Exhibit 10.37




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                                CREDIT AGREEMENT


                          Dated as of November 1, 2001


                                  by and among

                              PUBLIC STORAGE, INC.,
                                                 as Borrower

                     THE FINANCIAL INSTITUTIONS PARTY HERETO
                    AND THEIR ASSIGNEES UNDER SECTION 13.5.,
                                                 as Lenders

                           FIRST UNION NATIONAL BANK,
                                                 as Syndication Agent,

                                     Each of
                           SALOMON SMITH BARNEY INC.,
                           CREDIT SUISSE FIRST BOSTON
                                       and
                             BANKERS TRUST COMPANY,
                                                 as Documentation Agent,

                                       and

                     WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                                 as Agent



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<PAGE>

         THIS CREDIT  AGREEMENT dated as of November 1, 2001 by and among Public
Storage, Inc., a corporation organized under the laws of the State of California
(the  "Borrower"),  each of the  financial  institutions  initially  a signatory
hereto together with their assignees  pursuant to Section 13.5.(d),  FIRST UNION
NATIONAL BANK, as Syndication Agent (the "Syndication  Agent"),  each of SALOMON
SMITH BARNEY INC.,  CREDIT SUISSE FIRST BOSTON and BANKERS TRUST COMPANY (each a
"Documentation Agent"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent.

         WHEREAS,  the Agent and the  Lenders  desire to make  available  to the
Borrower a revolving credit facility in the initial amount of $200,000,000 which
may  be  increased  to  $300,000,000,  and  which  will  include  a  $70,000,000
competitive  bid  subfacility,   a  $50,000,000   swingline  subfacility  and  a
$5,000,000  letter  of  credit  subfacility,  all on the  terms  and  conditions
contained herein.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency of which are hereby  acknowledged by the parties hereto, the parties
hereto agree as follows:

                             ARTICLE I. DEFINITIONS

Section 1.1.  Definitions.

         In addition to terms defined  elsewhere  herein,  the  following  terms
shall have the following meanings for the purposes of this Agreement:

         "Absolute   Rate"  has  the   meaning   given   that  term  in  Section
2.2.(c)(ii)(C).

         "Absolute Rate Auction" means a solicitation of Bid Rate Quotes setting
forth Absolute Rates pursuant to Section 2.2.

         "Absolute  Rate Loan" means a Bid Rate Loan the interest  rate on which
is  determined  on the basis of an Absolute  Rate  pursuant to an Absolute  Rate
Auction.

         "Accession Agreement" means an Accession Agreement substantially in the
form of Annex I to the Guaranty.

         "Additional Costs" has the meaning given that term in Section 5.1.

         "Affected Lender" has the meaning given that term in Section 5.6.

         "Affiliate"  means any  Person  (other  than the  Agent or any  Lender)
directly or indirectly controlling, controlled by, or under common control with,
the  Borrower.  For  purposes  of this  definition,  "control"  (including  with
correlative meanings, the terms "controlling", "controlled by" and "under common
control  with")  means the  possession  directly or  indirectly  of the power to
direct  or cause the  direction  of the  management  and  policies  of a Person,
whether through the ownership of voting  securities or by contract or otherwise.
The Affiliates of a Person shall include any officer or director of such Person.
In no event  shall the Agent or any Lender be deemed to be an  Affiliate  of the
Borrower.

         "Agent" means Wells Fargo Bank,  National  Association,  as contractual
representative for the Lenders under the terms of this Agreement, and any of its
successors.

         "Agreement Date" means the date as of which this Agreement is dated.

         "Applicable  Facility Fee" means the  percentage set forth in the table
below  corresponding to the Level at which the "Applicable Margin" is determined
in accordance with the definition thereof:

                                      -1-

<PAGE>
                         Level           Facility Fee
                   ------------------- -----------------
                           1                0.20%
                           2                0.20%
                           3                0.20%
                           4                0.25%
                           5                0.30%

         Any change in the applicable  Level at which the  Applicable  Margin is
determined  shall  result  in a  corresponding  and  simultaneous  change in the
Applicable Facility Fee.

         "Applicable  Law" means all  applicable  provisions  of  constitutions,
statutes,  rules,  regulations  and  orders of all  governmental  bodies and all
orders and decrees of all courts, tribunals and arbitrators.

         "Applicable  Margin" means the  percentage  rate set forth in the table
below  corresponding  to the range into which the Borrower's  Credit Rating then
falls.  Any change in the Borrower's  Credit Rating which would cause it to move
to a different  range in the table shall be effective as of the first day of the
calendar month  immediately  following the date on which such change occurs.  If
only one Rating Agency has issued a Credit Rating,  then the  Applicable  Margin
will be determined based on the Level  corresponding  to such Credit Rating.  If
two  Rating  Agencies  have  issued  Credit  Ratings  and  such  Credit  Ratings
correspond to different  Levels in the table  resulting in different  Applicable
Margin  determinations,  the Applicable  Margin will be determined  based on the
Level  corresponding  to the lower of the two Credit Ratings.  During any period
that the Borrower  receives more than two Credit  Ratings (i) if at least two of
such  Credit  Ratings  are  equivalent,  then  the  Applicable  Margin  will  be
determined based on the Level  corresponding  to such equivalent  Credit Ratings
and (ii) if none of such  Credit  Ratings  is  equivalent,  then the  Applicable
Margin  shall  equal the  average of the  Applicable  Margins as  determined  in
accordance with the two lowest of such Credit Ratings; provided that one of such
Credit  Ratings has been issued by either S&P or Moody's and such Credit  Rating
is an Investment Grade Rating.  If the Applicable Margin cannot be determined in
accordance  with any of the  three  immediately  preceding  sentences,  then the
Applicable Margin shall be determined based on Level 5.

<TABLE>
<CAPTION>
                                                                        Applicable Margin
                   Borrower's Credit Rating        Applicable Margin        Margin for
    Level         (S&P/Moody's or equivalent)       for LIBOR Loans      Base Rate Loans
-------------- ---------------------------------- -------------------- --------------------
      <S>      <C>                                       <C>                  <C>
      1        A-/A3 or higher                           0.45%                 0%
      2        BBB+/Baa1                                 0.60%                 0%
      3        BBB/Baa2                                  0.70%                 0%
      4        BBB-/Baa3                                 0.90%                 0%
      5        Lower than BBB-/Baa3                      1.50%                0.25%

</TABLE>

         "Assignee" has the meaning given that term in Section 13.5.(d).

         "Assignment   and  Acceptance   Agreement"   means  an  Assignment  and
Acceptance Agreement among a Lender, an Assignee and the Agent, substantially in
the form of Exhibit A.

         "Base Rate"  means the  greater of (a) the rate of  interest  per annum
publicly announced from time to time by the Agent at its principal office in San
Francisco, California as its "prime rate" (which rate of interest may not be the
lowest rate charged by the Agent or any of the Lenders on similar loans) and (b)
the Federal Funds Rate plus one-half of one percent  (0.5%).  Each change in the
Base Rate shall  become  effective  without  prior notice to the Borrower or the
Lenders  automatically  as of the opening of business on the date of such change
in the Base Rate.

         "Base Rate Loan" means a Revolving  Loan or Term Loan bearing  interest
at a rate based on the Base Rate.

                                      -2-

<PAGE>

         "Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise  contributed  to by any member of the ERISA
Group.

         "Bid  Rate  Borrowing"  has the  meaning  given  that  term in  Section
2.2.(b).

         "Bid Rate Loan" means a loan made by a Lender under Section 2.2.

         "Bid Rate Loan Limit"  means an amount  equal to  $70,000,000,  as such
amount may be reduced from time to time in accordance with the terms hereof.

         "Bid Rate Note" means a promissory  note of the Borrower  substantially
in the form of Exhibit B,  payable to the order of a Lender and  otherwise  duly
completed.

         "Bid Rate Quote" means an offer in accordance with Section 2.2.(c) by a
Lender to make a Bid Rate Loan with one single specified interest rate.

         "Bid Rate Quote  Request"  has the  meaning  given that term in Section
2.2.(b).

         "Borrower"  has the  meaning  set forth in the  introductory  paragraph
hereof and shall include the Borrower's successors and permitted assigns.

         "Business Day" means (a) any day other than a Saturday, Sunday or other
day on which banks in San  Francisco,  California  are authorized or required to
close and (b) with reference to a LIBOR Loan, any such day that is also a day on
which  dealings  in Dollar  deposits  are  carried  out in the London  interbank
market.

         "Capitalized  EBITDA" means, with respect to a Person and as of a given
date, (a) such Person's  EBITDA for the fiscal quarter most recently ended times
(b) 4 and  divided by (c)  10.0%.  In  determining  Capitalized  EBITDA,  EBITDA
attributable  to real estate  properties  either acquired or disposed of by such
Person  during such fiscal  quarter  shall be  disregarded;  provided,  however,
EBITDA attributable to real estate properties acquired by the Borrower or any of
its Subsidiaries  during such fiscal quarter may, at the Borrower's  option,  be
included in determinations of the Capitalized EBITDA of the Borrower.

         "Capitalized  Lease Obligation" means obligations under a lease that is
required to be capitalized for financial  reporting  purposes in accordance with
GAAP. The amount of a Capitalized Lease Obligation is the capitalized  amount of
such obligation determined in accordance with GAAP.

         "Cash  Equivalents"  means (a) marketable direct  obligations issued or
unconditionally  guaranteed  by the  United  States  Government  or issued by an
agency  thereof and backed by the full faith and credit of the United  States of
America,  in each case  maturing  within one year after the date of  acquisition
thereof,  (b) marketable  direct  obligations  issued by any state of the United
States of America or any political  subdivision  of any such state or any public
instrumentality  thereof,  maturing within 90 days after the date of acquisition
thereof and, at the time of  acquisition,  having one of the two highest ratings
obtainable  from S&P and Moody's  (or,  if at any time  either of the  foregoing
shall not be rating such obligations, then from such other nationally recognized
rating services  acceptable to the Agent) and not listed for possible down-grade
in Credit Watch  published by S&P; (c) commercial  paper,  other than commercial
paper issued by any Loan Party or any of their respective  Affiliates,  maturing
no more than 90 days  after the date of  creation  thereof  and,  at the time of
acquisition,  having a rating of at least A-2 or P-2 from  either S&P or Moody's
(or, if at any time  neither S&P nor Moody's  shall be rating such  obligations,
then the highest rating from such other  nationally  recognized  rating services
acceptable to the Agent);  (d) domestic  certificates of deposit,  time deposits
and  bankers'  acceptances  which  mature  within  one  year  after  the date of
acquisition thereof; and (e) overnight  securities,  repurchase  agreements,  or
reverse  repurchase  agreements  secured  by  any  of  the  foregoing  types  of
Securities or debt instruments  issued, in each case, by (i) any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or Canada  having  combined  capital and surplus of not
less than $250,000,000 or (ii) any Lender.

                                      -3-

<PAGE>

         "Change  of  Control"  means  the  occurrence  of any of the  following
events:  (a) the Borrower is merged or consolidated  with or into another Person
with the effect that the common  stockholders of Borrower  immediately  prior to
such merger or consolidation  hold less than  seventy-five  percent (75%) of the
ordinary  voting  power of the  outstanding  securities  of the survivor of such
merger or the  Person  resulting  from such  consolidation;  (b) a change in the
composition  of the Board of Directors of the Borrower  after the Agreement Date
as a result of which  fewer  than a  majority  of the  incumbent  directors  are
directors  who either (i) had been  directors of the Borrower 24 months prior to
such change,  or (ii) were  elected,  or nominated  for election to the Board of
Directors with the affirmative votes of a majority of the directors who had been
directors  of the  Borrower 24 months prior to such change and who were still in
office at the time of the election or nomination; or (c) any "person" or "group"
(as such terms are used in Sections  13(d) and 14(d) of the Exchange  Act) other
than any Excluded Shareholder,  is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the  Exchange  Act,  except that a Person will be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire,  whether such right is  exercisable  immediately or only after
the passage of time),  directly or  indirectly,  of more than 25.0% of the total
voting power of the then outstanding voting stock of the Borrower.

         "Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. and to issue (in the case of the Agent)
or participate in (in the case of the other Lenders)  Letters of Credit pursuant
to  Section  2.3.(a)  and  2.3.(i)  respectively,  in an amount  up to,  but not
exceeding,  (but in the case of the  Agent  excluding  the  aggregate  amount of
participations  in the Letters of Credit held by other  Lenders)  the amount set
forth for such Lender on its signature page hereto as such Lender's  "Commitment
Amount" or as set forth in the applicable  Assignment and Acceptance  Agreement,
as the same may be reduced from time to time  pursuant to Section  2.13.  and or
otherwise  pursuant to the terms of this  Agreement or as appropriate to reflect
any assignments to or by such Lender effected in accordance with Section 13.5.

         "Commitment   Percentage"  means,  with  respect  to  any  Lender,  the
percentage  obtained by dividing (a) the amount of such  Lender's  Commitment by
(b)  the  aggregate  amount  of  Commitments  of all  the  Lenders,  or,  if the
Commitments  have  been  terminated   (whether  pursuant  to  Section  11.2.  or
otherwise),  the  percentage  obtained  by  dividing  (i) the  aggregate  unpaid
principal amount of Loans and Letter of Credit  Liabilities owing to such Lender
by (ii) the aggregate  unpaid principal amount of all Loans and Letter of Credit
Liabilities.

         "Compliance  Certificate"  has the  meaning  given that term in Section
9.3.

         "Continue",   "Continuation"   and  "Continued"   each  refers  to  the
continuation of a LIBOR Loan from one Interest Period to another Interest Period
pursuant to Section 2.10.

         "Convert",  "Conversion"  and "Converted" each refers to the conversion
of a Revolving  Loan of one Type into a Revolving  Loan of another Type pursuant
to Section 2.11.

         "Credit  Event" means any of the  following:  (a) the making (or deemed
making)  of  any  Loan,  (b)  the  Conversion  of  a  Revolving  Loan,  (c)  the
Continuation of a LIBOR Loan and (d) the issuance of a Letter of Credit.

         "Credit  Rating" means the lowest rating or implied rating assigned and
published by a Rating Agency to each series of rated senior  unsecured long term
indebtedness of the Borrower.

         "Default" means any of the events  specified in Section 11.1.,  whether
or not there has been satisfied any  requirement  for the giving of notice,  the
lapse of time, or both.

         "Defaulting Lender" has the meaning set forth in Section 3.10.

                                      -4-

<PAGE>

         "Derivatives Contract" means any and all rate swap transactions,  basis
swaps,  credit derivative  transactions,  forward rate  transactions,  commodity
swaps,  commodity options,  forward commodity contracts,  equity or equity index
swaps or  options,  bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward  bond index  transactions,  interest  rate
options,  forward  foreign  exchange  transactions,   cap  transactions,   floor
transactions,  collar transactions,  currency swap transactions,  cross-currency
rate swap transactions,  currency options, spot contracts,  or any other similar
transactions or any  combination of any of the foregoing  (including any options
to enter  into any of the  foregoing),  whether or not any such  transaction  is
governed  by or  subject  to any  master  agreement.  Not in  limitation  of the
foregoing,  the term "Derivatives Contract" includes any and all transactions of
any kind,  and the  related  confirmations,  which are  subject to the terms and
conditions  of, or governed  by, any form of master  agreement  published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master  Agreement,  or any other master  agreement,  including any such
obligations or liabilities under any such master agreement.

         "Derivatives  Termination  Value" means,  in respect of any one or more
Derivatives  Contracts,  after  taking  into  account  the effect of any legally
enforceable  netting agreement relating to such Derivatives  Contracts,  (a) for
any date on or after the date such  Derivatives  Contracts  have been closed out
and termination  value(s) determined in accordance  therewith,  such termination
value(s),  and (b) for any date prior to the date  referenced  in clause (a) the
amount(s)  determined  as  the  mark-to-market  value(s)  for  such  Derivatives
Contracts,  as  determined  based upon one or more  mid-market  or other readily
available  quotations  provided  by any  recognized  dealer in such  Derivatives
Contracts (which may include the Agent or any Lender).

         "Designated  Lender" means a special  purpose  corporation  which is an
affiliate of, or sponsored by, a Lender,  that is engaged in making,  purchasing
or  otherwise  investing  in  commercial  loans in the  ordinary  course  of its
business and that issues (or the parent of which issues)  commercial paper rated
at least  P-1 (or the then  equivalent  grade)  by  Moody's  or A-1 (or the then
equivalent  grade) by S&P that, in either case, (a) is organized  under the laws
of the United  States of America or any state  thereof,  (b) shall have become a
party to this Agreement  pursuant to Section 13.5.(f) and (c) is not otherwise a
Lender.

         "Designated  Lender  Note"  means  a Bid  Rate  Note  of  the  Borrower
evidencing  the  obligation  of the  Borrower  to repay Bid Rate Loans made by a
Designated Lender.

         "Designating  Lender"  has the  meaning  given  that  term  in  Section
13.5.(f).

         "Designation  Agreement" means a Designation Agreement between a Lender
and a Designated Lender and accepted by the Agent,  substantially in the form of
Exhibit C or such other form as may be agreed to by such Lender, such Designated
Lender and the Agent.

         "Development  Property" means a Property  currently  under  development
that has not yet achieved an Occupancy  Rate such that the Property is achieving
breakeven or positive  operating cash flow, or on which the improvements  (other
than tenant  improvements on unoccupied  space) related to the development  have
not been completed.  The term "Development Property" shall include real property
of the type described in the immediately  preceding sentence to be (but not yet)
acquired by the Borrower,  any Subsidiary or any  Unconsolidated  Affiliate upon
completion  of  construction  pursuant to a contract in which the seller of such
real  property is  required to develop or renovate  prior to, and as a condition
precedent to, such acquisition.

         "Dollars"  or "$" means the lawful  currency  of the  United  States of
America.

         "EBITDA"  means,  with respect to any Person for any period and without
duplication,  net  earnings  (loss) of such  Person for such  period  (including
equity in net earnings or net loss of Unconsolidated  Affiliates)  excluding the
following  amounts (but only to the extent  included in determining net earnings
(loss) for such period):  (a) depreciation  and  amortization  expense and other
non-cash  charges of such Person for such period;  (b) interest  expense of such
Person for such period; (c) income tax expense of such Person in respect of such
period;  and (d) extraordinary and nonrecurring  gains and losses of such Person
for such period, including without limitation, gains and losses from the sale of
assets, write-offs and forgiveness of debt.

                                      -5-

<PAGE>


         "Effective  Date" means the later of (a) the Agreement Date and (b) the
date on which all of the conditions precedent set forth in Section 6.1.(a) shall
have been fulfilled or waived in writing by the Agent.

         "Eligible  Assignee"  means any Person who is: (i)  currently a Lender;
(ii) a commercial bank,  trust company,  insurance  company,  investment bank or
pension fund  organized  under the laws of the United States of America,  or any
state  thereof,  and having  total assets in excess of  $5,000,000,000;  (iii) a
savings and loan  association  or savings bank  organized  under the laws of the
United States of America, or any state thereof,  and having a tangible net worth
of at least $500,000,000;  or (iv) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development  ("OECD"),  or a political  subdivision of any such country, and
having total  assets in excess of  $10,000,000,000,  provided  that such bank is
acting  through a branch or agency  located in the United States of America.  If
such Person is not currently a Lender,  such Person's senior unsecured long term
indebtedness  must be rated BBB or higher by S&P, Baa2 or higher by Moody's,  or
the  equivalent  or higher of  either  such  rating  by  another  Rating  Agency
acceptable to the Agent.

         "Eligible  Property"  means  a  Property  which  satisfies  all  of the
following requirements: (a) such Property is owned in fee simple by the Borrower
or a Wholly Owned  Subsidiary  and is located in a State of the United States of
America or in the District of Columbia;  (b) regardless of whether such Property
is owned by the Borrower or a Subsidiary,  the Borrower has the right  directly,
or indirectly  through a Subsidiary,  to take the following  actions without the
need to obtain the consent of any Person: (i) to create Lien on such Property as
security for Indebtedness of the Borrower or such Subsidiary,  as applicable and
(ii) to sell,  transfer or otherwise dispose of such Property;  (c) neither such
Property,  nor if such Property is owned by a Subsidiary,  any of the Borrower's
direct or indirect ownership interest in such Subsidiary,  is subject to (i) any
Lien other than  Permitted  Liens or (ii) any Negative  Pledge;  (d) the average
Occupancy  Rate of such Property for the period of twelve  calendar  months most
recently  ended  equals  or  exceeds  80.0%;  (e) such  Property  is free of all
structural  defects,  title defects,  environmental  conditions or other adverse
matters except for defects,  conditions or matters  individually or collectively
which are not material to the profitable operation of such Property; and (f) the
Borrower has obtained a "Phase I" environmental  assessment or other appropriate
environmental assessment with respect to such Property, and such assessment does
not  indicate  the  existence  of any  condition  that has, or could  reasonably
expected to have,  a materially  adverse  effect on the  condition,  fair market
value or net operating income of such Property.

         "Environmental Laws" means any Applicable Law relating to environmental
protection  or the  manufacture,  storage,  disposal or  clean-up  of  Hazardous
Materials  including,  without  limitation,  the  following:  Clean Air Act,  42
U.S.C.ss.7401 et seq.;  Federal Water Pollution Control Act, 33 U.S.C.ss.1251 et
seq.;  Solid  Waste  Disposal  Act,  42  U.S.C.ss.6901  et  seq.;  Comprehensive
Environmental  Response,  Compensation  and Liability Act, 42 U.S.C. ss. 9601 et
seq.; National  Environmental Policy Act, 42 U.S.C.ss.4321 et seq.;  regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial  interpretation  thereof  relating  primarily to the environment or
Hazardous Materials.

         "Equity  Interest"  means,  with  respect to any  Person,  any share of
capital stock of (or other  ownership or profit  interests in) such Person,  any
warrant,  option or other right for the purchase or other  acquisition from such
Person of any share of capital stock of (or other ownership or profit  interests
in) such Person, any security  convertible into or exchangeable for any share of
capital  stock of (or other  ownership  or profit  interests  in) such Person or
warrant,  right or option for the purchase or other acquisition from such Person
of such  shares (or such other  interests),  and any other  ownership  or profit
interest in such Person (including, without limitation,  partnership,  member or
trust interests therein),  whether voting or nonvoting,  and whether or not such
share,  warrant,  option,  right or other  interest is  authorized  or otherwise
existing on any date of determination.

         "Equity  Issuance" means any issuance or sale by a Person of any Equity
Interest.

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

         "ERISA Group" means the Borrower,  any  Subsidiary and all members of a
controlled  group of corporations  and all trades or businesses  (whether or not
incorporated)  under common  control  which,  together  with the Borrower or any
Subsidiary,  are treated as a single  employer under Section 414 of the Internal
Revenue Code.

                                      -6-

<PAGE>

         "Event of Default" means any of the events  specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time, together with all rules and regulations issued thereunder.

         "Excluded  Shareholder"  means (a) any Hughes Family Member and (b) any
Person eligible to file a statement on Schedule 13G pursuant to Rule 13d-1(b)(1)
of the Exchange Act.

         "Fair Market Value" means,  with respect to any asset,  the price which
could be  negotiated  in an  arm's-length  free  market  transaction,  for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction.  Except as otherwise provided herein,
Fair Market Value shall be  determined by the Board of Directors of the Borrower
acting  in good  faith  conclusively  evidenced  by a board  resolution  thereof
delivered to the Agent or, with respect to any asset valued at up to $5,000,000,
such  determination  may be made by the chief financial  officer or treasurer of
the Borrower evidenced by an officer's certificate delivered to the Agent.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upward to the nearest 1/100th of 1%) equal to the weighted  average of the rates
on overnight  Federal  funds  transactions  with members of the Federal  Reserve
System  arranged  by Federal  funds  brokers on such day,  as  published  by the
Federal  Reserve Bank of New York on the Business Day next  succeeding such day,
provided  that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding  Business
Day, and (b) if no such rate is so published  on such next  succeeding  Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to the
Agent  by  federal  funds  dealers  selected  by the  Agent  on such day on such
transaction as determined by the Agent.

         "Fees"  means the fees and  commissions  provided for or referred to in
Section 3.6.  and any other fees payable by the Borrower  hereunder or under any
other Loan Document.

         "Fixed Charges" means, with respect to a Person and for a given period,
the sum of (a) the Interest Expense of such Person for such period, plus (b) the
aggregate  of all  scheduled  principal  payments on  Indebtedness  made by such
Person  during such period  (excluding  balloon,  bullet or similar  payments of
principal due upon the stated maturity of Indebtedness),  plus (c) the aggregate
of all dividends  paid or accrued by such Person on any  Preferred  Stock during
such period, plus (d) the Reserve for Replacements.

         "Funds  From   Operations"   means  the  following,   determined  on  a
consolidated  basis for the Borrower  and its  Subsidiaries:  net income  (loss)
before (a) gain (loss) on early extinguishment of debt, (b) minority interest in
income and (c) gain (loss) on disposition  of real estate,  adjusted as follows:
(i) plus depreciation and amortization  related to real estate assets (including
the Borrower's pro-rata share of depreciation and amortization of unconsolidated
equity  interests and  amortization  of assets  acquired in a merger,  including
property  management  agreements  and  goodwill),   and  (ii)  less  Funds  From
Operations attributable to minority interests.

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

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

         "Governmental  Authority" means any national, state or local government
(whether domestic or foreign),  any political  subdivision  thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority,  body, agency, bureau or entity (including,  without limitation,  the
Federal Deposit  Insurance  Corporation,  the Comptroller of the Currency or the
Federal  Reserve  Board,  any central bank or any  comparable  authority) or any
arbitrator  with authority to bind a party at law.

                                      -7-

<PAGE>

         "Gross  Asset  Value"  means,   at  a  given  time,  the  sum  (without
duplication)  of (a)  Capitalized  EBITDA of the Borrower  and its  Subsidiaries
determined on a consolidated basis, excluding EBITDA attributable to Development
Properties,  plus (b) all cash and cash equivalents  (excluding  tenant deposits
and other cash and cash  equivalents  the disposition of which is restricted) of
the Borrower and its  Subsidiaries at such time, plus (c) the current book value
of  all  real  property  of  the  Borrower  and  its  Subsidiaries   upon  which
construction  is then in progress and all land held for  development;  provided,
however, any land which is not appropriately entitled or zoned to permit the use
of such Property a  self-storage  facility shall only be included at 50% of book
value, plus (d) with respect to each  Unconsolidated  Affiliate of the Borrower,
the Borrower's  respective Ownership Share of (i) the Capitalized EBITDA of each
such  Unconsolidated  Affiliate  and (ii) the  current  book  values of all real
property of each such  Unconsolidated  Affiliate upon which  construction  is in
progress,  plus (e) at the  Borrower's  option,  the purchase  price paid by the
Borrower  or any  Subsidiary  (less any  amounts  paid to the  Borrower  or such
Subsidiary  as a  purchase  price  adjustment,  held in  escrow,  retained  as a
contingency  reserve, or in connection with other similar  arrangements) for any
Property  acquired by the  Borrower or such  Subsidiary  during the  immediately
preceding  fiscal  quarter of the Borrower,  plus (f) the  contractual  purchase
price of  Properties  of the Borrower and its  Subsidiaries  subject to purchase
obligations,   repurchase   obligations,   forward   commitments   and  unfunded
obligations  to the extent such  obligations  and  commitments  are  included in
determinations of Total  Liabilities of the Borrower.  No more than 10.0% of the
Gross Asset Value may be attributable to the current book value of land held for
development.

         "Guarantor"  means  any  Person  that is  party  to the  Guaranty  as a
"Guarantor".

         "Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation
means and  includes:  (a) a guaranty  (other than by  endorsement  of negotiable
instruments  for  collection in the ordinary  course of  business),  directly or
indirectly,  in any  manner,  of any part or all of such  obligation,  or (b) an
agreement,  direct or  indirect,  contingent  or  otherwise,  and whether or not
constituting a guaranty,  the practical effect of which is to assure the payment
or  performance  (or payment of damages in the event of  nonperformance)  of any
part or all of such  obligation  whether by: (i) the purchase of  securities  or
obligations,  (ii) the purchase, sale or lease (as lessee or lessor) of property
or the  purchase or sale of services  primarily  for the purpose of enabling the
obligor with respect to such  obligation to make any payment or performance  (or
payment of damages in the event of  nonperformance) of or on account of any part
or all of such  obligation,  or to assure the owner of such  obligation  against
loss,  (iii) the  supplying of funds to or in any other manner  investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries  of letters of credit  (including  Letters of Credit),  or (v) the
supplying  of funds to or investing in a Person on account of all or any part of
such Person's  obligation  under a Guaranty of any obligation or indemnifying or
holding  harmless,  in any  way,  such  Person  against  any part or all of such
obligation.  As the context  requires,  "Guaranty"  shall also mean the guaranty
executed and delivered pursuant to Section 6.1.(a) and substantially in the form
of Exhibit D.

         "Hazardous Materials" means all or any of the following: (a) substances
that are  defined  or listed  in,  or  otherwise  classified  pursuant  to,  any
applicable Environmental Laws as "hazardous substances",  "hazardous materials",
"hazardous  wastes",  "toxic  substances" or any other  formulation  intended to
define, list or classify substances by reason of deleterious  properties such as
ignitability, corrosivity, reactivity,  carcinogenicity,  reproductive toxicity,
"TCLP"  toxicity,  or "EP  toxicity";  (b) oil,  petroleum or petroleum  derived
substances,  natural  gas,  natural gas liquids or  synthetic  gas and  drilling
fluids,  produced  waters  and other  wastes  associated  with the  exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any  flammable  substances  or  explosives  or any  radioactive  materials;  (d)
asbestos in any form;  and (e)  electrical  equipment  which contains any oil or
dielectric fluid  containing  levels of  polychlorinated  biphenyls in excess of
fifty parts per million.

         "Hughes Family Member" means any of the following: (a) B. Wayne Hughes,
his spouse,  his  children  (natural or adopted)  and the  children  (natural or
adopted) of his children; or (b) any foundation, trust, partnership, corporation
or other Person controlled by any of the individuals referred to in clause (a).

                                      -8-

<PAGE>

         "Indebtedness"  means,  with  respect  to a  Person,  at  the  time  of
computation  thereof,  all of  the  following  (without  duplication):  (a)  all
obligations of such Person in respect of money borrowed;  (b) all obligations of
such Person (other than trade debt incurred in the ordinary course of business),
whether or not for money borrowed (i)  represented  by notes payable,  or drafts
accepted,  in each case  representing  extensions of credit,  (ii)  evidenced by
bonds, debentures,  notes or similar instruments, or (iii) constituting purchase
money   indebtedness,   conditional   sales  contracts,   title  retention  debt
instruments  or other  similar  instruments,  upon which  interest  charges  are
customarily  paid or that are issued or assumed as full or partial  payment  for
property;   (c)  Capitalized   Lease   Obligations  of  such  Person;   (d)  all
reimbursement  obligations  of such  Person  under  any  letters  of  credit  or
acceptances  (whether or not the same have been presented for payment);  (e) all
Off Balance Sheet  Liabilities  of such Person;  (f) net  obligations  under any
Derivative  Contract in an amount  equal to the  Derivatives  Termination  Value
thereof;  and (g) all  Indebtedness  of other  Persons which (i) such Person has
Guaranteed or is otherwise  recourse to such Person or (ii) is secured by a Lien
on any property of such Person.

         "Intellectual  Property"  has the  meaning  given  that term in Section
7.1.(s).

         "Interest  Expense" means, with respect to a Person and for any period,
(a) all paid,  accrued  or  capitalized  interest  expense  (including,  without
limitation, capitalized interest expense (other than capitalized interest funded
from a construction loan interest reserve account held by another lender and not
included in the  calculation of cash for balance sheet  reporting  purposes) and
interest expense  attributable to Capitalized Lease  Obligations) of such Person
and in any event  shall  include  all  letter of  credit  fees and all  interest
expense  with  respect to any  Indebtedness  in respect of which such  Person is
wholly or partially  liable whether  pursuant to any repayment,  interest carry,
performance Guarantee or otherwise,  plus (b) to the extent not already included
in the foregoing clause (a) such Person's  Ownership Share of all paid,  accrued
or capitalized interest expense for such period of Unconsolidated  Affiliates of
such Person.

         "Interest Period" means,

         (a) with respect to any LIBOR Loan, each period  commencing on the date
such LIBOR Loan is made or the last day of the next  preceding  Interest  Period
for such Loan and  ending on the  numerically  corresponding  day in the  first,
second, third or sixth calendar month thereafter,  as the Borrower may select in
a Notice of Borrowing,  Notice of Continuation  or Notice of Conversion,  as the
case may be,  except  that  each  Interest  Period  that  commences  on the last
Business  Day  of a  calendar  month  (or on  any  day  for  which  there  is no
numerically  corresponding  day in the  appropriate  subsequent  calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
and

         (b) with  respect to any Absolute  Rate Loan or LIBOR Margin Loan,  the
period  commencing  on the date such Loan is made and ending on the date 30, 60,
90 or 180 days thereafter.

Notwithstanding  the foregoing:  (i) if any Interest Period for a Revolving Loan
or a Bid Rate Loan would  otherwise end after the Revolving  Credit  Termination
Date, such Interest Period shall end on the Revolving Credit  Termination  Date;
(ii) if any Interest  Period in respect of a Term Loan would otherwise end after
the Termination  Date,  such Interest Period shall end on the Termination  Date;
(iii) each  Interest  Period  that would  otherwise  end on a day which is not a
Business  Day shall end on the next  succeeding  Business  Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding  Business Day); and (iv) no Interest  Period for any Loan shall have a
duration  of less than one month and,  if the  Interest  Period for a Loan would
otherwise be a shorter  period,  such Loan shall not be available  hereunder for
such period.

         "Interest  Rate  Agreement"  means any  interest  rate swap  agreement,
interest rate cap  agreement,  interest  rate collar  agreement or other similar
Derivatives  Contract  entered  into  with  a  nationally  recognized  financial
institution  then  having a credit  rating  of BBB- or  higher by S&P or Baa3 or
higher by Moody's for the purpose of protecting against fluctuations in interest
rates.

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

                                      -9-

<PAGE>

         "Investment"  means,  with respect to any Person,  any  acquisition  or
investment (whether or not of a controlling interest) by such Person, whether by
means of (a) the purchase or other acquisition of any Equity Interest in another
Person, (b) a loan, advance or extension of credit to, capital  contribution to,
Guaranty  of  Indebtedness   of,  or  purchase  or  other   acquisition  of  any
Indebtedness  of,  another  Person,  including any  partnership or joint venture
interest in such other Person,  or (c) the purchase or other acquisition (in one
transaction  or a series  of  transactions)  of assets of  another  Person  that
constitute the business or a division or operating unit of another Person. A any
commitment or option to make an Investment in any other Person shall  constitute
an  Investment.   Except  as  expressly  provided  otherwise,  for  purposes  of
determining  compliance  with any  covenant  contained in a Loan  Document,  the
amount  of  any  Investment  shall  be the  amount  actually  invested,  without
adjustment  for  subsequent   increases  or  decreases  in  the  value  of  such
Investment.

         "Investment  Grade  Rating"  means a Credit Rating of BBB- or higher by
S&P,  Baa3 or higher by  Moody's,  or the  equivalent  or higher of either  such
rating by another Rating Agency.

         "L/C  Commitment  Amount"  equals an amount equal to $5,000,000 as such
amount may be reduced from time to time in accordance with the terms hereof.

         "Lender"  means  each  financial  institution  from time to time  party
hereto as a "Lender" or a  "Designated  Lender,"  together  with its  respective
successors  and assigns,  and, as the context  requires,  includes the Swingline
Lender.  The term  "Lender"  shall exclude each  Designated  Lender when used in
reference  to any Loan  other  than a Bid Rate Loan,  the  Commitments  or terms
relating  to any Loan other than a Bid Rate Loan and the  Commitments  and shall
further exclude each Designated  Lender for all other purposes  hereunder except
that any Designated Lender which funds a Bid Rate Loan shall, subject to Section
13.5.(f),  have the rights  (including the rights given to a Lender contained in
Sections 13.2. and 13.9.) and  obligations of a Lender  associated  with holding
such Bid Rate Loan.

         "Lending  Office" means, for each Lender and for each Type of Loan, the
office of such Lender  specified as such on its signature  page hereto or in the
applicable  Assignment  and Acceptance  Agreement,  or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.

         "Letter of Credit" has the meaning given that term in Section 2.3.(a).

         "Letter of Credit Collateral  Account" means a special interest bearing
deposit account maintained by the Agent and under its sole dominion and control.

         "Letter  of Credit  Documents"  means,  with  respect  to any Letter of
Credit,  collectively,  any  application  therefor,  any  certificate  or  other
document  presented in connection with a drawing under such Letter of Credit and
any other agreement, instrument or other document governing or providing for (a)
the rights and  obligations of the parties  concerned or at risk with respect to
such  Letter  of  Credit  or  (b)  any  collateral  security  for  any  of  such
obligations.

