Document:

EXHIBIT 10.3

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                                  BY AND AMONG
                               FEDERAL TRUST BANK,
                            FEDERAL TRUST CORPORATION
                                       AND
                                AUBREY H. WRIGHT

     THIS EMPLOYMENT AGREEMENT  ("Agreement") is being entered into by and among
Federal  Trust Bank,  a  federally-chartered  stock  savings  bank which has its
principal office in Winter Park, Florida ("Bank"),  Federal Trust Corporation, a
Florida corporation ("Corporation") and Aubrey H. Wright ("Employee").

                                   WITNESSETH:

         WHEREAS,  the Employee is the Chief  Financial  Officer of the Bank and
the  Corporation  and has  developed an intimate  and thorough  knowledge of the
business methods and operations of the Bank and the Corporation;

         WHEREAS,  the retention of the Employee's services for and on behalf of
the Bank and the Corporation is of material  importance to the  preservation and
enhancement of the value of the business of the Bank and the Corporation; and

         WHEREAS,  the Employee,  the Bank, through its Board of Directors,  and
the Corporation,  through its Chief Executive Officer and President, have agreed
to this  Agreement  in order to update and  clarify  their  relationship  and to
comply with current government regulations;

         NOW,  THEREFORE,  in  consideration  of the mutual covenants herein set
forth, the Bank, the Corporation and the Employee do hereby agree as follows:

                              I. TERM OF EMPLOYMENT

         Section 1.1 The Bank shall employ the  Employee as its Chief  Financial
Officer,  as  hereinafter  provided,   and  the  Employee  hereby  accepts  said
employment  and  agrees to  render  such  services  to the Bank on the terms and
conditions  set forth in this Agreement  commencing on the  "Effective  Date" as
defined in Section  8.5 herein,  and  terminating  September  30,  1998,  unless
further  extended or  terminated  in  accordance  with the terms and  conditions
hereinafter set forth. During the term of this Agreement, the Employee agrees to
perform such duties as are customarily  performed by one holding the position of
Chief Financial  Officer of a financial  institution.  The Board of Directors of
the Bank and the  Corporation  shall review this  Agreement  and the  Employee's
performance on or before September 15, 1997, and annually  thereafter,  in order
to determine  whether to extend this Agreement.  The decision to extend the term
of this  Agreement for an additional  year is within the sole  discretion of the
Board of Directors.  References herein to the term of this Agreement shall refer
both to the initial term and successive terms.

         Section  1.2  During the term of this  Agreement,  the  Employee  shall
perform  such  executive  services  for the Bank as may be  consistent  with his
titles  and  from  time  to time  be  assigned  to him by the  Bank's  Board  of
Directors. The Employee shall devote his best efforts, including such portion of
his time and effort to the affairs and business of the Bank and the  Corporation
as is customarily provided by a Chief Financial Officer for such companies.

         Section 1.3 The services of the Employee shall be rendered  principally
in Winter Park,  Florida,  but he shall do such  traveling on behalf of the Bank
and the Corporation as may be reasonably required.

                           II. COMPETITIVE ACTIVITIES

         Section 2.1  Employee  agrees  that  during the term of his  employment
hereunder, except with the express consent of the Board of Directors of the Bank
or the Corporation,  he will not, directly or indirectly,  engage or participate
in,  become a director  of, or render  advisory  or other  services  for,  or in
connection  with, or become  interested in, or make any financial  investment in
any  firm,  corporation,  or  business  enterprise  competitive  with  or to any
business of the Bank; provided,  however, that the Employee shall not thereby be
precluded or prohibited from owning passive investments,  including  investments
in the  securities of other  financial  institutions,  so long as such ownership

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does not require him to devote  substantial time to management or control of the
business or activities in which he has invested.

         Section  2.2  Employee  agrees and  acknowledges  that by virtue of his
employment  hereunder,  he will maintain an intimate knowledge of the activities
and affairs of the Bank, including trade secrets and other confidential matters.
As a result,  also because of the special,  unique,  and extraordinary  services
that  the  Employee  is  capable  of  performing  for the  Bank or one of  their
competitors,  the  Employee  recognizes  that the services to be rendered by him
hereunder  are of a character  giving them a peculiar  value,  the loss of which
cannot  be  adequately  or  reasonably  compensated  for by  damages.  Employee,
therefore,  agrees that during the term of this  Agreement,  and for a period of
six (6) months after either a voluntary  termination by the Employee (except for
a termination effected pursuant to the provisions of Section 7.10 herein) or due
to a  termination  resulting  from  termination  of the Employee for cause,  the
Employee shall not:

         (a) divulge any matter  pertaining to the activities and affairs of the
Bank, including without limitation, trade secrets and other confidential matters
except as may be required by law; and

         (b) become  employed,  directly or indirectly,  whether as an employee,
independent  contractor,  consultant,  or otherwise,  in the financial  services
industry with any business  enterprise or business entity competitive with or to
any  business  of the Bank,  and either  maintains  offices or does  business in
Orange County, Florida.

         Employee  agrees that breach of any of these  covenants by the Employee
shall  constitute  irreparable harm to the Bank for which the Bank does not have
an  adequate  remedy  at law,  and  that the Bank  is,  therefore,  entitled  to
immediate  injunctive  or other  equitable  relief to restrain the Employee from
violating the  provisions of this  Agreement.  The right to such  injunctive and
equitable  relief shall survive the termination for cause of the Employee by the
Bank or the voluntary  termination of this  Agreement by the Employee  except if
such termination is affected pursuant to the provisions of Section 7.10 herein.

         Employee  hereby  agrees  that  the  duration  of  the  anticompetitive
covenant set forth herein is  reasonable,  and its  geographic  scope not unduly
restrictive.

                                III. COMPENSATION

         Section 3.1 The Bank will  compensate and pay the Employee for services
during the term of the  Agreement  at a minimum  base salary of $75,000 per year
for the year ending  December 31, 1995,  with annual salary  increases,  if any,
thereafter in an amount determined by the Board of Directors.

         Section  3.2 At such  time as the  Bank  meets  the  "Well-Capitalized"
definition under federal banking  regulations,  and quarterly after-tax earnings
equal or exceed 0.50 percent of average quarterly assets on an annualized basis,
the Bank shall pay to the Employee a bonus ("Quarterly Bonus") equal to one (1%)
of the Bank's quarterly net income before taxes (excluding  extraordinary  gains
or losses).  Quarterly Bonus amounts shall be determined as of the close of each
of the Bank's fiscal  quarters and shall be paid to the Employee  within 45 days
of each quartered-end.  Aggregate Quarterly Bonuses in any one fiscal year shall
not exceed the amount of Employee's annual base salary for such fiscal year.

         Section 3.3 Employee may be granted an annual  performance bonus by the
Board of Directors of the Bank. The granting of a bonus shall be on a subjective
basis,  considering the Employee's  performance and the performance of the Bank.
Any bonuses  awarded the  Employee  by the Bank shall not be  considered  as nor
constitute  part of the Employee's  base  compensation  for the purposes of this
Agreement.

               IV. PARTICIPATING IN RETIREMENT AND MEDICAL PLANS,
                          LIFE INSURANCE AND DISABILITY

         Section 4.1 Except as otherwise  stated  herein,  the Employee shall be
entitled to  participate  in and  receive the  benefits of any plans of the Bank
relating  to  pension,  profit-sharing,   or  other  retirement  benefits.  This
includes,  but shall not be  limited  to,  participation  in the  Federal  Trust
Corporation's ESOP program.

         Except as otherwise stated herein,  the Employee shall also be entitled
to  participate in and receive the benefits of any plans of the Bank relating to
medical  coverage or  reimbursements  that the Bank may adopt for the benefit of
their  employees.  The Bank  shall also  provide  hospitalization  coverage  and
expenses for the Employee and his spouse.

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         Section 4.2 (a) If the Employee shall become disabled or  incapacitated
to the extent that he is unable to perform his duties as Chief Financial Officer
of the Bank and the Corporation,  he shall nevertheless  continue to receive the
following  percentages of his compensation,  exclusive of any benefits which may
be in effect for  employees  of the Bank,  under  Section  4.1  herein,  for the
following  periods of his disability:  100% for the first six (6) months and 75%
hereafter for the remaining  term of this  Agreement.  Upon  returning to active
duties, the Employee's full compensation as set forth in this Agreement shall be
reinstated. In the event that the Employee returns to active employment on other
than a  full-time  basis,  then his  compensation  (as set forth in Section  3.1
herein) shall be reduced in proportion to the time spent in said employment.

            (b) There shall be deducted  from the amounts  paid to the  Employee
hereunder  during any  period of  disability,  as  described  in Section  4.2(a)
herein,  any amounts  actually paid to the Employee  pursuant to any  disability
insurance or other  similar such program  which the Bank has  instituted  or may
institute on behalf of their employees for the purpose of compensating employees
in the event of disability.

            (c) For the purpose of this Agreement,  the Employee shall be deemed
disabled or  incapacitated  if the Employee,  due to physical or mental illness,
shall have been absent from his duties with the Bank,  on a full-time  basis for
three (3)  consecutive  months;  provided  that, if the Employee shall not agree
with a determination  to terminate him because of disability or incapacity,  the
question of the  Employee's  ability  shall be  submitted  to an  impartial  and
reputable  physician  selected  by  the  parties  hereto  and  such  physician's
determination on the question of disability or incapacity shall be binding.

                     V. ADDITIONAL COMPENSATION AND BENEFITS

         Section 5.1 During the term of this  Agreement,  the  Employee  will be
entitled to participate  in and receive the benefits of any stock option,  stock
ownership,  profit-sharing,  or other plans,  benefits and  privileges  given to
employees  and  executives  of the Bank  which  are  currently  in effect at the
execution of this Agreement or which may come into existence thereafter,  to the
extent the Employee is otherwise eligible and qualifies to so participate in and
receive such benefits or privileges.  The Bank and/or the Corporation  shall not
make any changes in such plans,  benefits or  privileges  which would  adversely
affect the Employee's rights or benefits  thereunder,  unless such change occurs
pursuant to a program  applicable to all executive  officers (Vice  President or
above) of the Bank or the Corporation, whichever the case might be, and does not
result in a proportionately  greater adverse change in the rights of or benefits
to the Employee as compared with any other executive  officer of the Bank or the
Corporation. Furthermore, the Bank shall not make any changes in plans, benefits
or privileges in effect at the execution of this Agreement which would adversely
affect  the  Employee's  Rights or  benefits  thereunder,  except by the  mutual
agreement  of the  parties.  Nothing  paid to the  Employee  under  any  plan or
arrangement  presently in effect or made available in the future shall be deemed
to be in lieu of the salary  payable to the  Employee  pursuant  to Section  3.1
herein.

         Section 5.2 Employee shall be entitled to three weeks paid vacation.

                                  VI. EXPENSES

         Section  6.1 The  Bank  and/or  the  Corporation  shall  reimburse  the
Employee or otherwise provide for or pay for all reasonable expenses incurred by
the Employee in  furtherance  or in connection  with the business of the Bank or
the  Corporation  including,  but  not  by  way of  limitation,  automobile  and
traveling  expenses,  along  with  reasonable  entertainment  expenses  (whether
incurred at the Employee's residence, while traveling, or otherwise), subject to
such  reasonable  limitations as may be established by the respective  Boards of
Directors.

                                VII. TERMINATION

         Section  7.1 The Bank  shall  have the  right,  at any time upon  prior
written notice of termination  satisfying the  requirements  of Section  7.10(c)
herein, to terminate the Employee's employment hereunder,  including termination
for just cause. For the purpose of this Agreement,  termination for "just cause"
shall  mean   termination  for  personal   dishonesty,   incompetence,   willful
misconduct,  material breach of fiduciary duty,  intentional  failure to perform
the duties  stated in this  Agreement,  willful  violation  of any law,  rule or
regulation  (other  than  traffic  violations  or  similar  offenses),   willful
violation of a final  cease-and-desist  order,  willful or intentional breach or
negligence or misconduct in the performance of such duties or material breach of
any  provision  of  this  Agreement  as  determined  by  a  court  of  competent
jurisdiction or in final agency action by a federal or state  regulatory  agency
having  jurisdiction  over the Bank.  For purposes of this  Section,  no act, or
failure to act, on the  Employee's  part shall be  considered  "willful"  unless
done,  or omitted to be done,  by him not in good faith and  without  reasonable
belief that his action or omission was in the best

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interest of the Bank or the  Corporation;  provided  that any act or omission to
act by the  Employee in  reasonable  reliance  upon an opinion of counsel to the
Bank or the Corporation shall not be deemed to be willful.

         Section  7.2 In the event the  Employee  is  terminated  for just cause
pursuant to Section 7.1 herein, the Employee shall have no right to compensation
or other benefits for any period after such date of termination. If the Employee
is  terminated  by the Bank other than for just cause  pursuant  to Section  7.1
herein,  and other than in  connection  with a change in control of the Bank, as
defined herein,  the Employee's  right to compensation  and other benefits under
this Agreement shall be as set forth in Sections 7.10(e) and (f) herein.  In the
event the Employee is terminated by the Bank other than for just cause  pursuant
to Section 7.1 herein, but in connection with a change in control of the Bank as
defined herein,  the Employee's  right to compensation  and other benefits under
this Agreement shall be as set forth in Sections 7.10(d)(e) and (f) herein.

         Section 7.3 Employee shall have the right, upon prior written notice of
termination  of not less than thirty (30) days  satisfying the  requirements  of
Section  7.10(c)  herein,  to terminate his  employment  hereunder,  but in such
event,  the  Employee  shall  have no right  after  the date of  termination  to
compensation  or other  benefits  as  provided  in this  Agreement,  unless such
termination  is for "good  reason",  as  defined,  pursuant  to Section  7.10(a)
herein.  If the Employee  provides a notice of termination for good reason,  the
date of termination shall be the date on which a notice of termination is given.

         Section 7.4 If the Employee is suspended from office and/or temporarily
prohibited from  participating  in the conduct of the Bank's affairs pursuant to
notice served under Section  8(e)(3) or Section  8(g)(1) of the Federal  Deposit
Insurance Act ("FDIA") (12 U.S.C.  Section  1818[e][3] and Section  1818[g][1]),
the Bank's obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings.  If the charges in the notice
are dismissed, the Bank may, in its discretion: (i) pay the Employee all or part
of the  compensation  withheld while its  obligations  under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations which
were suspended.

         Section 7.5 If the Employee is removed from office  and/or  permanently
prohibited from  participating  in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.  Sections
1818[e](4] and [g][1]),  all  obligations of the Bank under this Agreement shall
terminate  as of the  effective  date of the  order,  but  vested  rights of the
Employee and the Bank as of the date of termination shall not be affected.

         Section 7.6 All  obligations  under this  Agreement  may be  terminated
pursuant  to 12 C.F.R.  Section  563.39(b)(5)  (except to the extent  that it is
determined that continuation of the Agreement for the continued operation of the
Bank is  necessary):  (i) by the  Director  of the Office of Thrift  Supervision
("OTS"),  or  his/her  designee,  at the  time  the  Federal  Deposit  Insurance
Corporation ("FDIC") or Resolution Trust Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority  contained in
Section 13(c) of the FDIA (12 U.S.C.  Section 1823[c]);  or (ii) by the Director
of the OTS, or his/her  designee,  at the time the Director or his/her  designee
approves a supervisory  merger to resolve  problems  related to operation of the
Bank or when the Bank is  determined  by the Director of the OTS in final agency
action  to be in an  unsafe  or  unsound  condition,  but  vested  rights of the
Employee and the Bank as of the date of termination shall not be affected.

         Section 7.7 If the Bank is in default, as defined in Section 3(x)(1) of
the  FDIA  (12  U.S.C.  Section  1813[x][1])  to mean an  adjudication  or other
official determination by any court of competent  jurisdiction,  the appropriate
federal  banking  agency  or  other  public   authority   pursuant  to  which  a
conservator,  receiver or other legal  custodian is appointed for the Bank,  all
obligations under this Agreement shall terminate as of the date of default,  but
vested rights of the Employee and the Bank as of the date of  termination  shall
be not affected.

         Section 7.8 In the event that the  Employee is  terminated  in a manner
which  violates any  provisions of this  Agreement,  as determined by a court of
competent jurisdiction,  the Employee shall be entitled to reimbursement for all
reasonable  costs,  including  attorneys fees, in challenging such  termination.
Further,  because of economic  disparity among the Bank, the Corporation and the
and the  Employee,  the Bank  and/or the  Corporation  (jointly  and  severally)
agree(s) to pay for the Employee's  reasonable  attorneys'  fees and costs up to
$20,000 to enforce the terms of this  Agreement or recovered  damages for breach
of this agreement as follows;  up to $10,000 at the  commencement  of litigation
and up to an additional  $10,000 during the course of  litigation.  In the event
the  Employee  is  unsuccessful  in his claim or  defense,  the  Employee  shall
reimburse  the Bank for any  attorney'  fees,  expenses and costs that have been
advanced by the Bank. If the Employee is  successful,  any  attorneys' fee award
will be  reduced  by the  amount of  attorney's  fees and  costs  that have been
advanced.  Such  reimbursement  shall be in  addition to all rights to which the
Employee is otherwise entitled under this Agreement.

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         Section 7.9 This  Agreement  shall be terminated  upon the death of the
Employee during the term of this  Agreement;  provided that, if the Employee has
heirs,  the estate of the  Employee  shall be entitled to receive  payment in an
amount equal to 75% of the Employee's total annual compensation,  at the date of
death,  as herein  defined,  for the remainder of the term of this  Agreement or
twelve (12) months, whichever is longer. For purposes of this ARTICLE VII annual
compensation  shall  equal the  Employee's  base salary in effect at the time of
termination  plus an amount equal to (i) the previous 4 Quarterly Bonus payments
made to the  Employee,  or (ii) 4 times the amount of the most recent  Quarterly
Bonus payment,  whichever is higher. Unless alternative arrangements are made by
the Bank and/or the Corporation and the legal  representative  of the Employee's
estate,  such payment shall be made in one  installment  due and payable  within
thirty (30) days of the Employee's death.

         Section  7.10(a)  Employee may terminate his  employment  hereunder for
good reason.  For purposes of this  Agreement,  "good  reason"  shall mean (i) a
failure by the Bank or the Corporation to comply with any material  provision of
this  Agreement,  which  failure has not been cured within ten (10) days after a
notice of such  noncompliance  has been given by the Employee to the Bank or the
Corporation;  or (ii)  subsequent  to a change in  control as defined in Section
7.10(b) and without the Employee's express written consent, any of the following
shall occur: the assignment to the Employee of any duties  inconsistent with the
Employee's positions,  duties,  responsibilities and status with the Bank or the
Corporation immediately prior to a change in control; a change in the Employee's
reporting responsibilities,  titles or offices as in effect immediately prior to
a change in control of the Bank or the Corporation;  any removal of the Employee
from, or any failure to re-elect the Employee to, any of such positions,  except
in connection  with a  termination  of  employment  for just cause,  disability,
death,  or removal  pursuant to Sections  7.1 or 7.5 herein;  a reduction by the
Bank or the Corporation in the Employee's annual salary as in effect immediately
prior to a change in  control;  the  failure of the Bank or the  Corporation  to
continue in effect any bonus, benefit or compensation plan, life insurance plan,
health  and  accident  plan  or  disability   plan  in  which  the  Employee  is
participating at the time of a change in control of the Bank or the Corporation,
or the taking of any action by the Bank or the Corporation which would adversely
affect the  Employee's  participation  in or  materially  reduce the  Employee's
benefits under any of such plans or the transfer of the Employee to any location
outside of Orange County,  Florida,  or the assignment of substantial  duties to
the Employee to be completed outside Orange County,  Florida,  without the prior
consent of the Employee.

            (b) For purposes of this Agreement, a "change in control" shall mean
a change in  control  with  respect  to either  the Bank or the  Corporation  as
defined in 12 C.F.R. Sections 574.4 (a) or (b) of the OTS regulations.

           (c) Any  termination of the  Employee's  employment by the Bank or by
the Employee shall be communicated by written notice of termination to the other
party hereto.  For purposes of this Agreement,  a "notice of termination"  shall
mean a dated notice which shall (i) indicate the specific termination  provision
in the Agreement relied upon; (ii) set forth in reasonable  detail the facts and
circumstances  claimed  to  provide a basis for  termination  of the  Employee's
employment   under  the  provision  so  indicated;   (iii)  specify  a  date  of
termination,  which  shall be not  less  than  thirty  (30)  days nor more  than
forty-five  (45) days after such notice of termination  is given,  except in the
case of the  Bank's  termination  of the  Employee's  employment  for just cause
pursuant  to Section  7.1 herein,  in which case the notice of  termination  may
specify a date of  termination  as of the date of such notice of  termination is
given; and (iv) be given in the manner specified in Section 8.3 herein.

         (d). In the event of a change in control as provided in Section 7.10(b)
herein,  the  Corporation  shall to pay the Employee a special  incentive  bonus
equal to two times the Employee's annual compensation then in effect,  times the
price/book value ratio at which the Bank or the Corporation is acquired.

         (e) If the Employee  shall  terminate his employment for good reason as
defined in Section  7.10(a)(i)  herein,  or if the Employee is terminated by the
Bank or the  Corporation  for other than just  cause  pursuant  to  Section  7.1
herein,  then in lieu of any further salary payments to the Employee for periods
subsequent to the date of  termination,  the Employee shall be paid as severance
an amount  which  would  equal the  Employee's  current  annual  salary  for the
remainder of the term of the Agreement,  plus any special  incentive bonus which
the Employee would have been entitled to under Section 7.10(d) herein,  should a
change in control of the Corporation or the Bank occur within twelve (12) months
of the Employees'  voluntary  termination  for good reason.  Such payments to be
made in substantially equal semi-monthly  installments on the fifteenth and last
days of each month until paid in full.

         (f) Unless the  Employee  is  terminated  for just  cause  pursuant  to
Section 7.1 Sections  7.4 through 7.7 herein,  or pursuant to a  termination  of
employment  by the  Employee  for  other  than  good  reason,  the  Bank and the
Corporation  shall maintain in full force and effect,  for the continued benefit
of the Employee for  twenty-four  (24) months,  all employee  benefit  plans and
programs in which the Employee was entitled to participate  immediately prior to
the date of termination, provided that the Employee's continued participation is
possible under the general terms and

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provisions of such plans and  programs.  Further,  the Bank and the  Corporation
shall pay for the same or similar benefits if such benefits are available to the
employee on an individual or group basis as a result of contractual or statutory
provisions requiring or permitting such availability including,  but not limited
to, health insurance  covered under COBRA. At the Employee's  option, in lieu of
continued  benefits  over  future  years as provided  in this  Section  7.10(f),
Employee  shall be paid a lump sum payment  equal to the  present  value of each
benefits,  based  upon a  discount  rate  equal  to the  Federal  Funds  Rate as
published by the Wall Street Journal on the date of termination.

         (g)  Employee  shall not be  required  to  mitigate  the  amount of any
payment  provided for in Sections  7.10(d) and (e) of this  Agreement by seeking
other employment or otherwise.

         (h)  Notwithstanding  the foregoing or anything contained herein to the
contrary,  in no event  shall  the total  amount of  payments  made  under  this
Agreement on account of termination  under Subsection 8(a) (vi) above exceed the
aggregate present value of three times the "base amount" minus one dollar. "Base
amount"  means the  average  annualized  compensation  income  from the  Company
includible in the Executive's  gross income for Federal income tax purposes over
the five-year period  preceding the year in which the Executive's  employment is
terminated.  This  paragraph,  and the language  therein,  shall be  interpreted
consistently with Section 280G of the Internal Revenue Code of 1986, as amended,
and any regulations thereunder.

                               VIII. MISCELLANEOUS

         Section 8.1 Notwithstanding  anything to the contrary herein contained,
the  payment or  obligation  to pay any  monies,  or  granting  of any rights or
privileges to the Employee as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Employee now has under any plan
or benefit presently outstanding.

         Section 8.2 This Agreement may not be modified,  changed,  amended,  or
altered  except in  writing  signed by the  Employee  or by his duly  authorized
representative,  and by a duly  authorized  representative  of the  Bank and the
Corporation.

         Section 8.3 All notices  given or required to be given  herein shall be
in writing,  sent by United States  first-class  certified or  registered  mail,
postage  prepaid,  by way of overnight  carrier or by hand  delivery.  If to the
Employee  (or to the  Employee's  spouse or estate  upon the  Employee's  death)
notice shall be sent to the Employee's  last-known  address,  and if to the Bank
and/or the Corporation notice shall be sent to the corporate  headquarters.  All
such  notices  shall  be  effective  when  deposited  in the  mail if  sent  via
registered  mail,  or upon  delivery if by hand  delivery or sent via  overnight
carrier.  Either party, by notice in writing,  may change or designate the place
for receipt of all such notices.

         Section 8.4 No course of conduct by the Bank,  the  Corporation  or the
Employee and no delay or omission of the Bank,  the  Corporation or the Employee
to exercise any right or power given under this Agreement  shall: (i) impair the
subsequent  exercise of any right or power,  or (ii) be construed to be a waiver
of any  default or any  acquiescence  in or consent to the curing of any default
while any other default shall continue to exist,  or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen. Any power and/or remedy granted by law and by this Agreement to any
party hereto may be exercised  from time to time,  and as often as may be deemed
expedient.  All such rights and powers shall be cumulative to the fullest extent
permitted by law.

         Section 8.5 The "Effective Date" of this Agreement shall be retroactive
to September 1, 1995.

         Section 8.6 All references herein to particular  sections of a statute,
rule or regulation or to a particular  disclosure item or schedule shall also be
deemed to be a reference to any successor section,  statute,  rule,  regulation,
disclosure item or schedule.

         Section 8.7 The  invalidity  or  unenforceability  of any  provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

         Section  8.8  This  Agreement  supersedes  and  replaces  all  previous
employment  agreements or amendments thereto among the Bank, the Corporation and
the Employee.

                                       84

<PAGE>

                            IX.  SUCCESSORS, ETC.

         Section 9.1 This Agreement shall inure to the benefit of and be binding
upon the Employee, and to the extent applicable, his heirs, assigns,  executors,
and  personal  representatives,   and  the  Bank  and  the  Corporation,   their
successors, and assigns, including, without limitation, any person, partnership,
or corporation  which may acquire all or substantially  all of the Bank's or the
Corporation's  assets  and  business,  or  with or into  which  the  Bank or the
Corporation may be consolidated or merged, and this provision shall apply in the
event of any subsequent merger,  consolidation,  or transfer, unless such merger
or consolidation  or subsequent  merger or consolidation is a transaction of the
type which would result in termination under Sections 7.6 and 7.7 herein.

         Section  9.2 This  Agreement  is  personal  to each of the  parties and
neither  party may assign or delegate any of their rights or  obligations  under
this Agreement without the prior written consent of the other party.

                           X. APPLICABLE LAW AND VENUE

         Section  10.1 This  Agreement  shall be governed in all respects and be
interpreted by and under the laws of Florida, except to the extent that such law
may be preempted by applicable federal law, including  regulations,  opinions or
orders  duly  issued by the OTS or FDIC  ("Federal  Law"),  in which  event this
Agreement shall be governed and be interpreted by and under Federal Law.

         Section 10.2 The venue for any litigation concerning the enforcement of
this Agreement or a breach of this Agreement shall be Orange County, Florida.

         IN WITNESS WHEREOF,  the parties hereto have duly executed this Amended
and Restated Agreement on this 8th day of September, 1997

                                     FEDERAL TRUST BANK

/s/ Clair I. Ford                     By:/s/ James V. Suskiewich
-----------------                        -----------------------
Witness                                      James V. Suskiewich
                                             Chairman of the Board

                                     FEDERAL TRUST CORPORATION

/s/ Clair I. Ford                     By:/s/James V. Suskiewich
-----------------                        -----------------------
Witness                                     James V. Suskiewich
                                            Chairman of the Board

/s/ Clair I. Ford                           /s/Aubrey H. Wright
-----------------                           -------------------
Witness                                        Aubrey H. Wright
                                               (Employee)

                                       85$61,925,000

                                CREDIT AGREEMENT

                          dated as of December 31, 1999
                                      among

                       UNITED CAPITAL CORP., as Borrower,

                                       and

                        FLEET BANK, NATIONAL ASSOCIATION,
                     MANUFACTURERS & TRADERS TRUST COMPANY,
                               and BANK LEUMI USA

                                       and

                   FLEET BANK, NATIONAL ASSOCIATION, as Agent

<PAGE>
                  CREDIT  AGREEMENT (the  "Agreement")  dated as of December 31,
1999, among UNITED CAPITAL CORP., a corporation  organized under the laws of the
State of Delaware  (the  "Borrower")  and FLEET BANK,  NATIONAL  ASSOCIATION,  a
national  bank  organized  under  the  laws  of the  United  States  of  America
("Fleet"),  MANUFACTURERS  & TRADERS  TRUST  COMPANY,  ("M&T");  BANK  LEUMI USA
("Leumi";  collectively  with FLEET and M&T the "Banks");  FLEET BANK,  NATIONAL
ASSOCIATION,  as  administrative  agent  for the banks  (in such  capacity,  the
"Agent").

                  The Borrower desires each of the Banks to extend credit to the
Borrower  and the  Banks are  willing  to  extend  such  credit on the terms and
conditions set forth herein.

                  NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE 1.
                         DEFINITIONS; ACCOUNTING TERMS.

                  Section  1.1  Definitions.  As  used  in  this  Agreement  the
following  terms have the following  meanings  (terms defined in the singular to
have a correlative meaning when used in the plural and vice versa):

                  "Acquisition"  means  any  transaction  pursuant  to which the
Borrower or any of the Guarantors  (a) acquires,  or enters into an agreement to
acquire, equity securities (or warrants, options or other rights to acquire such
securities)  of any  Person  which is not  then a  Subsidiary  of the  Borrower,
pursuant to a solicitation  of tenders  therefor,  or in one or more  negotiated
block,  market  or  other  transactions  not  involving  a  tender  offer,  or a
combination  of any of the foregoing or (b) makes,  or enters into any agreement
to make,  any Person not then a Subsidiary of the  Borrower,  or causes any such
Person to be merged into the Borrower or any of the Guarantors, or vice versa in
any  case  pursuant  to a  merger,  purchase  of  assets  or any  reorganization
providing  for the  delivery or issuance  to the holders of such  Person's  then
outstanding securities,  in exchange for such securities,  of cash or securities
of the  Borrower or any of the  Guarantors,  or a  combination  thereof,  or (c)
purchases,  or enters into an agreement to purchase, all or substantially all of
the  business  or  assets  of  any  Person.   For  purposes  hereof,   the  term
"Acquisition"  shall include any transaction in which the Borrower or any of its
Subsidiaries  makes a loan or otherwise extends credit secured by an interest in
real property. For purposes hereof, the term "Acquisition" shall not include the
formation by the Borrower or any of the Guarantors of a new Subsidiary that does
not involve any of the  transactions  referred to in the  immediately  preceding
sentence.

                  "Additional  Costs" shall have the meaning  given to such term
in Section 4.2 hereof.

                  "Administrative  Fee"  means the  agency  fee  payable  by the
Borrower to the Agent pursuant to Section 3.5 hereof.

                  "Affiliate"  means,  with  respect  to any  Person,  any other
Person:  (a) which directly or indirectly  controls,  or is controlled by, or is
under  common  control  with,  such  Person;  (b) which  directly or  indirectly
beneficially  owns or holds  25% or more of any  class of  voting  stock of such
Person;  (c) 25% or more of the voting stock or other voting  interests of which
is directly

                                       2
<PAGE>

or  indirectly  beneficially  owned  or held  by such  Person;  (d)  which  is a
partnership  in which such Person is a general  partner;  (e) which is a limited
liability  company  in which such  Person is a member  and in which such  Person
owns,  directly  or  indirectly,  25% of the  equity  of such  Person.  The term
"control" means the possession,  directly or indirectly,  of the power to direct
or cause the  direction  of the  management  and  policies of a Person,  whether
through the ownership of voting securities, by contract, or otherwise.

                  "Aggregate  Outstandings" means, at a particular time, the sum
of Aggregate Revolving Credit Outstandings and Aggregate Term Loan Outstandings.

                  "Aggregate   Revolving  Credit   Outstandings"   means,  at  a
particular time, the aggregate  outstanding principal amount of Revolving Credit
Loans at such time.

                  "Aggregate  Term Loan  Outstandings"  means,  at a  particular
time, the aggregate outstanding principal amount of Term Loans at such time.

                  "Agreement"  means this Agreement,  as amended or supplemented
from  time to  time  pursuant  to the  terms  hereof.  References  to  Articles,
Sections,  Exhibits,  Schedules  and the like refer to the  Articles,  Sections,
Exhibits, Schedules and the like of this Agreement unless otherwise indicated.

                  "Amortization"  means amortization as determined or calculated
in accordance with GAAP.

                  "Assignment"  means each  Assignment of Leases and Rents dated
the date  hereof and  executed by the  Borrower  or a Guarantor  in favor of the
Banks hereunder.

                  "Banking Day" means any day on which  commercial banks are not
authorized  or required to close in New York City,  provided  that whenever such
day relates to a LIBOR Loan or notice with respect to any LIBOR Loan,  such term
shall mean any such day on which  dealings in Dollar  deposits  are also carried
out in the London interbank market.

                  "Base Rate" means the rate of interest determined by the Agent
to be the higher of (i)  Federal  Funds Rate plus 1/2of 1% per annum or (ii) the
Prime Rate.

                  "Base  Rate Loan"  means any Loan when and to the extent  that
the interest rate for such loan is determined on the basis of the Base Rate.

                  "Borrowing  Base" means,  at any time, the sum of (i) the Real
Estate Borrowing Base plus (ii) the Non-Real Estate Borrowing Base.

                  "Borrowing  Base  Certificate " means a certificate  signed by
the Chief Executive  Officer or the Chief  Financial  Officer of the Borrower in
the form of  Exhibit  "B"  annexed  hereto  with such  changes  as the Banks may
require from time to time.

                  "Capital  Expenditures"  means the sum of (a) expenditures for
any fixed  assets or  improvements,  replacements,  substitutions,  or additions
thereto which would be treated as capital  expenditures  in accordance with GAAP
and (b) the portion of all  payments  with  respect to

                                       3

<PAGE>

Capital  Leases which are required to be capitalized on the balance sheet of the
lessee in accordance with GAAP.

                  "Capitalization Value" means, at the time of calculation,  (i)
annualized and normalized actual year to date Consolidated EBITDA capitalized at
10% plus (ii) cash and cash  equivalents  on a  consolidated  basis  plus  (iii)
aggregate  acquisition  costs  for  real  properties  of the  Borrower  and  the
Guarantors,  subject to the provisions of the last sentence hereof. For purposes
hereof,  "acquisition  costs" for any real property  shall mean the  contractual
purchase price for such property and such closing costs as are customarily  paid
by purchasers in real estate  transactions.  For purposes  hereof,  clause (iii)
shall  include  acquisition  costs for any property only until such property has
been owned by the Borrower or any Guarantor for one full fiscal quarter.

                  "Capital  Lease"  means  any  lease  which is  required  to be
capitalized on the balance sheet of the lessee in accordance with GAAP.

                  "Change in Control" means any event or condition which results
in any Person or "group" other than a Person or group that is actively  involved
in the day to day  management of the Borrower and the  Guarantors on the date of
this Agreement:  (i) having acquired beneficial  ownership of 35% or more of any
outstanding  class of capital  stock of the  Borrower  or any  Guarantor  having
ordinary  voting  power in the  election of  directors  of the  Borrower or such
Guarantor or (ii)  obtaining  the power  (whether or not  exercised)  to elect a
majority of the directors of the Borrower or any Guarantor;  provided,  however,
that any  transfer  from any Person that is actively  involved in the day to day
management of the Borrower and the  Guarantors on the date of this  Agreement to
any Person in his or her  immediate  family  shall not  constitute  a "Change in
Control" if the Banks continue to be satisfied,  in their sole discretion,  with
the management of the Borrower and the Guarantors after such transfer.

                  "Closing Date" means the date this Agreement has been executed
by the Borrower and each of the Banks.

                  "Closing  Fee"  means  the  syndication  fee  payable  by  the
Borrower  to the Agent for the  benefit of the Banks  pursuant  to  Section  3.6
hereof.

