EXHIBIT 10.1
                                CREDIT AGREEMENT



                  CREDIT AGREEMENT,  dated as of October 23, 1998 between PUBLIC
STORAGE PROPERTIES, LTD., a California limited partnership (the "Borrower"), and
FIRST UNION NATIONAL BANK, a national banking association (the "Lender").

                                    RECITALS

                  The Borrower has requested that the Lender make a term loan to
the Borrower in the aggregate  principal amount of $13,000,000.00,  the proceeds
of which  would  be used to  refinance  substantially  all  indebtedness  of the
Borrower  and  its  subsidiaries  and to  pay  fees  and  expenses  incurred  in
connection herewith.  The Lender is willing to make such credit available to the
Borrower,  but only on the terms,  and subject to the  conditions,  set forth in
this Agreement.

                  The parties hereto hereby agree as follows:


                  SECTION 1. DEFINITIONS

                  1.1 Defined Terms.  As used in this  Agreement,  the following
terms shall have the following meanings:

                  "Affiliate":  as to any Person, any other Person (other than a
         Subsidiary)  which,  directly  or  indirectly,  is in  control  of,  is
         controlled  by, or is under  common  control  with,  such  Person.  For
         purposes of this definition, "control" of a Person (including, with its
         correlative meanings,  "controlled by" and "under common control with")
         means the power, directly or indirectly, either to (a) vote 10% or more
         of the  securities  having  ordinary  voting  power for the election of
         directors  of such Person or (b) direct or cause the  direction  of the
         management  and  policies  of  such  Person,  whether  by  contract  or
         otherwise.

                  "Agreement":  this Credit Agreement, as amended,  supplemented
         or otherwise modified from time to time.

                  "Annual Report":  means the Guarantor's  Annual Report on Form
         10-K filed with the Securities  and Exchange  Commission for the fiscal
         year ended December 31, 1997.

                  "Applicable Lending Office":  for the Lender and for the Loan,
         the lending office of such Lender  designated for such Loan on Schedule
         1 hereto (or any other  lending  office  from time to time  notified by
         such  Lender)  as the  office  at  which  its  Loan is to be  made  and
         maintained.

                  "Applicable  Margin":  means the  respective  percentages  per
         annum determined,  based on the range into which  Guarantor's  Interest
         Coverage Ratio falls, in accordance with the table set forth below.

<TABLE>
<CAPTION>

              Range of Guarantor's Interest                        Applicable Base Rate       Applicable LIBOR
                     Coverage Ratio                                    Loan  Margin             Loan Margin
---------------------------------------------------------------    --------------------       ----------------
<S>                                                                         <C>                     <C>  
less than 7.0 to 1.0                                                        0%                      1.25%
greater than or equal to 7.0 to 1.0 but less than 10.0 to 1.0               0%                      1.05%
greater than or equal to 10.0 to 1.0 but less than 13.0 to 1.0              0%                       .90%
greater than or equal to 13.0 to 1.0 but less than 15.0 to 1.0              0%                       .675%
greater than or equal to 15.0 to 1.0                                        0%                       .55%
</TABLE>

                  "Assignee": as defined in Section 10.6(c).

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<PAGE>

                  "Assignment and Acceptance": as defined in Section 10.6(c).

                  "Balance  Sheet  Leverage  Ratio":  means,  as of any day, the
         ratio of Total  Liabilities  as of such day to Gross  Asset Value as of
         such day.

                  "Base Rate":  for any day, the rate per annum (rounded upward,
         if  necessary,  to the next 1/16 of 1%) equal to the greater of (a) the
         Prime Rate in effect on such day and (b) the  Federal  Funds  Effective
         Rate in effect on such day plus 1/2 of 1%. For purposes hereof:  "Prime
         Rate" shall mean the rate of interest publicly announced by First Union
         National  Bank in  Charlotte,  North  Carolina from time to time as its
         base rate (the base rate not being  intended  to be the lowest  rate of
         interest  charged  by First  Union  National  Bank in  connection  with
         extensions of credit to debtors).

                  "Base Rate Loans":  Loans the rate of interest  applicable  to
         which is based upon the Base Rate.

                  "Borrower": as defined in the heading to this Agreement.

                  "Borrowing  Date":  any  Business  Day  specified  in a notice
         pursuant to Section 2.3 or 3.3 as a date on which the Borrower requests
         the Lender to make the Loan hereunder.

                  "Business": as defined in Section 4.22.

                  "Business  Day": a day other than a Saturday,  Sunday or other
         day  on  which  commercial  banks  in  Charlotte,  North  Carolina  are
         authorized  or required by law to close,  and, if such day relates to a
         borrowing  of, a payment or  prepayment of principal of or interest on,
         or a Conversion of or into, or an Interest  Period for, a LIBOR Loan or
         a notice by the Borrower with respect to any such  borrowing,  payment,
         prepayment, Conversion or Interest Period, which is also a day on which
         dealings in Dollar  deposits  are  carried out in the London  interbank
         market.

                  "Business Park  Property":  means a property  generally of the
         type described in the Annual Report as "business parks."

                  "Capitalized   Lease":   means  any  lease   under  which  the
         obligation of the lessee is required by GAAP to be shown as a liability
         on the financial statements of the lessee.

                  "Capital Stock": any and all shares, interests, participations
         or  other  equivalents  (however  designated)  of  capital  stock  of a
         corporation, any and all similar ownership interests in a Person (other
         than a corporation) and any and all warrants or options to purchase any
         of the foregoing.

                  "Cash Equivalents":  (a) securities with maturities of 90 days
         or less  from the date of  acquisition  issued or fully  guaranteed  or
         insured by the United  States  Government  or any agency  thereof,  (b)
         certificates  of deposit and LIBOR time deposits with  maturities of 90
         days or less from the date of  acquisition  and overnight bank deposits
         of any Lender or of any  commercial  bank having capital and surplus in
         excess of $500,000,000,  (c) repurchase obligations of any Lender or of
         any commercial bank  satisfying the  requirements of clause (b) of this
         definition,  having a term of not more than seven days with  respect to
         securities  issued or fully  guaranteed or insured by the United States
         Government,  (d) commercial  paper of a domestic  issuer rated at least
         A-2 or the  equivalent  thereof by Standard  and Poor's  Ratings  Group
         ("S&P") or P-2 or the equivalent  thereof by Moody's Investors Service,
         Inc.  ("Moody's")  and in either case maturing within 90 days after the
         day of  acquisition,  (e) securities with maturities of 90 days or less
         from the date of acquisition  issued or fully  guaranteed by any state,
         commonwealth  or  territory  of the  United  States,  by any  political
         subdivision  or taxing  authority  of any such state,  commonwealth  or
         territory or by any foreign government,  the securities of which state,
         commonwealth,  territory,  political  subdivision,  taxing authority or
         foreign  government (as the case may be) are rated at least A by S&P or
         A by Moody's,  (f) securities  with  maturities of 90 days or less from
         the date of acquisition  backed by standby  letters of credit issued by
         any Lender or any commercial bank satisfying the requirements of clause

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<PAGE>

         (b) of this  definition or (g) shares of money market mutual or similar
         funds which invest exclusively in assets satisfying the requirements of
         clauses (a) through (f) of this definition.

                  "Closing Date": the date on which the conditions precedent set
         forth in Section 6.1 shall be satisfied.

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

                  "Collateral":  all property  and  interests in property of the
         Borrower,  now  owned or  hereinafter  acquired,  upon  which a Lien is
         purported to be created by any Security Document.

                  "Combined  Property":  means a  property  part of  which  is a
         Mini-storage Property and part of which is a Business Park Property.

                  "Commonly  Controlled  Entity":  an  entity,  whether  or  not
         incorporated,  which is under common  control with the Borrower  within
         the  meaning  of  Section  4001 of  ERISA  or is part of a group  which
         includes the Borrower and which is treated as a single  employer  under
         Section 414 of the Code.

                  "Continue",  "Continuation" and "Continued" shall refer to the
         continuation  of a LIBOR  Loan  from one  Interest  Period  to the next
         Interest Period.

                  "Contractual  Obligation":  as to any Person, any 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.

                  "Convert",  Conversion"  and  "Converted"  shall  refer  to  a
         conversion  of a Base Rate Loan into a LIBOR  Loan,  or of a LIBOR Loan
         into a Base Rate Loan,  which may be  accompanied  by the  transfer  by
         Lender (at its sole discretion) of the Loan from one Applicable Lending
         Office to another.

                  "Default":  any of the events  specified in Section 8, whether
         or not any requirement for the giving of notice,  the lapse of time, or
         both, or any other condition, has been satisfied.

                  "Dollars"  and "$":  dollars in lawful  currency of the United
         States of America.

                  "EBITDA" means,  in respect of any fiscal period,  Net Income,
         increased by extraordinary  losses,  decreased by extraordinary  gains,
         and increased by depreciation,  amortization,  interest  (including the
         portion  of  payments   under  any   Capitalized   Lease  that  may  be
         characterized as interest), and federal and state income taxes, all for
         such period in accordance with GAAP.

                  "Environmental  Laws":  any and all foreign,  Federal,  state,
         local  or  municipal  laws,  rules,  orders,   regulations,   statutes,
         ordinances,  codes, decrees, requirements of any Governmental Authority
         or  other  Requirements  of  Law  (including  common  law)  regulating,
         relating to or imposing  liability or  standards of conduct  concerning
         protection  of human  health or the  environment,  as now or may at any
         time hereafter be in effect.

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

                  "Eurocurrency Reserve Requirements": for any day as applied to
         a  LIBOR  Loan,  the  aggregate  (without  duplication)  of  the  rates
         (expressed as a decimal fraction) of reserve  requirements in effect on
         such day (including, without limitation, basic, supplemental,  marginal
         and emergency  reserves under any regulations of the Board of Governors
         of the Federal Reserve System or other  Governmental  Authority  having
         jurisdiction  with respect thereto)  dealing with reserve  requirements
         prescribed  for  eurocurrency   funding   (currently   referred  to  as
         "Eurocurrency Liabilities" in Regulation D of such Board) maintained by
         a member bank of such System.

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<PAGE>

                  "Event of Default":  any of the events specified in Section 8;
         provided that any  requirement  for the giving of notice,  the lapse of
         time, or both, or any other condition, has been satisfied.

                  "Existing  Creditors":  means the creditors of the Borrower as
         set forth on Schedule 2 attached  hereto and  incorporated by reference
         herein.

                  "Existing Financing Documents":  means the documents set forth
         on Schedule 2 attached hereto and incorporated by reference herein.

                  "Federal  Funds  Effective  Rate":  for any day,  the weighted
         average  of the rates on  overnight  federal  funds  transactions  with
         members  of the  Federal  Reserve  System  arranged  by  federal  funds
         brokers,  as  published  on the  next  succeeding  Business  Day by the
         Federal  Reserve Bank of New York, or, if such rate is not so published
         for any day which is a Business Day, the average of the  quotations for
         the day of such transactions  received by the Lender from three federal
         funds brokers of recognized standing selected by it.

                  "GAAP": generally accepted accounting principles in the United
         States of America  consistent  with those  utilized  in  preparing  the
         audited financial statements referred to in Section 6.1.

                  "Governing  Documents":  as to any  Person,  its  articles  or
         certificate of incorporation  and by-laws,  its partnership  agreement,
         its certificate of formation and operating agreement,  and/or the other
         organizational or governing documents of such Person.

                  "Governmental Authority":  any nation or government, any state
         or  other  political  subdivision  thereof  and any  entity  exercising
         executive,   legislative,   judicial,   regulatory  or   administrative
         functions of or pertaining to government.

                  "Gross Asset  Value":  means as to any Person the sum (without
         duplication  of any  item)  at any date of  determination,  of (i) cash
         owned by such Person as of such date,  (ii) Cash  Equivalents  owned by
         such Person as of such date, and (iii) an amount equal to (a) EBITDA of
         such Person as of the most recently ended fiscal  quarter  (adjusted by
         the  Lender  in its  reasonable  discretion  to take into  account  any
         acquisitions  or  dispositions of real property or other assets by such
         Person), times (b) four (4) divided by (c) ten percent (10%).

                  "Guarantee  Obligation":  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 or in effect  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 (1) for the
         purchase or payment of any such primary  obligation  or (2) 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 terms
         "Guarantee"  and  "Guaranteed"  used as a verb shall have a correlative
         meaning.  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

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<PAGE>

         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 Borrower in good faith.

                  "Guarantor": Public Storage, Inc., a California corporation.

                  "Indebtedness":   of  any   Person   at  any   date,   without
         duplication,  (a) all  indebtedness  of such Person for borrowed  money
         (whether by loan or the  issuance and sale of debt  securities)  or for
         the deferred purchase price of property or services (other than current
         trade  liabilities  incurred in the  ordinary  course of  business  and
         payable  in  accordance  with  customary  practices),   (b)  any  other
         indebtedness  of such  Person  which  is  evidenced  by a  note,  bond,
         debenture or similar instrument,  (c) all obligations of such Person in
         respect of letters of credit, acceptances or similar instruments issued
         or created for the account of such Person (d) all Guarantee Obligations
         and (e) all  liabilities  secured by any Lien on any property  owned by
         such Person even though such Person has not assumed or otherwise become
         liable for the payment thereof.