         "Letter of Credit Liabilities" means, without duplication,  at any time
and in respect of any Letter of Credit, the sum of (a) the Stated Amount of such
Letter  of  Credit  plus  (b)  the  aggregate  unpaid  principal  amount  of all
Reimbursement  Obligations  of the  Borrower  at such  time due and  payable  in
respect of all drawings  made under such Letter of Credit.  For purposes of this
Agreement,  a Lender  (other  than the Agent in its  capacity  as such) shall be
deemed  to  hold  a  Letter  of  Credit  Liability  in an  amount  equal  to its
participation  interest  under Section  2.3.(i) in the related Letter of Credit,
and the Agent shall be deemed to hold a Letter of Credit  Liability in an amount
equal to its  retained  interest in the related  Letter of Credit  after  giving
effect  to the  acquisition  by the  Lenders  other  than  the  Agent  of  their
participation interests under such Section.

                                      -10-

<PAGE>

         "LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
average rate of interest per annum (rounded upwards,  if necessary,  to the next
highest  1/100th of 1%) at which  deposits  in  immediately  available  funds in
Dollars are offered to the Agent (at approximately  9:00 a.m., two Business Days
prior to the first day of such  Interest  Period)  by first  class  banks in the
interbank  Eurodollar  market where the  Eurodollar  operations of the Agent are
customarily  conducted,  for delivery on the first day of such Interest  Period,
such  deposits  being for a period of time equal or  comparable to such Interest
Period and in an amount equal to or comparable  to the  principal  amount of the
LIBOR Loan to which such Interest Period relates. Each determination of LIBOR by
the Agent shall, in absence of demonstrable error, be conclusive and binding.

         "LIBOR  Auction" means a solicitation  of Bid Rate Quotes setting forth
LIBOR Margins based on LIBOR pursuant to Section 2.2.

         "LIBOR Loan" means a Revolving Loan or Term Loan bearing  interest at a
rate based on LIBOR.

         "LIBOR Margin" shall have the meaning  assigned to such term in Section
2.2.(c)(ii)(D).

         "LIBOR Margin Loan" means a Bid Rate Loan the interest rate on which is
determined on the basis of LIBOR pursuant to a LIBOR Auction.

         "Lien" as applied to the property of any Person means: (a) any security
interest,  encumbrance,  mortgage,  deed to secure debt, deed of trust,  pledge,
lien, charge or lease  constituting a Capitalized Lease Obligation,  conditional
sale or other title retention agreement,  or other security title or encumbrance
of any kind in respect of any  property  of such  Person,  or upon the income or
profits  therefrom;  (b) any  arrangement,  express or implied,  under which any
property of such Person is transferred,  sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other  obligation  in priority to the payment of the  general,  unsecured
creditors of such Person;  (c) the filing of any financing  statement  under the
UCC or its equivalent in any jurisdiction;  and (d) any agreement by such Person
to grant, give or otherwise convey any of the foregoing.

         "Loan"  means a  Revolving  Loan,  a Term  Loan,  a Bid Rate  Loan or a
Swingline Loan.

         "Loan Document" means this Agreement,  each Note, each Letter of Credit
Document and each other  document or  instrument  now or hereafter  executed and
delivered by a Loan Party in  connection  with,  pursuant to or relating to this
Agreement.

         "Loan  Party"  means  each  of the  Borrower,  each  other  Person  who
guarantees all or a portion of the Obligations and/or who pledges any collateral
to secure all or a portion of the Obligations. Schedule 1.1. sets forth the Loan
Parties in addition to the Borrower as of the Agreement Date.

         "Majority  Lenders"  means,  as of any  date,  Lenders  whose  combined
Commitment Percentages equal or exceed 51.0%.

         "Material Adverse Effect" means a materially  adverse effect on (a) the
business,  assets,  liabilities,  financial condition,  results of operations or
business  prospects of the Borrower and its  Subsidiaries  taken as a whole, (b)
the ability of the  Borrower or any other Loan Party to perform its  obligations
under  any  Loan  Document  to  which  it  is  a  party,  (c)  the  validity  or
enforceability of any of the Loan Documents,  (d) the rights and remedies of the
Lenders and the Agent under any of the Loan  Documents or (e) the timely payment
of the  principal  of or  interest  on the  Loans or other  amounts  payable  in
connection therewith.

         "Material Contract" means any contract or other arrangement (other than
Loan Documents),  whether written or oral, to which the Borrower, any Subsidiary
or any  other  Loan  Party is a party as to which  the  breach,  nonperformance,
cancellation  or  failure  to renew by any party  thereto  could have a Material
Adverse Effect.

         "Material  Plan"  means at any time a Plan or  Plans  having  aggregate
Unfunded Liabilities in excess of $2,500,000.

                                      -11-

<PAGE>

         "Maximum  Availability"  means,  at any time,  an  amount  equal to the
positive  difference,  if any, of (a) 50.0% of the Unencumbered Pool Value minus
(b) all  Unsecured  Liabilities  (other  than the Loans and the Letter of Credit
Liabilities) of the Borrower and its  Subsidiaries  determined on a consolidated
basis.

         "Moody's" means Moody's Investors Service, Inc.

         "Mortgage"  means a  mortgage,  deed of trust,  deed to secure  debt or
similar security instrument made by a Person owning an interest in real property
granting a Lien on such interest in real property as security for the payment of
Indebtedness of such Person.

         "Multiemployer Plan" means at any time an employee pension benefit plan
within the  meaning of  Section  4001(a)(3)  of ERISA to which any member of the
ERISA Group is then making or accruing an  obligation to make  contributions  or
has within the preceding five plan years made contributions, including for these
purposes  any Person  which ceased to be a member of the ERISA Group during such
five year period.

         "Negative  Pledge" means,  with respect to a given asset, any provision
of a document,  instrument  or agreement  (other than any Loan  Document)  which
prohibits  or  purports to  prohibit  the  creation of any Lien on such asset as
security for Indebtedness of the Person owning such asset or any other Person.

         "Net Operating  Income" means, for any Property and for a given period,
the sum  (without  duplication)  of (a) rents and other  revenues  earned in the
ordinary  course from such Property  (excluding  pre-paid rents and revenues and
security  deposits  except to the extent  applied in  satisfaction  of  tenants'
obligations  for rent)  minus (b) all  expenses  paid or accrued  related to the
ownership,  operation or maintenance of such Property, including but not limited
to,  taxes,  assessments  and the like,  insurance,  utilities,  payroll  costs,
maintenance,  repair and landscaping expenses,  marketing expenses,  and general
and  administrative  expenses  (including an  appropriate  allocation for legal,
accounting,  advertising,  marketing and other  expenses  incurred in connection
with such Property,  but specifically excluding general overhead expenses of the
Borrower and its  Subsidiaries  and any property  management fees) minus (c) the
Reserve for Replacements for such Property for such period minus (d) the greater
of (i) the actual  property  management fee paid during such period with respect
to such Property and (ii) an imputed  management  fee in an amount equal to 6.0%
of the gross  revenues for such  Property for such period,  all as determined in
accordance with GAAP.

         "Net  Proceeds"  means with respect to an Equity  Issuance by a Person,
the aggregate  amount of all cash or the Fair Market Value of all other property
received  by such Person in respect of such Equity  Issuance  net of  investment
banking  fees,  legal  fees,   accountants  fees,   underwriting  discounts  and
commissions  and other  customary  fees and expenses  actually  incurred by such
Person in connection with such Equity Issuance.

         "New Guarantor" has the meaning given that term in Section 8.14.

         "Non-Guarantor  Entity" means:  (a) any Subsidiary that is not required
to become a party to the Guaranty under Section 8.14.(a); (b) any Unconsolidated
Affiliate of the Borrower;  and (c) any other Affiliate of the Borrower in which
the Borrower holds an Investment.

         "Nonrecourse   Indebtedness"   means,   with   respect   to  a  Person,
Indebtedness for borrowed money in respect of which recourse for payment (except
for  customary  exceptions  for fraud,  misapplication  of funds,  environmental
indemnities,  and other  similar  exceptions  to  recourse  liability  in a form
reasonably  acceptable to the Agent) is contractually limited to specific assets
of such Person encumbered by a Lien securing such Indebtedness.

         "Note" means a Revolving Note, a Bid Rate Note or the Swingline Note.

         "Notice  of  Borrowing"  means a notice in the form of  Exhibit E to be
delivered to the Agent  pursuant to Section  2.1.(b)  evidencing  the Borrower's
request for a borrowing of Revolving Loans.

         "Notice of Continuation"  means a notice in the form of Exhibit F to be
delivered  to the Agent  pursuant to Section  2.10.  evidencing  the  Borrower's
request for the Continuation of a LIBOR Loan.

                                      -12-

<PAGE>

         "Notice  of  Conversion"  means a notice in the form of Exhibit G to be
delivered  to the Agent  pursuant to Section  2.11.  evidencing  the  Borrower's
request for the Conversion of a Revolving Loan from one Type to another Type.

         "Notice of Swingline  Borrowing"  means a notice  substantially  in the
form of Exhibit H to be delivered to the  Swingline  Lender  pursuant to Section
2.4.(b) evidencing the Borrower's request for a Swingline Loan.

         "Obligations" means,  individually and collectively:  (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans; (b) all
Reimbursement  Obligations and all other Letter of Credit  Liabilities;  and (c)
all other indebtedness,  liabilities,  obligations,  covenants and duties of the
Borrower  or any of the other Loan  Parties  owing to the Agent or any Lender of
every kind, nature and description, under or in respect of this Agreement or any
of the  other  Loan  Documents,  including,  without  limitation,  the  Fees and
indemnification obligations, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any promissory note.

         "Occupancy  Rate" means,  with  respect to a Property at any time,  the
ratio, expressed as a percentage, of (a) the net rentable square footage of such
Property  actually occupied by tenants paying rent pursuant to binding leases as
to which no default  exists to (b) the aggregate net rentable  square footage of
such Property.

         "Off Balance Sheet Liabilities"  means, with respect to any Person, (a)
any repurchase obligation or liability,  contingent or otherwise, of such Person
with respect to any accounts or notes receivable sold,  transferred or otherwise
disposed  of by  such  Person,  (b)  any  repurchase  obligation  or  liability,
contingent  or  otherwise,  of such  Person  with  respect to property or assets
leased  by  such  Person  as  lessee  and  (c) all  obligations,  contingent  or
otherwise,  of such Person under any synthetic  lease,  tax retention  operating
lease,  off balance  sheet loan or similar off balance  sheet  financing  if the
transaction  giving rise to such obligation (i) is considered  indebtedness  for
borrowed money for tax purposes but is classified as an operating  lease or (ii)
does not (and is not  required to pursuant to GAAP) appear as a liability on the
balance sheet of such Person.

         "Ownership  Share"  means,  with respect to any  Subsidiary of a Person
(other than a Wholly  Owned  Subsidiary)  or any  Unconsolidated  Affiliate of a
Person,  the greater of (a) such Person's  relative  nominal direct and indirect
ownership   interest   (expressed  as  a  percentage)  in  such   Subsidiary  or
Unconsolidated Affiliate or (b) subject to compliance with Section 9.4.(q), such
Person's  relative  direct  and  indirect  economic  interest  (calculated  as a
percentage)  in  such  Subsidiary  or  Unconsolidated  Affiliate  determined  in
accordance with the applicable  provisions of the declaration of trust, articles
or  certificate  of   incorporation,   articles  of  organization,   partnership
agreement,  joint venture agreement or other applicable  organizational document
of such Subsidiary or Unconsolidated Affiliate.

         "Participant" has the meaning given that term in Section 13.5.(c).

         "PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.

         "Permitted  Liens"  means,  with  respect to any asset or property of a
Person,  (a) Liens  securing  taxes,  assessments  and other  charges  or levies
imposed by any  Governmental  Authority  (excluding any Lien imposed pursuant to
any of the  provisions  of ERISA or pursuant to any  Environmental  Laws) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials,  supplies or rentals  incurred in the  ordinary  course of  business,
which are not at the time required to be paid or discharged  under Section 8.6.;
(b) Liens  consisting  of deposits or pledges  made,  in the ordinary  course of
business,  in  connection  with,  or to secure  payment  of,  obligations  under
workmen's  compensation,  unemployment insurance or similar Applicable Laws; (c)
Liens  consisting  of  encumbrances  in  the  nature  of  zoning   restrictions,
easements,  and rights or  restrictions  of record on the use of real  property,
which do not  materially  detract from the value of such  property or impair the
use thereof in the business of such Person;  and (d) the rights of tenants under
leases or subleases  not  interfering  with the ordinary  conduct of business of
such Person and (e) Liens in favor of the Agent for the benefit of the Lenders.

         "Person"  means  an  individual,   corporation,   partnership,  limited
liability  company,  association,  trust or  unincorporated  organization,  or a
government or any agency or political subdivision thereof.

                                      -13-

<PAGE>

         "Plan" means at any time an employee pension benefit plan (other than a
Multiemployer  Plan)  which is  covered  by Title IV of ERISA or  subject to the
minimum  funding  standards  under Section 412 of the Internal  Revenue Code and
either (i) is maintained,  or  contributed  to, by any member of the ERISA Group
for  employees  of any member of the ERISA  Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for  employees  of any Person which
was at such time a member of the ERISA Group.

         "Post-Default  Rate" means,  in respect of any principal of any Loan or
any other Obligation that is not paid when due (whether at stated  maturity,  by
acceleration,  by optional or mandatory  prepayment  or  otherwise),  a rate per
annum equal to five percent  (5.0%) plus the Base Rate as in effect from time to
time.

         "Preferred Stock" means, with respect to any Person,  shares of capital
stock of, or other  equity  interests  in,  such  Person  which are  entitled to
preference or priority over any other capital stock of, or other equity interest
in, such Person in respect of the payment of dividends or distribution of assets
upon liquidation or both.

         "Property"  means a  parcel  (or  group  of  related  parcels)  of real
property  developed (or to be developed) for use as storage facility either as a
mini-warehouse or combination mini-warehouse and central warehouse for container
storage.

         "Property Management  Agreements" means,  collectively,  all agreements
entered  into by the  Borrower  or any other  Loan Party  pursuant  to which the
Borrower or such other Loan Party  engages a Person to advise it with respect to
the management of a given Property.

         "Rating  Agency" means S&P,  Moody's or Fitch,  Inc.  Other  nationally
recognized  securities rating agencies selected by the Borrower shall be "Rating
Agencies" only upon written approval by the Agent.

         "Recurring  Capital  Expenditures"  means capital  expenditures made in
respect of a Property for  maintenance of such Property and replacement of items
due to ordinary wear and tear including,  but not limited to,  expenditures made
for  maintenance  or  replacement of carpeting,  roofing  materials,  mechanical
systems,  electrical  systems  and other  structural  systems  and  expenditures
relating to tenant  improvements  and leasing  commissions.  "Recurring  Capital
Expenditures"  shall not include any of the following:  (a)  improvements to the
appearance  of such  Property or any other major  upgrade or  renovation of such
Property not necessary for proper maintenance or marketability of such Property;
(b) capital  expenditures for seismic upgrades;  or (c) capital expenditures for
deferred  maintenance  for such Property  existing at the time such Property was
acquired by the Borrower or a Subsidiary.

         "Register" has the meaning given that term in Section 13.5.(e).

         "Regulatory  Change"  means,  with  respect to any  Lender,  any change
effective  after  the  Agreement  Date  in  Applicable  Law  (including  without
limitation,  Regulation  D of the  Board of  Governors  of the  Federal  Reserve
System)  or the  adoption  or  making  after  such  date of any  interpretation,
directive or request applying to a class of banks,  including such Lender, of or
under any  Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental Authority
or monetary authority charged with the interpretation or administration  thereof
or  compliance  by any Lender with any request or  directive  regarding  capital
adequacy.

         "Reimbursement  Obligation"  means  the  absolute,   unconditional  and
irrevocable  obligation  of the Borrower to reimburse  the Agent for any drawing
honored by the Agent under a Letter of Credit.

         "REIT"  means a  Person  qualifying  for  treatment  as a "real  estate
investment trust" under the Internal Revenue Code.

         "Requisite  Lenders" means, as of any date, Lenders (which must include
the Lender then acting as Agent) whose combined Commitment  Percentages equal or
exceed 66-2/3%.

                                      -14-

<PAGE>

         "Reserve for  Replacements"  means,  for any period and with respect to
any Property,  an amount equal to (a) the aggregate net rentable  square footage
of all completed  space of such Property  times (b) the Reserve Amount times (c)
the number of days such Property was owned in such period divided by (d) 365. If
the term  Reserve for  Replacements  is used  without  reference to any specific
Property,  then it shall be determined on an aggregate basis with respect to all
Properties and a proportionate  share of all real property of all Unconsolidated
Affiliates.  For purposes of this definition, the term "Reserve Amount" means an
amount equal to (i) $0.45 for any portion of a period  occurring in any calendar
year  prior to 2003 and (ii)  during  any  portion  of a period  occurring  in a
calendar year  following  2002,  an amount equal to $0.45  increased by 5.0% for
each calendar year following 2002.

         "Restricted  Payment"  means:  (a) any dividend or other  distribution,
direct or  indirect,  on  account  of any  shares of any class of stock or other
equity  interest of the  Borrower or any of its  Subsidiaries  now or  hereafter
outstanding,  except a dividend  payable solely in shares of that class of stock
to the  holders  of  that  class;  (b)  any  redemption,  conversion,  exchange,
retirement,  sinking fund or similar payment,  purchase or other acquisition for
value,  direct or indirect,  of any shares of any class of stock or other equity
interest  of  the  Borrower  or  any  of  its   Subsidiaries  now  or  hereafter
outstanding;  (c) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, conversion, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to, any Subordinated  Debt; and (d)
any  payment  made to retire,  or to obtain the  surrender  of, any  outstanding
warrants, options or other rights to acquire shares of any class of stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding.

         "Revolving  Credit  Termination  Date" means  October 31, 2004, or such
later date to which such date may be extended in accordance with Section 2.14.

         "Revolving Loan" means a loan made by a Lender to the Borrower pursuant
to Section 2.1.(a).

         "Revolving Note" has the meaning given that term in Section 2.12.

         "Secured  Indebtedness"  means,  with  respect to any  Person,  (a) all
Indebtedness  of such  Person  that is  secured in any manner by any Lien on any
property plus (b) such Person's  Ownership Share of the Secured  Indebtedness of
any of such Person's Unconsolidated Affiliates.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.

         "Solvent"  means,  when used with  respect to any Person,  that (a) the
fair value and the fair salable value of its assets  (excluding any Indebtedness
due from any affiliate of such Person) are each in excess of the fair  valuation
of its total liabilities (including all contingent liabilities); (b) such Person
is able to pay its debts or other  obligations  in the  ordinary  course as they
mature;  and (c) such Person has capital not unreasonably  small to carry on its
business and all business in which it proposes to be engaged.

         "S&P"  means  Standard & Poor's  Rating  Services,  a  division  of The
McGraw-Hill Companies, Inc.

         "Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time,  as such amount may be  increased or
reduced from time to time in accordance with the terms of such Letter of Credit.

         "Subordinated  Debt"  means  Indebtedness  for  money  borrowed  of the
Borrower or any of its Subsidiaries that is subordinated in right of payment and
otherwise to the Loans and the other Obligations in a manner satisfactory to the
Agent in its sole and absolute discretion.

         "Subsidiary"  means,  for any  Person,  any  corporation,  partnership,
limited  liability  company or other  entity of which at least a majority of the
securities or other  ownership  interests  having by the terms thereof  ordinary
voting  power to elect a majority  of the Board of  Directors  or other  persons
performing similar functions of such corporation, partnership, limited liability
company or other entity (without regard to the occurrence of any contingency) is
at the time directly or indirectly  owned or controlled by such Person or one or
more  Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.

                                      -15-

<PAGE>

         "Substantial  Amount" means, at the time of determination  thereof,  an
amount in excess of 10.0% of total assets  (exclusive of  depreciation)  at such
time of the Borrower and its Subsidiaries determined on a consolidated basis.

         "Swingline  Commitment" means the Swingline Lender's obligation to make
Swingline  Loans pursuant to Section 2.4. in an amount up to, but not exceeding,
$50,000,000,  as such amount may be reduced from time to time in accordance with
the terms hereof.

         "Swingline  Lender"  means  Wells  Fargo  Bank,  National  Association,
together with its respective successors and assigns.

         "Swingline  Loan"  means a loan  made by the  Swingline  Lender  to the
Borrower pursuant to Section 2.4.(a).

         "Swingline Note" means a promissory note of the Borrower  substantially
in the form of Exhibit  I,  payable  to the order of the  Swingline  Lender in a
principal  amount equal to the amount of the Swingline  Commitment as originally
in effect and otherwise duly completed.

         "Swingline  Termination  Date" means the date which is 7 Business  Days
prior to the Revolving Credit Termination Date.

         "Tangible Net Worth" means, for any Person and as of a given date, such
Person's  total  stockholder's  equity plus,  in the case of the  Borrower,  (i)
accumulated  depreciation and  amortization  and (ii) minority  interests in the
Borrower, minus (to the extent reflected in determining  stockholders' equity of
such  Person):  (a) the amount of any  write-up  in the book value of any assets
reflected  in any  balance  sheet  resulting  from  revaluation  thereof  or any
write-up in excess of the cost of such assets acquired, and (b) the aggregate of
all amounts  appearing on the asset side of any such balance  sheet for patents,
patent applications,  copyrights,  trademarks,  trade names,  goodwill and other
like assets which would be classified as intangible assets under GAAP.

         "Taxes" has the meaning given that term in Section 3.11.

         "Term Loan" has the meaning given that term in Section 2.15.

         "Termination  Date" means the date one year after the Revolving  Credit
Termination Date.

         "Total  Budgeted Cost" means,  with respect to a Development  Property,
and at any time, the aggregate amount of all costs budgeted to be paid, incurred
or  otherwise  expended  or  accrued  by  the  Borrower,   a  Subsidiary  or  an
Unconsolidated  Affiliate  with respect to such Property to achieve an Occupancy
Rate such that the Property is achieving  breakeven or positive  operating  cash
flow, including without limitation,  all amounts budgeted with respect to all of
the  following:  (a)  acquisition  of land and any related  improvements;  (b) a
reasonable and appropriate reserve for construction  interest;  (c) a reasonable
and appropriate operating deficit reserve; (d) tenant improvements;  (e) leasing
commissions;  and (f) other hard and soft costs  associated with the development
or redevelopment of such Property.  With respect to any Property to be developed
in more than one phase,  the Total  Budgeted Cost shall exclude  budgeted  costs
(other than costs relating to acquisition of land and related  improvements)  to
the  extent  relating  to any  phase  for  which  (i)  construction  has not yet
commenced and (ii) a binding construction  contract has not been entered into by
the Borrower,  any Subsidiary or any Unconsolidated  Affiliate,  as the case may
be.

         "Total  Liabilities"  means,  as to any Person as of a given date,  all
liabilities  which would, in conformity  with GAAP, be properly  classified as a
liability on the balance sheet of such Person as of such date,  and in any event
shall  include  (without  duplication):  (a) all  Indebtedness  of  such  Person
(whether or not Nonrecourse  Indebtedness and whether or not secured by a Lien),
including without  limitation,  Capitalized Lease Obligations;  (b) all accounts
payable and accrued  expenses of such Person;  (c) all  purchase and  repurchase
obligations  and  forward   commitments  of  such  Person  to  the  extent  such
obligations  or  commitments  are  evidenced  by a  binding  purchase  agreement
(forward  commitments  shall  include  without  limitation  (i)  forward  equity
commitments   and  (ii)   commitments   to  purchase  any  real  property  under
development,  redevelopment or renovation); (d) all unfunded obligations of such
Person;  (e) all lease  obligations of such Person  (including ground leases) to
the extent  required  under GAAP to be  classified as a liability on the balance
sheet of such Person;  (f) all contingent  obligations of such Person including,

                                      -16-

<PAGE>

without  limitation,  all  Guarantees of  Indebtedness  by such Person;  (g) all
liabilities of any  Unconsolidated  Affiliate of such Person,  which liabilities
such Person has Guaranteed or is otherwise  obligated on a recourse  basis;  (h)
such  Person's  Ownership  Share  of  the  Indebtedness  of  any  Unconsolidated
Affiliate of such Person, including Nonrecourse Indebtedness of such Person; and
(i) in the case of the Borrower, obligations in respect of preferred partnership
units or other preferred  Equity  Interest  issued by any Subsidiary  (excluding
obligations in respect of any such preferred Equity Interests beneficially owned
by the Borrower or any Subsidiary).  For purposes of clauses (c) and (d) of this
definition,  the  amount of Total  Liabilities  of a Person at any given time in
respect of (x) a  contract  to  purchase  or  otherwise  acquire  unimproved  or
developed  real property  shall be equal to the total  purchase price payable by
such  Person  under the  contract  if,  at such  time,  the  seller of such real
property  would be entitled to  specifically  enforce the contract  against such
Person,  and (y) a contract  relating to the  acquisition of real property which
the  seller is  required  to develop or  renovate  prior to, and as a  condition
precedent  to,  such  acquisition,  shall equal the  maximum  amount  reasonably
estimated to be payable by such Person under the contract  assuming  performance
by the seller of its obligations under the contract, which amount shall include,
without  limitation,  any amounts payable after consummation of such acquisition
which may based on certain performance levels or other related criteria.

         "Type"  with  respect to any  Revolving  Loan or Term  Loan,  refers to
whether  such Loan is a LIBOR Loan or a Base Rate Loan,  or in the case of a Bid
Rate Loan only,  refers to whether such Loan is an Absolute Rate Loan or a LIBOR
Margin Loan.

         "UCC" means the Uniform  Commercial Code as in effect in any applicable
jurisdiction.

         "Unconsolidated  Affiliate" shall mean, with respect to any Person, any
other  Person in whom such  Person  holds an  Investment,  which  Investment  is
accounted for in the  financial  statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person.

         "Unencumbered  NOI" means, for any period,  the aggregate Net Operating
Income for such period of Unencumbered  Pool Properties and all other Properties
which satisfy all requirements  contained in the definition of Eligible Property
other than the requirements contained in clauses (d) and (e) thereof.

         "Unencumbered Pool Certificate" means a report,  certified by the chief
financial  officer or treasurer of the  Borrower,  substantially  in the form of
Exhibit J, setting forth the calculations required to establish the Unencumbered
Pool Values of each  Unencumbered  Pool Property as of a specified  date, all in
form and detail satisfactory to the Agent.

         "Unencumbered  Pool Properties"  means those Eligible  Properties that,
pursuant to the terms of this Agreement, are to be included when calculating the
Maximum Availability.  A Property shall cease to be a Unencumbered Pool Property
if such Property shall cease to be an Eligible Property.

         "Unencumbered  Pool Value" means (a) the Net  Operating  Income of each
Unencumbered  Pool Property for the fiscal quarter most recently ended times (b)
4 and  divided by (c) 10.0%.  To the extent that  Properties  located in any one
State of the  United  States  of  America  (in the case of  California,  each of
northern  and  southern  California  shall be  considered  separate  states  for
purposes  of this  definition)  or in the  District of  Columbia  would,  in the
aggregate,  account for more than 40.0% of Unencumbered  Pool Value, such excess
shall be excluded.

         "Unfunded Liabilities" means, with respect to any Plan at any time, the
amount  (if any) by which (a) the value of all  benefit  liabilities  under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for  purposes  of Section  4044 of ERISA,  exceeds  (b) the fair market
value of all Plan assets allocable to such  liabilities  under Title IV of ERISA
(excluding any accrued but unpaid contributions),  all determined as of the then
most  recent  valuation  date for such Plan,  but only to the  extent  that such
excess  represents  a potential  liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

                                      -17-

<PAGE>

         "Unsecured Liabilities" means, as to any Person as of a given date, the
sum of the following (without duplication):  (a) all liabilities which would, in
conformity with GAAP, be properly classified as a liability on the balance sheet
of such Person as at such date; plus (b) all Indebtedness of such Person;  minus
(c) all Secured Indebtedness of such Person.

         "Wells Fargo" means Wells Fargo Bank, National Association, and its
successors and permitted assigns.

         "Wholly Owned Subsidiary" means any Subsidiary of a Person which all of
the equity securities or other ownership interests (other than, in the case of a
corporation,   directors'  qualifying  shares)  are  at  the  time  directly  or
indirectly owned or controlled by such Person or one or more other  Subsidiaries
of such  Person or by such  Person  and one or more other  Subsidiaries  of such
Person.  In the case of the Borrower,  the term "Wholly Owned  Subsidiary" shall
also include any  Subsidiary  of the Borrower (a) of which the Borrower  owns or
controls,  directly,  or indirectly through one or more other  Subsidiaries,  at
least  95% of the  equity  securities  or  other  ownership  interests  of  such
Subsidiary  and (b) the  remaining  the  equity  securities  or other  ownership
interests of such Subsidiary are owned by Hughes Family Members.

Section 1.2.  General; References to San Francisco Time.

         Unless  otherwise   indicated,   all  accounting   terms,   ratios  and
measurements  shall be  interpreted  or determined  in  accordance  with GAAP in
effect as of the Agreement  Date.  References in this  Agreement to  "Sections",
"Articles",  "Exhibits" and "Schedules" are to sections,  articles, exhibits and
schedules  herein and hereto  unless  otherwise  indicated.  references  in this
Agreement  to any  document,  instrument  or  agreement  (a) shall  include  all
exhibits,  schedules  and  other  attachments  thereto,  (b) shall  include  all
documents,  instruments or agreements issued or executed in replacement thereof,
to the extent permitted  hereby and (c) shall mean such document,  instrument or
agreement,  or  replacement or predecessor  thereto,  as amended,  supplemented,
restated or otherwise  modified from time to time to the extent permitted hereby
and  in  effect  at any  given  time.  Wherever  from  the  context  it  appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural,  and pronouns  stated in the masculine,  feminine or neuter
gender  shall  include  the  masculine,  the  feminine  and the  neuter.  Unless
explicitly  set forth to the  contrary,  a  reference  to  "Subsidiary"  means a
Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to
an  "Affiliate"  means a reference to an Affiliate of the  Borrower.  Titles and
captions of Articles,  Sections,  subsections  and clauses in this Agreement are
for  convenience  only,  and neither  limit nor amplify the  provisions  of this
Agreement.  Unless otherwise indicated, all references to time are references to
San Francisco, California time.

                          ARTICLE II. CREDIT FACILITIES

Section 2.1.  Revolving Loans.

         (a) GENERALLY.  Subject to the terms and conditions  hereof,  including
without limitation,  Section 2.18., during the period from the Effective Date to
but excluding the Revolving Credit  Termination  Date, each Lender severally and
not jointly  agrees to make  Revolving  Loans to the  Borrower  in an  aggregate
principal  amount at any one time  outstanding  up to,  but not to  exceed,  the
lesser of (i) the  amount of such  Lender's  Commitment  and (ii) such  Lender's
Commitment  Percentage  of the  Maximum  Availability.  Subject to the terms and
conditions of this  Agreement,  during the period from the Effective Date to but
excluding the Revolving Credit Termination Date, the Borrower may borrow,  repay
and reborrow Revolving Loans hereunder.

         (b)  REQUESTING  REVOLVING  LOANS.  The  Borrower  shall give the Agent
notice  pursuant to a Notice of Borrowing of each borrowing of Revolving  Loans.
Each Notice of  Borrowing  shall be delivered to the Agent before 10:00 a.m. (i)
in the case of  LIBOR  Loans,  on the  date  three  Business  Days  prior to the
proposed date of such borrowing and (ii) in the case of Base Rate Loans,  on the
date one Business Day prior to the proposed  date of such  borrowing.  The Agent
will transmit by telecopy,  electronic  mail or other form of  transmission  the
Notice of Borrowing (or the  information  contained in such Notice of Borrowing)
to each Lender  promptly  upon  receipt by the Agent.  Each Notice of  Borrowing
shall be irrevocable once given and binding on the Borrower.

                                      -18-

<PAGE>

         (c) DISBURSEMENTS OF REVOLVING LOAN PROCEEDS.  No later than 10:00 a.m.
on the date  specified  in the  Notice  of  Borrowing,  each  Lender  will  make
available  for the account of its  applicable  Lending  Office to the Agent,  in
immediately  available  funds,  the proceeds of the Revolving Loan to be made by
such  Lender.  With respect to  Revolving  Loans to be made after the  Effective
Date,  unless the Agent  shall  have been  notified  by any Lender  prior to the
specified  date of borrowing  that such Lender does not intend to make available
to the Agent the  Revolving  Loan to be made by such  Lender on such  date,  the
Agent may assume that such Lender will make the proceeds of such  Revolving Loan
available  to the Agent on the date of the  requested  borrowing as set forth in
the Notice of Borrowing  and the Agent may (but shall not be  obligated  to), in
reliance upon such assumption, make available to the Borrower the amount of such
Revolving  Loan to be provided by such Lender.  Subject to  satisfaction  of the
applicable  conditions  set forth in Article VI. for such  borrowing,  the Agent
will make the proceeds of such borrowing available to the Borrower no later than
12:00 noon on the date and at the  account  specified  by the  Borrower  in such
Notice of Borrowing.

Section 2.2.  Bid Rate Loans.

         (a) BID RATE LOANS.  In addition to borrowings of Revolving  Loans,  at
any  time  during  the  period  from the  Effective  Date to but  excluding  the
Revolving  Credit  Termination  Date,  and so long as the Borrower  continues to
maintain an  Investment  Grade  Rating,  the Borrower  may, as set forth in this
Section,  request  the  Lenders  to make  offers  to make Bid Rate  Loans to the
Borrower in Dollars. The Lenders may, but shall have no obligation to, make such
offers and the Borrower  may, but shall have no  obligation  to, accept any such
offers  in the  manner  set forth in this  Section.  The  aggregate  outstanding
principal amount of Bid Rate Loans may not exceed the Bid Rate Loan Limit at any
time.

         (b)  REQUESTS FOR BID RATE LOANS.  When the Borrower  wishes to request
from the Lenders  offers to make Bid Rate Loans,  it shall give the Agent notice
(a "Bid Rate Quote  Request")  so as to be  received no later than 10:00 a.m. on
(x) the  Business  Day  immediately  preceding  the date of  borrowing  proposed
therein,  in the case of an  Absolute  Rate  Auction  and (y) on the  date  four
Business Days prior to the proposed  date of  borrowing,  in the case of a LIBOR
Auction.  The Agent  shall  deliver to each Lender a copy of each Bid Rate Quote
Request  promptly  upon receipt  thereof by the Agent.  The Borrower may request
offers to make Bid Rate Loans for up to 3 different Interest Periods in each Bid
Rate Quote Request; provided, that the request for each separate Interest Period
shall be deemed to be a separate Bid Rate Quote Request for a separate borrowing
(a "Bid Rate Borrowing").  Each Bid Rate Quote Request shall be substantially in
the form of Exhibit K and shall specify as to each Bid Rate Borrowing all of the
following:

                  (i) the  proposed  date of such  borrowing,  which  shall be a
         Business Day;

                  (ii) the  aggregate  amount of such Bid Rate  Borrowing  which
         shall be in a minimum amount of $10,000,000  and integral  multiples of
         $1,000,000 in excess thereof;

                  (iii)  whether the Bid Rate Quote  Request is for LIBOR Margin
         Loans or Absolute Rate Loans; and

                  (iv) the duration of the Interest Period applicable thereto.

The Borrower shall not deliver any Bid Rate Quote Request more  frequently  than
once per  calendar  month nor within 5 Business  Days of the giving of any other
Bid Rate Quote Request.

         (c)      BID RATE QUOTES.

                  (i) Each Lender may submit one or more Bid Rate  Quotes,  each
         containing an offer to make a Bid Rate Loan in response to any Bid Rate
         Quote Request;  provided that, if the Borrower's  request under Section
         2.2.(b) specified more than one Interest Period, such Lender may make a
         single  submission  containing  only one Bid Rate  Quote  for each such
         Interest Period. Each Bid Rate Quote must be submitted to the Agent not
         later than 8:30 a.m. (x) on the proposed date of borrowing, in the case
         of an Absolute  Rate  Auction and (y) on the date three  Business  Days
         prior  to the  proposed  date  of  borrowing,  in the  case  of a LIBOR
         Auction,  and in either  case the Agent  shall  disregard  any Bid Rate

                                      -19-

<PAGE>

         Quote received after such time; provided that the Lender then acting as
         the Agent may submit a Bid Rate Quote only if it notifies  the Borrower
         of the terms of the offer  contained  therein not later than 30 minutes
         prior to the latest  time by which the Lenders  must submit  applicable
         Bid Rate Quotes. Subject to Articles VI. and XI., any Bid Rate Quote so
         made  shall be  irrevocable.  Such Bid Rate  Loans  may be  funded by a
         Lender's  Designated  Lender (if any) as provided in Section  13.5.(f),
         however  such  Lender  shall not be required to specify in its Bid Rate
         Quote  whether  such Bid Rate Loan  will be  funded by such  Designated
         Lender.

                  (ii) Each Bid Rate Quote shall be substantially in the form of
         Exhibit L and shall specify:

                           (A) the proposed  date of borrowing  and the Interest
                  Period therefor;

                           (B) the  principal  amount  of the Bid Rate  Loan for
                  which  each  such  offer  is  being  made;  provided  that the
                  aggregate  principal  amount of all Bid Rate Loans for which a
                  Lender submits Bid Rate Quotes (x) may be greater or less than
                  the  Commitment  of such  Lender  but (y) shall not exceed the
                  principal  amount of the Bid Rate  Borrowing  for a particular
                  Interest Period for which offers were requested;

                           (C) in the case of an Absolute Rate Auction, the rate
                  of interest per annum (rounded upwards,  if necessary,  to the
                  nearest  1/1,000th of 1%) offered for each such  Absolute Rate
                  Loan (the "Absolute Rate");

                           (D) in the case of a LIBOR Auction,  the margin above
                  or below  applicable  LIBOR (the "LIBOR  Margin")  offered for
                  each  such  LIBOR  Margin  Loan,  expressed  as  a  percentage
                  (rounded  upwards,  if necessary,  to the nearest 1/1,000th of
                  1%) to be added to (or subtracted from) the applicable LIBOR;

                           (E) the identity of the quoting Lender; and

                           (F) any Bid Rate Quote  shall be in a minimum  amount
                  of $10,000,000 and integral  multiples of $1,000,000 in excess
                  thereof.