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

                  "Commitment"  means  with  respect  to each  Revolving  Credit
Lender,  the  obligation of such  Revolving  Credit  Lender to extend  Revolving
Credit  Loans to the Borrower  pursuant to Article 2 hereof and,  subject to the
terms hereof, in the following  aggregate amounts as such amounts may be reduced
in accordance with the terms of this Agreement:

                  Fleet             $25,000,000
                  M&T               $30,000,000
                  Leumi             $ 5,000,000

                  "Commitment  Fee"  means the  commitment  fee  payable  by the
Borrower to each of the Revolving Credit Lenders pursuant to Section 3.4 hereof.

                  "Commitment  Proportion" means, with respect to each Revolving
Credit Lender at the time of determination,  that proportion that its Commitment
bears to the Total Commitment.
                                       4

<PAGE>
                  "Consolidated  Debt  Service"  means,  for any fiscal  period,
interest  expense  (accrued,  paid  or  capitalized)  plus  scheduled  principal
amortization   (excluding   balloon   payments  due  at  maturity)  on  all  (a)
Indebtedness of the Borrower and the Guarantors,  on a consolidated  basis,  and
(b) the  Borrower's  and the  Guarantor's  pro rata share of  Indebtedness  from
unconsolidated joint ventures other than non-recourse Indebtedness on properties
owned by such ventures.

                  "Consolidated   EBITDA"   means,   for  any   fiscal   period,
Consolidated Net Income of the Borrower and the Guarantors, before provision for
federal  and  state  income  taxes,  minus  all  extraordinary  gains;  plus (i)
Consolidated  Interest  Expense;  plus (ii)  Depreciation and Amortization  plus
(iii) cash distributions (after debt service) from unconsolidated joint ventures
to the Borrower and the  Guarantors,  all on a  consolidated  basis,  and all as
determined in accordance with GAAP.

                  "Consolidated   Interest  Expense"  means,  for  a  particular
period, the consolidated interest expense (accrued,  paid or capitalized) of the
Borrower  and the  Guarantor  as reflected  in the  Borrower's  and  Guarantors'
consolidated  financial  statements for such period and calculated in accordance
with  GAAP  and  shall  in  any  event  include,  without  limitation,  (i)  the
amortization  of debt  discounts,  (ii) the  amortization of all fees payable in
connection  with the  incidence  of  Indebtedness,  and (iii) the portion of any
Capital Lease  obligation  allocable to interest expense plus the Borrower's and
the  Guarantors'  pro rata  share  of  interest  expense  on  Indebtedness  from
unconsolidated   joint  ventures,   other  than  non-recourse   Indebtedness  on
properties owned by such ventures.

                  "Consolidated Net Income" means, for a particular  period, the
consolidated  net income of the  Borrower  and the  Guarantors  for such  period
determined in accordance with GAAP.

                  "Default"  means any event  which with the giving of notice or
lapse of time, or both, would become an Event of Default.

                  "Default  Rate"  means a rate per annum  equal to 2% above the
rate of  interest  that would then be  applicable  to Base Rate Loans under this
Agreement.

                  "Depreciation"  means depreciation as determined or calculated
in accordance with GAAP.

                  "Dividends"  means,  for  any  period,  dividends  paid by the
applicable Person.

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

                  "Eligible  Inventory"  means,  on a  combined  basis  for  the
Operating Companies, the gross amount of the inventory less the following items:
any packaging  materials and  supplies,  supplies  (other than supplies held for
sale),  damaged or  unsalable  goods,  damaged or  unsalable  goods  returned or
rejected by such entities'  customers;  obsolete goods;  goods to be returned to
such  entities'  suppliers;   goods  in  transit  to  third  parties;  consigned
inventory. In no event shall the aggregate value of inventory located outside of
the United States and included as "Eligible  Inventory" exceed $1,000,000 at any
time.
                                       5

<PAGE>
                  "Eligible Properties" means, at any time, (a) those properties
(other than hotel properties as to which clause (b) shall apply) of the Borrower
and of the Guarantors which are leased to non-affiliated third parties and which
are (i)  unencumbered  capitalized at 10.5% or (ii) encumbered by Liens securing
debt  of  less  than  30% of the  annualized  and  normalized  year-to-date  Net
Operating  Income for such  property  capitalized  at 12.0% and (b) those  hotel
properties  of  the  Borrower  which  are   unencumbered.   The  term  "Eligible
Properties"  shall exclude (i) encumbered  properties  for which  annualized and
normalized actual year to date Net Operating Income capitalized at 10.5% is less
than or equal  to $0,  (ii)  encumbered  properties  for  which  annualized  and
normalized actual year to date Net Operating Income capitalized at 12.0% is less
than or equal to $0 or (iii)  unencumbered hotel properties for which annualized
and normalized  actual year to date Net Operating  Income minus the FF&E Reserve
capitalized  at  10.5%  is less  than or equal  to $0.  In  addition,  "Eligible
Properties" must be (i) wholly-owned by the Borrower or a Guarantor in fee, (ii)
must be free of environmental or structural defects,  (iii) must be at least 70%
leased;  (iv) must not have rents  more than 90 days past due,  and (v) must not
have lessees subject to bankruptcy  proceedings.  The Agent shall have the right
to conduct,  at the  Borrower's  expense  (subject to the aggregate  limitations
specified in Section  7.7(b)),  a site  inspection  of any property  before such
property is included as an "Eligible Property" hereunder. As of the date hereof,
"Eligible  Properties"  shall mean those  properties  listed on Schedule  1.1(a)
hereto. In no event will mortgage loans or any similar  transactions between the
Borrower or any Guarantor and any third party constitute an "Eligible Property".

                  "Eligible  Property EBITDA" means, for any fiscal period,  net
income,  on a combined basis, for the Eligible  Properties  before provision for
federal or state  income  taxes minus all  extraordinary  gains;  plus  interest
expense  for  the  Eligible  Properties,   plus  Depreciation  and  Amortization
attributable  to the  Eligible  Properties,  all on a combined  basis and all as
determined in accordance  with GAAP. For purposes  hereof,  Eligible  Properties
with EBITDA of less than $0 will be assigned a value of $0.

                  "Eligible  Receivables" means, on a combined basis, the amount
of the accounts  receivable of the Operating  Companies  arising out of sales in
the ordinary  course of business of the Operating  Companies net of any credits,
rebates or off-sets owed by the Operating  Companies to the  respective  account
debtor and net of any  commissions  payable by the Operating  Companies to third
parties,  which  accounts  receivable  are not in  dispute or subject to credit,
allowance,  defense,  off-set,  counterclaim or adjustment and for which records
are  maintained at a location of the Operating  Companies in the United  States;
provided,  however,  that the  following  items  shall  not be  deemed  Eligible
Receivables:  credit  balances over 90 days' from invoice date;  contra accounts
receivable;  receivables  owing from account debtors  determined by the Agent in
its sole discretion to be  unacceptable  for credit  reasons;  receivables  from
Affiliates;  accounts  receivable  with  respect to which the account  debtor is
subject to any bankruptcy or insolvency  proceeding;  accounts  receivable where
the account debtor's obligation to pay is conditional or subject to a repurchase
obligation  or right of return;  and all current  receivables  due from  account
debtors  of which  more  than 50% of the  total  accounts  receivable  from such
debtors is more than 90 days from invoice date.

                  "Environmental   Indemnity   Agreement"   means  that  certain
environmental indemnity agreement substantially in the form of Exhibit C annexed
hereto,  dated the date  hereof,  and  executed by the  Borrower and each of the
Guarantors  in favor of the  Banks  and their  respective  directors,  officers,
employees, affiliates, agents or other representatives.

                                       6

<PAGE>
                  "Environmental  Laws" means any and all federal,  state, local
and foreign statutes, laws, regulations,  ordinances,  rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental   restrictions   relating  to  the  environment  or  to  emissions,
discharges,  releases  or  threatened  releases  of  pollutants,   contaminants,
chemicals,  or  industrial,  toxic or  hazardous  substances  or wastes into the
environment,  including, without limitation,  ambient air, surface water, ground
water,  or  land,  or  otherwise   relating  to  the  manufacture,   processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,   contaminants,   chemicals,  or  industrial,  toxic  substances  or
Hazardous Substances or wastes.

                  "Equity Value" means  Capitalization Value less Total Adjusted
Outstanding Funded Indebtedness.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974,  as  amended  from  time to time,  including  any  rules  and  regulations
promulgated thereunder.

                  "ERISA  Affiliate"  means any corporation or trade or business
which is a member  of the same  controlled  group of  corporations  (within  the
meaning  of  Section  414(b) of the  Code) as the  Borrower  or is under  common
control (within the meaning of Section 414(c) of the Code) with the Borrower.

                  "Event of Default"  shall have the meaning  given such term in
Section 10.01 hereof.

                  "Eurocurrency  Reserve  Requirements"  means,  with respect to
each Interest Period for each LIBOR Loan, the aggregate (without duplication) of
the maximum rates  (expressed as a percentage and rounded upward,  if necessary,
to the  nearest  1/100 of 1%) of  reserve  requirements  current on the date two
Banking Days prior to the beginning of such Interest Period (including,  without
limitation,   basic,   supplemental,   marginal  and  emergency  reserves  under
Regulation D or any other  regulations  of the Board of Governors of the Federal
Reserve System or other governmental  authority having jurisdiction with respect
thereto),  as now and/or from time to time  hereafter  in effect,  dealing  with
reserve requirements  prescribed for eurocurrency funding maintained by a member
bank of such system.

                  "Existing  Bank  Debt"  means  Indebtedness  of  the  Borrower
existing  on the date  hereof and  arising  pursuant to the terms of that Credit
Agreement,  dated as of January 15, 1997  between the Borrower and Fleet as such
document  may have been  amended,  supplemented  or  modified  through  the date
hereof.

                  "Facility  Documents"  means this  Agreement,  the Notes,  the
Guarantees,  the Assignments,  the Security Agreements and all other agreements,
documents  and  instruments   executed  in  connection   herewith  or  therewith
including,  but not limited to, all  documents and  instruments  executed by the
Borrower or any Guarantor,  at any time, in favor of any Bank in connection with
this Agreement and the Loans made hereunder.

                  "Federal  Funds Rate"  means,  for any day, the rate per annum
equal  to  the  weighted  average  of  the  rates  on  overnight  Federal  funds
transactions  with  members of the Federal

                                       7

<PAGE>

Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Banking  Day,  for the next  preceding  Banking Day) by the
Federal  Reserve  Bank of New  York,  or, if such  rate is not so  announced  or
published for any day which is a Banking Day, the average of quotations  for the
day of such transactions  received by the Agent from three federal funds brokers
of recognized standing selected by it.

                  "FF&E Reserve" means, with respect to any hotel property,  the
greater  of  (i)  actual  expenditures  for  replacement  of  capital  items  of
furniture,  fixtures and equipment  and (ii) 4% of gross  revenues of such hotel
from all sources.

                  "Forfeiture  Proceeding"  means the commencement of any action
or proceeding  affecting the Borrower or any of the Guarantors before any court,
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign,  which would result in the seizure or  forfeiture of any of
their  property and thus cause a material  adverse  effect upon the  operations,
business,  properties  or financial  condition of the Borrower or any  Operating
Company or of the Borrower and the Guarantors, taken as a whole.

                  "GAAP" means generally accepted  accounting  principles in the
United States of America, as in effect from time to time,  consistently  applied
with respect to the financial  statements of the Borrower,  the Guarantors,  and
Affiliates of any Guarantor which are the subject of Section 6.5 hereof.

                  "Guarantees"  means  the  guarantees  to be  delivered  on the
Closing Date to the Banks by each of the  Guarantors,  and the  guarantees to be
delivered  to the Banks  from time to time  hereafter  by  Persons  that  become
Guarantors subsequent to the Closing Date, all in the form(s) attached hereto as
Exhibit D.

                  "Guarantors"  means each of the parties  listed on Schedule 5.
1(a) hereto and all Post-Closing Guarantors.

                  "Hazardous  Substance"  or  "Hazardous  Substances"  means any
material,  including,  without  limitation,  raw,  processed or waste by-product
materials,  which in itself or as found or used, is toxic, noxious or harmful to
the  health  or  safety of human or animal  life or  vegetation,  regardless  of
whether  such  material be found on or below the  surface of the ground,  in any
surface or underground water, or airborne in ambient air or in the air inside of
any  structure  built or located upon or below the surface of the ground,  or in
any  machinery,  equipment or inventory  located or used in any such  structure,
including,  but in no event  limited  to,  all  hazardous  materials,  hazardous
wastes,  toxic substances,  infectious wastes,  pollutants and contaminants from
time to  time  defined  or  classified  as such  under  any  Environmental  Law,
regardless of the quantity  found,  used,  manufactured  or removed from a given
location.

                  "Indebtedness" means, without duplication, with respect to any
Person, (a) all obligations of such Person for borrowed money or with respect to
deposits or advances made to it of any kind, (b) all  obligations of such Person
evidenced by bonds,  debentures,  notes or other  similar  instruments,  (c) all
obligations  of such  Person for the  deferred  purchase  price of  property  or
services,  (d) all  obligations of such Person under  conditional  sale or other
title retention  agreements  relating to property  purchased by such Person, (e)
all payment obligations of such Person with respect to interest rate or currency
protection  agreements,  (f) all  obligations of such

                                       8

<PAGE>

Person as an account  party under any letter of credit or in respect of bankers'
acceptances,  (g) all  obligations  of any third  party  secured by  property or
assets of such  Person  (regardless  of whether or not such Person is liable for
repayment of such  obligations),  (h) all  guarantees of such Person and (i) the
redemption  price of all redeemable  preferred stock (or similar  securities) of
such Person,  but only to the extent that such stock is redeemable at the option
of the holder or requires  sinking fund or similar payments at any time prior to
the Termination Date.

                  "Interest  Period" means the period  commencing on the date of
making,  renewal or  conversion of a Loan to a LIBOR Loan and expiring one, two,
three or six months (as available) thereafter,  as designated by the Borrower in
the notice given to the Agent under Section 2.4 hereof; provided that:

                  (a) the  initial  Interest  Period  for any LIBOR  Loan  shall
commence  on the date of the  making  of such  Loan  (including  the date of any
conversion from a Base Rate Loan) and each Interest Period occurring  thereafter
in respect of such Loan shall  commence on the date on which the next  preceding
Interest Period expires;

                  (b) if any  Interest  Period would  otherwise  expire on a day
which is not a  Banking  Day,  such  Interest  Period  shall  expire on the next
succeeding  Banking Day,  provided,  however,  that if any Interest Period would
otherwise  expire on a day which is not a Banking Day but is a day of a calendar
month after which no further  Banking Day occurs (in such month),  such Interest
Period shall expire on the next preceding Banking Day;

                  (c) no Loan shall be continued as or converted to a LIBOR Loan
if at the time of any such  continuation  or conversion a Default or an Event of
Default exists; and

                  (d) no  Interest  Period  for a Loan shall  extend  beyond the
Termination Date.

                  "Lending  Office" means,  for each Bank, the lending office of
such Bank (or of an affiliate of such Bank)  designated as such on its signature
page hereof or such other  office of such Bank (or of an affiliate of such Bank)
as such Bank may from time to time  specify  to the  Borrower  as the  office by
which its Loans are to be made and maintained.

                  "LIBOR" means, for any LIBOR Loan, the rate per annum (rounded
upward,  if necessary,  to the nearest 1/32 of one percent) as determined on the
basis of the offered  rates for deposits in U.S.  dollars,  for a period of time
equal to the requested  Interest  Period which appears on the Telerate page 3750
as of 11:00 a.m.  London time on the day that is two Banking Days  preceding the
first day of such LIBOR Loan;  provided,  however,  if the rate described  above
does not appear on the Telerate System on any applicable interest  determination
date, the LIBOR rate shall be the rate (rounded  upwards as described  above, if
necessary)  for  deposits  in dollars  for a period  substantially  equal to the
Interest  Period on the  Reuters  Page `LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying  such rates),  as of
11:00 a.m.  (London Time),  on the day that is two (2) Banking Days prior to the
beginning of such Interest Period.  If both the Telerate and Reuters systems are
unavailable,  then the rate for that date will be determined on the basis of the
offered  rates for deposits in U.S.  dollars for a period equal to the requested
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 Banking
Days  preceding  the first day of such LIBOR Loan as selected by the Agent.  The

                                       9
<PAGE>

principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S.  dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations.  If fewer than two quotations are provided as requested,  the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S.  dollars  to  leading  European  banks for a period of time equal to the
requested   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 Banking Days
preceding the first day of such LIBOR Advance. In the event that Agent is unable
to obtain any such  quotation  as provided  above,  it will be deemed that LIBOR
cannot be determined.

                  "LIBOR  Loan"  means  any  Loan  when  and to the  extent  the
interest  rate therefor is  determined  on the basis of Reserve  Adjusted  LIBOR
Rate.

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

                  "Loan" means any Revolving Credit Loan or any Term Loan.

                  "Margin"  means,  (i) with  respect to LIBOR  Loans,  that are
Revolving  Credit Loans, two percent (2.00%) per annum, and (ii) with respect to
LIBOR Loans that are Term Loans, 1.40% per annum.

                  "Multiemployer  Plan" means a Plan  defined as such in Section
400(a)(3) of ERISA to which  contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.

                  "Net Operating  Income"  means,  with respect to any parcel of
real property,  the rents received by the Borrower or any Guarantor with respect
thereto  less any expenses of such  Borrower or  Guarantor  with respect to such
property which are ordinary expenses and are not capitalized expenses, excluding
Depreciation, Amortization, income taxes and debt service.

                  "Non-Real  Estate  Borrowing  Base"  means,  at any time,  the
lesser of (i)  $10,000,000  and (ii) the sum of 75% of Eligible  Receivables and
50% of Eligible Inventory.

                  "Notes" means  collectively the Revolving Credit Notes and the
Term Notes.

                  "Obligations"  means all of the obligations of the Borrower or
any  Guarantor to the Banks under or in relation to this  Agreement,  the Notes,
any Loans, or any of the other Facility Documents, as such agreements, documents
and  instruments  are  originally  executed or as modified,  amended,  restated,
supplemented  or extended from time to time, and all obligations of the Borrower
or any  Guarantor  to the Banks  arising out of any  extension,  refinancing  or
refunding of any of the foregoing obligations,  whether such obligations are now
existing or hereafter acquired or arising, direct or indirect, joint or several,
absolute or contingent,  due or to become due, matured or unmatured,  liquidated
or unliquidated, arising by contract, operation of law or otherwise.
                                       10

<PAGE>
                  "Operating  Companies"  means the Borrower's  subsidiaries,(i)
Metex Mfg. Corp. a New York  corporation,  (ii) AFP Transformers LLC, a Delaware
limited  liability  company and (iii) any Subsidiary of the Borrower which is or
may  hereafter be engaged in any business  other than holding Real Estate Assets
and which has assets having a value in excess of $100,000.  Notwithstanding  the
foregoing,  the term  "Operating  Companies"  shall not  include  the  following
entities  provided  that  they  continue  to engage  in  substantially  the same
business as they are engaged in on the date hereof:  Metex  International  Sales
Corp., Metex Enviroco Corp., and Metex Europe S.A.R.L.

                  "PBGC" means the Pension Benefit Guaranty  Corporation and any
entity succeeding to any or all of its functions under ERISA.

                  "Permitted   Investments"   means   any   of   the   following
investments:  (i) obligations  issued or guaranteed by states or  municipalities
within the United States of America;  (ii)  obligations  issued or guaranteed by
the  United  States of  America  or any  agency or  subdivision  thereof;  (iii)
certificates  of deposit,  time deposits,  Eurodollar  certificates  of deposit,
bankers  acceptances and other "money market  instruments" issued by any Bank or
any other bank, trust company or financial  institution organized under the laws
of the  United  States of  America  or any  state  thereof  (or,  in the case of
Eurodollar  certificates of deposit, a branch of any such bank, trust company or
financial  institution)  having  capital and surplus in an aggregate  amount not
less than  $1,000,000,000;  (iv)  commercial  paper  rated at least  Prime-1  by
Moody's  Investors  Service,  Inc. or A-1 by Standard & Poors  Corporation;  (v)
securities  issued by money market funds with assets of  $2,500,000,000 or more;
(vi)  investments  existing  on the  Closing  Date and  described  on Schedule I
hereto; and (vii) repurchase  agreements with a term of not more than seven days
entered into with any bank,  trust  company or financial  institution  organized
under the laws of the  United  States of  America  or any state  thereof  having
capital  and surplus in an  aggregate  amount not less than  $1,000,000,000  and
relating to any of the  obligations  referred  to in clauses  (i),  (ii),  (iii)
above;  in each case  maturing or being due or payable in full not more than one
year after the acquisition thereof such entity.

                  "Permitted Liens" means those certain Liens defined in Section
8.2 hereof.

                  "Person"  means  an  individual,   partnership,   corporation,
business trust, joint stock company, trust,  unincorporated  association,  joint
venture, governmental authority or other entity of whatever nature.

                  "Plan" means any employee benefit or other plan established or
maintained,  or to which  contributions  have been made,  by the Borrower or any
ERISA  Affiliate  and which is covered by Title IV of ERISA or to which  Section
412 of the Code  applies  provided  that  such  term  shall  not  include  plans
terminated  prior to the date  hereof  except to the extent of  Unfunded  Vested
Liabilities.

                  "Post-Closing Guarantor" means each Subsidiary of the Borrower
or of any Guarantor  which is created after the date of this Agreement and which
shall,  simultaneously  with its  creation,  become  a  Guarantor  hereunder  in
accordance with Section 7.13 hereof.

                                       11
<PAGE>
                  "Prime  Rate" means the variable per annum rate of interest so
designated from time to time by the Agent as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest interest rate being
charged by the Agent to any of its customers.

                  "Principal  Office" means,  with respect to the Agent and each
Bank, its principal office as announced by such entity from time to time.

                  "Real Estate Assets" means,  with respect to any entity,  such
entity's real  properties for which the fee interests or, with the prior consent
of the Banks, ground lease interests,  are wholly-owned plus all loans and other
forms of indebtedness owing to such entity which are secured by first liens upon
real property.

                  "Real  Estate   Borrowing   Base"   means,   at  the  time  of
calculation,  the  sum of (i) 60% of the  aggregate  annualized  and  normalized
actual   year-to-date  Net  Operating  Incomes  of  the  unencumbered   Eligible
Properties (other than hotel  properties)  capitalized at 10.5%, (ii) 60% of the
aggregate  annualized and normalized  actual year to date Net Operating  Incomes
less FF&E  Reserves  of  unencumbered  Eligible  Properties  constituting  hotel
properties  capitalized  at 10.5%;  (iii) 50% of the  aggregate  annualized  and
normalized actual  year-to-date Net Operating Incomes of the encumbered Eligible
Properties capitalized at 12.0% up to a maximum amount of $10,000,000; provided,
however,  that in no event shall the aggregate  amounts  included in clause (ii)
above exceed 10% if the Borrowing Base at any time.

                  "Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented  from time
to time.

                  "Regulatory  Change"  means,  with  respect  to any Bank,  any
change  after the Closing Date in United  States  federal,  state,  municipal or
foreign laws or regulations  (including  Regulation D) or the adoption or making
after such date of any  interpretations,  directives  or requests  applying to a
class of banks  including  such Bank under any United  States,  federal,  state,
municipal  or foreign  laws or  regulations  (whether or not having the force of
law) by any  court  or  governmental  or  monetary  authority  charged  with the
interpretation or administration thereof.

                  "Reportable  Event"  means  any of the  events  set  forth  in
Section  4043(c)  of ERISA as to which  events  the PBGC by  regulation  has not
waived the requirement of Section 4.43(a) of ERISA that it be notified within 30
days of the occurrence of such event.

                  "Required  Banks"  means,  at any time,  with  respect  to any
decisions  to be made by the Banks  hereunder,  Banks having at least 66 2/3% of
the sum of aggregate of the Commitments  hereunder provided that for purposes of
calculating the Required Lenders the outstanding  principal  balance of the Term
Loan shall be added to the Commitment of Fleet.

                  "Reserve  Adjusted  LIBOR  Rate"  means,  with  respect to the
Interest Period for each LIBOR Loan, the rate per annum (rounded  upwards to the
nearest whole multiple of 1/100th of one percent) equal to the following:

                                      LIBOR
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements.

                                       12
<PAGE>

                  "Revolving Credit Lenders" means, Fleet, M&T and Leumi.

                  "Revolving  Credit Loan" means any extension of credit made by
the Banks pursuant to Section 2.1 hereof.

                  "Revolving  Credit Loan Debt Service"  means,  for any period,
the  interest  paid or  accrued  hereunder  for such  period  plus any  required
principal reductions.

                  "Revolving Credit Notes" means,  collectively,  the promissory
notes of the Borrower in the form of Exhibit A hereto  evidencing  the Revolving
Credit Loans made by a Revolving Credit Lender hereunder.

                  "Revolving Credit Termination Date" means the earlier to occur
of (a) the date on which  the  Commitments  shall  terminate  hereunder  and (b)
December 31, 2002.

                  "Security    Agreement"   means   each   security   agreement,
substantially  in the  form of  Exhibit  E, to be  dated  the  date  hereof  and
delivered by each of the Operating Companies to the Bank.

                  "Solvent"  means  when used with  respect  to any  Person on a
particular date, that on such date: (a) the fair saleable value of its assets is
in excess of the total amount of its liabilities, including, without limitation,
the  reasonably  expected  amount of such  Persons  obligations  with respect to
contingent  liabilities,  (b) the present fair  saleable  value of the assets of
such  Person  is not less  than the  amount  that  will be  required  to pay the
probable  liability of such Person on its  Indebtedness  as they become absolute
and  matured,  (c) such Person does not intend to, and does not believe  that it
will, incur  Indebtedness or liabilities  beyond such Person's ability to pay as
such  Indebtedness and liabilities  mature and (d) such Person is not engaged in
business or a transaction for which such Person's  property would  constitute an
unreasonably small capital.

                  "Subsidiary,"   with   respect  to  any   Person,   means  any
corporation  or other entity of which at least a majority of the  securities  or
other  ownership   interests   having  ordinary  voting  power   (absolutely  or
contingently) for the election of directors or other persons  performing similar
functions  are, at the  relevant  time,  owned  directly or  indirectly  by such
Person, or if the entity is a partnership or joint venture, a general partner is
under the control of such Person or such Person owns a majority of the equity of
such entity.

                  "Taxes"  means  any and all  levies  due  and  payable  to any
federal,  state,  municipality or other governmental authority under the laws of
the  United  States  of  America,  any  state  of  the  United  States  and  any
municipality or other governmental authority thereof.

                  "Term Loan"  means the  $1,925,000  Term Loan  advanced by the
Term Loan Lender to the Borrower pursuant to Section 2A-1 hereof.

                  "Term Loan Lender" means Fleet.

                  "Term Loan  Maturity  Date" means  September 30, 2002, or such
earlier date on which the Borrower's  obligations pursuant to Article 2-A hereof
have been paid in full.
                                       13

<PAGE>
                  "Term  Note"  means  the  promissory  note  of  the  Borrower,
substantially  in the form of Exhibit A-1 hereto,  evidencing the Term Loan made
by the Term Loan Lender hereunder.

                  "Total Adjusted Outstanding Funded Indebtedness" means, at any
time, the sum of (i) all outstanding  secured and unsecured funded  Indebtedness
of the Borrower and the  Guarantors  (excluding  Post-Closing  Guarantors)  on a
consolidated  basis  plus (ii) the  Borrower's  and the  Guarantors'  (excluding
Post-Closing  Guarantors)  pro rata share of  Indebtedness  from  unconsolidated
joint  venture  properties,   other  than  non-recourse   indebtedness  on  such
properties.

                  "Total  Commitments"  means, at any time, the aggregate of the
Commitments in effect at such time.

                  "Unfunded Vested Liabilities" means, with respect to any Plan,
the amount (if any) by which the present value of all vested  benefits under the
Plan  exceeds  the  fair  market  value  of all Plan  assets  allocable  to such
benefits,  as  determined on the most recent  valuation  date of the Plan and in
accordance with the provisions of ERISA for calculating the potential  liability
of the Borrower or any ERISA Affiliate to the PBGC or the Plan under Title IV of
ERISA.

                  Section  1.2.  Accounting  Terms.  All  accounting  terms  not
specifically  defined herein shall be construed in accordance with GAAP, and all
financial  data  required  to  be  delivered  hereunder  shall  be  prepared  in
accordance with GAAP.

                                   ARTICLE 2.
                                CREDIT FACILITY.

                  Section 2.1. Revolving Credit Loans.  Subject to the terms and
conditions of this Agreement,  each Revolving  Credit Lender severally agrees to
make revolving credit loans in Dollars (the "Revolving  Credit Loans"),  and all
Revolving  Credit  Loans shall be made by the  Revolving  Credit  Lenders,  on a
pro-rata basis in accordance with their respective  Commitment  Proportions,  to
the  Borrower  from  time to time,  from and  including  the date  hereof to but
excluding the Revolving Credit  Termination Date, up to but not exceeding at any
one time outstanding the amount of its Commitment;  provided,  that no Revolving
Credit Loan shall be made if after giving effect to such  Revolving  Credit Loan
the Aggregate Revolving Credit Outstandings at the time of such Revolving Credit
Loan would exceed the lesser of (i) the Total  Commitments or (ii) the Borrowing
Base in effect on such date.  The Revolving  Credit Loans may be  outstanding as
Base Rate Loans or LIBOR Loans;  provided,  however,  that during the occurrence
and  continuance  of an Event of  Default,  the  Borrower  may not elect and the
Revolving  Credit Lenders shall have no obligation to make LIBOR Loans.  Subject
to the foregoing  limits,  the Borrower may borrow,  repay and  reborrow,  on or
after the date hereof and prior to the Revolving Credit Termination Date, all or
a portion of the Total  Commitments  as Revolving  Credit Loans  hereunder.  Any
amount  of any  Revolving  Credit  Loan  not  paid  when  due (at  maturity,  on
acceleration or otherwise) shall bear interest thereafter until paid at the rate
set forth in Section 3.3(c) hereof.

                  Section 2.2. The Revolving  Credit Notes. The Revolving Credit
Loans of each Revolving Credit Lender shall be evidenced by a single  promissory
note in favor  of such  Revolving  Credit  Lender  substantially  in the form of
Exhibit A hereto with appropriate

                                       14
<PAGE>

insertions,  duly executed and completed by the Borrower.  Each Revolving Credit
Lender  is  hereby  authorized  to  record  the  date,  type and  amount of each
Revolving Credit Loan, the date and amount of each payment of principal thereof,
and the principal  amount subject thereto and interest rate with thereto in such
Revolving  Credit  Lender's  records  and/or  on the  schedules  annexed  to and
constituting a part of its Revolving  Credit Note,  and,  absent manifest error,
any such recordation shall constitute  conclusive evidence of the information so
recorded;  provided that the failure to make any such  recordation  shall not in
any way affect the  obligation  of the  Borrower to repay the  Revolving  Credit
Loans in accordance  with the terms of this Agreement  (without giving effect to
any such error made in the Revolving  Credit Note).  Each Revolving  Credit Note
(a) shall be dated  the date  hereof,  (b) be stated to mature on the  Revolving
Credit  Termination  Date,  and (c) shall bear interest on the unpaid  principal
amount thereof from time to time outstanding as provided herein.

                  Section 2.3. Use of Proceeds.

                  (a) The  Borrower  shall  use the  proceeds  of the  Revolving
Credit Loans on the date of this  Agreement to repay in full  Existing Bank Debt
(other than that portion of the Existing Bank Debt  constituting term loans that
will be refinanced by the Term Loan  hereunder)  and may use the proceeds of the
Revolving  Credit  Loans on the  date of this  Agreement  and from  time to time
thereafter  prior to the  Revolving  Credit  Termination  Date  (i) for  general
corporate and working capital purposes;  (ii) to finance the acquisition of Real
Estate Assets or to make mortgage  loans or similar loans that  constitute  Real
Estate  Assets;  (iii) to  repurchase  stock of the Borrower in an amount not to
exceed  $2,000,000  in any  fiscal  year  commencing  after  the date  hereof or
$5,000,000  during the term of this Agreement;  and (iv) to make advances to the
Operating  Companies in an  aggregate  amount not to exceed  $10,000,000  at any
time. No part of the proceeds of any of the Revolving  Credit Loans will be used
(i) for any purpose which  violates the  provisions of  Regulations T, U or X of
the Board of Governors of the Federal Reserve System as in effect on the date of
making  such Loans or (ii) to permit the  Borrower or any  Guarantor  to acquire
equity  securities  in any third  party  except  as  permitted  pursuant  to the
provisions of Section 8.7 hereof.

                  (b) The Borrower  agrees to  indemnify  the  Revolving  Credit
Lenders and their respective directors, officers, employees,  affiliates, agents
or other  representatives  and hold the Banks and  their  respective  directors,
officers, employees, affiliates, agents or other representatives,  harmless from
and against any and all liabilities,  losses, damages, costs and expenses of any
kind (including, without limitation, the reasonable fees and expenses of counsel
for any  such  Person  in  connection  with any  investigative,  administrative,
judicial  proceeding,  whether or not such Person  shall be  designated  a party
thereto) which may be incurred by any such Person, relating to or arising out of
this  Agreement or any actual or proposed  use of any proceeds of the  Revolving
Credit Loans hereunder.

                  Section 2.4.  Borrowing  Procedure for Revolving Credit Loans;
Rate and Interest Period Selection: Conversions.

                  (a) The Borrower may request a borrowing under the Commitments
hereunder as provided in Section 3.1. Each Revolving Credit Lender will make its
share of such borrowing  available to the Agent at the Agent's office located at
1185 Avenue of the Americas,  2nd Floor, New York, New York 10036 not later than
2:00  p.m.  New York  City  time on the date of such  borrowing  in  immediately
available funds. Unless any applicable  condition specified in Article 5 has not
been satisfied,  not later than 3:00 p.m. New York City time on the date of such

                                       15
<PAGE>

borrowing,  the Agent  shall,  through  its  Lending  Office and  subject to the
conditions  of this  Agreement,  make the  amount of the Loan to be made on such
date available to the Borrower,  in immediately available funds, by crediting an
account of the  Borrower  designated  by the Borrower  and  maintained  with the
Agent.

                  (b) In the case of each Revolving Credit Loan which is a LIBOR
Loan, the Borrower shall select an Interest Period of any duration in accordance
with  the  definition  of  Interest  Period  in  Section  1.1,  subject  to  the
limitations  that no Interest Period for a LIBOR Loan shall have a duration less
than one month, and if any such proposed  Interest Period would otherwise be for
a shorter period, such Interest Period shall not be available.

                  (c)  Upon  the  expiration  of  an  Interest  Period  for  any
Revolving  Credit Loan, or any portion  thereof,  such Revolving  Credit Loan or
portion thereof shall be  automatically  continued as a Base Rate Loan except to
the extent that such Loan shall be repaid hereunder or unless the Borrower shall
have notified the Revolving  Credit Lenders,  as provided in Section 3.1 hereof,
of its intention to select a different interest rate option with respect to such
Revolving  Credit  Loan  or  any  portion  thereof.  Subject  to  the  following
conditions and to the terms and conditions of this Agreement, the Borrower shall
have the right to convert  any loan or portion  thereof to a  different  type of
Loan (i.e., from a Base Rate Loan to a LIBOR Loan or vice versa):

                                    (i) if less than all Revolving  Credit Loans
                  at the time outstanding  shall be converted,  the notice given
                  by the Borrower to the Revolving  Credit Lenders shall specify
                  the aggregate amount of Loans in each case to be converted and
                  such  conversion  shall be made  ratably  among the  Revolving
                  Credit Lenders in accordance with their respective  Commitment
                  Proportions;

                                    (ii)  in the  case of a  conversion  of less
                  than all  outstanding  Revolving  Credit Loans,  the aggregate
                  principal  amount of  Revolving  Credit  Loans to be converted
                  shall  not be  less  than  (1)  $500,000  (and if  greater  in
                  integral  multiples of $100,000) in the case of conversions to
                  or  into  LIBOR  Loans  or (2)  $200,000  (and if  greater  in
                  integral  multiples of $50,000) in the case of  conversions to
                  or into Base Rate Loans;

                                    (iii)  no  Revolving   Credit  Loan  may  be
                  converted  to a LIBOR  Loan  less than one  month  before  the
                  Revolving Credit Termination Date;

                                    (iv) a  LIBOR  Loan  may be  converted  to a
                  different  type  of  Loan  only on the  last  day of the  then
                  applicable Interest Period with respect thereto; and

                                    (v) no  Revolving  Credit  Loan  or  portion
                  thereof may be converted to a LIBOR Loan during the occurrence
                  and continuance of an Event of Default.