                  "Insolvency":  with  respect to any  Multiemployer  Plan,  the
         condition  that such Plan is  insolvent  within the  meaning of Section
         4245 of ERISA.

                  "Insolvent": pertaining to a condition of Insolvency.

                  "Interest Coverage Ratio": shall have the meaning set forth in
         Exhibit B of the Payment Guarantee.

                  "Interest  Payment  Date":  (a) as to any Base Rate Loan,  the
         first day of each calendar month commencing on November 1, 1998, (b) as
         to any LIBOR Loan  having an Interest  Period of three  months or less,
         the last day of such Interest  Period,  and (c) as to any LIBOR Loan or
         having  an  Interest  Period  longer  than  three  months  or 90  days,
         respectively,   (i)  each  day  which  is  three  months  or  90  days,
         respectively,  or a whole multiple thereof, after the first day of such
         Interest Period, and (ii) the last day of such Interest Period.

                  "Interest Period": with respect to any LIBOR Loan:

                                    (i) initially,  the period commencing on the
                  borrowing or Conversion date, as the case may be, with respect
                  to such LIBOR Loan and ending  one,  two,  three or six months
                  thereafter,  as  selected  by the  Borrower  in its  notice of
                  borrowing or notice of  Conversion,  as the case may be, given
                  with respect thereto; and

                                    (ii) thereafter,  each period  commencing on
                  the last day of the next preceding  Interest Period applicable
                  to such LIBOR Loan and ending  one,  two,  three or six months
                  thereafter,  as selected by the Borrower by irrevocable notice
                  to the Lender not less than three  Business  Days prior to the
                  last day of the then  current  Interest  Period  with  respect
                  thereto;

         provided  that,  all of the foregoing  provisions  relating to Interest
         Periods are subject to the following:

                                    (1) if any Interest  Period  pertaining to a
                  LIBOR Loan would otherwise end on a day that is not a Business
                  Day,  such  Interest  Period  shall  be  extended  to the next
                  succeeding  Business  Day unless the result of such  extension
                  would be to carry such Interest  Period into another  calendar
                  month in which  event such  Interest  Period  shall end on the
                  immediately preceding Business Day;

                                    (2) any Interest Period that would otherwise
                  extend  beyond the  Maturity  Date  shall end on the  Maturity
                  Date;

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<PAGE>

                                    (3)  any  Interest  Period  pertaining  to a
                  LIBOR Loan that 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  end on the  last  Business  Day of a
                  calendar month; and

                                    (4)  the  Borrower  shall  select   Interest
                  Periods so as not to require a payment  or  prepayment  of any
                  LIBOR Loan or C/D Rate Loan during an Interest Period for such
                  Loan.

                  "Lender":  First  Union  National  Bank,  a  national  banking
         association.

                  "LIBOR Loans":  Loans the rate of interest applicable to which
         is based upon the LIBOR Rate.

                  "LIBOR  Rate":  means,  for any  LIBOR  Loan for any  Interest
         Period therefor, the rate per annum (rounded upwards, if necessary,  to
         the  nearest  1/100 of 1%)  appearing  on  Telerate  Page  3750 (or any
         successor  page) as the London  interbank  offered rate for deposits in
         Dollars for a period of comparable  duration to such Interest Period at
         approximately  11:00 a.m.  (London time) two Business Days prior to the
         first day of such Interest  Period.  If for any reason such rate is not
         available, the term "LIBOR Rate" shall mean, for any LIBOR Loan for any
         Interest  Period  therefor,  the rate per annum  (rounded  upwards,  if
         necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
         Page as the London  interbank  offered  rate for deposits in Dollars at
         approximately  11:00 a.m.  (London time) two Business Days prior to the
         first  day of  such  Interest  Period  for a term  comparable  to  such
         Interest Period; provided,  however, if more than one rate is specified
         on  Reuters  Screen  LIBO  Page,  the  applicable  rate  shall  be  the
         arithmetic mean of all such rates.

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

                  "Loan or Term Loan":  the loan made by Lender pursuant to this
         Agreement.

                  "Loan  Documents":  this  Agreement,  the Note and the Payment
         Guarantee.

                  "Loan Parties": the Borrower and the Guarantor.

                  "Material  Adverse  Effect":  a material adverse effect on (a)
         the business, operations,  property, condition (financial or otherwise)
         or prospects  of the  Borrower  taken as a whole or (b) the validity or
         enforceability of this or any of the other Loan Documents or the rights
         or remedies of the Lender hereunder or thereunder.

                  "Maturity Date": October 31, 2002.

                  "Mini-storage  Property":  means a property  generally  of the
         type described in the Annual Report as "mini-warehouse facilities."

                  "Multiemployer  Plan": a Plan which is a multiemployer plan as
         defined in Section 4001(a)(3) of ERISA.

                  "Net Income":  means, for any period,  the net income for such
         period determined in accordance with GAAP; provided,  however,  that in
         determining  Net Income of the Borrower (a) there shall not be included

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<PAGE>

         in gross revenues any earnings properly  attributable to the assets and
         business of any Persons acquired by the Borrower,  prior to the date of
         such acquisition but there shall be included in gross revenues (without
         duplication) an amount equal to the earnings  properly  attributable to
         any such assets and business  for the first three full fiscal  quarters
         after the date of the  acquisition  any amount  equal to such  earnings
         from the  beginning of the first full fiscal  quarter after the date of
         acquisition  annualized  over a period  equal to the  actual  number of
         fiscal  quarters  from the  beginning of such fiscal  quarters from the
         beginning of such fiscal quarter to the date of determination  plus the
         difference  between  such  amount and the end of the first full  fiscal
         quarter  after  the  date  that  is  one  year  from  the  date  of the
         acquisition;  and (b) there shall not be included in gross revenues any
         earnings of, and dividends payable to, the Borrower in a currency which
         at the time may not be  converted  into  Dollars  under the laws of the
         nation issuing such currency.

                  "Non-Excluded Taxes": as defined in Section 3.11.

                  "Note": the reference to the Term Note.

                  "Obligations":  the unpaid  principal  amount of, and interest
         (including, without limitation, interest accruing after the maturity of
         the Loans and  interest  accruing  after the filing of any  petition in
         bankruptcy,  or the commencement of any insolvency,  reorganization  or
         like proceeding,  relating to the Borrower,  whether or not a claim for
         post-filing or post-petition interest is allowed in such proceeding) on
         the Loan, and all other  obligations and liabilities of the Borrower to
         the Lender, whether direct or indirect,  absolute or contingent, due or
         to become due, or now existing or hereafter  incurred,  which may arise
         under, or out of or in connection  with this  Agreement,  the Note, the
         Payment Guarantee,  and any other Loan Documents and any other document
         made, delivered or given in connection  therewith or herewith,  whether
         on account of principal,  interest,  reimbursement  obligations,  fees,
         indemnities,  costs, expenses (including,  without limitation, all fees
         and disbursements of counsel to the Lender that are required to be paid
         by the  Borrower  pursuant  to the  terms  of the  Loan  Documents)  or
         otherwise.

                  "Participant": as defined in Section 10.6(b).

                  "Payment  Guarantee":  that certain Payment  Guarantee of even
         date  herewith  from the  Guarantor  to the  Lender  pursuant  to which
         Guarantor has guaranteed the Borrower's Obligations.

                  "PBGC": the Pension Benefit Guaranty  Corporation  established
         pursuant to Subtitle A of Title IV of ERISA.

                  "Person":  an individual,  partnership,  corporation,  limited
         liability  company,   business  trust,  joint  stock  company,   trust,
         unincorporated  association,  joint venture,  Governmental Authority or
         other entity of whatever nature.

                  "Plan":  at a particular time, any employee benefit plan which
         is covered by ERISA and in respect of which the  Borrower or a Commonly
         Controlled  Entity is (or, if such plan were  terminated  at such time,
         would under  Section  4069 of ERISA be deemed to be) an  "employer"  as
         defined in Section 3(5) of ERISA.

                  "Properties": as defined in Section 4.22.

                  "Refinancing":  means  satisfaction  and  termination  of  all
         Existing Financing Documents,  payment of all amounts owing to Existing
         Creditors,  and  the  release  of any  Liens  created  by the  Existing
         Financing Documents.

                  "Regulation U":  Regulation U of the Board of Governors of the
         Federal Reserve System as in effect from time to time.

                  "Reorganization":  with respect to any Multiemployer Plan, the
         condition  that such plan is in  reorganization  within the  meaning of
         Section 4241 of ERISA.

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<PAGE>


                  "Reportable  Event":  any of the  events  set forth in Section
         4043(b) of ERISA,  other  than those  events as to which the thirty day
         notice  period is waived under  Sections .13, .14, .16, .18, .19 or .20
         of PBGC Reg. ss. 4043.

                  "Requirement  of Law": as to any Person,  the  certificate  of
         incorporation   and  by-laws  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.

                  "Responsible  Officer":  the chief  executive  officer and the
         president of the Borrower  or, with respect to financial  matters,  the
         vice president and treasurer of the Guarantor.

                  "Single  Employer Plan": any Plan which is covered by Title IV
         of ERISA, but which is not a Multiemployer Plan.

                  "Subordinated   Debt":  any  unsecured   Indebtedness  of  the
         Borrower:  no part of the  principal  of which is  required  to be paid
         (whether  by way  of  mandatory  sinking  fund,  mandatory  redemption,
         mandatory  prepayment  or  otherwise)  prior to November  1, 2002;  the
         payment of the principal of and interest on which and other obligations
         of the  Borrower  in  respect  thereof  are  subordinated  to the prior
         payment  in  full  of  the   principal  of  and   interest   (including
         post-petition  interest)  on the Loan  and all  other  obligations  and
         liabilities  of the  Borrower  to the  Lender  hereunder  on terms  and
         conditions  approved in writing by the Lender;  and all other terms and
         conditions  of which  are  satisfactory  in form and  substance  to the
         Lender (as evidenced by its prior written approval thereof).

                  "Subsidiary": as to any Person, a corporation,  partnership or
         other  entity  of which  shares of stock or other  ownership  interests
         having  ordinary voting power (other than stock or such other ownership
         interests  having  such  power  only by  reason of the  happening  of a
         contingency)  to elect a majority  of the board of  directors  or other
         managers of such  corporation,  partnership  or other entity are at the
         time  owned,  or the  management  of  which  is  otherwise  controlled,
         directly or indirectly through one or more intermediaries,  or both, by
         such  Person.   Unless  otherwise   qualified,   all  references  to  a
         "Subsidiary"  or to  "Subsidiaries"  in this Agreement shall refer to a
         Subsidiary or Subsidiaries of the Borrower.

                  "Term Note": as defined in Section 2.2.

                  "Total   Liabilities":   means  all  direct   and   contingent
         liabilities  required to be  disclosed or reported by GAAP of Borrower,
         plus (without duplication) Indebtedness (not including nonrecourse debt
         of  minority  interests),  guarantees  of  Indebtedness  of any Person,
         letters  of  credit,   repurchase  obligations,   forward  commitments,
         accounts  payable,  lease obligations  (including  ground leases),  and
         unfunded obligations of Borrower.

                  "Tranche":  the  collective  reference to LIBOR Loans the then
         current Interest Periods with respect to all of which begin on the same
         date and end on the same later date  (whether  or not such Loans  shall
         originally have been made on the same day);  Tranches may be identified
         as "LIBOR Tranches".

                  "Transferee": as defined in Section 10.6(f).

                  "Type":  as to the Loan,  its  nature as a Base Rate Loan or a
         LIBOR Loan.


                  1.2  Other  Definitional  Provisions.   

                  (a) Unless otherwise  specified therein,  all terms defined in
         this Agreement shall have the defined meanings when used in the Note or
         any certificate or other document made or delivered pursuant hereto.

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<PAGE>

                  (b) As used herein and in Note,  and any  certificate or other
         document made or delivered  pursuant hereto,  accounting terms relating
         to the Borrower not defined in Section 1.1 and accounting  terms partly
         defined in Section  1.1,  to the  extent  not  defined,  shall have the
         respective meanings given to them under GAAP.

                  (c) 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 Section,  Schedule and Exhibit  references  are to this
         Agreement unless otherwise specified.

                  (d) The  meanings  given  to  terms  defined  herein  shall be
         equally applicable to both the singular and plural forms of such terms.


                  SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS

                  2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, Lender agrees to make the Loan to the Borrower on the Closing Date in an
amount equal to Thirteen Million and No/100 Dollars  ($13,000,000.00).  The Term
Loan may from  time to time be (a) a LIBOR  Loan,  (b) a Base Rate Loan or (c) a
combination thereof, as determined by the Borrower and notified to the Lender in
accordance with Sections 2.3 and 3.2.

