Document:

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                                                                  Exhibit 10.18

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                  THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is executed
as of the 1st day of May, 2000 ("Closing Date"), by VALLEY NATIONAL GASES, INC.,
a West Virginia corporation (the "Company"), VALLEY NATIONAL GASES INCORPORATED,
a Pennsylvania corporation ("VNGI"), VALLEY NATIONAL GASES DELAWARE, INC., a
Delaware corporation ("VNGDI"), and BANK ONE, INDIANA, NATIONAL ASSOCIATION, a
national banking association ("Bank One"), LASALLE BANK NATIONAL ASSOCIATION, a
national banking association ("LaSalle"), FIRSTAR, N.A. (formerly, Star Bank,
National Association), a national banking association with its principal office
in Cincinnati, Ohio ("Firstar"), BANK OF AMERICA, N.A. (successor to
NationsBank, N.A.), a national banking association ("B of A"), NATIONAL CITY
BANK, a national banking association,("National City"), THE HUNTINGTON NATIONAL
BANK, a national banking association ("Huntington"), WESBANCO BANK, INC.
"WesBanco"), and SKY BANK ("Sky Bank") (collectively, the "Signatory Lenders"),
National City, as syndication agent ("Syndication Agent"), Huntington, as
documentation agent for the Lenders ("Documentation Agent"), and Bank One, as
administrative and collateral agent for the Lenders (in such capacity, the
"Agent"; Syndication Agent, Documentation Agent and Agent being collectively
referred to as the "Agents").

                                    RECITALS

                  1. The Company, VNGDI, VNGI, the Initial Lenders, PNC Bank,
National Association ("PNC") and the Agent, are parties to an Amended and
Restated Credit Agreement, dated January 23, 1998 (as the same has been amended,
modified and supplemented prior to the Closing Date and as in effect immediately
prior to the execution of this Agreement, the "Original Agreement").

                  2. The Company is a wholly-owned Subsidiary of VNGDI, and
VNGDI is a wholly-owned Subsidiary of VNGI.

                  3. By Transfer Agreement, dated as of the Closing Date (the
"Transfer Agreement"), PNC has sold, transferred and assigned to Bank One,
WesBanco and Sky Bank and/or the Agent specified interests in and obligations
under the Original Agreement and the documents executed in connection therewith
and the indebtedness, obligations and liabilities evidenced thereby, arising
therefrom, pursuant to or by virtue thereof, such interests aggregating all of
PNC's rights, title and interests therein and obligations and lending
commitments thereunder.

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                  4. The Company, VNGDI and VNGI (referred to herein
collectively, as the "Credit Parties", and individually as a "Credit Party")
have requested the Signatory Lenders and the Agent to amend, and as so amended,
restate the Original Agreement, subject to and in accordance with the terms of
this Agreement.

                                    AGREEMENT

                  NOW THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein, and each act performed and to be performed
hereunder, the Signatory Lenders, the Agent and the Credit Parties agree to
amend, and as so amended, restate, the Original Agreement as follows:

                                    ARTICLE I

                               DEFINITION OF TERMS

         Section 1.01. ACCOUNTING TERMS -- DEFINITIONS. All accounting and
financial terms used in this Agreement are used with the meanings such terms
would be given in accordance with GAAP except as may be otherwise specifically
provided in this Agreement. The following terms have the meanings indicated when
used in this Agreement with the initial letter capitalized:

         "Acquisition Seller Debt" means, collectively (i) the Existing
         Acquisition Seller Debt, and (ii) any deferred purchase price of a New
         Acquisition payable by the Company to the Acquisition Sellers or any of
         them with respect to that New Acquisition evidenced by or payable under
         the terms of a promissory note or non-compete agreement or other Debt
         instrument.

         "Acquisition Sellers" means, collectively (i) the Existing Acquisition
         Sellers, and (ii) any and all Persons from whom the Company acquires a
         New Acquisition, and when used in the singular form, means any of the
         Acquisition Sellers, as the context so requires.

         "Additional EBITDA Amount" means such amount as may be approved by the
         Agent in its sole discretion of EBITDA of a Related Business Entity
         acquired in a New Acquisition for the twelve (12) calendar month period
         immediately preceding the New Acquisition Closing Date for such New
         Acquisition or for such other twelve (12)

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         calendar month period preceding such New Acquisition Closing Date as
         may be agreed and approved by the Agent, provided that, such amount is
         subject to redetermination by Bank One at its sole discretion to
         reflect elimination of expenses (including salaries, benefits and
         associated payroll costs for employees who have been identified for
         termination as a result of the New Acquisition and are to be
         terminated; rent expenses for leases that are to be terminated within
         sixty (60) days of closing of the New Acquisition; reduction of cost of
         goods sold due to lower gas margins from increased volume discounts;
         and any other identifiable, immediate net cost savings deemed
         applicable by the Agent) of such Related Business Entity by virtue of
         the acquisition.

         "Adjusted LIBOR Rate" means, with respect to any LIBOR Advance and the
         related Interest Period, the per annum rate obtained by dividing (i)
         the LIBOR Rate for such LIBOR Advance and related Interest Period, by
         (ii) an amount equal to one minus the stated maximum rate (expressed as
         a decimal) of all reserve requirements (including, without limitation,
         any marginal, emergency, supplemental, special or other reserves) that
         is specified on the first day of such Interest Period by the Board of
         Governors of the Federal Reserve System (or any successor agency
         thereto) for determining the maximum reserve requirement with respect
         to eurocurrency funding (currently referred to as "Eurocurrency
         liabilities" in Regulation D of such Board) maintained by a member bank
         of such System.

         "Advance" means a disbursement of proceeds of the Revolving Loans.

         "Affiliate" means, with respect to any Person, any officer, shareholder
         or director of such Person and any Person or group acting in concert in
         respect of the Person in question that, directly or indirectly,
         controls or is controlled by or is under common control with such
         Person.

         "Agent" has the meaning ascribed to such term in the preamble of this
         Agreement.

         "Agent Fee Agreement" has the meaning ascribed to such term in Section
         2.08 of this Agreement.

         "Agents" has the meaning ascribed to such term in the preamble to this
         Agreement.

         "Aggregate Commitment" means the aggregate of the Commitments of all of
         the Lenders, as reduced from time to time pursuant to the terms of this
         Agreement.

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         "Agreement" means this Second Amended and Restated Credit Agreement, as
         amended, modified, supplemented and/or restated from time to time and
         at any time.

         "Applicable LOC Fee Percentage" means the rate per annum at which the
         commission due on each Letter of Credit will be calculated, which rate
         shall be determined by reference to the Ratio of Total Funded Debt to
         EBITDA in accordance with the following table:

                  Ratio of
         Total Funded Debt to EBITDA           Applicable LOC Fee Percentage
         ---------------------------           -----------------------------
               3.75 or above                                 1.50%
                3.50 to 3.74                                 1.25%
                3.00 to 3.49                                 1.00%
                2.50 to 2.99                                 0.75%
                2.00 to 2.49                                 0.75%
                  Below 2.00                                 0.75%

The Applicable LOC Fee Percentage shall be determined on the Closing Date on the
basis of the Ratio of Total Funded Debt to EBITDA for the Credit Parties and
their respective Subsidiaries in effect on the Closing Date (which the Company
and the Lenders agree for purposes of the Applicable LOC Fee Percentage, the
Applicable Spread and the Applicable Unused Commitment Fee Percentage shall be
between 3.50 and 3.74 as of the Closing Date) and shall be redetermined, based
on the Ratio of Total Funded Debt to EBITDA as of the close of each fiscal
quarter of the Company thereafter, concurrently with each adjustment to the
"Ratio of Total Funded Debt to EBITDA" (as provided in the definition of Ratio
of Total Funded Debt to EBITDA in this Agreement), with such redetermined
Applicable LOC Fee Percentage to be effective as and for the period provided in
the definition of "Ratio of Total Funded Debt to EBITDA."

         Notwithstanding the foregoing, the Applicable LOC Fee Percentage shall
be as follows if, and during any period the Letter of Credit Exposure (including
any Letter of Credit requested to be issued) exceeds that amount equal to twenty
percent (20%) of the sum of the then-outstanding principal balance of the
Obligations (inclusive of the then-outstanding Letter of Credit Exposure):

                    Ratio
         Total Funded Debt to EBITDA           Applicable LOC Fee Percentage
         ---------------------------           -----------------------------

                3.75 or above                              2.250%
                 3.50 to 3.74                              2.125%
                 3.00 to 3.49                              1.875%
                 2.50 to 2.99                              1.625%
                 2.00 to 2.49                              1.250%
                   Below 2.00                              1.000%

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         Notwithstanding the foregoing, the Applicable LOC Fee Percentage shall
be as follows if, and during any period, the reimbursement obligations of the
Company to Bank One under the applicable Reimbursement Agreement and this
Agreement for such Letter of Credit are fully secured by Cash Collateral:

                  Ratio of
         Total Funded Debt to EBITDA           Applicable LOC Fee Percentage
         ---------------------------           -----------------------------

               3.75 or above                               0.75%
                3.50 to 3.74                               0.75%
                3.00 to 3.49                               0.75%
                2.50 to 2.99                               0.50%
                2.00 to 2.49                               0.50%
                  Below 2.00                               0.50%

         "Applicable Spread" means the percentage per annum to be taken into
         account in determining any LIBOR-based Rate and any Prime-based Rate as
         provided in this Agreement, which number shall be determined by
         reference to the Ratio of Total Funded Debt to EBITDA in accordance
         with the following table:

           Ratio of
         Total Funded             If Determining a         If Determining a
         Debt to EBITDA           Prime-based Rate         LIBOR-based Rate
         --------------           ----------------         ----------------

         3.75 or above                  0.50%                     2.25%
          3.50 to 3.74                  0.25%                    2.125%
          3.00 to 3.49                     0%                    1.875%
          2.50 to 2.99                     0%                    1.625%
          2.00 to 2.49                     0%                     1.25%
        less than 2.00                     0%                     1.00%

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                  The Applicable Spread shall be determined on the Closing Date
                  on the basis of the Ratio of Total Funded Debt to EBITDA for
                  the Credit Parties and their respective Subsidiaries in effect
                  on the Closing Date, as provided in the definition of "Ratio
                  of Total Funded Debt to EBITDA" in this Agreement, and shall
                  be redetermined and adjusted concurrently with any adjustment
                  to the Ratio of Total Funded Debt to EBITDA, as provided in
                  the definition of "Ratio of Total Funded Debt to EBITDA" in
                  this Agreement, with prospective effect until so redetermined
                  and adjusted.

         "Applicable Unused Commitment Fee Percentage" means the percentage per
         annum determined by reference to the Ratio of Total Funded Debt to
         EBITDA in accordance with the following table:

         Ratio of Total Funded                Applicable Unused Commitment
             Debt to EBITDA                           Fee Percentage
         ---------------------                ----------------------------
              3.75 or above                                0.50%
               3.50 to 3.74                                0.50%
               3.00 to 3.49                               0.375%
               2.50 to 2.99                               0.375%
               2.00 to 2.49                                0.25%
             less than 2.00                                0.25%

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                  The Applicable Unused Commitment Fee Percentage shall be
                  determined on the Closing Date on the basis of the Ratio of
                  Total Funded Debt to EBITDA in effect on the Closing Date, as
                  provided in the definition of "Ratio of Total Funded Debt to
                  EBITDA" in this Agreement, and shall be redetermined and
                  adjusted concurrently with any adjustment to the Ratio of
                  Total Funded Debt to EBITDA, as provided in the definition of
                  "Ratio of Total Funded Debt to EBITDA" in this Agreement, with
                  prospective effect until so redetermined and adjusted.

         "Application for Revolving Loans Advance" means a written application
         of the Company for an Advance substantially in the form of EXHIBIT A
         attached hereto.

         "Arranger" means Banc One Capital Markets, Inc., its successors and
         assigns.

         "Asset Sale Payment" has the meaning ascribed to such term in Section
         2.06 of this Agreement.

         "Authorized Officer" means the President or the Chief Financial Officer
         of the Company or such other officer whose authority to perform acts to
         be performed only by an Authorized Officer under the terms of this
         Agreement is evidenced to the Agent by a certified copy of an
         appropriate resolution of the Board of Directors of the Company.

         "Bank One" has the meaning ascribed to such term in the preamble to
         this Agreement.

         "Bank One Prime Rate" means a variable per annum interest rate at all
         times equal to the per annum interest rate established by Bank One from
         time to time as its "prime rate," such rate to change contemporaneously
         with each change in such established per annum rate (it being
         acknowledged that such announced or established

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         rate may not necessarily be the lowest rate charged by Bank One to any
         of its customers and shall not necessarily be representative of the
         rate of interest actually charged by Bank One on any loan or class of
         loans).

         "Banking Day" means a day on which the principal office of Bank One in
         the City of Indianapolis, Indiana, is open for the purpose of
         conducting substantially all of the Lender's business activities.

         "Budgeted Acquisition Capital Expenditures" means, Capital Expenditures
         made by the Company for or in connection with a New Acquisition and
         which are actually incurred at or within twelve (12) months after the
         New Acquisition Closing Date and do not exceed in the aggregate the
         budgeted total of Capital Expenditures for such New Acquisition, as set
         forth in a Capital Expenditure Budget for the New Acquisition provided
         to the Agent by the Company within thirty (30) days after the New
         Acquisition Closing Date.

         "Capital Expenditures" for any period shall mean the aggregate amount
         of all expenditures (whether paid in cash or accrued as a liability) of
         the Credit Parties and their respective Subsidiaries, computed on a
         consolidated basis, during such period that to the extent required by
         GAAP are required to be included in or reflected as property, plant or
         equipment or similar fixed asset account in any Financial Statements,
         including any acquisition, construction or installation of properties
         or for any additions and improvements thereto or any replacement
         thereof and the amount capitalized under any Capital Lease, less the
         net cash proceeds from any dispositions to the extent specifically
         permitted under this Agreement.

         "Capital Lease" shall mean any lease of property (whether real,
         personal or mixed) which, to the extent required by GAAP, is accounted
         for as a capital lease or a Capital Expenditure on the consolidated
         balance sheet of the Credit Parties and their respective Subsidiaries.

         "Cash Collateral" means any and all cash (or qualified investment
         property as may be acceptable to the Required Lenders in their sole
         discretion) required or permitted to be pledged by any Person to the
         Agent for the pro rata benefit of the Lenders and the Agent under this
         Agreement as security for all or any part of the Obligations, which
         shall be held by the Agent for the benefit of the Lenders and the
         Agent, as secured parties, in a cash or securities collateral account
         maintained with the Agent ("Collateral Account") under which the Agent
         for the benefit of the Lenders and the Agent are granted a pledge,
         security interest and Lien in and to the Collateral Account, the cash
         and any and all other investment property or other property at any time
         held in the Collateral Account, and all

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         proceeds and substitutions of any of the foregoing (collectively, the
         "Collateral Account Property"), pursuant to a pledge agreement, account
         control agreement and such other security and collateral assignment
         documents as may be required by the Required Lenders to attach and
         perfect and maintain perfection of such security interests and liens in
         the Collateral Account Property, all in form and substance satisfactory
         in all respects to the Required Lenders.

         "Change of Control" means: VNGDI shall cease to own Voting Stock of the
         Company in an aggregate representing 100% of the total aggregate voting
         power of all classes of the Voting Stock of the Company, calculated on
         a fully diluted basis, including Convertible Securities convertible
         into or exchangeable for Voting Stock of the Company; or VNGI shall
         cease to own Voting Stock of VNGDI in an aggregate representing 100% of
         the total aggregate voting power of all classes of the Voting Stock of
         VNGDI, calculated on a fully diluted basis, including Convertible
         Securities convertible into or exchangeable for Voting Stock of VNGDI.

         "Closing Date" has the meaning ascribed to such term in the preamble to
         this Agreement.

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

         "Collateral" means all present and future assets of each of the Credit
         Parties and their respective Subsidiaries upon which a Lien is
         purported to be created by this Credit Agreement, any security
         agreement or any other Loan Document executed in connection with,
         pursuant to or by virtue of this Credit Agreement, and all proceeds and
         products of any of the foregoing.

         "Commitment" means, with respect to each Lender, its commitment to make
         Advances, to lend its portion of the Term Loan, and to issue or risk
         participate as to Letters of Credit as set forth in Article II of this
         Agreement. The amounts of the initial Commitment of each Lender with
         respect to the Revolving Loans, the Letters of Credit and the Term Loan
         are set forth on EXHIBIT B attached to this Agreement and made a part
         hereof for all purposes, as amended from time to time and at any time
         in accordance with the terms of this Agreement.

         "Commitment Percentage" shall mean, when used with reference to any
         Lender and any described aggregate or total amount, an amount equal to
         the result obtained by multiplying such described aggregate or total
         amount by the percentage set opposite its designation on EXHIBIT B
         under the heading and caption "Commitment Percentage", as amended from
         time to time and at any time in accordance with the terms of this

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         Agreement, or as the context requires, shall mean, when used with
         reference to any Lender, the percentage set opposite its designation on
         EXHIBIT B under the heading "Commitment Percentage", as amended from
         time to time and at any time in accordance with the terms of this
         Agreement.

         "Common Stock" means, with respect to any corporation, the common stock
         of such corporation, and any class of capital stock of such corporation
         now or hereafter authorized having the right to share in distributions
         either of earnings or assets of such corporation without limit as to
         amount or percentage.

         "Company" has the meaning ascribed to such term in the preamble to this
         Agreement.

         "Company's Auditors" means one of the six (6) largest independent
         certified public accounting firms in the U.S.

         "Company Pledge Agreement" has the meaning ascribed to such term in
         Section 4.01(f) of this Agreement.

         "Company Security Agreement" means the Amended and Restated Security
         Agreement, dated as of the Closing Date, executed by the Company in
         favor of the Agent for the benefit of the Lenders and the Agent, in
         form and substance the same as EXHIBIT D to this Agreement, as the same
         has been and hereafter may be amended, modified, supplemented and/or
         restated from time to time and at any time.

         "Consolidated Net Income" means, for any period, the net income of the
         Credit Parties and their respective Subsidiaries, computed on a
         consolidated basis and in accordance with GAAP for such period.

         "Consolidated Net Worth" means, as of the date any determination
         thereof is to be made, the net worth of the Credit Parties and their
         respective Subsidiaries, computed on a consolidated basis in accordance
         with GAAP as of such date.

         "Convertible Securities" means evidences of indebtedness, shares of
         stock or other securities which are convertible into or exchangeable
         for, with or without payment of additional consideration, shares of
         Common Stock, either immediately or upon the arrival of a specified
         date or the happening of a specified event.

         "Credit Enhancement" means, in reference to the prohibited purposes of
         Letters of Credit described in Section 2.03(a) of this Agreement, the
         enhancement or support of or security

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         for any credit extended or to be extended by any Person to the Company
         or any Subsidiary or Affiliate of the Company or any other Credit
         Party, including any Debt of the Company for borrowed money, Capital
         Lease obligations, and any guarantees, endorsements and other
         contingent obligations of the Company or any other Credit Party with
         respect to indebtedness, liabilities or obligations of any other
         Person; provided, that, the term "Credit Enhancement" shall not include
         Acquisition Seller Debt.

         "Credit Party" and "Credit Parties" have the respective meanings
         ascribed to such terms in the Recitals to this Agreement.

         "Debt" means, with reference to any Person, all indebtedness,
         liabilities and obligations, contingent or otherwise, which in
         accordance with GAAP should be classified upon such Person's balance
         sheet as liabilities, but in any event including (without duplication)
         liabilities secured by any lien on property owned or acquired by such
         Person (whether or not the liability secured thereby shall have been
         assumed and whether or not such Person is personally liable for the
         payment thereof), obligations under leases which have been (or which in
         accordance with GAAP should be) capitalized for financial reporting
         purposes, and all guarantees, endorsements and other contingent
         obligations of such Person with respect to indebtedness, liabilities or
         obligations of others.

         "Draft" means a drawing or other demand for payment under a Letter of
         Credit.

         "EBITDA" means, with respect to the Credit Parties and their respective
         Subsidiaries for any period, the amount of Consolidated Net Income,
         plus, without duplication and to the extent deducted in determining the
         amount of Consolidated Net Income, the sum of interest expense, income
         tax expense, depreciation and amortization expense, determined in
         accordance with GAAP.

                  For purposes of determining EBITDA for the Credit Parties and
         their respective Subsidiaries on a pro forma basis to determine the
         effect of a New Acquisition on compliance with the covenants in
         subsections 5.01(g) of this Agreement (excluding the covenant in
         subsection 5.01(g)(2) of this Agreement) and to determine the
         Applicable Spread, the Applicable LOC Fee Percentage and the Applicable
         Unused Commitment Fee Percentage for any period of twelve (12) months
         or four fiscal quarters of the Company that ends ("Period Ending
         Date"): (i) on any New Acquisition Closing Date, EBITDA for such period
         will be deemed to include the Additional EBITDA Amount calculated with
         respect to the Related Business Entity acquired on such New Acquisition
         Closing Date; and (ii) within one year after any New Acquisition
         Closing Date, EBITDA for such period will be deemed to include an
         amount equal to (A) the Additional

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         EBITDA Amount calculated with respect to the Related Business Entity
         acquired on such New Acquisition Closing Date, minus (B) 1/12 of such
         Additional EBITDA Amount for each full calendar month that has elapsed
         between such New Acquisition Closing Date and the Period Ending Date,
         minus (c) 1/30 of such Additional EBITDA Amount for each day of any
         partial calendar month that has elapsed between such New Acquisition
         Closing Date and the Period Ending Date.

         "EBITDAR" means, with respect to the Credit Parties and their
         respective Subsidiaries for any period, the EBITDA for such period,
         plus the Rent Expense for such period.

         "Environmental Laws" means all federal, state and local laws and
         implementing regulations, now or hereafter effective during the term of
         this Agreement, relating to pollution or protection of the environment,
         including laws or regulations relating to or permitting 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 to the manufacture,
         processing, distribution, use, treatment, storage, disposal, transport,
         or handling of pollutants, contaminants, chemicals, industrial wastes,
         or hazardous substances. Such laws shall include, but not be limited
         to: (a) the Comprehensive Environmental Response, Compensation and
         Liability Act, as amended, 42 U.S.C. Section 9601 et seq.; (b) the
         Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
         6901 et seq., including the statutes regulating underground storage
         tanks, 42 U.S.C. 6991-6991h; (c) the Clean Air Act, as amended, 42
         U.S.C. 7401 et seq.; and (d) the Federal Water Pollution Control Act,
         as amended, 33 U.S.C. Section 1251 et seq., including the statute
         regulating the National Pollutant Discharge Elimination System, 33
         U.S.C. Section 1342.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
         amended.

         "Existing Acquisition Sellers" means, collectively, the Persons
         identified on EXHIBIT C attached hereto.

         "Existing Acquisition Seller Debt" means, collectively, the Debt owed
         by the Company to the Existing Acquisition Sellers, respectively,
         identified on EXHIBIT C attached hereto.

         "Event of Default" means any of the events described in Section 7.01 of
         this Agreement.

         "Federal Funds Rate" means, for any day, the average of the rates on
         overnight federal funds transactions with members of the Federal
         Reserve System arranged by

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         federal funds brokers, as published by the Federal Reserve Bank of New
         York for such day, or, if such rate is not so published for any day,
         the average of the quotations for such rates received by the Bank from
         three federal funds brokers of recognized standing selected by the Bank
         in its discretion from time to time as the opening federal funds rate
         paid or payable by the Bank in its regional federal funds market for
         overnight borrowings from other banks.

         "Financial Statements" includes, but is not limited to, balance sheets,
         profit and loss statements, and cash flow statements, prepared in
         accordance with GAAP.

         "Fixed Charge Coverage Ratio" means, with respect to the Credit Parties
         and their respective Subsidiaries for any period, a ratio of EBITDAR to
         the sum of the following for the Credit Parties and their respective
         Subsidiaries, computed on a consolidated basis and determined in
         accordance with GAAP: (i) the amount of interest which was due and
         payable in cash or was paid in cash during such period, plus (ii) the
         amount of depreciation expense deducted in determining the amount of
         Consolidated Net Income for such period, plus (iii) the amount of
         scheduled principal payments of Debt which were due and payable in cash
         or were paid during such period, plus (iv) the amount of income taxes
         which were due or paid during such period, plus (v) the amount of
         dividends that were paid by VNGI in cash during such period; plus (vi)
         Rent Expense deducted in determining the amount of Consolidated Net
         Income for such period; plus (vii) Stock Redemption Expense paid or
         payable during such period

         "GAAP" means generally accepted accounting principles in the United
         States of America as in effect from time to time, which shall include
         the official interpretations thereof by the Financial Accounting
         Standards Board, consistently applied (from and after the date hereof)
         and for the period as to which such accounting principles are to apply.
         Except as otherwise provided in this Agreement, to the extent
         applicable, all computations and determinations as to accounting or
         financial matters and all Financial Statements to be delivered pursuant
         to this Agreement shall be made and prepared in accordance with GAAP
         (including principles of consolidation where appropriate), and, to the
         extent applicable, all accounting or financial terms shall have the
         meanings ascribed to such terms by GAAP.

         "Government Acts" has the meaning ascribed to such term in
         subsection 2.03(e) of this Agreement.

         "Guaranties" means, collectively, the Parent Guaranties and the
         Subsidiary Guaranties, and the term "Guaranty" means any of the
         Guaranties, individually.

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         "Guarantors" means, collectively, VNGDI, VNGI and any Subsidiary of the
         Company which hereafter unconditionally guaranties the Obligations
         pursuant to a Guaranty executed and delivered by such Subsidiary in
         favor of the Lenders, and "Guarantor" means any of the Guarantors,
         individually.

         "Hazardous Substance" means any hazardous or toxic substance regulated
         by any Environmental Laws, including but not limited to the
         Comprehensive Environmental Response, Compensation and Liability Act,
         the Resource Conservation and Recovery Act and the Toxic Substance
         Control Act, or by any federal, state or local governmental agencies
         having jurisdiction over the control of any such substance including
         but not limited to the United States Environmental Protection Agency.

         "Highest Lawful Rate" means the maximum rate of interest which may be
         charged the Company by the Lenders under applicable state or federal
         usury law or regulation or any other law or regulation, however
         characterized, limiting the rate of interest which may be charged to
         corporations.

         "Initial Letters of Credit" means the letters of credit issued by Bank
         One on behalf of the Company pursuant to the Original Agreement or any
         previous version thereof which remain outstanding on the Closing Date.

         "Intercreditor Agreements" means, collectively, Intercreditor and
         Subordination Agreements among the Agent, the Company and certain of
         the Existing Acquisition Sellers and which are outstanding on the
         Closing Date, as the same may be amended, modified, extended, renewed,
         supplemented, replaced and/or restated from time to time and at any
         time.

         "Initial Lenders" means, collectively, Bank One, LaSalle, Firstar, B of
         A, National City and Huntington.

         "Interest Period" means, with respect to any LIBOR Advance, the one (1)
         month, two (2) month, three (3) month or six (6) month period selected
         by the Company as provided in this Agreement and commencing on that day
         designated by the Company in its written notice to the Bank making such
         selection (so long as such day is not less than two (2) London Business
         Days after the date of such notice). Each Interest Period for a LIBOR
         Advance that begins on the last day of a calendar month (or on a day
         for which there is no numerically corresponding day in the appropriate
         subsequent calendar month) shall end on the last London Business Day of
         the appropriate sequent calendar month.

                                       14
<PAGE>   15

         Each Interest Period for a LIBOR Advance which would otherwise end on a
         day which is not a London Business Day shall end on the immediately
         succeeding London Business Day (unless such immediately succeeding
         London Business Day is in another calendar month, in which case such
         Interest Period shall end on the immediately preceding London Business
         Day).

         "Interest Rate Agreement" means any interest rate hedging agreement,
         interest rate swap agreement, interest rate cap agreement, foreign
         currency hedging agreement or other interest rate or foreign currency
         protection agreement or arrangement designed to protect the Company
         against fluctuations in interest rates or foreign currency values. (The
         amount of the obligation under any Interest Rate Agreement shall be the
         amount determined in respect thereof as of the end of the most recently
         ended fiscal quarter of such Person, based on the assumption that such
         Interest Rate Agreement had terminated at the end of such fiscal
         quarter, and in making such determination, if any agreement relating to
         such Interest Rate Agreement provides for the netting of amounts
         payable by and to such Person thereunder or if any such agreement
         provides for the simultaneous payment of amounts by and to such Person,
         then in each such case, the amount of such obligation shall be the net
         amount so determined.)

         "Lenders" means, collectively, the Signatory Lenders and any Purchaser
         that becomes a Lender party to this Agreement pursuant to the terms of
         Section 9.08 of this Agreement, together with their respective
         successors and assigns, and "Lender" means any one of the Lenders.

         "Letters of Credit" means all standby letters of credit issued by Bank
         One pursuant to Section 2.03 of this Agreement, but also including the
         Initial Letters of Credit.

         "Letter of Credit Exposure" means, as of the date such amount is to be
         determined, the sum of:

                  (a)      the aggregate face amounts of all Letters of Credit
                           that have not expired by their terms or have not been
                           surrendered by the beneficiary prior to the
                           expiration thereof (including the face amounts of any
                           Letters of Credit that have expired by their terms
                           but have not been surrendered by the beneficiary and
                           as to which the beneficiary asserts a right to
                           present and/or have honored Drafts); less any portion
                           of such face amounts that has been exhausted by the
                           payment or acceptance of Drafts thereunder or
                           otherwise; plus

                                       15
<PAGE>   16

                  (b)      the total dollar amount of (1) the amount of all
                           Drafts under Letters of Credit which have been
                           honored by Bank One or which Bank One has otherwise
                           been required to pay but with respect to which Bank
                           One has not yet received reimbursement from the
                           Company, including without limitation, the principal
                           amounts of all outstanding Letter of Credit Loans,
                           and (2) the amount of all Drafts under Letters of
                           Credit which have been presented to Bank One but not
                           honored by Bank One, which Bank One (in its sole
                           discretion) determines it may yet honor or be
                           required to honor or the amount of which it may
                           otherwise be required to pay.

         "Letter of Credit Loan" has the meaning ascribed to such term in
         subsection 2.03(d) of this Agreement.

         "LIBOR Advance" means any Advance or portion of the Revolving Loans
         (or, if the case, the entire outstanding principal balance of the
         Revolving Loans) or any portion of the Term Loan (or, if the case, the
         entire outstanding principal balance of the Term Loan) as to which a
         LIBOR-based Rate is elected by the Company pursuant to this Agreement.

         "LIBOR-based Rate" means a per annum rate at which interest accrues on
         a LIBOR Advance equal to the sum of the applicable Adjusted LIBOR Rate,
         plus the Applicable Spread.

         "LIBOR Rate" means, with respect to a LIBOR Advance for the applicable
         Interest Period, an interest rate per annum equal to the applicable
         British Bankers' Association Interest Settlement Rate for deposits in
         U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London
         time) two London Banking Days prior to the first day of such Interest
         Period, and having a maturity equal to such Interest Period, provided
         that, (i) if Reuters Screen FRBD is not available to the Agent for any
         reason, the applicable LIBOR Rate for the relevant Interest Period
         shall instead be the applicable British Bankers' Association Interest
         Settlement Rate for deposits in U.S. dollars as reported by any other
         generally recognized financial information service as of 11:00 a.m.
         (London time) two London Banking Days prior to the first day of such
         Interest Period, and having a maturity equal to such Interest Period,
         and (ii) if no such British Bankers' Association Interest Settlement
         Rate is available to the Agent, the applicable LIBOR Rate for the
         relevant Interest Period shall instead be the rate determined by the
         Agent to be the rate at which Bank One or one of its Affiliate banks
         offers to place deposits in U.S. dollars with first-class banks in the
         London interbank market at approximately 11:00 a.m. (London time) two
         London Banking Days prior to the first day of such Interest Period, in
         the

                                       16
<PAGE>   17

         approximate amount of Bank One's relevant LIBOR Advance and having a
         maturity equal to such Interest Period. Each determination of a LIBOR
         Rate made by the Agent in accordance with the foregoing shall be
         conclusive except in the case of demonstrative or manifest error.

         "Lien" means any mortgage, security interest, pledge, hypothecation,
         assignment, deposit arrangement, encumbrance, lien (statutory or
         otherwise) or other security interest or preferential arrangement of
         any kind or nature whatsoever (including, without limitation, any
         conditional sale or other title retention agreement, any financing or
         similar statement or notice filed under the Uniform Commercial Code as
         in effect in any jurisdiction, or any other similar recording or notice
         statute, and any lease having substantially the same effect as the
         foregoing, but excluding any equipment operating leases and any
         precautionary filings related thereto).

         "Loans" means, collectively, the Revolving Loans, the Term Loan and
         Letter of Credit Loan and, when used in the singular form, means either
         of the Loans, as the context requires.

         "Loan Documents" means, collectively, this Agreement, the Revolving
         Notes, the Term Notes, the Company Security Agreement, the Company
         Pledge Agreement, the Parent Guaranties, the Parent Pledge Agreements,
         the Parent Security Agreements, the Subsidiary Guaranties, the
         Subsidiary Security Agreements, the Intercreditor Agreements, any and
         all Reimbursement Agreements, the Agent Fee Agreement, the Master
         Agreement and any and all Interest Rate Agreements which at any time
         from and after the Closing Date may be made between the Company and any
         of the Lenders, and all other instruments, agreements and documents
         executed and delivered or to be delivered by any Person pursuant to or
         by virtue of this Agreement, as each of the foregoing may be amended,
         modified, extended, renewed, supplemented and/or restated from time to
         time and at any time, and when used in the singular form, means any of
         the Loan Documents, as the context requires.

         "London Business Day" means, with respect to any LIBOR Advance, a day
         which is both a Banking Day and a day on which dealings in Dollar
         deposits are carried out in the London interbank market.

         "Master Agreement" means that certain ISDA Master Agreement, dated as
         of December 1, 1997, between Bank One and the Company, as the same may
         be amended, supplemented and/or restated from time to time.

                                       17
<PAGE>   18

         "Maximum Availability" means $100,000,000.00 or such greater amount as
         may be established pursuant to Section 2.02(g) of this Agreement. If an
         Event of Default or an Unmatured Event of Default has occurred and is
         continuing and the Agent shall have notified the Company of the
         election of the Required Lenders to take any action specified in
         Section 7.02 of this Agreement, the Maximum Availability shall be
         automatically reduced to zero (0) dollars without any action on the
         part of or the giving of any additional notice to the Company by the
         Lenders or the Agent.

         "Maximum Revolver Availability" means, as of any date such amount is to
         be determined, the Maximum Availability minus the Letter of Credit
         Exposure as of such date.

         "New Acquisition" means the acquisition by the Company from any Person
         of the assets and goodwill of such Person which comprise a Related
         Business Entity, or of all or substantially all of the stock,
         partnership interest, or other ownership interest of any type
         whatsoever of such Person in a Related Business Entity if such Related
         Business Entity is merged into the Company with the Company being the
         surviving entity, in a transaction or series of transactions closed
         after the Closing Date, provided that (i) the consummation of such
         acquisition on a pro forma basis will not cause the occurrence of an
         Event of Default or an Unmatured Event of Default; and (ii) Financial
         Statements have been maintained for such Related Business Entity for
         such periods preceding the acquisition as may be reasonably required by
         the Required Lenders (collectively, the "Qualification Conditions"). An
         acquisition which would otherwise qualify as a "New Acquisition" shall
         not so qualify unless the Company shall have obtained from the Agent
         its confirmation that the written submissions made to the Agent by the
         Company demonstrate that the Qualifying Conditions are fully met with
         respect to the proposed acquisition. To obtain such confirmation from
         the Agent the Company shall submit to the Agent such historical
         financial statements and pro forma calculations of the Additional
         EBITDA Amount which will be applicable to the proposed acquisition as
         the Agent may require.

         "New Acquisition Closing Date" means the date on which a New
         Acquisition is consummated.

         "Notes" means, collectively, the Revolving Notes and the Term Notes,
         and when used in the singular, means any of the Notes, as the context
         requires.