         No Bid Rate Quote  shall  contain  qualifying,  conditional  or similar
         language or propose  terms other than or in addition to those set forth
         in the  applicable  Bid Rate Quote Request and, in  particular,  no Bid
         Rate  Quote  may be  conditioned  upon  acceptance  by  the  applicable
         Borrower of all (or some specified  minimum) of the principal amount of
         the Bid Rate Loan for which such Bid Rate Quote is being made.

         (d)  NOTIFICATION BY AGENT. The Agent shall, as promptly as practicable
after the Bid Rate  Quotes are  submitted  (but in any event not later than 9:30
a.m.  (x) on the proposed  date of  borrowing,  in the case of an Absolute  Rate
Margin and (y) on the date three  Business  Days prior to the  proposed  date of
borrowing, in the case of a LIBOR Auction), notify the Borrower of the terms (i)
of any Bid Rate Quote  submitted by a Lender that is in accordance  with Section
2.2.(c) and (ii) of any Bid Rate Quote that  amends,  modifies  or is  otherwise
inconsistent  with a  previous  Bid Rate Quote  submitted  by such  Lender  with
respect to the same Bid Rate Quote Request.  Any such  subsequent Bid Rate Quote
shall be  disregarded  by the Agent  unless  such  subsequent  Bid Rate Quote is
submitted  solely to correct a manifest error in such former Bid Rate Quote. The
Agent's notice to the Borrower shall specify (A) the aggregate  principal amount
of the Bid Rate  Borrowing  for  which  offers  have been  received  and (B) the
principal amounts and Absolute Rates or LIBOR Margins, as applicable, so offered
by each Lender.

         (e) ACCEPTANCE BY BORROWER.

                  (i) Not later  than  10:30 a.m.  (x) on the  proposed  date of
         borrowing,  in the case of an Absolute Rate Auction and (y) on the date
         three  Business Days prior to the proposed  date of  borrowing,  in the
         case of LIBOR  Auction,  the  Borrower  shall  notify  the Agent of its
         acceptance or nonacceptance of the offers so notified to it pursuant to
         Section  2.2.(d) which notice shall be in the form of Exhibit M. In the
         case of acceptance,  such notice shall specify the aggregate  principal
         amount  of offers  for each  Interest  Period  that are  accepted.  The
         failure  of the  Borrower  to  give  such  notice  by such  time  shall
         constitute nonacceptance. The Borrower may accept any Bid Rate Quote in
         whole or in part;  provided that:

                                      -20-

<PAGE>

                           (A) the aggregate  principal  amount of each Bid Rate
                  Borrowing  may not exceed the  applicable  amount set forth in
                  the related Bid Rate Quote Request;

                           (B) the aggregate  principal  amount of each Bid Rate
                  Borrowing   shall  comply  with  the   provisions  of  Section
                  2.2.(b)(ii);

                           (C)   acceptance  of  offers  may  be  made  only  in
                  ascending  order  of  Absolute  Rates  or  LIBOR  Margins,  as
                  applicable,  in each case  beginning  with the lowest  rate so
                  offered;

                           (D) any  acceptance in part by the Borrower  shall be
                  in a minimum amount of $10,000,000  and integral  multiples of
                  $1,000,000 in excess thereof; and

                           (E) the  Borrower may not accept any offer that fails
                  to comply with Section  2.2.(c) or  otherwise  fails to comply
                  with the requirements of this Agreement.

                  (ii) If offers are made by two or more  Lenders  with the same
         Absolute Rates or LIBOR Margins, as applicable, for a greater aggregate
         principal  amount  than the  amount  in  respect  of which  offers  are
         accepted for the related Interest  Period,  the principal amount of Bid
         Rate  Loans in  respect of which  such  offers  are  accepted  shall be
         allocated  by  the  Agent  among  such  Lenders  in  proportion  to the
         aggregate principal amount of such offers.  Determinations by the Agent
         of the amounts of Bid Rate Loans shall be  conclusive in the absence of
         manifest error.

         (f) OBLIGATION TO MAKE BID RATE LOANS. The Agent shall promptly (and in
any event not later than 11:00 a.m.  (x) on the  proposed  date of  borrowing of
Absolute  Rate  Loans  and (y) on the  date  three  Business  Days  prior to the
proposed  date of  borrowing  of LIBOR  Margin  Loans)  notify  each Lender that
submitted a Bid Rate Quote as to whose Bid Rate Quote has been  accepted and the
amount and rate  thereof.  A Lender who is notified that it has been selected to
make a Bid Rate Loan may designate its  Designated  Lender (if any) to fund such
Bid Rate Loan on its behalf, as described in Section 13.5. Any Designated Lender
which funds a Bid Rate Loan shall on and after the time of such  funding  become
the obligee under such Bid Rate Loan and be entitled to receive  payment thereof
when due. No Lender shall be relieved of its obligation to fund a Bid Rate Loan,
and no  Designated  Lender shall assume such  obligation,  prior to the time the
applicable Bid Rate Loan is funded.  Any Lender whose offer to make any Bid Rate
Loan has been accepted  shall,  not later than 12:00 noon. on the date specified
for the making of such Loan, make the amount of such Loan available to the Agent
in immediately  available funds, for the account of the Borrower.  The amount so
received  by the  Agent  shall,  subject  to the terms  and  conditions  of this
Agreement,  be made  available  to the Borrower not later than 1:00 p.m. on such
date by depositing the same, in immediately  available  funds,  in an account of
the Borrower designated by the Borrower.

         (g) NO EFFECT ON  COMMITMENT.  Except for the purpose and to the extent
expressly  stated in Section 2.13.,  the amount of any Bid Rate Loan made by any
Lender shall not constitute a utilization of such Lender's Commitment.

Section 2.3.  Letters of Credit.

         (a)  LETTERS OF CREDIT.  Subject  to the terms and  conditions  of this
Agreement,  including without limitation, Section 2.18., the Agent, on behalf of
the Lenders,  agrees to issue for the account of the Borrower  during the period
from and including the Effective Date to, but excluding,  the date 30 days prior
to the Revolving Credit  Termination Date, one or more letters of credit (each a
"Letter of  Credit")  up to a maximum  aggregate  Stated  Amount at any one time
outstanding not to exceed the L/C Commitment Amount.

         (b) TERMS OF LETTERS OF CREDIT. At the time of issuance, the amount,
       form, terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and the
Borrower. Notwithstanding the foregoing, in no event may (i) the expiration date
of any Letter of Credit extend beyond the Revolving Credit Termination Date,
(ii) any Letter of Credit have an initial duration in excess of one year, or
(iii) any Letter of Credit contain an automatic renewal provision.

                                      -21-

<PAGE>

         (c) REQUESTS FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower shall give
the Agent written notice at least 5 Business Days prior to the requested date of
issuance of a Letter of Credit, such notice to describe in reasonable detail the
proposed  terms of such Letter of Credit and the nature of the  transactions  or
obligations  proposed to be supported by such Letter of Credit, and in any event
shall set forth with respect to such Letter of Credit (i) the requested  initial
Stated  Amount,  (ii) the  proposed  beneficiary,  (iii)  whether such Letter of
Credit is to be a standby or commercial  letter of credit and (iv) the requested
expiration  date.  The Borrower  shall also  execute and deliver such  customary
applications  and agreements for standby  letters of credit,  and other forms as
requested  from time to time by the Agent.  Provided  the Borrower has given the
notice  prescribed by the first  sentence of this  subsection and delivered such
application and agreements referred to in the preceding sentence, subject to the
other terms and conditions of this Agreement,  including the satisfaction of any
applicable  conditions precedent set forth in Article VI., the Agent shall issue
the requested Letter of Credit on the requested date of issuance for the benefit
of the stipulated  beneficiary but in no event prior to the date 5 Business Days
following the date after which the Agent has received all of the items  required
to be delivered  to it under this  subsection.  Upon the written  request of the
Borrower,  the Agent shall  deliver to the  Borrower a copy of (i) any Letter of
Credit proposed to be issued  hereunder  prior to the issuance  thereof and (ii)
each issued Letter of Credit within a reasonable time after the date of issuance
thereof.  To the extent any term of a Letter of Credit  Document is inconsistent
with a term of any Loan Document, the term of such Loan Document shall control.

         (d)  REIMBURSEMENT  OBLIGATIONS.  Upon  receipt  by the Agent  from the
beneficiary of a Letter of Credit of any demand for payment under such Letter of
Credit, the Agent shall promptly notify the Borrower of the amount to be paid by
the Agent as a result of such demand and the date on which payment is to be made
by the Agent to such beneficiary in respect of such demand.  The Borrower hereby
absolutely,  unconditionally  and  irrevocably  agrees to pay and  reimburse the
Agent for the amount of each demand for  payment  under such Letter of Credit at
or  prior  to the  date on  which  payment  is to be made  by the  Agent  to the
beneficiary   thereunder,   without  presentment,   demand,   protest  or  other
formalities of any kind.  Upon receipt by the Agent of any payment in respect of
any Reimbursement  Obligation,  the Agent shall promptly pay to each Lender that
has  acquired  a  participation  therein  under the second  sentence  of Section
2.3.(i) such Lender's Commitment Percentage of such payment.

         (e) MANNER OF  REIMBURSEMENT.  Upon its receipt of a notice referred to
in the immediately preceding subsection (d), the Borrower shall advise the Agent
whether  or not  the  Borrower  intends  to  borrow  hereunder  to  finance  its
obligation  to  reimburse  the Agent for the  amount of the  related  demand for
payment  and, if it does,  the Borrower  shall submit a timely  request for such
borrowing as provided in the  applicable  provisions of this  Agreement.  If the
Borrower fails to so advise the Agent, or if the Borrower fails to reimburse the
Agent  for a demand  for  payment  under a Letter  of Credit by the date of such
payment,  then (i) if the applicable  conditions  contained in Article VI. would
permit the  making of  Revolving  Loans,  the  Borrower  shall be deemed to have
requested a borrowing of Revolving  Loans (which shall be Base Rate Loans) in an
amount  equal to the unpaid  Reimbursement  Obligation  and the Agent shall give
each  Lender  prompt  notice  of the  amount  of the  Revolving  Loan to be made
available  to the Agent not later than 11:00  a.m.  and (ii) if such  conditions
would not permit the making of Revolving Loans, the provisions of subsection (j)
of this Section shall apply.

         (f) EFFECT OF LETTERS OF CREDIT ON  COMMITMENTS.  Upon the  issuance by
the Agent of any  Letter of Credit and until  such  Letter of Credit  shall have
expired or been terminated,  the Commitment of each Lender shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to the product of
(i) such  Lender's  Commitment  Percentage  and  (ii) the sum of (A) the  Stated
Amount of such Letter of Credit plus (B) any related  Reimbursement  Obligations
then outstanding.

         (g) AGENT'S DUTIES REGARDING LETTERS OF CREDIT; UNCONDITIONAL NATURE OF
REIMBURSEMENT  OBLIGATIONS.  In examining documents presented in connection with
drawings  under  Letters  of Credit and making  payments  under such  Letters of
Credit against such documents,  the Agent shall only be required to use the same
standard of care as it uses in connection with examining  documents presented in
connection  with  drawings  under  letters  of  credit  in which it has not sold
participations  and making  payments under such letters of credit.  The Borrower
assumes  all risks of the acts and  omissions  of, or misuse of the  Letters  of
Credit  by,  the  respective   beneficiaries  of  such  Letters  of  Credit.  In
furtherance and not in limitation of the foregoing, neither the Agent nor any of
the  Lenders  shall be  responsible  for (i) the  form,  validity,  sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
any  Letter  of  Credit  even if it  should  in fact  prove  to be in any or all
respects  invalid,  insufficient,  inaccurate,  fraudulent  or forged;  (ii) the

                                      -22-

<PAGE>

validity  or  sufficiency  of  any  instrument   transferring  or  assigning  or
purporting to transfer or assign any Letter of Credit, or the rights or benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective  for any reason;  (iii) failure of the beneficiary of any
Letter of Credit to comply fully with conditions  required in order to draw upon
such  Letter of  Credit;  (iv)  errors,  omissions,  interruptions  or delays in
transmission or delivery of any messages,  by mail,  cable,  telex,  telecopy or
otherwise,  whether or not they be in cipher;  (v) errors in  interpretation  of
technical terms;  (vi) any loss or delay in the transmission or otherwise of any
document  required in order to make a drawing under any Letter of Credit,  or of
the proceeds  thereof;  (vii) the  misapplication by the beneficiary of any such
Letter of Credit, or of the proceeds of any drawing under such Letter of Credit;
or (viii) any  consequences  arising from causes beyond the control of the Agent
or the Lenders. None of the above shall affect, impair or prevent the vesting of
any of the Agent's rights or powers hereunder. Any action taken or omitted to be
taken by the Agent under or in connection with any Letter of Credit, if taken or
omitted in the  absence of gross  negligence  or willful  misconduct,  shall not
create  against the Agent any  liability to the Borrower or any Lender.  In this
connection,  the  obligation  of the  Borrower  to  reimburse  the Agent for any
drawing  made under any Letter of Credit shall be  absolute,  unconditional  and
irrevocable  and shall be paid  strictly  in  accordance  with the terms of this
Agreement  or  any  other  applicable   Letter  of  Credit  Document  under  all
circumstances   whatsoever,   including   without   limitation,   the  following
circumstances:  (A) any lack of  validity  or  enforceability  of any  Letter of
Credit Document or any term or provisions  therein;  (B) any amendment or waiver
of or any  consent  to  departure  from  all or any  of  the  Letter  of  Credit
Documents;  (C) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against the Agent, any Lender, any beneficiary
of a Letter of  Credit or any other  Person,  whether  in  connection  with this
Agreement,  the  transactions  contemplated  hereby  or in the  Letter of Credit
Documents or any  unrelated  transaction;  (D) any breach of contract or dispute
between the Borrower, the Agent, any Lender or any other Person; (E) any demand,
statement or any other document presented under a Letter of Credit proving to be
forged,  fraudulent,  invalid or  insufficient  in any respect or any  statement
therein  or made in  connection  therewith  being  untrue or  inaccurate  in any
respect whatsoever; (F) any non-application or misapplication by the beneficiary
of a Letter of Credit or of the  proceeds  of any  drawing  under such Letter of
Credit; (G) payment by the Agent under the Letter of Credit against presentation
of a draft or certificate  which does not strictly  comply with the terms of the
Letter of Credit;  and (H) any other act, omission to act, delay or circumstance
whatsoever  that might,  but for the  provisions of this  Section,  constitute a
legal or  equitable  defense to or  discharge  of the  Borrower's  Reimbursement
Obligations.

         (h)  AMENDMENTS,  ETC.  The  issuance  by the  Agent of any  amendment,
supplement or other modification to any Letter of Credit shall be subject to the
same conditions  applicable  under this Agreement to the issuance of new Letters
of Credit  (including,  without  limitation,  that the request  therefor be made
through the Agent),  and no such  amendment,  supplement  or other  modification
shall be issued  unless  either  (i) the  respective  Letter of Credit  affected
thereby would have complied with such  conditions had it originally  been issued
hereunder in such amended,  supplemented  or modified form or (ii) the Requisite
Lenders shall have consented  thereto.  In connection  with any such  amendment,
supplement  or other  modification,  the  Borrower  shall pay the fees,  if any,
payable under the last sentence of Section 3.6.(b).

         (i) LENDERS'  PARTICIPATION IN LETTERS OF CREDIT.  Immediately upon the
issuance  by the Agent of any Letter of Credit  each  Lender  shall be deemed to
have absolutely, irrevocably and unconditionally purchased and received from the
Agent, without recourse or warranty,  an undivided interest and participation to
the extent of such Lender's Commitment  Percentage of the liability of the Agent
with respect to such Letter of Credit and each Lender thereby shall  absolutely,
unconditionally  and irrevocably  assume,  as primary obligor and not as surety,
and shall be  unconditionally  obligated to the Agent to pay and discharge  when
due, such Lender's  Commitment  Percentage of the Agent's  liability  under such
Letter of Credit.  In  addition,  upon the making of each payment by a Lender to
the  Agent in  respect  of any  Letter  of Credit  pursuant  to the  immediately
following  subsection  (j),  such Lender  shall,  automatically  and without any
further  action  on  the  part  of the  Agent  or  such  Lender,  acquire  (i) a
participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Agent by the  Borrower in respect of such Letter of Credit and (ii)
a participation in a percentage equal to such Lender's Commitment  Percentage in
any  interest  or other  amounts  payable  by the  Borrower  in  respect of such
Reimbursement  Obligation  (other than the Fees payable to the Agent pursuant to
the second and last sentences of Section 3.6.(b)).

                                      -23-

<PAGE>

         (j) PAYMENT OBLIGATION OF LENDERS.  Each Lender severally agrees to pay
to the Agent on demand in immediately  available  funds in Dollars the amount of
such Lender's Commitment Percentage of each drawing paid by the Agent under each
Letter of Credit to the extent such  amount is not  reimbursed  by the  Borrower
pursuant to Section 2.3.(d). Each such Lender's obligation to make such payments
to the Agent under this  subsection,  and the Agent's right to receive the same,
shall be absolute,  irrevocable and  unconditional  and shall not be affected in
any way by any circumstance  whatsoever,  including without limitation,  (i) the
failure of any other Lender to make its payment under this subsection,  (ii) the
financial condition of the Borrower or any other Loan Party, (iii) the existence
of any Default or Event of Default,  including any Event of Default described in
Section  11.1.(e) or 11.1.(f) or (iv) the termination of the  Commitments.  Each
such  payment  to the  Agent  shall  be  made  without  any  offset,  abatement,
withholding or deduction whatsoever.

         (k) INFORMATION TO LENDERS. Promptly following any change in Letters of
Credit  outstanding,  the Agent shall  deliver to each Lender and the Borrower a
notice  describing the aggregate amount of all Letters of Credit  outstanding at
such time.  Upon the  request of any Lender  from time to time,  the Agent shall
deliver any other information  reasonably  requested by such Lender with respect
to each  Letter  of Credit  then  outstanding.  Other  than as set forth in this
subsection,  the Agent  shall have no duty to notify the Lenders  regarding  the
issuance or other  matters  regarding  Letters of Credit issued  hereunder.  The
failure of the Agent to perform its requirements under this subsection shall not
relieve any Lender from its obligations under Section 2.3.(j).

Section 2.4.  Swingline Loans.

         (a)  SWINGLINE  LOANS.  Subject  to the  terms and  conditions  hereof,
including  without  limitation,  Section 2.18., if necessary to meet the various
funding deadlines of the Borrower, the Swingline Lender agrees to make Swingline
Loans  to the  Borrower,  during  the  period  from  the  Effective  Date to but
excluding the Swingline  Termination  Date, in an aggregate  principal amount at
any one time  outstanding up to, but not exceeding,  the amount of the Swingline
Commitment. If at any time the aggregate principal amount of the Swingline Loans
outstanding  at such time  exceeds the  Swingline  Commitment  in effect at such
time,  the  Borrower  shall  immediately  pay the Agent for the  account  of the
Swingline Lender the amount of such excess.  Subject to the terms and conditions
of this Agreement,  the Borrower may borrow,  repay and reborrow Swingline Loans
hereunder.

         (b) PROCEDURE FOR BORROWING  SWINGLINE  LOANS.  The Borrower shall give
the Agent and the  Swingline  Lender  notice  pursuant to a Notice of  Swingline
Borrowing  delivered  to the  Swingline  Lender no later  than 1:00 p.m.  on the
proposed date of such borrowing.  Any such  telephonic  notice shall include all
information  to be specified in a written  Notice of  Swingline  Borrowing.  Not
later than 3:00 p.m. on the date of the requested  Swingline Loan and subject to
satisfaction  of the  applicable  conditions  set forth in Article  VI. for such
borrowing,  the Swingline  Lender will make the proceeds of such  Swingline Loan
available to the Borrower in Dollars,  in immediately  available  funds,  at the
account specified by the Borrower in the Notice of Swingline Borrowing.

         (c) INTEREST.  Swingline  Loans shall bear interest at the Base Rate or
such other rates as the Borrower and the Swingline Lender may agree from time to
time in writing.  Interest  payable on Swingline Loans is solely for the account
of the  Swingline  Lender.  All accrued and unpaid  interest on Swingline  Loans
shall be payable on the dates and in the manner  provided in Section  2.5.  with
respect to interest on Base Rate Loans (except as the  Swingline  Lender and the
Borrower  may  otherwise  agree in writing  in  connection  with any  particular
Swingline Loan).

         (d) SWINGLINE  LOAN AMOUNTS,  ETC. Each  Swingline Loan shall be in the
minimum  amount of  $500,000,  or such other  minimum  amounts  agreed to by the
Swingline Lender and the Borrower.  Any voluntary prepayment of a Swingline Loan
must be in the minimum amount of $100,000 or, if less,  the aggregate  principal
amount of all  outstanding  Swingline  Loans (or such other minimum amounts upon
which the Swingline  Lender and the Borrower may agree) and in  connection  with
any such  prepayment,  the Borrower must give the Swingline Lender prior written
notice  thereof no later  than  10:00 a.m.  on the day prior to the date of such
prepayment.  The  Swingline  Loans  shall,  in  addition to this  Agreement,  be
evidenced by the Swingline Notes.

                                      -24-

<PAGE>

         (e)  REPAYMENT  AND  PARTICIPATIONS  OF SWINGLINE  LOANS.  The Borrower
agrees to repay each  Swingline  Loan  borrowed by it within one Business Day of
demand therefor by the Swingline Lender and in any event, within 5 Business Days
after the date such Swingline Loan was made.  Notwithstanding the foregoing, the
Borrower shall repay the entire outstanding principal amount of, and all accrued
but unpaid  interest on, the  Swingline  Loans  borrowed by it on the  Swingline
Termination  Date (or such earlier date as the Swingline Lender and the Borrower
may  agree  in  writing).  In lieu of  demanding  repayment  of any  outstanding
Swingline  Loan from the Borrower,  the  Swingline  Lender may, on behalf of the
Borrower (which hereby  irrevocably  directs the Swingline  Lender to act on its
behalf), request a borrowing of Revolving Loans (which shall be Base Rate Loans)
from the Lenders in an amount equal to the principal  balance of such  Swingline
Loan. The amount limitations contained in Section 3.5.(a) shall not apply to any
borrowing of Base Rate Loans made  pursuant to this  subsection.  The  Swingline
Lender  shall give notice to the Agent of any such  borrowing of Base Rate Loans
not later than 10:00 a.m. at least one Business  Day prior to the proposed  date
of such borrowing. Each Lender will make available to the Agent at the Principal
Office for the account of Swingline Lender, in immediately  available funds, the
proceeds  of the Base Rate Loan to be made by such  Lender.  The Agent shall pay
the proceeds of such Base Rate Loans to the Swingline Lender,  which shall apply
such proceeds to repay such Swingline  Loan. If the Lenders are prohibited  from
making  Loans  required  to  be  made  under  this  subsection  for  any  reason
whatsoever,  including without limitation, the occurrence of any of the Defaults
or Events of Default  described in Sections  11.1.(e) or  11.1.(f),  each Lender
shall  purchase  from the Swingline  Lender,  without  recourse or warranty,  an
undivided  interest and participation to the extent of such Lender's  Commitment
Percentage of such Swingline  Loan, by directly  purchasing a  participation  in
such Swingline Loan in such amount and paying the proceeds  thereof to the Agent
for the account of the Swingline Lender in Dollars and in immediately  available
funds.  A Lender's  obligation to purchase such a  participation  in a Swingline
Loan  shall be  absolute  and  unconditional  and shall not be  affected  by any
circumstance whatsoever,  including without limitation, (i) any claim of setoff,
counterclaim,  recoupment, defense or other right which such Lender or any other
Person may have or claim against the Agent,  the  Swingline  Lender or any other
Person whatsoever,  (ii) the occurrence or continuation of a Default or Event of
Default (including without limitation,  any of the Defaults or Events of Default
described  in  Sections   11.1.(e)  or  11.1.(f))  or  the  termination  of  the
Commitments  of any Lender,  (iii) the  existence  (or alleged  existence) of an
event of condition which has had or could have a Material  Adverse Effect,  (iv)
any breach of any Loan  Document by the Agent,  any Lender,  the Borrower or any
other Loan Party or (v) any other  circumstance,  happening or event whatsoever,
whether or not  similar to any of the  foregoing.  If such amount is not in fact
made available to the Swingline Lender by any Lender, the Swingline Lender shall
be entitled to recover  such amount on demand from such  Lender,  together  with
accrued  interest  thereon for each day from the date of demand thereof,  at the
Federal Funds Rate. If such Lender does not pay such amount  forthwith  upon the
Swingline Lender's demand therefor, and until such time as such Lender makes the
required  payment,  the  Swingline  Lender  shall be deemed to  continue to have
outstanding   Swingline  Loans  in  the  amount  of  such  unpaid  participation
obligation for all purposes of the Loan Documents  (other than those  provisions
requiring the other Lenders to purchase a participation therein).  Further, such
Lender shall be deemed to have  assigned any and all payments  made of principal
and interest on its Loans,  and any other  amounts due to it  hereunder,  to the
Swingline  Lender to fund Swingline Loans in the amount of the  participation in
Swingline  Loans that such Lender  failed to purchase  pursuant to this  Section
until  such  amount  has been  purchased  (as a  result  of such  assignment  or
otherwise).

Section 2.5.  Rates and Payment of Interest on Loans.

         (a) RATES. The Borrower promises to pay to the Agent for the account of
each Lender  interest on the unpaid  principal  amount of each Loan made by such
Lender for the period from and  including the date of the making of such Loan to
but  excluding  the date such Loan shall be paid in full,  at the  following per
annum rates:

                  (i) during such  periods as such Loan is a Base Rate Loan,  at
         the Base Rate (as in effect  from  time to time),  plus the  Applicable
         Margin for Base Rate Loans;

                  (ii)  during  such  periods as such Loan is a LIBOR  Loan,  at
         LIBOR  for  such  Loan  for the  Interest  Period  therefor,  plus  the
         Applicable Margin for LIBOR Loans;

                  (iii) if such Loan is a Absolute  Rate Loan,  at the  Absolute
         Rate for such  Loan for the  Interest  Period  therefor  quoted  by the
         Lender making such Loan, in accordance with Section 2.2.; and

                                      -25-

<PAGE>

                  (iv) if such Loan is a LIBOR  Margin  Loan,  at LIBOR for such
         Loan for the Interest Period therefor, plus (or minus) the LIBOR Margin
         to be added to (or  subtracted  from)  LIBOR,  as quoted by the  Lender
         making such Loan, in accordance with Section 2.2.

Notwithstanding  the foregoing,  during the  continuance of an Event of Default,
the Borrower  shall pay to the Agent for the account of each Lender  interest at
the  Post-Default  Rate on the outstanding  principal amount of any Loan made by
such Lender, on all Reimbursement Obligations and on any other amount payable by
the  Borrower  hereunder  or under the Notes  held by such  Lender to or for the
account  of such  Lender  (including  without  limitation,  accrued  but  unpaid
interest to the extent permitted under Applicable Law).

         (b)  PAYMENT  OF  INTEREST.  All  accrued  and unpaid  interest  on the
outstanding  principal  amount of each Loan shall be payable  (i) in the case of
Base Rate Loans and Bid Rate Loans,  monthly in arrears on the first day of each
month,  (ii) in the case of a Bid Rate  Loan,  on the last day of each  Interest
Period  therefor,  (iii)  in the case of a LIBOR  Loan,  on the last day of each
Interest  Period  therefor  and,  if such  Interest  Period is longer than three
months,  at  three-month  intervals  following  the first  day of such  Interest
Period,  and (iv) for all Loans, (A) on the Termination Date and (B) on any date
on which the principal  balance of such Loan is due and payable in full (whether
at  maturity,  due  to  acceleration  or  otherwise).  Interest  payable  at the
Post-Default   Rate  shall  be  payable  from  time  to  time  on  demand.   All
determinations  by the Agent of an interest rate  hereunder  shall be conclusive
and binding on the Lenders and the Borrower for all  purposes,  absent  manifest
error.

Section 2.6.  Number of Interest Periods.

         There may be no more than 6  different  Interest  Periods  collectively
with respect to LIBOR Loans and Bid Rate Loans outstanding at the same time.

Section 2.7.  Repayment of Loans.

         (a) REVOLVING LOANS. Subject to Section 2.15., the Borrower shall repay
the aggregate  outstanding  principal  balance of all Revolving Loans in full on
the Revolving Credit Termination Date.

         (b) BID RATE LOANS.  The  Borrower  shall repay the entire  outstanding
principal amount of each Bid Rate Loan on the last day of the Interest Period of
such Bid Rate Loan.

         (c) TERM  LOANS.  The  Borrower  shall  repay the  aggregate  principal
balance of the Term Loans in four equal consecutive quarterly installments. Each
such  installment  due on the  last day of  January,  April,  July  and  October
following the date of  conversion  of the Revolving  Loans into Term Loans until
such Term Loans are paid in full.  Notwithstanding the foregoing,  if not repaid
in full prior to then,  the  entire  outstanding  principal  balance of the Term
Loans shall be due and payable in full on the Termination Date.

Section 2.8.  Prepayments.

         (a)  OPTIONAL.  Subject to Section  5.4.,  the  Borrower may prepay any
Revolving Loan or Term Loan at any time without premium or penalty. The Borrower
shall  give the  Agent at least 2  Business  Days  prior  written  notice of the
prepayment of any Revolving Loan or Term Loan. Bid Rate Loans may not be prepaid
at the option of the Borrower.

         (b) MANDATORY.

                  (i)  COMMITMENT  OVERADVANCE.  If at any  time  the  aggregate
         principal amount of all outstanding Loans,  together with the aggregate
         amount of all  Letter  of Credit  Liabilities,  exceeds  the  aggregate
         amount of the Commitments,  the Borrower shall  immediately upon demand
         pay to the Agent for the  account  of the  Lenders,  the amount of such
         excess.

                                      -26-

<PAGE>


                  (ii)  UNENCUMBERED  POOL  OVERADVANCE.  If  at  any  time  the
         aggregate principal amount of all outstanding Loans,  together with the
         aggregate  amount  of all  Letter of Credit  Liabilities,  exceeds  the
         Maximum Availability,  the Borrower shall within 5 days of the Borrower
         obtaining  knowledge of the  occurrence of any such excess,  deliver to
         the  Agent  for  prompt  distribution  to each  Lender a  written  plan
         acceptable to the Lenders to eliminate  such excess.  If such excess is
         not eliminated  within 15 days of the Borrower  obtaining  knowledge of
         the occurrence thereof,  then the entire outstanding  principal balance
         of all Loans, together with all accrued interest thereon, and an amount
         equal to all Letter of Credit  Liabilities  for deposit into the Letter
         of Credit Collateral  Account,  shall be immediately due and payable in
         full.

                  (iii) BID RATE LOAN OVERADVANCE.  If at any time the aggregate
         principal amount of all outstanding Bid Rate Loans exceeds the Bid Rate
         Loan Limit,  then the Borrower shall  immediately  pay to the Agent for
         the accounts of the Lenders then holding outstanding Bid Rate Loans the
         amount of such excess.

All payments  under this  subsection  (b) shall be applied to pay all amounts of
excess  principal  outstanding  on  the  applicable  Loans  and  any  applicable
Reimbursement Obligations in accordance with Section 3.2., and the remainder, if
any,  shall be  deposited  into the  Letter of  Credit  Collateral  Account  for
application to any Reimbursement Obligations as and when due.

Section 2.9.  Late Charges.

         If the Borrower fails to pay any interest  payable under this Agreement
on or prior to the  expiration of 10 days after such interest  first becomes due
and payable,  the Borrower shall pay to the Agent for the benefit of the Lenders
a late charge equal to four percent (4.0%) of the amount of such unpaid interest
payment. The Borrower acknowledges and agrees that an accurate  determination of
the Lenders'  damages as a result of the  Borrower's  failure to pay interest as
and  when due  hereunder  is not  reasonably  practicable,  and the late  charge
provided for herein is a reasonable  estimate of the amount of  additional  cost
and the value of the loss of use of funds that will be  suffered  by the Lenders
if an interest payment is not paid when due.

Section 2.10.  Continuation.

         So long as no Default or Event of Default  exists,  the Borrower may on
any Business Day,  with respect to any LIBOR Loan,  elect to maintain such LIBOR
Loan or any portion  thereof as a LIBOR Loan by selecting a new Interest  Period
for such LIBOR Loan.  Each new Interest Period selected under this Section shall
commence on the last day of the  immediately  preceding  Interest  Period.  Each
selection of a new Interest  Period shall be made by the Borrower  giving to the
Agent a Notice of  Continuation  not later than 10:00 a.m. on the third Business
Day prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation   shall  be  by  telecopy,   electronic   mail  or  other  form  of
communication  in the  form of a  Notice  of  Continuation,  specifying  (a) the
proposed  date of such  Continuation,  (b) the LIBOR  Loan and  portion  thereof
subject to such  Continuation  and (c) the  duration  of the  selected  Interest
Period, all of which shall be specified in such manner as is necessary to comply
with all limitations on Loans outstanding hereunder. Each Notice of Continuation
shall be irrevocable  by and binding on the Borrower once given.  Promptly after
receipt of a Notice of  Continuation,  the Agent  shall  notify  each  Lender by
telecopy,  electronic mail or other similar form of transmission of the proposed
Continuation.  If the  Borrower  shall  fail to select in a timely  manner a new
Interest  Period for any LIBOR Loan in accordance  with this Section,  such Loan
will  automatically,  on the last day of the current  Interest Period  therefor,
Convert into a Base Rate Loan notwithstanding  failure of the Borrower to comply
with Section 2.11.

Section 2.11.  Conversion.

         So long as no Default or Event of Default  exists,  the Borrower may on
any Business  Day, upon the  Borrower's  giving of a Notice of Conversion to the
Agent, Convert all or a portion of a Revolving Loan of one Type into a Revolving
Loan of another Type. Any Conversion of a LIBOR Loan into a Base Rate Loan shall
be made on, and only on, the last day of an Interest  Period for such LIBOR Loan
and, upon  Conversion of a Base Rate Loan into a LIBOR Loan,  the Borrower shall
pay  accrued  interest  to the date of  Conversion  on the  principal  amount so
Converted.  Each such Notice of  Conversion  shall be given not later than 10:00
a.m. one Business  Day prior to the date of any  proposed  Conversion  into Base
Rate Loans and three Business Days prior to the date of any proposed  Conversion

                                      -27-

<PAGE>

into LIBOR Loans.  Promptly after receipt of a Notice of  Conversion,  the Agent
shall notify each Lender by telecopy,  electronic  mail or other similar form of
transmission of the proposed Conversion.  Subject to the restrictions  specified
above, each Notice of Conversion shall be by telecopy in the form of a Notice of
Conversion specifying (a) the requested date of such Conversion, (b) the Type of
Revolving  Loan to be  Converted,  (c) the  portion  of such  Type of Loan to be
Converted,  (d) the Type of Revolving Loan such Loan is to be Converted into and
(e) if such  Conversion  is into a LIBOR  Loan,  the  requested  duration of the
Interest Period of such Loan. Each Notice of Conversion  shall be irrevocable by
and binding on the Borrower once given.

Section 2.12.  Notes.

         The  Revolving  Loans and the Term Loan,  if any,  made by each  Lender
shall, in addition to this Agreement,  also be evidenced by a promissory note of
the Borrower  substantially in the form of Exhibit N (each a "Revolving  Note"),
payable to the order of such Lender in a principal amount equal to the amount of
its  Commitment as originally in effect and otherwise  duly  completed.  The Bid
Rate  Loans  made  by a  Lender  to the  Borrower  shall,  in  addition  to this
Agreement,  also be  evidenced by the  Borrower's  Bid Rate Note payable to such
Lender.

Section 2.13.  Voluntary Reductions of the Commitment.

         The Borrower  shall have the right to terminate or reduce the aggregate
unused amount of the Commitments (for which purpose use of the Commitments shall
be deemed to include the aggregate  principal amount of all outstanding Bid Rate
Loans  and  Swingline  Loans  and the  aggregate  amount  of  Letter  of  Credit
Liabilities)  at any time and from time to time without  penalty or premium upon
not less than 5  Business  Days prior  written  notice to the Agent of each such
termination or reduction,  which notice shall specify the effective date thereof
and the amount of any such  reduction  and shall be  irrevocable  once given and
effective  only  upon  receipt  by the  Agent;  provided,  however,  that if the
Borrower  seeks  to  reduce  the  aggregate  amount  of  the  Commitments  below
$75,000,000,  then,  unless the Agent and all Lenders have otherwise  previously
agreed in  writing,  the  Commitments  shall be reduced  to zero and,  except as
otherwise provided herein, the provisions of this Agreement shall terminate. The
Agent will promptly transmit such notice to each Lender.  The Commitments,  once
terminated or reduced may not be increased or  reinstated.  Any reduction in the
aggregate  amount of the Commitments  shall result in a proportionate  reduction
(rounded to the next lowest  integral  multiple of  $100,000) in each of the L/C
Commitment Amount, the Swingline Commitment and the Bid Rate Loan Limit.