                  2.2  Term  Notes.  The  Term  Loan  shall  be  evidenced  by a
promissory note of the Borrower,  substantially  in the form of Exhibit A-1 (the
"Term Note"),  payable to the order of Lender and representing the obligation of
the Borrower to pay the amount of the Term Loan made by Lender. Lender is hereby
authorized to record the date, Type and amount of the Term Loan and the date and
amount of each payment or prepayment of principal thereof and each Conversion of
all or a portion  thereof to another  Type and,  and in the case of LIBOR Loans,
the  Interest  Period  with  respect  thereto,  on the  schedule  annexed to and
constituting a part of the Term Note, and any such recordation  shall constitute
prima facie evidence of the accuracy of the  information so recorded;  provided,
that the  failure  of Lender to make any such  recordation  shall not  impair or
otherwise affect the validity or  enforceability of the Term Note. The Term Note
shall (a) be dated the Closing  Date,  and (b) bear interest for the period from
the date  thereof  on the unpaid  principal  amount  thereof  at the  applicable
interest  rates per annum  specified in Section  3.1.  Interest on the Term Note
shall be payable on the dates specified in Section 3.1(e).

                  2.3 Procedure for Term Loan Borrowing. The Borrower shall give
the Lender irrevocable notice (which notice must be received by the Lender prior
to 12:00 noon, Charlotte, North Carolina time, (a) one Business Day prior to the
Closing  Date,  if all or any part of the Term Loan are to be  initially a LIBOR
Loan, or (b) one Business Day prior to the Closing Date,  otherwise)  requesting
that the Lender make the Term Loan on the Closing  Date and  specifying  (i) the
Closing Date, (ii) the amount to be borrowed,  (iii) whether the Term Loan is to
be initially a LIBOR Loan, Base Rate Loan, or a combination thereof, and (iv) if
the Term  Loan is to be  entirely  or  partly a LIBOR  Loan,  the  length of the
initial Interest Period therefor.  Not later than 11:00 a.m. on the Closing Date
Lender  shall make  available  to the Borrower  such  borrowing  in  immediately
available  funds.  The  Lender  shall on such date  credit  the  account  of the
Borrower  on the books of such office of the Lender  with the  aggregate  of the
amounts made available.


                  SECTION 3. GENERAL PROVISIONS APPLICABLE TO THE LOAN

                  3.1  Interest  Rates and  Payment  Dates.  

                  (a) Each LIBOR Loan  shall bear  interest  for each day during
         each Interest  Period with respect thereto at a rate per annum equal to
         the LIBOR Rate determined for such day plus the Applicable Margin.

                  (b) Each Base  Rate Loan  shall  bear  interest  at a rate per
         annum equal to the Base Rate plus the Applicable Margin.

                  (c) Intentionally Omitted.

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<PAGE>

                  (d) If all or a portion of (i) any principal of the Loan, (ii)
         any  interest  payable  thereon,  or (iii)  any  other  amount  payable
         hereunder  shall not be paid when due (whether at the stated  maturity,
         by acceleration  or otherwise),  the principal of the Loan and any such
         overdue  interest,  or other amount  shall bear  interest at a rate per
         annum  which  is (x) in the case of  principal,  the  rate  that  would
         otherwise be applicable thereto pursuant to the foregoing provisions of
         this Section  plus 3% or (y) in the case of any such overdue  interest,
         or other  amount,  the rate  described in paragraph (b) of this Section
         plus 3%,  in each  case from the date of such  non-payment  until  such
         overdue principal,  interest, commitment fee or other amount is paid in
         full (as well after as before judgment).

                  (e)  Interest  shall be payable  in  arrears on each  Interest
         Payment Date, provided that interest accruing pursuant to paragraph (d)
         of this Section shall be payable from time to time on demand.


                  3.2 Conversion and Continuation  Options.

                  (a) The  Borrower  may elect  from  time to time to  Convert a
         LIBOR  Loan to a Base  Rate  Loan,  by giving  the  Lender at least two
         Business Days' prior irrevocable notice of such election, provided that
         any such Conversion of a LIBOR Loan may only be made on the last day of
         an Interest  Period with respect  thereto.  The Borrower may elect from
         time to time to  Convert a Base Rate Loan to a LIBOR Loan by giving the
         Lender at least three Business Days' prior  irrevocable  notice of such
         election.  Any such notice of  Conversion to a LIBOR Loan shall specify
         the length of the initial Interest Period therefor.  All or any part of
         the Term Loan may be Converted as provided  herein,  provided  that (i)
         the Term Loan not may be Converted  into a LIBOR Loan when any Event of
         Default has occurred and is  continuing  and the Lender has  determined
         that such a Conversion is not appropriate, (ii) any such Conversion may
         only be made if, after  giving  effect  thereto,  Section 3.3 shall not
         have been contravened,  and (iii) no Loan may be converted into a LIBOR
         Loan after the date that is one month or 30 days,  respectively,  prior
         to the Maturity Date.

                  (b)  Any  LIBOR  Loan  may  be  Continued  as  such  upon  the
         expiration of the then current  Interest Period with respect thereto by
         the  Borrower  giving  notice to the  Lender,  in  accordance  with the
         applicable  provisions  of the  term  "Interest  Period"  set  forth in
         Section 1.1, of the length of the next Interest Period to be applicable
         to such Loans, provided that no LIBOR Loan may be Continued as such (i)
         when any Event of Default has occurred and is continuing and the Lender
         has determined  that such a Continuation is not  appropriate,  (ii) if,
         after giving effect thereto,  Section 3.3 would be contravened or (iii)
         after  the  date  that is one  month or 30 days  prior  to,  the  final
         installment  of principal and provided,  further,  that if the Borrower
         shall fail to give such notice or if such Continuation is not permitted
         such Loan shall be  automatically  converted to a Base Rate Loan on the
         last day of such then expiring Interest Period.

                  3.3  Minimum  Amounts  and  Maximum  Number of  Tranches.  All
borrowings,  conversions  and  continuations  of  the  Loan  hereunder  and  all
selections of Interest  Periods  hereunder  shall be in such amounts and be made
pursuant to such elections so that,  after giving effect thereto,  the aggregate
principal  amount of the Loan  comprising  each LIBOR  Tranche shall be equal to
$1,000,000.00 or a whole multiple of $100,000.00 in excess thereof.  In no event
shall there be more than three (3) LIBOR Tranches outstanding at any time.

                  3.4 Optional Prepayments.  The Borrower may on the last day of
any Interest Period with respect thereto,  in the case of LIBOR Loans, or at any
time and from time to time, in the case of Base Rate Loans,  prepay the Loan, in
whole or in part, without premium or penalty,  upon at least four Business Days'
irrevocable  notice to the Lender,  specifying the date and amount of prepayment
and whether the  prepayment is of a LIBOR Loan,  Base Rate Loan or a combination
thereof,  and, if of a combination thereof, the amount allocable to each. If any
such  notice is given,  the amount  specified  in such  notice  shall be due and
payable  on the  date  specified  therein,  together  with any  amounts  payable
pursuant  to  Section  3.12 and  accrued  interest  to such  date on the  amount
prepaid.  Partial  prepayment of the Term Loan pursuant to this Section shall be
applied first to accrued interest to such date on the amount prepaid and then to
the principal  thereof.  Amounts  prepaid on account of the Term Loan may not be
reborrowed. Partial prepayment pursuant to this Section shall be in an aggregate
principal amount of $1,000,000.00 or a whole multiple thereof.

                  3.5 Intentionally Omitted.

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<PAGE>

                  3.6  Computation  of  Interest  and Fees. 

                  (a) Whenever it is  calculated  on the basis of the Base Rate,
         interest  shall be  calculated  on the basis of a 365- (or 366-, as the
         case may be) day year for the  actual  days  elapsed;  and,  otherwise,
         interest  shall be  calculated  on the basis of a 360-day  year for the
         actual days elapsed. The Lender shall as soon as practicable notify the
         Borrower  of each  determination  of a LIBOR  Rate.  Any  change in the
         interest rate on a Loan resulting from a change in the Base Rate or the
         Eurocurrency  Reserve  Requirements,  shall become  effective as of the
         opening of business on the day on which such change becomes  effective.
         The Lender  shall as soon as  practicable  notify the  Borrower  of the
         effective date and the amount of each such change in interest rate.

                  (b)  Each  determination  of an  interest  rate by the  Lender
         pursuant to any provision of this  Agreement  shall be  conclusive  and
         binding on the  Borrower in the absence of manifest  error.  The Lender
         shall,  at the  request  of the  Borrower,  deliver  to the  Borrower a
         statement  showing the quotations used by the Lender in determining any
         interest rate pursuant to Section 3.1(a).

                  3.7  Inability to  Determine  Interest  Rate.  If prior to the
first day of any  Interest  Period  the  Lender  shall  have  determined  (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining  the LIBOR Rate for such Interest Period,  the Lender
shall give  telecopy or  telephonic  notice  thereof to the  Borrower as soon as
practicable  thereafter.  If such notice is given (x) any LIBOR Loans, requested
to be made on the first day of such Interest Period shall be made as a Base Rate
Loan,  (y) if the Loan  was to have  been  Converted  on the  first  day of such
Interest  Period to a LIBOR Loan,  shall be  Converted to or Continued as a Base
Rate Loan and (z) any outstanding  LIBOR Loan, shall be Converted,  on the first
day of such  Interest  Period,  to a Base Rate Loan.  Until such notice has been
withdrawn  by the Lender,  no further  LIBOR Loans shall be made or Continued as
such, nor shall the Borrower have the right to Convert the Loan to a LIBOR Loan.

                  3.8 Payments. All payments (including  prepayments) to be made
by the Borrower hereunder,  whether on account of principal,  interest,  fees or
otherwise, shall be made without set-off or counterclaim and shall be made prior
to 2:00 p.m.,  Charlotte,  North  Carolina  time, on the due date thereof to the
Lender,  at the Lender's  office  specified in Section  10.2,  in Dollars and in
immediately  available funds. If any payment hereunder (other than payments on a
LIBOR Loan)  becomes due and  payable on a day other than a Business  Day,  such
payment shall be extended to the next succeeding Business Day, and, with respect
to  payments  of  principal,  interest  thereon  shall  be  payable  at the then
applicable  rate during such  extension.  If any payment on a LIBOR Loan becomes
due and payable on a day other than a Business  Day, the maturity  thereof shall
be  extended  to the next  succeeding  Business  Day  unless  the result of such
extension  would be to extend such payment into another  calendar month in which
event such payment shall be made on the immediately preceding Business Day.

                  3.9 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or  application  thereof shall make it unlawful for Lender to make or maintain a
LIBOR Loan as  contemplated  by this  Agreement,  (a) the  commitment  of Lender
hereunder  to Continue a LIBOR Loan as such and Convert Base Rate Loans to LIBOR
Loans shall  forthwith  be canceled and (b) Lender's  Loan then  outstanding  as
LIBOR Loans, if any, shall be Converted automatically to a Base Rate Loan on the
respective last days of the then current  Interest  Periods with respect to such
Loan or within such earlier period as required by law. If any such Conversion of
a LIBOR  Loan  occurs  on a day  which is not the  last day of the then  current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 3.12.

                  3.10 Requirements of Law. 

                  (a) If the adoption of or any change in any Requirement of Law
         or in the interpretation or application thereof or compliance by Lender
         with any request or directive  (whether or not having the force of law)
         from any central bank or other  Governmental  Authority made subsequent
         to the date hereof:

                                    (i) shall  subject  Lender to any tax of any
                  kind whatsoever  with respect to this  Agreement,  the Note or
                  any LIBOR Loan made by it, or change the basis of  taxation of
                  payments to Lender in respect thereof (except for Non-Excluded

                                       23

<PAGE>

                  Taxes  covered by Section  3.11 and changes in the rate of tax
                  on the overall net income of Lender);

                                    (ii) shall impose, modify or hold applicable
                  any  reserve,  special  deposit,  compulsory  loan or  similar
                  requirement   against  assets  held  by,   deposits  or  other
                  liabilities in or for the account of, advances, loans or other
                  extensions of credit by, or any other acquisition of funds by,
                  any office of Lender  which is not  otherwise  included in the
                  determination of the LIBOR Rate hereunder; or

                                    (iii)  shall  impose  on  Lender  any  other
                  condition;

         and the  result  of any of the  foregoing  is to  increase  the cost to
         Lender,  by an amount which  Lender  deems to be  material,  of making,
         Converting  into,  Continuing or  maintaining a LIBOR Loan or to reduce
         any amount receivable  hereunder in respect thereof,  then, in any such
         case, the Borrower shall promptly pay Lender such additional  amount or
         amounts  as will  compensate  such  Lender for such  increased  cost or
         reduced amount receivable.