         "Obligations" means all present and future indebtedness, obligations
         and liabilities, and all renewals and extensions thereof, now or
         hereafter owed to the Lenders or any of them

                                       18
<PAGE>   19

         or the Agent by the Company, whether arising under, by virtue of or
         pursuant to this Agreement, any of the Notes, any of the Reimbursement
         Agreements, any other Loan Document, the Master Agreement or any of the
         agreements contemplated by Section 9.15 of this Agreement, together
         with all costs, expenses and reasonable attorneys' fees (including the
         reasonable allocated costs of staff counsel) incurred by each of the
         Lenders and by the Agent in the enforcement or collection thereof,
         whether such indebtedness, obligations and liabilities are direct,
         indirect, fixed, contingent, liquidated, unliquidated, joint, several,
         joint and several, now exist or hereafter arise, or were prior to
         acquisition thereof by any Lender owed to some other Person.

         "Officer's Certificate" means a certificate in the form included as a
         part of EXHIBIT G attached hereto signed by the President or Chief
         Financial Officer of the Company, confirming that all of the
         representations and warranties contained in Section 3.01 of this
         Agreement are true and correct as of the date of such certificate
         except as specified therein and with the further exceptions that: (i)
         the representation contained in subsection 3.01(d) of this Agreement
         shall be construed so as to refer to the latest Financial Statements
         which have been furnished to the Lenders as of the date of any such
         certificate, (ii) the representations contained in subsection 3.01(k)
         (with respect to Hazardous Substances) will be construed so as to apply
         not only to the Credit Parties, but also to their respective
         Subsidiaries, whether now owned or hereafter acquired, (iii) the
         representation contained in subsection 3.01(l) of this Agreement shall
         be deemed to be amended to reflect the existence of any Subsidiary
         hereafter formed or acquired by the Credit Parties with the consent of
         the Required Lenders, and (iv) all other representations will be
         construed to have been amended to conform with any changes of which the
         Credit Parties shall have previously given the Lenders' notice in
         writing. The Officer's Certificate shall further confirm that no Event
         of Default or Unmatured Event of Default shall have occurred and be
         continuing as of the date of the Officer's Certificate or shall
         describe any such event which shall have occurred and be then
         continuing and the steps being taken by the Credit Parties to correct
         it.

         "Parent Guaranties" and "Parent Guaranty" have the respective meanings
         ascribed to such terms in Section 4.01(c) of this Agreement.

         "Parent Pledge Agreements" and "Parent Pledge Agreement" have the
         respective meanings ascribed to such terms in Section 4.01(e)(1) of
         this Agreement.

         "Parent Security Agreements" and "Parent Security Agreement" have the
         respective meanings ascribed to such terms in Section 4.01(d) of this
         Agreement.

                                       19
<PAGE>   20

         "Period Ending Date" has the meaning ascribed to such term in the text
         of the definition of EBITDA in this Section 1.01.

         "Permitted Asset Sales" means all sales and other dispositions by the
         Company and its Subsidiaries of tangible assets (other than the sale of
         inventory, cylinders and other equipment in the ordinary course of
         business and other than Short-Term Real Estate Sales) permitted by the
         terms of the Loan Documents.

         "Person" shall mean an individual, a corporation, a limited or general
         partnership, a limited liability company, a joint venture, a trust or
         unincorporated organization, a joint stock company or other similar
         organization, a government or any political subdivision thereof, a
         court, or any other legal entity, whether acting in an individual,
         fiduciary or other capacity.

         "Plan" means an employee pension benefit plan as defined in ERISA.

         "Prime-based Rate" means a variable rate per annum at which interest
         accrues on all or a portion of a Loan under the terms of this
         Agreement, equal at all times to the Prime Rate, as in effect from time
         to time, plus the Applicable Spread.

         "Prime Rate" means, for any date of determination, a rate of interest
         per annum equal to the higher of (i) the Bank One Prime Rate for such
         date, and (ii) the Federal Funds Rate for such date, plus One-Half
         Percent (.50%) per annum. The Prime Rate shall change each day with any
         change in the Bank One Prime Rate or Federal Funds Rate, if applicable.

         "Prime Rate Advance" means any Advance or portion of the Revolving
         Loans (or, if the case, the entire outstanding principal balance of the
         Revolving Loans) or any portion of the Term Loan (or, if the case, the
         entire outstanding principal balance of the Term Loan) which bears
         interest at the Prime-based Rate.

         "Purchaser" shall have the meaning ascribed to such term in
         Section 9.08(b) of this Agreement.

         "Ratio of Total Funded Debt to EBITDA" shall mean, for any period, the
         ratio of Total Funded Debt of the Credit Parties and their respective
         Subsidiaries at the close of that period to EBITDA of the Credit
         Parties and their respective Subsidiaries for that period, computed on
         a consolidated basis and determined in accordance with GAAP. For
         purposes of determining the Applicable Spread, the Applicable LOC Fee
         Percentage and the Applicable Unused Commitment Fee and the ratios for
         which compliance is required

                                       20
<PAGE>   21

         pursuant to Section 5.01(g) of this Agreement, the Ratio of Total
         Funded Debt to EBITDA shall be determined on the Closing Date on the
         basis of the consolidated Financial Statements of the Credit Parties
         and their respective Subsidiaries provided to the Lenders prior to the
         Closing Date for the preceding twelve (12) calendar month period ending
         December 31, 1999, and thereafter shall be redetermined and adjusted
         from and after the Closing Date as necessary as follows:

                           (i) Quarterly Adjustments. For purposes of
                  determining the Applicable Spread, the Applicable Unused
                  Commitment Fee, and the Applicable LOC Fee Percentage, the
                  Ratio of Total Funded Debt to EBITDA shall be redetermined and
                  adjusted as necessary on the basis of the consolidated
                  Financial Statements of the Credit Parties and their
                  respective Subsidiaries for the most recent preceding four
                  fiscal quarters of the Company provided to the Lender pursuant
                  to the requirements of subsection 5.01(b) of this Agreement (a
                  "Quarterly Adjustment"), with prospective effect until the
                  next adjustment date. Quarterly Adjustments shall be made on
                  the first interest payment date which follows receipt by the
                  Lenders of the consolidated Financial Statements for the last
                  month of the first fiscal quarter of the Company ending after
                  the Closing Date, and thereafter on the first interest payment
                  date which follows receipt by the Lenders of the consolidated
                  Financial Statements upon which such adjustment is based (a
                  "Quarterly Adjustment Date"), but no Quarterly Adjustment
                  shall be effective as to any LIBOR-based Rate elected prior to
                  the Quarterly Adjustment Date until the expiration of the
                  period of time for which such LIBOR-based Rate shall have been
                  elected by the Company.

                           (ii) New Acquisition Adjustments. For purposes of
                  determining the Applicable Spread, the Applicable Unused
                  Commitment Fee, the Applicable LOC Fee Percentage, and the
                  ratios for which compliance is required pursuant to Section
                  5.01(g) of this Agreement, the Ratio of Total Funded Debt to
                  EBITDA shall be redetermined and adjusted as necessary on each
                  New Acquisition Closing Date on the basis of the consolidated
                  Financial Statements of the Credit Parties and their
                  respective Subsidiaries for the most recent twelve (12)
                  calendar month period that precedes the New Acquisition
                  Closing Date provided to the Lenders pursuant to the
                  requirements of subsection 5.01(b) of this Agreement (a "New
                  Acquisition Adjustment"), with prospective effect until the
                  next adjustment date, but no New Acquisition Adjustment shall
                  be effective as to any LIBOR-based Rate elected prior to the
                  New Acquisition Date until the expiration of the period of
                  time for which such LIBOR-based Rate shall have been elected
                  by the Company.

                                       21
<PAGE>   22

                  Notwithstanding the foregoing, in the event the Credit Parties
         fail to deliver when due the Financial Statements and compliance
         certificates required under subsection 5.01(b) of this Agreement for
         any month which ends a fiscal quarter of the Company and fail to cure
         such default within ten (10) days after notice of such default by the
         Agent, then the Applicable Unused Commitment Fee Percentage, Applicable
         LOC Fee Percentage and the Applicable Spread shall be adjusted (without
         further prior notice by the Agent or any of the Lenders to the Company)
         to the largest number shown in the table applicable to such definition
         from such due date until the first interest payment date which follows
         delivery to the Lenders of such Financial Statements. It is noted that
         the tables defining Applicable LOC Percentage, Applicable Unused
         Commitment Fee Percentage and the Applicable Spread provide for a Ratio
         of Total Funded Debt to EBITDA with respect to the Credit Parties and
         their respective Subsidiaries greater than that which may be
         permissible under the terms of subsection 5.01(g) of this Agreement.
         For the avoidance of doubt, it is agreed that it is the intent of the
         parties that the Lenders shall be free to exercise all remedies
         otherwise provided for in this Agreement in the event of the violation
         of the covenant stated in subsection 5.01(g) of this Agreement,
         notwithstanding the determination of the Applicable Unused Commitment
         Fee Percentage, Applicable LOC Percentage and the Applicable Spread in
         accordance with and by reference to this definition.

         "Real Estate Leases" shall mean all non-cancellable leases of real
         property or improvements or fixtures thereon, which leases, in
         conformity with GAAP, are not required to be capitalized.

         "Regulatory Change" means at any time after the Closing Date (a) any
         change in existing, or any introduction or adoption of new, United
         States federal, state or foreign laws, regulations, treaties or
         directives (including Regulation D of the Board of Governors of the
         Federal Reserve System), (b) any change in the interpretation of the
         foregoing by any Governmental Authority charged with the administration
         or interpretation thereof, or (c) any change in the manner in which
         existing guidelines of any federal or state governmental authority are
         enforced.

         "Reimbursement Agreement" has the meaning ascribed to such term in
         subsection 2.03(a) of this Agreement.

         "Related Business Entity" means an operating business entity, division
         or unit engaged in one or more lines of business in which the Company
         is engaged as of the Closing Date,

                                       22
<PAGE>   23

         being the packaging and wholesale distribution of industrial gas and
         welding, propane and fire extinguishment equipment and supplies.

         "Remaining Availability" means, at any time a determination thereof is
         to be made, that amount which results by subtracting from the Maximum
         Availability the sum of (i) the principal balance of the Revolving
         Loans outstanding at such time, and (ii) the aggregate Letter of Credit
         Exposure at such time.

         "Rent Expense" means for any fiscal period, the total amount of rents
         and other charges payable during such period by the Credit Parties and
         their respective Subsidiaries under all Real Estate Leases to which
         they are a lessee, all as determined on a consolidated basis in
         accordance with GAAP.

         "Required Lenders" means Lenders in the aggregate having at least
         66.67% of the Aggregate Commitment or, if the Aggregate Commitment has
         been terminated, Lenders in the aggregate holding at least 66.67% of
         the aggregate unpaid principal of the Obligations.

         "Required Term Lenders" means Term Lenders in the aggregate holding at
         least 66.67% of the aggregate unpaid principal of the Term Loan.

         "Reserve Requirement" means, with respect to an Interest Period for a
         LIBOR Advance, the maximum aggregate reserve requirement (including all
         basic, supplemental, marginal, emergency and other reserves),
         assessments or similar requirements under any regulations of the Board
         of Governors of the Federal Reserve System (or any successor thereto)
         or other Governmental Authority having jurisdiction with respect
         thereto dealing with reserve requirements prescribed for eurocurrency
         funding (currently referred to as "Eurocurrency Liabilities" in
         Regulation D).

         "Revolver Lenders" means, collectively, all of the Signatory Lenders
         and any Purchaser that becomes a Revolver Lender party to this
         Agreement pursuant to the terms of Section 9.08 of this Agreement,
         together with their respective successors and assigns, and "Revolver
         Lender" means any one of the Revolver Lenders.

         "Revolving Loans" has the meaning ascribed to such term in
         subsection 2.02(a) of this Agreement.

         "Revolving Loans Commitment Percentage" shall mean, when used with
         reference to any Revolver Lender and any described aggregate or total
         amount, an amount equal to the

                                       23
<PAGE>   24

         result obtained by multiplying such described aggregate or total amount
         by the percentage set opposite its designation on EXHIBIT B under the
         heading "Revolving Loans Commitment Percentage", as amended from time
         to time and at any time in accordance with the terms of this Agreement,
         or as the context requires, shall mean, when used with reference to any
         Revolver Lender, the percentage set opposite its designation on EXHIBIT
         B under the heading "Revolving Loans Commitment Percentage", as amended
         from time to time and at any time in accordance with the terms of this
         Agreement.

         "Revolving Loans Maturity Date" means the earlier of (i) the Scheduled
         Revolving Loans Maturity Date, and (ii) that date upon which payment of
         any of the Revolving Loans is accelerated in accordance with Section
         7.02 of this Agreement.

         "Revolving Notes" has the meaning ascribed to such term in subsection
         2.02(b) of this Agreement, and "Revolving Note" means any one of the
         Revolving Notes.

         "Sale Value" means, with respect to any asset sold or otherwise
         disposed of as a Permitted Asset Sale, the higher of: (i) the book
         value of the asset on the books of the Company or its Subsidiary
         immediately prior to such sale or other disposition, and (ii) the Asset
         Sale Payment received with respect to such sale or other disposition.

         "Securities Commission" means the Securities and Exchange Commission or
         any other Federal agency from time to time administering the Securities
         Act of 1933, as amended.

         "Scheduled Revolving Loans Maturity Date" means April 30, 2003, or such
         later date as may be established pursuant to the terms of Section
         2.02(f) of this Agreement.

         "Scheduled Term Loan Maturity Date" means October 4, 2003.

         "Short-Term Real Estate Sale" means any arms-length sale made by the
         Company while there is no Event of Default or Unmatured Event of
         Default (including any sale which is part of a sale-leaseback
         transaction) to a Person who is not an Affiliate of the Company or any
         of the Guarantors, of real estate (including improvements thereon)
         which has been owned by the Company for less than one year, and the
         term "Short-Term Real Estate Sales" means all of such sales,
         collectively.

         "Stock Redemption Expense" means, with respect to any period, the total
         cost incurred by VNGI in the purchase and redemption of any of its
         capital stock at any time during such period, as such cost is
         determined in accordance with GAAP.

                                       24
<PAGE>   25

         "Subordination Agreement" has the meaning ascribed to such term in
         Section 5.02(d)(4) of this Agreement.

         "Subsidiary" means, with respect to any Person, any corporation,
         partnership, joint venture or other business entity over which such
         Person exercises control, provided that it shall be conclusively
         presumed that such Person exercises control over any such entity 51% or
         more of the equity interest in which is owned by such Person, directly
         or indirectly.

         "Subsidiary Guaranties" means, collectively, the guaranties executed
         and delivered to the Lenders by any Subsidiary of the Company pursuant
         to the requirements of Section 4.01(f) of this Agreement, as the same
         may be amended, modified, extended, renewed, supplemented, replaced
         and/or restated from time to time and at any time, and the term
         "Subsidiary Guaranty" means any of the Subsidiary Guaranties.

         "Subsidiary Security Agreements" means, collectively the security
         agreements executed and delivered to the Agent by any Subsidiary of the
         Company pursuant to the requirements of Section 4.01(f) of this
         Agreement, as the same may be amended, modified, extended, renewed,
         supplemented, replaced and/or restated from time to time and at any
         time, and the term "Subsidiary Security Agreement" means any of the
         Subsidiary Security Agreements.

         "Term Lenders" means all of the Signatory Lenders, other than WesBanco,
         and any Purchaser that becomes a Term Lender party to this Agreement
         pursuant to the terms of Section 9.08 of this Agreement, together with
         their respective successors and assigns.

         "Term Loan" has the meaning ascribed to such term in subsection 2.04 of
         this Agreement.

         "Term Loan Commitment Percentage" shall mean, when used with reference
         to any Term Lender and any described aggregate or total amount, an
         amount equal to the result obtained by multiplying such described
         aggregate or total amount by the percentage set opposite its
         designation on EXHIBIT B under the heading "Term Loan Commitment
         Percentage", as amended from time to time and at any time in accordance
         with the terms of this Agreement, or as the context requires, shall
         mean, when used with reference to any Term Lender, the percentage set
         opposite its designation on EXHIBIT B under the heading "Term Loan
         Commitment Percentage", as amended from time to time and at any time in
         accordance with the terms of this Agreement.

                                       25
<PAGE>   26

         "Term Loan Maturity Date" means the earlier of (i) the Scheduled Term
         Loan Maturity Date, and (ii) that date upon which payment of the Term
         Loan is accelerated in accordance with Section 7.02 of this Agreement.

         "Term Notes" has the meaning ascribed to such term in subsection
         2.04(b) of this Agreement, and "Term Note" means any one of the Term
         Notes.

         "Total Funded Debt" means, with respect to the Credit Parties and their
         respective Subsidiaries, as of the date any determination thereof is to
         be made, all interest-bearing Debt of the Credit Parties and their
         respective Subsidiaries (including all Acquisition Seller Debt or other
         subordinated interest-bearing Debt), computed on a consolidated basis
         and determined in accordance with GAAP.

         "Transfer Agreement" has the meaning ascribed to such term in the
         Recitals to this Agreement.

         "Type" means, with respect to any Advance, its nature as a LIBOR
         Advance or a Prime Rate Advance.

         "Unmatured Event of Default" means any event specified in Section 7.01
         of this Agreement, which is not initially an Event of Default, but
         which would, if uncured, become an Event of Default with the giving of
         notice or the passage of time or both.

         "VNGI" has the meaning ascribed to such term in the Recitals to this
         Agreement.

         "VNGDI" has the meaning ascribed to such term in the Recitals to this
         Agreement.

         "Voting Stock" means, in reference to the Company, all classes of
         capital stock of the Company then outstanding and normally entitled
         (without regard to the occurrence of any contingency) to vote in the
         election of directors of the Company, and means, in reference to VNGDI,
         all classes of capital stock of VNGDI then outstanding and normally
         entitled (without regard to the occurrence of any contingency) to vote
         in the election of directors of VNGDI.

                                       26
<PAGE>   27

                                   ARTICLE II

                                 Borrowing Terms

                  Section 2.01. General Statement. Subject to and in accordance
with the terms of this Agreement, and in reliance upon the representations,
warranties, covenants and agreements of the Company and the other Credit Parties
made in this Agreement and the other Loan Documents, each Lender severally
agrees to make the Loans and issue or risk participate with respect to the
Letters of Credit as described in this Article II.

                  Section 2.02.  The Revolving Loans.

                  (a) The Commitment -- Use of Proceeds. Each of the Revolver
Lenders severally agrees, subject to the terms and conditions of this Agreement,
to make Advances to the Company on a revolving basis (collectively, the
"Revolving Loans") from time to time from and after the Closing Date until the
Revolving Loans Maturity Date, with the principal balance of all of the
Revolving Loans not to exceed in the aggregate at any time the Maximum Revolver
Availability and with the outstanding principal balance of all Advances made by
each Revolver Lender not to exceed at any time such Lender's Revolving Loans
Commitment Percentage of the Maximum Revolver Availability. Advances may be used
by the Company only to fund working capital requirements and New Acquisitions
and to refinance existing Debt of the Company.

                  The Revolving Loans under this Agreement are a continuation,
on amended terms, of the "Revolving Loan" extended to the Company by the
Signatory Lenders and PNC under the Original Agreement (the "Prior Revolving
Loans") and the Company affirms, acknowledges and agrees that the aggregate
outstanding principal balance of the Prior Revolving Loans as of the Closing
Date is $__________________, being the unpaid principal amount of the Prior
Revolving Loans immediately prior to the execution of this Agreement.

                  (b) Method of Borrowing. The obligation of the Company to
repay the Revolving Loans shall be evidenced by promissory notes executed by the
Company to each of the Revolver Lenders in the form of EXHIBIT E attached hereto
(as the same may be amended, modified, extended, renewed, supplemented, replaced
and/or restated from time to time and at any time, the "Revolving Notes"). So
long as no Event of Default or Unmatured Event of Default shall have occurred
and be continuing and until the Revolving Loans Maturity Date, the Company may
borrow, repay (subject to the requirements of Section 2.06 of this Agreement)
and reborrow under the Revolving Notes on any Banking Day, provided that Company
shall not be entitled to receive and the Revolver Lenders shall not be obligated
to make any Advance: (i) at any time an Event of Default or an Unmatured Event
of Default has occurred or is continuing;

                                       27
<PAGE>   28

(ii) if the amount of such Advance would exceed the amount of the Remaining
Availability as of the date of such Advance; or (iii) if after making such
Advance the aggregate principal balance of the Revolving Loans would exceed the
Maximum Revolver Availability. Each Advance shall be conditioned upon receipt by
the Agent from the Company of an Application for Revolving Loans Advance and an
Officer's Certificate, provided that the Agent may, at its discretion, make a
disbursement upon the oral request of the Company made by an Authorized Officer,
or upon a request transmitted to the Agent by telecopy or by any other form of
written electronic communication (all such requests for Advances being hereafter
referred to as "informal requests"). The Agent shall promptly give each Revolver
Lender telephonic notice (confirmed in writing, which may be by telecopy) of
each Advance request. In so doing, the Agent may rely on any informal request
which shall have been received by it in good faith from a Person reasonably
believed to be an Authorized Officer. Each informal request shall be promptly
confirmed by a duly executed Application for a Revolving Loans Advance and
Officer's Certificate if the Agent so requires and shall in and of itself
constitute the representation of the Company that no Event of Default or
Unmatured Event of Default has occurred and is continuing or would result from
the making of the requested Advance, that the requested Advance would not exceed
the Remaining Availability then outstanding, and that the making of the
requested Advance would not cause the aggregate principal balance of the
Revolving Loans to exceed the Maximum Revolver Availability. All borrowings and
reborrowings and all payments shall be in amounts of not less than Two Hundred
Fifty Thousand Dollars ($250,000), except for payment of the entire aggregate
principal balance of the Revolving Loans and except for special prepayments of
principal required under the terms of Section 2.06 of this Agreement. Upon
receipt of an Application for a Revolving Loans Advance, or at the Agent's
discretion upon receipt of an informal request for an Advance and upon
compliance with any other conditions of lending stated in Section 6.01 of this
Agreement applicable to the Revolving Loans, the Agent shall disburse the amount
of the requested Advance to the Company as provided in Section 2.02(c). Except
as the Agent and the Revolver Lenders may otherwise determine in their absolute
discretion, no Advance will be made on the day the Agent receives the
Application for a Revolving Loans Advance or informal request for Advance is
received by the Agent unless such Application or request is received by the
Agent prior to 12:00 noon, Indianapolis, Indiana time. Advances by each Revolver
Lender and payments by the Company shall be recorded by each Revolver Lender on
its books and records, and the principal amount outstanding from time to time,
plus interest payable thereon, shall be determined by reference to the books and
records of each Revolver Lender. The Revolver Lenders' books and records shall
be presumed prima facie to be correct as to such matters.

                  (c) Disbursement of Funds. On the date each Advance is to be
made, each Revolver Lender will make available to the Agent its Revolving Loan
Commitment Percentage of the Advance requested to be made on such date in U.S.
Dollars and in immediately available

                                       28
<PAGE>   29

funds, not later than 1:00 p.m. (Indianapolis time) at the account specified in
Section 2.05(c), and the Agent will make available to the Company the aggregate
of the amounts so made available by the Revolver Lenders, in immediately
available funds by disbursing such amounts to an account established by the
Company with the Agent for that purpose. Unless the Agent shall have been
notified by any Revolver Lender prior to the date of an Advance that such
Revolver Lender does not intend to make available to the Agent such Revolver
Lender's Commitment Percentage of the Advance to be made on such date, the Agent
may assume that such Revolver Lender has made such amount available to the Agent
on the date of the Advance and the Agent may, in reliance upon such assumption,
make available to the Company such Revolver Lender's Revolving Loan Commitment
Percentage thereof. If such Revolver Lender does not in fact make available to
the Agent such amount on the date of such Advance, the Agent shall be entitled
to recover such amount on demand from such Revolver Lender. If a Revolver Lender
does not pay such amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Company and the Company shall within one Banking Day
repay a corresponding amount to the Agent, together with interest on such
corresponding amount in respect of each day from and including the date such
corresponding amount was made available by the Agent to the Company to the date
such corresponding amount is recovered by the Agent, at the interest rate
applicable to the related Advance during the period in question (which amounts
the Agent shall be entitled to retain for its own account). Nothing herein shall
be deemed to relieve any Revolver Lender from its obligation to fund its
Revolving Loan Commitment Percentage of each requested Advance, or to prejudice
any rights which the Company may have against a Revolver Lender as a result of
any failure by such Revolver Lender to fund its Revolving Loans Commitment
Percentage of any requested Advance.

                  The Company agrees that upon demand by any Revolver Lender
(which demand shall be accompanied by a statement setting forth the basis for
the calculations of the amount being claimed) the Company will indemnify such
Revolver Lender against any net loss or expense which such Revolver Lender
sustains or incurs, as reasonably determined by such Revolver Lender, as a
result of any failure of the Company to borrow any Advance on the date specified
therefor in an Advance request.

                  (d) Interest on the Revolving Loans. The principal amount of
the Revolving Loans outstanding each day from and after the Closing Date shall
bear interest until the Revolving Loans Maturity Date at a rate per annum equal
to the Prime-based Rate for such day, and shall be treated as a Prime Rate
Advance, except that at the option of the Company, exercised from time to time
as provided herein, interest may accrue prior to maturity on any portion or on
the entire outstanding principal balance of the Revolving Loans as to which no
LIBOR-based Rate elected remains in effect, at a LIBOR-based Rate, provided that
an election of a LIBOR-based Rate for a period extending beyond the Scheduled
Revolving Loans Maturity

                                       29
<PAGE>   30

Date shall be permitted only at the discretion of Required Lenders. After the
Revolving Loans Maturity Date and until paid in full, the principal amount of
the Revolving Loans outstanding from time to time shall bear interest each day
at a per annum rate equal to the Prime-based Rate for such day plus two percent
(2.0%) per annum, except that as to any LIBOR Advances for which the Company may
have elected a LIBOR-based Rate for an Interest Period that has not expired at
the Revolving Loans Maturity Date, such LIBOR Advances shall, during the
remainder of such period, bear interest at the greater of the Prime-based Rate
(for each day during the remainder of such period) plus two percent (2.0%) per
annum, or the LIBOR-based Rate then in effect with respect thereto plus two
percent (2.0%) per annum. Each change in the rate of interest to be charged on
Prime Rate Advances shall become effective on the date of each change in the
Prime Rate. Each change in the rate of interest to be charged on any LIBOR
Advance shall become effective without notice on the commencement of the
Interest Period for that LIBOR Advance based on the LIBOR-based Rate for that
Interest Period then in effect. With respect to that principal portion of the
Revolving Loans, if any, which bears interest at the Prime-based Rate, accrued
interest shall be due and payable quarterly on the last Banking Day of each
calendar quarter until the Revolving Loans Maturity Date. With respect to each
LIBOR Advance, accrued interest thereon shall be due and payable on the last day
of each applicable Interest Period until the Revolving Loans Maturity Date;
except in the case of LIBOR Advances with an Interest Period exceeding three
months, accrued interest shall be due and payable at intervals of three months
after the first day of such Interest Period until the Revolving Loans Maturity
Date. On the Revolving Loans Maturity Date, the entire unpaid principal balance
of the Revolving Loans and Revolving Notes and all unpaid, accrued interest
thereon, shall be due and payable in full without demand. After the Revolving
Loans Maturity Date, interest shall be payable as accrued and without demand.

                  (e) Facility Fee. In addition to interest accruing on the
Revolving Loans, the Company shall pay to the Agent, for the pro rata account of
the Revolver Lenders, a facility fee for each partial or full calendar quarter
from and after the Closing Date until the Revolving Loans Maturity Date equal to
the Applicable Unused Commitment Fee Percentage per annum on the daily average
"Unused Revolving Loans Commitment" (as hereinafter defined) during each such
quarter. As used herein, the term "Unused Revolving Loans Commitment" means, for
each day a determination thereof is to be made, the positive excess, if any,
which results by subtracting from the Maximum Availability at the close of such
day the sum of the outstanding aggregate principal amount of the Revolving Loans
at the close of such day plus the Letter of Credit Exposure at the close of such
day. Facility fees for each calendar quarter shall be due and payable within ten
(10) days following the Agent's submission of a statement of the amount due.
Such fees may be debited by the Agent when due to any demand deposit account of
the Company carried with the Agent without further authority.

                                       30
<PAGE>   31

                  (f) Extension of Scheduled Revolving Loans Maturity Date. Upon
the written request of the Company made not earlier than ninety (90) days nor
later than sixty (60) days prior to each anniversary of the Closing Date, and
the unanimous agreement of the Revolver Lenders (which approval and agreement by
each Revolver Lender is at the sole discretion of each such Revolver Lender)
extend the Scheduled Revolving Loans Maturity Date for a period of one
additional year, and upon the unanimous agreement in writing of the Revolver
Lenders to any such one-year extension, the date to which the Scheduled
Revolving Loans Maturity Date is then extended will become the "Scheduled
Revolving Loans Maturity Date" for purposes of this Agreement.

                  (g) Increase of Revolving Loans Commitment and Maximum
Availability. The Company may, at any time, request the Revolver Lenders in
writing to increase the total Commitments of the Revolver Lenders with respect
to the Revolving Loans, provided that (i) such increase shall not cause the
aggregate total Revolving Loans Commitments to exceed One Hundred Twenty Million
Dollars ($120,000,000.00), and (ii) no Event of Default shall have occurred or
be continuing. Any or all of the Revolver Lenders may, but shall not be
obligated to, increase its Revolving Loan Commitment by all or any portion of
the additional amount requested. Immediately upon the effectiveness of any such
increase in the total Revolving Loan Commitments, each Revolver Lender's
Revolving Loan Commitment Percentage of the total Commitments for Revolving
Loans shall be automatically adjusted to reflect the same. In the event the
Revolver Lenders agree to increase the Revolving Loans Commitments by less than
all of the amount requested, the Company may seek additional commitments in the
amount of the difference between the requested increase and the amount of
increase in Revolving Loans Commitments agreed to by the Revolver Lenders from a
third party financial institution provided that such third party financial
institution is selected upon prior written notice to Agent and would meet all
qualifications of a Purchaser, were it at that time to be a Purchaser, and such
third party financial institution shall become a party to this Credit Agreement
by an amendment in form and substance as required by Required Lenders.

                  Section 2.03.     Standby Letters of Credit.

                  (a) Standby Letters of Credit -- General. Bank One agrees,
subject to the terms and conditions of this Agreement, to issue upon the
application of the Company and for the account of the Company standby letters of
credit for the purpose of supporting payment of all or any part of the
Acquisition Seller Debt or for any other general business purpose of the Company
other than Credit Enhancement (each a "Letter of Credit"), provided that:

                                       31
<PAGE>   32

                           (1) The aggregate Letter of Credit Exposure shall not
         at any time exceed the lesser of (A) Twenty-Five Million Dollars
         ($25,000,000) or (B) the Maximum Availability at such time minus the
         aggregate outstanding principal balance of all Revolving Loans at such
         time;

                           (2) The Company shall not request and Bank One shall
         have no obligation to issue any Letter of Credit: (i) at any time any
         Event of Default or Unmatured Event Default shall have occurred and be
         continuing; (ii) at any time after the Revolving Loans Maturity Date;
         (iii) if, after giving effect to such issuance, the aggregate Letter of
         Credit Exposure would exceed the lesser of (A) Twenty-Five Million
         Dollars ($25,000,000) or (B) the Maximum Availability then outstanding
         minus the then aggregate outstanding principal balance of all Revolving
         Loans; (iv) if the face amount of such Letter of Credit would exceed
         the then outstanding Remaining Availability; or (v) for any purpose
         other than those permitted hereunder;

                           (3) Bank One in no event shall be obligated to issue
         any Letter of Credit: (i) having an expiration date later than seven
         (7) years and thirty (30) days from the date of issuance; or (ii) if
         the issuance of such Letter of Credit on the terms requested would be
         contrary to, or in violation of the policies of Bank One or any
         requirement of applicable law;

                           (4) The form of the requested Letter of Credit shall
         be satisfactory to Bank One in the reasonable exercise of Bank One's
         discretion; and

                           (5) Bank One shall have received from the Company an
         application and reimbursement agreement for the Letter of Credit in
         form and substance satisfactory to Bank One in all respects (as the
         same may be amended, modified, extended, renewed, supplemented,
         replaced and/or restated from time to time and at any time,
         "Reimbursement Agreement"), duly executed by an Authorized Officer on
         behalf of the Company.

                  (b) Risk Participation. Each Revolver Lender (other than Bank
One) hereby agrees that, immediately upon the issuance of each Letter of Credit
and as of the Closing Date as to the Initial Letters of Credit, such Revolver
Lender shall purchase, and shall be deemed to have irrevocably purchased from
Bank One (without the necessity of the execution or delivery by Bank One or such
Revolver Lender of any further or additional document evidencing such purchase)
a risk participation in such Letter of Credit and the obligations of Bank One
with respect to Drafts thereunder (including any Letter of Credit Loan), in an
amount equal to such Lender's Revolving Loan Commitment Percentage.

                                       32
<PAGE>   33

                  (c) Letter of Credit Procedures. Whenever the Company desires
the issuance of a Letter of Credit, it shall deliver to Bank One not later than
11:30 a.m. (Dallas, Texas time) at least three Banking Days (or such shorter
period as may be agreed to by Bank One in any particular instance) in advance of
the proposed date of issuance a Reimbursement Agreement duly executed by an
Authorized Officer. Each Reimbursement Agreement shall include a precise
description of the documents and the verbatim text of any certificate to be
presented by the proposed beneficiary with, or as a part of any Draft; provided
that Bank One, in its sole judgment, may require changes in the description of
any such documents and the text of such certificates; and provided further that,
at the discretion of Bank One, each Letter of Credit shall provide that payment
against a conforming Draft is not required to be made thereunder prior to the
close of business on the third Banking Day following presentment of such Draft.

                  (d) Draws under Letters of Credit. Upon presentation of a
Draft under any Letter of Credit by the beneficiary thereof, Bank One shall
notify the Company and the Lenders of the receipt thereof ("Draft Notice") not
later than one Banking Day prior to the date on which Bank One intends to honor
such Draft. The Draft Notice may be given by telephone or telecopy. Failure to
give the Draft Notice or to give the Draft Notice in a timely manner shall not
in any way affect or limit the payment obligation of the Company or the
obligations of the Lenders hereunder. Upon receipt of the Draft Notice, the
Company shall make or cause to be made an irrevocable deposit with Bank One not
later than 1:00 p.m., Dallas, Texas time, one (1) Banking Day prior to the day
on which the Draft is to be honored, in an amount equal to the full amount which
is to be paid under such Draft, in good and collected funds (the "Reimbursement
Amount"), specifying that it is depositing such money for the sole purpose of
funding the payment of such Draft.

                  In determining whether to honor any Draft, Bank One shall be
responsible only to determine that the documents and certificates required to be
delivered with such Draft under the appropriate Letter of Credit have been
delivered and that on their faces they are in substantial compliance with the
requirements of that Letter of Credit. In the event of any conflict between the
terms of any Reimbursement Agreement and the terms of this Agreement, the terms
of this Agreement shall control; and the terms of a Reimbursement Agreement
shall not be deemed to be in conflict with the terms of this Agreement solely by
reason of the fact that it addresses one or more subject matters that are
addressed by this Agreement and contains provisions that are different from
those set forth in this Agreement.

                  (e) Reimbursement Obligations of the Company. The Company
hereby agrees to reimburse Bank One, on demand, the amount paid by Bank One to
settle its obligations in respect of each Draft under each Letter of Credit
(whether such amount is paid by virtue of Bank One's honor of any Draft or
otherwise) to the extent that a Reimbursement Amount is not

                                       33
<PAGE>   34

available to Bank One for that purpose, which reimbursement obligation shall be
immediate and automatic, without the necessity of any further act or the
execution of any additional document, instrument, or agreement. Any
Reimbursement Amount that is not paid in full when due shall be deemed to be and
shall constitute a demand loan made to the Company by Bank One on such due date
in the principal amount of the unpaid Reimbursement Amount (each such loan being
referred to herein as a "Letter of Credit Loan", and collectively as "Letter of
Credit Loans"), which Letter of Credit Loans shall bear interest, until paid in
full, at a per annum rate equal to the Prime Rate plus Three Percent (3%) per
annum. A demand for payment of each Reimbursement Amount and Letter of Credit
Loan shall be deemed to have been made by Bank One on the date of the
corresponding payment by Bank One to settle its obligations under a Draft.
Nothing herein is intended to preclude the Company from requesting an Advance to
the extent available under the Revolving Loans to pay any Reimbursement Amount
or Letter of Credit Loan.

