Federal  Reserve  System as from
time to time in effect and any successor thereto.

         "Realty" means SC Realty Incorporated, a Nevada corporation.

         "Relevant  Environmental  Laws" means all  Requirements  of Law and all
other applicable Federal, state and local environmental  statutes,  regulations,
rules, ordinances,  codes, licenses, permits, approvals, plans,  authorizations,
guidelines,  concessions,  franchises,  orders and similar  items,  and rules of
common law (whether now existing or hereafter enacted or promulgated and whether
now  contemplated,  anticipated  or  foreseeable  or  not)  of  all  courts  and
Governmental  Authorities,  and all applicable  judicial and  administrative and
regulatory  decrees,  judgments  and  orders,  including  common law rulings and
determinations,  relating  to injury to or the  protection  of the  Environment,
including,   without  limitation,  all  requirements  pertaining  to  reporting,
licensing,  permitting,  investigation,  remediation  and removal of  emissions,
discharges,  releases or  threatened  releases of Hazardous  Materials  into the
Environment,  or relating to the  manufacture,  processing,  distribution,  use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
<PAGE>
         "Required Lenders" means the Lenders holding at least sixty six and two
thirds percent (66-2/3%) of the Commitment.

         "Requirement  of Law"  means,  as to any  Person,  the  certificate  of
incorporation and by-laws,  certificate of partnership and partnership agreement
or other  organizational  or governing  documents  of such Person,  and any law,
treaty,  rule,  or regulation  or  determination  of an arbitrator or a court or
other  Governmental  Authority,  in each case applicable to or binding upon such
Person or any of its  property or to which such Person or any of its property is
subject.

         "Sale-Leaseback  Facility"  means the lease   dated  February  23, 1999
between HPT, as lessor,  and HVI (2) Incorporated,  a Delaware  corporation,  as
lessee.

          "Stabilized   Appraised   Value"  means  appraised  value   reasonably
acceptable to the Agent.

         "Studies" means environmental studies and investigations respecting (i)
the condition and circumstances of the Environment on, under, about or affecting
any Mortgaged Property,  (ii) any actual or suspected Environmental Discharge or
Presence of any Hazardous  Materials on, under, about or affecting any Mortgaged
Property,   and  (iii)  any  actual  or  suspected  violation  of  any  Relevant
Environmental Laws on, under, about or related to any Mortgaged Property.

         "Subsidiary"  of any Person means a corporation,  partnership,  limited
liability,  trust or other entity of which a majority of the outstanding  shares
of stock or beneficial  interests of each class having  ordinary voting power is
owned by such Person,  by one or more  Subsidiaries  of such Person,  or by such
Person and one or more of its Subsidiaries.

         "Subsidiary  Mortgagor" means any wholly-owned  Subsidiary of Borrower,
any wholly-owned  Subsidiary of a wholly-owned  Subsidiary of Borrower, or, with
Lenders' consent,  any other Person which owns any portion of or interest in any
Mortgaged Property.

         "Subsidiary  Mortgagor  Guaranty" means a guaranty of the  Indebtedness
hereunder from a Subsidiary Mortgagor.

         "Suburban  Credit  Agreement"  means the  Amended and  Restated  Credit
Agreement of even date  herewith  among  Borrower,  Commerzbank  AG, Los Angeles
Branch and other lenders as set forth therein, and Agent, as agent,  governing a
certain credit  facility  secured by mortgage liens on properties  lying outside
major metropolitan cities.

         "Taxes" has the meaning provided in Section 2.17.

         "Total Costs" means,  with respect to any Property,  the sum of (i) the
Acquisition  Costs with  respect to such  Property,  (ii) the Direct  Costs with
respect to such  Property,  and (iii) the  Indirect  Costs with  respect to such
Property.

<PAGE>
         "Total Liabilities"  includes all GAAP liabilities and certain non-GAAP
(off balance sheet) liabilities with no redundancy.  Included are the following:
non-recourse  mortgage debt;  letters of credit;  binding purchase  obligations;
repurchase obligations;  forward commitments;  unsecured debt; accounts payable;
accrued  expenses,  capitalized  lease  obligations,  and to the extent required
under GAAP to be reported as a liability, any other lease obligations (including
ground  leases);   guarantees  of  indebtedness;   subordinated  debt;  unfunded
obligations of Borrower and its  Subsidiaries;  forward equity  commitments (but
excluding  forward equity  subscriptions for which stock is issued within thirty
(30) days of receipt of equity  proceeds);  Derivative  Exposure (as hereinafter
defined);  and any other  non-GAAP  liability  that the  Security  and  Exchange
Commission has determined,  either currently or in the future, should be treated
as debt. Total  Liabilities will include (without  redundancy):  (a) one hundred
percent (100%) of the recourse  liability of Borrower and its Subsidiaries under
(i) guarantees of  indebtedness  or (ii) loans where Borrower or a Subsidiary of
Borrower  is liable for debt as a general  partner  and (b)  Borrower's  and its
Subsidiaries'  share of  non-recourse  debt in their  Unconsolidated  Affiliates
based on the greater of its nominal  ownership  interest  or the  percentage  of
ownership  interest used to calculate Gross Asset Value -- Cost. As used herein,
"Derivative  Exposure" means the maximum  liability  (including  costs, fees and
expenses),  based  upon a  liquidation  or  termination  as of the  date  of the
applicable covenant compliance test, of any Person under any interest rate swap,
collar,  cap or other  interest  rate  protection  agreements,  treasury  locks,
foreign currency exchange agreements, commodity purchase or option agreements or
other interest or exchange rate or commodity price hedging agreements.

For  purposes  of  purchase  obligations,  repurchase  obligations  and  forward
commitments,  the amount of Total  Liabilities  of a Person at any given time in
respect of a contract to purchase real property  shall be determined as follows:
(x) if, at such time,  the seller of such real  property  would be  entitled  to
specific  enforcement  of the contract  against such Person,  then the amount of
Total  Liabilities  shall equal the total  purchase price payable by such Person
under the contract,  otherwise,  (y) the amount of Total Liabilities shall equal
the aggregate amount of due diligence deposits, earnest money payments and other
similar  payments  made by such Person under the contract  which,  at such time,
would be subject to forfeiture upon termination of such contract.

For  purposes  of  purchase  obligations,  repurchase  obligations  and  forward
commitments,  the amount of Total  Liabilities  of a Person at any given time in
respect of a contract to purchase a property  being  renovated or developed by a
third party shall equal the maximum  amount  reasonably  estimated to be payable
under such contract during the remaining term of such contract.

         "UCC" means the Uniform  Commercial Code as from time to time in effect
in the relevant jurisdiction.

         "Unconsolidated  Affiliate"  means,  with  respect  to any  Person,  an
unconsolidated affiliate of such Person (determined in accordance with GAAP).

<PAGE>
         "Use  Requirements"  means  any  and all  building  codes  or  permits,
certificates  of occupancy or  compliance,  restrictions  of record,  easements,
reciprocal  easements  or  other  agreements,   subdivision,   zoning,  wetlands
protection,  or land use laws or ordinances and any and all applicable  rules or
regulations of any  Governmental  Authority  affecting any part of any Mortgaged
Property.

     Section 1.2 "Accounting Terms and Determinations." Unless otherwise defined
or  specified  herein,  all  accounting  terms shall be  construed  herein,  all
accounting  determinations  hereunder  shall be made,  all financial  statements
required to be delivered hereunder shall be prepared,  and all financial records
shall be maintained in accordance with GAAP.

     Section 1.3 "Other  Definitional  Terms." The words "hereof," "herein," and
"hereunder"  and words of similar import when used in this Agreement shall refer
to  this  Agreement  as a  whole  and not to any  particular  provision  of this
Agreement, and Article, section,  schedule,  exhibit, and like references are to
this   Agreement   unless   otherwise   specified.   References  to  agreements,
instruments,  documents,  statutes,  and  regulations  include  all  amendments,
supplements, and modifications thereof as may be in effect from time to time.

                                     ARTICLE II

                           AMOUNTS AND TERMS OF LOANS

   Section 2.1 Commitment.

     a) Each  Lender,  severally  and not  jointly,  has  made  loans  (each  an
"Advance" and  collectively,  the  "Advances")  pro rata in accordance with such
Lender's Percentage to the Borrower from time to time before the Effective Date.

     b) No new  Advance  shall be made under this  Agreement.  Borrower  may not
reborrow any Advance once it has been repaid.

     c) The aggregate principal amount outstanding of all Advances made pursuant
hereto by the  Lenders,  at any time,  shall not  exceed  the lesser of the then
Commitment or the then Maximum Availability Amount.

     Section 2.2 Deliberately omitted.

     Section 2.3 Deliberately omitted.

     Section 2.4 Deliberately omitted.

     Section 2.5 "Promissory Notes;  Collateral." (a) The Borrower's  obligation
to pay the  principal  of, and interest on, the Advances  made by each Lender is
evidenced  by one or more  Promissory  Notes in the  face  amount  of each  such
Lender's  Percentage  of the  Commitment,  with  blanks  as to  payee,  date and
principal amount appropriately  completed. The determination by the Agent of the
amount of principal  outstanding  hereunder or under any Promissory  Note shall,
except for patent error, be final,  conclusive and binding upon the Borrower for
all purposes.
<PAGE>

     b) Each borrowing and repayment  hereunder  shall be recorded by the Agent;
provided,  however,  that no failure to make or error in making a recordation of
an  Advance  shall in any way  limit,  affect or modify  the  obligation  of the
Borrower to repay any obligations, or the rights of the Agent and the Lenders to
any amounts due under this  Agreement,  the Loan  Documents  and the  Promissory
Notes.

     c)  Except  as  otherwise  set  forth in the Loan  Documents,  each item of
Collateral  shall secure the payment and  performance  of all  indebtedness  and
obligations of the Borrower under this Agreement,  including without limitation,
any increased cost under Section 2.14 hereof, and each other Loan Document.

     Section 2.6 "Interest on Advances."

     a) The  Borrower  shall pay  interest  in respect  of the unpaid  principal
amount of each  Advance  from the date such  Advance is made at a rate per annum
for each Interest Period equal to the LIBOR Applicable  Margin plus the relevant
Adjusted LIBO Rate. Interest on each Advance shall accrue from and including the
date of such  Advance to but  excluding  the date of any  repayment  thereof and
shall be payable,  in arrears,  with respect to each Advance, on the last day of
each  calendar  month and on the last day of the Interest  Period  applicable to
such Advance,  (i) at maturity (whether by acceleration or otherwise),  and (ii)
after  maturity,  on demand.  Notwithstanding  the  foregoing,  interest on each
Advance  bearing  interest at the  Alternate  Rate pursuant to the terms of this
Agreement  shall be payable in  arrears on the last day of each  calendar  month
during the  Interest  Period  applicable  to such Advance and on the last day of
such Interest  Period,  (i) at maturity  (whether by acceleration or otherwise),
and (ii) after maturity, on demand.

     b) Overdue  principal and, to the extent permitted by law, overdue interest
in respect of each Advance, and all other overdue amounts owing hereunder, shall
bear interest for each day that such amounts are overdue at a rate (the "Default
Rate") per annum equal to three  percent (3%) per annum plus the  interest  rate
otherwise  applicable thereto from the first day such amounts are overdue to but
excluding the date such overdue amounts are paid.

     c) The Agent,  upon  determining  the  Adjusted  LIBO Rate for any Interest
Period,  shall promptly notify by telephone (confirmed in writing) or in writing
the Borrower thereof.

     d) It is  expressly  stipulated  and agreed to be the intent of the Lenders
and  Borrower  at all times to comply  with the  applicable  law  governing  the
highest  lawful  interest  rate.  If  the  applicable  law  is  ever  judicially
interpreted so as to render  usurious any amount called for under this Agreement
or under any of the other Loan  Documents,  or contracted for,  charged,  taken,
reserved or received with respect to the Indebtedness  evidenced thereby,  or if
acceleration of the maturity of the obligations,  or the rights of the Agent and
the Lenders to any amounts due, under this Agreement, the Loan Documents and the
Promissory  Notes,  any  prepayment  by  Borrower,  or  any  other  circumstance
whatsoever,  results in Borrower having paid any interest, penalty, fee or other
amount in excess of that  permitted by  applicable  law,  then it is the express
intent of Borrower and Lenders that all excess amounts theretofore  collected by
Lenders be credited on the  principal  balance of the Advances  (or, at Lenders'
option,  paid over to Borrower),  and the  provisions of this  Agreement and the
other Loan Documents  immediately be deemed reformed and the amounts  thereafter
collectible  hereunder  and  thereunder  reduced,  without the  necessity of the
execution of any new document,  so as to comply with the applicable  law, but so
as to permit the recovery of the fullest amount  otherwise  called for hereunder
and  thereunder.  The right to accelerate  maturity of the  obligations,  or the
rights of the Agent and the Lenders to any amounts  due,  under this  Agreement,
the Loan  Documents  and the  Promissory  Notes,  does not  include the right to
accelerate  any  interest  which has not  otherwise  accrued on the date of such
acceleration,  and Lenders do not intend to collect any unearned interest in the
event of  acceleration.  All sums paid or agreed to be paid to  Lenders  for the
use, forbearance or detention of the obligations, or the rights of the Agent and
the Lenders to any amounts due, under this Agreement, the Loan Documents and the
Promissory Notes shall, to the extent permitted by applicable law, be amortized,

<PAGE>

prorated,  allocated and spread throughout the full term of such obligations and
amounts  until payment in full so that the rate or amount of interest on account
of such  secured  obligations  does not  exceed  the  maximum  rate or amount of
interest permitted under applicable law.

     Section 2.7  "Interest  Periods." In connection  with each Advance  bearing
interest at the rate described in Section 2.6(a) above, an interest period (each
an "Interest  Period") shall be applicable  thereto,  which shall be a period of
one,  two,  three or six months as  selected  by the  Borrower  in the Notice of
Borrowing for such Advance, provided that:

     (i) the initial  Interest Period for any Advance shall commence on the date
of such Advance;

     (ii) subject to the  provisions  of Section 6.2 hereof and provided that no
Event of  Default  shall  have  occurred  and be  continuing,  at the end of the
initial  Interest Period,  and each subsequent  Interest Period for any Advance,
the Borrower shall be permitted to select an additional Interest Period for such
Advance by delivering a written notice  thereof,  in the form of Exhibit B-1, to
the Agent at any time prior to 12:00 noon (New York time) on the third  Business
Day prior to the expiration of the then current  Interest  Period  applicable to
such Advance,  provided that if no Interest Period selection is delivered to the
Agent by such time,  the Borrower  shall be deemed to have  selected an Interest
Period of one month and such  Interest  Period  selected  or deemed to have been
selected for such Advance may not be changed without the consent of the Agent;

     (iii) if any 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,  provided that if any Interest  Period in respect of an Advance (other than
an Advance  referred to in Section  2.13(b)(ii)  or Section  2.14(b)(ii))  would
otherwise  expire on a day that is not a Business  Day but is a day of the month
after which no further  Business Day occurs in such month,  such Interest Period
shall expire on the next preceding Business Day;

     (iv) any Interest  Period in respect of an Advance which begins on the last
Business Day of a calendar  month (or on a day for which there is no numerically
corresponding  day in the  calendar  month at the end of such  Interest  Period)
shall,  subject to clause (v) below,  end on the last Business Day of a calendar
month;

     (v) no Interest Period shall extend beyond the Maturity Date; and


<PAGE>

     (vi)  there  shall be no more than six  Interest  Periods  in effect at any
time.

     Section 2.8 "Repayment of Advances." The Borrower shall repay to the Agent,
for the account of the Lenders, the unpaid principal amount of each Advance made
by the Lenders hereunder,  together with all accrued and unpaid interest thereon
and any other sums due and payable to the Lenders  hereunder  or under the other
Loan Documents on the Maturity Date.

     Section  2.9  "Prepayments  of  Advances."  The  Borrower  may  prepay  all
outstanding  Advances,  any one Advance or portion  thereof on any  Business Day
without penalty,  premium or additional  charge,  except as set forth in Section
2.16 hereof;  provided such prepayment  shall be at least equal to the lesser of
$100,000 or the outstanding amount of such Advance.  Upon three (3) days written
notice to the Agent,  the Borrower may terminate the Commitment by prepaying all
outstanding  Advances  and all other  amounts  and fees due to the Agent and the
Lenders under this Agreement and the other Loan Documents.

     b) The Borrower shall be liable for all amounts payable pursuant to Section
2.16 with respect to a prepayment  of an Advance on any date other than the last
day of the Interest  Period related to such Advance where no new Interest Period
shall have been  selected  or deemed to have been  selected  pursuant to Section
2.7(ii) for such Advance.

     Section 2.10 "Deliberately omitted"

     Section 2.11  "Payments,  Etc." (a) All payments under this Agreement shall
be pro rata among the Lenders in accordance with their  Percentages and shall be
made by the Borrower, without defense, setoff, or counterclaim, to the Agent not
later  than 12:00 noon (New York time) on the date when due and shall be made in
Dollars  in  immediately  available  funds at the  Payment  Office and any funds
received by the Agent after such time shall, for all purposes of this Agreement,
be deemed to have been paid on the next succeeding Business Day. The Agent shall
thereafter  cause to be  distributed  to the  Lenders,  on the Business Day when
paid, in like funds their Percentage of payments so received.

b) Whenever any payment to be made hereunder or under the Promissory Notes shall
be stated to be due on a day which is not a Business  Day,  the due date thereof
shall be  extended to the next  succeeding  Business  Day  (unless the  relevant
Interest  Period expires on the next preceding  Business Day pursuant to Section
2.7(iii),  in which case the due date shall be the next preceding  Business Day)
and, with respect to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.

c) All  computations of interest on the Advances shall be made on the basis of a
year of (x) in the case of Advances  on which  interest is computed on the basis
of the LIBO Rate, 360 days, and (y) in the case of Advances on which interest is
computed on the basis of the  Alternate  Rate,  365/366 days, in either case for
the actual number of days  (including  the first day but excluding the last day)
occurring in the period for which such interest is payable.

