Document:

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                                                                   EXHIBIT 10.81

                                 LOAN AGREEMENT

                      Dated: As of December 20, 2002 Among

       KRAMONT OPERATING PARTNERSHIP, L.P. a Delaware limited partnership

                                  ("Borrower")

                                       and

               FLEET NATIONAL BANK ("Administrative Agent"),

                                      and

        FLEET NATIONAL BANK, WILMINGTON TRUST OF PENNSYLVANIA, WACHOVIA
     BANK, NATIONAL ASSOCIATION, COMPASS BANK, FIRSTRUST BANK and any other
    Lenders, if any, which may become parties to this Agreement ( "Lenders")

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

                      FLEET SECURITIES, INC. ("Arranger")

                                ----------------
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                               TABLE OF CONTENTS

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1.    BACKGROUND ..........................................................................       1
      1.1     Defined Terms ...............................................................       1
      1.2     Borrower ....................................................................       1
      1.3     Use of Loan Proceeds ........................................................       1
      1.4     Guaranties ..................................................................       1
      1.5     Loan ........................................................................       1
2.    LOAN PROVISIONS .....................................................................       2
      2.1     General Loan Provisions .....................................................       2
              2.1.1       Limit ...........................................................       2
              2.1.2       Procedures and Limits ...........................................       3
              2.1.3       Funding Procedures ..............................................       3
      2.2     Term of Loan ................................................................       4
      2.3     Interest Rate and Payment Terms .............................................       4
              2.3.1       Borrower's Options ..............................................       5
              2.3.2       Selection To Be Made ............................................       5
              2.3.3       Notice ..........................................................       5
              2.3.4       If No Notice ....................................................       5
              2.3.5       Telephonic Notice ...............................................       5
              2.3.6       Limits On Options, One Selection Per Month ......................       5
              2.3.7       Payment and Calculation of Interest .............................       5
              2.3.8       Mandatory Principal Payments ....................................       6
              2.3.9       Prepayment ......................................................       7
              2.3.10      Maturity ........................................................       7
              2.3.11      Method of Payment; Date of Credit ...............................       7
              2.3.12      Billings ........................................................       8
              2.3.13      Default Rate ....................................................       8
              2.3.14      Late Charges ....................................................       8
              2.3.15      Breakage Fees ...................................................       8
      2.4     Loan Fees; Administrative Agent's Fees ......................................       9
              2.4.1       Loan Fees .......................................................       9
              2.4.2       Administrative Agent's Fees .....................................       9
              2.4.3       Line Fee ........................................................       9
              2.4.4       Issuance Fees ...................................................       9
              2.4.5       Letter of Credit Fees ...........................................       9
      2.5     Acceleration ................................................................       9
      2.6     Additional Provisions Related to Interest Rate Selection ....................       9
              2.6.1       Increased Costs .................................................       9
              2.6.2       Illegality ......................................................      10
              2.6.3       Additional LIBO Rate Conditions .................................      10
              2.6.4       Variable Rate Advances ..........................................      11
      2.7     Letters of Credit ...........................................................      11
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3.    SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS ..................................      14
      3.1      Security ...................................................................      14
               3.1.1      Mortgage/ Deed of Trust and Security Agreement ..................      14
               3.1.2      Collateral Assignment of Leases and Rents .......................      16
               3.1.3      Collateral Assignment of Contracts ..............................      16
               3.1.4      Guaranties ......................................................      16
               3.1.5      Environmental Compliance and Indemnification Agreement ..........      16
               3.1.6      Ownership Interest and Inter-Company Loan Pledge ................      16
      3.2      Loan Documents and Security Documents ......................................      16
      3.3      Removal of Individual Property as a Borrowing Base Property - Borrower .....      17
      3.4      Removal of Individual Property as a Borrowing Base Property -
               Administrative Agent .......................................................      18
      3.5      Additional Borrowing Base Property .........................................      19
4.    CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES ..................................      19
5.    CONDITIONS PRECEDENT ................................................................      20
      5.1      Closing Loan and Funding Initial Loan Advance ..............................      20
               5.1.2      Financial Information; No Material Change .......................      20
               5.1.3      Warranties and Representations Accurate .........................      20
               5.1.4      Validity and Sufficiency of Security Documents ..................      21
               5.1.5      Litigation ......................................................      21
               5.1.6      Formation Documents and Entity Agreements .......................      21
               5.1.7      Compliance With Law .............................................      22
               5.1.8      Compliance With Financial Covenants .............................      22
               5.1.9      Indemnity/Contribution Agreement ................................      22
               5.1.10     Borrowing Base Property Due Diligence ...........................      22
               5.1.11     Condition of Property ...........................................      22
               5.1.12     Insurance .......................................................      23
               5.1.13     Third Party Consents and Agreements .............................      23
               5.1.14     Cash Management .................................................      23
               5.1.15     Legal and other Opinions ........................................      23
               5.1.16     No Default ......................................................      23
6.    WARRANTIES AND REPRESENTATIONS ......................................................      23
      6.1      Formation ..................................................................      23
      6.2      Proceedings; Enforceability ................................................      23
      6.3      Conflicts ..................................................................      24
      6.4      Ownership and Taxpayer Identification Numbers ..............................      24
      6.5      Litigation .................................................................      24
      6.6      Information ................................................................      24
      6.7      Taxes ......................................................................      24
      6.8      Financial Information ......................................................      25
      6.9      Control Provisions .........................................................      25
      6.10     Formation Documents ........................................................      25
      6.11     Bankruptcy Filings .........................................................      25
      6.12     Investment Company .........................................................      25
      6.13     Holding Company ............................................................      25
      6.14     Collateral Properties ......................................................      25
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      6.15     Use of Proceeds ............................................................      27
      6.16     Insurance ..................................................................      27
      6.17     Deferred Compensation and ERISA ............................................      27
      6.18     Conditions Satisfied .......................................................      27
      6.19     No Default .................................................................      27
      6.20     Other Loan Parties' Warranties and Representations .........................      27
      6.21     Qualification as a REIT ....................................................      27
      6.22     Regarding Representations and Warranties ...................................      28
7.    AFFIRMATIVE COVENANTS ...............................................................      28
      7.1      Notices ....................................................................      28
      7.2      Financial Statements; Reports; Officer's Certificates ......................      28
               7.2.1 Annual Statements ....................................................      28
               7.2.2 Periodic Statements ..................................................      28
               7.2.3 Borrowing Base Property Reports ......................................      29
               7.2.4 SEC Reports ..........................................................      29
               7.2.5 Compliance Certificates ..............................................      29
               7.2.6 Data Requested .......................................................      29
               7.2.7 Tax Returns ..........................................................      29
               7.2.8 Lease Notices ........................................................      29
               7.2.9 Ground Lessor Interest Notices .......................................      30
               7.2.10 Entity Notices ......................................................      30
               7.2.11 Notice of Litigation ................................................      30
      7.3      Existence ..................................................................      30
      7.4      Payment of Taxes ...........................................................      30
      7.5      Insurance; Casualty, Taking ................................................      30
      7.6      Inspection .................................................................      31
      7.7      Loan Documents .............................................................      31
      7.8      Further Assurances .........................................................      31
      7.9      Books and Records ..........................................................      31
      7.10     Business and Operations ....................................................      32
      7.11     Title ......................................................................      32
      7.12     Estoppel ...................................................................      32
      7.13     ERISA ......................................................................      32
      7.14     Depository Account .........................................................      33
      7.15     Costs and Expenses .........................................................      33
      7.16     Appraisals .................................................................      34
               7.16.1 Appraisal ...........................................................      34
               7.16.2 Costs of Appraisal ..................................................      34
      7.17     Indemnification ............................................................      34
      7.18     Leasing Matters ............................................................      35
               7.18.1 Administrative Agent's Approval Required ............................      35
               7.18.2 Borrower's Requests .................................................      35
               7.18.3 Response ............................................................      35
               7.18.4 Advance Information .................................................      35
               7.18.5 Preliminary Submission ..............................................      35
      7.19     Interest Expense Coverage ..................................................      36
      7.20     Leverage Ratio .............................................................      36
      7.21     Fixed Charge Ratio .........................................................      36
      7.22     Net Worth ..................................................................      36
      7.23     Borrowing Base Property Covenants ..........................................      37
      7.24     Replacement Documentation ..................................................      37
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       7.25    Other Covenants ............................................................      37
       7.26    Maintenance of REIT Status .................................................      37
       7.27    Maintenance of NYSE Listing ................................................      37
       7.28    Lenders' Consultants .......................................................      37
               7.28.1 Right to Employ .....................................................      37
               7.28.2 Functions ...........................................................      37
               7.28.3 Payment .............................................................      38
               7.28.4 Access ..............................................................      38
               7.28.5 No Liability ........................................................      38
8.     NEGATIVE COVENANTS .................................................................      38
       8.1     No Changes to Borrower and other Loan Parties ..............................      38
       8.2     Restrictions on Liens ......................................................      38
       8.3     Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity ......      39
       8.4     Restrictions on Debt .......................................................      40
       8.5     Respecting Collateral Properties ...........................................      40
       8.6     Other Business .............................................................      40
       8.7     Change of Control ..........................................................      40
       8.8     Forgiveness of Debt ........................................................      40
       8.9     Affiliate Transactions .....................................................      41
       8.10    ERISA ......................................................................      41
       8.11    Bankruptcy Filings .........................................................      41
       8.12    Investment Company .........................................................      41
       8.13    Holding Company ............................................................      41
       8.14    Use of Proceeds ............................................................      41
       8.15    Distributions ..............................................................      41
       8.16    Restrictions on Investments ................................................      41
       8.17    Negative Pledges, etc ......................................................      42
9.     SPECIAL PROVISIONS .................................................................      42
       9.1     Legal Requirements .........................................................      42
       9.2     Limited Recourse Provisions ................................................      42
               9.2.1 Borrower Fully Liable ................................................      42
               9.2.2 Certain Non-Recourse .................................................      42
               9.2.3 Additional Matters ...................................................      42
       9.3     Payment of Obligations .....................................................      43
10.    EVENTS OF DEFAULT ..................................................................      43
       10.1    Default and Events of Default ..............................................      43
               10.1.1 Failure to Pay the Loan .............................................      43
               10.1.2 Failure to Make Other Payments ......................................      43
               10.1.3 Note, Security Documents, and Other Loan Documents ..................      43
               10.1.4 Default under Other Agreements ......................................      43
               10.1.5 Representations and Warranties ......................................      44
               10.1.6 Affirmative Covenants ...............................................      44
               10.1.7 Negative Covenants ..................................................      44
               10.1.8 Financial Status and Insolvency .....................................      44
               10.1.9 Loan Documents ......................................................      44
               10.1.10 Judgments ..........................................................      45
               10.1.11 ERISA ..............................................................      45
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               10.1.12    Change of Control ...............................................      45
               10.1.13    Termination of Guaranty or Consent ..............................      45
               10.1.14    Generally .......................................................      45
       10.2    Grace Periods and Notice ...................................................      45
               10.2.1     No Notice or Grace Period .......................................      45
               10.2.2     Nonpayment of Interest ..........................................      46
               10.2.3     Other Monetary Defaults .........................................      46
               10.2.4     Nonmonetary Defaults Capable of Cure ............................      46
               10.2.5     Borrowing Base Property Defaults ................................      46
11.    REMEDIES ...........................................................................      46
       11.1    Remedies ...................................................................      46
               11.1.1     Accelerate Debt .................................................      46
               11.1.2     Collateralize Letters of Credit .................................      47
               11.1.3     Pursue Remedies .................................................      47
       11.2    Written Waivers ............................................................      47
       11.3    Power of Attorney ..........................................................      47
12.    SECURITY INTEREST AND SET-OFF ......................................................      47
       12.1    Security Interest ..........................................................      47
       12.2    Set-Off ....................................................................      47
       12.3    Right to Freeze ............................................................      48
       12.4    Additional Rights ..........................................................      48
13.    THE ADMINISTRATIVE AGENT AND THE LENDERS ...........................................      48
       13.1    Rights, Duties and Immunities of the Administrative Agent ..................      48
               13.1.1     Appointment of Administrative Agent .............................      48
               13.1.2     Administration of Loan by Administrative Agent ..................      49
               13.1.3     Delegation of Duties ............................................      49
               13.1.4     Exculpatory Provisions ..........................................      49
               13.1.5     Reliance by Administrative Agent ................................      50
               13.1.6     Notice of Default ...............................................      50
               13.1.7     Lenders' Credit Decisions .......................................      50
               13.1.8     Administrative Agent's Reimbursement and Indemnification ........      51
               13.1.9     Administrative Agent in its Individual Capacity .................      51
               13.1.10    Successor Administrative Agent ..................................      51
               13.1.11    Duties in the Case of Enforcement ...............................      52
       13.2    Respecting Loans and Payments ..............................................      53
               13.2.1     Procedures for Loans ............................................      53
               13.2.2     Nature of Obligations of Lenders ................................      53
               13.2.3     Payments to Administrative Agent ................................      53
               13.2.4     Distribution of Liquidation Proceeds ............................      54
               13.2.5     Adjustments .....................................................      54
               13.2.6     Distribution by Administrative Agent ............................      55
               13.2.7     Delinquent Lender ...............................................      55
               13.2.8     Holders .........................................................      56
       13.3    Assignment and Participation ...............................................      56
               13.3.1     Conditions to Assignment by Lenders .............................      56
               13.3.2     Certain Representations and Warranties ..........................      56
               13.3.3     Register ........................................................      57
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                13.3.4 New Notes ..........................................................      58
                13.3.5 Participations .....................................................      58
                13.3.6 Disclosure .........................................................      58
                13.3.7 Miscellaneous Assignment Provisions ................................      58
                13.3.8 Assignment by Borrower .............................................      59
       13.4     Administrative Matters ....................................................      59
                13.4.1 Amendment, Waiver, Consent, Etc ....................................      59
                13.4.2 Deemed Consent or Approval .........................................      59
       13.5     Arranger ..................................................................      60
14.    CASUALTY AND TAKING ................................................................      60
       14.1     Casualty or Taking; Obligation To Repair ..................................      60
       14.2     Adjustment of Claims ......................................................      60
       14.3     Payment and Application of Insurance Proceeds and Condemnation
                Awards ....................................................................      60
       14.4     Conditions To Release of Insurance Proceeds ...............................      61
15.    GENERAL PROVISIONS .................................................................      63
       15.1     Notices ...................................................................      63
       15.2     Limitations on Assignment .................................................      65
       15.3     Further Assurances ........................................................      65
       15.4     Payments ..................................................................      65
       15.5     Parties Bound .............................................................      65
       15.6     Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial .......      65
                15.6.1 Substantial Relationship ...........................................      65
                15.6.2 Place of Delivery ..................................................      65
                15.6.3 Governing Law ......................................................      66
                15.6.4 Exceptions .........................................................      66
                15.6.5 Consent to Jurisdiction ............................................      66
                15.6.6 JURY TRIAL WAIVER ..................................................      66
       15.7     Survival ..................................................................      67
       15.8     Cumulative Rights .........................................................      67
       15.9     Claims Against Administrative Agent or Lenders ............................      67
                15.9.1 Borrower Must Notify ...............................................      67
                15.9.2 Remedies ...........................................................      67
                15.9.3 Limitations ........................................................      68
       15.10    Regarding Consents ........................................................      68
       15.11    Obligations Absolute ......................................................      68
       15.12    Table of Contents, Title and Headings .....................................      68
       15.13    Counterparts ..............................................................      68
       15.14    Satisfaction of Term Sheet ................................................      68
       15.15    Time Of the Essence .......................................................      68
       15.16    No Oral Change ............................................................      69
       15.17    Monthly Statements ........................................................      69
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                                    EXHIBITS
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Exhibits ................................................................         1
Exhibit A    --   Definitions ...........................................      EA-1
Exhibit B-1  --   Requisition; Availability Certificate .................      EB-1
Exhibit B-2  --   Notice of Letter of Credit ............................      EB-8
Exhibit C    --   Note ..................................................      EC-1
Exhibit D    --   Authorized Representatives ............................      ED-1
Exhibit E    --   Required Property, Hazard and Other Insurance .........      EE-1
Exhibit F    --   Ownership Interests and Taxpayer Identification Numbers      EF-1
Exhibit G    --   Compliance Certificate ................................      EG-1
Exhibit H    --   Form of Assignment and Acceptance .....................      EH-1
Exhibit I    --   Lenders, Commitment ...................................      EI-1
Exhibit J    --   Borrowing Base Properties .............................      EJ-1
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                                    SCHEDULES

Schedule 6.14.2(i) .....................................................      26
Schedule 6.14.4(ii) ....................................................      26
Schedule 6.14.4(iii) ...................................................      26
Schedule 6.14.4(iv) ....................................................      26
Schedule 6.14.5 ........................................................      26

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                                 LOAN AGREEMENT

      This agreement ("Loan Agreement" or "Agreement") is made and entered into
as of the 20th day of December, 2002, by and between Kramont Operating
Partnership, L.P., a Delaware limited partnership having an address at 580 W.
Germantown Pike, Plymouth Meeting, Pennsylvania 19462 ("Borrower") and FLEET
NATIONAL BANK, a national banking association, with a place of business at 100
Federal Street, Boston, Massachusetts, 02110, WILMINGTON TRUST OF PENNSYLVANIA,
a Pennsylvania state banking institution, with a place of business at Suite 6,
795 E. Lancaster Avenue, Villanova, Pennsylvania 19085, WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, with a place of business at 123
South Broad Street, 15th Floor, Philadelphia, Pennsylvania 19109, COMPASS BANK,
an Alabama banking corporation, with a place of business at 15 South 20th
Street, 15th Floor, Birmingham, Alabama 35233, FIRSTRUST BANK, a Pennsylvania
state chartered institution, with a place of business at 15 East Ridge Pike,
Conshohocken, Pennsylvania 19428, and the other lending institutions which may
become parties to this Agreement pursuant to Section 13.3 (the "Lenders") and
FLEET NATIONAL BANK, a national banking association, with a place of business at
100 Federal Street, Boston, Massachusetts, 02110, as agent for itself and such
other lending institutions (the "Administrative Agent").

                                   WITNESSETH:

      1. BACKGROUND.

      1.1 Defined Terms. Capitalized terms used in this Agreement are defined
either in Exhibit A, or in specific sections of this Agreement, or in another
Loan Document, as referenced in Exhibit A.

      1.2 Borrower. Borrower is a limited partnership organized under the laws
of the State of Delaware of which the sole general partner is Kramont Realty
Trust ("KRT").

      1.3 Use of Loan Proceeds. Borrower has applied to Lenders for a revolving
loan of not to exceed ONE HUNDRED AND TWENTY-FIVE MILLION DOLLARS
($125,000,000.00) ("Loan"), the proceeds of which are to be used to provide
working capital to the Borrower, KRT, and the Borrower Subsidiaries, to provide
funds for acquisitions, development, capital expenditures, and refinancings of
real estate properties by the Borrower, KRT, and the Borrower Subsidiaries, to
pay certain closing and transactional costs as approved by the Administrative
Agent, and for other lawful REIT purposes.

      1.4 Guaranties. As an inducement to Lenders to make the Loan, KRT and each
Borrowing Base Property Owner (as defined herein) (severally and collectively
called "Guarantor" or "Guarantors") have agreed to furnish guaranties to the
Administrative Agent, on behalf of the Lenders. The establishment of the
facility provided for herein and the making of the Loan is in the best interest
of each of the Guarantors as the proceeds of the Loan are being, or may be, used
to satisfy Debt of certain of the Guarantors and to make available funds to the
Guarantors for working capital purposes and for acquisitions, development,
capital expenditures, and refinancings of real estate properties. The Lenders
have advised the Borrower that the Lenders will not establish this facility
without the Guaranty from the Guarantors.

      1.5 Loan. Subject to all of the terms, conditions and provisions of this
Agreement, and of the agreements and instruments referred to herein, each of the
Lenders agrees severally to make a loan to the Borrower up to a maximum
aggregate principal amount equal to such Lender's Commitment, and Borrower
agrees to accept and repay the Loan.

                                       -1-
<PAGE>
2. LOAN PROVISIONS.

2.1 General Loan Provisions.

      2.1.1 Limit.

            (i) Subject to all of the terms and conditions hereof, the Lenders
      hereby agree to lend to Borrower, and Borrower may borrow, reborrow and
      repay from time to time sums (the "Loan Advances") between the date hereof
      and the Maturity Date, (i) provided that (a) the aggregate of (1)
      outstanding principal balance of the Loan plus (2) the L/C Exposure, shall
      at no time exceed (a) the lesser of (1) the Established Loan Amount, (2)
      the Total Commitments, or (3) the Availability (the lesser of (1), (2) or
      (3), the "Maximum Loan Amount"), and (ii) provided, further, unless and
      until the repayment in full of the Obligations or the demand by the
      Administrative Agent for payment in full of the Obligations, the Borrower
      shall not repay any Loan Advances such that the aggregate of (a)
      outstanding principal balance of the Loan plus (b) the L/C Exposure, shall
      be at any time less than the Minimum Loan Amount (such limitation being
      the "Minimum Loan Amount Limitation").

            (ii) The Borrower shall have a one time right to elect to increase
      the Established Loan Amount to an amount not to exceed One-Hundred and
      Twenty-Five Million ($125,000,000.00) Dollars; provided, however, after
      such increase the Established Loan Amount shall not exceed the Total
      Commitments (as such may be increased after the date hereof) as determined
      by the Administrative Agent. Such right may be exercised by the Borrower
      by written notice to the Administrative Agent on or before sixty (60) days
      after the date hereof, which election shall designate the increased
      Established Loan Amount and shall be accompanied by payment of the
      required commitment fee in accordance with Section 2.4.1. The Borrower
      shall execute, deliver and satisfy, and shall cause each Loan Party to
      execute, deliver, and satisfy, any and all documentation and other
      conditions reasonably required by the Administrative Agent in order to
      evidence and effectuate the increase in the Established Loan Amount. Any
      such increase of the Established Loan Amount shall not be effective until
      written confirmation from the Administrative Agent to the Borrower and the
      Lenders of such increased amount and the confirmation that such amount
      does not exceed the Total Commitments. In connection with any increase in
      the Established Loan Amount, no Lender shall be required to increase the
      amount of such Lender's Commitment.

            (iii) The Lenders and the Borrower agree that if none of the
      Collateral Properties are located in the State of New York, the Minimum
      Loan Amount and the Minimum Loan Amount Limitation shall not be
      applicable, Further, if at any time any new Borrowing Base Property is
      located in the State of New York, the Minimum Loan Amount Limitation shall
      be deemed to be in effect for an adjusted Minimum Loan Amount as mutually
      agreed to by the Administrative Agent and the Borrower.

            (iv) The obligations of the Lenders hereunder are independent and
      not joint. Failure of any Lender to fulfill its obligations hereunder
      shall not result in any other Lender becoming obligated to advance more
      than its Commitment Percentage of any Loan.

                                       -2-
<PAGE>
      2.1.2 Procedures and Limits. Until the Maturity Date, the Lenders shall,
subject to compliance with all of the other terms, conditions and provisions of
this Agreement and there then occurring no Default or Event of Default, make
disbursements to Borrower of Loan Advances in installments in accordance with
the following:

            (i) Written Requests. Loan Advances shall be made, at Borrower's
      written request to Administrative Agent, not more frequently than four (4)
      times a month, on the basis of written requests, made in accordance with
      the method and procedures described in Section 2.1.3 below; and
      Administrative Agent shall act upon such requests within five (5) Business
      Days following the receipt of a written request from Borrower for a Loan
      Advance, which action may include, without limitation, funding the
      requested Loan Advance, or specifying the basis for not funding and, when
      applicable, requesting additional information and supporting
      documentation. The date on which any Loan Advance is funded (or Letter of
      Credit is issued) is herein called a "Drawdown Date."

            (ii) Requisitions, Certifications. Each request for a Loan Advance
      shall be in writing and in the form attached hereto as Exhibit B-1, and
      shall include an updated Availability Certificate in the form of Exhibit
      B-1 attached hereto. Each such request shall specify (i) the amount of the
      Loan Advance requested, (ii) the purpose of the Loan Advance requested,
      (iii) the aggregate outstanding principal balance of the Loan plus L/C
      Exposure, (iv) the then aggregate remaining amount which may be funded
      under the Notes, and (v) calculations evidencing the Borrower's continued
      compliance with the Financial Covenants. Each request for a Loan Advance
      hereunder shall be for (a) a minimum amount of $1,000,000.00, and (b) an
      amount not to exceed (x) the Maximum Loan Amount less (y) the aggregate of
      the then outstanding principal balance of the Loan plus L/C Exposure, and
      shall be irrevocable and binding on Borrower and shall obligate Borrower
      to accept the Loan Advance requested from respective Lenders on the
      proposed Drawdown Date.

      2.1.3 Funding Procedures. The following terms and provisions shall apply
to any Loan Advance:

            (i) Upon the satisfaction of the conditions set forth in this
      Section 2.1, to the extent applicable, Administrative Agent on behalf of
      the Lenders will either (x) deposit into a Depository Account of the
      Borrower or (y) disburse to, or for the benefit of, the Borrower or any
      Borrower Subsidiary (as directed by the Borrower), the amount of the Loan
      Advance requested by Borrower pursuant to this Section 2.1 provided the
      Administrative Agent has received from the Lenders immediately available
      funds not later than 1:00 p.m. (Eastern time) on the proposed Drawdown
      Date (to the extent immediately available funds are received later than
      1:00 p.m (Eastern time), Administrative Agent, on behalf of the Lenders,
      will make the deposit into the Depository Account on the following
      Business Day), provided that if Borrower's request for a Loan Advance so
      specifies, instead of making such deposit, Administrative Agent on behalf
      of the Lenders shall fund all or a portion of such Loan Advance received
      by the Administrative Agent from the Lenders directly by wire transfer of
      immediately available funds to a third party (in accordance with wiring
      instruction specified in such request), in which event such funds shall be
      wired by no later than 2:00 p.m. (Eastern time) on the proposed Drawdown
      Date.

                                       -3-
<PAGE>
            (ii) Each request for a Loan Advance hereunder shall constitute a
      representation and warranty by Borrower that the conditions set forth in
      Section 5.1 hereof, as the case may be, have been satisfied on the date of
      such request and will be satisfied on the proposed Drawdown Date (with
      respect to Section 5.1.3, notwithstanding that the representations and
      warranties of Borrower in Section 6 may be limited to being made as of the
      date of this Agreement or as of any proposed Drawdown Date), unless
      otherwise disclosed in writing to the Administrative Agent prior to or at
      the time of such request. Notwithstanding any such disclosure, the
      disclosure by Borrower to Administrative Agent that one or more of the
      conditions set forth in Section 5.1 hereof are not satisfied as of the
      date of Borrower's request for a Loan Advance or will not be satisfied as
      of the proposed Drawdown Date shall entitle Lender to refuse to make the
      Loan Advance requested by Borrower.

            (iii) If any Event of Default shall occur and be continuing, the
      Administrative Agent may, by notice to Borrower, terminate the obligation
      of the Lenders to fund Loan Advances in respect of the then unfunded
      portion of the Notes, and, upon such notice being given, such obligation
      of the Lenders to make any further Loan Advances in respect of the then
      unfunded portion of the Notes shall terminate immediately and the Lenders
      shall be relieved of all further obligations to make any Loan Advances to
      Borrower.

2.2 Term of Loan.

            2.2.1 The Loan shall be for a term (the "Term") commencing on the
      date hereof and ending on December 20, 2005 (such date, the Loan
      Termination Date (if applicable), or such earlier date as the Loan is
      accelerated upon an Event of Default, the "Maturity Date").

            2.2.2 The Borrower shall have the right to terminate the Loan prior
      to the originally scheduled Maturity Date by providing the Administrative
      Agent with fifteen (15) days written notice of the Borrower's intention to
      terminate the Loan (the date of such termination being the "Loan
      Termination Date"). In the event that the Borrower provides such written
      notice to the Administrative Agent, (i) such notice shall be irrevocable,
      (ii) as of the date of the notice, the Lenders shall have no further
      obligation to make or issue, and the Borrower shall have no further right
      to receive or request, any Loan Advances or any Letters of Credit
      hereunder, and (iii) the Borrower shall be obligated on the Loan
      Termination Date to (x) pay in full all accrued interest, principal and
      other charges due with respect to the Loan, including, without limitation,
      any Breakage Fees due on account of such payment and (y) either (1)
      provide Administrative Agent with cash collateral equal to the outstanding
      amount of all outstanding Letters of Credit from a source other than the
      proceeds of the Loan or (2) return all outstanding Letters of Credit to
      the Administrative Agent. If such cash collateral is posted, such funds
      shall be held in an interest bearing account at the Administrative Agent,
      shall be pledged to secure the Obligations, and shall be refunded to the
      Borrower upon the return to the Administrative Agent, or the expiration,
      of all of the Letters of Credit and the payment in full of the
      Obligations.

      2.3 Interest Rate and Payment Terms. The Loan shall be payable as to
interest and principal in accordance with the provisions of this Agreement and
the Note. This Agreement also provides for interest at a Default Rate, Late
Charges and prepayment rights and fees. All payments for the account of Lenders
shall be applied to the respective accounts of the Lenders in accordance with
each Lender's Commitment Percentage of the Loan. Any and all interest rate

                                       -4-
<PAGE>
selection and conversion provisions in this Agreement are to be administered by
the Administrative Agent and to be allocated on a pro rata basis to the portion
of the balance due under Note held by each Lender based upon such Lender's
Commitment Percentage.

            2.3.1 Borrower's Options. Principal amounts outstanding under the
      Loan shall bear interest at the following rates, at Borrower's selection,
      subject to the conditions and limitations provided for in this Agreement:
      (i) Variable Rate or (ii) Effective LIBO Rate.

            2.3.2 Selection To Be Made. Borrower shall select, and thereafter
      may change the selection of, the applicable interest rate, from the
      alternatives otherwise provided for in this Agreement, by giving
      Administrative Agent a Notice of Rate Selection (in accordance with the
      requirements of Section 2.3.3, below): (i) prior to each Loan Advance,
      (ii) prior to the end of each Interest Period applicable to an Effective
      LIBO Rate Advance, or (iii) on any Business Day on which Borrower desires
      to convert an outstanding Variable Rate Advance to an Effective LIBO Rate
      Advance.

            2.3.3 Notice. A "Notice of Rate Selection" shall be a written
      notice, given by cable, tested telex, telecopier (with authorized
      signature), or by telephone if immediately confirmed by such a written
      notice, from an Authorized Representative of Borrower which: (i) is
      irrevocable; (ii) is received by Administrative Agent not later than 10:00
      a.m. (Eastern time): (a) if a Effective LIBO Rate is selected, at least
      two (2) Business Days prior to the first day of the Interest Period to
      which such selection is to apply, (b) if a Variable Rate is selected, on
      the first day of the Interest Period to which it applies; and (iii) as to
      each selected interest rate option, sets forth the aggregate principal
      amount(s) to which such interest rate option(s) shall apply and the
      Interest Period(s) applicable to each Effective LIBO Rate Advance.

            2.3.4 If No Notice. If Borrower fails to select an interest rate
      option in accordance with the foregoing prior to a Loan Advance, or prior
      to the last day of the applicable Interest Period of an outstanding
      Effective LIBO Rate Advance, or if an Effective LIBO Rate Advance is not
      available, any new Loan Advance made shall be deemed to be a Variable Rate
      Advance, and on the last day of the applicable Interest Period all
      outstanding principal amounts of the applicable Effective LIBO Rate
      Advance shall be deemed converted to a Variable Rate Advance.

            2.3.5 Telephonic Notice. Without any way limiting Borrower's
      obligation to confirm in writing any telephonic notice, Administrative
      Agent may act without liability upon the basis of telephonic notice
      believed by Administrative Agent in good faith to be from Borrower prior
      to receipt of written confirmation. In each case Borrower hereby waives
      the right to dispute Administrative Agent's record of the terms of such
      telephonic Notice of Rate Selection in the absence of manifest error.

            2.3.6 Limits On Options, One Selection Per Month. Each Effective
      LIBO Rate Advance shall be in a minimum amount of $1,000,000.00. At no
      time shall there be outstanding a total of more than seven (7) Effective
      LIBO Rate Advances combined at any time. If Borrower shall make more than
      one (1) Effective LIBO Rate interest rate selection in any thirty (30) day
      period, excluding conversions of outstanding advances made at the end of
      an applicable Interest Period of any previously outstanding Effective LIBO
      Rate Advance, Administrative Agent may impose and Borrower shall pay a
      reasonable processing fee for each such additional selection.

            2.3.7 Payment and Calculation of Interest. All interest shall be:
      (a) payable in arrears commencing January 1, 2003 and on the same day of
      each month thereafter until

                                      -5-
<PAGE>
the principal together with all interest and other charges payable with respect
to the Loan shall be fully paid; and (b) calculated on the basis of a 360 day
year and the actual number of days elapsed. Each change in the Prime Rate shall
simultaneously change the Variable Rate payable under this Agreement. Interest
at the Effective LIBO Rate shall be computed from and including the first day of
the applicable Interest Period to, but excluding, the last day thereof.

      2.3.8   Mandatory Principal Payments.

            (i) If, on any day, the aggregate of (a) the outstanding principal
      balance of the Loan, plus (b) the L/C Exposure, exceeds the Maximum Loan
      Amount, then the Borrower shall make a principal payment to the
      Administrative Agent, on behalf of the Lenders, in the amount of such
      excess, including, without limitation, any payment required to comply with
      the terms of Section 3.4, below, in immediately available funds within
      thirty (30) days of demand from the Administrative Agent; provided,
      however, if during such thirty (30) day period the Borrower delivers to
      the Administrative Agent satisfactory Funding Evidence, such thirty (30)
      day period shall be extended for such additional time as is determined by
      the Administrative Agent to be required for Borrower, acting in due
      diligence, to obtain such funds, not to exceed an additional sixty (60)
      days.

            (ii) If at any time or from time to time the Borrower shall suffer a
      Major Event of Loss with respect to a Borrowing Base Property or any
      Borrowing Base Property as to which an Event of Loss (other than a Major
      Event of Loss) has occurred is not, or ceases to be, a Restoration
      Property, then the Borrower shall prepay the Loan in an amount equal to
      the Release Price, if any, of such Borrowing Base Property in immediately
      available funds within five (5) Business Days of the later of (x) written
      demand from the Administrative Agent or (y) the receipt of the applicable
      Net Proceeds by the applicable Loan Party.

            (iii) If at any time or from time to time the Borrower shall suffer
      a Major Event of Loss with respect to a Collateral Property (which is not
      a Borrowing Base Property) or any Collateral Property (which is not a
      Borrowing Base Property) as to which an Event of Loss (other than a Major
      Event of Loss) has occurred is not, or ceases to be, a Restoration
      Property, then the Borrower shall prepay the Loan in an amount equal to
      the Net Proceeds relating to such Major Event of Loss or Event of Loss in
      immediately available funds within five (5) Business Days of the later of
      (x) written demand from the Administrative Agent or (y) the receipt of the
      applicable Net Proceeds by the applicable Loan Party.

            (iv) In connection with the release of the Lien in favor of the
      Administrative Agent on behalf of the Lenders on any Borrowing Base
      Property in accordance with Section 3.3, the Borrower shall prepay the
      Loan in an amount equal to the Release Price, if any, of the said
      Borrowing Base Property simultaneously with, or prior to, the release of
      the said Lien.

            (v) If the Borrower shall sell or otherwise transfer a Collateral
      Property (which is not a Borrowing Base Property), then the Borrower shall
      prepay the Loan in an amount equal to the net proceeds received from the
      Borrower on account thereof in immediately available funds within five (5)
      Business Days of the later of (x) written demand from the Administrative
      Agent or (y) the receipt of the net proceeds of such sale or transfer by
      the applicable

                                       -6-
<PAGE>
      Loan Party (any payment due under subsections (i), (ii), (iii),(iv), or
      (v), a "Mandatory Principal Payment").

            (vi) During any period in which the Minimum Loan Amount Limitation
      is in effect, if the application of any Mandatory Principal Payment to the
      Obligations would cause the Loan Balance Test to not be met, at
      Administrative Agent's option, the Borrower shall deposit a portion of the
      Mandatory Principal Payment equal to the Excess Payment Amount in an
      interest bearing account at the Administrative Agent which shall be
      pledged to the Administrative Agent, on behalf of the Lenders, to secure
      the Obligations. Thereafter, if at any time the Loan Balance Test is met,
      the Administrative Agent shall have the right to apply all or a portion of
      the Excess Payment Amount in such account toward payment of the
      Obligations provided that the Loan Balance Test at all times remains in
      compliance. Further, thereafter, if at any time the Minimum Loan Amount
      Limitation shall not be in effect, Administrative Agent shall have the
      right to apply any amounts in such account toward payment of the
      Obligations. Upon and during the continuance of an Event of Default,
      Administrative Agent shall have the right to apply any amounts in such
      account toward payment of the Obligations.

            (vii) The entire principal balance of the Loan shall be due and
      payable in full on the Maturity Date.

      2.3.9 Prepayment. The Loan or any portion thereof may be prepaid in full
or in part at any time upon five (5) days, prior written notice to the
Administrative Agent without premium or penalty with respect to Variable Rate
Advances and, with respect to Effective LIBO Rate Advances subject to the
Breakage Fee. Any Mandatory Principal Prepayment and any other partial
prepayment of principal shall first be applied to the principal due in the
reverse order of maturity, and no such partial prepayment shall relieve Borrower
of the obligation to pay each installment of principal when due. Any amounts
prepaid may be reborrowed subject to the terms hereof.

            (i) Neither all nor any portion of the principal which bears
      interest at the Effective LIBO Rate may or shall be prepaid prior to the
      last day of the applicable interest Period, except upon five (5) days'
      prior written notice to Administrative Agent and the payment to
      Administrative Agent of any amounts required pursuant to Section 2.3.15.

            (ii) Once written notice of intention to prepay is given, the Loan,
      or the applicable portion thereof, shall become due and payable in full on
      the date specified in the notice of prepayment and the failure to so
      prepay the loan on such date, together with any amounts required pursuant
      to Section 2.3.15, shall constitute an Event of Default.

      2.3.10 Maturity. At Maturity all accrued interest, principal and other
charges due with respect to the Loan shall be due and payable in full and the
principal balance and such other charges, but not unpaid interest, shall
continue to bear interest thereafter at the Default Rate until so paid.

      2.3.11 Method of Payment; Date of Credit. All payments of interest,
principal and fees shall be made in lawful money of the United States in
immediately available funds, without counterclaim or setoff and free and clear
of, and without any deduction or withholding for, any taxes or other payments:
(a) by direct charge to an account of

                                -7-
<PAGE>
Borrower maintained with Administrative Agent (or the then holder of the Loan),
or (b) by wire transfer to Administrative Agent or (c) to such other bank or
address as the holder of the Loan may designate in a written notice to Borrower.
Payments shall be credited on the Business Day on which immediately available
funds are received prior to 1:00 p.m. (Eastern time); payments received after
1:00 p.m. (Eastern time) shall be credited to the Loan on the next Business Day.
Payments which are by check, which Administrative Agent may at its option accept
or reject, or which are not in the form of immediately available funds shall not
be credited to the Loan until such funds become immediately available to
Administrative Agent, and, with respect to payments by check, such credit shall
be provisional until the item is finally paid by the payor bank.

      2.3.12 Billings. Administrative Agent may submit monthly billings
reflecting payments due; however, any changes in the interest rate which occur
between the date of billing and the due date may be reflected in the billing for
a subsequent month. Neither the failure of Administrative Agent to submit a
billing nor any error in any such billing shall excuse Borrower from the
obligation to make full payment of all Borrower's payment obligations when due.

      2.3.13 Default Rate. Administrative Agent shall have the option of
imposing, and Borrower shall pay upon billing therefor, an interest rate which
is four percent (4.0%) per annum above the Effective LIBO Rate or Variable Rate
then in effect with respect to Loan Advances (as the case may be) ("Default
Rate"): (a) while any monetary Default exists and is continuing, during that
period between the due date and the date of payment; (b) following any Event of
Default, unless and until the Event of Default is waived by Administrative
Agent; and (c) after Maturity. Borrower's right to select pricing options shall
cease upon the occurrence of a monetary Default or following any Event of
Default.

      2.3.14 Late Charges. Borrower shall pay, upon billing therefor, a late
charge (herein, the "Late Charge") equal to five percent (5%) of the amount of
any payment of principal, other than principal due at Maturity, interest, or
both, which is not paid within ten (10) days of the due date thereof. Late
charges are: (a) payable in addition to, and not in limitation of, the Default
Rate, (b) intended to compensate Administrative Agent for administrative and
processing costs incident to late payments, (c) are not interest, and (d) shall
not be subject to refund or rebate or credited against any other amount due.

      2.3.15 Breakage Fees. Borrower shall pay to Administrative Agent,
immediately upon request and notwithstanding contrary provisions contained in
any of the Loan Documents, such amounts as shall, in the conclusive judgment of
Administrative Agent (in the absence of manifest error), compensate
Administrative Agent and the Lenders for the loss, cost or expense which it may
reasonably incur as a result of (i) any payment or prepayment, under any
circumstances whatsoever, whether voluntary or involuntary, of all or any
portion of an Effective LIBO Rate Advance on a date other than the last day of
the applicable Interest Period of an Effective LIBO Rate Advance, (ii) the
conversion, for any reason whatsoever, whether voluntary or involuntary, of any
Effective LIBO Rate Advance to a Variable Rate Advance on a date other than the
last day of the applicable interest Period, (iii) the failure of all or a
portion of a Loan which was to have borne interest at the Effective LIBO Rate
pursuant to the request of Borrower to be made under the Loan Agreement (except
as a result of a failure by any Lender to fulfill such Lender's obligations to
fund), or (iv) the failure of Borrower to borrow in accordance with any request
submitted by it for an Effective LIBO Rate Advance. Such amounts payable by
Borrower shall be equal to any administrative costs actually incurred plus any
amounts required to compensate for any loss, cost or expense

                                       -8-
<PAGE>
incurred by reason of the liquidation or redeployment of deposits or other
funds acquired by Administrative Agent or any Lender to fund or maintain an
Effective LIBO Rate Advance (herein, collectively, the "Breakage Fee").

      2.4 Loan Fees; Administrative Agent's Fees.

            2.4.1 Loan Fees. Borrower shall pay Administrative Agent a
      commitment fee in accordance with the written agreement between the
      Borrower and the Administrative Agent, such commitment fee to be for the
      benefit of any Lender only to the extent agreed to by the Administrative
      Agent and such Lender.

            2.4.2 Administrative Agent's Fees. Borrower shall pay to the
      Administrative Agent for its own account an annual administrative fee
      payable quarterly in arrears in accordance with the written agreement
      between the Borrower and the Administrative Agent, such administrative fee
      to not be for the benefit of any Lender. The first and last payments of
      such administrative fee are to be prorated based upon the partial calendar
      quarters to which they apply.

            2.4.3 Line Fee. Borrower agrees to pay an unused line fee (the "Line
      Fee") to Administrative Agent for the pro rata benefit of the Lenders
      calculated at the rate of the Line Percentage multiplied by the average
      daily amount during each quarter or portion thereof from the date hereof
      to the Maturity Date by which the Total Commitments exceeds the aggregate
      of (i) the outstanding principal balance of the Loan and (ii) the L/C
      Exposure. The Line Fee shall be payable to the Administrative Agent, for
      the pro rata benefit of the Lenders, quarterly in arrears on the first day
      of each calendar quarter for the immediately preceding calendar quarter or
      portion thereof, with a final payment on the Maturity Date and the first
      and last payments to be prorated based upon the partial calendar quarters
      to which they apply.

            2.4.4 Issuance Fees. Upon the issuance of a Letter of Credit,
      Borrower shall pay to the Administrative Agent for its own account an
      issuance fee in the amount of one-eighth of one percent (0.125%) of the
      face amount of each Letter of Credit.

            2.4.5 Letter of Credit Fees. Borrower agrees to pay a Letter of
      Credit fee to Administrative Agent for the pro rata benefit of the Lenders
      equal to the effective Applicable Margin for LIBO Rate Loans, as set forth
      herein, per annum of the face amount of each Letter of Credit, payable
      quarterly in arrears. The first and last payments of such Letter of Credit
      fee are to be prorated based upon the partial calendar quarters to which
      they apply.

      2.5 Acceleration. The Administrative Agent may, and upon the request of
the Required Lenders or as provided for in Section 13.1.11(ii), shall,
accelerate the Loan, following an Event of Default which at the time of such
acceleration is continuing. Upon such an acceleration, all principal, accrued
interest, Breakage Fee, and costs and expenses shall be due and payable together
with interest on such principal at the Default Rate from the date of the Event
of Default until paid.

      2.6 Additional Provisions Related to Interest Rate Selection.

            2.6.1 Increased Costs. If, due to any one or more of: (i) the
      introduction of any applicable law or regulation or any change (other than
      any change by way of imposition or increase of reserve requirements
      already referred to in the definition of Effective LIBO Rate) in the
      interpretation or application by any authority charged with

                                       -9-
<PAGE>
      the interpretation or application thereof of any law or regulation; or
      (ii) the compliance with any guideline or request from any governmental
      central bank or other governmental authority (whether or not having the
      force of law) (an event described in the preceding clause (i) or (ii) an
      "Increased Cost Event"), there shall be an increase in the cost to any
      Lender of agreeing to make or making, funding or maintaining Effective
      LIBO Rate Advances, including without limitation changes which affect or
      would affect the amount of capital or reserves required or expected to be
      maintained by any Lender, with respect to all or any portion of the Loan,
      or any corporation controlling any Lender, on account thereof, then
      Borrower from time to time shall, upon written demand by Administrative
      Agent, additional amounts sufficient to indemnify any Lender against the
      increased cost. A certificate as to the amount of the increased cost and
      the reason therefor submitted to Borrower by Administrative Agent, in the
      absence of manifest error, shall be conclusive and binding for all
      purposes. Notwithstanding the foregoing, Borrower shall only be
      responsible for increased costs described in this paragraph which are
      incurred with respect to Effective LIBO Rate Advances that (a) are made
      after written notice to Borrower by Administrative Agent of an Increased
      Cost Event and (b) are outstanding as of the date of such notice to
      Borrower by Administrative Agent of an Increased Cost Event, provided such
      notice is given to Borrower within thirty (30) days of the occurrence of
      the Increased Cost Event.

            2.6.2 Illegality. Notwithstanding any other provision of this
      Agreement, if the introduction of or change in or in the interpretation of
      any law, treaty, statute, regulation or interpretation thereof shall make
      it unlawful, or any central bank or government authority shall assert by
      directive, guideline or otherwise, that it is unlawful, for any Lender to
      make or maintain Effective LIBO Rate Advances or to continue to fund or
      maintain Effective LIBO Rate Advances then, on written notice thereof and
      demand by Administrative Agent to Borrower, (a) the obligation of
      Administrative Agent to make Effective LIBO Rate Advances and to convert
      or continue any Loan as Effective LIBO Rate Advances shall terminate and
      (b) Borrower shall convert all principal outstanding under this Agreement
      into Variable Rate Advances.

            2.6.3 Additional LIBO Rate Conditions. The selection by Borrower of
      a Effective LIBO Rate and the maintenance of the Effective LIBO Rate
      Advance at such rate shall be subject to the following additional terms
      and conditions:

                  A. Availability. If, before or after Borrower has selected to
            take or maintain an Effective LIBO Rate Advance, but before the
            Interest Period with respect thereto commences, the Administrative
            Agent notifies Borrower that:

                  (a) dollar deposits in the amount and for the maturity
            requested are not available to Lenders in the London interbank
            market at the rate specified in the definition of LIBO Rate set
            forth above, or

                  (b) reasonable means do not exist for Administrative Agent to
            determine the Effective LIBO Rate for the amounts and maturity
            requested, then the principal which would have been an Effective
            LIBO Rate Advance shall be a Variable Rate Advance.

                  B. Payments Net of Taxes. All payments and prepayments of
            principal and interest under this Agreement shall be made net of any
            taxes and costs resulting from having principal outstanding at or
            computed with reference,

                                      -10-
<PAGE>
            to a Effective LIBO Rate. Without limiting the generality of the
            preceding obligation, illustrations of such taxes and costs are
            taxes, or the withholding of amounts for taxes, of any nature
            whatsoever including income, excise, interest equalization taxes
            (other than United States or state income taxes) as well as all
            levies, imposts, duties or fees whether now in existence or as the
            result of a change in or promulgation of any treaty, statute,
            regulation, or interpretation thereof or any directive guideline or
            otherwise by a central bank or fiscal authority (whether or not
            having the force of law) or a change in the basis of, or the time of
            payment of, such taxes and other amounts resulting therefrom.
            Notwithstanding the foregoing, the Lenders shall not seek
            reimbursement for such taxes and costs that are attributable to a
            payment or prepayment of principal or interest previously made,
            except as to Effective LIBO Rate Advances that are made after
            written notice to Borrower by Administrative Agent of the event
            giving rise to any increase in such tax or cost.

            2.6.4 Variable Rate Advances. Each Variable Rate Advance shall
      continue as a Variable Rate Advance until Maturity of the Loan, unless
      sooner converted, in whole or in part, to an Effective LIBO Rate Advance,
      subject to the limitations and conditions set forth in this Agreement.