                  The obligation of the Company to reimburse Bank One in respect
of drawings made under the Letters of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement and the applicable Reimbursement Agreement (if and to extent the terms
of such Reimbursement Agreement do not conflict with this Agreement) under all
circumstances, and notwithstanding any of the following circumstances:

                  (1)      any lack of validity or enforceability of any Letter
                           of Credit;

                  (2)      the existence of any claim, set-off, defense or other
                           right which the Company may have at any time against
                           a beneficiary or any transferee of any Letter of
                           Credit or (or any Persons for whom any such
                           transferee may be acting), or any other Person,
                           whether in connection with this Agreement, the
                           transactions contemplated herein or any unrelated
                           transaction (including any underlying transaction
                           between the Company and the beneficiary of any Letter
                           of Credit);

                  (3)      any draft, demand, certificate or any other document
                           presented under any Letter of Credit proving to be
                           forged, fraudulent, invalid or insufficient in any
                           respect or any statement therein being untrue or
                           inaccurate in any respect;

                  (4)      payment by Bank One under any Letter of Credit
                           against presentation of a demand, draft or
                           certificate or other document which does not comply
                           with the terms of such Letter of Credit;

                                       34
<PAGE>   35

                  (5)      any other circumstance or happening whatsoever which
                           is similar to any of the foregoing; or

                  (6)      the fact that an Event of Default or Unmatured Event
                           of Default shall have occurred and be continuing;

provided however, that the Company shall not be obligated to reimburse Bank One
for any wrongful payment or disbursement made or to be made by Bank One under
any Letter of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of Bank One. Payment of a Draft
that does not comply with the terms of the Letter of Credit against which it is
presented shall not in any event be deemed to be wrongful or an act or omission
constituting gross negligence or willful misconduct on the part of Bank One if
such payment is made at the specific written request of the Company in which the
Company waives the non-compliance of the Draft.

                  Upon a written request by the Company made in accordance with
the terms of Section 8.02 of this Agreement, Bank One will undertake to provide
to the Company copies of all instruments and documents constituting a Draft with
the Draft Notice, and in the event the Company has any knowledge (however
obtained) of any claim of non-compliance with the Company's instructions or with
the terms of the Letter of Credit, or of discrepancies or other irregularities
related solely to the Draft on the Letter of Credit, the Company shall
immediately notify Bank One thereof in writing, and the Company shall be deemed
to have waived any such claim or defense against Bank One related thereto or
arising therefrom unless such notice is given. The Company shall be deemed to
have knowledge of any such claim that is apparent on the face of copies of
instruments and documents constituting a Draft that are provided to the Company
pursuant to the preceding sentence.

                  Unless specified to the contrary in the Reimbursement
Agreement for a Letter of Credit, or any amendment to a Letter of Credit, the
Company agrees that Bank One and its correspondents may receive and accept any
Draft drawn or presented under such Letter of Credit or other document otherwise
in order, issued or purportedly issued by an agent, executor, trustee in
bankruptcy, receiver or other representative of the party who is authorized
under such Letter of Credit to issue such Draft or other document, as complying
with the terms of such Letter of Credit.

                  (f) Default by Company. In the event the Company fails to
deposit the Reimbursement Amount with Bank One, or if for any other reason the
Reimbursement Amount is not available to settle Bank One's obligations under a
Draft, the Agent shall make a demand on the Revolver Lenders for funding
pursuant to this section. Each Revolver Lender (other than Bank

                                       35
<PAGE>   36

One) shall forthwith (and in any event, not later than 1:00 p.m., Indianapolis
time, on the day the Agent has indicated to the Revolver Lenders as the day such
Draft is to be honored, or if such demand is made after 10:00 a.m., Indianapolis
time on the day indicated for honor of the Draft, then not later than 1:00 p.m.,
Indianapolis time, on the first Business Day immediately following the day such
demand is made), make available to the Agent at its principal banking offices
immediately available funds in an amount equal to its Revolving Loans Commitment
Percentage of the amount of the Draft, which funds shall be immediately remitted
by the Agent to Bank One to be used by it to settle its obligations under such
Draft. In addition, if for any reason the Reimbursement Amount is recovered in
whole or in part from the Agent or Bank One or a recovery is obtained from the
Agent or Bank One based on such deposit, then the Agent shall make demand on
each Revolver Lender for, and each Revolver Lender shall pay to the Agent (for
the account of Bank One if the recovery is obtained from it) an amount equal to
such Revolver Lender's Revolving Loans Commitment Percentage of the amount of
the recovery (provided that Bank One shall not be required to make any such
payment in regard to an amount recovered from it). Each payment by a Revolver
Lender to the Agent pursuant to the preceding sentence of the amount of any
Reimbursement Amount recovered shall be deemed to be a Letter of Credit Loan
payable with interest as provided above. If for any reason the foregoing
payments to the Agent may not be deemed to be a Letter of Credit Loan, each
payment by a Revolver Lender to the Agent shall be considered to be the purchase
of a participation in Bank One's or the Agent's rights and claims arising as a
result of such recovery, if any, in an amount equal to such Revolver Lender's
Revolving Loans Commitment Percentage thereof.

                  (g) Indemnity. The Company agrees to protect, indemnify and
save Bank One and the Revolver Lenders harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
which Bank One or any of the other Revolver Lenders may incur or be subject to
as a consequence, direct or indirect, of (a) the issuance of the Letters of
Credit, other than as a result of the gross negligence or willful misconduct of
Bank One, as determined by a court of competent jurisdiction, or (b) the failure
of Bank One to honor a drawing under any Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or governmental authority (all such acts or omissions herein
called "Government Acts").

                                       36
<PAGE>   37

                  As between the Company, on the one hand, and Bank One, on the
other, the Company assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit by the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, Bank One shall not be
responsible and shall have no liability (a) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (b) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (c) for failure of the beneficiary of any such Letter of Credit to
comply fully with the terms and conditions of the agreement pursuant to which
the Letter of Credit was procured and pursuant to which the beneficiary is
entitled to draw upon such Letter of Credit; (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (e) for
errors in interpretation of technical terms; (f) for any loss or delay in the
transmission or otherwise of any document required in order to make a Draft
under any such Letter of Credit or of the proceeds thereof; (g) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any Draft under such Letter of Credit; (h) for any consequences arising from
causes beyond the control of Bank One, including, without limitation, any
Government Acts; and (i) for any action taken or omitted by Bank One under or in
connection with the Letters of Credit, if taken or omitted in good faith. None
of the above shall affect, impair, or prevent the vesting of any of Bank Ones'
rights or powers hereunder.

                  Following the occurrence of an Event of Default or an
Unmatured Event of Default which is continuing, the Company agrees that any
action taken by Bank One, if taken in good faith, under or in connection with
any of the Letters of Credit, Reimbursement Agreements and Drafts, shall be
binding on the Company and shall not subject Bank One to any resulting liability
to the Company. In furtherance thereof, Bank One shall have the full right and
authority, following an Event of Default or Unmatured Event of Default which is
continuing, to (i) clear and resolve any questions of non-compliance of
documents, (ii) to give any instructions as to acceptance or rejection of any
documents or goods, and (iii) to grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, acceptances, or
documents.

                  (h) Letter of Credit Fees. The Company covenants and agrees to
pay to Bank One, on the date each Letter of Credit is issued, and on each
anniversary of the issue date for as long as the Letter of Credit is
outstanding, a commission (a "L/C Commission") equal to the Applicable LOC Fee
Percentage then in effect (determined as of immediately after issuance of such
Letter of Credit). Each L/C Commission shall be deemed fully earned and
nonrefundable when due. The Company also shall pay to Bank One a fronting fee
equal to 0.125% of the amount of the Letter of Credit for which such fee is
charged and all standard Bank One transaction fees

                                       37
<PAGE>   38

with respect to any transactions occurring on account of any Letter of Credit,
including all standard fees for issuance, amendment, cancellation, negotiation
or transfer of each Letter of Credit and with respect to each Draft thereon.
Transaction fees shall be payable upon completion of the transaction as to which
they are charged. All such L/C Commissions and fees may be debited by Bank One
to any deposit account of the Company carried with Bank One without further
authority, and in any event, shall be paid by the Company within ten (10) days
following billing. Upon receipt of each L/C Commission, Bank One shall disburse
the L/C Commission to each Revolver Lender, including Bank One, pro rata in
accordance with each Revolver Lender's Revolving Loans Commitment Percentage.
All transaction fees and the fronting fee shall be retained by Bank One.

                  (i) Initial Letters of Credit. The Initial Letters of Credit
for all purposes shall be deemed to be Letters of Credit for all purposes
hereunder, except that no L/C Commission shall be due and payable by the Company
on the Initial Letters of Credit hereunder until renewal, extension or
replacement thereof.

                  (j) Cash Collateral. The Company shall on the Revolving Loans
Maturity Date provide the Agent with Cash Collateral in a deposit or an
investment in United States government securities with the Agent which is
acceptable to the Agent and which is in the name of the Company but under the
sole and exclusive dominion and control of the Agent with respect to which the
Company has no authority to withdraw from, to draw upon, or otherwise exercise
any authority of any kind, in an amount equal to the then-outstanding Letter of
Credit Exposure. The Company hereby grants a security interest in all of such
Cash Collateral to the Agent, for the benefit of itself and the Lenders, to
secure the Obligations. If there is any Draft, or other liability of the Agent
or Bank One under any Letter of Credit, the Agent shall apply the Cash
Collateral in reimbursement of any such Draft or other liability. The Cash
Collateral provided to the Agent pursuant to this Section 2.03(j) shall be
released to the Company only upon full payment or satisfaction of all
Obligations, including any Letter of Credit Exposure. The Company agrees to
execute all agreements, documents and instruments requested by the Agent to
further evidence the security interest granted in the Cash Collateral pursuant
to this Section 2.03(j).

                  Section 2.04      The Term Loan.

                  (a) The Term Loan -- General. Each Term Lender severally
agrees, subject to the terms and conditions of this Agreement, to loan to the
Company the principal amount equal to its Term Loan Commitment Percentage of
Eight Million Nine Hundred Fifty Four Thousand One Hundred Fifty Dollars
($8,954,150.00) for the term period beginning on the Closing Date and ending on
the Term Loan Maturity Date (collectively, the "Term Loan").

                  The Term Loan under this Agreement is a continuation, on
amended terms, of the "Term Loan" extended to the Company by the "Signatory
Lenders" (as such term is defined in the

                                       38
<PAGE>   39

Original Agreement) (the "Prior Term Loan") and the Company affirms,
acknowledges and agrees that the outstanding aggregate principal balance of the
Term Loan as of the Closing Date is $8,954,150.00, being the unpaid principal
amount of the Prior Term Loan immediately prior to the execution of this
Agreement.

                  (b) The Term Notes. The obligation of the Company to repay the
Term Loan shall be evidenced by promissory notes executed by the Company to each
of the Term Lenders in the form of EXHIBIT F attached hereto (as the same may be
amended, modified, extended, renewed, supplemented, replaced and/or restated
from time to time and at any time, the "Term Notes"). The principal of the Term
Loan shall be repayable in equal quarterly installments of $639,585.00 each,
which quarterly installments shall be due and payable on the last Banking Day of
June, 2000, and on the last Banking Day of each successive calendar quarter
thereafter until the Term Loan Maturity Date, at which time the entire aggregate
principal balance of the Term Loan and all unpaid, accrued interest thereon,
shall be due and payable in full without demand. Subject to the contemporaneous
payment of any amounts which may be due the Term Lenders pursuant to Section
2.05(b) of this Agreement, the principal of the Term Loan, upon not less than
two (2) Banking Days' prior written notice to the Agent from the Company, may be
prepaid at any time in whole or in part, provided that any partial prepayment
shall be in an amount which is a minimum of $1,000,000 and an integral multiple
of One Hundred Thousand Dollars ($100,000), and provided further that all
partial prepayments shall be applied to the latest maturing installments of
principal payable under the Term Loan in inverse order of maturity.

                  (c) Interest on the Term Loan. The principal amount of the
Term Loan and the Term Notes outstanding each day from and after the Closing
Date shall bear interest until the Term Loan Maturity Date at a rate per annum
equal to the Prime-based Rate for such day and shall be treated as a Prime Rate
Advance, except that at the option of the Company, exercised from time to time
as provided herein, interest may accrue prior to maturity on any specified
amount of the principal balance or on the entire outstanding principal balance
of the Term Loan as to which no LIBOR-based Rate elected remains in effect, at a
LIBOR-based Rate, provided that an election of a LIBOR-based Rate for a period
extending beyond the Scheduled Term Loan Maturity Date shall be permitted only
at the discretion of the Required Term Lenders. After the Term Loan Maturity
Date and until paid in full, the principal amount of the Term Loan and Term
Notes outstanding from time to time shall bear interest at a per annum rate
equal to the Prime-based Rate plus two percent (2.0%) per annum, except that as
to any LIBOR Advance which is a part of the Term Loan for which the Company may
have elected a LIBOR-based Rate for an Interest Period that has not expired at
the Term Loan Maturity Date, such LIBOR Advance shall, during the remainder of
such period, bear interest at the greater of the Prime-based Rate plus two
percent (2.0%) per annum, or the LIBOR-based Rate then in effect with respect
thereto plus two percent (2.0%) per annum. Each change in the rate of interest
to be charged on any principal of Term Loan that bears interest at the
Prime-based Rate shall become effective on the date of each change in the Prime

                                       39
<PAGE>   40

Rate. Each change in the rate of interest to be charged on any LIBOR Advance
which is part of the Term Loan shall become effective without notice on the
commencement of the Interest Period for that LIBOR Advance based on the
LIBOR-based Rate for that Interest Period. With respect to that principal of the
Term Loan and the Term Notes , if any, which bears interest at the Prime-based
Rate, accrued interest shall be due and payable quarterly on the last Banking
Day of each calendar month until the Term Loan Maturity Date. With respect to
each LIBOR Advance which is a part of the Term Loan, accrued interest thereon
shall be due and payable on the last day of each applicable Interest Period
until the Term Loan Maturity Date; except in the case of each such LIBOR Advance
with an Interest Period exceeding three months, accrued interest shall be due
and payable at intervals of three months after the first day of such Interest
Period until the Term Loan Maturity Date. On the Term Loan Maturity Date, the
entire unpaid principal balance of the Term Loan and the Term Notes, and all
unpaid, accrued interest thereon, shall be due and payable in full without
demand. After the Term Loan Maturity Date, interest shall be payable as accrued
and without demand.

                  Section 2.05. Provisions Applicable to All the Loans. The
following provisions are applicable to all the Loans:

                  (a) Procedures and Terms for Electing LIBOR Advances. LIBOR
Advances may be elected only in accordance with the following procedures and
subject to the following conditions, and the election of a LIBOR Advance shall
have the following consequences, in addition to other consequences stated in
this Agreement:

                          (1) A LIBOR Advance may be elected only in a minimum
                          amount of $1,000,000.00 and additional integral
                          multiples of $100,000.00.

                          (2) No LIBOR Advance may be elected at any time that
                          an Event of Default or Unmatured Event of Default has
                          occurred and is continuing.

                          (3) The Company has notified the Agent of its election
                          to obtain a LIBOR Advance and of the Interest Period
                          selected therefor and such notice is given as herein
                          provided. On any Banking Day, the Company may request
                          a quotation of the Adjusted LIBOR Rates then in effect
                          from the Agent. As soon as possible, and in any event
                          before the close of business on the next following
                          Banking Day, the Agent shall quote such Adjusted LIBOR
                          Rates and LIBOR-based Rates. The Company shall then
                          have until the end of the Banking Day on which such
                          quotation is given or within such shorter time as the
                          Agent may specify, to exercise its option to elect any
                          LIBOR-based Rate quoted, subject to all other
                          conditions and limitations stated in this Agreement.
                          The period for which any LIBOR-based Rate is effective
                          shall begin on the second London Banking Day following
                          the day on which the

                                       40
<PAGE>   41

                          quotation is given. Such election and the LIBOR-based
                          Rate for such LIBOR Advance shall be effective,
                          provided there is then no Event of Default or
                          Unmatured Event of Default and the notification
                          required under the preceding sentence has been given,
                          on the first day of such specified Interest Period. An
                          election of a LIBOR-based Rate may be communicated to
                          the Agent on behalf of the Company only by an
                          Authorized Officer. Such election may be communicated
                          by telephone or by telecopy or any other form of
                          written electronic communication, or by a writing
                          delivered to the Agent. At the request of the Agent,
                          the Company shall confirm any election in writing and
                          such written confirmation shall be signed by an
                          Authorized Officer. The Agent shall be entitled to
                          rely on any oral or written electronic communication
                          of an election of a LIBOR-based Rate which is received
                          by an appropriate employee of the Agent from anyone
                          reasonably believed in good faith by such employee to
                          be an Authorized Officer.

                          (4) No more than ten (10) Interest Periods in total
                          may be in effect on the Revolving Loans and the Term
                          Loan at any one time.

                  (b) Breakage. The Company may pay all or any portion of the
outstanding principal balance of the Loans and Notes, provided that if the
Company makes any such payment (whether voluntary, mandatory, or as a result of
acceleration after default) of a LIBOR Advance other than on the last day of the
relevant Interest Period, the Company shall pay all accrued interest on the
principal amount paid with such principal payment and, on demand, shall
reimburse each of the Lenders and hold each of the Lenders harmless from all
losses incurred by each of the Lenders as a result of such principal payment
having been made on other than the last day of the relevant Interest Period then
in effect, including without limitation, any losses incurred by reason of the
liquidation or reemployment of deposits or other funds acquired to fund or
maintain the principal amount paid. If with respect to a prepaid LIBOR Advance,
such reimbursement shall be calculated as though the Lenders each funded its
portion of the principal amount paid through the purchase of U.S. Dollar
deposits in the London, England interbank market having a maturity corresponding
to the Interest Period for such LIBOR Advance and bearing an interest rate equal
to the LIBOR-based Rate for such Interest Period, whether in fact that is the
case or not. A Lender's determination of the amount of such reimbursement shall
be conclusive in the absence of manifest error. If at the time of any payment of
any portion of the principal of any Loan, there are outstanding both LIBOR
Advances and Prime Rate Advances, then any payment of principal of that Loan
will be applied first to the portion of that Loan on which interest accrues at
the Prime-based Rate and next to the portion or portions which bear interest at
a LIBOR-based Rate or Rates, and if interest accrues on the LIBOR Advances at
more than one LIBOR-based Rate, first to the LIBOR Advance or LIBOR Advances on
which interest accrues at a rate or rates which results in least reimbursement
amount.

                                       41
<PAGE>   42

                  (c) Increased Costs. If, as the result of any Regulatory
Change, the basis of taxation of payments to any Lender of the principal of or
any interest on any LIBOR Advance or any other amounts payable hereunder in
respect thereof, other than taxes charged on the gross or net income of the
Lender, is changed, or any reserve, special deposit, or similar requirement
relating to any extensions of credit or other assets of or any deposits with or
other liabilities of the Lender are imposed, modified, or deemed applicable, and
the Lender reasonably determines that, by reason thereof, the cost to it of
making, issuing, or maintaining any LIBOR Advance at a LIBOR-based Rate is
increased by an amount deemed by it to be material, then the Company with
respect to such LIBOR Advance shall pay promptly upon demand by the Lender such
additional amounts as the Lender reasonably determines will compensate for such
increased costs; provided, however, that the Company shall not be the only
borrower of the Lender that is singled out from a group of similarly situated
borrowers of the Lender subject to this type of provision that is requested to
remit increased costs. Any determination by a Lender of increased costs made
pursuant to the provisions of this subsection shall be final, absent manifest
error.

                  (d) Limitation on Types of Advances. If, on or prior to the
determination of the interest rate for any LIBOR Advance, the Agent reasonably
and in good faith determines that deposits in U.S. Dollars comparable to the
amount and for the Interest Period of that LIBOR Advance are not available in
the London interbank eurodollar market, or that, by reason of circumstances
affecting the London interbank eurodollar market, adequate and reasonable means
do not exist for ascertaining the interest rate applicable to that Interest
Period, or that the making or funding of LIBOR Advances has become
impracticable, the Agent shall give the Company prompt notice thereof, and so
long as that condition remains in effect, the Lenders shall be under no
obligation to make, or to convert other principal amounts of any of the Loans
into, LIBOR Advances of the type affected, and the Company shall, on the later
of (a) the last day of the then current Interest Period for the affected LIBOR
Advance, or (b) seven (7) Banking Days after receipt of the Bank's notice,
either notify the Agent and thereafter prepay the LIBOR Advance, or notify the
Agent and thereafter convert the LIBOR Advance into a Prime Rate Advance
(subject to all other provisions of this Agreement).

                  (e) Illegality. In the event that it becomes unlawful for any
Lender to (a) honor its obligations to make any principal amount of a Loan a
LIBOR Advance, or (b) maintain any LIBOR Advance, the Lender shall promptly
notify the Company and the Agent thereof and the Lender's obligation to make
principal amounts into LIBOR Advances shall be suspended until such time as the
Lender may again legally make and maintain the affected type of LIBOR Advance,
and the Company shall, effective on the last day of the then current for that
LIBOR Advance (or on such earlier date as the Lender may specify to the
Company), either notify the Lender and the Agent and thereafter prepay the LIBOR
Advance or notify the Lender and the

                                       42
<PAGE>   43

Agent and thereafter convert the LIBOR Advance into a Prime Rate Advance
(subject to all other provisions of this Agreement).

                  (f) Funding Losses. The Company hereby agrees that upon demand
by any Lender (which demand shall be accompanied by a statement setting forth
the basis for the calculations of the amount being claimed), the Company will
indemnify the Lender against any losses or expense which the Lender may sustain
or incur (including, without limitation, any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
the Lender to fund or maintain any portion of a LIBOR Advance) as reasonably
determined by the Lender, as a result of any failure of the Company to borrow or
convert into a LIBOR Advance any principal amount on a date specified therefor
in an informal request or Application for Revolving Loans Advance or in a notice
of conversion pursuant to this Agreement (other than as a result of a default by
the Lender.). For this purpose, all notices to any Lender or the Agent pursuant
to this Agreement shall be deemed to be irrevocable.

                  (g) Additional Amounts Payable. If any Regulatory Change
either shall (a) subject any Lender to any additional tax, duty, charge,
deduction or withholding with respect to any of the Loans or Letters of Credit
(other than a tax measure by the net or gross income of the Lender), or (b)
impose or increase any reserve, special deposit or similar requirement on
account of any of the Loans or Letters of Credit not otherwise provided in this
Agreement or (c) impose increased minimum capital requirements on the Lender on
account of its issuing or maintaining any of the Loans or Letters of Credit; and
if any of the foregoing (i) results in any increase to the Lender in the cost of
issuing or maintaining any of the Loans or Letters of Credit, or making any
payment on account of any of the Loans or Letters of Credit, (ii) reduces the
amount of any payment receivable by the Lender under this Agreement with respect
to any of the Loans or Letters of Credit, (iii) requires the Lender to make any
payment calculated by reference to the gross amount of any sum received or paid
by the Lender pursuant to any of the Loans or Letters of Credit, or (iv) reduces
the rate of return on the Lender's capital to a level below that which the
Lender could otherwise have achieved (taking into consideration the Lender's
policies with respect to capital adequacy), then the Company shall pay to the
Lender, as additional compensation for the Loans or Letters of Credit, such
amounts as will compensate the Lender for such increased costs, payments or
reductions. Within twenty (20) days after (A) the initial demand therefor and
(b) presentation by the Lender of a certificate to the Company containing a
statement of the cause of such increased costs, payments or reductions and a
calculation of the amounts thereof (which statement and calculation shall be
presumed prima facie to be correct), the Company shall pay the additional amount
payable measured from the date such change, enactment, adoption or
interpretation first affects the Lender.

                  (h) Conversion and Continuation. Prime Rate Advances shall
continue as Prime Rate Advances unless and until such Prime Rate Advances are
converted into LIBOR Advances.

                                       43
<PAGE>   44

Each LIBOR Advance shall continue as a LIBOR Advance until the end of the
applicable Interest Period therefor, at which time such LIBOR Advance shall
automatically be converted into a Prime Rate Advance, unless the Company shall
have given the Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such LIBOR Advance continue
as a LIBOR Advance for the same or another specified Interest Period. Subject to
the terms hereof, the Company may elect from time to time to convert all or any
part of a Prime Rate Advance into a LIBOR Advance or to continue a LIBOR Advance
as a LIBOR Advance at the end of its applicable Interest Period, but only so
long as no Event of Default or Unmatured Event of Default has occurred and is
continuing and further provided that conversion of any LIBOR Advance shall be
made on, and only on, the last day of the Interest Period applicable thereto.
The Company shall give the Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of a Prime Rate Advance or a LIBOR Advance or
continuation of a LIBOR Advance not later than 10:00 A.M. (Indianapolis, Indiana
time) at least one (1) Banking Day, in the case of a conversion of a LIBOR
Advance into a Prime Rate Advance, or at least three (3) Banking Days, in case
of a conversion into or continuation of a LIBOR Advance, prior to the date of
the requested conversion or continuation, specifying: (i) the requested date,
which shall be a Banking Day, of such continuation or conversion; (ii) the
aggregate amount and Type of the Prime Rate Advance or LIBOR Advance to be
converted or continued; and (iii) the amounts and Type into which such Prime
Rate Advance or LIBOR Advance is to be converted or continued, and in the case
of a continuation of or a conversion into a LIBOR Advance, the duration of the
Interest Period applicable thereto. Any conversion shall be subject to all other
terms and provisions of this Agreement.

                  (i) Calculation of Interest. Interest on all of the
Obligations shall be calculated on the basis that an entire year's interest is
earned in 360 days.

                  (j) Manner of Payment - Application. All payments of principal
and interest on the Loans and the Obligations shall be payable at the principal
office of the Agent in Indianapolis, Indiana, in funds available for the Agent's
immediate use in that city at the Agent's account at:

                         Bank One, Indiana, National Association
                         ABA #074000010
                         Attn: Commercial Loan Note Servicing
                         Re: Valley National Gases, Inc.
                         Obligor No:  2310116845
                         Account No. 05315101000263

No payment will be considered to have been made until received in such funds.
Unless otherwise agreed to, in writing, or otherwise required by applicable law,
payments will be applied first to accrued, unpaid interest, then to principal,
and any remaining amount to any unpaid collection

                                       44
<PAGE>   45

costs, late charges and other fees and charges and reimbursement obligations,
provided, however, upon delinquency or other default, the Lenders reserve the
right to apply payments among principal, interest, late charges, collection
costs and other fees and charges and reimbursement obligations, at their
discretion, as determined by the Required Lenders. Except as provided in Section
2.06(b) of this Agreement, all prepayments for which the payment application has
not been specifically directed by the Company at the time of such prepayment
shall be applied first to the Term Loan and, upon the Term Loan being fully paid
to the remaining Obligations in such order and manner as the Required Lenders
may from time to time determine in their sole discretion. Following the Term
Loan Maturity Date, all payments and other recoveries shall be applied first to
the Term Notes until all of the Obligations evidenced by the Term Notes have
been paid in full.

                  (k) Automatic Debit. The Agent, on behalf of the Lenders, may
debit when due all payments of principal and interest due under the terms of
this Agreement to any deposit account of the Company carried with the Agent
without further authority.

                  (l) Unconditional Obligations and No Deductions. The Company's
obligation to make all payments provided for in this Agreement and the Notes
shall be unconditional. Each such payment shall be made without relief from
valuation and appraisement laws and without deduction for any claim, defense or
offset of any type, including without limitation any withholdings and other
deductions on account of income or other taxes and regardless of whether any
claims, defenses or offsets of any type exist.

                  (m) Payment on Non-Banking Days. Whenever any payment to be
made under this Agreement or under any of the Notes shall be stated to be due on
a day other than a Banking Day, such payment may be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of payment of fees, if any, and interest under this Agreement and
under such Note.

                  Section 2.06. Mandatory Prepayment/Reduction of Maximum
Availability. (a) If at any time a determination thereof is to be made, the sum
of (i) the aggregate principal balance of the Revolving Loans outstanding at
such time, plus (ii) the aggregate Letter of Credit Exposure existing at such
time, exceeds the Maximum Availability, the Company shall immediately repay the
Revolving Notes in an aggregate principal amount, together with such additional
amount as may be necessary, equal to such excess.

                  If an Event of Default or an Unmatured Event of Default has
occurred and is continuing and the Agent shall have notified the Company of the
Required Lenders' election to take any action specified in Section 7.02 of this
Agreement, the Maximum Availability shall be automatically reduced to $0 without
any action on the part of or the giving of notice to the Company by the Agent or
the Lenders.

                                       45
<PAGE>   46

                  (b) Sale of Assets. The Company or any Subsidiary of the
Company making a Permitted Asset Sale in any fiscal year of the Company shall
pay to the Agent, concurrently with the consummation of such Permitted Asset
Sale, a payment ("Asset Sale Payment") in an amount equal to the following: One
hundred percent (100%) of the gross amount realized upon such Permitted Asset
Sale and all other Permitted Asset Sales previously consummated by the Company
or any Subsidiary of the Company during such fiscal year (in each case net only
of reasonable and customary selling costs and expenses actually incurred by the
seller) minus the sum of (i) $2,000,000; and (ii) the amount of all Asset Sale
Payments previously made to the Agent with respect to Permitted Asset Sales
consummated during such fiscal year. Each Asset Sale Payment shall first be
applied to the Term Loan as a prepayment, and to the extent any balance remains
after payment of the Term Loan in full, shall be applied pro rata against the
outstanding principal balance of the Revolving Loans, with the Maximum Revolver
Availability to be automatically and concurrently reduced permanently by the
amount so applied against the Revolving Loans. To the extent that any balance of
the Asset Sale Payment remains unapplied after application against the Term Loan
and the Revolving Loans, it shall be held by the Agent as Cash Collateral to
secure payment of any Letter of Credit Exposure then existing.

                  Section 2.07. Pro Rata Treatment. All borrowings, conversions
and payments of the Revolving Loans shall be effected so that after giving
effect thereto the Obligations of the Company to each Revolver Lender with
respect to the Revolving Loans (which shall be deemed to include, with respect
to each Lender, its Revolving Loans Commitment Percentage of the Letter of
Credit Exposure) shall be equal to such Revolver Lender's Revolving Loans
Commitment Percentage of the Obligations of the Company to all Revolver Lenders
with respect to all of the Revolving Loans. All borrowings, conversions and
payments of the Term Loan shall be effected so that after giving effort thereto
the Obligations of the Company to each Term Loan Lender shall be equal to such
Term Lender's Term Loan Commitment Percentage of the Obligations of that Company
to all Term Lenders with respect to the Term Loan. The Agent shall distribute
all payments to the Lenders on the same day of receipt if received prior to
Noon, Indianapolis, Indiana time, otherwise on the next Banking Day. References
in any of the Loan Documents to Indianapolis time shall mean time as kept in
Indianapolis, Indiana. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Revolving Note or Term Note in a greater proportion
than that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase such participation in the Revolving Notes and Term Notes
held by the other Lenders so that after such purchase the purchasing Lender
shall share such excess payment ratably with each of them. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise, receives Collateral or other protection for the Obligations to such
Lender hereunder, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such Collateral ratably
in proportion to their Commitment

                                       46
<PAGE>   47

Percentages. In case any such payment is disturbed by legal process or
otherwise, appropriate further adjustments shall be made.

                  Section 2.08. Agent Fees. The Company shall pay to the Agent
fees for its services, the amounts and payment terms of which are set forth in a
separate agreement between the Agent and the Company (the "Agent Fee
Agreement").

                  Section 2.09. Setoff. Upon the occurrence of any Event of
Default (including any applicable cure period) and during the continuance of any
Event of Default, each of the Lenders is hereby authorized at any time and from
time to time, without notice to any Credit Party (any such notice being
expressly waived by the Credit Parties), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by each of the Lenders to or for
the credit or the account of the Credit Party against any and all of the
Obligations irrespective of whether or not any Lender shall have made any demand
under this Agreement, the Revolving Notes, the Term Notes or any other Loan
Document and although such Obligations may be unmatured. Each Lender exercising
such right of setoff and application agrees to promptly notify the Credit Party
after any such setoff and application; provided that, the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender under this Section 2.09 are in addition to all other rights and
remedies (including, without limitation, other rights of setoff) which such
Lender may have.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Section 3.01. REPRESENTATIONS AND WARRANTIES. To induce the Lenders to
make the Loans, each of the Credit Parties represents and warrants to each of
the Lenders and the Agent that:

                  (a) Organization of the Company. The Company is a corporation
organized, existing and in good standing under the laws of the State of West
Virginia. VNGI is a corporation organized, existing and in good standing under
the laws of the State of Pennsylvania. VNGDI is a corporation organized,
existing and in good standing under the laws of the State of Delaware. Each of
the Credit Parties and their respective Subsidiaries is qualified to do business
in every jurisdiction in which: (i) the nature of the business conducted or the
character or location of properties owned or leased, or the residences or
activities of employees make such qualification necessary; and (ii) failure so
to qualify might impair its title to material properties or its right to

                                       47
<PAGE>   48

enforce material contracts or result in its exposure to liability for material
penalties in such jurisdiction. No jurisdiction in which the Credit Parties or
any of their respective Subsidiaries is not qualified to do business has
asserted that the Credit Parties or any of their respective Subsidiaries is
required to be qualified therein. The principal office and chief executive
office of the Company is located at 67 43rd Street, Wheeling, West Virginia
26003-7601. The principal office and chief executive office of VNGI is located
at 1640 Jefferson Avenue, Washington, Pennsylvania 15301. The principal office
and chief executive office of VNGDI is located at 2121 S. Dupont Highway, Dover,
Delaware 19901. Neither the Credit Parties nor any of their respective
Subsidiaries nor any Guarantor conducts any material operations or keeps any
material amounts of property at any location other than the locations specified
in the Security Agreement or Guarantor Security Agreement to which it is a
party. Neither the Credit Parties nor any of their respective Subsidiaries nor
any Guarantor has done business under any name other than its present corporate
name at any time during the six years preceding the date of this Agreement
except as disclosed in the Security Agreement or Guarantor Security Agreement to
which it is a party.

                  (b) Authorization; No Conflict. The execution, delivery and
performance of this Agreement and all of the other Loan Documents to which it is
a party are within the corporate powers of each of the Credit Parties and each
Guarantor, have been duly authorized by all necessary corporate action, have
received any required governmental or regulatory agency approvals and do not and
will not contravene or conflict with any provision of law or of its articles of
incorporation or its by-laws or of any agreement binding upon it or its
properties.
                  (c) Validity and Binding Nature. This Agreement and all of the
other Loan Documents to which it is a party are the legal, valid and binding
obligations of each of the Credit Parties and each Guarantor, enforceable
against it in accordance with their respective terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws enacted for the relief of debtors generally and other
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles which may affect the availability of specific performance
and other equitable remedies.

                  (d) Financial Statements (i) The Credit Parties have delivered
to the Agent and the Lenders their audited, consolidated Financial Statements as
of June 30, 1999, and for the fiscal year of the Company then ended and their
unaudited consolidated interim Financial Statements as of December 31, 1999, and
for the month and partial fiscal year then ended, which Financial Statements
have been prepared in accordance with GAAP except, as to the interim statements,
for the absence of a statement of cash flows, footnotes and adjustments normally
made at year end which are not material in amount. Such Financial Statements
present fairly the financial position of the Credit Parties and their respective
Subsidiaries as of the dates thereof and the results of its and their operations
for the periods covered. (ii) Since the date of the most current Financial
Statement provided by the Credit Parties to the Lender there has been no
material adverse change

                                       48
<PAGE>   49

in the financial position of the Credit Parties or their respective Subsidiaries
or in the results of its and their operations.

                  (e) Litigation and Contingent Liabilities. Except as set forth
on Exhibit 3.01(e) to this Agreement, no litigation, arbitration proceedings or
governmental proceedings are pending or to the best of the knowledge of the
Credit Parties threatened against the Credit Parties or their respective
Subsidiaries or any Guarantor or any material assets owned thereby which would,
if adversely determined, materially and adversely affect the financial position
or continued operations of the Credit Parties or their respective Subsidiaries
or any Guarantor or which any of the Credit Parties is required by applicable
law to disclose in any filing of a Form 10-K or Form 10-Q with the United States
Securities and Exchange Commission. None of the Credit Parties or their
respective Subsidiaries or any Guarantor has any material contingent liabilities
not provided for or disclosed in the Financial Statements referred to in
subsection 3.01(d) of this Agreement or on EXHIBIT H attached hereto.