                  (b) If Lender  shall have  determined  that the adoption of or
any  change in any  Requirement  of Law  regarding  capital  adequacy  or in the
interpretation or application thereof or compliance by Lender or any corporation
controlling  Lender with any request or  directive  regarding  capital  adequacy
(whether or not having the force of law) from any  Governmental  Authority  made
subsequent  to the date  hereof  shall have the effect of  reducing  the rate of
return  on  Lender's  or such  corporation's  capital  as a  consequence  of its
obligations  hereunder  to a level below that which  Lender or such  corporation
could have achieved but for such  adoption,  change or  compliance  (taking into
consideration  Lender's or such  corporation's  policies with respect to capital
adequacy) by an amount deemed by Lender to be material,  then from time to time,
the Borrower shall promptly pay to Lender such  additional  amount or amounts as
will compensate such Lender for such reduction.

                  (c) If Lender becomes entitled to claim any additional amounts
pursuant to this Section,  it shall promptly notify the Borrower of the event by
reason of which it has become so entitled.  A certificate  as to any  additional
amounts  payable  pursuant to this  Section  submitted by Lender to the Borrower
shall be conclusive  in the absence of manifest  error.  The  agreements in this
Section shall survive the  termination  of this Agreement and the payment of the
Loans and all other amounts payable hereunder.

                  3.11  Taxes.  All  payments  made by the  Borrower  under this
Agreement and the Note shall be made free and clear of, and without deduction or
withholding  for or on account of, any present or future income,  stamp or other
taxes, levies, imposts,  duties, charges, fees, deductions or withholdings,  now
or  hereafter  imposed,   levied,   collected,   withheld  or  assessed  by  any
Governmental Authority,  excluding net income taxes and franchise taxes (imposed
in lieu of net income  taxes)  imposed on the Lender as a result of a present or
former  connection  between the Lender and the  jurisdiction of the Governmental
Authority  imposing such tax or any political  subdivision  or taxing  authority
thereof or therein  (other  than any such  connection  arising  solely  from the
Lender having  executed,  delivered or performed its  obligations  or received a
payment  under,  or  enforced,   this  Agreement  or  the  Note).  If  any  such
non-excluded  taxes,  levies,  imposts,  duties,  charges,  fees  deductions  or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under the Note, the amounts so payable to the
Lender shall be increased to the extent  necessary to yield to the Lender (after
payment of all  Non-Excluded  Taxes)  interest or any such other amounts payable
hereunder at the rates or in the amounts  specified in this Agreement.  Whenever
any  Non-Excluded  Taxes are  payable by the  Borrower,  as promptly as possible
thereafter  the  Borrower  shall  send to the  Lender,  a  certified  copy of an
original  official receipt received by the Borrower showing payment thereof.  If
the Borrower  fails to pay any  Non-Excluded  Taxes when due to the  appropriate
taxing authority or fails to remit to the Lender the required  receipts or other
required documentary  evidence,  the Borrower shall indemnify the Lender for any
incremental  taxes,  interest or penalties that may become payable by the Lender
as a result of any such  failure.  The  agreements in this Section shall survive
the  termination  of this  Agreement  and the payment of the Loans and all other
amounts payable hereunder.

                  3.12 Indemnity. The Borrower agrees to indemnify Lender and to
hold Lender  harmless from any loss or expense which Lender may sustain or incur
as a  consequence  of (a)  default by the  Borrower  in making a  borrowing  of,
Conversion into or Continuation of a LIBOR  Loan after the Borrower has given a

                                       24

<PAGE>

notice  requesting the same in accordance with the provisions of this Agreement,
(b) default by the  Borrower in making any  prepayment  after the  Borrower  has
given a notice  thereof in accordance  with the  provisions of this Agreement or
(c) the  making of a  prepayment  of a LIBOR Loan on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification may include
an amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid,  Converted or  Continued,  for the period
from the date of such  prepayment  or of such  failure to Convert or Continue to
the last day of such Interest Period (or, in the case of a failure to Convert or
Continue,  the  Interest  Period that would have  commenced  on the date of such
failure) in each case at the applicable  rate of interest for such Loan provided
for herein (excluding,  however, the Applicable Margin included therein, if any)
over (ii) the amount of interest  (as  reasonably  determined  by Lender)  which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank London market.  This
covenant shall survive the  termination of this Agreement and the payment of the
Loan and all other amounts payable hereunder.


                  3.13 Lending Offices;  Change of Lending Office. The Loan made
by Lender shall be made and maintained at Lender's Applicable Lending Office for
a Loan of such Type.

                  3.14  Repayment  of Loan;  Evidence of Debt.

                  (a) The Borrower hereby unconditionally promises to pay to the
         Lender  the  principal  amount  of the Term  Loan  (or the then  unpaid
         principal  amount of Term Loan,  on the date that the Term Loan becomes
         due and payable  pursuant to Section 8). The  Borrower  hereby  further
         agrees to pay interest on the unpaid  principal amount of the Loan from
         time to time  outstanding  from the date hereof  until  payment in full
         thereof at the rates per annum,  and on the dates, set forth in Section
         3.1.

                  (b)  Lender  shall  maintain  in  accordance  with  its  usual
         practice an account or accounts evidencing indebtedness of the Borrower
         to Lender  resulting  from Loan of Lender from time to time,  including
         the amounts of principal  and interest  payable and paid to Lender from
         time to time under this Agreement.


                  SECTION 4. REPRESENTATIONS AND WARRANTIES

                  To induce the Lender to enter into this  Agreement and to make
the Loan, the Borrower hereby represents and warrants to the Lender that:

                  4.1 Financial Condition.  The balance sheet of the Borrower as
at December 31, 1997, a copy of which has  heretofore  been furnished to Lender,
is complete  and correct and  presents  fairly the  financial  condition  of the
Borrower as at such date,  and the results of its  operations  and cash flow for
the fiscal year then ended.  The  unaudited  balance sheet of the Borrower as at
June 30, 1998 and the related  unaudited  statements of income and of cash flows
for the six month period ended on such date, certified by a Responsible Officer,
a copy of which has heretofore been furnished to Lender, is complete and correct
and presents fairly the financial condition of the Borrower as at such date, and
the results of its  operations  and its cash flow for the six month  period then
ended  (subject  to  normal  year-end  audit  adjustments).  All such  financial
statements,  including  the  related  schedules  and  notes  thereto,  have been
prepared in accordance  with GAAP applied  consistently  throughout  the periods
involved (except as approved by such accountants or Responsible  Officer, as the
case may be, and as disclosed  therein).  Borrower  has, at the date of the most
recent  balance  sheet  referred  to above,  no material  Guarantee  Obligation,
contingent  liability or liability for taxes,  or any long-term lease or unusual
forward or long-term  commitment,  including,  without limitation,  any interest
rate or  foreign  currency  swap or  exchange  transaction  or  other  financial
derivative,  which is not reflected in the foregoing  statements or in the notes
thereto.  During the period from June 30, 1998 to and  including the date hereof
there has been no sale,  transfer or other  disposition  by the  Borrower of any
material  part of its business or property and no purchase or other  acquisition
of any business or property  (including  any Capital  Stock of any other Person)
material in  relation to the  financial  condition  of the  Borrower at June 30,
1998.

                  4.2  No  Change.  Since  June  30,  1998  there  has  been  no
development or event which has had or could have a Material Adverse Effect.

                                       25

<PAGE>

                  4.3  Existence;  Compliance  with  Law.  Borrower  (a) is duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization, (b) has the corporate power and authority, and
the legal  right,  to own and operate  its  property,  to lease the  property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly  qualified as a foreign  corporation  and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification and (d) is in compliance
with all  Requirements  of Law except to the extent  that the  failure to comply
therewith could not, in the aggregate, have a Material Adverse Effect.

                  4.4  Power;   Authorization;   Enforceable  Obligations.   The
Borrower has the corporate  power and authority,  and the legal right,  to make,
deliver  and  perform  the Loan  Documents  to which it is a party and to borrow
hereunder  and has  taken  all  necessary  corporate  action  to  authorize  the
borrowing  on the terms and  conditions  of this  Agreement  and the Note and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or authorization  of, filing with,  notice to or other
act by or in  respect  of, any  Governmental  Authority  or any other  Person is
required in  connection  with the  borrowing  hereunder  or with the  execution,
delivery, performance, validity or enforceability of the Loan Documents to which
the Borrower is a party.  This  Agreement has been, and each other Loan Document
to which it is a party will be, duly  executed  and  delivered  on behalf of the
Borrower.  This Agreement constitutes,  and each other Loan Document to which it
is a party when  executed and  delivered  will  constitute,  a legal,  valid and
binding  obligation  of  the  Borrower   enforceable  against  the  Borrower  in
accordance  with its terms,  subject to the effects of  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,   moratorium  and  other  similar  laws
relating  to  or  affecting  creditors'  rights  generally,   general  equitable
principles  (whether  considered  in a  proceeding  in  equity or at law) and an
implied covenant of good faith and fair dealing.

                  4.5 No Legal Bar. The execution,  delivery and  performance of
the Loan Documents to which the Borrower is a party, the borrowing hereunder and
the use of the  proceeds  thereof  will not  violate any  Requirement  of Law or
Contractual  Obligation of the Borrower and will not result in, or require,  the
creation or imposition of any Lien on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.

                  4.6 No Material  Litigation.  No litigation,  investigation or
proceeding of or before any arbitrator or Governmental  Authority is pending or,
to the  knowledge  of the  Borrower,  threatened  by or against the  Borrower or
against any of its  properties  or revenues  (a) with respect to any of the Loan
Documents  or any of the  transactions  contemplated  hereby or thereby,  or (b)
which could have a Material Adverse Effect.

                  4.7 No  Default.  Borrower  is not in  default  under  or with
respect to any of its Contractual  Obligations in any respect which could have a
Material  Adverse  Effect.  No Default or Event of Default has  occurred  and is
continuing.

                  4.8 Ownership of Property; Liens. Borrower has good record and
marketable  title in fee simple to, or a valid  leasehold  interest  in, all its
real  property,  and good title to, or a valid  leasehold  interest  in, all its
other  property,  and none of such  property  is subject  to any Lien  except as
permitted by Section 7.3.

                  4.9 Intellectual Property. The Borrower owns, or is licensed
to  use,  all  trademarks,  tradenames,  copyrights,  technology,  know-how  and
processes  necessary  for the  conduct of its  business as  currently  conducted
except for those the  failure to own or license  which could not have a Material
Adverse Effect (the "Intellectual  Property"). 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. 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, do not have a Material Adverse Effect.

                  4.10 No  Burdensome  Restrictions.  No  Requirement  of Law or
Contractual Obligation of the Borrower has a Material Adverse Effect.

                                       26

<PAGE>

                  4.11 Taxes.  Borrower  has filed or caused to be filed all tax
returns  which,  to the knowledge of the Borrower,  are required to be filed and
has paid  all  taxes  shown  to be due and  payable  on said  returns  or on any
assessments made against it or any of its property and all other taxes,  fees or
other charges 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  reserves in
conformity  with GAAP have been provided on the books of the  Borrower);  no tax
Lien has been filed,  and, to the knowledge of the  Borrower,  no claim is being
asserted, with respect to any such tax, fee or other charge.

                  4.12 Federal Regulations.  No part of the proceeds of the Loan
will be used for  "purchasing"  or  "carrying"  any  "margin  stock"  within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors of the Federal  Reserve  System as now and from time
to time hereafter in effect,  or for any purpose which violates,  or which would
be  inconsistent  with,  the  provisions  of the  regulations  of such  Board of
Governors. If requested by the Lender, the Borrower will furnish to the Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in said Regulation G or Regulation U, as the case
may be.

                  4.13 ERISA.  Neither a  Reportable  Event nor an  "accumulated
funding  deficiency"  (within  the meaning of Section 412 of the Code or Section
302 of ERISA) has  occurred  during the  five-year  period  prior to the date on
which this  representation  is made or deemed made with respect to any Plan, and
each Plan has complied in all material  respects with the applicable  provisions
of ERISA and the Code. No  termination  of a Single  Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has  arisen,  during  such  five-year
period.  The present value of all accrued  benefits  under each Single  Employer
Plan  (based on those  assumptions  used to fund such  Plans) did not, as of the
last annual  valuation  date prior to the date on which this  representation  is
made or deemed  made,  exceed the value of the assets of such Plan  allocable to
such accrued benefits.  Neither the Borrower nor any Commonly  Controlled Entity
has had a complete  or  partial  withdrawal  from any  Multiemployer  Plan,  and
neither the Borrower nor any Commonly  Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw  completely  from all  Multiemployer  Plans as of the valuation
date most closely  preceding  the date on which this  representation  is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.

                  4.14 Investment Company Act; Other  Regulations.  The Borrower
is not an  "investment  company",  or a company  "controlled"  by an "investment
company",  within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation  under any Federal or State statute or
regulation  (other than  Regulation  X of the Board of  Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.

                  4.15 Subsidiaries. Borrower has no Subsidiaries or Affiliates.

                  4.16 Intentionally Omitted.

                  4.17 Accuracy and Completeness of Information.

                  (a) All factual information, reports and other papers and data
         with respect to the Loan Parties  (other than  projections)  furnished,
         and all factual statements and representations made, to the Lender by a
         Loan Party,  or on behalf of a Loan Party,  were,  at the time the same
         were so  furnished  or made,  when taken  together  with all such other
         factual  information,  reports and other papers and data  previously so
         furnished and all such other  factual  statements  and  representations
         previously so made,  complete and correct in all material respects,  to
         the extent necessary to give the Lender true and accurate  knowledge of
         the subject matter thereof in all material respects, and did not, as of
         the date so  furnished  or made,  contain  any  untrue  statement  of a
         material fact or omit to state any material fact  necessary in order to
         make the  statements  contained  therein not misleading in light of the
         circumstances in which the same were made.

                  (b) All projections with respect to the Loan Parties furnished
         by or on  behalf  of a Loan  Party  to the  Lender  were  prepared  and
         presented in good faith by or on behalf of such Loan Party.  No fact is
         known to a Loan Party which materially and adversely  affects or in the
         future is reasonably  likely (so far as such Loan Party can  reasonably
         foresee) to have a Material Adverse Effect which has not been set forth
         in the  financial  statements  referred  to in  Section  4.1 or in such

                                       27

<PAGE>

         information, reports, papers and data or otherwise disclosed in writing
         to the Lender prior to the Closing Date.

                  4.18 Labor  Relations.  No Loan Party is engaged in any unfair
labor  practice  which could  reasonably be expected to have a Material  Adverse
Effect.  There is (a) no unfair labor practice compliant pending or, to the best
knowledge  of each Loan  Party,  threatened  against  a Loan  Party  before  the
National  Labor  Relations  Board which could  reasonably  be expected to have a
Material Adverse Effect and no grievance or arbitration  proceeding  arising out
of or under a collective  bargaining agreement is so pending or threatened;  (b)
no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge
of  each  Loan  Party,  threatened  against  a Loan  Party;  and  (c)  no  union
representation  question  existing with respect to the employees of a Loan Party
and no union organizing activities are taking place with respect to any thereof.

                  4.19  Insurance.  Each Loan  Party  has,  with  respect to its
properties and business,  insurance covering the risks, in the amounts, with the
deductible or other retention amounts, and with the carriers, listed on Schedule
4.19,  which  insurance  meets the  requirements of Section 6.5 hereof as of the
date hereof and the Closing Date.

                  4.20 Solvency. On the Closing Date, after giving effect to the
consummation  of the  Loan  and  to  the  incurrence  of  all  indebtedness  and
obligations  being incurred on or prior to such date in connection  herewith and
therewith,  (i) the amount of the "present fair saleable value" of the assets of
the Borrower will, as of such date, exceed the amount of all "liabilities of the
Borrower,  contingent or  otherwise",  as of such date, as such quoted terms are
determined  in  accordance  with  applicable  federal  and state laws  governing
determinations  of the  insolvency  of debtors,  (ii) the present fair  saleable
value of the assets of the Borrower,  will, as of such date, be greater than the
amount that will be  required to pay the  liabilities  of the  Borrower,  on its
debts as such debts become  absolute and matured,  (iii) Borrower will not have,
as of such date, an  unreasonably  small amount of capital with which to conduct
their respective businesses,  and (iv) Borrower will be able to pay its debts as
they mature.  For purposes of this Section  4.20,  "debt" means  "liability on a
claim",  "claim" means any (x) right to payment,  whether or not such a right is
reduced to  judgment,  liquidated,  unliquidated,  fixed,  contingent,  matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to  payment,  whether  or not such  right to an  equitable  remedy is
reduced  to  judgment,  fixed,  contingent,   matured  or  unmatured,  disputed,
undisputed, secured or unsecured.

                  4.21 Purpose of Loans.  The proceeds of the Loan shall be used
by the Borrower for Refinancing of existing debt to Existing Creditors evidenced
by Existing Financing Documents.

                  4.22 Environmental Matters.

                  (a) To the best of Borrower's  knowledge,  the  facilities and
         properties owned, leased or operated by the Borrower (the "Properties")
         do not contain,  and have not  previously  contained,  any Materials of
         Environmental Concern in amounts or concentrations which (i) constitute
         or constituted a violation of, or (ii) could  reasonably be expected to
         give rise to liability under, any Environmental Law.

                  (b) To the best of Borrower's  knowledge,  the  Properties and
         all operations at the  Properties  are in  compliance,  and have in the
         last ten (10) years been in compliance,  in all material  respects with
         all  applicable  Environmental  Laws,  and,  to the best of  Borrower's
         knowledge,  there is no contamination at, under or about the Properties
         or violation of any Environmental Law with respect to the Properties or
         the business  operated by the  Borrower  (the  "Business")  which could
         materially  interfere with the continued operation of the Properties or
         materially impair the fair saleable value thereof.

                  (c) To the best of Borrower's knowledge,  the Borrower has not
         received any notice of violation,  alleged  violation,  non-compliance,
         liability or potential  liability  regarding  environmental  matters or
         compliance with Environmental Laws with regard to any of the Properties
         or the  Business,  nor does the  Borrower  have  knowledge or reason to
         believe  that any such notice  will be received or is being  threatened
         except insofar as such notice or threatened  notice, or any aggregation

                                       28

<PAGE>

         thereof, does not involve a matter or matters that is or are reasonably
         likely to result in the payment of a Material Environmental Amount.

                  (d)  To  the  best  of  Borrower's  knowledge,   materials  of
         Environmental Concern have not been transported or disposed of from the
         Properties in violation of, or in a manner or to a location which could
         reasonably   be  expected  to  give  rise  to  liability   under,   any
         Environmental Law, nor, to the best of Borrower's  knowledge,  have any
         Materials of Environmental Concern been generated,  treated,  stored or
         disposed of at, on or under any of the  Properties  in violation of, or
         in a manner that could give rise to  liability  under,  any  applicable
         Environmental  Law except  insofar as any such  violation  or liability
         referred  to in this  paragraph,  or any  aggregation  thereof,  is not
         reasonably likely to result in the payment of a Material  Environmental
         Amount.

                  (e)  To  the  best  of  Borrower's   knowledge,   no  judicial
         proceeding  or  governmental  or  administrative  action is  pending or
         threatened,  under any  Environmental  Law to which the  Borrower is or
         will  be  named  as a  party  with  respect  to the  Properties  or the
         Business,  nor,  to the best of  Borrower's  knowledge,  are  there any
         consent decrees or other decrees, consent orders, administrative orders
         or other  orders,  or other  administrative  or  judicial  requirements
         outstanding  under any Environmental Law with respect to the Properties
         except  insofar  as such  proceeding,  action,  decree,  order or other
         requirement,  or any aggregation  thereof,  is not reasonably likely to
         result in the payment of a Material Adverse Amount.

                  (f) To the best of  Borrower's  knowledge,  there  has been no
         release or threat of release of Materials of  Environmental  Concern at
         or from the Properties, or arising from or related to the operations of
         the  Borrower  in  connection  with  the  Properties  or  otherwise  in
         connection  with the  Business,  in  violation of or in amounts or in a
         manner  that  could give rise to  liability  under  Environmental  Laws
         except insofar as any such  violation or liability  referred to in this
         paragraph,  or any  aggregation  thereof,  is not reasonably  likely to
         result in the payment of a Material Environmental Amount.

                  4.23 Refinancing . Within thirty days of the date hereof,  all
amounts owing to the Existing Creditors under the Existing  Financing  Documents
shall have been repaid in full,  and any Liens created  pursuant to the Existing
Financing  Documents  shall  have  been  released,  and the  Existing  Financing
Documents  shall  terminate  and be of no  further  force and  effect  upon such
repayment;  in  each  case  pursuant  to such  payout  letters,  Lien  releases,
termination statements, mortgage satisfactions and other documents as the Lender
may require,  each of which shall be in form and substance  satisfactory  to the
Lender.


                  SECTION 5. CONDITIONS PRECEDENT 

                  5.1  Conditions to Loans.  The agreement of the Lender to make
the Loan requested to be made by it is subject to the satisfaction,  immediately
prior to or  concurrently  with the making of such Loan on the Closing  Date, of
the following conditions precedent:

                  (a) Loan Documents. The Lender shall have received:

                                    (i) this  Agreement,  executed and delivered
                  by a duly authorized officer of the Borrower,

                                    (ii) the Note of the Borrower  conforming to
                  the  requirements  hereof and  executed  by a duly  authorized
                  officer of the Borrower, and

                                    (iii) the Payment  Guarantee,  executed  and
                  delivered by a duly authorized officer of the Guarantor.

                  (b) Corporate  Proceedings  of the Borrower.  The Lender shall
         have  received,  a copy  of the  resolutions,  in  form  and  substance
         satisfactory  to the Lender,  of the Board of  Directors of the general
         partner of the Borrower  authorizing  (i) the  execution,  delivery and
         performance  of this Agreement and the other Loan Documents to which it
         is a party, and (ii) the borrowings contemplated  hereunder,  certified
         by the  Secretary or an Assistant  Secretary of the general  partner of
         the Borrower as of the Closing Date, which certificate shall be in form

                                       29

<PAGE>

         and  substance  satisfactory  to the  Lender  and shall  state that the
         resolutions thereby certified have not been amended,  modified, revoked
         or rescinded.

                  (c) General Partner Incumbency  Certificate.  The Lender shall
         have received a certificate of the Borrower, dated the Closing Date, as
         to the incumbency and signature of the officers of the general  partner
         of the Borrower  executing any Loan Document  satisfactory  in form and
         substance  to the  Lender,  executed  by  the  President  or  any  Vice
         President and the  Secretary or any Assistant  Secretary of the general
         partner of the Borrower.

                  (d) Corporate  Proceedings of the Guarantor.  The Lender shall
         have  received,  a copy  of the  resolutions,  in  form  and  substance
         satisfactory to the Lender,  of the Board of Directors of the Guarantor
         authorizing  the  execution,  delivery  and  performance  of  the  Loan
         Documents to which the Guarantor is a party, certified by the Secretary
         or an  Assistant  Secretary of the  Guarantor  as of the Closing  Date,
         which  certificate  shall be in form and substance  satisfactory to the
         Lender and shall state that the resolutions  thereby certified have not
         been amended, modified, revoked or rescinded.

                  (e) Guarantor  Incumbency  Certificate.  The Lender shall have
         received, a certificate of the Guarantor, dated the Closing Date, as to
         the  incumbency  and  signature  of  the  officers  of  the  Guarantor,
         satisfactory  in form and  substance  to the  Lender,  executed  by the
         President or any Vice  President  and the  Secretary  or any  Assistant
         Secretary of the Guarantor.

                  (f) Organizational  Documents. The Lender shall have received,
         true and complete copies of all of the organizational documents of each
         Loan Party,  certified  as of the Closing  Date as complete and correct
         copies  thereof by the Secretary or an Assistant  Secretary of the such
         Loan Party.

                  (g)  Good  Standing   Certificates.   The  Lender  shall  have
         received,  certificates dated as of a recent date from the Secretary of
         State or other appropriate  authority,  evidencing the good standing of
         each Loan Party in the jurisdiction of its organization.

                  (h) Consents,  Licenses and  Approvals.  The Lender shall have
         received,  a certificate  of a Responsible  Officer of the Borrower (i)
         attaching copies of all consents,  authorizations  and filings referred
         to in Section 4.4, and (ii)  stating that such  consents,  licenses and
         filings  are  in  full  force  and  effect,   and  each  such  consent,
         authorization and filing shall be in form and substance satisfactory to
         the Lender.

                  (i) Fees. The Lender shall have received its commitment fee in
         the amount of [Commitment Fee].

                  (j) Legal  Opinions.  The  Lender  shall  have  received,  the
         executed legal opinion of David  Goldberg,  counsel to the Borrower and
         the other  Loan  Parties.  The legal  opinion  shall  cover  such other
         matters incident to the transactions  contemplated by this Agreement as
         the Lender may reasonably require.

                  (k) Insurance. The Lender shall have received evidence in form
         and  substance  satisfactory  to it  that  all of the  requirements  of
         Section 6.5 hereof.