Section 2.14.  Extension of Revolving Credit Termination Date.

         (a) GENERALLY.  At least 60 days but not more than 90 days prior to any
anniversary  date of the Agreement  Date, the Borrower may request the Agent and
the Lenders to extend the Revolving Credit  Termination Date by one year. If the
Agent  receives  such a request,  the Agent  shall  forward a copy of it to each
Lender  promptly upon receipt  thereof.  If all of the Lenders have notified the
Agent on or before the date 30 days  prior to the  applicable  anniversary  date
that they accept such request,  the Revolving  Credit  Termination Date shall be
extended by one year. Otherwise, the Revolving Credit Termination Date shall not
be extended  (except as  otherwise  permitted  under the  immediately  following
subsection  (b)). The Agent shall promptly notify the Borrower whether a request
for an  extension  has been  accepted  or  rejected  as well as which  Lender or
Lenders  rejected such request  (each such Lender,  a "Rejecting  Lender").  The
Borrower understands and acknowledges that (i) this Section has been included in
this Agreement for the Borrower's  convenience in requesting an extension of the
Revolving  Credit  Termination  Date;  (ii) neither the Agent nor any Lender has
promised (either expressly or impliedly),  nor does the Agent or any Lender have
any  obligation  or  commitment  whatsoever,  to  extend  the  Revolving  Credit
Termination  Date and (iii) the Agent and the  Lenders  may  condition  any such
extension on such terms and  conditions  as they may deem  appropriate  in their
sole and absolute discretion.

         (b) REJECTING LENDERS. Notwithstanding the preceding subsection (a), if
the  Borrower  receives  notification  from  the  Agent  that a  request  for an
extension of the Revolving Credit  Termination Date has been rejected (a "Notice
of  Rejection"),  and  provided  that  Lenders  holding  at  least  70%  of  the
Commitments have approved of such request,  the Borrower may elect, with respect
to each such  Rejecting  Lender,  by giving  written notice to the Agent of such
election  within 15 days after receipt by the Borrower of a Notice of Rejection,
to either (i)  require  such  Rejecting  Lender to assign its  Commitment  to an
Eligible  Assignee as contemplated in the  immediately  following  clause (x) or
(ii) pay in full the amount of Loans,  interest and fees owing to such Rejecting

                                      -28-

<PAGE>

Lender and terminate such Rejecting  Lender's  Commitment as contemplated in the
immediately  following clause (y). If the Borrower has made a timely election as
permitted by the preceding sentence,  then the Borrower shall take either of the
following actions as specified in such election:  (x) demand that such Rejecting
Lender, and upon such demand such Rejecting Lender shall be obligated to, assign
its  Commitment to an Eligible  Assignee  subject to and in accordance  with the
provisions  of Section  13.5.(d)  for a purchase  price  equal to the  aggregate
principal  balance of Loans then  outstanding and owing to such Rejecting Lender
plus any accrued but unpaid  interest  thereon and accrued but unpaid fees owing
to such Rejecting Lender,  any such assignment to be effective as of the current
Revolving  Credit  Termination  Date  (without  taking  account of the requested
extension)  or (y)  effective as of such current  Revolving  Credit  Termination
Date, pay to such Rejecting Lender the aggregate principal balance of Loans then
outstanding  and owing to such  Rejecting  Lender  plus any  accrued  but unpaid
interest  thereon and accrued  but unpaid fees owing to such  Rejecting  Lender,
together with all amounts,  if any,  payable under Section 5.4.,  whereupon such
Rejecting Lender's Commitment shall terminate. Neither the Agent, such Rejecting
Lender,  nor any  other  Lender  shall be  obligated  in any way  whatsoever  to
initiate  any such  replacement  or to assist in  finding  an  Assignee.  If the
Borrower  has  elected to cause all  Rejecting  Lenders  either to assign  their
Revolving  Commitments to Eligible  Assignees as  contemplated  by the preceding
clause (x) or to be paid the amounts specified in the preceding clause (y), then
the Borrower's request for an extension of the Revolving Credit Termination Date
which  was  initially  rejected  shall  be  deemed  to  have  been  granted  and
accordingly  the  Revolving  Credit  Termination  Date shall be  extended by one
single  year,  otherwise  the  Revolving  Credit  Termination  Date shall not be
extended.  Any reduction in the aggregate  amount of the  Commitments  resulting
from the Borrower  exercising its rights under this subsection shall result in a
proportionate  reduction  (rounded  to the  next  lowest  integral  multiple  of
$100,000) in each of the L/C Commitment Amount, the Swingline Commitment and the
Bid Rate Loan Limit.

         (c) NO  EXTENSION  IN  CERTAIN  CASES.  Notwithstanding  the  preceding
subsections, if Lenders holding at least 70% of the Commitments do not approve a
request  for an  extension  of the  Revolving  Credit  Termination  Date or if a
Default or Event of Default exists on the current  Revolving Credit  Termination
Date or would exist after giving effect to any of the transactions  contemplated
by this  Section,  then the  Revolving  Credit  Termination  Date  shall  not be
extended.

Section 2.15.  Term Loan Conversion.

         Subject to the terms and conditions of this Agreement,  if a request by
the Borrower for an extension of the Revolving Credit  Termination Date shall be
denied,  the  Borrower  may  then  elect to  convert  each  Lender's  Commitment
Percentage of the aggregate  principal amount of Revolving Loans  outstanding on
the  Revolving  Credit  Termination  Date into a term loan owing to such  Lender
(each a "Term  Loan")  provided  (a) the  Borrower has given the Agent notice at
least  15 days  prior  to the  applicable  Anniversary  Date  of the  Borrower's
intention to so convert the Revolving  Loans and (b) the conditions set forth in
Section  6.3.  have been  satisfied  as of Revolving  Credit  Termination  Date.
Subject  to the  terms  and  conditions  hereof,  any such  conversion  shall be
effective as of the Revolving  Credit  Termination Date and upon such conversion
the Borrower shall not longer have the right to borrow any Loans hereunder.

Section 2.16.  Expiration or Maturity Date of Letters of Credit Past Termination
               of Facility.

         If on the date the Commitments are terminated (whether voluntarily,  by
reason of the  occurrence  of an Event of Default or  otherwise),  there are any
Letters of Credit outstanding  hereunder,  the Borrower shall, on such date, pay
to the Agent an amount of money equal to the Stated Amount of such  Letter(s) of
Credit for deposit into the Letter of Credit  Collateral  Account.  If a drawing
pursuant to any such Letter of Credit occurs on or prior to the expiration  date
of such Letter of Credit,  the Borrower  authorizes  the Agent to use the monies
deposited  in the Letter of Credit  Collateral  Account  to make  payment to the
beneficiary  with  respect to such  drawing  or the payee  with  respect to such
presentment.  If no drawing  occurs on or prior to the  expiration  date of such
Letter of Credit,  the Agent shall pay to the Borrower (or to whomever  else may
be  legally  entitled  thereto)  the  monies  deposited  in the Letter of Credit
Collateral  Account  with  respect  to such  outstanding  Letter of Credit on or
before the date 30 days after the expiration date of such Letter of Credit.

                                      -29

<PAGE>

Section 2.17.  Increase in Commitments.

         At any time during the twelve-month  period  immediately  following the
Agreement  Date,  the Borrower  shall have the right,  exercisable  one time, to
request an increase in the  aggregate  amount of the  Commitments  by  providing
written  notice to the Agent,  which  notice  shall be  irrevocable  once given;
provided,  however,  that after giving  effect to such  increase  the  aggregate
amount  of the  Commitments  shall not  exceed  $300,000,000.  The  Agent  shall
promptly notify each Lender of any such request. No Lender shall be obligated in
any way whatsoever to increase its  Commitment.  If a new Lender becomes a party
to this Agreement,  or if any existing Lender agrees to increase its Commitment,
such Lender shall on the date it becomes a Lender  hereunder  (or in the case of
an existing  Lender,  increases  its  Commitment)  (and as a condition  thereto)
purchase  from the other  Lenders its  Commitment  Percentage  (determined  with
respect to the Lenders'  relative  Commitments  and after  giving  effect to the
increase of Commitments) of any outstanding Revolving Loans, by making available
to the Agent for the account of such other Lenders, in same day funds, an amount
equal to the sum of (A) the portion of the outstanding  principal amount of such
Revolving  Loans to be purchased  by such Lender plus (B)  interest  accrued and
unpaid  to and as of such  date on such  portion  of the  outstanding  principal
amount of such Loans. The Borrower shall pay to the Lenders amounts payable,  if
any, to such Lenders  under  Section 5.4. as a result of the  prepayment  of any
such Loans.  An increase of the aggregate  amount of the  Commitments may not be
effected under this Section if either (x) a Default or Event of Default shall be
in existence on the effective date of such increase or (y) any representation or
warranty made or deemed made by the Borrower or any other Loan Party in any Loan
Document  to which  such Loan  Party is a party is not (or would not be) true or
correct on the effective  date of such  increase  except to the extent that such
representations  and warranties  expressly  relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual  circumstances
specifically and expressly permitted  hereunder.  In connection with an increase
in the  aggregate  amount of the  Commitments  pursuant to this  Section (a) any
Lender  becoming a party hereto shall execute such  documents and  agreements as
the Agent may  reasonably  request and (b) the Borrower  shall make  appropriate
arrangements  so that each new Lender,  and any existing  Lender  increasing its
Commitment, receives a new or replacement Note, as appropriate, in the amount of
such Lender's Commitment at the time of the effectiveness of the increase in the
aggregate amount of Commitments.

Section 2.18.  Amount Limitations.

         Notwithstanding  any other term of this  Agreement,  no Lender shall be
required  to make any Loan,  and the Agent  shall not be  required  to issue any
Letter of Credit if,  immediately  after the making of such Loan or  issuance of
such Letter of Credit:  (a) the aggregate  principal  amount of all  outstanding
Loans,  together with the aggregate amount of all Letter of Credit  Liabilities,
would exceed  either (i) the  aggregate  amount of the  Commitments  or (ii) the
Maximum  Availability or (b) the aggregate  principal  amount of all outstanding
Bid Rate Loans would exceed the Bid Rate Loan Limit.

            ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1.  Payments.

         Except  to the  extent  otherwise  provided  herein,  all  payments  of
principal,  interest  and other  amounts to be made by the  Borrower  under this
Agreement or any other Loan Document  shall be made in Dollars,  in  immediately
available funds, without deduction,  set-off or counterclaim,  to the Agent, not
later than 11:00 a.m. on the date on which such  payment  shall become due (each
such  payment  made  after  such time on such due date to be deemed to have been
made on the next  succeeding  Business Day). The Borrower  shall, at the time of
making each payment under this  Agreement or any Note,  specify to the Agent the
amounts  payable  by the  Borrower  hereunder  to which  such  payment  is to be
applied.  Each  payment  received by the Agent for the account of a Lender under
this Agreement or any Note of such Lender shall be paid to such Lender,  by wire
transfer  of  immediately   available   funds  in  accordance  with  the  wiring
instructions  provided  by such  Lender to the Agent from time to time,  for the
account of such Lender at the applicable  Lending Office of such Lender.  If the
Agent fails to pay such amount to a Lender  within one  Business  Day of receipt
thereof by the Agent,  the Agent shall pay interest on such amount until paid at
a rate per annum equal to the Federal Funds Rate from time to time in effect. If
the due date of any  payment  under this  Agreement  or any other Loan  Document

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would  otherwise  fall on a day which is not a  Business  Day such date shall be
extended to the next  succeeding  Business Day and interest shall be payable for
the period of such extension.

Section 3.2.  Pro Rata Treatment.

         Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section  2.1.(a) shall be made from the Lenders,  each payment
of the Fees under  Section  3.6.(a) and the first  sentence  of Section  3.6.(b)
shall be made for the account of the Lenders,  and each termination or reduction
of the amount of the  Commitments  under Section 2.13. or otherwise  pursuant to
this Agreement  shall be applied to the  respective  Commitments of the Lenders,
pro rata  according  to the amounts of their  respective  Commitments;  (b) each
payment or prepayment of principal of Revolving  Loans by the Borrower  shall be
made for the account of the Lenders pro rata in accordance  with the  respective
unpaid principal  amounts of the Revolving Loans held by them,  provided that if
immediately  prior to  giving  effect  to any such  payment  in  respect  of any
Revolving  Loans the outstanding  principal  amount of the Revolving Loans shall
not be  held by the  Lenders  pro  rata  in  accordance  with  their  respective
Commitments in effect at the time such Loans were made,  then such payment shall
be applied to the Revolving  Loans in such manner as shall result,  as nearly as
is practicable, in the outstanding principal amount of the Revolving Loans being
held by the Lenders pro rata in accordance  with their  respective  Commitments;
(c) each payment of interest on  Revolving  Loans and Term Loans by the Borrower
shall be made for the  account of the Lenders  pro rata in  accordance  with the
amounts  of  interest  on such  Loans  then due and  payable  to the  respective
Lenders; (d) the making, Conversion and Continuation of Revolving Loans and Term
Loans of a particular Type (other than Conversions provided for by Section 5.5.)
shall be made pro rata  among the  Lenders  according  to the  amounts  of their
respective  Commitments  (in the case of making  of  Loans) or their  respective
Revolving Loans or Term Loans (in the case of Conversions and  Continuations  of
Revolving Loans or Term Loans, as the case may be) and the then current Interest
Period for each Lender's portion of each Loan of such Type shall be coterminous;
(e) the  Lenders'  participation  in, and  payment  obligations  in respect  of,
Letters of Credit under  Section 2.3. and  Swingline  Loans under  Section 2.4.,
shall be pro rata in  accordance  with their  respective  Commitments;  (f) each
prepayment  of principal  of Bid Rate Loans by the Borrower  pursuant to Section
2.8.(b)(iii)  shall be made for account of the Lenders  then owed Bid Rate Loans
pro rata in accordance with the respective  unpaid principal  amounts of the Bid
Rate Loans then owing to each such Lender; and (g) each payment or prepayment of
principal  of Term Loans by the  Borrower  shall be made for the  account of the
Lenders pro rata in accordance with the respective  unpaid  principal  amount of
the Term Loans then owing to each of them.. All payments of principal, interest,
fees and other  amounts  in  respect  of the  Swingline  Loans  shall be for the
account of the Swingline Lender only (except to the extent any Lender shall have
acquired a participating interest in any such Swingline Loan pursuant to Section
2.4.(e)).

Section 3.3.  Sharing of Payments, Etc.

         If a Lender shall obtain  payment of any  principal of, or interest on,
any Loan  made by it to the  Borrower  under  this  Agreement,  or shall  obtain
payment on any other  Obligation  owing by the Borrower or a Loan Party  through
the exercise of any right of set-off,  banker's lien or  counterclaim or similar
right or  otherwise  or through  voluntary  prepayments  directly to a Lender or
other  payments  made by the Borrower or any other Loan Party to a Lender not in
accordance  with  the  terms  of this  Agreement  and  such  payment  should  be
distributed  to the Lenders pro rata in accordance  with Section 3.2. or Section
11.5., as applicable, such Lender shall promptly purchase from the other Lenders
participations  in (or, if and to the extent  specified by such  Lender,  direct
interests in) the Loans made by the other Lenders or other  Obligations  owed to
such other  Lenders in such  amounts,  pay such amounts to the other Lenders and
make such other adjustments from time to time as shall be equitable, so that all
the  Lenders  shall  share the benefit of such  payment  (net of any  reasonable
expenses  which may be incurred by such Lender in obtaining or  preserving  such
benefit) pro rata in accordance  with Section 3.2. or Section 11.5. To such end,
all the Lenders shall make  appropriate  adjustments  among  themselves  (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise  be  restored.  The  Borrower  agrees that any Lender so  purchasing a
participation  (or direct  interest) in the Loans or other  Obligations  owed to
such  other  Lenders  may  exercise  all  rights  of  set-off,   banker's  lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct  holder of Loans in the amount of such  participation.
Nothing  contained herein shall require any Lender to exercise any such right or
shall  affect the right of any Lender to  exercise,  and retain the  benefits of
exercising,  any such right with respect to any other indebtedness or obligation
of the Borrower.

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Section 3.4.  Several Obligations.

         No Lender shall be  responsible  for the failure of any other Lender to
make a Loan or to perform any other  obligation  to be made or performed by such
other  Lender  hereunder,  and the  failure  of any  Lender to make a Loan or to
perform any other  obligation to be made or performed by it hereunder  shall not
relieve the  obligation  of any other  Lender to make any Loan or to perform any
other obligation to be made or performed by such other Lender.

Section 3.5.  Minimum Amounts.

         (a)  BORROWINGS.  Each  borrowing  of Base  Rate  Loans  shall be in an
aggregate  minimum amount of $5,000,000.  Each borrowing of and Continuation of,
and  each  Conversion  of Base  Rate  Loans  into,  LIBOR  Loans  shall be in an
aggregate minimum amount of $5,000,000.

         (b) PREPAYMENTS.  Each voluntary prepayment of Revolving Loans shall be
in an aggregate minimum amount of $100,000,  or if less, the entire  outstanding
balance of Revolving Loans.

         (c) REDUCTIONS OF COMMITMENTS.  Each reduction of the Commitments under
Section 2.13. shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $100,000 in excess thereof.

Section 3.6.  Fees.

         (a) FACILITY  FEES.  During the period from the  Effective  Date to but
excluding the Revolving Credit  Termination  Date, the Borrower agrees to pay to
the Agent for the  account  of the  Lenders  a  facility  fee equal to the daily
aggregate  amount of the Commitments  (whether or not utilized) times a rate per
annum equal to the Applicable  Facility Fee. Such fee shall be payable quarterly
in arrears on the last day of each March,  June,  September and December  during
the term of this Agreement and on the Revolving Credit Termination Date.

         (b) LETTER OF CREDIT FEES. The Borrower  agrees to pay to the Agent for
the  account of each  Lender a letter of credit fee at a rate per annum equal to
the  Applicable  Margin for LIBOR Loans times the daily average Stated Amount of
each Letter of Credit for the period from and  including the date of issuance of
such  Letter  of Credit  (x) to and  including  the date  such  Letter of Credit
expires or is  terminated or (y) to but excluding the date such Letter of Credit
is drawn in full;  provided,  however, in no event shall the aggregate amount of
such fee be less than  $1,000.  The Agent  shall be entitled to deduct from such
Letter of Credit fees, and retain for its own account, a fronting fee in respect
of each Letter of Credit at the rate equal to one-eighth of one percent (0.125%)
per annum on the daily average Stated Amount of such Letter of Credit.  The fees
provided for in the immediately  preceding two sentences shall be  nonrefundable
and payable in arrears (i) quarterly on the last day of March,  June,  September
and December,  (ii) on the Revolving Credit  Termination Date, (iii) on the date
the  Commitments are terminated or reduced to zero and (iv) thereafter from time
to time on demand of the Agent.  The  Borrower  shall pay  directly to the Agent
from time to time on demand all commissions,  charges, costs and expenses in the
amounts customarily charged by the Agent from time to time in like circumstances
with respect to the issuance of each Letter of Credit, drawings,  amendments and
other transactions relating thereto.

         (c) BID RATE LOAN FEES.  The  Borrower  agrees to pay to the Agent such
fees for services rendered by the Agent in connection with the Bid Rate Loans as
shall be separately agreed upon between the Borrower and the Agent.

         (d) EXTENSION FEE. If, pursuant to Section 2.14.,  the Revolving Credit
Termination  Date is extended,  the Borrower  agrees to pay to the Agent for the
account of each Lender (other than a Rejecting Lender) such fees as the Borrower
and the Lenders (other than a Rejecting Lender) may agree to in writing. Payment
of such fees shall be a condition  precedent  to the  effectiveness  of any such
extension.

         (e) TERM LOAN  CONVERSION  FEE.  If,  pursuant  to Section  2.15.,  the
outstanding  balance of any Revolving  Loans is converted  into Term Loans,  the
Borrower  agrees to pay to the Agent for the account of each Lender a conversion
fee equal to  two-tenths  of one percent  (0.20%) of the  outstanding  principal
balance of such Lender's  Revolving  Loans being  converted to a Term Loan, such
fee to be payable on the date of such conversion.

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         (f) OTHER FEES. The Borrower agrees to pay such other fees of the Agent
and the  Lenders as may be agreed to in writing  from time to time  between  the
Borrower and the Agent or any Lenders, as the case may be.

Section 3.7.  Computations.

         Unless  otherwise  expressly set forth herein,  any accrued interest on
any Loan, any Fees or other  Obligations  due hereunder shall be computed on the
basis of a year of 360 days and the actual number of days elapsed.

Section 3.8.  Usury.

         In no event shall the amount of interest due or payable on the Loans or
other Obligations  exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective  Lender in writing that the Borrower  elects to have
such  excess sum  returned  to it  forthwith.  It is the  express  intent of the
parties  hereto that the Borrower not pay and the Lenders not receive,  directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower  under  Applicable  Law. The parties hereto hereby
agree and stipulate  that the only charge  imposed upon the Borrower for the use
of money  in  connection  with  this  Agreement  is and  shall  be the  interest
specifically described in subsections (i) through (iv) of Section 2.5.(a) and in
Section 2.4.(c). Notwithstanding the foregoing, the parties hereto further agree
and stipulate that all agency fees,  syndication fees,  facility fees, letter of
credit fees,  underwriting  fees,  default  charges,  late  charges,  funding or
"breakage"  charges,  increased cost charges,  attorneys' fees and reimbursement
for costs and expenses  paid by the Agent or any Lender to third  parties or for
damages incurred by the Agent or any Lender,  are charges made to compensate the
Agent or any such Lender for underwriting or  administrative  services and costs
or losses performed or incurred,  and to be performed or incurred,  by the Agent
and  the  Lenders  in  connection   with  this  Agreement  and  shall  under  no
circumstances  be deemed to be charges for the use of money.  All charges  other
than charges for the use of money shall be fully earned and  nonrefundable  when
due.

Section 3.9.  Statements of Account.

         The Agent will  account to the  Borrower  monthly  with a statement  of
Loans,  Letters of Credit,  accrued interest and Fees, charges and payments made
pursuant  to this  Agreement  and the other  Loan  Documents,  and such  account
rendered  by the  Agent  shall be deemed  conclusive  upon the  Borrower  absent
manifest error.  The Agent will account to the Borrower on changes in Letters of
Credit in accordance  with  2.3.(k).  The failure of the Agent to deliver such a
statement of accounts  shall not relieve or discharge  the Borrower  from any of
its obligations hereunder.

Section 3.10.  Defaulting Lenders.

         If for any  reason  any Lender (a  "Defaulting  Lender")  shall fail or
refuse to perform any of its obligations  under this Agreement or any other Loan
Document to which it is a party within the time period specified for performance
of such  obligation  or, if no time  period is  specified,  if such  failure  or
refusal continues for a period of two Business Days after notice from the Agent,
then,  in addition to the rights and remedies that may be available to the Agent
or the Borrower under this Agreement or Applicable Law, such Defaulting Lender's
right to participate in the  administration of the Loans, this Agreement and the
other Loan Documents, including without limitation, any right to vote in respect
of, to  consent to or to direct  any  action or  inaction  of the Agent or to be
taken  into  account  in the  calculation  of the  Requisite  Lenders,  shall be
suspended  during the  pendency  of such  failure or  refusal.  If a Lender is a
Defaulting  Lender  because it has failed to make timely payment to the Agent of
any amount required to be paid to the Agent hereunder  (without giving effect to
any notice or cure periods),  in addition to other rights and remedies which the
Agent or the Borrower may have under the  immediately  preceding  provisions  or
otherwise,  the  Agent  shall be  entitled  (i) to  collect  interest  from such
Defaulting  Lender on such  delinquent  payment  for the period from the date on
which the  payment  was due until the date on which the  payment  is made at the
Federal Funds Rate,  (ii) to withhold or setoff and to apply in  satisfaction of
the defaulted payment and any related interest, any amounts otherwise payable to
such Defaulting Lender under this Agreement or any other Loan Document and (iii)
to  bring  an  action  or suit  against  such  Defaulting  Lender  in a court of
competent jurisdiction to recover the defaulted amount and any related interest.
Any amounts  received  by the Agent in respect of a  Defaulting  Lender's  Loans

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shall not be paid to such Defaulting  Lender and shall be held uninvested by the
Agent and paid to such Defaulting Lender upon the Defaulting  Lender's curing of
its default.

Section 3.11.  Taxes.

         (a) TAXES GENERALLY.  All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without  deduction for any present or future  excise,  stamp or other taxes,
fees,  duties,  levies,  imposts,  charges,  deductions,  withholdings  or other
charges of any nature whatsoever imposed by any taxing authority,  but excluding
(i) franchise taxes,  (ii) any taxes (other than  withholding  taxes) that would
not be  imposed  but for a  connection  between  the  Agent or a Lender  and the
jurisdiction  imposing  such taxes  (other than a connection  arising  solely by
virtue of the  activities of the Agent or such Lender  pursuant to or in respect
of this  Agreement or any other Loan  Document),  (iii) any taxes  imposed on or
measured by any Lender's assets, net income, receipts or branch profits and (iv)
any taxes arising after the Agreement Date solely as a result of or attributable
to a Lender  changing its  designated  Lending Office after the date such Lender
becomes a party  hereto  (such  non-excluded  items  being  collectively  called
"Taxes").  If any  withholding  or deduction  from any payment to be made by the
Borrower  hereunder  is  required  in  respect  of  any  Taxes  pursuant  to any
Applicable Law, then the Borrower will:

                  (i) pay directly to the relevant  Governmental  Authority  the
         full amount required to be so withheld or deducted;

                  (ii)  promptly  forward  to the Agent an  official  receipt or
         other  documentation  satisfactory to the Agent evidencing such payment
         to such Governmental Authority; and

                  (iii) pay to the Agent for its  account or the  account of the
         applicable  Lender,  as the  case may be,  such  additional  amount  or
         amounts as is necessary to ensure that the net amount actually received
         by the Agent or such  Lender  will equal the full amount that the Agent
         or such Lender would have received had no such withholding or deduction
         been required.

         (b) TAX  INDEMNIFICATION.  If the Borrower  fails to pay any Taxes when
due to the  appropriate  Governmental  Authority or fails to remit to the Agent,
for its account or the account of the respective Lender, as the case may be, the
required  receipts or other required  documentary  evidence,  the Borrower shall
indemnify  the Agent and the  Lenders  for any  incremental  Taxes,  interest or
penalties  that may become payable by the Agent or any Lender as a result of any
such failure.  For purposes of this  Section,  a  distribution  hereunder by the
Agent or any  Lender  to or for the  account  of any  Lender  shall be  deemed a
payment by the Borrower.

         (c) TAX  FORMS.  Prior  to the  date  that any  Lender  or  Participant
organized under the laws of a jurisdiction  outside the United States of America
becomes a party hereto,  such Person shall deliver to the Borrower and the Agent
such  certificates,  documents  or other  evidence,  as required by the Internal
Revenue Code or Treasury Regulations issued pursuant thereto (including Internal
Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor
forms), properly completed, currently effective and duly executed by such Lender
or  participant  establishing  that payments to it hereunder and under the Notes
are (i) not subject to United States Federal backup withholding tax and (ii) not
subject to United States  Federal  withholding  tax under the Code.  Each Lender
shall  (x)  deliver   further   copies  of  such  forms  or  other   appropriate
certifications  on or  before  the date  that any such  forms  expire  or become
obsolete and after the  occurrence  of any event  requiring a change in the most
recent form delivered to the Borrower and (y) obtain such extensions of the time
for filing, and renew such forms and certifications thereof as may be reasonably
requested  by the Borrower or the Agent.  The Borrower  shall not be required to
pay any amount  pursuant to last sentence of subsection  (a) above to any Lender
or Participant that is organized under the laws of a jurisdiction outside of the
United  States of America or the Agent,  if it is organized  under the laws of a
jurisdiction   outside  of  the  United  States  of  America,  if  such  Lender,
Participant or the Agent, as applicable,  fails to comply with the  requirements
of this subsection.

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                    ARTICLE IV. UNENCUMBERED POOL PROPERTIES

Section 4.1.  Inclusion of Unencumbered Pool Properties.

         (a) EXISTING  UNENCUMBERED POOL PROPERTIES.  Subject to compliance with
the terms and  conditions  of  Section  6.1.(a),  as of the  Effective  Date the
parties hereto acknowledge and agree that the Properties listed on Schedule 4.1.
are Unencumbered Pool Properties.

         (b) ADDITIONAL UNENCUMBERED POOL PROPERTIES.  After the Effective Date,
an Eligible  Property  shall be  included as  Unencumbered  Pool  Property  upon
delivery  to the  Agent of (i) an  Unencumbered  Pool  Certificate  pursuant  to
Section 9.4.(a) setting forth the information  required to be contained  therein
and assuming that such  Eligible  Property is included as an  Unencumbered  Pool
Property,  (ii) if not  previously  delivered  to the Agent,  a  certificate  of
qualification to transact business or other comparable  certificate  issued with
respect to the Loan Party that owns such Property by the Secretary of State (and
any state  department  of taxation,  as  applicable)  of the state in which such
Property is located and (iii) such other  information as the Agent or any Lender
(through the Agent) may  reasonably  request in connection  with the  evaluation
such Eligible  Property.  Subject to the terms and conditions of this Agreement,
upon the Agent's receipt of such certificates and such other  information,  such
Eligible  Property  shall be  included as an  Unencumbered  Pool  Property.  Any
Property that does not satisfy the requirements of an Eligible Property shall be
included only upon the written approval of the Majority  Lenders.  If a Property
that is to become an Unencumbered  Pool Property is owned (or is being acquired)
by a Subsidiary of the Borrower  that is not yet a party to the  Guaranty,  such
Property shall not become an Unencumbered  Pool Property unless and until (x) an
Accession Agreement executed by such Subsidiary, and all other items required to
be delivered  under Section 8.14.,  have all been delivered to the Agent and (y)
the Agent  shall have  received  each of the  following,  in form and  substance
satisfactory to the Agent, if not previously delivered to the Agent:

                  (A) an opinion of counsel to such Subsidiary, addressed to the
         Agent and the Lenders and addressing the same legal matters  address in
         the opinions delivered pursuant to Section 6.1.(a)(iv);

                  (B) the certificate or articles of incorporation,  articles of
         organization,  certificate of limited partnership, declaration of trust
         or  other  comparable   organizational  instrument  (if  any)  of  such
         Subsidiary  certified as of a recent date by the  Secretary of State of
         the State of formation of such Subsidiary;

                  (C) a certificate of good standing (or  certificate of similar
         meaning) with respect to such Subsidiary  issued as of a recent date by
         the  Secretary of State of the State of  formation of such  Subsidiary;
         and

                  (D) copies  certified by the Secretary or Assistant  Secretary
         of such Subsidiary (or other individual  performing  similar functions)
         of (1) the by-laws of such Subsidiary, if a corporation,  the operating
         agreement,  if a limited liability company, the partnership  agreement,
         if a limited or general  partnership,  or other comparable  document in
         the case of any  other  form of  legal  entity  and (2) all  corporate,
         partnership,  member or other necessary action taken by such Subsidiary
         to  authorize  the  execution,  delivery  and  performance  of the Loan
         Documents to which it is a party.

Section 4.2.  Termination of Designation as Unencumbered Pool Property.

         Any Property  previously  included as an Unencumbered Pool Property but
which is not included in an Unencumbered Pool Certificate subsequently submitted
pursuant to this Agreement shall no longer be included as an  Unencumbered  Pool
Property  (effective as of the date of receipt by the Agent of such Unencumbered
Pool  Certificate)  so long as no Default  or Event of  Default  exists or would
exist  immediately  after such Property is no longer included as an Unencumbered
Pool Property.

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                        ARTICLE V. YIELD PROTECTION, ETC.

Section 5.1.  Additional Costs; Capital Adequacy.

         (a) ADDITIONAL  COSTS. The Borrower shall promptly pay to the Agent for
the  account  of a Lender  from time to time such  amounts  as such  Lender  may
reasonably  determine to be necessary  to  compensate  such Lender for any costs
incurred by such Lender that it  determines  are  attributable  to its making or
maintaining  of any  LIBOR  Loans  or its  obligation  to make any  LIBOR  Loans
hereunder,  any  reduction  in any amount  receivable  by such Lender under this
Agreement or any of the other Loan  Documents in respect of any of such Loans or
such  obligation or the  maintenance by such Lender of capital in respect of its
Loans or its  Commitments  (such  increases in costs and  reductions  in amounts
receivable  being  herein  called  "Additional   Costs"),   resulting  from  any
Regulatory Change that: (i) changes the basis of taxation of any amounts payable
to such  Lender  under  this  Agreement  or any of the other Loan  Documents  in
respect of any of such Loans or its Commitments  (other than taxes imposed on or
measured by the  overall net income of such Lender or of its Lending  Office for
any of such Loans by the  jurisdiction  in which such  Lender has its  principal
office or such Lending Office); or (ii) imposes or modifies any reserve, special
deposit or similar requirements  (including without limitation,  Regulation D of
the Board of Governors of the Federal  Reserve  System or other similar  reserve
requirement  applicable  to any other  category  of  liabilities  or category of
extensions  of credit or other assets by reference to which the interest rate on
LIBOR Loans is determined)  relating to any extensions of credit or other assets
of, or any deposits with or other liabilities of, such Lender, or any commitment
of such Lender (including,  without  limitation,  the Commitments of such Lender
hereunder); or (iii) has or would have the effect of reducing the rate of return
on capital of such  Lender to a level  below that which such  Lender  could have
achieved but for such Regulatory Change (taking into consideration such Lender's
policies with respect to capital adequacy).

         (b) LENDER'S SUSPENSION OF LIBOR LOANS.  Without limiting the effect of
the provisions of the immediately  preceding subsection (a), if by reason of any
Regulatory  Change,  any Lender either (i) incurs  Additional  Costs based on or
measured by the excess  above a  specified  level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the  interest  rate on LIBOR  Loans is  determined  as provided in this
Agreement or a category of  extensions  of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes  subject to restrictions on the amount
of such a category  of  liabilities  or assets that it may hold,  then,  if such
Lender  so elects by notice  to the  Borrower  (with a copy to the  Agent),  the
obligation  of such Lender to make or Continue,  or to Convert any other Type of
Loans into,  LIBOR Loans  hereunder  shall be  suspended  until such  Regulatory
Change  ceases to be in effect (in which  case the  provisions  of Section  5.5.
shall apply).

         (c) ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT.  Without limiting
the obligations of the Borrower under the preceding  subsections of this Section
(but  without  duplication),  if as a result  of any  Regulatory  Change  or any
risk-based capital guideline or other requirement heretofore or hereafter issued
by any  Governmental  Authority  there  shall be  imposed,  modified  or  deemed
applicable  any tax,  reserve,  special  deposit,  capital  adequacy  or similar
requirement  against or with  respect to or measured by  reference to Letters of
Credit and the result  shall be to increase the cost to the Agent of issuing (or
any Lender purchasing participations in) or maintaining its obligation hereunder
to issue (or  purchase  participations  in) any  Letter of Credit or reduce  any
amount  receivable by the Agent or any Lender hereunder in respect of any Letter
of Credit, then, upon demand by the Agent or such Lender, the Borrower shall pay
immediately  to the Agent for its  account  or the  account of such  Lender,  as
applicable,  from  time to time as  specified  by the  Agent or a  Lender,  such
additional amounts as shall be sufficient to compensate the Agent or such Lender
for such increased costs or reductions in amount.

         (d) NOTIFICATION AND  DETERMINATION  OF ADDITIONAL  COSTS.  Each of the
Agent and each Lender agrees to notify the Borrower of any event occurring after
the Agreement Date entitling the Agent or such Lender to compensation  under any
of the  preceding  subsections  of this  Section  as  promptly  as  practicable;
provided,  however,  the  failure of the Agent or any Lender to give such notice
shall not release the Borrower from any of its obligations hereunder.  The Agent
or such Lender agrees to furnish to the Borrower a certificate setting forth the
basis and amount of each  request by the Agent or such  Lender for  compensation
under this Section.  Determinations  by the Agent or any Lender of the effect of
any Regulatory Change shall be conclusive, provided that such determinations are
made on a reasonable basis and in good faith.

                                      -36-

<PAGE>

Section 5.2.  Suspension of LIBOR Loans.

         Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR for any Interest Period:

                  (a) the Agent reasonably determines (which determination shall
         be conclusive) that by reason of  circumstances  affecting the relevant
         market,  adequate and  reasonable  means do not exist for  ascertaining
         LIBOR for such Interest Period;

                  (b) the Agent reasonably determines (which determination shall
         be  conclusive)  that LIBOR will not  adequately and fairly reflect the
         cost to the  Lenders  of making  or  maintaining  LIBOR  Loans for such
         Interest Period; or

                  (c) a  Lender  that has  outstanding  a Bid  Rate  Quote  with
         respect  to  a  LIBOR   Margin  Loan   reasonably   determines   (which
         determination  shall be conclusive)  that LIBOR will not adequately and
         fairly  reflect the cost to such Lender of making or  maintaining  such
         LIBOR Margin Loan and such Lender gives notice thereof to the Agent;

then the Agent shall give the Borrower  and each Lender  prompt  notice  thereof
and, so long as such condition remains in effect, (i) in the case of clauses (a)
and (b) above,  the Lenders shall be under no obligation to, and shall not, make
additional  LIBOR Loans,  Continue LIBOR Loans or Convert Loans into LIBOR Loans
and the Borrower shall, on the last day of each current Interest Period for each
outstanding  LIBOR Loan, either repay such Loan or Convert such Loan into a Base
Rate  Loan  and (ii) in the case of  clause  (c)  above,  such  Lender  that has
outstanding  a Bid Rate Quote with  respect to a LIBOR  Margin Loan shall not be
under any obligation to make such Loan.

Section 5.3.  Illegality.

         Notwithstanding  any other provision of this  Agreement,  if it becomes
unlawful for any Lender to honor its  obligation to make or maintain LIBOR Loans
hereunder,  then such Lender shall promptly notify the Borrower  thereof (with a
copy to the Agent)  and such  Lender's  obligation  to make or  Continue,  or to
Convert Loans of any other Type into,  LIBOR Loans shall be suspended until such
time as such Lender may again make and  maintain  LIBOR Loans (in which case the
provisions of Section 5.5. shall be applicable).

Section 5.4.  Compensation.

         The Borrower shall pay to the Agent for the account of a Lender, upon
the request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
yield-maintenance loss, cost or expense that such Lender determines is
attributable to: (a) any payment or prepayment (whether mandatory, including
payment required under Section 2.7.(c), or optional) of a LIBOR Loan or Bid Rate
Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason
(including, without limitation, acceleration) on a date other than the last day
of the Interest Period for such Loan; or (b) any failure by the Borrower for any
reason (including, without limitation, the failure of any of the applicable
conditions precedent specified in Article VI. to be satisfied) to borrow a LIBOR
Loan or Bid Rate Loan from such Lender on the date for such borrowing, or to
Convert a Revolving Loan into a LIBOR Loan or Continue a LIBOR Loan on the
requested date of such Conversion or Continuation. Upon the Borrower's request,
any Lender requesting compensation under this Section shall provide the Borrower
with a statement setting forth the basis for requesting such compensation and
the method for determining the amount thereof. Any such statement shall be
conclusive absent manifest error.

Section 5.5.  Treatment of Affected Loans.

         If the obligation of any Lender to make LIBOR Loans or to Continue,  or
to Convert  Base Rate Loans into,  LIBOR Loans  shall be  suspended  pursuant to
Section  5.1.(b),  5.2.  or  5.3.,  then  such  Lender's  LIBOR  Loans  shall be
automatically  Converted  into  Base Rate  Loans on the last  day(s) of the then
current  Interest  Period(s)  for LIBOR Loans (or,  in the case of a  Conversion
required by Section  5.1.(b) or 5.3.,  on such  earlier  date as such Lender may
specify to the  Borrower  with a copy to the Agent)  and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 5.1., 5.2. or 5.3. that gave rise to such Conversion no longer exist:

                                      -37-

<PAGE>

                  (a) to the extent that such Lender's  LIBOR Loans have been so
         Converted,  all  payments  and  prepayments  of  principal  that  would
         otherwise  be applied to such  Lender's  LIBOR  Loans  shall be applied
         instead to its Base Rate Loans; and

                  (b) all Loans that would  otherwise  be made or  Continued  by
         such Lender as LIBOR Loans shall be made or  Continued  instead as Base
         Rate Loans, and all Base Rate Loans of such Lender that would otherwise
         be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion
of such  Lender's  LIBOR Loans  pursuant to this  Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding,  then such Lender's
Base Rate Loans shall be  automatically  Converted,  on the first  day(s) of the
next  succeeding  Interest  Period(s) for such  outstanding  LIBOR Loans, to the
extent  necessary so that,  after giving effect  thereto,  all Loans held by the
Lenders  holding  LIBOR  Loans  and by such  Lender  are  held  pro  rata (as to
principal  amounts,  Types  and  Interest  Periods)  in  accordance  with  their
respective Commitments.

Section 5.6.  Affected Lenders.

         If (a) a Lender  requests  compensation  pursuant to Section  3.11.  or
5.1.,  and the  Requisite  Lenders  are not  also  doing  the  same,  or (b) the
obligation of any Lender to make LIBOR Loans or to Continue,  or to Convert Base
Rate Loans into,  LIBOR Loans shall be suspended  pursuant to Section 5.1.(b) or
5.3. but the  obligation of the Requisite  Lenders shall not have been suspended
under such  Sections,  then, so long as there does not then exist any Default or
Event of  Default,  the  Borrower  may either (i) demand  that such  Lender (the
"Affected  Lender"),  and upon such demand the Affected  Lender shall  promptly,
assign its Commitments to an Eligible Assignee subject to and in accordance with
the  provisions of Section  13.5.(d) for a purchase price equal to the aggregate
principal  balance of Loans then owing to the  Affected  Lender plus any accrued
but unpaid  interest  thereon and accrued but unpaid fees owing to the  Affected
Lender,  or (ii) pay to the Affected Lender the aggregate  principal  balance of
Loans then owing to the  Affected  Lender plus any  accrued but unpaid  interest
thereon and accrued but unpaid fees owing to the Affected Lender,  whereupon the
Affected  Lender  shall  no  longer  be a party  hereto  or have any  rights  or
obligations  hereunder  or under any of the other  Loan  Documents.  Each of the
Agent and the Affected Lender shall  reasonably  cooperate in  effectuating  the
replacement of such Affected Lender under this Section, but at no time shall the
Agent,  such  Affected  Lender  nor any  other  Lender be  obligated  in any way
whatsoever to initiate any such  replacement or to assist in finding an Eligible
Assignee. The exercise by the Borrower of its rights under this Section shall be
at the Borrower's sole cost and expenses and at no cost or expense to the Agent,
the Affected Lender or any of the other Lenders; provided, however, the Borrower
shall not be  obligated  to  reimburse  or  otherwise  pay an Affected  Lender's
administrative or legal costs incurred as a result of the Borrower's exercise of
its rights under this  Section.  The terms of this Section  shall not in any way
limit the Borrower's obligation to pay to any Affected Lender compensation owing
to such Affected Lender pursuant to Section 3.11. or 5.1.

Section 5.7.  Change of Lending Office.

         Each Lender agrees that it will use reasonable efforts (consistent with
its  internal  policy and legal and  regulatory  restrictions)  to  designate an
alternate  Lending  Office  with  respect  to any of its Loans  affected  by the
matters or circumstances described in Sections 3.11., 5.1. or 5.3. to reduce the
liability of the Borrower or avoid the results provided  thereunder,  so long as
such  designation  is not  disadvantageous  to such Lender as determined by such
Lender in its sole discretion,  except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.

                                      -38-

<PAGE>

Section 5.8.  Assumptions Concerning Funding of LIBOR Loans.

         Calculation  of all amounts  payable to a Lender  under this Article V.
shall be made as though such Lender had actually  funded LIBOR Loans through the
purchase  of  deposits  in the  relevant  market  bearing  interest  at the rate
applicable  to such  LIBOR  Loans in an amount  equal to the amount of the LIBOR
Loans  and  having  a  maturity  comparable  to the  relevant  Interest  Period;
provided,  however,  that each  Lender  may fund each of its LIBOR  Loans in any
manner  it  sees  fit and the  foregoing  assumption  shall  be  used  only  for
calculation of amounts payable under this Article V.

                        ARTICLE VI. CONDITIONS PRECEDENT

Section 6.1.  Initial Conditions Precedent.

         The obligation of the Lenders to effect or permit the occurrence of the
first Credit Event hereunder, whether as the making of a Loan or the issuance of
a Letter of Credit, is subject to the following conditions precedent:

         (a) The Agent shall have  received each of the  following,  in form and
substance satisfactory to the Agent:

                  (i)  counterparts  of this  Agreement  executed by each of the
         parties hereto;

                  (ii)  Revolving  Notes  and Bid  Rate  Notes  executed  by the
         Borrower,  payable  to each  Lender (or in the case of a Bid Rate Note,
         such Lender's Designated Lender, if applicable), and the Swingline Note
         executed by the Borrower;

                  (iii)  the  Guaranty   executed  by  each  of  the  Borrower's
         Subsidiaries and Unconsolidated  Affiliates  initially required to be a
         party thereto pursuant to Section 8.14.(a);

                  (iv) an opinion of David  Goldberg,  Vice President and Senior
         Counsel of the Borrower and the other Loan  Parties,  and  addressed to
         the Agent and the Lenders in substantially the form of Exhibit O -1 and
         an opinion of Heller Ehrman White & McAuliffe LLP,  special  California
         counsel to the Borrower and the other Loan  Parties,  and  addressed to
         the Agent and the Lenders in substantially the form of Exhibit O-2;

                  (v) the articles of incorporation of the Borrower certified as
         of a recent date by the Secretary of State of the State of formation of
         such Person;

                  (vi) a certificate of good standing (or certificate of similar
         meaning) with respect to the Borrower issued as of a recent date by the
         Secretary  of  State of the  State of  formation  of the  Borrower  and
         certificates of qualification to transact  business or other comparable
         certificates   issued  by  each  Secretary  of  State  (and  any  state
         department  of  taxation,   as  applicable)  of  each  state  in  which
         Properties listed on Schedule 4.1. are located;

                  (vii) a certificate  of incumbency  signed by the Secretary or
         Assistant Secretary (or other individual  performing similar functions)
         of each Loan Party with  respect to each of the officers of such Person
         authorized  to execute  and deliver  the Loan  Documents  to which such
         Person  is a party,  and in the  case of the  Borrower,  authorized  to
         execute and  deliver on behalf of the  Borrower  Notices of  Borrowing,
         Notices of Swingline Borrowing, requests for Letters of Credit, Notices
         of Conversion and Notices of Continuation;

                  (viii)   copies   certified  by  the  Secretary  or  Assistant
         Secretary  of the  Borrower  (or other  individual  performing  similar
         functions)  of (i) the  by-laws of such  Person and (ii) all  corporate
         action taken by such Person to authorize  the  execution,  delivery and
         performance of the Loan Documents to which it is a party;

                  (ix) an Unencumbered  Pool  Certificate  calculated as of June
         30, 2001;

                                      -39-

<PAGE>

                  (x) a Compliance  Certificate  calculated on a pro forma basis
         for the Borrower's fiscal quarter ending June 30, 2001;

                  (xi) all tax forms and other documents required to be provided
         by a Lender under Section 3.11.;

                  (xii)  evidence  that the Second  Amended and Restated  Credit
         Agreement dated as of February 25, 1997, by and among the Borrower, the
         financial  institutions party thereto as "Banks", and Wells Fargo Bank,
         National Association, as agent for such Banks, has been terminated; and

                  (xiii) such other  documents and  instruments as the Agent, or
         any Lender through the Agent, may reasonably request; and

         (b) In the good faith judgment of the Agent:

                  (i) There shall not have occurred or become known to the Agent
         or the Lenders any event, condition, situation or status since the date
         of the information contained in the financial and business projections,
         budgets,  pro forma data and forecasts  concerning the Borrower and its
         Subsidiaries  delivered  to the  Agent  and the  Lenders  prior  to the
         Agreement  Date that has had or could  reasonably be expected to result
         in a Material Adverse Effect;

                  (ii) No  litigation,  action,  suit,  investigation  or  other
         arbitral,  administrative  or judicial  proceeding  shall be pending or
         threatened  which  could  reasonably  be  expected  to (A)  result in a
         Material  Adverse Effect or (B) restrain or enjoin,  impose  materially
         burdensome  conditions on, or otherwise materially and adversely affect
         the ability of any Loan Party to fulfill its obligations under the Loan
         Documents to which it is a party;

                  (iii) The  Borrower  and the other  Loan  Parties  shall  have
         received all  approvals,  consents and waivers,  and shall have made or
         given  all  necessary  filings  and  notices  as shall be  required  to
         consummate the transactions  contemplated hereby without the occurrence
         of any default under,  conflict with or violation of (A) any Applicable
         Law or (B) any  agreement,  document  or  instrument  to which any Loan
         Party is a party or by which any of them or their respective properties
         is bound,  except for such approvals,  consents,  waivers,  filings and
         notices the receipt, making or giving of which, or the failure to make,
         give or receive  which,  would not  reasonably  be likely to (1) have a
         Material Adverse Effect,  or (2) restrain or enjoin,  impose materially
         burdensome  conditions on, or otherwise materially and adversely affect
         the  ability of the  Borrower  or any other  Loan Party to fulfill  its
         obligations under the Loan Documents to which it is a party; and

                  (iv) There shall not have occurred or exist any other material
         disruption  of financial or capital  markets that could  reasonably  be
         expected  to   materially   and  adversely   affect  the   transactions
         contemplated by the Loan Documents.

Section 6.2.  Conditions Precedent to All Loans and Letters of Credit.

         The  obligation  of the  Lenders  to make any Loans and of the Agent to
issue Letters of Credit is subject to the further condition  precedent that: (a)
no Default or Event of Default  shall exist as of the date of the making of such
Loan or date of issuance  of such  Letter of Credit or would  exist  immediately
after giving effect  thereto,  and none of the  conditions  described in Section
2.18.  would exist after giving  effect  thereto;  (b) the  representations  and
warranties  made or deemed made by the Borrower and each other Loan Party in the
Loan Documents to which any of them is a party, shall be true and correct on and
as of the date of the making of such Loan or date of  issuance of such Letter of
Credit  with the same force and effect as if made on and as of such date  except
to the extent that such  representations and warranties  expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date) and except for changes in
factual  circumstances  specifically and expressly  permitted  hereunder and (c)
except as otherwise  provided herein, in the case of the borrowing of Loans, the
Borrower  shall  have  delivered  a timely  Notice  of  Borrowing  or  Notice of
Swingline  Borrowing,  as the case may be. Each Credit Event shall  constitute a

                                      -40-

<PAGE>

certification by the Borrower to the effect set forth in the preceding  sentence
(both as of the date of the giving of notice  relating to such Credit Event and,
unless  the  Borrower  otherwise  notifies  the Agent  prior to the date of such
Credit  Event,  as of the  date of the  occurrence  of such  Credit  Event).  In
addition,  the Borrower shall be deemed to have represented to the Agent and the
Lender at the time such Loan is made or such Letter of Credit is issued that all
conditions  to the  making  of such  Loan or  issuing  of such  Letter of Credit
contained in Article VI. have been satisfied.

Section 6.3.  Conditions to Conversion to Term Loans.

         The right of the  Borrower to convert  Revolving  Loans into Term Loans
under Section 2.15.  is subject to the  condition  precedent  that the following
conditions be satisfied in the judgment of the Agent:

         (a)  timely  receipt  by the  Agent of the  notice  from  the  Borrower
required under such Section;

         (b) the fee due  under  Section  3.6.(e)  shall  have  been paid to the
Agent;

         (c) immediately  before and after such conversion,  no Default or Event
of Default shall exist; and

         (d) the  representations  and  warranties of the Borrower and the other
Loan Parties  contained in the Loan  Documents to which any such Loan Party is a
party  shall  be true in all  material  respects  on and as of the  date of such
conversion except to the extent such representations or warranties  specifically
relate to an earlier date or such representations or warranties become untrue by
reason of events or  conditions  otherwise  expressly  permitted  under the Loan
Documents.

The  delivery of the notice  required  under such  Section  shall  constitute  a
certification  by the Borrower to the Agent and the Lenders that the  statements
in the immediately preceding clauses (c) and (d) are true.

Section 6.4.  Conditions as Covenants.

         If the  Lenders  effect or permit the  occurrence  of the first  Credit
Event  hereunder,  whether  the making of a Loan or the  issuance of a Letter of
Credit,  prior to the  satisfaction  of all  conditions  precedent  set forth in
Sections 6.1. and 6.2., the Borrower shall  nevertheless cause such condition or
conditions  to be satisfied  within 5 Business Days after the date of the making
of such Loans or the  issuance  of such  Letter of  Credit.  Unless set forth in
writing  to the  contrary,  the  making of its  initial  Loan by a Lender  shall
constitute a confirmation by such Lender to the Agent and the other Lenders that
insofar as such Lender is concerned the Borrower has  satisfied  the  conditions
precedent for initial Loans set forth in Sections 6.1. and 6.2.

                   ARTICLE VII. REPRESENTATIONS AND WARRANTIES

Section 7.1.  Representations and Warranties.

         In order to  induce  the  Agent  and each  Lender  to enter  into  this
Agreement  and to make Loans and, in the case of the Agent,  to issue Letters of
Credit, and, in the case of the Lenders, to acquire participations in Letters of
Credit,  the  Borrower  represents  and warrants to the Agent and each Lender as
follows:

         (a) ORGANIZATION;  POWER;  QUALIFICATION.  Each of the Loan Parties and
the other Subsidiaries is a corporation, partnership or other legal entity, duly
organized  or  formed,   validly   existing  and  in  good  standing  under  the
jurisdiction of its  incorporation or formation,  has the power and authority to
own or lease its respective  properties and to carry on its respective  business
as now being and hereafter proposed to be conducted and is duly qualified and is
in good standing as a foreign  corporation,  partnership  or other legal entity,
and authorized to do business,  in each  jurisdiction  in which the character of
its  properties  or the nature of its business  requires such  qualification  or
authorization  and where the  failure to be so  qualified  or  authorized  could
reasonably be expected to have, in each instance, a Material Adverse Effect.

                                      -41-

<PAGE>

         (b)  OWNERSHIP  STRUCTURE.  Part  I of  Schedule  7.1.  is,  as of  the
Agreement Date, a complete and correct list of all Subsidiaries of the Borrower,
setting forth for each such Subsidiary,  (i) the jurisdiction of organization of
such  Subsidiary  and  (ii)  the  percentage  of  ownership  of such  Subsidiary
represented by such Equity  Interests.  Except as disclosed in such Schedule (A)
each of the Borrower and its Subsidiaries owns, free and clear of all Liens, and
has the  unencumbered  right to vote, all outstanding  Equity  Interests in each
Person  shown  to be held  by it on such  Schedule,  (B) all of the  issued  and
outstanding  capital  stock of each such Person  organized as a  corporation  is
validly issued,  fully paid and  nonassessable and (C) except for (x) securities
of the Borrower and its Subsidiaries convertible or exchangeable into securities
of Borrower as  disclosed  in the  financial  statements  referred to in Section
7.1.(k) and (y) employee stock options, there are no outstanding  subscriptions,
options,  warrants,  commitments,  preemptive  rights or  agreements of any kind
(including,  without  limitation,  any stockholders' or voting trust agreements)
for the issuance,  sale,  registration  or voting of, or outstanding  securities
convertible  into,  any  additional  Equity  Interests  of any  type in any such
Person. Part II of Schedule 7.1. correctly sets forth, as of the Agreement Date,
all Unconsolidated Affiliates of the Borrower,  including the correct legal name
of such  Person,  the type of legal  entity  which each such  Person is, and all
Equity  Interests in such Person held  directly or  indirectly  by the Borrower.
Part III of Schedule 7.1. is, as of the  Agreement  Date, a complete and correct
list of all  Non-Guarantor  Entities,  setting  forth for each such Person,  the
correct  legal name of such  Person,  the type of legal  entity  which each such
Person is, and all equity  interests in such Person held  directly or indirectly
by the Borrower.

         (c)  AUTHORIZATION OF AGREEMENT,  NOTES, LOAN DOCUMENTS AND BORROWINGS.
The  Borrower  has the right and power,  and has taken all  necessary  action to
authorize  it, to borrow  hereunder.  The Borrower and each other Loan Party has
the right and power,  and has taken all  necessary  action to  authorize  it, to
execute,  deliver and perform each of the Loan  Documents to which it is a party
in accordance  with their  respective  terms and to consummate the  transactions
contemplated hereby and thereby. The Loan Documents to which the Borrower or any
other Loan Party is a party have been duly  executed  and  delivered by the duly
authorized  officers  of such  Person  and each is a legal,  valid  and  binding
obligation of such Person enforceable against such Person in accordance with its
respective terms,  except as the same may be limited by bankruptcy,  insolvency,
and other  similar  laws  affecting  the rights of creditors  generally  and the
availability of equitable  remedies for the  enforcement of certain  obligations
contained herein or therein may be limited by equitable principles generally.

         (d) COMPLIANCE OF AGREEMENT,  ETC. WITH LAWS.  The execution,  delivery
and  performance  of this  Agreement  and the other Loan  Documents to which the
Borrower or any other Loan Party is a party in accordance with their  respective
terms and the borrowings  hereunder do not and will not, by the passage of time,
the giving of notice, or both: (i) require any Governmental  Approval or violate
any Applicable Law (including all  Environmental  Laws) relating to the Borrower
or any other Loan Party; (ii) conflict with, result in a breach of or constitute
a default under the Borrower's  articles of incorporation  or bylaws  (including
without limitation,  Section 2 of Article IV and Section 2(a) of Article VIII of
the Borrower's  bylaws),  or any resolution  adopted by the Borrower's  Board of
Directors in connection with the designation of any series of Preferred Stock of
the Borrower,  or the  organizational  documents of any other Loan Party, or any
indenture, agreement or other instrument to which the Borrower or any other Loan
Party  is a party  or by which  it or any of its  respective  properties  may be
bound; or (iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter  acquired by the Borrower
or any other Loan Party  other than in favor of the Agent for the benefit of the
Lenders.

         (e) COMPLIANCE WITH LAW;  GOVERNMENTAL  APPROVALS.  The Borrower,  each
other  Loan  Party  and  each  other  Subsidiary  is  in  compliance  with  each
Governmental  Approval and all other  Applicable  Laws relating to it except for
noncompliances  which, and Governmental  Approvals the failure to possess which,
could not,  individually or in the aggregate,  reasonably be expected to cause a
Default or Event of Default or have a Material Adverse Effect.

         (f)  TITLE TO  PROPERTIES.  Each of the  Borrower  and the  other  Loan
Parties and all other Subsidiaries has good, marketable and legal title to, or a
valid leasehold interest in, its respective assets.

                                      -42-

<PAGE>

         (g) EXISTING INDEBTEDNESS; TOTAL LIABILITIES; LIENS. Part I of Schedule
7.1.(g)  is,  as of June  30,  2001,  a  complete  and  correct  listing  of all
Indebtedness of the Borrower,  its  Subsidiaries  and all of its  Unconsolidated
Affiliates,  and if such  Indebtedness  is secured by any Lien, a description of
all of the property  encumbered  by such Lien.  As of the  Agreement  Date,  the
Borrower, its Subsidiaries and its Unconsolidated  Affiliates have performed and
are in compliance with all of the terms of all Indebtedness of the Borrower, its
Subsidiaries  and all of its  Unconsolidated  Affiliates and all instruments and
agreements  relating  thereto,  and no default or event of default,  or event or
condition  which with the giving of notice,  the lapse of time,  or both,  would
constitute  such a default or event of default,  exists with respect to any such
Indebtedness.  Part II of Schedule  7.1.(g) is, as of June 30,  2001, a complete
and  correct  listing  of  all  Total   Liabilities  of  the  Borrower  and  its
Subsidiaries  (excluding any Indebtedness set forth on Part I of such Schedule).
During the period from June 30, 2001 to but excluding the  Agreement  Date,  the
Borrower,  its  Subsidiaries and all of its  Unconsolidated  Affiliates have not
incurred   additional  Total  Liabilities  in  excess  of  $100,000,000  in  the
aggregate.

         (h) MATERIAL CONTRACTS.  Schedule 7.1.(h) is, as of the Agreement Date,
a true,  correct and  complete  listing of all Material  Contracts.  Each of the
Borrower,  the other Loan Parties and the other  Subsidiaries that is a party to
any Material  Contract has performed and is in compliance  with all of the terms
of such  Material  Contract,  and no  default or event of  default,  or event or
condition  which with the giving of notice,  the lapse of time,  or both,  would
constitute  such a default or event of default,  exists with respect to any such
Material Contract.  Each Property Management  Agreement,  if any, relating to an
Unencumbered  Pool  Property  is in full  force and  effect  and is  subject  to
termination  at the option of the Loan Party  that owns such  Unencumbered  Pool
Property upon no more than 60-days' written notice.

         (i) LITIGATION.  Except as set forth on Schedule 7.1.(i),  there are no
actions,  suits or  proceedings  pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings  threatened,  nor is there any basis
therefor)  against or in any other way relating  adversely  to or affecting  the
Borrower,  any other Loan Party, any other Subsidiary or any of their respective
property in any court or before any  arbitrator  of any kind or before or by any
other Governmental Authority which, if adversely determined, could reasonably be
expected  to have a Material  Adverse  Effect,  and there are no  strikes,  slow
downs,  work  stoppages  or  walkouts  or other  labor  disputes  in progress or
threatened  relating  to the  Borrower,  any  other  Loan  Party  or  any  other
Subsidiary.

         (j) TAXES.  All federal,  state and other tax returns of the  Borrower,
each other Loan Party and each other Subsidiary required by Applicable Law to be
filed have been duly filed, and all federal, state and other taxes,  assessments
and other  governmental  charges or levies  upon the  Borrower,  each other Loan
Party and each other Subsidiary and their respective properties, income, profits
and assets which are due and payable have been paid,  except any such nonpayment
which is at the time permitted under Section 8.6. As of the Agreement Date, none
of the United States income tax returns of the Borrower, any other Loan Party or
any other Subsidiary is under audit.  All charges,  accruals and reserves on the
books of the  Borrower and each of its  Subsidiaries  in respect of any taxes or
other governmental charges are in accordance with GAAP.

         (k)  FINANCIAL  STATEMENTS.  The Borrower has  furnished to each Lender
copies of (i) the audited  consolidated  balance  sheet of the  Borrower and its
Subsidiaries for the fiscal years ending December 31, 1999 and December 31, 2000
and the related consolidated statements of operations,  stockholders' equity and
cash flow for the fiscal years ending on such dates, with the opinion thereon of
Ernst & Young LLP,  and (ii) the  unaudited  consolidated  balance  sheet of the
Borrower and its  Subsidiaries  for the fiscal quarter ending June 30, 2001, and
the related consolidated statements of operations, stockholders' equity and cash
flow of the  Borrower and its  Subsidiaries  for the two fiscal  quarter  period
ending on such date. Such balance sheets and statements  (including in each case
related  schedules  and notes) are complete and correct and present  fairly,  in
accordance with GAAP consistently  applied throughout the periods involved,  the
consolidated financial position of the Borrower and its Subsidiaries as at their
respective  dates  and the  results  of  operations  and the cash  flow for such
periods  (subject,  as to interim  statements,  to changes resulting from normal
year-end audit  adjustments).  Neither the Borrower nor any of its  Subsidiaries
has on the  Agreement  Date any material  contingent  liabilities,  liabilities,
liabilities for taxes, unusual or long-term commitments or unrealized or forward
anticipated  losses from any unfavorable  commitments,  except as referred to or
reflected or provided for in said financial statements.

                                      -43-

<PAGE>

         (l) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there has been
no material adverse change in the consolidated  financial condition,  results of
operations,  business or prospects of the Borrower and its Subsidiaries taken as
a whole. Each of the Borrower, the other Loan Parties and the other Subsidiaries
is Solvent.

         (m) ERISA. Each member of the ERISA Group has fulfilled its obligations
under the minimum funding  standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in  compliance  in all  material  respects  with the
presently  applicable  provisions  of ERISA and the  Internal  Revenue Code with
respect  to each Plan.  No member of the ERISA  Group has (i) sought a waiver of
the minimum funding  standard under Section 412 of the Internal  Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or  Multiemployer  Plan or in respect of any  Benefit  Arrangement,  or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the  imposition  of a Lien or the posting of a bond or other  security  under
ERISA or the Internal  Revenue Code or (iii) incurred any liability  under Title
IV of ERISA other than a liability to the PBGC for premiums  under  Section 4007
of ERISA.

         (n) ABSENCE OF DEFAULTS.  None of the Borrower,  the other Loan Parties
or the other  Subsidiaries  is in default  under its articles of  incorporation,
bylaws,  partnership agreement or other similar organizational documents, and no
event has  occurred,  which has not been  remedied,  cured or waived:  (i) which
constitutes  a Default or an Event of  Default;  or (ii) which  constitutes,  or
which with the passage of time, the giving of notice, or both, would constitute,
a default or event of default by the Borrower, any other Loan Party or any other
Subsidiary under any agreement  (other than this Agreement) or judgment,  decree
or order to which any such  Person is a party or by which any such Person or any
of its respective properties may be bound where such default or event of default
could, individually or in the aggregate, have a Material Adverse Effect.

         (o)  ENVIRONMENTAL  LAWS.  In the ordinary  course of business and from
time to time  each of the  Loan  Parties  and the  other  Subsidiaries  conducts
reviews  of  the  effect  of  Environmental  Laws  on its  respective  business,
operations  and  properties,   including  without  limitation,   its  respective
Properties, in the course of which such Loan Party or such Subsidiary identifies
and evaluates associated  liabilities and costs (including,  without limitation,
determining  whether any capital or  operating  expenditures  are  required  for
clean-up or closure of  properties  presently or previously  owned,  determining
whether  any  capital  or  operating  expenditures  are  required  to achieve or
maintain compliance in all material respects with Environmental Laws or required
as a  condition  of any  Governmental  Approval,  any  contract,  or any related
constraints  on  operating   activities,   determining   whether  any  costs  or
liabilities  exist in connection  with off-site  disposal of wastes or Hazardous
Materials,  and determining whether any actual or potential liabilities to third
parties, including employees, and any related costs and expenses exist). Each of
the Loan Parties and the other Subsidiaries is in compliance with all applicable
Environmental  Laws  and has  obtained  all  Governmental  Approvals  which  are
required  under  Environmental  Laws and is in  compliance  with all  terms  and
conditions  of such  Governmental  Approvals,  where with respect to each of the
foregoing the failure to obtain or to comply with could be  reasonably  expected
to have a Material Adverse Effect.  Except for any of the following matters that
could not be reasonably expected to have a Material Adverse Effect, the Borrower
is not aware of, nor has either  received notice of, any past or present events,
conditions,  circumstances,  activities, practices, incidents, actions, or plans
which, with respect to any Loan Party or any other Subsidiary,  may unreasonably
interfere with or prevent compliance or continued  compliance with Environmental
Laws, or may give rise to any common-law or legal liability, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling or the emission, discharge, release or threatened release
into the environment, of any Hazardous Material. There is no civil, criminal, or
administrative  action, suit, demand, claim, hearing,  notice, or demand letter,
notice of violation,  investigation, or proceeding pending or, to the Borrower's
knowledge  after due  inquiry,  threatened,  against any Loan Party or any other
Subsidiary  relating  in any way to  Environmental  Laws  which,  if  determined
adversely to such Loan Party or Subsidiary, could be reasonably expected to have
a Material Adverse Effect.

                                      -44-

<PAGE>

         (p) INVESTMENT  COMPANY;  PUBLIC UTILITY HOLDING  COMPANY.  Neither the
Borrower,  any other Loan Party,  nor any other Subsidiary is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a
"subsidiary  company" of a "holding  company",  or an  "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended,  or (iii) subject
to any other  Applicable  Law which purports to regulate or restrict its ability
to borrow money or to consummate the transactions contemplated by this Agreement
or to perform its obligations under any Loan Document to which it is a party.

         (q) MARGIN STOCK.  None of the  Borrower,  any other Loan Party nor any
other Subsidiary is engaged principally,  or as one of its important activities,
in the  business  of  extending  credit  for  the  purpose,  whether  immediate,
incidental or ultimate,  of buying or carrying "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System.

         (r) AFFILIATE TRANSACTIONS.  Except as permitted by Section 10.9., none
of the Borrower,  any other Loan Party nor any other Subsidiary is a party to or
bound  by any  agreement  or  arrangement  (whether  oral or  written)  with any
Affiliate.

         (s) INTELLECTUAL PROPERTY. The Borrower and each Subsidiary owns or has
the right to use,  under valid license  agreements  or  otherwise,  all patents,
licenses,  franchises,  trademarks,  trademark rights,  trade names,  trade name
rights,  trade secrets and copyrights  (collectively,  "Intellectual  Property")
necessary to the conduct of its  businesses,  without  known  conflict  with any
patent, license,  franchise,  trademark, trade secret, trade name, copyright, or
other proprietary right of any other Person.  All such Intellectual  Property is
fully  protected  and/or duly and  properly  registered,  filed or issued in the
appropriate  office  and  jurisdictions  for  such   registrations,   filing  or
issuances. No material claim has been asserted by any Person with respect to the
use of any  such  Intellectual  Property,  or  challenging  or  questioning  the
validity or effectiveness of any such Intellectual Property.

         (t)  BUSINESS.  As  of  the  Agreement  Date,  the  principal  business
activities  of  the  Borrower  and  its   Subsidiaries   are  the   acquisition,
development,  ownership and operation of storage  facilities which offer storage
spaces, usually on a month-to-month basis, for personal and business use.

         (u) BROKER'S FEES. Except for the various fees payable to the Agent and
the Lenders in connection with the Loan Documents,  no broker's or finder's fee,
commission  or  similar  compensation  will  be  payable  with  respect  to  the
transactions  contemplated  hereby. No other similar fees or commissions will be
payable by any Loan Party for any other services rendered to the Borrower or any
of its Subsidiaries ancillary to the transactions contemplated hereby.

         (v) NOT PLAN ASSETS; NO PROHIBITED TRANSACTIONS.  None of the assets of
any Loan Party or any other  Subsidiary  constitutes  "plan  assets"  within the
meaning of ERISA,  the  Internal  Revenue  Code and the  respective  regulations
promulgated  thereunder,  of  any  ERISA  Plan.  The  execution,   delivery  and
performance  of the Loan  Documents by the Loan  Parties,  and the borrowing and
repayment  of amounts  thereunder,  do not and will not  constitute  "prohibited
transactions" under ERISA or the Internal Revenue Code.

         (w)  UNENCUMBERED  POOL  PROPERTIES.  Each  Unencumbered  Pool Property
satisfies  all  requirements  under the Loan  Documents  for  being an  Eligible
Property.

         (x) ACCURACY AND COMPLETENESS OF INFORMATION.  All written information,
reports and other  papers and data  furnished  to the Agent or any Lender by, on
behalf of, or at the  direction  of, the  Borrower,  any other Loan Party or any
other  Subsidiary  were,  at the time the same were so  furnished,  complete and
correct in all material respects,  to the extent necessary to give the recipient
a true  and  accurate  knowledge  of the  subject  matter,  or,  in the  case of
financial  statements,  present  fairly,  in accordance  with GAAP  consistently
applied  throughout the periods involved,  the financial position of the Persons
involved as at the date thereof and the results of operations  for such periods.
No fact is known to the  Borrower  which has had,  or may in the future have (so
far as the Borrower can reasonably foresee), a Material Adverse Effect which has
not been set forth in the financial statements referred to in Section 7.1.(k) or
in such information,  reports or other papers or data or otherwise  disclosed in
writing to the Agent and the Lenders  prior to the  Effective  Date. No document

                                      -45-

<PAGE>

furnished  or written  statement  made to the Agent or any Lender in  connection
with the  negotiation,  preparation or execution of this Agreement or any of the
other Loan  Documents  contains or will  contain any untrue  statement of a fact
material to the  creditworthiness  of the Borrower,  any other Loan Party or any
other  Subsidiary  or omits or will omit to state a material  fact  necessary in
order to make the statements contained therein not misleading.

Section 7.2.  Survival of Representations and Warranties, Etc.

         All statements  contained in any  certificate,  financial  statement or
other instrument delivered by or on behalf of the Borrower, any other Loan Party
or any other  Subsidiary to the Agent or any Lender pursuant to or in connection
with this  Agreement  or any of the other  Loan  Documents  (including,  but not
limited  to, any such  statement  made in or in  connection  with any  amendment
thereto or any statement  contained in any certificate,  financial  statement or
other  instrument  delivered  by or on  behalf  of  the  Borrower  prior  to the
Agreement  Date and  delivered  to the Agent or any  Lender in  connection  with
closing the transactions  contemplated hereby) shall constitute  representations
and warranties  made by the Borrower under this Agreement.  All  representations
and warranties  made under this Agreement and the other Loan Documents  shall be
deemed to be made at and as of the Agreement Date, the Effective Date and at and
as of the date of the occurrence of any Credit Event,  except to the extent that
such  representations and warranties  expressly relate solely to an earlier date
(in which  case such  representations  and  warranties  shall have been true and
accurate  on and as of such  earlier  date) and  except  for  changes in factual
circumstances  specifically  permitted  hereunder.  All such representations and
warranties shall survive the effectiveness of this Agreement,  the execution and
delivery of the Loan  Documents  and the making of the Loans and the issuance of
the Letters of Credit.

                       ARTICLE VIII. AFFIRMATIVE COVENANTS

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise  consent in the manner  provided  for in Section  13.6.,  the Borrower
shall comply with the following covenants:

Section 8.1.  Preservation of Existence and Similar Matters.

         Except as otherwise  permitted under Section 10.5., the Borrower shall,
and shall cause each other Loan Party and each other Subsidiary to, preserve and
maintain its respective existence,  rights, franchises,  licenses and privileges
in the  jurisdiction  of its  incorporation  or formation and qualify and remain
qualified  and  authorized  to do  business  in each  jurisdiction  in which the
character  of  its  properties  or the  nature  of its  business  requires  such
qualification  and  authorization  and where the failure to be so authorized and
qualified could reasonably be expected to have a Material Adverse Effect.