                  (f) Liens. None of the assets of the Credit Parties or their
respective Subsidiaries or any Guarantor are subject to any mortgage, pledge,
title retention lien, judgment lien, execution lien, or other lien, encumbrance
or security interest except for liens and security interests described in
subsections 5.02(b)(1) through (7) of this Agreement.

                  (g) Employee Benefit Plans. Each Plan maintained by the Credit
Parties and their respective Subsidiaries and each Guarantor is in material
compliance with ERISA, the Code, and all applicable rules and regulations
adopted by regulatory authorities pursuant thereto, and the Credit Parties and
their respective Subsidiaries and each Guarantor each has filed all reports and
returns required to be filed by ERISA, the Code and such rules and regulations.
No Plan maintained by the Credit Parties or any of their respective Subsidiaries
and each Guarantor and no trust created under any such Plan has incurred any
"accumulated funding deficiency" within the meaning of Section 412(c)(1) of the
Code, and the present value of all benefits vested under each Plan did not
exceed, as of the last annual valuation date, the value of the assets of the
respective Plans allocable to such vested benefits. None of the Credit Parties
or any of their respective Subsidiaries or any Guarantor has any knowledge that
any "reportable event" as defined in ERISA has occurred with respect to any
Plan.

                  (h) Payment of Taxes. The Credit Parties and each of their
respective Subsidiaries and each Guarantor has filed all federal, state and
local tax returns and tax related reports which the Credit Parties and their
respective Subsidiaries and each Guarantor are required to file by any statute
or regulation and all taxes and any tax related interest payments and penalties
that are due and payable have been paid, except for such as are being contested
in good faith and by appropriate proceedings and as to which appropriate
reserves have been established. Adequate

                                       49
<PAGE>   50
 provision has been made for the payment when due of all tax liabilities which
have been incurred, but are not as yet due and payable.

                  (i) Investment Company Act. None of the Credit Parties or
their respective Subsidiaries or any Guarantor is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

                  (j) Regulation U. None of the Credit Parties or their
respective Subsidiaries or any Guarantor is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System. Not more than twenty-five
percent (25%) of the assets of the Credit Parties or their respective
Subsidiaries or any Guarantor consists of margin stock, within the contemplation
of Regulation U, as amended.

                  (k) Hazardous Substances. Except as disclosed on EXHIBIT I
attached hereto, to the best knowledge of each of the Credit Parties (i) no
premises owned or occupied by or under lease to any of the Credit Parties or
their respective Subsidiaries or any Guarantor have ever been used, and as of
the date of this Agreement, no such premises are being used for any activities
involving the use, treatment, transportation, generation, storage or disposal of
any Hazardous Substances except in compliance with Environmental Laws, and (ii)
no Hazardous Substances have been released on any such premises in violation of
any Environmental Law, nor is there any threat of release of any Hazardous
Substances on any such premises.

                  (l) Subsidiaries. The Company has no Subsidiaries as of the
Closing Date. VNGI has no Subsidiaries as of the Closing Date, other than VNGDI.
VNGDI has no Subsidiaries as of the Closing Date, other than the Company.

                  (m) Existing Seller Acquisition Debt. The nature and
outstanding balances of the Existing Seller Acquisition Debt identified on
EXHIBIT C attached hereto is true and accurate in all respects and the Company
is not in default with respect to any of the Existing Acquisition Seller Debt.

                  (n) Real Estate Leases. None of the Credit Parties or their
respective Subsidiaries or any Guarantor is in default under any of its leases
of real estate.

                  (o) Parent Assets. Neither of VNGI nor VNGDI own any assets
other than cash, intercompany receivables and Common Stock of their respective
Subsidiaries.

                                       50
<PAGE>   51

                                   ARTICLE IV

                            Security for Obligations

                  Section 4.01. COLLATERAL FOR THE OBLIGATIONS. Until paid in
full, the Obligations will be secured by the following:

                  (a) Company Security Agreement. The Obligations are and shall
remain secured by a valid and enforceable first priority security interest and
lien in and to all personal property of the Company, tangible and intangible,
now owned and existing or hereafter acquired or arising, including, without
limitation, all equipment, inventory, accounts receivable, investment property,
and general intangibles and all proceeds and products thereof, which security
interest (excepting as respects Collateral covered by the Company Pledge
Agreement) has been and shall continue to be granted by the Company Security
Agreement, subject only to liens and security interests described in the
exceptions enumerated in subsections 5.02(b)(1) through (7) of this Agreement.
In the event the Company owns or acquires tangible or intangible personal
property that the Required Lenders deem is or may not be covered as collateral
by the Company Security Agreement or the Company Pledge Agreement or in which
the Required Lenders deem their security interest is or may not be perfected,
the Company covenants and agrees promptly upon the request of the Agent to
execute such other security instruments and documents and take such other
actions as the Agent may require to grant to the Agent, for the ratable benefit
of the Lenders and the Agent, a perfected security interest therein, all of
which security instruments and documents shall be in form and substance
satisfactory to the Agent and the Required Lenders in all respects.

                  (b) Real Estate. Upon request by the Required Lenders or the
Agent, the Company covenants and agrees, within ten (10) days after receiving
such request, to grant to the Agent, for the ratable benefit of the Lenders and
the Agent, as security for the Obligations, security interests and liens on all
real estate and improvements, including all fixtures, equipment, furnishings,
systems, and related property located thereon (collectively, the "Real Estate")
now owned or hereafter acquired and owned by the Company for a period of 90
consecutive days, including all proceeds thereof, pursuant to real estate
mortgages or deeds of trust in form and substance satisfactory to the Required
Lenders in all respects duly executed, acknowledged and delivered to the Agent
in recordable form. Upon request by the Required Lenders, the Company covenants
and agrees, within ten (10) days after receiving such request, to grant to the
Agent, for the ratable benefit of the Lenders and the Agent, security interests
and liens in and to all of the Company's right, title and interest in any Real
Estate as a lessee thereof pursuant to leasehold mortgages or deeds of trust in
form and substance satisfactory to the Required Lenders in all respects duly
executed, acknowledged and delivered to the Agent in recordable form. The
Company further covenants and agrees to provide to the Agent at or prior to the
execution and delivery of any real estate mortgages or deeds of trust or
leasehold mortgages or deeds of trust, at

                                       51
<PAGE>   52

the Company's expense: (i) evidence satisfactory to the Required Lenders
showing, in the case of owned Real Estate, that such Real Estate is owned in fee
simple by the Company free and clear of all liens, encumbrances and exceptions
which are not acceptable to the Agent or the Required Lenders, and in the case
of leased Real Estate, showing the Company's leasehold interest therein; and
(ii) a Phase I environmental assessment (and where reasonably deemed appropriate
by the Required Lenders based upon information disclosed in such assessment, a
Phase II environmental assessment) prepared by a registered engineer or
environmental consultant acceptable to the Agent and the Required Lenders
confirming there are no material environmental problems associated with such
Real Estate.

                  (c) Parent Guaranties. The Obligations will be further secured
by the valid and enforceable amended and restated unconditional guaranty of each
of VNGI and VNGDI pursuant to a written guaranty executed and delivered by each
Guarantor in favor of the Lenders and the Agent, each in the form attached
hereto and made a part hereof for all purposes as EXHIBIT J-1 and J-2 (referred
to herein as the same may be amended, modified, extended, renewed, supplemented,
replaced and/or restated from time to time and at any time, collectively as the
"Parent Guaranties" and individually as a "Parent Guaranty"). Pursuant to its
Parent Guaranty, VNGI shall also unconditionally guaranty payment of all of the
obligations of VNGDI arising under, pursuant to or in connection with the Parent
Guaranty executed by VNGDI.

                  (d) Parent Security Agreements. The obligations of each of
VNGI and VNGDI arising under, pursuant to, or by virtue of its respective Parent
Guaranty shall be secured by a valid and enforceable first priority security
interest and lien in and to all of its personal property, tangible and
intangible, whether now owned and existing or hereafter acquired or arising,
including, without limitation, all equipment, inventory, accounts receivable,
investment property, and general intangibles and all proceeds thereof, which
security interest (except as respects Collateral covered by the Parent Pledge
Agreement) has been and shall continue to be granted by an amended and restated
security agreement executed and delivered by each of VNGI and VNGDI to the
Agent, for the benefit of the Lenders and the Agent, each in the form attached
hereto and made a part hereof for all purposes as EXHIBIT K-1 and K-2 (referred
to herein as the same may be amended, modified, extended, renewed, supplemented,
replaced and/or restated from time to time and at any time, collectively as the
"Parent Security Agreements" and individually as a "Parent Security Agreement"),
subject only to liens and security interests described in the exceptions
enumerated in subsections 5.02(b)(1) through (7) of this Agreement.

                  (e) Pledge Agreements.

                  (1) Parent Pledge Agreements. The obligations of each of VNGI
and VNGDI arising under, pursuant to, or by virtue of its respective Parent
Guaranty shall be further secured by a valid and enforceable first priority
pledge of and security interest and lien in and to all of the

                                       52
<PAGE>   53

capital stock of VNGDI owned by VNGI (which shall at all times be all of the
issued and outstanding capital stock of VNGDI) and all of the capital stock of
the Company owned by VNGDI (which shall be at all times all of the issued and
outstanding capital stock of the Company), whether now existing or hereafter
arising or acquired, and whether now or hereafter issued and outstanding, and
all proceeds thereof, which pledge, security interest and lien will be created
by an amended and restated pledge agreement executed by each of VNGI and VNGDI
in form and substance the same as attached hereto as EXHIBITS M-1 and M-2
(referred to herein as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time,
collectively as the "Parent Pledge Agreements" and individually as the "Parent
Pledge Agreements"), subject only to liens and security interests described in
the exceptions enumerated in subsections 5.02(b)(1) through (7) of this
Agreement.

                  (f) Additional Subsidiaries. The Obligations will be further
secured by a valid and enforceable first priority pledge of and security
interest and lien in and to all of the capital stock of each Subsidiary owned by
the Company (which in each case shall be all of the issued and outstanding
capital stock of each such Subsidiary), whether now existing or hereafter
arising or acquired, and whether now or hereafter issued and outstanding, and
all proceeds thereof, which pledge, security interest and lien will be created
by a pledge agreement in form and substance the same as attached hereto as
EXHIBIT N (as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time,
"Company Pledge Agreement"), subject only to liens and security interests
described in the exceptions enumerated in subsections 5.02(b)(1) through (7) of
this Agreement. Within sixty (60) calendar days of the acquisition by the
Company of any Subsidiary of the Company, (i) the Company shall execute and
deliver to the Agent for the benefit of the Lenders and the Agent a Company
Pledge Agreement (or at the Agent's option, an amendment to any existing Company
Pledge Agreement) to a pledge to, and grant to the Agent, for the benefit of the
Lenders and the Agent, a security interest and lien in and to all of the capital
stock of such Subsidiary, and shall deliver to the Agent all of such capital
stock and appropriate stock powers, and (ii) any such Subsidiary shall become a
Guarantor and to execute and deliver in favor of the Agent, for the benefit of
the Lenders and the Agent, a Subsidiary Guaranty and Subsidiary Security
Agreement in form and substance the same as attached hereto as EXHIBITS J-4 and
J-4, together with such financing statements and other perfection documents as
the Agent may require or as are required by the terms of such Security
Agreement.

                                       53
<PAGE>   54

                                    ARTICLE V

                                 Affirmative and
                    Negative Covenants of the Credit Parties

                  Section 5.01. AFFIRMATIVE COVENANTS OF THE CREDIT PARTIES.
Until all Obligations terminate or are paid and satisfied in full, and for so
long as the Company is entitled to receive any Advance or the issuance of a
Letter of Credit or any Letter of Credit Exposure exists, each of the Credit
Parties shall strictly observe, and shall cause each of their respective
Subsidiaries and each Guarantor to observe, the following covenants:

                  (a) Corporate Existence. The Credit Parties and their
respective Subsidiaries and each Guarantor shall preserve its corporate
existence.

                  (b) Reports, Certificates and Other Information. The Credit
Parties shall furnish or cause to be furnished to the Agent copies of the
following Financial Statements, certificates and other information:

                  (1) Annual Statements. As soon as available and in any event
        within one hundred (100) days after the close of each fiscal year of the
        Company, annual audited consolidated Financial Statements for the Credit
        Parties and their respective Subsidiaries, audited by the Company's
        Auditors, showing the financial condition and results of operations of
        the Credit Parties and their respective Subsidiaries as at the close of
        such fiscal year and for such fiscal year, all prepared in accordance
        with GAAP, accompanied by an opinion of the Company's Auditors, which
        opinion shall be without qualification and shall state that such audited
        Financial Statements present fairly the financial position of the Credit
        Parties and their respective Subsidiaries on a consolidated basis as of
        the date of such Financial Statements and the results of its and their
        operations and changes in its and their financial position for the
        period covered thereby, and that their examination in connection with
        such Financial Statements has been made in accordance with GAAP.

                  (2) Interim Monthly Statements. As soon as available and in
        any event within thirty (30) days after the end of each calendar month
        ending after the Closing Date (other than a calendar month which ends a
        fiscal quarter of the Company), unaudited consolidated income statements
        for the Credit Parties and their respective Subsidiaries showing its and
        their results of operations as at, and for such calendar month and
        year-to-date, all in reasonable detail, and certified to the Lender by
        the respective President, Chief Financial Officer, or Treasurer of each
        of the Credit Parties, together with comparable prior year-to-date
        income statements as at the end of same calendar month of the prior
        year.

                                       54
<PAGE>   55

                  (3) Interim Quarterly Statements. As soon as available and in
        any event within fifty (50) days after the close of each fiscal quarter
        of the Company ending after the Closing Date, unaudited consolidated
        Financial Statements of the Credit Parties and their respective
        Subsidiaries showing its and their financial condition and results of
        operations as at, and for such fiscal quarter and year-to-date, all in
        reasonable detail, prepared in accordance with GAAP (except that
        footnote disclosures normally included in Financial Statements prepared
        in accordance with GAAP may be condensed or omitted if and to the extent
        such condensation or omission is consistent with past practices of the
        Credit Parties, and if the information so omitted is not necessary for a
        fair presentation of the results for such fiscal quarter), and certified
        to the Lender by the respective President, Chief Financial Officer, or
        Treasurer of each of the Credit Parties, together with comparable prior
        year-to-date Financial Statements as at the end of same fiscal quarter
        of the prior year.

                  (4) Certificates. Contemporaneously with the furnishing of
        each set of Financial Statements provided for in subsections 5.01(b)(1)
        and (2) of this Agreement, an Officer's Certificate.

                  (5) Orders. Prompt notice of any orders in any material
        proceedings to which the Company or any of its Subsidiaries is a party,
        issued by any court or regulatory agency, federal or state, and if the
        Agent or any Lender should so request, a copy of any such order.

                  (6) Notice of Default or Litigation. Immediately upon learning
        of the occurrence of an Event of Default or Unmatured Event of Default,
        or the institution of or any adverse determination in any litigation,
        arbitration proceeding or governmental proceeding which is material to
        the Company or any of its Subsidiaries, or the occurrence of any event
        which could have a material adverse effect upon the Company or any of
        its Subsidiaries, written notice thereof describing the same and the
        steps being taken with respect thereto.

                  (7) Compliance Certificates. Within fifty (50) days after the
        end of each calendar month ending after the Closing Date that is also
        the end of a calendar quarter, a certificate of the Chief Financial
        Officer or other appropriate officer of the Company demonstrating
        compliance with the financial covenants stated in subsection 5.01(g) of
        this Agreement. Such certificate shall relate the covenants to the
        month-end figures and shall otherwise be in such form and provide such
        detail as may be reasonably satisfactory to the Agent.

                  (8) Registration Statements and Reports. Promptly upon filing
        with the Securities Commission or any state securities regulatory
        authority, copies of all registration

                                       55
<PAGE>   56

        statements and all periodic and special reports required or permitted
        to be filed under federal or state securities laws and regulations.

                  (9) Consolidated Budget. Concurrently with delivery of the
        annual financial statements pursuant to Section 5.06(b)(1), the Credit
        Parties shall provide to the Agent and each of the Lenders a
        consolidated budget for the next fiscal year forecasting revenues and
        expenses on a consolidated basis, for the Credit Parties. Such budget
        shall be in such detail as the Agent and the Required Lenders shall
        reasonably require.

                  (10) Other Information. Within thirty (30) days after the
        request, such other information concerning the Credit Parties and their
        respective Subsidiaries as the Agent or the Lenders may from time to
        time request, including, without limitation, consolidating Financial
        Statements of the Credit Parties and their respective Subsidiaries.

                  (11) Additional EBITDA Amount Confirmations. Within fourteen
        (14) calendar days of the consummation by the Company of a New
        Acquisition, the Company shall deliver to the Agent a final written
        calculation of the Additional EBITDA Amount applicable to such New
        Acquisition (as such calculation has been approved by the Agent in its
        discretion), together with a written statement of the President or Chief
        Financial Officer of the Company confirming pro forma compliance with
        the financial covenants set forth in Section 5.01 (g) of this Agreement
        as at immediately following the consummation of such New Acquisition,
        determined with the inclusion of the Additional EBITDA Amount.

                  (c) Books, Records and Inspections. Each of the Credit Parties
and their Subsidiaries and each Guarantor shall maintain complete and accurate
books and records, and permit access thereto by the Agent and each of the
Lenders for purposes of inspection, copying and audit, and the Credit Parties
and each of their respective Subsidiaries and each Guarantor shall permit the
Lender to inspect its properties and operations at all reasonable times.

                  (d) Insurance. In addition to any insurance required by any
other Loan Documents to which it is a party, the Credit Parties and their
respective Subsidiaries and each Guarantor shall maintain such insurance as may
be required by law and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated. The Credit Parties and their respective Subsidiaries and each
Guarantor agree to name the Agent and each of the Lenders, as additional
insureds and lender's loss payee on any such insurance policy under a standard
lender's loss payable clause and to provide a copy of any such policy to the
Agent.

                  (e) Taxes and Liabilities. The Credit Parties and their
respective Subsidiaries and each Guarantor shall pay when due all taxes, license
fees, assessments and other liabilities

                                       56
<PAGE>   57

except such as are being contested in good faith and by appropriate proceedings
and for which appropriate reserves have been established.

                  (f) Compliance with Legal and Regulatory Requirements. The
Credit Parties and their respective Subsidiaries and each Guarantor shall
maintain material compliance with the applicable provisions of all federal,
state and local statutes, ordinances and regulations and any court orders or
orders of regulatory authorities issued thereunder.

                  (g) Financial Covenants. The Credit Parties shall observe each
of the following financial covenants:

                  (1) Consolidated Net Worth. The Credit Parties and their
        respective Subsidiaries shall at all times from and after the Closing
        Date maintain Consolidated Net Worth at a level not less than (i)
        $25,300,000.00, plus (ii) Seventy-Five Percent (75%) of the cumulative
        Consolidated Net Income for each fiscal quarter of the Company ending
        after the date of the financial statement of the Credit Parties
        delivered to the Agent prior to the date hereof, provided that
        cumulative Consolidated Net Income shall not be reduced by the amount of
        the net loss for any fiscal quarter in which the Credit Parties and
        their respective subsidiaries on a consolidated basis suffers a net
        loss, plus (iii) One Hundred Percent (100%) of the amount of any new
        paid in capital or other new equity received by any Credit Party from
        any Person who is not a Credit Party provided, that, such amount shall
        in no event be less than zero.

                  (2) Fixed Charge Coverage Ratio. As of the close of each
        fiscal quarter of the Company ending after the Closing Date, the Credit
        Parties and their respective Subsidiaries, for the period of the four
        consecutive fiscal quarters which end on such close, shall have a Fixed
        Charge Coverage Ratio of not less than: (i) 1.10:1 through June 29,
        2002, and (ii) 1.15:1 on June 30, 2002, and thereafter.

                  (3) Ratio of Total Funded Debt to EBITDA. As of the close of
        each fiscal quarter of the Company ending after the Closing Date, the
        Credit Parties and their respective Subsidiaries, for the period of the
        four consecutive fiscal quarters which end on such close, shall have a
        Ratio of Total Funded Debt to EBITDA of not greater than (i) 4.00:1
        through June 29, 2002, (ii) 3.75:1 from June 30, 2002, through September
        29, 2002, and (iii) 3.50:1 on September 30, 2002, and thereafter.

                  (h) Primary Banking Relationship. The Company shall maintain
its primary concentration and deposit accounts with the Agent.

                  (i) Employee Benefit Plans. The Credit Parties and their
respective Subsidiaries and each Guarantor shall maintain any Plan in material
compliance with ERISA, the

                                       57
<PAGE>   58

Code, and all rules and regulations of regulatory authorities pursuant thereto
and shall file all reports required to be filed pursuant to ERISA, the Code, and
such rules and regulations.

                  (j) Hazardous Substances. If any of the Credit Parties or any
of their respective Subsidiaries or any Guarantor should commence the use,
treatment, transportation, generation, storage or disposal of any Hazardous
Substance in reportable quantities in its operations in addition to those noted
in EXHIBIT H attached hereto, the Credit Parties shall immediately notify the
Agent and the Lenders of the commencement of such activity with respect to each
such Hazardous Substance. The Credit Parties shall cause any Hazardous
Substances which are now or may hereafter be used or generated in the operations
of the Credit Parties or any of their respective Subsidiaries or any Guarantor
in reportable quantities to be accounted for and disposed of in compliance with
all Environmental Laws and other applicable federal, state and local laws and
regulations. The Credit Parties shall notify the Agent and the Lenders
immediately upon obtaining knowledge that:

                  (1) any premises which have at any time been owned or occupied
        by or have been under lease to any of the Credit Parties or any of their
        respective Subsidiaries or any Guarantor are the subject of an
        environmental investigation by any federal, state or local governmental
        agency having jurisdiction over the regulation of any Hazardous
        Substances, the purpose of which investigation is to quantify the levels
        of Hazardous Substances located on such premises, or

                  (2) any of the Credit Parties or any of their respective
        Subsidiaries or any Guarantor has been named or is threatened to be
        named as a party responsible for the possible contamination of any real
        property or ground water with Hazardous Substances, including, but not
        limited to the contamination of past and present waste disposal sites.

                  If any of the Credit Parties or any of their respective
Subsidiaries or any Guarantor is notified of any event described in subsections
5.01(j)(1) or (2) above, the Credit Parties shall immediately engage or cause
such Subsidiary or such Guarantor to engage a firm or firms of engineers or
environmental consultants appropriately qualified to determine as quickly as
practical the extent of contamination and the potential financial liability of
the Credit Parties or such Subsidiary or such Guaranty with respect thereto, and
the Agent and the Lenders shall be provided with a copy of any report prepared
by such firm or by any governmental agency as to such matters as soon as any
such report becomes available to the Credit Parties, and the Credit Parties
shall immediately establish reserves in the amount of the potential financial
liability of the Credit Parties or such Subsidiary or such Guarantor identified
by such environmental consultants or engineers. The selection of any engineers
or environmental consultants engaged pursuant to the requirements of this
Section shall be subject to the approval of the Agent and the Lenders, which
approval shall not be unreasonably withheld.

                                       58
<PAGE>   59

         Section 5.02. NEGATIVE COVENANTS OF THE CREDIT PARTIES. Until all
Obligations terminate or are paid and satisfied in full, and so long as the
Company is entitled to receive any Advance or the issuance of a Letter of Credit
or any Letter of Credit Exposure exists, the Credit Parties shall strictly
observe, and shall cause each of their respective Subsidiaries and each
Guarantor to strictly observe, the following covenants:

                  (a) Restricted Payments. Except as provided in the next
sentence, none of the Credit Parties or any of their respective Subsidiaries
shall (i) purchase or redeem any shares of their respective capital stock or
declare or pay any dividends thereon except for dividends payable entirely in
capital stock, or (ii) make any other distributions to shareholders as
shareholders, or set aside any funds for any such purpose, or prepay, purchase
or redeem any subordinated Debt of the Company or any other Credit Party.
Notwithstanding the foregoing, if no Event of Default or Unmatured Event of
Default has occurred and is continuing at the time of such payment or purchase,
as applicable, and if no Event of Default or Unmatured Event of Default would
result from such payment or purchase, as applicable: (1) the Credit Parties and
their respective Subsidiaries may pay cash dividends to shareholders on their
respective capital stock (i) in an unlimited amount with respect to shareholders
which are Credit Parties or their respective Subsidiaries, and (ii) not to
exceed an aggregate of $250,000 in any calendar year with respect to
shareholders which are not Credit Parties; and (2) from and after the Closing
Date VNGI may purchase and redeem up to an aggregate of 180,000 shares of its
Common Stock at a purchase price not to exceed $7.50 per share.

                  (b) Liens. Neither the Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall create or permit to exist any
mortgage, pledge, title retention lien or other lien, encumbrance or security
interest (all of which are hereafter referred to in this subsection and in this
Agreement as a "lien" or "liens") with respect to any property or assets now
owned or hereafter acquired, including, without limitation any of their
respective rights, title and interests in and to any Real Estate, whether leased
or owned, except:

                  (1) liens in favor of the Agent, for the benefit of the
        Lenders and the Agent, created pursuant to the requirements of this
        Agreement or otherwise;

                  (2) any Lien or deposit with any governmental agency required
        or permitted to qualify it to conduct business or exercise any
        privilege, franchise or license, or to maintain self-insurance or to
        obtain the benefits of or secure obligations under any law pertaining to
        worker's compensation, unemployment insurance, old age pensions, social
        security or similar matters, or to obtain any stay or discharge in any
        legal or administrative proceedings, or any similar lien or deposit
        arising in the ordinary course of business;

                                       59
<PAGE>   60

                  (3) any mechanic's, worker's, repairmen's, carrier's,
        warehousemen's or other like liens arising in the ordinary course of
        business for amounts not yet due and for the payment of which adequate
        reserves have been established, or deposits made to obtain the release
        of such liens;

                  (4) easements, licenses, minor irregularities in title or
        minor encumbrances on or over any real property which do not, in the
        judgment of the Required Lenders, materially detract from the value of
        such property or its marketability or its usefulness in its business;

                  (5) liens for taxes and governmental charges which are not yet
        due or which are being contested in good faith and by appropriate
        proceedings and for which appropriate reserves have been established;

                  (6) liens created by or resulting from any litigation or legal
        proceeding which is being contested in good faith and by appropriate
        proceedings and for which appropriate reserves have been established;

                  (7) those liens in favor of Acquisition Sellers which secure
        Acquisition Seller Debt, including those liens in favor of Existing
        Acquisition Sellers which secure Existing Acquisition Seller Debt as
        described on EXHIBIT O attached hereto; provided that (i) the maximum
        aggregate amount of Acquisition Seller Debt secured by such liens shall
        be $6,500,000 and (ii) the Acquisition Seller holding any such lien
        (other than any identified on Exhibit O as exempt from the subordination
        requirement) is a party to (a) the Intercreditor Agreements, or (b)
        other intercreditor and subordination agreement with the Agent and the
        Lenders and the Company in substance and form the same as the
        Intercreditor Agreements and in all events satisfactory to the Agent and
        the Required Lenders in all respects; and

                  (8) liens on property that secure only Debt incurred for the
        purchase price of such property, but only to the extent such Debt is
        permitted under Section 5.02(l)(iii) of this Agreement and to the extent
        such Debt is not greater than the fair market value of such property.

                  (c) Guaranties. Neither the Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall be a guarantor or surety of, or
otherwise be responsible in any manner with respect to any undertaking of any
other person or entity, whether by guaranty agreement or by agreement to
purchase any obligations, stock, assets, goods or services, or to supply or
advance any funds, assets, goods or services, or otherwise, except for:

                  (1) guaranties in favor of the Agent, for the benefit of the
        Lenders and the Agent;

                                       60
<PAGE>   61

                  (2) guaranties by endorsement of instruments for deposit made
        in the ordinary course of business; and

                  (3) those specific existing guaranties listed on EXHIBIT P
        attached hereto.

                  (d) Loans or Advances. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall make or permit to exist
any loans or advances to any other Person, except for:

                  (1) extensions of credit or credit accommodations to customers
        or vendors made by it in the ordinary course of its business as now
        conducted;

                  (2) reasonable salary advances to non-executive employees, and
        other advances to agents and employees for anticipated expenses to be
        incurred on its behalf of the course of discharging their assigned
        duties;

                  (3) loans made to its employees in accordance with its
        customary employee loan program, provided that, the amount of each loan
        made to any such employee shall not exceed a principal amount in excess
        of such employee's salary for two (2) pay periods for a term not to
        exceed twelve (12) pay periods for such employee;

                  (4) loans or advances made between the Credit Parties and
        their respective Subsidiaries, provided that (i) no Event of Default or
        Unmatured Event of Default exists and remains uncured or would be caused
        by the making of such loan or advance, (ii) such loans and advances
        shall not be evidenced by any promissory note or be secured by any
        collateral, and (iii) loans and advances by VNGI and VNGDI to the
        Company shall be junior and subordinate to the Obligations pursuant to
        an amended and restated subordination agreement executed by VNGI and
        VNGDI in form and substance the same as attached hereto as EXHIBIT Q (as
        the same may be amended, modified, supplemented and/or restated from
        time to time and at any time, the "Subordination Agreement").

                  (5) the specific items listed on EXHIBIT R attached hereto.

                  (e) Mergers, Consolidations, Sales, Acquisition or Formation
of Subsidiaries. Neither the Credit Parties nor any of their respective
Subsidiaries nor any Guarantor shall (i) be a party to any consolidation or to
any merger or purchase the capital stock of or otherwise acquire any equity
interest in any other business entity other than New Acquisitions (with respect
to the Company only), (ii) acquire any material part of the assets of any other
business entity other than New Acquisitions (with respect to the Company only),
except in the ordinary course of business

                                       61
<PAGE>   62

and excepting Short-Term Real Estate Sales, or (iii) sell, transfer, convey or
lease all or any material part of its assets, except in the ordinary course of
business, or sell or assign with or without recourse any receivables. VNGI shall
not cause to be created or otherwise acquire any Subsidiary other than VNGDI
without the prior written consent of the Agent and the Required Lenders. VNGDI
shall not cause to be created or otherwise acquire any Subsidiary other than the
Company without the prior written consent of the Agent and the Required Lenders.
The Company shall not cause to be created or otherwise acquire any Subsidiary
without the prior written consent of the Agent and the Required Lenders, which
consent shall not be unreasonably withheld. Without limiting the generality of
the foregoing sentence, the Company shall not consummate any New Acquisition
which would cause a new Subsidiary of the Company to exist without the prior
written consent of the Agent and the Required Lenders, and if such consent is
given, concurrently with or within sixty (60) days following consummation of
such New Acquisition: (i) the Company shall amend the Company Pledge Agreement
to include a pledge of and security interest and Lien in and to all of the
capital stock of such Subsidiary as provided in Section 4.01(f) of this
Agreement, and deliver to the Agent, for the benefit of the Lenders and the
Agent, all of the original stock certificates of such Subsidiary, together with
executed blank stock powers therefor; and (ii) such Subsidiary shall become a
Guarantor and shall execute and deliver in favor of the Agent, for the benefit
of the Lenders and the Agent, a Subsidiary Guaranty and Subsidiary Security
Agreement as provided in Section 4.01(f) of this Agreement. No Subsidiary of the
Company shall cause to be created or otherwise acquire any Subsidiary without
the prior written consent of the Agent and the Required Lenders.

                  (f) Margin Stock. The Company shall not use or cause or permit
the proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, as amended from time to time.

                  (g) Other Agreements. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall enter into any agreement
containing any provision which would be violated or breached in material respect
by the performance of its obligations under this Agreement or under any other
Loan Document to which it is a party.

                  (h) Judgments. Neither the Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall permit any uninsured judgment or
monetary penalty rendered against it in any judicial or administrative
proceeding to remain unsatisfied for a period in excess of forty-five (45) days
unless such judgment or penalty is being contested in good faith by appropriate
proceedings and execution upon such judgment has been stayed, and unless an
appropriate reserve has been established with respect thereto.

                                       62
<PAGE>   63

                  (i) Principal Office. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall change the location of its
principal office unless it gives not less than ten (10) days prior written
notice of such change to the Agent and the Required Lenders.

                  (j) Hazardous Substances. Neither the Credit Parties nor any
of their respective Subsidiaries nor any Guarantor shall allow or permit to
continue the release or threatened release of any Hazardous Substance on any
premises owned or occupied by or under lease to Credit Parties nor any of their
respective Subsidiaries nor any Guarantor, except as permitted by and in
accordance with that certain permit No. 25656 issued by the Allegheny Health
Department, State of Pennsylvania.

                  (k) Lease Obligations. Neither Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall incur obligations under any
Capital Leases.

                  (l) Additional Debt. Neither Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall create, incur, assume or suffer
to exist any Debt or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or services or
for Capital Lease obligations, except (i) Acquisition Seller Debt, (ii) the
Obligations, (iii) Debt incurred to finance the acquisition of property and
secured only by a security interest in the property so acquired, provided that,
the amount of all such Debt outstanding shall not exceed $1,000,000 in the
aggregate at any time, and (iv) the existing Debt for borrowed money disclosed
on EXHIBIT S attached hereto.

                  (m) Restrictions Parent Assets. Neither VNGI nor VNGDI shall
own any assets other than cash, intercompany receivables, and Common Stock of
their respective Subsidiaries, without the prior written consent of the Agent
and the Required Lenders.

                  (n) Negative Pledge Limitation. Neither the Company nor any
Guarantor shall enter into any agreement with any Person, other than the
Lenders, which prohibits or limits its ability to create, incur, assume, or
suffer to exist in favor of the Lenders or the Agent any Lien upon any of its
assets, rights, revenues, or property, real, personal, or mixed, tangible or
intangible, whether now owned or hereafter acquired.

                  (o) Accounting Policies/Change of Business. Neither the
Company nor any of the Guarantors shall: (1) change its fiscal year or any of
its significant accounting policies except to the extent necessary to comply
with GAAP; or (2) make any material change in the nature of its business as
carried on the Closing Date.

                  (p) Capital Expenditures. The Credit Parties and their
respective Subsidiaries on a consolidated basis shall not make Capital
Expenditures (excluding Budgeted Acquisition Capital Expenditures): (i) during
the first year following the Closing Date (with such year

                                       63
<PAGE>   64

beginning on the first day of the month in which the Closing Date occurs) which
in the aggregate on a consolidated basis exceed $6,500,000; and (ii) during the
second year following the Closing Date which in the aggregate on a consolidated
basis exceed $7,000,000; and (iii) during the third year following the Closing
Date which in the aggregate on a consolidated basis exceed $7,500,000.

                                   ARTICLE VI

                               Lending Conditions

                  Section 6.01. CONDITIONS OF LENDING. Unless the Agent and the
Required Lenders otherwise consent in writing, the obligation of the Lenders to
make any Advance and to make the Term Loan and of Bank One to issue any Letters
of Credit shall be subject to fulfillment of each of the following conditions
precedent:

                  (a) No Default. No Event of Default or Unmatured Event of
Default shall have occurred and be continuing, and the representations and
warranties of the Credit Parties contained in Section 3.01 of this Agreement
shall be true and correct as of the date of this Agreement and as of the date of
each Advance, except that after the date of this Agreement: (i) the
representations contained in subsection 3.01(d)(ii) of this Agreement will be
construed so as to refer to the latest Financial Statements furnished to the
Agent by the Credit Parties pursuant to the requirements of this Agreement, (ii)
the representations contained in subsection 3.01(k) (with respect to Hazardous
Substances) will be construed so as to apply not only to the Credit Parties, but
also to their respective Subsidiaries, (iii) the representation contained in
subsection 3.01(l) of this Agreement will be construed so as to except any
Subsidiary which may hereafter be formed or acquired by any of the Credit
Parties with the consent of the Required Lenders and the Agent, and (iv) all
other representations will be construed to have been amended to conform with any
changes of which the Agent and the Required Lenders shall previously have been
given notice in writing by the Credit Parties.