                  SECTION 6. AFFIRMATIVE COVENANTS 

                  The  Borrower  hereby  agrees  that,  so long as any amount is
owing to Lender hereunder or under any other Loan Document, the Borrower shall:

                  6.1 Financial Statements. Furnish to Lender:

                  (a) as soon as  available,  but in any event  within  120 days
         after  the  end of each  fiscal  year  of the  Borrower,  a copy of the
         balance  sheet  of the  Borrower  as at the  end of such  year  and the
         related  statements  of income and retained  earnings and of cash flows
         for such  year,  setting  forth in each  case in  comparative  form the

                                       30

<PAGE>

         figures for the previous year, reported on without a "going concern" or
         like  qualification or exception,  or qualification  arising out of the
         scope of the  audit,  by Ernst & Young or other  independent  certified
         public accountants of nationally recognized standing;

                  (b) as soon as  available,  but in any event not later than 50
         days after the end of each of the first three quarterly periods of each
         fiscal  year  of the  Borrower,  the  unaudited  balance  sheet  of the
         Borrower  as at the  end of such  quarter  and  the  related  unaudited
         statements  of income and  retained  earnings  and of cash flows of the
         Borrower  for such  quarter and the portion of the fiscal year  through
         the end of such quarter, setting forth in each case in comparative form
         the figures for the previous year,  certified by a Responsible  Officer
         as being  fairly  stated in all  material  respects  (subject to normal
         year-end audit adjustments);

all such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable  detail and in accordance with GAAP
applied  consistently  throughout the periods  reflected  therein and with prior
periods (except as approved by such accountants or officer,  as the case may be,
and disclosed therein).

                  6.2 Certificates; Other Information. Furnish to Lender:

                  (a) concurrently with the delivery of the financial statements
         referred to in Sections  6.1(a) and (b), a certificate of a Responsible
         Officer (i) stating  that,  to the best of such  Responsible  Officer's
         knowledge,  the  Borrower  during such period has observed or performed
         all  of  its  covenants  and  other  agreements,  and  satisfied  every
         condition,  contained in this Agreement and the other Loan Documents to
         be observed,  performed  or satisfied by it, and that such  Responsible
         Officer has  obtained no  knowledge  of any Default or Event of Default
         except as specified in such  certificate and (ii) showing in detail the
         calculations supporting such Responsible Officer's certification of the
         Borrower's compliance with the requirements of Section 7.1(a) and (b);

                  (b) during the month of May in each calendar year, a report of
         a reputable  insurance broker with respect to the insurance  maintained
         by the Borrower in accordance with Section 6.5 of this  Agreement,  and
         such supplemental  reports as the Lender may from time to time request;
         and

                  (c) promptly,  such additional financial and other information
         as Lender may from time to time reasonably request.

                  6.3  Payment  of  Obligations.  Pay,  discharge  or  otherwise
satisfy at or before maturity or before they become delinquent,  as the case may
be, all its obligations of whatever nature,  except where the amount or validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the Borrower.

                  6.4 Conduct of Business and Maintenance of Existence. Continue
to  engage in  business  of the same  general  type as now  conducted  by it and
preserve,  renew and keep in full force and effect its  corporate  existence and
take all  reasonable  action to maintain all rights,  privileges  and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted  pursuant to Section 7.5; comply with all Contractual  Obligations and
Requirements of Law except to the extent that failure to comply  therewith could
not, in the aggregate, have a Material Adverse Effect.

                  6.5  Maintenance  of  Property;  Insurance.  Keep all property
useful and  necessary  in its  business  in good  working  order and  condition;
maintain with financially sound and reputable  insurance  companies insurance on
all its  property in at least such  amounts and against at least such risks (but
including  in  any  event  public  liability,  product  liability  and  business
interruption)  as are  usually  insured  against  in the  same  general  area by
companies engaged in the same or a similar business; and furnish to Lender, upon
written request, full information as to the insurance carried.

                                       31

<PAGE>

                  6.6  Inspection of Property;  Books and Records;  Discussions.
Keep proper books of records and account in which full, true and correct entries
in  conformity  with  GAAP  and all  Requirements  of Law  shall  be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of Lender to visit and inspect any of its properties and examine
and make abstracts from any of its books and records at any reasonable  time and
as often as may  reasonably be desired and to discuss the business,  operations,
properties  and financial and other  condition of the Borrower with officers and
employees of the Borrower and with its independent certified public accountants.

                  6.7 Notices. Promptly give notice to the Lender of:

                  (a) the occurrence of any Default or Event of Default;

                  (b) any (i) default or event of default under any  Contractual
         Obligation  of  the  Borrower  or  (ii)  litigation,  investigation  or
         proceeding  which may exist at any time  between the  Borrower  and any
         Governmental  Authority,  which  in  either  case,  if not  cured or if
         adversely determined, as the case may be, could have a Material Adverse
         Effect;

                  (c) any  litigation  or  proceeding  affecting the Borrower in
         which the amount  involved  is  $500,000.00  or more and not covered by
         insurance or in which injunctive or similar relief is sought;

                  (d) the following events, as soon as possible and in any event
         within 30 days after the Borrower  knows or has reason to know thereof:
         (i) the occurrence or expected  occurrence of any Reportable Event with
         respect to any Plan, a failure to make any required  contribution  to a
         Plan,  the  creation  of any Lien in favor of the PBGC or a Plan or any
         withdrawal from, or the termination,  Reorganization  or Insolvency of,
         any  Multiemployer  Plan or (ii) the  institution of proceedings or the
         taking of any other  action by the PBGC or the Borrower or any Commonly
         Controlled  Entity  or  any  Multiemployer  Plan  with  respect  to the
         withdrawal from, or the terminating,  Reorganization  or Insolvency of,
         any Plan; and

                  (e) any material  adverse change in the business,  operations,
         property,  condition  (financial  or  otherwise)  or  prospects  of the
         Borrower.

Each notice  pursuant to this Section shall be  accompanied  by a statement of a
Responsible  Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.

                  6.8 Environmental Laws.

                  (a) Comply  with,  and ensure  compliance  by all  tenants and
         subtenants,  if any, with, all applicable Environmental Laws and obtain
         and  comply  with  and  maintain,  and  ensure  that  all  tenants  and
         subtenants  obtain and comply with and maintain,  any and all licenses,
         approvals,   notifications,   registrations   or  permits  required  by
         applicable  Environmental  Laws except to the extent that failure to do
         so could not be reasonably expected to have a Material Adverse Effect.

                  (b) Conduct and complete all investigations, studies, sampling
         and testing, and all remedial, removal and other actions required under
         Environmental  Laws and  promptly  comply  with all  lawful  orders and
         directives of all Governmental Authorities regarding Environmental Laws
         except to the extent that the same are being contested in good faith by
         appropriate  proceedings and the pendency of such proceedings could not
         be reasonably expected to have a Material Adverse Effect.


                  SECTION 7. NEGATIVE COVENANTS

                  The  Borrower  hereby  agrees  that,  so long as any amount is
owing to Lender  hereunder or under any other Loan Document,  the Borrower shall
not:

                  7.1 Financial Condition Covenants

                                       32

<PAGE>

                  (a) Permit  Borrower's  Balance Sheet Leverage Ratio to exceed
         at any time 0.80 to 1.00; or

                  (b)  Permit  net  income  of less than  $1.00 for each  fiscal
         quarter and each fiscal year.

                  7.2  Limitation  on  Indebtedness.  Create,  incur,  assume or
suffer to exist any Indebtedness, except Indebtedness of the Borrower under this
Agreement,  together with such additional  Indebtedness of Borrower  incurred in
the ordinary  course of its business,  provided that in no event shall  Borrower
allow  the  amount  of its  outstanding  Indebtedness  to  result in a breach of
Section 7.1(a) above.

                  7.3 Limitation on Liens.  Create,  incur,  assume or suffer to
exist any Lien upon any of its property,  assets or revenues,  whether now owned
or hereafter acquired, except for:

                  (a) Liens  for taxes not yet due or which are being  contested
         in good  faith  by  appropriate  proceedings,  provided  that  adequate
         reserves  with  respect  thereto  are  maintained  on the  books of the
         Borrower in conformity with GAAP;

                  (b)  carriers',  warehousemen's,   mechanics',  materialmen's,
         repairmen's  or other like  Liens  arising  in the  ordinary  course of
         business  which  are not  overdue  for a period of more than 60 days or
         which are being contested in good faith by appropriate proceedings;

                  (c)   pledges  or  deposits  in   connection   with   workers'
         compensation,   unemployment   insurance  and  other  social   security
         legislation and deposits securing liability to insurance carriers under
         insurance or self-insurance arrangements;

                  (d)  deposits  to  secure  the  performance  of  bids,   trade
         contracts   (other  than  for  borrowed   money),   leases,   statutory
         obligations,  surety  and  appeal  bonds,  performance  bonds and other
         obligations  of a like  nature  incurred  in  the  ordinary  course  of
         business;

                  (e) easements,  rights-of-way,  restrictions and other similar
         encumbrances  incurred in the ordinary course of business which, in the
         aggregate,  are not  substantial in amount and which do not in any case
         materially  detract from the value of the property  subject  thereto or
         materially  interfere with the ordinary  conduct of the business of the
         Borrower; and

                  (f) Liens with  respect to the  Existing  Financing  Documents
         which, pursuant to Section 4.23 above, are to be released within thirty
         days from the date hereof.

                  7.4 Intentionally Omitted.

                  7.5 Limitation on Fundamental Changes.  Enter into any merger,
consolidation  or  amalgamation,  or liquidate,  wind up or dissolve  itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially  all of its property,  business or
assets,  or make  any  material  change  in its  present  method  of  conducting
business.  Without in any way limiting the foregoing,  the Borrower shall not at
any time establish,  form or have any Subsidiary or Affiliate  except for Public
Storage, Inc. and the Hughes family.

                  7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without limitation,  receivables and leasehold interests),  whether
now owned or hereafter  acquired,  except the sale or other  disposition  of any
property  in  the  ordinary  course  of  business,  provided  that  (other  than
inventory)  the aggregate book value of all assets so sold or disposed of in any
period of twelve  consecutive months shall not exceed 10% of total assets of the
Borrower as at the beginning of such twelve-month period.

                                       33

<PAGE>

                  7.7 Intentionally Omitted.

                  7.8 Intentionally Omitted. 

                  7.9  Limitation  on  Sales  and  Leasebacks.  Enter  into  any
arrangement with any Person providing for the leasing by the Borrower of real or
personal property which has been or is to be sold or transferred by the Borrower
to such  Person or to any  other  Person  to whom  funds  have been or are to be
advanced by such Person on the security of such  property or rental  obligations
of the Borrower.

                  7.10  Limitation on Changes in Fiscal Year.  Permit the fiscal
year of the Borrower to end on a day other than December 31.

                  7.11 Limitation on Negative  Pledge  Clauses.  Enter into with
any Person any agreement,  which prohibits or limits the ability of the Borrower
to create,  incur,  assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.

                  7.12 Limitation on Lines of Business.  Enter into any business
except for those businesses in which the Borrower is engaged on the date of this
Agreement or which is directly related thereto.

                  7.13   Governing   Documents.   Amend   its   certificate   of
incorporation  (except to  increase  the number of  authorized  shares of common
stock),  partnership  agreement or other Governing Documents,  without the prior
written  consent of the  Lender,  which  shall not be  unreasonably  withheld or
delayed.

                  7.14 Manager. Without the prior written consent of the Lender,
replace  Public  Storage,  Inc. or an Affiliate of Public  Storage,  Inc. as the
property manager of Borrower's  Properties prior to the Maturity Date or change,
modify or amend in any  material  way any  agreement  currently  in effect  with
Public Storage, Inc. relating to the management of Borrower's Properties.


                  SECTION 8. EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:

                  (a) The Borrower  shall fail to pay any  principal of the Loan
         when due in  accordance  with  the  terms  thereof  or  hereof;  or the
         Borrower  shall  fail to pay any  interest  on the  Loan,  or any other
         amount payable hereunder or under the other Loan Documents, within five
         days after any such interest or other amount  becomes due in accordance
         with the terms thereof or hereof; or

                  (b) Any  representation or warranty made or deemed made by the
         Borrower or any other Loan Party  herein or in any other Loan  Document
         or which is  contained  in any  certificate,  document or  financial or
         other statement furnished by it at any time under or in connection with
         this Agreement or any such other Loan Document shall prove to have been
         incorrect in any  material  respect on or as of the date made or deemed
         made; or

                  (c) The Borrower or any other Loan Party shall  default in the
         observance  or  performance  of any  agreement  contained  in Section 7
         hereof and Section 10 of the Payment Guarantee; or

                  (d) The Borrower or any other Loan Party shall  default in the
         observance  or  performance  of any other  agreement  contained in this
         Agreement  or any  other  Loan  Document  (other  than as  provided  in
         paragraphs  (a) through (c) of this  Section),  and such default  shall
         continue unremedied for a period of 30 days; or

                                       34

<PAGE>

                  (e) The Borrower shall (i) default in any payment of principal
         of or  interest  of any  Indebtedness  (other than the Loans) or in the
         payment of any Guarantee Obligation, beyond the period of grace (not to
         exceed 30 days), if any,  provided in the instrument or agreement under
         which such  Indebtedness or Guarantee  Obligation was created;  or (ii)
         default in the  observance  or  performance  of any other  agreement or
         condition relating to any such Indebtedness or Guarantee  Obligation or
         contained  in any  instrument  or  agreement  evidencing,  securing  or
         relating  thereto,  or any other event shall occur or condition  exist,
         the effect of which default or other event or condition is to cause, or
         to permit the holder or holders of such  Indebtedness or beneficiary or
         beneficiaries  of such  Guarantee  Obligation (or a trustee or agent on
         behalf of such holder or holders or  beneficiary or  beneficiaries)  to
         cause,  with the giving of notice if  required,  such  Indebtedness  to
         become due prior to its stated maturity or such Guarantee Obligation to
         become payable; or

                  (f) (i) The  Borrower  or any Loan Party  shall  commence  any
         case,  proceeding  or other action (A) under any existing or future law
         of any  jurisdiction,  domestic  or foreign,  relating  to  bankruptcy,
         insolvency,  reorganization  or relief of  debtors,  seeking to have an
         order for relief  entered with respect to it, or seeking to  adjudicate
         it a bankrupt or  insolvent,  or seeking  reorganization,  arrangement,
         adjustment, winding-up, liquidation,  dissolution, composition or other
         relief with respect to it or its debts, or (B) seeking appointment of a
         receiver, trustee, custodian, conservator or other similar official for
         it or for all or any substantial part of its assets, or the Borrower or
         any Loan Party shall make a general  assignment  for the benefit of its
         creditors; or (ii) there shall be commenced against the Borrower or any
         Loan Party any case, proceeding or other action of a nature referred to
         in clause  (i) above  which  (A)  results  in the entry of an order for
         relief  or  any  such   adjudication  or  appointment  or  (B)  remains
         undismissed, undischarged or unbonded for a period of 60 days; or (iii)
         there shall be  commenced  against  the  Borrower or any Loan Party any
         case,  proceeding  or other  action  seeking  issuance  of a warrant of
         attachment,  execution, distraint or similar process against all or any
         substantial  part of its assets which  results in the entry of an order
         for any such relief which shall not have been vacated,  discharged,  or
         stayed or bonded  pending appeal within 60 days from the entry thereof;
         or (iv) the  Borrower  or any Loan  Party  shall  take  any  action  in
         furtherance   of,  or  indicating  its  consent  to,  approval  of,  or
         acquiescence  in,  any of the acts set forth in clause  (i),  (ii),  or
         (iii) above; or (v) the Borrower or any Loan Party shall generally not,
         or shall be unable to, or shall admit in writing its  inability to, pay
         its debts as they become due; or

                  (g)  (i)  Any   Person   shall   engage  in  any   "prohibited
         transaction" (as defined in Section 406 of ERISA or Section 4975 of the
         Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
         defined in Section 302 of ERISA),  whether or not  waived,  shall exist
         with  respect  to any  Plan or any  Lien in favor of the PBGC or a Plan
         shall  arise on the assets of the  Borrower,  any  Commonly  Controlled
         Entity or any Loan  Party,  (iii) a  Reportable  Event shall occur with
         respect to, or proceedings shall commence to have a trustee  appointed,
         or a trustee  shall be appointed,  to  administer or to terminate,  any
         Single  Employer  Plan,  which  Reportable  Event  or  commencement  of
         proceedings or  appointment of a trustee is, in the reasonable  opinion
         of the  Lender,  likely to result in the  termination  of such Plan for
         purposes  of Title IV of ERISA,  (iv) any  Single  Employer  Plan shall
         terminate  for  purposes of Title IV of ERISA,  (v) the Borrower or any
         Commonly  Controlled Entity shall, or in the reasonable  opinion of the
         Lender  is  likely  to,  incur  any  liability  in  connection  with  a
         withdrawal   from,   or  the   Insolvency  or   Reorganization   of,  a
         Multiemployer  Plan or (vi) any other event or condition shall occur or
         exist with  respect to a Plan;  and in each case in clauses (i) through
         (vi)  above,  such  event or  condition,  together  with all other such
         events or conditions, if any, could have a Material Adverse Effect; or

                  (h) One or more judgments or decrees shall be entered  against
         the Borrower or any Loan Party  involving in the  aggregate a liability
         (not paid or fully covered by insurance) of  $500,000.00  or more,  and
         all such judgments or decrees shall not have been vacated,  discharged,
         stayed or bonded  pending appeal within 60 days from the entry thereof;
         or

                  (i) The Payment  Guarantee shall cease, for any reason,  to be
         in full force and effect or the Guarantor shall so assert; or

                                       35

<PAGE>

                  (j) (i) Any Person or "group"  (within  the meaning of Section
         13(d) or 14(d) of the Securities  Exchange Act of 1934, as amended) (A)
         shall  have  acquired  beneficial  ownership  of  20%  or  more  of any
         outstanding  class of Capital Stock having ordinary voting power in the
         election of  directors  of the  Borrower or (B) shall  obtain the power
         (whether  or not  exercised)  to  elect a  majority  of the  Borrower's
         directors  or (ii) the Board of  Directors  of the  Borrower  shall not
         consist of a majority of Continuing Directors;  "Continuing  Directors"
         shall mean the  directors  of the Borrower on the Closing Date and each
         other director, if such other director's nomination for election to the
         Board of Directors of the Borrower is  recommended by a majority of the
         then Continuing Directors; or

                  (k) Any  Event of  Default  shall  have  occurred  under  that
         certain  Second  Amended and  Restated  Credit  Agreement,  dated as of
         February 25, 1997, by and among Guarantor,  the financial  institutions
         from time to time parties thereto and Wells Fargo Bank, as Agent;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) of this  Section  with  respect to the
Borrower  or any  Loan  Party  automatically  other  amounts  owing  under  this
Agreement shall immediately become due and payable, and (B) if such event is any
other Event of Default, the following action may be taken: Lender may, by notice
to the Borrower,  declare the Loan hereunder (with accrued interest thereon) and
all other  amounts owing under this  Agreement to be due and payable  forthwith,
whereupon the same shall immediately become due and payable. Except as expressly
provided  above in this  Section,  presentment,  demand,  protest  and all other
notices of any kind are hereby expressly waived.


                  SECTION 9. INTENTIONALLY OMITTED.


                  SECTION 10. MISCELLANEOUS

                  10.1  Amendments  and Waivers.  Neither this Agreement nor any
other  Loan  Document,   nor  any  terms  hereof  or  thereof  may  be  amended,
supplemented  or  modified  except in  accordance  with the  provisions  of this
Section  10.1.  The  Lender  may,  from time to time,  (a)  enter  into with the
Borrower  written  amendments,  supplements or  modifications  hereto and to the
other Loan  Documents for the purpose of adding any provisions to this Agreement
or the other Loan  Documents  or changing in any manner the rights of the Lender
or of the  Borrower  hereunder  or  thereunder  or (b) waive,  on such terms and
conditions  as  the  Lender,  may  specify  in  such  instrument,   any  of  the
requirements  of this  Agreement  or the other Loan  Documents or any Default or
Event of Default and its  consequences.  Any such waiver and any such amendment,
supplement or modification  shall be binding upon the Borrower,  the Lender, and
all future holders of the Loan. In the case of any waiver,  the Borrower and the
Lender  shall be restored to their former  positions  and rights  hereunder  and
under the other Loan Documents, 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.

                  10.2 Notices. All notices, requests and demands to or upon the
respective  parties  hereto to be effective  shall be in writing  (including  by
facsimile  transmission) and, unless otherwise expressly provided herein,  shall
be deemed to have been duly given or made (a) in the case of  delivery  by hand,
when  delivered,  (b) in the case of  delivery  by mail,  three days after being
deposited  in the mails,  postage  prepaid,  or (c) in the case of  delivery  by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed  as follows in the case of the  Borrower  and the  Lender,  and as set
forth in Schedule I in the case of the other  parties  hereto,  or to such other
address as may be hereafter notified by the respective parties hereto:

         The Borrower:              Public Storage Properties, Ltd.
                                    701 Western Avenue, Suite 200
                                    Glendale, California  91201
                                    Attention:  David P. Singelyn
                                    Fax:  (818) 244-9267

                                       36

<PAGE>

         The Lender:                First Union National Bank
                                    One First Union Center, TW-6
                                    Charlotte, North Carolina 28288
                                    Attention:  John A. Schissel
                                    Fax:  (704) 383-6205

         with a copy to:            First Union National Bank
                                    One First Union Center, TW--6
                                    Charlotte, North Carolina 28288
                                    Attention:  General Counsel
                                    Fax: (704) 383-6205

PROVIDED  that any notice,  request or demand to or upon the Lender  pursuant to
Section 2.3, 3.2, 3.4 or 3.6(b) shall not be effective until received.

                  10.3 No Waiver;  Cumulative  Remedies.  No failure to exercise
and no delay in exercising,  on the part of the Lender, any right, remedy, power
or privilege  hereunder  or under the other Loan  Documents  shall  operate as a
waiver thereof;  nor shall any single or partial exercise of any right,  remedy,
power or privilege  hereunder  preclude any other or further exercise thereof or
the  exercise  of any other  right,  remedy,  power or  privilege.  The  rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

                  10.4  Survival  of   Representations   and   Warranties.   All
representations  and warranties made hereunder,  in the other Loan Documents and
in any  document,  certificate  or  statement  delivered  pursuant  hereto or in
connection  herewith  shall survive the execution and delivery of this Agreement
and the making of the Loan hereunder.

                  10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or  reimburse  the  Lender  for all its  out-of-pocket  costs  and  expenses
incurred in connection with the  development,  preparation and execution of, and
any amendment,  supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection  herewith or therewith,
and the consummation and administration of the transactions  contemplated hereby
and  thereby,   including,   without   limitation,   the  reasonable   fees  and
disbursements  of counsel to the Lender,  (b) to pay or reimburse Lender for all
its  costs  and  expenses   incurred  in  connection  with  the  enforcement  or
preservation  of any rights under this  Agreement,  the other Loan Documents and
any  such  other  documents,   including,   without  limitation,  the  fees  and
disbursements of counsel to the Lender, (c) to pay,  indemnify,  and hold Lender
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying,  stamp, excise and other
taxes,  if any,  which may be payable or  determined to be payable in connection
with the execution and delivery of, or consummation or  administration of any of
the transactions  contemplated by, or any amendment,  supplement or modification
of, or any waiver or consent under or in respect of, this  Agreement,  the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
the Lender harmless from and against any and all other liabilities, obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements  of any kind or nature  whatsoever  with respect to the execution,
delivery,  enforcement,  performance and  administration of this Agreement,  the
other  Loan  Documents  and  any  such  other  documents,   including,   without
limitation,  any of the foregoing  relating to the  violation of,  noncompliance
with or liability under, any  Environmental  Law applicable to the operations of
the Borrower,  the Guarantor or any of the Properties (all the foregoing in this
clause (d), collectively,  the "indemnified  liabilities"),  provided,  that the
Borrower  shall  have no  obligation  hereunder  to the Lender  with  respect to
indemnified  liabilities  arising  from  (i) the  gross  negligence  or  willful
misconduct of the Lender or (ii) legal proceedings  commenced against the Lender
by any security holder or creditor  thereof arising out of and based upon rights
afforded any such  security  holder or creditor  solely in its capacity as such.
The agreements in this Section shall survive repayment of the Loan and all other
amounts payable hereunder.

                  10.6 Successors and Assigns;  Participations  and Assignments.

                                       37

<PAGE>

                  (a) This  Agreement  shall be  binding  upon and  inure to the
         benefit of the Borrower,  the Lender,  and their respective  successors
         and assigns, except that the Borrower may not assign or transfer any of
         its  rights or  obligations  under  this  Agreement  without  the prior
         written consent of the Lender.

                  (b)  Lender  may,  in the  ordinary  course of its  commercial
         banking  business and in accordance  with  applicable  law, at any time
         sell  to  one  or  more  banks  or  other   entities   ("Participants")
         participating  interests in the Loan owing to Lender,  any or any other
         interest of Lender hereunder and under the other Loan Documents. In the
         event of any such  sale by  Lender  of a  participating  interest  to a
         Participant,  Lender's  obligations  under this  Agreement to the other
         parties to this Agreement shall remain  unchanged,  Lender shall remain
         solely responsible for the performance thereof, Lender shall remain the
         holder of the Loan for all purposes  under this Agreement and the other
         Loan  Documents,  and the  Borrower  shall  continue to deal solely and
         directly with Lender in connection with Lender's rights and obligations
         under this Agreement and the other Loan Documents.  The Borrower agrees
         that if amounts  outstanding under this Agreement are due or unpaid, or
         shall have been  declared or shall have become due and payable upon the
         occurrence  of an Event of  Default,  each  Participant  shall,  to the
         maximum extent permitted by applicable law, be deemed to have the right
         of setoff in respect of its  participating  interest  in amounts  owing
         under  this  Agreement  to the  same  extent  as if the  amount  of its
         participating interest were owing directly to it as a Lender under this
         Agreement,  provided that, in purchasing such  participating  interest,
         such  Participant  shall be  deemed to have  agreed  to share  with the
         Lender the proceeds  thereof as provided in Section 10.7 as fully as if
         it  were a  Lender  hereunder.  The  Borrower  also  agrees  that  each
         Participant  shall be entitled to the benefits of Sections 3.10,  3.11,
         and 3.12 with respect to its  participation in the Loan as if it were a
         Lender;  provided, that no Participant shall be entitled to receive any
         greater amount  pursuant to any such Section than the Lender would have
         been entitled to receive in respect of the amount of the  participation
         transferred  by the  Lender to such  Participant  had no such  transfer
         occurred.