                  Notwithstanding  anything to the contrary herein, after giving
effect  to any  Revolving  Credit  Loan,  there  shall  not be more than six (6)
different  Interest  Periods in effect in respect of all Revolving  Credit Loans
then outstanding.

                                       16

<PAGE>
                  Section 2.5. Minimum Amounts of Revolving Credit Loan.  Except
for  borrowings  which  involve  or  utilize  the full  remaining  amount of the
Commitments  and payments which result in the prepayment of all Base Rate Loans,
each  borrowing  and  payment of a Base Rate Loan shall be in an amount at least
equal to  $200,000  and,  if greater,  integral  multiples  of $50,000 in excess
thereof.  Each  borrowing  and  payment of a LIBOR Loan shall be in an amount at
least equal to $500,000 and, if greater,  in integral  multiples of $ 100,000 in
excess thereof.

                  Section 2.6.  Reduction of Commitments.

                  (a) The  Borrower  shall have the right to reduce or terminate
the amount of the unused  Commitments at any time and from time to time provided
that:  (i) the Borrower  shall give notice of each such reduction or termination
to the Banks as provided in Section 3. 1, and (ii) each partial  reduction shall
be allocated pro rata between the  Commitments  of each Bank in accordance  with
their respective  Commitment  Proportions and shall be in an aggregate amount at
least equal to $3,000,000 or, if greater, in integral multiples of $1,000,000.

                  (b) The  Commitments,  once reduced or  terminated  may not be
reinstated.

                                  ARTICLE 2-A.
                                 THE TERM LOAN.

                  Section  2-A.1.  The  Term  Loan.  Subject  to the  terms  and
conditions  hereof,  the Term  Loan  Lender  agrees to make the Term Loan to the
Borrower on December 31, 1999.

                  Section 2-A.2.  The Term Notes. The Term Note made by the Term
Loan  Lender   hereunder  shall  be  evidenced  by  a  single   promissory  note
substantially in the form of Exhibit A-1 hereto,  with  appropriate  insertions,
payable to the order of the Term Loan Lender and  representing the obligation of
the Borrower to pay the unpaid principal balance of the Term Loan, with interest
thereon as provided herein.  The Term Loan Lender is hereby authorized to record
the date or amount of each payment or  prepayment  of principal  thereof and the
date and amount of each  payment of interest  thereon in the Term Loan  Lender's
records  and/or on a  schedule  annexed  to its Term Note and,  absent  manifest
error, any such recordation shall constitute conclusive evidence of the accuracy
of the information so recorded;  provided,  however,  that the failure to record
such information  shall not affect the Borrower's  obligations to repay the Term
Loan. The Term Note (a) shall be dated the date such Term Loan is made (b) shall
be stated to mature on the Term Loan Maturity  Date, (c) shall bear interest for
a period  from the date such Loan is made until it is paid in full on the unpaid
principal amount thereof at the applicable rates per annum specified herein.

                  Section 2-A.3.   Use of Proceeds.

                  (a) The  Borrower  shall use the  proceeds of the Term Loan to
repay the Existing Bank Debt to the extent that it constitutes term loans.

                  (b) The Borrower  agrees to indemnify the Term Loan Lender and
its  respective  directors,  officers,  employees,  affiliates,  agents or other
representatives  and hold the Term Loan  Lender  and its  respective  directors,
officers, employees, affiliates, agents and other representatives, harmless from
and against any and all liabilities,  losses, damages, costs and expenses of any
kind

                                       17
<PAGE>

(including,  without limitation, the reasonable fees and expenses of counsel for
any such  Person  in  connection  with  any  investigative,  administrative,  or
judicial  proceeding,  whether or not such Person  shall be  designated  a party
thereto) which may be incurred by any such person, relating to or arising out of
this  Agreement  or any  actual or  proposed  use of any  proceeds  of Term Loan
hereunder.

                  Section 2-A.4.  Amortization of Term Loans. The Term Loan made
hereunder shall have a term of 33 months. The principal balance of the Term Loan
shall be paid in equal consecutive quarterly installments of $175,000 commencing
on the last day of March,  2000,  and  continuing  on the last day of each June,
September,  December and March  thereafter  with the final  installment  thereof
being due on the Term Loan Maturity Date. All  installments  of principal on the
Term Loan shall be paid to the Agent for the benefit of the Term Loan Lender.

                  Section 2-A.5.  Borrowing  Procedure For Term Loans:  Interest
Rate and Interest Period Selection.

                  (a) The Term Loan Lender shall make the Term Loan available to
the Agent at the  Agent's  office  located at 1185 Avenue of the  Americas,  3rd
Floor,  New York, New York 10036, not later than 2:00 p.m. New York City time on
December  31,  1999  in  immediately  available  funds.  Unless  any  applicable
condition  specified  in Article 5 has not been  satisfied,  not later than 3:00
p.m.  New York City time on such date,  the Agent  shall,  through  its  lending
office and subject to the conditions of this  Agreement,  make the amount of the
Term Loan available to the Borrower in immediately  available funds by crediting
on account of the Borrower  designated by the Borrower and  maintained  with the
Agent.

                  (b) The Term  Loan  shall  initially  be made as a LIBOR  Loan
having an Interest  Period of three (3) months.  Upon expiration of any Interest
Period  applicable to the Term Loan, the Borrower shall pay the next installment
of  principal  on the Term  Loan,  and the  balance  of the Term  Loan  shall be
continued  as  a  LIBOR  Loan  having  a  three  (3)  month   Interest   Period.
Notwithstanding  the  foregoing,  the Term Loan may not be  continued as a LIBOR
Loan during the occurrence and continuance of an Event of Default.

                                   ARTICLE 3.
                  GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.

                  Section 3.1. Certain Notices.  Except as otherwise provided in
this Agreement,  notices by the Borrower to the Banks of each borrowing pursuant
to Sections 2.4,  each  prepayment  pursuant to Section 3.2,  each  reduction or
termination of the  Commitments  pursuant to Section 2.6 and each  conversion of
Revolving  Credit Loans pursuant to Sections 2.4 shall be irrevocable  and shall
be  effective  on the date of receipt only if received by the Banks by not later
than 11:00  a.m.,  New York City  time,  and (a) in the case of  borrowings  and
prepayments  of (i) Base Rate  Loans,  if given the date  thereof and (ii) LIBOR
Loans,  if given  three  (3)  Banking  Days  prior  thereto;  (b) in the case of
reductions or terminations of the Commitments, given five (5) Banking Days prior
thereto;  and (c) in the  case  of  conversions  or  continuations  pursuant  to
Sections  2.4,  if given  three (3)  Banking  Days prior  thereto in the case of
conversions to or  continuations of LIBOR Loans and if given on the date thereof
in the case of  conversions  to Base Rate Loans.  Each such  notification  which
relates to a borrowing,  continuation or conversion shall specify the

                                       18

<PAGE>

amount and the type of  Revolving  Credit  Loan  (i.e.,  Base Rate Loan or LIBOR
Loan),  the date of the proposed  borrowing,  whether such Revolving Credit Loan
represents an additional borrowing,  a continuation or a conversion,  and in the
case of a LIBOR  Loan,  the  Interest  Period to be used in the  computation  of
interest  with  respect  thereto.  Each such notice  relating to a reduction  or
termination of the Commitments shall specify the amount of the Commitments to be
reduced or terminated.

                  Section 3.2.  Prepayments.

                  (a) The  Borrower  shall  have the  right at any time and from
time to time to prepay any Base Rate Loan,  in whole or in part on one  business
day's notice to the Agent; provided,  however, that each such partial prepayment
of a Base Rate Loan shall be in a minimum aggregate principal amount of $200,000
or, if greater in amounts  which are integral  multiples  of $50,000.  Except as
required by paragraph (b) or (c) below or on the last day of an Interest  Period
with respect thereto, the Borrower shall not be permitted to prepay LIBOR Loans.

                  (b)  In  the  event  that  the  Aggregate   Revolving   Credit
Outstandings  exceed the lesser of the then  applicable  Borrowing  Base, or the
Total  Commitments at any time prior to the Revolving Credit  Termination  Date,
the Borrower shall promptly pay or prepay so much of the Revolving  Credit Loans
outstanding as shall be necessary in order that the Aggregate  Revolving  Credit
Outstandings  will not  exceed  the  lesser of the  Borrowing  Base or the Total
Commitments then in effect.  All prepayments  under this  subparagraph  shall be
subject to Section 4.1.

                  (c)  Unless  otherwise  agreed  by the Banks in  writing,  the
Borrower shall be required to pay or prepay Revolving  Credit Loans  outstanding
with (i) 80% of the proceeds of the issuance by the Borrower or any Guarantor of
additional equity;  (ii) 100% of the net proceeds of the sale by the Borrower or
any  Guarantor  of any  Real  Estate  Assets;  (iii)  100% of the  net  proceeds
resulting from the repayment of mortgages  constituting Real Estate Assets; (iv)
100% of the net  proceeds  of a financing  of any  Eligible  Property,  (v) such
proceeds as may be paid as a result of a casualty or condemnation, all in accord
with Sections 7.11 or 7.12 of this  Agreement,  or (vi) 100% of the net proceeds
of a sale of any Operating  Company  permitted in  accordance  with the terms of
Section  8.4  hereof;  provided,  however,  that  the  Borrower  shall  have  no
obligation  under clause (i) above until the  aggregate  net proceeds of any and
all additional equity issuances during the term of this Agreement shall equal or
exceed  $1,000,000.00.  All prepayments under this paragraph shall be subject to
Section 4.1. To the extent any prepayment  pursuant to this Section 3.2(c) would
result in the Borrower  being  obligated to pay amounts to the Banks pursuant to
Section 4.1,  then provided that no Default or Event of Default has occurred and
is continuing, at the Borrower's election the proceeds from any of the foregoing
events shall be deposited in an interest-bearing account owned by the Bank to be
applied to reduce the outstanding Loans upon expiration of the relevant Interest
Periods. The interest earned on such amounts shall be for the Borrower's account
and, in the  absence of a Default or Event of Default,  shall be credited by the
Agent to the Borrower's account.

                  (d) All payments required by paragraphs (b) or (c) above shall
be made to the Banks pro rata in  accordance  with their  respective  Commitment
Proportions  and shall be applied as follows:  first,  to outstanding  Base Rate
Loans up to the full amount thereof,  second,  to outstanding  LIBOR Loans up to
the full amount thereof, and third to Term Loan.
                                       19

<PAGE>
                  (e) All prepayments made pursuant to this Section 3.2 shall be
accompanied by the payment of all accrued  interest on the amount so prepaid and
by all  amounts  required  to be paid  pursuant  to  Section  4.1 in  connection
therewith.

                  Section 3.3.  Interest on Loans.

                  (a) Base Rate Loans.  The  Borrower  shall pay interest on the
outstanding and unpaid  principal  amount of each Base Rate Loan made under this
Agreement  at a  fluctuating  rate per annum equal to the Base Rate from time to
time  in  effect.   Each  change  in  the   interest   rate  shall  take  effect
simultaneously  with the  corresponding  change in the Prime Rate or the Federal
Funds Rate, as the case may be. Interest shall be calculated on the basis of the
actual  number of days elapsed  divided by a year of three  hundred  sixty (360)
days and shall be paid to the Agent for the account of the Banks  quarterly,  in
arrears,  on March 31, June 30, September 30 and December 31 in each year and on
the Termination Date.

                  (b)  LIBOR  Loans.  The  Borrower  shall pay  interest  on the
outstanding  and  unpaid  principal  amount of each  LIBOR  Loan made under this
Agreement for each Interest  Period  applicable to such LIBOR Loan at a rate per
annum equal to the Reserve  Adjusted LIBOR Rate in effect with respect  thereto,
plus the Margin.  Interest shall be calculated on the basis of the actual number
of days elapsed divided by a year of three hundred sixty (360) days and shall be
paid to the Banks, monthly in arrears on the last day of each month in each year
and on the Termination Date.

                  (c)  Post-Default.  If any  Default  or Event of  Default  has
occurred and is continuing hereunder, all Loans, and all interest, fees or other
amounts due  hereunder,  to the extent  permitted by applicable  law, shall bear
interest (payable on demand, and in any event on the last day of each month, and
computed  daily on the basis of a 360-day  year for actual days  elapsed) (i) in
all cases other than LIBOR Loans, at the Default Rate until paid and (ii) in the
case of LIBOR  Loans,  at a rate which  shall be the  greater of (x) the Default
Rate or (y) 2% per annum in excess of the rate  applicable  to such LIBOR  Loan,
until the  expiration of the Interest  Period  applicable to such Loan, at which
time the Loan will  automatically  be converted into a Base Rate Loan, and until
paid,  shall bear  interest at the Default  Rate.  In no event,  however,  shall
interest  payable  hereunder  be in  excess  of the  maximum  rate  of  interest
permitted  under  applicable  law. The  obligation  to so pay interest  upon any
reimbursement  obligation of the Borrower to the Banks shall not be construed so
as to waive the requirement for  reimbursement  on the same date that payment is
made by the Banks as set forth in this Agreement.

                  Section 3.4.  Commitment  Fee.  The Borrower  shall pay to the
Agent for the ratable  benefit of the Revolving  Credit Lenders a commitment fee
for the  period  from  and  including  the  date  hereof  to and  excluding  the
Termination  Date equal to 3/8 of 1% of the average daily unused  portion of the
Total  Commitments  during the  applicable  period.  The commitment fee shall be
calculated  on the  basis of a year of 360 days for the  actual  number  of days
elapsed. The commitment fee shall be due and payable quarterly in arrears on the
last day of each calendar quarter and on the Revolving Credit Termination Date.

                  Section 3.5. Administrative Fee. The Borrower shall pay to the
Agent for its own account an annual fee of $25,000. The administrative fee shall
be due and  payable  annual in advance on or before the date  hereof and on each
anniversary of the date hereof.
                                       20

<PAGE>
                  Section 3.6. Closing Fee. The Borrower shall pay to the Agent,
for the ratable benefit of the Revolving Credit Lenders,  a closing fee equal to
3/8 of 1% of the Total  Commitments.  This fee shall be due and  payable  on the
Closing Date.

                  Section 3.7.  Payments Generally.

                  (a) All  payments  under this  Agreement or the Notes shall be
made in Dollars in immediately  available funds to the Agent, in accordance with
the respective  obligations of the Borrower then due and payable to each of them
not later  than 1:00 p.m.  New York City time on the  relevant  dates  specified
above (each such  payment  made after such time on such due date is to be deemed
to have been made on the next  succeeding  Banking Day), to the Agent's  Lending
Office.  The  Borrower  will  notify the Agent of any  payment  pursuant  to the
provisions of this Section at the same time it makes any such payment.  The Bank
may (but shall not be obligated  to) debit the amount of any such payment to any
ordinary deposit account of the Borrower with such Bank; provided, however, that
the Agent shall not be permitted  to debit any funds which are not  available to
the Borrower other than on an overdraft  basis.  The Borrower shall, at the time
of making each payment under this  Agreement or the Notes,  specify to the Agent
the principal or other amount  payable by the Borrower  under this  Agreement or
the Notes to which such payment be applied; provided, however, that in the event
that the  Borrower  fails to so specify,  or if an Event of Default has occurred
and is continuing, the Banks shall apply such payment as they may elect in their
sole  discretion.  If the due date of any payment  under this  Agreement  or the
Notes would  otherwise fall on a day which is not a Banking Day, such date shall
be extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension. Except to the extent
otherwise  provided herein, it is the intention of the parties that all payments
hereunder be applied to the Banks pro rata in accordance  with their  respective
Commitment Proportions.

                  (b) All payments  made by the Borrower  under this  Agreement,
the Notes or the other Facility  Documents  shall be made free and clear of, and
without  deduction  or  withholding  for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or  withholdings,  now or  hereafter  imposed,  levied,  collected,  withheld or
assessed by any governmental or taxing authority of any jurisdiction, excluding,
(x) in the case of each Bank,  income taxes and franchise taxes (imposed in lieu
of  income  taxes)  imposed  on such  Bank as a result  of a  present  or former
connection  between the  jurisdiction of the government or the taxing  authority
imposing such tax and such Bank (excluding a connection arising solely from such
Bank having  executed,  delivered,  or performed its  obligations  or received a
payment  under,  or enforced,  this  Agreement,  the Notes or the other Facility
Documents) or any political  subdivision or taxing authority thereof or therein,
and (y) taxes (including  withholding taxes) imposed by reason of the failure of
the Agent or any Bank,  in either  case that is  organized  outside  the  United
States,  to comply with Section  3.7(c) hereof (or the inaccuracy at any time of
the certificates,  documents and other evidence delivered  thereunder) (all such
non-excluded taxes,  levies,  imposts,  duties,  charges,  fees,  deductions and
withholdings being hereinafter  called "Taxes").  If any Taxes are withheld from
any amounts payable to any Bank hereunder or under the Facility  Documents,  the
amounts,  paid to such Bank shall be increased to the extent  necessary to yield
to such Bank (after so payment of all Taxes)  interest or any such other amounts
payable  hereunder at the rates or in the amounts  specified in this  Agreement,
the Notes and the other  Facility  Documents.  Whenever any Taxes are payable by
                                       21

<PAGE>
the Borrower, the Borrower shall send to such Bank within 30 days after the date
of any payment, a certified copy of an original official receipt received by the
Borrower  showing payment  thereof.  If the Borrower fails to pay any Taxes when
due to the  appropriate  taxing  authority  or fails to remit to the  Banks  the
required  receipts or other required  documentary  evidence,  the Borrower shall
indemnify the Banks for any  incremental  taxes,  interest or penalties that may
become payable by any Bank as a result of any such failure. This indemnification
shall be made  within  30 days from the date such Bank or the Agent (as the case
may be ) makes written demand therefor. If any Bank receives a refund in respect
of any  Taxes  for  which  such  Bank has  received  payment  from the  Borrower
hereunder,  such Bank shall promptly notify the Borrower of such refund and such
Bank shall,  within 30 days of receipt of a request by the  Borrower  repay such
refund to the Borrower,  provided  that the  Borrower,  upon the request of such
Bank,  agrees to return  such  refund  (plus any  penalties,  interest  or other
charges) to such Bank in the event such Bank is  required to repay such  refund.
The  agreements  in  this  subsection  shall  survive  the  termination  of this
Agreement and the Facility  Documents and the payment of the Notes and all other
amounts payable hereunder or thereunder.

                  (c) Each Bank that is organized  outside of the United  States
shall  deliver  to the  Borrower  on the  date  hereof  (or,  in the  case of an
assignee,  on the date of the  assignment) and from time to time as required for
renewal under  applicable  law duly completed  copies of United States  Internal
Revenue  Service Form 1001 or 4224 (or any  successor or additional  forms),  as
appropriate,  indicating  in each case that such  Bank is  entitled  to  receive
payments under this Agreement without any deduction or withholding of any United
States  federal  income  taxes.  Each Bank that is organized  outside the United
States shall  promptly  notify the Borrower and each other Bank of any change in
its Lending  Office and upon written  request of the  Borrower  such Bank shall,
prior to the  immediately  following  due date of any payment by the Borrower or
any Guarantor  hereunder or under any other  Facility  Document,  deliver to the
Borrower or such Guarantor, as the case may be (with copies to each other Bank),
such  certificates,  documents  or other  evidence,  as  required by the Code or
Treasury  Regulations  issued pursuant  thereto,  including  without  limitation
Internal  Revenue  Service  Form 4224,  Form 1001 and any other  certificate  or
statement of exemption required by Treasury  Regulation  Section  1.1441-4(a) or
Section  1.1441-6(c) or any subsequent  version thereof,  properly completed and
duly executed by such Bank  establishing that such payment is (i) not subject to
withholding  under the Code because such payment is  effectively  connected with
the  conduct by such Bank of a trade or  business  in the United  States or (ii)
totally  exempt from United  States tax under a provision of an  applicable  tax
treaty. The Borrower shall be entitled to rely on such forms in their possession
until receipt of any revised or successor form pursuant to this Section  3.6(c).
If the  Agent or a Bank  fails  to  provide  a  certificate,  document  or other
evidence required pursuant to this Section 3.6(c),  then, unless it is no longer
entitled to such  exemption  due to a change in law, upon notice by the Borrower
to the Agent  and such  Bank (i) the  Borrower  shall be  entitled  to deduct or
withhold on payments to the Agent or such Bank as a result of such  failure,  as
required by law, and (ii) the Borrower shall not be required to make payments of
additional amounts with respect to such withheld Taxes pursuant to clause (x) of
Section 3.6(c) to the extent such  withholding  is required  solely by reason of
the  failure of the Agent or such Bank to  provide  the  necessary  certificate,
document or other evidence.

                  Section 3.8.  Interim Adjustments to Borrowing Base.

                  (a) The  Borrowing  Base  shall be  adjusted  periodically  as
follows:

                                       22

<PAGE>

                      (i) The Borrowing Base shall be increased to include:

                             (A) Real  Estate  Assets  that are  acquired by the
Borrower  and/or the  Guarantors  and that satisfy the  definition  of "Eligible
Properties" hereunder; and

                             (B)  Real  Estate  Assets  that do not  qualify  as
"Eligible  Properties" but  subsequently  satisfy the  requirements of "Eligible
Properties";

                             (C) Real Estate  Assets that  originally  satisfied
the  definition  of "Eligible  Properties"  hereunder,  where the  provisions of
clause (ii) (B) below were applied but the  condition  has been cured  through a
lease  extension or a re-leasing of such property,  provided,  however,  that in
either  case with  respect to any such  property,  the  Agent,  on behalf of the
Banks,  shall be permitted to conduct such due diligence  investigations  at the
Borrower's  expense  as the  Banks  deem  appropriate  prior to  including  such
property as an "Eligible  Property"  and the Banks shall be  satisfied  that the
property  meets the criteria for "Eligible  Properties".  In the event the Agent
does not inform the owner of the subject  Real Estate  Asset that the Banks have
rejected the Real Estate Asset as an Eligible  Property within 30 Business Days,
such property in question shall automatically be deemed an Eligible Property.

                      (ii) Conversely,  the Borrowing Base shall be decreased to
exclude:

                             (A)  Real  Estate  Assets  that  are  sold  by  the
Borrower or any Guarantor or that become subject to liens securing  Indebtedness
which  exceed 30% of the  annualized  and  normalized  actual  year-to-date  Net
Operating Income for such property [capitalized at 12.0%]; and

                             (B) Any Real Estate Asset that originally satisfied
the  definition  of  "Eligible  Property,"  (i) if the tenant for a  substantial
portion of such property has delivered a termination  notice, or (ii) six months
prior to the  termination of the lease with respect to a substantial  portion of
such property or (iii) if the tenant otherwise  indicates its intention to cease
paying rent with respect to a substantial portion of such property.

                  (b) Upon the happening of any of the events  described  above,
the Borrower shall deliver to the Banks a notice thereof as required pursuant to
Section 7.8 hereof.  In addition,  the Borrower shall deliver to the banks a new
Borrowing Base  Certificate  within five (5) Banking Days after the happening of
any such event;  provided,  however, that in the case of clause 3.8(a)(i) above,
the Borrower  shall not deliver a new Borrowing Base  Certificate  including any
such  property   until  the  Agent  shall  have   completed  its  due  diligence
investigation  and the Banks shall have been satisfied with the results thereof.
The  Agent  agrees  to use all  reasonable  efforts  to  complete  any  such due
diligence  investigation  within 30 Business  Days of receiving  notice from the
Borrower thereof.

                                   ARTICLE 4.
                             YIELD PROTECTION, ETC.

                  Section 4.1.  Certain Compensation.
                                       23

<PAGE>

                  (a) The Borrower  hereby agrees to indemnify the Banks against
any loss or expense which the Banks or any one of them may sustain or incur as a
consequence of any of the following:
                                    (i)  the  receipt  or  recovery  by a  Bank,
                  whether by voluntary prepayment, acceleration or otherwise, of
                  all or any  part of a LIBOR  Loan  prior to the last day of an
                  Interest Period applicable thereto;

                                    (ii) the  conversion,  prior to the last day
                  of an applicable  Interest Period, of a LIBOR Loan into a Base
                  Rate Loan;

                                    (iii) the failure by the  Borrower to borrow
                  any LIBOR Loan,  convert any Base Rate Loan to a LIBOR Loan or
                  continue any LIBOR Loan on the date of  borrowing,  conversion
                  or  continuation  set  forth in the  notice  delivered  by the
                  Borrower  pursuant  to  the  provisions  hereof,  unless  such
                  failure to borrow results from the Banks' failure to fund such
                  borrowing when the Banks are required to do so under the terms
                  of this Agreement; or

                                    (iv) the  failure  by the  Borrower  to pay,
                  punctually on the due date thereof,  any amount payable by the
                  Borrower with respect to or on account of any LIBOR Loan.

                  Without  limiting the effect of the foregoing,  Borrower shall
pay to any Bank a "yield maintenance fee" in an amount computed as follows:  The
current rate for United States Treasury  securities (bills on a discounted basis
shall be converted  to a bond  equivalent)  with a maturity  date closest to the
term chosen  pursuant to the Fixed Rate Election (as defined below) with respect
to the principal amount so received, recovered, converted or not borrowed, shall
be  subtracted  from the rate of interest  applicable to such LIBOR Loan (or the
rate agreed to in the case of a failure to  borrow).  If the result is zero or a
negative  number,  there shall be no yield  maintenance  fee. If the result is a
positive number then the resulting  percentage shall be multiplied by the amount
of the principal balance being received,  recovered,  converted or not borrowed.
The  resulting  amount shall be divided by 360 and  multiplied  by the number of
days  remaining  in the term chosen  pursuant  to the Fixed Rate  Election as to
which the  prepayment  is made.  Said amount  shall be reduced to present  value
calculated by using the above referenced United States Treasury  securities rate
and the number of days  remaining  in the term chosen  pursuant to the  relevant
Fixed Rate Election. The resulting amount shall be the yield maintenance fee due
to such Bank.  Each reference in this  paragraph to "Fixed Rate Election"  shall
mean the election by Borrower of the Reserve  Adjusted  LIBOR Rate. If by reason
of an Event of Default,  the Banks elect to declare the Notes to be  immediately
due and payable,  then any yield  maintenance fee with respect to all LIBOR Loan
shall become due and payable in the same manner as though the  Borrower  prepaid
such LIBOR loans.

                  (b)  Any  Bank  requesting  indemnification  pursuant  to this
Section 4.1 shall deliver to Agent and to the Borrower a  certificate  as to any
additional  amounts payable pursuant to this Section 4.1 setting forth the basis
and method of determining such amounts,  which  certificate shall be conclusive,
absent manifest error, as to the determination by each Bank set forth therein if
made  reasonably  and in good  faith.  The  Borrower  shall pay to each Bank any
amounts  so  certified  by such  Bank  within  10 days of  receipt  of any  such
certificate.  For purposes of this Section  4.1,  all  references  to the "Bank"
shall be deemed to include any participant in this Agreement and/or the Loans.
                                       24

<PAGE>
                  Section 4.2.  Additional Costs.

                  (a) The Borrower shall pay to each Bank, from time to time, on
demand of any such Bank,  such amounts as such Bank may reasonably  determine to
be necessary to compensate it for any costs which Bank reasonably determines are
attributable to its obligation to make any Loan  hereunder,  or any reduction in
any amount  receivable  by such Bank  hereunder  in respect of any such Loans or
such obligation  (such  increases in costs and reductions in amounts  receivable
being herein called  "Additional  Costs"),  resulting from any Regulatory Change
which:  (i) changes  the basis of  taxation of any amounts  payable to such Bank
under this Agreement or its Note in respect of any such obligations  (other than
taxes imposed on the overall net income of such Bank for any of such obligations
by the  jurisdiction  in which  such Bank has its  principal  office or  Lending
Office or franchise  taxes imposed in lieu of income taxes);  or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment,  minimum
capital,  capital ratio or similar  requirements  relating to any  extensions of
credit or other assets of, or any deposits  with or other  liabilities  of, such
Bank (including any of such Loans or any deposits referred to in the definitions
of  "LIBOR  Loans");  or  (iii)  imposes  any  other  condition  affecting  this
Agreement,  or its Note (or any of such extensions of credit or liabilities) and
such Bank's  obligations with respect  thereto.  Each Bank will notify the Agent
and the Borrower of any event  occurring  after the date of this Agreement which
will  entitle  such Bank to  compensation  pursuant  to this  Section  4.2(a) as
promptly as  practicable  after it obtains  knowledge  thereof and determines to
request such compensation.  Notwithstanding  anything herein to the contrary, no
provision of this Section 4.2(a) shall be deemed to require the Borrower to make
any payment of any amount to the extent that such payment  would  duplicate  any
payment made by the Borrower pursuant to Section 3.7 hereof.

                  (b) Without limiting the effect of the foregoing provisions of
this Section 4.2, in the event that,  by reason of any  Regulatory  Change,  any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified  level of the amount of a category of deposits or other  liabilities
of such Bank which includes  deposits by reference to which the interest rate on
LIBOR  Loans is  determined  as  provided  in this  Agreement  or a category  of
extensions of credit or other assets of such Bank which  includes LIBOR Loans or
(ii)  becomes  subject  to  restrictions  on the  amount of such a  category  of
liabilities or assets which it may hold,  then, if such Bank so elects by notice
to the Borrower, the obligation of such Bank to make LIBOR Loans hereunder shall
be suspended  until the date such  Regulatory  Change ceases to be in effect (in
which case the provisions of Section 4.5 shall be applicable).

                  (c) Without limiting the effect of the foregoing provisions of
this Section 4.2 (but without duplication),  the Borrower shall pay to each Bank
from time to time on request such amounts as such Bank may reasonably  determine
to be  necessary  to  compensate  such  Bank for any costs  which it  reasonably
determines are  attributable  to the  maintenance by it or any of its Affiliates
pursuant to any law or regulation  of any  jurisdiction  or any  interpretation,
directive  or request  (whether  or not  having the force of law and  whether in
effect on the date of this Agreement or thereafter) of any court or governmental
or monetary  authority,  of capital in respect of its Loans or other obligations
hereunder (such compensation to include, without limitation,  an amount equal to
any  reduction  in return on assets or equity of such Bank to a level below that
which it could  have  achieved  but for such  law,  regulation,  interpretation,
directive or request). Each Bank

                                       25

<PAGE>

will  notify  the Agent  and the  Borrower  if it is  entitled  to  compensation
pursuant to this Section 4.2(c) as promptly as  practicable  after it determines
to request such compensation.

                  (d) A  statement  of any Bank  setting  forth  such  amount or
amounts,  supported by calculations in reasonable  detail, as shall be necessary
to compensate  such Bank as specified in paragraphs (a), (b) and (c) above shall
be delivered to the Borrower and shall be conclusive absent  demonstrable error.
The  Borrower  shall  pay each  such  Bank the  amount  shown as due on any such
statement within ten (10) days after its receipt of the same.

                  (e) Any Bank claiming any additional  amounts payable pursuant
to this Section 4.2 agrees to use reasonable efforts  (consistent with legal and
regulatory  restrictions) to designate a different  Lending Office if the making
of such a  designation  would  avoid the need for,  or reduce the amount of, any
such additional amounts and would not, in the reasonable  judgment of such Bank,
be otherwise disadvantageous to such Bank.

                   Section 4.3. Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if:

                  (a)  any  Bank  determines  (which   determination   shall  be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the  definition of "LIBOR Loans " in Section 1.1 are not being provided in
the relevant amounts or for the relevant  maturities for purposes of determining
the rate of interest for any LIBOR Loans as provided in this Agreement; or

                  (b)  any  Bank  determines  (which   determination   shall  be
conclusive)  and notifies the Agent and the Borrower that the relevant  rates of
interest  referred to in the definition of "LIBOR Loans" in Section 1.1 upon the
basis  of  which  the rate of  interest  for any  type of  LIBOR  Loans is to be
determined  do not  adequately  cover  the  cost  to  such  Bank  of  making  or
maintaining such Loans, then, such Bank shall as soon as practicable  thereafter
give written notice (or facsimile notice promptly  confirmed in writing) of such
determination to the Agent and the Borrower, and any request by the Borrower for
the  making of a LIBOR Loan or  conversion  or  continuation  of any Loan into a
LIBOR Loan, in each case,  pursuant to the  provisions  hereof shall,  until the
circumstances  giving  rise to such  notice no longer  exist,  be deemed to be a
request for a Base Rate Loan. Each  determination by a Bank made hereunder shall
be conclusive absent manifest error.

                  Section 4.4.  Illegality.  Notwithstanding any other provision
in this  Agreement,  in the event that it becomes  unlawful  for any Bank or its
Lending  Office  to  honor  its  obligation  to make  or  maintain  LIBOR  Loans
hereunder,  then such Bank  shall  promptly  notify  the Agent and the  Borrower
thereof and such Bank's  obligation  to make or maintain  LIBOR Loans  hereunder
shall be suspended until such time as such Bank may again make and maintain such
affected   Loans  (in  which  case  the  provisions  of  Section  4.5  shall  be
applicable).

                  Section 4.5.  Certain LIBOR Loans  Pursuant To Sections  4.2.,
4.3 and 4.4. If an event  referred to in Section 4.2,  4.3 or 4.4 has  occurred,
the affected Bank shall be required to make Base Rate Loans in  accordance  with
this  Agreement,  and all LIBOR  Loans of such Bank  then  outstanding  shall be
automatically  converted into Base Rate Loans on the date specified by such Bank
in such  notice  (which  shall  be,  for each  LIBOR

                                       26
<PAGE>

Loan, the last day of the Interest  Period  applicable  thereto unless such Bank
determines  that it is required by law to convert  such LIBOR Loan on an earlier
date in which case such earlier date shall be the date of  conversion),  and, to
the extent that LIBOR Loans are so made as (or converted  into) Base Rate Loans,
all payments of principal  which would otherwise be applied to such Bank's LIBOR
Loans  shall be  applied  instead  to its Base Rate  Loans.  In the event of any
conversion  of any LIBOR Loan to a Base Rate Loan  pursuant to Section 4.5 prior
to the maturity date with respect to such LIBOR Loan,  the Borrower shall pay to
the  relevant  Bank all  amounts  required  to be paid  pursuant  to Section 4.1
hereof.

                  Section 4.6.  Survival.  The indemnities and other obligations
set  forth in this  Article  4 shall  survive  payment  in full of all  Loans or
extensions of credit made pursuant to this Agreement and the Termination Date.

                                   ARTICLE 5.
                              CONDITIONS PRECEDENT.