<PAGE>
     Section 2.12  "Interest  Rate Not  Ascertainable,  Etc." If the Agent shall
have determined  (which  determination  shall be conclusive and binding upon the
Borrower)  that on any  date for  determining  the  LIBO  Rate for any  Interest
Period, by reason of any circumstances affecting the interbank Eurodollar market
generally,  adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Adjusted LIBO Rate,
then, and in any such event, the Agent shall forthwith give notice (by telephone
confirmed  in writing) to the  Borrower of such  determination.  Until the Agent
notifies  the  Borrower  that the  circumstances  giving rise to the  suspension
described herein no longer exist:

         (i)  any  Advance  made  hereunder  shall  bear  interest  at the  then
applicable Alternate Rate; and

         (ii) if any Advance  affected is then  outstanding,  each such  Advance
shall  immediately  convert  into  an  Advance  bearing  interest  at  the  then
applicable  Alternate  Rate with an Interest  Period ending on the date on which
the Interest Period applicable to the Advance affected expires.

     Section 2.13  "Illegality." (a) If any Lender (a "Notifying  Lender") shall
have  determined at any time that the making or  continuance  of any Advance has
become  unlawful by compliance by such Lender in good faith with any  applicable
Requirement of Law adopted or becoming effective after the date hereof, then, in
any such event,  the  Notifying  Lender shall give prompt  notice (by  telephone
confirmed in writing) to the Agent and the Borrower of such determination.

     b) Upon the giving of the notice to the Agent and the Borrower  referred to
in subsection (a) above,  (i) the Borrower's  right to request and the Notifying
Lender's obligation to make Advances shall be immediately suspended, and (ii) if
any Advance of the Notifying Lender affected thereby is then  outstanding,  each
such Advance shall  immediately  convert into an Advance bearing interest at the
then  applicable  Alternate  Rate with an Interest  Period ending on the date on
which the Interest Period applicable to the Advance affected expires.

     Section  2.14  "Increased  Costs."  (a) If, by reason of (x) after the date
hereof, the implementation of or any change (including,  without limitation, any
change  by  way of  imposition  or  increase  of  reserve  or  capital  adequacy
requirements) in, or in the interpretation by any Governmental  Authority or any
other recognized authority of, any law or regulation, or (y) the compliance with
any guideline or request from any central bank or other  Governmental  Authority
or  quasi-Governmental  Authority  exercising  control  over banks or  financial
institutions  generally  (whether  or not  having  the force of law)  adopted or
becoming effective after the date hereof:

              (i) any Lender  (or its  Lending  Office)  shall be subject to any
tax,  duty, or other charge,  with respect to the Advances or its  obligation to
make  Advances,  or shall change the basis of taxation of payments to any Lender
of the  principal  of or interest  on the  Advances  or its  obligation  to make
Advances  (except  for  changes in the rate of tax on the  overall net income of
such  Lender or its Lending  Office  imposed by the  jurisdiction  in which such
Lender's principal executive office or Lending Office is located); or

<PAGE>
              (ii)  any  reserve,   special  deposit,   or  similar  requirement
(including,  without  limitation,  any  reserve,  special  deposit,  or  similar
requirement  imposed by the Board of  Governors of the Federal  Reserve  System)
against assets of,  deposits with or for the account of, or credit  extended by,
any Lender or its Lending  Office shall be imposed or deemed  applicable  or any
other  condition  affecting the Advances  shall be imposed on such Lender or its
Lending Office or the interbank Eurodollar market;

and as a result  thereof  there  shall be any cost to such Lender of agreeing to
make or maintain  the  Advances,  or there  shall be a  reduction  in the amount
received or receivable by such Lender or its Lending  Office,  then the Borrower
shall from time to time, upon written notice and demand (including such Lender's
reasonable  details with respect to such  increased  cost) promptly given by the
Agent,  pay to the Agent for the account of such  Lender,  within five  Business
Days after the date  specified  in such  notice and demand,  additional  amounts
sufficient to indemnify such Lender  against such  increased  cost. In the event
that a Lender  becomes  aware of the  imposition  of a cost to such  Lender or a
reduction  in the amount to be  received  or  receivable  by such  Lender or its
Lending Office which is an additional  cost pursuant to this Section 2.14,  such
Lender  shall  promptly  notify  the Agent and the  Borrower  in writing of such
imposition  or reduction,  which notice shall  include such Lender's  reasonable
details with respect to such increased cost. With respect to costs or reductions
incurred by a Lender  pursuant to this  Section  2.14  relating to any period in
which the  Commitment  is in effect,  the  provisions of this Section 2.14 shall
survive the  termination  of this  Agreement  and the payment of the  Promissory
Notes and all other amounts payable hereunder.

     b) If the Lenders  shall  notify the  Borrower in writing that at any time,
because of the  circumstances  described in clause (x) or (y) in Section 2.14(a)
or any other  circumstances  arising  after the Closing Date and relating to any
period in which the Commitment is in effect  affecting the interbank  Eurodollar
market generally,  the then applicable  Adjusted LIBO Rate, as determined by the
Agent, will not adequately and fairly reflect the cost to the Lenders of funding
the Advances, then, subject to Section 2.14(c), thereafter:

          (i) any Advance made  hereunder  shall bear  interest at the Alternate
Rate; and

          (ii) if the affected Advance is then  outstanding,  the Borrower shall
immediately, or if permitted by applicable law, no later than the date permitted
thereby, upon at least one Business Day's written notice to the Lenders, convert
each such Advance into an Advance bearing interest at the Alternate Rate with an
Interest  Period ending on the date on which the Interest  Period  applicable to
the affected Advance expires.

     c) If the Lenders  shall  notify the  Borrower in writing that at any time,
because of the  circumstances  described in clause (x) or (y) in Section 2.14(a)
or any other  circumstances  arising  after the Closing Date and relating to any
period in which the Commitment is in effect  affecting the interbank  Eurodollar
market generally,  then the Borrower shall be entitled to require each Lender to
which  such  circumstances  apply to assign its  Credit  Exposure  at par to any
Person  selected  by  Borrower  that  is  a  financial  institution   reasonably
acceptable to the Agent,  which assignment shall be effected pursuant to Section
7.18 hereof.

<PAGE>
     Section 2.15 "Change of Lending  Office."  Each Lender  agrees that it will
use reasonable  efforts to designate an alternate Lending Office with respect to
its Advances affected by the matters or circumstances described in Section 2.12,
2.13 or 2.14 to reduce  the  liability  of the  Borrower  or avoid  the  results
provided thereunder,  so long as such designation is not disadvantageous to such
Lender as determined by such Lender in its sole discretion.

     Section 2.16 "Funding  Losses." The Borrower shall  compensate each Lender,
upon such Lender's written request to the Agent and the Agent's delivery thereof
to the Borrower  (which  request shall set forth in reasonable  detail the basis
for  requesting  such  amounts),  for  all  losses,  expenses,  and  liabilities
(including,  without limitation,  any interest paid by such Lender to lenders of
funds  borrowed by it to make or carry its Advances to the extent not  recovered
by such Lender in connection with the  re-employment of such funds but excluding
loss  of  anticipated  profits),  which  such  Lender  may  sustain:  (i) if any
repayment of any Advance  occurs on a date which is not the Maturity Date or the
last day of an Interest  Period  applicable to such Advance  (subject to Section
2.9(b));  (ii) if, for any reason,  the Borrower  defaults in its  obligation to
repay any Advances  when required by the terms of this  Agreement;  or (iii) the
occurrence of any of the events  described in Sections 2.12,  2.13 or 2.15. With
respect to  losses,  expenses  and  liabilities  which a Lender  may  sustain as
described in this Section 2.16 relating to any period in which the Commitment is
in effect,  the provisions of this Section 2.16 shall survive the termination of
this  Agreement  and the payment of the  Promissory  Notes and all other amounts
payable hereunder.

     Section  2.17  "Taxes".  All  payments  made  by the  Borrower  under  this
Agreement and the Promissory  Notes shall be made free and clear of, and without
deduction  or  withholding  for or on account of, any present or future  income,
stamp, or other taxes,  levies,  imposts,  duties,  charges,  fees,  deductions,
reserves or withholdings,  now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority, excluding in the case of each Lender,
net income  taxes and  franchise  taxes  (imposed  in lieu of net income  taxes)
imposed on such Lender as a result of a present or former connection between the
jurisdiction  of the government or taxing  authority  imposing such tax and such
Lender (excluding a connection  arising solely from such Lender having executed,
delivered,  or  performed  its  obligations  or  received  a payment  under,  or
enforced,  this Agreement or the Promissory Notes) or any political  subdivision
or taxing authority  thereof or therein (all such  non-excluded  taxes,  levies,
imposts,  duties,  charges,  fees, deductions and withholdings being hereinafter
called  "Taxes").  If any Taxes are  required  to be  withheld  from any amounts
payable to any Lender  hereunder or under the Promissory  Notes,  the amounts so
payable to such Lender shall be  increased  to the extent  necessary to yield to
such Lender  (after  payment of all Taxes)  interest  or any such other  amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the appropriate  Promissory Note. Whenever any Taxes are payable by the Borrower
pursuant to  applicable  law, as promptly as possible  thereafter  the  Borrower
shall  send  to the  Agent a  certified  copy of an  original  official  receipt
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any Taxes when due to the appropriate  taxing authority or fails to remit to the
Agent the required receipts or other required  documentary  evidence (other than
any such failure due to failure of any Lender to furnish the documents  required
to be furnished by such Lender pursuant to Section 2.17(b)),  the Borrower shall
indemnify,  defend  and  hold  harmless  the  Agent  and  each  Lender  for  any
incremental taxes,  interest,  or penalties that may become payable by the Agent
or any Lender as a result of any such failure.  With respect to any  obligations
of the Borrower  pursuant to this  Section 2.17  relating to any period in which
the Commitment is in effect,  the agreements in this Section 2.17, as they apply
to any Advance,  shall survive the termination of this Agreement and the payment
of the Promissory  Notes and all other amounts payable  hereunder.

<PAGE>
     b) Agent and each Lender shall furnish Borrower,  at least thirty (30) days
prior to the date on which the first  payment  to each  Lender  (including  each
Purchasing Lender) is due, and annually  thereafter during the term of the Loan,
with United States Internal  Revenue Service Form 1001, 4224, W-8 or W-9 (or any
other successor form) or any other document  evidencing such Lender's  exemption
from  withholding  of Taxes from any amounts  payable to such  Lender  hereunder
under as of the Closing  Date. If any Taxes are required to be withheld from any
amounts payable to any Lender hereunder or under the Promissory  Notes, then the
Borrower shall be entitled to require such Lender to assign its Credit  Exposure
at par to any  Person  selected  by  Borrower  that is a  financial  institution
reasonably  acceptable to the Agent, which assignment shall be effected pursuant
to Section 7.18 hereof.

                                     ARTICLE III

                      CONDITIONS TO BORROWINGS AND CLOSING

     Section 3.1 "Conditions Precedent to Closing." On or prior to the Effective
Date,  all  obligations  of the Borrower  hereunder to the Agent and the Lenders
incurred  prior to the Closing Date and any amounts  payable to the Agent or the
Lenders on the  Effective  Date (other than legal fees  payable  pursuant to the
last paragraph of this Section 3.1),  shall have been paid in full. In addition,
the Agent shall have received or waived in writing the following,  each dated as
of or prior to the Effective  Date, in form and  substance  satisfactory  to the
Agent:

     (i) an  officer's  certificate,  dated the  Effective  Date,  signed by any
Co-Chairman, the President, any Senior Vice President, any Vice President or the
Controller  of the  Borrower,  and attested to by the Secretary or any Assistant
Secretary of the Borrower, in the form of Exhibit D with appropriate insertions,
together with copies of the Articles of Incorporation  of Borrower  certified by
the  Secretary  of State of the State of the  Borrower's  incorporation  and the
By-Laws of Borrower  and the  resolutions  of the  Borrower  referred to in such
certificate;  and certified  copies of all other documents,  if any,  evidencing
corporate action or governmental  authorization or approval with respect to this
Agreement, the Promissory Notes, the Advances and the Loan Documents;

     (ii) duly executed and completed  Promissory  Notes payable to the order of
each Lender;

     (iii) a duly executed and delivered Affirmation of Environmental Indemnity;

     (iv) an opinion of counsel to the  Borrower  addressed to the Agent and the
Lenders in form reasonably acceptable to the Agent;

     (v) financial statements in the forms prescribed by Sections 5.2(a)-(d) for
the fiscal year 1997, the fiscal  quarter ended  September 30, 1998 and the most
recent Accounting Period;

     (vi) copies of all  financial  statements,  reports,  and proxy  statements
mailed to the  Borrower's  shareholders  within the last year, and copies of all
registration  statements,  periodic  reports,  and other  documents filed by the
Borrower with the Securities and Exchange  Commission (or any successor thereto)
and any national  securities exchange within the last year;

<PAGE>
     (vii)  such  consents  or  acknowledgements,  with  respect  to such of the
transactions  hereunder,  from  such  Persons  as the Agent or its  counsel  may
reasonably determine to be necessary or appropriate;

     (viii)  (A) a good  standing  certificate  from the  State of  Maryland  in
respect  of the  Borrower  as of a recent  date;  and (B) a  certificate  of the
Secretary of State of each state in which the Borrower owns a Mortgaged Property
or is required to qualify to do business, as to due qualification to do business
as a foreign entity and good standing of Borrower as of a recent date; and

     (ix) title policy  endorsements which have the effect of redating the title
policies insuring the Liens of the Mortgages.

Execution and delivery of this Agreement by Borrower shall constitute Borrower's
agreement and covenant to pay to the Agent,  promptly upon demand (together with
a reasonably  detailed  invoice(s) in respect thereof),  all reasonable fees and
disbursements  of counsel to the Agent and the Lenders  incurred  prior to or on
the Effective Date.

     Section 3.2 "Deliberately omitted."

     Section 3.3 "Deliberately omitted."

     Section 3.4  "Unrecorded  Mortgages of  Subsidiary  Mortgagor."  Unrecorded
Mortgages of  Subsidiary  Mortgagor.  The Mortgage with respect to any Mortgaged
Property may remain  unrecorded  provided that all of the  following  conditions
are, and continue to be, satisfied: (i) the mortgage recording tax that would be
payable by the mortgagor under such Mortgage with the jurisdiction in which such
Mortgaged  Property is located as a condition  precedent to the  recordation  in
such  jurisdiction  of such  Mortgage,  shall  exceed one percent  (1.0%) of the
Eligible  Costs with respect to such  Mortgaged  Property,  (ii) such  Mortgaged
Property  is  owned  by a  Subsidiary  Mortgagor  that  is and  shall  remain  a
single-purpose  entity  which,  among  other  things,  (A) has the  ability  and
capacity as determined  in the sole  discretion of the Agent to pay the mortgage
recording  tax,  (B) does not and shall not  engage in any  business  other than
owning and operating  such  Mortgaged  Property,  or acquire or own assets other
than such Mortgaged Property and incidental  personal property without the prior
written consent of the Agent, which consent may be withheld for any reason or no
reason,  (C) has no debt as of the date hereof and shall not incur or create any
debt  except  such  debt  agreed to in  advance  by the  Agent in  writing,  (D)
maintains  its  assets in a way which  segregates  and  identifies  such  assets
separate  and apart  from the assets of any other  person or  entity,  (E) holds
itself out to the public as a separate  legal  entity  from any other  person or
entity,  and (F)  conducts  business  solely in its own name,  (iii) the  entire
stock,  partnership,  membership and other ownership interests and privileges in
such  Subsidiary  Mortgagor  and any  other  property  owned by such  Subsidiary
Mortgagor  under  clause  (ii)(B)  above are assigned and pledged to the Lenders
pursuant  to a  Pledge  and  Security  Agreement  in the form of  Exhibit  P and
appropriate  Financing  Statements are filed evidencing the collateral under the
Pledge  and  Security  Agreement  , and (iv)  the  jurisdiction  in  which  such
Mortgaged Property is located permits the immediate recordation of such Mortgage
at no cost or expense  to the Agent or the  Lenders  other than  payment of such
mortgage recording tax and nominal recording charges.  Notwithstanding  anything
to the contrary,  the Borrower irrevocably agrees that each and every unrecorded
Mortgage  may be recorded at any time (A)  immediately  upon an Event of Default
<PAGE>

described in Section 6.1(a),  (B) for any insubstantial,  immaterial,  technical
Default in the Agent's reasonable discretion, at the earlier of ninety (90) days
following such Default (unless such Default has been cured) or immediately  upon
an Event of  Default,  and (C) for any  Default not covered in either (A) or (B)
above,  immediately,  after such Default (unless such Default has been cured) or
after the Agent, in its sole discretion,  reasonably  believes that a Default is
likely to occur.  Borrower shall pay upon demand all mortgage  recording  taxes,
charges,  fees, cost and expenses incurred by the Agent or any of the Lenders in
connection with such recordation.

