Document:

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                                                                    Exhibit 10.2

                    OPEN-END MORTGAGE AND SECURITY AGREEMENT

                      THIS MORTGAGE SECURES FUTURE ADVANCES

                (All notices to be given to Mortgagee pursuant to
            42 Pa. C.S.A. Section 8143 shall be given as set forth in
                         Section 9.1 of this Mortgage.)

         THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT ("Mortgage") IS MADE as
of the 14th day of February, 2000 by INTERSTATE PITTSBURGH HOTEL HOLDINGS,
L.L.C., a Delaware limited liability company, with an address at Foster Plaza
Ten, 680 Andersen Drive, Pittsburgh, Pennsylvania 15220 ("Mortgagor"), in favor
of PNC BANK, NATIONAL ASSOCIATION, a national banking association, with an
address at One PNC Plaza, P1-POPP-19-2, 249 Fifth Avenue, Pittsburgh, PA 15222
("Mortgagee").

         This Mortgage is an "Open-End Mortgage" as set forth in 42 Pa. C.S.A.
Section 8143 and secures a maximum principal amount of indebtedness (as defined
in such statute) outstanding at any time equal to double the face amount of the
Note (as hereinafter defined), plus accrued and unpaid interest. This Mortgage
also secures advances for the payment of taxes and municipal assessments,
maintenance charges, insurance premiums, costs incurred for the protection of
the Mortgaged Property (as hereinafter define d) or the lien of this Mortgage,
expenses incurred by Mortgagee by reason of an Event of Default (as hereinafter
defined) under this Mortgage and advances for erection, construction, alteration
and repair of the Mortgaged Property or for any other purpose, together with all
other sums due hereunder or secured hereby as hereinafter described.

                                   WITNESSETH:

         WHEREAS, Mortgagor is the owner of a certain tract or parcel of land
described in Exhibit A attached hereto and made a part hereof, together with the
improvements now or hereafter erected thereon; and

         WHEREAS, Mortgagee is making a loan to Mortgagor in an amount not to
exceed Seven Million Five Hundred Sixty Thousand Dollars ($7,560,000) (the
"Loan") to, the proceeds of which will be advanced to Mortgagor pursuant to the
terms and conditions of a Loan Agreement, of even date, (the "Loan Agreement"),
by and between Mortgagor and Mortgagee for the purposes set forth in the Loan
Agreement (all capitalized terms used herein and not otherwise defined shall
have the meaning assigned to such term in the Loan Agreement);

         NOW, THEREFORE, for the purpose of securing the payment and performance
of the following obligations (collectively called the "Secured Obligations"):

         (A) all indebtedness, together with all interest thereon, evidenced by
that certain Mortgage Note, of even date herewith, from Mortgagor to Mortgagee
in the principal face amount of Seven Million Five Hundred Sixty Thousand
Dollars ($7,560,000) (said Mortgage

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Note, as the same may be amended, supplemented or replaced from time to time,
hereinafter called the "Note"), the provisions of the Note being incorporated
herein by this reference;

         (B) all indebtedness, together with all interest thereon, evidenced by
the Loan Agreement, as the same may be amended, supplemented or replaced from
time to time, the provisions of the Loan Agreement being incorporated herein by
this reference;

         (C) any sums advanced by Mortgagee or which may otherwise become due
pursuant to the provisions of the Note or Loan Agreement or this Mortgage or
pursuant to any other document or instrument at any time delivered to Mortgagee
to evidence or secure any of the Secured Obligations or which otherwise related
to any of the Secured Obligations (all such documents and instruments, including
this Mortgage, and any other agreements, documents or instruments hereinabove
referenced, as the same may be amended, supplemented or replaced from time to
time, being collectively referred to herein as the "Loan Documents"); and

         (D) all other obligations of Mortgagor to Mortgagee now existing or
hereafter arising, whether or not pursuant to any other loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Mortgagor to the
Mortgagee or to any other direct or indirect subsidiary of PNC Bank Corp. of any
kind or nature, present or future (including, without limitation, any interest
accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to the Mortgagor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether or not evidenced
by any note, guaranty or other instrument, whether arising under any agreement,
instrument or document, whether or not for the payment of money, whether arising
by reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement, or in any other manner, whether arising out
of overdrafts on deposit or other accounts or electronic funds transfers
(whether through automated clearing houses or otherwise) or out of the
Mortgagee's non-receipt of or inability to collect funds or otherwise not being
made whole in connection with depository transfer check or other similar
arrangements, whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, and any amendments, extensions, renewals
or increases and all costs and expenses of the Mortgagee incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses, provided, nevertheless, that this Mortgage shall
not extend to or secure any obligation of Mortgagor which is defined as
"consumer credit" under Regulation Z promulgated by the Board of Governors of
the Federal Reserve System and which is not exempted from application thereof.

         Mortgagor, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, does hereby give,
grant, bargain, sell, convey, assign, transfer, mortgage, hypothecate, pledge,
set over and confirm unto Mortgagee and does agree that Mortgagee shall have a
security interest in the following described property, all accessions and
additions thereto, all substitutions therefor and replacements and proceeds
thereof, and all reversions and remainders of such property (collectively, the
"Mortgaged Property") now owned or held or hereafter acquired, to wit:

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                  (i) all of Mortgagor's estate in the premises described in
         Exhibit A, together with all of the easements, rights of way,
         privileges, liberties, hereditaments, gores, streets, alleys, passages,
         ways, waters, watercourses, rights and appurtenances thereunto
         belonging or appertaining, and all of the estate, right, title,
         interest, claim and demand whatsoever of Mortgagor therein and in the
         public streets and ways adjacent thereto, either in law or in equity,
         in possession or expectancy (collectively, the "Realty");

                  (ii) the structures and buildings and all additions and
         improvements thereto now or hereafter erected upon the Realty
         (including all Equipment, as hereinafter defined, constituting
         fixtures) (collectively, the "Improvements");

                  (iii) all machinery, apparatus, equipment, fittings,
         appliances and fixtures of every kind and nature whatsoever and
         regardless of whether the same may now or hereafter be attached or
         affixed to the Realty or Improvements, including, without limitation,
         all electrical, antipollution, heating, lighting, incinerating, power,
         air conditioning, plumbing, lifting, cleaning, fire prevention, fire
         extinguishing, refrigerating, ventilating and communication machinery,
         apparatus, equipment, fittings, appliances and fixtures, and all
         engines, pipes, pumps, tanks, motors, conduits, ducts, compressors,
         elevators and escalators, and all articles of personal property and
         goods of every kind and nature whatsoever, including all shades,
         awnings and carpets now or hereafter affixed to, attached to, placed
         upon, or used or usable in any way in connection with the use,
         enjoyment, occupancy or operation of the Realty or Improvements
         (collectively, the "Equipment");

                  (iv) all leases and other agreements now or hereafter in
         existence relating to the use, occupancy or possession of the Realty,
         Improvements or Equipment or any part thereof, and all right, title and
         interest of Mortgagor thereunder, including cash and securities
         deposited thereunder to secure performance by the tenants of their
         obligations thereunder, and including further, the right to amend or
         terminate the same or waive the provisions thereof, and the right to
         receive and collect the rents thereunder and all guaranties thereof
         (collectively, the "Leases");

                  (v) all revenues, income, rents, issues and profits of the
         Realty, Improvements, Equipment and Leases, including, but not limited
         to, the proceeds of all room rentals (collectively, the "Rents"),
         including all proceeds of the conversion, voluntary or involuntary, of
         the Realty, Improvements and Equipment or any part thereof into cash or
         liquidated claims, including proceeds of insurance and condemnation
         awards or payments in lieu thereof;

                  (vi) all Mortgagor's rights and interests in all agreements
         now or hereafter in existence providing for or relating to the
         construction, alteration, maintenance, repair, operation or management
         of the Mortgaged Property or any part thereof, as well as the plans and
         specifications therefor, and all copies thereof (together with the
         right to amend or terminate the same or waive the provisions of the
         foregoing) and any amendments, renewals and replacements thereof; to
         the extent permitted by the relevant authorities, all licenses, permits
         and approvals for the ownership, construction, maintenance, operation,

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         use and occupancy of the Mortgaged Property or any part thereof and any
         amendments, renewals and replacements thereof; all Mortgagor's rights
         and interests in all warranties and guaranties from contractors,
         subcontractors, suppliers and manufacturers to the maximum extent
         permissible relating to the Mortgaged Property or any part thereof; all
         insurance policies covering or affecting the Mortgaged Property or any
         part thereof; all of Mortgagor's now and hereafter arising or acquired
         Accounts, General Intangibles, Goods, Inventory, Chattel Paper,
         Documents and Instruments (as such terms are defined in Article 9 of
         the Pennsylvania Uniform Commercial Code) arising out of, used in
         connection with, or otherwise relating to the Mortgaged Property
         (collectively, the "Other Property").

         TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns, to its own use forever in accordance with the provisions
hereof.