                   Section   5.1.   Documentary   Conditions   Precedent.    The
obligations  of the  Banks to make the  Loans on or after  the date  hereof  are
subject to the conditions precedent that:

                  (a) each Bank shall have received on or before the date hereof
each of the following,  in form and substance  reasonably  satisfactory  to such
Bank and its counsel:

                (i) this Agreement duly executed by the Borrower;

                                    (ii) in the  case of each  Revolving  Credit
                  Lender,  the  Revolving  Credit Note executed in favor of such
                  Revolving Credit Lender duly executed by the Borrower;

                                    (iii) in the case of the Term  Loan  Lender,
                  the Term Loan Note  executed in favor of such Term Loan Lender
                  duly executed by the Borrower;

                                    (iv) a  certificate  of the Secretary of the
                  Borrower and each of the Guarantors listed on Schedule 5.1(a),
                  dated the Closing  Date,  attesting  to all  corporate  action
                  taken by such entity,  including  resolutions  of its Board of
                  Directors authorizing the execution,  delivery and performance
                  of the  Facility  Documents  and  each  other  document  to be
                  delivered pursuant to this Agreement,  together with certified
                  copies of the certificate or articles of incorporation and the
                  by-laws of the Borrower and each of such Guarantors; and, such
                  certificate  shall state that the  resolutions  and  corporate
                  documents thereby  certified have not been amended,  modified,
                  revoked or rescinded as of the date of such certificate;

                                    (v) a  certificate  of the  Secretary of the
                  Borrower  and  each of the  Guarantors  (which  in the case of
                  Guarantors  may be in the  form  of an  omnibus  certificate),
                  dated  the  Closing  Date,   certifying  the  names  and  true
                  signatures  of the officers of such entity  authorized to sign
                  the Facility Documents and the other documents to be delivered
                  by such entity under this Agreement;

                                    (vi)  a  certificate  of a  duly  authorized
                  officer of the Borrower,  dated the Closing Date, stating that
                  the  representations  and warranties in Article 6 are true and

                                       27

<PAGE>

                  correct on such date as though made on and as of such date and
                  that no event has occurred and is continuing which constitutes
                  a Default or Event of Default;

                                    (vii)  Guarantees,  duly  executed  by  each
                  Guarantor;

                                    (viii) Security Agreements, duly executed by
                  each of the Operating Companies,  together with fully executed
                  and completed  financing  statements on form UCC-1,  in proper
                  form for  filing  in all  jurisdictions  necessary  or, in the
                  reasonable  discretion of the Agent,  desirable to perfect the
                  security interests granted under the Security Agreements;

                                    (ix)  UCC  search  results  identifying  all
                  financing  statements  on file with respect to the Borrower or
                  the  Guarantor  in such  jurisdictions  as the Agent  requires
                  indicating  that no party  claims any interest in the property
                  of the  Borrower or the  Guarantors  other than the holders of
                  Permitted Liens;

                                    (x) results of title  searches  with respect
                  to such  properties  of the Borrower and the  Guarantor as the
                  Agent  requires,  which shall be  satisfactory to the Banks in
                  all respects;

                                    (xi) the Assignments,  duly executed by each
                  of the Borrower and the  Guarantors  in proper form for filing
                  in all jurisdictions necessary or in the reasonable discretion
                  of the Agent,  desirable to record the Banks'  interest in the
                  leases on the Real Estate Assets;

                                    (xii) the Environmental Indemnity Agreement,
                  duly executed by the Borrower and each Guarantor;

                                    (xiii)  an  opinion   of  counsel   for  the
                  Borrower  and   Guarantors,   dated  the  Closing   Date,   in
                  substantially the form of Exhibit F;

                                    (xiv)   satisfactory   evidence   that   the
                  Borrower and the  Guarantors  listed on Schedule 5.1A are duly
                  organized,  validly  existing and in good  standing  under the
                  laws of their respective jurisdictions of incorporation;

                                    (xv) audited  consolidated balance sheets of
                  the Borrower and the  Guarantors as of December 31, 1998,  and
                  consolidated income statements and statements of cash flows of
                  the  Borrower  and the  Guarantors  for the  fiscal  year then
                  ended, all prepared in accordance with GAAP, together with the
                  unqualified   opinion   thereon  of  Arthur   Andersen,   LLP,
                  independent   certified  public  accountants,   together  with
                  management  prepared   consolidating  balance  sheets,  income
                  statements  and  statements  of cash flows as of the same date
                  and   covering   the  same  fiscal   period,   and   unaudited
                  consolidated and  consolidating  balance sheet of the Borrower
                  and the  Guarantors  as at September  30, 1999,  together with
                  income statements and statements of cash flows of the Borrower
                  and the Guarantors for the fiscal quarter ended  September 30,
                  1999 and for the period  commencing at the end of the previous
                  fiscal  year and  ending  with the end of such  quarter,  each
                  prepared by or under the  supervision  of the chief  financial
                  officer of the Borrower in accordance with GAAP;

                                    (xvi)  evidence  that the  Borrower  and the
                  Guarantors  maintain  such  insurance  with  respect  to their
                  business and properties as would  customarily be maintained by
                  similar businesses which are similarly situated;

                                       28
<PAGE>

                                    (xvii)  satisfactory  evidence  that neither
                  the Borrower  nor any  Guarantor is in default with respect to
                  any contractual obligations to which it is a party, the effect
                  of which may be material  and  adverse to the  Borrower or any
                  Operating Company,  or the Borrower and the Guarantors,  taken
                  as a whole, or to the ability of the Borrower or any Guarantor
                  to  perform  its  obligations  hereunder  or under  the  other
                  Facility Documents;

                                    (xviii)  a  duly  executed   Borrowing  Base
                  Certificate  containing  information as of September 30, 1999,
                  in form and substance satisfactory to the Banks;

                                    (xix) a property  cash flow  analysis in the
                  form of the property cash flow analysis  previously  delivered
                  to the Banks confirming information as of June 30, 1999, which
                  shall in all respects be satisfactory  to the Banks,  together
                  with a  certification  of a  duly  authorized  officer  of the
                  Borrower (A) that no event or circumstance  has occurred since
                  June 30,  1999 which would have a material  adverse  effect on
                  the information contained in such analysis with respect to any
                  property  or (B)  describing  all  material  changes  in  such
                  analysis from the date thereof through the date hereof;

                                    (xx)  such  other  documents,   instruments,
                  approvals,  opinions and evidence as the Banks may  reasonably
                  require.

                  (b) the  Borrower  shall have paid or caused to be paid to the
Banks  in full  all  fees  and  expenses  required  to be paid  hereunder  or in
connection  herewith,  and including all fees and expenses of the Banks incurred
in connection with the preparation, execution and delivery of this Agreement and
the  other  Facility   Documents  and  the   consummation  of  the  transactions
contemplated thereby (including,  without limitation, those set forth in Section
12.3 below) and all expenses  incurred by the Agent pursuant to Subparagraph (g)
below;

                  (c) the Borrower and the  Guarantors  shall have  obtained all
consents,  permits and  approvals  required in  connection  with the  execution,
delivery and performance by the Borrower and the Guarantors of their obligations
hereunder and such consents,  permits and approvals shall continue in full force
and effect;

                  (d) the Banks  shall be  satisfied  that the  proceeds  of the
initial Loans  hereunder  shall be applied to pay the  Borrower's  Existing Bank
Debt in full on the date hereof,  that all UCC-1 financing  statements  filed to
secure the Borrower's  obligations  with respect to the Existing Bank Debt shall
have  been  terminated,  and  that  all  existing  lines of  credit  and  demand
facilities of the Borrower and the Guarantor shall have been terminated;

                  (e) the Agent  shall  have been  provided  with  copies of all
credit agreements,  loan agreements,  indentures,  mortgages and other documents
relating to the extension of credit to the Borrower and shall be satisfied  with
its review of the foregoing;

                  (f) the Banks shall be satisfied  with the form and content of
all  Schedules  delivered  by the  Borrower  pursuant to this  Agreement  or any
document delivered in connection herewith;

                                       29
<PAGE>

                  (g) the Agent shall have conducted a physical inspection of no
fewer than twenty (20)  Eligible  Properties  and shall be  satisfied  that such
properties  are  occupied  as  represented  by the  Borrower,  are in  good  and
workmanlike  condition and are otherwise in conformance  with the Agent's normal
lending requirements;

                  (h) the Agent  shall have  received  title  reports on each of
twenty (20) Eligible Properties;

                  (i) the Agent shall have verified the nine month Net Operating
Income at September 30, 1999 (which shall be annualized and normalized) for each
of the properties  referred to in subparagraph (g) above,  including analysis of
future contractual income stream and verification of revenues and expenses;

                  (j) the Agent  shall  have  completed  a review of all  leases
relating to each of the properties referred to in paragraph (h) above;

                  (k) the  Banks  shall  be  satisfied  that  there  has been no
material  adverse  change in the  financial  condition  of the  Borrower  or any
Guarantor since December 31, 1998; and

                  (l) all legal matters in connection  with this financing shall
be reasonably satisfactory to the Banks and their counsel.

                  Section 5.2. Additional Conditions Precedent.  The obligations
of the  Banks to make  any  Loan  shall be  subject  to the  further  conditions
precedent  (which  shall be in addition  to, and shall not be deemed to limit or
modify,  any of the other terms and  conditions  hereunder)  that on the date of
such Loan the Banks shall have received the following:

                  (a) a certificate  executed by the Chief Financial  Officer or
the Chief Executive Officer of the Borrower dated as of such date,  stating that
(i) the representations and warranties  contained in Article 6 hereof, which for
purposes of this Section,  shall be deemed to relate to the Borrower and to each
Guarantor  as if each Person were the  subject of each such  representation  and
warranty, are true and correct in all material respects on and as of the date of
such Loan as though made on and as of such date (except when such representation
or warranty by its terms  relates to the date hereof or another  specific  date;
(ii) no Default or Event of Default  has  occurred  and is  continuing  or would
result from any such Loan;  (iii)  since the date of the most  recent  Borrowing
Base  Certificate  there has been no material  adverse  change in the  Borrowing
Base; and (iv) since the date of the most recent financial  statements delivered
hereunder there has been no material adverse change in the business, properties,
prospects,  financial or other  condition of the Borrower or any Guarantor;  and
(v) the proceeds of such Loan shall be used in  accordance  with all  applicable
provisions of this Agreement,  including,  without limitation, the provisions of
Section 8.7 hereof.

                  (b) a certificate  executed by the Chief Financial  Officer or
the Chief Executive Officer of the Borrower,  dated as of such date, in form and
substance  satisfactory  to the Banks  stating that after  giving  effect to the
proposed borrowing,  Aggregate  Outstandings,  will not exceed the lesser of (i)
the total Commitments or (ii) the Borrowing Base then in effect; and

                   (c) a copy  of the  Borrower's  most  recent  Borrowing  Base
Certificate delivered pursuant to Section 7.8 hereof.

                                       30
<PAGE>
                                   ARTICLE 6.
                         REPRESENTATIONS AND WARRANTIES.

                  The Borrower and, where  applicable,  each  Guarantor,  hereby
represents and warrants that:

                  Section   6.1.   Incorporation,    Good   Standing   and   Due
Qualifications;  Compliance with Law. Each of the Borrower and the Guarantors is
duly  incorporated,  validly existing and in good standing under the laws of its
respective jurisdiction of incorporation,  has the corporate power and authority
to own its assets and to  transact  the  business  in which it is now engaged or
presently proposes to be engaged, and is duly qualified as a foreign corporation
and in good  standing  under the laws of each other  jurisdiction  in which such
qualification is required except where the failure to so qualify would not cause
a material adverse effect upon the operations, business, properties or financial
condition  of the Borrower or any  Operating  Company or of the Borrower and the
Guarantors,  taken  as a  whole.  In  addition,  the  Borrower  and  each of the
Guarantors is in compliance  in all material  respects with all laws,  treaties,
rules or  regulations  and  determinations  or orders of or with  respect to all
arbitrators, courts or other governmental authorities applicable to it.

                  Section 6.2. Power and Authority; No Conflicts. The execution,
delivery  and  performance  by the Borrower  and the  Guarantors  of each of the
Facility  Documents  to which it is a party  have  been duly  authorized  by all
necessary  corporate  action and do not and will not: (a) require any consent or
approval  of the  stockholders  of the  Borrower or any of the  Guarantors;  (b)
contravene the charter or by-laws of the Borrower or any of the Guarantors;  (c)
violate  any  provision  of, or require  any  filing,  registration,  consent or
approval under, any law, rule, regulation  (including,  without limitation,  the
provisions  of  Regulation  T, U or X of the Board of  Governors  of the Federal
Reserve  system  as in  effect  from  time  to  time),  order,  writ,  judgment,
injunction,   decree,   determination   or  award  presently  in  effect  having
applicability to the Borrower; (d) result in a breach of or constitute a default
or require  any  consent  under any  indenture  or loan  agreement  or any other
agreement, lease or instrument to which the Borrower or any of the Guarantors is
a party or by which  properties of the Borrower or any of the  Guarantors may be
bound or affected;  (e) result in or require the creation or  imposition  of any
Lien  upon or with  respect  to any of the  properties  now  owned or  hereafter
acquired by the Borrower or any of the  Guarantors  except in favor of the Banks
as herein provided;  or (f) cause the Borrower or any of the Guarantors to be in
default under any such rule,  regulation,  order,  writ,  judgment,  injunction,
decree,  determination  or  award  or any such  indenture,  agreement,  lease or
instrument.

                  Section 6.3.  Legally  Enforceable  Agreements.  Each Facility
Document is, or when delivered under this Agreement will be, a legal,  valid and
binding  obligation of the Borrower and each Guarantor (if such entity or Person
is a party  thereto)  enforceable  against such entities or Person in accordance
with its terms,  except to the extent  that such  enforcement  may be limited by
applicable bankruptcy,  insolvency, fraudulent conveyance and other similar laws
affecting  creditors' rights generally or by the effect of general principles of
equity  which may limit the  availability  of equitable  remedies  (whether in a
proceeding at law or in equity).

                                       31
<PAGE>
                  Section  6.4.  Litigation.  There  are no  actions,  suits  or
proceedings pending or, to the knowledge of the Borrower, threatened, against or
affecting the Borrower or any of the Guarantors  before any court,  governmental
agency  or  arbitrator,  which  would,  in any  one  case  or in the  aggregate,
materially adversely affect the financial condition,  operations,  properties or
business  of  the  Borrower  or any of the  Guarantors,  or the  ability  of the
Borrower or any Guarantor to perform its obligations hereunder.

                  Section 6.5.  Financial  Statements;  Other  Liabilities.  The
consolidated balance sheet of the Borrower and the Guarantors as at December 31,
1998,  and the related  income  statements  and  statements  of cash flow of the
Borrower and the Guarantors for the fiscal year then ended, and the accompanying
notes,  together with the unqualified  opinion thereon of Arthur Andersen,  LLP,
independent  certified public accountants,  and the interim financial statements
of the  Borrower  and  the  Guarantors  as at and as of (as  the  case  may  be)
September  30, 1999,  copies of which have been  furnished to each of the Banks,
fairly present the financial  condition of the Borrower and the Guarantors as at
such dates and the results of the  operations of the Borrower and the Guarantors
for the  periods  covered  by  such  statements,  all in  accordance  with  GAAP
consistently applied (subject, in the case of interim financial  statements,  to
year-end  adjustments  and  except,  in  the  case  of  such  interim  financial
statements,  for the absence of notes thereto prepared in accordance with GAAP).
As of the date hereof,  there are no  liabilities or obligations of the Borrower
or any of the Guarantors, whether direct or indirect, absolute or contingent, or
matured  or  unmatured,  other  than (a) as  disclosed  or  provided  for in the
financial  statements and notes thereto which are referred to above or which are
not required to be so disclosed,  or (b) which are  disclosed  elsewhere in this
Agreement  or in the  Schedules  hereto  or  which  are  not  required  to be so
disclosed,  or (c) arising in the ordinary course of business since December 31,
1998 or (d) created by this  Agreement.  The written  information,  exhibits and
reports  furnished  by  the  Borrower  to  the  Banks  in  connection  with  the
negotiation of this Agreement are complete and correct in all material respects.
No event has occurred  which would  constitute a material  adverse change in the
business,  financial  or other  condition  or  prospects of the Borrower and the
Guarantors taken as a whole.

                  Section  6.6.  Ownership  and  Liens.  The  Borrower  and  the
Guarantors have title to, or valid leasehold interests in, all of its properties
and  assets,  real and  personal,  including  the  properties  and  assets,  and
leasehold interests reflected in the financial statements referred to in Section
6.5,  and  none of the  properties  and  assets  owned  by the  Borrower  or the
Guarantors,  and none of their respective leasehold interests, is subject to any
Lien, except for Permitted Liens.

                  Section 6.7.  Taxes.  The Borrower and each of the  Guarantors
have filed all tax returns  (foreign,  federal,  state and local) required to be
filed (including,  without limitation,  with respect to payroll and sales taxes)
and the  Borrower  and each of the  Guarantors  have paid all taxes  (including,
without limitation,  all payroll and sales taxes),  assessments and governmental
charges and levies shown thereon to be due,  including  interest and  penalties,
other  than  taxes,  assessments  and  governmental  charges  and  levies  being
contested  in good faith by  appropriate  proceedings  and with respect to which
adequate  reserves in conformity with GAAP shall have been provided on the books
of the Borrower and the Guarantors.

                  Section 6.8.  ERISA.  As of the date hereof,  the Borrower and
its  ERISA  Affiliates  are in  compliance  in all  material  respects  with all
applicable provisions of ERISA. No Reportable Event has occurred with respect to
any Plan;  no notice of intent to  terminate  a Plan has been  filed nor has any
Plan been terminated;  no circumstance  exists which  constitutes  grounds under

                                       32
<PAGE>

Section 4042 of ERISA entitling the PBGC to institute  proceedings to terminate,
or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings;  neither the Borrower,  nor any ERISA  Affiliate has  completely or
partially  withdrawn  under Sections 4201 or 4204 of ERISA from a  Multiemployer
Plan;  the  Borrower  and each of its ERISA  Affiliates  have met their  minimum
funding  requirements  under ERISA with  respect to all of their Plans and there
are no Unfunded  Vested  Liabilities,  and neither  the  Borrower  nor any ERISA
Affiliate has incurred any material liability to the PBGC under ERISA.

                   Section 6.9.  Subsidiaries.  As of the date hereof,  Schedule
6.9 is a complete and correct list of all Subsidiaries of the Borrower.

                  Section 6.10. Credit Arrangements. Schedule 6.10 is a complete
and correct list of all agreements, indentures, purchase agreements, guaranties,
Capital Leases and other  investments,  agreements and arrangements in effect on
the date of this Agreement  providing for or relating to extensions of credit in
the  aggregate  amounts  of  $250,000  or  more  to the  Borrower  or any of the
Guarantors for borrowed money  (including  agreements and  arrangements  for the
issuance  of  letters  of  credit  or for  acceptance  financing  but  excluding
indebtedness which is non-recourse to the Borrower or the Guarantors) in respect
of which the  Borrower  or any of the  Guarantors  is in any manner  directly or
contingently obligated;  and the maximum principal or face amounts of the credit
in question, outstanding and which can be outstanding, are correctly stated, and
all Liens of any nature  given or agreed to be given as  security  therefor  are
correctly described or indicated in such Schedule.

                  Section  6.11.  Operation  of  Business.  The Borrower and the
Guarantors  possess all  licenses,  permits,  franchises,  patents,  copyrights,
trademarks  and trade names,  or rights  thereto,  to conduct  their  respective
businesses  substantially  as now  conducted  and as  presently  proposed  to be
conducted  except  where the  failure to obtain any of the  foregoing  would not
result in a material adverse effect upon the operations,  business,  properties,
or  financial  condition  of the  Borrower  or any  Operating  Company or of the
Borrower and the Guarantors, taken as a whole.

                  Section 6.12. Hazardous Substances. Except as disclosed in the
Borrower's  most recent report on Form 10-K or on Schedule 6.12 (a copy of which
has been  provided to the Banks),  (i) the  Borrower and the  Guarantors  are in
material  compliance with all applicable  Environmental  Laws, and have obtained
all  necessary  licenses  and  permits  required  to be issued  pursuant  to any
applicable  Environmental  Law  and  (ii) as of the  date  hereof,  neither  the
Borrower nor any of the Guarantors has received any notice or communication from
any governmental  agency with respect to (a) any Hazardous Substance relative to
its operations,  property or acts, or (b) any  investigation,  demand or request
pursuant to or enforcing any Environmental Law relating to it or its operations,
properties or acts, and no such investigation is pending or, to the knowledge of
the Borrower or any Guarantor, threatened.

                  Section 6.13. No Default on  Outstanding  Judgments or Orders.
Each of the Borrower and the  Guarantors  has satisfied all  judgments,  orders,
notices of  violation  and  decrees  and  neither  the  Borrower  nor any of the
Guarantors is in default with respect to any judgment, writ, injunction, decree,
notice of violation,  rule or  regulation  of any court,  arbitrator or federal,
state,  municipal or other governmental  authority,  commission,  board, bureau,
agency or instrumentality, domestic or foreign applicable to it.

                                       33
<PAGE>
                  Section 6.14.  Labor  Disputes and Acts of God. As of the date
hereof,  neither the business nor the  properties  of the Borrower or any of the
Guarantors are affected by any fire,  explosion,  accident,  strike,  lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public  enemy or other  casualty  (whether  or not  covered  by  insurance),
materially and adversely affecting such business or properties or the operations
of the  Borrower  and the  Guarantors  taken as a whole,  or the  ability of the
Borrower or any  Guarantor to perform its  obligations  hereunder (in each case,
after giving effect to insurance).

                  Section 6.15.  Governmental  Regulation.  Neither the Borrower
nor any of the  Guarantors is to  regulation  under the Public  Utility  Holding
Company Act of 1935, the Investment  Company Act of 1940 or any other statute or
regulation  limited  its  ability to incur  indebtedness  for money  borrowed as
contemplated hereby.

                   Section  6.16.  Partnership,  Etc.  Except  as  disclosed  in
Schedule  6.16,  neither  the  Borrower  nor any  Guarantor  is a partner in any
partnership or a member in any limited liability partnership or company.

                  Section 6.17. No Forfeiture Proceedings.  Neither the Borrower
nor any of the Guarantors is engaged in or proposes to be engaged in the conduct
of  any  business  or  activity  which  is  likely  to  result  in a  Forfeiture
Proceeding,  and no Forfeiture  Proceeding against any of them is pending or, to
the best  knowledge of the Borrower  and the  Guarantors  as of the date hereof,
threatened.

                   Section 6.18.  No Default or Event of Default.  No Default or
Event of Default has occurred and is continuing under this Agreement.

                   Section  6.19.   Solvency.   Without  giving  effect  to  any
Guarantee  executed  in  connection  Agreement,  each  of the  Borrower  and the
Guarantors is Solvent.  After giving effect to any such Guarantee,  the Borrower
and the Guarantors, taken as a whole, are Solvent.

                  Section  6.20.  Name.  Except as set forth on  Schedule  6.20,
during  the five  years  prior to the  making  of this  Agreement,  neither  the
Borrower nor any Guarantor has been known under,  or transacted  business using,
any name or trade  style  except  for the name set  forth  above  such  entity's
signature on this Agreement.

                  Section 6.21.  Other Agreements . Neither the Borrower nor any
Guarantor, is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or corporate restriction
which would,  in any case or in the aggregate have a material  adverse effect on
its  ability  to carry  out its  obligations  hereunder  or under  the  Facility
Documents.  Neither the Borrower, nor any of the Guarantors is in default in any
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material to its
business to which it is a party.

                  Section  6.22.  Eligible  Properties.  The  Borrower  and  the
Guarantors  own each of the Eligible  Properties  free and clear of all liens or
encumbrances   other  than  liens  or  encumbrances  that  secure   indebtedness
aggregating,  in the case of any such  Eligible  Property,  less than 30% of the
annualized and normalized  year-to-date  Net Operating  Income for such property
capitalized at 12.0% at the time of determination.  The Borrower has provided to
the Banks true and correct

                                       34
<PAGE>

and complete  copies of all leases  applicable  to the Eligible  Properties  and
neither the Borrower nor any Guarantor,  knows of any present  default  (whether
monetary or non-monetary)  under or with respect to any of such leases.  Each of
such leases is in full force and effect and has not been  modified or  otherwise
amended.

                  Section 6.23. Title Insurance. The Borrower and the Guarantors
have with respect to each Real Property  Asset that is an owned property a fully
paid owner's title insurance policy and with respect to each Real Property Asset
that is a loan secured by a mortgage on real  property a fully paid  mortgagee's
title insurance policy.

                  Section 6.24.  Y2K. Any  reprogramming  required to permit the
proper functioning, in and following the year 2000, of (a) the Borrower's , each
of the Borrower's  Subsidiaries'  or any  Guarantor's  computer  systems and (b)
equipment  containing  embedded  microchips  (including  systems  and  equipment
supplied by others or, to the Borrower's knowledge without having undertaken any
independent  investigation,  with which the Borrower's,  any Subsidiary's or any
Guarantor's  systems  interface)  and  the  testing  of  all  such  systems  and
equipment,  as so reprogrammed,  have been completed as of the Closing Date. The
cost to the  Borrower,  each of its  Subsidiaries  and  each  Guarantor  of such
reprogramming and testing and of the reasonably foreseeable  consequences of the
year  2000  to  the  Borrower,  each  of its  Subsidiaries  and  each  Guarantor
(including, without limitation,  reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or Event of Default or have a
material  adverse  effect  on the  business  properties,  assets,  prospects  or
condition (financial or otherwise) of the Borrower or any Guarantor.  Except for
such  of the  reprogramming  referred  to in the  preceding  sentence  as may be
necessary, the computer and management information systems of the Borrower, each
of its  Subsidiaries  and each Guarantor are and, with ordinary course upgrading
and maintenance,  will continue to be sufficient to permit the Borrower, each of
its  Subsidiaries  and each  Guarantor to conduct  their  respective  businesses
without  having a material  adverse effect on the business  properties,  assets,
prospects  or  condition  (financial  or  otherwise)  of  the  Borrower  or  any
Guarantor.

                                   ARTICLE 7.
                             AFFIRMATIVE COVENANTS.

                  So long as any of the  Notes or any  other  Obligations  shall
remain unpaid or any Bank shall have any Commitment hereunder,  the Borrower and
each Guarantor shall:

                  Section 7.1.  Maintenance  of  Existence.  Except as otherwise
provided in this  Agreement,  preserve and maintain its corporate  existence and
remain in good standing in the jurisdiction of its organization, and qualify and
remain  qualified,  as a foreign  corporation in each jurisdiction in which such
qualification is required.

                   Section  7.2.   Conduct  of  Business.   Continue  to  engage
principally in the principal business conducted by it on the date hereof.

                  Section 7.3.  Maintenance  of Properties.  Maintain,  keep and
preserve, all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted.
                                       35

<PAGE>
                  Section 7.4. Maintenance of Records. Keep adequate records and
books  of  account,   in  which  complete  entries,   reflecting  all  financial
transactions of such Person, will be made.

                  Section 7.5.  Maintenance of Insurance.

                  (a) With respect to each Operating Company, maintain insurance
covering  its assets  and its  business  with  financially  sound and  reputable
insurance  companies  or  associations  properly  licensed to do business in the
jurisdictions where inventory is located in such amounts and covering such risks
(including,  without  limitation,  products liability) as are usually carried by
companies  engaged in the same or a similar business and similarly  situated and
as are required by the Facility Documents.  The Borrower shall provide the Banks
notice that such  policies  have been paid in full and shall  deliver  certified
copies of the policy or policies of such insurance or  certificates of insurance
to the Banks if the Banks so request.

                  (b) With respect to the Borrower or any Guarantor  that is not
an Operating  Company,  provide copies of evidence of insurance  provided by any
tenant of a Real Estate Asset as required by the lease relating to such property
and, if any tenant is in default of its  obligation to maintain  insurance or if
any Real Estate Asset becomes vacant, the Borrower or the Guarantor, as the case
may be, shall maintain such insurance as is required by Section 7.11 hereof.

                  Section  7.6.  Compliance  with  Laws.  Comply  and cause each
tenant of the Eligible  Properties to comply with all  applicable  laws,  rules,
regulations  and orders,  and maintain  all permits  necessary to operate at the
Eligible Properties.

                  Section 7.7. Right of Inspection.  (a) Subject to the terms of
any  lease  relating  to any Real  Estate  Asset,  at any  reasonable  time upon
reasonable  notice during normal  business  hours from time to time,  permit any
Agent or any agent or representative  thereof,  to make physical  inspections of
each Real Estate  Asset and to examine and make  copies and  abstracts  from the
records and books of account of, and visit the properties of, such Person and to
discuss  the  affairs,  finances  and  accounts  of such  Person with any of its
officers and directors and such entity's independent  accountants.  In addition,
if during the course of any such  examination  hereunder,  anything comes to the
Agent's  attention  which causes the Agent to be concerned  that there may be an
environmental  condition at any Real Estate Asset that is an Eligible  Property,
the  Agent  may  require  the  Borrower  to permit  the  Agent to  conduct  such
environmental inspections as the Agent shall deem necessary with respect to such
property at the Borrower's expense;  provided,  however,  that the Borrower may,
within 10 days of  receipt  of  notice  from the  Agent of its  intention  to so
inspect such  Eligible  Property,  elect not to permit the Agent to conduct such
examination  in which event such Real Estate Asset shall no longer be considered
an Eligible Property for purposes of calculating the Borrowing Base;

                  (b) In addition to the inspection rights of the Agent pursuant
to  subparagraph  (a) of this  Section,  the Agent shall be permitted to conduct
annual due diligence  investigations (which may include site inspections) of the
Eligible Properties. The scope of such investigations shall be determined by the
Agent and the costs of such  investigations  up to  $15,000  per year,  shall be
borne by the Borrower and shall be paid out of the Administrative Fee.

                   Section 7.8. Reporting Requirements. Furnish directly to each
of the Banks:
                                       36

<PAGE>
                  (a) as soon as available and in any event within 90 days after
the end of each fiscal year of the  Borrower,  audited,  consolidated  financial
statements of the Borrower and the Guarantors,  which shall include consolidated
balance  sheets of the Borrower and the  Guarantors as of the end of such fiscal
year,  together with consolidated income statements and statements of cash flows
of the Borrower and the Guarantors for such fiscal year and as of the end of and
for the prior fiscal year, all prepared in accordance  with GAAP and accompanied
by an  unqualified  opinion  on  such  consolidated  financial  statements  by a
nationally  recognized   independent  certified  public  accountants  reasonably
acceptable  to  the  Banks,  together  with  management  prepared  corresponding
consolidating financial statements,  all prepared by or under the supervision of
the Chief Financial Officer of the Borrower in accordance with GAAP;

                  (b) as soon as available and in any event within 45 days after
the end of each of the first,  second and third  quarters of each fiscal year of
the  Borrower,  consolidated  and  consolidating  financial  statements  of  the
Borrower and the Guarantors,  which shall include consolidated and consolidating
balance  sheets of the  Borrower and the  Guarantors  as of the end of each such
quarter,  together with  consolidated and  consolidating  income  statements and
statements  of cash  flows of the  Borrower  and the  Guarantors  for each  such
quarterly period and for the period commencing at the end of the previous fiscal
year and  ending  with the end of such  quarter,  all in  reasonable  detail and
stating in comparative form the respective figures of the corresponding date and
period in the previous  fiscal year and all prepared by or under the supervision
of the chief financial  officer of the Borrower in accordance with GAAP (subject
to  year-end  adjustments  and  except  for the  absence  of notes  prepared  in
accordance with GAAP);

                  (c)   simultaneously   with  the  delivery  of  the  financial
reporting  statements  referred to in (a) and (b) above,  a  certificate  of the
Chief  Executive  Officer  or the  Chief  Financial  Officer  of  the  Borrower,
certifying  that to the best of his knowledge (i) no Default or Event of Default
has occurred and is continuing, or if a Default or Event of Default has occurred
and is continuing,  a statement as to the nature thereof and the action which is
proposed  to be taken with  respect  thereto,  with  computations  demonstrating
compliance (or  non-compliance,  as the case may be with the covenants contained
in  Article  9, and  (ii)  such  financial  statements  have  been  prepared  in
accordance with GAAP (subject,  in the case of interim  statements,  to year end
adjustments  and except for the absence of notes thereto  prepared in accordance
with GAAP);

                  (d)  simultaneously  with the delivery of the annual financial
statements referred to in Section 7.8(a) above, a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination  necessary for the audit of such  statements,  they have obtained no
knowledge  of any  condition  or event which  constitutes  a Default or Event of
Default,  or if such  accountants  shall  have  obtained  knowledge  of any such
condition or event,  specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;

                  (e)  Quarterly,  as soon as available  and, in any event,  not
later than the dates financial  statements are required to be delivered pursuant
to (a) and (b) above, a Borrowing Base Certificate;

                  (f)  Annually,  not later than  February 15 of each year,  the
Borrower's  business  plan  and  projections  of  financial  statements  for the
immediately  succeeding  year  illustrating  the  projected

                                       37

<PAGE>

income statements,  balance sheets and statement of cash flows, each in form and
substance satisfactory to the Banks;

                  (g)  Quarterly,  as soon as available  and, in any event,  not
later than the dates financial  statements are required to be delivered pursuant
to (a) and (b) above,  a report  detailing the  performance of all operations of
the Borrower  and the  Guarantors  by business  segment,  in form and  substance
satisfactory to the Banks;

                  (h) Property  financial  information in a form consistent with
the form of information provided on Schedule 7.8(h) hereto;

                  (i) promptly after the Borrower or any Guarantor becomes aware
of the commencement thereof,  notice of (a) all actions,  suits, and proceedings
before any court or governmental department,  commission,  board, bureau, agency
or  instrumentality,   domestic  or  foreign,  affecting  the  Borrower  or  any
Guarantor,  including,  without  limitation,  any such proceeding to any alleged
violation of any Environmental Law and including any proceedings relating to any
matter if a  determination  adverse to the Borrower and the  Guarantors  in such
proceeding would have a material  adverse effect upon the operations,  business,
properties or financial condition of the Borrower or any Operating Company or of
the  Borrower and the  Guarantors,  taken as a whole,  or (b) default  under any
lease or  mortgage  with  respect to any Real  Estate  Asset  which would have a
material adverse effect upon the operations,  business,  properties or financial
condition  of the Borrower or any  Operating  Company or on the Borrower and the
Guarantors, taken as a whole;

                  (j)  immediately  after  the  Borrower  or any  Guarantor  has
knowledge  of any Default or Event of Default  has  occurred,  a written  notice
setting  forth the  details of such  Default or Event of Default  and the action
which is proposed to be taken by the Borrower with respect thereto;

                  (k) as soon as possible  and in any event  within five Banking
Days after the  Borrower  knows that any of the events or  conditions  specified
below with respect to any Plan or  Multiemployer  Plan have occurred or exist, a
statement signed by a Chief Executive  Officer or the Chief Financial Officer of
the Borrower  setting forth details  respecting  such event or condition and the
action, if any, which the Borrower or its ERISA Affiliate  proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA  Affiliate  with respect to such event
or condition):

                                    (i)  any Reportable Event;

                                    (ii) the filing, under Section 4041 of ERISA
                  of a notice of intent to terminate any Plan or the termination
                  of any Plan;

                                    (iii) the institution by PBGC of proceedings
                  under  Section  4042 of ERISA for the  termination  of, or the
                  appointment  of a trustee  to  administer,  any  Plan,  or the
                  receipt by the  Borrower  or any ERISA  Affiliate  of a notice
                  from a  Multiemployer  Plan that such action has been taken by
                  PBGC with respect to such Multiemployer Plan;

                                    (iv)   receipt  by  the  Borrower  or  ERISA
                  Affiliate of notice from a Multiemployer  Plan of the complete
                  or partial  withdrawal by the Borrower or any ERISA  Affiliate

                                       38
<PAGE>

                  under Section 4201 or 4204 of ERISA from a Multiemployer  Plan
                  imposing  withdrawal   liability  (as  of  the  date  of  such
                  notification)   exceeding   $250,000  or  requiring   payments
                  exceeding $250,000 per annum;

                                    (v)  receipt  by the  Borrower  or any ERISA
                  Affiliate  of notice from a  Multiemployer  Plan that it is in
                  reorganization or insolvency  pursuant to Section 4241 or 4245
                  of ERISA or that it intends  to  terminate  or has  terminated
                  under  Section   4041A  of  ERISA  if  the  aggregate   annual
                  contributions  of the Borrower and all ERISA Affiliates to all
                  Multiemployer  Plans which are then in reorganization or being
                  terminated  have been  increased  over amounts  contributed to
                  such  Multiemployer   Plans  for  the  plan  year  immediately
                  preceding  the  plan  year  in  which  the  reorganization  or
                  termination occurs by an amount exceeding $250,000; and

                                    (vi) the  institution  of a proceeding  by a
                  fiduciary  or any  Multiemployer  Plan against the Borrower or
                  any  ERISA  Affiliate  to  enforce  Section  515 of ERISA  for
                  delinquent   contributions   in  excess  of   $100,000   which
                  proceeding is not dismissed within 30 days;

                  (l)  annually,  not later than June 1 of each year, a property
cash flow analysis for the Borrower and the  Guarantors,  which shall be in form
and substance satisfactory to the Banks;

                  (m)  upon  the  request  of  the  Banks,  promptly  after  the
furnishing  thereof,  copies of any reports or records required to be filed with
or furnished to any insurance carriers or governmental  authorities  relating to
Hazardous  Substances located on any of real properties owned or occupied by the
Borrower or any Guarantor;

                  (n) promptly after the Borrower or any Guarantor  knows of the
commencement or threat thereof, notice of any Forfeiture Proceeding;

                  (o) promptly after such judgment,  decree or order is entered,
notice of any judgment,  decree or order entered  against the Borrower or any of
the Guarantors;

                  (p) promptly and, in any event,  within 5 Banking Days, notice
of any event which would (i) require an interim  adjustment  of $500,000 or more
to the Borrowing Base in accordance with the provisions of Section 3.8 hereof or
(ii) would require an interim  adjustment of the Borrowing  Base,  regardless of
amount, if as a result of such adjustment  Aggregate  Outstandings  would exceed
the Borrowing Base; and

                  (q)  promptly  upon the chief  executive  officer or the chief
financial officer of the Borrower or any Guarantor  obtaining knowledge thereof,
notice of any dispute with any account  debtor  involving an amount in excess of
$100,000 and notice of all disputes  with account  debtors  involving  aggregate
amounts in dispute in excess of $500,000; and

                  (r)  such  other  information   respecting  the  condition  or
operations,  financial or otherwise of the Borrower or any of the  Guarantors or
ERISA  Affiliates,  including  copies of other  reports  filed from time to time
within the  Securities  and Exchange  Commission,  as the Banks may from time to
time reasonably request.