                                     ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants the following as of the date hereof:

     Section 4.1 "Corporate  Existence."  Borrower is duly organized and validly
existing under the laws of the jurisdiction of its  incorporation.  In addition,
Borrower  is in  good  standing  under  the  laws  of  the  jurisdiction  of its
incorporation,  is duly qualified to do business as a foreign corporation and is
in good  standing  in each  jurisdiction  where it owns  property  or where  the
conduct of its business or the  ownership of its property or assets  (including,
without  limitation,  the  Mortgaged  Properties)  requires  such  qualification
(unless the failure to be so qualified or in good standing  would not constitute
a Material  Adverse  Change),  and has all corporate powers and all governmental
licenses,  authorizations,  consents,  and  approvals  required  to carry on its
business as is now or is proposed  to be  conducted  (unless the failure to have
same would not constitute a Material Adverse Change).

     Section 4.2  "Authorization  of Agreement;  No  Violation."  The execution,
delivery,  and  performance  by  Borrower  of  this  Agreement  and of the  Loan
Documents (i) are within the Borrower's  powers,  (ii) have been duly authorized
by all necessary action,  and (iii) do not violate or create a default under any
Requirement of Law, the Borrower's  Certificate of Incorporation  and By-Laws or
any Contractual  Obligation binding on or affecting the Borrower or its property
(other  than any  violation  or  default  that would not  constitute  a Material
Adverse Change).

     Section 4.3 "Governmental Approvals." No authorization or approval or other
action by, and no notice to or filing or  registration  with,  any  Governmental
Authority  is  required  in  connection  with  the  execution,   delivery,   and
performance by Borrower of this  Agreement or the other Loan  Documents  (unless
the  failure  to have  obtained  or made same  would not  constitute  a Material
Adverse Change).

     Section 4.4 "Binding  Effect." This  Agreement and the other Loan Documents
have each been duly executed by Borrower and each  constitutes  a legal,  valid,
and binding obligation of Borrower,  enforceable  against Borrower in accordance
with its terms,  except as enforcement  thereof may be subject to (i) the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar
law affecting creditors, rights generally, and (ii) general principles of equity
(regardless  of whether such  enforcement is sought in a proceeding in equity or
at law).
<PAGE>
     Section 4.5 "Financial Information and No Material Adverse Change."

     a)  Each  of  the  financial  statements  delivered  pursuant  to  Sections
3.1(a)(vi)  and  3.1(a)(vii)  were prepared in  accordance  with GAAP and fairly
present the financial  condition and results of operation of the Persons  and/or
properties  covered  thereby on the dates and for the periods  covered  thereby,
except as disclosed in the notes thereto and, with respect to normally recurring
year-end adjustments.  As of the date hereof Borrower does not have any material
liability,  absolute or contingent,  not reflected in such financial statements,
the notes thereto or Schedule 2 hereof.

     b) Since  December 31,  1997,  there has been no Material  Adverse  Change,
except as  otherwise  disclosed  in writing  to the Agent in the press  releases
dated  February 4, 1999 and March 15, 1999 and the reports on Forms 10-Q and 8-K
filed by the Borrower with the Securities and Exchange Commission.

     Section 4.6 "Litigation." There is no action,  suit, or proceeding,  or any
governmental  investigation or any arbitration,  in each case pending or, to the
knowledge of the Borrower,  threatened against Borrower,  or any property of the
Borrower before any court or arbitrator or any  governmental  or  administrative
body, agency, or official (i) which challenges the validity of this Agreement or
any of the other  Loan  Documents  or (ii)  which,  as  reasonably  likely to be
determined,  and taking into account any insurance with respect  thereto,  would
constitute a Material Adverse Change.

     Section 4.7  "Compliance  with Law." The Borrower is in compliance with all
Requirements of Law, the Borrower's Certificate of Incorporation and By-Laws and
all Contractual  Obligations binding on or affecting it or any of its properties
(other  than where the  failure  to so comply  would not  constitute  a Material
Adverse Change).  The execution and delivery by Borrower of this Agreement,  the
Promissory  Notes and the Loan Documents do not, and the performance by Borrower
of this Agreement, the Promissory Notes and each of the Loan Documents will not,
(a) violate any  Requirement  of Law, (b) violate or contravene any provision of
the  Borrower's  Certificate  of  Incorporation  and By-Laws,  or any law, rule,
regulation,  order, writ, judgment, decree, determination or award applicable to
the Borrower,  (c) violate,  contravene or result in a breach of or constitute a
default  under any  Contractual  Obligation,  or (d) result  in, or require  the
creation or imposition  of, any Lien upon or with respect to any of its property
or assets (including,  without limitation,  the Mortgaged Properties) other than
the Liens created by the Loan  Documents  (other than,  in any such case,  where
such violation, contravention, default or result would not constitute a Material
Adverse Change).

     Section  4.8 "Labor  Matters."  (a) There are no strikes,  work  stoppages,
slowdowns or lockouts  pending,  or reasonably  likely to occur in the immediate
future, against or involving the Borrower or any of its Subsidiaries, other than
those  which in the  aggregate  would not  constitute  or  result in a  Material
Adverse Change.
<PAGE>
     b) There are no arbitrations or grievances pending against or involving the
Borrower or any of its Subsidiaries, nor, to the best knowledge of Borrower, are
there any arbitrations or grievances threatened involving the Borrower or any of
its  Subsidiaries,  other than those which in the aggregate would not constitute
or result in a Material  Adverse Change.

     c) Neither the Borrower nor any of its Subsidiaries are parties to, or have
any  obligations  under,  any  collective  bargaining   agreement,   other  than
collective bargaining agreement(s) copies of which (certified by the Borrower as
being true, correct and complete) have been furnished to the Agent.

    d)  There  are no  representation  proceedings  pending,  or,  to the  best
knowledge of the Borrower,  threatened with the National Labor Relations  Board,
and no labor  organization  or group of  employees of the Borrower or any of its
Subsidiaries have made a pending demand for recognition,  other than those which
in the aggregate would not constitute or result in a Material Adverse Change.

     e) There are no unfair labor  practice  charges,  grievances  or complaints
pending or in process or, to the best knowledge of Borrower, threatened by or on
behalf of any  employee  or group of  employees  of the  Borrower  or any of its
Subsidiaries  other than those which in the  aggregate  would not  constitute or
result in a Material Adverse Change.

    f) There are no  complaints  or charges  against the Borrower or any of its
Subsidiaries  pending or, to the best  knowledge of Borrower,  threatened  to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise  relating to the employment by the Borrower or any
of its  Subsidiaries of any individual,  other than those which in the aggregate
would not constitute or result in a Material Adverse Change.

     g) The  Borrower and each of its  Subsidiaries  is in  compliance  with all
laws, and all orders of any court,  governmental agency or arbitrator,  relating
to the  employment of labor,  including all such laws relating to wages,  hours,
collective  bargaining,   discrimination,  civil  rights,  and  the  payment  of
withholding   and/or  social  security  and  similar  taxes,   other  than  such
non-compliances as in the aggregate would not constitute or result in a Material
Adverse Change.

     Section 4.9 "Deliberately omitted."

     Section 4.10 "No  Default." The Borrower is not in default  under,  or with
respect  to, any of its  Contractual  Obligations  in any  respect  which  could
reasonably be expected to result in a Material  Adverse Change and no Default or
Event of Default has occurred and is continuing.

     Section  4.11  "Improvements."  Subject to the  provisions  of Section  5.5
hereof:

     a) Except for portions of any  Mortgaged  Property  under  construction  or
which  are  to  be  demolished  in  the  course  of  construction,  all  of  the
improvements   located  on  the  Mortgaged   Properties  and  the  use  of  such
improvements  are covered by existing  valid  certificates  of occupancy and all
other certificates and permits required by applicable laws, rules,  regulations,
and ordinances or in connection with the use, occupancy, and operation thereof.

 <PAGE>
    b) No  material  portion  of any  of  the  Mortgaged  Properties,  nor  any
improvements  located on such  Mortgaged  Properties  that are  material  to the
operation,  use, or value thereof,  have been damaged in any respect as a result
of any fire, explosion, accident, flood, or other casualty, except to the extent
that the same have been or will with due diligence  and in compliance  with this
Agreement  and all of the other Loan  Documents  be restored to their  condition
prior thereto.

     c) No written  notices of violation of any federal,  state, or local law or
ordinance  or order or  requirement  have  been  received  with  respect  to any
Mortgaged Properties.

     Section 4.12 "Intellectual Property." Borrower owns, or is licensed to use,
all trademarks,  trade names,  copyrights,  technology,  know-how, and processes
necessary  for  the  conduct  of  its  business  as  currently   conducted  (the
"Intellectual  Property")  except for those the failure to own or license  which
could not reasonably be expected to have a Material Adverse Change. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any such  Intellectual  Property or the  validity or  effectiveness  of any such
Intellectual  Property,  nor does the  Borrower  know of any valid basis for any
such claim  (other than claims  which would not  constitute  a Material  Adverse
Change). The use of such Intellectual Property by the Borrower does not infringe
on the rights of any Person,  except for such claims and infringements  that, in
the  aggregate,  could not  reasonably  be expected  to have a Material  Adverse
Change.

     Section 4.13 "Unrecorded Mortgages." Each Subsidiary Mortgagor which owns a
Mortgaged  Property for which the Mortgage  encumbering such Mortgaged  Property
remains   unrecorded   pursuant  to  Section   3.3(c)  is  and  shall  remain  a
single-purpose  entity  which,  among  other  things,  (i) has the  ability  and
capacity  to pay the  mortgage  recording  tax,  (B) does not engage and has not
engaged in any business other than owning and operating such Mortgaged Property,
and has not  acquired  and does not own any  assets  other  than such  Mortgaged
Property,  any incidental  personal  property,  or such other property which has
been acquired  without the prior written consent of the Agent,  (C) has incurred
no debt as of the date hereof and shall not incur or create any debt except such
debt agreed to in advance by the Agent in writing, (D) maintains its assets in a
way which  segregates  and  identifies  such assets  separate and apart from the
assets of any other  person or entity,  (E) holds  itself out to the public as a
separate legal entity from any other person or entity, and (F) conducts business
solely in its own name.

     Section  4.14  "Taxes."  Borrower  has  filed or caused to be filed all tax
returns  that,  to the  knowledge of Borrower,  are required to be filed and has
paid all taxes shown to be due and payable on such returns or on any assessments
made  against it or any of its  property  and all other  taxes,  fees,  or other
charges  now  due  and  payable  imposed  on it or any of  its  property  by any
Governmental  Authority  (other  than any the  amount or  validity  of which are
currently  being  contested in good faith by  appropriate  proceedings  and with
respect to which adequate reserves in conformity with GAAP have been provided on
the books of Borrower). No tax Lien has been filed which could constitute a Lien
senior in priority to the Lien of any of the  Mortgages or Financing  Statements
and which has not been (or will not be) removed or  discharged  of record within
10 days  after  Borrower's  notice of such Lien (or the taxes to which such Lien
relates are being contested in good faith by appropriate  proceedings which have
the effect of staying  enforcement or execution of such Lien and with respect to
which adequate  reserves in conformity with GAAP have been provided on the books
of Borrower).
<PAGE>
     Section 4.15 "Deliberately omitted."

     Section 4.16 "Deliberately omitted."

     Section  4.17  "Insurance".  Subject  in all  events to the  provisions  of
Section 5.5 hereof,  notwithstanding  anything to the contrary  contained in the
Mortgages  and subject to Section  4.17(b),  the Borrower  maintains  upon or in
connection with each of the Mortgaged Properties:

     a)  Property  and  casualty  insurance  coverage  evidenced  by original or
certified copies of insurance  policies or binders for such insurance,  together
with evidence  that the premiums for such policies have been paid current.  Such
insurance policies shall insure each of the Mortgaged Properties for one hundred
percent  (100%) of their  full  replacement  cost  (exclusive  of  footings  and
foundations)  in  so-called  "all  risk"  form and  with  coverage  for  floods,
earthquakes  (except as  provided  in Section  4.17(b))  and such other  hazards
(including  "collapse" and  "explosion")  as the Lenders may require for each of
the Mortgaged  Properties  and as are consistent  with  reasonable and customary
requirements in the industry.  Such insurance policies shall contain replacement
cost and agreed amount  endorsements  (with no reduction for  depreciation),  an
endorsement  providing Building  Ordinance Coverage and an endorsement  covering
the  costs  of  demolition  and  increased  costs  of  construction  due  to the
enforcement of building codes or ordinances. To the extent there exists a boiler
on the premises of any of the Mortgaged Properties,  Borrower shall also furnish
insurance  providing  boiler  and  machinery   comprehensive  coverage  for  all
mechanical  and  electrical  equipment  at  each of  such  Mortgaged  Properties
insuring against  breakdown or explosion of such equipment on a replacement cost
value basis. Borrower shall also furnish business interruption or loss of rental
income  insurance in connection with all policies  covering  property and boiler
and  machinery  insurance  for a period of not less than one (1) year  endorsed,
other than with respect to boiler and machinery insurance,  to provide a 180 day
extended period of indemnity. All insurance required under Section 4.17 shall be
with companies and in amounts and with coverage and deductibles  satisfactory to
the Lenders.  All insurance  required under this Section 4.17(a) with respect to
the Mortgaged  Properties shall include  endorsements naming the Lenders as loss
payees,  and shall have endorsed thereon the standard  mortgagee clause in favor
of the Lenders. All companies issuing policies required under Section 4.17 shall
have a current Best  Insurance  Reports  rating no less favorable than "A-", and
all such  companies  shall be licensed  to do  business in the states  where the
applicable  Mortgaged  Property is located.  All policies required under Section
4.17  shall  provide  that (i) the  insurance  evidenced  thereby  shall  not be
canceled or modified without,  in the case of non-payment of premiums,  at least
ten (10) days' prior written notice from the insurance carrier to the Agent, or,
in any other circumstance,  at least thirty (30) days' prior written notice from
the  insurance  carrier  to the  Agent;  and  (ii) no act or  thing  done by the
Borrower,  or any Affiliate of any of Borrower  shall  invalidate  the policy as
against the Lenders.  The Borrower  shall deliver  renewal  certificates  of all
policies of  insurance  required  under  Section  4.17,  together  with  written
evidence that the premiums are paid current, at least ten (10) days prior to the
expiration of the then current policy.

         (b) earthquake  insurance  provided for in Section 4.17(a) only for the
Mortgaged  Properties  and only to the  extent  (i) any  Mortgaged  Property  is
located in an  earthquake  prone area and (ii) such  insurance  is  available at
commercially reasonable rates.
<PAGE>
         (c) Liability and worker's compensation insurance evidenced by original
or certified copies of insurance policies,  binders for such insurance policies,
or certificates of insurance,  together with evidence that the premiums for such
policies have been paid current. Such insurance shall provide for (i) commercial
general  liability  (including  contractual  liability)  covering  each  of  the
Mortgaged Properties and the Borrower's operations thereon in an amount not less
than  $1,000,000 per  occurrence and not less than  $1,000,000 per occurrence in
the aggregate;  (ii) commercial  automobile liability with a limit not less than
$1,000,000  combined  single  limit and be  endorsed to cover  owned,  hired and
non-owned automobiles; and (iii) worker's compensation insurance covering all of
the Borrower's  employees and contracted  parties  (including  their  employees)
situated  at  the  Mortgaged   Properties  in  accordance   with  the  statutory
requirements  of the states where the applicable  Mortgaged  Property is located
and including an endorsement  for employer's  liability  coverage.  The Borrower
shall  also  furnish  umbrella  liability  coverage  in excess of the  foregoing
liability  coverage  with a limit of not less than  $9,000,000.  The  commercial
general  liability and automobile  policies and umbrella  liability policy shall
name the Lenders as  additional  insureds.  Such  policies  shall also contain a
so-called "products-completed operations endorsement."

         (d)  Insurance  insuring  against loss or damage by perils  customarily
included under standard  "builder's risk completed value non-reporting form" and
which  include all  insurance  required to be carried by  Borrower,  as "owner,"
under the  provisions of all  construction  contracts let by Borrower;  provided
that such  insurance  shall  insure  all  construction  on all of the  Mortgaged
Properties,  including, without limitation, the construction of an extended stay
facility  and  such  ancillary  facilities  related  thereto  on each  Mortgaged
Property,  including  all  materials  in  storage  and while in  transit  during
construction.