                        1. REPRESENTATIONS AND WARRANTIES

         Mortgagor represents and warrants to Mortgagee as follows:

         1.1      Warranty of Title.

         (a) Mortgagor has good and marketable title to an estate in fee simple
absolute in the Realty and Improvements and has all right, title and interest in
all other property constituting a part of the Mortgaged Property, in each case
free and clear of all liens and encumbrances, except as may otherwise be set
forth on an Exhibit B which may be attached hereto;

         (b) this Mortgage is a valid and enforceable first lien on the
Mortgaged Property (except as aforesaid) and Mortgagee shall, subject to
Mortgagor's right of possession prior to an Event of Default, quietly enjoy and
possess the Mortgaged Property; and

         (c) Mortgagor shall preserve such title as Mortgagor warrants herein
and the validity and priority of the lien hereof and shall forever warrant and
defend the same to Mortgagee against the claims of all persons and parties
whomsoever.

         1.2      Accuracy of Information.

         The information, financial statements and other financial data
furnished to Mortgagee by Mortgagor or any other obligor or guarantor of all or
any portion of the Secured Obligations, including any information furnished with
respect to the Mortgaged Property, are accurate, correct and complete in all
material respects.

         1.3      No Litigation.

         There is no litigation or governmental investigation of any type
pending, or to the best of Mortgagor's knowledge threatened, which questions the
capacity or authority of Mortgagor or any other obligor or guarantor of all or
any portion of the Secured Obligations to fulfill its obligations under this
Mortgage or the other Loan Documents, or if determined adversely, could

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materially affect the business or financial condition of Mortgagor or
Mortgagor's use, ownership, control or occupancy of any portion of the Mortgaged
Property.

         1.4      No Conflicts.

         The execution and delivery of this Mortgage and the other Loan
Documents does not conflict with any statute, rule, judgment or order of any
court or governmental authority by which Mortgagor or any other obligor or
guarantor of all or any portion of the Secured Obligations is bound and does not
conflict with or constitute a default under any contract, agreement or other
document by which Mortgagor or any such obligor or guarantor or the Mortgaged
Property is bound.

         1.5      No Casualty or Taking.

         None of the Mortgaged Property has been damaged by fire or other
casualty which is not now fully restored and no notice of taking by eminent
domain or condemnation of any of the Mortgaged Property has been received and
Mortgagor has no knowledge that any taking is contemplated.

         1.6      Licenses and Permits.

         All licenses, permits, consents and approvals necessary to occupy the
Mortgaged Property and to conduct and operate Mortgagor's business, whether at
the Mortgaged Property or elsewhere, have been obtained and are in full force
and effect, including, but not limited to, all licenses, permits, consents and
approvals required under federal, state or local law relating to occupancy,
zoning, access to public streets, sewage, stormwater drainage, building, health,
employee safety, public safety, environmental and energy matters.

         1.7      Due Organization, Etc.

         Each party (other than individuals) to each of the Loan Documents is
duly organized and validly existing under the laws of the jurisdiction of its
formation and is duly authorized and qualified to do business in each
jurisdiction wherein its activities require such authorization or qualification.
Each of the Loan Documents has been duly executed and delivered by the parties
thereto pursuant to all requisite power and authority. Each of the Loan
Documents constitutes the legal, valid and binding obligation of each of the
parties thereto, enforceable in accordance with its terms. Notwithstanding the
foregoing, Mortgagor does not make any representation or warranty as to
Mortgagee under this Section.

                            2. AFFIRMATIVE COVENANTS

         Until all of the Secured Obligations shall have been fully paid,
satisfied and discharged, Mortgagor shall:

         2.1      Payment and Performance of Secured Obligations.

         Pay or perform all Secured Obligations when due as provided in the Loan
Documents.

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         2.2      Legal Requirements.

         Promptly comply with and conform to all present and future laws,
statutes, codes, ordinances, orders, decrees, regulations and requirements, even
if unforeseen or extraordinary, of every governmental authority or agency and
all covenants, restrictions and conditions which may be applicable to Mortgagor
or to any of the Mortgaged Property or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of any
of the Mortgaged Property (collectively, the "Legal Requirements"), even if such
compliance necessitates structural changes or improvements or results in
interference with the use or enjoyment of any of the Mortgaged Property,
provided that no structural changes shall be made without the prior written
consent of Mortgagee.

         2.3      Impositions.

         (a) Before interest or penalties are due thereon and otherwise when
due, pay all taxes of every kind and nature (including real and personal
property taxes on the Mortgaged Property, income, franchise, withholding,
profits and gross receipts taxes) assessed against Mortgagor or any portion of
the Mortgaged Property, all charges for any easement or agreement maintained for
the benefit of any of the Mortgaged Property, all general and special
assessments (including, without limitation, any condominium or planned unit
development assessments, if any), levies, permits, inspection and license fees,
all mortgages and other liens or encumbrances upon any portion of the Mortgaged
Property, all water and sewer rents and charges, and all other charges and
liens, whether of a like or different nature, even if unforeseen or
extraordinary, now or hereafter imposed upon or assessed against Mortgagor or
any of the Mortgaged Property or arising in respect of the ownership, occupancy,
use or possession thereof. In addition, Mortgagor shall pay promptly on demand
all taxes, assessments and charges which may now or hereafter be imposed upon
Mortgagee by reason of its holding any of the Loan Documents, including
intangibles, business privilege and excise taxes, but excluding any taxes upon
the income derived by Mortgagee upon the interest or other sums collected by
Mortgagee pursuant to the Loan Documents. The obligations referred to in this
Section are hereinafter collectively referred to as the "Impositions". Within
thirty (30) days after the payment of any Imposition, Mortgagor shall deliver to
Mortgagee evidence acceptable to Mortgagee of such payment. Mortgagor shall also
deliver to Mortgagee within ten (10) days of receipt thereof copies of all
settlements and notices pertaining to the Impositions which may be issued by any
governmental authority.

         (b) Subject to the right of Mortgagor to contest the payment of an
Imposition as hereinafter provided, Mortgagee may pay or perform any Imposition
and add the amount so paid or the cost incurred to the Secured Obligations, and
all such amounts shall on demand be due and payable, together with interest
thereon, from the date of such demand at the highest rate applicable to any
portion of the Secured Obligations, but in no event exceeding the highest rate
permitted by law (the "Default Rate").

         (c) Mortgagor may in good faith contest by proper legal proceedings the
validity of any Legal Requirement or the validity or amount of any Imposition,
provided, (i) an Event of Default does not exist; (ii) Mortgagor provides
Mortgagee with security satisfactory to Mortgagee assuring compliance with or
payment of the Legal Requirement or Imposition and any additional charge,
interest, penalty, expense or other payment which may arise from or be incurred
as a result of any delay in such compliance or payment during the course of such
contest, all as estimated from time to time by Mortgagee; and (iii) such contest
operates to

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suspend enforcement of compliance with or collection of the Legal Requirement or
Imposition and is maintained and prosecuted with diligence.

         2.4      Maintenance and Impairment of Security.

         Keep the Mortgaged Property in good condition and order and in a
rentable and tenantable state of repair and will make or cause to be made, as
and when necessary, all repairs, renewals, and replacements, structural and
nonstructural, exterior and interior, foreseen and unforeseen, ordinary and
extraordinary, provided, however, that no structural repairs, renewals or
replacements shall be made without Mortgagee's prior written consent. Mortgagor
shall not remove, demolish or alter the Mortgaged Property nor commit or suffer
waste with respect thereto nor permit the Mortgaged Property to become deserted
or abandoned. Mortgagor shall permit Mortgagee and its agents at any time and
from time to time to enter upon and visit the Mortgaged Property for the purpose
of inspecting and appraising the same. Mortgagor covenants and agrees not to
take or permit any action with respect to the Mortgaged Property which will in
any manner impair the security of this Mortgage.

         2.5      Use of Mortgaged Property.

         Use, and permit others to use, the Mortgaged Property only for uses
permitted under applicable Legal Requirements.

         2.6      Books and Records.

         Maintain and Mortgagee shall have access to complete and adequate books
of account and other records relating to the financing, development,
construction, leasing, management, operation and use of the Mortgaged Property
as Mortgagee may require, and Mortgagor will discuss the finances and business
of Mortgagor with Mortgagee as Mortgagee may request. Such books and records
shall be kept in all material respects in accordance with generally accepted
accounting principles consistently applied. Mortgagor shall permit Mortgagee to
photocopy such books and records on the Mortgaged Property or, if photocopying
facilities are not available on the Mortgaged Property, at a copying facility
selected by Mortgagee in its discretion. Mortgagee may freely share any of such
information with any other affiliated entity or any participating lender with
Mortgagee with respect to any part of the Secured Obligations at any time.

         2.7      [intentionally omitted]

         2.8      Leases.

         (a) Mortgagor shall promptly (i) perform all of the provisions of the
Leases on the part of the landlord thereunder to be performed; (ii) appear in
and defend any action or proceeding in any manner connected with the Leases or
the obligations of Mortgagor thereunder; (iii) within ten (10) days after
request by Mortgagee, deliver to Mortgagee a certificate from each tenant under
the Leases identifying such Lease with particularity and stating that no default
by Mortgagor or such tenant has occurred under the applicable Lease, that no
rent thereunder has been prepaid, except for the current month, and addressing
such other matters as Mortgagee may request; (iv) within ten (10) days after

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request by Mortgagee, deliver a written statement containing the names of all
tenants, the terms of all Leases and the spaces occupied and rentals payable
thereunder and a statement of all Leases which are then in default, including
the nature of the default; (v) deliver to Mortgagee promptly copies of any
notices of default which Mortgagor may at any time forward to or receive from a
tenant of any Lease; and, within ten (10) days after execution, deliver to
Mortgagee a fully executed counterpart of each Lease or a copy thereof.

         (b) Each Lease hereafter executed with respect to the Realty or
Improvements or any part thereof shall provide that (i) the tenant thereunder,
at the request of any transferee in foreclosure of this Mortgage or in lieu
thereof, shall attorn to such other transferee and shall recognize such
transferee as landlord under the Lease, (ii) neither Mortgagee nor any such
transferee or its successors or assigns shall be bound by (A) any prepayment of
an installment or rent or other obligation under any Lease, or (B) any amendment
or modification to any Lease made without the written consent of Mortgagee or
such transferee, or (C) any obligations under the Lease to have been performed
prior to the date that Mortgagee or such transferee shall have acquired title to
the Mortgaged Property, (iii) such Lease shall not be amended, extended or
consensually terminated without the prior written consent of Mortgagee, and (iv)
such Lease shall incorporate the terms of Section 8.9 of this Mortgage. By the
recordation of this Mortgage, the foregoing provisions shall be binding upon
each Lease hereafter executed with respect to the Realty or Improvements, even
if not contained expressly in such Leases. Each tenant, upon request by
Mortgagee or such successor in interest, shall execute and deliver an instrument
or instruments confirming the foregoing provisions.

                              3. NEGATIVE COVENANTS

         Until all of the Secured Obligations shall have been fully paid,
satisfied and discharged:

         3.1      Leases.

         (a) Mortgagor shall not (i) execute an assignment or pledge of the
Rents and/or the Leases other than in favor of Mortgagee; or (ii) accept any
prepayment of an installment of any Rents more than one month prior to the due
date of such installment.

         (b) Mortgagor shall not, without the prior written consent of
Mortgagee, (i) amend, modify, extend or consent to the surrender of any Lease or
give any consent or waiver to any tenant pursuant to any Lease; or (ii) make any
Lease, except for Leases approved in writing by Mortgagee, it being the express
understanding of Mortgagee and Mortgagor that, unless waived in writing by
Mortgagee, Mortgagee shall have the right to approve all terms and conditions of
each Lease.

         3.2      No Other Financing or Liens.

         Without the prior written consent of Mortgagee, other than leases for
certain equipment as set forth on Exhibit C attached hereto, Mortgagor shall not
enter into any lease for any personal property as lessee which is to be used in
connection with the operation of Mortgagor's business at the Mortgaged Property
or create or cause or permit to exist any lien on, or security interest in,
whether voluntary or involuntary, any part of the Mortgaged Property, other than
in favor of Mortgagee.

<PAGE>   9

         3.3      Sale of Mortgaged Property, Etc.

         Mortgagor shall not sell, assign, give, mortgage, pledge, hypothecate,
encumber, lease or otherwise transfer the Mortgaged Property or any part thereof
or interest therein, voluntarily or involuntarily, without Mortgagee's prior
written consent.

         3.4      Maintenance of Existence

         (a) If Mortgagor is other than an individual, Mortgagor will not
dissolve or liquidate nor merge or consolidate with any other entity nor permit
any other entity to merge into it nor amend, supplement or modify its articles
of incorporation, bylaws, partnership agreement or other document relating to
its formation, structure or governance, as the case may be, without the prior
written consent of Mortgagee. Mortgagor shall do all things necessary to
preserve and keep in full force and effect its existence, franchises, rights and
privileges under the laws of the state of its formation and its right to own
property and transact business in each jurisdiction where any part of the
Mortgaged Property is located.

         (b) Unless Mortgagee gives its prior written consent, no interests in
Mortgagor will be sold, assigned, transferred, pledged, mortgaged, hypothecated
or otherwise encumbered, and all such interests shall be maintained in the
percentages existing as of the date of this Mortgage.

                   4. INSURANCE, CONDEMNATION AND RESTORATION

         4.1      Insurance.

         (a) Mortgagor shall maintain the insurance required under Section 4.7
of the Loan Agreement.

         (b) If Mortgagor shall not at any time comply with the terms of this
Section, irrespective of the passage of any grace period, Mortgagee may cure
such non-compliance and may purchase such insurance as it may elect. Mortgagor
shall reimburse Mortgagee on demand for any costs incurred by Mortgagee in
connection with any such actions, together with interest at the Default Rate.
Any such actions by Mortgagee shall not constitute a waiver of any
non-compliance of the terms of this Mortgage by Mortgagor.

         4.2      Rights of Mortgagee to Proceeds.

         In the event of any loss with respect to the project where Mortgagor is
entitled to receive insurance proceeds, Mortgagee shall have the exclusive right
to adjust, collect and compromise all such insurance claims in excess of
$250,000 (hereinafter referred to as a "Major Loss"), and Mortgagor shall not
adjust, collect or compromise any claims for Major Losses under said policies
without the prior written consent of Mortgagee. For Major Losses, each insurer
is hereby authorized and directed to make payment under said policies, including
return of unearned premiums, directly to Mortgagee instead of to Mortgagor and
Mortgagee jointly, and Mortgagor appoints Mortgagee as Mortgagor's
attorney-in-fact to endorse any draft therefor. All insurance proceeds for Major
Losses shall be payable to Mortgagee and such proceeds may, at

<PAGE>   10

Mortgagee's sole option, be applied to all or any part of the Secured
Obligations and in any order (notwithstanding that such Secured Obligations may
not then otherwise be due and payable) or to the repair and restoration of any
of the Mortgaged Property under such terms and conditions as are set forth in
Section 4.4 or otherwise as Mortgagee may impose. Mortgagee shall not be deemed
to have elected such option until such option is elected specifically in
writing. Until so elected, Mortgagee shall not in any circumstances be deemed to
have waived its right to make such election.

         4.3      Condemnation.

         Mortgagor, immediately upon obtaining knowledge of the institution of
any proceedings for the condemnation or taking by eminent domain of any of the
Mortgaged Property, shall notify Mortgagee of the pendency of such proceedings.
Mortgagee may participate in any such proceedings and Mortgagor shall deliver to
Mortgagee all instruments requested by it to permit such participation. Any
award or compensation for property taken or for damage to property not taken,
whether as a result of such proceedings or in lieu thereof, is hereby assigned
to and shall be received and collected directly by Mortgagee, and any award or
compensation shall be applied, at Mortgagee's option, to any part of the Secured
Obligations and in any order (notwithstanding that any of such Secured
Obligations may not then be due and payable) or to the repair and restoration of
any of the Mortgaged Property under such terms and conditions as are set forth
in Section 4.4 or otherwise as Mortgagee may impose. Mortgagee shall not be
deemed to have elected such option until such option is elected specifically in
writing. Until so elected, Mortgagee shall not in any circumstances be deemed to
have waived its right to make such election.

         4.4      Restoration.

         (a) All amounts received by Mortgagee pursuant to this Article and
which Mortgagee, at its sole option, permits to be applied to the restoration of
the Mortgaged Property may either be held in a restoration fund ("Restoration
Fund") by Mortgagee or, if it refuses to serve, a bank or trust company
appointed by Mortgagee which has a combined capital and surplus of not less than
$100,000,000 as restoration fund trustee (the "Restoration Fund Trustee") with
any additions thereto that may be required by Mortgagee as hereinafter provided.
The interest or income, if any, received on all deposits or investments of any
monies in the Restoration Fund shall be added to the Restoration Fund. If
Mortgagee consents to the deposit of such funds in an interest-bearing account
or otherwise consents to the investment of such funds, neither Mortgagee nor the
Restoration Fund Trustee shall be liable or accountable for any loss resulting
from any such deposit or investment or for any withdrawal, redemption or sale of
deposits or investments. Mortgagee and the Restoration Fund Trustee may impose
reasonable charges for services performed in managing the Restoration Fund and
may deduct such charges therefrom. Restoration shall be performed only in
accordance with the following conditions:

                  (i) prior to commencement of restoration and from time to time
         during restoration, Mortgagee may require Mortgagor to deposit
         additional monies into the Restoration Fund in amounts which, in
         Mortgagee's judgment, are sufficient to defray all costs to be incurred
         to complete the restoration and all costs associated therewith,
         including labor, materials, architectural and design fees and expenses
         and contractor's fees and expenses, and Mortgagee shall have approved a
         budget and cost breakdown for the restoration, together with a
         disbursement schedule, in detail satisfactory to Mortgagee;

<PAGE>   11

                  (ii) prior to commencement of restoration, the contracts,
         contractors, plans and specifications for the restoration shall have
         been approved by Mortgagee and all governmental authorities having
         jurisdiction, and Mortgagee shall be provided with satisfactory title
         insurance and acceptable surety bonds insuring satisfactory completion
         of the restoration and the payment of all subcontractors and
         materialmen;

                  (iii) all restoration work shall be done under fixed price
         contracts, fully bonded;

                  (iv) at the time of any disbursement, an Event of Default or
         any event or conditions which with the passage of time or the giving of
         notice, or both, would constitute an Event of Default shall not have
         occurred, no mechanics' or materialmen's liens shall have been filed
         and remain undischarged and an endorsement satisfactory to Mortgagee to
         its title insurance policy shall have been delivered to Mortgagee;

                  (v) disbursements from the Restoration Fund shall be made from
         time to time, but not more frequently than once each calendar month,
         for completed work under the aforesaid contracts (subject to retainage)
         and for other costs associated therewith and approved by Mortgagee upon
         receipt of evidence satisfactory to Mortgagee of the stage of
         completion and of performance of the work in a good and workmanlike
         manner in accordance with the contracts, plans and specifications as
         approved by Mortgagee;

                  (vi) Mortgagor will pay the cost of Mortgagee's inspecting
         architect or engineer and the cost of any attorney's fees and
         disbursements incurred by Mortgagee in connection with such
         restoration;

                  (vii) Mortgagee shall have the option to retain up to ten
         percent (10%) of the cost of all work until the restoration is fully
         completed, as determined by Mortgagee, and all occupancy permits
         therefor have been issued;

                  (viii) Mortgagee may impose such other reasonable conditions,
         including a restoration schedule, as are customarily imposed by
         construction lenders to assure complete and lien-free restoration;

                  (ix) any sum remaining in the Restoration Fund upon completion
         of restoration shall, at Mortgagee's option, be applied to any part of
         the Secured Obligations and in any order (notwithstanding that any of
         such Secured Obligations may not then be due and payable) or be paid to
         Mortgagor.

         (b) If within 120 days after the occurrence of any loss or damage to
the Mortgaged Property Mortgagor shall not have submitted to Mortgagee and
received Mortgagee's approval of plans and specifications for the repair,
restoration or rebuilding of such loss or damage or shall not have obtained
approval of such plans and specifications from all governmental authorities
whose approval is required or if, after such plans and specifications are
approved by Mortgagee and by all such governmental authorities, Mortgagor shall
fail to commence promptly such repair, restoration or rebuilding or if
thereafter Mortgagor fails to carry

<PAGE>   12

out diligently such repair, restoration or rebuilding or is delinquent in the
payment to mechanics, materialmen or others of the costs incurred in connection
with such work or if any other condition of this paragraph is not satisfied
within 120 days after the occurrence of any such loss or damage, then Mortgagee,
in addition to all other rights herein set forth, and after giving Mortgagor
thirty (30) days written notice of the nonfulfillment of one or more of the
foregoing conditions, may, failing Mortgagor's fulfillment of said conditions
within said thirty (30)-day period, at Mortgagee's option, (A) declare all
Secured Obligations immediately due and payable, and/or (B) perform or cause to
be performed such repair, restoration or rebuilding and may take such other
steps as Mortgagee may elect to carry out such repair, restoration or rebuilding
and may enter upon the Mortgaged Property for any of the foregoing purposes, and
Mortgagor hereby waives, for itself and all others holding under it, any claim
against Mortgagee and any receiver and their respective agents (other than a
claim based upon the alleged gross negligence or intentional misconduct of
Mortgagee or any such receiver or agent) arising out of anything done by them or
any of them pursuant to this paragraph and Mortgagee may, in its discretion,
apply any insurance or condemnation proceeds held by it to reimburse itself
and/or such receiver for all amounts expended or incurred by it in connection
with the performance of such work, including attorneys' fees, and any excess
costs shall be paid by Mortgagor to Mortgagee, and Mortgagor's obligation to pay
such excess costs shall be secured by the lien of this Mortgage and shall bear
interest at the Default Rate until paid.

         (c) Mortgagor waives any and all right to claim or recover against
Mortgagee, its officers, employees, agents and representatives for loss of or
damage to Mortgagor, the Mortgaged Property, Mortgagor's property or the
property of others under Mortgagor's control from any cause insured against or
required to be insured against by the provisions of this Mortgage.

                                   5. DEFAULT

         5.1      Events of Default.

         The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:

         (a) a failure to pay any Secured Obligations when due in accordance
with the terms thereof;

         (b) Mortgagor shall fail to perform or observe any of the obligations
in Article 3 or 4 of this Mortgage;

         (c) a failure by Mortgagor to duly perform and observe any other
provision in this Mortgage, and such failure shall continue for a period of
thirty (30) days after notice from Mortgagee;

         (d) a failure by Mortgagor to duly perform and observe any other
provision in any of the other Loan Documents, and such failure continues beyond
the grace period, if any, set forth therein or the occurrence of any defined
"default" or "event of default" under any of the Loan Documents (it being
understood that any such default or event of default shall be additional Events
of Default hereunder and shall not be construed to be in substitution of any
other Events of Default);

<PAGE>   13

         (e) any representation or warranty made by Mortgagor herein or in any
of the Loan Documents, or in any other instrument or document which pertains to
or is delivered in connection with any of the Secured Obligations, shall prove
to be incorrect, now or hereafter, in any material respect;

         (f) Mortgagor, or any obligor or guarantor of any of the Secured
Obligations, shall become insolvent or unable to pay its or his or her debts as
the same mature, or a petition shall be filed by Mortgagor or any such party in
bankruptcy or seeking the appointment of a receiver, trustee or conservator for
Mortgagor or any such party or for any portion of its or his or her property, or
for reorganization or to effect a plan or other arrangement with or for the
benefit of creditors of Mortgagor or any such party, or Mortgagor or any such
party shall consent to the appointment of a receiver, trustee or conservator for
Mortgagor or any such party or for any portion of its or his or her property;

         (g) a petition shall be filed against Mortgagor or any obligor or
guarantor of any of the Secured Obligations in bankruptcy or seeking the
appointment of a receiver, trustee or conservator for Mortgagor or any such
party or for any portion of its or his or her property, or for reorganization or
to effect a plan or other arrangement with or for the benefit of creditors of
Mortgagor or any such party, and such petition shall not be dismissed within
sixty (60) days thereafter;

         (h) any attachment proceeding shall be commenced against Mortgagee or
any obligor or guarantor of any of the Secured Obligations for the collection of
any indebtedness or liability;

         (i) foreclosure proceedings shall be instituted against the Mortgaged
Property upon any other lien or claim whether alleged to be superior or junior
to the lien of this Mortgage;

         (j) the Improvements shall be substantially damaged or destroyed by an
uninsured or inadequately insured casualty;

         (k) Mortgagor shall fail to deliver any certification or other document
or instrument requested by Mortgagee pursuant to the Loan Documents within ten
(10) days after receipt of request;

         (l) Mortgagor shall fail to comply with any duty or obligation imposed
pursuant to Article 7 hereof, or any warranty or representation contained
therein shall be incorrect or misleading; or

         (m) Mortgagor shall at any time deliver or cause to be delivered to
Mortgagee a notice pursuant to 42 Pa. C.S.A. Section 8143 electing to limit the
indebtedness secured by this Mortgage.

         5.2      Demand Obligation.

<PAGE>   14

         Nothing in this Mortgage or any of the other Loan Documents shall be
construed to limit the applicability of any term of the Loan Documents providing
for the payment of any Secured Obligations on demand.

                                   6. REMEDIES

         6.1      Rights and Remedies of Mortgagee.

         If an Event of Default occurs, Mortgagee may, at its option and
notwithstanding any contrary provisions in the Loan Documents, without demand,
notice or delay, do one or more of the following:

         (a) Mortgagee may declare the entire unpaid principal balance of the
Secured Obligations, together with all interest thereon, to be due and payable
immediately (and in the case of an Event of Default under subsection 5.1(f), (g)
or (h), all such indebtedness shall automatically and immediately become due and
payable without notice or any other act).

         (b) Mortgagee may (i) institute and maintain an action of mortgage
foreclosure against the Mortgaged Property and the interests of Mortgagor
therein, (ii) institute and maintain an action on any instruments evidencing the
Secured Obligations or any portion thereof, and (iii) take such other action at
law or in equity for the enforcement of any of the Loan Documents as the law may
allow, and in each such action Mortgagee shall be entitled to all costs of suit
and attorneys' fees.

         (c) Mortgagee may, in its sole and absolute discretion, and without
releasing Mortgagor or any other obligor or guarantor from any obligation under
any of the Loan Documents and without waiving any Event of Default: (i) collect
any or all of the Rents, including any Rents past due and unpaid, (ii) perform
any obligation or exercise any right or remedy of Mortgagor under any Lease, or
(iii) enforce any obligation of any tenant of any of the Mortgaged Property.
Mortgagee may exercise any right under this subsection (c) whether or not
Mortgagee shall have entered into possession of any of the Mortgaged Property,
and nothing herein contained shall be construed as constituting Mortgagee a
"mortgagee in possession", unless Mortgagee shall have entered into and shall
continue to be in actual possession of the Mortgaged Property. Mortgagor hereby
authorizes and directs each and every present and future tenant of any of the
Mortgaged Property to pay all Rents directly to Mortgagee and to perform all
other obligations of that tenant for the direct benefit of Mortgagee, as if
Mortgagee were the landlord under the Lease with that tenant, immediately upon
receipt of a demand by Mortgagee to make such payment or perform such
obligations. Mortgagor hereby waives any right, claim or demand it may now or
hereafter have against any such tenant by reason of such payment of Rents or
performance of obligations to Mortgagee, and any such payment or performance to
Mortgagee shall discharge the obligations of the tenant to make such payment or
performance to Mortgagor. Mortgagor shall indemnify Mortgagee and hold Mortgagee
harmless from and against any and all claims, liability, damage, cost and
expense (including attorneys' fees) which may be asserted against or incurred by
Mortgagee by reason of any obligations of Mortgagor to perform any provision of
any Lease. Mortgagee may apply the Rents received by Mortgagee to the payment of
any one or more of the following, in such order and amounts as Mortgagee, in its
sole discretion, may elect, whether or not the same be then due: the Secured
Obligations, liens on any of the Mortgaged Property, Impositions, claims,
insurance premiums, other carrying charges, invoices of persons who at any time
have supplied goods or services to or for the benefit of any

<PAGE>   15

of the Mortgaged Property, and all other costs and expenses of maintenance,
repair, restoration, management, operation, ownership, use, leasing, occupancy,
protection, security, insurance, alteration or improvement of any of the
Mortgaged Property, costs of enforcing Mortgagee's rights under the Loan
Documents, including any foreclosure sale hereunder, and including all
attorneys' fees and costs. Mortgagee may, in its sole discretion, determine the
method by which, and extent to which, the Rents will be collected and
obligations of tenants enforced; and Mortgagee may waive or fail to perform or
enforce any provision of any Lease. Mortgagee shall not be accountable for any
Rents or other sums it does not actually receive. Mortgagor hereby appoints
Mortgagee as its attorney-in-fact effective upon an Event of Default to perform
all acts which Mortgagor is required or permitted to perform under any and all
Leases.

         (d) Mortgagee may, without releasing Mortgagor or any obligor or
guarantor of any of the Secured Obligations from any obligation under any of the
Loan Documents and without waiving any Event of Default, enter upon and take
possession of the Mortgaged Property or any portion thereof, with or without
legal action and by force if necessary, or have a receiver appointed without
proof of depreciation or inadequacy of the value of the Mortgaged Property, the
insolvency of Mortgagor, or any other proof. Mortgagee or said receiver may
manage and operate the Mortgaged Property, make, cancel, enforce or modify the
Leases or any of them, obtain and evict tenants, establish or change the amount
of any Rents, and perform any acts and advance any sums which Mortgagee deems
proper to protect the security of this Mortgage, all such sums to be payable on
demand, together with interest thereon at the Default Rate, from the date of
such demand, and such sums and interest to be secured by this Mortgage.

         (e) Mortgagee may take possession of the Equipment and Other Property,
or any portion thereof, and may use and deal with the same to the same extent as
Mortgagor is entitled to do so and may sell the same pursuant to law and
exercise such other rights and remedies with respect to the same as may be
provided by law, and file such continuation statements which it deems desirable.

         6.2      Sale in Parcels or Units.

         In case any sale under this Mortgage occurs by virtue of judicial
proceedings, the Mortgaged Property may be sold in one parcel or unit and as an
entity, or in such parcels or units, and in such manner or order, as Mortgagee
in its sole discretion may elect.

         6.3      Confession of Judgment in Ejectment.

         At any time after the occurrence of an Event of Default, without
further notice, regardless of whether Mortgagee has asserted any other right or
exercised any other remedy under this Mortgage or any of the other Loan
Documents, it shall be lawful for any attorney licensed in the Commonwealth of
Pennsylvania as attorney for Mortgagor to confess judgment in ejectment against
Mortgagor and all persons claiming under Mortgagor for the recovery by Mortgagee
of possession of all or any part of the Mortgaged Property, for which this
Mortgage shall be sufficient warrant. If for any reason after such action shall
have commenced the same shall be determined and the possession of the Mortgaged
Property remain in or be restored to Mortgagor, Mortgagee shall have the right
upon any subsequent default or defaults to bring one or more

<PAGE>   16

amicable action or actions as hereinbefore set forth to recover possession of
all or any part of the Mortgaged Property.

         6.4      Remedies Cumulative.

         All remedies contained in this Mortgage are cumulative and Mortgagee
also has all other remedies provided by law or in equity or in any of the other
Loan Documents. No delay or failure by Mortgagee to exercise any right or remedy
under this Mortgage will be construed to be a waiver of that right or remedy or
a waiver of any Event of Default. Mortgagee may exercise any one or more of its
rights and remedies without regard to the adequacy of its security. One or more
of the other Loan Documents may contain provisions pursuant to which all or a
part of the Secured Obligations shall become immediately and automatically due
and payable upon the occurrence of certain events described therein. Nothing in
this Mortgage shall be construed as limiting the effectiveness of such
provisions, and in the event of any inconsistency with the terms of this
Mortgage, those provisions more advantageous to Mortgagee shall govern.

         6.5      No Merger.

         (a) If Mortgagee or any other person or entity owning or holding this
Mortgage shall acquire or shall become vested with the fee title to the
Mortgaged Property or any other estate or interest in the Mortgaged Property,
such estates shall not merge as a result of such acquisition and shall remain
separate and distinct from all other estates and interests in the Mortgaged
Property for all purposes after such acquisition. The lien and security interest
created hereby shall not be destroyed or terminated by the application of the
doctrine of merger and, in such event, Mortgagee nor such other person or entity
shall continue to have and enjoy all of the rights and privileges of Mortgagee
hereunder as to each separate estate unless and until Mortgagee nor such other
person or entity shall affirmatively elect in writing to merge such estates.

         (b) Upon the foreclosure of the lien created hereby on the Mortgaged
Property, as herein provided, any Leases then existing shall not be destroyed or
terminated by application of the doctrine of merger or by operation of law or as
a result of such foreclosure unless Mortgagee or any purchaser at a foreclosure
sale shall so elect by written notice to the lessee in question.

         (c) THE OBLIGATIONS OF THE MORTGAGOR AND THE RIGHTS AND REMEDIES OF THE
MORTGAGEE HEREUNDER OR UNDER ANY OF THE LOAN DOCUMENTS OR THE SECURED
OBLIGATIONS SHALL CONTINUE AFTER AND SURVIVE THE ENTRY OF JUDGMENT HEREUNDER OR
THEREUNDER; IT BEING THE INTENTION OF THE PARTIES HERETO THAT SUCH RIGHTS,
REMEDIES AND OBLIGATIONS SHALL NOT MERGE INTO OR BE EXTINGUISHED BY ANY SUCH
JUDGMENT BUT SHALL CONTINUE UNTIL THE SECURED OBLIGATIONS HAVE BEEN IRREVOCABLY
PAID IN FULL.

                            7. ENVIRONMENTAL MATTERS

         7.1      Environmental Warranty.

<PAGE>   17

         Mortgagor hereby agrees that the Environmental Indemnity Agreement is
hereby incorporated herein by reference.

                      8. ADDITIONAL RIGHTS AND OBLIGATIONS

         8.1      Installments for Insurance, Taxes and Other Charges.

         Without limiting the effect of any other provision of this Mortgage,
Mortgagor shall, if requested by Mortgagee, pay to Mortgagee monthly with
Mortgagor's payment on the Note an amount equal to one-twelfth (1/12) of the
annual premiums for the insurance policies referred to hereinabove and the
annual Impositions and any other item which at any time may be or become a lien
upon the Mortgaged Property (the "Escrow Charges"); and on demand from time to
time Mortgagor shall pay to Mortgagee any additional sums necessary to pay when
due all Escrow Charges. The amounts so paid shall be security for the Secured
Obligations and shall be used in payment of the Escrow Charges so long as no
Event of Default shall have occurred. No amount so paid to Mortgagee shall be
deemed to be trust funds but may be commingled with general funds of Mortgagee,
nor shall any sums paid bear interest. Upon the occurrence of an Event of
Default, Mortgagee shall have the right, at its election, to apply any amount so
held against the Secured Obligations due and payable in such order as Mortgagee
may deem fit, and Mortgagor hereby grants to Mortgagee a lien upon and security
interest in such amounts for such purpose. At Mortgagee's option, Mortgagee from
time to time may waive, and after any such waiver may reinstate, the provisions
of this Section 8.1. In the event the interest of Mortgagor in the Mortgaged
Property is sold or otherwise transferred, voluntarily or involuntarily, then
all of the interest of Mortgagor in and to the sums held by Mortgagee shall vest
in the successor to the interest of Mortgagor in the Mortgaged Property,
subject, nevertheless, to the rights of Mortgagee hereunder.

         8.2      Mortgagee's Right to Protect Security.

         Mortgagee is hereby authorized to do any one or more of the following,
irrespective of whether an Event of Default has occurred: (a) appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Mortgagee hereunder; (b) take such action as Mortgagee may
determine to pay, perform or comply with any Impositions or Legal Requirements,
to cure any Events of Default and to protect its security in the Mortgaged
Property, including the recordation or filing of financing statements and other
documents to further assure the enforceability or priority of Mortgagee's liens
and security interests, advance sums on behalf of Mortgagor to pay, perform or
comply with any Imposition, Legal Requirement, prohibited lien, claims, costs
and expenses in connection with the Mortgaged Property, including payment for
utilities, fuel or any other necessary maintenance expenses, fees, insurance and
repairs; and for the purpose of exercising any such powers and all other rights
and powers granted by this Mortgage to Mortgagee, Mortgagee is hereby appointed
attorney-in-fact for Mortgagor. All sums paid by or otherwise owing to Mortgagee
under this Section shall be paid by Mortgagor to Mortgagee on demand, and until
paid such sums shall be added to the principal secured hereby, shall be included
as part of the Secured Obligations and shall bear interest at the Default Rate
from the date of demand.

         8.3      Mortgagee's Costs and Expenses.

<PAGE>   18

         In the event of an Event of Default or the exercise by Mortgagee of any
of its rights hereunder, or if Mortgagee shall become a party, either as
plaintiff or defendant or otherwise, to any suit or legal proceeding affecting
any of the Mortgaged Property or the Secured Obligations, or if review and
approval of any document, or any other matter related to any of the Secured
Obligations, is required by, or requested of, Mortgagee, Mortgagor shall pay to
Mortgagee on demand its costs, expenses and attorneys' fees incurred in
connection therewith. If such amounts are not paid, they shall be added to the
principal secured hereby, shall be included as part of the Secured Obligations
and shall bear interest at the Default Rate from the date of demand.

         8.4      Security Agreement Under Uniform Commercial Code.

         This Mortgage is a Security Agreement as defined in the Uniform
Commercial Code. Notwithstanding the filing of a financing statement covering
any of the Mortgaged Property in the records normally pertaining to personal
property, at Mortgagee's option all of the Mortgaged Property, for all purposes
and in all proceedings, legal or equitable, shall be regarded (to the extent
permitted by law) as part of the Realty, whether or not any such item is
physically attached to the Realty or Improvements. The mention in any such
financing statement of any of the Mortgaged Property shall not be construed as
in any way altering any of the rights of Mortgagee or adversely affecting the
priority of the lien granted hereby or by any other Loan Document, but such
mention in the financing statement is hereby declared to be for the protection
of Mortgagee in the event any court shall at any time hold that notice of
Mortgagee's priority of interest, to be effective against any third party, must
be filed in the Uniform Commercial Code records. This Mortgage constitutes a
fixture filing under the Uniform Commercial Code.

         8.5      Assignment of Loan Documents; Estoppel Certificates.

         Mortgagor agrees that nothing herein shall be deemed to prohibit the
assignment or negotiation, with or without recourse, of any of the Loan
Documents or any interest of Mortgagee therein, or the assignment of this
Mortgage. Mortgagor further agrees that, if requested by Mortgagee, Mortgagor
shall certify to the assignee of this Mortgage, to Mortgagee, and to such other
persons as Mortgagee may request from time to time that this Mortgage is in full
force and effect, the amount or amounts of the Secured Obligations, the terms of
the Loan Documents, whether any offsets, claims, counterclaims or defenses exist
with respect to the payment of the Secured Obligations or the performance of the
Loan Documents and such other matters as Mortgagee or any assignee may require.

         8.6      Waivers by Mortgagor.

         Mortgagor, to the extent permitted by law, hereby waives all errors and
imperfections in any proceedings instituted by Mortgagee under any of the Loan
Documents and all benefit of any present or future statute of limitation or
repose, or moratorium law, or any other present or future law, regulation or
judicial decision which (a) exempts any of the Mortgaged Property or any other
property, real or personal, or any part of the proceeds arising from any sale
thereof from attachment, levy or sale under execution, (b) provides for any stay
of execution, marshaling of assets, exemption from civil process, redemption,
extension of time for payment or valuation or appraisement of any of the
Mortgaged Property, or (c) conflicts with any provision of any of the Loan
Documents.

         8.7      Payment of Fees.

<PAGE>   19

         The Mortgagor will pay all filing, registration and recording fees, and
all expenses incident to the preparation, execution, acknowledgment, filing and
recording of this Mortgage, any financing statements, releases, continuation
statements, and any instruments of further assurance and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Mortgage and the other Loan Documents.

         8.8      Further Assurances.

         Mortgagor agrees to execute such further assurances, documents and
instruments as may be desirable by Mortgagee for the purposes of further
evidencing, carrying out and/or confirming this Mortgage and for all other
purposes intended by this Mortgage.

         8.9      Subordination to Leases.

         At the option of Mortgagee, this Mortgage shall become subject and
subordinate, in whole or in part (but not with respect to the priority of
entitlement to insurance proceeds or any award in condemnation or with respect
to any option to purchase), to any and all Leases, upon the execution by
Mortgagee and recording thereof, at any time hereafter, in the office of the
Recorder of Deeds in and for the county wherein the Realty is situate, of a
unilateral declaration to that effect.

         8.10     Subrogation.

         If the proceeds of any loan or other credit extended by Mortgagee, the
repayment of which is hereby secured, is used directly or indirectly to pay off,
discharge or satisfy, in whole or in part, any prior lien or encumbrance upon
the Mortgaged Property or any part thereof, then Mortgagee shall be subrogated
to any additional security held by the holder of such lien or encumbrance.

         8.11     Restatement of Representations and Warranties.

         Each representation or warranty made by Mortgagor in this Mortgage or
in any other Loan Document or certificate related thereto shall be deemed to be
restated as of the date of each advance made or credit extended by Mortgagee
constituting a Secured Obligation.

         8.12     Acceleration.

         In order to accelerate the maturity of the indebtedness hereby secured
because of the failure of Mortgagor to pay any tax assessment, liability,
obligation or encumbrance upon the Mortgaged Property as herein provided, it
shall not be necessary that Mortgagee shall first pay the same.

                            9. MISCELLANEOUS MATTERS

         9.1      Notices.

<PAGE>   20

         (a) Except as otherwise provided in this Mortgage, all notices
hereunder shall be in writing and shall be deemed to have been duly given for
all purposes when delivered in person, or when deposited in the United States
mail, by registered or certified mail, return receipt requested, directed to the
party to receive the same at the addresses set forth at the beginning of this
Mortgage or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be waived.
Copies of all notices by Mortgagor pursuant to this Section must be sent to:

                  Marcus & Shapira, LLP
                  35th Floor, One Oxford Centre
                  301 Grant Street
                  Pittsburgh, Pennsylvania 15219
                  Attention: Carrie Kochenbach, Esq.

         (b) All notices given to Mortgagee by any person or entity (other than
Mortgagor) pursuant to 42 Pa. C.S.A. Section 8143(c) or (d) shall be in writing
and shall be sent exclusively by registered or certified mail, return receipt
requested, to Mortgagee at the address set forth above.

         9.2      Governing Law.

         This Mortgage shall be interpreted in accordance with the law of the
jurisdiction in which the Realty is located, without regard to principles of
conflicts of law.

         9.3      Status of Parties.

         It is understood and agreed that the relationship of the parties is
that of Mortgagor and Mortgagee and that nothing herein shall be construed to
constitute a partnership, joint venture or co-tenancy between Mortgagor and
Mortgagee.

         9.4      Severability.

         In the event any one or more of the provisions contained in this
Mortgage shall for any reason be held to be inapplicable, invalid, illegal, or
unenforceable in any respect, such inapplicability, invalidity, illegality or
unenforceability shall not affect any other provision of this Mortgage, but this
Mortgage shall be construed as if such inapplicable, invalid, illegal or
unenforceable provision had never been contained herein.

         9.5      Successors and Assigns.

         All of the grants, covenants, terms, provisions and conditions herein
shall run with the land and shall apply to, bind and inure to the benefit of the
successors and assigns of Mortgagor and Mortgagee.

         9.6      Time of Essence.

<PAGE>   21

         Time is of the essence as to all of Mortgagor's obligations hereunder
and under the other Loan Documents and under any and all other documents
relating in any manner to any of the Secured Obligations.

         9.7      Section Headings.

         The section headings in this Mortgage are used only for convenience in
finding the subject matters and are not part of this Mortgage or to be used in
determining the intent of the parties or otherwise interpreting this Mortgage.

         9.8      Performance by Mortgagee.

         Any act which Mortgagee is permitted to perform under the Loan
Documents may be performed at any time and from time to time by Mortgagee or any
person or entity designated by Mortgagee.

         9.9      Attorney-in-Fact.

         Each appointment of Mortgagee as attorney-in-fact for Mortgagor in this
Mortgage is irrevocable and coupled with an interest.

         9.10     Refusal of Consent.

         Except as otherwise specified herein, Mortgagee has the right to refuse
to grant its consent whenever such consent is required under this Mortgage.

         9.11     Joint and Several Obligations.

         If there is more than one party identified in this Mortgage as
"Mortgagor", then each such party so identified shall be liable, jointly and
severally, for all obligations of Mortgagor hereunder, and all references to
"Mortgagor" herein shall refer to each such party individually and to all, or
any two or more, of such parties collectively.

         9.12     No Oral Modification.

         This Mortgage may be modified, amended, discharged or waived only by an
agreement in writing, signed by all of the parties hereto.

         9.13     Defeasance.

         If Mortgagor pays to Mortgagee in full the Secured Obligations, then
this Mortgage shall become void.

         9.14     WAIVER OF JURY TRIAL.

         MORTGAGOR WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS MORTGAGE OR ANY
OF THE OTHER LOAN DOCUMENTS OR ANY OF THE

<PAGE>   22

TRANSACTIONS RELATED TO ANY OF THE LOAN DOCUMENTS. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY MORTGAGOR AND MORTGAGOR ACKNOWLEDGES THAT
NEITHER MORTGAGEE NOR ANY PERSON ACTING ON BEHALF OF MORTGAGEE HAS OR HAVE MADE
ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY
TO MODIFY OR NULLIFY ITS EFFECT. MORTGAGOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS MORTGAGE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL. MORTGAGOR AGREES THAT THE OBLIGATION EVIDENCED BY THIS
MORTGAGE IS AN EXEMPTED TRANSACTION UNDER THE TRUTH-IN-LENDING ACT, 15 U.S.C.
SECTION 1061, ET SEQ. MORTGAGOR FURTHER ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS THE MEANING OF THIS WAIVER PROVISION AND AS EVIDENCE OF THIS FACT
SIGNS ITS INITIALS.

                                                                   /s/ JWR
                                                                  --------------
                                                         (INITIALS OF MORTGAGOR)

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE>   23
         IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed the day and year first above written.

WITNESS/ATTEST:                    INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.

                                   By: Interstate Property Partnership, L.P., a
                                   Delaware limited partnership, its sole Member

                                       By: Interstate Property Corporation, a
                                       Delaware corporation, General Partner

/s/ PATRICIA SHEARER               By: /s/ J. WILLIAM RICHARDSON
----------------------                 -----------------------------------------
                                   Title: Vice-President
                                          --------------------------------------
<PAGE>   24

                              CERTIFICATE OF RESIDENCE

The undersigned certifies that the residence of Mortgagee is One PNC Plaza,
P1-POPP-19-2, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222.

                                   By: /s/ CARRIE KOCHENBACH
                                       ---------------------------------------
                                   Title: Attorney for Mortgagee
                                          ------------------------------------<PAGE>   1
                                                                    Exhibit 10.3

                      AGREEMENT OF GUARANTY AND SURETYSHIP
                                    (PAYMENT)

         In order to induce PNC BANK, NATIONAL ASSOCIATION, a national banking
association, with its principal office at One PNC Plaza, 249 Fifth Avenue,
P1-POPP-19-2, Pittsburgh, Pennsylvania 15222-2707, Attention: Real Estate
Banking (hereinafter called "Lender"), to make a mortgage loan in the principal
amount of (the "Loan") to INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., a
Delaware limited liability company ("Borrower") pursuant to a certain Loan
Agreement of even date herewith between Borrower and Lender (the "Loan
Agreement"), undersigned, intending to be legally bound, and for good and
valuable consideration, receipt of which is hereby acknowledged, covenants and
agrees as follows:

         1. In this Agreement of Guaranty and Suretyship (this "Agreement"), the
following terms shall have the meanings specified in this Section 1 unless the
context otherwise requires and all other capitalized terms used and not
otherwise expressly defined herein shall have the meaning ascribed to such terms
in the Loan Agreement:

         "Loan Debt Service" shall mean the sum of all interest payments as
shall become due under the provisions of the Note (as hereinafter defined) and
Loan Agreement.

         2. Subject to the provisions of Section 3 hereof, if applicable,
undersigned unconditionally guarantees and become surety for the full and timely
payment, whether by declaration, acceleration or otherwise, by Borrower of the
principal of and interest on all the following (hereinafter collectively
referred to as the "Obligations"):

                  (i) all principal, interest and other sums due or to become
         due under that certain Mortgage Note, of even date herewith, given by
         Borrower to Lender in the principal amount of Seven Million Five
         Hundred Sixty Thousand Dollars ($7,560,000), as the same may be
         amended, supplemented, renewed or replaced from time to time (the
         "Note"), and

                  (ii) all sums now or hereafter to be paid by either or both
         Borrower under all other agreements, instruments and documents given to
         Lender to evidence, secure or otherwise support the indebtedness
         evidenced by the Note (all such agreements, instruments and documents,
         including the Note, as the same may be amended, supplemented, renewed
         or replaced from time to time being hereinafter referred to as the
         "Loan Documents").

         3. Notwithstanding any other provision contained in this Agreement to
the contrary, the Obligations of the undersigned hereunder shall be limited to
(a) the amount of $3,000,000 plus (b) all unpaid Loan Debt Service calculated at
the rate or rates set forth in Section 3.1 of the Loan Agreement. At any given
time, the Obligations of the undersigned hereunder determined pursuant to this
Paragraph 3 are referred to as the "Liability Limitation".

         The Liability Limitation shall be reduced by payments made directly by
the undersigned to the Lender after acceleration of the indebtedness evidenced
by the Note and shall not include any amounts received by the Lender from any
other party or source or realized as a result of the

<PAGE>   2

exercise of the rights in collateral furnished by any other party or source,
including, without limitation, the Borrower. In order for a payment to be
construed as having been made directly by the undersigned, the undersigned shall
cause such payment to be delivered in person or by mail, to any Vice-President
of the Lender's Real Estate Banking Department or by wire with written
confirmation to any Vice-President of the Lender's Real Estate Banking
Department and such payment shall contain a written statement by undersigned
that such payment is being made in satisfaction of its Obligations, subject to
the Liability Limitation under this Agreement.

         4. Undersigned agrees to pay the Obligations, subject to the Liability
Limitation immediately when due, irrespective of whether or not any one or more
of the following events have occurred: (i) Lender has made any demand on
Borrower; (ii) Lender has taken any action of any nature against Borrower; (iii)
Lender has pursued any rights which Lender has against any other person who may
be liable for any of the Obligations; (iv) Lender holds or has resorted to any
security for any of the Obligations; or (v) Lender has invoked any other
remedies or rights Lender has available with respect to any of the Obligations.
The liability of undersigned as surety and guarantor is unconditional.
Undersigned therefore agrees to pay the Obligations even if any of the Loan
Documents, or any part thereof, are for any reason invalid or unenforceable.
Undersigned further agrees to make full payment to Lender even if circumstances
exist which otherwise constitute a legal or equitable discharge of undersigned
as surety or guarantor.

         5. Undersigned waives and agrees not to enforce any of the rights of
undersigned against Borrower unless and until Borrower are no longer liable in
any respect to Lender, including, but not limited to: (i) any right of
undersigned to be subrogated in whole or in part to any right or claim with
respect to any of the Obligations or any portion thereof to Lender which might
otherwise arise from partial payment or performance by undersigned to Lender on
account of the Obligations or any portion thereof; and (ii) any right of
undersigned to require the marshaling of assets of Borrower which might
otherwise arise from partial payment or performance by undersigned to Lender on
account of the Obligations or any portion thereof.

         6. Undersigned waives any and all notice with respect to: (i)
acceptance by Lender of this Agreement or any of the Loan Documents; and (ii)
the provisions of any of the Loan Documents or any other instrument or agreement
relating to the Obligations; and (iii) any default in connection with the
Obligations.

         7. Undersigned waives any presentment, demand, notice of dishonor or
nonpayment, protest, notice of protest and notice of non-payment in connection
with the Obligations.

         8. Undersigned agrees that Lender may do any of the following without
notice to undersigned and without adversely affecting the validity or
enforceability of this Agreement or any other agreement, document or instrument
given by undersigned to Lender in connection with this Agreement or the
Obligations, including, without limitation, any mortgage or other security
instrument given by undersigned to secure its Obligations under this Agreement:
(i) release, surrender, exchange, compromise or settle the Obligations, or any
part thereof; (ii) change, renew or waive the terms of the Obligations, or any
part thereof; (iii) change, renew or waive the terms of any of the Loan
Documents or any other note, instrument or agreement relating to the
Obligations, such rights in Lender to include without limitation the right to
change the rate of interest charged to Borrower (in which event the Obligations
shall be deemed also to include all interest at such changed rate); (iv) grant
any extension or indulgence with respect to the payment

<PAGE>   3

or performance of the Obligations or any part thereof; (v) enter into any
agreement of forbearance with respect to the Obligations, or any part thereof;
(vi) release, surrender, exchange or compromise any security held by Lender for
any of the Obligations; (vii) release any person who is a guarantor or surety or
who has agreed to purchase the Obligations or any part thereof; and (viii)
release, surrender, exchange or compromise any security or lien held by Lender
for the liabilities of any person who is guarantor or surety for the Obligations
or any part thereof. Undersigned agrees that Lender may do any of the above as
Lender deems necessary or advisable, in Lender's sole discretion, without giving
any notice to undersigned, and that undersigned will remain liable for full
payment and performance of the Obligations, subject to the Liability Limitation.
If at any time all or any part of any payment theretofore applied by Lender to
any of the liabilities is or must be rescinded or returned by Lender for any
reason whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of either Borrower), such liability shall, for the purposes of
this Agreement, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by Lender, and this Agreement shall continue to be effective or be
reinstated, as the case may be, as to such liabilities, all as though such
application by Lender had not been made.

         9. Undersigned, as security for the obligations of the undersigned
hereunder, pledges to Lender, and grants to Lender a security interest in and a
right of set-off against, all moneys, deposits and other property of any kind
owned by undersigned or in which undersigned has an interest and which are or
shall be in the possession or control of Lender at any time for any reason
whatsoever.

         10. Undersigned agrees that no failure on the part of Lender to
exercise any of its rights under this Agreement shall be a waiver of such rights
or a waiver of any default by undersigned. Undersigned further agrees that no
waiver or modification of any rights of Lender under this Agreement shall be
effective unless in writing and signed by an authorized officer of Lender.
Undersigned further agrees that each written waiver shall extend only to the
specific instance actually recited in such written waiver and shall not impair
the rights of Lender in any other respect.

         11. Undersigned agrees to pay all costs and expenses, including
attorneys' fees, incurred by Lender in enforcing this Agreement against
undersigned. Undersigned further agrees to pay all costs and expenses, including
attorneys' fees, incurred by Lender in collecting or enforcing or attempting to
collect or enforce the Obligations.

         12. Undersigned acknowledges that Lender may, in its sole discretion,
elect to enforce this Agreement for the total Obligations, subject to the
Liability Limitation or any part thereof, against undersigned without any duty
or responsibility to pursue any other person or entity and that such an election
by Lender shall not be a defense to any action Lender may elect to take against
undersigned.

         13. Undersigned agrees that this Agreement shall be binding upon
undersigned, and undersigned's respective heirs, executors, administrators,
successors or assigns, and that the death or disability of any person shall in
no way impair or affect this Agreement or the power of attorney to confess
judgment as hereinafter provided, either with respect to the estate of the

<PAGE>   4

person so dying, which shall continue to be bound, or otherwise. Undersigned
further agrees that this Agreement shall inure to the benefit of Lender, its
successors and assigns.

         14. Undersigned agree that this Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
Undersigned agrees that the Courts of Common Pleas of Allegheny County,
Pennsylvania and the United States District Court for the Western District of
Pennsylvania shall have exclusive jurisdiction and venue with respect to all
actions by or against undersigned under or pursuant to this Agreement and hereby
consents to the jurisdiction of such courts and to service of process, effective
upon receipt by personal service, overnight express delivery or registered or
certified mail to undersigned at the address given below undersigned's signature
hereto. Undersigned shall promptly notify Lender in writing of any change in
undersigned's address.

         15. Undersigned recognizes that this agreement when executed
constitutes a sealed instrument and as a result the instrument will be
enforceable as such without regard to any statute of limitations which might
otherwise be applicable and without any consideration.

         16. Until payment in full of all Bank Debt, satisfaction of all of
Borrower's other obligations under the Loan Documents, the undersigned shall
comply at all times with the following covenants (as reflected on the financial
statements of the undersigned prepared and delivered to the Lender in accordance
with Exhibit C Section (c) of the Loan Agreement):

                  (i) Cash and Cash Equivalents. The amount of the undersigned's
Cash and Cash Equivalents shall not be less than $8,000,000 at any given time;

                  (ii) Debt Multiple Ratio. The Debt Multiple Ratio with respect
to undersigned shall not exceed 3.00 to 1.00;

                  (iii) Current Ratio. The undersigned shall maintain a Current
Ratio of at least 1.25 to 1.00; and

                  (iv) Net Worth. The Net Worth of undersigned shall not be less
than $50,000,000 excluding minority interest.

         17. This Agreement may be executed in several counterparts, each of
which shall be an original and all of which together shall constitute but one
and the same instrument.

         18. CONFESSION OF JUDGMENT. UNDERSIGNED ACKNOWLEDGES THAT (A) IT HAS
READ AND UNDERSTAND, AFTER CONSULTATION WITH ITS COUNSEL, THAT THE PROVISIONS OF
THE FOLLOWING PARAGRAPH COULD ENABLE LENDER TO OBTAIN A JUDGMENT AGAINST
UNDERSIGNED AND COMMENCE EXECUTION PROCEEDINGS THAT COULD RESULT IN THE SEIZURE
OF ASSETS OF UNDERSIGNED, IN EITHER CASE, WITHOUT UNDERSIGNED HAVING THE BENEFIT
OF PRIOR NOTICE OF A HEARING; AND (B) UNDERSIGNED NEVERTHELESS KNOWINGLY AND
VOLUNTARILY AGREES TO SUCH POSSIBLE CONSEQUENCES AND THE PROVISIONS OF THE
FOLLOWING PARAGRAPH.

<PAGE>   5

          UNDERSIGNED HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD WITHIN
THE COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR UNDERSIGNED AND, WITH OR WITHOUT
A COMPLAINT OR DECLARATION FILED, CONFESS A JUDGMENT OR JUDGMENTS AGAINST
UNDERSIGNED IN ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA, AT
ANY TIME AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE LOAN DOCUMENTS,
IN FAVOR OF LENDER OR ITS SUCCESSORS OR ASSIGNS FOR THE UNPAID PRINCIPAL BALANCE
OF THE NOTE, AND ALL INTEREST THEREON, TOGETHER WITH COSTS OF SUIT AND AN
ATTORNEY'S COMMISSION OF 10% FOR COLLECTION. THE AUTHORITY AND POWER TO APPEAR
FOR AND ENTER JUDGMENT AGAINST UNDERSIGNED SHALL NOT BE EXHAUSTED BY ONE OR MORE
EXERCISES THEREOF, AND MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS LENDER
OR ITS SUCCESSORS OR ASSIGNS SHALL DEEM NECESSARY OR DESIRABLE. THE VALIDITY OF
ANY JUDGMENT ENTERED UNDER THE AUTHORITY OF THIS WARRANT SHALL NOT BE ADVERSELY
AFFECTED BY THE OCCURRENCE OF ANY OF THE EVENTS DESCRIBED IN PARAGRAPH 8 OF THIS
AGREEMENT AND ANY SUCH JUDGMENT SHALL BE FULLY ENFORCEABLE UP TO THE AMOUNT OF
THE OBLIGATIONS AT THE TIME ENFORCEMENT OF THE JUDGMENT IS SOUGHT, PLUS AN
ATTORNEY'S COMMISSION OF 10% FOR COLLECTION, EVEN THOUGH ANY OF THE EVENTS
DESCRIBED IN PARAGRAPH 8 HAVE OCCURRED. UNDERSIGNED HEREBY FOREVER WAIVES AND
RELEASES ANY AND ALL ERRORS IN SAID PROCEEDINGS, WAIVES STAY OF EXECUTION, STAY,
CONTINUANCE OR ADJOURNMENT OF SALE ON EXECUTION, THE RIGHT TO PETITION TO SET
ASIDE OR ORDER A RESALE, THE RIGHT TO EXCEPT TO THE SHERIFF'S SCHEDULE OF
PROPOSED DISTRIBUTION, THE RIGHT OF INQUISITION AND EXTENSION OF TIME OF
PAYMENT, AND AGREES TO CONDEMNATION OF ANY PROPERTY LEVIED UPON BY VIRTUE OF ANY
EXECUTION ISSUED ON ANY SUCH JUDGMENT, AND UNDERSIGNED SPECIFICALLY WAIVES ALL
EXEMPTIONS FROM LEVY AND SALE OF ANY PROPERTY THAT NOW IS OR MAY HEREAFTER BE
EXEMPT UNDER ANY EXISTING OR FUTURE LAWS OF THE UNITED STATES OF AMERICA OR THE
COMMONWEALTH OF PENNSYLVANIA OR OF ANY OTHER JURISDICTION.

         19. In the event that any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.

         20. UNDERSIGNED WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE
LOAN DOCUMENTS. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY
UNDERSIGNED AND UNDERSIGNED ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON
ACTING ON BEHALF OF LENDER HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY

<PAGE>   6

OR NULLIFY ITS EFFECT. UNDERSIGNED FURTHER ACKNOWLEDGES THAT UNDERSIGNED HAVE
BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING
OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT UNDERSIGNED HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. UNDERSIGNED AGREES THAT THE OBLIGATIONS
EVIDENCED BY THIS AGREEMENT ARE EXEMPTED TRANSACTIONS UNDER THE TRUTH-IN-LENDING
ACT, 15 U.S.C. SECTION 1601, ET SEQ.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE>   7

         IN WITNESS WHEREOF, undersigned, intending to be legally bound, has
executed this Agreement as of the 14th day of February, 2000.

WITNESS:

                                            INTERSTATE HOTELS CORPORATION,
                                            a Maryland corporation

                                            By: /s/ J. WILLIAM RICHARDSON
                                               ---------------------------------
                                            Title: Vice Chairman and CFO
------------------------------                    ------------------------------

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