                                       39
<PAGE>
                  Section  7.9.  Payment  of  Obligations.   Pay,  discharge  or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be,  all  material  Indebtedness  and  other  material  obligations  of
whatever nature.

                  Section 7.10.  Payment of Taxes.

                  (a)  From  time to time  when the same  shall  become  due and
payable,  pay and discharge all taxes of every kind and nature,  all general and
special assessments, levies, permits, inspection and license fees, all water and
sewer  rents and  charges,  and all other  public  charges  whether of a like or
different nature,  imposed upon or assessed against the Eligible Properties,  or
any part thereof, or upon the revenues, rents, issues, income and profits of the
Eligible  Properties,  or  any  part  thereof,  or  arising  in  respect  of the
occupancy,  use of possession  thereof unless such claims are being contested in
good  faith by  appropriate  proceedings  provided  that  adequate  reserves  in
conformity  with GAAP  shall  have been  provided  on the books of the  Borrower
and/or such Guarantor(s). Borrower and each Guarantor shall, upon the request of
the Agent,  deliver to the Agent  receipts  evidencing  the  payment of all such
taxes, assessments, levies, fees, rents and other public charges imposed upon or
assessed against the Eligible  Properties or any part thereof,  or the revenues,
rents, issues, income or profits thereof.

                  (b) Pay from time to time when the same shall  become due, all
lawful claims and demands of mechanics,  materialmen, laborers and others, which
claims and  demands,  if unpaid,  might  result in, or permit the creation of, a
lien on the Eligible Properties or any part thereof, or on the revenues,  rents,
issues,  income and  profits  arising  therefrom,  unless  such claims are being
contested  in good  faith by  appropriate  proceedings  provided  that  adequate
reserves in  conformity in the GAAP shall have been provided on the books of the
Borrower and/or the Guarantors.

                  Section 7.11.  Insurance.

                  (a) Keep or enforce  the  obligation  of tenants to keep,  the
Real Estate Assets insured  against damage by fire and other hazards  coveted by
the standard  extended coverage  insurance  policy.  Subject to the terms of the
applicable leases, all insurance policies and endorsements  required pursuant to
this Section shall be fully paid for,  nonassessable and contain such provisions
and  expiration  dates  and be in such  form  and  amounts  and  issued  by such
insurance companies satisfactory to the Banks. In addition, after the occurrence
of an Event of Default  hereunder,  the Banks may require the  Borrower  and the
Guarantors to carry or to require their  respective  tenants to carry such other
insurance on the Real Estate  Assets  including oil storage tank  insurance,  in
such  amounts as may from time to time be  required  by  institutional  lenders,
against  insurable  casualties which at the time are commonly insured against in
the case of premises similarly situated.

                  (b)  Subject  to the terms of the  applicable  leases,  if any
Eligible  Property  or any part  thereof,  is  located in an area which has been
identified by the Secretary of Housing and Urban  Development  as a flood hazard
area,  the Borrower and the  Guarantors  shall keep,  or cause their  respective
tenants to keep, for as long as any Indebtedness  remains unpaid,  such Eligible
Property  covered by flood  insurance  in an amount at least  equal to the value
assigned to such Eligible Property in the Borrowing Base.

                                       40
<PAGE>
                  (c) The  Borrower  shall give the Agent  prompt  notice of any
loss to any Real Estate Asset  covered by insurance if such loss would  decrease
the value of such Real  Estate  Asset by  $500,000  or more or (ii) would have a
material  adverse  affect on the  Borrowing  Base or upon the  Borrower  and its
Subsidiaries  on a  consolidated  basis.  For so long as no Event of Default has
occurred and is continuing, (i) the Borrower shall have the sole right to adjust
losses covered by insurance, (ii) the proceeds from any adjusted insurance claim
shall be paid to the Borrower,  which proceeds shall be used by the Borrower for
the  restoration,  rebuilding,  renovation  and/or  repair  of the  property  so
requiring  same.  If, at the time of any loss,  an Event of Default has occurred
and is continuing, (i) the Borrower shall not adjust said loss without the prior
written consent of the Banks;  and (ii) any and all insurance  proceeds shall be
paid to the Agent and the Agent,  with the consent of the Required Banks, in its
sole discretion, may use such proceeds to either (i) repay all or any portion of
the Loans or (ii) restore, rebuild, renovate and/or repair the damaged property.
In the event the Agent makes the insurance  proceeds  available to the Borrower,
the Borrower agrees to promptly commence and diligently  continue to perform the
repairs, restoration,  renovation or rebuilding of the damaged property so as to
restore such  property to be in full  compliance  with all laws and so that such
property  shall be at least equal in value and general  utility as prior to such
damage or  destruction.  All  provisions of this Section  7.11(c) and the Banks'
rights and remedies  hereunder  are subject to the  insurance  provisions of the
applicable  leases on the Real Estate Assets and proceeds for  rebuilding  which
shall exceed  $500,000  shall be disbursed by the Agent in  conformity  with its
normal construction lending procedures.

                  Section 7.12.  Condemnation.  The Borrower,  immediately  upon
obtaining  of the  knowledge  of the  institution  of any  proceedings  for  the
condemnation  of any of the Real  Estate  Assets or any part of any Real  Estate
Assets that may  materially  effect the value of the Borrowing  Base or that may
materially adversely effect the Borrower and its Subsidiaries, on a consolidated
basis, will notify the Agent of the pendency of such proceeding.  Subject to the
provisions of the applicable leases, after the occurrence of an Event of Default
hereunder,  the Agent may  participate in any such  proceeding and the Borrower,
from time to time, will deliver to the Agent all instruments  requested by it to
permit such  participation.  In the event of such condemnation  proceeding after
the  occurrence  of an Event of  Default  hereunder,  the award or  compensation
payable is hereby assigned to and shall be paid to the Agent. The Agent shall be
under no obligation to question the amount of any such award or compensation. In
any such  condemnation  proceedings  after the occurrence of an Event of Default
hereunder,  the Agent may be represented by counsel  selected by the Agent.  The
Borrower, upon request by the Agent, shall make, execute and deliver any and all
instruments  requested for the purpose of  confirming  of the  assignment of the
aforesaid  awards  and  compensation  to the Agent  free and clear of any liens,
charges or encumbrances of any kind or nature whatsoever. All provisions of this
Section  7.12 and the Banks'  rights and remedies  hereunder  are subject to the
condemnation provisions of the applicable leases on the Real Estate Assets.

                  Section   7.13.   Subsidiaries.   Simultaneously   with  their
creation,  give to the  Agent  notice  of each  new  Subsidiary  and  cause  all
Subsidiaries  to become  Guarantors  hereunder  and, in connection  therewith to
execute and deliver Guarantees to the Banks.

                                       41
<PAGE>
                                   ARTICLE 8.
                               NEGATIVE COVENANTS.

                  So long as any of the Notes or other  Obligations shall remain
unpaid or any Bank shall have any Commitment hereunder, neither the Borrower nor
any Guarantor shall:

                  Section 8.1. Indebtedness.  Create, incur, assume or suffer to
exist, or permit any Subsidiary to create,  incur, assume or suffer to exist any
Indebtedness, except for any of the following types of Indebtedness:

                  (a)  Indebtedness  of the Borrower under this Agreement or the
Notes;

                  (b)  Indebtedness  described  in  Schedule  8.1 and any  other
existing  Indebtedness of any Guarantor relating to extensions of credit of less
than $250,000 that is  non-recourse  to the Borrower or any other  Guarantor and
any  refinancing  of any such  Indebtedness  secured by a  mortgage  on any real
property of the Borrower or any Guarantor  provided that such  refinancing  does
not increase the principal amount of such Indebtedness or change non-recourse to
recourse Indebtedness;

                  (c)  Provided  that no Event of Default  then  exists or would
result therefrom,  Indebtedness of the Borrower, or any such Guarantor,  secured
by purchase  money Liens  permitted  by Section  8.2  provided  that the maximum
amount  of  such  Indebtedness   incurred  during  any  fiscal  year  (excluding
non-recourse indebtedness secured by real property) shall not exceed $500,000;

                  (d)  unsecured  trade   indebtedness  and  customer   deposits
incurred in the ordinary course of business;

                  (e) in the  case  of the  Guarantors,  the  guarantees  of the
Obligations pursuant to the Guarantees; and

                  (f) Indebtedness of any Post-Closing Guarantor,  provided that
such  Indebtedness is non-recourse to the Borrower or to any other Subsidiary of
the Borrower.

                  Section 8.2. Liens.  Create,  incur, assume or suffer to exist
or permit any Subsidiary to create,  incur or suffer to exist,  any Lien upon or
with respect to any of its properties, now owned or hereafter acquired, or grant
to any third party any rights to enforce a "negative pledge" with respect to its
properties or assets, except the following liens ("Permitted Liens"):

                  (a)  Liens in  favor of the  Banks  securing  the  Obligations
pursuant to the provisions hereof;

                  (b) Liens for taxes or assessments or other government charges
or  levies  if not yet due  payable  or if due and  payable  if they  are  being
contested in good faith by  appropriate  proceedings  and for which  appropriate
reserves are maintained in conformity with GAAP;

                  (c) Liens imposed by law, such as  mechanic's,  materialmen's,
landlord's,  warehousemen's  and  carrier's  Liens,  and  other  similar  Liens,
securing  obligations  incurred in the ordinary course of business which are not
past due for more than 30 days,  or which are being  contested  in good faith by
appropriate  proceedings and for which  appropriate  reserves in accordance with
GAAP have been established,  including,  without limitation, any landlord's lien
which is being contested in good faith by appropriate  proceedings and for which
appropriate reserves in accordance with GAAP have been established;

                                       42
<PAGE>

                  (d) Liens under workers' compensation, unemployment insurance,
social security or similar legislation (other than ERISA);

                  (e) Liens,  deposits or pledges to secure the  performance  of
bids,  tenders,  contracts  (other  than  contracts  for the  payment of money),
leases,  public  or  statutory  obligations,  surety,  stay  appeal,  indemnity,
performance or other similar bonds, or other similar  obligations arising in the
ordinary course of business;

                  (f) easements,  rights-of-way,  restrictions and other similar
encumbrances  which,  in the  aggregate,  do not  materially  interfere with the
occupation,  use  and  enjoyment  by the  Borrower  of the  property  or  assets
encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto;

                  (g)  judgment  and  other   similar  Liens   securing   claims
aggregating not more than $250,000 arising in connection with court proceedings;
provided that the execution or other  enforcement  of such Liens is  effectively
stayed and the claims secured thereby are being actively contested in good faith
and by appropriate proceedings;

                  (h) subject to the provisions of Section  8.1(c)  hereof,  (i)
purchase  money Liens on any property  heretofore  or hereafter  acquired or the
assumption of any Lien on any property existing at the time of such acquisition,
or (ii) a Lien incurred in connection with any  conditional  sale or other title
retention  agreement or a Capital  Lease;  provided,  that in the case of any of
(i)-(ii)  above,  (i) the  creation  or  occurrence  of any such Lien  shall not
otherwise  result in a Default  or Event of Default  with  respect to any of the
other provisions of this Agreement,  (ii) the Indebtedness  secured by such Lien
shall not exceed 100% of the fair market  value of the  property  encumbered  by
such Lien,  and (iii) such Lien shall not  encumber any property of the Borrower
and the Subsidiaries other than the property so acquired;

                  (i) Liens  arising  by virtue of any  statutory  or common law
provision  relating to banker's liens,  rights of set off or similar rights with
respect to deposit accounts of the Borrower or any Subsidiary; and

                  (j) Liens  securing  Indebtedness  permitted  by  Section  8.1
hereof.

                  Section 8.3.  Investments.  Make or permit any  Subsidiary  to
make any loan or advance  to any  Person or  purchase  or  otherwise  acquire or
permit any  Subsidiary  to purchase or  otherwise  acquire,  any capital  stock,
obligations  or other  securities  of,  make any  capital  contribution  to,  or
otherwise  invest,  after the date  hereof,  in, or acquire any  interest in any
Person  (each  of  the  foregoing,   an  "Investment"),   except  (i)  Permitted
Investments;  (ii)  Investments  permitted  under Section 8.7 hereof;  (iii) the
Borrower may make loans or advances to the Operating Companies provided that the
outstanding  principal  balance  of such  loans or  advances  may not  exceed an
aggregate of  $10,000,000  at any one time;  (iv) subject to the  provisions  of
Section 8.7 hereof,  the Borrower or any  Subsidiary  may make loans  secured by
mortgages on real property in the ordinary  course of their business  consistent
with  past  practices  and  (v) the  Borrower  may  make  investments  in  Prime
Hospitality  Corp.  in an aggregate  amount not to exceed  $8,000,000  (plus any
amounts available to be invested pursuant to Section 8.7(iii) provided that such
investments

                                       43
<PAGE>
may not be funded with the proceeds of any Loan  hereunder and provided  further
that all such investments  shall be made in compliance with all applicable laws,
rules and  regulations.  All amounts referred to in this Section shall be valued
at cost.

                  Section 8.4. Sale of Assets. Sell, lease, assign,  transfer or
otherwise dispose of or permit any Subsidiary to sell, lease,  assign,  transfer
or  otherwise  dispose  of any of its now  owned or  hereafter  acquired  assets
(except to the  Borrower),  except for:  (a) assets  disposed of in the ordinary
course of business (it being  understood  that the  Borrower and the  Guarantors
sell Real Estate Assets the ordinary course of business);  (b) the sale or other
disposition  of assets no longer used or useful in the conduct of its  business;
or (c) the sale or  other  disposition  of any  Operating  Company  or of all or
substantially all of the assets of any Operating  Company,  provided,  that: (i)
such  sale  or  disposition  is  negotiated  on an  arms  length  basis  and the
consideration paid in connection with such sale or disposition reflects the fair
market value of the property sold or disposed of; (ii) the Banks shall have been
provided  with  copies of all  documents  executed  in  connection  with sale or
disposition; (iii) the Banks shall be satisfied with the terms and conditions of
such sale or  disposition  and (iv) the  Borrower and  Guarantors  remain in pro
forma compliance with all terms hereof.

                  Section  8.5.  Transactions  with  Affiliates.  Enter  into or
permit  any  Subsidiary  to  enter  into  any  transaction,  including,  without
limitation,  the purchase,  sale or exchange of property or the rendering of any
service, with any Affiliate,  except (unless elsewhere restricted hereunder) (a)
transactions  between the Borrower and any Subsidiary or any Subsidiary with any
other Subsidiary,  (b) upon fair and reasonable terms, in the ordinary course of
and pursuant to the reasonable  requirements of, the relevant  Person's business
and upon fair and reasonable terms no less favorable to the relevant Person than
would  obtain in a  comparable  arm's  length  transaction  with a Person not an
Affiliate; provided that, after giving effect to any such transaction (i.e., any
of the transactions referred to in any of (a)-(b) above), no Default or Event of
Default shall have occurred.

                  Section 8.6. Mergers. Etc. Merge or consolidate with, or sell,
assign,  lease or  otherwise  dispose  of or permit any  Subsidiary  to merge or
consolidate with, or sell, assign, lease or otherwise dispose of (whether in one
transaction  or in a series of  transactions)  all or  substantially  all of its
assets (whether now owned or hereafter acquired) to, any Person, except that any
Guarantor may merge with or into any other Guarantor or the Borrower  hereunder,
provided  that,  in the case of a transaction  that  involves the Borrower,  the
Borrower is the surviving entity,  and provided that, after giving effect to any
such transaction, no Default or Event of Default shall have occurred.

                  Section  8.7.  Acquisitions.  After the date  hereof,  make an
Acquisition or permit any Subsidiary to make an Acquisition, except that (i) the
Borrower or any  Guarantor  may acquire  Real Estate  Assets  provided  that the
aggregate  consideration  paid  or to be  paid  (in  the  case  of a  purchase),
including  all  indebtedness  assumed  by  the  Borrower  or  any  Guarantor  in
connection  with  such  Acquisition,  or  advanced  (in the  case of a loan)  in
connection  with any such  transaction  that is wholly  funded with  proceeds of
Revolving  Credit Loans  hereunder,  shall not exceed  $25,000,000 in any single
transaction   (assuming  the  transaction  involves  multiple  asset  locations,
provided that no single asset may account for more than $15,000,000 of the total
transaction  value),  (ii) the Borrower or any Guarantor may acquire Real Estate
Assets provided that the aggregate consideration paid or to be paid (in the case
of a  purchase),  including  all

                                       44
<PAGE>

indebtedness  assumed by the Borrower or any Guarantor in  connection  with such
Acquisition,  or advanced  (in the case of a Loan) in  connection  with any such
transaction  that is wholly  funded with  proceeds  of  Revolving  Credit  Loans
hereunder,  shall  not  exceed  $15,000,000  in any  transaction  (assuming  the
transaction  involves a single  asset  location);  or (iii) the  Borrower or any
Guarantor may acquire  property or assets other than Real Estate Assets provided
that the aggregate  consideration  paid in connection with any such  transaction
shall not exceed $5,000,000 and the aggregate  consideration  paid in connection
with all such transactions permitted by this clause (iii) during the term hereof
shall not exceed  $10,000,000.  The  provisions  of this  Section  8.7 shall not
restrict the  Borrower's  ability to repurchase  its capital stock in accordance
with Section 8.11 below.

                  Section 8.8. No Activities  Leading to  Forfeiture.  Engage or
permit any Subsidiary to engage in the conduct of any business or activity which
would be reasonably likely to result in a Forfeiture Proceeding.

                  Section 8.9. Corporate  Documents:  Fiscal Year. Amend, modify
or  supplement  or permit any  Subsidiary  to amend,  modify or  supplement  its
certificate  or  articles  of  incorporation  or by-laws  or, in the case of any
partnership,  its  partnership  agreement,  in any way  which  would  materially
adversely  affect the ability of the Borrower or any  Subsidiary  to perform its
obligations hereunder or change its fiscal year.

                  Section 8.10. Hazardous Substances; Use of Real Property. Use,
or permit the use of, or permit any  Subsidiary  to use or permit the use of any
of its real properties for conducting any manufacturing,  industrial, commercial
or retail  business  which  involves in any way the  introduction,  manufacture,
generation,  processing or storage of any Hazardous  Substance in violation,  in
any material respect of any applicable Environmental Law.

                  Section 8.11. Dividends,  etc. Declare or pay any dividends on
its capital stock or purchase,  redeem,  retire or otherwise  acquire any of its
capital stock at any time  outstanding,  except that any Subsidiary wholly owned
by the Borrower may declare and pay dividends to the  Borrower,  and except that
the  Borrower  may  repurchase  its  capital  stock  in  amounts  not to  exceed
$2,000,000 in any fiscal year  starting  after the date of Closing or $5,000,000
during the term of this Agreement.

                  Section 8.12. Other Material Adverse Change.  Suffer or permit
any  other  material  adverse  change  in the  business,  properties,  financial
condition,  prospects or  operations of the Borrower or any  Subsidiary;  in the
business,  properties,  financial  condition,  prospects  or  operations  of the
Borrower and the Guarantors  taken as a whole; or in the ability of the Borrower
or any Guarantor to perform its obligations under this Agreement or under any of
the Facility Documents.

                  Section 8.13.  Sales of Receivables;  Sale  Leasebacks.  Sell,
discount or otherwise  dispose of or permit any Subsidiary to sell,  discount or
otherwise  dispose of notes,  accounts  receivable or other obligations owing to
such entity, with or without recourse,  except for purposes of collection in the
ordinary course of business;  or sell or permit any Subsidiary to sell any asset
pursuant to an  arrangement  to  thereafter  lease such asset from the purchaser
thereof.

                                       45
<PAGE>
                  Section 8.14. Leases of Eligible Properties. Enter into leases
with  respect  to  Eligible  Properties  on terms and  conditions  which are not
commercially reasonable within the markets in which such properties are located.

                  Section 8.15.  Maintenance of Real Estate  Assets.  Subject to
the terms of any leases  with  respect  to any Real  Estate  Assets,  commit any
waste,  or permit any tenant to commit any waste on the Real Estate  Assets,  or
any part thereof,  or make any change,  or permit any tenant to make any change,
in the use of the Real Estate Assets or any part thereof, which shall in any way
increase  any  ordinary  fire or other  hazard  arising out of  construction  or
operation.  The Borrower and the  Guarantors  shall,  at all times,  maintain or
cause any tenants to maintain the Real Estate Assets in good operating order and
condition  and shall  promptly  make or cause any tenants to make,  from time to
time,  all  repairs,  renewals,  replacements,  additions  and  improvements  in
connection therewith which are needful or desirable to such end.

                                   ARTICLE 9.
                              FINANCIAL COVENANTS.

                  So long as any of the Notes or other  Obligations shall remain
unpaid, or any Bank shall have any Commitment under this Agreement, the Borrower
and the Guarantors shall:

                  Section  9.1.  Limitation  on  Indebtedness.  Not permit Total
Adjusted Outstanding Funded Indebtedness of the Borrower and the Guarantors,  on
a consolidated basis, to exceed 50% of the Capitalization  Value of the Borrower
and the Guarantors, on a consolidated basis.

                  Section 9.2. Minimum Equity Value. Maintain, on a consolidated
basis, a minimum Equity Value of $90,000,000.

                  Section  9.3.  Minimum  Interest   Coverage  Ratio.   Maintain
quarterly,  on a  consolidated  basis,  a ratio of (i) annualized and normalized
Consolidated  EBITDA to (ii)  annualized  and normalized  Consolidated  Interest
Expense of not less than 2.25:1.00.

                  Section 9.4.  Minimum Debt Service  Coverage  Ratio.  Maintain
quarterly,  on a  consolidated  basis,  a ratio of (i) annualized and normalized
Consolidated   EBITDA  less  gains  from  the  sale  of  properties   and  other
non-recurring income to (ii) annualized and normalized Consolidated Debt Service
of not less than 1.15:1.00.

                  Section 9.5. Minimum Eligible Properties Debt Service Coverage
Ratio.  Maintain  quarterly,  on a consolidated basis, a ratio of (i) annualized
and  normalized  Eligible  Property  EBITDA to (ii)  Revolving  Credit Loan Debt
Service of not less than 2.00:1.00.

                  Section  9.6.  Limitation  of Capital  Expenditures.  Not make
Capital Expenditures  excluding  expenditures for the acquisition of Real Estate
Assets,  in  excess  of an  aggregate  of  $3,000,000  in any  fiscal  year on a
consolidated basis.

                  Section 9.7.  Minimum  Capitalization  Value.  Maintain at all
times, on a consolidated basis, a minimal Capitalization Value of $150,000,000.

                  Section 9.8.  Limitation on Operating  Leases . Not enter into
operating  leases  requiring

                                       46
<PAGE>
the Borrower and the  Guarantors to make more than $500,000 in lease payments in
any calendar year, on a consolidated basis.

                                   ARTICLE 10.
                               EVENTS OF DEFAULT.

                  Section 10.1.  Events of Default.  Any of the following events
shall be an "Event of Default":

                  (a) The Borrower  shall (A)(i) fail to pay the principal of or
interest on any Loan or Note as and when due and payable  fail to pay any fee or
other amount due hereunder as and when due and payable;  or (B) fail to make any
required  prepayment as and when due and payable in accordance with the terms of
this Agreement;

                  (b) Any  representation or warranty made or deemed made by the
Borrower or by any Guarantor in this Agreement or in any other Facility Document
or which is contained in any certificate,  document, opinion, financial or other
statement  furnished to the Banks at any time pursuant to any Facility  Document
shall prove to have been incorrect in any material  respect on or as of the date
made or deemed made;

                  (c) The  Borrower  shall:  (i) fail to perform or observe  any
term,  covenant or agreement  contained in Section 2.3, in Articles 4, 8 or 9 or
Sections  7.7  (subject  to the  provisions  of the leases  relating to the Real
Estate Assets), 7.8 or 12.3; or (ii) fail to perform any other term, covenant or
agreement  on its part to be  performed  or  observed  (other  than  obligations
specifically  referred to in Section  10.1(a)) in any Facility  Document and, in
the  case  of  this  clause  (ii)  only,  such  failure  shall  continue  for 10
consecutive business days;

                  (d) The Borrower or any of the Guarantors  shall:  (i) fail to
make when due any payments with respect to any  Indebtedness,  including but not
limited to indebtedness  for borrowed money (other than the payment  obligations
described in Section 10.1 (a) above), of the Borrower or such Subsidiary, as the
case may be, or any interest or premium thereon,  when due (whether by scheduled
maturity,  required prepayment,  acceleration,  demand or otherwise) or, if such
Indebtedness  has no  stated  due  date,  before an  action  for  collection  is
commenced; or (ii) fail to perform or observe any term, covenant or condition on
its part to be performed or observed any agreement or instrument relating to any
Indebtedness  when  required to be performed or observed,  if the effect of such
failure to perform or observe is to  accelerate,  or to permit the  acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
Indebtedness,  whether or not such failure to perform or observe shall be waived
by the holder of such  Indebtedness  (unless  such waiver  shall be absolute and
unconditional);  or  (iii)  any  Indebtedness  shall be  declared  to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment)  prior to the stated  maturity  thereof;  provided,  however that it
shall  not  constitute  an Event  of  Default  hereunder  unless  the  aggregate
principal amount of the Indebtedness  referred to in clauses (i), (ii) and (iii)
above equals or exceeds (x) $500,000 in the case of recourse Indebtedness of the
Borrower or in the case of Indebtedness  relating to Eligible  Properties or (y)
$1,000,000 in the case of Indebtedness of any Guarantors that is non-recourse to
the Borrower or any other  Guarantor which relates to assets other than Eligible
Properties;

                                       47

<PAGE>
                  (e) The Borrower or any of the Guarantors (i) shall  generally
not, or be unable to, or shall admit in writing its or their  inability  to, pay
its or their debts as such debts  become  due; or (ii) shall make an  assignment
for the benefit of  creditors,  petition or apply to any court or otherwise  for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets;  or (iii) shall,  as debtor,  commence any  proceeding  under any
bankruptcy,  reorganization,  arrangement,  readjustment of debt, dissolution or
liquidation  law or statute of any  jurisdiction,  whether now or  hereafter  in
effect;  or (iv) shall have had any such  petition or  application  filed or any
such  proceeding  shall have been  commenced,  against  it or them,  in which an
adjudication  or  appointment  is made or order for relief is entered,  or which
petition,  application or proceeding remains undismissed for a period of 30 days
or more; or (v) by any act or omission  shall  indicate its or their consent to,
approval of or acquiescence  in any such petition,  application or proceeding or
order for relief or the appointment of a custodian,  receiver or trustee for all
or  any  substantial   part  of  its  property;   (vi)  shall  suffer  any  such
custodianship, receivership or trusteeship to continue undischarged for a period
of 30 days or more; or (vii) on a consolidated basis, shall cease to be Solvent.

                  (f) One or more  judgments,  decrees or orders for the payment
of money in excess of  $250,000  in the  aggregate  in respect of  uninsured  or
unbonded claims shall be rendered  against the Borrower or any of the Guarantors
and such judgments,  decrees or orders shall continue  unsatisfied and in effect
for a period of 30 consecutive days without being vacated, discharged, satisfied
or stayed or bonded pending appeal;

                  (g) An event or condition  specified in Section  7.8(k) hereof
shall occur or exist with  respect to any Plan or  Multiemployer  Plan and, as a
result  of such  event or  condition,  together  with all other  such  events or
conditions, the Borrower or any ERISA Affiliate shall incur or in the opinion of
the  Bank  shall  be  reasonably  likely  to  incur a  liability  to a  Plan,  a
Multiemployer  Plan or PBGC (or any  combination of the foregoing)  which is, in
the determination of the Bank, material in relation to the financial  condition,
operations, business or prospects of the Borrower or any Subsidiary;

                  (h) Any Forfeiture  Proceeding  shall have been commenced with
respect to the Borrower or any Subsidiary;

                  (i)  Any  of  the  Assignments,  the  Security  Agreements  or
Guarantees  shall at any time  after  its  execution  and  delivery  and for any
reason, cease to be in full force and effect or shall be declared null and void,
or the validity or enforceability  thereof shall be contested by the Borrower or
the  Guarantors or any of them, or any of the Borrower or the  Guarantors  shall
deny that it has any further  liability or  obligation  under an  Assignment,  a
Security Agreement or a Guarantee to which it is a party, or any of such parties
shall fail to perform any of its material  obligations  under any such document;
or

                  (j) a Change in Control shall occur.

                  Section 10.2.  Remedies.  Upon the  occurrence of any Event of
Default  hereunder,  the  Required  Banks may,  by notice to the  Borrower,  (i)
declare the  Commitments  to be terminated,  whereupon the same shall  forthwith
terminate, and (ii) declare the outstanding principal of the Notes, all interest
thereon and all other Obligations to be forthwith due and payable, whereupon the

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<PAGE>

Notes,  all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, that, in the
case of an Event of Default  referred to in Section  10.1(e) or Section  10.1(h)
above,  the  Commitments  shall be immediately  terminated,  and the Notes,  all
interest thereon and all other amounts payable under this Agreement or the Notes
shall be  immediately  due and  payable  without  notice,  presentment,  demand,
protest or other  formalities  of any kind,  all of which are  hereby  expressly
waived by the Borrower.

                                   ARTICLE 11.
                        THE AGENT; RELATIONS AMONG BANKS.

                  Section  11.1.  Appointment,  Powers and  Immunities of Agent.
Each Bank  hereby  irrevocably  (but  subject to removal by the  Required  Banks
pursuant to Section 11.9)  appoints and authorizes the Agent to act as its agent
hereunder  and  under  any  other  Facility  Document  with  such  powers as are
specifically delegated to the Agent by the terms of this Agreement and any other
Facility Document,  together with such other powers as are reasonably incidental
thereto.  The  Agent  shall  have no  duties or  responsibilities  except  those
expressly set forth in this Agreement and any other Facility Document, and shall
not by reason of this  Agreement be a trustee for any Bank.  The Agent shall not
be responsible  to the Banks for any recitals,  statements,  representations  or
warranties made by the Borrower,  or any officer or official of the Borrower, or
any other Person contained in this Agreement or any other Facility Document,  or
in any  certificate or other document or instrument  referred to or provided for
in, or  received  by any of them  under  this  Agreement  or any other  Facility
Document,  or for the value,  legality,  validity,  effectiveness,  genuineness,
enforceability  or sufficiency of this Agreement or any other Facility  Document
or any other  document  or  instrument  referred  to or  provided  for herein or
therein,  or for the failure by the  Borrower to perform any of its  obligations
hereunder or thereunder.  The Agent may employ agents and  attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or its
authorized  agents,  for the  negligence  or  misconduct  of any such  agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agent nor any
of its directors,  officers,  employees or agents shall be liable or responsible
for any action taken or omitted to be taken by it or them hereunder or under any
other Facility Document or in connection  herewith or therewith,  except for its
or their own gross negligence or willful misconduct.  The Borrower shall pay any
fee agreed to by the Borrower and the Agent with respect to the Agent's services
hereunder.

                  Section 11.2.  Reliance by Agent.  The Agent shall be entitled
to rely upon any  certification,  notice or other  communication  (including any
thereof by telephone,  telefax,  telex,  telegram or cable) believed by it to be
genuine  and  correct  and to have  been  signed  or sent by or on behalf of the
proper  Person or Persons,  and upon  advice and  statements  of legal  counsel,
independent  accountants and other experts  selected by the Agent. The Agent may
deem and treat each Bank as the holder of the Loans made by it for all  purposes
hereof  unless  and  until  a  notice  of the  assignment  or  transfer  thereof
satisfactory  to the Agent signed by such Bank shall have been  furnished to the
Agent,  but the Agent  shall not be  required  to deal with any  Person  who has
acquired  a  participation  in any  Loan  from a  Bank.  As to any  matters  not
expressly  provided for by this  Agreement or any other Facility  Document,  the
Agent shall in all cases be fully  protected in acting,  or in  refraining  from
acting,  hereunder in accordance with instructions signed by the Required Banks,
and such  instructions  of the Required Banks and any action taken or failure to

                                       49
<PAGE>

act pursuant  thereto  shall be binding on all of the Banks and any other holder
of all or any portion any Loan.

                  Section 11.3. Defaults.  The Agent shall not be deemed to have
knowledge  of the  occurrence  of a Default or Event of Default  (other than the
non-payment  of  principal of or interest or fees on the Loans to the extent the
same is required  to be paid to the Agent for the  account of the Banks)  unless
the  Agent has  received  notice  from a Bank or the  Borrower  specifying  such
Default or Event of Default.  In the event that the Agent receives such a notice
of the occurrence of a Default or Event of Default,  the Agent shall give prompt
notice thereof to the Banks (and shall give each Bank prompt notice of each such
non-payment).  The Agent shall  (subject to Section  11.8) take such action with
respect  to such  Default or Event of Default  which is  continuing  as shall be
directed by the Required Banks;  provided that, unless and until the Agent shall
have received such directions,  the Agent may take such action,  or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Banks;  and provided further that the
Agent shall not be required to take any such action  which it  determines  to be
contrary to law.

                  Section 11.4.  Rights of Agent as a Bank.  With respect to its
Commitment  and the  Loans  made by it,  the  Agent  in its  capacity  as a Bank
hereunder shall have the same rights and powers  hereunder as any other Bank and
may  exercise  the same as though it were not acting as the Agent,  and the term
"Bank" or "Banks" shall,  unless the context  otherwise  indicates,  include the
Agent in its  capacity  as a Bank.  The Agent or any Bank and  their  respective
Affiliates  may  (without  having to account  therefor to any other Bank) accept
deposits  from,  lend money to (on a secured  or  unsecured  basis as  otherwise
permitted  hereunder),  and  generally  engage in any kind of banking,  trust or
other business  with,  the Borrower or any of the  Guarantors  (and any of their
Affiliates).  In the case of the Agent, it may do so as if it were not acting as
the  Agent,  and the Agent may  accept  fees and  other  consideration  from the
Borrower or any of the Guarantors for services in connection with this Agreement
or otherwise  without having to account for the same to the Banks.  Although the
Agent  or a Bank  or  their  respective  Affiliates  may in the  course  of such
relationships and relationships with other Persons acquire information about the
Borrower or any of the Guarantors or Affiliates and such other Persons,  neither
the Agent nor such Bank shall have any duty to disclose such  information to the
other Banks except as otherwise required pursuant to Facility Documents.

                  Section  11.5.  Indemnification  of Agent.  The Banks agree to
indemnify  the Agent (to the extent not  reimbursed  under Section 12.3 or under
the applicable  provisions of any other Facility Document,  but without limiting
the obligations of the Borrower under Section 12.3 or such provisions),  ratably
in  accordance  with the  respective  Obligations  of the Borrower  then due and
payable to each of them (or, if no Loans are at the time outstanding, ratably in
accordance  with their  respective  Commitments),  for any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted  against the Agent in any way relating to or arising
out of this  Agreement,  any other  Facility  Document  or any  other  documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby  (including,  without  limitation,  the  costs  and  expenses  which the
Borrower  is  obligated  to pay  under  Section  12.3 or  under  the  applicable
provisions of any other  Facility  Document but  excluding,  unless a Default or
Event  of  Default  has  occurred,  normal  administrative  costs  and  expenses
incidental to the performance of its agency duties hereunder) or the enforcement

                                       50
<PAGE>
of any of the terms hereof or thereof or of any such  documents or  instruments;
provided  that no Bank  shall be liable for any of the  foregoing  to the extent
they arise from the gross  negligence  or willful  misconduct of the party to be
indemnified.

                  Section 11.6. Documents.  The Agent will forward to each Bank,
promptly after the Agent's  receipt  thereof,  a copy of each report,  notice or
other document  required by this Agreement or any other Facility  Document to be
delivered to the Agent for such Bank.

                  Section 11.7. Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed  appropriate,
made its own credit  analysis of the Borrower and the Guarantors and decision to
enter into this Agreement and that it will,  independently  and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem  appropriate  at the time,  continue to make its own  analysis and
decisions  in taking or not  taking  action  under this  Agreement  or any other
Facility Document. The Agent shall not be required to keep itself informed as to
the  performance  or observance  by the Borrower of this  Agreement or any other
Facility  Document or any other  document  referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary,
except as provided herein.  Except for notices,  reports and other documents and
information  expressly  required  to be  furnished  to the  Banks  by the  Agent
hereunder,  the Agent shall not have any duty or  responsibility  to provide any
Bank with any credit or other  information  concerning  the  affairs,  financial
condition  or  business  of the  Borrower  or any  Subsidiary  (or any of  their
Affiliates)  which  may  come  into  the  possession  of  the  Agent  or of  its
Affiliates.  The Agent shall not be required to file this  Agreement,  any other
Facility  Document or any document or instrument  referred to herein or therein,
for record or give notice of this Agreement,  any other Facility Document or any
document or instrument referred to herein or therein, to anyone.