     Section 4.18 "Properties." Subject to the provisions of Section 5.5 hereof:

     a) Borrower and each Subsidiary Mortgagor, as the case may be, has good and
marketable  title to all of the  Mortgaged  Properties,  subject to no mortgage,
security interest, pledge, lien, charge, encumbrance or title retention or other
security  agreement or arrangement of any nature  whatsoever,  except  Permitted
Encumbrances.  Borrower  shall,  and shall cause each  Subsidiary  Mortgagor to,
forever warrant and defend the title of their  respective  Mortgaged  Properties
against the lawful claims and demands of all persons  whomsoever  subject to the
Permitted Encumbrances.

     b) There are no pending or, to the best  knowledge of Borrower,  threatened
proceedings or actions to revoke, attack, invalidate,  rescind, or modify in any
material  respect (i) the zoning of any Mortgaged  Property or any part thereof,
or (ii) any  building or other  permits  heretofore  issued with  respect to any
Mortgaged  Property or any part  thereof,  or asserting  that any such zoning or
permits  do not permit  the  operation  of any  Mortgaged  Property  or any part
thereof or that any  improvements  located on such Mortgaged  Property cannot be
operated in  accordance  with its intended use or is in violation of  applicable
Use Requirements.

     c) The Mortgage covering each such Mortgaged  Property creates a valid and,
except for  unrecorded  Mortgages,  enforceable  first  Lien,  on such  property
described therein, as security for the repayment of the Indebtedness incurred by
the Borrower  hereunder and under the other Loan Documents,  subject only to the
Permitted  Encumbrances  applicable to such property.

     d) The Collateral is now, and so long as the  Commitment  remains in effect
or any monetary  obligation  to the Agent or the Lenders  hereunder or under the
Promissory Notes or the other Loan Documents shall remain unpaid,  will be owned
solely by the Borrower or a Subsidiary  Mortgagor,  as the case may be, and said
Collateral,  including the proceeds resulting from the sale or other disposition
(other than as permitted by Section 5.3(k)) thereof, is and will remain free and
clear of any Liens except the Liens  granted  pursuant to the Loan  Documents to
the Agent and the Lenders,  which Liens to the Agent and the Lenders  shall,  at
all times, be first and prior on the Collateral and all proceeds  resulting from
the sale or other  disposition  thereof,  and no further action need be taken to
perfect said Liens.
<PAGE>
     e) Except for portions of any Mortgaged Property which are to be demolished
in the  course  of  construction  of an  extended  stay  facility,  neither  the
existence of any improvements upon a Mortgaged  Property nor the intended use or
condition of any  Mortgaged  Property  violates in any material  respect any Use
Requirements.  With respect to each Mortgaged  Property,  neither the zoning nor
any other  right to carry on the use of such  Mortgaged  Property as an extended
stay facility,  including such ancillary  facilities related thereto,  is to any
extent  dependent  upon or  related  to any other real  estate.  Each  Mortgaged
Property  may be operated  as an  extended  stay  facility  with such  ancillary
facilities related thereto and the Borrower has received no written notices from
any Governmental Authorities alleging any violation by any Mortgaged Property of
any   Requirement   of  Law,   including  but  not  limited  to  applicable  Use
Requirements.

     f) There are no pending or, to the  knowledge of the  Borrower,  threatened
proceedings  relating to any (i) taking by eminent domain or other  condemnation
of any portion of any Mortgaged Property, (ii) condemnation or relocation of any
roadways  abutting  any  Mortgaged  Property  and (iii)  denial of access to any
Mortgaged Property from any point of access to such Mortgaged  Property,  in any
such case not accounted for in the Plans and Specifications.

     g) Each  Mortgaged  Property  has adequate  and  permanent  legal access to
water,  gas, and electrical  supply,  storm, and sanitary  sewerage  facilities,
other  required  public  utilities  (with respect to each of the  aforementioned
items by means of either a direct  connection to the source of such utilities or
through  easements  or  connections  available  on publicly  dedicated  roadways
directly  abutting such  Mortgaged  Property),  and means of access between such
Mortgaged Property and public highways over recognized curb cuts, and all of the
foregoing comply with all applicable Use Requirements.

     h) Each Mortgaged  Property  constitutes a legally subdivided lot under all
applicable Use Requirements  (or, if not subdivided,  no subdivision or platting
of such Mortgaged  Property is required under  applicable  Requirements of Law),
and  for  all  material  purposes  each  Mortgaged  Property  may be  mortgaged,
conveyed, and otherwise dealt with as an independent parcel.

     Section 4.19 "Full and Accurate  Disclosure."  No statement of fact made by
or on behalf  of the  Borrower  in this  Agreement  or in any of the other  Loan
Documents  (other than any Loan  Documents to which neither the Borrower nor any
Affiliate is a party),  or any certificate or financial  statement  furnished by
the  Borrower to the Agent when made or deemed made or the date as of which such
certificate  or  statement  speaks or is  deemed  to speak,  as the case may be,
contains any untrue  statement of a material  fact or, to the best of Borrower's
knowledge,  omits  to state  any  material  fact  necessary  to make  statements
contained herein or therein not misleading.
<PAGE>
     Section 4.20 "Deliberately omitted."

     Section 4.21 "Deliberately omitted."

     Section  4.22  "Assessments."  Subject to the  provisions  of  Section  5.5
hereof, except as disclosed to Lenders in writing with respect to the applicable
Mortgaged  Property,  there  are no  pending  or, to the  Borrower's  knowledge,
proposed  special or other  assessments  for public  improvements  or  otherwise
affecting any Mortgaged Property,  nor, to the Borrower's  knowledge,  are there
any contemplated  improvements to any Mortgaged Property that may result in such
special or other assessments.

     Section  4.23 "Flood  Zone."  Except as  disclosed  by a survey  delivered
pursuant to Section  3.3(a)(iii),  no  Mortgaged  Property is located in a flood
hazard area as defined by the Federal Emergency Management Agency.

     Section 4.24 "Flood Zone." Subject to the provisions of Section 5.5 hereof,
except for portions of any Mortgaged  Property which are to be demolished in the
course of  construction  of an extended  stay  facility  and  related  ancillary
facilities  thereon,  each  Mortgaged  Property is free of  material  structural
defects and all building  systems  contained  therein are in good working  order
subject to ordinary wear and tear.

     Section 4.25 "Operation of Premises."  Subject to the provisions of Section
5.5  hereof,  except for  portions  of any  Mortgaged  Property  which are to be
demolished  in the course of  construction  of an  extended  stay  facility  and
related ancillary facilities thereon,  each Mortgaged Property is being operated
and maintained in accordance  with the Borrower's  usual and customary  business
practices.

     Section 4.26 "Deliberately omitted."

     Section 4.27  "Hazardous  Materials."  Subject to the provisions of Section
5.5 hereof,  except as disclosed in the Studies,  to the best of the  Borrower's
knowledge,  no  Hazardous  Materials  are  located  on or  about  the  Mortgaged
Properties,  and the Mortgaged  Properties do not contain any underground  tanks
for the storage or  disposal of  Hazardous  Materials.  Further,  subject to the
provisions  of Section 5.5 hereof,  except as disclosed in the Studies,  (i) the
Borrower has not,  and to the  knowledge of the Borrower no other party has, (A)
stored or treated Hazardous Materials on the Mortgaged Properties,  (B) disposed
of Hazardous  Materials or  incorporated  Hazardous  Materials on the  Mortgaged
Properties,  and (C)  permitted  any  underground  storage tanks to exist on the
Mortgaged Properties,  (ii) no complaint,  order, citation or notice with regard
to air emissions, water discharges,  noise emissions, or Hazardous Materials, if
any,  or any other  environmental,  health,  or  safety  matters  affecting  the
Mortgaged  Properties  or any portion  thereof,  from any person,  government or
entity,  has been issued to the Borrower  which has not been  remedied or cured,
and (iii) the Borrower has complied with all  Requirements  of Law affecting the
Mortgaged Properties.
<PAGE>

     Section  4.28  "Representations  and  Warranties  in the  Loan  Documents."
Subject to the  provisions  of  Section  5.5  hereof,  the  representations  and
warranties  in  each  of  the  Loan  Documents   (except  with  respect  to  the
representations  and warranties  expressly provided as being made only as of the
Effective Date) are true, complete and correct in all material respects, and the
Borrower  hereby confirms each such  representation  and warranty as being true,
complete and correct in all material  respects as of the relevant dates with the
same effect as if set forth in its entirety herein.

     Section 4.29 "Loan  Documents."  The  provisions of the Loan  Documents are
each effective to create, in favor of the Agent, a legal,  valid and enforceable
Lien on or security  interest in all of the collateral  described  therein,  and
when  the  appropriate   recordings  and  filings  have  been  effected  in  the
appropriate  public  offices  (or,  in the  case of  collateral  represented  by
certificates,  when such  certificates  have been pledged to and received by the
Agent),  the Loan  Documents  will  constitute  a  perfected  first  Lien on and
security interest in all right,  title, estate and interest of the Borrower or a
Subsidiary  Mortgagor,  as the case may be, in the collateral described therein,
prior and superior to all other Liens except for Permitted  Encumbrances  and as
otherwise permitted under this Agreement.

     Section 4.30 "Deliberately omitted."

     Section  4.31  "Subsidiary  Mortgagors."  Each  Subsidiary  Mortgagor  is a
Subsidiary of Borrower.

     Section 4.32 "Deliberately omitted."

     Section 4.33 "Deliberately omitted."

                                     ARTICLE V

                                    COVENANTS

     Section 5.1  "Certain  Affirmative  Covenants."  So long as the  Commitment
remains in effect or any amounts due to the Agent or the  Lenders  hereunder  or
under the Promissory Notes or the other Loan Documents shall remain unpaid,  the
Borrower  will,  and, to the extent any of the following  relates to a Mortgaged
Property  any  portion  of or  interest  in which  is  owned  by any  Subsidiary
Mortgagor, the Borrower will cause each such Subsidiary Mortgagor,  with respect
to such  Mortgaged  Property,  to (unless  expressly  waived by the Agent or the
Lenders as provided herein):

a) Payment.  Duly and  punctually  pay or reimburse  when due or, if there is no
specified due date, when demanded,  the principal and interest on the Promissory
Notes and all  other  amounts  due  under  this  Agreement  and the  other  Loan
Documents.

b) Existence, Etc. (i) Preserve and maintain its existence in Maryland, and (ii)
preserve  and maintain  its rights and  franchises  in each state in which there
exists a Mortgaged  Property (unless the failure to so preserve and maintain its
rights and franchises would not constitute a Material Adverse Change).


<PAGE>

c) Compliance With Laws,  Etc.  Subject to the provisions of Section 5.5 hereof,
comply  with  all  applicable  Requirements  of Law,  Use  Requirements  and all
agreements and grants of easements or  rights-of-way,  permits,  declarations of
covenants, conditions and restrictions,  disposition and development agreements,
planned unit development  agreements,  management or parking  agreements,  party
wall agreements or other instruments affecting the Mortgaged Properties.

d)  Payment  of Taxes  and  Claims,  Etc.  Pay (i) all  taxes,  assessments  and
governmental  charges  imposed  upon it or upon  its  property  (other  than the
Mortgaged Property), unless the failure to so pay would not constitute or result
in a Material  Adverse  Change,  (ii) subject to the  provisions  of Section 5.5
hereof  and  subparagraph  (iii) of this  Section,  all taxes,  assessments  and
governmental  charges  imposed  upon the  Mortgaged  Properties,  and all claims
(including,  without  limitation,  claims for  labor,  materials,  supplies,  or
services) which might, if unpaid, become a Lien upon the Mortgaged Properties or
any of them  unless,  in each  case,  the  validity  or amount  thereof is being
contested  in  good  faith  by  appropriate  proceedings  and the  Borrower  has
maintained  adequate  reserves  with  respect  thereto,  and  (iii)  all  taxes,
assessments and governmental charges imposed upon the Mortgaged Properties which
would,  if unpaid,  become a Lien  senior in  priority to the Lien of any of the
Mortgages within ten (10) days after Borrower's  notice of such Lien (unless the
taxes,  assessments or governmental charges to which such Lien relates are being
contested  in good  faith by  appropriate  proceedings  which have the effect of
staying enforcement or execution of such Lien and with respect to which adequate
reserves in conformity with GAAP have been provided on the books of Borrower).

e) Keeping of Books.  Keep accurate  records and books of account in which full,
accurate and correct  entries shall be made of all dealings or  transactions  in
relation to its business and affairs in accordance  with GAAP.  Upon  reasonable
prior  notice and during  normal  business  hours,  the  Borrower  shall  permit
representatives of any Lender to visit its offices and inspect, examine and make
abstracts  from any of its books  and  records,  and to  discuss  the  business,
operations,  and financial and other condition of the Borrower with officers and
employees of the Borrower and with its independent certified public accountants,
if any, in the presence of a representative of the Borrower.

f) Visitation,  Inspection,  Etc. Permit any  representative of the Agent or the
Lenders to visit and inspect  any of the  Mortgaged  Properties,  to examine its
books and records and to make copies and take extracts therefrom, and to discuss
its affairs, finances, and accounts with its officers,  accountants, and agents,
all upon reasonable notice from the Agent during normal business hours.

g) Maintenance of Property.  Keep all Mortgaged Properties in good working order
and condition and operate  Mortgaged  Properties in a manner consistent with the
operation thereof as an extended stay facility,  including ancillary  facilities
related thereto, and otherwise consistent with prudent business practices.

<PAGE>
h) Management of  Properties.  Subject to the  provisions of Section 5.5 hereof,
Borrower or a Subsidiary of shall directly or indirectly  operate and manage the
business of the Borrower at each of the Mortgaged Properties; provided, however,
that with the prior  written  consent of the Agent,  which  consent shall not be
unreasonably  withheld,  the  Borrower  may hire  another  Person to operate and
manage any Mortgaged Property.

i) Hazardous Materials Removal. Subject to the provisions of Section 5.5 hereof,
abate and/or remove any Hazardous  Materials  present in, on or under any of the
Mortgaged Properties in violation of any applicable Requirement of Law.

j) Covenants in the Loan  Documents.  Subject to the  provisions  of Section 5.5
hereof,  perform all covenants  (affirmative and negative)  contained in each of
the Loan  Documents  with  the same  effect  as if set  forth in their  entirety
herein.

(k)  Insurance.  Subject to the  provisions  of  Section  5.5  hereof,  keep the
Mortgaged  Properties  insured  in the manner  and in the  amounts  set forth in
Section 4.17.

(l) Further  Assurances.  The Borrower agrees upon demand of the Agent (i) to do
any act or execute  any  additional  documents  (including,  but not limited to,
security  agreements  on  any  personalty  included  or to be  included  in  the
Collateral)  as may be  reasonably  required by the Agent to confirm the Lien of
the Loan  Documents or to exercise or enforce its rights  under this  Agreement,
the Promissory Notes or the Loan Documents and to realize  thereon,  and (ii) to
execute and deliver to the Agent  and/or the Lenders such  additional  documents
and to provide such  additional  information as the Agent and/or the Lenders may
reasonably  require to carry out or confirm the terms of this  Agreement  or the
other Loan  Documents.  This  covenant  shall  survive the  termination  of this
Agreement  until  payment  in full of all  amounts  due  hereunder  or under the
Promissory  Notes and the Loan  Documents,  provided that the covenant  shall be
reinstated if any payment of all amounts due  hereunder or under the  Promissory
Notes and the Loan  Documents  is  required  to be  returned to the payor or any
other party under any applicable bankruptcy law.

(m) Deliberately omitted.

     Section 5.2 "Reporting  Covenants."  So long as the  Commitment  remains in
effect or any monetary obligation to the Agent or the Lenders hereunder or under
the  Promissory  Notes or the other Loan  Documents  shall  remain  unpaid,  the
Borrower  will  furnish  to the Agent at the  Borrower's  sole cost and  expense
(unless expressly waived by the Agent or the Lenders as provided herein):

a)  Annual  Financial  Statements  With  Respect  to the  Borrower.  As  soon as
available  and in any event within ninety (90) days after the end of each fiscal
year (unless the filing  requirements  have been extended by the  Securities and
Exchange  Commission  ("SEC"), in which case the 90-day period shall be extended
until the  earlier  of the date of  filing  with the SEC or such  extended  date
granted  by the SEC),  a  consolidated  balance  sheet of the  Borrower  and its
Subsidiaries as at the end of such year and the related consolidated  statements
of income, retained earnings, and cash flow of the Borrower and its Subsidiaries
for such fiscal year, setting forth in each case in comparative form the figures
for the previous  fiscal year,  all in reasonable  detail and  accompanied  by a
report thereon of Arthur  Andersen or other  independent  public  accountants of
comparable  recognized  national  standing  acceptable to the Agent,  which such
report  shall be  unqualified  as to scope of audit  and shall  state  that such
<PAGE>
consolidated  financial  statements  present fairly the  consolidated  financial
condition as at the end of such fiscal  year,  and the  consolidated  results of
operations  and changes in cash flow for such fiscal  year,  of the Borrower and
its Subsidiaries in accordance with GAAP, and a statement of sources and uses of
funds in the form of Exhibit Q, indicating to Agent's satisfaction, that (A) the
sources and uses of funds are in balance with respect to Borrower's  business in
general and (B) the Borrower has adequate sources to satisfy the Borrower's cash
requirements..

b)  Quarterly  Financial  Statements  With Respect to the  Borrower.  As soon as
available  and in any event  within sixty (60) days after the end of each fiscal
quarter  other than the last fiscal  quarter of a fiscal year (unless the filing
requirements have been extended by the SEC in which case the 60-day period shall
be  extended  until  the  earlier  of the  date of  filing  with the SEC or such
extended date granted by the SEC), a consolidated  balance sheet of the Borrower
and its Subsidiaries as at the end of such quarter and the related  consolidated
statements of income and cash flow of the Borrower and its Subsidiaries for such
fiscal quarter and/or for the portion of the Borrower's fiscal year ended at the
end of such quarter,  setting forth in each case in comparative form the figures
for the corresponding  quarter and the  corresponding  portion of the Borrower's
previous  fiscal year, all in reasonable  detail and certified by the Controller
or chief  financial  officer of the Borrower  that they are complete and correct
and that they fairly present the consolidated  financial condition as at the end
of such fiscal quarter,  and the consolidated  results of operations and changes
in cash flow for such  fiscal  quarter  and/or  such  portion of the  Borrower's
fiscal year,  of the  Borrower  and its  Subsidiaries  in  accordance  with GAAP
(subject to normal, year-end audit adjustments),  and a statement of sources and
uses of funds in the form of Exhibit Q, indicating to Agent's satisfaction, that
(A) the  sources  and uses of funds are in balance  with  respect to  Borrower's
business in general and (B) the  Borrower  has  adequate  sources to satisfy the
Borrower's cash requirements.