Section 8.2.  Compliance with Applicable Law and Material Contracts.

         The  Borrower  shall,  and shall  cause  each other Loan Party and each
other Subsidiary to, comply with (a) all Applicable Law, including the obtaining
of all Governmental Approvals, the failure with which to comply could reasonably
be expected to have a Material Adverse Effect,  and (b) all terms and conditions
of all Material Contracts to which it is a party.

Section 8.3.  Maintenance of Property.

         In addition to the requirements of any of the other Loan Documents, the
Borrower shall,  and shall cause each other Loan Party and each other Subsidiary
to, (a) protect and preserve all of its material properties,  including, but not
limited to, all  Intellectual  Property,  and maintain in good  repair,  working
order and condition all tangible  properties,  ordinary wear and tear  excepted,
and (b) from time to time make or cause to be made all  needed  and  appropriate
repairs,  renewals,  replacements and additions to such properties,  so that the
business carried on in connection  therewith may be properly and  advantageously
conducted at all times.

                                      -46-

<PAGE>

Section 8.4.  Conduct of Business.

         The  Borrower  shall,  and shall cause the other Loan  Parties and each
other Subsidiary to, carry on its respective  businesses as described in Section
7.1.(t) and not enter into any line of business not otherwise  engaged in by any
such Person as of the Agreement Date except for (a) lines of business incidental
or related thereto and (b) other lines of business so long as the aggregate book
value of the assets of all such other lines of business  does not exceed 5.0% of
Gross Asset Value.

Section 8.5.  Insurance.

         The  Borrower  shall,  and shall  cause each  Subsidiary  to,  maintain
insurance with financially sound and reputable  insurance companies against such
risks and in such amounts as is customarily  maintained by similar businesses or
as may be required  by  Applicable  Law.  The  Borrower  shall from time to time
deliver to the Agent upon request a detailed  list,  together with copies of all
policies of the insurance then in effect if requested,  stating the names of the
insurance  companies,  the amounts and rates of the insurance,  the dates of the
expiration thereof and the properties and risks covered thereby.

Section 8.6.  Payment of Taxes and Claims.

         The  Borrower  shall,  and shall  cause  each other Loan Party and each
other  Subsidiary to, pay and discharge when due (a) all taxes,  assessments and
governmental  charges or levies imposed upon it or upon its income or profits or
upon any properties  belonging to it, and (b) all lawful claims of  materialmen,
mechanics,  carriers,  warehousemen and landlords for labor, materials, supplies
and rentals  which,  if unpaid,  might become a Lien on any  properties  of such
Person;  provided,  however,  that this Section shall not require the payment or
discharge  of any such tax,  assessment,  charge,  levy or claim  which is being
contested in good faith by appropriate  proceedings which operate to suspend the
collection  thereof and for which adequate reserves have been established on the
books of such Person in accordance with GAAP.

Section 8.7.  Books and Records; Inspections.

         The  Borrower  shall,  and shall  cause  each other Loan Party and each
other Subsidiary to, keep proper books of record and account in which full, true
and correct  entries shall be made of all dealings and  transactions in relation
to its respective  business and activities.  The Borrower shall, and shall cause
each other Loan Party and each other  Subsidiary to, permit  representatives  of
the Agent or any Lender to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their respective
officers,  employees  and  independent  public  accountants  (in the  Borrower's
presence if an Event of Default  does not then  exist),  all at such  reasonable
times during  business  hours and as often as may reasonably be requested and so
long as no Event of Default  exists,  with  reasonable  prior notice and, at any
time  while an Event of  Default  exists,  all at the  Borrower's  sole cost and
expense.

Section 8.8.  Use of Proceeds.

         The  Borrower  shall use the proceeds of Loans only (a) for the payment
of pre-development  and development costs incurred in connection with Properties
owned by the Borrower or any Subsidiary;  (b) to finance acquisitions  otherwise
permitted under this  Agreement;  (c) to finance  capital  expenditures  and the
repayment  of  Indebtedness  of the Borrower  and its  Subsidiaries;  and (d) to
provide  for  the  general  working  capital  needs  of  the  Borrower  and  its
Subsidiaries  and for other general  corporate  purposes of the Borrower and its
Subsidiaries.  The  Borrower  shall  only use  Letters  of  Credit  for the same
purposes for which it may use the proceeds of Loans. The Borrower shall not, and
shall not permit any Subsidiary to, use any part of such proceeds to purchase or
carry,  or to reduce or retire or refinance  any credit  incurred to purchase or
carry,  any margin  stock  (within the meaning of  Regulation  U of the Board of
Governors of the Federal  Reserve  System) or to extend credit to others for the
purpose of  purchasing  or carrying  any such margin stock if, in any such case,
such use might result in any of the Loans being consider to be "purpose  credit"
directly or indirectly  secured by margin stock within the meaning of Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System.

                                      -47-

<PAGE>

Section 8.9.  Environmental Matters.

         The  Borrower  shall,  and shall  cause  each other Loan Party and each
other Subsidiary to, comply with all  Environmental  Laws the failure with which
to comply could reasonably be expected to have a Material Adverse Effect. If the
Borrower,  any other Loan Party or any other Subsidiary shall (a) receive notice
that any violation of any  Environmental Law may have been committed or is about
to be committed by such Person,  (b) receive notice that any  administrative  or
judicial  complaint or order has been filed or is about to be filed  against any
such Person alleging  violations of any  Environmental Law or requiring any such
Person to take any action in connection with the release of Hazardous  Materials
or (c)  receive  any notice  from a  Governmental  Authority  or  private  party
alleging that any such Person may be liable or responsible for costs  associated
with a response to or cleanup of a release of Hazardous Materials or any damages
caused thereby, and the matters covered by such notices,  individually or in the
aggregate,  could reasonably be expected to have a Material Adverse Effect,  the
Borrower shall provide the Agent with a copy of such notice within 10 days after
the  receipt  thereof  by the  Borrower,  such  other  Loan  Party or such other
Subsidiary.  The Borrower shall,  and shall cause each other Loan Party and each
other  Subsidiary  to,  promptly  take all  actions  necessary  to  prevent  the
imposition of any Liens on any of their respective  properties arising out of or
related to any Environmental Laws.

Section 8.10.  Further Assurances.

         At the Borrower's  cost and expense and upon request of the Agent,  the
Borrower  shall  duly  execute  and  deliver  or cause to be duly  executed  and
delivered,  to the Agent such further  instruments,  documents and certificates,
and do and cause to be done such further acts that may be  reasonably  necessary
or  advisable  in the  reasonable  opinion  of  the  Agent  to  carry  out  more
effectively  the  provisions  and purposes of this  Agreement and the other Loan
Documents.

Section 8.11.  Material Contracts.

         The  Borrower  shall,  and shall  cause  each other Loan Party and each
other  Subsidiary  to, duly and  punctually  perform and comply with any and all
material representations,  warranties, covenants and agreements binding upon any
such Person under any Material  Contract.  The Borrower shall not, and shall not
permit any other Loan Party or any other  Subsidiary to, do or knowingly  permit
to be done  anything  to  impair  materially  the  value of any of the  Material
Contracts.

Section 8.12.  REIT Status.

         The Borrower shall maintain its status as a REIT.

Section 8.13.  Exchange Listing.

         The Borrower  shall maintain at least one class of common shares of the
Borrower  having  trading  privileges  on the New  York  Stock  Exchange  or the
American  Stock  Exchange or which is subject to price  quotations on The NASDAQ
Stock Market's National Market System.

Section 8.14.  Guarantors; Release of Guarantors.

         (a)  GENERALLY.  The  Borrower  shall  cause  any  Subsidiary  and  any
Unconsolidated Affiliate that is not already a Guarantor and to which any of the
following  conditions  apply (each a "New  Guarantor") to execute and deliver to
the Agent an Accession  Agreement,  together with the other items required to be
delivered under the subsection (c) below:

                  (i) In the case of a Subsidiary,  such  Subsidiary (A) owns an
         Unencumbered Pool Property or (B) is a Wholly Owned Subsidiary; or

                                      -48-

<PAGE>

                  (ii)  In the  case  of any  Subsidiary  or any  Unconsolidated
         Affiliate,  such Person shall Guarantee,  or otherwise become obligated
         in respect of, any Indebtedness of the Borrower,  any Subsidiary or any
         Non-Guarantor Entity (except in the case of an Unconsolidated Affiliate
         Guaranteeing,  or  otherwise  becoming  obligated  in  respect  of, any
         Indebtedness of another Unconsolidated Affiliate).

Any such Accession  Agreement and the other items required under  subsection (c)
below  must be  delivered  to the Agent no later than the date the  Borrower  is
required to deliver  financial  statements  under  Section  9.1.  for the fiscal
quarter (or Section 9.2. for the fourth fiscal  quarter) during which any of the
above conditions first applies to a New Guarantor.

         (b) OTHER GUARANTORS.  The Borrower may, at its option, cause any other
Person  that is not already a Guarantor  to become a Guarantor  by causing  such
Person to execute and deliver to the Agent an Accession Agreement, together with
the other items required to be delivered under the subsection (c) below.

         (c) REQUIRED  DELIVERIES.  Each Accession  Agreement delivered by a New
Guarantor  under  the  immediately  preceding  subsections  (a) or (b)  shall be
accompanied by each of the following in form and substance  satisfactory  to the
Agent:

                  (i) a  certificate  of  incumbency  signed by the Secretary or
         Assistant Secretary (or other individual  performing similar functions)
         of such New Guarantor  with respect to each of the officers of such New
         Guarantor authorized to execute and deliver the Loan Documents to which
         such New Guarantor is a party; and

                  (ii) such other documents and instruments as the Agent, or any
         Lender through the Agent, may reasonably request.

         (d) RELEASE OF GUARANTOR.  The Borrower may request in writing that the
Agent  release,  and upon  receipt of such  request the Agent shall  release,  a
Guarantor  from it  obligations  under the  Guaranty  if,  and only if: (i) such
Guarantor  does  not own any  Unencumbered  Pool  Property,  nor any  direct  or
indirect Equity  Interest in any Subsidiary  that does own an Unencumbered  Pool
Property;  (ii) such  Guarantor is not  otherwise  required to be a party to the
Guaranty under this Section; and (iii) no Default or Event of Default shall then
be in existence or would occur as a result of such release.

                             ARTICLE IX. INFORMATION

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise  consent in the manner set forth in Section 13.6.,  the Borrower shall
furnish to each  Lender (or to the Agent if so  provided  below) at its  Lending
Office:

Section 9.1.  Quarterly Financial Statements.

         As soon as available and in any event within 50 days after the close of
each of the  first,  second  and third  fiscal  quarters  of the  Borrower,  the
unaudited  consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such  period and the related  unaudited  consolidated  statements  of
income, shareholders' equity and cash flows of the Borrower and its Subsidiaries
for such period,  setting forth in each case in comparative form the figures for
the  corresponding  periods of the previous  fiscal year,  all of which shall be
certified by the chief financial officer or treasurer of the Borrower, in his or
her opinion,  to present  fairly,  in  accordance  with GAAP,  the  consolidated
financial  position of the Borrower and its  Subsidiaries as at the date thereof
and the results of operations for such period  (subject to normal year-end audit
adjustments).

                                      -49-

<PAGE>

Section 9.2.  Year-End Statements.

         As soon as available  and in any event within 120 days after the end of
each fiscal year of the Borrower,  the audited consolidated balance sheet of the
Borrower and its  Subsidiaries as at the end of such fiscal year and the related
audited consolidated  statements of income,  shareholders' equity and cash flows
of the Borrower and its  Subsidiaries  for such fiscal  year,  setting  forth in
comparative  form the figures as at the end of and for the previous fiscal year,
all of which shall be certified by (a) the chief financial  officer or treasurer
of the Borrower,  in his or her opinion,  to present fairly,  in accordance with
GAAP, the financial position of the Borrower and its Subsidiaries as at the date
thereof and the result of operations  for such period and (b) either (i) Ernst &
Young  LLP or  (ii)  any  other  independent  certified  public  accountants  of
recognized  national  standing  acceptable  to  the  Requisite  Lenders,   whose
certificate shall be unqualified and in scope and substance  satisfactory to the
Requisite  Lenders and who shall have  authorized  the  Borrower to deliver such
financial  statements  and  certification  thereof to the Agent and the  Lenders
pursuant to this Agreement.  Such financial statements shall be accompanied by a
statement  of the  accountants  which  reported  on such  statements  indicating
whether  anything has come to their  attention to cause them to believe that any
Default or Event of Default existed on the date of such statements.

Section 9.3.  Compliance Certificate.

         At the time the financial statements are furnished pursuant to Sections
9.1.  and  9.2.,  a  certificate  substantially  in the  form  of  Exhibit  P (a
"Compliance  Certificate")  executed  on  behalf  of the  Borrower  by the chief
financial  officer or treasurer of the Borrower (a) setting  forth as of the end
of such  quarterly  accounting  period or fiscal  year,  as the case may be, the
calculations  required to establish  whether the Borrower was in compliance with
the  covenants  contained in Section  10.1.;  and (b) stating that no Default or
Event of Default exists, or, if such is not the case, specifying such Default or
Event of Default and its nature,  when it occurred  and the steps being taken by
the Borrower with respect to such event, condition or failure.

Section 9.4.  Other Information.

         (a)  UNENCUMBERED  POOL  CERTIFICATES.  As soon as available and in any
event within 50 days after the end of each fiscal  quarter of the  Borrower,  an
Unencumbered  Pool  Certificate  setting forth the  information  to be contained
therein;

         (b) SECURITIES  FILINGS.  Within 5 Business Days of the filing thereof,
copies of all  registration  statements  (excluding the exhibits thereto and any
registration  statements on Form S-8 or its equivalent),  reports on Forms 10-K,
10-Q and 8-K (or their  equivalents)  and all other  periodic  reports which the
Borrower,  any other  Loan  Party or any other  Subsidiary  shall  file with the
Securities and Exchange  Commission (or any Governmental  Authority  substituted
therefor) or any national securities exchange;

         (c) ACCOUNTANTS' REPORTS.  Promptly upon receipt thereof, copies of all
reports,  if any,  submitted  to the  Borrower or its Board of  Directors by its
independent public accountants  including,  without  limitation,  any management
report;

         (d) REPORTS TO  SHAREHOLDERS.  Promptly upon the mailing thereof to the
shareholders  of the Borrower  generally,  copies of all  financial  statements,
reports and proxy statements so mailed;

         (e) PRESS RELEASES.  Promptly upon the issuance thereof,  copies of all
press  releases  issued  by the  Borrower,  any  other  Loan  Party or any other
Subsidiary;

         (f)  BUDGETS.  No  later  than  November  30th of each  calendar  year,
projected  balance sheets,  income  statements and cash flow budgets  (including
projected  sources and uses of funds) of the Borrower and its  Subsidiaries on a
consolidated  basis for each quarter of the next  succeeding  fiscal  year,  all
itemized in reasonable  detail.  The foregoing shall be accompanied by pro forma
calculations,  together with detailed assumptions, required to establish whether
or not the  Borrower  will be in  compliance  with the  covenants  contained  in
Sections 10.1. at the end of each fiscal quarter of the next  succeeding  fiscal
year;

                                      -50-

<PAGE>

         (g) ERISA.  If and when any  member of the ERISA  Group (i) gives or is
required  to give  notice to the PBGC of any  "reportable  event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might  constitute  grounds
for a termination  of such Plan under Title IV of ERISA,  or knows that the plan
administrator  of any Plan has given or is  required  to give notice of any such
reportable  event,  a copy of the  notice  of such  reportable  event  given  or
required to be given to the PBGC;  (ii)  receives  notice of complete or partial
withdrawal  liability  under Title IV of ERISA or notice that any  Multiemployer
Plan is in reorganization,  is insolvent or has been terminated,  a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate,  impose  liability  (other than for premiums under Section 4007 of
ERISA) in respect  of, or appoint a trustee to  administer  any Plan,  a copy of
such notice;  (iv) applies for a waiver of the minimum  funding  standard  under
Section 412 of the Internal Revenue Code, a copy of such application;  (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such  notice and other  information  filed with the PBGC;  (vi) gives  notice of
withdrawal  from any Plan  pursuant  to  Section  4063 of ERISA,  a copy of such
notice;  or (vii)  fails  to make any  payment  or  contribution  to any Plan or
Multiemployer  Plan or in  respect  of any  Benefit  Arrangement  or  makes  any
amendment to any Plan or Benefit  Arrangement which has resulted or could result
in the  imposition  of a Lien or the  posting  of a bond or  other  security,  a
certificate of the  controller of the Borrower  setting forth details as to such
occurrence and action,  if any,  which the Borrower or applicable  member of the
ERISA Group is required or proposes to take;

         (h) GOVERNMENTAL  ACTIONS. To the extent the Borrower or any Subsidiary
is aware of the same,  prompt notice of the  commencement  of any  proceeding or
investigation  by or  before  any  Governmental  Authority  and  any  action  or
proceeding in any court or other tribunal or before any arbitrator against or in
any other way relating adversely to, or adversely affecting, the Borrower or any
Subsidiary or any of their respective properties, assets or businesses which, if
determined or resolved adversely to such Person, could reasonably be expected to
have a Material Adverse Effect,  and prompt notice of the receipt of notice that
any United States income tax returns of the Borrower or any of its  Subsidiaries
are being audited;

         (i)  AMENDMENT  TO  ORGANIZATIONAL  DOCUMENTS.  A copy of any  material
amendment,  or any other amendment upon the Agent's request,  to the articles of
incorporation,  bylaws,  partnership  agreement or other similar  organizational
documents of the Borrower,  or any  Subsidiary  that owns an  Unencumbered  Pool
Property  within  5  Business  Days of the  effectiveness  thereof  (or  request
therefor);

         (j) CHANGES IN MANAGEMENT,  FINANCIAL CONDITION,  ETC. Prompt notice of
any change in the senior management of the Borrower, any other Loan Party or any
other Subsidiary and any change in the business, assets, liabilities,  financial
condition,  results of operations  or business  prospects of the Borrower or any
Subsidiary which in either event has had or could have Material Adverse Effect;

         (k) DEFAULTS.  Prompt notice of the  occurrence of any Default or Event
of Default or any event which constitutes or which with the passage of time, the
giving of notice,  or otherwise,  would constitute a default or event of default
by the Borrower, any other Loan Party or any other Subsidiary under any Material
Contract  to which any such Person is a party or by which any such Person or any
of its respective properties may be bound;

         (l) JUDGMENTS,  ETC. Prompt notice of any order,  judgment or decree in
excess of $10,000,000  having been entered against the Borrower,  any other Loan
Party or any other Subsidiary or any of their respective properties or assets;

         (m)  OWNERSHIP  SHARE  CALCULATION.  Promptly  upon the  request of the
Agent,  evidence  of the  Borrower's  calculation  of the  Ownership  Share with
respect to a Subsidiary or an Unconsolidated  Affiliate,  such evidence to be in
form and detail satisfactory to the Agent;

         (n)  ELIGIBILITY  OF  PROPERTIES.  Prompt  notice  to the  Agent if any
Unencumbered Pool Property shall cease to qualify as an Eligible Property; and

                                      -51-

<PAGE>

         (o)  OTHER  INFORMATION.  From  time to time  and  promptly  upon  each
request,  such data,  certificates,  reports,  statements,  opinions of counsel,
documents or further information regarding any Property or the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower or any of its  Subsidiaries  as the Agent or any Lender may request
and which is reasonably available to the Borrower or any such Subsidiary.

                          ARTICLE X. NEGATIVE COVENANTS

         For so  long as this  Agreement  is in  effect,  unless  the  Requisite
Lenders (or, if required  pursuant to Section  13.6.,  all of the Lenders) shall
otherwise  consent in the manner set forth in Section 13.6.,  the Borrower shall
comply with the following covenants:

Section 10.1.  Financial Covenants.

         (a) RATIO OF TOTAL LIABILITIES TO GROSS ASSET VALUE. The Borrower shall
not  permit  the  ratio  of (i)  Total  Liabilities  of  the  Borrower  and  its
Subsidiaries  determined on a consolidated  basis to (ii) Gross Asset Value,  at
the end of any fiscal quarter to exceed 0.50 to 1.00 at any time.

         (b) RATIO OF SECURED  INDEBTEDNESS  TO GROSS ASSET VALUE.  The Borrower
shall not permit the ratio of (i) Secured  Indebtedness  of the Borrower and its
Subsidiaries  determined on a consolidated  basis to (ii) Gross Asset Value,  to
exceed 0.35 to 1.0 at any time.

         (c) RATIO OF EBITDA TO INTEREST EXPENSE.  The Borrower shall not permit
the ratio of (i) EBITDA of the Borrower  and its  Subsidiaries  determined  on a
consolidated  basis for the fiscal  quarter most recently ended to (ii) Interest
Expense of the Borrower and its Subsidiaries  determined on a consolidated basis
for such fiscal  quarter,  to be less than 2.50 to 1.0 at the end of such fiscal
quarter.

         (d) RATIO OF EBITDA TO FIXED CHARGES. The Borrower shall not permit the
ratio  of (i)  EBITDA  of the  Borrower  and its  Subsidiaries  determined  on a
consolidated  basis for the four  fiscal-quarter  period most recently  ended to
(ii)  Fixed  Charges  of the  Borrower  and  its  Subsidiaries  determined  on a
consolidated basis for such four-quarter  period, to be less than 1.75 to 1.0 at
the end of each fiscal quarter.

         (e)  RATIO OF  UNENCUMBERED  NOI TO  UNSECURED  INTEREST  EXPENSE.  The
Borrower shall not permit the ratio of (i)  Unencumbered NOI of the Borrower and
its Subsidiaries  determined on a consolidated basis to (ii) Interest Expense on
Indebtedness  (other  than  Secured   Indebtedness)  of  the  Borrower  and  its
Subsidiaries  determined on a consolidated  basis,  for any fiscal quarter to be
less than 1.75 to 1.00 for such fiscal quarter.

         (f) RATIO OF  UNENCUMBERED  POOL VALUE TO  UNSECURED  LIABILITIES.  The
Borrower shall not permit the ratio of (i) the  Unencumbered  Pool Value to (ii)
Unsecured Liabilities, to be less than 2.0 to 1.0 at any time.

         (g) MINIMUM  TANGIBLE  NET WORTH.  The  Borrower  shall not at any time
permit the Tangible Net Worth of the Borrower and its Subsidiaries determined on
a  consolidated  basis to be less than an amount  equal to the greater of (a)(i)
$4,000,000,000  plus  (ii)  90% of the  Net  Proceeds  of all  Equity  Issuances
effected  at any time after the  Agreement  Date by the  Borrower  to any Person
other than the  Borrower or any of its  Subsidiaries  minus (iii) the  aggregate
amount paid by the Borrower to purchase or otherwise acquire  outstanding shares
of the common stock or Preferred Stock of the Borrower (so long as such payments
are   permitted  by  the   immediately   following   subsection   (h)),  or  (b)
$3,000,000,000.  To the extent a purchase or other  acquisition  of  outstanding
shares of the common  stock of the Borrower is purchased or acquired in exchange
for, or out of the net cash proceeds of, a  substantially  concurrent  issue and
sale of Equity  Interests of the Borrower (other than Equity  Interests that are
subject to mandatory  redemption)  to any Person  (other than to a  Subsidiary),
such purchase or acquisition  shall be excluded from the  immediately  preceding
clause (iii).

                                      -52-

<PAGE>

         (h)  DISTRIBUTIONS.  The  Borrower  shall not, and shall not permit any
Subsidiary to, declare or make any Restricted Payment; provided,  however, that:
(i) the  Borrower  may declare or make cash  distributions  to its  shareholders
during any fiscal year in an  aggregate  amount not to exceed the greater of (x)
95.0% of Funds From  Operations  for such fiscal year or (y) the minimum  amount
required for the Borrower to remain in compliance  with Section 8.12.;  (ii) the
Borrower  may make cash  distributions  to its  shareholders  of  capital  gains
resulting  from gains from certain asset sales to the extent  necessary to avoid
payment of taxes on such asset sales imposed under  Sections  857(b)(3) and 4981
of the Internal  Revenue Code;  (iii) the Borrower and its Subsidiaries may make
cash  payments  to  repurchase  outstanding  shares  of any  of  its  respective
Preferred Stock, common stock or other similar common Equity Interests; and (iv)
Subsidiaries  may  pay  Restricted   Payments  to  the  Borrower  or  any  other
Subsidiary.   Notwithstanding  the  foregoing,  but  subject  to  the  following
sentence,  if a  Default  or  Event  of  Default  shall  have  occurred  and  be
continuing,  the  Borrower may only  declare or make cash  distributions  to its
shareholders  during any fiscal  year in an  aggregate  amount not to exceed the
minimum amount  necessary for the Borrower to remain in compliance  with Section
8.12. If a Default or Event of Default  specified in Section  11.1.(a),  Section
11.1.(e) or Section  11.1.(f) shall have occurred and be continuing,  or if as a
result of the occurrence of any other Event of Default the Obligations have been
accelerated,  the Borrower  shall not, and shall not permit any  Subsidiary  to,
make any Restricted Payments to any Person whatsoever other than to the Borrower
or any Subsidiary.

         (i) INVESTMENTS GENERALLY. The Borrower shall not, and shall not permit
any  Subsidiary  to,  directly or  indirectly,  acquire,  make or  purchase  any
Investment,  or permit any  Investment of such Person to be  outstanding  on and
after the Agreement Date, other than the following:

                  (i)  Investments in cash,  Cash  Equivalents or  institutional
         money market  funds  organized  under the laws of the United  States of
         America or any state thereof that invest solely in Cash Equivalents;

                  (ii) (x) trade credit extended on usual and customary terms in
         the  ordinary  course of business,  and (y)  advances to employees  for
         moving,  relocation and travel  expenses,  drawing accounts and similar
         expenditures in the ordinary course of business;

                  (iii)   Investments  in   Subsidiaries  in  existence  on  the
         Agreement Date and disclosed on Part I of Schedule 7.1.(b);

                  (iv)  Investments to acquire Equity  Interests of a Subsidiary
         or any other Person who after giving effect to such  acquisition  would
         be a Subsidiary,  so long as in each case (x) immediately prior to such
         Investment,  and after giving  effect  thereto,  no Default or Event of
         Default is or would be in existence  and (y) if such  Subsidiary is (or
         immediately  after giving effect to such Investment  would be) required
         to be a party to the Guaranty,  the terms and  conditions  set forth in
         Section 8.14. are satisfied; and

                  (v) other  Investments  subject  to, and  otherwise  permitted
         under, the immediately following subsection (j).

         (j)  Limitations  on Certain  Investments.  The Borrower shall not, and
shall not permit any  Subsidiary  to, make an Investment in or otherwise own the
following  items which would cause the aggregate  value of such holdings of such
Persons to exceed the following percentages of Gross Asset Value:

                  (i)  unimproved  real estate such that the aggregate  value of
         all such unimproved real estate calculated on the basis of the lower of
         cost or market  value,  exceeds  10.0% of Gross Asset Value (a Property
         that is a Development Property shall not be considered to be unimproved
         real estate for purposes of this clause);

                  (ii) Equity  Interests  in Persons  (other than  Subsidiaries,
         Unconsolidated  Affiliates  and Persons that are REITs),  such that the
         aggregate value of such interests  calculated on the basis of the lower
         of cost or market, exceeds 10.0% of Gross Asset Value;

                                      -53-

<PAGE>

                  (iii)  Mortgages in favor of the  Borrower or any  Subsidiary,
         such that the  aggregate  book value of  Indebtedness  determined  on a
         consolidated  basis  secured by such  Mortgages  exceeds 10.0% of Gross
         Asset Value;

                  (iv) Investments in Unconsolidated  Affiliates,  such that the
         aggregate  value of such  Investments,  exceeds  15.0%  of Gross  Asset
         Value.  For  purposes  of this  clause  (iv),  the  "value" of any such
         Investment in an  Unconsolidated  Affiliate  shall be  determined  with
         respect  to the  Borrower's  Ownership  Share  of  such  Unconsolidated
         Affiliate; and

                  (v) other  Investments  having  an  aggregate  book  value not
         exceeding 5% of Gross Asset Value.

In addition to the foregoing limitations, the aggregate value of the Investments
and other items subject to the limitations in the preceding  clauses (i) through
(v) shall not exceed 25.0% of Gross Asset Value.

         (k)  DEVELOPMENT  LIMITS.  The Borrower  shall not permit the aggregate
amount of Total Budgeted Cost with respect to all Development  Properties of the
Borrower, its Subsidiaries and all of the Borrower's  Unconsolidated  Affiliates
to  exceed  15.0% of  Gross  Asset  Value  at any  time.  For  purposes  of this
subsection,  the Total  Budgeted Cost with respect to any  Development  Property
owned by an Unconsolidated  Affiliate of the Borrower shall equal the greater of
(i) the product of (x) the  Borrower's  Ownership  Share in such  Unconsolidated
Affiliate and (y) the Total Budgeted Cost for such Development  Property or (ii)
the recourse  obligations of the Borrower and its  Subsidiaries  relating to the
Indebtedness of such Unconsolidated Affiliate.

         (l)  AGGREGATE  OCCUPANCY  RATES.  The  Borrower  shall not  permit the
weighted  average  aggregate  Occupancy Rate (weighted on the basis of aggregate
square footage) of all  Unencumbered  Pool Properties (i) for the period of four
calendar  quarters most recently  ended to be less than 85.0% or (ii) to be less
than 80.0% at any time.

         (m) GROSS ASSETS VALUE OF NON-GUARANTORS. The Borrower shall not permit
Gross  Asset  Value  determined  with  respect  to  the  Non-Guarantor  Entities
obligated in respect of any Indebtedness other than Nonrecourse  Indebtedness to
exceed 25.0% of the Gross Asset Value of the Borrower and its Subsidiaries.

Section 10.2.  Indebtedness.

         The Borrower  will not, and will not permit any other Loan Party or any
other  Subsidiary to, incur,  assume or otherwise become obligated in respect of
any  Indebtedness  after the  Agreement  Date if  immediately  after  incurring,
assuming or  otherwise  becoming  obligated in respect of such  Indebtedness,  a
Default or Event of Default would exist, including without limitation, a Default
or Event of Default resulting from a violation of any of the covenants contained
in Section 10.1. determined after giving proforma effect thereto.

Section 10.3.  Negative Pledge.

         The  Borrower  shall not,  and shall not permit any other Loan Party or
any other Subsidiary to, (a) create,  assume, incur or permit or suffer to exist
any Lien upon any of the Unencumbered  Pool Properties or any direct or indirect
ownership  interest of the Borrower in any  Subsidiary  owning any  Unencumbered
Pool Property,  other than Permitted Liens or (b) permit any  Unencumbered  Pool
Property,  or any direct or indirect  ownership  interest of the Borrower in any
Subsidiary  owning  any  Unencumbered  Pool  Property,  to become  subject  to a
Negative Pledge.

                                      -54-

<PAGE>

Section 10.4.  Restrictions on Intercompany Transfers.

         Except for the  encumbrances  or  restrictions  described  on  Schedule
10.4.,  the Borrower shall not, and shall not permit any  Subsidiary  either (a)
having  assets  whose book value is in excess of 5% of Gross  Asset Value or (b)
owning any Unencumbered  Pool Property,  to, create or otherwise cause or suffer
to exist or become  effective any  consensual  encumbrance or restriction of any
kind on the ability of any such  Subsidiary  to: (i) pay  dividends  or make any
other  distribution on any Equity  Interests issued by such Subsidiary and owned
by the Borrower or any other  Subsidiary;  (ii) pay any Indebtedness owed to the
Borrower or any other  Subsidiary;  (iii) make loans or advances to the Borrower
or any other  Subsidiary;  or (iv) transfer any of its property or assets to the
Borrower or any other Subsidiary.

Section 10.5.  Merger,  Consolidation, Sales  of Assets, Acquisitions and  Other
               Arrangements.

         The  Borrower  shall not,  and shall not permit any other Loan Party or
any  other   Subsidiary  to,  (a)  enter  into  any  transaction  of  merger  or
consolidation;  (b)  liquidate,  wind-up  or  dissolve  itself  (or  suffer  any
liquidation or dissolution);  (c) convey,  sell,  lease,  sublease,  transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial  part of its  business or assets,  or the capital  stock of or other
Equity  Interests  in any of its  Subsidiaries,  whether now owned or  hereafter
acquired;  or (d) acquire (whether by purchase,  acquisition of Equity Interests
of a Person, or as a result of a merger or  consolidation) a Substantial  Amount
of the assets of, or make an Investment  of a  Substantial  Amount in, any other
Person; provided, however, that:

                  (i) the Borrower and its  Subsidiaries  may lease and sublease
         its respective  assets, as lessor or sublessor (as the case may be), in
         the ordinary course of their business;

                  (ii) any Subsidiary may merge with (x) the Borrower so long as
         the Borrower is the survivor of such merger or (y) any other Subsidiary
         so long as the  survivor  of such  merger is a Loan  Party or becomes a
         Guarantor simultaneously with the effectiveness of such merger;

                  (iii) any  Subsidiary  may sell,  transfer  or  dispose of its
         assets  to any Loan  Party  or any  other  Subsidiary  that  becomes  a
         Guarantor  simultaneously with the effectiveness of such sale, transfer
         or disposition;

                  (iv) a Loan Party  (other than the  Borrower or any Loan Party
         which owns an  Unencumbered  Pool Property) and any Subsidiary  that is
         not (and is not required to be) a Loan Party may convey, sell, transfer
         or  otherwise   dispose  of,  in  one   transaction   or  a  series  of
         transactions, all or any substantial part of its business or assets, or
         the  capital  stock  of  or  other  Equity  Interests  in  any  of  its
         Subsidiaries,  and  immediately  thereafter  liquidate,  provided  that
         immediately prior to any such conveyance,  sale, transfer,  disposition
         or  liquidation  and  immediately  thereafter  and after giving  effect
         thereto,  no Default  or Event of Default is or would be in  existence;
         and

                  (v)  the  Borrower,   any  other  Loan  Party  and  any  other
         Subsidiary  may,  directly  or  indirectly,  (A)  acquire  (whether  by
         purchase,  acquisition of Equity Interests of a Person,  or as a result
         of a merger or consolidation) a Substantial Amount of the assets of, or
         make an Investment of a Substantial Amount in, any other Person and (B)
         sell,  lease or  otherwise  transfer,  whether  by one or a  series  of
         transactions,  a Substantial  Amount of assets (including capital stock
         or other securities of  Subsidiaries) to any other Person,  so long as,
         in each  case,  (1) the  Borrower  shall  have  given the Agent and the
         Lenders at least 15 days prior  written  notice of such  consolidation,
         merger,  acquisition,  Investment,  sale, lease or other transfer;  (2)
         immediately prior thereto, and immediately  thereafter and after giving
         effect  thereto,  no  Default  or  Event of  Default  is or would be in
         existence;  (3) in the case of a consolidation  or merger involving the
         Borrower or a Loan Party which owns an Unencumbered Pool Property, such
         Person shall be the  survivor  thereof and (4) at the time the Borrower
         gives notice  pursuant to clause (1) of this  subsection,  the Borrower
         shall  have  delivered  to the  Agent  and  the  Lenders  a  Compliance
         Certificate,  calculated on a pro forma basis, evidencing the continued
         compliance  by the  Borrower  with the  terms  and  conditions  of this
         Agreement and the other Loan Documents,  including without  limitation,
         the financial covenants contained in Section 10.1., after giving effect
         to such consolidation,  merger, acquisition, Investment, sale, lease or
         other transfer.

                                      -55-

<PAGE>

Section 10.6. Plans.

         The  Borrower  shall not,  and shall not permit any other Loan Party or
any other  Subsidiary  to, permit any of its  respective  assets to become or be
deemed to be "plan  assets"  within the meaning of ERISA,  the Internal  Revenue
Code and the respective regulations promulgated thereunder.

Section 10.7.  Fiscal Year.

         The  Borrower  shall not,  and shall not permit any other Loan Party or
any other  Subsidiary  to,  change its fiscal year from that in effect as of the
Agreement Date.

Section 10.8.  Modifications of Organizational Documents; Material Contracts.

         The  Borrower  shall not,  and shall not permit any other Loan Party or
other Subsidiary to, amend, supplement, restate or otherwise modify its articles
of incorporation, by-laws, partnership agreement or other similar organizational
document if such amendment, supplement,  restatement or other modification could
have a Material Adverse Effect. The Borrower shall not, and shall not permit any
other  Loan  Party or any other  Subsidiary  to,  enter  into any  amendment  or
modification to any Material  Contract that could reasonably be expected to have
a Material  Adverse Effect or default in the  performance of any  obligations of
such  Person in any  Material  Contract  or permit any  Material  Contract to be
canceled or terminated prior to its stated maturity.

Section 10.9.  Transactions with Affiliates.

         Except for transactions described on Schedule 10.9., the Borrower shall
not, and shall not permit any  Subsidiary  to, permit to exist or enter into any
transaction (including the purchase,  sale, lease or exchange of any property or
the  rendering  of any service)  with any  Affiliate of the Borrower or with any
director,  officer or employee of any  Subsidiary,  except  transactions  in the
ordinary  course of and pursuant to the reasonable  requirements of the business
of the Borrower or any of its  Subsidiaries  and upon fair and reasonable  terms
and are no less  favorable  to the  Borrower  or such  Subsidiary  than would be
obtained in a comparable  arm's length  transaction with a Person that is not an
Affiliate.

                               ARTICLE XI. DEFAULT

Section 11.1.  Events of Default.

         Each of the following  shall  constitute an Event of Default,  whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable  Law or pursuant to any judgment or order of
any Governmental Authority:

         (a) DEFAULT IN PAYMENT.  The Borrower  shall fail to pay when due under
this Agreement or any other Loan Document (whether upon demand, at maturity,  by
reason  of  acceleration  or  otherwise)  (i) the  principal  of any Loan or any
Reimbursement Obligation or (ii) any interest on any of the Loans, or any of the
other  payment  Obligations  owing by the Borrower  under this  Agreement or any
other Loan  Document,  or any other  Loan  Party  shall fail to pay when due any
payment  obligation owing by such Loan Party under any Loan Document to which it
is a party,  and  solely  in the case of this  clause  (ii) such  failure  shall
continue for a period of 5 calendar days.

         (b) DEFAULT IN PERFORMANCE.  The Borrower or any other Loan Party shall
fail to perform or observe any term, covenant,  condition or agreement contained
(i) in Section  10.1.  or (ii)  elsewhere  in this  Agreement  or any other Loan
Document to which it is a party and not otherwise  mentioned in this Section and
solely in the case of this clause (ii) such failure shall  continue for a period
of 30 calendar  days after the  earlier of (x) the date upon which the  Borrower
obtains  knowledge  of such  failure or (y) the date upon which the Borrower has
received written notice of such failure from the Agent;

                                      -56-

<PAGE>

         (c)  MISREPRESENTATIONS.   Any  written  statement,  representation  or
warranty  made or deemed made by or on behalf of the  Borrower or any other Loan
Party under this  Agreement or under any other Loan  Document,  or any amendment
hereto or thereto,  or in any other  writing or statement at any time  furnished
by, or at the direction of, the Borrower or any other Loan Party to the Agent or
any Lender,  shall at any time prove to have been incorrect or misleading in any
material respect when furnished or made.

         (d) INDEBTEDNESS CROSS-DEFAULT.

                  (i) The Borrower or any Subsidiary  shall fail to pay when due
         and payable the principal of, or interest on, any  Indebtedness  (other
         than the Loans)  having an aggregate  outstanding  principal  amount of
         $10,000,000 or more  ("Material  Indebtedness")  and such failure shall
         continue beyond any applicable cure periods; or

                  (ii) (x) The maturity of any Material  Indebtedness shall have
         been  accelerated  in accordance  with the provisions of any indenture,
         contract or  instrument  evidencing,  providing  for the creation of or
         otherwise  concerning  such Material  Indebtedness  or (y) any Material
         Indebtedness  shall have been  required  to be  prepaid or  repurchased
         prior to the stated maturity thereof; or

                  (iii) Any other event shall have  occurred  and be  continuing
         (including the expiration of any applicable cure periods) which permits
         any holder or  holders of any  Material  Indebtedness,  any  trustee or
         agent  acting on behalf of such holder or holders or any other  Person,
         to accelerate the maturity of any Material  Indebtedness or require any
         Material  Indebtedness to be prepaid or repurchased prior to its stated
         maturity;  provided,  however,  this  clause  (iii) shall only apply to
         Nonrecourse  Indebtedness the aggregate outstanding principal amount of
         which is $25,000,000 or more.

         (e) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower, any other Loan Party
or any  other  Subsidiary  shall:  (i)  commence  a  voluntary  case  under  the
Bankruptcy Code of 1978, as amended or other federal  bankruptcy laws (as now or
hereafter  in effect);  (ii) file a petition  seeking to take  advantage  of any
other Applicable Laws, domestic or foreign, relating to bankruptcy,  insolvency,
reorganization, winding-up, or composition or adjustment of debts; (iii) consent
to, or fail to contest in a timely and  appropriate  manner,  any petition filed
against it in an involuntary case under such bankruptcy laws or other Applicable
Laws or  consent  to any  proceeding  or  action  described  in the  immediately
following  subsection;  (iv)  apply for or  consent  to, or fail to contest in a
timely and appropriate  manner,  the appointment of, or the taking of possession
by, a receiver,  custodian, trustee, or liquidator of itself or of a substantial
part of its property, domestic or foreign; (v) admit in writing its inability to
pay its debts as they become due; (vi) make a general assignment for the benefit
of  creditors;  (vii) make a conveyance  fraudulent  as to  creditors  under any
Applicable  Law;  or (viii) take any  corporate  or  partnership  action for the
purpose of effecting any of the foregoing.

         (f) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding shall
be commenced against the Borrower,  any other Loan Party or any other Subsidiary
in any court of competent  jurisdiction seeking: (i) relief under the Bankruptcy
Code of 1978, as amended or other federal  bankruptcy  laws (as now or hereafter
in effect) or under any other Applicable Laws, domestic or foreign,  relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian,  liquidator
or the like of such  Person,  or of all or any  substantial  part of the assets,
domestic or foreign,  of such  Person,  and in the case of either  clause (i) or
(ii) such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive  calendar  days, or an order granting the relief  requested in
such case or  proceeding  (including,  but not  limited  to, an order for relief
under such  Bankruptcy  Code or such other  federal  bankruptcy  laws)  shall be
entered.

         (g) REVOCATION OF LOAN DOCUMENTS.  The Borrower or any other Loan Party
shall (or shall  attempt to) disavow,  revoke or terminate  any Loan Document to
which it is a party or shall otherwise  challenge or contest in any action, suit
or proceeding in any court or before any Governmental  Authority the validity or
enforceability of any Loan Document.

                                      -57-

<PAGE>

         (h)  JUDGMENT.  A judgment  or order for the  payment of money shall be
entered against the Borrower or any  Subsidiary,  by any court or other tribunal
and (i) such  judgment or order shall  continue  for a period of 30 days without
being paid stayed or dismissed  through  appropriate  appellate  proceedings and
(ii)  either (A) the amount for which  insurance  has not been  acknowledged  in
writing  by the  applicable  insurance  carrier  (or the  amount as to which the
insurer has denied liability)  exceeds,  individually or together with all other
such  judgments or orders  entered  against the  Borrower and its  Subsidiaries,
$20,000,000 or (B) such judgment or order could reasonably be expected to have a
Material Adverse Effect.

         (i)  ATTACHMENT.  A warrant,  writ of attachment,  execution or similar
process shall be issued against any property of the Borrower or any  Subsidiary,
which exceeds,  individually  or together with all other such  warrants,  writs,
executions  and  processes,  $10,000,000  in  amount  and  such  warrant,  writ,
execution or process shall not be paid,  discharged,  vacated,  stayed or bonded
for a period of 30 days.

         (j) ERISA.  Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $2,500,000 which it shall have become
liable to pay  under  Title IV of ERISA;  or  notice  of intent to  terminate  a
Material  Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan  administrator or any combination of the foregoing;  or the PBGC
shall  institute  proceedings  under Title IV of ERISA to  terminate,  to impose
liability  (other than for premiums  under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to  administer  any  Material  Plan;  or a
condition  shall exist by reason of which the PBGC would be entitled to obtain a
decree  adjudicating  that any Material Plan must be terminated;  or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section  4219(c)(5) of ERISA, with respect to, one or more  Multiemployer  Plans
which  could  cause one or more  members  of the ERISA  Group to incur a current
payment obligation in excess of $2,500,000.

         (k) LOAN  DOCUMENTS.  An Event of Default  (as defined  therein)  shall
occur under any of the other Loan Documents;

         (l) CHANGE OF CONTROL. A Change of Control shall occur.

Section 11.2.  Remedies Upon Event of Default.

         Upon the  occurrence  of an Event of Default the  following  provisions
shall apply:

         (a) Acceleration; Termination of Facilities.

                  (i)  AUTOMATIC.  Upon the  occurrence  of an Event of  Default
         specified in Sections  11.1.(e) or 11.1.(f),  (1)(A) the  principal of,
         and all  accrued  interest  on,  the  Loans  and the  Notes at the time
         outstanding, (B) an amount equal to the Stated Amount of all Letters of
         Credit  outstanding  as of the date of the  occurrence of such Event of
         Default  and  (C)  all  of  the  other  Obligations  of  the  Borrower,
         including,  but not limited to, the other  amounts  owed to the Lenders
         and the Agent under this Agreement,  the Notes or any of the other Loan
         Documents shall become immediately and automatically due and payable by
         the Borrower without presentment,  demand,  protest, or other notice of
         any kind, all of which are expressly waived by the Borrower and (2) the
         Commitments and the Swingline Commitment, the obligation of the Lenders
         to make  Loans  hereunder,  and the  obligation  of the  Agent to issue
         Letters of Credit  hereunder,  shall all immediately and  automatically
         terminate.

                  (ii) OPTIONAL.  If any other Event of Default shall exist, the
         Agent may, and at the direction of the  Requisite  Lenders  shall:  (1)
         declare (A) the  principal  of, and accrued  interest on, the Loans and
         the Notes at the time  outstanding,  (B) an amount  equal to the Stated
         Amount  of all  Letters  of  Credit  outstanding  as of the date of the
         occurrence  of  such  Event  of  Default  and  (C)  all  of  the  other
         Obligations,  including,  but not limited to, the other amounts owed to
         the Lenders and the Agent under this Agreement, the Notes or any of the
         other Loan  Documents to be forthwith  due and payable,  whereupon  the
         same shall  immediately  become due and  payable  without  presentment,
         demand, protest or other notice of any kind, all of which are expressly
         waived  by the  Borrower  and (2)  terminate  the  Commitments  and the
         obligation of the Lenders to make Loans hereunder and the obligation of
         the  Agent to issue  Letters  of  Credit  hereunder.  If the  Agent has
         exercised any of the rights provided under the preceding sentence,  the
         Swingline  Lender  shall:  (x)  declare the  principal  of, and accrued

                                      -58-

<PAGE>

         interest on, the Swingline  Loans and the  Swingline  Notes at the time
         outstanding,  and all of the other  Obligations  owing to the Swingline
         Lender,  to be  forthwith  due and  payable,  whereupon  the same shall
         immediately become due and payable without presentment, demand, protest
         or other notice of any kind,  all of which are expressly  waived by the
         Borrower and (y) terminate the Swingline  Commitment and the obligation
         of the Swingline Lender to make Swingline Loans.

                  (b) LOAN DOCUMENTS. The Requisite Lenders may direct the Agent
         to, and the Agent if so  directed  shall,  exercise  any and all of its
         rights under any and all of the other Loan Documents.

                  (c) APPLICABLE LAW. The Requisite Lenders may direct the Agent
         to, and the Agent if so directed  shall,  exercise all other rights and
         remedies it may have under any Applicable Law.

                  (d)  APPOINTMENT  OF  RECEIVER.  To the  extent  permitted  by
         Applicable  Law,  the Agent and the  Lenders  shall be  entitled to the
         appointment of a receiver for the assets and properties of the Borrower
         and its Subsidiaries, without notice of any kind whatsoever and without
         regard to the  adequacy  of any  security  for the  Obligations  or the
         solvency of any party bound for its payment,  to take possession of all
         or any portion of the of any of the Unencumbered Pool Properties and/or
         the business  operations  of the Borrower and its  Subsidiaries  and to
         exercise such power as the court shall confer upon such receiver.

Section 11.3.  Remedies Upon Default.

         Upon the  occurrence  of a Default  specified  in Sections  11.1.(e) or
11.1.(f), the Commitments shall immediately and automatically terminate.

Section 11.4.  Marshaling; Payments Set Aside.

         Neither  the Agent nor any  Lender  shall be under  any  obligation  to
marshal  any assets in favor of any Loan Party or any other  party or against or
in payment of any or all of the  Obligations.  To the extent that any Loan Party
makes a payment or payments to the Agent and/or any Lender,  or the Agent and/or
any Lender enforce their security  interests or exercise their rights of setoff,
and such  payment or payments or the proceeds of such  enforcement  or setoff or
any part thereof are  subsequently  invalidated,  declared to be  fraudulent  or
preferential,  set aside and/or required to be repaid to a trustee,  receiver or
any other party under any bankruptcy  law,  state or federal law,  common law or
equitable  cause,  then to the extent of such recovery,  the Obligations or part
thereof originally intended to be satisfied,  and all Liens, rights and remedies
therefor,  shall be revived  and  continued  in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

Section 11.5.  Allocation of Proceeds.

         If an Event of Default  exists and  maturity of any of the  Obligations
has been  accelerated,  all payments received by the Agent under any of the Loan
Documents,  in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower hereunder or thereunder,  shall be applied
in the following order and priority:

                  (a)  amounts  due to the Agent and the  Lenders  in respect of
         Fees and expenses due under Section 13.2.;

                  (b) payments of interest on Swingline Loans;

                  (c) payments of interest on all other Loans, to be applied for
         the ratable  benefit of the  Lenders,  in such order as the Lenders may
         determine in their sole discretion;

                  (d) payment of principal on Swingline Loans;

                  (e) payments of  principal  of all other Loans,  to be applied
         for the ratable  benefit of the  Lenders,  in such order as the Lenders
         may  determine  in their sole  discretion;

                                      -59-

<PAGE>

                  (f)  amounts  to  be  deposited  into  the  Letter  of  Credit
         collateral Account in respect of Letters of Credit;

                  (g)  amounts  due to the Agent  and the  Lenders  pursuant  to
         Sections 12.7. and 13.9.;

                  (h)  payments  of all other  amounts due under any of the Loan
         Documents,  if any,  to be  applied  for  the  ratable  benefit  of the
         Lenders; and

                  (i) any amount remaining after  application as provided above,
         shall be paid to the Borrower or whomever else may be legally  entitled
         thereto.

Section 11.6.  Letter of Credit Collateral Account.

         (a) As collateral  security for the prompt  payment in full when due of
all Letter of Credit Liabilities,  the Borrower hereby pledges and grants to the
Agent,  for the  benefit of the Agent and the  Lenders  as  provided  herein,  a
security  interest in all of its right,  title and interest in and to the Letter
of Credit Collateral Account and the balances from time to time in the Letter of
Credit Collateral Account  (including the investments and reinvestments  therein
provided  for  below).  The  balances  from time to time in the Letter of Credit
Collateral  Account  shall  not  constitute  payment  of any  Letter  of  Credit
Liabilities  until  applied by the Agent as  provided  herein.  Anything in this
Agreement  to the contrary  notwithstanding,  funds held in the Letter of Credit
Collateral  Account  shall be subject to  withdrawal  only as  provided  in this
Section and in Section 2.16.

         (b) Amounts on deposit in the Letter of Credit Collateral Account shall
be invested and  reinvested by the Agent in such Cash  Equivalents  as the Agent
shall determine in its sole discretion.  All such investments and  reinvestments
shall be held in the name of and be under the sole  dominion  and control of the
Agent,  provided,  that all earnings on such investments will be credited to and
retained in the Letter of Credit  Collateral  Account.  The Agent shall exercise
reasonable care in the custody and  preservation of any funds held in the Letter
of Credit Collateral  Account and shall be deemed to have exercised such care if
such funds are accorded  treatment  substantially  equivalent  to that which the
Agent accords other funds deposited with the Agent, it being understood that the
Agent  shall not have any  responsibility  for  taking  any  necessary  steps to
preserve rights against any parties with respect to any funds held in the Letter
of Credit Collateral Account.

         (c) If an Event of Default exists, the Agent may (and, if instructed by
the Requisite Lenders,  shall) in its (or their) discretion at any time and from
time to time elect to  liquidate  any such  investments  and  reinvestments  and
credit the proceeds thereof to the Letter of Credit Collateral Account and apply
or cause to be applied  such  proceeds  and any other  balances in the Letter of
Credit  Collateral  Account  to the  payment  of any of  the  Letter  of  Credit
Liabilities due and payable.

         (d) So long as no Default or Event of Default exists,  the Agent shall,
from time to time,  at the  request of the  Borrower,  deliver to the  Borrower,
against receipt but without any recourse, warranty or representation whatsoever,
such of the  balances in the Letter of Credit  Collateral  Account as exceed the
aggregate  amount of Letter of Credit  Liabilities at such time. When all of the
Obligations  shall have been  indefeasibly paid in full and no Letters of Credit
remain outstanding, the Agent shall deliver to the Borrower, against receipt but
without  any  recourse,  warranty or  representation  whatsoever,  the  balances
remaining in the Letter of Credit Collateral Account.

         (e) The Borrower  shall pay to the Agent from time to time such fees as
the Agent normally  charges for similar  services in connection with the Agent's
administration  of the Letter of Credit  Collateral  Account and investments and
reinvestments of funds therein.

                                      -60-

<PAGE>

Section 11.7.  Performance by Agent.

         If the Borrower  shall fail to perform any covenant,  duty or agreement
contained  in any of the Loan  Documents,  the Agent may  perform  or attempt to
perform such  covenant,  duty or  agreement on behalf of the Borrower  after the
expiration  of any cure or grace periods set forth  herein.  In such event,  the
Borrower shall, at the request of the Agent,  promptly pay any amount reasonably
expended by the Agent in such performance or attempted performance to the Agent,
together with interest thereon at the applicable Post-Default Rate from the date
of such expenditure until paid. Notwithstanding the foregoing, neither the Agent
nor any Lender shall have any  liability or  responsibility  whatsoever  for the
performance  of any obligation of the Borrower under this Agreement or any other
Loan Document.

Section 11.8.  Rights Cumulative.

         The  rights  and  remedies  of the Agent  and the  Lenders  under  this
Agreement  and each of the other  Loan  Documents  shall be  cumulative  and not
exclusive of any rights or remedies  which any of them may otherwise  have under
Applicable Law. In exercising their respective rights and remedies the Agent and
the Lenders may be selective  and no failure or delay by the Agent or any of the
Lenders in  exercising  any right shall operate as a waiver of it, nor shall any
single or partial  exercise of any power or right  preclude its other or further
exercise or the exercise of any other power or right.

                             ARTICLE XII. THE AGENT

Section 12.1.  Authorization and Action.

         Each  Lender  hereby  appoints  and  authorizes  the Agent to take such
action as  contractual  representative  on such Lender's  behalf and to exercise
such  powers  under  this   Agreement  and  the  other  Loan  Documents  as  are
specifically  delegated to the Agent by the terms  hereof and thereof,  together
with such powers as are reasonably  incidental thereto. Not in limitation of the
foregoing,  each Lender  authorizes and directs the Agent to enter into the Loan
Documents for the benefit of the Lenders. Each Lender hereby agrees that, except
as otherwise  set forth  herein,  any action taken by the  Requisite  Lenders in
accordance with the provisions of this Agreement or the Loan Documents,  and the
exercise  by the  Requisite  Lenders of the powers set forth  herein or therein,
together with such other powers as are reasonably  incidental thereto,  shall be
authorized  and  binding  upon  all of the  Lenders.  Nothing  herein  shall  be
construed to deem the Agent a trustee or fiduciary  for any Lender nor to impose
on the Agent  duties or  obligations  other than those  expressly  provided  for
herein. At the request of a Lender, the Agent will forward to such Lender copies
or,  where  appropriate,  originals  of the  documents  delivered  to the  Agent
pursuant  to this  Agreement  or the other Loan  Documents.  The Agent will also
furnish  to any  Lender,  upon  the  request  of  such  Lender,  a  copy  of any
certificate or notice furnished to the Agent by the Borrower,  any Loan Party or
any other  Affiliate of the  Borrower,  pursuant to this  Agreement or any other
Loan Document not already delivered to such Lender pursuant to the terms of this
Agreement  or any such other Loan  Document.  As to any  matters  not  expressly
provided for by the Loan Documents (including,  without limitation,  enforcement
or  collection  of any of the  Obligations),  the Agent shall not be required to
exercise any  discretion or take any action,  but shall be required to act or to
refrain  from acting (and shall be fully  protected  in so acting or  refraining
from  acting)  upon the  instructions  of the  Requisite  Lenders (or all of the
Lenders if explicitly required under any other provision of this Agreement), and
such  instructions  shall be binding  upon all Lenders and all holders of any of
the  Obligations;  provided,  however,  that,  notwithstanding  anything in this
Agreement  to the  contrary,  the Agent shall not be required to take any action
which  exposes  the Agent to  personal  liability  or which is  contrary to this
Agreement or any other Loan Document or Applicable Law. Not in limitation of the
foregoing,  the Agent shall not  exercise  any right or remedy it or the Lenders
may have under any Loan Document upon the occurrence of a Default or an Event of
Default unless the Requisite Lenders have so directed the Agent to exercise such
right or remedy.

                                      -61-

<PAGE>

Section 12.2.  Agent's Reliance, Etc.

         Notwithstanding  any other  provisions  of this  Agreement or any other
Loan Documents,  neither the Agent nor any of its directors,  officers,  agents,
employees or counsel shall be liable for any action taken or omitted to be taken
by it or them  under or in  connection  with this  Agreement,  except for its or
their own gross  negligence  or willful  misconduct  as determined by a court of
competent  jurisdiction  in  a  nonappealable  judgment.  Without  limiting  the
generality of the foregoing,  the Agent:  (a) may treat the payee of any Note as
the holder thereof until the Agent receives  written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent; (b)
may consult  with legal  counsel  (including  its own counsel or counsel for the
Borrower or any other Loan  Party),  independent  public  accountants  and other
experts  selected by it and shall not be liable for any action  taken or omitted
to be taken in good faith by it in  accordance  with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender or
any other Person and shall not be  responsible to any Lender or any other Person
for any statements,  warranties or  representations  made by any Person in or in
connection  with this Agreement or any other Loan  Document;  (d) shall not have
any duty to ascertain or to inquire as to the  performance  or observance of any
of the terms, covenants or conditions of any of this Agreement or any other Loan
Document or the satisfaction of any conditions precedent under this Agreement or
any Loan  Document on the part of the  Borrower or other  Persons or inspect the
property, books or records of the Borrower or any other Person; (e) shall not be
responsible   to  any  Lender  for  the  due  execution,   legality,   validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document,  or any other instrument or document  furnished pursuant thereto;
and (f) shall incur no  liability  under or in respect of this  Agreement or any
other Loan  Document by acting upon any notice,  consent,  certificate  or other
instrument or writing (which may be by telephone or telecopy)  believed by it to
be genuine and signed, sent or given by the proper party or parties.

Section 12.3.  Notice of Defaults.

         The  Agent  shall  not be  deemed  to have  knowledge  or notice of the
occurrence of a Default or Event of Default unless the Agent has received notice
from a Lender or the  Borrower  referring  to this  Agreement,  describing  with
reasonable  specificity  such  Default or Event of Default and stating that such
notice is a "notice of  default." If any Lender  (excluding  the Lender which is
also serving as the Agent) becomes aware of any Default or Event of Default,  it
shall  promptly  send to the Agent such a "notice of default."  Further,  if the
Agent  receives  such a "notice of default",  the Agent shall give prompt notice
thereof to the Lenders.

Section 12.4.  Wells Fargo as Lender.

         Wells Fargo, as a "Lender", shall have the same rights and powers under
this  Agreement and any other Loan Document as any other Lender and may exercise
the same as though it were not the Agent;  and the term  "Lender"  or  "Lenders"
shall, unless otherwise expressly indicated, include Wells Fargo in each case in
its individual capacity. Wells Fargo and its affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of  business  with the  Borrower,  any other Loan Party or any other
affiliate  thereof as if it were any other bank and  without any duty to account
therefor to the other Lenders.  Further,  the Agent and any affiliate may accept
fees and other  consideration  from the Borrower for services in connection with
this Agreement and otherwise without having to account for the same to the other
Lenders.

Section 12.5.  Approvals of Lenders.

         All  communications  from  the  Agent  to any  Lender  requesting  such
Lender's determination,  consent,  approval or disapproval (a) shall be given in
the form of a written  notice to such  Lender,  (b)  shall be  accompanied  by a
description  of the  matter or issue as to which such  determination,  approval,
consent  or  disapproval  is  requested,  or  shall  advise  such  Lender  where
information,  if any, regarding such matter or issue may be inspected,  or shall
otherwise  describe the matter or issue to be resolved,  (c) shall  include,  if
reasonably requested by such Lender and to the extent not previously provided to
such Lender, written materials and a summary of all oral information provided to
the Agent by the Borrower in respect of the matter or issue to be resolved,  and
(d) shall include the Agent's  recommended  course of action or determination in
respect  thereof.  Each Lender shall reply promptly,  but in any event within 10
Business Days (or such lesser or greater period as may be specifically  required
under the express terms of the Loan Documents) of receipt of such communication.
Except as otherwise expressly provided in this Agreement,  unless a Lender shall

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give  written  notice  to  the  Agent  that  it  specifically   objects  to  the
recommendation   or   determination  of  the  Agent  (together  with  a  written
explanation of the reasons  behind such  objection)  within the applicable  time
period for reply, such Lender shall be deemed to have  conclusively  approved of
or consented to such recommendation or determination.

Section 12.6.  Lender Credit Decision, Etc.

         Each Lender  expressly  acknowledges  and agrees that neither the Agent
nor   any   of   its   officers,   directors,    employees,   agents,   counsel,
attorneys-in-fact or other affiliates has made any representations or warranties
as to the financial condition, operations,  creditworthiness,  solvency or other
information  concerning the business or affairs of the Borrower,  any other Loan
Party,  any Subsidiary or any other Person to such Lender and that no act by the
Agent  hereafter  taken,  including  any review of the affairs of the  Borrower,
shall be deemed to constitute any such  representation  or warranty by the Agent
to any Lender. Each Lender  acknowledges that it has,  independently and without
reliance  upon the Agent,  any other  Lender or counsel to the Agent,  or any of
their respective  officers,  directors,  employees and agents,  and based on the
financial  statements of the Borrower,  the  Subsidiaries or any other Affiliate
thereof,  and inquiries of such Persons,  its  independent  due diligence of the
business and affairs of the Borrower,  the Loan Parties,  the  Subsidiaries  and
other Persons, its review of the Loan Documents,  the legal opinions required to
be  delivered  to it  hereunder,  the advice of its own  counsel  and such other
documents and information as it has deemed appropriate,  made its own credit and
legal  analysis and decision to enter into this  Agreement  and the  transaction
contemplated  hereby. Each Lender also acknowledges that it will,  independently
and without reliance upon the Agent, any other Lender or counsel to the Agent or
any of their respective officers, directors,  employees and agents, and based on
such review,  advice,  documents and information as it shall deem appropriate at
the time,  continue  to make its own  decisions  in taking or not taking  action
under the Loan  Documents.  Except for notices,  reports and other documents and
information expressly required to be furnished to the Lenders by the Agent under
this Agreement or any of the other Loan Documents,  the Agent shall have no duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning the business, operations,  property, financial and other condition or
creditworthiness  of the Borrower,  any other Loan Party or any other  Affiliate
thereof  which may come  into  possession  of the Agent or any of its  officers,
directors, employees, agents, attorneys-in-fact or other Affiliates. Each Lender
acknowledges  that the Agent's legal counsel in connection with the transactions
contemplated by this Agreement is only acting as counsel to the Agent and is not
acting as counsel to such Lender.

Section 12.7.  Indemnification of Agent.

         Each Lender agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower and without  limiting the  obligation  of the Borrower to do so)
pro rata in accordance with such Lender's respective Commitment Percentage, from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent (in its  capacity  as Agent but not as a "Lender")  in any way
relating to or arising out of the Loan Documents,  any transaction  contemplated
hereby or  thereby or any  action  taken or omitted by the Agent  under the Loan
Documents (collectively,  "Indemnifiable Amounts");  provided,  however, that no
Lender  shall be liable  for any  portion of such  Indemnifiable  Amounts to the
extent resulting from the Agent's gross  negligence or willful  misconduct or if
the Agent fails to follow the written  direction of the Requisite Lenders unless
such  failure is  pursuant  to the advice of counsel of which the  Lenders  have
received notice.  Without limiting the generality of the foregoing,  each Lender
agrees to reimburse the Agent (to the extent not  reimbursed by the Borrower and
without  limiting the  obligation of the Borrower to do so) promptly upon demand
for its ratable share of any out-of-pocket  expenses  (including counsel fees of
the counsel(s) of the Agent's own choosing)  incurred by the Agent in connection
with the preparation, negotiation, execution, administration, or enforcement of,
or legal  advice with respect to the rights or  responsibilities  of the parties
under,  the Loan  Documents,  any suit or action brought by the Agent to enforce
the terms of the Loan  Documents  and/or  collect any  Obligations,  any "lender
liability" suit or claim brought  against the Agent and/or the Lenders,  and any
claim or suit  brought  against the Agent and/or the Lenders  arising  under any
Environmental  Laws. Such out-of-pocket  expenses (including counsel fees) shall
be advanced by the Lenders on the request of the Agent notwithstanding any claim
or assertion  that the Agent is not entitled to  indemnification  hereunder upon
receipt of an undertaking by the Agent that the Agent will reimburse the Lenders
if it is actually and finally  determined  by a court of competent  jurisdiction
that the Agent is not so entitled to  indemnification.  The  agreements  in this
Section  shall  survive the payment of the Loans and all other  amounts  payable
hereunder  or  under  the  other  Loan  Documents  and the  termination  of this

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Agreement.  If the  Borrower  shall  reimburse  the Agent for any  Indemnifiable
Amount  following  payment  by any  Lender  to the  Agent  in  respect  of  such
Indemnifiable  Amount  pursuant  to this  Section,  the Agent  shall  share such
reimbursement on a ratable basis with each Lender making any such payment.

Section 12.8.  Successor Agent.

         The Agent may resign at any time as Agent under the Loan  Documents  by
giving written notice thereof to the Lenders and the Borrower. In the event of a
material breach of its duties hereunder, the Agent may be removed as Agent under
the Loan Documents at any time by all Lenders (other than the Lender then acting
as Agent) and the Borrower upon 30-day's prior notice. Upon any such resignation
or removal,  the  Requisite  Lenders  (which,  in the case of the removal of the
Agent as provided in the  immediately  preceding  sentence,  shall be determined
without  regard to the Commitment of the Lender then acting as Agent) shall have
the right to appoint a successor  Agent  which  appointment  shall,  provided no
Default or Event of Default exists, be subject to the Borrower's approval, which
approval shall not be unreasonably withheld or delayed (except that the Borrower
shall,  in all  events,  be deemed to have  approved  each Lender as a successor
Agent).  If no successor  Agent shall have been so appointed in accordance  with
the immediately  preceding  sentence,  and shall have accepted such appointment,
within 30 days after the resigning  Agent's  giving of notice of  resignation or
the Lenders' removal of the resigning Agent, then the resigning or removed Agent
may,  on behalf of the  Lenders,  appoint a  successor  Agent,  which shall be a
Lender,  if any  Lender  shall be  willing to serve,  and  otherwise  shall be a
commercial bank having total combined assets of at least  $10,000,000,000.  Upon
the acceptance of any appointment as Agent hereunder by a successor Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent  shall be  discharged  from its  duties  and  obligations  under  the Loan
Documents.  After any Agent's  resignation  or removal  hereunder as Agent,  the
provisions of this Article XII. shall continue to inure to its benefit as to any
actions  taken or  omitted  to be taken by it while it was Agent  under the Loan
Documents.

Section 12.9.  Titled Agents.

         Each of the  Syndication  Agent and each  Documentation  Agent  (each a
"Titled Agent") in each such respective  capacity,  assumes no responsibility or
obligation hereunder, including, without limitation, for servicing,  enforcement
or collection of any of the Loans,  nor any duties as an agent hereunder for the
Lenders. The titles given to the Titled Agents are solely honorific and imply no
fiduciary  responsibility  on the part of the Titled  Agents to the  Agent,  any
Lender, the Borrower or any other Loan Party and the use of such titles does not
impose on the Titled Agents any duties or obligations  greater than those of any
other  Lender or  entitle  the Titled  Agents to any rights  other than those to
which any other Lender is entitled.

Section 12.10.  Approvals and Other Actions by Lenders.

         (a) Requisite Lenders. Each of the following shall require the approval
of, or may be taken at the request of, the Requisite Lenders:

                  (i)  Termination of the  Commitments  and  acceleration of the
         Obligations  upon the  occurrence of an Event of Default as provided in
         Section 11.2.(a)(ii);

                  (ii)  Approving of a replacement  Agent as provided in Section
         12.8.;

                  (iii)  Except as  specifically  provided  otherwise in Section
         13.6., any consent or approval regarding, any waiver of the performance
         or observance by the Borrower of and the waiver of the  continuance  of
         any  Default  or Event  of  Default  in  respect  of,  any term of this
         Agreement or any other Loan Document.

         (b) ALL LENDERS.  Each of the following  shall require the approval of,
or may be taken only at the request of, all of the Lenders:

                  (i) Agreeing  that the  Borrower's  reduction of the aggregate
         amount of Commitment  below the amount set forth in Section 2.13.  will
         not result in a termination of this Agreement;

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<PAGE>

                  (ii)   Consenting  to  extensions  of  the  Revolving   Credit
         Termination Date as provided in Section 2.14.;

                  (iii) Removing the Agent for good cause as provided in Section
         12.8.; and

                  (iv)  Consenting to the  assignment by the Borrower to another
         Person of the Borrower's rights and obligations under this Agreement as
         provided in Section 13.5.(a); and

                  (v) Any  consent  or  approval  regarding,  any  waiver of the
         performance  or  observance  by the  Borrower  of and the waiver of the
         continuance  of any Default or Event of Default in respect of, any term
         of this  Agreement  or any other  Loan  Document  described  in Section
         13.6.(a) through (k).

         (b) Conflict with Terms of Loan Documents.  To the extent any provision
of this Section conflicts with any other provision of this Agreement,  including
without  limitation,  Section  13.6.,  or any other  Loan  Document,  such other
provision shall control.

                           ARTICLE XIII. MISCELLANEOUS

Section 13.1.  Notices.

         Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:

         If to the Borrower:

                  Public Storage, Inc.
                  701 Western Avenue
                  Glendale, California  91201-2349
                  Attention:  Treasurer
                  Telecopy Number:  (818) 244-9267
                  Telephone Number: (818) 244-8080

         If to the Agent:

                  Wells Fargo Bank, National Association
                  1000 Lakes Drive, Suite 250
                  West Covina, California  91790
                  Attention: Perry Moreth
                  Telecopy Number:  (626) 919-2909
                  Telephone Number: (626) 919-6623

         If to a Lender:

                  To such Lender's address or telecopy number, as applicable,
                  set forth on its signature page hereto or in the applicable
                  Assignment and Acceptance Agreement.

or, as to each party at such other  address as shall be designated by such party
in a written  notice to the other  parties  delivered  in  compliance  with this
Section.  All such notices and other  communications  shall be effective  (i) if
mailed, when received;  (ii) if telecopied,  when transmitted;  or (iii) if hand
delivered,  when delivered.  Notwithstanding the immediately preceding sentence,
all notices or communications to the Agent or any Lender under Article II. shall
be effective only when actually received. Neither the Agent nor any Lender shall
incur any  liability to the Borrower (nor shall the Agent incur any liability to
the Lenders) for acting upon any telephonic notice referred to in this Agreement
which the Agent or such  Lender,  as the case may be,  believes in good faith to
have been given by a Person  authorized  to deliver such notice or for otherwise
acting in good faith hereunder.

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<PAGE>

Section 13.2.  Expenses.

         The Borrower  agrees (a) to pay or  reimburse  the Agent for all of its
reasonable  out-of-pocket  costs and expenses  incurred in  connection  with the
preparation,   negotiation,  execution  and  delivery  of,  and  any  amendment,
supplement or modification to, any of the Loan Documents  (including  reasonable
due diligence  expense and reasonable  travel expenses related to closing),  and
the arrangement,  underwriting,  syndication, consummation and administration of
the  transactions  contemplated  thereby,  including  the  reasonable  fees  and
disbursements  of  counsel  to the  Agent  (which  may  include  the  reasonable
allocated cost of in-house  counsel),  (b) to pay or reimburse the Agent and the
Lenders  for all their  costs  and  expenses  incurred  in  connection  with the
enforcement or preservation  of any rights under the Loan  Documents,  including
the reasonable fees and disbursements of their respective counsel (including the
reasonable   allocated   cost  of  in-house   counsel)   and  any   payments  in
indemnification or otherwise payable by the Lenders to the Agent pursuant to the
Loan  Documents,  (c) to pay, and  indemnify and hold harmless the Agent and the
Lenders from, any and all recording and filing fees and any and all  liabilities
with  respect  to, or  resulting  from any  failure  to pay or delay in  paying,
documentary, stamp, excise and other similar taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of any
of  the  Loan  Documents,  or  consummation  of  any  amendment,  supplement  or
modification  of, or any  waiver or  consent  under or in  respect  of, any Loan
Document  and (d) to the extent  not  already  covered  by any of the  preceding
subsections,  to pay the  reasonable  fees and  disbursements  of counsel to the
Agent and any Lender incurred in connection with the representation of the Agent
or such Lender in any matter  relating to or arising  out of any  bankruptcy  or
other  proceeding  of the type  described  in  Sections  11.1.(e)  or  11.1.(f),
including, without limitation (i) any motion for relief from any stay or similar
order, (ii) the negotiation, preparation, execution and delivery of any document
relating to the  Obligations  and (iii) the  negotiation  and preparation of any
debtor-in-possession  financing or any plan of reorganization of the Borrower or
any other Loan Party,  whether  proposed by the Borrower,  such Loan Party,  the
Lenders or any other  Person,  and whether  such fees and  expenses are incurred
prior  to,  during  or  after  the   commencement  of  such  proceeding  or  the
confirmation or conclusion of any such proceeding.

Section 13.3.  Setoff.

         Subject to Section  3.3. and in addition to any rights now or hereafter
granted  under  Applicable  Law and not by way of limitation of any such rights,
the  Agent,  each  Lender  and each  Participant  is  hereby  authorized  by the
Borrower,  at any time or from time to time  while an Event of  Default  exists,
without  notice to the  Borrower or to any other  Person,  any such notice being
hereby expressly waived, but in the case of a Lender or a Participant subject to
receipt  of the  prior  written  consent  of the  Agent  exercised  in its  sole
discretion,  to set off and to  appropriate  and to apply  any and all  deposits
(general or special,  including,  but not limited to, indebtedness  evidenced by
certificates   of  deposit,   whether   matured  or  unmatured)  and  any  other
indebtedness  at any  time  held or  owing  by the  Agent,  such  Lender  or any
affiliate  of the Agent or such  Lender,  to or for the credit or the account of
the Borrower against and on account of any of the  Obligations,  irrespective of
whether  or not any or all of the  Loans  and all  other  Obligations  have been
declared  to be, or have  otherwise  become,  due and  payable as  permitted  by
Section 11.2., and although such obligations shall be contingent or unmatured.

Section 13.4.  Litigation; Jurisdiction; Other Matters; Waivers.

         (a) EACH PARTY  HERETO  ACKNOWLEDGES  THAT ANY  DISPUTE OR  CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT  AND  COMPLEX  ISSUES  OF LAW AND FACT AND  WOULD  RESULT IN DELAY AND
EXPENSE TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE  LENDERS,  THE AGENT AND THE BORROWER  HEREBY  WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR  PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR
TRIBUNAL  IN WHICH AN ACTION MAY BE  COMMENCED  BY OR AGAINST  ANY PARTY  HERETO
ARISING  OUT OF THIS  AGREEMENT,  THE NOTES,  OR ANY OTHER LOAN  DOCUMENT  OR BY
REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG
THE BORROWER, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.

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         (b) EACH OF THE BORROWER,  THE AGENT AND EACH LENDER HEREBY AGREES THAT
THE FEDERAL  DISTRICT  COURT OF THE NORTHERN  DISTRICT OF CALIFORNIA  OR, AT THE
OPTION OF THE AGENT, ANY STATE COURT LOCATED IN SAN FRANCISCO, CALIFORNIA, SHALL
HAVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG
THE BORROWER, THE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT,  THE LOANS AND LETTERS OF CREDIT, THE NOTES OR ANY OTHER LOAN
DOCUMENT OR TO ANY MATTER ARISING  HEREFROM OR THEREFROM.  THE BORROWER AND EACH
OF THE LENDERS EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR PROCEEDING  COMMENCED IN SUCH COURTS.  THE BORROWER  HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED
THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS
OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED  MAIL ADDRESSED TO THE BORROWER
AT ITS ADDRESS FOR NOTICES  PROVIDED  FOR HEREIN.  SHOULD THE  BORROWER  FAIL TO
APPEAR OR ANSWER ANY  SUMMONS,  COMPLAINT,  PROCESS  OR PAPERS SO SERVED  WITHIN
THIRTY DAYS AFTER THE MAILING  THEREOF,  THE BORROWER SHALL BE DEEMED IN DEFAULT
AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR
IN SUCH SUMMONS,  COMPLAINT,  PROCESS OR PAPERS.  EACH PARTY FURTHER  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 FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION  SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF
ANY  ACTION BY THE AGENT OR ANY  LENDER OR THE  ENFORCEMENT  BY THE AGENT OR ANY
LENDER  OF  ANY  JUDGMENT  OBTAINED  IN  SUCH  FORUM  IN ANY  OTHER  APPROPRIATE
JURISDICTION.

         (c) THE  PROVISIONS OF THIS SECTION HAVE BEEN  CONSIDERED BY EACH PARTY
WITH  THE  ADVICE  OF  COUNSEL  AND  WITH A  FULL  UNDERSTANDING  OF  THE  LEGAL
CONSEQUENCES  THEREOF,  AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS,  THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

Section 13.5.  Successors and Assigns.

         (a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective  successors and permitted
assigns,  except that the Borrower  may not assign or otherwise  transfer any of
its rights or obligations under this Agreement or as of the other Loan Documents
without the prior  written  consent of all Lenders (and any such  assignment  or
other  transfer to which all of the Lenders have not so consented  shall be null
and void).

         (b) Any  Lender  may make,  carry or  transfer  Loans at, to or for the
account  of, any of its branch  offices  or the office of an  affiliate  of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.

         (c) Any  Lender  may at any time  grant  to one or more  banks or other
financial  institutions  (each a "Participant")  participating  interests in its
Commitment or the Obligations owing to such Lender; provided,  however, any such
participating  interest  must be for a  constant  and not a  varying  percentage
interest.  Except as otherwise  provided in Section 13.3., no Participant  shall
have any rights or benefits under this Agreement or any other Loan Document.  In
the  event  of any  such  grant by a Lender  of a  participating  interest  to a
Participant,  such Lender shall remain  responsible  for the  performance of its
obligations  hereunder,  and the Borrower  and the Agent shall  continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which any Lender may
grant such a participating  interest shall provide that such Lender shall retain
the sole right and  responsibility  to enforce the  obligations  of the Borrower
hereunder  including,  without  limitation,  the right to approve any amendment,
modification  or waiver of any provision of this Agreement;  provided,  however,
such Lender may agree with the Participant that it will not, without the consent
of the Participant, agree to (i) increase, or extend the term or extend the time
or waive any  requirement  for the  reduction or  termination  of, such Lender's
Commitment,  (ii)  extend the date  fixed for the  payment  of  principal  of or

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<PAGE>

interest on the Loans or portions thereof owing to such Lender, (iii) reduce the
amount of any such payment of principal,  (iv) reduce the rate at which interest
is payable thereon or (v) release any Guarantor from its  obligations  under the
Guaranty.  An assignment or other  transfer which is not permitted by subsection
(d) or (f) below shall be given  effect for purposes of this  Agreement  only to
the  extent  of  a  participating  interest  granted  in  accordance  with  this
subsection  (c).  The selling  Lender shall notify the Agent and the Borrower of
the sale of any participation hereunder and the terms thereof.

         (d) Any Lender may with the prior written  consent of the Agent and the
Borrower assign to one or more Eligible  Assignees (each an "Assignee") all or a
portion  of its  Commitment  and its other  rights  and  obligations  under this
Agreement and the Notes;  provided,  however, (i) so long as no Default or Event
of Default shall exist,  the Borrower  shall have  consented to such  assignment
(which  consent,  in each case,  shall not be  unreasonably  withheld  (it being
agreed that the Borrower's  withholding of consent to an assignment  which would
result in the Borrower having to pay amounts under Section 3.11. shall be deemed
to be  reasonable));  (ii) no such consent by the Borrower  shall be required in
the case of any  assignment to another Lender or any affiliate of such Lender or
another  Lender;  (iii) any  partial  assignment  shall be in an amount at least
equal to  $10,000,000  and after giving effect to such  assignment the assigning
Lender retains a Commitment,  or if the Commitments have been terminated,  holds
Notes  having  an  aggregate   outstanding   principal  balance,   of  at  least
$10,000,000;  and (iv) each such  assignment  shall be  effected  by means of an
Assignment  and  Acceptance  Agreement.  Upon  execution  and  delivery  of such
instrument and payment by such Assignee to such  transferor  Lender of an amount
equal to the purchase  price  agreed  between  such  transferor  Lender and such
Assignee,  such Assignee  shall be deemed to be a Lender party to this Agreement
as of the effective date of the  Assignment  and Acceptance  Agreement and shall
have all the rights and  obligations  of a Lender with a Commitment as set forth
in such Assignment and Acceptance Agreement,  and the transferor Lender shall be
released  from its  obligations  hereunder  to a  corresponding  extent,  and no
further consent or action by any party shall be required.  Upon the consummation
of any assignment pursuant to this subsection,  the transferor Lender, the Agent
and the  Borrower  shall  make  appropriate  arrangements  so that new Notes are
issued to the Assignee and such transferor Lender, as appropriate. In connection
with any such  assignment,  the  transferor  Lender  shall  pay to the  Agent an
administrative fee for processing such assignment in the amount of $3,500.

         (e) The Agent shall  maintain a copy of each  Assignment and Acceptance
Agreement  delivered to and accepted by it and a register for the recordation of
the names and  addresses of the Lenders and the  Commitment  of each Lender from
time to time (the "Register"). The Agent shall give each Lender and the Borrower
notice of the  assignment  by any Lender of its rights as  contemplated  by this
Section.  The  Borrower,  the Agent and the Lenders may treat each Person  whose
name is recorded in the Register as a Lender  hereunder for all purposes of this
Agreement  and the  other  Loan  Documents.  The  Register  and  copies  of each
Assignment  and  Acceptance  Agreement  shall be available for inspection by the
Borrower  or any  Lender  at any  reasonable  time  and from  time to time  upon
reasonable  prior  notice to the Agent.  Upon its receipt of an  Assignment  and
Acceptance  Agreement  executed by an assigning Lender,  together with each Note
subject to such  assignment,  the Agent shall, if such Assignment and Acceptance
Agreement  has been  completed  and if the Agent  receives  the  processing  and
recording fee described in subsection (d) above,  (i) accept such Assignment and
Acceptance  Agreement,  (ii)  record the  information  contained  therein in the
Register and (iii) give prompt notice thereof to the Borrower.

         (f) Any Lender (each a "Designating  Lender") may at any time while the
Borrower has been assigned an Investment  Grade Rating  designate one Designated
Lender to fund Bid Rate Loans on behalf of such  Designating  Lender  subject to
the terms of this  subsection,  and the provisions in the immediately  preceding
subsections  (c) and (d)  shall  not apply to such  designation.  No Lender  may
designate more than one Designated  Lender. The parties to each such designation
shall  execute  and  deliver  to the  Agent  for its  acceptance  a  Designation
Agreement. Upon such receipt of an appropriately completed Designation Agreement
executed  by a  Designating  Lender  and a  designee  representing  that it is a
Designated  Lender,  the Agent will accept such  Designation  Agreement and give
prompt notice thereof to the Borrower, whereupon, (i) the Borrower shall execute
and deliver to the  Designating  Lender a Designated  Lender Note payable to the
order of the Designated Lender, (ii) from and after the effective date specified
in the Designation Agreement, the Designated Lender shall become a party to this
Agreement  with a right to make Bid Rate  Loans  on  behalf  of its  Designating
Lender  pursuant to Section 2.2. after the Borrower has accepted a Bid Rate Loan
(or portion thereof) of the Designating  Lender, and (iii) the Designated Lender
shall not be required to make payments with respect to any  obligations  in this
Agreement  except to the extent of excess  cash flow of such  Designated  Lender
which is not otherwise  required to repay  obligations of such Designated Lender
which are then due and  payable;  provided,  however,  that  regardless  of such
designation  and assumption by the Designated  Lender,  the  Designating  Lender

                                      -68-

<PAGE>

shall be and remain  obligated  to the  Borrower,  the Agent and the Lenders for
each and every of the  obligations  of the  Designating  Lender and its  related
Designated Lender with respect to this Agreement, including, without limitation,
any  indemnification  obligations  under  Section 12.7.  and any sums  otherwise
payable to the Borrower by the Designated Lender.  Each Designating Lender shall
serve as the agent of the  Designated  Lender and shall on behalf of, and to the
exclusion of, the Designated  Lender:  (i) receive any and all payments made for
the   benefit  of  the   Designated   Lender  and  (ii)  give  and  receive  all
communications  and notices and take all actions hereunder,  including,  without
limitation, votes, approvals, waivers, consents and amendments under or relating
to this Agreement and the other Loan Documents. Any such notice,  communication,
vote, approval,  waiver, consent or amendment shall be signed by the Designating
Lender  as agent  for the  Designated  Lender  and  shall  not be  signed by the
Designated  Lender on its own  behalf  and shall be  binding  on the  Designated
Lender  to the same  extent as if  signed  by the  Designated  Lender on its own
behalf.  The  Borrower,  the Agent and the Lenders may rely thereon  without any
requirement  that  the  Designated  Lender  sign or  acknowledge  the  same.  No
Designated  Lender may assign or  transfer  all or any  portion of its  interest
hereunder  or under any other  Loan  Document,  other  than  assignments  to the
Designating  Lender which  originally  designated  such Designated  Lender.  The
Borrower,  the  Lenders  and the  Agent  each  hereby  agrees  that it will  not
institute  against any Designated Lender or join any other Person in instituting
against  any  Designated  Lender any  bankruptcy,  reorganization,  arrangement,
insolvency or liquidation  proceeding  under any federal or state  bankruptcy or
similar  law,  until  the  later to occur of (x) one year and one day  after the
payment  in full of the latest  maturing  commercial  paper note  issued by such
Designated  Lender and (y) the Revolving Credit  Termination Date. In connection
with any such  designation  the  Designating  Lender  shall  pay to the Agent an
administrative fee for processing such designation in the amount of $2,500.

         (g) In addition to the assignments and  participations  permitted under
the foregoing  provisions of this Section,  any Lender may assign and pledge all
or any  portion  of its  Loans  and its  Notes to any  Federal  Reserve  Bank as
collateral  security pursuant to Regulation A and any Operating  Circular issued
by such  Federal  Reserve  Bank,  and  such  Loans  and  Notes  shall  be  fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.

         (h) A Lender may furnish any information  concerning the Borrower,  any
other Loan Party or any of their  respective  Subsidiaries  in the possession of
such  Lender  from  time  to  time  to  Assignees  and  Participants  (including
prospective Assignees and Participants) subject to compliance with Section 13.8.

         (i) Anything in this Section to the contrary notwithstanding, no Lender
may assign or  participate  any interest in any Loan held by it hereunder to the
Borrower,  any  other  Loan  Party  or any of  their  respective  Affiliates  or
Subsidiaries.

         (j) Each Lender agrees that,  without the prior written  consent of the
Borrower and the Agent, it will not make any assignment  hereunder in any manner
or under any circumstances that would require  registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws of the United States of America or of any other jurisdiction.

         (k)  Notwithstanding  anything to the contrary  contained  herein,  any
Lender (for  purposes of this  subsection,  a "Granting  Lender") may grant to a
special purpose funding vehicle organized under the laws of the United States of
America or any state thereof and affiliated or sponsored by such Granting Lender
or one of its  affiliates  (for the purposes of this  subsection,  an "SPC") the
option to make, on behalf of such Granting Lender, all or a portion of the Loans
which  such  Granting  Lender  is  obligated  to make (a  "Funding  Obligation")
hereunder,  such option to be  exercisable  in the sole  discretion  of the SPC,
provided, however, that

                  (i) such Granting  Lender's  obligations  under this Agreement
         and the  Loan  Documents  shall  remain  unchanged,  including  without
         limitation  the  indemnification  obligations  of the  Granting  Lender
         pursuant to Section 12.7. hereof;

                  (ii) such Granting  Lender shall remain solely  responsible to
         the  other  parties   hereto  for  the   performance   of  all  Funding
         Obligations;

                                      -69-

<PAGE>

                  (iii) the Borrower,  the Lenders and the Agent shall  continue
         to deal solely and directly  with such  Granting  Lender in  connection
         with  such  Granting   Lender's  rights  and  obligations   under  this
         Agreement,  and the Agent shall  continue  to deal solely and  directly
         with  the  Granting  Lender  as  agent  for the  SPC  with  respect  to
         distribution  of payment of  principal,  interest and fees,  Notices of
         Conversion and Continuation and all other matters;

                  (iv) such  Granting  Lender  shall  retain  the sole  right to
         enforce the  obligations of the Borrower  relating to its Loans and its
         Notes and to  approve  any  amendment,  modification,  or waiver of any
         provisions of this Agreement;

                  (v) the  granting  of such  option  shall  not  constitute  an
         assignment  to or  participation  of  such  SPC of or in  the  Granting
         Lender's Commitment and Obligations owing thereto;

                  (vi) such SPC shall not become a Lender nor acquire any rights
         hereunder as a result of the granting of such option;

                  (vii) such SPC shall not become obligated or committed to make
         Loans as a result of the granting of such option;

                  (viii)  if such SPC  elects  not to  exercise  such  option or
         otherwise  fails  to make  all or any part of any  Loan,  the  Granting
         Lender shall retain its Funding Obligation and be obligated to make the
         entire Loan or any portion of such Loan not made by such SPC;

                  (ix) Loans made by an SPC hereunder shall be deemed to satisfy
         the  Funding  Obligation  and utilize the  Commitment  of the  Granting
         Lender as if,  and to the same  extent,  such  Loans  were made by such
         Granting Lender;

                  (x) Each party  hereto  agrees that no SPC shall be liable for
         any  indemnity  or payment  under this  Agreement  for which a Granting
         Lender would  otherwise  be liable so long as, and to the extent,  such
         Loans were made by such Granting Lender; and

                  (xi) Each party hereto agrees that,  prior to the date that is
         one year  and one day  after  the  payment  in full of all  outstanding
         commercial  paper or other senior  indebtedness of any SPC, it will not
         institute  against,  or join any other person in  instituting  against,
         such SPC any  bankruptcy,  reorganization,  arrangement,  insolvency or
         liquidation  proceedings  under  the laws of the  United  States or any
         state thereof.

Section 13.6.  Amendments.

         Except as otherwise  expressly provided in this Agreement,  any consent
or approval  required or permitted by this  Agreement or in any Loan Document to
be given by the Lenders may be given,  and any term of this  Agreement or of any
other Loan Document  (other than any fee letter solely  between the Borrower and
the Agent) may be amended,  and the  performance  or observance by the Borrower,
any other Loan Party or any other  Subsidiary of any terms of this  Agreement or
such other Loan Document  (other than any fee letter solely between the Borrower
and the Agent) or the  continuance  of any  Default  or Event of Default  may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite Lenders
(and, in the case of an amendment to any Loan Document,  the written  consent of
each Loan Party  which is party  thereto).  Notwithstanding  the  foregoing,  no
amendment,  waiver or consent shall, unless in writing, and signed by all of the
Lenders (or the Agent at the written  direction of the  Lenders),  do any of the
following: (a) increase the Commitments of the Lenders or subject the Lenders to
any additional obligations;  (b) reduce the principal of, or interest rates that
have accrued or that will be charged on the outstanding principal amount of, any
Loans or other  Obligations;  (c) reduce  the amount of any Fees  payable to the
Lenders hereunder;  (d) postpone any date fixed for any payment of any principal
of,  interest on, or Fees with  respect to, any Loans or any other  Obligations;
(e) change the  Commitment  Percentages  (excluding any change as a result of an
assignment of  Commitments  permitted  under Section  13.5.(d) or an increase of
Commitments  effected  pursuant to Section 2.17.);  (f) modify the definition of
the terms "Revolving Credit  Termination Date" or "Termination  Date"; (g) amend
this Section or amend the definitions of the terms used in this Agreement or the

                                      -70-

<PAGE>

other Loan Documents  insofar as such  definitions  affect the substance of this
Section;  (h) modify the definition of the term "Requisite Lenders" or modify in
any other manner the number or  percentage  of the Lenders  required to make any
determinations  or waive any rights hereunder or to modify any provision hereof;
(i) release any Guarantor from its  obligations  under the Guaranty  (except for
releases  permitted under Sections  8.14.(d));  (j) modify the definition of the
terms  "Maximum  Availability"  or  "Unencumbered  Pool Value";  and (k) waive a
Default or Event of Default under  Section  11.1.(a).  No  amendment,  waiver or
consent  unless in writing  and signed by the Agent,  in addition to the Lenders
required  hereinabove to take such action,  shall affect the rights or duties of
the  Agent  under  this  Agreement  or any  of the  other  Loan  Documents.  Any
amendment,  waiver or consent relating to Section 2.4. or the obligations of the
Swingline  Lender under this  Agreement  or any other Loan  Document  shall,  in
addition to the Lenders  required  hereinabove to take such action,  require the
written consent of the Swingline Lender. No waiver shall extend to or affect any
obligation not expressly waived or impair any right  consequent  thereon and any
amendment,  waiver or consent shall be effective  only in the specific  instance
and for the specific purpose set forth therein. No course of dealing or delay or
omission  on the part of the Agent or any Lender in  exercising  any right shall
operate as a waiver  thereof or otherwise be prejudicial  thereto.  Any Event of
Default  occurring  hereunder  shall  continue  to exist until such time as such
Event of  Default  is waived in  writing  in  accordance  with the terms of this
Section, notwithstanding any attempted cure or other action by the Borrower, any
other Loan Party or any other Person  subsequent to the occurrence of such Event
of Default.  Except as otherwise  explicitly provided for herein or in any other
Loan  Document,  no notice to or demand  upon the  Borrower  shall  entitle  the
Borrower to other or further notice or demand in similar or other circumstances.

Section 13.7.  Nonliability of Agent and Lenders.

         The relationship between the Borrower, on the one hand, and the Lenders
and the Agent,  on the other hand,  shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any  fiduciary  responsibilities  to
the  Borrower  and no  provision  in this  Agreement or in any of the other Loan
Documents,  and no course of dealing between or among any of the parties hereto,
shall be deemed to create any fiduciary duty owing by the Agent or any Lender to
any Lender,  the Borrower,  any Subsidiary or any other Loan Party.  Neither the
Agent nor any Lender undertakes any  responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the Borrower's
business or operations.

Section 13.8.  Confidentiality.

         Except as  otherwise  provided by  Applicable  Law,  the Agent and each
Lender  shall  utilize  all  non-public  information  obtained  pursuant  to the
requirements  of this Agreement  which has been  identified as  confidential  or
proprietary  by the Borrower in  accordance  with its  customary  procedure  for
handling confidential information of this nature and in accordance with safe and
sound  banking  practices  but in any event may make  disclosure:  (a) to any of
their  respective  affiliates  (provided any such affiliate  shall agree to keep
such information confidential in accordance with the terms of this Section); (b)
as  reasonably  requested  by any  bona  fide  Assignee,  Participant  or  other
transferee in connection  with the  contemplated  transfer of any  Commitment or
participations therein as permitted hereunder (provided they shall agree to keep
such information confidential in accordance with the terms of this Section); (c)
as required or requested by any Governmental Authority or representative thereof
or pursuant to legal process or in connection with any legal proceedings; (d) to
the  Agent's  or such  Lender's  independent  auditors  and  other  professional
advisors  (provided  they shall be  notified of the  confidential  nature of the
information);  (e) if an  Event of  Default  exists,  to any  other  Person,  in
connection with the exercise by the Agent or the Lenders of rights  hereunder or
under any of the other Loan  Documents;  and (f) to the extent such  information
(x)  becomes  publicly  available  other  than as a result  of a breach  of this
Section or (y) becomes available to the Agent or any Lender on a nonconfidential
basis from a source other than the Borrower or any Affiliate.

                                      -71-

<PAGE>

Section 13.9.  Indemnification.

         (a) The Borrower shall and hereby agrees to indemnify,  defend and hold
harmless the Agent, any affiliate of the Agent and each of the Lenders and their
respective  affiliates,  parents,  directors,  officers,  shareholders,  agents,
employees and counsel (each referred to herein as an  "Indemnified  Party") from
and  against  any  and  all  losses,   costs,  claims,   damages,   liabilities,
deficiencies, judgments or expenses of every kind and nature (including, without
limitation,   amounts  paid  in  settlement,   court  costs  and  the  fees  and
disbursements   of  counsel   incurred  in  connection   with  any   litigation,
investigation,  claim  or  proceeding  or  any  advice  rendered  in  connection
therewith,   but  excluding  losses,   costs,  claims,   damages,   liabilities,
deficiencies,  judgments  or  expenses  indemnification  in  respect of which is
specifically  covered by Section  3.11.  or 5.1. or expressly  excluded from the
coverage of such Sections)  incurred by an Indemnified Party in connection with,
arising out of, or by reason of, any suit, cause of action, claim,  arbitration,
investigation  or settlement,  consent decree or other proceeding (the foregoing
referred  to herein as an  "Indemnity  Proceeding")  which is in any way related
directly or indirectly  to: (i) this Agreement or any other Loan Document or the
transactions  contemplated  thereby; (ii) the making of any Loans or issuance of
Letters of Credit hereunder; (iii) any actual or proposed use by the Borrower of
the proceeds of the Loans or Letters of Credit; (iv) the Agent's or any Lender's
entering into this  Agreement;  (v) the fact that the Agent and the Lenders have
established the credit facility evidenced hereby in favor of the Borrower;  (vi)
the fact that the Agent and the Lenders are  creditors  of the Borrower and have
or are alleged to have information regarding the financial condition,  strategic
plans or business  operations  of the Borrower and the  Subsidiaries;  (vii) the
fact that the Agent and the Lenders are  material  creditors of the Borrower and
are alleged to  influence  directly or  indirectly  the  business  decisions  or
affairs of the  Borrower  and the  Subsidiaries  or their  financial  condition;
(viii) the  exercise  of any right or remedy the Agent or the  Lenders  may have
under this Agreement or the other Loan Documents;  provided,  however,  that the
Borrower shall not be obligated to indemnify any Indemnified  Party for any acts
or omissions of such Indemnified  Party in connection with matters  described in
this clause (viii) that constitute  gross negligence or willful  misconduct;  or
(ix) any violation or  non-compliance  by the Borrower or any  Subsidiary of any
Applicable Law (including any Environmental Law) including,  but not limited to,
any Indemnity  Proceeding commenced by (A) the Internal Revenue Service or state
taxing  authority  or (B) any  Governmental  Authority or other Person under any
Environmental   Law,   including  any  Indemnity   Proceeding   commenced  by  a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower or its  Subsidiaries  (or its respective  properties) (or the Agent
and/or the Lenders as successors to the Borrower) to be in compliance  with such
Environmental Laws.

         (b) The Borrower's indemnification obligations under this Section shall
apply to all Indemnity  Proceedings arising out of, or related to, the foregoing
whether  or  not an  Indemnified  Party  is a  named  party  in  such  Indemnity
Proceeding.  In this connection,  this indemnification shall cover all costs and
expenses of any  Indemnified  Party in  connection  with any  deposition  of any
Indemnified  Party or  compliance  with any  subpoena  (including  any  subpoena
requesting the production of documents). This indemnification shall, among other
things,  apply to any Indemnity  Proceeding  commenced by other creditors of the
Borrower or any  Subsidiary,  any  shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity  Proceeding in their
individual  capacity or  derivatively  on behalf of the  Borrower),  any account
debtor of the Borrower or any Subsidiary or by any Governmental Authority.

         (c)  This  indemnification  shall  apply  to any  Indemnity  Proceeding
arising during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.

         (d) All out-of-pocket fees and expenses of, and all amounts required to
be paid to  third-persons  by,  an  Indemnified  Party in  connection  with this
Agreement or any of the other Loan  Documents  shall be advanced by the Borrower
at the request of such Indemnified Party  notwithstanding any claim or assertion
by the Borrower that such Indemnified  Party is not entitled to  indemnification
hereunder  upon receipt of an undertaking  by such  Indemnified  Party that such
Indemnified  Party will  reimburse  the  Borrower if it is actually  and finally
determined by a court of competent  jurisdiction  that such Indemnified Party is
not so entitled to indemnification hereunder.

                                      -72-

<PAGE>

         (e) An Indemnified  Party may conduct its own investigation and defense
of, and may formulate its own strategy with respect to, any Indemnity Proceeding
covered by this Section and, as provided above, all costs and expenses  incurred
by such Indemnified  Party shall be reimbursed by the Borrower.  No action taken
by legal counsel chosen by an Indemnified  Party in  investigating  or defending
against any such  Indemnity  Proceeding  shall  vitiate or in any way impair the
obligations and duties of the Borrower  hereunder to indemnify and hold harmless
each such  Indemnified  Party;  provided,  however,  that (i) if the Borrower is
required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower
has provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial  wherewithal to reimburse such Indemnified  Party for
any  amount  paid by such  Indemnified  Party with  respect to such  Indemnified
Proceeding,  such  Indemnified  Party  shall not settle or  compromise  any such
Indemnified  Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).

         (f) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution  to the  payment  and  satisfaction  of such  obligations  which is
permissible under Applicable Law.

         (g) The Borrower's  obligations hereunder shall survive any termination
of this  Agreement and the other Loan  Documents and the payment in full in cash
of the  Obligations,  and are in addition  to, and not in  substitution  of, any
other  of their  obligations  set  forth in this  Agreement  or any  other  Loan
Document to which it is a party.

Section 13.10.  Termination; Survival.

         At such time as (a) all of the Commitments  have been  terminated,  (b)
none of the Lenders is  obligated  any longer  under this  Agreement to make any
Loans and (c) all Obligations  (other than obligations which survive as provided
in the following  sentence) have been paid and satisfied in full, this Agreement
shall terminate. The indemnities to which the Agent and the Lenders are entitled
under the provisions of Sections 3.12.,  5.1., 5.4., 12.7.,  13.2. and 13.9. and
any other  provision of this  Agreement  and the other Loan  Documents,  and the
provisions of Section  13.4.,  shall continue in full force and effect and shall
protect the Agent and the Lenders (i)  notwithstanding  any  termination of this
Agreement,  or of the other Loan  Documents,  against  events arising after such
termination  as well as before and (ii) at all times after any such party ceases
to be a party to this Agreement with respect to all matters and events  existing
on or prior to the date such party ceased to be a party to this Agreement.

Section 13.11.  Severability of Provisions.

         Any provision of this Agreement which is prohibited or unenforceable in
any  jurisdiction  shall, as to such  jurisdiction,  be ineffective  only to the
extent  of  such  prohibition  or  unenforceability   without  invalidating  the
remainder  of such  provision  or the  remaining  provisions  or  affecting  the
validity or enforceability of such provision in any other jurisdiction.

Section 13.12.  GOVERNING LAW.

         THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED,  AND TO BE
FULLY PERFORMED, IN SUCH STATE.

Section 13.13.  Counterparts.

         This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of  counterparts  and by different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all of which counterparts together shall constitute but
one and the same instrument.

                                      -73-

<PAGE>

Section 13.14.  Obligations with Respect to Loan Parties.

         The  obligations  of the  Borrower to direct or prohibit  the taking of
certain actions by the other Loan Parties as specified  herein shall be absolute
and not subject to any defense the Borrower may have that the Borrower  does not
control such Loan Parties.

Section 13.15.  Marshaling; Payments Set Aside.

         Neither  the Agent nor any  Lender  shall be under  any  obligation  to
marshal  any assets in favor of any Loan Party or any other  party or against or
in payment of any or all of the  Obligations.  To the extent that any Loan Party
makes a payment or payments to the Agent and/or any Lender,  or the Agent and/or
any Lender enforce their security  interests or exercise their rights of setoff,
and such  payment or payments or the proceeds of such  enforcement  or setoff or
any part thereof are  subsequently  invalidated,  declared to be  fraudulent  or
preferential,  set aside and/or required to be repaid to a trustee,  receiver or
any other party under any bankruptcy  law,  state or federal law,  common law or
equitable  cause,  then to the extent of such recovery,  the Obligations or part
thereof originally intended to be satisfied,  and all Liens, rights and remedies
therefor,  shall be revived  and  continued  in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

Section 13.16.  Independence of Covenants.

         All covenants hereunder shall be given in any jurisdiction  independent
effect so that if a particular  action or  condition is not  permitted by any of
such  covenants,  the fact that it would be permitted by an exception  to, or be
otherwise  within  the  limitations  of,  another  covenant  shall not avoid the
occurrence  of a  Default  or an Event of  Default  if such  action  is taken or
condition exists.

Section 13.17.  Limitation of Liability.

         Neither the Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of the Agent or any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases, and agrees not to sue
any  of  them  upon,  any  claim  for  any  special,  indirect,  incidental,  or
consequential  damages  suffered or incurred by the Borrower in connection with,
arising out of, or in any way related  to,  this  Agreement  or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents.  The Borrower hereby waives,  releases,  and agrees
not to sue  the  Agent  or any  Lender  or any of the  Agent's  or any  Lender's
affiliates,  officers, directors,  employees,  attorneys, or agents for punitive
damages in respect of any claim in  connection  with,  arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.

Section 13.18.  Entire Agreement.

         This  Agreement,  the Notes,  and the other Loan Documents  referred to
herein embody the final, entire agreement among the parties hereto and supersede
any and all prior commitments, agreements,  representations, and understandings,
whether  written or oral,  relating to the subject matter hereof and thereof and
may not be  contradicted  or varied by  evidence of prior,  contemporaneous,  or
subsequent oral  agreements or discussions of the parties  hereto.  There are no
oral agreements among the parties hereto.

Section 13.19.  Construction.

         The Agent,  the Borrower and each Lender  acknowledge that each of them
has had the benefit of legal  counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents  shall be construed
as if jointly drafted by the Agent, the Borrower and each Lender.


                         [Signatures on Following Pages]

                                      -74-

<PAGE>

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

                                  Borrower:

                                  PUBLIC STORAGE, INC.


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


                       [Signatures Continued on Next Page]

                                      -75-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                     as the Agent, as the Swingline Lender and
                                     as a Lender


                                  By: /s/ Perry Moreth
                                      ----------------
                                      Name: Perry Moreth
                                      Title:  Vice President

                                  Commitment Amount:

                                  $40,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  1000 Lakes Drive, Suite 250
                                  West Covina, CA 91790
                                  Attn:  Perry Moreth
                                  Telecopier: 626-919-2909
                                  Telephone: 626-919-6623


                       [Signatures Continued on Next Page]

                                      -76-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  FIRST UNION NATIONAL BANK


                                  By: /s/ David Hoagland
                                      ------------------
                                      Name:  David Hoagland
                                      Title:  Vice President

                                  Commitment Amount:

                                  $30,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  One First Union Center
                                  301 South College Street
                                  Charlotte, NC 28288-5604
                                  Attn: David Hoagland
                                  Telecopier: 704-383-6205
                                  Telephone: 704-374-4809


                       [Signatures Continued on Next Page]

                                      -77-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  CREDIT SUISSE FIRST BOSTON


                                  By: /s/ Bill O'Daly
                                      ---------------
                                      Name: Bill O'Daly
                                      Title:  Vice President

                                  By: /s/ Kristin Lepri
                                      -----------------
                                      Name: Kristin Lepri
                                      Title:  Assistant Vice President

                                  Commitment Amount:

                                  $25,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  Eleven Madison Avenue
                                  New York, NY 10010
                                  Attn: Edward Markowski
                                  Telecopier: 212-538-3477
                                  Telephone: 212-538-3380


                       [Signatures Continued on Next Page]


                                      -78-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  AMSOUTH BANK


                                  By: /s/ Arthur J. Sharbel, III
                                      --------------------------
                                      Name: Arthur J. Sharbel, III
                                      Title:  Vice President

                                  Commitment Amount:

                                  $25,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  1900 5th Avenue North
                                  AmSouth-Sonat Tower, 9th Floor
                                  Birmingham, AL 35203
                                  Attn: Arthur J. Sharbel III
                                  Telecopier: 205-326-4075
                                  Telephone: 205-581-7647


                       [Signatures Continued on Next Page]

                                      -79-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  BANKERS TRUST COMPANY


                                  By: /s/ Steve P. Lepham
                                      -------------------
                                      Name:  Steve P. Lepham
                                      Title: Director

                                  Commitment Amount:

                                  $25,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  300 South Grand Avenue
                                  41st Floor
                                  Los Angeles, CA 90071
                                  Attn:  Leon Schwartzman
                                  Telecopier:  213-620-8210
                                  Telephone:  213-620-8297


                       [Signatures Continued on Next Page]

                                      -80-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  CITICORP REAL ESTATE, INC.


                                  By: /s/ David Bouton
                                      ----------------
                                      Name: David Bouton
                                      Title:  Vice President

                                  Commitment Amount:

                                  $25,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  390 Greenwich Street
                                  New York, NY 10013
                                  Attn: Michael Psyllos
                                  Telecopier: 212-723-8547
                                  Telephone: 212-723-6789


                       [Signatures Continued on Next Page]

                                      -81-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  BANK OF MONTREAL


                                  By: /s/ Greg K. Steele
                                      ------------------
                                      Name:  Greg K. Steele
                                      Title:  Vice President

                                  Commitment Amount:

                                  $15,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  115 South LaSalle Street, SW
                                  Chicago, IL 60603
                                  Attn: Thomas Batterham
                                  Telecopier:  312-293-8364
                                  Telephone:  312-293-5852


                       [Signatures Continued on Next Page]

                                      -82-

<PAGE>

                 Signature Page to Credit Agreement dated as of
                   November 1, 2001 with Public Storage, Inc.


                                  THE BANK OF NEW YORK


                                  By: /s/ Robert Besser
                                      -----------------
                                      Name: Robert Besser
                                      Title:  Vice President

                                  Commitment Amount:

                                  $15,000,000


                                  Lending Office (all Types of Loans) and
                                  Address for Notices:

                                  10990 Wilshire Boulevard
                                  Suite 1125
                                  Los Angeles, CA 90024
                                  Attn:  Robert Besser
                                  Telecopier:  310-996-8667
                                  Telephone:  310-996-8663

                                      -83-