                  (b) Documents and other Items to be Furnished at Closing. To
the extent not previously delivered to the Agent pursuant to the Original
Agreement, the Agent shall have received contemporaneously with the execution of
this Agreement (or such later date as indicated below), the following, each duly
executed, currently dated (as applicable) and in form and substance satisfactory
to the Agent and the Signatory Lenders:

                  (1) The Term Notes, the Revolving Notes and the Company
                      Security Agreement, each duly executed and delivered by
                      the Company to each of the Signatory Lenders.

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<PAGE>   65

                  (2)     The Parent Guaranties, the Parent Security Agreements
                          and the Parent Pledge Agreements, each duly executed
                          and delivered by VNGI and VNGDI, respectively, to the
                          Agent, together with the original stock certificates
                          of each of VNGDI and the Company and blank stock
                          powers therefor duly executed and delivered by VNGI
                          and VNGDI to the Agent.

                  (3)     The Subordination Agreement, duly executed and
                          delivered to the Agent by the Credit Parties.

                  (4)     A certificate of the Secretaries of each of the Credit
                          Parties:

                              (i)   certifying the adoption at a duly called
                                    meeting of its Board of Directors of the
                                    resolutions authorizing the execution,
                                    delivery and performance, respectively, of
                                    this Agreement and the other Loan Documents
                                    provided for in this Agreement to which it
                                    is a party;

                              (ii)  certifying the names of the officer or
                                    officers authorized to sign this Agreement
                                    and the other Loan Documents provided for in
                                    this Agreement to which it is a party,
                                    together with a sample of the true signature
                                    of each such officer; and

                              (iii) certifying as complete and correct its
                                    Articles of Incorporation and By-laws as
                                    then in effect.

                  (5)     On or before June 1, 2000, a copy of the file-marked
                          Articles of Incorporation of each of Credit Parties
                          certified as complete and correct by the Secretary of
                          State of the state of its incorporation.

                  (6)     On or before June 1, 2000, a currently dated
                          certificate of existence for each of the Credit
                          Parties issued by the Secretary of State of the state
                          of its incorporation and certificates of good standing
                          from the respective Secretaries of State for each
                          other state in which any of them engages in business.

                  (7)     Certificates evidencing the existence of all insurance
                          required under the terms of this Agreement or any
                          other of the Loan Documents.

                  (8)     Payment to the Agent of all legal fees and expenses of
                          Baker & Daniels, special counsel to the Agent, in
                          connection with the negotiation, preparation and
                          closing of this Agreement, the other Loan Documents,
                          the Transfer Agreement, other closing documents and
                          UCC-1 assignments and filings. By

                                       65
<PAGE>   66

                          its execution of this Agreement, the Company
                          authorizes the Agent to debit any of the deposit
                          accounts of the Company carried with the Agent for
                          such attorneys' fees and any other amounts owed under
                          Section 9.03 of this Agreement.

                   (9)    Payment to Bank One and the Arranger of all amounts
                          due them under the Agent Fee Agreement and payment to
                          each Signatory Lender of a Commitment Fee in the
                          amounts shown on the Schedule of Commitment Fee
                          Amounts which accompanies this Agreement.

                  (10)    Such other UCC Financing Statements, Perfection
                          Certificates and other documents as the Agent or the
                          Signatory Lenders may reasonably require.

                  (11)    Pay current to the Closing Date all accrued interest
                          on the Prior Revolving Loans and the Term Loan.

                  (12)    The opinion of counsel for the Credit Parties
                          addressed to the Agent and the Lenders in such form
                          and substance as may be reasonably acceptable to the
                          Agent and the Lenders.

                  (c) Documents to be Furnished at Time of Each Advance. The
Agent shall have received the following prior to making any Advance, each duly
executed and currently dated, unless waived at the Agent's discretion as
provided in subsection 2.02(b) of this Agreement:

                  (1)     An Application for a Revolving Loans Advance.

                  (2)     An Officer's Certificate.

                  (3)     Such other documents as the Agent or the Required
                          Lenders may reasonably require.

                                   ARTICLE VII

                         Events of Default--Acceleration

                  Section 7.01. EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:

                                       66
<PAGE>   67

                  (a) Nonpayment of the Loans. Default in the payment when due
of any amount payable under the terms of either of the Notes, or otherwise
payable to the Agent or any of the Lenders or any other holder of the Notes
under the terms of this Agreement.

                  (b) Nonpayment of Other Debt. Default by any Credit Party or
any Guarantor in the payment when due, whether by acceleration or otherwise, of
any other material Debt for borrowed money, or default in the performance or
observance of any obligation or condition with respect to any such other Debt if
the effect of such default is to accelerate the maturity of such other Debt or
to permit the holder or holders thereof, or any trustee or agent for such
holders, to cause such Debt to become due and payable prior to its scheduled
maturity, unless the Credit Party or the Guarantor is contesting the existence
of such default in good faith and by appropriate proceedings.

                  (c) Other Material Obligations. Subject to the expiration of
any applicable grace period, default by any Credit Party or any Guarantor in the
payment when due, or in the performance or observance of any material obligation
of, or condition agreed to by any Credit Party or any Guarantor with respect to
any material purchase or lease of goods, securities or services except only to
the extent that the existence of any such default is being contested in good
faith and by appropriate proceedings and that appropriate reserves have been
established with respect thereto.

                  (d) Bankruptcy, Insolvency, etc. Any Credit Party or any
Guarantor admitting in writing its inability to pay its debts as they mature or
an administrative or judicial order of dissolution or determination of
insolvency being entered against any Credit Party or any Guarantor; or any
Credit Party or any Guarantor applying for, consenting to, or acquiescing in the
appointment of a trustee or receiver for it or any of its property, or any
Credit Party or any Guarantor making a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee or receiver being appointed for any Credit Party or any Guarantor or for
a substantial part of its property and not being discharged within sixty (60)
days; or any bankruptcy, reorganization, debt arrangement, or other proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding being instituted by or against any Credit Party or any Guarantor,
and, if involuntary, being consented to or acquiesced in by any Credit Party or
any Guarantor or remaining for sixty (60) days undismissed.

                  (e) Warranties and Representations. Any warranty or
representation made by any Credit Party or any Guarantor in this Agreement or
any other Loan Document to which it is a party proving to have been false or
misleading in any material respect when made, or any schedule, certificate,
financial statement, report, notice, or other writing furnished by any Credit
Party or any Guarantor to the Lender proving to have been false or misleading in
any material respect when made or delivered, provided that the foregoing shall
not be deemed to be an Event of

                                       67
<PAGE>   68

Default until the Agent gives such Credit Party or such Guarantor ten (10) days'
prior written notice of same.

                  (f) Violations of Negative and Financial Covenants. Failure by
the Credit Parties and their respective Subsidiaries or any of them to comply
with or perform any covenant stated in Section 5.01(g) or Section 5.02 of this
Agreement.

                  (g) Noncompliance With Other Provisions of this Agreement.
Failure of any Credit Party or any Guarantor to comply with or perform any
covenant or other provision of this Agreement or any other Loan Document to
which it is a party or to perform any other Obligation (which failure does not
constitute an Event of Default under any of the preceding provisions of this
Section 7.01) and continuance of such failure for thirty (30) days after notice
thereof to such Credit Party or such Guarantor from the Agent.

                  (h) Guaranty Defaults. Any Guarantor shall default in the due
observance or performance of any covenant, condition or agreement on its part to
be observed or performed under the terms of its Guaranty and continuance of such
default for ten (10) days after written notice thereof to the Guarantor by the
Agent.

                  (i) Termination of Guaranties. The termination or purported
termination of any of the Guaranties.

                  (j) Default under Other Loan Documents. The occurrence of any
"Default" or "Event of Default" as such terms are defined in any of the Loan
Documents other than this Agreement.

                  (k) Change of Control. The occurrence of any Change of Control
without the consent of the Required Lenders.

                  Section 7.02. Effect of Event of Default. If any Event of
Default described in Section 7.01(d) of this Agreement shall occur, maturity of
the Loans shall immediately be accelerated and the Notes and the Loans evidenced
thereby, and all other indebtedness and any other payment Obligations of the
Company to the Lenders shall become immediately due and payable, and the
obligation of the Lenders to make any Advance and the obligation of Bank One to
issue any Letter of Credit shall immediately terminate, all without notice of
any kind. When any other Event of Default has occurred and is continuing, the
Required Lenders may accelerate payment of the Loans and declare the Notes and
all other payment Obligations due and payable, whereupon maturity of the Loans
shall be accelerated and the Notes and the Loans evidenced thereby, and all
other payment Obligations shall become immediately due and payable and the
obligation of the Lenders to make any Advance and the obligation of Bank One to
issue any Letter

                                       68
<PAGE>   69

of Credit shall immediately terminate, all without notice of any kind. The Agent
shall promptly advise the Company of any such declaration, but failure to do so
shall not impair the effect of such declaration. The remedies of the Agent and
the Lenders specified in this Agreement or in any other Loan Document shall not
be exclusive, and the Agent and the Lenders each may avail itself of any other
remedies provided by law as well as any equitable remedies available to the
Lenders.

                                  ARTICLE VIII

                                      Agent

                  Section 8.01. Agent. This Article specifies rights and
obligations among and between the Lenders and the Agent, Syndication Agent and
Documentation Agent. The Credit Parties acknowledge the existence of limitations
in Agent's authority but shall be entitled to rely upon the authority, of the
Agent as conferred by this Article and otherwise specified in this Agreement or
any other Loan Document.

                  Section 8.02. Appointment of Agent. Each Lender hereby
appoints and authorizes the Agent to act as its agent under this Agreement and
the other Loan Documents to receive payments made in respect of the Revolving
Notes and the Term Notes and in respect to Letter of Credit Loans and to have
such powers as are specifically delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto.

                                       69
<PAGE>   70

                  Section 8.03. Powers and Immunities of Agent.

                  (a) Powers. The Agents shall have no rights or duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents, and the Agents shall not by reason of this Agreement or
any of the other Loan Documents be a trustee or fiduciary for any Lender. None
of the Agents nor any of their respective directors, officers, agents, attorneys
or employees, shall be responsible for any recitals, statements, representations
or warranties contained in this Agreement or any other Loan Documents, or
received by any of them under this Agreement or any other Loan Documents, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Documents or for any failure by the Credit
Parties to perform any of their obligations hereunder or thereunder. The Agent
may employ agents and attorneys 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 selected by it with reasonable care.
None of the Agents nor any of their respective directors, officers, employees or
agents, shall be liable or responsible for any action taken or omitted to be
taken by it to any Lender, Credit Party or any other Person under this Agreement
or any other Loan Documents or in connection herewith, except for its or their
own gross negligence or willful misconduct.

                  (b) Reliance by Agent. Each of the Agents shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telex, telegram, cable or telecopy) received by it in
connection with this Agreement or the other Loan Documents 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 it. As to any matters not
expressly provided for by this Agreement or the other Loan Documents, each of
the Agents shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions signed by the Required
Lenders, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders.

                  (c) Defaults. None of the Agents shall be deemed to have
knowledge of the occurrence of an Event of Default or Unmatured Event of Default
(other than (i) the non-payment of principal of or interest on the Notes or any
other amounts payable under this Agreement or (ii) the failure of the Credit
Parties to provide timely the statements and certification required by Section
5.01(b)(1) through (4) hereof) or to comply with a request or demand by the
Agent, unless the Agent has received written notice or other written
documentation from a Lender or from a Credit Party indicating that an Event of
Default or Unmatured Event of Default has occurred. In the event that the Agent
receives such a notice of the occurrence of an Event of Default or Unmatured
Event of Default, the Agent shall give prompt notice thereof to the Lenders (and
shall give each Lender prompt notice of each such non-payment). The Agent shall
(subject to Section 8.03(g)

                                       70
<PAGE>   71

of this Agreement) take such action with respect to such Event of Default or
Unmatured Event of Default as shall be directed by the Required Lenders.

                  (d) Rights as a Lender. With respect to the Loan Documents,
Bank One, Huntington and National City, each in its capacity as a Lender
hereunder, shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent,
Documentation Agent or Syndication Agent, respectively. The affiliates of any
Lender (including Bank One) may (without having to account therefor to any other
Lender) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with a Credit Party. Bank One may accept fees
and other consideration from a Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to the other
Lenders except as specified herein. In so doing, no Lender shall violate the
provisions of this Agreement or the other Loan Documents.

                  (e) Indemnification. Each of the Lenders agrees to indemnify
the Agent (to the extent not reimbursed by a Credit Party) ratably in proportion
to its Commitment Percentage 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 its capacity as one of the Agents, in any way
relating to or arising out of this Agreement or any other Loan Documents or the
enforcement of any of the terms hereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent.

                  (f) Non-Reliance on Agents and other Lenders. Each Lender
agrees that it has, independently and without reliance on any of the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Credit Parties and its decision
to enter into this Agreement and that it will, independently and without
reliance upon any of the Agents or any other Lender, 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
and the other Loan Documents. None of the Agents shall be required to keep
itself informed as to the performance or observance by the Credit Parties of
this Agreement or any other Loan Documents or to inspect the properties or books
of the Credit Parties, unless an inspection of the properties or books is
requested in writing by the Required Lenders.

                  (g) Failure to Act. Except for action expressly required of
one of the Agents hereunder, each of the Agents shall in all cases be fully
justified in failing or refusing to act under this Agreement and the other Loan
Documents unless it shall be indemnified to its satisfaction by the Lenders
against any and all liability and expenses which may be incurred by it by reason
of taking or continuing to take any such action.

                                       71
<PAGE>   72

                  (h) 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 notice thereof to the Lenders and the Company, and
the Agent may be removed at any time with or without cause by the Required
Lenders. Upon such resignation or removal, the Required Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders or such successor shall not have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation or after the removal of the Agent, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a bank which
has an office in the United States and having a combined capital and surplus of
at least Five Hundred Million Dollars ($500,000,000.00). Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as Agent under this Agreement and the
other Loan Documents. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Section 8.03 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 Agent.

                  (i) Collateral. Any Collateral in the possession of the Agent
(as agent for the Lenders) shall be held for the ratable benefit of the Lenders
and the Agent, subject to any prior lien therein held by the Agent in its
individual capacity and not as agent for the Lenders. As to Collateral in its
possession, the Agent shall exercise only such degree of care as it would
exercise for its own account.

                                   ARTICLE IX

                                  Miscellaneous

                  Section 9.01. Waiver -- Amendments. No delay on the part of
the Agent or the Lenders, or any holder of the Notes in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by any of them of any right, power or remedy preclude any
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to any
of the provisions of this Agreement or the other Loan Documents or otherwise of
the Obligations shall be effective unless such amendment, modification, waiver
or consent is in writing and signed by the Required Lenders.

                  Section 9.02. Notices. Any notice given under or with respect
to this Agreement to any Credit Party, the Agent or the Lenders shall be in
writing and, if delivered by hand or sent by

                                       72
<PAGE>   73
overnight courier service, shall be deemed to have been given when delivered
and, if mailed, shall be deemed to have been given five (5) days after the date
when sent by registered or certified mail, postage prepaid, and addressed to
such Credit Party, the Agent or the Lenders (or other holder of the Notes) at
its address shown below, or at such other address as any such party may, by
written notice to the other party to this Agreement, have designated as its
address for such purpose. The addresses referred to are as follows:

         The Company:               Valley National Gases, Inc.
                                    67 43rd Street
                                    Wheeling, West Virginia 26003-7601
                                    Attention:  President

         VNGI:                      Valley National Gases Incorporated
                                    1640 Jefferson Avenue
                                    Washington, Pennsylvania  15301
                                    Attention:  President

         VNGDI:                     Valley National Gases Delaware, Inc.
                                    300 Delaware Avenue, Suite 1704
                                    Wilmington, Delaware 19801
                                    Attention:  President

         Agent and Bank One:        Bank One, Indiana, National Association
                                    111 Monument Circle
                                    Mail Code IN1-0046
                                    P.O. Box 7700
                                    Indianapolis, Indiana  46277
                                    Attention: Division Manager,
                                               Commercial Lending Dept.

         LaSalle:                   LaSalle Bank National Association
                                    One Metropolitan Sq.
                                    211 North Broadway, Suite 4050
                                    St. Louis, Missouri  63102
                                    Attention: David J. Carney,
                                               Asst. Vice President

         Firstar:                   Firstar, N.A.
                                    425 Walnut St., ML 8160
                                    Cincinnati, Ohio 45201-1038
                                    Attention: Mark Whitson, Vice President

                                       73
<PAGE>   74

         B of A:                    Bank of America, N.A.
                                    Bank of America Plaza, NC1-002-03-10
                                    101 South Tryon Street
                                    Charlotte, North Carolina  28255
                                    Attention: Randy Dickerson,
                                               Sr. Vice President

         National City:             National City Bank
                                    30 South 4th Street
                                    Martins Ferry, OH  43935
                                    Attention: Reese Slater, Vice President

                                       74
<PAGE>   75

         Huntington:                The Huntington National Bank
                                    One Huntington Square
                                    Charleston, West Virginia  25322
                                    Attention: Kenneth H. Berberich

         WesBanco:                  WesBanco Bank
                                    1 Bank Wheeling
                                    Wheeling, West Virginia 26003-3565
                                    Attention:  David Pell, Sr. Vice President

         Sky Bank:                  Sky Bank
                                    10 East Main Street
                                    Salineville, Ohio  43945
                                    Attention:  Gregory J. Agresta,
                                                Sr. Vice President

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

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

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

                                       75
<PAGE>   76

                  Section 9.03. Costs, Expenses and Taxes. The Company agrees to
pay (without duplication), all of the following fees, costs and expenses
incurred by the Agent and the Arranger: (i) all reasonable costs and expenses in
connection with (1) syndication of the Loans, (2) the negotiation, preparation,
printing, typing, reproduction, execution and delivery of the Loan Documents and
any and all other documents furnished pursuant hereto or in connection herewith,
(3) and all investigation of and due diligence regarding the Company and the
security for the Obligations undertaken and performed with respect thereto,
including without limitation the reasonable fees and out-of-pocket expenses of
Baker & Daniels, special counsel to the Agent, as well as the fees and
out-of-pocket expenses of counsel, independent public accountants and other
outside experts retained by the Agent in connection with the foregoing and the
administration of this Agreement and the other Loan Documents, (ii) all
reasonable costs and expenses in connection with the negotiation, preparation,
printing, typing, reproduction, execution and delivery of any amendments or
modifications of (or supplements to) any of the foregoing and any and all other
documents furnished pursuant thereto or in connection therewith, and all
investigation of and due diligence regarding the Company and the security for
the Obligations undertaken and performed with respect thereto, including without
limitation the reasonable fees and out-of-pocket expenses of counsel retained by
the Agent relative thereto (or, but not as well as the reasonable allocated
costs of staff counsel) as well as the fees and out-of-pocket expenses of
counsel, independent public accountants and other outside experts retained by
the Agent in connection with the foregoing and the administration of this
Agreement, and (iii) all search fees, appraisal fees and expenses, title
insurance policy fees, costs and expenses and filing and recording fees and
taxes. In addition, the Company agrees to pay (without duplication) all costs
and expenses of the Agent and the Lenders (including, without limitation,
reasonable attorneys' fees and expenses of the Agent, the Lenders or any of
them), if any, in connection with the enforcement and collection of this
Agreement, any Note and/or any other Loan Documents or other agreement furnished
pursuant hereto or thereto or in connection herewith or therewith. In addition,
the Company shall pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, or any of the other Loan Documents or the issuance
of any Note or the making of any of the Loans, and agrees to save and hold the
Agent and the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay in paying, or omission to pay, such
taxes. Any portion of the foregoing fees, costs and expenses which remains
unpaid following the statement and request for payment thereof shall bear
interest from the date of such statement and request to the date of payment at a
per annum rate equal to the Prime Rate plus Two Percent (2%) per annum.

                  Section 9.04. Severability. If any provision of this Agreement
or any other Loan Document is determined to be illegal or unenforceable, such
provision shall be deemed to be severable from the balance of the provisions of
this Agreement or such Document and the remaining provisions shall be
enforceable in accordance with their terms.

                                       76
<PAGE>   77

                  Section 9.05. Captions. Section captions used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.

                  Section 9.06. Governing Law/Process. Except as may otherwise
be expressly provided in any other Loan Document, this Agreement and all other
Loan Documents are made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that Indiana
conflicts of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply. EACH CREDIT PARTY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON THE COMPANY AND AGREES THAT ALL SERVICE OF PROCESS MAY BE
MADE BY MESSENGER, BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY REGISTERED
MAIL DIRECTED TO SUCH CREDIT PARTY AT THE ADDRESS STATED IN SECTION 9.02 OF THIS
AGREEMENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

                  Section 9.07. Prior Agreements, Etc. This Agreement supersedes
all previous agreements and commitments made by the Agent or the Lenders and the
Credit Parties with respect to the Loans and all other subjects of this
Agreement, including, without limitation, any oral or written proposals or
commitments made or issued by the Agent or the Lenders.

                  Section 9.08.  Successors and Assigns.

                  (a) This Agreement and the other Loan Documents shall be
binding upon and shall inure to the benefit of the Credit Parties, the Agent and
the Lenders and their respective successors and assigns, provided that the
Credit Parties' rights under this Agreement shall not be assignable without the
prior written consent of the Lenders.

                  (b) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time assign to one or more banks or
other entities (a "PURCHASER") all or any part of its Revolving Loans, Term
Loan, Letter of Credit Exposure, Commitment and its rights and obligations under
its Notes and under this Agreement, pursuant to a form of assignment acceptable
to such Lender and such Purchaser, provided that (i) the Lender shall have given
the Agent and the Company not less than seven (7) Banking Days prior written
notice of such assignment, (ii) each individual assignment shall be in an amount
of not less than the lesser of: (1) $5,000,000; and (2) the then outstanding
amount of the transferor Lender's Commitment, (iii) the prior written consent of
the Agent shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not then a Lender or an affiliate thereof, which
consent shall not be unreasonably withheld, (iv) unless (1) an Event of Default
or Unmatured Event of Default has occurred and is continuing, or (2) such
assignment would result from the sale or acquisition by or of any Lender, the
prior written consent of the Company shall be required prior to an assignment

                                       77
<PAGE>   78

becoming effective with respect to a Purchaser which is not then a Lender or an
affiliate thereof, which consent shall not be unreasonably withheld, (v) the
senior unsecured debt of such Purchaser must be rated by Moody's Investors
Service, Inc. as Baa1 or higher; and (vi) the Purchaser shall have paid an
assignment fee to the Agent, for its account, in the amount of $5,000.
Notwithstanding the foregoing provisions of this Section 9.08(b), any Lender may
at any time assign all or any portions of its Revolving Loans, Term Loan,
Revolving Note, Term Note and its risk participation in the Letter of Credit
Exposure to a Federal Reserve Bank (but no such assignment shall release such
Lender from any of its obligations hereunder).

                  (c) Upon delivery to the Agent and the Company of a notice of
assignment, together with any consent required by this Section 9.08, such
assignment shall become effective on the effective date specified in such
notice, and EXHIBIT B shall be deemed to have been amended to reflect such
Purchaser as a Lender, and the appropriate adjustments of the Commitments, the
Commitment Percentages of the Lenders, the Revolving Loans Commitment
Percentages of the Revolver Lenders and the Term Loan Commitment Percentages of
the Term Lenders, as applicable. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and shall have all the rights and obligations of a Lender under this
Agreement, to the same extent as if it were an original party hereto, and no
further consent or action by the Company, the Agent or any other Lender shall be
required to release the transferor Lender with respect to the percentage of the
Revolving Loans, Term Loan, Letter of Credit Exposure and Commitment assigned to
such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 9.08, the transferor Lender and the Company shall make
appropriate arrangements so that replacement Notes are issued to such transferor
Lender in principal amounts reflecting its pro rata share of the Aggregate
Commitment.

                  (d) The Company authorizes each Lender to disclose to any
Purchaser or prospective Purchaser or any other entity acquiring an interest in
this Agreement or its Notes by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Company, the other Credit Parties and
their respective Subsidiaries.

                  (e) This Agreement and all covenants, representations and
warranties made herein and in any of the other Loan Documents shall survive the
making of the Loans, the execution and delivery of the Loan Documents and shall
continue in effect so long as any Obligations remain unpaid or any Commitment
remains outstanding.

                  Section 9.09. Waiver of Jury Trial. EACH OF THE CREDIT
PARTIES, THE AGENT AND EACH OF THE LENDERS HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT,

                                       78
<PAGE>   79

TORT OR OTHERWISE) BETWEEN OR AMONG THE CREDIT PARTIES, THE AGENT AND THE
LENDERS ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS
TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
NEITHER THE COMPANY OR ANY GUARANTORS NOR THE LENDERS WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED.

                  Section 9.10. Amendments. Subject to the provisions of this
Section, the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Credit Parties may enter into agreements supplemental
hereto for the purpose or adding or modifying any provisions of the Loan
Documents or changing in any manner the rights of the Lenders, the Agent or the
Credit Parties hereunder or waiving any Event of Default; provided, however,
that no such supplemental agreement shall, without the consent of each Lender:

                  (a) Reduce the principal amount of any Revolving Note or Term
Note, or reduce the rate, extend or change the time of payment of principal,
interest or fees hereunder or thereunder, or amend the terms of Section
2.03(a)(3)(i) so as to lengthen the maximum permitted expiration date of a
Letter of Credit.

                  (b) Reduce the percentages specified in the definition of
Required Lenders or Required Term Lenders.

                  (c) Extend the Scheduled Revolving Loans Maturity Date or the
Scheduled Term Loan Maturity Date or increase the amount of the Commitment of
any Lender, or permit the Company to assign its rights under this Agreement.

                  (d) Amend this section.

                  (e) Waive any Event of Default arising from a failure to pay
principal of or interest on a Loan.

                  (f) Affect the rights, duties or obligations of the Agents

                  (g) Release any Guaranty or asset having a value in excess of
$1,000,000.00 at the time of release from any lien or security interest held by
the Agent as security for all or any part of the Obligations; provided that the
Agent may release Collateral sold in a transaction that has been approved by the
Required Lenders if the proceeds of such sale (net of reasonable

                                       79
<PAGE>   80

expenses of sale) are paid to the Agent, for the ratable benefit of the Lenders,
in exchange for such release.

                  (h) Amend or otherwise override the Asset Sale Payment
application provisions of Section 2.06(b) of this Agreement.

                  Section 9.11. Entire Agreement. This Credit Agreement, the
other Loan Documents and the other documents identified herein or therein
contain the entire agreement between the parties concerning the subject matter
hereof as of the date hereof and supersedes all prior dealings between them with
respect to such subject matter.

                  Section 9.12. Waiver and Release. As a material inducement to
each of the Signatory Lenders to execute the Transfer Agreement and this
Agreement, the Credit Parties hereby acknowledge that none of them have any
unsatisfied claims or causes of action as of the Closing Date against PNC under,
pursuant to or by virtue of the Original Agreement, including all prior versions
thereof, and waive and release any and all such claims, rights, causes of action
or demands against PNC.

                  Section 9.13. Indemnification. The Credit Parties, jointly and
severally, agree to indemnify and hold harmless each of the Lenders and the
Agents from and against all liabilities, obligations, losses, damages,
penalties, action, judgments, suits, costs (including attorneys' fees), expenses
or disbursements of any kind whatever which may be imposed upon or asserted
against any of the Agents or any of the Lenders in any way relating to the
business operations of the Credit Parties, their execution of this Credit
Agreement or any other of the Loan Documents or the performance of their
obligations thereunder. It is expressly agreed that none of the Agents or the
Lenders shall control the business activities of the Credit Parties as a result
of this Credit Agreement or the other Loan Documents or the performance thereof.

                  Section 9.14. Interest Rate Hedging Agreement. Each of the
Lenders may enter into Interest Rate Hedging Agreements with the Company. Each
Lender entering into such an agreement shall provide notice of such agreement
and the amount thereof to the Agent within ten (10) days of the execution
thereof, provided, however, that the failure to give such notice timely shall
not affect any of the obligations and liabilities of the Company, then existing
or thereafter arising, under or with respect to the agreement by which the
notice was to have been given, nor preclude such obligations and liabilities
from being part of the Obligations.

                  Section 9.15. Execution. This Agreement may be executed, by
original or facsimile signatures, in two or more counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute but one agreement.

                                       80
<PAGE>   81

                  Section 9.16. Highest Lawful Rate. Notwithstanding any
provision to the contrary contained in this Agreement or in any of the other
Loan Documents, it is expressly provided that in no case or event shall the
aggregate of (a) all interest on the unpaid balance of any Note, accrued or paid
from the date hereof, and (b) the aggregate of any other amounts accrued or paid
pursuant to such Note, or any of the other Loan Documents, which under
applicable laws are or may be deemed to constitute interest upon such Debt from
the date hereof, ever exceed the maximum rate of interest which could lawfully
be contracted for, charged or received on the unpaid principal balance of such
Debt. In this connection, it is expressly stipulated and agreed that it is the
intent of the Company and the Lenders to contract in strict compliance with
Indiana usury laws and with any other applicable state usury laws and with
federal usury laws (whichever permit the higher rate of interest) from time to
time in effect. In furtherance thereof, none of the terms of this Agreement or
any of the other Loan Documents shall ever be construed to create a contract to
pay, as consideration for the use, forbearance or detention of money, interest
at a rate in excess of the Highest Lawful Rate. Neither the Company nor any
other Person now or hereafter becoming liable for payment of indebtedness
pursuant to the Loan Documents (the "Lender Debt") shall ever be liable for
interest in excess of the Highest Lawful Rate. If under any circumstances the
aggregate amounts paid on the Lender Debt include amounts which by law are
deemed interest which would exceed the Highest Lawful Rate, the Company
stipulates that such amounts will be deemed to have been paid as a result of an
error on the part of the Company and the Lenders, and the Person receiving such
excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Person making such payment, refund the amount of such excess.
The parties further stipulate that such refund shall be a sufficient and sole
remedy for such error and that no party shall be entitled to any damages or
penalties, whether statutory or otherwise, as a result of such error. In
addition, all sums paid or agreed to be paid to the holder or holders of the
Lender Debt for the use, forbearance or detention of the Lender Debt shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of the Lender Debt. The provisions of this
Section 9.17 shall control all agreements, whether now or hereafter existing and
whether written or oral, among the Company and the Lenders.

                  IN WITNESS WHEREOF, the Agent, the Signatory Lenders and the
Credit Parties have by their duly authorized officers executed this Agreement as
of the date first set forth above.

                                VALLEY NATIONAL GASES, INC.,
                                a West Virginia corporation

                                By:
                                   -------------------------------------------
                                   Lawrence E. Bandi, President

                                And

                                By:
                                   -------------------------------------------
                                   Robert D. Scherich, Chief Financial Officer
                                   and Assistant Secretary

                                                                (the "Company")

                                       81
<PAGE>   82

                                VALLEY NATIONAL GASES INCORPORATED
                                a Pennsylvania corporation

                                By:
                                   -------------------------------------------
                                   Lawrence E. Bandi, President

                                And

                                By:
                                   -------------------------------------------
                                   Robert D. Scherich, Chief Financial Officer
                                   and Assistant Secretary

                                                                       ("VNGI")

                                       82
<PAGE>   83

                                VALLEY NATIONAL GASES DELAWARE, INC.
                                a Delaware corporation

                                By:
                                   -------------------------------------------
                                   Lawrence E. Bandi, President

                                And

                                By:
                                   -------------------------------------------
                                   Robert D. Scherich, Chief Financial Officer
                                   and Assistant Secretary

                                                                      ("VNGDI")

                                       83
<PAGE>   84

                                   BANK ONE, INDIANA,
                                     NATIONAL ASSOCIATION

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

                                      ----------------------------------------
                                                   ("Bank One" and the "Agent")

                                       84
<PAGE>   85

                                   LASALLE BANK NATIONAL ASSOCIATION

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

                                   Printed:
                                           ------------------------------------

                                   Title:
                                         --------------------------------------

                                       85

<PAGE>   86

                                   FIRSTAR, N.A.

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

                                   Printed:
                                           ------------------------------------

                                   Title:
                                         --------------------------------------

                                       86
<PAGE>   87

                                   BANK OF AMERICA, N.A.

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

                                   Printed:
                                           ------------------------------------

                                   Title:
                                         --------------------------------------

                                       87
<PAGE>   88

                                   NATIONAL CITY BANK

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

                                   Printed:
                                           ------------------------------------

                                   Title:
                                         --------------------------------------

                                       88
<PAGE>   89

                                   THE HUNTINGTON NATIONAL BANK

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

                                   Printed:
                                           ------------------------------------

                                   Title:
                                         --------------------------------------

                                       89
<PAGE>   90

                                   WESBANCO BANK, INC.

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

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

                                       90
<PAGE>   91

                                   SKY BANK

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

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

                                       91<PAGE>   1
                                                                    Exhibit 10.1

                                 LOAN AGREEMENT

                                 BY AND BETWEEN

                  INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.

                                      AND

                         PNC BANK, NATIONAL ASSOCIATION

                        CLOSING DATE: FEBRUARY 14, 2000

                                 RESIDENCE INN
             NORTH FAYETTE TOWNSHIP, ALLEGHENY COUNTY, PENNSYLVANIA

<PAGE>   2

                         LIST OF SCHEDULES AND EXHIBITS

Schedule I        Names, Addresses, Telephone and Telecopier Numbers of Parties

Exhibit A         Loan Interest Rate Request Form

Exhibit B         Items to be Supplied

Exhibit C         Financial Reporting Requirements

Exhibit D         Compliance Certificate

Exhibit E         Amortization Schedule

Exhibit F         Leased Office Equipment

<PAGE>   3

                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT ("Agreement") is made as of the __ day of February,
2000, by and between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., a Delaware
limited liability company (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION,
a national banking association (the "Bank"). Each initially capitalized term
used in the following recitals and not otherwise defined shall have the meaning
ascribed to it in Article 1.

                                  WITNESSETH:

         WHEREAS, Borrower is the owner in fee simple of the Land which is
located in the Township of North Fayette, County of Allegheny, Commonwealth of
Pennsylvania, comprising approximately 8.877 acres.

         WHEREAS, pursuant to the terms of this Agreement, the Bank has agreed
to make a loan to Borrower in the maximum aggregate principal amount of
$7,560,000 (the "Loan").

         WHEREAS, the Bank is willing to provide the Loan upon the terms and
conditions hereinafter set forth.

        NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:

                                 1. DEFINITIONS

         1.1    Definitions.

        In addition to words and terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:

         "Affiliate" as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 50% or more of any class
of the voting stock (or in the case of a Person which is not a corporation, more
than 50% of the equity interest) of such Person, or (iii) 50% or more of the
voting stock (or in the case of a Person which is not a corporation, 50% or more
of the equity interest) of which is beneficially owned or held, directly or
indirectly, by such Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.

         "Agreement" shall mean this Loan Agreement as the same may be
supplemented or amended from time to time, including all schedules and exhibits.

<PAGE>   4

         "Appraisal" shall mean a written appraisal prepared by an independent
appraiser engaged by Bank at Borrower's sole cost and expense prepared in
compliance with all applicable regulatory requirements, being also subject to
the Bank's customary independent appraisal requirements.

         "Appraised Value" for any period of determination shall mean the
stabilized dollar value of the Project as determined by an Appraisal of the
Project.

         "Assignment of Leases and Rents" shall mean that certain Assignment of
Leases and Rents of even date herewith from the Borrower to the Bank securing
the Loan, as the same may be amended, replaced or supplemented from time to time
in writing by the Borrower and the Bank.

         "Assignment of Property Management Agreement" shall mean that certain
Assignment of Property Management Agreement of even date hereunder from the
Borrower to the Bank, as the same may be amended, replaced or supplemented from
time to time in writing by the Borrower and the Bank.

         "Authorized Officer" shall mean those Persons designated by written
notice to the Bank from the Borrower, authorized to execute notices, reports and
other documents on behalf of the Borrower. The Borrower may amend such list of
Persons from time to time by giving written notice of such amendment to the
Bank.

         "Bank" shall mean PNC BANK, NATIONAL ASSOCIATION and its successors and
assigns.