c) Annual Financial  Statements With Respect to Operating Mortgaged  Properties.
As soon as available  and in any event within  ninety (90) days after the end of
each fiscal year of the  Borrower  or at such time as the  financial  statements
described in Section  5.2(a) above are furnished to the Agent,  a statement with
respect to each of the operating Mortgaged Properties for such fiscal year, each
of which statements  shall (i) be in the form of Exhibit L attached hereto,  and
contain in comparative form the information required to complete such Exhibit in
the manner  and  detail  contemplated  by such  Exhibit,  (ii) set forth the Net
Operating Income of each such Mortgaged  Property in comparative form, and (iii)
be certified by the Controller or chief  financial  officer of the Borrower that
they are  complete  and  correct and that they  fairly  present the  information
required to complete  such Exhibit for each such  property as at the end of such
fiscal year, in accordance with GAAP and (iv) state that such statement presents
fairly the information  required to complete such Exhibit for each such property
as at the end of such fiscal year, in accordance with GAAP.

d)  Monthly  Financial  Statements  With  Respect  to  the  Operating  Mortgaged
Properties.  As soon as available and in any event within thirty (30) days after
the end of each  Accounting  Period,  a  statement  with  respect to each of the
operating Mortgaged  Properties as at the end of such Accounting Period, each of
which  statements  shall (i) be in the form of  Exhibit L attached  hereto,  and
contain in comparative form the information required to complete such Exhibit in
the manner  and  detail  contemplated  by such  Exhibit,  (ii) set forth the Net
Operating Income of each such Mortgaged  Property in comparative  form, (iii) be
certified by the Controller or chief financial officer of the Borrower that they
are complete and correct and that they fairly present the  information  required
to complete such Exhibit for each such property as at the end of such Accounting
Period, in accordance with GAAP (subject to normal, year-end audit adjustments).

e) No  Default/Compliance  Certificate.  Together with the financial  statements
required  pursuant to subsections  (a), (b), (c) and (d) above, a certificate of
the President,  the Controller or the chief financial officer of the Borrower to
the effect  that,  based  upon a review of the  Borrower's  activities  and such
financial statements during the period covered thereby, there exists no Event of
Default  and no Default  under this  Agreement,  or if there  exists an Event of
Default or a Default hereunder, specifying the nature thereof and the Borrower's
actions taken or proposed to be taken in response thereto.  The President or the
chief  financial  officer or the  Controller of the Borrower  shall complete the
form of  certificate  attached as Exhibit D to this  Agreement and shall certify
thereon that the Borrower is in compliance  with all financial  covenants  under
this Agreement.

f) Notice of Default or Events of Default. Promptly after acquiring knowledge of
the  occurrence  of a  Default  or an Event of  Default,  a  certificate  of the
president  or  chief  financial  officer  or  the  Controller  of  the  Borrower
specifying the nature thereof and the Borrower's proposed response thereto.

g) Litigation.  Promptly after (i) the  occurrence  thereof,  the Borrower shall
deliver notice of the institution of or any development in any action,  suit, or
proceeding or any  governmental  investigation  or any  arbitration,  before any
court or arbitrator or any  governmental  or  administrative  body,  agency,  or
official,  against the Borrower or any Mortgaged  Property in writing,  (ii) the
Borrower receives actual knowledge thereof, the Borrower shall deliver notice of
the threat of any such action, suit, proceeding,  investigation, or arbitration,
or (iii)  receipt  thereof,  the  Borrower  shall  deliver  notice of any claims
relating to the Lenders'  interests or any proposal by a Governmental  Authority
to acquire any part of the Mortgaged  Properties (other than any such proceeding
or  development  which,  as  reasonably  likely  to  be  determined,  would  not
constitute or result in a Material Adverse Change).

(h) Adverse  Change.  Immediately  after the Borrower knows of the occurrence of
any Material Adverse Change,  a certificate of any  Co-Chairman,  the President,
any  Senior  Vice  President,  any Vice  President  or the  Controller  or chief
financial officer of the Borrower specifying the nature of such change.

(i) Deliberately omitted

(k) Other Information.  With reasonable promptness, such other information about
the Borrower,  Realty and the  Mortgaged  Properties as the Agent or the Lenders
may reasonably request from time to time.

     Section 5.3  "Certain  Negative  Covenants."  Neither  Borrower  nor,  with
respect to subsections (k) through (r), any Subsidiary of Borrower will:

a)        Deliberately omitted

b)        Deliberately omitted

c)        Deliberately omitted

d)        Deliberately omitted

e)        Deliberately omitted

f)        Deliberately omitted

g)        Deliberately omitted

h) Available  Amount.  Permit the aggregate  principal amount of all outstanding
Advances  at any time to exceed the lesser of (i) the  Commitment,  and (ii) the
Maximum Availability Amount at such time.

i)        Deliberately omitted

j)        Deliberately omitted

k) Sales, Transfers.  Sell, transfer or enter into any agreement for the sale or
transfer of any of the  Mortgaged  Properties  without the consent of the Agent,
which consent may be withheld in the Agent's sole discretion.

l) Liens.  Create,  incur,  assume, or suffer to exist any Lien on any Mortgaged
Property to secure any  Indebtedness of the Borrower or any other Person,  other
than Permitted Encumbrances.

m)        Deliberately omitted

n) Changes in Property or Business. Except in connection with the development of
an extended stay facility and ancillary  facilities  related thereto or with the
prior written consent of the Agent:

              (A) Make or allow any material  change to be made in the nature of
the use of any  Mortgaged  Property,  or any part thereof from that in effect on
the date hereof or the date acquired, as the case may be; or

              (B) Initiate or  acquiesce  in any change in any Use  Requirements
now or  hereafter in effect and  affecting  any  Mortgaged  Property or any part
thereof.

o)        Deliberately omitted

p) Use of  Proceeds.  Use the  proceeds  of the  Advances  for  other  than  any
Permitted Purpose.

q) Change of Business.  Make or allow any material change in the nature or scope
of the business of the  Borrower or any  Subsidiary,  except as permitted  under
Section 4.32.

r)        Hazardous Materials. Subject to the provisions of Section 5.5 hereof:

(i) Use or permit or suffer use of any Mortgaged Property or any part thereof or
any interest therein or conduct any activity or operations thereon in any manner
which:

                  (A) would  involve or result in the  occurrence or presence of
or  exposure  to  Hazardous  Materials  at,  upon,  under,  across or within any
Mortgaged Property or any part thereof not in the ordinary course of operation;

                  (B) would violate any Relevant Environmental Laws; or

                  (C)  would  result  in the  occurrence  of  any  Environmental
Discharge.

(ii) Install or suffer or permit  installation  or Presence  on, in or under any
Mortgaged  Property  or any part  thereof  of any  underground  or  above-ground
containers for the storage of fuel oil, gasoline or other petroleum  products or
by-products,  except (i) such above-ground  containers that are required for the
operation of the Mortgaged Property and that are at all times in compliance with
all Relevant Environmental Laws and any other applicable Requirements of Law and
(ii) such  underground  containers  that are required  for the  operation of the
Mortgaged  Property  and  are at all  times  in  compliance  with  all  Relevant
Environmental Laws and any other applicable Requirements of Law.

     Section 5.4 "Material  Casualties." The Borrower agrees that if at any time
prior  to the  repayment  in full of the  Advances  and the  termination  of the
Commitment  (including,  but not limited  to, at any time,  prior to or after an
Event of Default) any Mortgaged Property is damaged by fire, earthquake or other
casualty  in such a manner or to such an extent so that it is  unlikely,  in the
Agent's reasonable judgment, that such Mortgaged Property will be restored on or
prior to the Maturity Date to the same physical,  leased and operating condition
as it exists prior to such casualty, the Borrower shall, within twenty (20) days
of the Agent's  written  request,  direct that the  insurance  proceeds from the
casualty be delivered over to the Agent, to be applied by the Agent to repayment
of or the  Borrower's  obligations  under  this  Agreement  and the  other  Loan
Documents.

     Section  5.5  "Effect  of  Certain   Representations   or  Covenants  Being
Inaccurate  or  Breached."  In the  event  that any of the  representations  and
warranties  contained in Sections 4.11,  4.17,  4.18, 4.22, 4.24, 4.25, 4.27 and
4.28 of this Agreement (or any representation or warranty contained in any other
Loan  Document  which  is   substantially   similar  to  any  of  the  foregoing
representations and warranties) are not accurate when made or deemed made, or in
the event that any of the covenants contained in Sections 5.1(c),  (d)(ii), (h),
(i),  (j), (k) and (m) and 5.3(n) (or any  covenant  contained in any other Loan
Document which is substantially  similar to any of the foregoing  covenants) are
breached,  then,  notwithstanding  anything  to the  contrary,  such  breach  or
inaccuracy shall not constitute or be deemed a Default or Event of Default,  and
Borrower shall not be deemed to have made any misrepresentation, or breached any
warranty or covenant unless and until (but shall, at Agent's option,  constitute
and be deemed a Default and Event of Default,  and  Borrower  shall be deemed to
have made such misrepresentation,  or breached such warranty or covenant, if and
when):
<PAGE>
         (a) (i) Borrower is given notice of the  circumstances  which,  but for
this Section 5.5, would constitute such misrepresentation, or breach of warranty
or covenant and such  circumstances  are not remediated (i.e, the  circumstances
which would otherwise constitute such  misrepresentation,  or breach of warranty
or covenant no longer exist) within (1) in the case of  circumstances  which can
be  remediated  by the payment of a sum of money only, 10 days after such notice
is given, and (2) in the case of all other circumstances, thirty (30) days after
such notice is given plus, if such circumstances cannot reasonably be remediated
within  thirty (30) days after such notice is given and the  Borrower has during
such 30-day period  commenced to remediate  such  circumstances  and  thereafter
diligently  pursues  all  necessary  efforts to effect  such  remediation,  such
additional  period  of time  as may be  required  to  effect  such  remediation;
provided,  however,  that if at any time during any cure period  described above
regarding  circumstances the cost to remediate which are quantifiable,  Borrower
shall not have provided evidence satisfactory to the Agent that the Borrower has
available to it sufficient  funds (other than from  borrowings  pursuant to this
Agreement)  to  promptly  effect  any such  remediation,  then  the cure  period
provided for above regarding such circumstances shall immediately expire; and

              (ii) upon the expiration of the applicable  cure period  described
in  Section  5.5(a)(i),  if such  circumstances  have not been  remediated,  the
aggregate principal amount of all outstanding  Advances at such time exceeds the
"Eligible Maximum  Availability  Amount",  as herein defined,  at such time. The
term "Remediation  Amount" means the amount which Borrower certifies to Agent in
writing  (Borrower  hereby  agreeing  to so certify  such amount  promptly  upon
Agent's request) as being Borrower's reasonable estimate (determined in a manner
reasonably  acceptable to Agent, the basis for which  determination shall be set
forth in  reasonable  detail in such  certification)  of the  aggregate  cost of
remediating all  circumstances  which would  constitute a  misrepresentation  or
breach of  warranty or covenant  of any of the  representations,  warranties  or
covenants  described  above in this  Section  5.5.  The term  "Eligible  Maximum
Availability Amount" means, as of the date of expiration of such applicable cure
period,  the  Maximum   Availability  Amount  as  of  such  date  recomputed  by
subtracting  from the  Eligible  Costs as of such  date the  amount by which the
Remediation Amount exceeds, if at all, the lesser of (x) $3,000,000.00,  and (y)
the  greater of (A)  $300,000.00,  and (B) 3% of the  Eligible  Costs as of such
date; provided, however,  notwithstanding the foregoing, the aggregate principal
amount of all  outstanding  Advances  shall not at any time exceed the lesser of
(i) the Commitment, and (ii) the Maximum Availability Amount at such time; or

         (b) all  circumstances  which would constitute a  misrepresentation  or
breach of  warranty or covenant  of any of the  representations,  warranties  or
covenants described above in this Section 5.5, when taken as a whole, constitute
a Material Adverse Change.

In the event that any  misrepresentation  or breach of warranty or covenant with
respect  to one or more  Mortgaged  Properties  occurs  which,  pursuant  to the
provisions  of this Section 5.5,  constitutes  or will  constitute a Default and
Event of Default,  then,  subject to the terms hereof,  Borrower  shall have the
right to substitute  for such affected  Mortgaged  Properties  one or more other
properties  of the Borrower or its  Subsidiaries,  provided that (i) all of such

<PAGE>
proposed  substitute  properties  are acceptable in all respects to the Agent in
its sole, absolute and subjective  discretion,  (ii) all other conditions herein
to a property becoming a Mortgaged Property are satisfied and complied with, and
(iii) both before and after  giving  effect to such  proposed  substitution,  no
Default or Event of Default (other than as a result of such misrepresentation or
breach of warranty or covenant) shall exist.

                                     ARTICLE VI

                                EVENTS OF DEFAULT

     Section 6.1 "Events of Default." The occurrence  and  continuance of any of
the following specified events shall constitute an "Event of Default":

a) Payments.  The Borrower  shall fail to pay (i) any  principal of the Advances
hereunder when due, or (ii) within three (3) days when due  (including,  without
limitation,  by mandatory prepayment) (1) any interest on any of the Advances or
any fees or (2) any other  amount  payable  hereunder  or under  the other  Loan
Documents.

b) Certain Property  Representations  and Covenants.  Any  misrepresentation  or
breach of warranty or  covenant  occurs  which,  pursuant to the  provisions  of
Section 5.5 hereof, constitutes a Default and Event of Default.

c) Other  Covenants.  The Borrower shall fail to observe or perform any covenant
or agreement  (other than those referred to in Sections 6.1(a) and (b)) and such
failure shall remain unremedied (i) in the case of any amounts payable hereunder
or under the other Loan Documents,  for 3 days after notice from the Agent, (ii)
in the case of covenants or agreements contained in Section 5.2(a), (b), (c) and
(d) of this  Agreement,  for 15 Business Days after the occurrence  thereof;  or
(iii) in all other cases, for 30 days after the occurrence thereof. In the event
that a breach of a covenant  described  in clause  (iii)  above  cannot be cured
within 30 days after the  occurrence  thereof and the  Borrower  has during such
30-day period  commenced to cure such breach and thereafter  diligently  pursues
all necessary efforts to effect a cure, an Event of Default shall be deemed only
to have occurred if the breach either cannot be remedied, or remains unremedied,
for 60 days after the occurrence thereof.

d) Representations. Any representation, warranty, or statement (other than those
referred to in Section  6.1(b)) made or deemed to be made by the Borrower or any
other  Person  (other than the Agent or any Lender)  that is a party to any Loan
Document under or in connection with any Loan Document shall have been incorrect
in any material respect as of the date hereof,  or as of the date deemed to have
been made.

e)  Non-Payments  of Other  Indebtedness.  The  Borrower  shall fail to make any
payment of principal of or interest on any  Indebtedness  of the Borrower (other
than any Indebtedness under this Agreement or the other Loan Documents and other
than Permissible  Assumed  Indebtedness) in an aggregate principal amount of not
less than $5,000,000.00 within the applicable cure period or any event specified
in any note,  agreement,  indenture or other document  evidencing or relating to
any such Indebtedness shall occur; and the effect of such failure or event is to
accelerate,  or to permit the holder of such aggregate Indebtedness or any other
Person to accelerate,  the maturity of such  Indebtedness;  or such Indebtedness
shall be required to be prepaid  (other than by a regularly  scheduled  required
prepayment) in whole or in part prior to its stated maturity.
<PAGE>
f) Defaults Under Loan  Documents.  The Borrower or any other Person (other than
the Agent or any  Lender)  that is a party to any Loan  Document  shall  fail to
observe or perform any  covenant or agreement  (other than those  referred to in
Sections  6.1(a) and (b)) contained in any other Loan  Document,  or any default
shall  occur  under any other Loan  Document  (other  than those  referred to in
Sections 6.1(a) and (b)) and such failure or default shall remain unremedied (i)
in the case of any amounts  payable under the other Loan  Documents,  for 3 days
after notice from the Agent, (ii) in the case of covenants or agreements similar
to the covenants or agreements  contained in Section 5.2(a), (b), (c) and (d) of
this Agreement,  for 15 Business Days after the occurrence  thereof; or (iii) in
all other cases, for 30 days after the occurrence  thereof.  In the event that a
breach of a covenant  described  in clause (iii) above cannot be cured within 30
days after the  occurrence  thereof and the  Borrower  or such other  Person has
during  such  30-day  period  commenced  to  cure  such  breach  and  thereafter
diligently  pursues all necessary  efforts to effect a cure, an Event of Default
shall be deemed only to have  occurred if the breach  either cannot be remedied,
or remains unremedied, for 60 days after the occurrence thereof.

g) Bankruptcy.  The Borrower shall commence a voluntary case  concerning  itself
under  Title  11 of the  United  States  Code  entitled  "Bankruptcy"  as now or
hereafter in effect,  or any successor  thereto (the "Bankruptcy  Code");  or an
involuntary  case is  commenced  against the  Borrower  and the  petition is not
dismissed  within 90 days,  after  commencement  of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of the Borrower;  or the Borrower commences any
other  proceeding  under any  reorganization,  arrangement,  adjustment of debt,
relief of debtors, dissolution, insolvency, or liquidation or similar law of any
jurisdiction  whether now or  hereafter  in effect  relating to the  Borrower or
there is  commenced  against the  Borrower  any such  proceeding  which  remains
undismissed for a period of 90 days; or the Borrower is adjudicated insolvent or
bankrupt;  or any  order of  relief or other  order  approving  any such case or
proceeding is entered;  or the Borrower suffers any appointment of any custodian
or  the  like  for it or any  substantial  part  of  its  property  to  continue
undischarged  or  unstayed  for a period  of 90 days;  or the  Borrower  makes a
general  assignment for the benefit of creditors;  or the Borrower shall fail to
pay,  or shall  state that it is unable to pay,  or shall be unable to pay,  its
debts  generally as they become due; or the Borrower shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts;  or
the  Borrower  shall by any act or  failure  to act  indicate  its  consent  to,
approval of, or acquiescence in any of the foregoing;  or any action is taken by
the Borrower for the purpose of effecting  any of the  foregoing;  or any of the
foregoing shall occur with respect to any Subsidiary Mortgagor.
<PAGE>
h) Money  Judgment.  A judgment  or order for the  payment of money in excess of
$5,000,000  shall be rendered  against the Borrower  and such  judgment or order
shall continue unsatisfied (in the case of a money judgment) and in effect for a
period of 30 days during  which  execution  shall not be  effectively  stayed or
deferred (whether by action of a court, by agreement, or otherwise) (or, if such
judgment is covered by  insurance,  such longer period during which the Borrower
is appealing or otherwise contesting such judgment in good faith).

i)  Cessation.  Borrower  ceases,  or threatens  to cease,  to carry on all or a
substantial part of its business.