      2.7 Letters of Credit.

            2.7.1 Borrower has requested the Administrative Agent, and
      Administrative Agent has agreed, until the Maturity Date and subject to
      compliance with all of the other terms, conditions and provisions of this
      Agreement and there then occurring no Default or Event of Default, to
      issue on behalf of the Lenders one or more letters of credit
      (individually, a "Letter of Credit" and collectively, "Letters of Credit")
      for the Borrower as the account party in an aggregate amount not to exceed
      the lesser of (1) the difference between (x) the Maximum Loan Amount and
      (y) the then outstanding principal amount of the Loan plus the L/C
      Exposure or (2) Ten Million Dollars ($10,000,000.00). The Borrower shall
      give the Administrative Agent written notice in the form of Exhibit B-2
      attached hereto(each a "Notice of Letter of Credit") that it requires the
      issuance of a Letter of Credit not later than 11:00 a.m. (Eastern time) on
      the fourth (4th) Business Day preceding the requested date for issuance
      thereof under this Agreement (or such later date as the Administrative
      Agent may in its sole discretion agree to). Such notice shall be
      irrevocable unless and until such request is denied by the Administrative
      Agent and shall specify (i) the aggregate amount of the requested Letters
      of Credit, (ii) the individual amount of each requested Letter of Credit
      and the number of Letters of Credit to be issued, (iii) the date of such
      issuance (which shall be a Business Day), (iv) the name and address of the
      beneficiary and if other than the Borrower, the name and address of the
      Borrower Subsidiary for whose account the Letter of Credit will be issued,
      (v) the expiration date of the Letter of Credit, (vi) the purpose and
      circumstances for which such Letter of Credit is being issued, (vii) the
      terms upon which each such Letter of Credit may be drawn down (which terms
      shall not leave any discretion to Administrative Agent), (viii) that no
      Default or Event of Default has occurred or is continuing both before and
      after giving effect to such issuance, (ix) that no material adverse change
      in the financial condition of Borrower has occurred, (x) that the Borrower
      and all Loan Parties are in compliance in all material respects with all
      covenants set forth herein after giving effect to such issuance, (xi) that
      all representations and warranties made under the Loan Documents (other
      than representations and warranties which speak as of a specific date or
      as to which the Administrative Agent has previously been advised in
      writing by the Borrower are no longer true and correct) are true, correct
      and complete in all material respects as if made as of the date of such
      issuance, and (xii) the L/C Exposure. No later

                                -11-
<PAGE>
      than 10:00 a.m. (Eastern time), on the date that is four (4) Business Days
      prior to the date of issuance, the Borrower shall specify a precise
      description of the documents and the verbatim text of any certificate to
      be presented by the beneficiary of such Letter of Credit, which if
      presented by such beneficiary prior to the expiration date of the Letter
      of Credit would require the Administrative Agent to make a payment under
      the Letter of Credit; provided, that Administrative Agent may, in its
      reasonable judgment, require changes in any such documents and
      certificates only in conformity with changes in customary and commercially
      reasonable practice or law. In determining whether to pay on such Letter
      of Credit, the Administrative Agent shall be responsible only to determine
      that the documents and certificates required to be delivered under the
      Letter of Credit have been delivered and that they comply on their face
      with the requirements of that Letter of Credit.

            2.7.2 In the event that prior to the Maturity Date, the beneficiary
      of any Letter of Credit draws all or a portion of the amount thereof, then
      the portion so drawn shall be treated as a Loan Advance under the Notes,
      and shall bear interest at the Variable Rate (as defined in the Notes) and
      shall be treated as a Variable Rate Advance under, and shall otherwise be
      payable on the same terms and conditions hereof (provided that the portion
      so drawn shall not be deemed to be a new Loan Advance for purposes of
      calculating the Availability, to the extent the issuance of the Letter of
      Credit shall have so reduced such Availability in accordance with the
      terms of this Agreement). The foregoing is not intended to prohibit
      Borrower from converting such Variable Rate Advance to an Effective LIBO
      Advance in accordance with the provisions of the Notes.

            2.7.3 Each Letter of Credit shall be issued using the standard form
      of letter of credit then being used by Administrative Agent (which
      standard form shall, at Borrower's request, be provided by Administrative
      Agent to Borrower prior to the issuance of any Letter of Credit), and
      shall have an expiration date no later than thirty (30) days prior to the
      Maturity Date.

            2.7.4 Notwithstanding anything to the contrary contained in this
      Agreement or the Notes, in no event shall Borrower have the right to pay
      off the entire indebtedness evidenced by the Notes and, in connection
      therewith, advise Administrative Agent and the applicable Lenders that it
      unconditionally waives its right to obtain further applicable Loan
      Advances and Letters of Credit under the Loan (i.e., Borrower desires to
      cancel the applicable Notes) unless Borrower either (i) provides
      Administrative Agent with cash collateral equal to the outstanding amount
      of the Letters of Credit from a source other than the proceeds of the Loan
      or (ii) returns all outstanding Letters of Credit to the Administrative
      Agent. If such cash collateral is posted, such funds shall be held in an
      interest bearing account at the Administrative Agent for the benefit of
      the Lenders, shall be pledged to secure the Obligations, and shall be
      refunded to the Borrower upon the return to the Administrative Agent, or
      the expiration, of all of the Letters of Credit and the payment in full of
      the Obligations.

            2.7.5 Upon the issuance of each Letter of Credit, a participation
      therein, in an amount equal to each Lender's Commitment Percentage, shall
      automatically be deemed granted by the Administrative Agent to each Lender
      on the date of such issuance and each Lender shall automatically be
      obligated, to reimburse the Administrative Agent to the extent of its
      Commitment Percentage for all obligations incurred by the Administrative
      Agent to third parties in respect of such Letters of Credit, if not
      otherwise deemed to be a Loan Advance hereunder.

                                -12-
<PAGE>
            2.7.6 The Administrative Agent may accept or pay any draft presented
      to it, regardless of when drawn and whether or not negotiated, if such
      draft, the other required documents and any transmittal advice are
      presented to the Administrative Agent and dated on or before the
      expiration date of the Letter of Credit under which such draft is drawn.
      The Administrative Agent may honor as complying with the terms of the
      Letter of Credit and with this Agreement any drafts or other documents
      otherwise in order signed or issued by an administrator, executor,
      conservator, trustee in bankruptcy, debtor in possession, assignee for
      benefit of creditors, liquidator, receiver or other legal representative
      of the party authorized under such Letter of Credit to draw or issue such
      other drafts or other documents.

            2.7.7 The Uniform Customs and Practice for Documentary Credits (1993
      Revision), International Chamber of Commerce Publication No. 500, and any
      subsequent revisions thereof approved by a Congress of the International
      Chamber of Commerce and adhered to by the Administrative Agent (the
      "Uniform Customs and Practice"), shall be binding on the Borrower and the
      Administrative Agent except to the extent otherwise provided herein, in
      any Letter of Credit or in any other Loan Document. Anything in the
      Uniform Customs and Practice to the contrary notwithstanding:

                  (i) None of the Loan Parties nor any beneficiary of any Letter
            of Credit shall be deemed an agent of the Administrative Agent.

                  (ii) With respect to any Letter of Credit, neither the
            Administrative Agent nor its correspondents shall be responsible for
            or shall have any duty to ascertain:

                  A. the genuineness of any signature;

                  B. the validity, sufficiency, accuracy, genuineness or legal
            effect of any endorsements;

                  C. delay in giving, or failure to give, notice of arrival,
            notice of refusal of documents or of discrepancies in respect of
            which the Administrative Agent refuses the documents or any other
            notice, demand or protest;

                  D. the performance by any beneficiary under any Letter of
            Credit of such beneficiary's obligations to the Borrower or any Loan
            Party;

                  E. inaccuracy in any notice received by the Administrative
            Agent; or

                  F. the validity, sufficiency, accuracy, genuineness or legal
            effect of any instrument, draft, certificate or other document
            required by such Letter of Credit to be presented before payment of
            a draft, or the office held by or the authority of any Person
            signing any of the same.

                  (iii) The obligations of the Borrower under the Loan Documents
            are absolute, unconditional, and irrevocable and shall be performed
            strictly in accordance with the terms hereof under all
            circumstances, whatsoever, including the following:

                  A. any lack of validity or enforceability or restriction,
            restraint, or stay in the enforcement of this Agreement, the Letters
            of Credit, or any other

                                      -13-
<PAGE>
            agreement or instrument relating thereto, unless the Administrative
            Agent is restrained or stayed from honoring a drawing under the
            subject Letter of Credit;

                  B. any amendment or waiver of, or consent to the departure
            from, the Letters of Credit, unless the said amendment, waiver or
            consent has been made in accordance with the Administrative Agent's
            procedures with respect thereto and with the written authorization
            or acknowledgment of the Administrative Agent; or

                  C. the existence of any claim, set-off, defense, or other
            right which the Borrower may have at any time against the
            beneficiary of the Letters of Credit.

                  (iv) The occurrence of any of the events referred to in the
            preceding clauses of this Section 2.7.7 shall not affect or prevent
            the vesting of any of the Administrative Agent's rights or powers
            hereunder or the Borrower's obligation to make reimbursement of
            amounts paid under any Letter of Credit or any draft accepted
            thereunder.

                  (v) All directions, correspondence, and funds transfers
            relating to the Letter of Credit are at the risk of the Borrower.
            Administrative Agent shall have discharged Administrative Agent's
            obligations under the Letter of Credit by the initiation of the
            method of payment called for in any drawing which includes payment
            instructions (or by any other commercially reasonable and comparable
            method). The Lenders and, unless caused by the gross negligence or
            willful misconduct of the Administrative Agent, the Administrative
            Agent shall not have any responsibility to the Borrower for any
            inaccuracy, interruption, error, or delay in transmission or
            delivery by post, telegraph or cable, or for any inaccuracy of
            translation.

                  (vi) The Borrower recognizes that:

                  A. Administrative Agent has no financial or other interests in
            the beneficiary of Letters of Credit.

                  B. Administrative Agent is irrevocably obligated to honor a
            proper drawing under the Letters of Credit.

                  C. In the event of any conflict between the provisions of this
            Agreement and the Uniform Customs and Practice, the provisions of
            this Agreement shall govern.

      3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.

      3.1 Security. The Loan together with interest thereon and all other
charges and amounts payable by, and all other obligations of, Borrower and the
other Loan Parties to the Administrative Agent and/or each of the Lenders,
whenever incurred, direct or indirect, absolute or contingent, arising under or
with respect to this Agreement, the Security Documents, or any other Loan
Document, together with all other Obligations, shall be secured by the following
collateral (the "Collateral") which Borrower agrees to provide and maintain, or
cause to be provided and maintained (whether provided for each in separate
agreements or combined with various other agreements):

            3.1.1 Mortgage/ Deed of Trust and Security Agreement.

                                      -14-
<PAGE>
            (i) A first priority mortgage/deed of trust (as applicable) and
      security agreement (individually and collectively, the "Mortgage") granted
      by each Borrowing Base Property Owner to the Administrative Agent or a
      trustee on behalf of the Administrative Agent, as applicable, on behalf of
      the Lenders, on (i) each Collateral Property, (ii) all land, improvements,
      furniture, fixtures, equipment, and other assets (including, without
      limitation, property management agreements, contracts, contract rights,
      accounts, Licenses and Permits and general intangibles), including all
      after-acquired property, owned, or in which each Borrowing Base Property
      Owner has or obtains any interest, in connection with each Collateral
      Property; (iii) all insurance proceeds and other proceeds therefrom, and
      (iv) all other assets of each Borrowing Base Property Owner, whether now
      owned or hereafter acquired and related to each Collateral Property.

            (ii) In the event that any Collateral Property is ground leased by
      the Borrowing Base Property Owner, the reference herein to the "Mortgage"
      shall include (i) if the ground lessor is an Affiliate of any Loan Party
      and the fee interest has not been separately mortgaged by such Affiliate,
      the said ground lessor joining in the Mortgage to include within the
      Collateral the fee interest in the said Collateral Property or (ii) if the
      ground lessor is not an Affiliate of any Loan Party or, if the ground
      lessor is an Affiliate of any Loan Party and the fee interest has been
      separately mortgaged by such Affiliate, an estoppel certificate from the
      ground lessor in form and substance acceptable to the Administrative
      Agent.

            (iii) Each Mortgage shall secure the payment and performance of the
      Obligations, except that for certain of the Collateral Properties, the
      Administrative Agent may agree to limit the recourse to any Collateral
      Property to a Maximum Property Amount (each Maximum Property Amount
      established as of the Closing Date is set forth in Exhibit J, annexed
      hereto).

            (iv) At the option of the Administrative Agent, each Mortgage shall
      be either (x) a first priority mortgage/deed of trust (as applicable) and
      security agreement granted by the applicable Borrowing Base Property Owner
      to the Administrative Agent or a trustee on behalf of the Administrative
      Agent, as applicable, on behalf of the Lenders, or (y) an amendment,
      restatement and consolidation of a first priority mortgage/deed of trust
      (as applicable) and security agreement acquired by the Administrative
      Agent, on behalf of the Lenders, with proceeds of a Loan Advance.

            (v) In the event that in connection with the granting of any
      Mortgage on a Borrowing Base Property, the Administrative Agent, on behalf
      of the Lender, purchases by assignment an existing mortgage loan or loans
      on such Borrowing Base Property, the Borrower represents, warrants,
      covenants and agrees as follows:

                  (a) The request for the Administrative Agent to purchase by
            assignment such loan or loan shall constitute a representation and
            warranty by the Borrower that (i) all signatures by the Borrower,
            any Borrower Subsidiary and all other persons or entities on the
            assigned promissory note, mortgage, and all other documents,
            instruments, and agreements executed in connection therewith are
            genuine, (ii) such documents set forth the entire agreement binding
            on the Lenders with

                                      -15-
<PAGE>
            respect to the loan arrangement evidenced thereby, (iii) the
            applicable Borrowing Base Property Owner is absolutely and
            unconditionally indebted under said documents and does not have any
            offsets, defenses, or counterclaims thereunder, or otherwise against
            the lender thereunder, or any predecessor in interest to such
            lender;

                  (b) The Borrower waives, on its own behalf and on the behalf
            of KRT and the Loan Parties, any offsets, defenses or counterclaims
            that exist or may have existed with respect to such assigned loan
            arrangement and assigned documents; and

                  (c) The Borrower shall cause to be delivered to the
            Administrative Agent such documents, instruments and agreements as
            the Administrative Agent shall reasonably require in order to
            evidence and effectuate such assignment and the terms and conditions
            hereof.

            3.1.2 Collateral Assignment of Leases and Rents. A first priority
      collateral assignment of leases and rents (individually and collectively,
      the "Assignment of Leases and Rents") granted by each Borrowing Base
      Property Owner to the Administrative Agent, on behalf of the Lenders, with
      respect to all Leases of each Collateral Property and all income and
      profits to be derived from the operation and leasing of each Collateral
      Property.

            3.1.3 Collateral Assignment of Contracts. A first priority
      collateral assignment and security agreement granted by each Borrowing
      Base Property Owner to the Administrative Agent, on behalf of the Lenders,
      with respect to all Licenses and Permits and all contracts, agreements and
      warranties now owned or hereafter acquired by each Collateral Property
      Owner and related in any manner to each Collateral Property.

            3.1.4 Guaranties. The unconditional, continuing guaranty (singly and
      collectively the "Guaranty") from the Guarantor, pursuant to which each
      Guarantor shall guaranty the prompt, punctual, and faithful payment of the
      Loan and the performance of all Borrower's other Obligations to the
      Administrative Agent and each of the Lenders under the Loan Documents.

            3.1.5 Environmental Compliance and Indemnification Agreement. A
      compliance and indemnification agreement with respect to environmental
      matters ("Environmental Indemnity") from Borrower and each Guarantor in
      favor of the Administrative Agent and each of the Lenders.

            3.1.6 Ownership Interest and Inter-Company Loan Pledge. A first
      priority pledge granted to the Administrative Agent, on behalf of the
      Lenders, with respect to (i) the one-hundred (100%) percent ownership
      interest in each Borrowing Base Property Owner and each manager/general
      partner of a Borrowing Base Property Owner and (ii) any inter-company
      loans from time to time due from any Borrowing Base Property Owner to the
      Borrower.

      3.2 Loan Documents and Security Documents. The Loan shall be made,
evidenced, administered, secured and governed by all of the terms, conditions
and provisions of the following loan documents (the "Loan Documents"), each as
the same may be hereafter modified or amended, consisting of: (i) this Loan
Agreement; (ii) a separate promissory note in the form of Exhibit C, annexed
hereto, payable to each Lender in the aggregate principal amount of Established
Loan Amount (as such amount may be increased as provided for herein) (together

                                      -16-
<PAGE>
with any additional Notes delivered as provided herein, "Note"); (iii) the
various documents and agreements referenced in Section 3.1, above, and (iv) any
other documents, instruments, or agreements heretofore or hereafter executed to
further evidence or secure the Loan.

      The Loan Documents, referenced in items 3.1.1 through and including 3.1.6,
together with any such other Loan Documents as may be executed in accordance
with Section 3.5, below, as to any Collateral Property, are sometimes referred
to herein, singly and collectively as the "Security Documents".

      3.3 Removal of Individual Property as a Borrowing Base Property -
Borrower. From time to time during the term of this Agreement following (i)
Borrower's written request ("Collateral Release Request") indicating that (x)
the Borrower intends to sell or refinance the subject Borrowing Base Property or
(y) the removal of one or more Borrowing Base Properties is necessary to cure or
remedy a Default hereunder, and (ii) satisfaction of the Release Conditions, the
Administrative Agent shall release such Borrowing Base Property from the Lien
held by the Administrative Agent, release the subject Borrowing Base Property
Owner from the Guaranty, terminate the assignments made by such Borrowing Base
Property Owner pursuant to Sections 3.1.2 and 3.1.3, and release its Lien upon
the ownership interest in such Borrowing Base Property Owner and its manager or
general partner which was pledged by the Borrower as Collateral pursuant to
Section 3.1.6, and thereafter such Borrowing Base Property Owner shall no longer
be a Loan Party for the purposes of this Agreement (provided, however, any such
release by the Administrative Agent shall not be deemed to terminate or release
such Borrowing Base Property Owner from any obligation or liability under any
Loan Document which specifically by its terms survives the said release or the
payment in full of the Obligations). The "Release Conditions" are the following:

            3.3.1 The Borrower shall make a Mandatory Principal Payment equal to
      the Release Price, if any, relative to the subject Borrowing Base
      Property.

            3.3.2 Upon release of the Lien on the subject Borrowing Base
      Property, the Financial Covenants shall remain satisfied (or be satisfied
      if the release cures a Default which resulted from the Financial Covenants
      not being satisfied).

            3.3.3 No Default shall exist under this Agreement or the other Loan
      Documents at the time of any such release, except for any Default which is
      cured or remedied by the removal of such Individual Property from being a
      Borrowing Base Property.

            3.3.4 No Event of Default shall exist under this Agreement or the
      other Loan Documents at the time of the Collateral Release Request or at
      the time of any such release, except for any Default which is cured or
      remedied by the removal of such Individual Property from being a Borrowing
      Base Property.

            3.3.5 All representations and warranties contained herein or in the
      other Loan Documents shall be true and correct as of the time of any such
      release (other than representations and warranties which speak as of a
      specific date or which Administrative Agent was notified of were not true
      and correct prior to a request for a Loan Advance which was nonetheless
      made).

            3.3.6 The Borrower shall pay or reimburse the Administrative Agent
      for all appraisal fees, title insurance and recording costs, reasonable
      legal fees and expenses and other reasonable costs and expenses incurred
      by Administrative Agent in connection with the release.

                                      -17-
<PAGE>
      Any failure of any removal and release requested by the Borrower to meet
all of the Release Conditions shall be deemed a rejection of the proposed
Collateral Release Request and, subject to the other terms and conditions hereof
as to whether any Individual Property is a Borrowing Base Property, such
Borrowing Base Property shall remain a Borrowing Base Property hereunder and
shall be included within the Collateral.

      3.4 Removal of Individual Property as a Borrowing Base Property -
Administrative Agent.

            3.4.1 An Individual Property shall no longer be deemed to be a
      Borrowing Base Property upon the determination by the Administrative Agent
      of the occurrence of any of the following:

                  (i) A Borrowing Base Property is a Non-Stabilized Asset for a
            period of twelve (12) consecutive months;

                  (ii) A Major Event of Loss occurs as to a Borrowing Base
            Property;

                  (iii) A Borrowing Base Property as to which an Event of Loss
            occurs is not, or ceases to be, a Restoration Property; or

                  (iv) The Required Lenders have instructed the Administrative
            Agent to remove a Borrowing Base Property if a tenant or tenants
            which have Leases of 25,000 rentable square fee or more in the
            aggregate in such Borrowing Base Property are subject to bankruptcy
            or insolvency proceedings and are not paying rent as required under
            such Leases.

            3.4.2 At the option of the Administrative Agent, on or after June
      30, 2003, the Valley Fair Property shall no longer be deemed to be a
      Borrowing Base Property.

            3.4.3 Upon any such Individual Property no longer being deemed to be
      a Borrowing Base Property, the Borrower shall make a Mandatory Principal
      Payment when required equal to the Release Price for such Borrowing Base
      Property.

            3.4.4 With respect to any Individual Property determined by the
      Administrative Agent to no longer be deemed a Borrowing Base Property in
      accordance with this Section 3.4, if the Release Conditions are satisfied
      with respect thereto, the Administrative Agent shall release such
      Individual Property from the Lien held by the Administrative Agent,
      release the subject Borrowing Base Property Owner from the Guaranty,
      terminate the assignments made by such Borrowing Base Property Owner
      pursuant to Sections 3.1.2 and 3.1.3, and release its Lien upon the
      ownership interest in such Borrowing Base Property Owner and its manager
      or general partner which was pledged by the Borrower as Collateral
      pursuant to Section 3.1.6, and thereafter such Borrowing Base Property
      Owner shall no longer be a Loan Party for the purposes of this Agreement
      (provided, however, any such release by the Administrative Agent shall not
      be deemed to terminate or release such Borrowing Base Property Owner from
      any obligation or liability under any Loan Document which specifically by
      its terms survives the said release or the payment in full of the
      Obligations). However, if the said Release Conditions are not satisfied
      with respect to such Individual Property, although such Individual
      Property shall no longer be a Borrowing Base Property, the Individual
      Property shall not be released from the Lien held by the Administrative
      Agent (shall continue to be a Collateral Property) and there shall be no
      release of the Collateral

                                      -18-
<PAGE>
      relating to such Individual Property or the subject Borrowing Base
      Property Owner, until such time at the Release Conditions are satisfied
      with respect thereto.

      3.5 Additional Borrowing Base Property. From time to time during the term
of this Agreement following Borrower's written request ("Additional Collateral
Request"), compliance with the provisions of this Section 3.5, and compliance
with the requirements for inclusion as a Borrowing Base Property, as set forth
in the definition thereof, the Required Lenders shall authorize the
Administrative Agent to accept one or more Individual Properties as Borrowing
Base Properties (as identified by the Borrower in its written request) to be
held by the Administrative Agent as Collateral. The Lenders shall agree to the
acceptance of the Individual Property as an additional Borrowing Base Property
only upon the satisfaction of the following conditions, in a manner reasonably
acceptable to the Administrative Agent and the Required Lenders:

            3.5.1 The Borrower shall have obtained Preliminary Approval for the
      addition of such Individual Property.

            3.5.2 The Borrower (or applicable Loan Party) shall have satisfied
      all of the Borrowing Base Requirements as to such Individual Property.

            3.5.3 No Default by Borrower shall exist under this Agreement or the
      other Loan Documents at the time of any such Individual Property becoming
      a Borrowing Base Property, except for any Default which is cured or
      remedied by such Individual Property becoming a Borrowing Base Property.

            3.5.4 No Event of Default shall exist under this Agreement or the
      other Loan Documents at the time of the Additional Collateral Request or
      at the time of any such Individual Property becoming a Borrowing Base
      Property.

            3.5.5 All representations and warranties contained herein or in the
      other Loan Documents shall be true and correct as of the time of any such
      Individual Property becoming a Borrowing Base Property (other than
      representations and warranties which speak as of a specific date or which
      Administrative Agent was notified of were not true and correct prior to a
      request for a Loan Advance which was nonetheless made).

            3.5.6 The Borrower shall pay or reimburse the Administrative Agent
      for all appraisal fees, title insurance and recording costs, reasonable
      legal fees and expenses and other costs and expenses incurred by
      Administrative Agent in connection with the additional Borrowing Base
      Property.

            3.5.7 The Borrower, the subject Borrowing Base Property Owner, and
      the subject Individual Property shall have satisfied all applicable
      conditions precedent set forth in Article 5 prior to the inclusion of the
      Individual Property as a Borrowing Base Property.

      Any failure of the proposed Borrowing Base Property to meet all of the
foregoing conditions shall be deemed a rejection of the proposed Borrowing Base
Property for that Additional Collateral Request and such proposed Borrowing Base
Property shall not be included in the Borrowing Base for any purpose unless and
until it is accepted by Administrative Agent and the Required Lenders and all of
the foregoing conditions are satisfied or waived by the Administrative Agent and
the Required Lenders.

                                      -19-
<PAGE>
      4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES. Administrative
Agent and each of the Lenders are authorized to rely upon the continuing
authority of the persons, officers, signatories or agents hereafter designated
("Authorized Representatives") to bind Borrower with respect to all matters
pertaining to the Loan and the Loan Documents including, but not limited to, the
selection of interest rates, the submission of requests for Loan Advances or
Letters of Credit and certificates with regard thereto. Such authorization may
be changed only upon written notice to Administrative Agent accompanied by
evidence, reasonably satisfactory to Administrative Agent, of the authority of
the person giving such notice and such notice shall be effective not sooner than
five (5) Business Days following receipt thereof by Administrative Agent. The
present Authorized Representatives are listed on Exhibit D. The Administrative
Agent shall have a right of approval, not to be unreasonably withheld or
delayed, over the identity of the Authorized Representatives so as to assure
Administrative Agent and each of the Lenders that each Authorized Representative
is a responsible and senior official of Borrower.

      5. CONDITIONS PRECEDENT.

      5.1 Closing Loan and Funding Initial Loan Advance. It shall be a condition
precedent of Lenders' obligation to close the Loan and to fund the initial
proceeds of the Loan that each of the following conditions precedent be
satisfied in full (as determined by each Lender in its discretion which
discretion shall be exercised in good faith having due regard for the advice of
the Administrative Agent), unless specifically waived in writing by all of the
Lenders at or prior to the date of the closing and funding of the initial Loan
Advance (the "Closing Date") (in the event that the closing of the Loan is an
earlier date than the date of the initial funding of the Loan, then the Closing
Date shall refer to the date of the initial funding of the Loan):

            5.1.1 Satisfactory Loan Documents. On the Closing Date, each of the
      Loan Documents shall be satisfactory in form, content and manner of
      execution and delivery to Administrative Agent and Administrative Agent's
      counsel and all Loan Documents shall be in full force and effect.

            5.1.2 Financial Information; No Material Change.

                  (i) No change shall have occurred in the financial condition,
            business, affairs, operations or control of Borrower and/or the Loan
            Parties, since the date of their respective financial statements of
            financial projections most recently delivered to Administrative
            Agent or any of the Lenders, which change has had or could
            reasonably be expected to have a Material Adverse Effect; and
            Borrower and the other Loan Parties shall have furnished
            Administrative Agent such other financial information, projections,
            and certifications as requested by the Administrative Agent.

                  (ii) The Borrower shall have provided to the Administrative
            Agent such certificates, opinions and other evidence as the
            Administrative Agent may reasonably require to evidence that the
            Borrower, KRT and each of the Borrowing Base Property Owners (both
            before and after giving effect to the Loan) is solvent, has assets
            having a fair value in excess of the amount required to pay such
            Person's probable liabilities and existing Debts as such become
            absolute and mature, and has adequate capital for the conduct of
            such Person's business and the ability to pay such Person's Debts
            from time to time incurred in connection therewith as such Debts
            mature.

                                      -20-
<PAGE>
      5.1.3 Warranties and Representations Accurate. All warranties and
representations made by or on behalf of any of the Borrower and the other Loan
Parties, or any of them, to Administrative Agent or any of the Lenders shall be
true, accurate and complete in all material respects and shall not omit any
material fact necessary to make the same not misleading.

      5.1.4 Validity and Sufficiency of Security Documents. The Security
Documents shall create a valid and perfected lien in and to the Collateral and
each of the Security Documents and related UCC filings shall have been duly
recorded and filed to the satisfaction of Administrative Agent and
Administrative Agent's counsel, including, without limitation, as follows:

            (i) On the Closing Date, the Borrower, the other Loan Parties, and
      any other Persons executing Loan Documents on the Closing Date shall have
      delivered to the Administrative Agent evidence of the completion of all
      recordings and filings of, or with respect to, the Security Documents or,
      in the case of UCC-1 financing statements, delivery of such financing
      statements in proper form for recording, and shall have taken all such
      other actions as may be necessary or, in the opinion of the Administrative
      Agent, desirable to perfect the Liens and security interests intended to
      be created by the Security Documents in the Collateral covered thereby.
      Such filings, recordings and other actions shall include, without
      limitation, in addition to the Mortgage, the Assignment of Leases and
      Rents, and the UCC-1 financing statements; and

            (ii) on or prior to the Closing Date, the Administrative Agent shall
      have received the results of a UCC, tax lien and judgment search as may be
      reasonably requested by the Administrative Agent with respect to the
      Borrower, the Borrower Subsidiaries, and any other Loan Parties, and the
      results of such search shall indicate there are no judgments or Liens not
      permitted under the Loan Documents or to be satisfied with the proceeds of
      the initial Loan Advance.

      5.1.5 Litigation. On the Closing Date, there shall not be any actions,
suits or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority by any entity (private
or governmental) pending or, to the best of the Borrower's knowledge, threatened
with respect to the Loan, the transactions contemplated in the Loan Documents,
or the Borrower, any other Loan Party, or any other Borrower Subsidiary, which
the Administrative Agent shall determine in good faith could have a Material
Adverse Effect.

      5.1.6 Formation Documents and Entity Agreements.

            (i) On the Closing Date, the Administrative Agent shall have
      received a certificate of an officer of each limited liability company
      which is a manager or general partner of a Loan Party or limited
      partnership which is a general partner of a Loan Party annexing and
      certifying as to (a) resolutions of such limited liability company
      authorizing and approving the transactions contemplated by the Loan
      Documents, and the execution and delivery thereof by such limited
      liability company in respect of the documents to which it is a party on
      its own behalf, or as a general partner or manager of such other Loan
      Party or limited partnership, in respect of any of the Loan Documents, (b)
      signatures and incumbency of all officers of such limited liability
      company executing documentation on behalf of such entity or on behalf of
      any entity as to which such limited liability company is a general partner
      or manager, as the case may be, in connection with the

                                -21-
<PAGE>
      transactions contemplated by the Loan Documents, (c) the Formation
      Documents of such limited liability company, the Loan Party which it is a
      manager or general partner of, the limited partnership which it is general
      partner of, and the Loan Party which such limited partnership is a general
      partner of, having been duly executed, delivered and filed (to the extent
      required by applicable Legal Requirements) and remaining in full force and
      effect and unmodified as of the date of such certificate (and annexing
      copies thereof) and (d) such limited liability company, the Loan Party
      which it is a manager or general partner of, the limited partnership which
      it is general partner of, and the Loan Party which such limited
      partnership is a general partner of, being in good standing and authorized
      to do business in each jurisdiction where the conduct of its business and
      ownership of its assets requires such qualification.

            (ii) On the Closing Date, the Administrative Agent shall have
      received a certificate of the secretary of each corporation which is a
      Loan Party or the general partner of another Loan Party or the owner of
      the majority beneficial interests of Montgomery annexing and certifying as
      to (a) corporate resolutions of such entity authorizing and approving the
      transactions contemplated by the Loan Documents, and the execution and
      delivery thereof by such entity in respect of the documents to which it is
      a party on its own behalf, or as a general partner of such other Loan
      Party, in respect of any of the Loan Documents, (b) signatures and
      incumbency of all officers of such corporation executing documentation on
      behalf of such entity or on behalf of any entity as to which such
      corporation is a general partner, in connection with the transactions
      contemplated by the Loan Documents, (c) the Formation Documents of such
      corporation and Loan Party having been duly executed, delivered and filed
      (to the extent required by applicable Legal Requirements) and remaining in
      full force and effect and unmodified as of the date of such certificate
      (and annexing copies thereof) and (d) such corporation and Loan Party
      being in good standing and authorized to do business in each jurisdiction
      where the conduct of its business and ownership of its assets requires
      such qualification.
      5.1.7 Compliance With Law. Administrative Agent and each of the Lenders
shall have received and approved evidence that there are no Legal Requirements
which prohibit or adversely limit the capacity or authority of the Borrower or
any Loan Party to enter into the Loan and perform the obligations of such Person
with respect thereto.

      5.1.8 Compliance With Financial Covenants. Administrative Agent shall have
received an Officer's Certificate reflecting the Borrower's compliance with the
Financial Covenants and the terms and conditions hereof.

      5.1.9 Indemnity/Contribution Agreement. Administrative Agent shall have
received an Indemnity and Contribution Agreement between and among the Borrower,
KRT, and the Borrowing Base Property Owners, in form and substance satisfactory
to the Administrative Agent.

      5.1.10 Borrowing Base Property Due Diligence. Administrative Agent shall
have received and completed a review of such due diligence as the Administrative
Agent may require with respect to any Borrowing Base Property, including,
without limitation, satisfaction of the Borrowing Base Property Requirements.

      5.1.11 Condition of Property. There shall have been no material uninsured
unrepaired or unrestored damage or destruction by fire or otherwise to any of
the real or

                                -22-
<PAGE>
tangible personal property comprising or intended to comprise the Borrowing Base
Properties.

            5.1.12 Insurance. Borrower shall have provided to Administrative
      Agent and each of the Lenders with respect to each Borrowing Base
      Property, the Borrower and the Collateral evidence of: (i) insurance
      coverages which meet the property, hazard, terrorism and other insurance
      requirements set forth on Exhibit E of this Loan Agreement to the
      satisfaction of Administrative Agent; and (ii) prepayment of the premiums
      for such insurance in accordance with the requirements set forth in
      Section 7.5.3.

            5.1.13 Third Party Consents and Agreements. The Administrative Agent
      shall have received such third party consents and agreements as the
      Administrative Agent may reasonably require with respect to the Loan.

            5.1.14 Cash Management. The Borrower shall open the Depository
      Account, as provided for herein.

            5.1.15 Legal and other Opinions. Administrative Agent shall have
      received and approved legal opinion letters from counsel representing the
      Borrower and the other Loan Parties which meet Administrative Agent's
      legal opinion requirements and covering such matters incident to the
      transactions contemplated herein as the Administrative Agent may request.

            5.1.16 No Default. There shall not be any Default under any of the
      Loan Documents.

To the extent that the Lenders made the initial funding of the Loan, the Lenders
shall be deemed to have waived the compliance with any of the above conditions
precedent to the closing of the Loan and the funding of the initial proceeds of
the Loan, and the Lenders shall have no further right hereunder to require the
Borrower to comply with such condition precedent so waived as to such initial
funding, except to the extent otherwise agreed to in writing by the Borrower.
This provision shall not be deemed to waive, modify or amend any of terms of any
other section of this Agreement, including, without limitation, Articles 7 and
8.

      6. WARRANTIES AND REPRESENTATIONS. The Administrative Agent and the
Lenders acknowledge and agree that all representations and warranties made in
this Section 6 shall be deemed to be made only as of the date hereof; however,
as provided for in Section 6.22, all such representations and warranties shall
be deemed to be reaffirmed as of any proposed Drawdown Date, unless modified by
such additional disclosures as shall be provided to the Administrative Agent in
writing after the date hereof and prior to or with a request for a Loan Advance
and/or the issuance of a Letter of Credit. Subject to such limitations, Borrower
warrants and represents to Administrative Agent and each of the Lenders for the
express purpose of inducing Lenders to enter into this Agreement, to make each
Loan Advance, to issue each Letter of Credit, and to otherwise complete all of
the transactions contemplated hereby as follows

      6.1 Formation. Each Loan Party has been duly formed and is validly
existing and in good standing as a corporation, partnership or limited liability
company, as the case may be, under the laws of the State of its formation. Each
Loan Party has the requisite corporate, partnership or company power and
authority, as applicable, to own its assets and conduct its businesses as
currently conducted and owned, and to enter into and perform its obligations
under each Loan Document to which it is a party. Each Loan Party is in good
standing and authorized to do business in each jurisdiction where the ownership
of its assets and/or the conduct of its

                                      -23-
<PAGE>
business requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect.

      6.2 Proceedings; Enforceability. Each Loan Party has taken all requisite
corporate, partnership or company action, as applicable, to authorize the
execution, delivery and performance by such Loan Party of the Loan Documents to
which it is a party. Each Loan Document which is required to be executed and
delivered on or prior to the date on which this representation and warranty is
being made has been duly authorized, executed and delivered and constitutes the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against each such Loan Party in accordance with its respective terms except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally
and to general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).

      6.3 Conflicts. Neither the execution, delivery and performance of the Loan
Documents by the Loan Parties or compliance by any Loan Party with the terms and
provisions thereof (including, without limitation, the granting of Liens
pursuant to the Security Documents), (i) will contravene any provision of any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions of, or constitute a default
under, or result in the creation or imposition (or the obligation to create or
impose) of any Lien (except pursuant to the Security Documents) upon any of the
property or assets of any Loan Party pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or loan agreement or any other
agreement, contract or instrument to which any Loan Party is a party or by which
it or any of its properties or assets is bound or to which it may be subject, or
(iii) will violate any provision of any Formation Document of any Loan Party.

      6.4 Ownership and Taxpayer Identification Numbers. All of the partners,
owners, stockholders, and members, respectively and as may be applicable, of
each Loan Party (other than the Borrower and KRT) are listed in Exhibit F (as
such may be updated from time to time in accordance with Section 6.22). The
exact correct name and organizational number(s) and federal employment
identification number(s) of the Borrower, KRT and each such Loan Party are
accurately stated in Exhibit F. Each Borrowing Base Property Owner is a
Wholly-Owned Subsidiary of the Borrower or as stated in Exhibit F, Montgomery or
KRT.

      6.5 Litigation. There are no actions, suits or proceedings at law or in
equity or by or before any governmental instrumentality or other agency or
regulatory authority by any entity (private or governmental) pending or, to the
best of each Loan Party's knowledge, threatened with respect to the Loan, the
transactions contemplated in the Loan Documents, or any other Borrower
Subsidiary, which are not fully covered by an insurance policy issued by a
reputable and financially viable insurance company, or, to the extent not so
covered, could have or reasonably be expected to have a Material Adverse Effect.

      6.6 Information. All factual information furnished by or on behalf of the
Borrower or any Loan Party to the Administrative Agent and/or any of the Lenders
(including, without limitation, all information contained in the Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of the Borrower or any Loan
Party to the Administrative Agent and/or any of the Lenders will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information not misleading in any material respect at such time in
light of the circumstances under which such information was provided. There is
no material fact presently known to the Borrower which has

                                      -24-
<PAGE>
not been disclosed to Administrative Agent which could have or reasonably be
expected to have a Material Adverse Effect.

      6.7 Taxes. All Loan Parties have made all required tax filings and are not
delinquent in the payment of any federal, state and local taxes, assessments,
impositions or other governmental charges applicable to them and/or their
respective assets, except to the extent same are being contested in a manner
which complies with the requirements of Section 8.2.3.

      6.8 Financial Information. The financial statements and financial
projections of the Borrower, and the Loan Parties delivered to the
Administrative Agent present fairly the financial conditions of each at the
dates of such statements of financial condition and the results of operations
for the periods covered thereby. Since the dates of the relevant financial
statements, no change has occurred which could have or reasonably be expected to
have a Material Adverse Effect, except as may be disclosed in any update from
time to time in accordance with Section 6.22. All financial statements and
projections of the Borrower, the Borrower Subsidiaries, or any other Loan
Parties hereafter furnished to Administrative Agent or any of the Lenders shall
be true, accurate and complete in all material respects and shall fairly present
the financial condition of Borrower and respective Loan Party as of the date
thereof.

      6.9 Control Provisions. The Borrower, controls, directly or indirectly,
and without the requirement for consent of any other Person (other than KRT),
the management of each Borrowing Base Property Owner.

      6.10 Formation Documents. The Borrower has delivered or caused to be
delivered to the Administrative Agent true and complete copies of all Formation
Documents of the Loan Parties, and all amendments thereto.

      6.11 Bankruptcy Filings. No Loan Party is contemplating either a filing of
a petition under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and the
Borrower has no knowledge of any Person contemplating the filing of any such
petition against any Loan Party.

      6.12 Investment Company. No Loan Party is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.

      6.13 Holding Company. No Loan Party is 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.

      6.14 Collateral Properties.

            6.14.1 Each of the Borrowing Base Property Owners possesses such
      Licenses and Permits issued by the appropriate federal, state, or local
      regulatory agencies or bodies necessary to own and operate each Collateral
      Property, except where the failure to possess any such License or Permit
      would not have a Material Adverse Effect. The Borrowing Base Property
      Owners are in material compliance with the terms and conditions of all
      such Licenses and Permits, except where the failure so to comply would
      not, singly or in the aggregate, result in a Material Adverse Effect. All
      of the Licenses and Permits are valid and in full force and effect, except
      where the invalidity of such Licenses and Permits or the failure of such
      Licenses and Permits to be in full force and effect would not result in a
      Material Adverse Effect. Neither the Borrower nor any of the

                                      -25-
<PAGE>
      Borrowing Base Property Owners has received any notice of proceedings
      relating to the revocation or modification of any such Licenses and
      Permits which, singly or in the aggregate, if the subject of an
      unfavorable decision, ruling or finding, would result in a Material
      Adverse Effect.

            6.14.2 (i) The Borrowing Base Property Owners have either (x) fee
      simple title to the Collateral Properties or (y) a leasehold estate
      interest in the Collateral Properties, as set forth in Schedule
      6.14.2(i)(as such may be updated from time to time in accordance with
      Section 6.22); (ii) the interest of the Borrowing Base Property Owners in
      the Collateral Properties are not subject to any Liens except for those in
      favor of the Administrative Agent on behalf of the Lenders securing the
      repayment of Obligations and other Permitted Liens, (iii) neither the
      Borrower nor any of the Borrowing Base Property Owners has received notice
      of the assertion of any claim by anyone adverse to any Loan Party's
      ownership, or leasehold rights in and to any Collateral Property (except
      as may be disclosed in any update from time to time in accordance with
      Section 6.22); (iv) no Person has an option or right of first refusal to
      purchase all or part of any Collateral Property or any interest therein
      which has not been waived (except as may be disclosed in any update from
      time to time in accordance with Section 6.22);

            6.14.3 Except to the extent the failure of the following to be true
      would not result in a Material Adverse Effect or is disclosed in the
      Environmental Reports (as defined in the Environmental Indemnity), (i)
      each Collateral Property is free of any Hazardous Materials in violation
      of any Environmental Legal Requirements applicable to such property; (ii)
      none of the Borrowing Base Property Owners or Borrower has received any
      notice of a claim under or pursuant to any Environmental Legal
      Requirements applicable to an Collateral Property or under common law
      pertaining to Hazardous Materials on or originating from any Collateral
      Property (except as may be disclosed in any update from time to time in
      accordance with Section 6.22); and (iii) none of the Borrowing Base
      Property Owners or Borrower has received any notice from any Governmental
      Authority claiming any material violation of any Environmental Legal
      Requirements that is uncured or unremediated (except as may be disclosed
      in any update from time to time in accordance with Section 6.22);

            6.14.4 Except to the extent the failure of the following to be true
      would not result in a Material Adverse Effect, (i) with respect to the
      Collateral Properties, each Major Lease is in full force and effect
      (except as may be disclosed in any update from time to time in accordance
      with Section 6.22), (ii) except as set forth in Schedule 6.14.4(ii) (as
      such may be updated from time to time in accordance with Section 6.22), to
      the Borrower's knowledge, none of the Borrowing Base Property Owners is in
      default in the performance of any material obligation under any Major
      Lease and the Borrower has no knowledge of any circumstances which, with
      the passage of time or the giving of notice, or both, would constitute an
      event of default by any party under any of the Major Leases, (iii) except
      as set forth in Schedule 6.14.4(iii) (as such may be updated from time to
      time in accordance with Section 6.22), to the Borrower's knowledge, no
      tenant is in monetary default beyond 30 days or material nonmonetary
      default under any Major Lease, (iv) except as otherwise expressly set
      forth in Schedule 6.14.4(iv) (as such may be updated from time to time in
      accordance with Section 6.22), to the Borrower's Knowledge, there are no
      actions, voluntary or involuntary, pending against any tenant under a
      Major Lease under any bankruptcy or insolvency laws, and (v) none of the
      Major Leases and none of the rents or other amounts payable thereunder has
      been assigned, pledged or encumbered by any of the Borrowing Base Property
      Owners or any other Person, except with respect to the Lien in favor of
      the Administrative Agent on behalf of the Lenders securing the repayment
      of Obligations.

                                      -26-
<PAGE>
            6.14.5 Except to the extent the failure of the following to be true
      would not result in a Material Adverse Effect, (i) each Ground Lease is
      valid, binding and in full force and effect as against the applicable
      Borrowing Base Property Owners and, to the Borrower's knowledge, the other
      party thereto, (ii) none of the Ground Leases is subject to any pledge,
      lien, assignment, license or other agreement granting to any third party
      any interest therein, and (iii) no payments under any Ground Lease are
      delinquent and no notice of default thereunder has been sent or received
      by any Loan Party which has not been cured or waived prior to the date
      hereof, and to the knowledge of the Borrower, there does not exist under
      any of the Ground Leases any default by any Borrowing Base Property Owners
      or any event which merely with notice or lapse of time or both, would
      constitute such a default by any of the Borrowing Base Property Owners,
      and (iv) the identity of each ground lessee and whether each such ground
      lessee is an Affiliate of any Loan Party are set forth in Schedule 6.14.5.

      6.15 Use of Proceeds. The proceeds of the Loan shall be used solely and
exclusively as provided in Section 1.3. No portion of the proceeds of the Loan
shall be used directly or indirectly, and whether immediately, incidentally or
ultimately (i) to purchase or carry any margin stock or to extend credit to
others for the purpose thereof or to repay or refund indebtedness previously
incurred for such purpose, or (ii) for any purpose which would violate or in
inconsistent with the provisions of regulations of the Board of Governors of the
Federal Reserve System including, without limitation, Regulations T, U and X
thereof.

      6.16 Insurance. The Collateral Properties are insured by insurers of
recognized financial responsibility against such losses and risks in compliance
with the requirements of Exhibit E hereto.

      6.17 Deferred Compensation and ERISA. Neither Borrower nor any other Loan
Party, other than KRT, has any pension, profit sharing, stock option, insurance
or other arrangement or Plan for employees covered by ERISA except as may be
designated to Administrative Agent in writing by Borrower from time to time and,
to the best of the Borrower's Knowledge, no Reportable Event has occurred and is
now continuing with respect to any such ERISA Plan. KRT sponsors The Kramont
Realty Trust 401K Plan, a 401(k) profit sharing plan The granting of the Loan,
the performance by Borrower and/or any of the Loan Parties of their respective
obligations under the Loan Documents and Borrower's and/or such other Loan
Parties' conducting of their respective operations do not and will not violate
any provisions of ERISA.

      6.18 Conditions Satisfied. Assuming that the Administrative Agent and the
Lenders have approved or waived all matters requiring their approval, all of the
conditions precedent to closing and funding the initial Loan Advance have been
satisfied or waived.

      6.19 No Default. There is no Default on the part of Borrower or any of the
other Loan Parties under this Agreement or any of the other Loan Documents and
no event has occurred and is continuing which could constitute a Default under
any Loan Document.

      6.20 Other Loan Parties' Warranties and Representations. Borrower has no
reason to believe that any warranties or representations made in writing by any
of the Loan Parties to the Administrative Agent or any of the Lenders are
untrue, incomplete or misleading in any material respect.

      6.21 Qualification as a REIT. KRT qualified as a REIT under the provisions
of the Code, as applicable for its fiscal years ended December 31, 2000 through
December 31, 2001, and from December 31, 2001 through the date hereof. All
appropriate federal income tax returns

                                      -27-
<PAGE>
for the fiscal years through December 31, 2001 have been filed by KRT with the
IRS and no previously filed return has been examined and reported on by the IRS.
KRT has not incurred any liability for excise taxes pursuant to Section 4981 of
the Code. KRT is organized in conformity with the requirements for qualification
as a REIT pursuant to Sections 856 through 860 of the Code, and KRT's proposed
method of operation consistent with the KRT's business and the business
activities contemplated by this Agreement will enable it to meet the
requirements for qualification and taxation as a REIT under the Code.

      6.22 Regarding Representations and Warranties Each request by any Borrower
for a Loan Advance and/or the issuance of a Letter of Credit: (i) shall
constitute an affirmation by Borrower that the foregoing representations and
warranties remain true and correct as of the date of such request (except as
modified by matters specifically disclosed in writing to Administrative Agent or
as reflected in any update to the representations or warranties, Schedules or
Exhibits referred to in this Article 6 delivered to the Administrative Agent
prior to or simultaneously with such written request) and, unless Administrative
Agent and each of the Lenders is notified to the contrary prior to the
disbursement of the requested Loan Advance or the issuance of the requested
Letter of Credit, will be so on the date of such Loan Advance or issuance of
such Letter of Credit, and (ii) shall constitute the representation and warranty
of Borrower that the information set forth in each such request is true and
correct and omits no material fact necessary to make the same not misleading.
All representations, warranties, covenants and agreements made in this Agreement
or in the other Loan Documents by each Loan Party shall be deemed to have been
relied upon by the Administrative Agent and each of the Lenders notwithstanding
any investigation heretofore or hereafter made by the Administrative Agent
and/or any of the Lenders or on its behalf.

      7. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that from the date
hereof and so long as any Obligations remain outstanding, as follows:

      7.1 Notices. Borrower shall within five (5) days after it has actual
knowledge thereof, notify Administrative Agent and each of the Lenders in
writing of the occurrence of any act, event or condition which constitutes a
Default or Event of Default under any of the Loan Documents. Such notification
shall include a written statement of any remedial or curative actions which
Borrower proposes to undertake and/or to cause any of other Loan Parties to cure
or remedy such Default or Event of Default.