         "Bank Debt" shall mean all monetary obligations, liabilities and
Indebtedness of the Borrower to the Bank, its successors, assigns or
participants, evidenced by, arising under or directly relating to the Loan
Documents, whether as principal, guarantor, surety or otherwise, secured or
unsecured, joint and/or several, absolute or contingent, due or not due, matured
and unmatured, original, renewed, extended, refinanced or replaced, now existing
or hereafter incurred or created, consensual or created by law, and including
principal (whether resulting from advances made by the Bank or from Indebtedness
purchased by the Bank), interest, yield protection payments, premiums, fees,
expenses (including reasonable collection expenses), taxes, charges, commissions
and reasonable attorneys' fees actually incurred, and including all monetary
obligations, liabilities and Indebtedness of Borrower to the Bank incurred or
arising after the commencement of any case by or against Borrower under the U.S.
Bankruptcy Code, specifically including any post-petition interest or advances.

         "Base-Rate" shall mean the greater of (i) the Prime Rate, or (ii) the
Federal Funds Effective Rate plus 0.5% per annum.

         "Base-Rate Options" shall have the meaning assigned to that term in
subsection 3.1(a) hereof.

         "Benefit Arrangement" shall mean at any time an "employee benefit
plan," within the

<PAGE>   5

meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer
Plan and which is maintained, sponsored or otherwise contributed to, by any
member of the ERISA Group.

         "Borrower" shall mean Interstate Pittsburgh Hotel Holdings, L.L.C., a
Delaware limited liability company.

         "Borrower Documents" shall mean the Borrower's operating agreement,
articles of organization and resolutions and all other formation documents of
the Borrower.

         "Borrowing Date" shall mean the date for the making of an advance of
the Loan or the renewal or conversion thereof to the same or a different
Interest Rate Option, which shall be a Business Day.

         "Borrowing Tranche" shall mean (i) portions of the Loan to which a
Euro-Rate Option applies by reason of the selection of, conversion to or renewal
of such Interest Rate Option on the same day and having the same Interest
Period, and (ii) portions of the Loan to which any Base-Rate Option applies by
reason of the selection of or conversion to such Interest Rate Option.

         "Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business in Pittsburgh, Pennsylvania.

         "Cash and Cash Equivalents" shall mean as of any date of determination,
cash, demand deposits, securities issued by the U.S. Department of the Treasury,
certificates of deposit (provided that no securities or certificates of deposit
shall have maturities of more than ninety (90) days from such date) and publicly
traded, marketable equity securities acceptable to the Bank.

         "Closing Date" shall mean the date hereof. The closing shall take place
on the Closing Date at the offices of Marcus & Shapira LLP, One Oxford Centre,
35th Floor, Pittsburgh, Pennsylvania 15219, or at such other time and place as
the parties agree.

         "Collateral" shall mean the real estate encumbered by the Mortgage and
all security pledged pursuant to this Agreement in connection with the Loan and
the Collateral Documents.

         "Collateral Documents" shall mean the Mortgage, the Assignment of
Leases and Rents, the Subordination Agreement, the Assignment of Property
Management Agreement, the Pledge Agreement and the Financing Statements.

        "Comfort Letter" shall mean that certain Standard Form Comfort Letter
dated February ___, 2000 from Franchisor to the Bank with respect to the
Franchise Agreement.

        "Commitment Fee" shall mean the sum of $47,250.00.

<PAGE>   6

         "Conditions for Extension" shall mean the provision by Borrower to the
Bank of evidence satisfactory to the Bank of Borrower's compliance with the
following:

         (i) no Event of Default shall have occurred and be continuing and no
Potential Default shall have occurred, which Potential Default is not cured
prior to the commencement date of the Extension Period;

         (ii) the entire Project is free of Liens and encumbrances (except for
Permitted Encumbrances);

         (iii) the Debt Service Coverage Ratio for the twelve (12) month period
ending December 31, 2001 for the Project shall not be less than 1.50 to 1.00;
and

         (iv) together with its notice of its election to exercise the Extension
Option, Borrower shall pay the Extension Fee to the Bank.

         "Consequential Loss" shall mean an amount equal to the present value
(as determined by Bank) of the product of (a) the positive difference resulting
from subtracting the interest rate for the Euro-Rate Option which would be
applicable to a similarly sized Borrowing Tranche determined on the date of
prepayment for a period of time commencing on the date of prepayment and
terminating on the last day of the Interest Period for the Borrowing Tranche
being prepaid from the interest rate for the Euro-Rate Option actually in effect
for the Borrowing Tranche being prepaid; and (b) the amount of the prepayment;
and (c) a fraction with a numerator equal to the number of days remaining in the
Interest Period of the Borrowing Tranche being prepaid and a denominator of 360.
Any certificate of Bank delivered to Borrower setting forth the amount of
Consequential Loss as provided herein shall show the calculations required to
determine such Consequential Loss and shall be conclusive and binding, absent
manifest error, as to such amount and determination.

         "Current Assets" shall have the meaning ascribed to such term by GAAP.

         "Current Liabilities" shall have the meaning ascribed to such term by
GAAP (excluding maturities of property level debt).

         "Current Ratio" shall mean the ratio of Current Assets to Current
Liabilities.

         "Debt Multiple Ratio" shall mean the ratio of Total Debt to EBITDA, as
measured for the twelve (12) month period ending on the last day of the
applicable quarter.

         "Debt Service" shall mean, for any period of determination the sum of
all principal and interest payments that would be payable over a twelve (12)
month period with respect to the Loan based upon a twenty-five (25) year
mortgage-style amortization of the Loan, assuming an interest rate per annum
(based on a year of twelve equal months) equal to the greater of (i) two and
three-quarters percent (2 3/4%) above the Treasury Rate or (ii) eight and
one-quarter percent (8 1/4%) per annum.

<PAGE>   7

         "Debt Service Coverage Ratio" shall mean the ratio of Net Operating
Income to Debt Service.

         "Default Rate" shall mean interest at a rate per annum equal to four
percent (4%) above the Base Rate.

        "EBITDA" shall mean, for any period of determination with respect to
Guarantor, Guarantor's net income after minority interest, plus Guarantors
portion of depreciation and amortization, plus other non-cash losses, plus
Guarantor's portion of Interest Expense or interest income, as the case maybe,
plus income taxes, less non-cash gains, as each one of the foregoing is
determined in accordance with GAAP, provided however, that EBITDA shall also
include pro forma adjustments for any tangible or intangible assets acquired
with Indebtedness. Such pro forma adjustments shall utilize the previous twelve
(12) month's Net Operating Income with respect to the asset in the calculation
of the Debt Multiple Ratio.

         "Environmental Complaint" shall mean any written complaint setting
forth a cause of action for personal or property damage or equitable relief,
order, notice of violation, citation, request for information issued pursuant to
any Environmental Laws by an Official Body, subpoena or other written notice of
any type relating to, arising out of, or issued pursuant to any Environmental
Law or any Environmental Conditions, as the case may be.

        "Environmental Conditions" shall mean any conditions of the environment,
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking water
supply sources, substrata or the ambient air, relating to or arising out of, or
caused by the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the
renovation and construction of the Improvements or the use of, or operations on,
the Land.

        "Environmental Indemnity Agreement" shall mean that certain Hazardous
Materials Certificate and Indemnity Agreement of even date herewith from
Borrower and the Guarantor to the Bank, as the same may be amended, replaced or
supplemented from time to time in writing by the parties thereto with the prior
written consent of the Bank.

         "Environmental Laws" shall mean, in each case applicable to the
Project, all federal, state, local and foreign laws and regulations, including
permits, licenses authorizations, bonds, orders, judgments and consent decrees
issued, or entered into, pursuant thereto, relating to pollution or protection
of human health or the environment or employee safety in the workplace.

         "Environmental Report" shall mean that certain Phase I Environmental
Site Assessment Update prepared for Interstate Hotels Corporation by Law
Engineering and Environmental Services, Inc. dated October 13, 1999, or any
other written report of the review and inspection of the Project prepared by an
environmental consultant acceptable to Bank and engaged by Borrower (or by Bank
pursuant to Section 7.1(c)) at Borrower's sole cost and expense, together

<PAGE>   8

with a reliance letter satisfactory to Bank stating that Bank may rely on such
report in making the Loan, in all cases together with all annexes, schedules,
exhibits and attachments thereto that have been provided to the Bank.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.

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

         "Euro-Rate" shall mean with respect to any Borrowing Tranche to which a
Euro-Rate Option applies for any Interest Period, the interest rate per annum
determined by the Bank by dividing (the resulting quotient rounded upward to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Bank
in accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the "offered" eurodollar rate as quoted by
Exco-Noonan, Incorporated (or appropriate successor or, if Exco-Noonan or its
successor ceases to provide such quotes, a comparable replacement as determined
by the Bank), as evidenced on Dow Jones Markets Service (formerly known as
Telerate) display page 3750 (or other such display page on the Dow Jones Markets
Service system as may replace Dow Jones Markets Service display page 3750) two
(2) Business Days prior to the first day of such Interest Period in amounts
comparable to such Borrowing Tranche and having maturities comparable to such
Interest Period by a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:

                             Dow Jones Markets Service display page 3750
         Euro-Rate  =    as quoted by Exco-Noonan, or appropriate successor
                     -----------------------------------------------------------
                                 1.00 - Euro-Rate Reserve Percentage

Each determination by the Bank of the Euro-Rate or of the non-existence or non-
determinability through its customary means of any Euro-Rate, in the absence of
manifest error, shall be conclusive and binding. The Euro-Rate shall be adjusted
with respect to any Euro-Rate Option outstanding on the effective date of any
change in the Euro-Rate Reserve Percentage as of such effective date. The Bank
shall give prompt notice to the Borrower of the Euro-Rate as determined or
adjusted in acceptance herewith, which determination shall be conclusive and
binding absent manifest error.

         "Euro-Rate Options" shall have the meaning assigned to that term in
Section 3.1.

         "Euro-Rate Reserve Percentage" shall mean the maximum effective
percentage in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities"). Each determination by the Bank

<PAGE>   9

of a Euro-Rate Reserve Percentage, in the absence of manifest error, shall be
conclusive and binding.

         "Event of Default" or "Events of Default" shall have the meaning
assigned to those terms in Section 10.1.

         "Exhibits" shall mean those schedules and exhibits attached hereto and
made a part hereof, including Schedule I - Names, Addresses, Telephone and
Telecopier Numbers of Parties; Exhibit A - Loan Interest Rate Request Form;
Exhibit B - Items to be Supplied; Exhibit C - Financial Reporting Requirements;
Exhibit D - Compliance Certificate; Exhibit E - Amortization Schedule and
Exhibit F - Leased Office Equipment.

         "Expiration Date" shall mean the earlier of (i) February ___, 2002, or
(ii) the date upon which the Loan is accelerated pursuant to this Agreement by
virtue of an Event of Default which is not cured within applicable notice and
cure periods.

         "Extension Fee" shall mean the amount which is equal to one-quarter of
one percent (1/4%) of the outstanding principal balance of the Loan at the
commencement of the Extension Period, which shall be payable prior to the
commencement of the Extension Period pursuant to Section 2.4 hereof.

         "Extension Period" shall mean a single period of twelve (12) months by
which Borrower may extend the Expiration Date subject to the terms and
conditions of Section 2.4 hereof.

         "FF&E Account" shall have the meaning assigned to such term in Section
4.23 hereof.

         "Federal Funds Effective Rate" for any day shall mean the rate per
annum (based on a year of 365 or 366 days and actual days elapsed, and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, however, that if
such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.

         "Financing Statements" shall mean the financing statements which the
Bank may from time to time require in order to perfect its security interest in
the collateral described in the Mortgage, the other Collateral Documents and
this Agreement pursuant to the applicable Uniform Commercial Code.

         "First Disbursement" shall have the meaning ascribed thereto in Section
6.1 thereof.

         "Franchise Agreement" shall mean that certain Franchise Agreement dated
November 1,

<PAGE>   10

1999 between Marriott International, Inc. as Franchisor and Borrower as
Franchisee, as the same may be amended, replaced or supplemented from time to
time in writing with the consent of the Bank.

         "Franchisor" shall mean Marriott International, Inc.

         "GAAP" shall mean generally accepted accounting principles as are in
effect from time to time and applied on a consistent basis both as to
classification of items and amounts.

         "Governmental Approvals" shall mean all consents, licenses, permits and
all other authorizations or approvals required by Official Bodies with respect
to the construction, completion, use and occupancy of the Improvements.

         "Guarantor" shall mean Interstate Hotels Corporation, a Maryland
corporation.

         "Guarantor Default" shall mean a default or a defined "event of
default" under any Indebtedness of Guarantor where such default or a defined
"event of default" has occurred as a result of Guarantor's failure to make a
principal or interest payment due under such Indebtedness.

         "Guaranty" of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement to
indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.

         "Impositions" shall mean all (i) real estate and personal property
taxes and other taxes and assessments, water and sewer rates and charges and all
other governmental charges and any interest or costs or penalties with respect
thereto and charges for any easement or agreement maintained for the benefit of
the Land and Improvements, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever which at any time may
be assessed, levied or imposed upon the Land or the Improvements, or the rent or
income received therefrom, or any use or occupancy thereof, and (ii) other
taxes, assessments, fees and governmental charges levied, imposed or assessed
upon or against the Borrower or any of its properties.

         "Improvements" shall mean that certain 156 room Residence Inn and any
and all related improvements now or hereafter located on the Land.

         "Indebtedness" shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of (i) borrowed money, (ii) amounts
raised under or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations under any letter of credit, currency
swap agreement, interest rate swap, cap, collar or floor agreement or

<PAGE>   11

other interest rate management device, (iv) any other transaction (including
without limitation forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than thirty (30) days
past due), or (v) any Guaranty of Indebtedness for borrowed money.

         "Interest Expense" shall mean, for any period of determination, all
interest expense incurred by the Guarantor with respect to the Indebtedness of
Guarantor, as defined in accordance with GAAP.

         "Insolvency Proceedings" shall mean an action or proceeding seeking any
reorganization, arrangement, composition, readjustment, liquidation or other
similar relief under the U.S. Bankruptcy Code or any present or future statute,
law or regulation, or any proceedings for voluntary liquidation, dissolution or
other winding up, or the appointment of any trustee, receiver, liquidator or
conservator or similar official (whether in a proceeding or otherwise), or any
assignment for the benefit of creditors or any marshaling of assets.

         "Interest Payment Date" shall mean each date specified for the payment
of interest in Section 3.8.

         "Interest Period" shall mean the term during which a Euro-Rate option
will apply, such period to be one, two, three, six or twelve months.

         "Interest Rate Option" shall mean any Euro-Rate Option or any Base-Rate
Option.

         "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.

         "Land" shall mean the real property owned in fee simple by the Borrower
consisting of approximately 8.877 acres and identified in Exhibit A to the
Mortgage, together with all rights of the Borrower in and to all easements,
rights and privileges benefitting the Land.

         "Leases" shall have the meaning assigned to such term in the Mortgage.

         "Lien" shall mean any deed of trust, mortgage, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

         "Loan" shall mean the mortgage loan which shall be made by the Bank
pursuant to this

<PAGE>   12

Agreement in the maximum principal of $7,560,000.

         "Loan Documents" shall mean this Agreement, the Note, the Collateral
Documents, the Environmental Indemnity Agreement, the Payment Guaranty, the
Comfort Letter and all other documents, instruments, certificates and agreements
executed in connection with the Loan, as the same may be amended, replaced or
supplemented from time to time. "Loan Document" shall mean any of the Loan
Documents.

         "Manager" shall mean Crossroads Hospitality Management Company.

         "Material Adverse Change" shall mean any set of circumstances or events
which (a) has any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could
reasonably be expected to be material and adverse to the business properties,
assets, financial condition, results of operations or prospects of the Borrower
or Guarantor taken as a whole, (c) impairs materially or could reasonably be
expected to impair materially the ability of the Borrower or Guarantor to duly
and punctually pay or perform its Indebtedness, or (d) impairs materially the
ability of the Bank, to the extent permitted, to enforce its legal remedies
pursuant to this Agreement or any other Loan Document.

         "Month" with respect to an Interest Period, shall mean the interval
between the days in consecutive calendar months numerically corresponding to the
first (lst) day of such Interest Period.

         "Monthly Mandatory Principal Payments" shall have the meaning ascribed
thereto in Section 3.10.

         "Mortgage" shall mean that certain Open-End Mortgage and Security
Agreement of even date herewith, given by the Borrower to the Bank securing the
Loan, as the same may be amended, replaced or supplemented from time to time in
writing by the Borrower and the Bank.

         "Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001 (a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.

         "Multiple Employer Plan" shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.

         "Net Operating Income" shall mean the Operating Income of Borrower,
including all gross revenues from the Project, as calculated in accordance with
GAAP and as determined for the twelve (12) month period prior to the date of
calculation less (i) actual Operating Expenses, (ii) a base management fee equal
to three percent (3%), (iii) franchise fees paid pursuant to the Franchise
Agreement, and (iv) the Required FF&E Reserve net of extraordinary gains and
losses.

<PAGE>   13

         "Net Worth" shall mean the consolidated net worth of Guarantor which
shall be determined in accordance with GAAP.

         "Note" shall mean that certain Mortgage Note of even date herewith,
given by Borrower to the Bank in the aggregate principal face amount of the Loan
as the same may be amended, reserved, replaced or supplemented from time to time
with the prior written consent of the Bank.

         "Official Body" shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

         "Operating Expenses" shall mean the expenses actually and reasonably
incurred by Borrower with respect to the ownership, operation, leasing and
occupancy of the Project in the normal course of business, determined on the
basis of GAAP.

         "Operating Income" shall mean all gross income, revenues and
consideration of whatever nature, received by or paid to or for the account or
benefit of Borrower, whether received by Borrower or any of its agents, or
employees, or any affiliate of Borrower, its agents or employees, from any and
all sources, resulting from or attributable to the ownership, operation, and
occupancy of the Project determined on the basis of GAAP.

        "Payment Guaranty" shall mean that certain Agreement of Guaranty and
Suretyship (Payment), of even date herewith, given by the Guarantor to the Bank,
as the same may be amended, replaced or supplemented from time to time in
writing by the Guarantor and the Bank.

        "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.

         "Pension Plan" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Pension Plan but not a Multiemployer Pension
Plan) which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group, or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.

        "Permitted Encumbrances" shall mean the liens, assignments and security
interests in favor of the Bank pursuant hereto; the easements, restrictions,
encumbrances and other matters described in and permitted to exist under the
terms of the Mortgage; such other matters as may be expressly consented to in
writing by the Bank; and real estate taxes on the Land and Improvements not yet
due and payable.

         "Person" shall mean any individual, corporation, partnership,
association, joint-stock

<PAGE>   14

company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.

        "Plans" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.

        "Pledge Agreement" shall mean that certain Pledge Agreement of even date
herewith from Borrower to the Bank with respect to the FF&E Account.

        "Potential Default" shall mean an event or condition which, with the
passage of time, the giving of notice, or a determination by the Bank, or any
combination of the foregoing, would constitute an Event of Default.

         "Prime Rate" shall mean the interest rate per annum announced from time
to time by the Bank at its Principal Office as its then prime rate, which rate
may not be the lowest rate then being charged commercial borrowers by the Bank.

         "Principal Office" shall mean the main banking office of the Bank in
Pittsburgh, Pennsylvania.

         "Prohibited Transaction" shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.

         "Project" shall mean the Land and the Improvements.

         "Property Management Agreement" shall mean that certain Management
Agreement between Borrower and Manager dated November 1, 1999, as the same may
be amended, replaced or supplemented from time to time in writing with the
consent of the Bank.

         "Regulated Substances" shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse,
garbage, wastes, chemicals, petroleum products, by-products, co-products,
impurities, dust, scrap, heavy metals, defined as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic substance,"
"extremely hazardous substance," "toxic chemical," "toxic waste," "hazardous
waste," "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or
"regulated substance" or any related materials, substances or wastes as now or
hereafter defined pursuant to any Environmental Laws, ordinances, rules,
regulations or other directives of any Official Body, the generation,
manufacture, extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking, dumping,
injection, pumping, leaching,

<PAGE>   15

emptying, discharge, escape, release or other management or mismanagement of
which is regulated by the Environmental Laws.

         "Regulation U" shall mean Regulation U, T, G or X as promulgated by the
Board of Governors of the Federal Reserve System, as amended from time to time.

         "Reportable Event" means a reportable event described in Section 4043
of ERISA and regulations thereunder with respect to a Pension Plan or
Multiemployer Pension Plan.

         "Required Amortization Portion" shall mean a portion of the outstanding
principal balance of the Loan as determined by the Bank in its discretion
immediately prior to the commencement of each Interest Period, which shall be
sufficient to permit all principal payments projected by the Bank to occur
during the term of an applicable Interest Period to be applied against the
portion of the outstanding principal balance that is subject to any Base-Rate
Option.

         "Required FF&E Reserve" shall have the meaning assigned to such term in
Section 4.23 hereof.

         "Solvent" shall mean, with respect to any Person on a particular date,
that on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair market 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 debts as they become absolute and
matured, (iii) such Person not is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, and (iv) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature.

         "Subordination Agreement" shall mean that certain Subordination
Agreement of even date hereunder by and among the Borrower, IHC Holdings, Inc.,
a Delaware corporation, ("IHC") and the Bank, as the same may be amended,
replaced or supplemented from time to time in writing by the Borrower, IHC and
the Bank.

         "Subordinated Debt" shall have the meaning assigned to such term in the
Subordination Agreement.

         "Total Debt" shall mean all Indebtedness of Guarantor which is
outstanding as the last day of the applicable quarter, as determined in
accordance with GAAP.

         "Treasury Rate" shall mean the "weekly average yield" on United States
Treasury Securities adjusted to a constant maturity of ten (10) years, rounded
to the nearest one- sixteenth of one percent (1/16%), as published in the
Release five (5) Business Days prior to the date of determination. It is
provided, however, that if the Release is no longer published, a substitute
therefor as may be selected by the Bank in its reasonable discretion shall be
utilized, and further provided that if the Release is not published five (5)
Business Days prior
<PAGE>   16

to the date of determination, then the Release as published on the most recent
date prior thereto shall be utilized.

         "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in each applicable jurisdiction.

         1.2 Interpretation.

         Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:

                  (a) Number; Inclusion.

                  References to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";

                  (b) Documents Taken as a Whole.

                  The words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;

                  (c) Headings.

                  The section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any), preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;

                  (d) Implied References to this Agreement.

Article, section, subsection, clause, schedule and exhibit references are to
this Agreement unless otherwise specified;

                  (e) Persons.

                  Reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;

<PAGE>   17

                  (f) Modifications to Documents.

                  Reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;

                  (g) From, To and Through.

                  Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding," and "through" means
"through and including"; and

                  (h) Shall: Will.

                  References to "shall" and "will" are intended to have the same
meaning.

         1.3 Accounting Principles.

         Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP.

                         2. AGREEMENT TO BORROW AND LEND

         2.1 Agreement to Borrow and Lend.

         Subject to the terms, provisions and conditions contained in this
Agreement in reliance upon the representations and warranties set forth herein,
the Bank agrees to lend to Borrower the Loan.

         2.2 The Note.

        The Loan is and shall be evidenced by the Note, and the Loan shall bear
interest calculated and payable as provided in Article 3 below. Borrower shall
pay the outstanding principal of the Loan and all unpaid interest accrued on the
Loan and all other sums then owing under the Loan Documents in full on the
Expiration Date. The unpaid amounts of the Loan, as set forth on the books and
records of the Bank or other holder of the Note maintained in the ordinary
course of business shall be presumptive evidence of the principal amount thereof
owing and unpaid, absent manifest error, but the failure to record any such
amount on the books and records shall not limit or affect the obligations of
Borrower hereunder or under the Note to make payments of principal and interest
on the Loan when due.

         2.3 Term.

         The term of the Loan shall commence on the Closing Date and shall
terminate on the Expiration Date.

<PAGE>   18

         2.4 Extension Option.

         If the Conditions for Extension are satisfied prior to the initial
Expiration Date and remain satisfied on the date of exercise by Borrower of the
Extension Option and on the date of the commencement of the Extension Period,
the Borrower shall have the right to extend the Expiration Date for an
additional period of twelve (12) months. Borrower shall provide the Bank with
written notice of its election to extend the initial Expiration Date for the
Extension Period no earlier than ninety (90) nor later than forty-five (45) days
prior to the initial Expiration Date.

                    3. LOAN INTEREST RATES, PAYMENTS AND FEES

         3.1 Interest Rate Options.

        The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loan as selected by it from the Base-Rate Options or
Euro-Rate Options set forth below, it being understood that, subject to the
provisions of this Agreement, the Borrower may select different Interest Rate
Options and different Interest Periods to apply simultaneously to the Loan
comprising different Borrowing Tranches and may convert to or renew one or more
Interest Rate Options with respect to all or any portion of the Loan comprising
any Borrowing Tranche, provided that, there shall not be at any one time
outstanding more than three (3) Borrowing Tranches (including the Base-Rate
Tranche) in the aggregate, and provided further that the Borrowing Tranche
subject to the Base-Rate Options shall at all times be equal to or greater than
the Required Amortization Portion. If at any time the designated rate applicable
to the Loan exceeds the Bank's highest lawful rate, the rate of interest on the
Loan shall be limited to the Bank's highest lawful rate. The Borrower shall have
the right to select from the following Interest Rate Options, with the interest
rate to be paid by Borrower being determined based upon the most recent
quarterly calculation of the Debt Service Coverage Ratio to be made pursuant to
Exhibit C Section (c) hereof as follows :

                  (a) Base-Rate Options:

                           (i) in the event that the Debt Service Coverage Ratio
shall be greater than 1.35 to 1.00 but less than 1.55 to 1.00, a fluctuating
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Base-Rate plus one and three-quarters percent (1 3/4%),
such interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or

                           (ii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.55 to 1.00 but less than 1.75 to 1.00,
a fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the Base-Rate plus one and one-half percent
(1 1/2%), such interest rate to change automatically from time to time effective
as of the effective date of each change in the Base Rate; or

<PAGE>   19

                           (iii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.75 to 1.00, a fluctuating rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Base-Rate plus one and one-quarter percent (1 1/4%), such interest
rate to change automatically from time to time effective as of the effective
date of each change in the Base Rate (collectively, the "Base-Rate Options").

                  (b) Euro-Rate Options:

                           (i) in the event that the Debt Service Coverage Ratio
shall be greater than 1.35 to 1.00 but less than 1.55 to 1.00, a fluctuating
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus two and one-half percent (2 1/2%); or

                           (ii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.55 to 1.00 but less than 1.75 to 1.00,
a fluctuating rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the Euro-Rate plus two and one-quarter percent
(2 1/4%); or

                           (iii) in the event that the Debt Service Coverage
Ratio shall be equal to or greater than 1.75 to 1.00, a fluctuating rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Euro-Rate plus two percent (2%) (collectively, the "Euro-Rate
Options")

         3.2 Loan Requests/Interest Periods.

         Except as otherwise provided herein, following the First Disbursement,
the Borrower may, on any Borrowing Date, request the Bank to renew or convert
any Interest Rate Option applicable to a portion of the Loan, by the delivery to
the Bank, not later than 12:00 noon Eastern time (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the conversion to or the
renewal of a Euro-Rate Option for a portion of the Loan; and (ii) one (1)
Business Day prior to the last day of the preceding Interest Period with respect
to the renewal or conversion to a Base-Rate Option for a portion of the Loan, of
a duly completed request therefor substantially in the form of Exhibit A hereto
or a request by telephone immediately confirmed in writing by letter, facsimile
or telex in such form (each, an "Interest Rate Request"), it being understood
that the Bank may rely on the authority of any Person making such a telephonic
request without the necessity of receipt of such written confirmation. Each
Interest Rate Request shall be irrevocable and shall specify (i) the proposed
Borrowing Date; (ii) the aggregate amount of the portion of the Loan comprising
the Borrowing Tranche, which shall not be less than $1,000,000 for portions of
the Loan to which a Euro-Rate Option applies; (iii) whether a Euro-Rate Option
or a Base-Rate Option shall apply to the portion of the Loan comprising the
Borrowing Tranche; and (iv) in the case of portions of the Loan to which a
Euro-Rate Option applies, an appropriate Interest Period for the proposed
portion of the Loan comprising the Borrowing Tranche, provided that:

                  (a) any Interest Period which would otherwise end on a date
which is not a

<PAGE>   20

Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day;

                  (b) any Interest Period which begins on the last day of a
calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such Interest Period is to end shall end
on the last Business Day of such subsequent month;

                  (c) the Borrower shall not select, convert to or renew a
Euro-Rate Option for an Interest Period that would end after the Expiration
Date;

                  (d) in the case of the renewal of a Euro-Rate Option at the
end of an Interest Period, the first day of the Interest Period shall be the
last day of the preceding Interest Period, without duplication in payment of
interest for such day.

         3.3 Default Interest and Late Payment Charge.

        To the extent permitted by law, upon the occurrence and during the
continuation of any Event of Default, the Borrower shall pay interest on the
entire principal amount then outstanding and all other sums due under the Loan,
regardless of the Interest Rate Option otherwise applicable thereto, at a rate
per annum equal to the Default Rate. The Default Rate shall accrue before and
after any judgment has been entered. In addition, Borrower shall pay upon demand
by Bank a late payment charge equal to four percent (4%) of the amount of any
payment due under the Loan, prior to maturity or acceleration, which is not
received by the Bank within ten (10) days after the date such payment is due.
The Borrower acknowledges that the increased interest rate and the late payment
charge provided for herein reflect, among other things, the fact that the Loan
has become a substantially greater risk given its default status and that the
Bank is entitled to additional compensation for such risk.

         3.4 Euro-Rate Unascertainable.

                  (a) If, on any date on which a Euro-Rate would otherwise be
determined, the Bank shall have determined (which determination shall be
conclusive absent manifest error) that:

                           (i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or

                           (ii) an event or condition has occurred which
materially and adversely affects the applicable U.S. eurodollar markets, or

                  (b) If, at any time, the Bank shall have determined (which
determination shall be conclusive absent manifest error) that:

<PAGE>   21

                           (i) the making, maintenance or funding of any portion
of the Loan to which a Euro-Rate Option applies has been made impracticable or
unlawful if the Bank complies in good faith with any law or any interpretation
or application thereof by any Official Body or with any request or directive of
any such Official Body (whether or not having the force of law), or

                           (ii) such Euro-Rate will not adequately and fairly
reflect the cost to the Bank of the establishment or maintenance of any portion
of the Loan to which a Euro-Rate Option applies, or

                           (iii) after making all reasonable efforts, deposits
of the relevant amount in U.S. dollars for the relevant Interest Period for any
portion of the Loan to which a Euro-Rate Option applies are not available to the
Bank in the applicable U.S. eurodollar markets,

then, in the case of any event specified in subsection (a) or (b) above, the
Bank shall promptly so notify the Borrower thereof. Upon such date as shall be
specified in any such notice (which shall not be earlier than the date such
notice is given) the obligation of the Bank to allow the Borrower to select,
continue, convert to or renew a Euro-Rate Option shall be suspended until the
Bank shall have later notified the Borrower of the Bank's determination (which
determination shall be conclusive absent manifest error) that the circumstances
giving rise to such previous determination no longer exist. If at any time the
Borrower receives notice from the Bank as provided for in this Section 3.4
whether or not any Euro-Rate Option has gone into effect, such notification
shall, subject to the Borrower's indemnification obligations under Section
3.12(b), be deemed to provide for selection of, conversion to or renewal of a
Base-Rate Option.

         3.5 Selection of Interest Rate Options.

        If the Borrower fails to select an Interest Period in accordance with
the provisions of Section 3.2 in the case of a portion of the Loan to which a
Euro-Rate Option applies, the Borrower shall be deemed to have converted such
portion of the Loan to a one month Euro- Rate Borrowing Tranche. If an Event of
Default shall occur and be continuing, the Bank may in its discretion limit the
Borrower to the Default Rate.

         3.6 Payments.

        All payments and prepayments to be made in respect of principal,
interest, or other amounts due from the Borrower to the Bank hereunder shall be
payable prior to 12:00 noon, Eastern time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Bank at the Principal Office in U.S. Dollars and
in immediately available funds. The Bank's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of and interest on the Loan and other
amounts owing under this Agreement and shall be deemed an "account stated."

         3.7 [INTENTIONALLY OMITTED]

<PAGE>   22

         3.8 Interest Payment Dates.

         Interest shall be due in arrears on the first day of each month after
the date hereof and on the Expiration Date or upon acceleration of the Note.

         3.9 Optional Prepayments.

                  (a) The Borrower shall have the right at its option from time
to time to prepay the Loan in whole or part on the dates set forth below without
premium or penalty (except as provided below or in Section 3.12(b) hereof):

                           (i) on any Business Day with respect to any portion
of the Loan to which a Base-Rate Option applies;

                           (ii) on the last day of the applicable Interest
Period with respect to any portion of the Loan to which a Euro-Rate Option
applies; or

                           (iii) with the Bank's prior approval, on any Business
Day of an Interest Period with respect to any portion of the Loan to which a
Euro-Rate Option applies, provided such prepayment is accompanied by an amount
sufficient to compensate the Bank for all Consequential Loss and other costs and
losses reimbursable under Section 3.12(b).

                  Whenever the Borrower desires to prepay any part of the Loan,
it shall provide a prepayment notice to the Bank at least five (5) Business Days
prior to the date of prepayment setting forth the date, which shall be a
Business Day, on which the proposed prepayment is to be made, and the total
principal amount of such prepayment, which shall not be less than $500,000. The
principal amount of the portion of the Loan for which a prepayment notice is
given shall be due and payable on the date specified in such prepayment notice.

         3.10 Mandatory Principal Payments.

                  (a) Beginning on April 1, 2000, and on the first (1st) day of
each calendar month thereafter, throughout the remaining term of the Loan,
Borrower shall make monthly payments of the outstanding principal balance of the
Loan based upon the principal portion of the level payment amount which is
payable pursuant to a twenty-five (25) year mortgage style amortization of the
maximum principal amount of the Loan assuming an interest rate per annum equal
to eight and one quarter percent (8 1/4%) as set forth on Exhibit E attached
hereto.

                  (b) The principal payments made by Borrower pursuant to this
Section 3.10 are hereinafter referred to as the "Monthly Mandatory Principal
Payments".

         3.11 Application Among Interest Rate Options.

        All payments permitted or required pursuant to Sections 3.9 or 3.10
shall be applied among

<PAGE>   23

the Interest Rate Options first to the principal amount of the Loan subject to a
Base-Rate Option, then to the principal amount of the Loan subject to a
Euro-Rate Option to be applied to such Borrowing Tranches subject to a Euro-Rate
Option as designated by Borrower, as long as no Event of Default exists
hereunder. In accordance with subsection 3.12(b), the Borrower shall indemnify
the Bank for any loss or expense including loss of margin incurred with respect
to any such prepayments, other than prepayments made under Section 3.10, applied
against any portion of the Loan subject to a Euro-Rate Option on any day other
than the last day of the applicable Interest Period, provided that, to the
extent that the outstanding principal balance which is subject to a Base-Rate
Option is less than the amount of the applicable payment, then, at the election
of Borrower, as long as no Event of Default exists hereunder, such payment and
any interest earned thereon, if applicable, shall be applied against such
Borrowing Tranches subject to the Euro-Rate Option as Borrower may choose, to
the extent of such insufficiency, subject to Borrower's obligation to indemnify
the Bank pursuant to subsection 3.12(b). Upon the occurrence of an Event of
Default, notwithstanding anything to the contrary contained above in this
Section 3.11, the Bank shall have the right to designate the application of such
payments.

         3.12 Additional Compensation in Certain Circumstance

                  (a) Increased Costs or Reduced Return on Borrowing Tranches
Subject to a Euro-Rate Option Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc. With respect to Borrowing Tranches subject to a
Euro-Rate Option, if any law, guideline or interpretation or any change in any
law, guideline or interpretation or application thereof by any Official Body
charged with the interpretation or administration thereof or compliance with any
request or directive (whether or not having the force of law) of any central
bank or other Official Body:

                           (i) subjects the Bank to any tax or charge with
respect to this Agreement, the Note, the Loan or payments by the Borrower of
principal, interest, or other amounts due from the Borrower hereunder or under
the Note (except for taxes on the overall net income of the Bank or any
corporate franchise tax imposed on the Bank),

                           (ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisition of funds by, the Bank, or

                           (iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by the Bank,
or (B) otherwise applicable to the obligations of the Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expenses (including loss of margin) upon the
Bank with respect to this Agreement, the Note or the making, maintenance or
funding of any part of the Loan (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on the
Bank's capital, taking into consideration the Bank's customary policies with
respect to capital adequacy) by an amount which the Bank in its sole discretion
deems to be material, the Bank may from time to time notify the Borrower of the
amount determined in good faith (using any averaging and attribution methods
employed in

<PAGE>   24

good faith) by the Bank (which determination shall be conclusive absent manifest
error) to be necessary to compensate the Bank for such increase in cost,
reduction of income or additional expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due and
payable by Borrower to the Bank within ten (10) Business Days after such notice
is given; provided, however, that if the Bank demands compensation under this
Section 3.12, Borrower may at any time upon five (5) Business Days' prior notice
to the Bank (a) give notice to the Bank that it is canceling such Borrowing
Tranches subject to a Euro-Rate Option, whereupon each such Borrowing Tranche so
canceled shall terminate and the Borrower shall be obligated to compensate the
Bank as provided in this Section 3.12(a) above and to indemnify the Bank as
provided in subsection 3.12(b) below and to pay the Bank upon demand an amount
equal to all Consequential Loss, if any, resulting therefrom, and (b) convert
such Borrowing Tranches subject to a Euro-Rate Option to the Base Rate Option.

                  (b) Indemnity. In addition to the compensation required by
subsection (a) of this Section 3.12, the Borrower shall indemnify the Bank
against any loss or expense (including Consequential Loss, loss of margin, any
loss incurred in liquidating or employing deposits from third parties and any
loss or expense incurred in connection with funds acquired by the Bank to fund
or maintain a portion of the Loan subject to a Euro-Rate Option) which the Bank
sustains or incurs as a consequence of any

                           (i) payment, prepayment, conversion or renewal of any
portion of the Loan to which a Euro-Rate Option applies on a day other than the
last day of an Interest Period (whether or not such payment or prepayment is
mandatory or automatic and whether or not such payment or prepayment is then
due), or

                           (ii) attempt by the Borrower to revoke (expressly, by
later inconsistent notices or otherwise) in whole or part any notice relating to
the selection of a Euro-Rate Option under Section 3.2 or prepayments under
Section 3.9.

                  If the Bank sustains or incurs any such loss or expense it
shall from time to time notify the Borrower of the amount determined in good
faith by the Bank (which determination shall be conclusive absent manifest error
and may include such assumptions, allocations of costs and expenses and
averaging or attribution methods as the Bank shall deem reasonable) to be
necessary to indemnify the Bank for such loss or expense. Such notice shall set
forth in reasonable detail the basis for such determination. Such amount shall
be due and payable by the Borrower to the Bank ten (10) Business Days after such
notice is given.

         3.13 Commitment Fee.

         The Borrower agrees to pay to the Bank, on or before the Closing Date,
as consideration for the Loan, the Commitment Fee.

                            4. AFFIRMATIVE COVENANTS

        The Borrower hereby covenants and agrees that, from the date hereof and
until the Bank Debt has been paid in full and all other obligations hereunder
shall have been performed and

<PAGE>   25

discharged, it shall comply at all times with the following affirmative
covenants:

         4.1 Preservation of Existence, Etc.

        The Borrower and Guarantor shall each maintain its corporate existence
and its license or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business makes such
licensing or qualification necessary.

         4.2 Payment of Liabilities, Including Impositions.

        The Borrower shall duly pay and discharge all liabilities to which it is
subject or which are asserted against it, prior to the date when any fine, late
charge or other penalty for late payment may be imposed, including all
Impositions, provided that it shall not be deemed to be a violation of this
Section 4.2 if such liabilities, including Impositions, are being contested in
good faith and by appropriate and lawful proceedings diligently conducted, and
such failure to pay and discharge such liabilities, including Impositions, (a)
would not reasonably be expected to result in a Material Adverse Change, (b)
would not reasonably be expected to materially affect the Collateral or the
validity of the Loan, and (c) for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made.

         4.3 Compliance with Laws.

        The Borrower shall comply with all applicable laws in all respects,
including, but not limited to, all Environmental Laws.

         4.4 Keeping of Records and Books of Account.

        The Borrower and Guarantors shall maintain and keep proper books of
record and account which enable each of them to issue financial statements and
reports in accordance with Section 7.2 and in which full, true and correct
entries shall be made in all material respects of all their respective dealings
and business and financial affairs.

         4.5 Visitation Rights.

        The Borrower shall permit any of the officers or authorized employees or
representatives of the Bank to visit and inspect the Project and to examine and
make excerpts from its books and records and discuss its affairs, finances and
accounts with its officers, all in such reasonable detail and at such reasonable
times during normal business hours and as often as the Bank may reasonably
request.

         4.6 [RESERVED]

         4.7 Maintenance of Insurance.

                  (a) The Borrower shall obtain the insurance coverages
specified in this subsection 4.7(a). The insurer issuing any such policy shall
certify to the Bank that (1) losses will be adjusted with the approval of the
Bank, (2) loss payments will be payable to the Bank,

<PAGE>   26

such payments to be applied in the manner set forth in the Mortgage either to
the restoration, repair or replacement of the Improvements or to the payment of
the Bank Debt, (3) the interests of the Bank shall be insured regardless of any
breach or violation by the Borrower of any warranties, declarations or
conditions contained in such policy, and (4) if such insurance is canceled or
materially changed or if any reinsurance is canceled for any reason whatsoever,
such insurer will promptly notify the Bank and such cancellation or change shall
not be effective as to the Bank for thirty (30) days after receipt by the Bank
of such notice. The Borrower shall deliver to the Bank Acord Form 27 Evidence of
Insurance with respect to such policies on or before the Closing Date, and
evidence of each renewal policy in a form acceptable to Bank not less than
thirty (30) days prior to the expiration of the original policy or preceding
renewal policy (as the case may be); and to deliver to the Bank, upon Bank's
request, receipts or other evidence that the premiums thereon have been paid in
accordance with the Policy. The insurer or reinsurer for all such policies shall
be rated A- IX by A.M. Best, or such other rating reasonably acceptable to the
Bank. The form, content, insurers and reinsurers of all insurance policies
required under this Agreement and the Mortgage shall be satisfactory to the Bank
in accordance with the standards established in this Section 4.7. Such insurance
coverages shall include:

                           (i) Fire and Extended Coverage Insurance. Fire and
Extended Coverage Insurance insuring the Improvements and all materials
(installed and uninstalled), supplies and other personal property owned by
Borrower on the Land against loss or damage by fire, vandalism, burglary, theft,
riot, and other hazards insured against by extended coverage insurance and such
other insurance (including, but not limited to, business interruption insurance
covering loss of net earnings, including rental income, and costs associated
with the period of project restoration, malicious mischief insurance and flood
insurance if in a Federal flood prone area) as may be specified by the Bank from
time to time, in amounts acceptable to the Bank and to be evidenced by an Acord
Form 27 Evidence of Insurance (or such other equivalent form as may be
acceptable to the Bank). The Borrower shall, to the extent applicable, cause
each insurance policy issued in connection herewith to name the Bank as
mortgagee and loss payee.

                           (ii) Public Liability Insurance. Commercial public
liability and property damage insurance in connection with the Land and
Improvements, and contractual liability and completed operations coverage, and
comprehensive automobile liability insurance covering all motor vehicles used in
connection with the Land and Improvements, all in amounts and with insurers
acceptable to the Bank. The Borrower shall cause the insurer to name the Bank as
an additional insured under such coverage.

                           (iii) Workers' Compensation Insurance. Workers'
compensation and employer's liability insurance covering all liability in
connection with the Land and Improvements under applicable laws with respect to
the Borrower and, with respect to all contractors employed by Borrower, Borrower
shall contractually obligate each such contractor to obtain worker's
compensation and employer's liability insurance.

                  (b) The Borrower shall insure its properties and assets (other
than the Land and Improvements which are required to be insured in the manner
provided in subsection (a) above) against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including business
interruption insurance) and in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on

<PAGE>   27

similar businesses and against public liability for damages and against other
risks in amounts normally carried by prudent companies carrying on similar
businesses and reasonably satisfactory to the Bank.

         4.8 Notice.

         The Borrower shall give prompt written notice to the Bank (a) of any
action or proceeding instituted by or against it or as to which it shall have
received written notice or of which it has actual knowledge which constitutes a
Potential Default or an Event of Default under this Agreement, or (b) of a
default by the Borrower under any other material contract, instrument or
agreement to which it is a party or by which it or any of its properties or
assets may be bound or to which it or any of its properties or assets may be
subject, which default could be reasonably expected result in a Material Adverse
Change.

         4.9 Performance of Obligations

         The Borrower shall duly pay, perform and discharge all of its
obligations hereunder and under the other Loan Documents.

         4.10 Compliance with Agreements.

         The Borrower and Guarantor shall each comply in all material respects
with all obligations under any contracts, instruments and agreements to which it
is a party or to which any of its properties or assets may be subject.

         4.11 Title to Land and Improvements.

        The Borrower shall retain its fee simple interest in the Land and
Improvements until the Bank Debt has been indefeasibly paid in cash and
satisfied in full.

         4.12 Further Assurances.

         The Borrower shall, from time to time, at its expense, faithfully
preserve and protect the Bank's liens on and security interest in the Collateral
as a continuing first priority perfected lien, as applicable, subject only to
Permitted Encumbrances, and shall take such other action as the Bank in its sole
discretion may reasonably deem necessary from time to time in order to preserve,
perfect and protect the liens granted under the Collateral Documents, to
exercise and enforce the Bank's rights and remedies thereunder and with respect
to the Collateral and to carry out the terms of this Agreement and the other
Loan Documents.

         4.13 Estoppel Certificate.

         At any time within ten (10) Business Days after written demand by the
Bank therefor, the Borrower shall deliver to the Bank a certificate duly
executed and in form satisfactory to the Bank, stating and acknowledging, to the
best of Borrower's knowledge, (i) the then unpaid principal balance, and
interest due and unpaid under, the Loan, the fact that there are no defenses,
off-sets or counterclaims thereto (or, if such should not be the fact, then the
facts and

<PAGE>   28

circumstances relating to such defenses, off-sets or counterclaims); (ii) the
Borrower has kept, observed, complied with, fulfilled and performed in all
material respects every term, covenant and condition in this Agreement and the
other Loan Documents on its part to be kept and performed; (iii) that no
Potential Default or Event of Default exists; that no event has occurred or is
threatened which if continued would permit the holder of any recourse
indebtedness of the Borrower or to which its property is subject to accelerate
the maturity thereof or enforce any lien securing the same; and (iv) that no
material litigation or administrative proceeding has been instituted by or
against the Borrower (or, if such should not be the fact, then the facts and
circumstances relating to such event or litigation in detail) and covering such
other matters relating to the Borrower, the Loan or the Collateral as the Bank
may reasonably require.

         4.14 Repairs.

         The Borrower shall maintain and keep the Land and the Improvements in
good working order and condition and make all necessary and proper repairs and
replacements thereto, including, without limitation, making such repairs and
alterations as are necessary to the generator room so that such room is in
compliance with applicable building codes and regulations.

         4.15 Protection Against Lien Claims.

         Any Lien claimed or filed against any part of the Land or the
Improvements for labor done or materials or services furnished in connection
with any construction activities performed on the Land or Improvements shall be
insured over or discharged, by bond or otherwise, within the time frames set
forth in Section 4.2 hereof.

         4.16 Plans and Benefit Arrangements.

         The Borrower shall, and shall cause each other member of the ERISA
Group to, comply with ERISA, the Internal Revenue Code and other applicable laws
applicable to Plans and Benefit Arrangements except where such failure, alone or
in conjunction with any other failure, would not result in a Material Adverse
Change. Without limiting the generality of the foregoing, the Borrower shall
cause all of its Plans and all Plans maintained by any member of the ERISA Group
to be funded in accordance with the minimum funding requirements of ERISA and
shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Plans, Benefit Arrangements and Multiemployer
Plans.

         4.17 Conditions Precedent.

         As conditions precedent to the Bank's obligation to close the Loan and
make the First Disbursement, Borrower shall have complied with all the
requirements and shall have fulfilled all the conditions set forth in this
Agreement and shall prior to the Closing Date (unless otherwise set forth herein
or waived in writing by the Bank), furnish to Bank at Borrower's sole cost and
expense, the items set forth on Exhibit B attached hereto, all of which shall be
in form and content satisfactory to Bank and its counsel.

<PAGE>   29

         4.18 Use of Proceeds.

         The Borrower shall use the proceeds of the Loan for the purpose of
consolidating and refinancing the existing Indebtedness secured by the Project.

         4.19 Year 2000.

         The Borrower has reviewed the areas within its businesses and
operations which could be adversely affected by, and has developed a program to
address on a timely basis, the risk that certain computer applications used by
the Borrower (or any of its material suppliers, customers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem will not result in any Material Adverse Change with respect to
Borrower.

         4.20 Management of the Project.

         The Borrower shall operate the Project strictly in accordance with the
Franchise Agreement. The Project will be managed at all times by the Manager
pursuant to the Property Management Agreement and Borrower shall not terminate
or materially modify the Property Management Agreement without the prior written
consent of the Bank. The Borrower shall terminate the Manager at Bank's request
upon thirty (30) days' prior written notice to Borrower and the Manager, which
termination notice may be given by the Bank upon the occurrence of an Event of
Default under Section 10.1(a), (c) or (d) hereof. In the event that the Manager
is terminated pursuant hereto, Borrower shall immediately seek to appoint a
replacement property manager acceptable to Bank in Bank's sole discretion, and
Borrower's failure to obtain such an acceptable property manager within 30 days
of Bank's request to terminate the Manager shall constitute an immediate Event
of Default hereunder.

         4.21 Borrower Financial Covenants.

                  (a) The Borrower covenants and agrees that during the first
calendar year following the Closing Date, the Debt Service Coverage Ratio for
the Project, as measured as of the end of each calendar quarter for the prior
twelve (12) month period and as set forth on the covenant compliance certificate
required to be delivered to the Bank pursuant to Exhibit C, Section (c) hereof,
shall not be less than 1.30 to 1.00.

                  (b) The Borrower covenants and agrees that during the second
calendar year following the Closing Date, the Debt Service Coverage Ratio for
the Project, as measured as of the end of each calendar quarter for the prior
twelve (12) month period and as set forth on the covenant compliance certificate
required to be delivered to the Bank pursuant to Exhibit C, Section (c) hereof,
shall not be less than 1.35 to 1.00.

                  (c) The Borrower covenants and agrees that during the
Extension Period, the Debt Service Coverage Ratio for the Project, as measured
as of the end of each calendar quarter for the prior twelve (12) month period
and as set forth on the covenant compliance certificate required to be delivered
to the Bank pursuant to Exhibit C, Section (c) hereof, shall not be less than
1.50 to 1.00.

<PAGE>   30

         4.22 Guarantor Financial Covenants.

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

                  (i) Cash and Cash Equivalents. The amount of the Guarantor'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 Guarantor shall not exceed 3.00 to 1.00;

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

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

         4.23 Required FF&E Reserve.

         Borrower shall establish an interest-bearing reserve account (the "FF&E
Account") to be maintained with the Bank, subject to the payment of all
customary charges and fees, and shall pledge all of its right, title and
interest in the FF&E Account to the Bank pursuant to the Pledge Agreement.
Beginning with the first calendar quarter following the Closing Date as soon as
available and in any event within fifteen (15) days following the end of each
calendar quarter throughout the term of the Loan, Borrower shall deposit the
greater of (i) three percent (3%) of all Facility Revenues (as hereinafter
defined) or (ii) the actual amount spent by Borrower for the costs of
acquisition of furniture, fixtures and equipment to be used in connection with
the Project into the FF&E Account (the "Required FF&E Reserve"). The Borrower
shall be permitted to withdraw amounts from the FF&E Account, so long as no
Event of Default or Potential Default shall then exist and be continuing, to
cover the cost of acquisition of furniture, fixtures and equipment to be used in
connection with the Project as long as the acquisition thereof is required to be
capitalized in accordance with Borrower's capitalization policy as approved by
the Bank prior to the Closing Date (each being a "Capital Acquisition"). At the
time the quarterly financial reports required to be delivered to the Bank
pursuant to Exhibit C, Section (c) are due, Borrower shall provide a summary and
accounting of all Capital Acquisitions made by the Borrower during the previous
calendar quarter. For the purposes hereof, the term "Facility Revenues" shall
mean all gross revenues and receipts derived from the operation of the Project,
including, without limitation, all revenues and receipts from room rents, food,
and beverage sales and other miscellaneous revenues arising from the operation
of the Project.

                              5. NEGATIVE COVENANTS

        The Borrower hereby covenants and agrees that, from the date hereof and
until the Bank

<PAGE>   31

Debt has been paid in full and all other obligations hereunder shall have been
performed and discharged, it shall comply at all times with the following
negative covenants:

         5.1 Changes in Organizational Documents.

        The Borrower shall not amend or modify, or permit the amendment or
modification of, in any material respect, the Borrower Documents, without
providing prior written notice to the Bank and obtaining the prior written
consent of the Bank.

         5.2 Transfer of Land and Improvements.

        The Borrower shall not voluntarily or by operation of law, directly or
indirectly, sell, convey, transfer, assign, pledge, encumber, or permit to be
sold, conveyed, transferred, assigned, pledged or encumbered any interest
whether nominal, beneficial or otherwise in or any part of the Land or the
Improvements, without the prior written consent of the Bank having been
obtained. Any transaction which is prohibited under this Section 5.2 shall be
null and void to the extent permitted by applicable law. The Bank shall not be
under any obligation to allege or show any impairment of the Collateral, and the
Bank may pursue any legal or equitable remedies for default, without such
allegation or showing, notwithstanding the foregoing.

         5.3 Change in Ownership.

        The Borrower shall not cause or permit sales, pledges, encumbrances,
conveyances, transfers or assignments of interests in the Borrower (whether
owned directly or through other entities) without the prior written consent of
the Bank.

         5.4 Liquidations, Mergers, Consolidations, Acquisitions.

        The Borrower shall not dissolve, liquidate or become a party to any
merger or consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other Person.

         5.5 Breach of Documents.

         The Borrower shall not commit any act, or permit any act to occur,
which would, in any manner, give rise to a breach of any term, covenant or
condition on Borrower's part to be performed under any contract to which the
Borrower is a party or by which it is bound.

         5.6 Judgments.

         The Borrower shall not permit any final judgment obtained against it to
remain unpaid for a period of ten (10) days following the entry thereof without
obtaining a stay of execution or bonding or causing such judgment to be bonded.

         5.7 Leasing of Premises.

         The Borrower shall not, without the prior written approval of the Bank,
enter into,

<PAGE>   32

terminate, amend, modify, extend or give any consent to any tenant under any
Lease.

         5.8 Material Adverse Change.

         The Borrower shall not permit any Material Adverse Change in the
business, assets, operation or condition, financial or otherwise, of Borrower or
Guarantor to occur.

         5.9 Conduct of Business.

         The Borrower shall not conduct any business or activity, the nature of
which would differ in any material respect from that presently conducted by it.

         5.10 Creation of Liens.

         Except as specifically contemplated by the Loan Documents the Borrower
shall not create, incur, assume or suffer to exist or be created, or permit any
pledge of, or any deed of trust, mortgage, Lien, charge, security interest or
encumbrances of any nature with respect to the Land or the Improvements, or
assign, pledge or in any way transfer or encumber its rights to receive income
from the Land or the Improvements.

         5.11 Value of Collateral.

         The Borrower shall not take any action which would result in any
material impairment of the value of any Collateral.

         5.12 Transfer of Personalty.

         The Borrower shall not voluntarily or by operation of law, directly or
indirectly, sell, assign, transfer, encumber, pledge, mortgage, hypothecate,
convey or otherwise dispose of any interest of Borrower in or any part of any
personalty located upon the Land or the Improvements or used or intended to be
used in connection therewith, provided that Borrower may dispose of any worn out
personal property as long the same is promptly replaced with personal property
that is the functional equivalent of the replaced property within such time as
would not impair the operation of the Project.

         5.13 Disposition of Rents.

         The Borrower shall not consent to or commit any sale, conveyance,
pledge, mortgage, hypothecation or other disposition of any rents or other funds
arising from the Land or the Improvements.

         5.14 Indebtedness.

         The Borrower shall not at any time create, incur, assume or suffer to
exist any Indebtedness, except for leases entered into by Borrower for certain
office equipment (as set forth on Exhibit F attached hereto), Indebtedness under
the Loan Documents and the Subordinated Debt.

<PAGE>   33

         5.15 Dividends and Related Distributions.

         Borrower shall not make or pay, or agree to become or remain liable to
make or pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its membership
interests, on account of the purchase, redemption, retirement or acquisition of
its membership interests (or warrants, options or rights therefor), except as
may be permitted in accordance with Borrower's Operating Agreement, provided
however that an Event of Default shall not have occurred and be continuing.

         5.16 Pension Plans and Benefit Arrangements.

         The Borrower and members of the ERISA Group shall not:

                  (i) fail to satisfy the minimum funding requirements of ERISA
and the Internal Revenue Code with respect to any Plan;

                  (ii) request a minimum funding waiver from the Internal
Revenue Service with respect to any Plan;

                  (iii) engage in a Prohibited Transaction with any Plan,
Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with
any other circumstances or set of circumstances resulting in liability under
ERISA, would constitute a Material Adverse Change;

                  (iv) permit the aggregate actuarial present value of all
benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in the most recent actuarial report
completed with respect to such Plan, to exceed, as of any actuarial valuation
date, the fair market value of the assets of such Plan;

                  (v) fail to make when due any contribution to any
Multiemployer Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
law pertaining thereto;

                  (vi) withdraw (completely or partially) from any Multiemployer
Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from
any Multiple Employer Pension Plan, where any such withdrawal is likely to
result in a material liability of Borrower or any member of the ERISA Group;

                  (vii) terminate, or institute proceedings to terminate, any
Plan, where such termination is likely to result in a material liability to the
Borrower or any member of the ERISA Group;

                  (viii) make any amendment to any Plan with respect to which
security is required under Section 307 of ERISA; or

                  (ix) fail to give any and all notices and make all disclosures
and governmental

<PAGE>   34

filings required under ERISA or the Internal Revenue Code, where such failure is
likely to result in a Material Adverse Change.

                             6. DISBURSEMENT MATTERS

         6.1 First Disbursement.

         The Bank's obligation to disburse the Loan proceeds (the "First
Disbursement") shall be subject to the satisfaction of all requirements set
forth on Exhibit B hereto and to the satisfaction of the following conditions:

                  (a) No material portion of the Project shall have been damaged
by fire or other casualty and no condemnation or taking of the Project or any
portion thereof shall be pending or threatened;

                  (b) The Bank shall have received all duly executed Loan
Documents on or before the Closing Date; and the Collateral Documents and other
documents to be placed of record shall have been duly recorded and filed in all
appropriate offices;

                  (c) The security interest in all property described in the
Collateral Documents shall have been duly perfected and shall be a valid and
enforceable first Lien;

                  (d) The Commitment Fee shall have been paid on or before the
Closing Date;

                  (e) All Governmental Approvals shall be in full force and
effect, and no notices of violation or revocation with respect thereto shall
have been received which have not been cured to the satisfaction of the
applicable Governmental Authority;

                  (f) The Bank shall have received, at Borrower's expense, a
marked title insurance commitment to issue a lender's title insurance policy in
the amount of the Loan (and a title policy reflecting such marked commitment
promptly thereafter) . Such title insurance commitment and policy shall be
satisfactory to the Bank and shall insure the first priority of the Lien of the
Mortgage and contain no exceptions other than the Permitted Encumbrances;

                  (g) No Event of Default or Potential Default shall have
occurred and be continuing under this Agreement or any of the other Loan
Documents;

                  (h) The Franchise Agreement and Property Management Agreement
shall each be in full force and effect;

                  (i) The Bank shall have received a structural report
satisfactory to Bank from its inspecting architect concerning its review of the
Improvements, and the Governmental Approvals; and

                  (j) The representations and warranties of the Borrower
contained in Article 8 hereof shall be true and accurate in all material
respects on and as of the date of the First

<PAGE>   35

Disbursement of Loan proceeds with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and the Borrower shall have
performed and complied with all covenants and conditions hereof.

                            7. REPORTING REQUIREMENTS

         7.1 Appraisals, Environmental Reports and Title Reports.

                  (a) Appraisal. In addition to the Appraisal required prior to
the Closing Date as set forth on Exhibit B attached hereto, until the Bank Debt
is repaid in full the Bank shall have the right at any time and from time to
time but no more frequently than once each calendar year prior to the occurrence
of an Event of Default to obtain an Appraisal with respect to the Project, which
Appraisal shall be at the expense of the Borrower. After the occurrence of an
Event of Default and so long thereafter as such Event of Default shall remain
uncured, the Bank shall have the right to obtain such Appraisals as it may
require at the expense of the Borrower without limitation.

                  (b) Title Reports. In addition to the title insurance
commitment required prior to the Closing Date, at the option of Bank, exercised
not more than once each calendar year until the Bank Debt has been repaid in
full, Bank may request and Borrower shall deliver within fifteen (15) days of
such request, an updated title report on the Project, prepared and issued by the
same title insurance company that delivered to Bank the lender's policy of title
insurance in connection with the delivery of the Mortgage and such updated title
report shall be provided at Borrower's expense. After the occurrence of an Event
of Default and so long thereafter as such Event of Default shall remain uncured,
Borrower will furnish such title reports, endorsements or policies as the Bank
shall require. If Borrower fails to deliver the title updates, reports,
endorsements or policies required pursuant to this Section, Bank may obtain such
item(s) and Borrower will reimburse Bank for costs incurred upon demand.

                  (c) Environmental Reports. Within sixty (60) days following
the request of Bank, which request must be after such time that Bank reasonably
suspects that there has been a breach of the Environmental Indemnity Agreement,
or if a previously undisclosed adverse environmental condition becomes apparent
or a change in applicable law with respect to environmental matters should occur
(but such request may be made at any time following the occurrence of an Event
of Default and so long thereafter as such Event of Default shall remain uncured,
or if Bank has reason to believe there has been a breach of the Environmental
Indemnity Agreement) until the Bank Debt has been repaid in full, the Borrower
shall cause an Environmental Report of the Project to be prepared at Borrower's
sole cost and expense, which Environmental Report will be in form and performed
by a consultant approved by Bank, and if Borrower does not respond to Bank's
request within sixty (60) days, the Bank shall cause an Environmental Report of
the Project to be performed and, upon demand, Borrower will reimburse Bank for
all costs incurred.

<PAGE>   36

         7.2 Financial Reports.

         Until the Bank Debt is repaid in full, the Borrower shall furnish or
cause to be furnished to the Bank, within the time periods specified on Exhibit
C attached hereto, the financial reports and information listed on Exhibit C.

                        8. REPRESENTATIONS AND WARRANTIES

         The Borrower hereby warrants and represents to the Bank as follows:

         8.1 Due Formation: Capacity.

                  (a) The Borrower is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full power and
authority to own or lease and operate properties, and to conduct its affairs as
now being conducted and as proposed to be conducted.

                  (b) The Guarantor is duly organized, validly existing and in
good standing under the laws of the State of Maryland, and has full power and
authority to own or lease and operate properties, and to conduct its affairs as
now being conducted and as proposed to be conducted.

         8.2 Power and Authority.

         The Borrower and Guarantor each has full power and authority to enter
into, execute, deliver and carry out this Agreement and the other Loan Documents
to which either of them is a party, and to perform their respective obligations
hereunder and thereunder and all such actions have been duly authorized by all
necessary proceedings on Borrower's and Guarantor's part.

         8.3 Validity and Binding Effect.

         This Agreement and the other Loan Documents will have been duly
executed and delivered by the Borrower and the Guarantor, to the extent they are
a party thereto, on the required date of delivery of such document. This
Agreement and the other Loan Documents constitute the legal, valid and binding
obligations of the Borrower, and the Guarantor, to the extent they are a party
thereto, enforceable against them in accordance with their respective terms.

         8.4 No Conflict.

         Neither the execution and delivery of this Agreement, the other Loan
Documents, nor the consummation of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
will conflict with, constitute a default under or result in any breach of (i)
the terms and conditions of the Borrower Documents or (ii) any Governmental
Approval, any applicable law or any material agreement, instrument, order, writ,
judgment, injunction or decree to which the Borrower or Guarantor is a party or
by which either of them is bound, or result in the creation or enforcement of
any Lien, charge or encumbrance whatsoever upon any property (now or hereafter
acquired) of Borrower or Guarantor (other than Liens

<PAGE>   37

granted under the Loan Documents).

         8.5 Other Agreements.

         Neither the Borrower nor Guarantor is a party to any agreement or
instrument that materially and adversely affects its present or proposed
business, properties or assets, operation or conditions, financial or otherwise
or is in default of the performance, observance, or fulfillment of any of the
material obligations, covenants or conditions set forth in any material
agreement or instrument to which Borrower or Guarantor is a party.

         8.6 No Potential Default or Event of Default.

         No Potential Default has occurred and no condition exists or will be
caused by the First Disbursement which will constitute a Potential Default or
Event of Default.

         8.7 No Litigation or Investigations.

         There is no pending or threatened litigation or governmental
investigation (or any basis therefor known to the Borrower) which questions the
capacity, ability or authority of the Borrower or Guarantor to execute, deliver
and perform the provisions of the Loan Documents to which either of them is a
party, or if determined adversely to the Borrower or Guarantor would reasonably
be expected to cause a Material Adverse Change.

         8.8 Financial Statements and Other Information.

         The information, financial statements and other financial data
furnished by the Borrower and the Guarantor to the Bank are true and correct in
all material respects and present fairly the financial condition of the Borrower
and the Guarantor . All other information given to the Bank by and with respect
to the Borrower or the Guarantor is accurate, correct and complete in all
material respects. To the best of the Borrower's knowledge, all surveys, plot
plans and similar documents heretofore furnished by the Borrower to the Bank
with respect to the Land and Improvements are accurate and complete in all
material respects as of their respective dates.

         8.9 Impositions.

         All returns for Impositions required to have been filed by the Borrower
have been timely filed and payment has been made, or will be made prior to the
date upon which any penalty or fine may be imposed, for all Impositions which
have or may become due pursuant to said returns or to assessments received.

         8.10 Title Aspects.

         The Borrower has good and marketable fee simple title to the Land and
Improvements, subject only to Permitted Encumbrances. The Borrower has been
granted all easements appropriate for the occupancy and operation of the
Improvements, and any mortgage liens now or hereafter affecting any land
burdened by such easements are subordinate to such easements.

<PAGE>   38

         8.11 Zoning and Governmental Approvals.

         The development, construction, use and occupancy of the Project
conforms in all material respects to all applicable laws, all existing
Governmental Approvals and all covenants, conditions and restrictions contained
in a deed, lease or other instrument or agreement covering or affecting all or
any portion of the Land. All Governmental Approvals have been obtained and are
valid and in full force and effect.

         8.12 Utilities.

         All utility and municipal services necessary for the use and occupancy
of the Improvements are available to the Land and have sufficient capacity to
operate the Improvements for their intended purposes, including water supply,
storm and sanitary sewer facilities, electricity and telephone facilities.

         8.13 Security Interests.

         The liens and security interests granted or to be granted to the Bank
pursuant to this Agreement and the other Loan Documents constitute and will
continue to constitute valid perfected first priority security interests under
the Uniform Commercial Code or other applicable law, entitled to all the rights,
benefits and priorities provided by the Uniform Commercial Code or any other
law, upon proper filing, and the property secured thereby is subject to no other
Liens or encumbrances except for the Permitted Encumbrances.

         8.14 Mortgage.

         The Lien granted to the Bank pursuant to the Mortgage constitutes and
will, upon proper recording, constitute a valid perfected first priority Lien
under applicable law, and the property secured thereby is subject to no other
Liens or encumbrances except for the Permitted Encumbrances. All action as is
necessary or advisable to establish such Lien and its priority as described in
the preceding sentence, including recordation of the Mortgage in the appropriate
offices, will be taken promptly following the Closing Date, and there will be,
upon execution, delivery and recordation of the Mortgage, no necessity for any
further action in order to protect, preserve and continue such Lien and such
priority.

         8.15 [INTENTIONALLY OMITTED]

         8.16 Environmental Matters.

                  (a) Except as disclosed in the Environmental Report, the
Borrower has not received any Environmental Complaint from any Official Body or
private Person alleging that any past owner or operator of the Land is a
potentially responsible party under the Comprehensive Environmental Response,
Cleanup and Liability Act, 42 U. S.C. Section 960 1, et seq., and the Borrower
has no reason to believe that such an Environmental Complaint might be received.
Except as disclosed in the Environmental Report, to Borrower's knowledge, there
are no pending or threatened, Environmental Complaints relating to the Land
pertaining to or arising out of any Environmental Conditions.

<PAGE>   39

                  (b) Except as disclosed in the Environmental Report, to
Borrower's knowledge, there are no conditions, facilities or any other facts or
circumstances at, on or under the Project that constitute a breach of or
non-compliance with any of the Environmental Laws, and there are no past or
present Environmental Conditions at, on or under the Project that prevent
compliance with the Environmental Laws.

                  (c) Except as disclosed in the Environmental Report, to
Borrower's knowledge, there are no conditions, facilities or any other facts or
circumstances at, on or under adjacent property, and there are no past or
present Environmental Conditions at, on or under adjacent property that prevent
compliance of the Project with the Environmental Laws.

                  (d) Except as disclosed in the Environmental Report, to
Borrower's knowledge, neither the Land nor any structures, improvements,
equipment, fixtures, activities or facilities thereon or thereunder contain or
use Regulated Substances, except in compliance with Environmental Laws.

         8.17 Insurance.

         All insurance policies furnished to the Bank by the Borrower are valid
and in full force and effect. No notice has been given or claim made and, to the
best of the Borrower's knowledge, no grounds presently exist to cancel or void
any of such policies or to reduce the coverage provided thereby. Such policies
provide adequate coverage in amounts sufficient to insure the assets and risks
of the Borrower in accordance with prudent business practices.

         8.18 Solvency.

         The Borrower and Guarantor are Solvent as of the Closing Date and will
be Solvent after giving effect to the transactions contemplated by the Loan
Documents, including all Indebtedness incurred thereby, the security interests
granted therein and the payment of all fees related thereto.

         8.19 Pension Plans and Benefit Arrangements.

                  (a) The Borrower and each other member of the ERISA Group are
in compliance in all material respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There
has been no Prohibited Transaction with respect to any Benefit Arrangement or
any Pension Plan or, to the best knowledge of the Borrower, with respect to any
Multiemployer Plan or Multiple Employer Plan, which could result in any material
liability of the Borrower or any other member of the ERISA Group. The Borrower
and all members of the ERISA Group have made when due any and all payments
required to be made under any agreement relating to a Multiemployer Plan or a
Multiple Employer Plan or any law pertaining thereto. With respect to each Plan
and Multiemployer Plan, the Borrower and each member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii)
have not had asserted against them any penalty for failure to fulfill the
minimum funding requirements of ERISA.

<PAGE>   40

                  (b) To the best of the Borrower's knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.

                  (c) Neither the Borrower nor any other member of the ERISA
Group has instituted or intends to institute proceedings to terminate any Plan.

                  (d) No event requiring notice to the PBGC under Section
302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with
respect to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.

                  (e) The aggregate actuarial present value of all benefit
liabilities (whether or not vested) under each Plan, determined on a plan
termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Plan.

                  (f) Neither the Borrower nor any other member of the ERISA
Group has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan
or Multiple Employer Plan has been terminated within the meaning of Title IV of
ERISA, and, to the best knowledge of the Borrower, no Multiemployer Plan or
Multiple Employer Plan is reasonably expected to be reorganized or terminated,
within the meaning of Title IV of ERISA.

                  (g) To the extent that any Benefit Arrangement is insured, the
Borrower and all members of the ERISA Group have paid when due all premiums
required to be paid for all periods through and including the Closing Date. To
the extent that any Benefit Arrangement is funded other than with insurance, the
Borrower and all other members of the ERISA Group have made when due all
contributions required to be paid for all periods through the Closing Date.

                  (h) All Plans, Benefit Arrangements and Multiemployer Plans
have been administered in accordance with their terms and applicable law.

                             [ARTICLE 9 - RESERVED]

                           10. DEFAULTS AND REMEDIES

         10.1 Events of Default.

         The following shall be deemed to be Events of Default under this
Agreement (whatever the reason therefor and whether voluntary, involuntary or
effected by operation of law):

                  (a) The Borrower shall fail to make any principal payment due
under the Loan or shall fail to pay any interest on the Loan or any other amount
owing hereunder or under the other Loan Documents after such principal, interest
or other amount shall become due and payable in accordance with the terms hereof
or thereof;

<PAGE>   41

                  (b) Any representation or warranty made at any time by the
Borrower or Guarantor herein or in any other Loan Document, or any certificate,
other instrument or written statement furnished by Borrower or Guarantor
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished;

                  (c) The Borrower shall fail to comply with any other covenant
contained in this Agreement or any of the other Loan Documents which calls for
the payment of money and shall not cure that failure within ten (10) days after
written demand by the Bank;

                  (d) The Borrower shall fail to comply with any covenant
contained in this Agreement or any of the other Loan Documents, other than those
defaults referred to in the other subparagraphs of this Section 10.1, and shall
not cure that failure within thirty (30) days after written notice thereof by
the Bank to Borrower or such shorter period of time for cure specified in any
Loan Document (such grace period to be applicable only in the event such default
can be remedied by corrective action of the Borrower as determined by the Bank
in its sole discretion);

                  (e) The Borrower shall fail to comply with the covenant set
forth in Section 4.21;

                  (f) The Guarantor shall fail to comply with any covenant set
forth in Section 4.22;

                  (g) The Borrower or Guarantor shall cease to be Solvent or
shall be unable to pay their respective debts as the same shall mature or there
shall be filed by or against the Borrower or Guarantor a petition in bankruptcy
or a petition seeking the appointment of a receiver, trustee or conservator for
Borrower or Guarantor or any portion of their respective properties or seeking
reorganization or to effect a plan or other arrangement with or for the benefit
of creditors, or the Borrower or Guarantor shall consent to the appointment of a
receiver, trustee or conservator;

                  (h) Any Lien or encumbrance, other than a Permitted
Encumbrance, is entered against the Land or Improvements and such Lien or
encumbrance is not discharged, vacated or bonded within ten (10) Business Days
after the filing thereof;

                  (i) Any final judgments for the payment of money shall be
entered against the Borrower or Guarantor by a court having jurisdiction which
is not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry of such judgment and such judgment shall
result in a Material Adverse Change with respect to the Borrower or Guarantor;

                  (j) There shall occur any uninsured damage to or loss, theft
or destruction of any of the Collateral in excess of $100,000, and such damage,
loss, theft or destruction is not restored within one hundred twenty (120) days
of the date thereof;

<PAGE>   42

                  (k) Any of the Loan Documents shall cease to be legal, valid
and binding agreements enforceable against the Borrower or Guarantor in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with their terms) or become or be judicially declared
ineffective or inoperative or shall in any way cease to give or provide the
respective liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby and Borrower has not
provided to the Bank either replacement documentation or substitute collateral
satisfactory to the Bank with thirty (30) days following written notice from the
Bank;

                  (l) Any party shall obtain an order or decree in any court of
competent jurisdiction to enjoin or prohibit the Bank, the Borrower or Guarantor
from carrying out the terms and conditions of any of the Loan Documents to which
any of them is a party and such order or decree is not vacated or stayed within
ten (10) days after the filing thereof;

                  (m) Any of the following occurs: (i) any Reportable Event,
which the Bank determines in good faith constitutes grounds for the termination
of any Plan by the PBGC or the appointment of a trustee to administer or
liquidate any Plan, shall have occurred and be continuing; (ii) proceedings
shall have been instituted or other action taken to terminate any Plan, or a
termination notice shall have been filed with respect to any Plan; (iii) a
trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC
shall give notice of its intent to institute proceedings to terminate any Plan
or Plans or to appoint a trustee to administer or liquidate any Plan; and, in
the case of the occurrence of (i), (ii), (iii) or (iv) above, the Bank
determines in good faith that the amount of Borrower's liability is likely to
cause a Material Adverse Change; (v) the Borrower or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a Multiemployer
Plan; (vi) the Borrower or any member of the ERISA Group shall make any
amendment to a Plan with respect to which security is required under Section 307
of ERISA; (vii) the Borrower or any member of the ERISA Group shall withdraw
completely or partially from a Multiemployer Plan; (viii) the Borrower or any
member of the ERISA Group shall withdraw (or shall be deemed under Section
4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable law, rule or regulation is adopted, changed or interpreted by any
governmental authority or agency or court with respect to or otherwise affecting
one or more Plans, Multiemployer Plans or Benefit Arrangements and, with respect
to any of the events specified in (v), (vi), (vii), (viii) or (ix), the Bank
determines in good faith that any such occurrence would be reasonably likely to
materially and adversely affect the total enterprise represented by the Borrower
and the other members of the ERISA Group;

                  (n) A Guarantor Default shall occur with respect to any
Indebtedness of Guarantor;

                  (o) a default shall occur under the Franchise Agreement which
is not cured within any applicable cure period (as such cure period may be
extended by the Franchisor) or the Franchise Agreement shall cease to be in full
force and effect;

                  (p) a default shall occur under the Property Management
Agreement which is not cured within any applicable cure period or the Property
Management Agreement shall cease to be in full force and effect;

                  (q) a "default" or defined "event of default" shall occur
under the Subordinated Debt; or

<PAGE>   43

                  (r) Borrower shall fail to fund the Required FF&E Reserve
pursuant to Section 4.23 hereof.

         10.2 Remedies.

         The Bank may exercise any or all of the following rights and remedies:

                  (a) If an Event of Default shall occur, the Bank may by
written notice to the Borrower, declare the unpaid principal amount of the Note
then outstanding and all interest accrued thereon and all other Indebtedness of
the Borrower to the Bank hereunder and thereunder to be immediately due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived.

                  (b) If an Event of Default shall occur, the Bank and any
branch, subsidiary or affiliate of the Bank anywhere in the world shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Borrower, to set-off against and apply to the then unpaid balance
of the Loan and all other obligations of the Borrower hereunder or under any
other Loan Document any debt owing to, and any other funds held in any manner
for the account of the Borrower, or by such branch subsidiary or affiliate,
including without limitation, all funds in all deposit accounts (whether time or
demand, general or special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by the Borrower for its own account with
the Bank or such branch, subsidiary or affiliate. Such right shall exist whether
or not the Bank shall have made any demand under this Agreement or any other
Loan Document, whether or not such debt owing to or funds held for the account
of the Borrower is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, or other security to the Bank;

                  (c) If an Event of Default shall occur, and so long thereafter
as such Event of Default shall remain uncured, and whether or not the Bank shall
have accelerated the maturity of the Loan pursuant to any of the foregoing
provisions of this Section 10.2, the Bank may proceed to protect and enforce the
Bank's rights by suit in equity, action at law and/or other appropriate
proceeding, for the specific performance of any covenant or agreement contained
in this Agreement or the other Loan Documents and, as to any amount that shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof to enforce any other legal or equitable right of the Bank;

                  (d) From and after the date on which the Bank has taken any
action pursuant to this Article 10 and until all Bank Debt has been paid in
full, any and all proceeds received by the Bank from any sale or other
disposition of any Collateral, or any part thereof, or the exercise of any other
remedy by the Bank, shall be applied as follows:

                           (i) first, to reimburse the Bank for out-of-pocket
costs, expenses and disbursements, including without limitation, reasonable
attorneys' fees and legal expenses actually incurred by the Bank in connection
with realizing on any Collateral or collection of any obligations of the
Borrower under any of the Loan Documents, including advances made subsequent to
an Event of Default by the Bank or any of them or the Bank for the reasonable

<PAGE>   44

maintenance, preservation, protection or enforcement of, or realization upon,
any Collateral, including without limitation, advances for Impositions,
insurance, repairs and the like and reasonable expenses incurred to sell or
otherwise realize on, or prepare for sale or other realization on, any of the
Collateral;

                           (ii) second, to the repayment of all Bank Debt in the
order and manner determined by the Bank as to principal, interest, fees or other
amounts;

                           (iii) the balance, if any, as required by law.

                  (e) The Bank shall have all of the rights and remedies
contained in this Agreement and the other Loan Documents (including the right to
appoint a receiver and all other rights described in the Mortgage). In addition,
the Bank shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law, all of which rights and
remedies shall be cumulative and nonexclusive, to the extent permitted by law;
and

                  (f) The Bank shall have the further right to enter the Project
and take any and all actions necessary, in its judgment, to secure, winterize,
protect and preserve the Improvements and any materials or supplies located on
the Land.

         10.3 Notice of Sale.

         Any notice required to be given by the Bank of a sale, lease, or other
disposition of any Collateral or any other intended action by the Bank, if given
ten (10) Business Days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.

                               11. MISCELLANEOUS

         11.1 Modifications, Amendments or Waivers.

         The Bank and the Borrower may from time to time enter into written
agreements amending or changing any provision of this Agreement or any other
Loan Document (except as otherwise expressly provided herein) or the rights of
the Bank or the Borrower hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the obligations of the
Borrower hereunder or thereunder.

         11.2 No Implied Waivers: Cumulative Remedies; Writing Required.

         No course of dealing and no delay or failure of the Bank in exercising
any right, power, remedy or privilege under this Agreement or any other the Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Bank under this Agreement
and any other Loan Documents are cumulative and not exclusive of any rights or
remedies which they would otherwise have. Any waiver, permit consent or approval
of any kind or character on the part of the Bank of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.

<PAGE>   45

         11.3 Reimbursement and Indemnification of Bank by the Borrower;
Impositions.

         The Borrower agrees unconditionally upon demand to pay or reimburse to
the Bank and to save the Bank harmless against (i) liability for the payment of
all reasonable out-of-pocket costs, expenses and disbursements, (including
reasonable fees and expenses of counsel including allocated costs of staff
counsel) for the Bank except with respect to (a) and (b) below (a) in connection
with the administration and interpretation of this Agreement, and other
instruments and documents to be delivered hereunder, (b) relating to any
amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) incurred by the
Bank in connection with any workout or restructuring, or in connection with the
protection, preservation, exercise or enforcement of this Agreement or any other
Loan Document or collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any other Loan
Document, whether in Insolvency Proceedings or otherwise, and (ii) all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
actually imposed on, incurred by or asserted against the Bank in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by the Bank hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements) if the same results from the Bank's gross negligence or willful
misconduct. The Bank will attempt to minimize the fees and expenses of legal
counsel for the Bank which are subject to reimbursement by the Borrower
hereunder by considering the usage of one law firm to represent the Bank if
appropriate under the circumstances. The Borrower agrees unconditionally to pay
all stamp, document, transfer, recording or filing taxes or fees and similar
Impositions during the Borrower's ownership of the Land and the Improvements
(except for taxes on the overall net income of the Bank and except for franchise
taxes) now or hereafter determined by the Bank to be actually due and payable in
connection with this Agreement or any other Loan Document, and the Borrower
agrees unconditionally to save the Bank harmless from and against any and all
present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any such taxes, fees or other
similar Impositions, except as otherwise provided herein.

         11.4 Holidays.

         Whenever any payment or action to be made or taken hereunder shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day (except as provided in
Section 3.2 with respect to Interest Periods), and such extension of time may be
included in computing interest or fees, if any, in connection with such payment
or action, except that the Loan shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day.

<PAGE>   46

         11.5 Funding by Branch, Subsidiary or Affiliate.

                  (a) Notional Funding. The Bank shall have the right from time
to time, without notice to the Borrower, to deem any branch, subsidiary or
Affiliate entity (which for the purposes of this Section 11.5 shall mean any
corporation or association which is directly or indirectly controlled by or is
under direct or indirect common control with any corporation or association
which directly or indirectly controls the Bank) of the Bank to have made,
maintained or funded any portion of the Loan to which the Euro-Rate Option
applies at any time, provided that immediately following (on the assumption that
a payment was then due from the Borrower to such other office), and as a result
of such change, the Borrower would not be under any greater financial obligation
pursuant to Section 3.12 than it would have been in the absence of such change.
Notional funding offices may be selected by the Bank without regard to the
Bank's actual methods of making, maintaining or funding the Loan or any sources
of funding actually used by or available to the Bank.

                  (b) Actual Funding. The Bank shall have the right from time to
time to make or maintain any portion of the Loan by arranging for a branch,
subsidiary or Affiliate of the Bank to make or maintain such portion of the Loan
subject to the last sentence of this subsection 11.5(b). If the Bank causes a
branch, subsidiary or Affiliate to make or maintain any portion of the Loan
hereunder, all terms and conditions of this Agreement shall, except where the
context clearly requires otherwise, be applicable to such portion of the Loan to
the same extent as if such portion of the Loan were made or maintained by the
Bank, but in no event shall the Bank's use of such a branch, subsidiary or
Affiliate to make or maintain any part of the Loan hereunder cause the Bank or
such branch, subsidiary or Affiliate to incur any cost or expenses payable by
the Borrower hereunder or require the Borrower to pay any other compensation to
the Bank (including any expenses incurred or payable pursuant to Section 3.12)
which would otherwise not be incurred.

         11.6 Notices.

         All notices, requests, demands, directions and other communications
(collectively, "notices") given to or made upon any party hereto under the
provisions of this Agreement shall be in writing (including telex or facsimile
communication) unless otherwise expressly required hereunder and shall be
delivered by mail or other means or sent by telex or facsimile (in either case,
to be immediately confirmed verbally by telephone) to the respective parties at
the addresses and numbers set forth on Schedule I hereto or in accordance with
any subsequent written direction from any party to the others. All notices
shall, except as otherwise expressly herein provided, be effective (i) in the
case of telex or facsimile, when received and confirmed by telephone, (ii) in
the case of hand-delivered notice, when hand-delivered, (iii) if given by mail,
four (4) days after such communication is deposited in the mails with
first-class postage prepaid, return receipt requested, and (iv) if given by any
other means (including by air courier), when delivered; provided, however, that
notices to the Bank with respect to conversion or renewal of Interest Rate
Options and prepayment shall not be effective until received by the Bank.

         11.7 Severability.

         The provisions of this Agreement are intended to be severable. If any
provision of this

<PAGE>   47

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 un enforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.

         11.8 Governing Law.

         This Agreement shall be deemed to be a contract under the laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of laws principles.

         11.9 Prior Understanding.

         This Agreement, together with the other Loan Documents, supersedes all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.

         11.10 Duration: Survival.

         All representations and warranties of the Borrower contained herein or
made in connection herewith shall survive the making of the Loan and shall not
be waived by the execution and delivery of this Agreement, any investigation by
the Bank or the making of the Loan in each case. All covenants and agreements of
the Borrower contained herein relating to the payment of additional compensation
or expenses and indemnification, including those set forth in the Note and
Sections 3.12 and 11.3 hereof, shall survive payment in full of the Bank Debt.

         11.11 Successors and Assigns.

         This Agreement shall be binding upon and shall inure to the benefit of
the Bank and the Borrower and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights and obligations
hereunder or any interest herein without the Bank's prior written consent. The
Bank may, at its own cost, make assignments in all or any part of the Loan to
one or more banks or other entities. In the case of a participation, the
participant's rights against Bank in respect of such participation shall be
those set forth in the agreement executed by Bank in favor of the participant
relating thereto and shall not include any voting rights. All of Bank's
obligations under this Agreement or any other Loan Documents shall remain
unchanged and all amounts payable by the Borrower hereunder or thereunder shall
be determined as if the Bank had not sold such participation.

         11.12 Counterparts.

         This Agreement may be executed by different parties hereto on any
number of separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together constitute one
and the same instrument.

<PAGE>   48

         11.13   Exceptions.

         The representations and warranties and covenants contained herein shall
be independent of each other and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable law.

         11.14 Consent to Jurisdiction.

         THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWER AT
THE ADDRESSES PROVIDED FOR IN SECTION 11.6 HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.

         11.15 No Third Parties Benefitted.

         This Agreement is made and entered into for the sole protection and
benefit of the Borrower and the Bank. No trust fund is created by this Agreement
and no other Persons or entities will have any right of action under this
Agreement or any right against the Bank to obtain any proceeds of the Loan.

         11.16 Authority to File Notices.

         The Borrower irrevocably appoints the Bank as its attorney-in-fact,
with full power of substitution, to file for record, at the Borrower's cost and
expense and in the Borrower's name, any notices that the Bank considers
necessary or desirable to protect the Collateral.

         11.17 Publicity.

         Borrower agrees that Bank may at its expense publish advertisements,
print media and promotional materials or other announcements in such
publications as it may choose identifying the Borrower, the transaction and the
Bank's participation therein.

         11.18 Interpretation.

         Whenever the context requires, all words used in the singular will be
construed to have been used in the plural, and vice versa, and each gender will
include any other gender. The captions of the articles, sections, schedules and
exhibits of this Agreement are for convenience

<PAGE>   49

only and do not define or limit any terms or provisions. In the event of a
conflict between the terms of the other Loan Documents and the terms of this
Agreement, the terms of this Agreement shall control.

         11.19 Status of Parties.

         It is understood and agreed that the relationship of the parties hereto
is that of borrower and lender and that nothing contained herein or in any of
the other Loan Documents shall be construed to constitute a partnership, joint
venture or co-tenancy among Borrower and the Bank.

         11.20 Brokerage Fee.

         The Borrower represents to the Bank that no broker or other Person is
entitled to a brokerage fee or commission as a result of the Borrower's actions
or undertakings in connection with the financing of the Improvements and agrees
to hold the Bank harmless from all claims for brokerage commissions which may be
made as a result of such actions or undertakings, if any.

         11.21 Waiver of Jury Trial.

         THE BORROWER 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
BORROWER AND BORROWER ACKNOWLEDGES THAT NEITHER THE BANK NOR ANY PERSON ACTING
ON BEHALF OF THE BANK HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER
OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE BORROWER
FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED BY ITS OWN FREE WILL, AND THAT
BORROWER HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THE
BORROWER 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.
THE BORROWER FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING
OF THIS WAIVER PROVISION.

         11.22 Warrant of Attorney to Enter Judgment by Confession.

         (A) THE BORROWER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS,
AFTER CONSULTATION WITH ITS COUNSEL, THAT THE PROVISIONS OF PARAGRAPH (B) BELOW
COULD ENABLE THE BANK TO OBTAIN A JUDGMENT AGAINST THE BORROWER AND COMMENCE
EXECUTION PROCEEDINGS THAT RESULT IN THE SEIZURE OF ASSETS OF THE BORROWER, IN
EITHER CASE, WITHOUT THE BORROWER HAVING THE BENEFIT OF PRIOR NOTICE OR A
HEARING; AND (ii) THE BORROWER NEVERTHELESS KNOWINGLY AND

<PAGE>   50

VOLUNTARILY AGREES TO SUCH POSSIBLE CONSEQUENCES AND THE PROVISIONS OF PARAGRAPH
(B) BELOW.

         (B) FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT BORROWER DOES
HEREBY EMPOWER ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF
PENNSYLVANIA, TO APPEAR FOR BORROWER AND, WITH OR WITHOUT A COMPLAINT OR
DECLARATION FILED, CONFESS A JUDGMENT OR JUDGMENTS AGAINST BORROWER AND IN FAVOR
OF THE BANK OR THE BANK'S SUCCESSORS OR ASSIGNS IN ANY COURT OF RECORD WITHIN
THE COMMONWEALTH OF PENNSYLVANIA FOR THE UNPAID PRINCIPAL BALANCE OF THE NOTES,
AND ALL INTEREST THEREON, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S
COMMISSION OF IO% FOR COLLECTION. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES
THEREOF, AND MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS THE BANK OR ITS
SUCCESSORS OR ASSIGNS SHALL DEEM NECESSARY OR DESIRABLE. ANY SUCH JUDGMENT SHALL
BE FULLY ENFORCEABLE UP TO THE AMOUNT DUE FROM BORROWER AT THE TIME ENFORCEMENT
OF THE JUDGMENT IS SOUGHT, PLUS AN ATTORNEY'S COMMISSION OF 10% FOR COLLECTION.
BORROWER 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
BORROWER 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.

         11.23 Time of Essence.

         Time is of the essence with respect to each obligation of the Borrower
hereunder.

                          [REST OF PAGE INTENTIONALLY
                                  LEFT BLANK]

<PAGE>   51

        IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement under seal as of the day and year first
above written.

                                 BORROWER:

WITNESS/ATTEST:                  INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
                                 a Delaware limited liability company

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

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

/s/ PATRICIA SHEARER
---------------------------      By: /s/ J. WILLIAM RICHARDSON
                                    --------------------------------------------
                                 Name: J. William Richardson
                                      ------------------------------------------
                                 Title: Vice President
                                       -----------------------------------------

                                 BANK:

WITNESS:                         PNC BANK, NATIONAL ASSOCIATION,
                                 a national banking association

/s/ TERRI WYDA
---------------------------      By: /s/ RANDALL S. CORNELIUS
                                    --------------------------------------------
                                 Name: Randall S. Cornelius
                                      ------------------------------------------
                                 Title: Assistant Vice President
                                       -----------------------------------------

<PAGE>   52

                                   SCHEDULE I
                          Names, Addresses, Telephone
                       and Telecopier Numbers of Parties

Borrower:

INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
c/o Interstate Hotels Corporation
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, PA 15220
Attention: Chief Financial Officer
(412) 937-3359 (Phone)
(412) 937-8051 (Fax)

With a copy to:

Interstate Hotels Corporation
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, PA 15220
Attention: General Counsel
(412) 937-3384 (Phone)
(412) 937-3116 (Fax)

Bank:

PNC BANK NATIONAL ASSOCIATION
One PNC Plaza, 249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, PA 15222-2707
Attention:  Real Estate Banking

Randall S. Cornelius
(412) 768-5778 (Phone)
(412) 762-6500 (Fax)

Barbara Burzio
(412) 762-7924 (Phone)
(412) 768-5754 (Fax)

<PAGE>   53

                                   EXHIBIT A

                           LOAN INTEREST RATE REQUEST

      [OPTION A: NOTICE OF CONVERSION TO OR ELECTION OF EURO-RATE OPTION]

PNC BANK NATIONAL ASSOCIATION
One PNC Plaza, 249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, PA 15222-2707
Attention:  Real Estate Banking

Ladies and Gentlemen:

         The undersigned refers to the Loan Agreement dated as of February
_______, 2000 (as amended, restated, supplemented or modified from time to time,
the "Loan Agreement") between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
("Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(the "Bank"). Terms defined in the Loan Agreement shall have the same meanings
assigned to them therein when used herein.

         1. The undersigned Borrower hereby gives notice, irrevocably, that it
wishes to convert all or part of the outstanding Loan subject to a Base-Rate
Option into, or elect to have a new Borrowing Tranche subject to a Euro-Rate
Option as follows:

         (a) Proposed date of conversion or election to Euro-Rate Option and
expiration of Interest Period (must be three (3) Business Days after date of
this Notice for conversion or election to Euro-Rate Option):

                   Conversion Date           Expiration Date
                             , 200-                     ,200-

         (b) Aggregate amount of the Loan to be converted to the Euro-Rate
Option (must be at least $1,000,000 for each Interest Period selected) and
Euro-Rate Interest Period (must be one, two, three, six or twelve months and end
before the Expiration Date), to apply to the following conversion:

<PAGE>   54

                                                       Amount Euro-Rate Interest
                                                       Period Euro-Rate Option

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

         2. The undersigned confirms as of the date hereof that no Event of
Default or Potential Default has occurred and is continuing.

DATED:
                                 Very truly yours,

WITNESS/ATTEST:                  INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
                                 a Delaware limited liability company

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

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

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

<PAGE>   55

                  [OPTION B: CONTINUATION OF EURO-RATE OPTION]

PNC BANK, NATIONAL ASSOCIATION
PNC Bank, National Association
One PNC Plaza, 249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, PA 15222-2707
Attention:  Real Estate Banking

Ladies and Gentlemen:

         The undersigned refers to the Loan Agreement dated as of February __,
2000 (as amended, restated, supplemented or modified from time to time, the
"Loan Agreement") between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.
("Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(the "Bank"). Terms defined in the Loan Agreement shall have the same meanings
assigned to them therein when used herein.

         1. The undersigned Borrower hereby gives notice, irrevocably, that it
wishes to continue all or part of the outstanding Borrowing Tranche subject to a
Euro-Rate Option with a Euro-Rate Interest Period whose last day is ___________,
200__ (the "Subject Tranche") as follows:

         (a) Proposed date of continuation and expiration of Euro-Rate Interest
Period (must be (i) three (3) Business Days after date of this Notice, and (ii)
the maturity date of the Euro-Rate Interest Period for the subject Tranche):

<TABLE>
<CAPTION>
Amount                     Conversion Date           Expiration Date                    Effective Date
------------------------------------------------------------------------------------------------------
<S>                        <C>                       <C>                                <C>
$

</TABLE>

<PAGE>   56

         (b) Aggregate amount of Subject Tranche to be continued under Euro-Rate
Option (must be at least $1,000,000 for each Euro-Rate Interest Period selected)
and Interest Period (must be one, two, three, six or twelve months and end
before the Expiration Date):

                                                       Amount Euro-Rate Interest
                                                       Period Euro-Rate Option

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

                                                       $       months
                                                        ------

                                                       from         200
                                                            --------   --
                                                               %

                  to              200
                     ------------    --

<PAGE>   57

         2. The undersigned confirms as of the date hereof that no Event of
Default or Potential Default has occurred and is continuing.

DATED:
                                 Very truly yours,

WITNESS/ATTEST:                  INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C.,
                                 a Delaware limited liability company

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

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

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

                                    EXHIBIT B

                              ITEMS TO BE SUPPLIED

         1. Title and Collateral Matters:

         (a) a current survey of the Land, certified by a registered surveyor
approved by Bank, such certification to be addressed to the Bank and the title
company issuing the lender's title insurance policy and (i) to show the location
and area covered by all building lines affecting the Land, the location and area
of all easements encumbering and/or benefitting the Land, the relation of the
Land to public thoroughfares for access purposes, the location of all physical
conditions on the Land, the location of the Improvements and any encroachments
of the Improvements or other physical conditions upon any easements, building
lines or property boundary lines, and (ii) to state whether the Land or any
portion thereof is located in any federally designated flood prone area, and if
so, to locate on the survey such portion of the Land so designated and to show
the dimension and location of all improvements, parking areas, drives, easements
and rights-of-way and the location of adjoining streets and distances to the
nearest intersecting street);

         (b) an Appraisal of the Project which shall establish that the amount
of the Loan does not exceed sixty percent (60%) of the Project's stabilized
Appraised Value;

<PAGE>   58

         (c) a legal description of the Land and all easements, compatible with
the above mentioned survey and sufficient for the purpose of the Mortgage;

         (d) evidence in such form as Bank may require of (i) satisfactory
subdivision of the Land and zoning for the Project; (ii) the availability of all
utility and municipal services required for the operation of the Project; (iii)
satisfactory soils compaction conditions and sub-surface support for the
Project; and (iv) the availability of means of access to and from the Land by
means of easements benefitting the same;

         (e) evidence in such form as Bank may require, including without
limitation engineering and soils reports, environmental assessment reports,
reports and clearances from governmental agencies, chain of title searches and
certifications of Borrower, that the Project is free from all asbestos, and
hazardous waste and all other materials regulated by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, the
Resource Conservation Recovery Act, as amended, or by any other federal, state
or local law, statute, regulation, ordinance, code or order together with a
reliance letter indicating that the Bank may rely on such report in making the
Loan;

         (f) evidence in such form as Bank may require (including the actual
policies and Acord Form 27 Evidence of Insurance, and evidence of payment of
premiums) that all types of hazard insurance (including business interruption
insurance, loss of rents insurance, malicious mischief insurance and flood
insurance, if in a federal flood prone area) available with respect to the
Improvements, public liability and property damage insurance with respect to the
Land and Improvements, and workers' compensation insurance are in force and will
continue in force so long as the Bank Debt is outstanding (the policies for such
insurance to be in form, in amounts and with companies satisfactory to Bank, and
all hazard and liability policies, as applicable, to have attached to them
additional insured, mortgagee and loss payee clauses, as applicable, in favor of
Bank);

         (g) a title insurance binder, together with a specimen policy issued by
a title insurance company acceptable to Bank, pursuant to which said title
insurance company will on the Closing Date issue an ALTA lender's policy of
title insurance insuring the Mortgage in the principal sum secured thereby, as a
first lien upon Borrower's fee simple title to the Land and Improvements, and
all appurtenances thereto (including such easements and appurtenances as may be
required by Bank), subject only to such exceptions as may be approved in writing
by Bank, with endorsements thereto as to such matters as Bank may designate,
including, without limitation, a compliance endorsement and contiguity of the
Land with all easements and public roads, and together with such reinsurance and
direct access agreements as Bank shall in its discretion require;

         (h) the certificate of occupancy for the Improvements; and

         (i) the report from the Bank's inspecting architect as set forth in
Section 6.1(j) hereof.

<PAGE>   59

         2. Corporate Documents

         (a) an opinion or opinions of counsel acceptable to Bank and its
counsel (including local counsel), to be delivered on the Closing Date in form
and scope satisfactory to Bank, to the effect (in addition to other matters
which Bank may require to be favorably addressed) that (i) Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdictions of their formation; (ii) Borrower is duly qualified to do business
in the jurisdiction in which the Land is located, and Borrower and the Guarantor
have all requisite power and authority to operate the Land and Improvements and
to enter into, perform and consummate all aspects of the transactions
contemplated hereby; (iii) all Loan Documents and other documents to be executed
by or on behalf of Borrower or the Guarantor have been duly executed and are
valid and binding upon and enforceable against the parties thereto (other than
the Bank) in accordance with the respective terms of each, except as the same
may be limited by bankruptcy, insolvency and similar laws affecting the rights
of creditors generally; (iv) there is no action, proceeding or investigation
pending or to the knowledge of counsel threatened (or any basis therefor known
to counsel) which questions the validity of the Loan or the transactions
contemplated hereby or the ability of Borrower or the Guarantor from performing
their respective obligations under the Loan Documents; (v) the performance of
and compliance with the provisions hereof and the other documents referred to
herein will not result in or be in conflict with or constitute a default under
any agreement, instrument, document, decree, order or any federal, state or
local law, statute, rule, regulation or ordinance applicable to or affecting
Borrower or the Guarantor; (vi) no consent, approval, order or authorization of,
or registration or filing with, any governmental or public body or authority is
required in connection with the acceptance hereof, the Loan or the matters
contemplated hereby; (vii) the Loan shall not violate the usury or other laws of
the Commonwealth of Pennsylvania or of any other jurisdiction relating to the
maximum rate of interest and (viii) the Bank has a security interest in that
portion of the Mortgaged Property defined in the Mortgage and in the other
personal property described in this Agreement as security for the Loan, subject
to no Liens or encumbrances except as may have been approved by the Bank in
writing;

         (b) a good standing certificate for Borrower from Delaware and evidence
of Borrower's authorization to do business in Pennsylvania;

         (c) a current copy of Borrower's articles of organization certified by
the Secretary of State of Delaware;

         (d) an Incumbency Certificate of Borrower certifying as to the
Operating Agreement, Bylaws of the Borrower and the corporate resolutions of
Borrower authorizing the Loan;

         (e) a good standing certificate for Guarantor from Maryland and
evidence of Guarantor's authorization to do business in Pennsylvania;

         (f) a current copy of Guarantor's articles of incorporation certified
by the Secretary of State of Maryland; and

         (g) an Incumbency Certificate of Borrower certifying as to the Bylaws
of the Guarantor and the corporate resolutions of Guarantor authorizing the
Loan.

<PAGE>   60

         (h) information satisfactory to the Bank relating to the financial
condition of the Borrower and the Guarantor;

         (i) the Property Management Agreement;

         (j) the Franchise Agreement; and

         (j) such other documents and other materials as the Bank may require
with respect to the Borrower, the Guarantor the Project, the Leases, the tenants
of the Project and the market area in which the Project is located.

<PAGE>   61

                                   EXHIBIT C

                               FINANCIAL REPORTS

         (a) As soon as available and in any event within forty-five (45) days
after the close of each calendar quarter, internally prepared, unaudited
financial statements for the Borrower, including a balance sheet and related
statements of operations and statements of cash flow and net worth as of the end
of such calendar quarter and for such calendar quarter, which shall be certified
by the Chief Financial Officer of Borrower as being true and correct and
prepared in accordance with GAAP, and shall fairly present the financial
condition of the Borrower as at the end of such calendar quarter;

         (b) Beginning with the first calendar quarter following the Closing
Date as soon as available and in any event within sixty (60) days after the
close of each calendar quarter, operating reports and occupancy reports with
respect to the Project as of the end of such calendar quarter, which reports
shall be prepared in a manner acceptable to the Bank;

         (c) As soon as available, but in no event later than forty-five (45)
days after each calendar quarter for the Borrower and the Guarantor,
certificates of the Borrower and Guarantor, each as certified by the Chief
Financial Officer of Borrower or Guarantor, certifying, in sufficient detail
acceptable to the Bank, calculations substantiating compliance, as of the date
of the certificate, with all financial covenants in this Agreement, including,
without limitation, the financial covenants set forth in Sections 4.21 and 4.22
hereof for Borrower;

         (f) As soon as available and in any event within forty five (45) days
after the close of each fiscal year, forecasts for the Project and an annual
budget with respect to the Project, which budget shall compare the prior year's
results of operation and forecasts for the Project on a line item basis and
shall be prepared in a manner acceptable to the Bank;

         (g) As soon possible and in any event within ten (10) days after the
occurrence of any Material Adverse Change in the operations, financial condition
or prospects of the Borrower or Guarantor, notice of any such occurrence;

         (h) As soon as possible and in any event within ten (10) days after the
occurrence of each Event of Default or each Potential Default, a statement of
the Borrower setting forth the details of such Event of Default or Potential
Default and the action which the Borrower proposes to take with respect thereto;

         (i) Within forty-five (45) days following the due date thereof, copies
of the receipts evidencing payment of all real estate taxes relating to the
Project;

         (j) All material filings made by the Borrower or the Guarantor with the
Securities Exchange Commission, including, without limitation, all Forms 10-K
and 10-Q and 8-K, within ten (10) Business Days after the filing thereof; and

         (k) Such other information respecting the operations and properties,
financial or

<PAGE>   62

otherwise, of the Borrower, the Guarantor and the Project as the Bank may from
time to time reasonably request.

<PAGE>   63

                                   EXHIBIT D
                             COMPLIANCE CERTIFICATE

                        Covenant Compliance Certificate

                                   (Borrower)

                         Dated as of _____________, 200_

Pursuant to that certain Loan Agreement (the "Loan Agreement") dated February
___, 2000 between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C. (the "Borrower")
and PNC Bank, National Association, (the "Bank"), the Borrower hereby certifies
to the Bank, effective on the date hereof, that:

(1)      The Borrower has performed and complied with all covenants and
         conditions contained in the Loan Documents;

(2)      No Event of Default, after giving effect to any applicable notice,
         grace and cure periods, has occurred and is continuing or exists under
         the Note and the other Loan Documents; and

(3)      Attached hereto are calculations substantiating compliance with the
         financial covenant set forth in Section 4.21 of the Loan Agreement.

All capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement. The Borrower has executed and delivered this Certificate
with the understanding that the Bank will rely hereon pursuant to the terms of
the Loan Documents.

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

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

<PAGE>   64

                        Covenant Compliance Certificate

                                  (Guarantor)

                        Dated as of _____________, 200_

Pursuant to that certain Loan Agreement (the "Loan Agreement") dated February
___, 2000 between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C. (the "Borrower")
and PNC Bank, National Association, (the "Bank"), the undersigned hereby
certifies to the Bank, effective on the date hereof, that:

(1)      The Guarantor has performed and complied with all covenants and
         conditions contained in the Loan Documents to which it is a party;

(2)      Attached hereto are calculations substantiating compliance with the
         financial covenants set forth in Section 4.22 of the Loan Agreement and
         Section ___ of the Payment Guaranty.

All capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement. The undersigned Guarantor has executed and delivered this
Certificate with the understanding that the Bank will rely hereon pursuant to
the terms of the Loan Documents.

WITNESS:                         INTERSTATE HOTELS CORPORATION

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

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