(j) Suburban Credit Agreement.  An Event of Default,  as defined in the Suburban
Credit Agreement.

(k)   Sale-Leaseback   Facility.   A  default  shall  have  occurred  under  the
Sale-Leaseback Facility.

         (l)  Appraisals.  Agent  shall  have  failed to receive an "as is" land
valuation,  acceptable to Agent, for each of the Mortgaged Properties by May 18,
1999.

     Section 6.2 "Global  Remedies." Upon the occurrence and  continuation of an
Event of Default, and at any time thereafter, if any Event of Default shall then
be continuing,  the Lenders may, by written notice to the Borrower,  take any or
all of the following actions,  without prejudice to the rights of the Lenders to
enforce its claims against the Borrower:  (i) declare the Commitment terminated,
whereupon the Commitment  shall terminate  immediately;  (ii) declare all or any
portion of the  principal  of and any accrued  interest on the  Advances and all
other  obligations  owing hereunder and under the other Loan  Documents,  to be,
whereupon the same shall become,  forthwith due and payable without presentment,
demand,  protest, or other notice of any kind, all of which are hereby waived by
the Borrower; (iii) foreclose on any Collateral concurrently or in such order as
the Agent may from time to time see fit; or (iv) take any action permitted under
any Loan Document;  provided, that, if any Event of Default specified in Section
6.1(g) shall occur, the actions specified in clauses (i) and (ii) above shall be
deemed to have immediately and automatically  occurred without the giving of any
notice to the Borrower.

     Section 6.3 "Marshalling: Waiver of Certain Rights; Recapture." Neither the
Agent nor the Lenders  shall be under any  obligation  to marshall any assets in
favor of the  Borrower or any other party or against or in payment of any or all
of the obligations of such parties.  To the extent permitted by law the Borrower
waives and  renounces  the benefit of all  valuation,  appraisement,  homestead,
exemption,  stay,  redemption,  and moratorium  rights under or by virtue of the
constitution and laws of the state in which the Mortgaged Properties are located
and of any other  state or of the  United  States,  now  existing  or  hereafter
enacted.  To the extent the Agent or any Lender  receives  any  payment by or on
behalf of the  Borrower,  which  payment  or any part  thereof  is  subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate,  trustee,  receiver,  custodian, or any
other party  under any  bankruptcy  law,  state or federal  law,  common law, or
equitable cause, then to the extent of such payment or repayment, the obligation
or part  thereof  which has been paid,  reduced,  or  satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included  within
the  liabilities  of the  Borrower  to such  party as of the date  such  initial
payment,  reduction,  or  satisfaction  occurred,  together with interest at the
Default  Rate.  The Borrower  agrees that (i) the Agent on behalf of the Lenders
shall have the right to pursue all of its rights and remedies in one proceeding,
or separately and  independently  in separate  proceedings from time to time, as
the Agent,  in its sole and absolute  discretion,  shall  determine from time to
time,  (ii) the Collateral may be sold at such  proceeding or proceedings in one
or more sales and in such portions or combinations as the Agent, in its sole and
absolute discretion,  shall determine,  (iii) the Agent on behalf of the Lenders
shall not be required  to marshall  assets,  sell any of the  Collateral  in any
inverse order of  alienation,  or be subject to any "one action" or "election of
remedies" law or rule, (iv) the exercise by the Lenders of any remedies  against
any one item of  Collateral  will not impede the Lenders  from  subsequently  or
simultaneously exercising remedies against any other item of Collateral, and (v)
all Liens and other rights,  remedies,  or privileges  provided to the Agent and
the Lenders under this  Agreement and the other Loan  Documents  shall remain in
full force and effect  until the Agent and the  Lenders  have  exhausted  all of
their  remedies  against  the  Collateral  and all of the  Collateral  has  been
foreclosed,  sold or otherwise  realized upon in  satisfaction of the Promissory
<PAGE>
Notes and the other  obligations  of the  Borrower to the Agent and the Lenders.
Each Lender and its officers,  directors,  shareholders,  employees, counsel and
agents shall not incur any liability as a result of the sale of the  Collateral,
or any part thereof,  in accordance with the provisions of this Agreement or any
Loan Document,  or for the failure to sell or offer for sale the Collateral,  or
any part  thereof,  for any reason  whatsoever.  The Borrower  waives any claims
against  each  Lender  and its  officers,  directors,  shareholders,  employees,
counsel and agents arising with respect to the price at which the Collateral, or
any part  thereof,  may have been sold by reason of the fact that such price was
less than the  aggregate  amount of the  indebtedness  due under the  Promissory
Notes, this Agreement and the other Loan Documents.

     Section 6.4  "Application of Proceeds." All proceeds  received by the Agent
or the  Lenders in  respect of the  repayment  of any sums due  hereunder  or in
connection with a foreclosure sale of all or any portion of the Collateral after
the occurrence of an Event of Default shall be applied,  first,  to the costs of
enforcement of the Lenders' rights hereunder and under the other Loan Documents;
second, to pay any accrued and unpaid interest  (including all interest owing at
the Default  Rate),  the  principal  amount of the  Advances and any unpaid fees
payable  under  this  Agreement  and the other Loan  Documents  in such order of
priority as the Agent, in its sole and absolute  discretion  shall determine but
subject to the rights of the Lenders;  and third,  if any excess proceeds exist,
to the Borrower or any party entitled  thereto as a matter of law. If the amount
of all proceeds received in liquidation of the Collateral which shall be applied
to payment of the indebtedness due in respect of this Agreement,  the Promissory
Notes and the Loan Documents shall be insufficient to pay all such  indebtedness
or obligations in full,  the Borrower  acknowledges  that it shall remain liable
for any  deficiency,  together  with  interest  thereon and costs of  collection
thereof (including reasonable counsel fees and legal expenses).

b) The Agent  shall  have the right,  but not the  obligation,  to  deposit  any
proceeds in its  possession  which are  available  under clause third of Section
6.4(a) above into a court of competent  jurisdiction  for  determination by such
court of the  disposition  of such excess  proceeds and upon such  deposit,  the
Agent shall have no further  liability with respect to such proceeds.  All costs
and  expenses  of the Agent in  connection  with such  action may be deducted or
charged  by the Agent  against  such  excess  proceeds  and shall  otherwise  be
reimbursed by the Borrower upon demand.  The Agent shall have the right, but not
the  obligation,  to request  and rely on the  instructions  of the  Borrower in
connection with the disposition of any such excess proceeds and, upon compliance
with such  instructions,  shall have no further  liability  with respect to such
proceeds.

     Section 6.5 "Attorneys-in-Fact." The Borrower hereby makes, constitutes and
appoints the Agent, and its agents and designees, the true and lawful agents and
attorneys-in-fact of the Borrower, with full power of substitution,  to take any

<PAGE>
or all of the following  actions during the  continuance of an Event of Default:
(i) to receive,  open and dispose of all mail addressed to the Borrower relating
to the  Collateral,  (ii) to notify and direct the  United  States  Post  Office
authorities  by  notice  given in the name of the  Borrower  and  signed  on its
behalf, to change the address for delivery of all mail addressed to the Borrower
relating to the  Collateral to an address to be designated by the Agent,  and to
cause such mail to be delivered to such  designated  address where the Agent may
open all such mail and remove therefrom any notes, checks, acceptances,  drafts,
money  orders or other  instruments  in payment of the  Collateral  in which the
Agent has a security interest hereunder and any documents relative thereto, with
full power to endorse  the name of the  Borrower  upon any such  notes,  checks,
acceptances,  drafts,  money orders or other form of payment or on Collateral or
security of any kind and to effect the deposit and collection  thereof,  and the
Agent shall have the further right and power to endorse the name of the Borrower
on any documents otherwise relating to such Collateral,  and (iii) to do any and
all other things  necessary or proper to carry out the intent of this  Agreement
and to perfect and protect the liens and rights of the Agent  created under this
Agreement, including, without limitation, to claim, bring suit, settle or adjust
any insurance  proceeds claims  relating to the Collateral.  The Borrower agrees
that  neither the Lenders nor any of their  officers,  directors,  shareholders,
employees,  counsel,  agents,  designees or attorneys-in-fact will be liable for
any acts of commission  or omission,  or for any error of judgment or mistake of
fact or law, except for any acts of gross negligence or willful misconduct.  The
powers  granted  hereunder are coupled with an interest and shall be irrevocable
during the term hereof.

                                     ARTICLE VII

                     AGENCY AND INTERCREDITOR RELATIONSHIPS

     Section 7.1 "Appointment."  Each Lender hereby  irrevocably  designates and
appoints  Commerzbank AG, New York Branch, as the Agent of such Lender under the
Loan Documents,  and each such Lender irrevocably authorizes Commerzbank AG, New
York  Branch,  to act as the Agent for such  Lender,  to take such action on its
behalf under the  provisions  of this  Agreement  and the Loan  Documents and to
exercise such powers and perform such duties as are  expressly  delegated to the
Agent by the terms of this Agreement and the Loan Documents,  together with such
other powers as are reasonably  incidental thereto. The Agent shall not have any
duties or  responsibilities,  except those expressly set forth in this Agreement
and the Loan Documents,  or any fiduciary  relationship with any Lender,  and no
implied  covenants,   functions,   responsibilities,   duties,   obligations  or
liabilities  on the  part of the  Agent  shall  be  read  into  any of the  Loan
Documents or otherwise  exist against the Agent.  The provisions of this Article
VII are solely for the benefit of the Agent and the  Lenders,  and the  Borrower
shall not have any rights as a third-party beneficiary or otherwise under any of
the provisions of this Article VII. In performing its functions and duties under
the Loan  Documents,  the Agent shall act solely as the agent of the Lenders and
does not assume nor shall the Agent be deemed to have assumed any  obligation or
relationship  of trust or agency with or for the Borrower or any of such party's
respective successors and assigns.

     Section 7.2 "Delegation of Duties." The Agent may execute any of its duties
under the Loan Documents by or through agents or attorneys-in-fact  and shall be
entitled to advice of counsel  (including its internal  counsel)  concerning all
matters  pertaining to such duties.  The Agent shall not be responsible  for the
negligence or misconduct of any agents or attorneys-in-fact  selected by it with
reasonable care.

<PAGE>
     Section 7.3 "Exculpatory Provisions." The Agent shall not be (a) liable for
any action  lawfully taken or omitted to be taken by it or any Person  described
in Section 7.2 under or in connection  with any Loan Document  (except for those
actions arising from the Agent's own gross negligence or willful misconduct), or
(b)  responsible  in  any  manner  to  any  of the  Lenders  for  any  recitals,
statements,  representations or warranties made by the Borrower contained in any
Loan Document, or by the Borrower in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection with
any  Loan  Document  or for the  value,  validity,  effectiveness,  genuineness,
enforceability  or  sufficiency  of any Loan  Document or any such  certificate,
report,  statement or other document, or for any failure of the Borrower, or any
Lender to perform or observe its respective obligations hereunder or thereunder.
Unless the Agent shall have been requested to do so by a Lender on such Lender's
behalf,  the Agent shall not be under any  obligation to any Lender to ascertain
or to inquire  as to the  observance  or  performance  of any of the  agreements
contained in, or conditions of any Loan Document,  or to inspect the properties,
or the books or records of the Borrower.  This Section 7.3 is intended to govern
solely the relationship  between the Agent, on the one hand, and the Lenders, on
the other.

     Section 7.4  "Reliance  by the Agent." The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing,  resolution,  notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message,  statement, order or other document or conversation (including
by telephone)  believed by it to be genuine and correct and to have been signed,
sent or made by the proper  Person or Persons and upon advice and  statements of
legal counsel (including,  without limitation,  its internal counsel and counsel
to the  Borrower),  independent  accountants  and other experts  selected by the
Agent.  The Agent  shall be fully  justified  in failing or refusing to take any
action  under any Loan  Document  unless it shall first  receive  such advice or
concurrence of the Lenders required pursuant to this Agreement or it shall first
be indemnified to its  satisfaction by the Lenders against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.

     Section  7.5  "Notice of  Default."  The Agent  shall not be deemed to have
knowledge or notice of the  occurrence of any Default or Event of Default unless
(i) the Agent has  received  notice from a Lender or the  Borrower  referring to
this  Agreement,  describing  such  Default or Event of Default and stating that
such notice is a "notice of  default,"  or (ii) the Agent,  in its capacity as a
Lender,  has actual knowledge of such Default or Event of Default.  In the event
that the Agent  receives  such a notice,  the Agent shall  promptly  give notice
thereof to the  Lenders.  The Agent shall take such action with  respect to such
Default  or Event of  Default  as shall be  directed  by the  Required  Lenders;
provided that unless and until the Agent shall have  received  such  directions,
the Agent may (but shall not be obligated to) take such action,  or refrain from
taking  such  action,  with  respect to such  Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Lenders.
<PAGE>

b) Each Lender agrees that it shall  promptly  notify the Agent in writing after
it first has knowledge of any Default or Event of Default or of any matter which
in such Lender's judgment adversely affects any Lender's respective interests in
the  Commitment,  which notice will  describe the Default or Event of Default or
matter in  reasonable  detail.  The Agent  shall give a copy of any such  notice
received by the Agent to the other Lenders if such notice pertains to a Decision
by the Lenders pursuant to Section 7.14 or 7.15 hereof.

     Section  7.6."Non-Reliance on the Agent and the Other Lenders." Each Lender
expressly  acknowledges  that  neither  the  Agent,  nor  any of  its  officers,
directors,  employees,  agents,  attorneys-in-fact  or  affiliates  has made any
representations  or  warranties  to it and  that no act by the  Agent  hereafter
taken, including,  without limitation, any review of the affairs of the Borrower
shall be deemed to constitute any  representation or warranty by the Agent. Each
Lender  represents  and  warrants  to the Agent that it has,  independently  and
without  reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate,  (a) made its own appraisal of and
investigation into the business, operations,  property, prospects, financial and
other condition,  creditworthiness  and solvency of the Borrower,  (b) satisfied
itself as to the due execution, legality, validity, enforceability, genuineness,
sufficiency and value of all of the Loan Documents and all other instruments and
documents furnished pursuant to any Loan Document, and (c) made its own decision
as to its Percentage of the Commitment  pursuant to this Agreement.  Each Lender
also represents that it will,  independently and without reliance upon the Agent
or any other Lender,  and based on such  documents and  information  as it shall
deem  appropriate  at the  time,  continue  to  make  its own  credit  analyses,
appraisals  and decisions in taking or not taking  action under this  Agreement,
and to make such  investigation as it deems necessary to inform itself as to the
business,  operations,  property,  prospects,  financial and other condition and
creditworthiness  of  the  Borrower.  Except  for  notices,  reports  and  other
documents  expressly  required pursuant to the Loan Documents to be furnished by
the Agent to the Lenders, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations,    property,   prospects,   financial   and   other   condition   or
creditworthiness of the Borrower which may come into the possession of the Agent
or any of its  officers,  directors,  employees,  agents,  attorneys-in-fact  or
affiliates.

     Section 7.7 "Indemnification." The Lenders agree to indemnify the Agent (in
its capacity as such) and its officers,  directors,  employees,  representatives
and agents (to the extent not  reimbursed  by the Borrower and without  limiting
the  obligation,  if any, of the Borrower to do so),  ratably in accordance with
their  Percentages,  from  and  against  any and all  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements of any kind or nature whatsoever  (including,  without limitation,
the fees and disbursements of counsel for the Agent or such Person in connection
with any  investigative,  administrative  or judicial  proceeding  commenced  or
threatened,  whether or not the Agent or such Person shall be designated a party
thereto) that may at any time be imposed on, incurred by or asserted against the
Agent or such Person as a result of, or arising out of, or in any way related to
or by reason of, any of the  transactions  contemplated by the Loan Documents or
the  execution,  delivery or performance of any Loan Document (but excluding any
such liabilities,  obligations,  losses, damages, penalties, actions, judgments,
suits,  costs,  expenses  or  disbursements  resulting  solely  from  the  gross
negligence or willful  misconduct of the Agent or such Person as determined by a
court of  competent  jurisdiction).  The  agreements  in this  subsection  shall
survive  the  payment  of the  Promissory  Notes and all other  amounts  payable
hereunder.
<PAGE>
     Section  7.8 "The  Agent in Its  Individual  Capacity."  The  Agent and its
Affiliates may make loans to, accept  deposits from and generally  engage in any
kind of business  with the  Borrower as though it were not the Agent  hereunder.
With respect to Advances made or renewed by it and any Promissory Note issued to
it, the Agent shall have the same rights and powers under this  Agreement as any
Lender and may exercise the same as though it were not the Agent.