      7.2 Financial Statements; Reports; Officer's Certificates. Borrower shall
furnish or cause to be furnished to Administrative Agent and each of the Lenders
from time to time, the following financial statements, reports, certificates,
and other information, all in form and manner of presentation acceptable to
Administrative Agent:

            7.2.1 Annual Statements. Within one hundred five (105) days after
      the close of each fiscal year of the Borrower, the Consolidated statements
      of financial condition of the Borrower, KRT and each Borrower Subsidiary,
      as at the end of such fiscal year and the related Consolidated statements
      of income and retained earnings and statements of changes in financial
      position for such fiscal year, in each case, commencing with the Fiscal
      Year ending December 31, 2002, setting forth comparative figures for the
      preceding fiscal year and certified, in the case of the Consolidated
      financial statements, by BDO Seidman or other independent certified public
      accountants of recognized national standing reasonably acceptable to the
      Administrative Agent; such financial statements to include and to be
      supplemented by such detail and supporting data and schedules as
      Administrative Agent may from time to time reasonably determine;

            7.2.2 Periodic Statements Within forty five (45) days after the
      close of each

                                      -28-
<PAGE>
      calendar quarter (except for the quarter ending on December 31), the
      following (i) the Consolidated statements of financial condition of the
      Borrower, KRT, and each Borrower Subsidiary, internally prepared in
      accordance with GAAP, consistently applied, as at the end of such
      quarterly period and the related Consolidated statements of income and
      retained earnings and statements of changes in financial position for such
      quarterly period and for the elapsed portion of the fiscal year ended with
      the last day of such quarterly period, in each case commencing with the
      Fiscal Year ending December 31, 2002, setting forth comparative figures
      for the related periods in the prior fiscal year, subject to normal
      year-end audit adjustments, all in form and manner of presentation
      acceptable to Administrative Agent, such financial statements to include
      and to be supplemented by such detail and supporting data and schedules as
      Administrative Agent may from time to time reasonably determine, (ii) an
      Officer's Certificate from the Borrower certifying that such financial
      statements are true, accurate, and complete and that no Default or Event
      of Default has occurred and is continuing, or if it is, a statement as to
      the nature thereof, and (iii) an updated Cash Flow Projection specifically
      identifying, without limitation, (a) any changes to the Cash Flow
      Projections provided in the then prior Officer's Certificate and (b) any
      Distributions projected during the next one-hundred and eighty (180) days.

            7.2.3 Borrowing Base Property Reports. Quarterly and annually, upon
      delivery of each of the financial statements required pursuant to Sections
      7.2.1 and 7.2.2, above, the following financial statements for each of the
      Borrowing Base Property Owners internally prepared by Borrower and
      certified by Borrower to be true, accurate and complete: (i) an operating
      statement showing the results of operation for the prior quarter and on a
      year-to-date basis for the period just ended and, annually, an operating
      statement for the year just ended; (ii) a detailed, current rent roll of
      the subject Collateral Property, containing such details as Administrative
      Agent may reasonably request, and (iii) cash flows for the quarter just
      ended;

            7.2.4 SEC Reports. Within ten (10) days of being filed, copies of
      all filings by Borrower or KRT with the SEC, and within ten (10) days of
      being received, copies of all correspondence from the SEC, other than
      routine non-substantive general communications from the SEC.

            7.2.5 Compliance Certificates. Within forty-five (45) after the
      close of each quarterly accounting period in each fiscal year of the
      Borrower, a Compliance Certificate in form of Exhibit G, annexed hereto,
      together with an Officer's Certificate from the Borrower providing and
      otherwise certifying the compliance or non-compliance by the Borrower with
      the Financial Covenants, with such supporting detail as is reasonably
      deemed necessary by the Administrative Agent to verify the calculations
      incorporated therein.

            7.2.6 Data Requested. Within a reasonable period of time and from
      time to time such other financial data or information as Administrative
      Agent or the Lenders may reasonably request with respect to the Collateral
      Properties, the Borrower, and/or the other Loan Parties including, but not
      limited to, rent rolls, aged receivables, aged payables, leases, budgets,
      forecasts, reserves, cash flow projections, deposit accounts, mortgage
      information, physical condition of the Collateral Properties and pending
      lease proposals;

            7.2.7 Tax Returns. Upon Administrative Agent's request, copies of
      all federal and state tax returns of the Borrower and the other Loan
      Parties;

                                      -29-
<PAGE>
            7.2.8 Lease Notices. Concurrently with the giving thereof, and
      within ten (10) Business Days of receipt thereof, copies of all notices,
      other than routine correspondence, given or received by any Loan Party
      and/or other Loan Party with respect to any Major Lease.

            7.2.9 Ground Lessor Interest Notices. Concurrently with the giving
      thereof, and within five (5) Business Days of receipt thereof, copies of
      all notices, other than routine correspondence, given or received by any
      Loan Party and/or any other Loan Party with respect to any Ground Lease.

            7.2.10 Entity Notices. Concurrently with the issuance thereof,
      copies of all material written notices (excluding routine correspondence)
      given to the partners, owners, stockholders, and/or members, respectively,
      of the Borrower.

            7.2.11 Notice of Litigation. Within ten (10) Business Days after an
      officer of either Borrower, any Borrower Subsidiary, or any Loan Party
      obtains knowledge thereof, written notice of any pending or, to the best
      of the Borrowers' knowledge, threatened action, suit or proceeding at law
      or in equity or by or before any governmental instrumentality or other
      agency or regulatory authority by any entity (private or governmental)
      relating in any way to the Loan, the transactions contemplated in the Loan
      Documents (including, without limitation, with regard to all
      Distributions), or the transactions contemplated in any documentation
      executed in connection therewith, or the Borrower, any other Loan Party,
      or any other Borrower Subsidiary, which could have or reasonably be
      expected to have a Material Adverse Effect.

      7.3 Existence. Borrower shall do or cause to be done all things necessary
to (i) preserve, renew and keep in full force and effect (x) the partnership,
company or corporate existence, as applicable, of each Loan Party and (y) the
material rights, licenses, permits and franchises of each Loan Party, (ii)
comply with all laws and other Legal Requirements applicable to it and its
assets, business and operations, the non-compliance with which could have or
reasonably be expected to have a Material Adverse Effect, (iii) to the extent
applicable, at all times maintain, preserve and protect all material franchises
and trade names and all the remainder of its property used or useful in the
conduct of its business, and (iv) to keep and cause each Loan Party to keep, its
assets in good working order and repair, ordinary wear and tear and damage by
casualty or taking by condemnation excepted, and from time to time make, or
cause to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto.

      7.4 Payment of Taxes. Borrower shall duly pay and discharge, and cause
each Loan Party to duly pay and discharge, before the same shall become overdue,
all taxes, assessments, impositions, and other governmental charges payable by
it or with respect to the Collateral Properties, to the extent that same are not
paid by the tenants under the respective Leases; provided, however, the failure
of any Loan Party to pay such taxes, assessments, impositions, or other
governmental charges shall not constitute a Default or Event of Default as long
as same are being contested in a manner which complies with the requirements of
Section 8.2.3.

      7.5 Insurance; Casualty, Taking.

            7.5.1 Borrower shall at all times maintain or cause the appropriate
      Person to maintain in full force and effect the following insurance: (i)
      the Collateral Properties shall be insured by insurers of recognized
      financial responsibility against such losses and risks in compliance with
      the Major Leases and the requirements set forth in Exhibit E, hereto, and
      (ii) all other assets of the Borrower and the Borrower Subsidiaries shall
      be

                                      -30-
<PAGE>
      insured with such insurance as is reasonable and usual for Persons
      conducting business operations similar to those of the Borrower and in
      compliance with the terms of any secured financing with respect thereto.

            7.5.2 Without limiting the generality of the insurance requirements
      set forth herein, only if commercially available at commercially
      reasonable rates (in an amount reasonably consistent with the amount of
      such insurance generally obtained by companies engaging in real estate
      business operations of a similar size and nature as that of the Borrower)
      either (i) the insurance policies required hereunder shall not include any
      so called "terrorist exclusion" or similar exclusion or exception to
      insurance coverage relating to the acts of terrorist groups or
      individuals, or (ii) excess or blanket coverage with respect thereto shall
      be provided, which excess or blanket coverage must be in an amount, from
      an insurer, and in accordance with terms and conditions reasonably
      acceptable to the Administrative Agent.

            7.5.3 All insurance premiums shall be paid in equal quarterly
      installments, following payment of an initial installment prior to the
      inception of the relevant policy equal to 20% of the total annual premium,
      and Administrative Agent shall be provided with evidence of such payment
      of insurance premiums upon request.

            7.5.4 In the event of any damage or destruction to any Collateral
      Property by reason of fire or other hazard or casualty, Borrower shall
      give immediate written notice thereof to Administrative Agent. With
      respect to any such damage or destruction, the Borrower shall make the
      Mandatory Principal Payment, if any is required, set forth herein. If
      there is any condemnation for public use of any Collateral Property
      Borrower shall give immediate written notice thereof to Administrative
      Agent. With respect to any such condemnation, the Borrower shall make the
      Mandatory Principal Payment, if any is required, set forth herein.
      Further, Borrower shall upon the request of the Administrative Agent
      provide to the Administrative Agent a report as to the status of any
      insurance adjustment, condemnation claim, or restoration resulting from
      any casualty or taking.

      7.6 Inspection. Borrower shall cause the other Loan Parties to permit the
Administrative Agent and the Lenders and its/their agents, representatives and
employees to inspect the Collateral Properties, the Collateral, and any and all
other assets of the Borrower or any of the Loan Parties, at reasonable hours
upon reasonable notice.

      7.7 Loan Documents. Borrower shall (and shall cause the other Loan Parties
to) observe, perform and satisfy all the terms, provisions, covenants and
conditions to be performed by it under, and to pay when due all costs, fees and
expenses, and other Obligations to the extent required under, the Loan
Documents.

      7.8 Further Assurances. Borrower shall and shall cause the other Loan
Parties to execute and deliver to the Administrative Agent and the other Lenders
such documents, instruments, certificates, assignments and other writings, and
do such other acts, necessary or desirable in the reasonable judgment of the
Administrative Agent, to evidence, preserve and/or protect the Collateral at any
time securing or intended to secure the Obligations or for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents.

      7.9 Books and Records. Borrower shall and shall cause the other Loan
Parties and Borrower Subsidiaries to keep and maintain in accordance with GAAP
(or such other accounting basis reasonably acceptable to the Administrative
Agent), proper and accurate books, records and accounts reflecting all of the
financial affairs of the Borrower and such other Loan Parties

                                     -31-
<PAGE>
and Borrower Subsidiaries and all items of income and expense in connection with
their respective business and operations and in connection with any services,
equipment or furnishings provided in connection with the operation of the
business of the Borrower, the other Loan Parties, and the Borrower Subsidiaries,
whether such income or expense is realized thereby or by any other Person. The
Administrative Agent shall have the right, not more than once each quarter
(unless an Event of Default shall have occurred and be continuing in which case
as often as the Administrative Agent shall determine), during normal business
hours and upon reasonable notice, to examine such books, records and accounts at
the office of the Person maintaining such books, records, correspondence, and
accounts and to make such copies or extracts thereof as the Administrative Agent
shall desire. Borrower shall maintain all of its business records at the address
specified at the beginning of this Agreement. The Administrative Agent may
discuss the financial and other affairs of the Borrower, the other Loan Parties,
and the Borrower Subsidiaries with any of its partners, owners, and any
accountants hired by Borrower, it being agreed that Administrative Agent and
each of the Lenders shall use reasonable efforts to not divulge information
obtained from such examination to others except in connection with Legal
Requirements and in connection with administering the Loan, enforcing its rights
and remedies under the Loan Documents and in the conduct, operation and
regulation of its banking and lending business (which may include, without
limitation, the transfer of the Loan or of participation interests therein). Any
assignee or transferee of the Loan, co-lender, or any holder of a participation
interest in the Loan shall be entitled to deal with such information in the same
manner and in connection with any subsequent transfer of its interest in the
Loan or of further participation interests therein.

      7.10 Business and Operations. Borrower shall (and shall cause the other
Loan Parties and Borrower Subsidiaries) to (i) continue to engage in the type of
businesses, acquisition, sale, financing, development and operation of retail
properties and usual and customary uses incidental to such retail activities)
presently conducted by them as of the Closing Date, respectively, and (ii) be
qualified to do business and in good standing under the laws of each
jurisdiction, and otherwise to comply with all Legal Requirements, as and to the
extent the same are required for the ownership, maintenance, management and
operation of the assets of such Person except where the failure to be so
qualified could not have or reasonably be expected to have a Material Adverse
Effect.

      7.11 Title. Borrower shall and shall cause the other Loan Parties to (i)
warrant and defend (x) the title to each item of Collateral owned by such Person
and every part thereof, subject only to the Liens (if any) permitted hereunder,
(y) the validity and priority of the Liens and security interests held by the
Administrative Agent pursuant to the Loan Documents, in each case against the
claims of all Persons whomsoever, and (z) the title to and in the Collateral
Properties, and (ii) Borrower and the other Loan Parties shall be responsible,
jointly and severally, to reimburse Administrative Agent and the Lenders for any
losses, costs, damages or expenses (including reasonable attorneys' fees and
court costs) incurred by the Administrative Agent and/or any of the Lenders if
an interest in any item of Collateral, other than as permitted hereunder, is
claimed by another Person.

      7.12 Estoppel. Borrower shall (and shall cause the other Loan Parties to),
within ten (10) Business Days after a request therefor from the Administrative
Agent, which request shall not be made by Administrative Agent more than once
each quarter during each Fiscal Year, furnish to the Administrative Agent a
statement, duly acknowledged and certified, setting forth (i) the amount then
owing by Borrower in respect of the Obligations, (ii) the date through which
interest on the Loan has been paid, (iii) any offsets, counterclaims, credits or
defenses to the payment by any Loan Party to the Obligations and (iv) whether
any written notice of Default from Administrative Agent to the Borrower or any
of the other Loan Parties is then outstanding and acknowledging that this
Agreement and the other Loan Documents are in full force and

                                      -32-
<PAGE>
effect and unmodified, or if modified, giving the particulars of such
modification.

      7.13 ERISA. Borrower shall (and shall cause each of the other Loan Parties
and Borrower Subsidiaries to) as soon as possible and, in any event, within ten
(10) days after any Loan Party, Borrower Subsidiary, or any ERISA Affiliate
knows of the occurrence of any of the following which could have or reasonably
be expected to have a Material Adverse Effect, deliver to Administrative Agent a
certificate of an executive officer of the Borrower setting forth details as to
such occurrence and the action, if any, that the applicable Borrower or other
Loan Party or Borrower Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by such Borrower, Loan Party, the ERISA Affiliate, the PBGC, a
Plan participant or the Plan administrator with respect thereto: (i) that a
Reportable Event has occurred; (ii) that an accumulated funding deficiency has
been incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan; (iii) that a contribution
required to be made to a Plan has not been timely made; (iv) that a Plan has
been or may be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA; (v) that a Plan has an Unfunded Current Liability giving rise
to a lien under ERISA or the Code; (vi) that proceedings may be or have been
instituted to terminate or appoint a trustee to administer a Plan; (vii) that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; (viii) that such Borrower, Loan Party,
Borrower Subsidiary, or ERISA Affiliate will or may incur any liability
(including any indirect, contingent, or secondary liability) to or on account of
the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of
ERISA; (ix) or that such Borrower, the Loan Party or Borrower Subsidiary may
incur any material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(l) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon the
request of the Administrative Agent, the Borrower shall (and shall cause the
other Loan Parties and Borrower Subsidiaries to) deliver to Administrative Agent
a complete copy of the annual report (Form 5500) of each Plan required to be
filed with the Internal Revenue Service. In addition to any certificates or
notices delivered to Administrative Agent pursuant to the first sentence hereof,
copies of any material notices received by any Borrower, a Loan Party, a
Borrower Subsidiary, or any ERISA Affiliate with respect to any Plan shall be
delivered to Administrative Agent no later than ten (10) days after the date
such report has been filed with the Internal Revenue Service or such notice has
been received by such Borrower, Loan Party or Borrower Subsidiary or ERISA
Affiliate, as applicable.

      7.14 Depository Account.

            7.14.1 Borrower shall maintain an operating and other depository
      account (the "Depository Account") with Fleet National Bank (or any
      successor thereto), unless otherwise agreed by Administrative Agent in
      writing.

            7.14.2 Administrative Agent is hereby authorized, on or after the
      due date, to charge such Depository Account of Borrower with the amount of
      all payments due under this Agreement, the Note or the other Loan
      Documents. The failure of Administrative Agent to so charge such
      Depository Account shall not affect or limit Borrower's obligation to make
      any required payment.

      7.15 Costs and Expenses. Borrower shall pay all costs and expenses
(excluding salaries or wages of full time employees of Administrative Agent)
reasonably incurred by

                                      -33-
<PAGE>
Administrative Agent in connection with the implementation and syndication of
the Loan and the administration of the Loan, and reasonably incurred by the
Administrative Agent or any of the Lenders in connection with the enforcement of
the Administrative Agent's and Lenders' rights under the Loan Documents,
including, without limitation, legal fees and disbursements, appraisal fees,
inspection fees, plan review fees, travel costs, fees and out-of-pocket costs of
independent engineers and consultants. Borrower's obligations to pay such costs
and expenses shall include, without limitation, all reasonable attorneys' fees
and other costs and expenses for preparing and conducting litigation or dispute
resolution arising from any breach by Borrower or the Loan Parties of any
covenant, warranty, representation or agreement under any one or more of the
Loan Documents.

      7.16 Appraisals

            7.16.1 Appraisal. Administrative Agent shall have the right at its
      option, from time to time, to order an appraisal of one or more of the
      Borrowing Base Properties prepared at Administrative Agent's direction by
      an appraiser selected by Administrative Agent (the "Appraisal"). An
      appraiser selected by Administrative Agent shall be an MAI member with not
      less than ten (10) years experience appraising commercial properties in
      the respective area(s) of the Borrowing Base Properties and otherwise
      qualified pursuant to provisions of applicable laws and regulations under
      and pursuant to which Administrative Agent operates).

            7.16.2 Costs of Appraisal. Borrower shall pay for the costs of each
      Appraisal and each updated Appraisal only (i) after the occurrence of an
      Event of Default or (ii) if Administrative Agent reasonably determines
      that a material adverse change has occurred to any Borrowing Base
      Property.

      7.17 Indemnification. Borrower shall at all times, both before and after
repayment of the Loan, at its sole cost and expense defend, indemnify, exonerate
and save harmless Administrative Agent and each of the Lenders and all those
claiming by, through or under Administrative Agent and each of the Lenders
("Indemnified Party") against and from all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind whatsoever, including,
without limitation, attorneys, fees and experts' fees and disbursements, which
may at any time (including, without limitation, before or after discharge or
foreclosure of the Security Documents) be imposed upon, incurred by or asserted
or awarded against the Indemnified Party and arising from or out of:

            (i) any liability for damage to person or property arising out of
      any violation of any Legal Requirement, or

            (ii) any and all liabilities, damages, penalties, costs, and
      expenses, relating in any manner to any brokerage or finder's fees in
      respect of the Loan arising from any act or course of dealing by the
      Borrower or any Loan Party, or

            (iii) any act, omission, negligence or conduct at any Collateral
      Property, or arising or claimed to have arisen, out of any act, omission,
      negligence or conduct of Borrower, any Borrower Subsidiary, or any tenant,
      occupant or invitee thereof which is in any way related to any Collateral
      Property.

Notwithstanding the foregoing, an Indemnified Party shall not be entitled to
indemnification in respect of claims arising from acts of its own gross
negligence or willful misconduct to the extent that such gross negligence or
willful misconduct is determined by the final judgment of a

                                      -34-
<PAGE>
court of competent jurisdiction, not subject to further appeal, in proceedings
to which such Indemnified Party is a proper party.

      7.18 Leasing Matters.

            7.18.1 Administrative Agent's Approval Required.

                  (i) Except as provided for herein, the Loan Parties may enter
            into any Lease for a Collateral Property without the approval of the
            Administrative Agent or the Lenders.

                  (ii) Administrative Agent's prior written approval shall be
            required in each instance as to any Major Lease described in clause
            (i) of the definition of "Major Lease".

                  (iii) For any Major Lease requiring approval hereunder, the
            approval shall relate to: (i) the economic and other terms of the
            Major Lease; (ii) each tenant under a proposed Major Lease; (iii)
            each guarantor of a tenant's obligations under a proposed Major
            Lease; (iv) any modification or amendment to the Major Lease, and
            (v) any optional termination, cancellation or surrender of any Major
            Lease by the Loan Party thereto.

            7.18.2 Borrower's Requests. Any request by Borrower for an approval
      from Administrative Agent with respect to leasing matters shall be sent to
      the Administrative Agent and shall be accompanied, at a minimum, by the
      following: (i) the proposed lease or amendment or modification thereof
      complete with all applicable schedules and exhibits; (ii) a complete copy
      of any proposed guaranty; (iii) comprehensive financial information with
      respect to the proposed tenant and, if applicable, the proposed guarantor
      (as to new leases or amendments or modifications to existing leases
      involving material economic changes); and (iv) an executive summary of the
      terms and conditions of the proposed lease and, if applicable, the
      proposed guaranty.

            7.18.3 Response. The Administrative Agent shall act on requests from
      Borrower for any approval required under Section 7.18 in a commercially
      reasonable manner and shall use commercially reasonable efforts to respond
      to any such request within ten (10) Business Days for approvals required
      under Section 7.18, in each instance following Administrative Agent's
      receipt thereof with all required supporting information. Administrative
      Agent's response may consist of an approval or disapproval of the request,
      or a conditional approval thereof subject to specified conditions, or a
      request for further data or information, or any combination thereof. In
      order to expedite the processing of requests for such approvals, Borrower
      agrees to provide Administrative Agent with as much advance information as
      is possible in a commercially reasonable manner in advance of Borrower's
      formal request for an approval.

            7.18.4 Advance Information. In order to expedite the processing of
      requests for such approvals, Borrower agrees to provide Administrative
      Agent with as much advance information as is possible in a commercially
      reasonable manner in advance of Borrower's formal request for an approval.

            7.18.5 Preliminary Submission.

                  (i) At Borrower's option, after the execution of a letter of
            intent with any proposed tenant under a Major Lease requiring
            approval herein, the Borrower

                                      -35-
<PAGE>
            may deliver to the Administrative Agent a preliminary submission
            consisting of (x) an executive summary of the terms and conditions
            of the proposed lease and, if applicable, the proposed guaranty and
            (y) comprehensive financial information with respect to the proposed
            tenant and, if applicable, the proposed guarantor. Administrative
            Agent shall act on requests from Borrower for any approval under
            this section in a commercially reasonable manner and shall use
            commercially reasonable efforts to respond to any such request
            within ten (10) Business Days following Lender's receipt thereof. In
            the event that Administrative Agent approves such summary material
            and financial information for any Major Lease, the material shall be
            referred to herein as an "Approved Lease Term Sheet".

                  (ii) Administrative Agent shall not withhold its approval of
            (x) the economic terms of any lease which are not less favorable
            than the economic terms established by an Approved Lease Term Sheet,
            or (y) the identity of the tenant and each guarantor, and any terms
            or other substantive provisions, reflected in an Approved Lease Term
            Sheet, unless there has been a material adverse change in the
            financial condition of the tenant or any such guarantor since the
            approval of such Approved Lease Term Sheet.

      7.19 Interest Expense Coverage. The Interest Expense Coverage as
determined on each Calculation Date shall be not less than 1.75:1. The Interest
Expense Coverage covenant shall be tested by the Administrative Agent on the
Calculation Date with results based upon the results for the most recent
Calculation Period, such calculation and results to be as determined solely by
the Administrative Agent.

      7.20 Leverage Ratio. The Leverage Ratio as determined on each Calculation
Date shall be less than sixty-five percent (65%). The Leverage Ratio covenant
shall be tested by the Administrative Agent on each Calculation Date, such
calculation and results to be as determined solely by the Administrative Agent.

      7.21 Fixed Charge Ratio. The Fixed Charge Ratio as determined on each
Calculation Date shall be not less than the following during the relevant
periods indicated:

<TABLE>
<CAPTION>
Relevant period                                   Minimum Fixed Charge
                                                  Ratio
-----------------------------------------         ----------------------------
<S>                                               <C>
Closing through December 31, 2003                 1.35:1
January 1, 2004 through December 31, 2004         1.45:1
January 1, 2005 through the Maturity Date         1.50:1
</TABLE>

The Fixed Charge Ratio covenant shall be tested by the Administrative Agent on
each Calculation Date with results based upon the results for the most recent
Calculation Period, such calculation and results to be as determined solely by
the Administrative Agent.

      7.22 Net Worth. The Net Worth shall as determined on each Calculation Date
be equal to or greater than $240,000,000.00 plus ninety percent (90%) of the
cumulative net cash proceeds received from and the value of assets acquired (net
of Debt incurred or assumed in connection therewith) through the issuance of
Capital Stock by KRT or the Borrower after December 20, 2002. For purposes of
this section "net" means net of underwriters' discounts, commissions and other
reasonable out-of-pocket expenses of issuance actually paid to any Person (other
than a Loan Party or an Affiliate of any Loan Party). The Net Worth covenant

                                      -36-
<PAGE>
shall be tested by the Administrative Agent on each Calculation Date, such
calculation and results to be as determined solely by the Administrative Agent.

      7.23 Borrowing Base Property Covenants.

            7.23.1 The aggregate Occupancy Ratio for the Borrowing Base
      Properties shall not at any time be less than Eighty-Five (85%) percent
      for a period of ninety (90) consecutive days.

            7.23.2 The number of Borrowing Base Properties shall at no time be
      less than (i) eight (8) if the Established Loan Amount is $100,000,000.00,
      (ii) nine (9) if the Established Loan Amount is more than $100,000,000.00,
      but equal to or less than $112,500,000.00, or (iii) ten (10) if the
      Established Loan Amount is more than $112,500,000.00, but equal to of less
      than $125,000,000.00.

            7.23.3 Each Borrowing Base Property shall at all times be a retail
      center consistent with the Borrower's business strategy.

      7.24 Replacement Documentation. Upon receipt of an affidavit of an officer
of Administrative Agent as to the loss, theft, destruction or mutilation of the
Note or any other security document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other security document, Borrower will issue, in
lieu thereof, a replacement Note or other security document in the same
principal amount thereof and otherwise of like tenor.

      7.25 Other Covenants. The Borrower hereby represents and warrants that no
Collateral is in the possession of any third party bailee (such as at a
warehouse). In the event that the Borrower and/or any of the other Loan Parties,
after the date hereof, intends to store or otherwise deliver any Collateral or
other personal property in which the Administrative Agent has been granted a
security interest to such a bailee, then the Borrower shall receive the prior
written consent of the Administrative Agent and such bailee must acknowledge in
writing that the bailee is holding such Collateral or such other personal
property for the benefit of the Administrative Agent and the Lenders.

      7.26 Maintenance of REIT Status. KRT shall engage in such business
activities, and shall refrain from engaging in such activities, so as to
continue to meet the requirements for qualification and taxation as a REIT under
the Code.

      7.27 Maintenance of NYSE Listing. KRT shall engage in such business
activities, and shall refrain from engaging in such activities, so as to
continue to be listed on the New York Stock Exchange.

      7.28 Lenders' Consultants.

            7.28.1 Right to Employ. The Borrower agrees that the Administrative
      Agent shall have the right to employ on its behalf and on behalf of the
      Lenders, its own personnel, or one or more engineers, architects,
      environmental advisors, scientists, accountants, and attorneys to act as
      an advisor to Administrative Agent and the Lenders in connection with the
      Loan (each of which shall be a "Lenders' Consultant").

            7.28.2 Functions. The functions of a Lenders' Consultant shall
      include, without limitation: (i) inspection and physical review of any
      Collateral Property; (ii) review and analysis of environmental matters;
      (iii) review and analysis of financial and legal matters;

                                      -37-
<PAGE>
      and (iv) providing usual inspection and review services in the event of
      the use of Net Proceeds for any Repair Work.

            7.28.3 Payment. The reasonable costs and fees of Lenders'
      Consultants shall be paid by Borrower upon billing therefor and, if not so
      paid within thirty (30) days, may be paid directly by the Lenders through
      a Loan Advance.

            7.28.4 Access. Borrower shall provide Lenders' Consultants with
      reasonable access to all Collateral Properties.

            7.28.5 No Liability. Neither Administrative Agent nor any Lender
      shall have liability to Borrower, any Loan Party, Guarantor, or third
      party on account of: (i) services performed by Lenders' Consultant; or
      (ii) any failure or neglect by Lenders' Consultant to properly perform
      services . Borrower shall have no rights under or relating to any
      agreement, report, or similar document prepared by any Lenders' Consultant
      for Administrative Agent or Lenders. No Lenders' Consultant shall have
      liability to Borrower, any Loan Party, Guarantor, or third party on
      account of: (i) services performed by such Lenders' Consultant; or (ii)
      any failure or neglect by such Lenders' Consultant to properly perform
      services, except for its gross negligence or willful misconduct.

      8. NEGATIVE COVENANTS. Borrower covenants and agrees that from the date
hereof and so long as any Obligations remain outstanding, the Borrower shall not
(and shall not suffer or permit the other Loan Parties, and/or the Borrower
Subsidiaries to):

      8.1 No Changes to Borrower and other Loan Parties. Without the prior
written consent of the Administrative Agent, after not less than thirty (30)
days' prior written notice (with reasonable particularity of the facts and
circumstances attendant thereto):(i) change its jurisdiction of organization,
(ii) change its organizational structure or type, (iii) change its legal name,
or (iv) change the organizational number (if any) assigned by its jurisdiction
of formation or its federal employment identification number (if any).

      8.2 Restrictions on Liens. Create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets (real or personal, tangible
or intangible, including, without limitation, the Collateral Properties),
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable with recourse)
or assign any right to receive income or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute, or grant rights with respect to, or otherwise
encumber or create a security interest in, such property or assets (including,
without limitation, any item of Collateral) or any portion thereof or any other
revenues therefrom or the proceeds payable upon the sale, transfer or other
disposition of such property or asset or any portion thereof, or permit or
suffer any such action to be taken, except the following (singly and
collectively, "Permitted Liens"):

            8.2.1 Liens created by the Loan Documents;

            8.2.2 Liens to secure Permitted Debt, provided that (x) the Borrower
      will be in compliance with the Financial Covenants considering the
      consequences of the granting of any such Lien and (y) no such Lien shall
      be secured by any Collateral Property, the ownership interest in any
      Borrowing Base Property Owner, or any other assets of any Borrowing Base
      Property Owner;

            8.2.3 Liens for taxes, assessments or other governmental charges not
      yet

                                      -38-
<PAGE>
      delinquent or which are being diligently contested in good faith and by
      appropriate proceedings, if (x) to the extent such contest concerns a
      Borrowing Base Property, reasonable reserves in an amount not less than
      the tax, assessment or governmental charge being so contested shall have
      been established in a manner satisfactory to the Administrative Agent or
      deposited in cash (or cash equivalents) with the Administrative Agent to
      be held during the pendency of such contest, or such contested amount
      shall have been duly bonded in accordance with applicable law, (y) no risk
      of sale, forfeiture or loss of any interest in any Collateral Property or
      the Collateral or any part thereof arises during the pendency of such
      contest and (z) such contest does not have and could not reasonably be
      expected to have a Material Adverse Effect;

            8.2.4 Liens in respect of property or assets imposed by law, which
      do not secure Debt, such as judgment Liens (provided such judgment Liens
      do not cause the occurrence of an Event of Default under Section 10.1),
      carriers', warehousemen's, material men's and mechanics' liens and other
      similar Liens arising in the ordinary course of business, (x) which,
      except for such judgment Liens, do not in the aggregate materially detract
      from the value of any property or assets or have, and could not reasonably
      be expected to have, a Material Adverse Effect, (y) which, except for such
      judgment Liens, are being contested in good faith by appropriate
      proceedings, which proceedings have the effect of preventing the
      forfeiture or sale of the property or assets subject to any such Lien, and
      (z) which as to any Collateral Property do not have a lien priority prior
      to the Lien in favor of the Administrative Agent, for the benefit of the
      Lenders, with respect to the Obligations, including, without limitation,
      any future Loan Advances;

            8.2.5 Personal property financing leases entered into in the
      ordinary course of business with respect to equipment, fixtures,
      furniture, furnishings and similar assets

      8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity.
(i) Dissolve, terminate, liquidate, consolidate with or merge with or into any
other Person, (ii) issue, sell, lease, transfer or assign to any Persons or
otherwise dispose of (whether in one transaction or a series of transactions)
any portion of its assets (whether now owned or hereafter acquired), including,
without limitation, any securities, membership or partnership interests, or
other interests of any kind in any other Loan Party or Borrower Subsidiary,
directly or indirectly (whether by the issuance of rights of, options or
warrants for, or securities convertible into, any such security, membership or
partnership interests or other interests of any kind), (iii) permit another
Person to merge with or into it, (iv) acquire all or substantially all the
capital stock, membership or partnership interests or assets of any other
Person, or (v) take any action which could have the effect, directly or
indirectly, of diluting the economic interest of any Loan Party in any other
Loan Party or Borrower Subsidiary; except the following:

            8.3.1 Transfers pursuant to the Security Documents and other
      agreements in favor of Administrative Agent on behalf of the Lenders;

            8.3.2 Any such dissolution, liquidation, or termination which does
      not involve a Loan Party;

            8.3.3 Any consolidation, merger, or issuance provided that (x) the
      Borrower will be in compliance with the Financial Covenants considering
      the consequences of such event, (y) no such event shall cause a Change of
      Control, and (z) each Borrowing Base Property Owner will continue to be a
      Wholly-Owned Subsidiary of the Borrower, KRT, or, to the extent a
      Wholly-Owned Subsidiary of Montgomery as of the date hereof, Montgomery;

                                      -39-
<PAGE>
            8.3.4 Sales of any Borrowing Base Property, provided the Release
      Conditions are satisfied with respect thereto;

            8.3.5 Leases of all or any portion of any Borrowing Base Property
      which either (i) are permitted by the terms of this Agreement without
      Administrative Agent's or Lenders' consent or approval or (ii) are
      approved as provided for in this Loan Agreement;.

            8.3.6 Sales, leases, transfers or assignments of other assets of the
      Borrower, any Loan Party or any Borrower Subsidiary which are not within
      the Collateral, provided that the Borrower will be in compliance with the
      Financial Covenants considering the consequences of the sale;

            8.3.7 Sales or dispositions in the ordinary course of business of
      worn, obsolete or damaged items of personal property or fixtures which are
      suitably replaced;

            8.3.8 Transactions, whether outright or as security, for which
      Administrative Agent's prior written consent has been obtained; and

            8.3.9 In connection with a Permitted Investment.

      8.4 Restrictions on Debt. (i) Create, incur or assume any Debt, or make
any voluntary prepayments of any Debt in respect of which it is an obligor, (ii)
enter into, acquiesce, suffer or permit any amendment, restatement or other
modification of the documentation evidencing and/or securing any Debt under
which it is an obligor, (iii) increase the amount of any Debt existing as of the
Closing Date; except with respect to the following (singly and collectively,
"Permitted Debt"):

            8.4.1 The Obligations;

            8.4.2 Debt of the Borrower, KRT or any Borrower Subsidiary, other
      than a Borrowing Base Property Owner; provided that the Borrower will be
      in compliance with the Financial Covenants considering the consequences of
      the incurrence of such Debt;

            8.4.3 Indebtedness incurred in the ordinary course of business for
      the purchase of goods or services which are payable, without interest,
      within thirty (30) days of billing; and

            8.4.4 Transactions, whether secured or unsecured, for which
      Administrative Agent's prior written consent has been obtained; and

            8.4.5 Debt of any Borrowing Base Property Owner under capital leases
      of the type described in Section 8.2.5.

      8.5 Respecting Collateral Properties. Permit or otherwise suffer to occur
any event such that the representations and warranties of the Borrower set forth
in Section 6.14 would be untrue or misleading in any material respect.

      8.6 Other Business. Enter into any line of business or make any material
change in the nature of its business, purposes or operations, or undertake or
participate in activities other than the continuance of its present business
except as otherwise specifically permitted by this Agreement or the other Loan
Documents.

                                      -40-
<PAGE>
      8.7 Change of Control. Permit or otherwise suffer to occur any Change of
Control.

      8.8 Forgiveness of Debt. Voluntarily cancel or otherwise forgive or
release any Debt owed to it by any Person, except for adequate consideration.

      8.9 Affiliate Transactions. On and after the Closing Date, enter into, or
be a party to, any transaction with any Person which is an Affiliate of any Loan
Party, except transactions (a) involving the restructuring of the Recreation
Mortgage Notes Receivable on an arms' length basis (provided no additional Debt
is incurred in connection therewith), (b) involving the offering or sale of a
Person's equity interests on an arm's length basis, or (c) entered into in the
ordinary course of business and on terms which are no less favorable to such
Loan Party or Borrower Subsidiary than would be obtained in a comparable
arm's-length transaction with an unrelated third party, provided that this
clause shall not apply to transactions between and among Loan Parties or between
and among Borrower Subsidiaries or to transactions between Loan Parties and
Borrower Subsidiaries.

      8.10 ERISA. Except for Code Section 401(k) plans, establish or be
obligated to contribute to any Plan.

      8.11 Bankruptcy Filings. With respect to any of the Loan Parties, file a
petition under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property.

      8.12 Investment Company. Become an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.

      8.13 Holding Company. Become 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.

      8.14 Use of Proceeds. Permit the proceeds of the Loan, or any other
accommodation at any time made hereunder, to be used for any purpose which
entails a violation of, or is inconsistent with, Regulation T, U or X of the
Board, or for any purpose other than those set forth in Section 1.3.

      8.15 Distributions. Authorize, declare, or pay any Distributions on behalf
of the Borrower, except for Permitted Distributions.

      8.16 Restrictions on Investments. make or permit to exist or to remain
outstanding any Investment except which are in:

            (i) marketable direct or guaranteed general obligations of the
      United States of America which mature within one year from the date of
      purchase;

            (ii) bank deposits, certificates of deposit and banker's
      acceptances, or other obligations in or of the Lenders or banks located
      within and chartered by the United States of America or a state and having
      assets of over $500,000,000.00;

            (iii) the Borrower's Subsidiaries (both Subsidiaries as of the date
      hereof and any other Person that becomes a Borrower Subsidiary), subject
      in all instances to the terms of this Agreement; and

                                      -41-
<PAGE>
            (iv) Permitted Investments.

      8.17 Negative Pledges, etc.. Enter into any agreement subsequent to the
Closing Date (other than a Loan Document) which (a) prohibits the creation or
assumption of any Lien upon any of the Collateral, including, without
limitation, any hereafter acquired property, (b) specifically prohibits the
amendment or other modification of this Agreement or any other Loan Document, or
(c) could have, or reasonably be expected to have, a Material Adverse Effect.

      9. SPECIAL PROVISIONS.

      9.1 Legal Requirements. Borrower, any Borrower Subsidiary or any Loan
Party may contest in good faith any claim, demand, levy or assessment under any
Legal Requirements by any person or entity if: (i) the contest is based upon a
material question of law or fact raised by Borrower in good faith; (ii) such
Person properly commences and thereafter diligently pursues the contest; (iii)
the contest will not materially impair the ability to ultimately comply with the
contested Legal Requirement should the contest not be successful; (iv) if the
contest concerns a Borrowing Base Property or a Borrowing Base Property Owner,
reasonable reserves in an amount necessary to undertake and pay for such contest
and any corrective or remedial action then or thereafter reasonably likely to be
necessary shall have been established in a manner satisfactory to the
Administrative Agent or deposited in cash (or cash equivalents) with the
Administrative Agent to be held during the pendency of such contest, or such
contested amount shall have been duly bonded in accordance with applicable law;
(vi) no Event of Default exists; (vii) if the contest relates to an
Environmental Legal Requirement, the conditions set forth in the Environmental
Indemnity relating to such contests shall be satisfied; (viii) no risk of sale,
forfeiture or loss of any interest in any Borrowing Base Property or the
Collateral or any part thereof arises during the pendency of such contest; and
(ix) such contest does not have and could not reasonably be expected to have a
Material Adverse Effect.

      9.2 Limited Recourse Provisions.

            9.2.1 Borrower Fully Liable. Borrower shall be fully liable for the
      Loan and the Obligations of Borrower to each of the Lenders.

            9.2.2 Certain Non-Recourse. This Agreement and all Loan Documents
      have been executed by the undersigned in its capacity as an officer of
      KRT, as general partner of the Borrower and not individually, and none of
      the trustees, officers, members, limited partners, or shareholders of the
      Borrower or KRT shall be bound or have any personal liability hereunder or
      thereunder except under any Guaranty or other Loan Document signed by such
      Person, other than a signature in a representative capacity. Under no
      circumstances shall any party be entitled to seek recourse or commence any
      action against any of the trustees, officers, members, limited partners,
      or shareholders of the Borrower or KRT or any such Person's personal
      assets for the performance or payment of any obligation hereunder. In all
      other Loan Documents, all parties shall not seek recourse or commence any
      action against any of the trustees, officers, members, limited partners,
      or shareholders of Borrower or KRT or any of such Person's personal assets
      for the performance or payment of any obligation hereunder or thereunder,
      except under any Guaranty or other Loan Document signed by such Person,
      other than a signature in a representative capacity.

            9.2.3 Additional Matters. Nothing contained in the foregoing
      non-recourse provisions or elsewhere shall: (i) limit the right of
      Administrative Agent or any of the

                                      -42-
<PAGE>
      Lenders to obtain injunctive relief or to pursue equitable remedies under
      any of the Loan Documents, excluding only any injunctive relief ordering
      payment of obligations by any Person or entity for which personal
      liability does not otherwise exist; or (ii) limit the liability of any
      attorney, law firm, accountant or other professional who or which renders
      or provides any written opinion or certificate to Administrative Agent or
      any of the Lenders in connection with the Loan even though such person or
      entity may be a limited partner of Borrower.

      9.3 Payment of Obligations. Upon the return to the Administrative Agent,
or the expiration, of all of the Letters of Credit and the payment in full of
the Obligations, in immediately available funds, including, without limitation,
all unreimbursed costs and expenses of the Agent and of each Lender for which
the Borrower is responsible, and the termination of the Loan, the Agent shall
release any security and other collateral interests as provided for herein and
under the other Loan Documents and shall execute and deliver such documents and
termination statements as Borrower or any other Loan Party reasonably requests
to evidence such termination and release. However, such release by the Agent
shall not be deemed to terminate or release any Person from any obligation or
liability under the Loan Documents which specifically by its terms survives the
payment in full of the Obligations.

      10. EVENTS OF DEFAULT. The following provisions deal with Default, Events
of Default, notice, grace and cure periods, and certain rights of Administrative
Agent following an Event of Default.

      10.1 Default and Events of Default. The term "Default" as used herein or
in any of the other Loan Documents shall mean any fact or circumstance which
constitutes, or upon the lapse of time, or giving of notice, or both, could
constitute, an Event of Default. The occurrence of any of the following events,
respectively, shall constitute an event of default ("Event of Default"). Upon
the occurrence of any Event of Default described in Section 10.1.8, any and all
Obligations shall become due and payable without any further act on the part of
the Administrative Agent. Upon the occurrence of any other Event of Default, the
Administrative Agent may declare that any and all Obligations shall become
immediately due and payable. The occurrence of any Event of Default shall also
constitute, without notice or demand, a default under all other agreements
between the Administrative Agent and/or the Lenders and the Borrower and
instruments and papers heretofore, now, or hereafter given the Administrative
Agent and/or the Lenders by the Borrower.

            10.1.1 Failure to Pay the Loan. The failure by the Borrower to pay
      when due any principal of, interest on, or fees in respect of, the Loan.

            10.1.2 Failure to Make Other Payments. The failure by the Borrower
      to pay when due (or upon demand, if payable on demand) any payment
      Obligation other than any payment Obligation on account of the principal
      of, or interest on, or fees in respect of, the Loan.

            10.1.3 Note, Security Documents, and Other Loan Documents. Any other
      default in the performance of any term or provision of any Note, or of the
      Security Documents, or of any of the other Loan Documents, or a breach, or
      other failure to satisfy, any other term, provision, condition or warranty
      under the Note, the Security Documents, or any other Loan Document,
      regardless of whether any then undisbursed portion of the Loan is
      sufficient to cover any payment of money required thereby, and the
      specific grace period, if any, allowed for the default in question in
      Section 10.2 or elsewhere in this Agreement shall have expired without
      such default having been cured.

                                      -43-
<PAGE>
            10.1.4 Default under Other Agreements. The occurrence of any breach
      of any covenant or Obligation imposed by, or of any default under, any
      agreement (including any Loan Document) between the Administrative Agent
      and/or the Lenders and the Borrower, and/or the Loan Parties in connection
      with the Loan or any instrument given by the Borrower and such Persons to
      the Administrative Agent and/or the Lenders, in connection with the Loan
      and the expiry, without cure, of any applicable grace period in Section
      10.2, elsewhere in this Agreement, or in the applicable Loan Document
      (notwithstanding that the Administrative Agent and/or the Lenders may not
      have exercised all or any of its/their rights on account of such breach or
      default).

            10.1.5 Representations and Warranties. If any representation or
      warranty made by the Borrower or by any of the other Loan Parties or the
      Borrower Subsidiaries in the Loan Documents was untrue or misleading in
      any material respect as of the date made or deemed made (updated as
      provided for herein), including, without limitation, all representations
      and warranties made in Article 6 herein.

            10.1.6 Affirmative Covenants. The breach of any covenant contained
      in Article 7 herein, including, without limitation, the Financial
      Covenants.

            10.1.7 Negative Covenants. The breach of any covenant contained in
      Article 8 herein. 10.1.8 Financial Status and Insolvency.

            A. Borrower shall: (i) admit in writing its inability to pay its
      debts generally as they become due; (ii) file a petition in bankruptcy or
      a petition to take advantage of any insolvency act; (iii) make an
      assignment for the benefit of creditors; (iv) consent to, or acquiesce in,
      the appointment of a receiver, liquidator or trustee of itself or of the
      whole or any substantial part of its properties or assets; (v) file a
      petition or answer seeking reorganization, arrangement, composition,
      readjustment, liquidation, dissolution or similar relief under the Federal
      Bankruptcy laws or any other applicable law; (vi) have a court of
      competent jurisdiction enter an order, judgment or decree appointing a
      receiver, liquidator or trustee of Borrower, or of the whole or any
      substantial part of the property or assets of Borrower, and such order,
      judgment or decree shall remain unvacated or not set aside or unstayed for
      sixty (60) days; (vii) have a petition filed against it seeking
      reorganization, arrangement, composition, readjustment, liquidation,
      dissolution or similar relief under the Federal Bankruptcy laws or any
      other applicable law and such petition shall remain undismissed for sixty
      (60) days; (viii) have, under the provisions of any other law for the
      relief or aid of debtors, any court of competent jurisdiction assume
      custody or control of Borrower or of the whole or any substantial part of
      its property or assets and such custody or control shall remain
      unterminated or unstayed for sixty (60) days; or (ix) have an attachment
      or execution levied against any substantial portion of the property of
      Borrower or against any portion of the Collateral which is not discharged
      or dissolved by a bond within thirty (30) days; or

            B. any such event set forth in subsection A above shall occur with
      respect to any Loan Party;

            10.1.9 Loan Documents. If any Loan Document for any reason other
      than the satisfaction in full of all Obligations shall cease to be in full
      force and effect (other than in accordance with its terms), thereby
      preventing the Administrative Agent and/or the Lenders from obtaining the
      practical realization of the benefits thereof, or if any Loan Document
      shall be declared null and void or any Loan Party shall claim or declare
      any

                                      -44-
<PAGE>
      such Loan Document to no longer be in full force and effect or is null and
      void, or if the Liens and security interests purported to be created by
      any of the Loan Documents shall cease to be valid, perfected, first
      priority (except as otherwise expressly provided herein) security
      interests;

            10.1.10 Judgments. One or more judgments or decrees shall be entered
      against Borrower or any Loan Party or Borrower Subsidiary involving a
      liability (not paid or fully covered by a reputable and solvent insurance
      company) and such judgments and decrees either shall be final and
      non-appealable or shall not be vacated, discharged or stayed or bonded
      pending appeal for any period of sixty (60) consecutive days, and the
      aggregate amount of all such judgments exceeds five (5%) percent of the
      Borrower's Net Worth;

            10.1.11 ERISA. (i) If any Plan shall fail to satisfy the minimum
      funding standard required for any plan year or part thereof and a waiver
      of such standard or extension of any amortization period is not granted
      under Section 412 of the Code, any Plan shall have had or is likely to
      have a trustee appointed to administer such Plan, any Plan is, shall have
      been or is likely to be terminated or to be the subject of a distress
      termination proceeding under ERISA, any Plan shall have an Unfunded
      Current Liability, a contribution required to be made to a Plan has not
      been timely made, a Loan Party or any ERISA Affiliate has incurred or is
      likely to incur a liability to or on account of a Plan under Section 409,
      502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA
      or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or a Loan Party has
      incurred or is likely to incur liabilities pursuant to one or more
      employee welfare benefit plans (as defined in Section 3(l) of ERISA) that
      provide benefits to retired employees or other former employees (other
      than as required by Section 601 of ERISA) or employee pension benefit
      plans (as defined in Section 3(2) of ERISA) and any of the foregoing could
      have a Material Adverse Effect; (ii) if there shall result from any such
      event or events the imposition of a lien, the granting of a security
      interest, or a liability or a material risk of incurring a liability which
      could have, or reasonably be expected to have, a Material Adverse Effect;
      or (iii) if any such lien, security interest or liability is imposed or
      granted and, individually, and/or in the aggregate, in the reasonable
      opinion of the Administrative Agent could have, or reasonably be expected
      to have, a Material Adverse Effect.

            10.1.12 Change of Control. If a Change of Control shall occur.

            10.1.13 Termination of Guaranty or Consent. The termination or
      attempted termination of any Guaranty by any Guarantor of the Obligations.

            10.1.14 Generally. A default by Borrower in the performance of any
      term, provision or condition of this Agreement to be performed by
      Borrower, or a breach, or other failure to satisfy, any other term
      provision, condition, covenant or warranty under this Agreement and such
      default remains uncured beyond any applicable specific grace period
      provided for in this Agreement, including, without limitation, as set
      forth in Section 10.2. below;

      10.2 Grace Periods and Notice. As to each of the foregoing events the
following provisions relating to grace periods and notice shall apply:

            10.2.1 No Notice or Grace Period. There shall be no grace period and
      no notice provision with respect to the payment of principal at maturity
      and/or as required in connection with a Mandatory Principal Prepayment and
      no grace period and no notice

                                      -45-
<PAGE>
provision with respect to defaults related to the voluntary filing of bankruptcy
or reorganization proceedings or an assignment for the benefit of creditors, or
with respect to nonmonetary defaults which are not reasonably capable of being
cured, or with respect to a breach of warranty or representation under Article
6, or (subject to Section 10.2.5) with respect to the breach of any of the
affirmative covenants set forth in Article 7 (unless a grace or cure period is
specifically provided for therein) or (subject to Section 10.2.5) with respect
to the breach of any of the negative covenants set forth in Article 8.

            10.2.2 Nonpayment of Interest. As to the nonpayment of interest
      there shall be a ten (10) day grace period without any requirement of
      notice from Administrative Agent.

            10.2.3 Other Monetary Defaults. All other monetary defaults shall
      have a five (5) day grace period following notice from Administrative
      Agent.

            10.2.4 Nonmonetary Defaults Capable of Cure. As to non-monetary
      Defaults which are reasonably capable of being cured or remedied, unless
      there is a specific shorter or longer grace period provided for in this
      Loan Agreement or in another Loan Document, there shall be a thirty (30)
      day grace period following notice from Administrative Agent or, if such
      Default would reasonably require more than thirty (30) days to cure or
      remedy, such longer period of time not to exceed a total of ninety (90)
      days from Administrative Agent's notice as may be reasonably required so
      long as Borrower shall commence reasonable actions to remedy or cure the
      default within thirty (30) days following such notice and shall diligently
      prosecute such curative action to completion within such ninety (90) day
      period. However, where there is an emergency situation in which there is
      danger to person or property such curative action shall be commenced as
      promptly as possible. As to breaches of warranties and representations
      (other than those related to financial information) there shall be a
      thirty (30) day grace period following notice from Administrative Agent.

            10.2.5 Borrowing Base Property Defaults As to any non-monetary
      Defaults which are reasonably capable of being cured or remedied by the
      removal of any Individual Property or Individual Properties from being
      Borrowing Base Properties, there shall be a ninety (90) day grace period
      following notice from the Administrative Agent for the Borrower to cure or
      remedy such Default by compliance with the Release Conditions and the
      terms and provisions of Section 3.3, hereof, concerning the removal of any
      said Individual Properties from being Borrowing Base Properties (in the
      event that the subject non-monetary Default is a failure to satisfy the
      Occupancy Ratio set forth in Section 7.23.1, the said ninety (90) day
      period shall run coterminously with the ninety (90) day cure period
      provided for in Section 7.23.1).

      11. REMEDIES.

      11.1 Remedies. Upon the occurrence of an Event of Default, whether or not
the indebtedness evidenced by the Note and secured by the Security Documents
shall be due and payable or Administrative Agent shall have instituted any
foreclosure or other action for the enforcement of the Security Documents or the
Note, Administrative Agent may, or upon the direction of the Required Lenders or
as provided for in Section 13.1.11(ii) shall, in addition to any other remedies
which Administrative Agent may have hereunder or under the other Loan Documents,
or otherwise, and not in limitation thereof, and in Administrative Agent's sole
and absolute discretion:

            11.1.1 Accelerate Debt. Administrative Agent may, or with the
      direction of the

                                      -46-
<PAGE>
      Required Lenders or as provided for in Section 13.1.11(ii) shall, declare
      the indebtedness evidenced by the Note and secured by the Security
      Documents immediately due and payable (provided that in the case of a
      voluntary petition in bankruptcy filed by Borrower or an involuntary
      petition in bankruptcy filed against Borrower (after expiration of the
      grace period, if any, set forth in Section 10.1.8), such acceleration
      shall be automatic).:

            11.1.2 Collateralize Letters of Credit. Administrative Agent may
      require the Borrower to deposit into accounts maintained with, and pledged
      to the Administrative Agent for the benefit of the Lenders, cash proceeds
      in an amount equal to the L/C Exposure, which deposits shall secure the
      L/C Exposure.

            11.1.3 Pursue Remedies. Administrative Agent may, or with the
      direction of the Required Lenders or as provided for in Section
      13.1.11(ii) shall, pursue any and all remedies provided for hereunder,
      under any one or more of the other Loan Documents, and/or otherwise.

      11.2 Written Waivers. Except as otherwise provided in Section 13.4, if a
Default or an Event of Default is waived by the Required Lenders, in its sole
discretion, pursuant to a specific written instrument executed by an authorized
officer of Administrative Agent, the Default or Event of Default so waived shall
be deemed to have never occurred.

      11.3 Power of Attorney. For the purpose of exercising the rights granted
by this Article 11, as well as any and all other rights and remedies of
Administrative Agent under the Loan Documents, Borrower hereby irrevocably
constitutes and appoints Administrative Agent (or any agent designated by
Administrative Agent) its true and lawful attorney-in-fact, with full power of
substitution, upon and following any Event of Default which is continuing, to
execute, acknowledge and deliver any instruments and to do and perform any acts
in the name and on behalf of Borrower. In connection with the foregoing power of
attorney, the Borrower hereby grants unto the Administrative Agent (acting
through any of its officers) full power to do any and all things necessary or
appropriate in connection with the exercise of such powers as fully and
effectually as the Borrower might or could do, hereby ratifying all that said
attorney shall do or cause to be done by virtue of this Agreement. The foregoing
power of attorney shall not be affected by any disability or incapacity suffered
by the Borrower and shall survive the same. All powers conferred upon the
Administrative Agent by this Agreement, being coupled with an interest, shall be
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Administrative Agent.

      12. SECURITY INTEREST AND SET-OFF.

      12.1 Security Interest. Borrower hereby grants (and shall cause each other
Loan Party to grant) to the Administrative Agent and each of the Lenders, a
continuing lien, security interest and right of setoff as security for all of
the Obligations, upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Administrative Agent or any of the Lenders or any entity under the control of
FleetBoston Financial Corporation and its successors and assigns, or in transit
to any of them.

      12.2 Set-Off. If any payment is not made when due under any of the Loan
Documents, after giving regard to applicable grace periods, if any, or if any
Event of Default or other event which would entitle Administrative Agent or any
of the Lenders to accelerate the Loan occurs, any such deposits, balances or
other sums credited by or due from Administrative Agent, any affiliate of
Administrative Agent or FleetBoston Financial Corporation or any of the Lenders,
or from any such affiliate of Administrative Agent or FleetBoston Financial
Corporation or any of the Lenders, to Borrower may to the fullest extent not
prohibited by applicable law at any time or

                                      -47-
<PAGE>
from time to time, without regard to the existence, sufficiency or adequacy of
any other collateral, and without notice or compliance with any other condition
precedent now or hereafter imposed by statute, rule of law or otherwise, all of
which are hereby waived, be set off, appropriated and applied by Administrative
Agent against any or all of Borrower's Obligations irrespective of whether
demand shall have been made and although such obligations may be unmatured, in
such manner as Administrative Agent in its sole and absolute discretion may
determine. Within five (5) Business Days of making any such set off,
appropriation or application, Administrative Agent agrees to notify Borrower
thereof, provided the failure to give such notice shall not affect the validity
of such set off or appropriation or application. ANY AND ALL RIGHTS TO REQUIRE
ADMINISTRATIVE AGENT OR ANY OF THE LENDERS TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED. Each of the Lenders agrees with each other Lender that (a) if an amount
to be set off is to be applied to indebtedness of the Borrower to such Lender,
other than the Obligations evidenced by the Note due to such Lender, such amount
shall be applied ratably to such other indebtedness and to the Obligations
evidenced by the Note due to such Lender, and (b) if such Lender shall receive
from the Borrower, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Note due to such Lender by proceedings against the Borrower at law or in equity
or by proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note due to such Lender any amount in excess of its ratable portion of the
payments received by all of the Lenders with respect to Obligations under the
Note due to all of the Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Lender receiving in respect of the Note its proportionate
payment as contemplated by this Agreement; provided that if all or any part of
such excess payment is thereafter recovered from such Lender, such disposition
and arrangements shall be rescinded and the amount restored to the extent of
such recovery, but without interest.

      12.3 Right to Freeze. The Administrative Agent and each of the Lenders
shall also have the right, at its option, upon the occurrence of any event which
would entitle the Administrative Agent and each of the Lenders to set off or
debit as set forth in Section 12.2, to freeze, block or segregate any such
deposits, balances and other sums so that Borrower may not access, control or
draw upon the same.

      12.4 Additional Rights. The rights of Administrative Agent, the Lenders
and each affiliate of Administrative Agent and each of the Lenders under this
Article 12 are in addition to, and not in limitation of, other rights and
remedies, including other rights of set off, which Administrative Agent or any
of the Lenders may have.

      13. THE ADMINISTRATIVE AGENT AND THE LENDERS

      13.1 Rights, Duties and Immunities of the Administrative Agent.

            13.1.1 Appointment of Administrative Agent. Each Lender hereby
      irrevocably designates and appoints Fleet National Bank as Administrative
      Agent of such Lender to act as specified herein and in the other Loan
      Documents, and each such Lender hereby irrevocably authorizes the
      Administrative Agent to take such actions, exercise such powers and
      perform such duties as are expressly delegated to or conferred upon the
      Administrative Agent by the terms of this Loan Agreement and the other
      Loan

                                      -48-
<PAGE>
      Documents, together with such other powers as are reasonably incidental
      thereto. The Administrative Agent agrees to act as such upon the express
      conditions contained in this Article 13. The Administrative Agent shall
      not have any duties or responsibilities except those expressly set forth
      herein or in the other Loan Documents, nor shall it have any fiduciary
      relationship with any Lender, and no implied covenants, responsibilities,
      duties, obligations or liabilities shall be read into this Loan Agreement
      or otherwise exist against the Administrative Agent. Except as provided
      for in Section 13.3, the provisions of this Article 13 are solely for the
      benefit of the Administrative Agent and the Lenders, and the Borrower
      shall not have any rights as a third party beneficiary of any of the
      provisions hereof; provided, however, the Borrower may rely on any
      consent, waiver, approval, certificate or instrument delivered by the
      Administrative Agent as evidencing that the Administrative Agent has
      received, to the extent required hereunder, the prior approval of the
      Required Lenders or the Lenders.

            13.1.2 Administration of Loan by Administrative Agent. The
      Administrative Agent shall be responsible for administering the Loan on a
      day-to-day basis. In the exercise of such administrative duties, the
      Administrative Agent shall use the same diligence and standard of care
      that is customarily used by the Administrative Agent with respect to
      similar loans held by the Administrative Agent solely for its own account.

      Each Lender delegates to the Administrative Agent the full right and
authority on its behalf to take the following specific actions in connection
with its administration of the Loan:

            (i) to fund the Loan in accordance with the provisions of the Loan
      Documents, but only to the extent of immediately available funds provided
      to the Administrative Agent by the respective Lenders for such purpose;

            (ii) to receive all payments of principal, interest, fees and other
      charges paid by, or on behalf of, the Borrower and, except for fees to
      which the Administrative Agent is entitled pursuant to the Loan Documents
      or otherwise, to distribute all such funds to the respective Lenders as
      provided for hereunder;

            (iii) to keep and maintain complete and accurate files and records
      of all material matters pertaining to the Loan, and make such files and
      records available for inspection and copying by each Lender and its
      respective employees and agents during normal business hours upon
      reasonable prior notice to the Administrative Agent; and

            (iv) to do or omit doing all such other actions as may be reasonably
      necessary or incident to the implementation, administration and servicing
      of the Loan and the rights and duties delegated hereinabove.

            13.1.3 Delegation of Duties. The Administrative Agent may execute
      any of its duties under this Loan Agreement or any other Loan Document by
      or through its agents or attorneys-in-fact, and shall be entitled to the
      advice of counsel concerning all matters pertaining to its rights and
      duties hereunder or under the Loan Documents. The Administrative Agent
      shall not be responsible for the negligence or misconduct of any agents or
      attorneys-in-fact selected by it with reasonable care.

            13.1.4 Exculpatory Provisions. Neither the Administrative Agent nor
      any of its officers, directors, employees, agents, attorneys-in-fact or
      affiliates shall be liable for any action lawfully taken or omitted to be
      taken by it or them under or in connection with this Loan Agreement or the
      other Loan Documents, except for its or their gross negligence or willful
      misconduct. Neither the Administrative Agent nor any of its officers,
      directors,

                                      -49-
<PAGE>
      employees, agents, attorneys-in-fact or affiliates shall be responsible
      for or have any duty to ascertain, inquire into, or verify (i) any
      recital, statement, representation or warranty made by the Borrower or any
      of its officers or agents contained in this Loan Agreement or the other
      Loan Documents or in any certificate or other document delivered in
      connection therewith; (ii) the performance or observance of any of the
      covenants or agreements contained in, or the conditions of, this Loan
      Agreement or the other Loan Documents; (iii) the state or condition of any
      properties of the Borrower or any other obligor hereunder constituting
      Collateral for the Obligations of the Borrower hereunder, or any
      information contained in the books or records of the Borrower; (iv) the
      validity, enforceability, collectibility, effectiveness or genuineness of
      this Loan Agreement or any other Loan Document or any other certificate,
      document or instrument furnished in connection therewith; or (v) the
      validity, priority or perfection of any lien securing or purporting to
      secure the Obligations or the value or sufficiency of any of the
      Collateral.

            13.1.5 Reliance by Administrative Agent. The Administrative Agent
      shall be entitled to rely, and shall be fully protected in relying, upon
      any notice, consent, certificate, affidavit, or other document or writing
      believed by it to be genuine and correct and to have been signed, sent or
      made by the proper person or persons, and upon the advice and statements
      of legal counsel (including, without, limitation, counsel to the
      Borrower), independent accountants and other experts selected by the
      Administrative Agent. The Administrative Agent shall be fully justified in
      failing or refusing to take any action under this Loan Agreement or any
      other Loan Document, except as otherwise specifically provided for herein,
      unless it shall first receive such advice or concurrence of the Required
      Lenders as it deems appropriate or it shall first be indemnified to its
      satisfaction by the Lenders against any and all liability and expense
      which may be incurred by it by reason of the taking or failing to take any
      such action. The Administrative Agent shall in all cases be fully
      protected in acting, or in refraining from acting, under this Loan
      Agreement and the other Loan Documents in accordance with any written
      request of the Required Lenders, and each such request of the Required
      Lenders, and any action taken or failure to act by the Administrative
      Agent pursuant thereto, shall be binding upon all of the Lenders;
      provided, however, that the Administrative Agent shall not be required in
      any event to act, or to refrain from acting, in any manner which is
      contrary to the Loan Documents or to applicable law.

            13.1.6 Notice of Default. The Administrative Agent shall not be
      deemed to have knowledge or notice of the occurrence of any Default or
      Event of Default unless the Administrative Agent has actual knowledge of
      the same or has received notice from a Lender or the Borrower referring to
      this Loan Agreement, describing such Default or Event of Default and
      stating that such notice is a notice of default (a "Notice of Default").
      In the event that the Administrative Agent obtains such actual knowledge
      or receives such a notice, the Administrative Agent shall give prompt
      written notice thereof to each of the Lenders. The Administrative Agent
      shall take such action with respect to such Default or Event of Default as
      shall be reasonably directed by the Required Lenders. Unless and until the
      Administrative Agent shall have received such direction, the
      Administrative Agent may (but shall not be obligated to) take such action,
      or refrain from taking such action, with respect to any such Default or
      Event of Default as it shall deem advisable in the best interest of the
      Lenders.

            13.1.7 Lenders' Credit Decisions. Each Lender acknowledges that it
      has, independently and without reliance upon the Administrative Agent or
      any other Lender, and based on the financial statements prepared by the
      Borrower and such other documents and information as it has deemed
      appropriate, made its own credit analysis and investigation into the
      business, assets, operations, property, and financial and other

                                      -50-
<PAGE>
      condition of the Borrower and has made its own decision to enter into this
      Loan Agreement and the other Loan Documents. Each Lender also acknowledges
      that it will, independently and without reliance upon the Administrative
      Agent or any other Lender, and based on such documents and information as
      it shall deem appropriate at the time, continue to make its own credit
      decisions in determining whether or not conditions precedent to Closing
      any Loan hereunder have been satisfied and in taking or not taking any
      action under this Loan Agreement and the other Loan Documents.

            13.1.8 Administrative Agent's Reimbursement and Indemnification. The
      Lenders agree to reimburse and indemnify the Administrative Agent, ratably
      in proportion to their respective Commitments, for (i) any amounts not
      reimbursed by the Borrower for which the Administrative Agent is entitled
      to reimbursement by the Borrower under this Loan Agreement or the other
      Loan Documents, (ii) any other expenses incurred by the Administrative
      Agent on behalf of the Lenders in connection with the preparation,
      execution, delivery, administration, amendment, waiver and/or enforcement
      of this Loan Agreement and the other Loan Documents, and (iii) any
      liabilities, obligations, losses, damages, penalties, actions, judgments,
      suits, costs, expenses or disbursements of any kind and nature whatsoever
      which may imposed on, incurred by or asserted against the Administrative
      Agent in any way relating to or arising out of this Loan Agreement or the
      other Loan Documents or any other document delivered in connection
      therewith or any transaction contemplated thereby, or the enforcement of
      any of the terms hereof or thereof, provided that no Lender shall be
      liable for any of the foregoing to the extent that they arise from the
      gross negligence or willful misconduct of the Administrative Agent. If any
      indemnity furnished to the Administrative Agent for any purpose shall, in
      the opinion of the Administrative Agent, be insufficient or become
      impaired, the Administrative Agent may call for additional indemnity and
      cease, or not commence, to do the action indemnified against until such
      additional indemnity is furnished.

            13.1.9 Administrative Agent in its Individual Capacity. With respect
      to its Commitment as a Lender, and the Loans made by it and the Note
      issued to it, the Administrative Agent shall have the same rights and
      powers hereunder and under any other Loan Document as any Lender and may
      exercise the same as though it were not the Administrative Agent, and the
      term "Lender" or "Lenders" shall, unless the context otherwise indicates,
      include the Administrative Agent in its individual capacity. The
      Administrative Agent and its subsidiaries and affiliates may accept
      deposits from, lend money to, and generally engage in any kind of
      commercial or investment banking, trust, advisory or other business with
      the Borrower or any subsidiary or affiliate of the Borrower as if it were
      not the Administrative Agent hereunder.

            13.1.10 Successor Administrative Agent. Only if the Administrative
      Agent, in its individual capacity as a Lender, retains an amount of its
      Commitment of less than $20,000,000.00, the Administrative Agent may
      resign at any time by giving thirty (30) days' prior written notice to the
      Lenders and Borrower. The Required Lenders, for good cause, may remove
      Administrative Agent at any time by giving thirty (30) days' prior written
      notice to the Administrative Agent, the Borrower and the other Lenders.
      Upon any such resignation or removal, the Required Lenders shall have the
      right to appoint a successor Administrative Agent, which successor
      Administrative Agent shall, if such appointment is prior to the occurrence
      of an Event of Default which is continuing, be subject to the approval of
      the Borrower, which approval shall not be unreasonably withheld or
      delayed. If no successor Administrative Agent shall have been so appointed
      by the Required Lenders and accepted such appointment within thirty (30)
      days after the retiring Administrative Agent's giving notice of
      resignation or the Required Lenders'

                                      -51-
<PAGE>
      giving notice of removal, as the case may be, then the retiring
      Administrative Agent may appoint, on behalf of the Borrower and the
      Lenders, a successor Administrative Agent. If in such instance the
      retiring Administrative Agent appoints as the successor Administrative
      Agent a Lender, such Lender shall accept such appointment. Each such
      successor Administrative Agent shall be a Lender or a financial
      institution which meets the requirements of an Eligible Assignee. Upon the
      acceptance of any appointment as Administrative Agent hereunder by a
      successor Administrative Agent, such successor Administrative Agent shall
      thereupon succeed to and become vested with all the rights, powers,
      privileges and duties of the retiring Administrative Agent, and the
      retiring Administrative Agent shall be discharged from its duties and
      obligations hereunder and under the other Loan Documents. After any
      retiring Administrative Agent's resignation hereunder, the provisions of
      this Article 13 shall continue in effect for its benefit in respect of any
      actions taken or omitted to be taken by it while it was acting as the
      Administrative Agent hereunder.

            13.1.11 Duties in the Case of Enforcement.

                  (i) In case one or more Events of Default have occurred and
            shall be continuing, and whether or not acceleration of the
            Obligations shall have occurred, the Administrative Agent may or
            shall, at either the request of the Required Lenders or as provided
            for in Section 13.1.11(ii), proceed to enforce the provisions of
            this Loan Agreement and the other Loan Documents respecting the
            foreclosure, the sale, or other disposition of all or any part of
            the Collateral and the exercise of any other legal or equitable
            rights or remedies as it may have hereunder or under any other Loan
            Document or otherwise by virtue of applicable law, or to refrain
            from so acting if similarly requested by the Required Lenders. The
            Administrative Agent shall be fully protected in so acting or
            refraining from acting upon the instruction of the Required Lenders,
            and such instruction shall be binding upon all the Lenders. The
            Required Lenders may direct the Administrative Agent in writing as
            to the method and the extent of any such foreclosure, sale or other
            disposition or the exercise of any other right or remedy, the
            Lenders hereby agreeing to indemnify and hold the Administrative
            Agent harmless from all costs and liabilities incurred in respect of
            all actions taken or omitted in accordance with such direction,
            provided that the Administrative Agent need not comply with any such
            direction to the extent that the Administrative Agent reasonably
            believes the Administrative Agent's compliance with such direction
            to be unlawful or commercially unreasonable in any applicable
            jurisdiction.

                  (ii) In the event that the Administrative Agent provides to
            the Lenders the written notice of the occurrence of an Event of
            Default under Section 13.1.6 and within sixty (60) days thereafter,
            the Required Lenders have not provided to the Administrative Agent
            direction as a course of action to be undertaken by the
            Administrative Agent with respect thereto, the Administrative Agent,
            subject to receiving any direction thereafter from the Required
            Lenders, shall accelerate the Loan and proceed to enforce the
            provisions of this Loan Agreement and the other Loan Documents
            respecting the foreclosure, the sale, or other disposition of all or
            any part of the Collateral and the exercise of any other legal or
            equitable rights or remedies as it may have hereunder or under any
            other Loan Document or otherwise by virtue of applicable law, with
            the same diligence and standard of care that is customarily used by
            the Administrative Agent with respect to similar loans held by the
            Administrative Agent solely for its own account. The Lenders agree
            to indemnify and hold the Administrative Agent harmless from all
            costs and

                                      -52-
<PAGE>
            liabilities incurred in respect of all actions taken or omitted by
            the Administrative Agent in accordance with this subsection,
            provided that no Lender shall be liable for any of the foregoing to
            the extent that they arise from the gross negligence or willful
            misconduct of the Administrative Agent.

                  (iii) The Administrative Agent may, in its discretion but
            without obligation, in the absence of direction from the Required
            Lenders, take such interim actions as it believes necessary to
            preserve the rights of the Lenders hereunder and in and to any
            Collateral securing the Obligations, including but not limited to
            petitioning a court for injunctive relief, appointment of a receiver
            or preservation of the proceeds of any Collateral. Each of the
            Lenders acknowledges and agrees that no individual Lender may
            separately enforce or exercise any of the provisions of any of the
            Loan Documents against the Borrower, any of the Loan Parties or the
            Collateral, including without limitation the Note, other than
            through the Administrative Agent.

      13.2 Respecting Loans and Payments.

            13.2.1 Procedures for Loans. Administrative Agent shall give written
      notice to each Lender of each request for a Loan Advance, or conversion of
      an existing Loan Advance from a Variable Rate Advance to an Effective LIBO
      Rate Advance, by facsimile transmission, hand delivery or overnight
      courier, not later than 11:00 a.m. (Eastern time) (i) three (3) Business
      Days prior to any Effective LIBO Rate Advance or conversion to an
      Effective LIBO Rate Advance, or (ii) one (1) Business Day prior to any
      Variable Rate Advance. Each such notice shall be accompanied by a written
      summary of the request for a Loan Advance and shall specify (a) the date
      of the requested Loan Advance, (b) the aggregate amount of the requested
      Loan Advance, (c) each Lender's pro rata share of the requested Loan
      Advance, and (d) the applicable interest rate selected by Borrower with
      respect to such Loan Advance, or any portion thereof, together with the
      applicable Interest Period, if any, selected, or deemed selected, by
      Borrower. Each Lender shall, before 11:00 a.m. (Eastern time) on the date
      set forth in any such request for a Loan Advance, upon Administrative
      Agent's determination that the applicable conditions to making the
      requested Loan Advance have been fulfilled or will be fulfilled prior to
      the said Loan Advance, make available to Administrative Agent, at an
      account to be designated by Administrative Agent at Fleet National Bank in
      Boston, Massachusetts, in same day funds, each Lender's ratable portion of
      the requested Loan Advance. After Administrative Agent's receipt of such
      funds and upon Administrative Agent's determination that the applicable
      conditions to making the requested Loan Advance have been fulfilled,
      Administrative Agent shall make such funds available to Borrower as
      provided for in this Loan Agreement. Within a reasonable period of time
      following the making of each Loan Advance, but in no event later than ten
      (10) Business Days following such Loan Advance, Administrative Agent shall
      deliver to each Lender a copy of Borrower's request for Loan Advance.
      Promptly after receipt by Administrative Agent of written request from any
      Lender, Administrative Agent shall deliver to the requesting Lender the
      accompanying certifications and such other instruments, documents,
      certifications and approvals delivered by or on behalf of Borrower to
      Administrative Agent in support of the requested Loan Advance.

            13.2.2 Nature of Obligations of Lenders. The obligations of the
      Lenders hereunder are several and not joint. Failure of any Lender to
      fulfill that its obligations hereunder shall not result in any other
      Lender becoming obligated to advance more than its Commitment Percentage
      of the Loan, nor shall such failure release or diminish the

                                      -53-
<PAGE>
      obligations of any other Lender to fund its Commitment Percentage provided
      herein.

            13.2.3 Payments to Administrative Agent. All payments of principal
      of and interest on the Loan or the Note shall be made to the
      Administrative Agent by the Borrower or any other obligor or guarantor for
      the account of the Lenders in immediately available funds as provided in
      the Note and this Loan Agreement. Except as otherwise expressly provided
      herein, the Administrative Agent agrees promptly to distribute to each
      Lender, on the same Business Day upon which each such payment is made,
      such Lender's proportionate share of each such payment in immediately
      available funds excluding Liquidation Proceeds which shall be distributed
      in accordance with Section 13.2.4 below. The Administrative Agent will
      disburse such payments to the Lenders on the date of receipt thereof if
      received prior to 10:00 a.m. on such date and, if not, on the next
      Business Day. The Administrative Agent shall upon each distribution
      promptly notify Borrower of such distribution and each Lender of the
      amounts distributed to it applicable to principal of, and interest on, the
      proportionate share held by the applicable Lender. Each payment to the
      Administrative Agent under the first sentence of this Section shall
      constitute a payment by the Borrower to each Lender in the amount of such
      Lender's proportionate share of such payment, and any such payment to the
      Administrative Agent shall not be considered outstanding for any purpose
      after the date of such payment by the Borrower to the Administrative Agent
      without regard to whether or when the Administrative Agent makes
      distribution thereof as provided above. If any payment received by the
      Administrative Agent from the Borrower is insufficient to pay both all
      accrued interest and all principal then due and owing, the Administrative
      Agent shall first apply such payment to all outstanding interest until
      paid in full and shall then apply the remainder of such payment to all
      principal then due and owing, and shall distribute the payment to each
      Lender accordingly.

            13.2.4 Distribution of Liquidation Proceeds. Subject to the terms
      and conditions hereof, the Administrative Agent shall distribute all
      Liquidation Proceeds in the order and manner set forth below:

      First:   To the Administrative Agent, towards any fees and any expenses
               for which the Administrative Agent is entitled to reimbursement
               under this Agreement or the other Loan Documents not theretofore
               paid to the Administrative Agent.

      Second:  To all applicable Lenders in accordance with their proportional
               share based upon their respective Commitment Percentages until
               all Lenders have been reimbursed for all expenses which such
               Lenders have previously paid to the Administrative Agent and not
               theretofore paid to such Lenders.

       Third:  To all Lenders in accordance with their proportional share based
               upon their respective Commitment Percentages until all Lenders
               have been paid in full all principal and interest due to such
               Lenders under the Loan, with each Lender applying such proceeds
               for purposes of this Agreement first against the outstanding
               principal balance due to such Lender under the Loan and then to
               accrued and unpaid interest due under the Loan.

       Fourth: To all applicable Lenders in accordance with their proportional
               share based upon their respective Commitment Percentages until
               all Lenders have been paid in full all other amounts due to such
               Lenders under the Loan including, without limitation, any costs
               and expenses incurred directly by such Lenders to the extent such
               costs and expenses are reimbursable to such Lenders by the
               Borrower under the Loan Documents.

                                      -54-
<PAGE>
      Fifth:   To the Borrower or such third parties as may be entitled to claim
               Liquidation Proceeds.

            13.2.5 Adjustments. If, after Administrative Agent has paid each
      Lender's proportionate share of any payment received or applied by
      Administrative Agent in respect of the Loan and other Obligations, that
      payment is rescinded or must otherwise be returned or paid over by
      Administrative Agent, whether pursuant to any bankruptcy or insolvency
      law, sharing of payments clause of any loan agreement or otherwise, such
      Lender shall, at Administrative Agent's request, promptly return its
      proportionate share of such payment or application to Administrative
      Agent, together with the Lender's proportionate share of any interest or
      other amount required to be paid by Administrative Agent with respect to
      such payment or application.

            13.2.6 Distribution by Administrative Agent. If in the opinion of
      the Administrative Agent distribution of any amount received by it in such
      capacity hereunder or under the Note or under any of the other Loan
      Documents might involve any liability, it may refrain from making
      distribution until its right to make distribution shall have been
      adjudicated by a court of competent jurisdiction or has been resolved by
      the mutual consent of all Lenders. In addition, the Administrative Agent
      may request full and complete indemnity, in form and substance
      satisfactory to it, prior to making any such distribution. If a court of
      competent jurisdiction shall adjudge that any amount received and
      distributed by the Administrative Agent is to be repaid, each person to
      whom any such distribution shall have been made shall either repay to the
      Administrative Agent its proportionate share of the amount so adjudged to
      be repaid or shall pay over to the same in such manner and to such persons
      as shall be determined by such court.

            13.2.7 Delinquent Lender. If for any reason any Lender shall fail or
      refuse to abide by its obligations under this Loan Agreement, including
      without limitation its obligation to make available to Administrative
      Agent its pro rata share of any Loans, expenses or setoff (a "Delinquent
      Lender") and such failure is not cured within ten (10) days of receipt
      from the Administrative Agent of written notice thereof, then, in addition
      to the rights and remedies that may be available to Administrative Agent,
      other Lenders, the Borrower or any other party at law or in equity, and
      not at limitation thereof, (i) such Delinquent Lender's right to
      participate in the administration of, or decision-making rights related
      to, the Loans, this Loan Agreement or the other Loan Documents shall be
      suspended during the pendency of such failure or refusal, and (ii) a
      Delinquent Lender shall be deemed to have assigned any and all payments
      due to it from the Borrower, whether on account of outstanding Loans,
      interest, fees or otherwise, to the remaining non-delinquent Lenders for
      application to, and reduction of, their proportionate shares of all
      outstanding Loans until, as a result of application of such assigned
      payments the Lenders' respective pro rata shares of all outstanding Loans
      shall have returned to those in effect immediately prior to such
      delinquency and without giving effect to the nonpayment causing such
      delinquency. The Delinquent Lender's decision-making and participation
      rights and rights to payments as set forth in clauses (i) and (ii)
      hereinabove shall be restored only upon the payment by the Delinquent
      Lender of its pro rata share of any Loans or expenses as to which it is
      delinquent, together with interest thereon at the Default Rate from the
      date when originally due until the date upon which any such amounts are
      actually paid.

      The non-delinquent Lenders shall also have the right, but not the
      obligation, in their respective, sole and absolute discretion, to acquire
      for no cash consideration, (pro rata, based on the respective Commitments
      of those Lenders electing to exercise such right) the Delinquent Lender's
      Commitment to fund future Loans (the "Future Commitment").

                                      -55-
<PAGE>
      Upon any such purchase of the pro rata share of any Delinquent Lender's
      Future Commitment, the Delinquent Lender's share in future Loans and its
      rights under the Loan Documents with respect thereto shall terminate on
      the date of purchase, and the Delinquent Lender shall promptly execute all
      documents reasonably requested to surrender and transfer such interest,
      including, if so requested, an Assignment and Acceptance. Each Delinquent
      Lender shall indemnify Administrative Agent and each non-delinquent Lender
      from and against any and all loss, damage or expenses, including but not
      limited to reasonable attorneys' fees and funds advanced by Administrative
      Agent or by any non-delinquent Lender, on account of a Delinquent Lender's
      failure to timely fund its pro rata share of a Loan or to otherwise
      perform its obligations under the Loan Documents.

            13.2.8 Holders. The Administrative Agent may deem and treat the
      Lender designated in the Register as the proportionate owner of such
      interest in the Note for all purposes hereof unless and until a written
      notice of the assignment, transfer or endorsement thereof, as the case may
      be, shall have been filed with the Administrative Agent. Any request,
      authority or consent of any person or entity who, at the time of making
      such request or giving such authority or consent, is the holder of any
      designated interest in the Note shall be conclusive and binding on any
      subsequent holder, transferee or endorsee, as the case may be, of such
      interest in the Note or of any Note or Notes issued in exchange therefor.

      13.3 Assignment and Participation.

            13.3.1 Conditions to Assignment by Lenders. Except as provided
      herein, each Lender may assign to one or more Eligible Assignees all or a
      portion of its interests, rights and obligations under this Loan Agreement
      (including all or a portion of its Commitment Percentage and Commitment
      and the same portion of the Loans at the time owing to it and the portion
      of the Note held by it), upon satisfaction of the following conditions:
      (a) each of the Administrative Agent and the Borrower shall have given its
      prior written consent to such assignment (provided that, (1) in the case
      of the Borrower, such consent will not be unreasonably withheld, delayed,
      or conditioned and such consent shall not be required if a Default or
      Event of Default shall have occurred and be continuing and (2) in the case
      of the Administrative Agent, such consent will not be unreasonably
      withheld, delayed, or conditioned); (b) each such assignment shall be of a
      constant, and not a varying, percentage of all the assigning Lender's
      rights and obligations under this Loan Agreement, (c) each assignment
      shall be in an amount that is at least $5,000,000.00 and is a whole
      multiple of $1,000,000.00, (d) each Lender which is a Lender at the time
      of such assignment shall retain, free of any such assignment, an amount of
      its Commitment of not less than $5,000,000.00, (e) prior to the occurrence
      of an Event of Default, the Administrative Agent, in its individual
      capacity as a Lender, shall retain, free of any such assignment, an amount
      of its Commitment of not less than $25,000,000.00, and (f) the parties to
      such assignment shall execute and deliver to the Administrative Agent, for
      recording in the Register (as hereinafter defined), an Assignment and
      Acceptance, substantially in the form of Exhibit H hereto (an "Assignment
      and Acceptance"). Upon such execution, delivery, acceptance and recording,
      from and after the effective date specified in each Assignment and
      Acceptance, which effective date shall be at least five (5) Business Days
      after the execution thereof, and written notice thereof to the Borrower,
      (x) the assignee thereunder shall be a party hereto and, to the extent
      provided in such Assignment and Acceptance, have the rights and
      obligations of a Lender hereunder, and (y) the assigning Lender shall, to
      the extent provided in such assignment and upon payment to the
      Administrative Agent of the registration fee referred to in Section
      13.3.3, be released from its obligations under

                                      -56-
<PAGE>
      this Loan Agreement.

            13.3.2 Certain Representations and Warranties. Limitations,
      Covenants. By executing and delivering an Assignment and Acceptance, the
      parties to the assignment thereunder confirm to and agree with each other
      and the other parties hereto as follows:

            (a) other than the representation and warranty that it is the legal
      and beneficial owner of the interest being assigned thereby free and clear
      of any adverse claim, the assigning Lender makes no representation or
      warranty, express or implied, and assumes no responsibility with respect
      to any statements, warranties or representations made in or in connection
      with this Loan Agreement or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Loan Agreement,
      the other Loan Documents or any other instrument or document furnished
      pursuant hereto or the attachment, perfection or priority of any security
      interest or mortgage;

            (b) the assigning Lender makes no representation or warranty and
      assumes no responsibility with respect to the financial condition of the
      Borrower and its affiliates, related entities or subsidiaries or any other
      person primarily or secondarily liable in respect of any of the
      Obligations, or the performance or observance by the Borrower or any other
      person primarily or secondarily liable in respect of any of the
      Obligations of any of their obligations under this Loan Agreement or any
      of the other Loan Documents or any other instrument or document furnished
      pursuant hereto or thereto;

            (c) such assignee confirms that it has received a copy of this Loan
      Agreement, together with copies of the most recent financial statements
      provided by the Borrower as required by the terms of this Loan Agreement,
      together with such other documents and information as it has deemed
      appropriate to make its own credit analysis and decision to enter into
      such Assignment and Acceptance;

            (d) such assignee will, independently and without reliance upon the
      assigning Lender, the Administrative Agent or any other Lender and based
      on such documents and information as it shall deem appropriate at the
      time, continue to make its own credit decisions in taking or not taking
      action under this Loan Agreement;

            (e) such assignee represents and warrants that it is an Eligible
      Assignee;

            (f) such assignee appoints and authorizes the Administrative Agent
      to take such action as agent on its behalf and to exercise such powers
      under this Loan Agreement and the other Loan Documents as are delegated to
      the Administrative Agent by the terms hereof or thereof, together with
      such powers as are reasonably incidental thereto;

            (g) such assignee agrees that it will perform in accordance with
      their terms all of the obligations that by the terms of this Loan
      Agreement are required to be performed by it as a Lender; and

            (h) such assignee represents and warrants that it is legally
      authorized to enter into such Assignment and Acceptance.

            13.3.3 Register. The Administrative Agent shall maintain a copy of
      each Assignment and Acceptance delivered to it and a register or similar
      list (the "Register") for the recordation of the names and addresses of
      the Lenders and the Commitment Percentage of, and principal amount of the
      Loan owing to the Lenders from time to time. The entries in the Register
      shall be conclusive, in the absence of manifest error, and the

                                      -57-
<PAGE>
      Borrower, the Administrative Agent and the Lenders may treat each person
      whose name is recorded in the Register as a Lender hereunder for all
      purposes of this Loan Agreement. The Register shall be available for
      inspection by the Borrower and the Lenders at any reasonable time and from
      time to time upon reasonable prior notice. Upon each such recordation, the
      assigning Lender agrees to pay to the Administrative Agent a registration
      fee in the sum of $2,500.00.

            13.3.4 New Notes. Upon its receipt of an Assignment and Acceptance
      executed by the parties to such assignment, together with each Note
      subject to such assignment, the Administrative Agent shall (a) record the
      information contained therein in the Register, and (b) give prompt notice
      thereof to the Borrower and the Lenders (other than the assigning Lender).
      Within ten (10) Business Days after receipt of such notice, the Borrower,
      at no cost and expense to the Borrower, shall execute and deliver to the
      Administrative Agent, in exchange for each surrendered Note, a new Note to
      the order of such Eligible Assignee in an amount equal to the amount
      assumed by such Eligible Assignee pursuant to such Assignment and
      Acceptance and, if the assigning Lender has retained some portion of its
      obligations hereunder, a new Note to the order of the assigning Lender in
      an amount equal to the amount retained by it hereunder. Such new Notes
      shall provide that they are replacements for the surrendered Notes, shall
      be in an aggregate principal amount equal to the aggregate principal
      amount of the surrendered Notes, shall be dated the effective date of such
      Assignment and Acceptance and shall otherwise be in the form of the
      assigned Notes. The surrendered Notes shall be cancelled and returned to
      the Borrower.

            13.3.5 Participations. At no cost to the Borrower, each Lender may
      sell participations to one or more banks or other financial institutions
      in all or a portion of such Lender's rights and obligations under this
      Loan Agreement and the other Loan Documents; provided that (a) each such
      participation shall be in a minimum amount of $5,000,000.00, (b) each
      participant shall meet the requirements of an Eligible Assignee, (c) any
      such sale or participation shall not affect the rights and duties of the
      selling Lender hereunder to the Borrower, and (d) the only rights granted
      to the participant pursuant to such participation arrangements with
      respect to waivers, amendments or modifications of the Loan Documents
      shall be the rights to approve waivers, amendments or modifications that
      would reduce the principal of or the interest rate on any Loans, extend
      the term or increase the amount of the Commitment of such Lender as it
      relates to such participant, reduce the amount of any commitment fees to
      which such participant is entitled or extend any regularly scheduled
      payment date for principal or interest.

            13.3.6 Disclosure. The Borrower agrees that in addition to
      disclosures made in accordance with standard and customary banking
      practices any Lender may disclose information obtained by such Lender
      pursuant to this Loan Agreement to assignees or participants and potential
      assignees or participants hereunder; provided that such assignees or
      participants or potential assignees or participants shall agree (a) to
      treat in confidence such information unless such information otherwise
      becomes public knowledge, (b) not to disclose such information to a third
      party, except as required by law or legal process and (c) not to make use
      of such information for purposes of transactions unrelated to such
      contemplated assignment or participation.

            13.3.7 Miscellaneous Assignment Provisions. Any assigning Lender
      shall retain its rights to be indemnified pursuant to Section 7.17 with
      respect to any claims or actions arising prior to the date of such
      assignment. If any assignee Lender is not incorporated under the laws of
      the United States of America or any state thereof, it shall, prior to the
      date on which any interest or fees are payable hereunder or under any of
      the

                                      -58-
<PAGE>
      other Loan Documents for its account, deliver to the Borrower and the
      Administrative Agent certification as to its exemption from deduction or
      withholding of any United States federal income taxes. Anything contained
      in this Section 13.3 to the contrary notwithstanding, any Lender may at
      any time (i) pledge all or any portion of its interest and rights under
      this Loan Agreement (including all or any portion of its Notes) to any of
      the twelve Federal Reserve Banks organized under Section 4 of the Federal
      Reserve Act, 12 U.S.C. Section 341 or (ii) assign all or any portion of
      its interest and rights under this Loan Agreement to a Lender Affiliate.
      No such pledge or the enforcement thereof shall release the pledgor Lender
      from its obligations hereunder or under any of the other Loan Documents.

            13.3.8 Assignment by Borrower. The Borrower shall not assign or
      transfer any of its rights or obligations under any of the Loan Documents
      without the prior written consent of each of the Lenders.

      13.4 Administrative Matters.

            13.4.1 Amendment, Waiver, Consent, Etc. Except as otherwise provided
      herein or as to any term or provision hereof which provides for the
      consent or approval of the Administrative Agent, no term or provision of
      this Loan Agreement or any other Loan Document may be changed, waived,
      discharged or terminated, nor may any consent required or permitted by
      this Loan Agreement or any other Loan Document be given, unless such
      change, waiver, discharge, termination or consent receives the written
      approval of the Required Lenders.

      Notwithstanding the foregoing, the unanimous written approval of all the
Lenders (other than a Defaulting Lender) shall be required with respect to any
proposed amendment, waiver, discharge, termination, or consent which:

            (i) has the effect of (a) extending the final scheduled maturity or
      the date of any amortization payment of any Loan or Note, (b) reducing the
      rate or extending the time of payment of interest or fees thereon, (c)
      increasing or reducing the principal amount thereof, or (d) otherwise
      postponing or forgiving any indebtedness thereunder,

            (ii) releases or discharges any material portion of the Collateral
      other than in accordance with the express provisions of the Loan
      Documents,

            (iii) amends, modifies or waives any provisions of this Section
      13.4,

            (iv) amends any of the Financial Covenants,

            (v) reduces the percentage specified in the definition of Required
      Lenders,

            (vi) except as otherwise provided in the Loan Agreement, changes the
      amount of any Lender's Commitment or Commitment Percentage, or

            (vii) releases or waives any guaranty of the Obligations or
      indemnifications provided in the Loan Documents;

and provided, further, that without the consent of the Administrative Agent, no
such action shall amend, modify or waive any provision of this Article or any
other provision of any Loan Document which relates to the rights or obligations
of the Administrative Agent.

                                      -59-
<PAGE>
            13.4.2 Deemed Consent or Approval. With respect to any requested
      amendment, waiver, consent or other action which requires the approval of
      the Required Lenders or all of the Lenders, as the case may be, in
      accordance with the terms of this Loan Agreement, or if the Administrative
      Agent is required hereunder to seek, or desires to seek, the approval of
      the Required Lenders or all of the Lenders, as the case may be, prior to
      undertaking a particular action or course of conduct, the Administrative
      Agent in each such case shall provide each Lender with written notice of
      any such request for amendment, waiver or consent or any other requested
      or proposed action or course of conduct, accompanied by such detailed
      background information and explanations as may be reasonably necessary to
      determine whether to approve or disapprove such amendment, waiver, consent
      or other action or course of conduct. The Administrative Agent may (but
      shall not be required to) include in any such notice, printed in capital
      letters or boldface type, a legend substantially to the following effect:

      "THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN
      TEN (10) BUSINESS DAYS FROM THE RECEIPT OF THIS COMMUNICATION SHALL
      CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE ACTION REQUESTED BY
      THE BORROWER OR THE COURSE OF CONDUCT PROPOSED BY THE ADMINISTRATIVE AGENT
      AND RECITED ABOVE,"

and if the foregoing legend is included by the Administrative Agent in its
communication, a Lender shall be deemed to have approved or consented to such
action or course of conduct for all purposes hereunder if such Lender fails to
object to such action or course ( of conduct by written notice to the
Administrative Agent within ten (10) Business Days of such Lender's receipt of
such notice.

      13.5 Arranger. Notwithstanding the provisions of this Agreement or of the
other Loan Documents, the Arranger shall have no powers, rights, duties,
responsibilities or liabilities with respect to this Agreement and the other
Loan Documents. To the extent requested by the Administrative Agent, the
Arranger has coordinated, or will coordinate, the initial syndication of the
Loan and the assignment of interests in the Loan.

      14. CASUALTY AND TAKING.

      14.1 Casualty or Taking; Obligation To Repair. In the event of the
occurrence of an Event of Loss as to any Collateral Property, Borrower shall
give immediate written notice thereof to Administrative Agent and proceed with
reasonable diligence, in full compliance with all Legal Requirements and the
other requirements of the Loan Documents, to repair, restore, rebuild or replace
the affected Collateral Property (each, the "Repair Work").

      14.2 Adjustment of Claims. All insurance claims or condemnation or similar
awards shall be adjusted or settled by Borrower, at Borrower's sole cost and
expense, but subject to Administrative Agent's prior written approval which
approval shall not be unreasonably withheld; provided that (i) the
Administrative Agent shall have the right to participate in any adjustment or
settlement with respect to which the Net Proceeds in the aggregate are equal to
or greater than Five Hundred Thousand Dollars ($500,000.00) and (ii) if any
Default exists under any of the Loan Documents, Administrative Agent shall have
the right to adjust, settle, and compromise such claims without the approval of
Borrower.

      14.3 Payment and Application of Insurance Proceeds and Condemnation
Awards.

            14.3.1 All Net Proceeds shall be paid to Administrative Agent, on
      behalf of the

                                      -60-
<PAGE>
      Lenders, and except as otherwise provided for herein, at Administrative
      Agent's option, be applied to Borrower's Obligations or released, in whole
      or in part, to pay for the actual cost of repair, restoration, rebuilding
      or replacement (collectively, "Cost To Repair"). If any Net Proceeds are
      received directly by any Loan Party, such Loan Party shall hold such Net
      Proceeds in trust for the Administrative Agent and shall promptly deliver
      such Net Proceeds in kind to the Administrative Agent.

            14.3.2 Notwithstanding the terms and provisions hereof, if the Net
      Proceeds do not exceed Five Hundred Thousand Dollars ($500,000.00) and the
      Insurance/Taking Release Conditions have been satisfied in a manner
      reasonably acceptable to the Administrative Agent, Administrative Agent
      shall release so much of the Net Proceeds as may be required to pay for
      the actual Cost to Repair and the applicable Loan Party shall commence and
      diligently prosecute to completion, the Repair Work relative to the
      subject Collateral Property.

            14.3.3 Notwithstanding the terms and provisions hereof, if either
      (i) the Net Proceeds are equal to or greater than Five Hundred Thousand
      Dollars ($500,000.00) or (ii) the Net Proceeds do not exceed Five Hundred
      Thousand Dollars ($500,000.00), but the Insurance/Taking Release
      Conditions have not been satisfied with respect to such Event of Loss, the
      Administrative Agent shall release so much of the Net Proceeds as may be
      required to pay for the actual Cost To Repair in accordance the
      limitations and procedures set forth in Section 14.4, if the following
      conditions are satisfied in a manner acceptable to the Administrative
      Agent:

                  (i) no Default or Event of Default shall have occurred and be
            continuing under the Loan Documents;

                  (ii) in Administrative Agent's good faith judgment such Net
            Proceeds together with any additional funds as may be deposited with
            and pledged to Administrative Agent, on behalf of the Lenders, are
            sufficient to pay for the Cost To Repair. In order to make this
            determination, Administrative Agent shall be furnished by the
            Borrower with an estimate of the Cost to Repair accompanied by an
            independent architect's certification as to such Cost to Repair and
            appropriate plans and specifications for the Repair Work;

                  (iii) the subject Event of Loss was not a Major Event of Loss;

                  (iv) Administrative Agent in the exercise of its reasonable
            discretion, shall have determined that all rents from Leases of the
            subject Collateral Property which are to abate pursuant to their
            terms are to be payable to the Borrowing Base Property Owner,
            subject to deductibles, if any, permitted pursuant to the insurance
            policies to be maintained pursuant to this Agreement, from Rent Loss
            Proceeds;

                  (v) in Administrative Agent's good faith judgment, the Repair
            Work can reasonably be completed on or before the earliest to occur
            of (A) the earliest date required for such completion under the
            terms of any Major Lease and (B) such time as may be required under
            applicable Legal Requirements; and

                  (vi) each tenant under a Major Lease which might otherwise
            have a right to terminate its lease on account of such Event of Loss
            shall have waived its right to so terminate conditioned only upon
            the Repair Work being completed within a reasonable period of time
            acceptable to Administrative Agent.

                                      -61-
<PAGE>
      14.4 Conditions To Release of Insurance Proceeds. If Administrative Agent
elects or is required to release insurance proceeds, Administrative Agent may
impose reasonable conditions on such release which shall include, but not be
limited to, the following:

            14.4.1 Prior written approval by Administrative Agent, which
      approval shall not be unreasonably withheld or delayed of plans,
      specifications, cost estimates, contracts and bonds for the Repair Work;

            14.4.2 Waivers of lien, architect's certificates, contractor's sworn
      statements and other evidence of costs, payments and completion as
      Administrative Agent may reasonably require;

            14.4.3 The funds shall be released upon final completion of the
      Repair Work, unless Borrower requests earlier funding, in which event
      partial monthly disbursements equal to (i) 90% of the costs of the work
      completed prior to the certification by the applicable Lender's Consultant
      and if there is no Lender's Consultant, an independent architect retained
      by the Borrower, that the Repair Work is 50% completed, and thereafter
      (ii) 100% of the costs of the work completed thereafter (such that the
      effective retainage upon completion of the Repair Work would be 5%), and
      then (iii) upon final completion of the Repair Work as certified by such
      Lender's Consultant or independent architect, and the receipt by
      Administrative Agent of satisfactory evidence of payment and release of
      all liens, the balance of the funds shall be released;

            14.4.4 Determination by Administrative Agent that the undisbursed
      balance of such Net Proceeds on deposit with Administrative Agent,
      together with additional funds deposited for the purpose, shall be at
      least sufficient to pay for the remaining Cost To Repair, free and clear
      of all liens and claims for lien;

            14.4.5 All work to comply with the standards, quality of
      construction and Legal Requirements applicable to the construction of the
      Improvements; and

            14.4.6 The absence of any Default or Event of Default under any Loan
      Documents.

      14.5 The Administrative Agent shall have the right to hire, at the cost
and expense of the Borrower, a Lender's Consultant to assist the Administrative
Agent in the determination of the satisfaction of the conditions provided for
herein for the release of the Net Proceeds to pay the Costs to Repair and to
periodically inspect the status of the construction of any Repair Work.

      14.6 In the event that the Administrative Agent makes any Net Proceeds
available to any Loan Party for the payment of Costs to Repair as provided for
herein, upon the completion of the Repair Work as certified by the applicable
Lender's Consultant and if there is no Lender's Consultant, an independent
architect retained by the Borrower, and receipt by Administrative Agent of
satisfactory evidence of payment and release of all liens, any excess Net
Proceeds still held by the Administrative Agent shall be remitted by the
Administrative Agent to the Borrower provided that no Event of Default shall
have occurred and be continuing;

      14.7 The terms and provisions of this Article 14 shall be subject to the
terms and provisions of any Lease as to which the Administrative Agent has
agreed otherwise with respect to the use and disbursement of Net Proceeds in any
agreement entered into between the tenant under such Lease and the
Administrative Agent.

                                     -62-
<PAGE>
      14.8 The Administrative Agent acknowledges that provided that no Event of
Default has occurred and is continuing, all Rent Loss Proceeds shall be payable
to the Borrower or the applicable Loan Party.

      15. GENERAL PROVISIONS.

      15.1 Notices. Any notice or other communication in connection with this
Loan Agreement, the Note, the Security Documents, or any of the other Loan
Documents, shall be in writing, and (i) deposited in the United States Mail,
postage prepaid, by registered or certified mail, or (ii) hand delivered by any
commercially recognized courier service or overnight delivery service such as
Federal Express, or (iii) sent by facsimile transmission if a FAX Number is
designated below addressed:

If to Borrower:

              Kramont Operating Partnership, L.P.
              580 W. Germantown Pike
              Plymouth Meeting, Pennsylvania 19462
              Attention: Louis P. Meshon, Sr., President
              FAX Number: (610) 834-8110

with copies by regular mail or such hand delivery or facsimile transmission to:

              Fox, Rothschild, O'Brien & Frankel LLP
              2000 Market Street, 10th Floor
              Philadelphia, Pennsylvania 19103
              Attention: Mark Morris, Esquire
              FAX Number: (215) 299-2150

If to Administrative Agent or as Lender:

              Fleet National Bank
              100 Federal Street
              Boston, Massachusetts 02110
              Attention: Michael Tsandilas
              FAX Number: (617) 434-6384

              And

              Attention: Commercial Real Estate Loan
                               Administration Manager,

with copies by regular mail or such hand delivery or facsimile transmission to:

                                      -63-
<PAGE>
              Riemer & Braunstein LLP
              Three Center Plaza
              Boston, Massachusetts 02108
              Attention: Steven J. Weinstein, Esquire
              FAX Number: (617) 880-3456

If to Lenders:

              Wilmington Trust of Pennsylvania
              Suite 6
              795 E. Lancaster Avenue
              Villanova, Pennsylvania 19085
              Attention: J. Christopher Eckardt
              FAX Number: (610) 520-1426

              Wachovia Bank, National Association
              123 South Broad Street, 15th Floor
              Philadelphia, Pennsylvania 19109
              Attention: Commercial Real Estate Department Head
              FAX Number: (215) 670-6530

              Compass Bank
              15 So. 20th Street, 15th Floor
              Birmingham, Alabama 35233
              Attention: Jo Paley
              FAX Number: (205) 297-7994

              Firstrust Bank
              15 East Ridge Pike
              Conshohocken, Pennsylvania 19428
              Attention: Gary S. Kinn
              FAX Number: (610) 238-5065

and to such addresses as set forth in the Assignment and Acceptance.

Any such addressee may change its address for such notices to such other address
in the United States as such addressee shall have specified by written notice
given as set forth above. All periods of notice shall be measured from the
deemed date of delivery.

      A notice shall be deemed to have been given, delivered and received for
the purposes of all Loan Documents upon the earliest of: (i) if sent by such
certified or registered mail, on the third Business Day following the date of
postmark, or (ii) if hand delivered at the specified address by such courier or
overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (iii) if so mailed, on the date
of actual receipt as evidenced by the return receipt, or (iv) if so delivered,
upon actual receipt, or (v) if facsimile transmission is a permitted means of
giving notice, upon receipt as evidenced by confirmation.

                                     -64-
<PAGE>
      15.2 Limitations on Assignment. Borrower may not assign this Agreement or
the monies due thereunder without the prior written consent of the Required
Lenders in each instance, but in such event Lenders may nevertheless at its
option make the Loan under this Agreement to Borrower or to those who succeed to
the title of Borrower and all sums so advanced by Lenders shall be deemed a Loan
Advance under this Agreement and not to be modifications thereof and shall be
secured by all of the Collateral given at any time in connection herewith.

      15.3 Further Assurances. Borrower shall upon request from Administrative
Agent from time to time execute, seal, acknowledge and deliver such further
instruments or documents which Administrative Agent may reasonably require to
better perfect and confirm its rights and remedies hereunder, under the Note,
under the Security Documents and under each of the other Loan Documents.

      15.4 Payments.

            (i) All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Administrative Agent or the Lenders (to
the extent reimbursable to the Lenders in accordance with the terms hereof)
(excluding principal and interest), then to accrued interest, and the balance on
account of outstanding principal; provided, however, that after an Event of
Default, payments will be applied to the obligations of Borrower to
Administrative Agent and the Lenders as Administrative Agent determines in its
sole discretion.

            (ii) Any payments required by this Agreement, the Note or any of the
other Loan Documents, or any other instruments or agreements executed in
connection herewith or therewith, including, without limitation, may (but not
before the due date thereof) be deducted by each Lender from the amount, if any,
not already advanced, and the same shall be deemed to be a Loan Advance, or may
be deducted from any Loan Advance due hereunder. Any attorneys' fees, appraisal
charge, inspection fee, or any other expense payable by Borrower as herein
provided for, or incurred in connection with the drafting of the Loan Documents
and other instruments evidencing or securing the Obligations and all other Loan
Documents may be likewise deducted from the amounts, if any, not already
advanced or from any Loan Advance payable to Borrower and, in any event, charged
as a Loan Advance hereunder.

      15.5 Parties Bound. The provisions of this Agreement and of each of the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and the Administrative Agent and each of the Lenders and their respective
successors and assigns, except as otherwise prohibited by this Agreement or any
of the other Loan Documents.

      This Agreement is a contract by and among Borrower, the Administrative
Agent and each of the Lenders for their mutual benefit, and no third person
shall have any right, claim or interest against either Administrative Agent, any
of the Lenders or Borrower by virtue of any provision hereof.

      15.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.

            15.6.1 Substantial Relationship. It is understood and agreed that
      all of the Loan Documents were negotiated, executed and delivered in The
      Commonwealth of Massachusetts, which Commonwealth the parties agree has a
      substantial relationship to the parties and to the underlying transactions
      embodied by the Loan Documents.

            15.6.2 Place of Delivery. Borrower agrees to furnish to
      Administrative Agent at the Administrative Agent's office in Boston,
      Massachusetts all further instruments,

                                      -65-
<PAGE>
      certifications and documents to be furnished hereunder.

            15.6.3 Governing Law. This Agreement, except as otherwise provided
      in Section 15.6.4, and each of the other Loan Documents shall in all
      respects be governed, construed, applied and enforced in accordance with
      the internal laws of the Commonwealth of Massachusetts without regard to
      principles of conflicts of law.

            15.6.4 Exceptions. Notwithstanding the foregoing choice of law:

                  (i) The procedures governing the enforcement by Administrative
            Agent of its foreclosure and other remedies under the Security
            Documents and under the other Loan Documents with respect to each
            Collateral Property shall be governed by the laws of the State in
            which such Collateral Property is located;

                  (ii) Administrative Agent shall comply with applicable law of
            such State to the extent required by the law of such jurisdiction in
            connection with the foreclosure of the security interests and liens
            created under the Security Documents and the other Loan Documents
            with respect to each Collateral Property or other assets situated in
            such State; and

                  (iii) provisions of Federal law and the law of such State
            shall apply in defining the terms Hazardous Materials, Environmental
            Legal Requirements and Legal Requirements applicable to each
            Collateral Property as such terms are used in this Loan Agreement,
            the Environmental Indemnity and the other Loan Documents.

      Nothing contained herein or any other provisions of the Loan Documents
      shall be construed to provide that the substantive laws of any other State
      shall apply to any parties, rights and obligations under any of the Loan
      Documents, which, except as expressly provided in clauses (i), (ii) and
      (iii) of this Section 15.6.4., are and shall continue to be governed by
      the substantive law of Commonwealth of Massachusetts, except as set forth
      in clauses (i), (ii) and (iii) of this Section 15.6.4. In addition, the
      fact that portions of the Loan Documents may include provisions drafted to
      conform to the law of any other State is not intended, nor shall it be
      deemed, in any way, to derogate the parties, choice of law as set forth or
      referred to in this Loan Agreement or in the other Loan Documents. The
      parties further agree that the Administrative Agent may enforce its rights
      under the Loan Documents including, but not limited to, its rights to sue
      the Borrower or to collect any outstanding indebtedness in accordance with
      applicable law.

            15.6.5 Consent to Jurisdiction. Borrower hereby consents to personal
      jurisdiction in any state or Federal court located within The Commonwealth
      of Massachusetts.

            15.6.6 JURY TRIAL WAIVER. BORROWER, ADMINISTRATIVE AGENT, AND EACH
      OF THE LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
      WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
      THIS LOAN AGREEMENT, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN
      AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
      CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
      STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
      WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
      OR ACTIONS OF ADMINISTRATIVE AGENT OR ANY LENDER RELATING TO THE

                                -66-
<PAGE>
      ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE
      THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
      ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
      PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM
      OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
      CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT
      OR ATTORNEY OF ADMINISTRATIVE AGENT OR ANY LENDER HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT ADMINISTRATIVE AGENT OR ANY LENDER WOULD NOT,
      IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
      WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER, ADMINISTRATIVE
      AGENT, AND EACH OF THE LENDERS TO ENTER INTO THE TRANSACTIONS CONTEMPLATED
      HEREBY.

      15.7 Survival. All representations, warranties, covenants and agreements
of Borrower, or a Loan Party, herein or in any other Loan Document, or in any
notice, certificate, or other paper delivered by or on behalf of Borrower or a
Loan Party pursuant hereto are significant and shall be deemed to have been
relied upon by Administrative Agent and each of the Lenders notwithstanding any
investigation made by Administrative Agent or any of the Lenders or on its
behalf and shall survive the delivery of the Loan Documents and the making of
the Loan pursuant thereto. No review or approval by Administrative Agent or the
Lenders or any of their representatives, of any opinion letters, certificates by
professionals or other item of any nature shall relieve Borrower or anyone else
of any of the obligations, warranties or representations made by or on behalf of
Borrower or a Loan Party, or any one or more of them, under any one or more of
the Loan Documents.

      15.8 Cumulative Rights. All of the rights of Administrative Agent and the
Lenders hereunder and under each of the other Loan Documents and any other
agreement now or hereafter executed in connection herewith or therewith, shall
be cumulative and may be exercised singly, together, or in such combination as
Administrative Agent may determine in its sole good faith judgment.

      15.9 Claims Against Administrative Agent or Lenders.

            15.9.1 Borrower Must Notify. The Administrative Agent and each of
      the Lenders shall not be in default under this Agreement, or under any
      other Loan Document, unless a written notice specifically setting forth
      the claim of Borrower shall have been given to Administrative Agent and
      each of the Lenders within thirty (30) days after Borrower first had
      actual knowledge or actual notice of the occurrence of the event which
      Borrower alleges gave rise to such claim and Administrative Agent or any
      of the Lenders does not remedy or cure the default, if any there be, with
      reasonable promptness thereafter. Such actual knowledge or actual notice
      shall refer to what was actually known by, or expressed in a written
      notification furnished to, any of the persons or officials referred to in
      Exhibit D as Authorized Representatives.

            15.9.2 Remedies. If it is determined by the final order of a court
      of competent jurisdiction, which is not subject to further appeal, that
      Administrative Agent or any of the Lenders has breached any of its
      obligations under the Loan Documents and has not remedied or cured the
      same with reasonable promptness following notice thereof, Administrative
      Agent's and each of the Lenders' responsibilities shall be limited to: (i)

                                      -67-
<PAGE>
where the breach consists of the failure to grant consent or give approval in
violation of the terms and requirements of a Loan Document, the obligation to
grant such consent or give such approval and to pay Borrower's reasonable costs
and expenses including, without limitation, reasonable attorneys' fees and
disbursements in connection with such court proceedings; and (ii) the case of
any such failure to grant such consent or give such approval, or in the case of
any other such default by Administrative Agent or any of the Lenders, where it
is also so determined that Administrative Agent or any of the Lenders acted in
gross negligence or bad faith, the payment of any actual, direct, compensatory
damages sustained by Borrower as a result thereof plus Borrower's reasonable
costs and expenses, including, without limitation, reasonable attorneys' fees
and disbursements in connection with such court proceedings.

            15.9.3 Limitations. In no event, however, shall Administrative Agent
      and each of the Lenders be liable to Borrower or to any Loan Party or
      anyone else for other damages such as, but not limited to, indirect,
      speculative or punitive damages whatever the nature of the breach by
      Administrative Agent or any of the Lenders of its obligations under this
      Loan Agreement or under any of the other Loan Documents. In no event shall
      Administrative Agent or any of the Lenders be liable to Borrower or to any
      Loan Party or anyone else unless a written notice specifically setting
      forth the claim of Borrower shall have been given to Administrative Agent
      and each of the Lenders within the time period specified above.

      15.10 Regarding Consents. Except to the extent expressly provided herein,
any and all consents to be made hereunder by the Administrative Agent, Required
Lenders, or Lenders shall be in the discretion of the Party to whom consent
rights are given hereunder.

      15.11 Obligations Absolute. Except to the extent prohibited by applicable
law which cannot be waived, the Obligations of Borrower and the obligations of
the Guarantor and the other Loan Parties under the Loan Documents shall be joint
and several, absolute, unconditional and irrevocable and shall be paid strictly
in accordance with the terms of the Loan Documents under all circumstances
whatsoever, including, without limitation, the existence of any claim, set off,
defense or other right which Borrower or any Loan Party may have at any time
against Administrative Agent or any of the Lenders whether in connection with
the Loan or any unrelated transaction.

      15.12 Table of Contents, Title and Headings. Any Table of Contents, the
titles and the headings of sections are not parts of this Loan Agreement or any
other Loan Document and shall not be deemed to affect the meaning or
construction of any of its or their provisions.

      15.13 Counterparts. This Loan Agreement and each other Loan Document may
be executed in several counterparts, each of which when executed and delivered
is an original, but all of which together shall constitute one instrument. In
making proof of this agreement, it shall not be necessary to produce or account
for more than one such counterpart which is executed by the party against whom
enforcement of such loan agreement is sought.

      15.14 Satisfaction of Term Sheet. The Loan being made pursuant to the
terms hereof and of the other Loan Documents is being made in satisfaction of
Administrative Agent's and each of the Lenders' obligations under the Term Sheet
dated October 2, 2002. The terms, provisions and conditions of this Agreement
and the other Loan Documents supersede the provisions of the Term Sheet.

      15.15 Time Of the Essence. Time is of the essence of each provision of
this Agreement and each other Loan Document.

                                      -68-
<PAGE>
      15.16 No Oral Change. This Loan Agreement and each of the other Loan
Documents may only be amended, terminated, extended or otherwise modified by a
writing signed by the party against which enforcement is sought (except no such
writing shall be required for any party which, pursuant to a specific provision
of any Loan Document, is required to be bound by changes without such party's
assent). In no event shall any oral agreements, promises, actions, inactions,
knowledge, course of conduct, course of dealings or the like be effective to
amend, terminate, extend or otherwise modify this Loan Agreement or any of the
other Loan Documents.

      15.17 Monthly Statements. While Administrative Agent may issue invoices or
other statements on a monthly or periodic basis (a "Statement"), it is expressly
acknowledged and agreed that: (i) the failure of Administrative Agent to issue
any Statement on one or more occasions shall not affect Borrower's obligations
to make payments under the Loan Documents as and when due; (ii) the inaccuracy
of any Statement shall not be binding upon Lenders and so Borrower shall always
remain obligated to pay the full amount(s) required under the Loan Documents as
and when due notwithstanding any provision to the contrary contained in any
Statement; (iii) all Statements are issued for information purposes only and
shall never constitute any type of offer, acceptance, modification, or waiver of
the Loan Documents or any of Lenders' rights or remedies thereunder; and (iv) in
no event shall any Statement serve as the basis for, or a component of, any
course of dealing, course of conduct, or trade practice which would modify,
alter, or otherwise affect the express written terms of the Loan Documents.

                                      -69-
<PAGE>
      IN WITNESS WHEREOF this Agreement has been duly executed and delivered as
a sealed instrument at Boston, Massachusetts, as of the date first written
above.

BORROWER:                     KRAMONT OPERATING PARTNERSHIP, L.P.

                              By: Kramont Realty Trust,
                                  Its general partner

                                    By: ____________________________________
                                        Name: Louis P. Meshon, Sr.
                                        Title: President

ADMINISTRATIVE AGENT:         FLEET NATIONAL BANK

                                By:______________________________
                                   Name:
                                   Title: Vice-President

LENDER:                       FLEET NATIONAL BANK

                                By:______________________________
                                   Name:
                                   Title: Vice-President

LENDER:                       WILMINGTON TRUST OF PENNSYLVANIA

                                 By:______________________________
                                    Name: J. Christopher Eckardt
                                    Title: Vice President

                              LENDER: WACHOVIA BANK, NATIONAL ASSOCIATION

                                By: ______________________________
                                    Name: Terry W. Martin
                                    Title: Senior Vice President,
                                           Senior Portfolio Manager

LENDER:                       COMPASS BANK

                                By: ______________________________
                                    Name: Johanna Duke Paley
                                    Title: Senior Vice President

                                      S-1
<PAGE>
LENDER:                       FIRSTRUST BANK

                                By: ______________________________
                                    Name: Gary S. Kinn
                                    Title: Vice President

                                     S-2
<PAGE>
                                   EXHIBITS:

<TABLE>
<CAPTION>
                                                                                   Section
                                                                                   -------
                                                                                 Reference
                                                                                 ---------
                                                                                    Number
                                                                                    ------
<S>                                                                      <C>
Exhibit A - Definitions ...........................................                    1.1
Exhibit B-1 - Requisition; Availability Certificate ...............                  2.1.2
Exhibit B-2 - Notice of Letter of Credit ..........................                  2.7.1
Exhibit C - Note ..................................................                    3.2
Exhibit D - Authorized Representatives ............................                      4
Exhibit E - Required Property, Hazard and Other Insurance .........      5.1.12, 6.16, 7.5
Exhibit F - Ownership Interests and Taxpayer Identification Numbers                    6.4
Exhibit G - Compliance Certificate ................................                  7.2.5
Exhibit H - Form of Assignment and Acceptance .....................                 13.3.1
Exhibit I - Lenders' Commitment ...................................              Exhibit A
Exhibit J - Borrowing Base Properties .............................              Exhibit A
</TABLE>

                                    E-1
<PAGE>
                           EXHIBIT A TO LOAN AGREEMENT

                                   DEFINITIONS

Additional Collateral Request as defined in Section 3.3.

Administrative Agent.  Fleet National Bank, acting as agent for the Lenders.

Adjusted Appraised Value. With respect to any Collateral Property that is the
subject of an Appraisal, the appraised value set forth in such Appraisal, as
such may be reviewed and adjusted by the Administrative Agent.

Adjusted Capitalized Value. With respect to any Borrowing Base Property, (i)
which is a Stabilized Asset, based upon the most recent two (2) fiscal quarters
Adjusted Net Operating Income for such Borrowing Base Property, annualized,
divided by at a nine and one-half percent (9.5%) capitalization rate and (ii)
which is a Non-Stabilized Asset, undepreciated Book Value (as reported on the
financial statements for the subject Borrowing Base Property Owner).

Adjusted LIBO Rate. The Term "Adjusted LIBO Rate" means for each Interest Period
the rate per annum obtained by dividing (i) the LIBO Rate for such Interest
Period, by (ii) a percentage equal to one hundred percent (100%) minus the
maximum reserve percentage applicable during such Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System for determining the maximum reserve requirements (including,
without limitation, any basic, supplemental, marginal and emergency reserve
requirements) for Administrative Agent (or of any subsequent holder of a Note
which is subject to such reserve requirements) in respect of liabilities or
assets consisting of or including Eurocurrency liabilities (as such term is
defined in Regulation D of the Board of Governors of the Federal Reserve System)
having a term equal to the Interest Period. Adjusted Net Operating Income: For
any period of determination, for any Real Estate Property (i) Net Operating
Income less (ii) management fees (calculated as the greater of either 3% of
total revenue or actual management expenses incurred), less (iii) allowances for
capital expenditures in the amount of $.25 per rentable square foot of completed
improvements.

Affiliate shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

Aggregate Borrowing Base Value shall mean, as determined by the Administrative
Agent as of each Calculation Date, the aggregate of the Borrowing Base Values
for all Borrowing Base Properties; provided, however, to the extent that the
Borrowing Base Value of any single Borrowing Base Property represents more than
twenty (20%) percent of the Aggregate Borrowing Base Value, the Borrowing Base
Value of said Borrowing Base Property for purposes of the calculation of the
Aggregate Borrowing Base Value shall be limited to twenty (20%) percent of the
Aggregate Borrowing Base Value.

Agreement as defined in the Preamble.

Applicable Margin shall be determined based upon the then applicable Leverage
Ratio, as

                                     EA-1
<PAGE>
provided below, as follows.

<TABLE>
<CAPTION>
              Level         Leverage       Applicable    Applicable
                              Ratio        Margin for    Margin for
                                            LIBO Rate     Variable
                                              Loans      Rate Loans
            ------------    ------------   ----------    ---------------
<S>                         <C>            <C>           <C>
                1           Leverage       175 basis     0 basis
                            Ratio<=50%     points        points

                2           Leverage       200 basis     0 basis
                            Ratio>50% to   points        points
                            <=60%

                3           Leverage       225 basis     25 basis
                            Ratio >60%     points        points
                            to <65%
</TABLE>

      The Applicable Margin shall remain in effect until the Administrative
Agent has provided the Borrower with written notice (in the manner provided in
the Loan Agreement) that the Applicable Margin has been modified due to a change
in the Leverage Ratio as of any Calculation Date. The initial Applicable Margin
hereunder shall be established at Level 3.

Appraisal shall mean an MAI appraisal in form and substance acceptable to the
Required Lenders and prepared by an appraiser acceptable to the Administrative
Agent.

Arranger as defined in the Preamble.

Assignment and Acceptance as defined in Section 13.3.1.

Authorized Representatives as defined in Section 4 and listed on Exhibit D.

Availability shall mean, from time to time, an amount determined by the
Administrative Agent as of each Calculation Date equal to the lesser of the
following:

      (a) sixty-five percent (65%) of the Aggregate Borrowing Base Value of the
Borrowing Base Properties as of such Calculation Date; or

      (b) the Implied Loan Amount.

Banking Day. The term "Banking Day" means a day on which banks are not required
or authorized by law to close in the city in which Administrative Agent's
principal office is situated.

Book Value shall mean the value of such property or asset, as determined in
accordance with GAAP.

Borrower as defined in the Preamble.

Borrower GP shall mean KRT.

Borrower Subsidiaries shall mean, individually and collectively, all of the
Subsidiaries of the Borrower and/or KRT, including, without limitation, each
Loan Party.

                                     EA-2
<PAGE>
Borrowing Base Property and Borrowing Base Properties. The Individual Properties
initially listed in Exhibit J hereto, plus any Individual Property which
subsequently becomes a Borrowing Base Property in accordance with Section 3.5,
hereof, less any Borrowing Base Property which is determined by the
Administrative Agent to no longer be a Borrowing Base Property in accordance
with Section 3.4, hereof, less any Borrowing Base Property which is released as
Collateral in accordance with Section 3.3, hereof.

Borrowing Base Property Requirements.

      (a) The Individual Property satisfies all Eligibility Criteria.

      (b) The Borrower (or applicable Loan Party) has executed all Security
Documents in connection with such Individual Property, including, without
limitation, the Security Documents set forth in Sections 3.1.1 through and
including Section 3.1.6, hereof.

      (c) The Individual Property is owned by a Wholly-Owned Subsidiary of the
Borrower, KRT, or, to the extent a Wholly-Owned Subsidiary of Montgomery as of
the date hereof, Montgomery.

      (d) Administrative Agent shall have received and completed a satisfactory
review of such due diligence as the Administrative Agent may require with
respect to any Individual Property, including, without limitation:

                  (i) (1) A mortgagee's title insurance policy naming the
            Administrative Agent, on behalf of the Lenders, as the first
            mortgagee, which meets Administrative Agent's title insurance
            requirements previously furnished to Borrower to the reasonable
            satisfaction of Administrative Agent and Administrative Agent's
            counsel; and (2) such other evidence of the perfection of its
            security interests as Administrative Agent and Administrative
            Agent's counsel may reasonably require;

                  (ii) A current, on site instrument survey of the Individual
            Property containing a certification thereon, or on a separate
            surveyor's certificate, of a land surveyor acceptable to
            Administrative Agent which meets Administrative Agent's survey
            requirements previously furnished to Borrower to the reasonable
            satisfaction of Administrative Agent and its counsel;

                  (iii) If the Individual Property is ground leased by the
            Borrowing Base Property Owner, a copy of the Ground Lease. Further,
            in the event that the ground lessor of the Individual Property is
            (i) an Affiliate of any Loan Party and the fee interest has not been
            separately mortgaged by such Affiliate, the said ground lessor shall
            join in the Mortgage to include within the Collateral the fee
            interest in the said Individual Property or (ii) not an Affiliate of
            any Loan Party, or, if an Affiliate of any Loan Party and the fee
            interest has been separately mortgaged by such Affiliate, the
            Administrative Agent shall receive an estoppel certificate from the
            ground lessor in form and substance reasonably acceptable to the
            Administrative Agent.

                  (iv) The Borrower has utilized reasonable efforts to obtain
            executed estoppel certificates and subordination, nondisturbance and
            attornment agreements from tenants under Major Leases;

                  (v) Copies of all Major Leases and, to the extent required by
            the

                                      EA-3
<PAGE>
            Administrative Agent, copies of other Leases;

                  (vi) A copy of the property management agreement with respect
            to the Individual Property, if any, and, if requested by the
            Administrative Agent, a consent by the property manager to the
            collateral assignment of the property management agreement to the
            Administrative Agent, on behalf of the Lenders;

                  (vii) A copy of any reciprocal easement agreements with
            respect to the Individual Property and, only if there are material
            financial obligations of a recurring and defined nature payable by
            the owner of the Borrowing Base Property thereunder, if requested by
            the Administrative Agent, an Estoppel Certificate from all of the
            parties thereto in form and substance acceptable to the
            Administrative Agent;

                  (viii) Evidence of existence of all Licenses and Permits to
            evidence compliance with Legal Requirements with respect to the use
            and operation of the Individual Property;

                  (ix) Evidence of insurance complying with the requirements of
            Exhibit E, hereto;

                  (x) A current Appraisal;

                  (xi) A current environmental Phase I Site Assessment performed
            by a firm acceptable to the Administrative Agent, which indicates
            the property is free from recognized hazardous materials or
            substances apparent from the inspection, or affected by such
            environmental matters as may be acceptable to the Administrative
            Agent in its sole and absolute discretion;

                  (xii) A current structural report relative to any improvements
            on the Individual Property; and

                  (xiii) Such other real estate documents reasonably deemed
            appropriate for commercially reasonable underwriting by the
            Administrative Agent in respect of the Borrowing Base Property.

Borrowing Base Property Owner and Borrowing Base Property Owners shall mean,
from time to time, the Wholly-Owned Subsidiary or Subsidiaries of the Borrower
or KRT which is or are the owner or owners of the fee simple interest in, or the
ground lessee of, a Collateral Property or the Collateral Properties.

Borrowing Base Value shall mean, as determined by the Administrative Agent as of
each Calculation Date, (i) for each Borrowing Base Property which is a
Stabilized Asset, the lesser of the (x) Adjusted Appraised Value of such
Borrowing Base Property, as determined by an Appraisal completed within the
prior six (6) month period, or (y) Adjusted Capitalized Value of such Borrowing
Base Property, or (z) if applicable, the Maximum Property Amount (for any such
Borrowing Base Property as to which there is no such Appraisal, the Borrowing
Base Value thereof shall be the lesser of subsection (i)(y) or (i)(z), above)
and (ii) for each Borrowing Base Property which is a Non-Stabilized Asset, the
lesser of the (x) Adjusted Appraised Value of such Borrowing Base Property, as
determined by the most recent Appraisal of such Borrowing Base Property, or (y)
Adjusted Capitalized Value of such Borrowing Base Property, or (z) if
applicable, the Maximum Property Amount. Notwithstanding the above, for purposes
of determining the Borrowing Base Value, the Borrowing Base Value for any
Borrowing Base

                                     EA-4
<PAGE>
Property as to which an Event of Loss has occurred shall be equal to the lesser
of (1) Adjusted Capitalized Value of such Borrowing Base Property or (2) if
applicable, the Maximum Property Amount, for a period equal to the lesser of (i)
twelve (12) months from the occurrence of the Event of Loss or (ii) the
determination that the subject Borrowing Base Property is not, or ceases to be,
a Restoration Property.

Breakage Fees as defined in Section 2.3.15.

Business Day shall mean: any day of the year on which offices of Administrative
Agent are not required or authorized by law to be closed for business in Boston,
Massachusetts. If any day on which a payment is due is not a Business Day, then
the payment shall be due on the next day following which is a Business Day, and
such extension of time shall be included in computing interest and fees in
connection with such payment. Further, if there is no corresponding day for a
payment in the given calendar month (i.e., there is no "February 30th"), the
payment shall be due on the last Business Day of the calendar month.

Calculation Date shall mean the last day of each calendar quarter commencing
with December 31, 2002.

Calculation Period shall mean the following for each Calculation Date, the two
(2) immediately preceding calendar quarters (inclusive of the applicable
Calculation Date).

Capital Stock shall mean (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including without
limitation, each class or series of common stock and preferred stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all investment units, partnership, membership or other equity interests of such
Person.

Cash Flow Projections shall mean a detailed schedule of all cash Distributions
projected to be made to the Borrower from the Borrower Subsidiaries within the
next one hundred and eighty (180) days, being initially the Cash Flow
Projections to be provided within thirty (30) days of the Closing Date based
upon information then available to the Borrower, and subject to change as shall
be detailed in the respective Officer's Certificate to be provided to the
Administrative Agent as set forth herein.

Change of Control shall mean the occurrence of the occurrence of any of the
following:

      (a) The acquisition by any Person, or "group" (within the meaning of
      Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
      amended) of Persons acting in concert, of beneficial ownership (within the
      meaning of Rule 13d-3 of the Securities and Exchange Commission under the
      Securities Exchange Act of 1934, as amended), directly or indirectly, of
      50% or more of the outstanding shares of voting stock of KRT;

      (b) During any period of twelve (12) consecutive calendar months,
      individuals:

            (1) who were directors of KRT on the first day of such period; or

            (2) whose election or nomination for election to the board of
            directors of KRT was recommended or approved by at least a majority
            of the directors then still in office who were directors of KRT on
            the first day of such period, or whose election or nomination for
            election was so approved,

            shall cease to constitute a majority of the board of directors of
            KRT.

                                     EA-5
<PAGE>
      (c) KRT shall cease to be the sole general partner of Borrower; or

      (d) KRT shall cease to own at least fifty percent (50%) of the beneficial
      ownership interest in the Borrower; or

      (e) The removal or replacement of the general partner or managing member
      of any Borrowing Base Property Owner such that the sole general partner or
      managing member thereof is not Montgomery CV Realty L.P., the Borrower,
      KRT or a Wholly-Owned Subsidiary of the Borrower, Montgomery CV Realty
      L.P. or KRT; or

      (f) With respect to any Borrowing Base Property Owner, the transfer of any
      ownership interest therein such that such Borrowing Base Property Owner is
      not a Wholly-Owned Subsidiary of the Borrower, Montgomery CV Realty L.P.,
      or KRT.

Closing Date as defined in Section 5.1.

Code shall mean the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.

Collateral as defined in Section 5.1.4.

Collateral Property and Collateral Properties shall mean any Borrowing Base
Property or Borrowing Base Properties and other Individual Properties which were
a Borrowing Base Property, were no longer deemed such under Section 3.4.1, and
for which the Release Conditions have not been satisfied, as described in
Section 3.4.3.

Collateral Release Request as defined in Section 3.3.

Combined EBITDA shall mean the sum of (i) the EBITDA for each Consolidated
Kramont Entity and (ii) the Pro Rata share of the EBITDA for each Unconsolidated
Kramont Entity. In determining Combined EBITDA, (1) the excess of equity in
earnings from Unconsolidated Kramont Entities over ordinary cash dividends
actually received from such Unconsolidated Kramont Entities shall be subtracted,
(2) the excess of ordinary cash dividends actually received from such
Unconsolidated Kramont Entities over the equity in earnings from Unconsolidated
Kramont Entities shall be added, and (3) the foregoing shall be calculated
without duplication.

Commitment shall mean, with respect to each Lender, the amount set forth on
Exhibit I hereto as the amount of such Lender's commitment to make advances to
the Borrower, as may be amended from time to time by the Administrative Agent as
provided in Article 13.

Commitment Percentage shall mean, with respect to each Lender, the percentage
set forth on Exhibit I hereto as such Lender's percentage of the aggregate
Commitments of all of the Lenders, as may be amended from time to time by the
Administrative Agent as provided in Article 13.

Consolidated or Consolidating means consolidated or consolidating as defined in
accordance with GAAP.

Consolidated Kramont Entity or Consolidated Kramont Entities shall mean, singly
and collectively, the Borrower, KRT, Montgomery, and any Wholly-Owned Subsidiary
of the Borrower, KRT or Montgomery.

                                     EA-6
<PAGE>
Cost to Repair as defined in Section 14.3.1.

Debt shall mean, with respect to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property and services purchased, and expense accruals and deferred compensation
items arising, in the ordinary course of business), (iii) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the ordinary course
of business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases which
have been, or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, to the extent required to be so
recorded, (vi) all reimbursement, payment or similar obligations of such Person,
contingent or otherwise, under acceptance, letter of credit or similar
facilities (other than letters of credit in support of trade obligations or in
connection with workers' compensation, unemployment insurance, old-age pensions
and other social security benefits in the ordinary course of business), (vii)
all Debt in the nature of that referred to in clauses (i) through (vi) above
which is guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Debt, (viii) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any indebtedness or other obligation of any
Person, either directly or indirectly, of the nature described in clauses (i)
through (vi), and (ix) all Debt referred to in clauses (i) through (vi) above
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien, security interest or other
charge or encumbrance upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Debt. Without limiting the
generality of the foregoing, in determining Debt, Debt shall include any Debt
secured by the Recreation Mortgage Notes Receivable.

Default as defined in Section 10.1.

Default Rate as defined in Section 2.3.13.

Delinquent Lender as defined in Section 13.2.7.

Depository Account as defined in Section 7.14.1.

Development Assets shall mean Real Estate Properties as to which construction of
the associated or contemplated improvements has commenced (either new
construction or substantial renovation) but has not yet been completed such that
a certificate of occupancy (or the local equivalent) for a substantial portion
of the intended improvements has not yet been issued.

Distribution shall mean, with respect to any Person, that such Person has paid a
dividend or returned any equity capital to its stockholders, members or partners
or made any other distribution, payment or delivery of property (other than
common stock or partnership or

                                     EA-7
<PAGE>
membership interests of such Person) or cash to its stockholders, members or
partners as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock or any membership or partnership interests (or any options or
warrants issued by such Person with respect to its capital stock or membership
or partnership interests), or shall have permitted any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of any class of the
capital stock or any membership or partnership interests of such Person (or any
options or warrants issued by such Person with respect to its capital stock or
membership or partnership interests). Without limiting the foregoing,
"Distributions" with respect to any Person shall also include all payments made
by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans.

Dollars shall mean lawful money of the United States.

Drawdown Date as defined in Section 2.1.2(i).

EBITDA shall mean for any Person the sum of (i) net income (or loss), plus (ii)
actual interest paid or payable respecting all Debt to the extent included as an
expense in the calculation of net income, plus (iii) total Tax Expenses to the
extent included as an expense in the calculation of net income, plus (iv) total
depreciation and amortization expense, whether paid or accrued, to the extent
included as an expense in the calculation of net income, plus (v) losses from
extraordinary items, nonrecurring items, asset sales, write-ups or forgiveness
of debt, to the extent included as an expense in the calculation of net income,
minus (vi) gains from extraordinary items, nonrecurring items, asset sales,
write-ups or forgiveness of debt, to the extent included as income in the
calculation of net income, minus (vii) an assumed replacement reserve in an
amount equal to $0.25 per annum multiplied by the average rentable square
footage of improvements on any applicable Real Estate Property, adjusted (viii)
for straight line rents, all of the foregoing as determined in accordance with
GAAP. Without limiting the generality of the foregoing, in determining EBITDA,
net income shall include as income, Rent Loss Proceeds, interest received on
account of the Recreation Mortgage Notes Receivable and as an expense, interest
paid or payable with respect to any Debt secured by such Recreation Mortgage
Notes Receivable.

Effective LIBO Rate. The term "Effective LIBO Rate" means the per annum rate
equal to the aggregate of (x) the Adjusted LIBO Rate, plus (y) the Applicable
Margin for Effective LIBO Rate Loans.

Effective LIBO Rate Advance. The term "Effective LIBO Rate Advance" means any
principal outstanding under this Agreement which pursuant to this Agreement
bears interest at the Effective LIBO Rate.

Eligibility Criteria shall mean the following criteria which must be satisfied
in a manner acceptable to the Administrative Agent for each Borrowing Base
Property:

      (a) the Borrowing Base Property is a retail center consistent with the
Borrower's business strategy;

      (b) the Borrower provides reasonably acceptable historical operating and
leasing information;

      (c) the Borrower provides a certification as to the absence of any
material environmental issues;

                                    EA-8
<PAGE>
      (d) the Borrower provides certification as to the absence of any material
structural issues; and

      (e) no liens or encumbrances shall exist on the Borrowing Base Property
upon its inclusion as a Borrowing Base Property, other than Permitted Liens.

Eligible Assignee shall mean any of (a) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; and (e) any other assignee that, in the
reasonable judgment of the Administrative Agent, is a reputable institutional
investor with substantial experience in lending and originating loans similar to
the Loan, or in purchasing, investing in or otherwise holdings such loans,
having a financial net worth of at least $100,000,000 and (f) any Lender
Affiliate or a Related Fund of a Lender. For the purposes hereof, "Lender
Affiliate" shall mean, (a) with respect to any Person who would otherwise be an
Eligible Assignee under clauses (a) - (e), above (a "Qualified Assignee"), (i)
an Affiliate of such Qualified Assignee or (ii) any entity (whether a
corporation, partnership, trust or otherwise) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered (including
as placement agent therefor) or managed by a Qualified Assignee or an Affiliate
of such Qualified Assignee and (b) with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor (i.e., a Related Fund of such Lender). Further, for the purposes hereof,
"Related Fund" shall mean, with respect to a Lender which is a fund that invests
in loans, any other such fund managed by the same investment advisor as such
Lender or by an Affiliate of such Lender or such advisor. Neither the Borrower
nor an affiliate of the Borrower shall be Eligible Assignee.

Environmental Indemnity as defined in Section 3.1.5.

Environmental Legal Requirements as defined in the Environmental Indemnity.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.

ERISA Affiliate shall mean each person (as defined in Section 3(9) of ERISA)
which together with either Borrower or a Loan Party would be deemed to be a
"single employer" (i) within the meaning of Section 414(b), (c), (m) or (o) of
the Code or (ii) as a result of either Borrower or a Loan Party being or having
been a general partner of such person.

Established Loan Amount shall mean as of the date hereof One-Hundred Million
($100,000,000.00) Dollars, as such amount may be increased in accordance with
Section 2.1.1.

Event of Default as defined in Section 10.1.

                                     EA-9
<PAGE>
Event of Loss shall mean, with respect to any Collateral Property, any of the
following: (a) any loss or destruction of, or damage to, such Collateral
Property; or (b) any actual condemnation, seizure or taking, by exercise of the
power of eminent domain or otherwise, of such Collateral Property, or
confiscation of such Collateral Property or the requisition of such Collateral
Property by a Governmental Agency or any Person having the power of eminent
domain, or any voluntary transfer of such Collateral Property or any portion
thereof in lieu of any such condemnation, seizure or taking.

Excess Payment Amount shall mean upon receipt of any Mandatory Principal
Payment, the amount by the which the Minimum Loan Amount would exceed the
aggregate of (a) the outstanding principal balance of the Loan plus (b) the L/C
Exposure, if the Mandatory Principal Payment was applied toward payment of the
Obligations.

Federal Funds Rate shall mean: For any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day that is a Business Day, the average
of the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by the Administrative Agent.

FFO shall mean for KRT net income (loss) (computed in accordance with GAAP)
excluding gains (or losses) from debt restructurings and sales of depreciated
real property, plus real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures, as set forth in
more detail under the definitions and interpretations thereof promulgated by the
National Association of Real Estate Investment Trusts or its successor.

Financial Covenants shall mean those covenants of the Borrower set forth in
Sections 7.19, 7.20, 7.21, 7.22, and 7.23.

Fiscal Year shall mean each twelve month period commencing on January 1 and
ending on December 31.

Fixed Charges shall mean the aggregate of all (a) Interest Expenses, (b) all
regularly scheduled principal amortization payments on all Debt of the
Consolidated Kramont Entities, (c) the Pro Rata share of all regularly scheduled
principal amortization payments on all Debt of the Unconsolidated Kramont
Entities, (d) all preferred dividend payments paid or payable by the
Consolidated Kramont Entities; (e) the Pro Rata share of all preferred dividend
payments paid or payable by the Unconsolidated Kramont Entities, (f) all Ground
Lease Payments, (g) all Tax Expenses for the Consolidated Kramont Entities, and
(h) the Pro Rata share of all Tax Expenses for the Unconsolidated Kramont
Entities, all of the foregoing as determined in accordance with GAAP. Without
limiting the generality of the foregoing, in determining Fixed Charges, Interest
Expense shall be net of interest paid or payable to the Borrower on account of
the Recreation Mortgage Notes Receivable and principal amortization shall be net
of the regularly scheduled principal amortization payments due to the Borrower
on account of the Recreation Mortgage Notes Receivable.

Fixed Charge Ratio shall mean, for each Calculation Period, the ratio of (a)
Combined EBITDA to (b) Fixed Charges.

Formation Documents shall mean, singly and collectively, the partnership
agreements, joint venture agreements, limited partnership agreements, limited
liability company or operating

                                      EA-10
<PAGE>
agreements and certificates of limited partnership and certificates of
formation, articles (or certificate) of incorporation and by-laws and any
similar agreement, document or instrument of any Person, as amended subject to
the terms and provisions hereof.

Funding Evidence shall mean, in connection with the Borrower raising the funds
necessary to make a Mandatory Principal Payment as required under Section
2.3.8(i), evidence in connection with (i) the sale of any asset, that the
Borrower has entered into a sales agreement, letter of intent, or listed the
asset for sale with a recognized broker or (ii) the financing or refinancing of
an asset, that the Borrower has obtained a commitment for such financing or
submitted a loan application to a recognized financial institution.

GAAP shall mean generally accepted accounting principles in the United States of
America as of the date applicable.

Governmental Authority shall mean any court, board, agency, commission, office
or authority of any nature whatsoever for any governmental unit (federal, state,
county, district, municipal, city or otherwise) whether now or hereafter in
existence.

Ground Leases shall mean, from time to time, any Ground Lease relative to a
Collateral Property as to which a Loan Party is the ground lessee.

Ground Lease Payments shall mean the sum of (i) payments made by the
Consolidated Kramont Entities under ground leases, plus (ii) the Pro Rata share
of payments made under ground leases by Unconsolidated Kramont Entities.

Guaranty as defined in Section 3.1.4.

Guarantor or Guarantors as defined in Section 1.4.

Hazardous Materials shall mean and include asbestos, mold, flammable materials,
explosives, radioactive substances, polychlorinated biphenyls, radioactive
substances, other carcinogens, oil and other petroleum products, pollutants or
contaminants that could be a detriment to the environment, and any other
hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future federal, state
or local laws, rules, codes or regulations, or any judicial or administrative
interpretation of such laws, rules, codes or regulations.

Implied Debt Service shall mean the annual amount of principal and interest
payable on a hypothetical loan in an amount equal to the Implied Loan Amount,
based upon a twenty-five (25) year direct reduction monthly amortization
schedule and a per annum interest rate equal to the greater of (i) the actual
blended interest rate for the Loan, or (ii) the 10-year Treasury Rate as of the
Calculation Date plus two percent (2%); however, using a minimum constant of
nine and 26/100 percent (9.26%).

Implied Debt Service Coverage Ratio shall mean as of each Calculation Date, the
ratio of the Adjusted Net Operating Income for all Borrowing Base Properties for
the most recent two (2) fiscal quarters, annualized, to Implied Debt Service.

Implied Loan Amount shall mean a principal amount which would generate as of any
Calculation Date an Implied Debt Service Coverage Ratio of 1.45 to 1.00.

Increased Cost Event as defined in Section 2.6.1.

                                     EA-11
<PAGE>
Increased Tax Event as defined in Section 2.6.3.

Indemnified Party as defined in Section 7.17.

Individual Property and Individual Properties shall mean, from time to time, all
real estate property owned or ground leased by any Consolidated Kramont Entity,
together with all improvements, fixtures, equipment, and personalty relating to
such property.

Insurance/Taking Release Conditions shall mean as to any Event of Loss, the
following conditions: (a) the Cost to Repair is less than or equal to Five
Hundred Thousand Dollars ($500,000.00); (b) no Event of Default shall have
occurred and be continuing; (c) the Collateral Property and the use thereof
after the Repair Work will be in compliance with, and permitted under, all
applicable Legal Requirements; and (d) such Event of Loss does not materially
impair access to the Collateral Property.

Interest Expense shall mean the sum of (i) the aggregate actual interest
(including capitalized interest) paid or payable respecting all Debt by the
Consolidated Kramont Entities, and (ii) the Pro Rata share of the aggregate
actual interest (including capitalized interest) paid or payable by the
Unconsolidated Kramont Entities. Without limiting the generality of the
foregoing, in determining Interest Expense, Interest Expense shall include
interest paid or payable with respect to any Debt secured by such Recreation
Mortgage Notes Receivable and Interest Expense shall be net of interest received
on account of the Recreation Mortgage Notes Receivable.

Interest Expense Coverage shall mean the ratio for each Calculation Period of:
(A) Combined EBITDA to (B) Interest Expense.

Interest Period.

      (A) The term "Interest Period" means with respect to each Effective LIBO
Rate Advance: a period of one (1), three (3), or six (6) consecutive months,
subject to availability, as selected, or deemed selected, by Borrower at least
two (2) Business Days prior to the initial date of such Effective LIBO Rate
Advance, or if an advance is already outstanding, at least two (2) Business Days
prior to the end of the current Interest Period. Each such Interest Period shall
commence on the Business Day so selected, or deemed selected, by Borrower and
shall end on the numerically corresponding day in the first, third, or sixth
month thereafter, as applicable. Provided, however: (i) if there is no such
numerically corresponding day, such Interest Period shall end on the last
Business Day of the applicable month, (ii) if the last day of such an Interest
Period would otherwise occur on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day; but (iii) - if
such extension would otherwise cause such last day to occur in a new calendar
month, then such last day shall occur on the next preceding Business Day.

      (B) The term "Interest Period" shall mean with respect to each Variable
Rate Advance consecutive periods of one (1) day each.

      (C) No Interest Period may be selected which would end beyond the then
Maturity Date of the Loan. If the last day of an Interest Period would otherwise
occur on a day which is not a Business Day, such last day shall be extended to
the next succeeding Business Day, except as provided above in clause (A)
relative to an Effective LIBO Rate Advance.

Investment shall mean the acquisition of any real or tangible personal property
or of any stock or other security, any loan, advance, bank deposit, money market
fund, contribution to capital, extension of credit (except for accounts
receivable arising in the ordinary course of business and

                                      EA-12
<PAGE>
payable in accordance with customary terms), or purchase or commitment or option
to purchase or otherwise acquire real estate or tangible personal property or
stock or other securities of any party or any part of the business or assets
comprising such business, or any part thereof.

Knowledge or knowledge shall mean with respect to the Borrower, KRT and the
Borrower Subsidiaries, (a) the actual knowledge of Louis P. Meshon, Sr.,
President of Kramont, Carl Kraus, Chief Financial Officer of Kramont, Jeffrey
Hipple, Senior Vice President of Kramont, or Etta M. Strehle, Chief Accounting
Officer of Kramont, or (b) the actual knowledge of such Persons' successors to
their positions (or positions similar thereto) as officers of Kramont.
Notwithstanding the foregoing, such named parties and their successors are not
parties to this Agreement and shall have no liability for a breach of any
representation, warranty, covenant or agreement deemed to be made to their
actual knowledge.

Kramont Party and Kramont Parties shall mean, singly and collectively, each Loan
Party and each Borrower Subsidiary.

KRT as defined in Section 1.2.

Land Assets shall mean Real Estate Properties constituting raw or undeveloped
land as to which construction of contemplated improvements has not commenced.

Late Charge as defined in Section 2.3.14.

L/C Draw shall mean a payment made by the Administrative Agent pursuant to a
Letter of Credit which was presented to the Administrative Agent for a draw of
proceeds thereunder.

L/C Exposure shall mean, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time, plus (b) the aggregate
amount of all L/C Draws that have not yet been reimbursed by or on behalf of the
Borrower, or repaid through a Loan Advance, at such time.

Lease shall mean any lease relative to all or any portion of a Collateral
Property.

Legal Requirements shall mean all applicable federal, state, county and local
laws, by-laws, rules, regulations, codes and ordinances, and the requirements of
any governmental agency or authority having or claiming jurisdiction with
respect thereto, including, but not limited to, those applicable to zoning,
subdivision, building, health, fire, safety, sanitation, the protection of the
handicapped, and environmental matters and shall also include all orders and
directives of any court, governmental agency or authority having or claiming
jurisdiction with respect thereto.

Lenders as defined in the Preamble.

Lenders' Consultant as defined in Section 7.28.

Letter of Credit as defined in Section 2.7.1.

Leverage Ratio shall mean the quotient (expressed as a percentage) resulting
from dividing (i) the aggregate of (x) the Total Liabilities and all Debt,
without duplication, of the Consolidated Kramont Entities and (y) the Pro Rata
share of the Total Liabilities and all Debt, without duplication, of the
Unconsolidated Kramont Entities by (ii) the Total Asset Value.

LIBO Rate. The term "LIBO Rate" means, as applicable to any Effective LIBO Rate
Advance, the rate per annum as determined on the basis of the offered rates for
deposits in Dollars, for a period

                                      EA-13
<PAGE>
of time equal to the Interest Period for the Effective LIBO Rate Advance which
appears on the "Telerate Page 3750" as of 11:00 a.m. London time on the day that
is two (2) London Banking Days preceding the first day of such Effective LIBO
Rate Advance (or if the Effective LIBO Rate Advance is the conversion of an
outstanding Effective LIBO Rate Advance, two London Banking Days preceding the
end of the Interest Period of such outstanding advance); provided, however, if
the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBO Rate shall be the rate (rounded
upward, if necessary, to the nearest one hundred-thousandth of a percentage
point), determined on the basis of the offered rates for deposits in Dollars for
a period of time comparable to such Interest Period which are offered by four
major banks in the London interbank market at approximately 11:00 a.m. London
time, on the day that is two (2) London Banking Days preceding the first day of
such Effective LIBO Rate Advance as selected by Administrative Agent (or if the
Effective LIBO Rate Advance is the conversion of an outstanding Effective LIBO
Rate Advance, two London Banking Days preceding the end of the Interest Period
of such outstanding advance). The principal London office of each of the four
major London banks will be requested to provide a quotation of its Dollar
deposit offered rate. If at least two (2) such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations. If fewer than two
(2) quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in Dollars to leading
European banks for a period of time comparable to such Interest Period offered
by major banks in New York City at approximately 11:00 a.m. New York City time,
on the day that is two (2) London Banking Days preceding the first day of such
Effective LIBO Rate Advance (or if the Effective LIBO Rate Advance is the
conversion of an outstanding Effective LIBO Rate Advance, two London Banking
Days preceding the end of the Interest Period of such outstanding advance).

Lien shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and mechanic's, materialmen's and other similar liens and
encumbrances.

Licenses and Permits shall mean all licenses, permits, authorizations and
agreements issued by or agreed to by any governmental authority, or by a private
party pursuant to a Permitted Title Exception, and including, but not limited
to, building permits, occupancy permits and such special permits, variances and
other relief as may be required pursuant to Legal Requirements which may be
applicable to any Collateral Property.

Line Fee as defined in Section 2.4.3.

Line Percentage shall mean either (a) 0.05% for any quarter during which the
average daily balance for such quarter of the aggregate of (x) the outstanding
principal balance of the Loan and (y) the L/C Exposure is less than fifty
percent (50%) of the Total Commitment, or (b) 0.0375% for any quarter during
which the average daily balance for such quarter of the aggregate of (x) the
outstanding principal balance of the Loan and (y) the L/C Exposure is equal to
or greater than fifty percent (50%) of the Total Commitment.

Liquidation Proceeds. Amounts received by the Administrative Agent and/or the
Lenders in the exercise of the rights and remedies under the Loan Documents
(including, but not limited to, all rents, profits and other proceeds received
by the Administrative Agent and/or the Lenders from the liquidation of, or
exercising rights upon the occurrence of an Event of Default relative to, any
Collateral, but not including any amount bid at a foreclosure sale or on behalf
of the Administrative Agent or otherwise credited to the Borrower in, any
deed-in-lieu of foreclosure or similar transaction).

                                      EA-14
<PAGE>
Loan as defined in Section 1.3.

Loan Advances shall mean any advance of any proceeds of the Loan hereunder, and
as defined in Section 2.1.1.

Loan Agreement as defined in the Preamble.

Loan Balance Test shall mean the determination that the aggregate of (a)
outstanding principal balance of the Loan plus (b) the L/C Exposure, equals or
exceeds the Minimum Loan Amount.

Loan Documents as defined in Section 3.2.

Loan Party and Loan Parties shall mean, singly and collectively, the Borrower,
KRT, and any Borrower Subsidiary or Subsidiary of KRT which is a party to any
Loan Document or the beneficiary of any Letter of Credit, each Borrowing Base
Property Owner, and any Subsidiary and Affiliate of any of the foregoing which
is party to any Loan Document.

Loan Termination Date as defined in Section 2.2.2.

London Banking Day. The term "London Banking Day" means any day on which
dealings in deposits in Dollars are transacted in the London interbank market.

Major Event of Loss shall mean, with respect to any Collateral Property, both
(1) any of the following: (a) any loss or destruction of, or damage to, such
Collateral Property such that either (x) the repairs and restoration thereof
cannot be completed, in the judgment of the applicable Lender's Consultant and
if there is no Lender's Consultant, an independent architect retained by the
Borrower, within twelve (12) months after the occurrence of such loss, damage or
destruction or (y) rendering more than fifty (50%) percent of the said
Collateral Property unusable for the purposes conducted thereon immediately
prior to such loss, destruction or damage, as determined by the applicable
Lender's Consultant and if there is no Lender's Consultant, an independent
architect retained by the Borrower; or (b) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of such
Collateral Property, or confiscation of such Collateral Property or the
requisition of such Collateral Property by a Governmental Agency or any Person
having the power of eminent domain, or any voluntary transfer of such Collateral
Property or any portion thereof in lieu of any such condemnation, seizure or
taking, rendering more than fifty (50%) percent of the said Collateral Property
unusable for the purposes conducted thereon immediately prior to action, as
determined by the applicable Lender's Consultant and if there is no Lender's
Consultant, an independent architect retained by the Borrower, and (2) the
Administrative Agent does not elect under Section 14.3.3 to make the Net
Proceeds with respect to such Event of Loss available for Repair Work.

Major Lease shall mean (i) any Lease for space in any Collateral Property (x) in
excess of 25,000 rentable square feet or (y) in excess of twenty (20%) percent
of the rentable square footage of such Collateral Property or (ii) any Lease
with a tenant who is a tenant in more than one Collateral Property and who
leases 10,000 or more rentable square feet, in the aggregate, in all Collateral
Properties.

Mandatory Principal Payment as defined in Section 2.3.8(v).

Material Adverse Effect shall mean a material adverse effect on (i) the
business, assets, prospects, operations or financial or other condition of any
of the Borrower, KRT, or, taken as a whole, the Loan Parties, (ii) the ability
of any of the Borrower, KRT, or, taken as a whole, the Loan Parties to perform
any material Obligations or to pay any Obligations which it is or they are
obligated to pay

                                     EA-15
<PAGE>
in accordance with the terms hereof or of any other Loan Document, (iii) the
rights of, or benefits available to, the Administrative Agent and/or any of the
Lenders under any Loan Document or (iv) any Lien given to Administrative Agent
and/or any of the Lenders on any material portion of the Collateral or the
priority of any such Lien.

Maturity shall mean the Maturity Date, or, in any instance, upon acceleration of
the Loan, if the Loan has been accelerated by Lenders upon an Event of Default.

Maturity Date as defined in Section 2.2.

Maximum Loan Amount as defined in Section 2.1.1.

Maximum Property Amount shall mean for any Borrowing Base Property as to which
the Administrative Agent has agreed, or hereafter agrees, at Borrower's request,
in the applicable Mortgage to limit the portion of the guaranty by the
applicable Borrowing Base Property Owner secured by the Mortgage to less than
the entire amount of the Loan, the said limited principal amount. The Maximum
Property Amounts applicable as of the date hereof are initially listed in
Exhibit J hereto.

Minimum Loan Amount shall mean initially $8,690,000.00, as such amount may be
adjusted by the Administrative Agent in accordance with Section 2.1.1.

Minimum Loan Amount Limitation as defined in Section 2.1.1.

Montgomery. Montgomery CV Realty L.P., a Delaware limited partnership, the
general partner of which is CV GP L.P. and 99.87% of the equity interest therein
being owned, directly or indirectly, by the Borrower.

Net Operating Income: For any period of determination, (i) net operating income
generated by an Real Estate Property for such period (i.e., gross operating
income, inclusive of any Rent Loss Proceeds, less expenses (exclusive of debt
service, capital expenditures and vacancy allowances)), determined in accordance
with GAAP, as generated by, through or under Leases, and (ii) all other income
arising from direct operations of or licenses or operating agreements for any
part of the Real Estate Property determined on a GAAP basis. For purposes
hereof, all rental income shall be adjusted for straight line rents. Borrower
shall provide Administrative Agent with all information and materials required
by Administrative Agent necessary for the determination of Net Operating Income.
If any Leases are scheduled to expire during such period of determination, no
rents or other amounts payable under such Leases with respect to any portion of
such period occurring after such scheduled expiration date shall be included in
the determination of Net Operating Income for such period. If any Leases are
scheduled to commence (and rent and occupancy pursuant thereto are also
scheduled to commence) during such period of determination, the rents and other
amounts payable under such Leases with respect to any period occurring after the
scheduled commencement date shall be included in the determination of Net
Operating Income for such period.

Net Proceeds. (1) The net amount of all insurance proceeds received under any
insurance policies other than Rent Loss Proceeds as a result of the occurrence
of an Event of Loss described in clause (a) of the definition of Event of Loss
with respect to any Collateral Property, after deduction of the reasonable costs
and expenses (including, but not limited to reasonable counsel fees), if any, in
collecting the same, or (2) the net amount of all awards and payments received
with respect to the occurrence of an Event of Loss described in clause (b) of
the definition of Event of Loss, after deduction of the reasonable costs and
expenses (including, but not limited to reasonable counsel fees), if any, in
collecting the same, whichever the case may be.

                                     EA-16
<PAGE>
Net Worth shall mean the (a) the Total Asset Value, plus (b) the value of all
intangible assets, such as good will, of the Consolidated Kramont Entities
valued at cost as shown on the most recent financial statement of such
Consolidated Kramont Entity, plus (c) the Pro Rata share of the value of all
intangible assets, such as good will, of the Unconsolidated Kramont Entities
valued at cost as shown on the most recent financial statement of such
Unconsolidated Kramont Entity, less (d) the Total Liabilities of the
Consolidated Kramont Entities plus the Pro Rata Share of the Total Liabilities
of the Unconsolidated Kramont Entities, with (b) through (d) determined in
accordance with GAAP, without duplication.

Non-Stabilized Asset shall mean a Borrowing Base Property which has an Occupancy
Ratio of less than seventy percent (70%).

Note. Collectively, the Notes payable to each Lender in the aggregate original
principal amount of the Established Loan Amount (as such amount may be increased
as provided for herein).

Notice of Default as defined in Section 13.1.6.

Notice of Letter of Credit as defined in Section 2.7.1.

Notice of Rate Selection as defined in Section 2.3.3.

Obligations shall mean without limitation, all and each of the following,
whether now existing or hereafter arising:

                  (a) Any and all direct and indirect liabilities, debts, and
            obligations of the Borrower or any Loan Party to the Administrative
            Agent or any Lender under or arising out of the Loan Documents, each
            of every kind, nature, and description.

                  (b) Each obligation to repay any loan, advance, indebtedness,
            note, obligation, overdraft, or amount now or hereafter owing by the
            Borrower or any Loan Party to the Administrative Agent or any Lender
            (including all future advances whether or not made pursuant to a
            commitment by the Administrative Agent or any Lender) under or
            arising out of the Loan Documents, whether or not any of such are
            liquidated, unliquidated, primary, secondary, secured, unsecured,
            direct, indirect, absolute, contingent, or of any other type,
            nature, or description, or by reason of any cause of action which
            the Administrative Agent or any Lender may hold against the Borrower
            or any Loan Party including, without limitation, any obligation
            arising under any interest rate hedging, cap or other protection
            arrangement with the Administrative Agent or any Lender.

                  (c) All notes and other obligations of the Borrower or any
            Loan Party now or hereafter assigned to or held by the
            Administrative Agent or any Lender under or arising out of the Loan
            Documents, each of every kind, nature, and description.

                  (d) All interest, fees, and charges and other amounts which
            may be charged by the Administrative Agent or any Lender to the
            Borrower or any Loan Party and/or which may be due from the Borrower
            or any Loan Party to the Administrative Agent or any Lender from
            time to time under or arising out of the Loan Documents.

                  (e) All costs and expenses incurred or paid by the
            Administrative Agent or any Lender in respect of any agreement
            between the Borrower or any Loan Party and the Administrative Agent
            or any Lender or instrument furnished by the Borrower or any Loan
            Party to the Administrative Agent or any Lender (including, without
            limitation, costs of collection, attorneys' reasonable fees, and all
            court and litigation costs and

                                     EA-17
<PAGE>
            expenses) in connection with the Loan.

                  (f) Any and all covenants of the Borrower or any Loan Party to
            or with the Administrative Agent or any Lender and any and all
            obligations of the Borrower or any Loan Party to act or to refrain
            from acting in accordance with any agreement between the Borrower or
            any Loan Party and the Administrative Agent or any Lender or
            instrument furnished by the Borrower or any Loan Party to the
            Administrative Agent or any Lender in connection with the Loan.

Occupancy Ratio shall mean with respect to any Borrowing Base Property, the
ratio as determined by the Administrative Agent of the rentable square footage
thereof as to which tenants are in physical occupancy and paying rent, to the
total rentable square footage thereof. For purposes of determining the Occupancy
Ratio, the Occupancy Ratio for any Borrowing Base Property as to which an Event
of Loss has occurred shall be equal to the greater of (i) the actual Occupancy
Ratio with respect thereto or (ii) the Occupancy Ratio immediately prior to the
said Event of Loss for a period equal to the lesser of (x) twelve (12) months
from the occurrence of the Event of Loss or (y) the determination that the
subject Borrowing Base Property is not, or ceases to be, a Restoration Property.
Further, for the purposes of this definition, it is acknowledged by the parties
that the total rentable square footage of the Borrowing Base Property owned by
KR Wampanong LLC is 190,357 square feet.

Officer's Certificate shall mean a certificate delivered to the Administrative
Agent by the Borrower, a Borrower Subsidiary, or a Guarantor, as the case may be
respectively, which is signed by an authorized officer thereof (or an authorized
officer of the direct or indirect managing general partner or managing member,
as applicable, of the Borrower, Borrower Subsidiary, or Guarantor, if and as
applicable).

PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to
Section 4002 of ERISA, or any successor thereto.

Permitted Debt as defined in Section 8.4.

Permitted Distributions shall mean (a) so long as no Default or Event of Default
exists and is continuing, or would be created thereby, any Distributions by the
Borrower and KRT (i) with respect to Fiscal Year 2002, which are necessary to
pay a dividend of $1.30 per share to the holders of the common stock of KRT, and
to pay the required dividend due with respect to any preferred shares of stock
of KRT which are outstanding, (ii) with respect to Fiscal Year 2003, which are
necessary to pay a dividend of $1.30 per share to the holders of the common
stock of KRT and to pay the required dividend due with respect to any preferred
shares of stock of KRT which are outstanding, but not exceeding one-hundred
(100%) percent of FFO for the trailing twelve (12) month period, (iii)
thereafter, in any amount, provided that such Distributions with respect to
Fiscal Year 2004 and thereafter shall not exceed ninety (90%) percent of FFO for
the trailing twelve (12) month period, (iv) concerning the repurchase or
redemption of stock of KRT or partnership interests in the Borrower, or (v)
concerning the issuance of operating partnership units or stock in return for
equity interests in connection with any Permitted Investment (provided, any
Distributions by the Borrower or Kramont shall be permitted as are necessary for
KRT to maintain REIT status, if such Distributions are greater than the amount
set forth in subclauses (a)(i) and (ii), above) or (b) at any time after and
during the continuance of any Default or Event of Default (other than a monetary
Event of Default), such Distributions as are necessary for KRT to maintain REIT
status (measured on a rolling four quarter basis).

Permitted Liens as defined in Section 8.2.

                                     EA-18
<PAGE>
Permitted Investments shall mean the following: (a) Investments in notes,
mortgages and unimproved real estate, which, in the aggregate, do not exceed
fifteen percent (15%) of Consolidated Total Asset Value; (b) Investments in
construction or Development Assets (total budgeted cost) which, in the
aggregate, do not exceed fifteen percent (15%) of Total Asset Value; (c)
Investment in Land Assets which, in the aggregate, do not exceed five percent
(5%) of Total Asset Value; (d) Investments in Unconsolidated Kramont Entities
which, in the aggregate, do not exceed ten percent (10%) of Total Asset Value;
provided, however, the aggregate of the Permitted Investments under subsections
(a) through (d), above, shall not exceed twenty-five percent (25%) of Total
Asset Value; and (e) Investments in entities for the purpose of making such
entities Borrower Subsidiaries.

Person shall mean any individual, corporation, partnership, joint venture,
estate, trust, unincorporated association or limited liability company, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

Plan shall mean any multiemployer or single-employer plan as defined in Section
4001 of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) any Loan Party or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest date on which
such Loan Party or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.

Preliminary Approval shall mean the following:

      (a) Delivery by the Borrower to the Administrative Agent and the Lenders
of the following with respect to any Individual Property proposed to be a
Borrowing Base Property, each such item to the reasonable satisfaction of the
Administrative Agent:

            (i) physical description;

            (ii) current rent roll and operating statements;

            (iii) to the extent then available in Borrower's files, the
      following: a survey, environmental reports, copies of existing title
      insurance policies or a title commitment, and copies of all title
      exceptions, engineering reports and similar information; and

            (iv) the Borrower's certification that to its knowledge the proposed
      Borrowing Base Property presently satisfies (or is anticipated to satisfy
      upon the grant of such Collateral) the Eligibility Criteria set forth in
      subsections (a), (c), (d), (e), (f), (g), and (h) of the definition of
      Eligibility Criteria.

      (b) Administrative Agent and the Required Lenders shall, within ten (10)
Business Days after delivery of all items described in subsection (a), above,
grant or deny the preliminary approval for the proposed replacement Borrowing
Base Property.

Prime Rate. The term "Prime Rate" means the greater of (i) a variable per annum
rate of interest so designated from time to time by Fleet National Bank (or any
successor thereto), as its prime rate, or (ii) the Federal Funds Rate plus 0.50%
per annum. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate being charged to any customer.

Pro Rata shall mean a calculation based on the percentage of the Capital Stock
of any Unconsolidated Kramont Entity owned, directly or indirectly, by the
Borrower and/or KRT.

Real Estate Property and Real Estate Properties shall mean (i) the Individual
Properties and (ii) all

                                      EA-19
<PAGE>
real estate property owned or ground leased by any Unconsolidated Kramont
Entity, together with all improvements, fixtures, equipment, and personalty
relating to such property.

Recreation Mortgage Notes Receivable shall mean the four (4) so called
Recreation Mortgage Notes totaling $34,000,000.0 as of September 30, 2002, such
Recreation Mortgage Notes secured by first mortgages on the recreation
facilities at three Century Village adult condominium communities in Southeast
Florida,

Register as defined in Section 13.3.3.

REIT means a "real estate investment trust" as such term is defined in Section
856 of the Code.

Release Conditions as defined in Section 3.3.

Release Price shall mean, with respect to any Borrowing Base Property, the
amount, if any, necessary to reduce the aggregate outstanding principal amount
of the Loans plus the L/C Exposure to the Maximum Loan Amount (computed without
regard to the Borrowing Base Property for which the Borrower is seeking
release).

Rent Loss Proceeds. The proceeds received under any rent loss or business
interruption insurance policies.

Repair Work as defined in Section 14.1.

Reportable Event shall mean an event described in Section 4043(b) of ERISA with
respect to a Plan other than those events as to which the 30-day notice period
is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation
Section 2615, or as otherwise now or hereafter defined in ERISA.

Required Lenders. As of any date, the Lenders, excluding any delinquent Lenders,
holding at least Sixty-Six and 2/3rds (66 2/3%) percent of the outstanding
principal amount due under the Note on such date; and if no such principal is
outstanding, the Lenders whose aggregate Commitments constitute at least
Sixty-Six and 2/3rds (66 2/3%) percent of the Total Commitment; provided,
however, in any calculation of Required Lenders, the outstanding principal
amount due under a Note held by a Delinquent Lender or the Commitment of a
Delinquent Lender, as applicable, shall not be included in the numerator or
denominator of such calculation.

Restoration Property. Any Collateral Property as to which an Event of Loss has
occurred and as to which the Net Proceeds are being made available in accordance
with the terms and provisions of Article 14 for Repair Work relative to the
subject Collateral Property.

Security Documents as defined in Section 3.2.

Stabilized Asset shall mean a Borrowing Base Property which has an Occupancy
Ratio of equal to or greater than seventy percent (70%). If due to the
occurrence of an Event of Loss as to any Borrowing Base Property which was a
Stabilized Asset prior to such Event of Loss, the Occupancy Ratio with respect
thereto is less than seventy percent (70%), such Borrowing Base Property shall
continue to be deemed to be a Stabilized Asset (notwithstanding that the
Occupancy Ratio with respect thereto is less than seventy percent (70%) as a
result of such Event of Loss) for a period equal to the lesser of (i) twelve
(12) months from the occurrence of the Event of Loss or (ii) the determination
that the subject Borrowing Base Property is not, or ceases to be, a Restoration
Property.

                                     EA-20
<PAGE>
State shall mean the State or Commonwealth in which the subject of such
reference or any part thereof is located.

Subsidiary shall mean, with respect to any Person, any corporation, association,
limited liability company, partnership or other business entity of which
securities or other ownership interests representing more than 50% of either (x)
the beneficial ownership interest or (y) ordinary voting power are, at the time
as of which any determination is being made, owned or controlled, directly or
indirectly, by such Person.

Tax Expenses shall mean tax expense (if any) attributable to income and
franchise taxes based on or measured by income, whether paid or accrued.

Total Asset Value shall mean the aggregate of:

      (a) for all Individual Properties that are owned or ground leased by the
      Consolidated Kramont Entities (which are not Individual Properties
      acquired within the prior 180 days, Development Assets, Land Assets, or
      Development Assets completed within the prior 180 days) the most recent
      two (2) quarter's aggregate Adjusted Net Operating Income for all such
      Individual Properties, annualized, capitalized at a rate of 9.50%, plus

      (b) for other Real Estate Properties that are owned or ground leased by
      the Unconsolidated Kramont Entities (which are not Real Estate Properties
      acquired within the prior 180 days, Development Assets, Land Assets, or
      Development Assets completed within the prior 180 days), the sum of, for
      each such Real Estate Property, the Pro Rata share of the Total Asset
      Value for each such Real Estate Property at such time, as calculated
      pursuant to the foregoing clause (a), plus

      (c) for Development Assets and Land Assets that are owned by the
      Consolidated Kramont Entities, the undepreciated Book Value at such time
      of Development Assets and Land Assets; plus

      (d) for Development Assets and Land Assets that are owned by
      Unconsolidated Kramont Entities, the Pro Rata share of the undepreciated
      Book Value at such time of such Development Asset and such Land Asset;
      plus

      (e) for all unencumbered cash and cash equivalent investments, accounts
      receivable, restricted cash held by a qualified intermediary, prepaid
      assets and escrows, and the Recreation Mortgage Notes Receivable, owned by
      the Consolidated Kramont Entities, the Book Value of such assets; plus

      (f) for all unencumbered cash and cash equivalent investments, accounts
      receivable, restricted cash held by a qualified intermediary, and prepaid
      assets and escrows owned by Unconsolidated Kramont Entities, the Pro Rata
      share of the Book Value at such time of such assets; plus

      (g) deposits corresponding to outstanding Letters of Credit..

      Real Estate Properties acquired or Development Assets completed during a
quarter will be valued at undepreciated Book Value for a maximum of one hundred
eighty (180) days from acquisition or completion (and until end of the following
quarter) and based on Adjusted Net Operating Income under subsections (a) or (b)
above thereafter.

Total Commitment. The sum of the Commitments of the Lenders, as in effect from
time to time.

                                     EA-21
<PAGE>
Total Liabilities shall mean for any Person, the total liabilities for such
Person determined in accordance with GAAP.

Treasury Rate The term "Treasury Rate" means, as of the date of any calculation
or determination, the latest published rate for United States Treasury Notes or
Bills (but the rate on Bills issued on a discounted basis shall be converted to
a bond equivalent) as published weekly in the Federal Reserve Statistical
Release H.15(519) of Selected Interest Rates in an amount which approximates (as
determined by Administrative Agent) the amount (i) approximately comparable to
the portion of the Loan to which the Treasury Rate applies for the Interest
Period, or (ii) in the case of a prepayment, the amount prepaid and with a
maturity closest to the original maturity of the installment which is prepaid in
whole or in part.

UCC or the Uniform Commercial Code means the Uniform Commercial Code in effect
in a State.

Unconsolidated Kramont Entity or Unconsolidated Kramont Entities shall mean each
Person, other than Montgomery, as to which the Borrower and/or KRT own, directly
or indirectly, any Capital Stock, but which is not a Wholly-Owned Subsidiary.

Unfunded Current Liability of any Plan means the amount, if any, by which the
actuarial present value of the accumulated plan benefits under the Plan as of
the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.

United States and U.S. shall each mean the United States of America.

Valley Fair Property shall mean and refer to the 112,000 square foot (65,213
square feet included in the Borrowing Base Property) neighborhood shopping
center in Tredyffrin, Pennsylvania.

Variable Rate. The term "Variable Rate" means a per annum rate equal at all
times to the Prime Rate plus the Applicable Margin for Prime Rate Loans, with
changes therein to be effective simultaneously without notice or demand of any
kind with any change in the Prime Rate.

Variable Rate Advance. The term "Variable Rate Advance" means any principal
amount outstanding under this Agreement which pursuant to this Agreement bears
interest at the Variable Rate.

Wholly-Owned Subsidiary shall mean, with respect to any Person, any other Person
as to which one-hundred (100%) percent of the Capital Stock thereof is owned,
directly or indirectly, by such Person.

                                     EA-22
<PAGE>
                          EXHIBIT B-1 TO LOAN AGREEMENT
                    REQUISITION AND AVAILABILITY CERTIFICATE

TO:   Fleet National Bank ("Administrative Agent")

RE:   Loan Agreement dated as of December 20, 2002 (the "Loan Agreement")
      between Administrative Agent, the lenders described therein and Kramont
      Operating Partnership, L.P. ("Borrower")

LOAN REQUEST NO.:________________

AMOUNT OF LOAN ADVANCE REQUESTED:$__________________

DATE:________________, 200__

      This Borrower's Certificate and Request for Loan Advance is submitted by
Borrower to Administrative Agent pursuant to the provisions of the Loan
Agreement in order to induce Lenders to make the Loan Advance identified above.
Capitalized terms used herein which are not otherwise specifically defined shall
have the same meaning herein as in the Loan Agreement.

      Borrower hereby requests Lenders to make a Loan Advance under the Notes in
the following amount: $_________________.

      The Loan Advance is requested for the following purposes:________________
_______________________________________________________________________________
______________________________________________________________________________.

      The Loan Advance requested of $______________, when added to prior Loan
Advances under the Notes of $________________, plus the L/C Exposure of
$__________________, will result in aggregate Loans plus L/C Exposure of
$_______________.

      The Maximum Loan Amount shall not be exceeded upon the making of the Loan
Advance requested hereunder. Calculations of the Maximum Loan Amount, current
Loan balance, and amount of the Loan available to be advanced and/or L/C's
available to be issued are set forth on the Availability Certificate annexed
hereto.

      Borrower hereby certifies, warrants and represents to Administrative Agent
and the Lenders that (except for each condition precedent to Lender's obligation
to make the requested Loan Advance) this request: (i) constitutes an affirmation
by Borrower that, except as otherwise disclosed in writing to the Administrative
Agent, each of the warranties and representations made in the Loan Agreement
remains true and correct as of the date of this request and, unless
Administrative Agent is notified to the contrary prior to the disbursement of
the Loan Advance, will be so on the date of such Loan Advance; and (ii)
constitutes the representation and warranty of Borrower that the information set
forth in this request is true, accurate and complete.

      The Borrower hereby further certifies, warrants and represents to
Administrative Agent and the Lenders that: (i) to the best of the Borrower's
knowledge, the information provided on the accompanying financial statements is
true and accurate in all material respects; (ii) the Borrower is in compliance
with the financial covenants contained in the Loan Agreement to the extent set
forth below; (iii) to the best of the Borrower's knowledge, an Event of Default
which

                                      EB-1
<PAGE>
is continuing has not occurred under the Loan Agreement or any of the other Loan
Documents.

<TABLE>
<CAPTION>
        COVENANT                    REQUIREMENT                     ACTUAL
-------------------------   ------------------------------       ------------
<S>                         <C>                                  <C>
Interest Expense Coverage   Not less than 1.75:1
Leverage Ratio              Less than 65%
Fixed Charge Ratio          Closing Date through
                            December 31, 2003, not less
                            than 1.35:1.
                            January 1, 2004 through
                            December 31, 2004, not less
                            than 1.45:1.
                            January 1, 2005 through
                            Maturity Date, not less than
                            1.50:1.

Borrower's Net Worth        Not less than $240,000,000
                            plus 90% of cumulative net
                            cash proceeds and value of
                            assets acquired, as set forth in
                            the Loan Agreement
</TABLE>

      Calculations of the Financial Covenants are set forth on the worksheet
annexed hereto.

      This request is submitted to Administrative Agent for the purpose of
inducing Lenders to make a Loan Advance and Borrower intends that Administrative
Agent and the Lenders shall rely upon the same being true, accurate and
complete.

      If all conditions precedent to Lenders' obligation to make a Loan Advance
are satisfied, please disburse the Loan Advance on ______________, 200__.

      WITNESS the execution hereof as an instrument under seal as of the _______
day of _____________, 200__.

                             KRAMONT OPERATING PARTNERSHIP, L.P.,
                             a Delaware limited partnership

                             By: Kramont Realty Trust,
                                 its general partner

                                 By:
                                    ------------------------------------

                                     EB-2
<PAGE>
                            AVAILABILITY CERTIFICATE

<TABLE>
<S>                                    <C>              <C>
16.  MAXIMUM LOAN AMOUNT

16.1 Established Loan Amount           $____________
16.2 Total Commitment                  $____________
16.3 Availability (calculated below)   $____________
     lesser of (a), (b) and (c)
                                                        $____________
17.  LOAN BALANCE

17.1 Outstanding Balance of Loan       $____________
     plus

17.2 L/C Exposure                      $____________
     (a) plus (b)                                       $____________

18.  AMOUNT OF LOAN AVAILABLE TO
     BE ADVANCED AND/OR L/C'S
     AVAILABLE TO BE ISSUED
               1 minus 2                                $____________
</TABLE>

                                      EB-3
<PAGE>
                            AVAILABILITY CALCULATION

<TABLE>
<S>                                            <C>
18.1  Aggregate Borrowing Base Value*          $____________
        (calculated below)
18.2  Implied Loan Amount                      $____________
        (calculated below)
          lesser of (a) or (b)                 $____________
</TABLE>

*     Reduce any single Borrowing Base Property Borrowing Base Value, if
      necessary, to 20% of Aggregate Borrowing Base Value

                                      EB-4
<PAGE>
                        BORROWING BASE VALUE CALCULATION
                   (prepare for each Borrowing Base Property)

<TABLE>
<S>                                                             <C>
(a)    If Stabilized Asset

       (i)     Adjusted Appraised Value                         $____________
               (complete only if Appraisal completed
               within prior 6 months)

       (ii)    Adjusted Capitalized Value**                     $____________
                (calculated below)

       (iii)   Maximum Property Amount                          $____________
               (complete only if applicable)
                 lesser of (i), (ii), and (iii)                 $____________

                 Multiplied by 65%                              $____________
</TABLE>

**    Adjusted Capitalized Value Calculation (For Stabilized Asset)

<TABLE>
<S>                                                             <C>
        Adjusted Net Operating Income for most recent
        two (2) fiscal quarters, annualized                     $____________
             divided by 9.5%                                    $____________

(b)    If Non-Stabilized Asset

       (i)   Adjusted Appraised Value                           $____________

       (ii)  Adjusted Capitalized Value                         $____________
               (Undepreciated Book Value)
       (iii) Maximum Property Amount                            $____________
               (complete only if applicable)
               lesser of (i), (ii), and (iii)                   $____________

               Multiplied by 65%                                $____________
</TABLE>

                                      EB-5
<PAGE>
        CALCULATION OF BORROWING BASE VALUE IF EVENT OF LOSS HAS OCCURRED

<TABLE>
<S>                                                             <C>
      (i)   Adjusted Capitalized Value                          $____________
            (calculated in the manner set forth
            above for Stabilized Asset, or
            No-Stabilized Asset, as applicable)

      (ii)  Maximum Property Amount                             $____________
            (complete only if applicable)
              lesser of (i) or (ii)                             $____________

            Multiplied by 65%                                   $____________
</TABLE>

                                      EB-6
<PAGE>
                          Implied Loan Amount Calculation

Principal amount which generates Implied Debt Service Coverage Ratio of 1.45 to
1.00, calculated in accordance with the worksheet which is to be annexed hereto.

                                      EB-7
<PAGE>
                         EXHIBIT B-2 TO LOAN AGREEMENT

                           NOTICE OF LETTER OF CREDIT

                                                  Date of Request:______________

TO:   Fleet National Bank ("Administrative Agent")

RE:   Loan Agreement dated as of December 20, 2002 (the "Loan Agreement")
      between Administrative Agent, the lenders described therein and Kramont
      Operating Partnership, L.P. ("Borrower")

This confirms the following request for the issuance of Letter of Credit as
follows:

AGGREGATE AMOUNT OF REQUESTED LETTERS OF CREDIT: $______________

NUMBER OF LETTERS OF CREDIT TO BE ISSUED: ______________

INDIVIDUAL DOLLAR AMOUNT FOR EACH LETTER OF CREDIT TO BE ISSUED:

1) $________________
2) $________________
3) $________________
4) $________________

PURPOSE OF EACH LETTER OF CREDIT TO BE ISSUED:

1) ________________
2) ________________
3) ________________
4) ________________

PROPOSED DATE OF ISSUANCE OF LETTERS OF CREDIT: ______________

IF OTHER THAN THE BORROWER, THE ACCOUNT PARTY OF EACH LETTER OF CREDIT:

1)______________________________________________________________
2)______________________________________________________________
3)______________________________________________________________
4)______________________________________________________________

                                      EB-8
<PAGE>
NAME AND ADDRESS OF BENEFICIARY UNDER LETTERS OF CREDIT:

1)______________________________________________________________
2)______________________________________________________________
3)______________________________________________________________
4)______________________________________________________________

EXPIRATION DATE OF EACH LETTER OF CREDIT:

1)______________________________________________________________
2)______________________________________________________________
3)______________________________________________________________
4)______________________________________________________________

CURRENT OUTSTANDING LETTER OF CREDIT OBLIGATIONS: $_______________

      The following are the terms upon which each such Letter of Credit may be
drawn down upon by the beneficiary thereunder: _________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.

      The Letters of Credit requested, aggregating $______________, when added
to prior Loan Advances under the Notes of $________________, plus the L/C
Exposure of $__________________, will result in aggregate Loans plus L/C
Exposure of $_________________ .

      The Maximum Loan Amount shall not be exceeded upon the issuance of Letters
of Credit requested hereunder. Calculations of the Maximum Loan Amount, current
Loan balance, and amount of the Loan available to be advanced and/or L/C's
available to be issued are set forth on the Availability Certificate annexed
hereto.

      This request shall constitute a certification by the Borrower that (i) no
Default or Event of Default has occurred and is continuing or would result from
the issuance of the above Letters of Credit, (ii) no material adverse change in
the financial condition of Borrower has occurred, (iii) the Borrower and all
Loan Parties are, and will continue to be after the requested issuance of the
Letters of Credit, in compliance in all material respects with all of the
covenants set forth in the Loan Agreement, and (iv) each of the representations
and warranties under the Loan Documents (other than those representations and
warranties which speak as of a specific date or as to which the Administrative
Agent has previously been advised in writing by the Borrower are no longer true
and correct) are true, correct and complete in all material respects as of the
date of the issuance of the Letters of Credit, with the same effect as if made
at and as of that time.

                                     EB-9
<PAGE>
      This Notice is irrevocable and binding on the Borrower.

                       KRAMONT OPERATING PARTNERSHIP, L.P.,
                       a Delaware limited partnership

                       By: Kramont Realty Trust,
                           its general partner

                           By:
                              ------------------------------------

                                      EB-10
<PAGE>
                           EXHIBIT C TO LOAN AGREEMENT

                                      NOTE

____________________                                        December 20, 2002

      1. Promise To Pay.

      FOR VALUE RECEIVED, Kramont Operating Partnership, L.P., a Delaware
limited partnership having an address at 580 West Germantown Pike, Plymouth
Meeting, Pennsylvania 19462 (hereinafter, the "Borrower") promises to pay to the
order of _______________________ (hereinafter, a "Lender"), the principal sum of
_____________________________($___________) DOLLARS, or so much thereof as may
be advanced or readvanced by or on behalf of Lender, with interest thereon as
provided in the Loan Agreement (as defined herein), or on the amount thereof
from time to time outstanding, to be computed, as provided in the Loan
Agreement, on each advance from the date of its disbursement until such
principal shall be fully paid. Interest and principal shall be payable in
installments as set forth in the Loan Agreement. The total principal sum, or the
amount thereof outstanding, together with any accrued but unpaid interest, shall
be due and payable in full on December 20, 2005 (hereinafter, the "Maturity
Date"), which term is further defined in, and is subject to acceleration, in
accordance with, the Loan Agreement pursuant to which this Note has been issued.

      2. Loan Agreement.

      This Note is issued pursuant to the terms, provisions and conditions of an
agreement captioned "Loan Agreement" (hereinafter, the "Loan Agreement") dated
as of even date among Borrower, Lender and the other financial institutions
named therein (the Lender and such other institutions, the "Lenders") and Fleet
National Bank as Agent (hereinafter the "Agent") and evidences the Loan and Loan
Advances made by or on behalf of the Lender pursuant thereto. Capitalized terms
used herein which are not otherwise specifically defined shall have the same
meaning herein as in the Loan Agreement, which capitalized terms are hereby
incorporated by reference herein. This Note is one of two or more Notes executed
and delivered by the Borrower to the Lenders in accordance with the terms and
provisions of the Loan Agreement.

      3. Acceleration; Event of Default.

      At the option of the Agent, subject to the terms of the Loan Agreement,
this Note and the indebtedness evidenced hereby shall become immediately due and
payable without further notice or demand, and notwithstanding any prior waiver
of any breach or default, or other indulgence, upon the occurrence of an Event
of Default. Upon the occurrence and during the continuance of an Event of
Default and subject to the terms of the Loan Agreement, Agent shall have, in
addition to any rights and remedies contained herein, any and all rights and
remedies set forth in the Loan Agreement or any other Loan Document.

      4. Certain Waivers, Consents and Agreements.

      Each and every party liable hereon or for the indebtedness evidenced
hereby whether as maker, endorser, guarantor, surety or otherwise (except to the
extent provided in such Guarantor's Guaranty) hereby: (a) waives presentment,
demand, protest, suretyship defenses and defenses in the nature thereof; (b)
waives any defenses based upon and specifically assents to

                                     EC-1
<PAGE>
any and all extensions and postponements of the time for payment, changes in
terms and conditions and all other indulgences and forbearances which may be
granted by the Agent or the holder to any party now or hereafter liable
hereunder or for the indebtedness evidenced hereby; (c) agrees to any
substitution, exchange, release, surrender or other delivery of any security or
collateral now or hereafter held hereunder or in connection with the Loan
Agreement, or any of the other Loan Documents, and to the addition or release of
any other party or person primarily or secondarily liable; (d) agrees that if
any security or collateral given to secure this Note or the indebtedness
evidenced hereby or to secure any of the obligations set forth or referred to in
the Loan Agreement, or any of the other Loan Documents, shall be found to be
unenforceable in full or to any extent, or if Agent or any other party shall
fail to duly perfect or protect such collateral, the same shall not relieve or
release any party liable hereon or thereon nor vitiate any other security or
collateral given for any obligations evidenced hereby or thereby; (e) agrees to
pay all reasonable costs and expenses actually incurred by Agent and Lenders or
any other holder of this Note in connection with the indebtedness evidenced
hereby pursuant to the Loan Agreement, including, without limitation, all
reasonable attorneys' fees and costs, for the implementation of the Loan, the
collection of the indebtedness evidenced hereby and the enforcement of rights
and remedies hereunder or under the other Loan Documents, whether or not suit is
instituted; and (f) consents to all of the terms and conditions contained in
this Note, the Loan Agreement, the Mortgage, the Assignment of Leases and Rents,
and all other instruments now or hereafter executed evidencing or governing all
or any portion of the security or collateral for this Note and for such Loan
Agreement, or any one or more of the other Loan Documents.

      5. Delay Not A Bar.

      No delay or omission on the part of the Agent or the holder in exercising
any right hereunder or any right under any instrument or agreement now or
hereafter executed in connection herewith, or any agreement or instrument which
is given or may be given to secure the indebtedness evidenced hereby or by the
Loan Agreement, or any other agreement now or hereafter executed in connection
herewith or therewith shall operate as a waiver of any such right or of any
other right of such holder, nor shall any delay, omission or waiver on any one
occasion be deemed to be a bar to or waiver of the same or of any other right on
any future occasion.

      6. Partial Invalidity.

      The invalidity or unenforceability of any provision hereof, of the Loan
Agreement, of the other Loan Documents, or of any other instrument, agreement or
document now or hereafter executed in connection with the Loan made pursuant
hereto and thereto shall not impair or vitiate any other provision of any of
such instruments, agreements and documents, all of which provisions shall be
enforceable to the fullest extent now or hereafter permitted by law.

      7. Compliance With Usury Laws.

      All agreements among Borrower, Guarantor, Agent and Lenders are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Agent or Lenders for
the use or the forbearance of the indebtedness evidenced hereby exceed the
maximum permissible under applicable law. As used herein, the term "applicable
law", shall mean the law in effect as of the date hereof, provided, however,
that in the event there is a change in the law which results in a higher
permissible rate of interest, then this Note shall be governed by such new law
as of its effective date. In this regard, it is expressly agreed that it is the
intent of Borrower, Agent and Lenders in the execution, delivery and acceptance
of this Note to contract in strict compliance with the laws of the Commonwealth
of Massachusetts from

                                     EC-2
<PAGE>
time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision( hereof or of any of the Loan Documents or the
Security Documents at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by applicable law, then
the obligation to be fulfilled shall automatically be reduced to the limit of
such validity, and if under or from any circumstances whatsoever Agent or
Lenders should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal balance evidenced hereby and not to the payment
of interest. This provision shall control every other provision of all
agreements among Borrower, the Guarantor, Agent and Lenders.

      8. Use of Proceeds.

      All proceeds of the Loan shall be used solely for the purposes more
particularly provided for and limited by the Loan Agreement.

      9. Security.

      This Note is secured by certain collateral as set forth in the Loan
Agreement, and any and all other collateral in which an interest may from time
to time be granted to the Agent, on behalf of the Lenders, as security herefor.
The collateral for this Note shall be held by the Agent, on behalf of the Lender
and the other Lenders.

      10. Notices.

      Any notices given with respect to this Note shall be given in the manner
provided for in the Loan Agreement.

      11. Governing Law and Consent to Jurisdiction.

      11.1 Substantial Relationship. It is understood and agreed that all of the
Loan Documents were delivered in the Commonwealth of Massachusetts, which
Commonwealth the parties agree has a substantial relationship to the parties and
to the underlying transactions embodied by the Loan Documents.

      11.2 Place of Delivery. Borrower agrees to furnish to Lender at Lender's
office in Boston, Massachusetts all further instruments, certifications and
documents to be furnished hereunder, if any.

      11.3 Governing Law. This Note shall in all respects be governed,
construed, applied and enforced in accordance with the internal laws of the
Commonwealth of Massachusetts without regard to principles of conflicts of law.

      11.4 Consent to Jurisdiction. Borrower hereby consents to the nonexclusive
personal jurisdiction in any state or Federal court located within the
Commonwealth of Massachusetts.

      12. Waiver of Jury Trial.

      BORROWER, AND, BY THEIR ACCEPTANCE HEREOF, AGENT AND LENDERS MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION

                                     EC-3
<PAGE>
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR LENDER TO ACCEPT THIS NOTE AND MAKE THE LOAN.

      13. No Oral Change.

      This Note and the other Loan Documents may only be amended, terminated,
extended or otherwise modified by a writing signed by the party against which
enforcement is sought. In no event shall any oral agreements, promises, actions,
inactions, knowledge, course of conduct, course of dealing, or the like be
effective to amend, terminate, extend or otherwise modify this Note or any of
the other Loan Documents.

      14. Rights of the Agent and Holder.

      This Note and the rights and remedies provided for herein may be enforced
by Agent, the Lender, or any subsequent holder hereof. Wherever the context
permits each reference to the term "holder" herein shall mean and refer to
Agent, the Lender, or the then subsequent holder of this Note.

      15. Right to Pledge.

      Lender may at any time pledge all or any portion of its rights under the
Loan Documents including any portion of this Note to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or enforcement thereof shall release Lender
from its obligations under any of the Loan Documents.

      16. Setoff

      Borrower hereby grants to Agent and each of the Lenders, a continuing
lien, security interest and right of setoff as security for all Obligations of
Borrower to Agent and the Lenders, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Agent or any
Lender or any entity under the control of Fleet National Bank and its successors
and assigns, or in transit to any of them. If any payment is not made when due
hereunder or under any of the Loan Documents, after giving regard to applicable
grace periods, if any, or if any Event of Default or other event which would
entitle Agent or any of the Lenders to accelerate the Loan occurs, the same or
any part thereof may to the fullest extent not prohibited by applicable law at
any time or from time to time, without regard to the existence, sufficiency or
adequacy of any other collateral, and without notice or compliance with any
other condition precedent now or hereafter imposed by statute, rule of law or
otherwise, all of which are hereby waived, be set off, appropriated and applied
by Agent or a Lender against any Obligation of Borrower irrespective of whether
demand shall have been made and although such Obligations may be unmatured, in
such manner as Agent in its sole and absolute discretion may determine. Within
five (5) Business Days of making any such set off, appropriation or application,
Agent agrees to notify Borrower thereof, provided the failure to give such
notice shall not affect the validity of such set off or appropriation or
application. ANY AND ALL RIGHTS TO REQUIRE AGENT OR LENDERS TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

                                     EC-4
<PAGE>
      17. Limitations on Recourse.

      The limitations on recourse set forth in Section 9.2 of the Loan Agreement
are incorporated herein by this reference.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     EC-5
<PAGE>
      IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as
of the date set forth above as a sealed instrument.

Witness:                      BORROWER:

                              KRAMONT OPERATING PARTNERSHIP, L.P.,
                              A Delaware limited partnership

                              By: Kramont Realty Trust,
                                  its sole general partner

                                 By:______________________________
                                    Louis P. Meshon, Sr., President

                                      EC-6
<PAGE>
                           EXHIBIT D TO LOAN AGREEMENT

                           AUTHORIZED REPRESENTATIVES

Louis P. Meshon, Sr. - President of Kramont Realty Trust

Carl Kraus - Chief Financial Officer of Kramont Realty Trust

Etta Strehle - Chief Accounting Officer of Kramont Realty Trust

                                     ED-1
<PAGE>
                           EXHIBIT E TO LOAN AGREEMENT

                  REQUIRED PROPERTY, HAZARD AND OTHER INSURANCE

      Borrower or the applicable Loan Party shall at all times provide and
maintain the following insurance coverages with respect to the Property and the
Collateral issued by companies qualified to do business in the applicable
jurisdictions where the Collateral Property is located, having a Best's Rating
of not less than A-VIII and otherwise acceptable to Administrative Agent in its
sole reasonable discretion:

            (i) physical insurance on an all-risk basis without exception
      (including, without limitation, flood required if property is in a
      "Special Flood Hazard Area" A or V), vandalism and malicious mischief,
      earthquake, collapse, boiler explosion, sprinkler coverage, mold
      infestation, cost of demolition, increased costs of construction and the
      value of the undamaged portion of the building and soft costs coverage)
      covering all the real estate, fixtures and personal property to the extent
      of the full insurable value thereof, on a builder's risk non-reporting
      form prior to completion and occupancy to Occupy Endorsement, having
      replacement cost and agreed amount endorsements (with deductibles not in
      excess of it of insurable value);

            (ii) rent loss or business interruption insurance in an amount equal
      to one year's projected rentals or gross revenues;

            (iii) public liability insurance, with underlying and umbrella
      coverages totaling not less than $25,000,000.00 per occurrence and
      $25,000,000.00 in the aggregate or such other amounts as may be determined
      by Administrative Agent from time to time;

            (iv) automobile liability insurance (including non-owned automobile)
      with a coverage of $1,000,000 per occurrence during construction;

            (v) worker's compensation, employer's liability and other insurance
      required by law;

            (vi) such other insurance coverages in such amounts as
      Administrative Agent may request consistent with the customary practices
      of prudent developers and owners of similar properties.

An actual insurance policy or certified copy thereof, or a binder, certificate
of insurance, or other evidence of property coverage in the form of Acord 27
(Evidence of Property Coverage), Acord 25 (Certificate of Insurance), or a
30-day binder in form acceptable to Administrative Agent with an unconditional
undertaking to deliver the policy or a certified copy within thirty (30) days,
shall be delivered at closing of the Loan and prior to the first Loan Advance.

      Flood insurance shall be provided if the property or the collateral is
located in a flood prone, flood risk or flood hazard area as designated pursuant
to the Federal Flood Disaster Protection Act of 1973, as amended, and the
Regulations thereunder, or if otherwise reasonably required by Administrative
Agent.

      Administrative Agent, on behalf of the Lenders, shall be named as first
mortgagee on policies of all-risk-type insurance on the Collateral Property, as
loss payee on the Collateral and its contents, and as first mortgagee on
rent-loss or business interruption coverages related thereto.

                                      EE-1
<PAGE>
      Except with respect to public liability insurance, as to which
Administrative Agent, on behalf of the Lenders, shall be named as an additional
insured with respect to the Collateral Property or the Collateral, all other
required insurance coverages shall have a so-called "Mortgagee's endorsement" or
"Lenders' loss-payable endorsement" which shall provide in substance as follows:

            A. Subject to the terms of this Agreement, loss or damage, if any,
      under the policy shall be paid to Administrative Agent and its successors
      and assigns, on behalf of the Lenders, in whatever form or capacity its
      interest may appear and whether said interest be vested in said
      Administrative Agent in its individual or in its disclosed or undisclosed
      fiduciary or representative capacity, or otherwise, or vested in a nominee
      or trustee of said Administrative Agent.

            B. The insurance under the policy, or under any rider or endorsement
      attached thereto, as to the interest only of Administrative Agent and its
      successors and assigns, on behalf of the Lenders, shall not be invalidated
      nor suspended:

                  (a) by any error, omission or change respecting the ownership,
            description, possession or location of the subject of the insurance
            or the interests therein or the title thereto; or

                  (b) by the commencement of foreclosure or similar proceedings
            or the giving of notice of sale of any of the property covered by
            the policy by virtue of any mortgage, deed of trust, or security
            interest; or

                  (c) by any breach of warranty, act, omission, neglect, or
            noncompliance with any provisions of the policy by the named
            insured, or any one else, whether before or after a loss, which
            under the provisions of the policy of insurance, would invalidate or
            suspend the insurance as to the named insured, excluding, however,
            any acts or omissions of Administrative Agent while exercising
            active control and management of the insured property.

            C. Insurer shall provide Administrative Agent and each of the
      Lenders with not less than thirty (30) days, prior written notice of
      cancellation of the policy (for non-payment or any other reason) or of the
      non-renewal thereof.

            D. The insurer reserves the right to cancel the policy at any time,
      but only as provided by its terms. However, in such case this policy shall
      continue in force for the benefit of Administrative Agent, on behalf of
      the Lenders, for thirty (30) days after written notice of such
      cancellation is received by Administrative Agent and shall then cease.

            E. Should legal title to and beneficial ownership of any of the
      property covered under the policy become vested in Administrative Agent or
      its agents, successors or assigns, insurance under the policy shall
      continue for the term thereof for the benefit of Administrative Agent.

            F. All notices herein provided to be given by the insurer to
      Administrative Agent in connection with this policy and Administrative
      Agent's loss payable endorsement shall be mailed to or delivered to
      Administrative Agent by certified or registered mail, return receipt
      requested, as follows:

                                     EE-2
<PAGE>
Fleet National Bank
Post Office Box 2984
Hartford, Connecticut 06101-2984
Mail Code CT4M10J
Attention: Central Insurance Unit

                                      EE-3
<PAGE>
                           EXHIBIT F TO LOAN AGREEMENT

            OWNERSHIP INTERESTS AND TAXPAYER IDENTIFICATION NUMBERS

                                      EF-1
<PAGE>
                           EXHIBIT G TO LOAN AGREEMENT

                             COMPLIANCE CERTIFICATE

TO:   The Administrative Agent and Lenders party to the Loan Agreement Described
      Below

      This Compliance Certificate is furnished pursuant to that certain Loan
Agreement dated as of December 20, 2002 (the "Loan Agreement"), among Kramont
Operating Partnership, L.P. ("Borrower"), Fleet National Bank, as Administrative
Agent and the Lenders identified therein. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings ascribed
thereto in the Loan Agreement.

      THE UNDERSIGNED HEREBY CERTIFIES THAT:

      1. I am the duly elected/authorized ______________________ of Kramont
Realty Trust, general partner of the Borrower.

      2. I have reviewed the terms of the Loan Agreement and I have made, or
have caused to be made under my supervision, a review of the transactions and
conditions of the Borrower during the accounting period covered by the attached
financial statements.

      3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Event of Default or an event which, with notice or the passage of time or both,
would constitute an Event of Default during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.

      4. Schedule 1 attached hereto sets forth financial data and computations
for the period ending __________ evidencing the Borrower's compliance with
certain covenants of the Loan Agreement, except as set forth below, all of which
data and computations are true, complete and correct to my knowledge.

      Described below are the exceptions, if any, to paragraphs 3 and 4, listing
the nature of the condition or event, the period during which it has existed and
the action which the Borrower has taken, is taking, or proposes to take with
respect to each such condition or event:
________________________________________________________________________________
________________________________________________________________________________

                                     EG-1
<PAGE>
      IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___
day of __________, 200___.

                             KRAMONT OPERATING PARTNERSHIP, L.P.,
                             a Delaware limited partnership

                             By: Kramont Realty Trust,
                                 its general partner

                                 By:
                                    ------------------------------------

                                     EG-2
<PAGE>
                      SCHEDULE 1 TO COMPLIANCE CERTIFICATE

<TABLE>
<CAPTION>
        COVENANT                     REQUIREMENT                   ACTUAL
-------------------------   -----------------------------      ----------------
<S>                         <C>                                <C>
Interest Expense Coverage   Not less than 1.75:1
Leverage Ratio              Less than 65%
Fixed Charge Ratio          Closing Date through
                            December 31, 2003, not less than 1.35:1.
                            January 1, 2004 through
                            December 31, 2004, not less
                            than 1.45:1.
                            January 1, 2005 through
                            Maturity Date, not less than
                            1.50:1.

Borrower's Net Worth        Not less than $240,000,000
                            plus 90% of cumulative net
                            cash proceeds and value of
                            assets acquired, as set forth in
                            the Loan Agreement
</TABLE>

                                      EG-3
<PAGE>
                           EXHIBIT H TO LOAN AGREEMENT

                       FORM OF ASSIGNMENT AND ACCEPTANCE

                           Dated: as of _______________

      Reference is made to the Loan Agreement, dated as of December 20, 2002 (as
amended and in effect from time to time, the "Loan Agreement"), among Kramont
Operating Partnership, L.P., a Delaware limited partnership (the "Borrower"),
Fleet National Bank (the "Administrative Agent") and the Lenders named therein.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Loan Agreement.

      ________________ (the "Assignor") and _____________ (the "Assignee") agree
      as follows:

      5. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a __________ (____%) interest in
and to all of the Assignor's rights and obligations under the Loan Documents as
of the Effective Date (as hereinafter defined). The amount of the Assignor's
Commitment being purchased by and assigned to the Assignee as of the Effective
Date is $____________

      6. The Assignor (i) represents that as of the date hereof, its Commitment
Percentage (without giving effect to assignments thereof which have not yet
become effective) is ______ and the outstanding balance of the Loan owing to the
Assignor under the Note held by the Assignor (unreduced by any assignments
thereof which have not yet become effective) is $__________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto, other than that the Assignor is the legal and
beneficial owner of the interest being assigned by it hereunder, that such
interest is free and clear of any adverse claim, that it is legally authorized
to enter into this Assignment and Acceptance, and it has no knowledge of the
occurrence of an Event of Default under the Loan Agreement; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, Guarantor, or any other person which may be
primarily or secondarily liable in respect of any of the Obligations or any of
their obligations, or the performance or observance by the Borrower, Guarantor,
or any other person primarily or secondarily liable in respect of any of the
obligations under any of the Loan Documents or any other instrument or document
delivered or executed pursuant thereto; and (iv) requests that the
Administrative Agent reflect on the Register maintained by the Administrative
Agent the assignment to the Assignee of that portion of the Assignor `s
Commitment as set forth herein.

      7. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Loan Documents, together with copies of the most recent financial
statements of the Borrower and the Guarantor delivered pursuant to the Loan
Agreement and such other documents and information as the

                                     EH-1
<PAGE>
Assignee has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Assignor or any Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents; (iv) confirms that it is an Eligible Assignee; (v) appoints
and authorizes the Administrative Agent to take such action as Administrative
Agent on its behalf and to exercise such powers as are expressly delegated to or
conferred upon the Administrative Agent as Administrative Agent by the terms of
the Loan Documents together with such other powers as are reasonably incidental
thereto; (vi) agrees that it will perform all the obligations which by the terms
of the Loan Documents are required to be performed by the Assignee as a Lender
in accordance with the terms of the Loan Documents; and (vii) specifies as to
its address for notices the office set forth beneath its name on the signature
page hereof.

      8. The effective date for this Assignment and Acceptance shall be
______________ , ______(the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording in the Register by the Administrative Agent.

      9. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Loan Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder, and (ii) the Assignor shall, with respect to that portion of
its interest under the Loan Documents assigned hereunder relinquish its future
rights and be released from its future obligations under the Loan Documents but
shall remain liable for all obligations which arose prior to such assignment.

      10. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the rights and
obligations assigned hereby (including payments of principal, interest, fees and
other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date by
the Administrative Agent or with respect to the making of this assignment
directly between themselves.

      11. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.

                                     EH-2
<PAGE>
      IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.

                                    ______________
                                    "Assignor"

                                    By:___________________________

                                    Title:________________________

                                    ______________
                                    "Assignee"

                                    By:___________________________

                                    Title:________________________

              Notice Address:       ______________
                                    ______________
                                    ______________

                                    Telephone No.:  _____________
                                    Telecopier No.: _____________

                                      EH-3
<PAGE>
                          EXHIBIT I TO LOAN AGREEMENT

                               LENDERS' COMMITMENT

<TABLE>
<CAPTION>
       Lender              Commitment Amount       Commitment Percentage
       ------              -----------------       ---------------------
<S>                        <C>                     <C>
Fleet National Bank         $52,500,000.00               52.5%

Wilmington Trust of         $15,000,000.00              15.00%
Pennsylvania

Wachovia Bank, National     $10,000,000.00              10.00%
Association

Compass Bank                $15,000,000.00              15.00%

Firstrust Bank              $ 7,500,000.00               7.50%
</TABLE>

                                      EI-1
<PAGE>
                                    EXHIBIT J

                           BORROWING BASE PROPERTIES

<TABLE>
<CAPTION>
Borrowing Base Property          Adjusted Appraised Value    Maximum Property Amount
                                 as of Closing
---------------------------      ------------------------    ------------------------
<S>                              <C>                         <C>
Park Center, Columbia,           $7,150,000
South Carolina; 190,705 sf

Park Center-Stein Mart,          $2,950,000
Columbia, South Carolina;
36,000 sf

Cherry Square, Northampton,      $7,150,000
Pennsylvania; 75,005 sf

Century Plaza, Deerfield         $12,000,000                 $13,200,000.00
Beach, Florida; 90,669 sf

Bainbridge Town Center,          $7,150,000
Bainbridge, Georgia; 143,729
sf

Wampanoag Plaza, East            $9,500,000
Providence, Rhode Island;
190,357 sf

Barn Plaza, Doylestown,          $5,950,000
Pennsylvania; 48,840 sf

The Mall at Cross County,        $7,900,000                  $ 8,690,000.00
Yonkers, New York; 46,200
sf

Franklin Center,                 $6,900,000
Chambersburg,
Pennsylvania; 174,892 sf

Magnolia Plaza, Morganton,       $5,700,000
North Carolina; 104,539 sf

Tower Plaza, Carrollton,         $4,400,000
Georgia; 87,990 sf

Valley Fair, Tredyffrin,         $6,650,000
Pennsylvania; 65,213 sf
</TABLE>

                                      EJ-1
<PAGE>
<TABLE>
<S>                              <C>                        <C>
East Main Center,                $5,600,000
Spartanburg, South Carolina;
190,687 sf

Northpark Center, Macon,         $12,500,000
Georgia; 195,355 sf

Killingly Plaza, Killingly,      $8,350,000
Connecticut; 75,376 sf

Harrodsburg, Harrodsburg,        $3,800,000
Kentucky; 60,048 sf
</TABLE>

                                      EJ-2
<PAGE>
                               SCHEDULE 6.14.2(i)

        Schedule of Borrowing Base Property Owners with Leasehold Estates

1     KR Barn, L.P. - Barn Plaza

2.    Lilac DE LLC - Mall at Cross County (leasehold estate in Block 5175, Lot 1
      only)

3.    KR Development LP - Valley Fair

                                      Sch-1
<PAGE>
                               SCHEDULE 6.14.4(ii)

To the Borrower's knowledge, none of the Borrowing Base Property Owners is in
default in the performance of any material obligation under any Major Lease,
except as alleged in the estoppel certificates delivered to Lenders as of the
date of the Loan Agreement for the following tenants under Major Leases:

<TABLE>
<CAPTION>
TENANT UNDER A MAJOR LEASE:              BORROWING BASE PROPERTY:
---------------------------              ------------------------
<S>                                      <C>
Stein Mart, Inc.                         Park Centre Stein Mart

KMart Corporation                        Bainbridge Town Center

Family Dollar Stores of Georgia, Inc.    Tower Plaza
</TABLE>

                                      Sch-2
<PAGE>
                              SCHEDULE 6.14.4(iii)

                                     Sch-3
<PAGE>
                               SCHEDULE 6.14.4(iv)

Tenants under a Major Lease against whom action, voluntary or involuntary, is
pending under bankruptcy or insolvency laws:

<TABLE>
<CAPTION>
TENANT UNDER A MAJOR LEASE:        BORROWING BASE PROPERTY:
---------------------------        ------------------------
<S>                                <C>
KMart Corporation                  Magnolia

KMart Corporation                  NorthPark Center

KMart Corporation                  Bainbridge Town Center
</TABLE>

                                      Sch-4
<PAGE>
                                SCHEDULE 6.14.5

                           Schedule of Ground Lessees

1.    KR Barn, L.P. - Affiliate

2.    Lilac DE LLC - Affiliate

3.    KR Development LP - Affiliate

                                                              751410.3

                                      Sch-5<PAGE>

                                                                    Exhibit 10.1

G1

     NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE ON CONVERSION OF
THIS NOTE (THE "SHARES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE
HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS NOTE AND THE SHARES MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OR DISPOSED OF UNLESS THE NOTE OR THE SHARES AS THE CASE MAY BE, HAS
BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS ARE
AVAILABLE.

     IF THE HOLDER OF THIS NOTE WAS AN AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE THREE MONTHS PRECEDING THE DATE OF ANY SUCH TRANSFER, THE FOREGOING
CONDITIONS MUST BE COMPLIED WITH REGARDLESS OF WHEN SUCH TRANSFER IS MADE.

     ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE U.S. INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED
IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED.

     THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY ANY AGENCY OF THE
UNITED STATES GOVERNMENT.

                            HARKEN ENERGY CORPORATION
                 7% SENIOR CONVERTIBLE NOTES DUE 2007, SERIES G
                                      NOTE

     Harken Energy Corporation, a Delaware corporation (hereinafter, the
"Company," which term includes any successor to the Company), for value
received, hereby promises to pay to Waverley Investments Limited, upon
presentation and surrender of this Note (the "Note") the principal sum of THREE
MILLION FOUR HUNDRED AND TEN THOUSAND DOLLARS (U.S. $3,410,000) (the "Principal
Amount") on March 31, 2007, and to pay interest thereon in cash from and
including March 12, 2003, semi-annually in arrears on September 30 and March 31
in each year, commencing September 30, 2003 (each an " Interest Payment Date"),
at the rate of 7% per annum, calculated on the basis of a 360-day year
consisting of twelve 30-day months, until the principal hereof is paid or
payment thereof is duly provided for; provided, however, that the Principal
Amount payable upon presentation and surrender may be reduced from time to time
in connection with conversions, redemptions, purchases, cancellations and
similar events described in the Terms and Conditions hereof, and such reductions
shall be duly noted on Schedule A hereto (which is incorporated herein by this
reference as if set out in full); and provided further that interest accruing
after the date of a reduction in Principal Amount shall be calculated with
reference to the new Principal Amount.

<PAGE>

     Payments of interest on this Note shall be paid by the Company on each
Interest Payment Date, commencing September 30, 2003, to a bank account
nominated in writing by the registered holder of such Note as shown in the Note
Register at the close of business on the applicable Record Date.

     Upon failure of the Company to make any payment of interest or principal on
the date when due and payable, the outstanding principal balance of the Notes
and, to the extent permitted by law, interest thereon will bear interest at the
Default Rate beginning on the date such payment was due until the default is
cured.

     Notwithstanding any other provision of the Note to the contrary, in no
event shall the interest contracted for, charged or received in connection with
the Note (including any other costs or considerations that constitute interest
under applicable law which are contracted for, charged or received pursuant to
the Notes) exceed the maximum rate of nonusurious interest allowed under
applicable law as presently in effect and to the extent an increase is allowable
by such laws, but in no event shall any amount ever be paid or payable greater
than the amount contracted for in the Note, and all amounts paid by the Company
which constitute usurious interest under the applicable law shall be applied in
the manner described herein.

     To the extent permitted by law, interest contracted for, charged or
received on the Note shall be allocated over the entire term of this Note, to
the end that interest paid on the Note does not exceed the maximum amount
permitted to be paid thereon by law.

     The principal on this Note shall be paid to a bank account nominated in
writing by the registered holder of this Note as shown on the Note Register at
the close of business on the applicable Record Date.

         This Note has been issued pursuant to resolutions adopted by the Board
of Directors of the Company by unanimous written consent effective 3 March 2003.

     This Note and the Terms and Conditions shall be governed by and construed
in accordance with the laws of the State of New York.

                                                                               2

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed in its
corporate name by the manual or facsimile signatures of the undersigned duly
authorized officers of the Company.

Dated as of  March 18, 2003.

                                            HARKEN ENERGY CORPORATION

                                            By:  /s/ Bruce N. Huff
                                               --------------------------------
                                                 Bruce N. Huff, President and
                                                 Chief Operating Officer

[Corporate Seal]

ATTEST:

By: /s/ A. Wayne  Hennecke
   ---------------------------------
    A. Wayne Hennecke,
    Senior Vice President-Finance
    and Secretary

                                                                               3

<PAGE>

                        TERMS AND CONDITIONS OF THE NOTE

     The U.S. $3,410,000 of 7% Senior Convertible Note Due 2007, Series G (the
"Note" or "Notes") of Harken Energy Corporation, a Delaware corporation (the
"Company") is constituted by, and authorized to be issued pursuant to these
Terms and Conditions and resolutions of the Board of Directors of the Company by
unanimous written consent effective on 3 March 2003.

     Certain terms not otherwise defined in the text hereof are defined in
Condition 19 herein.

1. Form, Denominations, and Title, and Certain Administrative Provisions

     (A) The Note is issued in registered certified form in denominations of
U.S. $1,000 or multiples thereof (the "Authorized Denomination") and with such
numerical and other identification designation as the Company shall deem
desirable.

     (B) Title to the Note will pass by form of transfer as set out in Schedule
C and reregistration of new ownership in the Note Register. The Company may (to
the fullest extent permitted by applicable laws) deem and treat the registered
Holder of the Note as the absolute owner thereof for all purposes (whether or
not the Note shall be overdue and notwithstanding any notice to the contrary).

     (C) The Note shall be executed on behalf of the Company by its President
and Chief Operating Officer under its corporate seal or a facsimile of such seal
reproduced thereon and attested by its Senior Vice President-Finance and
Secretary or an Assistant Secretary. The signature of any of these officers on
the Note may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the Note.

     The Note bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of the Note or did not hold such offices at the
date of the Note.

     Upon surrender for transfer or exchange of the Note to the Company, if it
will serve as Note Registrar, or to the office of the Note Registrar designated
by the Company for that purpose, the Company shall execute and deliver in the
name of the transferee or transferees a new Note or Notes of the same series and
interest rate and in Authorised Denominations, and for the aggregate principal
amount the owner is entitled to receive. No transfer of the Note shall be
binding upon the Company, unless made at such office and shown on the Note
Register. The Bank of New York will initially serve as the Note Registrar.

     In case the Company, pursuant to Conditions 3(B) and 3(C), shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its Properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have entered into an amendment
hereto, the Note may, from time to time, at the request of the successor Person,
be exchanged for another Note executed in the name of the successor Person with
such changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Note surrendered for such exchange and of like
principal amount.

     (D) Except as otherwise provided herein, no service charge shall be made
for any exchange, conversion or redemption of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any exchange of Notes.

                                                                               4

<PAGE>

     (E) (1) The Holder of this Note may grant proxies and otherwise authorize
any person to take any action which a Noteholder is entitled to take under these
Terms and Conditions.

     (2) Nothing contained herein shall be deemed to authorize any transfers of
this Note otherwise than in accordance with the Securities Act. Unless otherwise
required by applicable law, the Company shall not recognize or give effect to
any attempt to transfer or convert any Note or any interest therein in violation
of the Securities Act.

     (F) The Noteholder by acceptance of the Note hereby covenants and agrees
that neither the Note nor the Conversion Shares will be offered, sold,
transferred, pledged, converted or otherwise disposed of unless the Note and/ or
the Conversion Shares have been registered under the Securities Act or any
applicable state securities or blue sky laws or exemptions from the registration
requirements of such laws are available.

     (G) If (i) any mutilated Note is surrendered to the Company or the Note
Registrar, or (ii) the Company or the Note Registrar, as the case may be,
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Note Registrar such security
and/or indemnity as may be required by them to save them harmless, then, in the
absence of notice to the Company or the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Company shall execute and deliver, in
exchange for any such mutilated Note or in lieu of any such destroyed, lost or
stolen Note, a new Note of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.

     In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note, as the case may be.

     Upon the issuance of any new Note under this Condition, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith.

     Every new Note issued pursuant to this Condition in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all
benefits hereunder equally and proportionately with any and all other Notes duly
issued hereunder.

     The provisions of this Condition are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of a mutilated, destroyed, lost or stolen Note.

     (H) The Company shall maintain an office or agency where the Note may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent" or
"paying agent"). The Registrar shall keep a register of the Note and of its
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" or "paying agent" includes any additional paying
agent. The Company may change any paying agent or Registrar without notice to
any Holder. The Company shall notify the Noteholder in writing of the name and
address of the Registrar or any paying agent, if the Company is not serving as
such. The Company or any of its Subsidiaries may act as paying agent or
Registrar. The Bank of New York will initially act as Registrar and paying
agent.

2. Status

     The Note is a direct, unconditional and unsecured obligation of the
Company. The Note will rank senior to all Subordinated Obligations of the
Company, present and future, but, in the event of bankruptcy or insolvency of
the Company, only to the extent permitted by the applicable laws relating to
creditors' rights. The Notes will not be secured by any assets or property of
the Company. The Note will rank pari passu with all other present and future

                                                                               5

<PAGE>

Indebtedness of the Company (including the Company's 5.0% Senior Convertible
Notes due 2003) other than Subordinated Obligations.

3. Covenants

     (A) The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
(charter and statutory) and franchises of the Company; provided, however, that
the Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer in
the best interests of the Company and the conduct of its business, and that the
loss thereof is not disadvantageous in any material respect to the Noteholders;
and provided, further, that nothing contained in this Condition 3(A) shall
prohibit any transaction permitted by Condition 3(B) or Condition 3(C) herein.

     (B) The Company will not merge or consolidate with or sell, convey,
transfer or lease or otherwise dispose of all, or substantially all of its
Properties and assets substantially as an entirety to any Person, unless: (a)
either (i) the Company shall be the surviving Person or (ii) the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or the Person which acquired by conveyance or transfer, or which
leases, the Properties and assets of the Company substantially as an entirety
(1) shall be a Person organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and (2)
shall expressly assume, by a written instrument, the Company's obligation for
the due and punctual payment of the principal of and interest on the Note and
the performance and observance of every Term and Condition contained herein.

     (C) Upon any consolidation of the Company with or merger of the Company
with or into any other Person or any conveyance, transfer or lease of the
Properties and assets of the Company substantially as an entirety to any person,
the successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under the Terms and Conditions contained herein with the same effect as if such
successor Person had been named as the Company herein, and in the event of any
such conveyance or transfer, the Company, except in the case of a lease, shall
be discharged of all obligations and covenants under the Note and may be
dissolved and liquidated.

     (D) The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or Property of the Company and (b) all lawful claims for labour,
materials and supplies which, if unpaid, might by law become a Lien upon the
Property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.

     (E) The Company will not amend its Certificate of Incorporation or Bylaws
except as required by law, except in respect to such amendments that the Board
of Directors reasonably determines do not materially adversely affect the rights
of the Noteholder, or except to the extent that such amendment would not have a
material adverse effect on (a) the ability of the Company to perform its
obligations under the Note or (b) the rights of the Noteholder, except that
neither (i) increases in the number of Shares and issuance thereof with related
securities, nor (ii) designations of Preferred Stock of the Company,
modifications of the terms of such designations and issuance thereof with
related securities, nor (iii) modification or expansion of the indemnity
provisions provided by the Company to its directors and officers, nor (iv)
change of the Company's registered agent shall be deemed an amendment hereunder.

     (F) To the extent permitted by law, the Company will provide to the
Noteholder such statements, certificates or other documentation concerning the
organization or operations of the Company as may be reasonably necessary to
establish any exceptions or exemptions from United States federal income tax
withholding and reporting requirements.

                                                                               6

<PAGE>

     (G) The Company shall file a registration statement on Form S-3 (or such
other form as the Company may determine is appropriate or required under the
rules of the Commission), within ninety (90) days following the Issue Date in
respect of all Shares that may be issuable at any time upon the conversion
and/or redemption of the Note. The Company shall use its best efforts to cause
the Commission to declare such registration statement (and any necessary
amendments thereto) effective. The Company shall also use its best efforts to
maintain the effectiveness of such registration statement, and to refile such a
registration statement from time to time in the event its effectiveness lapses,
until all such Shares that either are issued or that may be issued are Freely
Tradable in the United States.

     While any Conversion Right remains exercisable, the Company will use its
best efforts to list and maintain a listing of all Shares issued upon conversion
or redemption of the Note on a Stock Exchange. In the event a Stock Exchange
requires stockholder approval in order to complete the listing of the Shares to
be so issued upon conversion or redemption of the Note, then the Company will
use its best efforts to obtain such stockholder approval at the earliest
possible stockholder meeting. In this event, the conversion or redemption in
Shares will occur only if and when stockholder approval has been obtained. If
the Company is unable to obtain or maintain such listing of Shares, it will
forthwith give not less than 30 calendar days notice to the Noteholder of the
listing, de-listing or quotation or lack of quotation of the Shares (as a class)
by any such Stock Exchange.

     (H) If the Company shall at any time act as its own paying agent, it will,
on or before each due date of the principal of or interest on any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided.

4. Interest

     The Note bears interest from (and including) March 12, 2003 (the "Issue
Date"), at the rate of seven percent (7%) per annum, payable semi-annually in
arrears on September 30 and March 31 in each year (each an "Interest Payment
Date"), the first such payment to be made on September 30, 2003, in respect of
the period from (and including) March 12, 2003 to (but excluding) September 30,
2003, and this interest payable will equal U.S. $35.00 per U.S. $1,000 principal
amount of the Note for each complete semi-annual interest period.

     The Note will cease to bear interest (i) from its due date for redemption
unless the Company shall default in the payment of the Redemption Price, in
which event interest shall continue to accrue as provided in herein, or (ii)
where the Conversion Right shall have been voluntarily exercised by the
Noteholder, from the Conversion Date, or (iii) in the case of a Mandatory
Conversion, from the Mandatory Conversion Date.

     Any money held by the Company in trust for the payment of the principal of
or interest on the Note and remaining unclaimed for two years after such
principal or interest has become due and payable shall be discharged from such
trust; and the Holder of the Note shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Company with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.

     Interest is calculated on the basis of a 360 day year consisting of 12
months of 30 days each and, in the case of an incomplete month, the number of
days elapsed.

5. Payments

     Payments of interest on the Note shall be paid by the Company or its paying
agent on each Interest Payment Date, commencing September 30, 2003, to the
Holder of such Note as shown on the Note Register at the close of business on
the applicable Record Date. The principal of and interest on the Notes shall be
payable in lawful money of the United States of America (a) on each Interest
Payment Date, by check mailed on the applicable payment date

                                                                               7

<PAGE>

to the Holder thereof on the Record Date at its address shown on the
registration books of the Company kept by the Paying Agent, as Registrar,
without the need to present or surrender the Note, and (b) upon its presentation
and surrender as it becomes due and payable in full, whether at maturity or by
prior redemption, at the principal specified office of the Agent.
Notwithstanding the foregoing, at the option of any of the Holders of $1,000,000
in aggregate principal amount of the Notes, payment of principal and interest on
each Note may be transmitted by wire transfer to such Holders' account on file
with the Paying Agent upon the such Holder's written request delivered to the
Paying Agent; provided that that the final payment of principal shall be made
upon presentation of the Notes at the office of the Paying Agent designated for
such purpose.

     If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner to the Persons who are Holders on a
subsequent special record date. The Company shall notify the Agent in writing of
the amount of defaulted interest proposed to be paid on the Notes and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date; provided that no such special record date
shall be less than ten (10) days prior to the related payment date for such
defaulted interest. At least 15 days before the special record date, the
Company, or the Agent, upon the written request of the Company and in the name
and at the expense of the Company, shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such defaulted interest to be paid.

     Payments of principal in respect of the Note and any net proceeds from the
sale of Shares payable under Condition 6(D) will only be made, against
presentation and surrender of the certificate for the Note at the specified
office of the Company or its paying agent. All payments of principal and
interest shall be made in U.S. dollars. Each such payment and any payment of the
net proceeds of the sale of Shares pursuant to Condition 6(D) will be made at
the specified office of the Company or its paying agent, at the option of the
Holder, by U.S. dollar cheque mailed to an address, or delivered in accordance
with the Holder's instructions, or by transfer to a U.S. dollar account
maintained by the Holder in accordance with the holder's instructions, subject
in all cases to any applicable fiscal or other laws and regulations, but without
prejudice to the provisions of Condition 9.

     If, at any time, in the opinion of the Company or of the paying agent,
payments in U.S. dollars cannot be so made, payments will be made in U.S.
dollars in such other manner as may be approved by the Company and the paying
agent and notice of the alternative manner of payment will be given to the
Noteholder in accordance with Condition 15.

     All monies paid by the Company to a paying agent for the payment of
principal or interest on any Note which remain unclaimed at the end of two (2)
years after the principal on such Note will have become due and payable will be
repaid to the Company and the Holder of such Note will thereafter have only the
rights of a creditor of the Company as described in these Terms and Conditions
or such rights as may be otherwise provided by applicable law.

     A Holder shall be entitled to present a Note for payment only on a
Presentation Date and shall not be entitled to any further interest or other
payment if a Presentation Date is after the due date.

     When making payments to Noteholders, fractions of one cent will be rounded
down to the nearest whole cent.

6. Conversion

     (A) Optional Conversion by the Noteholder; Conversion Period and Price

          (i) Noteholders have the right, subject as provided herein and to any
     applicable laws and regulations, to require the Company to convert all or
     any of the Note at its principal amount into Shares at any time during the
     Conversion Period ("Conversion Right"). The Conversion Period begins after
     the earlier to occur of (I)

                                                                               8

<PAGE>

     the close of the effective date of a Registration Statement filed by the
     Company with the Commission with respect to the Shares or (II) the date
     such Shares may be sold pursuant to the exemption from registration under
     the Securities Act provided by Rule 144 or other exemption from
     registration under the Securities Act, and ends upon the earliest to occur
     of (A) the second Business Day prior to the later of March 31, 2007, or the
     date on which all principal and interest on the Note is repaid in full, (B)
     if such Notes shall have been called for redemption pursuant to Condition
     7, the close of the second Business Day prior to the Redemption Date, or
     (C) the effective date of a Mandatory Conversion. Upon conversion, the
     right of the converting Noteholder to repayment of the principal amount of
     the Note to be converted (and, subject as provided in Condition 6(B)(iv),
     accrued and unpaid interest thereon) shall be extinguished and released,
     and in consideration and in exchange therefor the Company shall allot and
     issue Shares credited as paid up in full as provided in this Condition 6.

          The number of Shares to be issued on conversion of a Note will be
     determined by dividing the principal amount of the Note to be converted,
     plus accrued and unpaid interest thereon, by the Conversion Price, (as
     defined below) in effect on the Conversion Date, with the result being
     rounded down to the nearest whole number.

          (ii) A Conversion Right may only be exercised in respect of the
     Authorized Denomination or multiples thereof of Notes. If more than one
     Note is converted at any one time by the same Holder, the number of Shares
     to be issued upon such conversion will be calculated on the basis of the
     aggregate principal amount of the Notes to be converted. Fractions of
     Shares will not be issued on conversion and no cash adjustments will be
     made in respect thereof.

          (iii) Except for conversions pursuant to Condition 7(B)(iii), the
     price at which Shares will be issued upon the exercise of a Conversion
     Right (the "Conversion Price") initially will be U.S. $0.50. The Conversion
     Price will be subject to adjustment in accordance with the manner provided
     in Condition 6(C). The Company shall give notice of any adjustment of the
     Conversion Price in accordance with Condition 15 within ten (10) Business
     Days with effective date of such adjustment.

          (iv) Notwithstanding the provisions of paragraph (i) of this Condition
     6(A), if the Company shall default in making payment in full in respect of
     any Note which shall have been called for redemption or shall fail to issue
     Shares in respect of any Conversion or redemption, then, from the Relevant
     Date, interest shall continue to accrue on such Note and the Conversion
     Right attaching to such Note will continue to be exercisable (unless
     already exercised by the Company pursuant to Condition 6(D)) up to, and
     including the close of business (at the place where the Note is deposited
     in connection with the exercise of the Conversion Right) on the date upon
     which the full amount of the monies payable in respect of such Note has
     been duly received by the Holder or, or the date of the issuance of the
     Conversion Shares or redemption Shares.

     (B) Procedure for Conversion

     (i) To exercise the Conversion Right attaching to any Note, the Holder
thereof must complete, execute and deposit at his own expense during normal
business hours at the specified office of the Company, a notice of conversion (a
"Conversion Notice") in the form for the time being currently obtainable from
the specified office of the Company, together with the relevant Note and any
amount to be paid by the Noteholder pursuant to this Condition 6(B)(i). The form
of Conversion Notice is attached hereto as Exhibit A.

          The Conversion Date must fall at a time when the Conversion Right
     attaching to that Note is expressed in these Conditions to be exercisable
     and will be deemed to be the date of the surrender of the Note and delivery
     of such Conversion Notice and, if applicable, any payment to be made or
     indemnity given under these Conditions in connection with the exercise of
     such Conversion Right.

          A Noteholder delivering a Note for conversion must pay any taxes and
     capital, stamp, issue and registration duties arising on conversion (other
     than any taxes or capital, or stamp duties payable in the U.S. or required
     by any Stock Exchange, by the Company in respect of the allotment and issue
     of Shares and listing of the Shares on conversion). A Conversion Notice
     delivered shall be irrevocable.

                                                                               9

<PAGE>

     (ii) As soon as practicable, and in any event not later than fourteen (14)
calendar days after the Conversion Date, the Company will in the case of Notes
converted on exercise of the Conversion Right or a Note being converted in
accordance with Condition 6(D) and in respect of which a Conversion Notice or
has been delivered and the relevant Note and amounts payable by the relevant
Noteholder deposited as permitted by sub-paragraph (i) above, cause the person
or persons designated for the purpose in the Conversion Notice to be registered
as holder(s) of the relevant number of Shares and will make a certificate or
certificates for the relevant Shares available for collection at the Company's
principal office in Houston, Texas or at the Company's transfer agent in New
York, New York, or, if so requested in the relevant Conversion Notice, will
deliver such certificate or certificates to the person and at the place
specified in the Conversion Notice, at the risk of the Noteholder, together with
any other securities, property or cash required to be delivered upon conversion
and such assignments and other documents (if any) as may be required by law to
effect the transfer thereof.

     (iii) The person or persons specified for that purpose will be deemed for
all purposes to be the Holder of record of the number of Shares issuable upon
conversion with effect from the Conversion Date or Mandatory Conversion Date, as
the case may be. The Shares issued upon conversion of the Notes will in all
respects rank pari passu with the issued and outstanding Shares of Common Stock
in issue on the relevant Conversion Date or Mandatory Conversion Date, as the
case may be, except for any right excluded by mandatory provisions of applicable
law. A Holder of Shares issued on conversion of Notes shall not be entitled to
any rights for any record date which precedes the relevant Conversion Date or
Mandatory Conversion Date, as the case may be.

     (iv) If any notice requiring the redemption of any Notes is given pursuant
to Condition 7(B) on or after the fifteenth (15th) calendar day prior to the
record date in respect of any dividend payable in respect of the Shares and such
notice specifies a date for redemption falling on or prior to the next following
Interest Payment Date, interest shall (subject as hereinafter provided) accrue
on Notes which shall have been delivered for conversion on or after such record
date from the preceding Interest Payment Date; provided, that the relevant
Noteholder's entitlement to interest on any Note, in the event that the Shares
allotted on conversion thereof shall carry an entitlement to receive such
dividend, shall be limited to the amount by which the interest such Noteholder
would have received had no conversion taken place exceeds the amount of the
dividend received on such Shares. Any such interest shall be paid by the Company
not later than fourteen (14) calendar days after the relevant Conversion Date by
U.S. dollar cheque drawn on, or by transfer to U.S. dollar account maintained by
the payee with, a bank outside the United States in accordance with instructions
given by the relevant Noteholder.

     (C) Adjustment of Conversion Price

     (i) Dividends or Distributions of Common Stock. In case the Company shall
pay or make a dividend or other distribution on its Common Stock exclusively in
Common Stock or shall pay or make a dividend or other distribution on any other
class of capital stock of the Company which dividend or distribution includes
Common Stock, the Conversion Price in effect at the opening of business on the
day next following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day next following the date fixed for such determination. For
the purposes of this Condition 6(C)(i), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company. For the avoidance of doubt, this Condition does not apply to dividends
or other distributions in shares of the Common Stock pursuant to the terms of
the securities to which such dividend or other distribution may be made.

     (ii) Dividends or Distributions of Rights, Warrants or Options to Purchase
Common Stock. In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights, warrants or options entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price per share

                                                                              10

<PAGE>

(as further defined in certain circumstances as provided in paragraph (vii) of
this Condition 6(C)) of the Common Stock on the date fixed for the determination
of stockholders entitled to receive such rights, warrants or options, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Market Price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, outstanding at
the close of business on the date fixed for such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this paragraph (ii), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not issue any rights, warrants or
options in respect of shares of Common Stock held in the treasury of the
Company.

     (iii) Dividends or Distributions in Cash. In case the Company shall, by
dividend or otherwise, make a distribution to all holders of its Common Stock
exclusively in cash in an aggregate amount that, together with (1) the aggregate
amount of any other distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of such
distribution and in respect of which no Conversion Price adjustment pursuant to
this 6(C)(iii) has been made and (2) the aggregate of any cash plus the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Company's
Board of Directors), as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or exchange
offer by the Company or a Subsidiary for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no Conversion Price adjustment pursuant to
paragraph (vi) of this Condition 6(C) has been made, exceeds five percent (5%)
of the product of the Market Price per share (as further defined in certain
circumstances as provided in paragraph (vii) of this Condition 6(C)) of the
Common Stock on the date fixed for stockholders entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
paragraph (iii) by a fraction of which the numerator shall be the Market Price
per share (determined as provided in Condition 6(C)(vii)) of the Common Stock on
the date of such effectiveness less the amount of cash so distributed applicable
to one share of Common Stock and the denominator shall be such Market Price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for the payment
of such distribution.

     (iv) All Other Distributions or Dividends. Subject to the last sentence of
this paragraph (iv), in case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness,
shares of any class of capital stock, securities, cash or Property (excluding
any rights, warrants or options referred to in Condition 6(C)(ii), any dividend
or distribution paid exclusively in cash and any dividend or distribution
referred to in Condition 6(C)(i), the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (iv) by a fraction of which the numerator shall
be the Market Price per share (as further defined in certain circumstances as
provided in paragraph (vii) of this Condition 6(C)) of the Common Stock on the
date of such effectiveness less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Company's Board of Directors and shall, in the
case of securities being distributed for which prior thereto there is an actual
or when issued trading market, be no less than the value determined by reference
to the average of the Market Price over the period specified in the succeeding
sentence), on the date of such effectiveness, of the portion of the evidences of
indebtedness, shares of capital stock, securities, cash and Property so
distributed applicable to one share of Common Stock and the denominator shall be
such Market Price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day next following
the date fixed for the payment of such distribution (such date to being referred
to as the "Reference Date"). If the Board of Directors

                                                                              11

<PAGE>

determines the fair market value of any distribution for purposes of this
paragraph (iv) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the Market Price per share
pursuant to paragraph (vi) of this Condition 6(C). For purposes of this
paragraph (iv), any dividend or distribution that includes shares of Common
Stock or rights, warrants or options to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, cash, Property, shares of capital stock or securities
other than such shares of Common Stock or such rights, warrants or options
(making any Conversion Price reduction required by this paragraph (iv))
immediately followed by (2) a dividend or distribution of such shares of Common
Stock or such rights, warrants or options (making any further Conversion Price
reduction required by Condition 6(C)(i) or (ii)), except (A) the Reference Date
of such dividend or distribution as defined in this Condition 6(C)(iv) shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution," "the date fixed for the
determination of stockholders entitled to receive such rights, warrants or
options," and "the date fixed for such determination" within the meaning of
Condition 6(C)(i) and Condition 6(C)(ii) and (2) any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Condition 6(C)(i)).

     (v) Subdivision of Common Stock. In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.

     (vi) Tender or Exchange Offer for Common Stock. In case a tender or
exchange offer made by the Company or any Subsidiary for all or any portion of
the Common Stock shall expire and such tender or exchange offer shall involve an
aggregate consideration having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Company's Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that, together with (A) the aggregate of
the cash plus the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Company's Board of Directors), as of the expiration of the other tender
or exchange offer referred to below, of consideration payable in respect of any
other tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the preceding 12 months and in
respect of which no Conversion Price adjustment pursuant to this paragraph (vi)
has been made and (B) the aggregate amount of any distributions to all holders
of the Common Stock made exclusively in cash within the preceding 12 months and
in respect of which no Conversion Price adjustment pursuant to Condition 6(C)(v)
has been made, exceeds five percent (5%) of the product of the Market Price per
share (determined as provided in Condition 6(C)(vii)) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (1) the
product of the Market Price per share (as further defined in certain
circumstances as provided in paragraph (vii) of this Condition 6(C)) of the
Common Stock at the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
minus (2) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and the denominator shall be the product of (1) such Market Price per
share at the Expiration Time times (2) such number of outstanding shares at the
Expiration Time less the number of Purchased Shares, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time.

                                                                              12

<PAGE>

     (vii) Determination of Market Price. For the purpose of any computation of
the Market Price under this paragraph (vii) and Conditions 6(C)(ii), (iv) and
(v), when certain circumstances described therein have occurred within ten (10)
Business Days of the event giving rise to the adjustment in the Conversion
Price, (A) if the "ex" date (as hereinafter defined) for any event (other than
the issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to paragraphs (i), (ii), (iii),
(iv), (v) or (vi) above ("Other Event") occurs on or after the tenth Stock
Exchange Business Day prior to the date in question and prior to the "ex" date
for the issuance or distribution requiring such computation (the "Current
Event"), the closing price for each Stock Exchange Business Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such Other Event, (B) if the "ex" date for any Other
Event occurs after the "ex" date for the Current Event and on or prior to the
date in question, the closing price for each Stock Exchange Business Day on and
after the "ex" date for such Other Event shall be adjusted by multiplying such
closing price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such Other Event, (C) if the "ex" date
for any Other Event occurs on the "ex" date for the Current Event, one of those
events shall be deemed for purposes of clauses (A) and (B) of this proviso to
have an "ex" date occurring prior to the "ex" date for the other event, and (C)
if the "ex" date for the Current Event is on or prior to the date in question,
after taking into account any adjustment required pursuant to clause (B) of this
proviso, the closing price for each Stock Exchange Business Day on or after such
"ex" date shall be adjusted by adding thereto the amount of any cash and the
fair market value on the date in question (as determined in good faith by the
Board of Directors in a manner consistent with any determination of such value
for purposes of Condition 6(C)(iii) or Condition 6(C)(iv) or (C), whose
determination shall be conclusive and described in a resolution of the Company's
Board of Directors) of the portion of the rights, warrants, options, evidences
of indebtedness, shares of capital stock, securities, cash or Property being
distributed applicable to one share of Common Stock. For the purpose of any
computation under Condition 6(C)(vi), the Market Price per share of Common Stock
on any date in question shall be deemed to be the Market Price on the date
selected by the Company commencing on or after the latest (the "Commencement
Date") of (A) the date 20 Stock Exchange Business Days before the date in
question, (B) the date of commencement of the tender or exchange offer requiring
such computation, and (C) the date of the last amendment, if any, of such tender
or exchange offer involving a change in the maximum number of shares for which
tenders are sought or a change in the consideration offered, and ending not
later than the date of the Expiration Time of such tender or exchange offer (or,
if such Expiration Time occurs before the close of trading on a Stock Exchange
Business Day, not later than the Stock Exchange Business Day immediately
preceding the date of such Expiration Time); provided, however, that if the "ex"
date for any Other Event (other than the tender or exchange offer requiring such
computation) occurs on or after the Commencement Date and on or prior to the
date of the Expiration Time for the tender or exchange offer requiring such
computation, the closing price for each Stock Exchange Business Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this paragraph, the
term "ex" date, (A) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the closing price was
obtained without the right to receive such issuance or distribution, (B) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange, or in such market after the time at which such subdivision or
combination becomes effective, and (C) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the Expiration Time of such tender or
exchange offer.

     (viii) Further Reductions for Federal Income Tax. The Company may make such
reductions in the Conversion Price, in addition to those required by Conditions
6(C) (i), (ii), (iii), (iv), (v), and (vi), as it considers to be advisable in
order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.

     (ix) Adjustments to be Carried Forward. No adjustment in the Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least five percent (5%) in the Conversion Price; provided,
however, that any adjustments which by reason of this paragraph (ix) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.

                                                                              13

<PAGE>

     (x) Notice of Adjustments of Conversion Price

     Whenever the Conversion Price is adjusted as herein provided the Company
shall compute the adjusted Conversion Price in accordance with Condition 6(C)
and shall prepare a certificate signed by the chief financial officer of the
Company setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be delivered to any paying agent and the Company shall cause notice
thereof to be delivered in accordance with Condition 15 at least ten (10)
Business Days in advance of the effective date of such adjustment.

     (D) Mandatory Conversion

     (i) The Noteholder acknowledges and agrees that provided the Shares into
which the Notes would be converted are Freely Tradeable and listed on a Stock
Exchange, the Company may, at its own cost (save those expenses or taxes
referred to in Condition 6(D)(iii)), at any time following ninety days from the
Effective Date, elect to exercise the Conversion Right on behalf of each and
every Noteholder in respect of all of the Notes Outstanding at the Conversion
Price applicable as of the date fixed by the Company for such conversion (the
"Mandatory Conversion Date"), provided that the average of the Market Price of
the Shares over the Stock Exchange Business Days in any thirty (30) consecutive
calendar day period following the Effective Date, is equal to or greater than
one hundred twenty-five percent (125%) of the Conversion Price. The Company will
give notice in the manner set out in Condition 15 that the criteria for
Mandatory Conversion under this Condition 6(D) has been met within 30 days of
having met such criteria. The form of Company Conversion Notice is attached
hereto as Exhibit B.

     (ii) At least 45 calendar days prior to the Mandatory Conversion Date, the
Company shall cause written notice of the Mandatory Conversion Date to be given
to any paying and conversion agent. Not less than 30 and not more than 60
calendar days prior to the Mandatory Conversion Date, the Company shall cause
written notice of the Mandatory Conversion Date to be given to the Noteholders
(in accordance with Condition 15). Following such notice, the Noteholders will
be required on or before the Mandatory Conversion Date to deliver or procure
delivery of the Notes together with a duly completed Conversion Notice to the
specified office of the company, during its usual business hours for such
purposes and perform together with the Company, the obligations applicable to it
on conversion specified in this Condition 6. Failure to deliver the Conversion
Notice shall not affect the conversion of such Notes pursuant to the terms of
this Condition 6(D).

     (iii) If any Noteholder with respect to whose Notes Mandatory Conversion
(pursuant to this Condition 6) is to take place shall fail to perform its
obligations specified in this Condition 6 or shall have a registered address in
any territory where, in the absence of any registration statement or other
special formalities or legal requirements, the issue, allotment, transfer or
delivery of the Shares arising on Mandatory Conversion in the reasonable opinion
of the Company, is or could be unlawful or impracticable, subject to applicable
law, Company shall make arrangements for the sale of such Shares to a third
party at the best consideration reasonably obtainable by the Company and it
shall pay, or shall arrange for the paying agent to pay, to such Noteholder the
consideration received by it in respect of such Shares (after any deduction
required to reimburse any reasonable and proper expenses incurred in arranging
any such sale or any taxes payable in connection therewith arising solely as a
result of the Noteholder's failure to perform its obligations under this
Condition 6(D)).

     (iv) From and after the Mandatory Conversion Date and upon compliance by
the Company of its obligations hereunder with respect to such conversion, the
Notes shall cease to constitute Indebtedness of the Company and shall thereafter
be only deemed to represent the right to receive Shares.

     (E) Notice of Certain Corporate Action

     In case of the occurrence of one or more of the events that are listed
herein, the Company shall cause to be mailed to any paying agent and conversion
agent and any Noteholder in the manner provided under Condition 15

                                                                              14

<PAGE>

hereof within ten (10) Business Days after the date on which notice is sent to
the holders of the Company's Common Stock. Such events are: (i) the Company
shall declare a dividend (or any other distribution) on its Common Stock payable
(1) otherwise than exclusively in cash, or (2) exclusively in cash in an amount
that would require a Conversion Price adjustment pursuant to Condition
6(C)(iii); or (ii) the Company shall authorize the granting to the holders of
its Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding employee
stock options); or (iii) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company; or (v) the Company or any Subsidiary of the Company shall commence
a tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer); The
Notice shall state (i) the date on which a record is to be taken for the purpose
of such dividend, distribution or granting of rights, warrants or options, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights, warrants or
options are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other Property deliverable upon such
re-classification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or (iii) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or the
material terms of any amendment thereto).

     (F) Consolidation, Amalgamation or Merger

     In the event that the Company shall be a party to any transaction,
including without limitation any (i) recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of all of the outstanding shares of Common
Stock of the Company), (iii) any sale or transfer of all or substantially all of
the assets of the Company, or (iv) any compulsory share exchange pursuant to
which the Common Stock is converted into the right to receive other securities,
cash or other Property, the Company will forthwith notify the Noteholders of
such event in accordance with Condition 15 and, then lawful provision shall be
made as part of the terms of such transaction whereby the Holder of each Note
then Outstanding shall have the right (during the period in which such Note is
convertible) to convert such Note into the class and amount of shares and other
securities and property receivable upon such transaction by a holder of such
number of shares of Common Stock which would have been liable to be issued upon
conversion of such Note immediately prior to the transaction. So far as legally
possible, the Company shall cause the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquired the
Company's Shares, as the case may be, to execute and deliver to the Noteholder
an amendment to these Terms and Conditions as provided for under Condition 17.
Such amendment shall provide for adjustments which, for events subsequent to the
effective date of such amendment, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Condition. The above
provisions of this Condition 6(F) shall similarly apply to successive
transactions of the foregoing type.

     (G) Conversion Prohibited Under Certain Circumstances

     The Note shall not be convertible into Conversion Shares as provided in
this Condition 6 nor may it be redeemed for Shares as provided in Condition
7(B)(iii) herein if the Stock Exchange on which the Shares are listed requires
the approval by the stockholders of the Company of the issuance of the Shares
which may be issued upon the exercise of the conversion rights contained in this
Condition 6 or issued pursuant to Condition 7(B)(iii) and the stockholders fail
to approve such issuances of the Shares at an annual meeting or special meeting
held to approve such issuances.

                                                                              15

<PAGE>

7. Redemption and Purchase

     (A) Unless previously redeemed, converted or purchased and canceled as
provided herein, the Company will redeem the Note at its principal amount on
March 31, 2007.

     (B) (i) If as a result of any change in, or amendment to, the laws or
regulations of the U.S. or any political sub-division of, or any authority in,
or of, the U.S. having power to tax, or any change in the application or
official interpretation of such laws or regulations, which change or amendment
becomes effective after March 31, 2002, the Company has or will become obliged
to pay additional amounts as provided or referred to in Condition 8 (and such
amendment or change has been evidenced by the delivery by the Company to the
paying agent or Noteholder (who shall, in the absence of manifest error, accept
such certificate and opinion as sufficient evidence thereof) of (x) a
certificate signed by two officers of the Company on behalf of the Company
stating that such amendment or change has occurred (irrespective of whether such
amendment or change is then effective), describing the facts leading thereto and
stating that such obligation cannot be avoided by the Company taking reasonable
measures available to it and (y) an opinion of independent legal advisers of
recognized standing to the effect that such amendment or change has occurred
(irrespective of whether such amendment or change is then effective), the
Company may at its option, having given not less than 30 nor more than 60
calendar days' notice to the Noteholders in accordance with Condition 15 (which
notice shall be irrevocable), redeem all the Notes but not some only, at their
principal amount together with interest (if any) accrued to (but excluding) the
Redemption Date, provided that no notice of redemption shall be given earlier
than 90 calendar days before the earliest date on which the Company would be
required to pay such additional amounts were a payment in respect of the Notes
then due.

     (ii) The Company may, at its option, at any time and from time to time, and
after having given not less than 30 nor more than 60 calendar days' notice to
the Noteholder in accordance with Condition 15 (which notice shall be
irrevocable), redeem the Notes for cash, in whole or in part, at a Redemption
Price equal to 100 per cent of their principal amount together with interest (if
any) accrued to (but excluding) the Redemption Date. If the Company elects to
redeem less than all the Notes, Company or its paying agent will select which
Notes to redeem by lot, random, or such other method as it shall deem fair and
appropriate. Upon expiry of any such notice period as is referred to in this
Condition 7(B) (and subject as provided above), the Company shall be bound to
redeem Notes at their principal amount, together with interest accrued to but
excluding the Redemption Date.

     (iii) Provided that the Shares which may be issued pursuant to this
paragraph shall be Freely Tradeable and listed on a Stock Exchange, commencing
March 31, 2006, the Company may redeem upon not less than 30 nor more than 60
days notice, pursuant and subject the Conditions listed above, up to 50% of the
Outstanding Notes for Shares and, on March 31, 2007, the scheduled Maturity
Date, the Company may redeem upon not less than 30 nor more than 60 days notice
any Outstanding Notes for Shares. If the Company elects to redeem the Notes for
Shares, each Note will be redeemed for the number of shares of Common Stock
equal to 110% of the sum of the face value of the Note plus interest accrued and
unpaid thereon divided by the average of the Market Price of the Shares over the
30 Stock Exchange Business Day period immediately preceding the date of notice
of such redemption. If the Company elects to redeem less than all the Notes, the
Company will select which Notes to redeem by lot, random, or such other method
as it shall deem fair and appropriate. Upon expiry of any such notice period as
is referred to in this Condition 7(B) (and subject as provided above), the
Company shall be bound to redeem Notes as described above.

     (C) Subject to applicable law, the Company or any of its Subsidiaries may
at any time purchase Notes in any manner and at any price in the open market or
by private treaty. If purchases are made by tender, tenders must be available to
all Noteholders alike. Notes purchased by the Company or any of its Subsidiaries
will forthwith be surrendered for cancellation and shall no longer be deemed
Outstanding.

     (D) All Notes which are redeemed by the Company will forthwith be canceled
and may not be reissued or resold.

                                                                              16

<PAGE>

8. Taxation

     All payments in respect of the Notes by the Company shall be made without
withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature ("Taxes") imposed
or levied by or on behalf of the U.S. or any political sub-division of, or any
authority in, or of, the U.S. having power to tax, unless the withholding or
deduction of the Taxes is required by law. In that event, the Company will pay
such additional amounts as may be necessary in order that the net amounts
received by the Noteholders after the withholding or deduction shall equal the
respective amounts which would have been receivable in respect of the Notes in
the absence of the withholding or deduction; except that no additional amounts
shall be payable in relation to any payment in respect of any Note:

     (A) to, or to a third party on behalf of, a Holder who is liable for the
Taxes in respect of the Note by reason of such Holder having some connection
with the U.S. other than the mere holding of the Note; and

     (B) presented for payment more than 30 calendar days after the Relevant
Date except to the extent that a Holder would have been entitled to additional
amounts on presenting the same for payment on the last day of such period of 30
calendar days; or

     (C) to, or to a third party on behalf of, a Holder who would not be liable
or subject to the withholding or deduction by making a declaration of
non-residence or other similar claim for exemption to the relevant tax
authority.

     Any reference in these Terms and Conditions to any amounts in respect of
the Notes shall be deemed also to refer to any additional amounts which may be
payable under this Condition.

9. Additional Covenants

     While any Conversion Right remains exercisable, the Company will, save with
the approval of an Extraordinary Resolution:

          (1) at all times after ninety (90) days from the date of the initial
     issuance of the Notes keep available for issuance free from any preemptive
     rights out of its authorized but unissued capital such number of Shares as
     would enable the Conversion Rights and all other rights of subscription and
     exchange for and conversion into Shares to be satisfied in full;

          (2) maintain a listing for all the issued Shares and all Shares to be
     issued on the exercise of the Conversion Rights on a Stock Exchange, it
     being understood that if the Company is unable to obtain or maintain such
     listing of Shares and will forthwith give notice to the Noteholders in
     accordance with Condition 15 of the listing, de-listing or quotation or
     lack of quotation of the Shares (as a class) by any such Stock Exchange;
     and

          (3) not in any way modify the rights attaching to the Shares with
     respect to voting, dividends or liquidation.

10. Prescription

     Notes will become void unless presented for payment within periods of ten
(10) years (in the case of principal) and five (5) years (in the case of
interest) from the Relevant Date in respect of the Notes, as the case may be,
subject to the provisions of Condition 5.

11. Events of Default and Enforcement

     (A) Event of Default

                                                                              17

<PAGE>

     "Event of Default," wherever used in these Terms and Conditions, means any
one of the following events (whatever the reason for such Event of Default,
whether voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) which shall have occurred and is
continuing:

          (1) if default is made for a period of five (5) Business Days or more
     in the payment of interest or principal due in respect of the Notes or any
     of them; or

          (2) if the Company fails to perform or observe any of its other
     obligations, covenants, conditions or provisions under the Notes, these
     Terms and Conditions, the Company's 5.0% Senior Notes due 2003, or the
     trust indenture pursuant to which such 5.0% Senior Notes due 2003 were
     issued, and such failure continues for the period of 30 calendar days (or
     such longer period as the Majority Holders may in their absolute discretion
     permit) next following the service by the one or more of the Holders on the
     Company of notice requiring the same to be remedied; or

          (3) if (i) any other Indebtedness of the Company becomes due and
     payable prior to its Stated Maturity by reason of an event of default
     (howsoever defined) or (ii) any such Indebtedness of the Company is not
     paid when due or, as the case may be, within any applicable grace period or
     (iii) the Company fails to pay when due (or, as the case may be, within any
     applicable grace period) any amount payable by it under any present or
     future guarantee for, or indemnity in respect of, any Indebtedness of any
     Person or (iv) any security given by the Company or any subsidiary for any
     Indebtedness of any Person or any guarantee or indemnity of Indebtedness of
     any Person by the Company becomes enforceable by reason of default in
     relation thereto and steps are taken to enforce such security save in any
     such case where there is a bona fide dispute as to whether the relevant
     Indebtedness or any such guarantee or indemnity as aforesaid shall be due
     and payable (following any applicable grace period); provided, however,
     that in each such case the Indebtedness exceeds in the aggregate U.S.
     $2,000,000 and in each such case such event continues unremedied for a
     period of 30 calendar days (or such longer period as the Majority Holders
     may in their sole discretion consent to in writing upon receipt of written
     notice from the Company); or

          (4) if the Company shall generally fail to pay its debts as such debts
     come due (except debts which the Company may contest in good faith
     generally) or shall be declared or adjudicated by a competent court to be
     insolvent or bankrupt, shall consent to the entry of an order of relief
     against it in an involuntary bankruptcy case, shall enter into any
     assignment or other similar arrangement for the benefit of its creditors or
     shall consent to the appointment of a custodian (including, without
     limitation, a receiver, liquidator or Company); or

          (5) if a receiver, administrative receiver, administrator or other
     similar official shall be appointed in relation to the Company or in
     relation to the whole or a substantial part its undertaking or assets or a
     distress, execution or other process shall be levied or enforced upon or
     sued out against, or an encumbrancer shall take possession of, the whole or
     a substantial part of the assets of any of them and in any of the foregoing
     cases is not paid out or discharged within 90 calendar days (or such longer
     period as the Majority Holders may in their absolute discretion consent to
     in writing upon receipt of written notice from the Company); or

          (6) if the Company institutes proceedings to be adjudicated a
     voluntary bankrupt, or shall consent to the filing of a bankruptcy
     proceeding against it, or shall file a petition or answer or consent
     seeking organization under the laws of the Federal Bankruptcy Code or any
     similar applicable U.S. federal, state or foreign law, or shall consent to
     the filing of any such petition, or shall consent to the appointment of a
     receiver or liquidator or trustee or assignee (or other similar official)
     in bankruptcy or insolvency of it or its Property, or shall make an
     assignment for the benefit of creditors, or shall admit in writing its
     inability to pay its debts generally as they come due; or

          (7) if a decree or order by a court having jurisdiction in the
     premises shall have been entered adjudging the Company a bankrupt or
     insolvent, or approving as properly filed a petition seeking the
     reorganization of the Company under the Federal Bankruptcy Code or any
     other similar applicable U.S. federal, state or foreign law, and such
     decree or order shall have continued undischarged or unstayed for a period
     of 90 calendar days; or a

                                                                              18

<PAGE>

     decree or order of a court having jurisdiction in the premises for the
     appointment of a receiver or liquidator or trustee or assignee (or other
     similar official) in bankruptcy or insolvency of the Company or of all or
     substantially all of its Property, or for the winding up or liquidation of
     its affairs, shall have been entered, and such decree or order shall have
     continued undischarged and unstayed for a period of 90 calendar days; or

          (8) if a warranty, representation, or other statement made by or on
     behalf of the Company contained herein or any certificate or other
     agreement furnished in compliance herewith is false in any material respect
     when made and such falsity continues for a period of 30 calendar days (or
     such longer period as the Majority Holders may in their absolute discretion
     permit) next following the service by one or more of the Holders on the
     Company of notice requiring the same to be remedied; or

          (9) if there is any final judgment or judgments for the payment of
     money exceeding in the aggregate U.S. $2,000,000 outstanding against the
     Company which has been outstanding for more than 60 calendar days from the
     date of its entry and shall not have otherwise been discharged in full or
     stayed by appeal, bond or otherwise.

     (B) Acceleration of Maturity; Rescission and Annulment

     If an Event of Default (other than an Event of Default specified in
Condition 11(A)(6) or 11(A)(7)) occurs and is continuing, then and in every such
case the Majority Holders may declare the principal amount of all the Notes and
accrued and unpaid interest thereon to be due and payable immediately, by a
notice in writing to the Company, and upon any such declaration such principal
amount and accrued and unpaid interest shall become immediately due and payable.

     If an Event of Default specified in Condition 11(A)(6) or Condition
11(A)(7) occurs and is continuing, then the principal amount of all the Notes
and all accrued and unpaid interest thereon shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
any Noteholder.

     At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the
Majority Holders as hereinafter in this Condition provided, the Majority
Holders, with written notice to the Company, may rescind and annul such
declaration and its consequences if

     (1) the Company has paid or deposited in a manner satisfactory to such
Holders a sum sufficient to pay

          (i) all overdue interest on all Outstanding Notes,

          (ii) all unpaid principal of any Outstanding Notes which has become
     due otherwise than by such declaration of acceleration, and interest on
     such unpaid principal at the rate prescribed therefor in the Notes,

          (iii) to the extent that payment of such interest is legally
     enforceable, interest on overdue interest at the rate prescribed therefor
     in the Notes, and

          (iv) all reasonable sums paid or advanced by the such Holders
     hereunder; and

     (2) all Events of Default, other than the non-payment of amounts of
principal of or interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Condition
11(K)

     No such rescission shall affect any subsequent default or impair any right
consequent thereon.

                                                                              19

<PAGE>

     (C) Collection of Indebtedness and Suits for Enforcement by the Majority
Holders

     The Company covenants that if

          (1) default is made in the payment of any installment of interest on
     any Note when such interest becomes due and payable and such default
     continues for a period of five (5) Business Days, or

          (2) default is made in the payment of the principal of any Note at the
     Maturity thereof and such default continues for a period of five (5)
     Business Days,

the Company will, upon demand of the Majority Holders, pay to the Holders of the
Notes, the whole amount then due and payable on the Notes for principal and
interest, and interest on any overdue principal and, to the extent that payment
of such interest shall be legally enforceable, upon any overdue installment of
interest, at the rate prescribed therefor in the Notes, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable expenses, disbursements and
advances of the Holders, their agents and counsel, and the reasonable
compensation of such agents and counsel.

     If the Company fails to pay such amounts forthwith upon such demand, the
Majority Holders in their name, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the Company or any
other obligor upon the Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the Property of the Company or any
other obligor upon the Notes, wherever situated.

     If an Event of Default occurs and is continuing, the Majority Holders may
in their discretion proceed to protect and enforce their rights and the rights
of the other Noteholders by such appropriate judicial proceedings as such
Holders shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in these Terms
and Conditions or to enforce any other proper remedy.

     (D) Majority Holders May File Proofs of Claim

     In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the Property of the Company or of such other obligor or their creditors, the
Majority Holders (irrespective of whether the principal of the Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Majority Holders shall have made any demand on the
Company for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

     (1) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Holders (including any claim for the reasonable expenses, disbursements and
advances of such Holders, their agents and counsel and the reasonable fees and
expenses of the paying agent and its counsel) and of the other Noteholders
allowed in such judicial proceeding, and the reasonable compensation of such
agents and counsel, and

     (2) to collect and receive any moneys or other Property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Majority Holders due them for

                                                                              20

<PAGE>

the reasonable expenses, disbursements and advances of such Holders, their
agents and counsel and the reasonable compensation of such agents and counsel,
and to pay to the Paying Agent (where one is appointed) all such other sums due
under the Notes. In the absence of such appointment, any such sums shall be paid
for the rateable benefit of all the Noteholders.

     Nothing herein contained shall be deemed to authorize the Majority Holders,
except as permitted by law and these Terms and Conditions, to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Noteholder thereof, or to authorize the such Holder to vote in
respect of the claim of any Noteholder in any such proceeding, except to the
extent permitted by law.

     (E) Majority Holders May Enforce Claims Without Possession of Notes

     All rights of action and claims under these Terms and Conditions may be
prosecuted and enforced by the Majority Holders without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Majority Holders shall be brought in their own
name and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Majority
Holders, their agents and counsel, be paid to the Paying Agent (where one is
appointed) for the rateable benefit of all the Noteholders in respect of which
such judgment has been recovered.

     (F) Application of Money Collected

     Any money collected by the Majority Holder pursuant to this Condition shall
be applied in the following order in case of the distribution of such money on
account of principal or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

          FIRST: To the payment of the amounts then due and unpaid for principal
     of and interest on the Notes in respect of which or for the benefit of
     which such money has been collected, ratably, without preference or
     priority of any kind, according to the amounts due and payable on such
     Notes for principal and interest, respectively; and

          SECOND: The balance, if any, to the Person or Persons entitled
     thereto.

     (G) Unconditional Right of Holders to Receive Principal and Interest

     Notwithstanding any other provision in these Terms and Conditions, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment, as provided herein and in such Note of the principal of and
interest on, such Note on the respective Stated Maturity or expressed in such
Note (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder; provided, that all monies paid by
the Company to the Paying Agent (if appointed) for the payment of principal or
interest on any Note which remain unclaimed at the end of two (2) years after
the Stated Maturity or Redemption Date of such Note will be repaid to the
Company and the Holder of any Note shall thereafter have only the rights of a
creditor of the Company or such rights as may be otherwise provided by
applicable law.

                                                                              21

<PAGE>

     (H) Restoration of Rights and Remedies

     If the Majority Holders or any Noteholder has instituted any proceeding to
enforce any right or remedy under these Terms and Conditions and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Majority Holders or to such Noteholder, then and in every such
case, subject to any determination in such proceeding, the Company, the Majority
Holders and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Majority Holders and the Noteholders shall continue as though no such proceeding
had been instituted.

     (I) Rights and Remedies Cumulative

     Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes as provided herein, no right or
remedy herein conferred upon or reserved to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

     (J) Delay or Omission Not Waiver

     No delay or omission of the Majority Holders or Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Noteholders.

     (K) Waiver of Past Defaults

     Subject to Condition 11(B), the Majority Holders may on behalf of the
Holders of all the Notes waive any past default hereunder and its consequences,
except a default

     (1) in respect of the payment of the principal of or interest on any Note,
or

     (2) in respect of a covenant or provision hereof which under Condition 17
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.

     Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of these Terms and Conditions; but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.

     (L) Waiver of Stay or Extension Laws

     The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of these Terms and Conditions; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law.

     (M) Requirements Regarding Agents (if appointed)

                                                                              22

<PAGE>

     (1) At any time after an Event of Default has occurred and is continuing
the Majority Holders shall notify in writing the Company and the Paying Agent
(if appointed), and may by notice in writing to the Company and the Paying Agent
(if appointed):

          (i) require the Paying Agent, until notified to the contrary by
     Majority Holders, to hold all Notes and all moneys, documents and records
     held by it in respect of Notes to the order of the Holders; or

          (ii) require the Paying Agent to deliver to the Holders on a pro rata
     basis all funds held by it for the benefit of the Holders, and to deliver
     the documents and records held by it in respect of Notes to the Holders,
     provided that such notice shall be deemed not to apply to any documents or
     records which the relevant Paying Agent is obliged to release by any law or
     regulation; and

          (iii) require the Company to make all subsequent payments in respect
     of the Notes to or to the order of the Holders and not to the Paying Agent.

     (2) The Majority Holders shall notify the Paying Agent immediately upon the
cure or waiver of an Event of Default. Upon receipt of such notice, the
provisions of this Condition 11(M) shall no longer apply.

     (3) Prior to taking any action under these Terms and Conditions at the
direction of any Person with respect to the Notes, the Paying Agent shall be
entitled to receive (and shall receive) indemnity or security satisfactory to
it.

12. Liability Solely Corporate

     No recourse shall be had for the payment of the principal of or interest on
any Notes or any part thereof, or for any claim based thereon or otherwise in
respect thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement in these Terms and Conditions, against any
incorporator, or against any stockholder, officer or director, as such, past,
present or future, of the Company, or of any predecessor or successor Person,
either directly or through the Company or any such predecessor or successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly agreed
and understood that the Notes and these Terms and Conditions which are a part
thereof are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be insured by, any such incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any predecessor or successor Person, either directly or through
the Company or any such predecessor or successor Person, because of the
indebtedness hereby authorized or under or by reason of any of the obligations,
covenants, promises or agreements contained in the Notes or the these Terms and
Conditions which constitute a part thereof or to be implied herefrom; and that
any such personal liability is hereby expressly waived and released as a
condition of, and as part of the consideration for the exchange transaction
pursuant to which the Notes were issued; provided, however, that nothing herein
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.

13. Defeasance and Covenant Defeasance

     (A) Company's Option to Effect Defeasance or Covenant Defeasance

     The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Condition 13(B) or Condition 13(C)
applied to all Outstanding Notes upon compliance with the conditions set forth
below in this Condition, The Company shall promptly give notice of such election
to the Holders.

     (B) Legal Defeasance and Discharge

                                                                              23

<PAGE>

     Upon the Company's exercise under Condition 13(A) of the option applicable
to this Condition 13(B), the Company shall be deemed to have been discharged
from its obligations with respect to all Outstanding Notes on the date the
conditions set forth in Condition 13(D) are satisfied (hereinafter, "legal
defeasance"). For this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Notes, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Condition 13(E) and the other Conditions of these Terms
and Conditions referred to in (1) and (2) below, and to have satisfied all its
obligations under such Notes, including the obligation to pay interest on the
Notes, and these Terms and Conditions insofar as such Notes are concerned (and
the Holders, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of
Outstanding Notes to receive, solely from the trust fund described in Condition
13(D) and as more fully set forth in such Condition, payments in respect of the
principal of and interest on such Notes when such payments are due, and (B) the
Company's obligations with respect to the Notes under Conditions 1(D), 1(E),
1(H), 3(D) or 3(L). Subject to compliance with this Condition, the Company may
exercise its option under this Condition 13(B) notwithstanding the prior
exercise of its option under Condition 13(C) with respect to the Notes.

     (C) Covenant Defeasance

     Upon the Company's exercise under Condition 13(A) of the option applicable
to this Condition 13(C), the Company shall be released from its obligations
under any covenant contained in Condition 3 (except Condition 3(D) with respect
to the Outstanding Notes on and after the date the conditions set forth in
Condition 13(D)) are satisfied (hereinafter, "covenant defeasance"), and the
Notes shall thereafter be deemed not to be "Outstanding" for the purposes of any
request, demand, authorization, direction, declaration, notice, consent, waiver
or Act of Noteholders (and the consequences of any thereof) in connection with
such covenants, but shall continue to be deemed "Outstanding" for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with
respect to the Outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Condition 11(A)(4) , but, except as specified above, the remainder of these and
the Notes shall be unaffected thereby.

     (D) Conditions to Legal Defeasance or Covenant Defeasance

     The following shall be the conditions to application of either Condition
13(B) or Condition 13 (C) to the Outstanding Notes:

          (1) The Company shall irrevocably have deposited or caused to be
     deposited with a paying agent as trust funds in trust for the purpose of
     making the following payments, specifically pledged as security for, and
     dedicated solely to, the benefit of the Holders of such Notes, (A) money in
     an amount, or (B) U.S. Government Obligations which through the scheduled
     payment of principal and interest in respect thereof in accordance with
     their terms will provide, not later than one day before the due date of any
     payment, money in an amount, or (C) a combination thereof, sufficient, in
     the opinion of a nationally recognized firm of independent public
     accountants expressed in a written certification thereof delivered to the
     paying agent, to pay and discharge, and which shall be applied by the
     paying agent to pay and discharge, the principal of and interest on the
     Outstanding Notes on the Stated Maturity (or Redemption Date, if
     applicable) of such principal or installment of interest; provided that the
     paying agent shall have been irrevocably instructed to apply such money or
     the proceeds of such U.S. Government Obligations to said payments with
     respect to the Notes; and provided further that, upon the effectiveness of
     this Condition 13(D), the money or U.S. Government Obligations deposited
     shall not be subject to the rights of the

                                                                              24

<PAGE>

     Noteholders pursuant to the provisions of this Condition. Before or after
     such a deposit, the Company may give to the paying agent a notice of its
     election to redeem all of the Outstanding Notes at a future date in
     accordance with Condition 7, which notice shall be irrevocable. Such
     irrevocable redemption notice, if given, shall be given effect in applying
     the foregoing.

          (2) No Default or Event of Default with respect to the Notes shall
     have occurred and be continuing on the date of such deposit or, insofar as
     paragraphs (6) and (7) of Condition 11(A) hereof are concerned, at any time
     during the period ending on the 91st day after the date of such deposit (it
     being understood that this condition shall not be deemed satisfied until
     the expiration of such period).

          (3) No event or condition shall exist that pursuant to the provisions
     of Condition 13(B) or 13(C) would prevent the Company from making payments
     of the principal of or interest on the Notes on the date of such deposit or
     at any time during the period ending on the 91st day after the date of such
     deposit (it being understood that this condition shall not be deemed
     satisfied until the expiration of such period).

          (4) Such legal defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a default under any material
     agreement or material instrument to which the Company is a party or by
     which it is bound.

          (5) In the case of an election under Condition 13(B), the Company
     shall have delivered to the paying agent an Opinion of Counsel stating that
     the Holders of the Outstanding Notes will not recognize income, gain or
     loss for U.S. federal income tax purposes as a result of such defeasance
     and will be subject to federal income tax on the same amounts, in the same
     manner and at the same times as would have been the case if such defeasance
     had not occurred.

          (f) The Company shall have delivered to the paying agent an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent provided for relating to either the legal defeasance under
     Condition 13(B) or the covenant defeasance under Condition 13(C) (as the
     case may be) have been complied with.

     (E) Deposited Money and U.S. Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions

     Subject to the provisions of the disposition of unclaimed moneys contained
herein, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the paying agent pursuant to Condition 13(D) in respect
of the Outstanding Notes shall be held in trust and applied by the paying agent,
in accordance with the provisions of these Terms and Conditions, to the payment,
either directly or through the paying agent (including the Company acting as its
own paying agent) to the Holders of the Notes of all sums due and to become due
thereon in respect of principal and interest, but such money and U.S. Government
Obligations need not be segregated from other funds except to the extent
required by law.

     (F) Reinstatement

     If the paying agent is unable to apply any money or U.S. Government
Obligations in accordance with Condition 13(E) by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
these Terms and Condition shall be revived and reinstated as though no deposit
had occurred pursuant to Condition 13(B) or 13(C), as the case may be, until
such time as the paying agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Condition 13(E); provided, however,
that no action taken in good faith by the Company after a deposit of money or
U.S. Government Obligations or both pursuant to Condition 13(E) and prior to the
revival and reinstatement of obligations under these Terms and Conditions
pursuant to this Condition 13(F) shall constitute the

                                                                              25

<PAGE>

basis for the assertion of an Event of Default pursuant to Condition 11; and
provided, further, that if the Company makes any payment of principal of or
interest on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money or U.S. Government Obligations held the Paying Agent.

14. Replacement of Notes

     As provided in Conditions 1(H), should any Note be lost, stolen, mutilated,
defaced or destroyed, it may be replaced at the specified office of the paying
agent or Company upon payment by the claimant of the expenses incurred in
connection with the replacement and on such terms as to evidence indemnity and
security as the Company and paying agent may reasonably require. Mutilated or
defaced Notes must be surrendered before replacements will be issued.

15. Notices

     (A) Notices to all the Noteholders will be valid if posted by ordinary mail
to the address of the Noteholder on the Note Register (unless another form of
notice is permitted by these Terms and Conditions) with a written copy provided
to RP&C International, Limited. Any notice shall be deemed to have been given on
the date which is 5 Business Days after the date of posting. If posting of
notice as provided above is not practicable, notice will be given in such other
manner, and shall be deemed to have been given on such date, as the Company may
reasonably approve.

     (B) Any request, demand, authorization, direction, declaration, notice,
consent, waiver, Extraordinary Resolution or Act of Noteholders or other
document provided or pertained by these Terms and Conditions (herein
collectively called "Notice") to be made upon, given or furnished to, or filed
with the Company by any Noteholder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given, furnished
or filed in writing to or with the Company addressed to it at the address of its
principal office which shall initially be: Harken Energy Corporation, 580
WestLake Park Boulevard, Suite 600, Houston, Texas 77079, Attention: Mikel D.
Faulkner, Chairman of the Board and Chief Executive Officer Tel. (281) 504-4000,
Fax, (281) 504-4100; with a copy to A. Wayne Hennecke, Senior Vice
President-Finance and Secretary: Tel. (281) 504-4040, Fax. (281) 504-4110.

16. Acts of Noteholders, Meetings of Noteholders

     (A) Any Extraordinary Resolution, request, demand, authorization,
direction, declaration, notice, consent, waiver or other action provided by
these Terms and Conditions to be given or taken by Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of these Terms and Conditions and conclusive in favor of the Company, if
made in the manner provided in this Condition

     (B) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to such witness, notary public or other such officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than such signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Company
deems sufficient.

     (C) Any Extraordinary Resolution, request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holders of any Note shall
bind every future Holder of the same Note and the Holder of every

                                                                              26

<PAGE>

Note issued upon conversion or redemption thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done the
Company or any paying or conversion agent in reliance thereon, whether or not
notation of such action is made upon such Note.

     (D) The Noteholders may convene a meeting at any time and from time to time
to consider any matter affecting the Holders of the Notes, including the
modification of the Terms and Conditions and to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this these Terms and Conditions to be made, given or taken by
Holders of the Notes.

     (E) Notice of every meeting of the Holders of the Notes, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in the manner provided in Condition 15,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.

     (F) To be entitled to vote at any meeting of Holders of the Notes, a Person
shall be (i) a Holder of one or more Outstanding Notes, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Notes by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Noteholders shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Company, and their respective counsel.

     (G) The quorum at any meeting for passing any Extraordinary Resolution will
be one or more Persons present holding or representing 50% or more in principal
amount of the Outstanding Notes as of the date of the meeting, or at any
adjourned such meeting one or more Persons present whatever the principal amount
of the Notes held or represented by such Person and the vote required for
passing an Extraordinary Resolution at such meeting will be not less than a
majority of the principal amount of the Outstanding Notes and represented at
such meeting or adjournment thereof; provided, that at any meeting, the business
of which includes the modification of the provisions of the Terms and Conditions
and the provisions of these Terms and Conditions, the necessary quorum and vote
required for passing an Extraordinary Resolution will be one or more Persons
present holding or representing not less than a majority, or at any adjourned
such meeting not less than one-third, of the principal amount of the Outstanding
Notes. An Extraordinary Resolution passed at any meeting of the Holders of the
Notes will be binding on all Holders of the Notes, whether or not such
Noteholders are present at the meeting.

17. Amendments to Terms and Conditions

     (A) Amendments with Consent of Noteholders

     With the consent of the Holders of a majority in principal amount of the
Notes Outstanding, the Company, when authorized by a Board Resolution, may amend
these Terms and Conditions for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions hereof or of
modifying in any manner the rights of the Noteholders hereunder; provided,
however, that no such amendment shall, without the consent of the Holder of each
Outstanding Note affected thereby:

          (1) change the Stated Maturity of the principal of, or any installment
     of principal of or interest on, any Note, or reduce the principal amount
     thereof or the rate of interest thereon, or change the coin or currency in
     which any Note or the interest thereon is payable, or impair the right to
     institute suit for the enforcement of any such payment after the Stated
     Maturity thereof (or, in the case of redemption, on or after the Redemption
     Date), or

          (2) reduce the percentage in principal amount of the Outstanding
     Notes, the consent of whose Holders is required for any amendment of these
     terms and conditions, or the consent of whose Holders is required for any
     waiver of compliance with certain provisions of these Terms and Conditions
     or certain defaults hereunder and their consequences provided for herein,
     or

                                                                              27

<PAGE>

          (3) modify any of the provisions of Condition 11(K), except to
     increase any such percentage or to provide that certain other provisions of
     these Terms and Conditions be modified or waived without the consent of the
     Holder of each Outstanding Note affected thereby,

          (4) modify any of the provisions of these Terms and Conditions
     relating to the subordination of the Notes in a manner adverse to the
     Holders thereof, or

          (5) modify any of the provisions of these Terms and Conditions
     relating to Conversion Rights or redemption rights.

     It shall not be necessary for any Act of Noteholders under this Condition
to approve the particular form of any proposed amendment to the Terms and
Conditions, but it shall be sufficient if such Act shall approve the substance
thereof.

     (B) Effect of Amendments

     Upon the entering into of an amendment of these Terms and Conditions
pursuant to the terms hereof, these Terms and Conditions shall be modified in
accordance therewith, and amendment shall form a part of these Terms and
Conditions for all purposes; and every Holder of Notes theretofore or thereafter
delivered hereunder shall be bound thereby.

18. Governing Law

     The Notes, including these Terms and Conditions, are governed by, and will
be construed in accordance with, the laws of the State of New York.

19. Definitions of Certain Terms

     "Act," when used with respect to any Noteholder, has the meaning specified
in Condition 16.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.

     "Authorized Denomination" means U.S. $1,000.

     "Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is a day on which banking institutions in the City of New York, New York,
and London, England are not authorized or obliged by law, regulation or
executive order to close.

     "Capitalized Lease Obligation" means the amount of the liability under any
capital lease that, in accordance with GAAP, is required to be capitalized and
reflected as a liability on the balance sheet of the relevant Person.

                                                                              28

<PAGE>

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted or, if at any time after the Issue Date such Commission is not
existing, then the body performing similar duties at such time.

     "Common Stock" means, with respect to any Person, any and all shares,
interests, participation and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.

     "Company" means Harken Energy Corporation, until a successor Person shall
have become such pursuant to the applicable provisions of these Terms and
Conditions, and thereafter "Company" shall mean such successor Person.

     "Conversion Agent" or "conversion agent" means any Person (including the
Company acting as conversion agent) authorized by the Company to effect
conversions of the Note on behalf of the Company. The initial conversion agent
is the Bank of New York.

     "Conversion Date" means the Business Day during the Conversion Period on
which the Conversion Right is exercised by delivery to the Conversion Agent of
the Note surrendered for conversion and the completed notice of a Noteholder's
intention to exercise its Conversion Right (as set forth in Exhibit A hereto)
with respect to any Note.

     "Conversion Period" means, with respect to any Note, the period which
begins after the earlier to occur of (I) the close of the effective date of a
Registration Statement filed by the Company with the Commission with respect to
the Shares or (II) the date such Shares may be sold pursuant to the exemption
from registration under the Securities Act provided by Rule 144 or other
exemption from registration under the Securities Act, and ends upon the earliest
to occur of (A) the second Business Day prior to the later of March 31, 2007, or
the date on which all principal and interest on the Notes is repaid in full, (B)
if such Notes shall have been called for redemption pursuant to Condition 7 of
these Terms and Conditions, the close of the second Business Day prior to the
Redemption Date, or (C) the effective date of a Mandatory Conversion.

     "Conversion Price" means, in respect of a Conversion Right, initially U.S.
$0.50.

     "Conversion Right" means the right of a Holder of any Note to convert such
Note into Conversion Shares.

     "Conversion Shares" means the Shares into which the Notes are convertible.

     "Corporation" includes corporations, limited liability companies, limited
and general partnerships, associations, joint-stock companies and business
trusts.

     "Default Rate" means, with respect to the Notes, ten percent (10%) per
annum.

     "Effective Date" means the first Business Day following the date upon which
the Commission declares to be effective a registration statement filed by the
Company pursuant to the Securities Act relating to the Conversion Shares.

     "Extraordinary Resolution" means a resolution passed at a meeting of the
Noteholders duly convened and held in these Terms and Conditions.

                                                                              29

<PAGE>

     "Federal Bankruptcy Code" means the Bankruptcy Act or Title 11 of the
United States Code, as amended from time to time.

     "Freely Tradable" means, with respect to the Notes and the Conversion
Shares and redemption Shares, that under the Securities Act the holders thereof
may then offer and sell any amount of such outstanding securities to the public
in the United States without restrictions in transactions that are not brokers'
transactions (as defined in the Securities Act) either (i) pursuant to an
effective registration statement then in effect or (ii) pursuant to Rule 144(k).
For purposes of determining whether such securities are Freely Tradable, it
shall be assumed that no person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company has ever held such securities from and after their issuance.

     "Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as applied from time to
time by the Company and its Subsidiaries in the preparation of its financial
statements.

     "Guaranty" means all obligations of any Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including without
limitation all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, or (ii) to advance or
supply funds (1) for the purchase or payment of such Indebtedness or obligation,
or (2) to enable the recipient of such funds to maintain certain financial
conditions (e.g. agreed amount of working capital) under loan or similar
documents, or (iii) to lease Property or to purchase securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under these Terms and
Conditions, a Guaranty in respect of any Indebtedness shall be deemed to be
Indebtedness equal to the principal amount and accrued interest of such
Indebtedness which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.

     "Holder or Noteholder" means a Person in whose name a Note is registered in
the Note Register.

     "Indebtedness" of any Person means and includes all present and future
obligations of such Person, which shall include all obligations (i) which in
accordance with generally accepted accounting principles in the United States
shall be classified upon a balance sheet of such Person as liabilities of such
Person, (ii) for borrowed money, (iii) which have been incurred in connection
with the acquisition of Property (including, without limitation, all obligations
of such Person evidenced by any debenture, bond, note, commercial paper or other
similar security, but excluding, in any case, obligations arising from the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection), (iv) secured by any Lien existing on Property owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (v) created or arising under any conditional sale
or other title retention agreement with respect to Property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of such Property, (vi) which are Capitalized Lease
Obligations, (vii) for all Guaranties, whether or not reflected in the balance
sheet of such Person and (viii) which are all reimbursement and other payment
obligations (whether contingent, matured or otherwise) of such Person in respect
of any acceptance or documentary credit. Notwithstanding the foregoing,
Indebtedness shall not include (i) Indebtedness incidental to the operation of
the business of the Person in the ordinary course and in the aggregate not
material to the business and operations of the Person, (ii) Indebtedness for

                                                                              30

<PAGE>

which the Company or any of its Subsidiaries are the sole obligors and obligees,
and (iii) Indebtedness represented by purchase, rental or lease obligations not
to exceed $1,000,000 in any period of 12 months for any Person and its
Subsidiaries.

     "Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.

     "Issue Date" means the date of the initial issuance of the Note.

     "Lien" means any mortgage, charge, pledge, lien, security interest or
encumbrance of any kind whatsoever, including any interest in Property securing
an obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of these Terms and Conditions, the Company
or its Subsidiary shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.

     "Majority Holders" means the Holders of a majority of the principal amount
of Notes Outstanding.

     "Mandatory Conversion" means conversion of the Notes at the option of the
Company pursuant to Condition 6D.

     "Market Price" means the daily closing sale price of the Shares for a Stock
Exchange Business Day on a Stock Exchange. If the Common Stock is not quoted on
any Stock Exchange, then the Market Price shall be for any particular day shall
be calculated promptly at the Company's expense by a reputable investment bank
selected by the Company.

     "Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or the Redemption Date and whether by declaration
of acceleration, call for redemption or otherwise.

     "Note Register" means the register maintained by the Company for the
registration and transfer of the Note.

     "Note Registrar" means the registrar appointed by the Company from time to
time to act as Note registrar.

     "Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore issued, except: (1) Notes heretofore
cancelled by the paying and conversion agent or delivered to the paying agent or
Company for cancellation; (2) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited any
paying agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own paying agent) for the
Holders of such Notes; provided that, if such Notes are to be redeemed, notice
of such redemption has been duly given or provision therefor satisfactory to the
paying agent (if appointed) has been made; (3) Notes, except to the extent
provided in Conditions 13 (B) and 13(C), with respect to which the Company has
effected defeasance and/or covenant defeasance as provided in Condition 13; and
(4) Notes which have been paid pursuant to or in exchange for or in lieu of
which other Notes have been issued, however, that in determining whether the
Holders of the requisite principal amount of Outstanding Notes have taken any
Act or given or made any Extraordinary Resolution, Notes owned by the Company or
any other obligor upon the Notes or any Affiliate of the Company (other than
Persons whose Affiliate relationship arises solely from ownership of Conversion
Shares) or such other obligor shall be disregarded and deemed not to be
Outstanding.

                                                                              31

<PAGE>

     "Paying Agent" or "paying agent" means any Person (including the Company
acting as paying agent) authorized by the Company to pay the principal of or
interest on any Notes on behalf of the Company. Pursuant to the terms and
conditions hereof, the Company has initially appointed The Bank of New York as
the paying agent.

     "Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

     "Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding or issued on or
after the Issue Date, and includes, without limitation, all classes and series
of preferred or preference stock.

     "Presentation Date" means the date on which a Note is presented by a
Noteholder for payment of principal or if such date is not a Business Day in
London and New York, the next date which is a Business Day in each of the
foregoing cities.

     "Property" or "Properties" means any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, and any interest therein.

     "Record Date" means the 15th day preceding each Interest Payment Date
whether or not a Business Day.

     "Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
these Terms and Conditions.

     "Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to the terms hereof, plus
accrued and upaid interest to, but excluding, the Redemption Date, if applicable
expressed in a number of Conversion Shares into which such Note shall be
converted in the event the Notes are to be redeemed for Shares and, in the event
of any other redemption, a cash amount.

     "Relevant Date" means the date on which the payment first becomes due;
provided, that if the full amount of the money payable has not been received by
the Paying Agent on or before the due date, it shall mean the date on which, the
full amount of the money having been so received, notice to that effect shall
have been duly given to the Noteholders by the Company in accordance with
Condition 15.

     "Rule 144A" means Rule 144A, as amended, promulgated by the Commission
pursuant to the Securities Act.

     "Rule 144" means Rule 144, as amended, promulgated by the Commission
pursuant to the Securities Act.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time by the Commission pursuant
thereto.

     "Shares" means the common stock, par value U.S. $0.01, of the Company (and
all other (if any) shares or stock resulting from any sub-division,
consolidation or reclassification of such shares).

     "Stated Maturity," when used with respect to any Indebtedness or any
installment of principal thereof or interest thereon, means the date specified
in such

                                                                              32

<PAGE>

Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of principal or interest is due and payable.

     "Stock Exchange" means any United States national or regional stock
exchange or quotation service such as NASDAQ National Market System or any
similar quotation service maintained by the National Quotation Bureau or any
successor thereto.

     "Stock Exchange Business Day" means any day (other than a Saturday or
Sunday) on which the a Stock Exchange is open for business.

     "Subordinated Obligation" means any Indebtedness of the Company outstanding
on such date which is contractually subordinate or junior in right of payment to
the Notes.

     "Subsidiary" of any Person means any Corporation of which at least a
majority of the shares of stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such Corporation
(irrespective of whether or not at the time stock of any other class or classes
of such Corporation shall have or might have voting power by reason of the
happening of any contingency) is directly or indirectly owned or controlled by
the Person.

     "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.

                                                                              33

<PAGE>

                                   SCHEDULE A

                          Principal Amount of this Note

         The aggregate principal amount of this Note is as shown by the latest
entry made by or on behalf of the Paying Agent in the fourth column below.
Reductions in the outstanding principal amount of this Note following
redemption, conversion into shares of Common Stock, or the purchase and
cancellation of Notes are entered in the second and third columns below.

<TABLE>
<CAPTION>
                                                                       Outstanding           Notation made by or on
                        Reasons for change in                           principal       Behalf of the Company (other
                           The outstanding                             Amount of this               than
                         Principal amount of        Amount of      Note following such    In respect of the initial
         Date                   Note               Such change           Change                Principal amount
----------------------------------------------------------------------------------------------------------------------
<S>                     <C>                       <C>              <C>                   <C>
         , 2003            Not applicable         Not applicable                                Not applicable
----------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

                                                                              34

<PAGE>

                                   SCHEDULE B

                    Interest Payments in respect of this Note

The following payments of interest in respect of this Note have been made:

<TABLE>
<CAPTION>

                          Amounts of interest                                  Notation made by and on behalf of the
      Date made             Due and payable        Amount of interest paid                    Company
----------------------------------------------------------------------------------------------------------------------
<S>                     <C>                       <C>                          <C>
----------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

                                                                              35

<PAGE>

                                   SCHEDULE C

                                Form of Transfer

FOR VALUE RECEIVED, [ ] being the registered holder of this Note hereby
transfers to [ ] of [ ] U.S. $[ ] in principal amount of the U.S.$3,410,000 (the
"Note") of HARKEN ENERGY CORPORATION (the "Issuer") and irrevocably requests and
authorizes the Issuer or the Note Registrar in its capacity as registrar in
relation to the Note to effect the relevant transfer by means of appropriate
entries in the register kept by it.

Dated:

By:      _______________________________
         (duly authorized)

In connection with any transfer of this Note, the undersigned confirms that
documents are being furnished to the registrar which comply with the conditions
set forth in this Note.

The registrar shall not be obligated to register this Note in the name of any
Person other than the Holder hereof unless and until the conditions to any such
registration or transfer set forth here in have been satisfied.

Note

The name of the Person by or on whose behalf this form of transfer is signed
must correspond with the name of the registered holder as it appears on the face
of this Note.

(1)  A representative of such registered holder should state the capacity in
     which he signed, e.g. executor.

(2)  The signature of the Person effecting a transfer shall conform to any list
     of duly authorized specimen signatures supplied by the registered holder or
     be certified by a recognized bank, notary public or in such other manner as
     the registrar may require.

(3)  Any transfer of the Note shall be in an amount equal to U.S.$1,000 or any
     integral multiple of U.S.$1,000 in excess thereof.

                                                                              36

<PAGE>

                                    EXHIBIT A

                           HOLDER'S CONVERSION NOTICE

To: [Conversion Agent][Company]

     The undersigned Holder of the 7% Senior Convertible Notes Due 2007, Series
G (the "Notes") in the aggregate principal amount of U.S. $          tendered
herewith hereby irrevocably exercises the option to convert such Note(s) into
shares of Common Stock in accordance with the Terms and Conditions of the Notes
relating to the issuance by Harken Energy Corporation of an aggregate of U.S.
$3,410,000 of the Notes and directs that the Conversion Shares issuable and
deliverable upon such conversion be issued and delivered to the undersigned in
the name and at the address set forth below.

     If the Conversion Shares are to be issued in the name of a Person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied with.

     All terms used and not otherwise defined herein have the respective
meanings set forth in the Terms and Conditions.

     DATE: _____________________

                                         -----------------------------------
                                         Name of Holder

                                         -----------------------------------
                                         Signature(s) of Holder

Address for Delivery
of Share Certificates

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

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

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

Name for Registration
of Share Certificates (if
Different than Holder):

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

                                      A-1

<PAGE>

                                    EXHIBIT B

                           COMPANY'S CONVERSION NOTICE

To: Conversion Agent/Noteholder

     Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert all of the 7% Senior Convertible Notes Due 2007, Series G (the
"Notes") of the Company that have not been previously converted and are
Outstanding at the date of this notice into shares of its Common Stock, in
accordance with the Terms and Conditions, pursuant to which the Company has
issued an aggregate of U.S. $3,410,000 of the Notes, and confirms that the
Conversion Shares issuable and deliverable upon conversion shall be issued and
delivered to the Noteholders in accordance with the instructions for
registration and delivery of the Conversion Shares to each Holder, to be
provided by each Holder to the Conversion Agent or the Company.

     The Company is entitled to exercise its option to convert because (i)
ninety (90) days has elapsed from the Effective Date, (ii) the average of the
Market Price of the Common Stock over the Stock Exchange Business Days during
the thirty (30) consecutive calendar day period beginning on         and ending
on          (being a date after the Effective Date) equaled or exceeded 125% of
the Conversion Price, and (iii) the Conversion Shares were Freely Tradeable on
the date such threshold was met and for the 30 calendar day period after such
date.

     All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.

DATE:                                 HARKEN ENERGY CORPORATION
       --------------------

                                               By:
                                                  ------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                      B-1

<PAGE>

                                    EXHIBIT C

                    COMPANY'S NOTICE OF REDEMPTION FOR SHARES

To: [Paying and Conversion Agent] [Noteholder]

     Harken Energy Corporation (the "Company") hereby irrevocably exercises the
option to convert _______ United States dollars (U.S. $      ) principal amount
of the 7% Senior Convertible Notes Due 2007, Series G (the "Notes") of the
Company that have not been previously converted and are Outstanding at the date
of this notice into shares of its Common Stock, in accordance with the Terms and
Conditions, pursuant to which the Company has issued an aggregate of U.S.
$3,410,000 of the Notes, and confirms that the Conversion Shares issuable and
deliverable upon conversion shall be issued and delivered to the Noteholders in
accordance with the instructions for registration and delivery of the Conversion
Shares to each Holder, to be provided by each Holder to the Conversion
Agent/Company.

     Each Note so redeemed will be redeemed for the number of Shares of Common
Stock equal to 110% of the face value of the Note plus interest accrued and
unpaid thereon divided by US $     , which represents the average of the Market
Price of the Common Stock over the 30 Stock Exchange Days day period immediately
preceding the pricing date.

     All terms used and not otherwise defined herein shall have the respective
meanings set forth in the Terms and Conditions.

DATE: __________________________         HARKEN ENERGY CORPORATION

                                                  By:
                                                     ---------------------------
                                                  Name:
                                                       -------------------------
                                                  Title:
                                                        ------------------------

                                      C-1

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