                  (c)  Lender  may,  in the  ordinary  course of its  commercial
         banking business and in accordance with applicable law, at any time and
         from  time to time  assign  to any bank or  financial  institution  (an
         "Assignee")  all or any part of its rights and  obligations  under this
         Agreement  and the other  Loan  Documents.  Upon such  assignment,  the
         Assignee  thereunder  shall be a party  hereto  and have the rights and
         obligations  of the Lender  hereunder  and the Lender shall be released
         from its obligations under this Agreement and shall cease to be a party
         hereto.

                  (d) Intentionally Omitted.

                  (e) Intentionally Omitted.

                  (f)  The  Borrower   authorizes  Lender  to  disclose  to  any
         Participant or Assignee  (each,  a  "Transferee")  and any  prospective
         Transferee,  subject to the  provisions of Section  10.15,  any and all
         financial  information in Lender's  possession  concerning the Borrower
         which has been  delivered  to  Lender  by or on behalf of the  Borrower
         pursuant to this  Agreement or which has been delivered to Lender by or
         on behalf of the Borrower in connection with Lender's credit evaluation
         of the Borrower prior to becoming a party to this Agreement.

                  (g) For  avoidance  of doubt,  the  parties to this  Agreement
         acknowledge that the provisions of this Section concerning  assignments
         of the Loan and the Note relate only to absolute  assignments  and that
         such  provisions  do  not  prohibit   assignments   creating   security
         interests,  including,  without limitation, any pledge or assignment by
         Lender of the Loan or Note to any Federal  Reserve  Bank in  accordance
         with applicable law.

                  10.7  Adjustments;  Set-off.  The Lender shall have the right,
without prior notice to the Borrower,  any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower  hereunder  (whether at the stated maturity,  by
acceleration  or  otherwise) to set-off and  appropriate  and apply against such
amount any and all deposits (general or special, time or demand,  provisional or
final), in any currency,  and any other credits,  indebtedness or claims, in any
currency,  in each case  whether  direct or  indirect,  absolute or  contingent,
matured or  unmatured,  at any time held or owing by the Lender or any branch or
agency  thereof to or for the credit or the account of the Borrower.  The Lender
agrees  promptly to notify the Borrower  after any such set-off and  application
made by the Lender,  provided  that the  failure to give such  notice  shall not
affect the validity of such set-off and application.

                                       38

<PAGE>

                  10.8  Counterparts.  This  Agreement may be executed by one or
more of the parties to this  Agreement  on any number of  separate  counterparts
(including by facsimile transmission of signature pages hereto), and all of said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.  A set of the  copies of this  Agreement  signed by all the  parties
shall be lodged with the Borrower and the Lender.

                  10.9  Severability.  Any provision of this Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

                  10.10 Integration. This Agreement and the other Loan Documents
represent  the  agreement  of the  Borrower  and the Lender with  respect to the
subject matter hereof, and there are no promises, undertakings,  representations
or warranties by the Lender  relative to subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.

                  10.11  GOVERNING  LAW.  THIS  AGREEMENT  AND  THE  RIGHTS  AND
OBLIGATIONS  OF THE PARTIES  HEREUNDER  SHALL BE GOVERNED BY, AND  CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.

                  10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:

                  (a) submits for itself and its property in any legal action or
         proceeding  relating to this  Agreement and the other Loan Documents to
         which it is a party, or for recognition and enforcement of any judgment
         in respect thereof,  to the non-exclusive  general  jurisdiction of the
         courts of the State of North Carolina,  the courts of the United States
         of America for the Western  District of North  Carolina,  and appellate
         courts from any thereof;

                  (b) consents that any such action or proceeding may be brought
         in such courts and waives any  objection  that it may now or  hereafter
         have to the venue of any such action or proceeding in any such court or
         that such action or proceeding was brought in an inconvenient court and
         agrees not to plead or claim the same;

                  (c) agrees  that  service  of  process  in any such  action or
         proceeding  may be effected by mailing a copy thereof by  registered or
         certified  mail (or any  substantially  similar form of mail),  postage
         prepaid, to the Borrower at its address set forth in Section 10.2 or at
         such  other  address  of which the  Lender  shall  have  been  notified
         pursuant thereto;

                  (d)  agrees  that  nothing  herein  shall  affect the right to
         effect service of process in any other manner permitted by law or shall
         limit the right to sue in any other jurisdiction; and

                  (e) waives,  to the maximum  extent not prohibited by law, any
         right it may have to claim or recover in any legal action or proceeding
         referred  to in  this  Section  any  special,  exemplary,  punitive  or
         consequential damages.

                  10.13 Acknowledgments. The Borrower hereby acknowledges that:

                  (a)  it has  been  advised  by  counsel  in  the  negotiation,
         execution and delivery of this Agreement and the other Loan Documents;

                  (b) Lender has no fiduciary  relationship  with or duty to the
         Borrower  arising out of or in connection with this Agreement or any of
         the other Loan Documents, and the relationship between the Borrower and
         the other Loan Parties,  in connection  herewith or therewith is solely
         that of debtor and creditor; and

                                       39

<PAGE>

                  (c) no joint  venture is  created  hereby or by the other Loan
         Documents   or   otherwise   exists  by  virtue  of  the   transactions
         contemplated hereby between the Borrower and the Lender.

                  10.14  WAIVERS OF JURY  TRIAL.  THE  BORROWER,  AND THE LENDER
HEREBY IRREVOCABLY AND  UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING  RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.

                  10.15 Confidentiality.  Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this Agreement
that is  designated  by the Borrower in writing as  confidential;  provided that
nothing herein shall prevent Lender from disclosing any such  information to any
Transferee  which  receives  such  information  having  been  made  aware of the
confidential  nature  thereof,  (iii)  to  its  employees,   directors,  agents,
attorneys, accountants and other professional advisors, (iv) upon the request or
demand of any examiner or other Governmental  Authority having jurisdiction over
Lender,  (v) in  response  to any  order  of any  court  or  other  Governmental
Authority or as may otherwise be required  pursuant to any  Requirement  of Law,
(vi) which has been publicly  disclosed  other than in breach of this Agreement,
or (vii) in connection with the exercise of any remedy hereunder.


                                             [Signature Page Follows]

                                       40

<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed and delivered by their proper and duly  authorized
officers as of the day and year first above written.


                                        PUBLIC STORAGE PROPERTIES, LTD.,
                                        a California limited partnership


                                        By:   Public Storage, Inc., a
                                              California corporation, 
                                                  its General Partner


                                               By:   /s/  David P. Singelyn
                                                     --------------------------
                                                     Name:  David P. Singelyn
                                                     Title:  Vice President and 
                                                             Treasurer





                                        FIRST UNION NATIONAL BANK


                                        By:  /s/ John A. Schissel
                                             ------------------------
                                        Name:  John A. Schissel
                                        Title:  Director

                                       41

<PAGE>

                                   Exhibit A-1


                                    TERM NOTE


$13,000,000.00                                        Charlotte, North Carolina
                                                               October 23, 1998

                  FOR VALUE RECEIVED, the undersigned PUBLIC STORAGE PROPERTIES,
LTD., a California limited partnership, (the "BORROWER"), hereby unconditionally
promises to pay to the order of FIRST UNION  NATIONAL  BANK, a national  banking
association (the "LENDER"), at One First Union Center, Charlotte, North Carolina
28288,  Attention:  REIT Banking Group, 6th Floor, or such other place as Lender
may designate from time to time, in lawful money of the United States of America
and in immediately available funds, the principal amount of THIRTEEN MILLION AND
NO/100 DOLLARS ($13,000,000.00). The principal amount of this Term Note shall be
due and payable on October 31, 2002 (the "MATURITY DATE").

                  The  undersigned  further agrees to pay interest in like money
at such office on the unpaid  principal amount hereof from time to time from the
date  hereof at the rates per annum and on the dates as  provided in Section 4.1
of the Credit Agreement  referred to below,  until paid in full (both before and
after judgment).

                  The holder of this Term Note is authorized  to, and so long as
it holds this Term Note  shall,  record the date,  Types and amounts of the Term
Loan, each Continuation  thereof and each Conversion of all or a portion thereof
to another Type  pursuant to Section 4.2 of the Credit  Agreement,  the date and
amount of each payment or  prepayment  of principal  thereof and, in the case of
LIBOR Loans,  the length of each Interest Period and the LIBOR Rate with respect
thereto, on the schedules annexed hereto and constituting a part hereof, or on a
continuation thereof which shall be annexed hereto and constitute a part hereof,
and any such  recordation  shall constitute prima facie evidence of the accuracy
of the information so recorded,  provided that failure of the Lender to make any
such  recordation  (or any  error in such  recordation)  shall  not  affect  the
obligations of the Borrower under this Term Note or under the Credit Agreement.

                  This  Term  Note is the Term Note  referred  to in the  Credit
Agreement,  dated as of the date hereof (as amended,  supplemented  or otherwise
modified from time to time,  the "Credit  Agreement"),  between the Borrower and
the Lender is entitled to the  benefits  thereof and is subject to optional  and
mandatory prepayment in whole or in part as provided therein.  Terms used herein
which are  defined in the Credit  Agreement  shall  have such  defined  meanings
unless otherwise defined herein or unless the context otherwise requires.

                  Upon  the  occurrence  of any  one or more  of the  Events  of
Default specified in the Credit Agreement,  all amounts then remaining unpaid on
this Note shall become,  or may be declared to be,  immediately due and payable,
all as provided therein.

                  The Borrower expressly waives diligence, presentment, protest,
demand and other notices of any kind.

                  This  Term  Note  shall be  governed  by,  and  construed  and
interpreted in accordance with, the laws of the State of North Carolina.

                                   PUBLIC STORAGE PROPERTIES, LTD.,
                                   a California limited partnership

                                   By:      Public Storage, Inc., a California 
                                            corporation, its General Partner



                                            By:  /s/ David P. Singelyn
                                                 ---------------------
                                                 Name:  David P. Singelyn
                                                 Title:  Vice President and 
                                                         Treasurer

                                       42

<PAGE>

                                                                   SCHEDULE A to
                                                                       Term Note
                                                                       ---------


<TABLE>
<CAPTION>
                         LOANS, CONVERSIONS AND PAYMENTS
                               OF BASE RATE LOANS
                               ------------------


                                             Amount of
                                             LIBOR
               Amount          Loans         Converted      Loans          Principal      Amount of
               of Base        Converted      into           Amount of      Balance of     Unpaid
Base Rate      Rate           into Base      LIBOR          Principal      Base Rate      Notation
Date           Loan           Rate Loans     Loans          Repaid         Loans          Made by
-----------    -----------    -----------    -----------    -----------    -----------    -----------    

<S>            <C>            <C>            <C>            <C>            <C>            <C>
-----------    -----------    -----------    -----------    -----------    -----------    -----------    

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

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

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

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

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

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

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

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

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

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


</TABLE>

                                       43

<PAGE>

                                                                   SCHEDULE B to
                                                                       Term Note

<TABLE>
<CAPTION>

                         LOANS, CONVERSIONS AND PAYMENTS
                                 OF LIBOR LOANS
                                 --------------


               Amount of      Amount of      Interest        Amount of
               Eurodollar     Base Rate      Period and      LIBOR                         Unpaid
               Loan           Loans           LIBOR          Loans                         Principal
               (and           Converted       Rate with      Converted      Amount of      Balance of
               Continuations  into Eurodollar Respect        into Base      Principal      LIBOR          Notation
Date           Thereof)       Loans           Thereto        Rate Loans     Repaid         Loans          Made by
-----------    -----------    -----------     -----------    -----------    -----------    -----------    -----------   

<S>            <C>            <C>            <C>            <C>            <C>            <C>             <C>
-----------    -----------    -----------     -----------    -----------    -----------    -----------    -----------   

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

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

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

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

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

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

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

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

-----------    -----------    -----------     -----------    -----------    -----------    -----------    -----------   
</TABLE>

                                       44

<PAGE>

                                   SCHEDULE 2

1.   Credit Agreement between public Storage Properties,  Ltd. and The Travelers
     Insurance  Company  dated as August 28,  1987,  as amended in the  original
     principal amount of $20,885,000, secured by a Deed of Trust and Security
     Agreement  with  Assignment  of Rents and Leases and Fixture  Filing  dated
     August 28, 1987.

2.   Intercompany Loan from Public Storage,  Inc. to Public Storage  Properties,
     Ltd. in the original principal amount of $11,000,000.

                                       45