     Section  7.9  "Agents  Resignation."  The Agent  may  resign at any time by
giving  notice  thereof  to  the  Lenders  and  the  Borrower.   Upon  any  such
resignation,  the Required  Lenders  shall  designate  within 45 days in writing
another Person as the successor  Agent.  Provided that no Event of Default shall
have occurred and be  continuing,  Borrower shall have the right to approve such
successor  Agent.  If such proposed  successor Agent agrees in writing to act as
the Agent in  accordance  with the terms  hereof,  such  successor  Agent  shall
thereupon succeed to and become vested with all the rights, powers,  privileges,
duties and obligations of the resigning  Agent, and the resigning Agent shall be
discharged from its duties and obligations as Agent under this Agreement.  After
any retiring Agent's resignation  hereunder,  the provisions of this Article VII
shall inure to its benefit as to any actions  taken or omitted to be taken by it
while it was the Agent under this Agreement.

     Section 7.10 "Appointment of a Substitute Agent."  Commerzbank AG, New York
Branch,  shall be the initial Agent under this  Agreement and the Loan Documents
until the Loan Documents have been  terminated and the Lenders have been paid in
full. In the event that any Agent determines, for good cause (including, without
limitation, a conflict which, in such Agent's judgment, is material), that it is
not in the best interest of the Agent to continue to act as the Agent,  then the
Agent may, at its option and upon thirty (30) days' prior written  notice to the
Borrower and the Lenders,  request a substitute  Agent be selected in accordance
with the terms of this Section to act as the Agent with respect to such matters.
Within  fifteen  (15) days after  receipt of such notice,  the Required  Lenders
shall  select a proposed  substitute  agent and shall notify the Borrower of the
identity of such proposed  substitute agent. In addition,  the Required Lenders,
on not less than thirty (30) days'  notice to the Agent,  may elect to appoint a
substitute  Agent in the event that the Agent has acted  hereunder  with willful
misconduct,  gross  negligence  or exhibited a continuing  pattern of negligence
with respect to its duties and obligations hereunder.  Provided that no Event of
Default shall have occurred and be continuing,  Borrower shall have the right to
approve any such proposed  substitute  agent.  The succeeding  substitute  Agent
shall have all the rights,  powers and duties of the Agent and the term  "Agent"
shall mean such substitute Agent,  effective upon its appointment.  In the event
that the substitute Agent wishes to resign,  it may do so upon thirty (30) days'
prior notice to the Borrower,  the Agent and the Lenders,  and a new  substitute
Agent shall be appointed in  accordance  with this  Section.  After any retiring
substitute Agent's resignation  hereunder as substitute Agent, the provisions of
this  Section  7.10 and  Section  8.4 hereof  shall inure to the benefit of such
retired  substitute  Agent as to any actions  taken or omitted to be taken by it
while it was substitute Agent under this Agreement.

     Section 7.11 "Loans." Each Lender shall make available to the Borrower such
Lender's  portion  of the  Commitment  subject  to and in  accordance  with  the
provisions of the Loan Documents.  The Borrower shall look solely to each Lender
for the performance of such Lender's obligations, covenants and agreements under
the Loan  Documents on the part of each Lender to be performed or observed  with
respect  to each  such  portion  of the  Commitment,  subject  to and  upon  the
conditions,  limitations and restrictions set forth herein and in the other Loan
Documents, as evidenced by the signature of each such party hereto. In the event
any Lender has not made available its  Percentage of any Advance,  the Agent may
(but  shall not be  obligated  to),  and each  Lender  authorizes  the Agent to,
advance for such Lender's account,  pursuant to the terms hereof,  the amount of
the Advance to be made by such Lender and each Lender  agrees to  reimburse  the
Agent in immediately  available  funds for any amount so advanced on its behalf.
If any such reimbursement is not made in immediately available funds on the same
day on which the Agent  shall have made such amount  available  on behalf of any
Lender,  such Lender shall also pay interest thereon to the Agent at the Federal
Funds Rate.
<PAGE>
     Section 7.12  "Priority of Loans." Each Lender's  portion of the Commitment
shall be of equal priority with each other Lender's  portion of the  Commitment,
and no portion of the  Commitment  shall have  priority or  preference  over any
other portion of the Commitment or the security therefor,  except as provided in
Sections 7.20 through 7.24 hereof.

     Section 7.13 "Books and Records." The Agent will keep  customary  books and
records relating to the Advances,  and such books and records shall be available
at the Agent's office for the Lenders' reasonable  inspection during the Agent's
normal business hours. The original Loan Documents shall be kept at the New York
office of the Agent or at such other  office of the Agent or at such other place
as may be designated  from time to time by the Agent and shall be made available
to any Lender for  inspection at such office within a reasonable  period of time
following such Lender's written request to inspect same.

     Section 7.14  "Decisions of the Lenders."  Except as expressly set forth in
Sections 7.15 and 7.16 hereof, all decisions,  consents,  waivers, approvals and
other  actions  (collectively,  "Decisions")  authorized to be taken under or in
connection  with this Agreement and the other Loan Documents by any Lender shall
be taken by the Agent in its  discretion  reasonably  exercised,  subject to the
provisions of Section 7.4 hereof.  Except as expressly provided in Sections 7.15
and 7.16 hereof,  the Agent (i) may consent or withhold consent to any action by
the Borrower,  (ii) may exercise or refrain from exercising any power, rights or
remedies  hereunder or under the other Loan Documents or otherwise in respect of
the Advances,  and/or (iii) may waive any conditions in any Loan  Documents,  so
long as such  consent,  exercise or waiver  would not,  in the Agent's  judgment
reasonably  exercised,  represent a departure from the standards followed by the
Agent in the  administration  of loans  held by the Agent  entirely  for its own
account.  The Agent may request a Decision with respect to matters  described in
Sections  7.15 and 7.16 hereof at any time by making a request for such Decision
in writing to all of the Lenders. Any such request (x) shall contain an adequate
description together with relevant background  information of the Decision being
requested,  (y) shall specify the reasons for such request,  and (z) shall state
the effect of not  responding to such notice as set forth in this  Section.  The
Agent will provide the Lenders with such  additional  information as the Lenders
may  reasonably  request to assist such  Lenders in reaching a Decision,  to the
extent such information is in the Agent's  possession or under its control.  The
requested Decision shall be deemed approved by the Lenders if and when the Agent
receives  written  approval  from the  required  percentage  of the  Lenders  as
specified in Sections 7.15 and 7.16 hereof, as the case may be. If a Lender does
not deliver to the Agent a written  objection  thereto  within ten (10) Business
Days after hand delivery,  mailing or delivery to an express  courier service of
the request by the Agent,  the Agent shall make a second  written  request for a
Decision from that Lender. If the Lender does not deliver to the Agent a written
objection within five (5) Business Days after hand delivery, mailing or delivery
to an express  courier  service of such a second  request,  such Lender shall be
deemed  to have  approved  the  requested  Decision.  If the  Agent is unable to
contact the usual  representatives  of a Lender for any  reason,  the Agent will
make a good faith  effort to contact  other  representatives  of such  Lender as
necessary to reach a Decision  within the allotted  time. To the extent that the
Agent  reasonably  deems  necessary,  any such  Decision  may also be  requested
<PAGE>
telephonically by the Agent from each Lender with such telephonic  request to be
confirmed  in writing by the Agent.  Any Decision as to which the Agent has made
telephonic  requests for approval shall be deemed  approved by the Lenders after
the Agent has received the written  approval of the required  percentage  of the
Lenders as specified in Sections  7.15 and 7.16  hereof.  The Borrower  shall be
promptly  notified of the  Decision,  if such Decision was made in response to a
request by the Borrower.

     Section 7.15  "Unanimous  Approvals by the Lenders." No written  amendment,
supplement,  modification or waiver which adds,  deletes,  changes or waives any
provisions  of the Loan  Documents  shall (i) extend either the Maturity Date or
any installment or required prepayment of any Advances;  (ii) reduce the rate or
extend  the time of  payment  of  interest  on any  Advances;  (iii)  reduce the
principal  amount of any  Advances;  (iv)  reduce  the fees  payable  under this
Agreement and the other Loan Documents, or any other fee payable to the Lenders;
(v) change any Lender's  portion of the  Commitment or the amount of any Advance
of any Lender (except to the extent permitted by Sections 7.18 and 7.19 hereof);
(vii) change any  provision of this Section 7.15 or the  definition  of Required
Lenders;  (viii) modify any financial  covenants,  waive any Default or Event of
Default,  or waive or release  any lien on any of the  Mortgaged  Properties  or
commence  any  judicial  or  nonjudicial  foreclosure  proceeding,  in each case
without the written consent of all the Lenders;  or (ix) amend,  modify or waive
any  provision  of any Loan  Document,  if the  effect  thereof is to affect the
rights or duties of the  Agent,  without  the  written  consent  of the then the
Agent.  Any such  amendment,  supplement,  modification or waiver shall apply to
each of the Lenders equally and shall be binding upon the Borrower, the Lenders,
Agent and all future holders of the Promissory Notes. In the case of any waiver,
the  Borrower,  the Lenders  and the Agent  shall be  restored  to their  former
position and rights  hereunder and under the outstanding  Promissory  Notes, and
any  Default  or Event of  Default  waived  shall be  deemed to be cured and not
continuing,  but no such waiver shall extend to any  subsequent or other Default
or Event of Default, or impair any right consequent thereon.

     Section 7.16 "Approvals by the Required  Lenders." Upon the Agent's receipt
of a notice of default (as defined in Section  7.5(a) hereof) with respect to an
Event of  Default,  the Agent shall  consult  with the Lenders in respect of any
such Event of Default to determine a course of action which is acceptable to the
Required  Lenders.  Subject to Section 7.15  hereof,  the Agent shall pursue any
such course of action  approved by the  Required  Lenders in respect of any such
Event of Default, including,  without limitation,  acceleration of the Advances.
In the event that the Required Lenders cannot decide which remedies, if any, are
to be pursued,  the Agent may  commence  proceedings  on behalf of the  Lenders;
provided,  however,  that if at any time  thereafter the Required  Lenders shall
direct that a different  or  additional  remedial  action  shall be taken,  such
different or additional remedial action shall be taken in lieu of or in addition
to such proceedings.
<PAGE>
b) The Agent shall not, without the prior approval of the Required Lenders,  (i)
enter into written  amendments,  supplements,  modifications  or waivers for the
purpose of  adding,  deleting,  changing  or waiving  any of the  provisions  of
Article V or Section  6.1,  except to the  extent  such  amendment,  supplement,
modification or waiver requires the unanimous consent of the Lenders pursuant to
Section  7.15  hereof,  or (ii)  enter  into  written  amendments,  supplements,
modifications  or  waivers  for the  purpose of adding,  deleting,  changing  or
waiving  any  provision  of  the  Loan  Documents,  except  to the  extent  such
amendment, supplement,  modification or waiver requires the unanimous consent of
the Lenders (pursuant to Section 7.15 hereof),  or (iii) consent to, approve, or
waive the  requirement  of receipt  of,  any  documents,  certificates  or other
agreements  or  statements  delivered  or to be delivered by the Borrower or any
other  Person  pursuant to Article III hereof,  or (iv) consent to or permit (if
not expressly  permitted under the Loan Documents) the assignment or transfer by
the Borrower of any of its rights and  obligations  under any Loan Document,  or
consent to any merger or  consolidation  or sale, lease or other disposal of all
or a substantial part of the Borrower's property or assets.

c) All losses,  costs,  expenses,  disbursements,  liabilities,  fees (including
reasonable  attorneys' fees and  disbursements),  obligations,  damages,  suits,
actions and penalties of any kind or nature whatsoever (collectively,  a "Loss")
incurred by the Agent in connection with the Advances or the enforcement thereof
shall be borne by the Lenders in accordance with each Lender's Percentage.

d) Each  Lender  shall,  upon demand by the Agent,  reimburse  the Agent (to the
extent not otherwise reimbursed by the Borrower) for such Lender's Percentage of
(i) any out-of-pocket expenses incurred by the Agent in good faith in connection
with  any  Event  of  Default  under  the  Loan  Documents  (including,  without
limitation,  reasonable fees and disbursements of outside counsel), and (ii) any
other  expenses  incurred  in good  faith to the extent  not  reimbursed  by the
Borrower in connection with the enforcement of the Loan Documents.

e) The Borrower  hereby  consents and agrees to the  provisions of Sections 7.14
through  7.16 and any  modifications  thereof  entered into by the Agent and the
Lenders of such  provisions  and  specifically  acknowledges  and  agrees  that,
notwithstanding  any  provisions in the Loan Documents  requiring  action by the
"Lenders" or similar  provisions in connection  with the declaration of an Event
of Default, the acceleration of the indebtedness evidenced by the Loan Documents
and/or the  exercise  of any  remedies  under the Loan  Documents,  the Agent is
hereby  empowered  to act on  behalf  of the  Lenders  in  accordance  with  the
provisions  hereof and the  authority  of the Agent  with  respect to any action
taken by the Agent pursuant to and in accordance  with this Agreement  shall not
be contested by the Borrower by reason of any different or conflicting provision
contained in any of the Loan Documents.

<PAGE>
     Section  7.17  "Participation."  Any  Lender  may at  any  time  after  the
execution  and delivery of this  Agreement,  sell to one or more Persons (each a
"Participant")  participating interests in any Advance owing to such Lender, any
Promissory  Note held by such  Lender  and/or any other  interest of such Lender
hereunder   (in   respect  of  any  such   Lender,   its   "Credit   Exposure").
Notwithstanding  any  such  sale by a Lender  of  participating  interests  to a
Participant,  unless the Agent shall have agreed otherwise, such Lender's rights
and  obligations  hereunder  shall  remain  unchanged,  such Lender shall remain
solely  responsible  for the performance  thereof,  such Lender shall remain the
holder  of any  such  Promissory  Note for all  purposes  hereunder  (except  as
expressly  provided  below),  and the Agent  shall  continue  to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations  hereunder.  The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections  2.11,  2.13 and 2.15  hereof.  Each Lender
agrees  that any  agreement  between  such  Lender and any such  Participant  in
respect of such participating interest shall not restrict such Lender's right to
agree to any amendment, supplement, waiver or modification to any Loan Document,
except  where the  result of any of the  foregoing  would be to extend the final
maturity of any Advance or any regularly scheduled installment thereof or reduce
the rate or extend  the time of  payment  of  interest  thereon  or  reduce  the
principal amount thereof.

     Section 7.18  "Assignments."  Any Lender may, in the ordinary course of its
business and in accordance  with applicable law, at any time after the execution
and delivery of this Agreement and from time to time assign to any Lender or any
affiliate thereof or to any other Person (each a "Purchasing Lender") all or any
part of its Credit Exposure in amounts not less than $10,000,000.  The Borrower,
the Agent and the  Lenders  agree  that to the  extent  of any  assignment,  the
Purchasing Lender shall be deemed to have the same rights and benefits under the
Loan Documents and the same  obligation to share pursuant to Section 7.24 hereof
as it  would  have had if it had been a  Lender  which  was one of the  original
parties  hereto.  The consent of the Agent and,  provided no Default or Event of
Default has  occurred,  the Borrower  shall be required  prior to an  assignment
becoming effective, which consents will not be unreasonably withheld, delayed or
conditioned;  provided  that the Agent  shall be  entitled  to  continue to deal
solely and directly with the assignor Lender in connection with the interests so
assigned  to the  Purchasing  Lender  unless  and until such  Purchasing  Lender
executes a supplement to this Agreement,  substantially in the form of Exhibit M
hereto (a "Form of Assignment and Assumption Agreement").

b) Upon (i) execution of a Form of Assignment  and  Assumption  Agreement,  (ii)
delivery  of an  executed  copy  thereof to the  Borrower  and the Agent,  (iii)
payment by such Purchasing  Lender to such transferor  Lender of an amount equal
to the purchase price agreed between such transferor  Lender and such Purchasing
Lender,  and  (iv)  payment  to  Agent of an  assignment  fee of $2500  for each
assignment  by any Lender of all or any  portion of its  Credit  Exposure,  such
transferor Lender shall be released from its obligations hereunder to the extent
of such assignment and such Purchasing Lender shall for all purposes be a Lender
party to this  Agreement  and shall  have all the rights  and  obligations  of a
Lender under this  Agreement to the same extent as if it were an original  party
hereto,  and no further  consent or action by the  Borrower,  the Lenders or the
Agent shall be required.  Such Form of Assignment and Assumption Agreement shall
be  deemed  to amend  this  Agreement  to the  extent,  and only to the  extent,
necessary  to  reflect  the  addition  of such  Purchasing  Lender  as a Lender.
Promptly after the consummation of any transfer to a Purchasing  Lender pursuant
hereto, the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that a replacement  Promissory Note is issued to such transferor
Lender and a new Promissory  Note is issued to such Purchasing  Lender,  in each
case in principal amounts reflecting such transfer.  The Purchasing Lender shall
furnish  to  Borrower,  at least 10 days  prior to the date on which  the  first
payment to such  Purchasing  Lender is due, the  documents  described in Section
2.17(b) hereof.

<PAGE>
c)  Commerzbank  AG, Los  Angeles  Branch,  agrees  that it will not assign to a
Purchasing Lender any part of its Credit Exposure such that, after giving effect
to such  assignment,  Commerzbank AG, Los Angeles  Branch's  Percentage shall be
less than 20%,  unless the foregoing  shall (or in  Commerzbank  AG, Los Angeles
Branch's  reasonable  judgment  is likely  to)  constitute  a  violation  of any
Requirement of Law. Notwithstanding the foregoing, nothing herein shall restrict
or limit  Commerzbank  AG, Los  Angeles  Branch,  from  selling a  participating
interest in any portion, or all, of its Credit Exposure.

     Section  7.19  "Withholding."  Notwithstanding  anything  to  the  contrary
herein,  no  Participant  or other  assignee  of all or any  part of the  Credit
Exposure of any Lender  (each,  a "Non-Party  Holder"),  other than a Purchasing
Lender, shall be entitled to any of the benefits of Section 2.16 hereof.