                  Section  11.8.  Failure  of Agent to Act.  Except  for  action
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder  unless it shall have received
further  assurances  (which may include cash collateral) of the  indemnification
obligations  of the Banks under Section 11.5 in respect of any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.

                  Section 11.9.  Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving  written  notice  thereof at least 30 Banking  Days
prior  thereto  to the Banks and the  Borrower,  the Agent may be removed at any
time with cause by the  Required  Banks and the Agent may be removed at any time
without  cause by the Required  Banks if with the prior  written  consent of the
Borrower;  provided  that the  Borrower  and the other  Banks  shall be promptly
notified thereof. Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor  Agent.  If no successor  Agent shall have
been so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring  Agent,  then the retiring Agent may, on
behalf of the Banks,  appoint a  successor  Agent,  which  shall be a Bank.  The
Required  Banks  or the  retiring  Agent,  as the case  may be,  shall  upon the
appointment  of a Successor  Agent promptly so notify the Borrower and the other
Banks.  Upon the acceptance of any appointment as Agent hereunder by a successor
Agent,  such successor Agent shall  thereupon  succeed to and

                                       51
<PAGE>

become vested with all the rights, powers, privileges and duties of the retiring
Agent,  and  the  retiring  Agent  shall  be  discharged  from  its  duties  and
obligations  hereunder.  The  retiring  Agent  shall  execute all  documents  or
instruments  of assignment as shall be necessary to vest in the successor  Agent
all  rights  of  the  retiring  Agent  hereunder.  After  any  retiring  Agent's
resignation  or removal  hereunder as Agent,  the  provisions of this Article 11
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 Agent.

                  Section 11.10.  Amendments  Concerning  Agency  Function.  The
Agent shall not be bound by any waiver, amendment, supplement or modification of
this Agreement or any other Facility Document which affects its duties hereunder
or thereunder unless it shall have given its prior consent thereto.

                  Section  11.11.  Liability of Agent.  The Agent shall not have
any liabilities or responsibilities to the Borrower on account of the failure of
any Bank to perform its  obligations  hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations  hereunder or under any other
Facility Document.

                  Section  11.12.  Transfer  of  Agency  Function.  Without  the
consent of the  Borrower or any Bank,  the Agent may at any time or from time to
time  transfer its functions as Agent  hereunder to any of its offices  wherever
located,  provided  that the Agent shall  promptly  notify the  Borrower and the
Banks thereof.

                  Section 11.13.  Non-Receipt of Funds by the Agent.  Unless the
Agent  shall  have  been  notified  by a Bank  or the  Borrower  (either  one as
appropriate  being the "Payor")  prior to the date on which such Bank is to make
payment  hereunder  to the Agent of the proceeds of a Loan or the Borrower is to
make  Payment to the  Agent,  as the case may be (either  such  payment  being a
"Required  Payment"),  which notice shall be effective  upon  receipt,  that the
Payor does not intend to make the Required  Payment to the Agent,  the Agent may
assume that the  Required  Payment has been made and may, in reliance  upon such
assumption (but shall not be required to), make the amount thereof  available to
the  intended  recipient on such date and, if the Payor has not in fact made the
Required  Payment to the Agent,  the recipient of such payment shall, on demand,
repay to the Agent the  amount  made  available  to it  together  with  interest
thereon for the period  commencing on the date such amount was so made available
by the Agent until the date the Agent  recovers  such amount at a rate per annum
equal to the  Federal  Funds  Rate for such day (when the  Agent  recovers  such
amount  from a Bank) or equal to the rate of  interest  applicable  to such Loan
(when the Agent  recovers such amount from the Borrower)  and, if such recipient
shall fail to make such payment promptly, the Agent shall be entitled to recover
such amount, on demand, from the Payor, with interest as aforesaid.

                  Section 11.14. Withholding Taxes. Each Bank represents that it
is  entitled  to receive any  payments  to be made to it  hereunder  without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements  and other  documents  as the Agent may request  from time to time to
evidence such Bank's  exemption  from the  withholding of any tax imposed by any
jurisdiction  or to  enable  the  Agent to comply  with any  applicable  laws or
regulations relating thereto.  Without limiting the effect of the foregoing,  if
any Bank is not  created or  organized  under the laws of the  United  States of
America or any state  thereof,  in the event that the payment of interest by the
Borrower is treated for U.S.  income tax purposes as derived in

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<PAGE>

whole or in part from  sources  from within the U.S.,  such Bank will furnish to
the  Agent,  no less  frequently  than  annually,  Form 4224 or Form 1001 of the
Internal Revenue  Service,  or such other forms,  certifications,  statements or
documents,  duly  executed and completed by such Bank as evidence of such Bank's
exemption from the withholding of U.S. tax with respect thereto. The Agent shall
not be obligated  to make any payments  hereunder to such Bank in respect of any
Loan or such Bank's Commitment until such Bank shall have furnished to the Agent
the requested form, certification, statement or document.

                  Section 11.15.  Several  Obligations and Rights of Banks.  The
failure  of any Bank to make  any  Loan to be made by it on the  date  specified
therefor  shall not relieve any other Bank of its obligation to make its Loan on
such date, but no Bank shall be responsible for the failure of any other Bank to
make a Loan to be made by such  other  Bank.  The  amounts  payable  at any time
hereunder to each Bank shall be a separate and  independent  debt, and each Bank
shall be  entitled  to  protect  and  enforce  its  rights  arising  out of this
Agreement,  and it shall not be necessary  for any other Bank to be joined as an
additional party in any proceeding for such purposes.

                  Section 11.16.  Pro Rata Treatment of Revolving  Credit Loans,
Etc. Except to the extent otherwise provided: (a) each borrowing under Article 2
shall be made from the Revolving  Credit Lenders,  each reduction or termination
of the amount of the  Revolving  Credit  Commitments  under Section 2.8 shall be
applied to the Revolving Credit Commitments of the Revolving Credit Lenders, and
each payment of the fees  referenced in Article 3, shall be made by and held for
the  account  of the  Banks,  pro  rata  in  accordance  with  their  respective
Commitment  Proportions;  (b) each  prepayment  and payment of  principal  of or
interest on Loans of a particular type and a particular Interest Period shall be
made to the Agent for the account of the Bank's  holding  Loans of such type and
Interest  Period pro rata in accordance  with the  respective  unpaid  principal
amounts of such Loans of such Interest Period held by such Banks.

                  Section  11.17.  Sharing of Payments  Among  Banks.  If a Bank
shall  obtain  payment of any  principal  of or  interest on any Loan made by it
through the exercise of any right of setoff, banker's lien, counterclaim,  or by
any other means, it shall promptly purchase from the other Banks a participation
in the  Loans  made by the other  Banks in such  amounts,  and make  such  other
adjustments  from  time to time as  shall be  equitable  to the end that all the
Banks shall share the benefit of such payment (net of any expenses  which may be
incurred by such Bank in  obtaining  or  preserving  such  benefit)  pro rata in
accordance  with the unpaid  principal and interest on the Loans held by each of
them. To such end the Banks shall make appropriate  adjustments among themselves
(by the resale of any such  participation  sold or otherwise) if such payment is
rescinded or must  otherwise be restored.  The Borrower  agrees that any Bank so
purchasing  a  participation  in the Loans made by other Banks may  exercise all
rights of setoff,  banker's lien, counterclaim or similar rights with respect to
such participation.  Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness of
the Borrower.

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<PAGE>
                                   ARTICLE 12.
                                 MISCELLANEOUS.

                  Section  12.1.  Amendments  and  Waivers.  Except as otherwise
expressly  provided in this  Agreement,  any provision of this  Agreement may be
amended or modified only by an instrument in writing  signed by the Borrower and
the Required  Banks,  and any  provision of this  Agreement may be waived by the
Borrower and by an instrument  signed by the Required  Banks (if such  provision
requires performance by the Borrower),  including, but not limited to, any Event
of Default; provided that no amendment,  modification or waiver shall, unless by
an  instrument  signed by all of the Banks:  (a) increase or extend the term, or
extend the time or waive any  requirement for the reduction or termination of or
otherwise  change the  Commitment,  (b) extend the date fixed for the payment of
principal  of or interest  on any Loan,  (c) reduce the amount of any payment of
principal  thereof or the rate at which  interest is payable  thereon or any fee
payable hereunder, (d) alter the terms of this Section 12.1, (e) change the fees
payable to any Bank except as expressly  otherwise  provided herein,  (f) permit
the  Borrower,  or any of the  Guarantors,  to  transfer  or  assign  any of its
obligations hereunder or under the Facility Documents,  (g) release the security
interest  in and Lien on or the right to a security  interest  in and Lien,  any
collateral  securing the Borrower's  obligations  thereunder,  or (h) change the
definition of the term  "Required  Banks". No failure on the part of any Bank to
exercise,  and no delay in exercising,  any right  hereunder  shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any  other  right.  The  remedies  herein  provided  are  cumulative  and not
exclusive of any remedies provided by law.

                  Section  12.2.   Usury.   Anything   herein  to  the  contrary
notwithstanding,  the  Obligations  shall  be  subject  to the  limitation  that
payments of interest  shall not be required to the extent that  receipt  thereof
would be contrary to  provisions of law  applicable to a Bank limiting  rates of
interest  which  may  be  charged  or  collected  by  such  Bank.  If any of the
above-referenced  payments of interest,  together with any other charges or fees
deemed in the nature of interest,  exceed the maximum legal rate, then the Banks
shall have the right to make such  adjustments  as are  necessary  to reduce any
such aggregate  interest rate (based on the foregoing  aggregate  amount) to the
maximum legal rate, and if any Bank ever receives,  collects or applies any such
excess, it shall be deemed a partial repayment of principal and treated as such;
and if principal is paid in full, any remaining  excess shall be refunded to the
Borrower.  The Borrower  waives any right to prior notice of such adjustment and
further agrees that any such  adjustment may be made by the Banks  subsequent to
notification from the Borrower that such aggregate  interest charged exceeds the
maximum legal rate.

                  Section 12.3. Expenses and Indemnification. The Borrower shall
reimburse  each of the Banks on demand for all  reasonable  costs,  expenses and
charges  (including,  without  limitation,  reasonable  fees and charges of such
Banks'  special  counsel,  Farrell  Fritz,  P.C.  up to a cap of  $45,000,  plus
disbursements of such counsel up to a cap of $15,000),  incurred by such Bank in
connection  with  the  preparation,  review,  execution  and  delivery  of  this
Agreement and the Facility  Documents.  Without  limiting the  generality of the
foregoing,  the Borrower  shall pay all recording fees and charges and recording
taxes  incurred by any of the Banks  hereunder  or in  connection  herewith.  In
addition, the Borrower shall reimburse each Bank for all of its reasonable costs
and expenses  incurred  from and after the  occurrence of an Event of Default in
connection with the perfection,  protection,  enforcement or preservation of any
rights under this  Agreement,  the Notes or the other  Facility  Documents.  The
Borrower agrees to indemnify each Bank and their respective directors, officers,
employees,  representatives  and  agents  from,  and hold each of them  harmless
against,  any and all losses,  liabilities,  claims,  damages or expenses of any
kind (including, without limitation, the reasonable fees and expenses of counsel
for such

                                       54

<PAGE>

Person  in  connection  with  any  investigative,   administrative  or  judicial
proceeding,  whether or not such Person  shall be  designated  a party  thereto)
incurred  by any of them  arising  out of or by reason of any  investigation  or
litigation or other  proceedings  (including  any  threatened  investigation  or
litigation or other  proceedings)  relating to or arising out of this Agreement,
any actual or proposed use by the  Borrower of the proceeds of the Loans,  or to
the failure of the Borrower to perform or observe any of the terms, covenants or
conditions on its part to be performed or observed under this Agreement or under
any of the Facility Documents.  The indemnity provided in this Section shall not
extend to any such losses, liabilities,  claims, damages or expenses incurred by
reason of the gross negligence, willful misconduct or bad faith of the Person to
be indemnified.

                  Section  12.4.   Special  Provisions   Regarding   Collateral.
Simultaneously  with the execution and delivery of this Agreement,  the Borrower
and the  Guarantors  have deposited with the Agent for the benefit of the Banks,
the  Assignments  duly  executed and in proper form for recording in each of the
jurisdictions where Eligible Properties are located. In addition,  the Operating
Companies  have  deposited  with the  Agent  for the  benefit  of the  Banks the
Security  Agreements,  together  with  UCC-I  financing  statements,  each  duly
executed and in proper form for recording in each of the  jurisdictions in which
the Operating Companies maintain assets. The Agent agrees to hold such documents
and not to file or record such  documents  unless and until any Event of Default
shall occur  hereunder.  The Agent further  agrees that upon the happening of an
Event of  Default  hereunder,  other  than an Event of  Default  referred  to in
Section 10.1 (e) hereof (in which case no notice shall be  required),  the Agent
shall  give the  Borrower  fourteen  (14)  days'  prior  written  notice  before
recording any of such  documents.  The costs incurred after the occurrence of an
Event of Default in connection  with  recording any such document shall be borne
by the Borrower  whether or not any such  document is recorded by the Agent.  If
any of the Assignments or financing  statements require amendment,  re-execution
or any revision prior to being in a form acceptable to be recorded, the Borrower
shall be responsible  for all costs incurred from and after the occurrence of an
Event of Default in connection with such amendment, re-execution or revision and
the Borrower shall do all things  necessary at the request of the Agent in order
to  permit  such  documents  to be filed  or  recorded  whether  or not any such
documents are filed or recorded. Furthermore, upon the occurrence of an Event of
Default and the  expiration of such fourteen (14) day period (except in the case
of an Event of Default under Section 10.1(e) hereof in which case no such notice
shall be required),  and upon request of the Agent, the Borrower shall cause the
Operating  Companies  to do all things  necessary  or  required  to perfect  the
Agent's  liens upon any  inventory or other  collateral  located  outside of the
United States. To the extent that the Agent or any Bank incurs any of such costs
in  connection  with the  foregoing  directly,  such costs be  reimbursed by the
Borrower on demand. The failure of the Agent to file any of the foregoing or the
improper  filing  thereof shall not relieve the Borrower or any Guarantor of any
Obligations.

                  Section 12.5. Survival.  The obligations of the Borrower under
Section  2.3(b),  Article 4 and Section 12.3 shall  survive the repayment of the
Loans  and the  Termination  Date  for a  period  corresponding  to the  maximum
applicable  statute of  limitations in effect in the State of New York from time
to time.

                  Section 12.6. Assignments; Participation. This Agreement shall
be binding upon, and shall inure to the benefit of Borrower, the Banks and their
respective  successors  and assigns,  except that the Borrower may not assign or
transfer its rights or obligations hereunder.  Each Bank may sell participations

                                       55

<PAGE>
in or,  with the prior  written  consent  of the  Borrower,  which  shall not be
unreasonably  withheld and which shall not be required during the occurrence and
continuance  of an  Event  of  Default,  assign  all or any  part of any Loan to
another bank or other entity,  in which event (a) in the case of an  assignment,
upon notice thereof by the Bank to the Borrower, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein),  the same rights,
benefits and obligations (including, without limitation, a ratable assumption of
the assigning Bank's Commitment and Commitment Proportion hereunder) as it would
have if it were a Bank hereunder;  and (b) in the case of a  participation,  the
participant  shall have no rights under the Facility  Documents  and all amounts
payable by the Borrower  under  Articles 2 and 3 shall be  determined as if such
Bank had not sold such  participation.  Such Bank may  furnish  any  information
concerning  the  Borrower  in the  possession  of such Bank from time to time to
assignees and participants  (including  prospective assignees and participants);
provided  that such Bank shall  require  any such  prospective  assignee or such
participant  (prospective  or  otherwise)  to agree in writing to  maintain  the
confidentiality  of such  information.  There shall be no limit on the number of
assignments  or  participants  that  may be  granted  by any  Bank  except  that
assignments shall be in minimum amounts of $5,000,000 and in integral  multiples
of $1,000,000 in excess thereof. Notwithstanding any such assignment, any rights
and remedies  available to the Borrower for any breaches by an assigning Bank of
its obligations  hereunder while a Bank shall be preserved after such assignment
and such Bank shall not be relieved of any liability to the Borrower due to such
breach.  Each Bank may at any time pledge all or any portion of its rights under
the Facility Documents including any portion of the Notes to any Federal Reserve
Bank  organized  under  Section 4 of the Federal  Reserve Act. No such pledge or
enforcement thereof shall release any Bank from its obligations under any of the
Facility Documents.

                  Section  12.7.  Notices.  Unless  the  party  to  be  notified
otherwise  notifies the other party in writing as provided in this Section,  and
except as otherwise  provided in this  Agreement,  notices shall be given to the
Borrower by certified or  registered  mail or by recognized  overnight  delivery
services to such party at its address on the signature  page of this  Agreement.
In addition,  notices of  borrowing  pursuant to Section 2.4 may be delivered by
telecopier,  provided that such telecopied notices shall be confirmed by sending
the original  signed copy of such notice to the Banks by certified or registered
mail or by recognized  overnight delivery services.  Initially,  notice shall be
delivered to each party hereto at the addresses set forth on the signature  page
hereof.  Notices  shall be  effective:  (a) if given by  registered or certified
mail,  72 hours after  deposit in the mails with postage  prepaid,  addressed as
aforesaid;  or (b) if given by recognized  overnight  delivery  service,  on the
Banking Day following deposit with such service  addressed as aforesaid;  or (c)
if given by telecopy, when the telecopy is transmitted to the telecopy number as
aforesaid and confirmed with a confirmation receipt.

                  Section 12.8. Setoff. The Borrower agrees that, in addition to
(and without limitation of) any right of setoff, banker's lien or counterclaim a
Bank may otherwise have, each Bank shall be entitled,  at its option without any
prior notice to Borrower (any such notice being expressly waived by the Borrower
to the extent  permitted by  applicable  law),  to offset  balances  (general or
special, time or demand, provisional or final) held by it for the account of the
Borrower at any offices of such Bank or any of its Affiliates,  in Dollars or in
any other  currency,  against  any amount  payable by the  Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due  (regardless
of whether such balances are then due to the  Borrower),  in which case it shall
promptly notify the Borrower thereof;  provided that such Bank's failure to give

                                       56
<PAGE>
such notice shall not affect the validity thereof. ANY AND ALL RIGHTS TO REQUIRE
A BANK TO EXERCISE ITS RIGHTS OR REMEDIES  WITH RESPECT TO ANY OTHER  COLLATERAL
THAT SECURES THE OBLIGATIONS OF THE BORROWER HEREUNDER,  PRIOR TO EXERCISING ITS
RIGHTS OF SETOFF ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY THE
BORROWER.  Payments by the  Borrower  thereof  hereunder  shall be made  without
setoff or counterclaim.

                  Section 12.9.  Jurisdiction; Immunities.

                  (a)  THE   BORROWER   HEREBY   IRREVOCABLY   SUBMITS   TO  THE
JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW
YORK, NASSAU OR SUFFOLK COUNTIES OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS  AGREEMENT OR THE NOTES,  AND THE BORROWER  HEREBY  IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY BE HEARD AND
DETERMINED  IN SUCH NEW YORK STATE OR FEDERAL  COURT.  THE BORROWER  IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR  PROCEEDING
BY THE MAILING (BY CERTIFIED OR  REGISTERED  MAIL) COPIES OF SUCH PROCESS TO THE
BORROWER AT THE ADDRESS  SPECIFIED IN SECTION 12.7.  THE BORROWER  AGREES THAT A
FINAL  JUDGMENT  (INCLUDING  ANY  APPLICABLE  APPEALS)  IN ANY  SUCH  ACTION  OR
PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER  JURISDICTIONS  BY
SUIT ON THE  JUDGMENT  OR IN ANY OTHER  MANNER  PROVIDED  BY LAW.  THE  BORROWER
FURTHER  WAIVES ANY  OBJECTION  TO VENUE IN SUCH STATE AND ANY  OBJECTION  TO AN
ACTION OR  PROCEEDING  IN SUCH STATE ON THE BASIS OF FORUM NON  CONVENIENS.  THE
BORROWER  FURTHER AGREES THAT ANY ACTION OR PROCEEDING  BROUGHT AGAINST ANY BANK
SHALL BE  BROUGHT  ON ONLY IN NEW YORK  STATE OR  UNITED  STATES  FEDERAL  COURT
SITTING IN NEW YORK COUNTY.

                  (b) EACH OF THE BANKS AND THE  BORROWER  MUTUALLY,  KNOWINGLY,
VOLUNTARILY  WAIVE ANY RIGHT THEY MAY HAVE TO JURY  TRIAL  WITH  RESPECT TO THIS
AGREEMENT AND THE OTHER FACILITY  DOCUMENTS.  THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT  FOR THE  BANKS TO  ENTER  INTO  THIS  AGREEMENT  AND MAKE THE  LOANS
HEREUNDER.

                  (c) NOTHING IN THIS SECTION 12.9 SHALL AFFECT THE RIGHT OF ANY
BANK TO SERVE LEGAL  PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR AFFECT THE
RIGHT OF ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER, OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.

                  (d) TO THE  EXTENT  THAT THE  BORROWER  HAS OR  HEREAFTER  MAY
ACQUIRE ANY IMMUNITY  FROM  JURISDICTION  OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE NOTES.

                                       57
<PAGE>

                  Section  12.10.  Table of  Contents;  Headings.  Any  table of
contents and the headings and captions  hereunder are for  convenience  only and
shall not affect the interpretation or construction of this Agreement.

                  Section 12.11. Severability.  The provisions of this Agreement
are intended to be severable.  If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any  jurisdiction,
such provision shall, as to such  jurisdiction,  be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability  thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

                  Section 12.12. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument,  and any party hereto may execute this Agreement by signing
any such counterpart.

                  Section 12.13.  Integration.  The Facility Documents set forth
the entire  agreement  among the parties  hereto  relating  to the  transactions
contemplated  thereby  and  supersede  any prior oral or written  statements  or
agreements with respect to such transactions.

                  Section 12.14. Governing Law. This Agreement shall be governed
by, and  interpreted  and construed in accordance  with, the law of the State of
New York.

                  Section  12.15.  Relief from  Bankruptcy  Stay.  The  Borrower
agrees  that,  in the event  that such  Borrower,  any  Guarantor  or any of the
persons or parties  constituting the Borrower or a Guarantor shall (i) file with
any bankruptcy court of competent jurisdiction or be the subject of any petition
under Title 11 of the U.S.  Code, as amended  ("Bankruptcy  Code"),  (ii) be the
subject of any order for relief issued under the Bankruptcy  Code, (iii) file or
be  the  subject  of  any  petition  seeking  any  reorganization,  arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present  or  future  federal  or  state  act  or  law  relating  to  bankruptcy,
insolvency,  or other  relief for  debtors,  (iv) have sought or consented to or
acquiesced  in  the  appointment  of  any  trustee,  receiver,  conservator,  or
liquidator,  or (v) be the  subject of any  judgment,  or decree  entered by any
court  of  competent  jurisdiction  approving  a  petition  filed  against  such
readjustment,  liquidation,  dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or relief
for debtors,  the Banks shall thereupon be entitled and the Borrower irrevocably
consents to immediate and  unconditional  relief from  automatic stay by Section
362 of the Bankruptcy Code, or otherwise  available to the Banks as provided for
herein, in the Notes, other Facility Documents  delivered in connection herewith
and as otherwise provided by law, and the Borrower hereby irrevocably waives any
right to object to such  relief  and will not  contest  any  motion by the Banks
seeking  relief from the automatic stay and the Borrower will cooperate with the
Banks,  in any manner  requested by the Banks, in their efforts to obtain relief
from any such stay or other prohibition.

                                       58
<PAGE>
                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their respective  officers thereunto duly authorized
as of the date first above written.

                                            UNITED CAPITAL CORP.

                                            By: /s/  Anthony J. Miceli
                                                --------------------------------
                                            Name: Anthony J. Miceli
                                            Title:Vice President

                                      Address for Notices:

                                            United Capital Corp.
                                            United Capital Building
                                            9 Park Place
                                            Great  Neck,  N.Y. 11021
                                            Telephone No.: (516) 466-6464
                                            Telefax No.:   (516) 829-4301

BANKS:

                                            FLEET BANK, NATIONAL ASSOCIATION

                                            By: /s/ David T. Sunderwirth
                                                --------------------------------
                                            Name:  David T. Sunderwirth
                                            Title: Vice President

                                      Lending Office and Address for Notices:

                                            Fleet Bank, National Association
                                            1185 Avenue of the Americas,
                                            2nd Floor
                                            New York, New York 10036
                                            Attention: David T. Sunderwirth,
                                                       Vice President
                                            Telephone No.: (212) 819-5766
                                            Telefax No.: (212) 819-4120

                                       59

<PAGE>

                                            MANUFACTURERS & TRADERS TRUST
                                            COMPANY

                                            By: /s/ Gino Martocci
                                                --------------------------------
                                            Name:  Gino Martocci
                                            Title: Vice President

                                      Lending Office and Address for Notices:

                                            350 Park Avenue
                                            New York, New York 10022
                                            Attention: Gino Martocci
                                            Telephone No.: (212) 350-2472
                                            Telefax No.:  (212) 350-2112

                                            BANK LEUMI USA

                                            By: /s/ Fred Wilheim
                                                --------------------------------
                                            Name: Fred Wilheim
                                            Title:Vice President

                                      Lending Office and Address for Notices:

                                            562 Fifth Avenue
                                            New York, New York 10036
                                            Attention: Fred Wilheim
                                            Telephone No.: (212) 626-1240
                                            Telefax No.:  (212) 626-1239

                                       60

<PAGE>
                                LIST OF EXHIBITS

EXHIBIT A            FORM OF REVOLVING CREDIT NOTE
EXHIBIT A-1          FORM OF TERM NOTE
EXHIBIT B            FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C            FORM OF ENVIRONMENTAL INDEMNITY
EXHIBIT D            FORM OF GUARANTY
EXHIBIT E            FORM OF SECURITY AGREEMENT
EXHIBIT F            FORM OF OPINION

                                       61
<PAGE>
                                    EXHIBIT A

                                     FORM OF
                              REVOLVING CREDIT NOTE

$---------                                                     December 31, 1999
                                                         Nassau County, New York

                  UNITED CAPITAL CORP., a corporation  organized  under the laws
of the State of Delaware (the "Borrower") for value received, hereby promises to
pay to the order of ___________________ (the "Bank") or its permitted successors
or assigns, at the office of Fleet Bank, National Association, at 1185 Avenue of
the Americas,  2nd Floor, New York, New York 10036, or its permitted  successors
or  assigns  (the  "Agent"),  for  the  account  of the  Bank on or  before  the
Termination Date the principal sum of  ______________________  ($__________) or,
if less, the amount loaned as Loans by the Bank to the Borrower  pursuant to the
Credit  Agreement  referred to below,  in lawful  money of the United  States of
America and in  immediately  available  funds,  on the date(s) and in the manner
provided in said Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
to the  Agent  for the  account  of the  Bank,  in like  money,  at the rates of
interest as provided in the Credit Agreement described below, on the date(s) and
in the manner provided in said Credit Agreement.

                  The holder of this Note shall record the date, type and amount
of each Loan  made by the  Bank,  and the date and  amount  of each  payment  or
prepayment  of principal of or interest on any Loan,  and the  principal  amount
subject  thereto and the interest  rate with respect  thereto on such  computer,
magnetic disk, tape or other such  electronic data storage and retrieval  system
deemed  adequate  for  such  purpose  by the  Bank,  in its  sole  and  absolute
discretion,  which record shall,  constitute,  absent manifest error, conclusive
evidence of the accuracy of the  information  so recorded,  but no failure so to
record or any error in so recording  shall affect the obligation of the Borrower
to repay any such  Loans,  with  interest  thereon,  as  provided  in the Credit
Agreement or herein.

                  This is one of the Notes  referred to in that  certain  Credit
Agreement  (as  amended  from time to time the "Credit  Agreement")  dated as of
December ___, 1999 among the Borrower, the Agent, the Bank and _________________
and  evidences  the Loans  made by the Bank  thereunder.  All terms not  defined
herein shall have the meanings given to them in the Credit Agreement.

                  The Credit  Agreement  provides  for the  acceleration  of the
maturity of principal  upon the  occurrence of certain Events of Default and for
prepayments on the terms and conditions  specified therein.  The Borrower waives
presentment,  notice of dishonor, protest and any other notice or formality with
respect to this Note.

                                       62

<PAGE>

                  The terms of this Note may not be changed orally,  but only by
an instrument duly executed by the Borrower and the Banks.

                  This Note shall be governed by, and  interpreted and construed
in accordance with, the laws of the State of New York.

                                        UNITED CAPITAL CORP.

                                        By:________________________
                                        Name:
                                        Title:

                                       63
<PAGE>

                                   EXHIBIT A-1

                                     FORM OF
                                    TERM NOTE

$1,925,000                                                     December 31, 1999
                                                              Melville, New York

                  UNITED CAPITAL CORP., a corporation  organized  under the laws
of the State of Delaware,  having a principal place of business at 9 Park Place,
Great Neck, New York 11021 (the "Borrower"), for value received, hereby promises
to pay to the order of Fleet  Bank,  National  Association  (the  "Bank") at the
office of the Bank located at 1185 Avenue of the Americas,  2nd Floor, New York,
New York 10036,  the  principal  sum of One  Million  Nine  Hundred  Twenty Five
Thousand  Dollars  ($1,925,000)  in  eleven  (11)  equal  consecutive  quarterly
installments  of $175,000 in lawful money of the United States of America and in
immediately  available  funds,  in the manner  provided in the Credit  Agreement
referred to below  commencing on the last day of March,  2000, and continuing on
the last day of each June,  September,  December and March  thereafter  with the
final installment thereof being due on the Term Loan Maturity Date.

                  The  Borrower  shall  pay  interest  on the  unpaid  principal
balance of this Term Note from time to time outstanding,  at said office, at the
rates of interest,  at the times and for the periods set forth in the  Agreement
(as defined below).

                  All payments including  prepayments of this Term Note shall be
made in lawful money of the United  States of America in  immediately  available
funds.  Except as otherwise provided in the Agreement,  if a payment becomes due
and payable on a day other than a Banking  Day, the  maturity  thereof  shall be
extended to the next  succeeding  Banking  Day,  and  interest  shall be payable
thereon at the rate herein specified during such extension.

                  This Note is one of the Term Notes referred to in that certain
Credit  Agreement dated as of December 31, 1999 among the Borrower and the Banks
party thereto (the  "Agreement"),  as such Agreement may be amended from time to
time, and is subject to prepayment  and its maturity is subject to  acceleration
upon the terms contained in said Agreement.  All capitalized  terms used in this
Term Note and not  defined  herein  shall  have the  meanings  given them in the
Agreement.

                  If any action or  proceeding be commenced to collect this Term
Note or enforce any of its provisions, the Borrower agrees to pay all reasonable
costs and expenses of such action or proceeding  and  reasonable  attorneys fees
and expenses and further  expressly  waive any and every right to interpose  any
counterclaim  in any such action or proceeding.  The Borrower  hereby submits to
the  jurisdiction  of the Supreme Court of the State of New York for purposes of
any action on or related to this Term Note, the liabilities,  or the enforcement
of either or all of the same. The Borrower hereby expressly waives any and every
right to a trial by jury in any  action on or  related  to this Term  Note,  the
liabilities  or the  enforcement  of  either  or all of the  same.  The Bank may
transfer  this Term note and may deliver the security or any part thereof to the
transferee or transferees, who shall thereupon become vested with all the powers
and  rights

                                       64
<PAGE>

above given to the Bank in respect  thereto,  and the Bank shall  thereafter  be
forever  relieved and fully discharged from any liability or  responsibility  in
the  matter.  The  failure of any holder of this Term note to insist upon strict
performance of each and/or all of the terms and  conditions  hereof shall not be
construed as or deemed to be a waiver of any such term or condition.

                  The Borrower and all  endorsers  and  guarantors  hereof waive
presentment and demand for payment,  notice of non-payment,  protest, and notice
of protest.

                  The  terms of this Term Note may not be  changed  orally,  but
only by an instrument duly executed by the Borrower and the Bank.

                  This Term  Note  shall be  construed  in  accordance  with and
governed by the laws of the State of New York.

                                             UNITED CAPITAL CORP.

                                             By:
                                                -----------------------
                                                Name:
                                                Title:

                                       65
<PAGE>
                                    EXHIBIT B

                                     FORM OF
                           BORROWING BASE CERTIFICATE

                       UNITED CAPITAL CORP.

                             DATE:__________________
                                 (000's Omitted)

              (Capitalized term used herein and not defined herein
                 shall have the meanings ascribed to such terms
                       in the Credit Agreement dated as of
 December __, 1999 among United Capital Corp., Fleet Bank, National Association
            Manufacturers & Traders Trust Company and Bank Leumi USA)

1.     Real Estate Borrowing Base

       (a)    (i)    Aggregate annualized and
                     normalized year-to-date
                     Net  Operating  Income  of
                     all unencumbered  Eligible
                     Properties excluding Hotel
                     properties  (see  attached
                     schedule  for  property by
                     property breakdown)                      $_________________

              (ii)   Item 1(a)(i), capitalized at 10.5%       $_________________

              (iii)  60% of Item l(a)(ii)                     $_________________

       (b)    (i)    Aggregate  annualized and
                     normalized year-to-date Net
                     Operating Income of all
                     unencumbered Eligible Properties
                     that are hotel  properties (see
                     attached schedule of property by
                     property breakdown).
                                                              $_________________

              (ii)   FF&E Reserve                             $_________________

              (iii)  Item 1(b)(i) minus Item (1)(b)(ii)       $_________________

              (iv)   Item 1(b)(iii), capitalized at 10.5%     $_________________

              (v)    60% of Item 1(b)(iv),                    $_________________

              (vi)   The lesser of (i) $6,000,000 or (ii)
                     10% of Item 3 below calculated as
                     if Item  1(d) were the sum of  Items
                     1(a)(iii)  plus Item 1(b)(v) plus Item
                     1(c),  plus Item 2(d), or (iii) Item
                     1(b)(v)                                  $_________________

                                       66
<PAGE>

       (c)    (i)    Aggregate annualized and normalized
                     year-to-date Net Operating Income of
                     encumbered Eligible Properties           $_________________

              (ii)   Item 1(c)(i), capitalizing at 12.0%      $_________________

              (iii)  50% of Item 1(c)                         $_________________

              (iv)   The lesser of Item 1(c)(iii)
                     or $10,000,000.                          $_________________

       (d)    Item (1)(a)(iii) plus Item 1(b)(vi) plus
              Item 1(c)(iv)                                   $_________________

2.     Non-Real Estate Borrowing Base

       (a)    (i)    Eligible Receivables                     $_________________

              (ii)   75% of Item 2(a)(i)                      $_________________

       (b)    (i)    Gross amount of Eligible Inventory       $_________________

              (ii)   50% of item 2(b)(i)                      $_________________

       (c)    The sum of items 2(a)(ii) and 2(b)(ii)          $_________________

       (d)    The lesser of $10,000,000 or (c)                $_________________

3.     Borrowing Base

       The sum of items 1(d) and 2(d)                         $
                                                              ==================

The undersigned  hereby represents and warrants that the above statement and the
information  set forth herein is true and  correct,  and complete as of the date
specified  above.  The  undersigned  further  represents  and warrants  that the
Borrower is in complete  compliance  with all terms and  conditions set forth in
the  Agreement  and  the  other  Facility  Documents.  The  undersigned  further
understands  that your loans to the Borrower will be based upon your reliance on
the information contained herein.

                                           UNITED CAPITAL CORP.

                                           By:________________________
                                           Name:
                                           Title:
                                       67
<PAGE>
                                    EXHIBIT C

                                     FORM OF
                        ENVIRONMENTAL INDEMNITY AGREEMENT

                  This  Agreement  made  this  31st day of  December,  1999 from
UNITED CAPITAL CORP., a Delaware  corporation having an address at 9 Park Place,
Great  Neck,  New  York  11021  (the  "Indemnitor"),  to  FLEET  BANK,  NATIONAL
ASSOCIATION, a national banking association having an office at 300 Broad Hollow
Road, Melville, New York 11747 ("Fleet"),  MANUFACTURERS & TRADERS TRUST COMPANY
("M&T") and BANK LEUMI USA ("Bank Leumi";  collectively  with M&T and Fleet, the
"Banks").

                              Preliminary Statement

                  WHEREAS,  the  Indemnitor  or one of its  Subsidiaries  is the
owner of each of the real  properties  set forth in  Schedule A attached  hereto
(said real properties  being herein  collectively  called the "Land";  the Land,
together  with all  improvements  now or  hereafter  located on the Land,  being
herein collectively called the "Property");

                  WHEREAS, on the date hereof, pursuant to the terms of a Credit
Agreement,  dated the date  hereof  (the  "Credit  Agreement"),  the Banks  have
extended  credit to the  Indemnitor in the aggregate  principal  amount of up to
$60,000,000  (the "Loan") secured by, among other things,  assignments of leases
and rents with respect to each of the Properties (the "Assignments");

                  WHEREAS,  as a condition to extending the Loan,  Banks require
the Indemnitor to provide  certain  indemnities  concerning  existing and future
asbestos,  polychlorinated  biphenyls  and  petroleum  products  and  any  other
hazardous  or  toxic  materials,   wastes  and  substances  which  are  defined,
determined or identified as such in any Laws (as hereinafter  defined) (any such
asbestos,  polychlorinated  biphenyls and petroleum  products and any such other
materials,  wastes and substances being herein  collectively  called  "Hazardous
Materials");  as used in this Agreement, the term "Laws" means federal, state or
local laws, rules or regulations  (whether now existing or hereafter  enacted or
promulgated)  and  any  judicial  or  administrative   interpretation   thereof,
including any judicial or administrative orders or judgments;

                  WHEREAS,  to  induce  the  Banks  to  enter  into  the  Credit
Agreement the above described  transaction  and to lend the indicated  amount to
Indemnitor, Indemnitor has agreed to enter into this Agreement;

                  NOW THEREFORE, in consideration of the premises and other good
and valuable  consideration,  the receipt,  and  sufficiency of which are hereby
acknowledged,  Indemnitor hereby represents, warrants and covenants to the Banks
as follows:

                                       68

<PAGE>
                  1. Indemnitor covenants and agrees, to indemnify,  protect and
save the Banks and each of their officers, directors, shareholders, employees or
agents (the "Indemnified Parties") harmless against and from any and all claims,
litigation,  demands,  judgments,  suits, proceedings,  costs,  disbursements or
expenses  (including,  without limitation,  attorneys',  and experts' reasonable
fees and  disbursements) of any kind or of any nature whatsoever  (collectively,
the "Indemnified Matters") which may at any time be imposed upon, incurred by or
asserted or awarded against the Indemnified Parties arising from or out of:

                     (A) any Hazardous  Materials on, in, under or affecting the
                  Property  which  affect all or any portion of the  Property or
                  any surrounding areas, or

                     (B) the  enforcement  of this Agreement or the assertion by
                  the  Indemnitor  of any defense to its  obligations  hereunder
                  (except  the  successful  defense  of actual  performance  not
                  subject to further appeal),

whether any of such matters  arise before or after the Banks  exercising  any of
their  rights or  remedies  under the  Assignments.  Indemnified  Matters  shall
include,  without limitation,  all of the following: (i) the costs of removal of
any and all Hazardous  Materials  from all or any portion of the Property or any
surrounding  areas (except that the indemnity  provided for under this Agreement
shall not cover the costs of such removal from  surrounding  areas unless either
(a) removal is  required  by Laws or (b) any  present or future use,  operation,
development, construction, alteration or reconstruction of all or any portion of
the  Property  is or would be  conditioned  in any way  upon,  or is or would be
limited in any way until the  completion  of, such  removal in  accordance  with
Laws),  (ii) additional  costs required by all applicable Laws to take necessary
precautions to protect against the release of Hazardous  Materials on, in, under
or  affecting  the Property  into the air,  any body of water,  any other public
domain  or any  surrounding  areas  and  (iii)  costs  incurred  to  comply,  in
connection  with all or any portion of the  Property or any  surrounding  areas,
with all applicable  Laws with respect to Hazardous  Materials (all removal work
referred  to in clause  (i)  above,  all work and  actions  to take  precautions
against release  referred to in clause (ii) above and all work and other actions
performed  in order to comply with Laws  referred to in clause (iii) above being
herein  collectively  called  "Corrective  Work").  The Banks' rights under this
Agreement  shall be in addition to all rights of the  Indemnified  Parties under
the Credit Agreement, the Assignments, the notes secured by the Assignments (the
"Notes") and any guaranty or guaranties  (whether of payment and/or performance)
given to the Banks in connection  with the Loan and under any other documents or
instruments  evidencing or securing the Loan (the Credit  Agreement,  the Notes,
any such  guaranty or guaranties  and such other  documents or  instruments,  as
amended or modified from time to time, being herein called the "Loan Documents")
and  payments  by the  Indemnitor  under  this  Agreement  shall not  reduce the
Indemnitor's obligations and liabilities under any of the Loan Documents.

                  2. The liability of the Indemnitor  under this Agreement shall
in no way be  limited  or  impaired  by any  amendment  or  modification  of the
provisions  of the  Loan  Documents  to or with  the  Banks.  In  addition,  the
liability  of  Indemnitor  under  this  Agreement  shall in no way be limited or
impaired by (i) any  extensions of time for  performance  required by any of the
Loan  Documents,  (ii) any sale,  assignment or  foreclosure of the Notes or any
sale  or  transfer  of all or  part  of the  Property,  (iii)  the  accuracy  or
inaccuracy of the  representations  and warranties made by the Indemnitor  under
any of the Loan  Documents,  (iv) the  release  of the  Indemnitor  or any other
person from performance or observance of any of the agreements, covenants, terms
or  conditions

                                       69
<PAGE>

contained in any of the Loan Documents by operation of law, the Banks' voluntary
act, or otherwise,  (v) the release or  substitution  in whole or in part of any
security for the Notes,  (vii) the Banks'  failure to record the  Assignments or
file any UCC financing  statement (or the Banks' improper recording or filing or
any thereof) or to  otherwise  perfect,  protect,  secure or insure any security
interest or lien given as security for the Notes or (viii) the  repayment of all
Obligations to the Banks; and, in any such case,  whether with or without notice
to the Indemnitor and with or without consideration.

                  3. No delay on the Banks' part in exercising any right,  power
or privilege  under any of the Loan  Documents  shall operate as a waiver of any
such privilege, power or right.

                  4. Except as herein provided,  this Agreement shall be binding
upon and  inure  to the  benefit  of the  Indemnitor  and the  Banks  and  their
respective heirs, personal representatives,  successors and assigns,  including,
as to the Banks,  any holder of the Notes or any  affiliate  of the Banks  which
acquired all or part of the Property by any sale, assignment or foreclosure,  by
deed or other  assignment in lieu of  foreclosure,  or  otherwise.  The benefits
granted the Indemnified Parties are not assignable except as indicated above. No
third party beneficiary  rights are intended to be created hereby (except to any
Affiliates or participants  of the Banks).  Notwithstanding  the foregoing,  the
Indemnitor, without the prior written consent of the Banks in each instance, may
not assign,  transfer or set over to  another,  in whole or in part,  all or any
part of its benefits, rights, duties and obligations hereunder.

                  5. All  notices  hereunder  shall be in  writing  and shall be
deemed to have been  sufficiently  given or served for all purposes when sent by
registered or certified mail, if to the Indemnitor, at its address stated on the
cover page  hereof,  and if to the Banks,  to________________,  or at such other
address of which a party  shall have  notified  the party  giving such notice in
writing in accordance  with the foregoing  requirements.  Notice shall be deemed
given 3 business days after mailing.

                  6. No  provision  of this  Agreement  may be changed,  waived,
discharged or terminated orally, by telephone or by any other means except by an
instrument  in  writing  signed by the party  against  whom  enforcement  of the
change, waiver, discharge or termination is sought.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES  HEREUNDER SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO NEW YORK'S PRINCIPLES OF
CONFLICTS OF LAW).  INDEMNITORS HEREBY IRREVOCABLY  SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION  OF ANY NEW YORK STATE OR FEDERAL  COURT SITTING IN THE CITY OF NEW
YORK (OR ANY  COUNTY IN NEW YORK STATE  WHERE ANY  PORTION  OF THE  PROPERTY  IS
LOCATED) OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

                                       70
<PAGE>
                  IN WITNESS  WHEREOF,  the Indemnitor has caused this Agreement
to be executed as of the date first written above.

                                           UNITED CAPITAL CORP.

                                           By:_____________________________
                                           Name:  Anthony  J. Miceli
                                           Title: Vice President

                                       71
<PAGE>
STATE OF NEW YORK )
                  ) SS.:
COUNTY OF NASSAU  )

                  On the ____ day of __________, 1999, before me personally came
Anthony J. Miceli,  to me known,  who, being duly sworn, did depose and say that
he  resides  at  __________________;  that he is the Vice  President  of  United
Capital Corp., the corporation  described in and which he executed the foregoing
instrument;  that he signed his name  thereto by order of the board of directors
of such corporation.

                                             ---------------------------
                                                  Notary Public

                                       72
<PAGE>
                                    EXHIBIT D

                                     FORM OF
                                    GUARANTEE

                  WHEREAS,  FLEET BANK,  NATIONAL  ASSOCIATION,  MANUFACTURERS &
TRADERS TRUST COMPANY and BANK LEUMI USA (the"Banks") have entered into a Credit
Agreement (the "Credit Agreement"), dated December 31, 1999, with UNITED CAPITAL
CORP. (the "Debtor"); and

                  WHEREAS,  under the terms of the Credit  Agreement,  the Banks
have agreed to extend credit to the Debtor, which indebtedness will be evidenced
by certain  promissory  notes of the Debtor (the "Notes"),  dated as of December
31, 1999, in the aggregate principal amount of $61,925,000;

                  WHEREAS,  each of the  undersigned  (jointly and severally the
"Guarantors")  is a direct or indirect  subsidiary of the Debtor and has derived
or will derive direct benefit from the extension of credit to the Debtor; and

                  WHEREAS,  the Banks will not extend such credit unless,  among
other conditions,  the undersigned  Guarantors shall have executed and delivered
this Guarantee;

                  NOW,  THEREFORE,  in consideration of the Banks extending such
credit to the Debtor and other benefits accruing to Guarantors,  the receipt and
sufficiency  of  which  are  hereby  acknowledged,  Guarantors  hereby  make the
following  representations  and warranties to the Banks and hereby  covenant and
agree with the Banks as follows:

                  1.   Guarantors,   jointly  and  severally,   irrevocably  and
unconditionally  guarantee to the Banks (i) timely  payment in full by Debtor to
Banks of all payments due pursuant to the Notes (it being  understood  that this
is a guarantee of payment and not of collection), and (ii) timely payment and/or
performance,  as applicable, of all other payment and performance obligations of
Debtor pursuant to the Notes,  the Credit  Agreement and all other documents and
instruments  executed in  connection  therewith,  or pursuant to any  amendment,
modification  or supplement to any of the foregoing (all of the foregoing  under
clauses  (i)  and  (ii)  being  collectively  referred  to  as  the  "Guaranteed
Obligations").  If Debtor shall default in payment of any amount due pursuant to
the Notes beyond any  applicable  grace period or otherwise  default  beyond any
applicable  grace  period  in the  performance  of the  Guaranteed  Obligations,
Guarantors, jointly and severally,  irrevocably and unconditionally agree to pay
to the Banks upon demand the amount in default or to cure the default if it is a
non-payment default (it being understood, however, that a non-payment may result
in the  acceleration of all indebtedness and a demand for payment in full by the
Guarantors, or any of them, under the Guarantee).  Guarantors understand,  agree
and confirm that the Banks may enforce  this  Guarantee up to the full amount of
the Guaranteed  Obligations  owing against the Guarantors or any of them without
proceeding  against  the  Debtor,   against  any  security  for  the  Guaranteed
Obligations or against any other guarantor  under any other  guarantee  covering
the Guaranteed Obligations.

                                       73
<PAGE>
                  2.  The   Guarantors   hereby   acknowledge   the   Guaranteed
Obligations and hereby  expressly  waive: (i) presentment and demand for payment
of the  principal  of or  interest  thereon  or any  other  sums  of any  nature
whatsoever with respect thereto, (ii) notice of acceptance of this Guarantee, or
of the extension of credit to the Debtor,  (iii) notice of any default hereunder
or under any  agreements  between the Banks and the Debtor  with  respect to the
Guaranteed Obligations, and of all indulgences with respect thereto, (iv) demand
on the Debtor for observance or  performance  of, or enforcement of any terms or
provisions  of any  agreements  between the Banks and the Debtor with respect to
the Guaranteed  Obligations,  (v) to the maximum extent  permitted by applicable
law and except as  otherwise  provided  herein,  the  benefit of all laws now or
hereafter  in effect in any way  limiting or  restricting  the  liability of the
Guarantors  under  this  Guarantee,  including  any  and  all  right  to stay of
execution  and  exemption of property in any action to enforce the  liability of
the  Guarantors  hereunder  and (vi) any other event or  circumstance  which may
constitute a release of or defense to the obligors  under any of the  Guaranteed
Obligations or any Guarantor under this  Guarantee.  In the event this Guarantee
shall be enforced by suit or otherwise,  the Guarantors  shall pay the Banks, on
demand, for all reasonable fees and expenses incurred by the Banks in connection
therewith,  including,  without limitation,  the reasonable fees and expenses of
the Banks' counsel.

                  3. The Banks in their sole and absolute discretion, may at any
time and from time to time without the consent of, or notice to, Guarantors,  or
any of them, without incurring  responsibility to Guarantors,  without impairing
or releasing the obligations of Guarantors hereunder,  upon or without any terms
or  conditions  and in  whole  or in part  (but  in all  events  subject  to the
applicable provisions of the Credit Agreement);

                  (a) by agreement with the Debtor,  change the manner, place or
terms of payment of,  and/or  change or extend the time of payment of,  increase
the amount of, or renew or alter any of the Guaranteed Obligations, any security
therefor,  or any liability  incurred directly or indirectly in respect thereof,
and the Guarantee  herein made shall apply to the  Guaranteed  Obligations as so
changed, extended, increased, renewed or altered;

                  (b) exercise or refrain  from  exercising  any rights  against
Debtor or others or otherwise act or refrain from acting;

                  (c)  release,  settle  or  compromise  any of  the  Guaranteed
Obligations,  any security  therefor or any  liability  (including  any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and may
subordinate  the  payment  of all or any  part  thereof  to the  payment  of any
liability  (whether  due or not) of Debtor to  creditors  of Debtor  other  than
Guarantors;

                  (d) consent to or waive any breach of, or any act, omission or
default under,  the Credit  Agreement or the Notes, or any of the instruments or
agreements  referred to therein, or otherwise amend, modify or supplement any of
the foregoing;

                  (e)  agree to the  substitution,  exchange,  release  or other
disposition  of  all  or  any  part  of any  property  securing  the  Guaranteed
Obligations;

                  (f) make advances for the purposes of  performing  any term or
covenant  contained  in any  agreement  between  the Banks and the  Debtor  with
respect to which the Debtor may be in default;
                                       74

<PAGE>
                  (g)  assign  or  otherwise  transfer  all or any  part  of the
Guaranteed Obligations; and

                  (h) deal in all respects with the Debtor as if this  Guarantee
were not in effect.

                  4. No invalidity,  irregularity or  unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guarantee, and this Guarantee is a primary, joint
and several obligation of Guarantors.

                  5. This Guarantee is a continuing  one and all  liabilities to
which it  applies  or may apply  under the terms  hereof  shall be  conclusively
presumed  to have been  created in reliance  hereon.  No failure or delay on the
part of the  Banks  (whether  acting  individually  or  through  an  agent),  in
exercising  any right,  power or privilege  hereunder  shall operate as a waiver
thereof,  nor shall any  single  or  partial  exercise  of any  right,  power or
privilege  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other right, power or privilege.  The rights and remedies herein
expressly  specified are  cumulative and not exclusive of any rights or remedies
which the Banks  (whether  acting  individually  or through  an  agent),  or any
subsequent holder of any Guaranteed  Obligations would otherwise have. No notice
to or demand on Guarantors in any case shall entitle  Guarantors to any other or
further  notice or demand in  similar or other  circumstances  or  constitute  a
waiver of the rights of the Banks  (whether  acting  individually  or through an
agent),  or any  holder of any  Guaranteed  Obligations  to any other or further
action in any circumstances without notice or demand.

                  6. This is a guarantee of payment and not of  collection,  and
the liability of Guarantors  under this Guarantee  shall be primary,  direct and
immediate,  and not  conditional or contingent  upon pursuit by the Banks of any
remedies  it may  have  against  the  Debtor  with  respect  to  the  Guaranteed
Obligations  whether  pursuant  to the terms  thereof or by law,  or against any
other  person or entity or against any other  collateral.  Without  limiting the
generality of the foregoing,  the Banks shall not be required to make any demand
on the Debtor,  or to sell at foreclosure  or otherwise  pursue or exhaust their
remedies  against  the  property  securing  the  Debtor's  obligations  for  the
Guaranteed  Obligations  or against the Debtor,  or against any other  person or
entity or against any other collateral whatsoever,  before,  simultaneously with
or after enforcing their rights and remedies  hereunder  against the Guarantors.
Any one or more  successive or concurrent  actions may be brought hereon against
the Guarantors  either in the same action, if any, brought against the Debtor or
in separate actions, as often as the Banks may deem advisable.

                  7. Each Guarantor represents and warrants to the Banks that:

                  (a) It is a corporation  duly organized,  validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all corporate  power and authority to own all of its  properties and to carry on
its business as presently  conducted and as  contemplated  by this Guarantee and
has corporate  power and authority to execute and deliver this  Guarantee and to
perform its obligations hereunder.

                  (b) This Guarantee is and will be the legal, valid and binding
obligation of such Guarantor  enforceable  in accordance  with its terms and the
execution, delivery and performance of this Guarantee and such other agreements,
documents and instruments and the performance of the  transactions  contemplated
hereunder have been and will be duly and validly  authorized and

                                       75
<PAGE>

approved by the Board of  Directors  and do not and will not require any consent
or approval of any third party or of the  stockholders  of such Guarantor  other
than consents which have previously been obtained.

                  (c) The execution  and delivery of this  Guarantee do not, and
the consummation of the transactions  contemplated hereby will not, constitute a
violation of, and are not, and will not be, a default under or conflict with the
terms of the Certificate of Incorporation  or By-Laws of such Guarantor,  or any
contract, lease, indenture, agreement, order, judgment, or decree to which it is
a party or by which it is bound or to which any of its assets are subject, which
in any case or in the  aggregate  could  have a material  adverse  effect on its
ability to carry out its obligations under this Guarantee,  and do not, and will
not, violate or constitute a default under any statute, rule, regulation,  order
or ordinance of any governmental,  judicial or arbitral body, which in any case,
or in the  aggregate,  could have a material  adverse  effect on its  ability to
carry out its obligations under this Guarantee.

                  (d) Neither the  execution,  delivery or  performance  of this
Guarantee,  nor  the  consummation  of  the  transactions  contemplated  hereby,
requires  such  Guarantor  to obtain any  consent,  authorization,  approval  or
registration  under any law,  rule or  regulation,  other  than as  contemplated
hereby or as previously obtained.

                  (e)  There  is  no  suit,  action  or  legal,  administrative,
arbitration or other  proceeding of any nature pending,  or, to the knowledge of
such  Guarantor,  threatened,  against it which  might  affect the  legality  or
validity of this Guarantee,  or the transactions  contemplated hereby, and there
is not any factual basis known to it for any such suit, action or proceeding.

                  8. This Guarantee  shall be binding upon  Guarantors and their
respective  successors  and  assigns and shall inure to the benefit of the Banks
and their successors and assigns. This Guarantee may not under any circumstances
be assigned by any  Guarantor to any other person or entity  without the express
prior written consent of the Banks.

                  9.  Neither this  Guarantee  nor any  provision  hereof may be
changed, waived, discharged or terminated except with the written consent of the
Banks.

                  10. In the event that the Banks shall  receive any payments on
account of any of the Guaranteed  Obligations,  whether  directly or indirectly,
and it shall  subsequently  be determined that such payments were for any reason
improper,  or a claim  shall be made  against  the  Banks  that  the  same  were
improper,  and the Banks  pursuant to court order shall  return the,  same,  the
Guarantors  shall be liable,  with the same  effect as if the said  payment  had
never been paid to, or received  by the Banks,  for the amount of such repaid or
returned payments,  notwithstanding the fact that they may theretofore have been
credited on account of the Guaranteed Obligations or any of them. Moreover, this
Guarantee shall remain effective or be reinstated, as the case may be, if at any
time  payment  or  performance,  or  any  part  thereof,  or  any  or all of the
Guarantors,  obligations  under this Guarantee is rescinded or must otherwise be
restored or returned by the Banks, in connection with the insolvency, bankruptcy
or reorganization of the Guarantors, or any of them, or otherwise, all as though
such  payment  or  performance  had  not  been  rendered.   Notwithstanding  any
compromise,  release,  discharge,  settlement,  extension or  adjustment  of the
Debtor's obligations or any amendment, modification or stay of the Banks' rights
against the Debtor that may occur in any  bankruptcy or  reorganization  case or

                                       76

<PAGE>
proceeding  concerning the Debtor,  whether or not assented to by the Banks, the
Guarantors shall remain fully obligated to discharge the Guarantors' obligations
hereunder in accordance  with the terms of this  Guarantee in effect on the date
hereof.  The Guarantors assume all risks of a bankruptcy or reorganization  with
respect to the  Debtor.  In  furtherance  of this  Section,  the Banks shall not
otherwise   indicate  the   satisfaction  of  the  obligations  of  the  parties
represented  herein until the  expiration of all  applicable  bankruptcy-related
periods of time during which the Debtor, the Guarantors,  or any of them, or any
third  party  would have the right to commence a  bankruptcy  or  reorganization
proceeding with regard to the Debtor or any Guarantor.

                  11. All notices and other  communications  provided  for under
this  Guarantee and under any other  document  executed in  connection  herewith
shall be in  writing  (including  telegraphic  or telefax  communications)  and,
unless the party to be notified otherwise notifies the other party in writing as
provided  herein,  notices  shall  be  given  by  telecopier,  by  certified  or
registered mail or by recognized  overnight delivery service.  If such notice is
delivered to the  Guarantors,  or to any of them, such notice shall be addressed
to the  Guarantors c/o United Capital  Corp.,  United Capital  Building,  9 Park
Place,  Great Neck,  New York 11021,  telecopier  (516)  829-4301,  Attn:  Chief
Financial Officer and, if to the Banks, at their respective  addresses listed on
the signature pages of the Credit Agreement;  or as to each party, at such other
address as shall be  designated  by such party in a written  notice to the other
parties  complying  as to delivery  with the terms of this  Section 10.  Notices
shall be effective:  (a) if given by registered or certified  mail, on the third
day after deposit in the mails with postage prepaid, addressed as aforesaid; (b)
if given by recognized overnight delivery service, on the business day following
deposit with such service, addressed as aforesaid; and (c) if-given by telecopy,
when the telecopy is transmitted to the telecopy number, as aforesaid;  provided
that all notices to the Banks shall be effective on receipt.

                  12. This Guarantee and the rights and obligations of the Banks
and  of the  undersigned  hereunder  shall  be  governed  and  be  construed  in
accordance  with the laws of the State of New York applicable to agreements made
and to be  wholly  performed  in the State of New York.  The  Guarantors  hereby
irrevocably  submit to the  jurisdiction  of any New York State or United States
Federal Court  sitting in New York County over any action or proceeding  arising
out of or relating to the Guarantee, and the Guarantors hereby irrevocably agree
that all  claims  in  respect  of such  action  or  proceeding  may be heard and
determined in such New York State or Federal court.  The Guarantors  irrevocably
consent to service of any and all  process in any such action or  proceeding  by
the mailing (by registered or certified mail) of copies of such process to it at
its address  specified in Section 10. The Guarantors agree that a final judgment
in any such  action or  proceeding  shall be  conclusive  and may be enforced in
other  jurisdictions  by suit on the judgment or in any other manner provided by
law.  The  Guarantors  further  waive any  objection  to venue in such  State or
Federal  court and any  objection  to an action or  proceeding  in such State or
Federal  court on the basis of forum non  conveniens.  Nothing  in this  Section
shall limit the rights of the Banks to serve legal  process in any other  manner
permitted  by law or  affect  the  right of the  Banks to bring  any  action  or
proceeding  against the  Guarantors,  or any of them, in the courts of any other
jurisdiction.  To the extent that the  Guarantors  have or hereafter may acquire
immunity from  jurisdiction  of any court or from any legal process with respect
to itself or its property,  the Guarantors hereby waive, to the extent permitted
by applicable law, such immunity in respect of their obligations hereunder.

                  13. Each of the  undersigned  Guarantors  hereby makes for the
benefit of the Banks each of the  representations  and warranties  applicable to

                                       77

<PAGE>
the Guarantors,  contained in Article 6 of the Credit  Agreement with respect to
itself and each of such representations and warranties as incorporated herein by
reference.

                  14. THE PARTIES  HERETO  WAIVE ANY RIGHT TO A TRIAL BY JURY IN
CONNECTION HEREWITH TO THE EXTENT PERMITTED BY APPLICABLE LAW.

                  IN WITNESS WHEREOF,  Guarantor's have caused this Guarantee to
be executed and delivered as of December 31, 1999.

                                 THE GUARANTORS:

                                  140 CORP.
                                  147 CORP.
                                  150 CORP.
                                  1690 LEX CORP.
                                  2911 CORP.
                                  47 BOUNDARY CORP.
                                  521 W. 146 CORP.
                                  627 SECOND CORP.
                                  629 SECOND CORP.
                                  747 MIDDLENECK CORP.
                                  860 FRANKLIN ASSOCIATES INC.
                                  9 PARK PLACE CORP.
                                  95 PERRY CORP.
                                  AFP FINANCIAL CORP.
                                  AFP FINANCIAL LLC
                                  AFP REALTY CORP.
                                  AFP TECHNOLOGIES, INC.
                                  AFP TRANSFORMERS LLC
                                  AFP ONE CORP.
                                  AFP TWO CORP.
                                  AFP THREE CORP.
                                  AFP FOUR CORP.
                                  AFP FIVE CORP.
                                  AFP SIX CORP.
                                  AFP SEVEN CORP.
                                  AFP EIGHT CORP.
                                  AFP NINE CORP.
                                  AFP TEN CORP.
                                  AFP ELEVEN CORP.
                                  AFP TWELVE CORP.
                                  AFP THIRTEEN CORP.
                                  AFP FOURTEEN CORP.
                                  AFP FIFTEEN CORP.
                                  AFP SIXTEEN CORP.
                                  AFP SEVENTEEN CORP.
                                       78

<PAGE>
                                  AFP EIGHTEEN CORP.
                                  AFP NINETEEN CORP.
                                  AFP TWENTY CORP.
                                  AFP TWENTY-ONE CORP.
                                  AFP TWENTY-TWO CORP.
                                  AFP TWENTY-THREE CORP.
                                  AFP TWENTY-FOUR CORP.
                                  AFP TWENTY-FIVE CORP.
                                  AFP TWENTY-SIX CORP.
                                  AFP TWENTY-SEVEN CORP.
                                  AFP TWENTY-EIGHT CORP.
                                  AFP TWENTY-NINE CORP.
                                  AFP THIRTY CORP.
                                  AFP THIRTY-ONE CORP.
                                  AFP THIRTY-TWO CORP.
                                  AFP THIRTY-THREE CORP.
                                  AFP THIRTY-FOUR CORP.
                                  AFP THIRTY-FIVE CORP.
                                  AFP THIRTY-SIX CORP.
                                  AFP THIRTY-SEVEN CORP.
                                  AFP THIRTY-EIGHT CORP.
                                  AFP THIRTY-NINE CORP.
                                  AFP FORTY CORP.
                                  AFP FORTY-ONE CORP.
                                  AFP FORTY-TWO CORP.
                                  AKM CORP.
                                  ALBA CORP.
                                  AVALON CORP.
                                  BEEKMAN CORP.
                                  BELMONT CORP.
                                  BKM CORP.
                                  BPI CORP.
                                  BROAD FOX PROPERTIES CORP.
                                  BROAD  NORBROOK  PROPERTIES
                                  CORP.
                                  BROADWAY CORPORATION
                                  BUSCH REALTY CORP.
                                  C. P.  MANUFACTURING
                                  CAMBRELENG CORP.
                                  CAVINU CORP.
                                  CEDAR ENTERPRISES CORP.
                                  CEW PROPERTIES, INC.
                                  CLEETHORPES PROPERTIES, INC.
                                  CLINTON-BUSH CORP.
                                  CORTLAND ENTERPRISES CORP.
                                  CULVER CORP.
                                  D&M/CHU TECHNOLOGY, INC.
                                  DALLAS ENTERPRISES CORP.
                                  DEL-METEX CORPORATION
                                       79

<PAGE>
                                  DIESEL CORPORATION
                                  DUNVEGAN PROPERTIES, INC.
                                  EASTSIDE CORP.
                                  EBMO CORP.
                                  EKM CORP.
                                  ELEVENTH CAVENDISH PROPERTIES, INC.
                                  EROICA CORP.
                                  FERN CORP.
                                  FOURTEENTH CAVENDISH PROPERTIES, INC.
                                  FRANKLIN 850 CORP.
                                  GENH REALTY CORP.
                                  GREENVALE ENTERPRISES CORP.
                                  HADLEY CORPORATION
                                  HHKM REALTY CORP.
                                  HJA REALTY CORP.
                                  HJB CORP.
                                  HJM CORP.
                                  HJR CORP.
                                  HJSC CORP.
                                  HJSP CORP.
                                  HORIZON CORPORATION
                                  HR-TWENTY CORP.
                                  IVES CORPORATION
                                  JKM CORP.
                                  K-SOUTH CORP.
                                  KENTILE, INC.
                                  KINGS COUNTY CORP.
                                  LAND & LEASES CORP.
                                  LC CORP.
                                  MADISON CORP.
                                  MAXCO INC.
                                  MELANCON CORP.
                                  METEX ENVIROCO CORP.
                                  METEX EUROPE S.A.R.L.
                                  METEX EXPORT CORPORATION
                                  METEX  INTERNATIONAL SALES CORPORATION
                                  METEX LIQUIDATION CO. INC.
                                  METEX MFG. CORPORATION
                                  METROMATIC PARTNER, INC.
                                  METROPOLITAN MANAGEMENT SERVICES, INC.
                                  NEMO ACQUISITION CORP.
                                  NORTHBROOK ENTERPRISES CORP.
                                  NORTHWOOD CORP.
                                  PDK CORP.
                                  PARNELL PROPERTIES LLC
                                  PINE EQUITIES CORP.
                                  PROSPECT CENTER CORP.
                                  RBS REALTY CORP.

                                       80
<PAGE>

                                  SCHULLER CORPORATION
                                  SECOND CEW PROPERTIES, INC.
                                  SECOND HAYWORTH
                                  SHREWBURRYS PROPERTIES, INC.
                                  SUNRISE EQUITIES CORP.
                                  SUTTON REALTY CORP.
                                  THIRD CEW PROPERTIES, INC.
                                  TOLEDO CORP.
                                  TOWN REALTY CORPORATION
                                  TRI-MART CORP.
                                  TWELFTH CAVENDISH CORP.
                                  TWENTY-M CORP.
                                  TWIN CORPORATION
                                  TWIN II REALTY CORP.
                                  VARIOUS EQUITIES CORP.
                                  WAVERLY CORP.
                                  WELLFORD CORP.
                                  WEST 145 CORP.

                                  EACH OF THE FOREGOING ENTITIES BY:

                                  --------------------------------------
                                  Name: Anthony J. Miceli
                                  Title:  Its Duly Authorized
                                  Officer

                                       81
<PAGE>
                                    EXHIBIT E

                                     FORM OF
                               SECURITY AGREEMENT

                  THIS SECURITY AGREEMENT (this "Security Agreement") is made as
of this 31st day of December, 1999, by and between:

                  METEX MFG. CORP., a New York corporation,  having an office at
970 New Durham Road, Edison,  New Jersey 08818  (hereinafter  referred to as the
"Debtor), and

                  FLEET  BANK,   NATIONAL   ASSOCIATION,   a  national   banking
association  organized  under  the laws of the  United  States of  America  (the
"Agent") as agent for itself and  MANUFACTURERS & TRADERS TRUST COMPANY AND BANK
LEUMI USA (the "Secured Parties").

                                   WITNESSETH

                  WHEREAS,  the Secured  Parties and UNITED  CAPITAL CORP.  (the
"Borrower")  have entered into a Credit  Agreement dated as of December 31, 1999
(as it may hereafter be amended or otherwise  modified from time to time,  being
the "Agreement")  pursuant to which the secured Parties may lend to the Borrower
the aggregate principal amounts set forth therein, upon and subject to the terms
and conditions thereof;

                  WHEREAS,  the Debtor has  executed a Guarantee  dated the date
hereof (as it may hereafter be amended or otherwise  modified from time to time,
the "Guarantee")  pursuant to which the Debtor has guaranteed the obligations of
the Borrower to the Secured Parties;

                  WHEREAS,  it is a condition precedent to the obligation of the
Secured  Parties to extend credit to the Borrower  provided for in the Agreement
that the Debtor shall execute and deliver this Security Agreement; and

                  WHEREAS,  all capitalized terms used herein without definition
shall have the respective meanings ascribed thereto in the Agreement.

                  NOW, THEREFORE,  in consideration of the premises and in order
to induce the  Secured  Parties  to extend  credit to the  Borrower,  the Debtor
agrees with the Agent and the Secured Parties as follows:

                  1.                Security Interest.

                  (a) Grant of  Security.  As security for the  Obligations  (as
defined in Section 1(b) hereof),  the Debtor  hereby  assigns and pledges to the
Agent for the benefit of the Secured Parties, and hereby grants to the Agent for
the benefit of the-Secured Parties a first priority security interest in, all of
the  Debtor's  right,  title and  interest,  whether now  existing or  hereafter
arising or acquired, in and to the following (collectively, the "Collateral"):
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                         (i) All personal property of the Debtor, whether now or
hereafter existing or now owned or hereafter  acquired and wherever located,  of
every  kind  and  description,   tangible  or  intangible,   including,  without
limitation,  the balance of every deposit  account now or hereafter  existing of
the  Debtor  with the  Secured  Parties,  or  either  of  them,  or any of their
affiliates or with any agent of the Secured  Parties,  or either of them, or any
of their  affiliates  to the extent such account is  maintained by such agent in
its capacity as agent of any kind for the Secured  Parties,  or any of them,  or
any  of  their  affiliates,  and  all  goods,  equipment,  furniture,  inventory
(including,   without   limitation  all  raw   materials,   finished  goods  and
work-in-process),  accounts,  contract rights,  chattel paper, notes receivable,
instruments,  documents  (including,  without  limitation,  documents  or title,
warehouse  receipts and all other shipping documents and instruments of any kind
whatsoever,  whether  relating  to  goods  in  transit  or  otherwise),  general
intangibles,  credits,  claims,  demands and any other  obligations of any kind,
whether  now  or  hereafter  arising,  of  the  Debtor,  and,  as to  all of the
foregoing,  any and all additions and accessions thereto,  all substitutions and
replacements therefor and all products and proceeds thereof (including,  without
limitation, all proceeds of insurance thereon).

                         The term "accounts"  shall mean,  without  limiting the
generality  of the  foregoing,  any and all now  existing or  hereafter  arising
rights  to  payment  held  by the  Debtor,  whether  in  the  form  of  accounts
receivable,  notes,  drafts,  acceptances  or  other  forms of  obligations  and
receivables  now or  hereafter  received by or  belonging  to the Debtor for (A)
inventory sold or leased by it, (B) services  rendered by it, or (C) advances or
loans  made by it to  customers,  together  with  all  guarantees  and  security
therefor  and  all  proceeds  thereof,   whether  cash  proceeds  or  otherwise,
including,  without  limitation,  all right, title and interest of the Debtor in
the  inventory  which  gave  rise  to  any  such  accounts,  including,  without
limitation,  the  right to  stoppage  in  transit  and all  returned,  rejected,
rerouted or repossessed inventory.

                         (ii) All choses in action, any rights arising under any
judgment,  statute or rule, all corporate and business records,  customer lists,
credit files,  computer  program  print-outs,  and other computer  materials and
records,  all  inventories,  trademarks,  trade  styles,  trade names,  designs,
patents,  copyrights,  licenses,  license  agreements,  and any applications for
patents and/or trademarks.

                         (iii)  Any  and all  additions  and  accessions  to the
foregoing  Collateral,  all  substitutions  and  replacements  therefor  and all
products  and  proceeds  thereof  (including,  without  limitation,  proceeds of
insurance thereon).

                  (b) Security for Obligations.  This Security Agreement secures
the payment of all obligations of Debtor to the Secured Parties now or hereafter
existing  under the Guarantee or this  Security  Agreement,  including,  in each
case,  any  modifications  or  amendments  thereto,  or  otherwise,  whether for
principal,  interest,  fees,  expenses or otherwise,  together with all costs of
collection or enforcement,  including, without limitation, reasonable attorneys'
fees  incurred  in  any  collection  efforts  or  in  any  judicial   proceeding
(including,   without  limitation,   bankruptcy  or  reorganization)  (all  such
obligations being the "Obligations").

                  (c) Debtor  Remains  Liable.  Anything  herein to the contrary
notwithstanding, (i) the Debtor shall remain liable to perform all of its duties
and obligations under the transactions giving rise to the Collateral to the same
extent as if this Security Agreement had not been executed, (ii) the exercise by
the Secured Parties of any of the rights  hereunder shall not release the Debtor

                                       83

<PAGE>

from any of its duties or obligations under the transactions  giving rise to the
Collateral,  which shall remain unchanged as if this Security  Agreement had not
been  executed,  and (iii)  neither the Agent nor the Secured  Parties shall not
have any  obligation  or  liability  under the  transactions  giving rise to the
Collateral by reason of this Security  Agreement,  nor shall the Secured Parties
be  obligated  to  perform  any of  the  obligations  or  duties  of the  Debtor
thereunder  or to take any action to collect  or enforce  any claim for  payment
assigned hereunder.

                  (d) Continuing Agreement. This Security Agreement shall create
a continuing  security interest in the Collateral and shall remain in full force
and effect  until  payment in full of the  Obligations  and until the  Guarantee
shall no longer be in effect.

                2.Debtor's Title; Liens and Encumbrances.

                  The Debtor  represents  and warrants that the Debtor is, or to
the extent that this  Security  Agreement  states that the  Collateral  is to be
acquired  after the date hereof,  will be, the owner of the  Collateral,  having
good  and  marketable  title  thereto,  free  from any and all  liens,  security
interests,  encumbrances  and  claims.  The Debtor  will not create or assume or
permit to exist any such lien,  security  interest,  encumbrance  or claim on or
against the  Collateral  except as created by this Security  Agreement,  and the
Debtor will promptly  notify the Agent of any such other claim,  lien,  security
interest or other  encumbrance  made or asserted against the Collateral and will
defend the Collateral against any such claim,  lien,  security interest or other
encumbrance.

                  3.  Representations and Warranties;
                      Location of Collateral and Records;
                      Business and Trade Names of Debtor.

                  (a) The Debtor represents and warrants that it has no place of
business,  offices  where  Debtor's  books of account and  records are kept,  or
places where the Collateral is used,  stored or located,  except as set forth on
Schedule I annexed  hereto,  and covenants that the Debtor will promptly  notify
the Agent of any change in the foregoing representation. The Debtor shall at all
times  maintain its records as to the  Collateral at its chief place of business
at the address  referred to on Schedule I and at none other.  The Debtor further
covenants that except for Collateral  delivered to the Agent or an agent for the
Agent,  the Debtor will not store,  use or locate any of the  Collateral  at any
place other than as listed on Schedule I annexed hereto.  To the extent that any
Collateral is located at a location  which is not owned by the Debtor,  upon the
occurrence and during the  continuance of an Event of Default,  the Debtor shall
deliver to the Agent landlords waivers in form and substance satisfactory to the
Agent.

                  (b) The Debtor represents and warrants that it currently uses,
and during the last five years has used,  no business or trade names,  except as
set forth on  Schedule I annexed  hereto,  and  covenants  that the Debtor  will
promptly notify the Agent, in sufficient  detail,  of any changes in,  additions
to, or deletions from the business or trade names used by the Debtor for billing
purposes.

                  (c) The Debtor  represents  and warrants  that it has complied
and is in  compliance  with the  provisions  of the Fair  Labor  Standards  Act,
including,  without limitation, the minimum wage and overtime rules of that Act,
and  covenants  that the Debtor will  continue to comply with the  provisions of
such Act.

                                       84

<PAGE>

                  4.  Perfection of Security Interest.

                  Subject to the  provisions  of  Section 17 hereof,  the Debtor
will execute all such financing  statements  pursuant to the Uniform  Commercial
Code or other notices appropriate under applicable law as the Agent may require,
each in form  satisfactory  to the  Agent and will pay all  filing or  recording
costs with respect  thereto,  and all costs of filing or recording this Security
Agreement or any other instrument,  agreement or document executed and delivered
pursuant hereto to the Guarantee or to the Agreement  (including the cost of all
federal,  state or local mortgage,  documentary,  stamp or other taxes), in each
case, in all public  offices where filing or recording is deemed by the Agent to
be necessary or desirable.  The Debtor  hereby  authorizes  the Agent,  upon the
occurrence and during the continuance of an Event of Default, to take all action
(including,  without  limitation,  the  filing of any  Uniform  Commercial  Code
financing  statements or amendments  thereto without the signature of the Debtor
or by signing  of the  Debtor's  name to any such  financing  statements  as its
attorney-in-fact,) which the Agent may deem necessary or desirable to perfect or
otherwise  protect the liens and security  interests  created  hereunder  and to
obtain the benefits of this Security Agreement.

                5.General Covenants.

                  The Debtor shall:

                  (a) furnish the Agent from time to time at the Agent's request
written  statements  and  schedules  further   identifying  and  describing  the
Collateral in such detail as the Agent may reasonably require;

                  (b) advise the Agent promptly,  in sufficient  detail,  of any
substantial  change in the Collateral,  and of the occurrence of any event which
would have a material  adverse  effect on the value of the  Collateral or on the
Secured Parties' security interest therein;

                  (c) comply with all acts, rules, regulations and orders of any
legislative,  administrative  or  judicial  body or official  applicable  to the
Collateral  or any part thereof or to the  operation  of the  Debtor's  business
except where the failure to comply (a) is non-material  and (b) has no effect on
the  value of the  Collateral  or on the  ability  of the  Agent or the  Secured
Parties to exercise their rights and remedies hereunder;

                  (d)  perform  and  observe  all  covenants,  restrictions  and
conditions  contained in the Agreement and applicable to the Borrower  providing
for payment of taxes,  maintenance  of insurance and  otherwise  relating to the
Collateral, as though such covenants, restrictions and conditions were fully set
forth in this Security Agreement and were applicable to it;

                  (e)  promptly  upon the Chief  Executive  Officer or the Chief
Financial Officer of the Borrower obtaining knowledge thereof,  notify the Agent
of any dispute with an account debtor involving amounts in excess of $100,000 or
of any combination of disputes involving amounts aggregating $500,000 or more;

                  (f) subject to the  provisions of Section 17 hereof,  promptly
execute and deliver to the Agent such  further  deeds,  mortgages,  assignments,
security agreements or other instruments, documents, certificates and assurances

                                       85
<PAGE>

and take  such  further  action  as the  Agent may from time to time in its sole
discretion  deem necessary to perfect,  protect or enforce the Secured  Parties'
security  interests in the  Collateral or otherwise to effect the intent of this
Security Agreement;

                  (g) keep or cause to be kept the  Collateral  in good  working
order,  repair,  running  and  marketable  condition,  ordinary  wear  and  tear
excepted, at the Debtor's own cost and expense; and

                  (h) not assign, sell, mortgage, lease, transfer, pledge, grant
a  security  interest  in or lien  upon,  encumber  or  otherwise  dispose of or
abandon,  any part or all of the  Collateral,  without the express prior written
consent of the Agent,  except (i) for the sale from time to time in the ordinary
course of business of the Debtor of such items of Collateral  as may  constitute
part of the business  inventory of the Debtor;  and (ii) as otherwise  expressly
provided in the Agreement.

                  6.  Assignment of Insurance.

                  Upon the occurrence and during the  continuance of an Event of
Default,  the  Debtor  shall  deliver  to  each  Secured  Party  copies  of,  or
certificates of the issuing  companies with respect to,  endorsements of any and
all policies of insurance owned by the Debtor covering or in any manner relating
to the  Collateral,  in form and substance  satisfactory to the Agent naming the
Secured Parties as additional insured parties as their interests may appear with
respect to  liability  coverage  and naming  the Agent,  for the  benefit of the
Secured Parties,  as loss payee with respect to property and extended  insurance
coverage,  and indicating that no such policy will be terminated,  or reduced in
coverage or amount,  without at least thirty (30) days prior written notice from
the  insurer  to the  Agent.  As  further  security  for  the  due  payment  and
performance of the  Obligations,  the Debtor hereby assigns to the Agent for the
benefit  of the  Secured  Parties  all  sums,  including  returned  or  unearned
premiums,  which  may  become  payable  under or in  respect  of any  policy  of
insurance  owned  by the  Debtor  covering  or in  any  manner  relating  to the
Collateral  after the  occurrence  and  during  the  continuance  of an Event of
Default,  and the Debtor hereby directs each insurance  company issuing any such
policy to make  payment of sums  directly  to the Agent,  for the benefit of the
Secured  Parties.   The  Debtor  hereby  appoints  the  Agent  as  the  Debtor's
attorney-in-fact and authorizes the Agent in the Debtor's or in the Agent's name
after the  occurrence  and  during  the  continuance  of an Event of  Default to
endorse  any check or draft  representing  any such  payment  and to execute any
proof of claim,  subrogation  receipt  and any other  document  required by such
insurance  company  as a  condition  to or  otherwise  in  connection  with such
payment, and, upon the occurrence of any Default or Event of Default, to cancel,
assign or surrender any such policies. All such sums received by the Agent shall
be applied by the Agent to  satisfaction  of the  Obligations  or, to the extent
that such sums represent unearned premiums in respect of any policy of insurance
on the Collateral refunded by reason of cancellation, toward payment for similar
insurance  protecting  the  respective  interests  of the Debtor and the Secured
Parties, or as otherwise required by applicable law.

                  7.  Fixtures.

                  It is the intent of the Debtor and the  Secured  Parties  that
none of the Collateral is or shall be regarded as fixtures, as that term is used
or  defined  in  Article  9 of the  Uniform  Commercial  Code,  and  the  Debtor
represents  and  warrants  that it has not made and is not bound by any lease or
other  agreement which is inconsistent  with such intent.  Nevertheless,  if the
Collateral  or any part  thereof is or is to become  attached  or affixed to any
                                       86

<PAGE>

real estate, the Debtor will, upon request,  furnish the Agent with a disclaimer
or subordination in form satisfactory to the Agent of the holder of any interest
in the real estate to which the Collateral is attached or affixed, together with
the names and addresses of the record  owners of, and all other  persons  having
interest in, and a general description of, such real estate.

                  8. Collections.

                  (a) The Debtor may collect all checks,  drafts,  cash or other
remittances  (i) in payment of any of its accounts,  contract  rights or general
intangibles  constituting  part  of  the  Collateral,  (ii)  in  payment  of any
Collateral  sold,  transferred,  leased or  otherwise  disposed  of, or (iii) in
payment of or on account of its accounts,  contracts,  contract  rights,  notes,
drafts, acceptances,  general intangibles,  choses in action and all other forms
of obligations relating to any of the Collateral so sold, transferred, or leased
or otherwise  disposed of, and all of the foregoing  amounts so collected  after
the  occurrence of an Event of Default shall be held in trust by the Debtor for,
and as the  property  of, the Agent for the benefit of the  Secured  Parties and
shall not be commingled with other funds, money or property of the Debtor.

                  (b) Upon the occurrence and continuance of an Event of Default
and upon the  written  request of the Agent,  the Debtor will  immediately  upon
receipt of all such checks, drafts, cash or other remittances in payment for any
Collateral sold, transferred,  leased or otherwise disposed of, or in payment or
on  account  of  its  accounts,   contracts,  contract  rights,  notes,  drafts,
acceptances,  general  intangibles,  choses  in action  and all  other  forms of
obligations  relating to any of the Collateral so sold,  transferred,  leased or
otherwise  disposed of, deliver any such items to the Agent,  for the benefit of
the Secured  Parties  accompanied  by a  remittance  report in form  supplied or
approved by the Agent,  such items to be delivered to the Agent in the same form
received, endorsed or otherwise assigned by the Debtor where necessary to permit
collection of such items and,  regardless of the form of such  endorsement,  the
Debtor hereby waives presentment, demand, notice of dishonor, protest, notice of
protest and all other notices with respect hereto.

                  (c)  Upon  the  written  request  of  the  Agent,   after  the
occurrence and during the  continuance  of an Event of Default,  the Debtor will
promptly  notify the Agent in writing  of the return or  rejection  of any goods
represented  by any accounts,  contract  rights or general  intangibles  and the
Debtor shall forthwith  account  therefor to the Agent in cash without demand or
notice and,  until such payment has been received by the Agent,  the Debtor will
receive and hold all such goods separate and apart,  in trust for and subject to
the  security  interest in favor of the Agent,  and the Agent is  authorized  to
sell, for the Debtor's account and at the Debtor's sole risk, all or any part of
such goods.

                  (d) All of the  foregoing  remittances  shall be  applied  and
credited by the Agent first to  satisfaction  of the Obligations or as otherwise
required by applicable law, and to the extent not so credited or applied,  shall
be paid over to the Debtor.

                  9. Rights and Remedies.

                  In the event of the occurrence and continuance of any Event of
Default the Agent,  shall at any time thereafter have the right, with or without
(to the extent  permitted by applicable law) notice to the Debtor,  as to any or

                                       87
<PAGE>

all of the Collateral,  by any available  judicial procedure or without judicial
process, to take possession of the Collateral and without liability for trespass
to enter any  premises  where the  Collateral  may be located for the purpose of
taking possession of or removing the Collateral, and, generally, to exercise any
and all rights afforded to a secured party under the Uniform  Commercial Code or
other  applicable  law.  Without  limiting the generality of the foregoing,  the
Debtor agrees that the Agent,  shall have the right to sell, lease, or otherwise
dispose of all or any part of the  Collateral,  whether in its then condition or
after further preparation or processing,  either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit,  with or without
warranties or  representations,  and upon such terms and conditions,  all as the
Agent in its sole discretion may deem  advisable,  and the Secured  Parties,  or
either of them,  shall have the right to purchase at any such sale;  and, if any
Collateral shall require rebuilding, repairing, maintenance,  preparation, or is
in process or other  unfinished  state,  the Agent shall have the right,  at its
sole  option and  discretion,  to do such  rebuilding,  repairing,  preparation,
processing  or  completion  of  manufacturing,  for the  purpose of putting  the
Collateral in such saleable or disposable form as it shall deem appropriate.  At
the Agent's  request,  the Debtor  shall  assemble  the  Collateral  and make it
available  to the Agent at places which the Agent shall  select,  whether at the
Debtor's premises or elsewhere,  and make available to the Agent,  without rent,
all of the  Debtor's  premises  and  facilities  for the  purpose of the Agent's
taking  possession  of,  removing  or putting  the  Collateral  in  saleable  or
disposable  form. The proceeds of any such sale,  lease or other  disposition of
the  Collateral  shall be applied  first to the expenses of  retaking,  holding,
storing,  processing and preparing for sale,  selling,  and the like, and to the
reasonable attorneys' fees and legal expenses incurred by the Agent, and then to
satisfaction  of the  Obligations,  and  to the  payment  of any  other  amounts
required by  applicable  law,  after which the Agent shall account to the Debtor
for any surplus  proceeds.  If, upon the sale, lease or other disposition of the
Collateral,  the proceeds  thereof are  insufficient to pay all amounts to which
the  Secured  Parties are  legally  entitled,  the Debtor will be liable for the
deficiency,  together  with  interest  thereon,  at the rate  prescribed  in the
Agreement,  and the  reasonable  fees of any  attorneys  employed by the Secured
Parties to collect such  deficiency.  To the extent permitted by applicable law,
the Debtor  waives all  claims,  damages  and  demands  against the Agent or the
Secured Parties arising out of the repossession,  removal,  retention or sale of
the Collateral.

                  10. Costs and Expenses.

                  Subject  to the  provisions  of the  Credit  Agreement  and of
Section 17 hereof,  any and all fees,  costs and  expenses,  of whatever kind or
nature,  including the reasonable attorneys' fees and legal expenses incurred by
the Agent or the Secured  Parties,  or either of them,  in  connection  with the
preparation of this Security  Agreement and all other documents  relating hereto
and the consummation of this  transaction,  the filing or recording of financing
statements and other documents (including all taxes in connection  therewith) in
public  offices,  the payment or  discharge  of any taxes,  insurance  premiums,
encumbrances or otherwise  protecting,  maintaining or preserving the Collateral
and the Secured Parties'  security  interest  therein,  whether through judicial
proceedings  or  otherwise,  or in  defending  or  prosecuting  any  actions  or
proceedings  arising out of or related to the transaction to which this Security
Agreement relates,  shall be borne and paid by the Debtor on demand by the Agent
and until so paid shall be added to the principal  amount of the Obligations and
shall bear interest at the rate prescribed in the Agreement.

                                       88
<PAGE>
                  11. Power of Attorney.

                  The  Debtor   authorizes  the  Agent  and  does  hereby  make,
constitute  and appoint the Agent,  and any officer or agent of the Agent,  with
full power of  substitution,  as the Debtor's true and lawful  attorney-in-fact,
with power, in its own name or in the name of the Debtor upon the occurrence and
continuance of an Event of Default:  (a) to endorse any notes,  checks,  drafts,
money orders, or other instruments of payment (including  payments payable under
or in respect of any policy of insurance) in respect of the Collateral  that may
come  into  possession  of the  Agent or the  Secured  Parties;  (b) to sign and
endorse  any  invoice,  freight or  express  bill,  bill of  lading,  storage or
warehouse  receipts,  drafts against  debtors,  assignments,  verifications  and
notices in connection with accounts; and other documents relating to Collateral;
(c)  to  pay  or  discharge  any  taxes,  liens,   security  interest  or  other
encumbrances  at  any  time  levied  or  placed  on or  threatened  against  the
Collateral; (d) to demand, collect, receipt for, compromise,  settle and sue for
monies due in respect of the Collateral; (e) to receive, open and dispose of all
mail addressed to the Debtor and to notify the Post Office authorities to change
the address for delivery of mail  addressed to the Debtor to such address as the
Agent may  designate;  and (f) generally to do, at the Agent's option and at the
Debtor's  expense,  at any time, or from time to time, all acts and things which
the Agent deems  necessary to protect,  preserve and realize upon the Collateral
and the Secured Parties' security interest therein in order to effect the intent
of this Security  Agreement,  the Guarantee and the Agreement,  all as fully and
effectually as the Debtor might or could do; and the Debtor hereby  ratifies all
that said attorney shall  lawfully do or cause to be done by virtue hereof.  All
acts of said  attorney or designee  are hereby  ratified  and  approved and said
attorney or designee shall not be liable for any acts of commission or omission,
nor for any error or judgment or mistake of fact or law except for its own gross
negligence or willful  misconduct.  This power of attorney  shall be irrevocable
for the term of this  Security  Agreement  and  thereafter as long as any of the
Obligations shall be outstanding.

                  12. Notices.

                  Unless the party to be notified  otherwise  notifies the other
party in writing as provided in this Section,  notices shall be given  hereunder
by telecopy, by certified or registered mail or by recognized overnight delivery
services  to any party at its  address on the  signature  page of this  Security
Agreement.  Notices  shall be effective  (a) if given by registered or certified
mail,  on the  third day  after  deposit  in the  mails  with  postage  prepaid,
addressed as aforesaid;  (b) if given by recognized  overnight delivery service,
on the business day following deposit with such service, addressed as aforesaid;
or (c) if given by telecopy,  when the telecopy is  transmitted  to the telecopy
number as  aforesaid;  provided  that all  notices  to the Agent or the  Secured
Parties shall be effective on receipt.

                  13. Other Security.

                  To the  extent  that  the  Obligations  are  now or  hereafter
secured  by  property  other  than  to  the  Collateral  or  by  the  guarantee,
endorsement  or  property  of any other  person,  then the Agent and the Secured
Parties  shall have the right in their sole  discretion  to pursue,  relinquish,
subordinate,  modify or take any other action with respect  thereto,  without in
any way  modifying or  affecting  any of the rights and remedies of the Agent or
the Secured Parties hereunder.

                                       89
<PAGE>
                  14. Deposits.

                  Any and all deposits or other sums at any time  credited by or
due from any of the Secured Parties to the Debtor, whether in regular or special
depository  accounts  or  otherwise,  shall at all times  constitute  additional
Collateral for the  Obligations,  and may upon the occurrence and continuance of
an Event of Default,  be set-off by the Secured  Parties against any Obligations
at any time,  whether or not other  collateral  held by the  Secured  Parties is
considered to be adequate.

                  15. Miscellaneous.

                  (a) Beyond the safe custody  thereof,  the Agent shall have no
duty as to the  collection of any  Collateral in its possession or control or in
the  possession  or control of any agent or nominee of the Agent,  or any income
thereon or as to the  preservation  of rights against prior parties or any other
rights pertaining thereto.

                  (b) No course of dealing  between  the Debtor and the Agent or
the Secured Parties,  nor any failure to exercise,  nor any delay in exercising,
on the part of the Agent or the Secured Parties,  any right,  power or privilege
hereunder,  under the Guarantee or under the Agreement shall operate as a waiver
thereof;  nor shall any  single  or  partial  exercise  of any  right,  power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.

                  (c)  All of the  rights  and  remedies  of the  Agent  and the
Secured Parties with respect to the Collateral,  whether  established hereby, by
the Guarantee or by the Agreement,  or by any other  agreements,  instruments or
documents  or by law,  shall  be  cumulative  and  may be  exercised  singly  or
concurrently.

                  (d) The  provisions of this Security  Agreement are severable,
and if any clause or provision shall be held invalid or  unenforceable  in whole
or in part in any jurisdiction,  then such invalidity or unenforceability  shall
affect only such clause or provision,  or part thereof, in such jurisdiction and
shall  not  in  any  manner  affect  such  clause  or  provision  in  any  other
jurisdiction, or any other clause or provision of this Security Agreement in any
jurisdiction.

                  (e) This Security  Agreement  (including  this  subsection) is
subject to modification only by a writing signed by all of the parties hereto.

                  (f) The benefits and burdens of this Security  Agreement shall
inure to the  benefit  of and be  binding  upon the  respective  successors  and
assigns  of  the  parties  hereto;  provided,   however,  that  the  rights  and
obligations of the Debtor under this Security Agreement shall not be assigned or
delegated without the prior written consent of the Secured Parties  (exercisable
in its sole discretion), and any purported assignment or delegation without such
consent shall be void.

                  16. Term of Agreement.

                  The term of this Security Agreement shall commence on the date
hereof and this Security  Agreement shall continue in full force and effect, and
be binding upon the Debtor,  until all of the  Obligations  have been fully paid
and performed and such payment and performance have been acknowledged in writing
by the Secured Parties, whereupon this Security Agreement shall terminate.

                  17.  Special  Provision   Regarding   Perfection  of  Security
Interests.

                                       90
<PAGE>
                  The Agent and the Secured Parties hereby agree that,  until an
Event of Default shall have occurred  hereunder,  the Agent shall not record any
UCC-1 financing statements in any jurisdiction to perfect the security interests
granted hereunder. The parties further agree that upon the happening of an Event
of Default under the  Agreement,  other than an Event of Default  referred to in
Section 10.1(e)  thereof (in which case no notice shall be required),  the Agent
shall give the Borrower fourteen (14) days prior written notice before recording
any such documents.

                  WITNESS  the  execution  hereof  as of the day and year  first
above written.

                               METEX MFG. CORP., as Debtor

                               By:___________________________
                               Name:  Anthony  J. Miceli
                               Title: Vice President

                     Address for Notices:

                               970 New Durham Road
                               Edison, New Jersey 08818
                               Telecopier:  (732) 287-8546

                               FLEET BANK, NATIONAL ASSOCIATION,
                               as Agent and as Secured Party

                               By:_____________________________
                               Name:  David  T. Sunderwirth
                               Title: Vice President

                     Address for Notices:

                               Fleet Bank, National Association
                               1133 Sixth Avenue, 40th Floor
                               New York, New York 10036
                               Attn:  David T. Sunderwirth, Vice President
                               Telephone:  (212) 703-1707
                               Telecopier: (212) 703-1724

                                       91
<PAGE>

                               MANUFACTURERS & TRADERS TRUST
                               COMPANY, as Secured Party

                               By:_________________________
                               Name:  Gino Martocci
                               Title: Vice President

                     Address for Notices:

                               350 Park Avenue
                               New York, New York 10022
                               Attention: Gino Martocci
                               Telephone: (212) 350-2472
                               Telecopier: (212) 350-2112

                               BANK LEUMI USA

                               By:_________________________
                               Name:  Fred Wilheim
                               Title: Vice President

                     Address for Notices:

                               562 Fifth Avenue
                               New York, New York 10036
                               Attention: Fred Wilheim
                               Telephone: (212) 626-1240
                               Telecopier:(212) 626-1239

                                       92
<PAGE>

                                   SCHEDULE I

                                       TO

                               SECURITY AGREEMENT

                         Offices Where Records Are Kept:

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

                        Other Locations Where Collateral
                           Is Stored, Used or Located:

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

                            Business and Trade Names
                                 Used by Debtor:

                                       93
<PAGE>

SCHEDULE A

                                       TO

                            UCC-1 FINANCING STATEMENT

                     NAMING METEX MFG. CORP., AS DEBTOR, AND

            FLEET BANK NATIONAL ASSOCIATION, AS AGENT FOR ITSELF AND
                      MANUFACTURERS & TRADERS TRUST COMPANY
                     AND BANK LEUMI USA, AS SECURED PARTIES

                  All of the Debtor's  right,  title and  interest,  whether now
existing or hereafter arising, in and to the following:

                  (a)  All  personal  property  of the  Debtor,  whether  now or
hereafter existing or now owned or hereafter  acquired and wherever located,  of
every  kind  and  description,   tangible  or  intangible,   including,  without
limitation,  the balance of every deposit  account now or hereafter  existing of
the  Debtor  with the  Secured  Parties,  or  either  of  them,  or any of their
affiliates or with any agent of the Secured Parties, or either of them or any of
their  affiliates  to the extent such account is maintained by such agent in its
capacity as agent of any kind for the Secured Parties, or either of them, or any
of its affiliates and all goods,  equipment,  furniture,  inventory  (including,
without  limitation,  all raw materials,  finished  goods and  work-in-process),
accounts,  contract  rights,  chattel  paper,  notes  receivable,   instruments,
documents (including, without limitation, documents of title, warehouse receipts
and all other shipping documents and instruments of any kind whatsoever, whether
relating  to goods in  transit  or  otherwise),  general  intangibles,  credits,
claims,  demands and any other obligations of any kind, whether now or hereafter
arising,  of the Debtor and, as to all the foregoing,  any and all additions and
accessions thereto, all substitutions and replacements therefor and all products
and  proceeds  thereof  (including,  without  limitation,  proceeds of insurance
thereon).

                  The  term  "accounts"   shall  mean,   without   limiting  the
generality  of the  foregoing,  any and all now  existing or  hereafter  arising
rights  to  payment  held  by the  Debtor,  whether  in  the  form  of  accounts
receivable,  notes,  drafts,  acceptances  or  other  forms of  obligations  and
receivables  now or  hereafter  received by or  belonging  to the Debtor for (A)
inventory sold or leased by it, (B) services  rendered by it, or (C) advances or
loans  made by it to  customers,  together  with  all  guarantees  and  security
therefor  and  all  proceeds  thereof,   whether  cash  proceeds  or  otherwise,
including,  without  limitation,  all right, title and interest of the Debtor in
the  inventory  which  gave  rise  to  any  such  accounts,  including,  without
limitation,  the  right to  stoppage  in  transit  and all  returned,  rejected,
rerouted or repossessed inventory.

                  (b) All  choses  in  action,  any  rights  arising  under  any
judgment,  statute or rule, all corporate and business records,  customer lists,
credit files,  computer  program  print-outs,  and other computer  materials and
records,  all  inventories,  trademarks,  trade  styles,  trade names,  designs,
patents,  copyrights,  licenses,  license  agreements and any  applications  for
patents and/or trademarks.

                                       94
<PAGE>
                  (c) Any and all  additions  and  accessions  to the  foregoing
Collateral,  all  substitutions  and replacements  therefor and all products and
proceeds thereof (including, without limitation, proceeds of insurance thereon).

                  (d) All sums,  including returned or unearned premiums,  which
may become  payable under or in respect of any policy of insurance  owned by the
Debtor covering or in any manner relating to the Collateral.

                  (e) Any and all deposits or other sums at any time credited by
or due from any of the  Secured  Parties  to the  Debtor  whether  in regular or
special depository accounts or otherwise.

                                       95
<PAGE>
                                    EXHIBIT E

                                     FORM OF
                               OPINION OF COUNSEL

Fleet Bank, National Association
300 Broad Hollow Road
Melville, New York 11747-4850

Manufacturers & Traders Trust Company
_______________________________
_______________________________

Bank Leumi USA
_____________________________
_____________________________

                            Re: United Capital Corp.

Ladies and Gentlemen:

                  We have acted as counsel to United  Capital  Corp., a Delaware
corporation  ("United  Capital")  and  certain  of its  subsidiaries  listed  on
Schedule  "A" hereto (the  "Scheduled  Subsidiaries";  collectively  with United
Capital, the "Obligors") in connection with the execution and delivery by United
Capital of a Credit Agreement dated the date hereof (the "Credit Agreement") and
executed  by and between  United  Capital,  as  borrower,  Fleet Bank,  National
Association, Manufacturers & Traders Trust Company, and Bank Leumi USA, as banks
(the "Banks"); and Fleet Bank, National Association, as Agent. Capitalized terms
used herein and not defined  herein shall have the meaning  given to them in the
Credit Agreement.

                  We have  examined  the  Credit  Agreement  and  all  documents
executed in connection therewith  (collectively,  the "Facility  Documents") and
have examined the originals,  or copies certified or otherwise identified to our
satisfaction,  of the  by-laws  and  the  certificate  of  incorporation  of the
Obligors  and  such  other  documents,   corporate  records,   certificates  and
instruments  as in our judgment are  necessary  or  appropriate  to enable us to
render the opinion  hereinafter  expressed.  In such examination we have assumed
the genuineness of all signatures,  the authenticity of all documents  submitted
to us as originals, the conformity to originals of all documents submitted to us
as certified copies or photocopies and the authenticity of the originals of such
latter documents.

                  As to all questions of fact material to the opinions specified
herein  that  have not  been  independently  established,  we have  relied  upon
certificates  or  comparable  documents of officers and  representatives  of the
Obligors and upon the  representations  and warranties of the Obligors contained
in the Facility Documents.

                                       96
<PAGE>

                  Many of the Facility  Documents  provides  that they are to be
governed by and  construed in accordance  with the laws (in some cases,  without
regard to the conflicts of laws  provisions)  of the State of New York.  For the
purposes  of this  opinion we are  assuming,  but  express no opinion as to such
assumption,  that any court or other  tribunal  outside of the State of New York
which may  interpret the Facility  Documents  would give effect to the choice of
law clause.

                  With  your  permission,  we have  not  examined  title  or any
leases,  mortgages or other documents  governing real estate in which you are to
receive a collateral  interest  pursuant to the  Assignments,  and  accordingly,
express no opinion on whether the execution of the Assignments by the Guarantors
conflicts with, results in a breach, or creates a default under the terms of any
documents  to which the  Guarantors  may be parties or their  properties  may be
subject,  and on  whether  any  such  could  affect  the  enforceability  of any
Assignment.

                  We  express  no opinion  on  whether  any of the  Obligors  is
required  to  qualify  to  do  business  in  any  jurisdiction  other  than  its
jurisdiction  of  incorporation  or what effect,  if any, the failure to qualify
could have on the Obligors.

                  The opinions set forth in paragraph 4 below,  are based solely
on our knowledge and representations of the Company, we have done no independent
investigations as to such matters.

                  On  the   basis  of  the   preceding   and   subject   to  the
qualifications and assumptions set forth herein, we are of the opinion that:

                  1. Each  Obligor  is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the state of its  incorporation,
has all requisite  corporate  power and authority to own its property and assets
and to transact the business in which it is engaged.

                  2. Each  Obligor has full  corporate  power and  authority  to
enter into and perform the Credit Agreement and the Facility  Documents to which
it is a party,  all of which  have been duly  authorized  by all  necessary  and
proper corporate action. No consent or approval (including,  without limitation,
by  shareholders  of any  Obligor) is required as a condition to the validity or
enforceability of the Credit Agreement and the Facility Documents except for any
consents and approvals heretofore delivered to you.

                  3. The Credit  Agreement and the Facility  Documents have been
duly  executed  and  delivered  and  constitute  the valid and  legally  binding
obligations of the Obligors party  thereto,  enforceable in accordance  with its
respective  term.  The  foregoing  is  subject  to  (i)  applicable  bankruptcy,
insolvency,  reorganization,  fraudulent conveyance, moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally,   and  subject,  as  to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement is sought in a proceeding at law or in equity); (ii) the application
or effect of  judicial  decisions  invoking  statutes or  principles  of equity,
including  decisions which have held that certain covenants and other provisions
of  agreements,   including,   without  limitation,   those  providing  for  the
acceleration  of indebtedness  upon the occurrence of events therein  described,
are  unenforceable  in  circumstances  where it cannot be demonstrated  that the
enforcement of such provisions is reasonably necessary for the protection of the
lenders;  (iii)  limitations  upon the enforcement of terms or conditions of the
Facility  Documents  which  may be  construed  and  held by a court to be in the
nature of penalties or forfeitures; and (iv) Lenders acting in good faith and in
a commercially reasonable manner.

                                       97
<PAGE>
                  4.  Except as may be  disclosed  in  Schedules  to the  Credit
Agreement, we are aware of no actions,  suits,  investigations or administrative
proceedings  of or before  any  court,  arbitrator  or  governmental  authority,
pending or threatened against any Obligor or any of their respective  properties
or  assets  which  (i)  either  in any case or in the  aggregate,  if  adversely
determined,  would  materially,  adversely  affect the  business,  operations or
condition,  financial or otherwise,  of the Obligors,  taken as a whole; or (ii)
question the validity of the Agreement and the Facility  Documents or any action
to be taken in connection with the transactions contemplated thereby.

                  5. The execution,  delivery and performance by the Obligors of
the Credit Agreement and the Facility  Documents do not and will not (i) violate
any provision of the corporate  charter or by-laws of any Obligor;  (ii) violate
any  order,  decree or  judgment,  or any  provisions  of any  statute,  rule or
regulation,  domestic or foreign (including,  without limitation,  Regulations U
and X of the Board of Governors of the Federal Reserve System); (iii) violate or
conflict  with,  result in a breach of or  constitute  (with  notice or lapse of
time,  of both) a default  under any  shareholder  agreement,  stock  preference
agreement,  mortgage, indenture or contract to which any Obligor is a party, and
of which we have knowledge,  or (iv) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any property or assets
of any Obligor except as contemplated  by the Credit  Agreement and the Facility
Documents.

                  The opinions  expressed  herein are limited to the laws of the
State of New York,  the corporate  laws of Delaware and Nevada (the other states
of incorporation of the Obligors) and any applicable  federal laws of the United
States of America.  We express no opinion herein with respect to the laws of any
other jurisdiction.

                  This opinion is rendered solely for your benefit in connection
with the  transaction  described  above.  This opinion may not be used or relied
upon  by any  other  person  and may not be-  disclosed,  quoted,  filed  with a
governmental  agency or otherwise referred to without our prior written consent,
and as  otherwise  required by any  Governmental  Authority or pursuant to legal
process,  except that copies of this  opinion (i) may be furnished to and relied
upon by assignees or any of the Lenders,  successors  to any of the Agent or the
Lenders and by counsel to the Lender and (ii) may be furnished  to  participants
of the  Lenders.  We  expressly  disclaim  any duty to update this letter in the
future  in the event  there are any  changes  in  relevant  fact or law that may
affect any of our opinions expressed herein.

                                                  Very truly yours,

cc: Mr. A. F. Petrocelli

                                       98

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