     Section 7.20 "Amounts  Received by the Lenders." Each Lender agrees that it
shall act as a trustee for the benefit of the other Lenders to the extent of the
respective  interests of the other  Lenders in the Advances  with respect to all
sums of any kind  paid to or  received  by such  Lender in  payment  of all or a
portion of the Advances by or on behalf of the Borrower.

     Section 7.21 "No Joint  Venture."  Neither the execution of this  Agreement
nor the selling of an interest in the  Advances  nor any  agreement  to share in
profits  or  losses  as  provided  herein  is  intended  to be,  nor shall it be
construed  to be, the  formation of a  partnership  or joint  venture  among the
parties to this Agreement.

     Section  7.22.  "Acknowledgment  by Parties  Hereto" The  agreement  to and
acceptance of this Agreement by the parties  hereto,  indicated by the execution
of this Agreement,  shall evidence (a) each party's  acceptance of all the terms
and  conditions  of this  Agreement  and the other Loan  Documents  and (b) each
party's consent to the Agent's acting as the Agent on behalf of the Lenders with
regard to all aspects of the  administration,  enforcement and collection of the
Advances  and to all matters  pertaining  to the Loan  Documents as provided for
herein.

     Section 7.23 "Rights of the Lenders and the Agent to Transact Busines." The
Lenders, the Agent and/or any of their respective affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business  with, the Borrower or any other Person without any duty to
account therefor to the other Lenders and/or the Agent, as the case may be.

     Section 7.24 "Sharing of Payments.  "Each of the Lenders  agrees that if it
should  receive  any  amount  under  this  Agreement  or any of the  other  Loan
Documents  (whether by voluntary payment,  by realization upon security,  by the
exercise of the right of banker's lien, by counterclaim or cross action,  by the
enforcement  of any  right  under the Loan  Documents,  or  otherwise)  which is
applicable  to the  payment of any  Advance  of a sum which with  respect to the
related  sum or sums  received by the other  Lenders is in a greater  proportion
than the total of such  Advance  then owed and due to such  Lender  bears to the
total of such Advance then owed and due to all of the Lenders  immediately prior
to such receipt,  then such Lender  receiving such excess payment shall purchase
for cash without recourse or warranty from the other Lenders an interest in such
Advance  owing to such Lenders in such amount as shall result in a  proportional
participation by all of the Lenders in such amount;  provided that if all or any
portion of such excess amount is  thereafter  recovered  from such Lender,  such
purchase  shall be rescinded  and the purchase  price  restored to the extent of
such recovery,  but without interest.
<PAGE>
     Section  7.25  "Limitation  of  Liability."  No  claim  may be  made by the
Borrower  or any other  Person  against  the Agent or any Lender or any of their
affiliates,  directors,  officers, employees,  attorneys or agent of any of such
Persons for any  special,  indirect or  consequential  damages in respect of any
claim for breach of contract or any other theory of liability  arising out of or
under this Article VII; and the Borrower hereby waives,  releases and agrees not
to sue upon any such  claim for any such  damages,  whether or not  accrued  and
whether or not known or suspected to exist in its favor.

                                     ARTICLE VIII

                                  MISCELLANEOUS

     Section 8.1 "Notices." All notices,  requests,  and other communications to
any party  hereunder  shall be in writing  (including  bank wire,  telecopy,  or
similar  teletransmission  or  writing)  and shall be given to such party at its
address or telecopy  number set forth on Schedule 3 annexed hereto or such other
address or telecopier  number as such party may  hereafter  specify by notice to
the Agent and the Borrower. No notices, requests, and other communications given
to any Person other than the Agent (including, without limitation, any Affiliate
of the Agent) shall be deemed to have been given to the Agent. Each such notice,
request,   or  other   communication  shall  be  effective  (i)  when  delivered
personally,  (ii) if given by  telecopier,  when such telecopy is transmitted to
the telecopier number specified in this Section 8.1, (iii) if given by certified
or registered mail, return receipt requested,  72 hours after such communication
is  deposited  in the mails  with  first-class  postage  prepaid,  addressed  as
aforesaid,  or (iv) by Federal Express or other  recognized  overnight  delivery
service  (provided  that,  in either  such case,  such  delivery  is made with a
request for  receipt),  on the next  Business  Day after such  communication  is
deposited  with such delivery  service,  or (v) if given by any other means when
delivered at the address specified in this Section 8.1.

     Section 8.2  "Amendments,  Etc." No amendment or waiver of any provision of
this  Agreement  or the other Loan  Documents,  nor consent to any  departure by
either party therefrom, shall in any event be effective unless the same shall be
in writing  and signed by the party or its agent,  if  authorized  to act on its
behalf, against whom enforcement of such waiver or amendment is sought, and then
such waiver or consent shall be effective only in the specific  instance and for
the specified  purpose for which given.  None of the  foregoing  shall negate or
vitiate any of the provisions of Sections 7.14, 7.15 or 7.16.

     Section 8.3 "No Waiver;  Remedies  Cumulative."  No failure or delay on the
part of the Lenders in  exercising  any right or remedy  hereunder  or under any
other Loan Document and no course of dealing  between the Borrower and the Agent
or the  Lenders  shall  operate  as a waiver  thereof,  nor shall any  single or
partial  exercise  of any right or  remedy  hereunder  or under  any other  Loan
Document  preclude any other or further  exercise thereof or the exercise of any
other right or remedy hereunder. The rights and remedies herein and in the other
Loan Documents expressly provided are cumulative and not exclusive of any rights
or remedies that the Lenders would otherwise have. No notice to or demand on the
Borrower  not required  hereunder or under the other Loan  Documents in any case
shall  entitle the Borrower to any other or further  notice or demand in similar
or other  circumstances  or  constitute a waiver of the rights of the Lenders to
any other or further action in any circumstances without notice or demand.
<PAGE>
     Section 8.4 "Payment of Expenses,  Etc." The Borrower shall: whether or not
the  transactions  hereby  contemplated  are  consummated,  pay  all  reasonable
out-of-pocket  costs and  expenses  of the Lenders in the  administration  (both
before and after the execution  hereof and including advice of counsel as to the
rights and duties of the Agent or the  Lenders) of, and in  connection  with the
preparation,   execution,   and  delivery  of,  preservation  of  rights  under,
enforcement of, and, after an Event of Default, refinancing,  renegotiation,  or
restructuring  of, this Agreement and the other Loan Documents and the documents
and instruments referred to therein; any amendment,  waiver, or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Agent and the Lenders);

b) to the extent  permitted  by  applicable  law, pay and hold the Agent and the
Lenders  harmless  from  and  against  any and all  present  and  future  stamp,
recording,  and  other  similar  taxes and fees with  respect  to the  foregoing
matters and save the Lenders  harmless from and against any and all  liabilities
with  respect to or  resulting  from any delay or omission to pay such taxes and
fees; and

c) indemnify  the Agent and the Lenders and each of their  officers,  directors,
employees, Affiliates,  representatives,  and agents from, and hold each of them
harmless against, any and all costs, losses,  liabilities,  claims,  damages and
expenses  incurred by any of them  (whether or not any of them is  designated  a
party  thereto)  arising  out  of or by  reason  of  any  litigation,  or  other
proceeding related to any actual or proposed use by the Borrower of the proceeds
of any of the  Advances or the Borrower  entering  into and  performing  of this
Agreement or the other Loan  Documents or  resulting  from the  ownership of any
Mortgaged  Property,  including,  without  limitation,  the reasonable  fees and
disbursements  of counsel  incurred in connection  with any such  investigation,
litigation,  or other  proceeding;  provided  that  the  Borrower  shall  not be
obligated  to  indemnify  any such  Person to the extent of any  costs,  losses,
liabilities,  claims,  damages,  or expenses  caused by the gross  negligence or
willful misconduct of such Person.

     If and to the  extent  that the  obligations  of the  Borrower  under  this
Section 8.4 are unenforceable for any reason, the Borrower hereby agrees to make
the maximum  contribution to the payment and  satisfaction  of such  obligations
which is permissible under applicable law. The Borrower's obligations under this
Section 8.4 shall survive any  termination  of this Agreement and the payment of
the sums due hereunder and under the other Loan Documents.

     Section 8.5 "Right to Setoff." In addition to and not in  limitation of all
rights of offset  that the Lenders may have under  applicable  law,  the Lenders
shall,  upon the occurrence  and during the  continuance of any Event of Default
and  whether  or not  the  Lenders  have  made  any  demand  or  the  Borrower's
obligations are matured,  have the right to appropriate and apply to the payment
of the Borrower's obligations hereunder and under the other Loan Documents,  all
deposits  (general  or  special,  time or demand,  provisional  or final) of the
Borrower then or thereafter held by, and other  indebtedness or property then or
thereafter owing by, the Lenders.

     Section 8.6 "Benefit of Agreement."  This  Agreement  shall be binding upon
and inure to the benefit of and be enforceable by the respective  successors and
assigns of the parties hereto, provided that

<PAGE>


the Borrower may not assign or transfer  any of its interest  hereunder  without
the prior written consent of the Lenders.

     Section 8.7 "Governing Law; Submission to Jurisdiction." This Agreement and
the rights and  obligations  of the  parties  hereunder  shall be  construed  in
accordance  with  and be  governed  by the law  (without  giving  effect  to the
conflict of law principles thereof) of the State of New York except as otherwise
specifically  provided in the Loan  Documents  with  respect to the  perfection,
priority and enforcement of liens upon real property and fixtures not located in
the State of New York.

b) Any legal action or  proceeding  with respect to this  Agreement or the other
Loan Documents or any document  related  thereto may be brought in the courts of
the  State of New York or of the  United  States  of  America  for the  Southern
District of New York,  and by  execution  and  delivery of this  Agreement,  the
Borrower hereby accepts for itself and in respect of its property  generally and
unconditionally,  the jurisdiction of the aforesaid courts.  The Borrower hereby
irrevocably waives any objection,  including,  without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter  have to the bringing of any such action or  proceeding  in
such  respective  jurisdictions.  The  Borrower  agrees  that any process in any
proceeding  in any such court may be served on the  Borrower  through the United
States mails in accordance with Section 8.1.

c) WAIVER OF JURY TRIAL. TO THE EXTENT  PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO HEREBY  IRREVOCABLY AND  UNCONDITIONALLY  WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE PROMISSORY NOTE
OR ANY OTHER LOAN DOCUMENTS AND FROM ANY COUNTERCLAIM THEREIN.

d) Nothing  herein shall affect the right of the Lenders to serve process in any
other manner  permitted  by law or to commence  legal  proceedings  or otherwise
proceed against the Borrower in any other jurisdiction.

     Section 8.8 "Counterparts." This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,  each
of which when  executed and  delivered  shall be an  original,  but all of which
shall together constitute one and the same instrument.

     Section  8.9  "Headings   Descriptive."  The  headings  contained  in  this
Agreement are for  convenience  only and shall not in any way affect the meaning
or construction of any provision of this Agreement.

     Section 8.10 "Entire Agreement"

         (a)      (a) The provisions:

              (i) the letter  agreements  among the Borrower,  Wells Fargo Bank,
National  Association  and Agent  dated as of March 18,  1999,  March 15,  1999,
February 4, 1999, January 25, 1999, and September 3, 1998, and

              (ii) the letter  agreement  dated as of August 25,  1997 among the
Borrower, Commerzbank AG, Los Angeles Branch and Agent,

each of which letter agreement is attached hereto as Exhibit R shall survive the
execution of this Agreement and shall be deemed incorporated herein.

         (b) Except as set forth in subsection (a) above, this Agreement and the
other Loan Documents constitute the entire agreement of the parties with respect
to  the  subject  matter  hereof  and  thereof,   and  all  prior   discussions,
negotiations,  term sheets,  commitment  letters,  waiver  letters,  agreements,
letter  agreements,  correspondence  and  document  drafts with  respect to such
matters are merged  herein and therein.  Neither the Lenders nor any employee of
the Lenders has been  authorized to make any  representation  or agreement  upon
which the Borrower or its Affiliates may rely unless such matter is set forth in
this Agreement or the other Loan Documents.

     Section 8.11 "Deliberately omitted"

     Section 8.12  "Subordination of Certain  Mortgaged  Property." Agent agrees
that, upon Borrower's  request (a "Subordination  Request"),  it will deliver to
Borrower a form of  subordination,  duly executed and acknowledged by the Agent,
subordinating the lien of the applicable  Mortgage (a  "Subordination"),  to any
Development  Encumbrances  on a  Mortgaged  Property,  but  only  if  and on the
condition that:

(i)  each  Subordination  Request  shall  be  in  writing,   shall  contain  all
information  necessary for the Agent to cause a Subordination in recordable form
to be prepared and shall be given at least ten (10)  Business  Days prior to the
requested date of such Subordination;

(ii) Agent shall have received an endorsement to the title policy referred to in
Section 3.3(a)(iii) with respect to the applicable Mortgaged Property indicating
that since the date of the last  endorsement  to such  policy  there has been no
change in the state of title not theretofore  approved by Agent,  providing with
respect to such Development Encumbrances a so-called "comprehensive endorsement"
(or  equivalent),  to the extent  available  in the  jurisdiction  in which such
Mortgaged  Property is located,  and such other  affirmative  insurance as Agent
shall reasonably  require,  which  endorsement shall have the effect of redating
the title  policy to the date of  recordation  of, and  insuring the lien of the
Mortgage as subordinated pursuant to, the Subordination;

(iii) as of the date of such Subordination Request, and as of the effective date
of  such  Subordination   (before  as  well  as  after  giving  effect  to  such
Subordination),  no  Default  or Event of Default  shall  have  occurred  and be
continuing,   and  each  Subordination   Request  shall  constitute   Borrower's
representation and warranty that the foregoing is true, complete and accurate;

(iv) before as well as after giving effect to such Subordination, subject to the
provisions of Section 5.5 hereof, all representations  and warranties  contained
herein (except representations and warranties expressly provided herein as being
made only as of the  Effective  Date) shall be true and correct in all  material
respects with the same effect as though such  representations and warranties had
been made on and as of the date of such Subordination;
<PAGE>

(v)  Borrower  executes,  acknowledges  and  delivers  to Agent,  at  Borrower's
expense,  any and all documents and instruments  reasonably required by Agent to
preserve and maintain Agent's and Lenders'  rights,  upon and following any such
Subordination, under and with respect to the Loan Documents; and

(vi) (1) The Agent shall have received  payment of all costs and expenses (other
than the legal fees described in the following clause (2) of this  subparagraph)
incurred by Agent in  connection  with such  Subordination,  including,  but not
limited to, all title  insurance  premiums  arising as a result of  endorsements
required by Agent in connection  with such  Subordination,  and (2) receipt of a
Subordination   Request  for  each  Subordination  shall  constitute  Borrower's
agreement and covenant to pay to the Agent,  promptly upon demand (together with
a reasonably detailed invoice(s) in respect thereof),  all reasonable legal fees
and expenses arising in connection with the preparation, execution, delivery and
review of each  Subordination,  the documents and instruments  described in this
Section,  and all other  documents  relating to, and rendering at the request of
Agent all advice respecting, each Subordination.

     Section 8.13  "Confidentiality by the Agent and the Lenders." The Agent and
the Lenders agree that,  unless  otherwise agreed to in writing by us, except as
required  by law or  regulation  or by legal  process,  to keep  all  Non-public
Information  delivered by the Borrower to the Agent or the Lenders  confidential
and not to disclose or reveal any Non-public  Information  to any person,  other
than those employed or retained by the Agent or the Lenders (including,  without
limitation,  employees, counsel, accountants,  engineers,  advisers, experts and
consultants  to the Agent or the  Lenders).  Except as provided  for in the next
sentence, in the event that the Agent or any Lender is requested pursuant to, or
required by,  applicable  law or  regulation or by legal process to disclose any
Non-public  Information,  the Agent or such Lender  agrees that it shall provide
the Borrower with prompt notice of such  request(s)  and, unless required by law
or regulation to disclose  sooner,  shall wait at least  forty-eight  (48) hours
before disclosing such Non-public information.  Notwithstanding the foregoing or
anything else to the contrary herein  contained or contained in any of the other
Loan  Documents,  the provisions of this Section 8.13 shall not apply to (a) the
disclosure  or sharing  of any  Non-public  information  among the Agent and the
Lenders,  (b) the  disclosure  by the  Agent  or any  Lender  of any  Non-public
information to federal,  state and local bank  regulators or other  governmental
agencies to the extent  required or  requested to do so (such  disclosure  shall
not, however, in and of itself be deemed to render such information public), and
(c)  the  Agent  or any  Lender  may,  in  connection  with  any  assignment  or
participation or proposed assignment or participation,  disclose to the assignee
or  participant  or proposed  assignee or  participant  under a  requirement  of
confidentiality,  any  Non-public  information  relating  to the  Borrower,  the
Collateral,   the  Borrower's  assets,  properties  or  financial  condition  or
information otherwise furnished to the Agent or the Lenders by the Borrower.

     IN WITNESS  WHEREOF,  the parties hereto have caused their duly  authorized
officers to execute  and deliver  this  Agreement  as of the date first  written
above.

                         [Signatures on following page]

                                   HOMESTEAD VILLAGE INCORPORATED


                                  By
                                  Name:
                                  Title:

                                  COMMERZBANK AG, New York Branch, as Agent


                                  By
                                  Name:
                                  Title:


                                  And by
                                  Name:
                                  Title:

                                 COMMERZBANK AG, Los Angeles Branch, as a lender


                                 By
                                 Name:
                                 Title:


                                 And by
                                 Name:
                                 Title: