Document:

<PAGE>

                                  EXHIBIT 10.2

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

                       LIMITED WAIVER AND SECOND AMENDMENT

                       TO TERM LOAN AND SECURITY AGREEMENT

     THIS  LIMITED  WAIVER  AND  SECOND  AMENDMENT  TO TERM  LOAN  AND  SECURITY
AGREEMENT  (this  "Agreement")  is dated as of June 14, 2000 and entered into by
and among LAS VEGAS SANDS,  INC., a Nevada  corporation  ("LVSI" ), and VENETIAN
CASINO RESORT,  LLC, a Nevada limited  liability  company ("VCR"),  as joint and
several  obligors  (each of LVSI and VCR, a "Borrower"  and,  collectively,  the
"Borrowers"),  GENERAL ELECTRIC CAPITAL CORPORATION, as administrative agent (in
such capacity,  "Administrative  Agent") for the financial institutions party to
the Original  Equipment Loan Agreement  referred to below  ("Lenders"),  and the
Lenders listed on the signature pages hereto and executing a counterpart  hereof
and is made with  reference to that  certain  Term Loan and Security  Agreement,
dated as of December 22, 1997, by and among Borrowers,  Lenders,  Administrative
Agent and BancBoston  Leasing Inc., as co-agent,  as amended by a Limited Waiver
and First  Amendment to Term Loan and Security  Agreement,  dated as of November
12, 1999,  among the same parties (as so amended,  the "Original  Equipment Loan
Agreement").  Capitalized  terms used herein without  definition  shall have the
same meanings herein as set forth in the Original Equipment Loan Agreement.

     WHEREAS,  Borrowers,  Administrative Agent and Lenders desire to enter into
this  Agreement to make certain  amendments  to the terms and  provisions of the
Original  Equipment  Loan  Agreement  and to document  certain  waivers  granted
thereunder.

     NOW,  THEREFORE,  in consideration of the premises and the covenants herein
contained, the parties hereto agree as follows:

Section 1.        AMENDMENTS

     Subject to the terms and  conditions set forth herein,  the  Administrative
Agent,  the Requisite  Lenders,  and the Borrowers hereby agree to the following
amendments to the Original Equipment Loan Agreement:

     (A) Section 1.11 of the Original Equipment Loan Agreement is hereby amended
by adding  thereto at the end thereof a new  subsection  (c) thereof which shall
read as follows:

          "(c) In the event that any  Conforming  Adelson  L/C Draw Event  shall
     have occurred,  the Administrative  Agent may direct the Conforming Adelson
     L/C Drawing Agent to draw down on each outstanding  Conforming  Adelson L/C
     in its entirety.  In such event, the  Administrative  Agent shall apply all
     proceeds of each such  drawing  which are  received  by the  Administrative
     Agent  from the  Conforming  Adelson  L/C  Drawing  Agent to the  immediate
     prepayment of the  Obligations,  such prepayment to be applied in each case
     in the manner  specified in sections  1.13(b) and (c). For the avoidance of
     doubt,  (i) a Conforming  Adelson L/C Draw Event shall be in addition to an
     Event of Default  described in section 8.1, (ii) the  Administrative  Agent
     shall not be required to exercise any rights or remedies under section 8 in
     order to draw on the  Conforming  Adelson  L/Cs and (iii) any  drawing on a
     Conforming  Adelson  L/C shall not be deemed to be a waiver of any Event of
     Default."

The caption to section 1.11 of the Original  Equipment  Loan Agreement is hereby
amended to read as follows:  "Mandatory  Prepayments  and Commitment  Reductions
from Loss Net Proceeds;  Mandatory  Prepayments Following Conforming Adelson L/C
Draw Events."

     (B) Sections  1.22(a)(v)  and  1.22(a)(vi)  of the Original  Equipment Loan
Agreement are hereby amended and restated to read in their entirety as follows:

          "(v)  all  cash  collateral,  if any,  from  time to time  held by the
     Administrative Agent under any provision hereof; and

          (vi) to the extent not  otherwise  included,  all Proceeds  (including
     insurance and condemnation  proceeds and proceeds of other proceeds) of any
     of the  foregoing  and all  accessories  (including  tools  specific to the
     included equipment) and accessions (excluding cash in slot machines and the
     contents of minibars) to and substitutions and replacements for each of the
     foregoing.".

<PAGE>

     (C) Section 3 of the Original Equipment Loan Agreement is hereby amended by
adding  thereto new sections  3.31,  3.32 and 3.33  thereof  which shall read as
follows:

               "3.31 Construction Litigation.

               (a) The litigation  arising out of the lawsuit filed by Borrowers
          against the  Construction  Manager in United States District Court for
          the District of Nevada and the countersuit  filed by the  Construction
          Manager  against  the  Borrowers  and any other  outstanding  lawsuit,
          action,  claim or Lien arising out of or relating to the  construction
          of the Mall or the Project (the "Construction Litigation"),  including
          any claim made or Lien filed by Construction Manager or any contractor
          or  subcontractor  or to the bonding  company  insuring  over any Lien
          relating to or binding  upon the Mall or the Project or to VCR,  LVSI,
          Mall Construction  Subsidiary or any of their Affiliates in connection
          therewith, and any judgment or settlement amount owed by the Borrowers
          to the  Construction  Manager or any contractor or subcontractor or to
          the  bonding  company  insuring  over any such Lien as a result of the
          Construction  Litigation  (such  amount,  the  "Additional  Contingent
          Claims")  cannot  reasonably  be expected  to have,  when taken in the
          aggregate, a Material Adverse Effect.

               (b) The status summary of the  Construction  Litigation  attached
          hereto as  Schedule  3.31  annexed  hereto is true and  correct in all
          material respects as of the date hereof.

               (c) Borrowers have sufficient Available Funds such that Available
          Funds will equal or exceed  Remaining Costs after giving effect to the
          Additional Contingent Claims as a Remaining Cost.

               3.32 No Events of Default.  No Event of Default or Default exists
          or is continuing  (other than those Events of Default and Defaults set
          forth on Schedule 3.32 attached hereto).

               3.33  Adelson  Subordination  Agreement.  Sheldon G.  Adelson has
          complied with the terms and  conditions of that certain  Subordination
          and  Intercreditor  Agreement  (Trade Claims) dated as of November 12,
          1999  by and  among  Bank  Agent,  the  Borrowers,  Mall  Construction
          Subsidiary   and  Sheldon  G.  Adelson  (the  "Adelson   Subordination
          Agreement")."

     (D) Section  6.2(e) of the  Original  Equipment  Loan  Agreement  is hereby
amended and restated to read in its entirety as follows:

          "(e) the Borrowers and their  Subsidiaries  may invest in the New Mall
     Subsidiary or the Phase II Subsidiary,  or both, any cash or other property
     contributed to the Borrowers by Sheldon G. Adelson or any of his Affiliates
     for either of such express purposes;"

     (E) Each of  sections  6.3(d),  6.3(g),  6.3(j),  6.3(n)  and 6.3(o) of the
Original  Equipment Loan Agreement is hereby amended and restated to read in its
entirety as follows:

     "[Intentionally omitted.]".

     (F) Section  6.3(f) of the  Original  Equipment  Loan  Agreement  is hereby
amended and restated to read in its entirety as follows:

          "(f) the Borrowers may become and remain liable for Indebtedness under
     the Bank Credit  Agreement,  or any  replacement,  refinancing or refunding
     thereof  permitted  pursuant to section 6.8(l),  in an aggregate  principal
     amount  not to  exceed  (I) at any time  prior to June 14,  2000 the sum of
     $190,000,000 and (II) from and after June 14, 2000 the sum of $210,000,000,
     in  each  case  reduced  by any  principal  payments  required  to be  made
     thereon;".

     (G) Section  6.3(q) of the  Original  Equipment  Loan  Agreement  is hereby
amended to read in full as follows:

          "(q) From and after  the  Completion  Date,  the  Borrowers  may incur
     Indebtedness  in an aggregate  principal  amount not to exceed  $15,000,000
     (plus any accrued and unpaid  interest  thereon  added to principal) at any
     time  outstanding  ("Additional  Indebtedness"),  provided  that  (a)  such
     Additional  Indebtedness  shall not be secured by,  directly or indirectly,
     any Liens on any property or assets owned  directly or indirectly by VCR or
     LVSI  or any  Subsidiary  of  VCR or  LVSI  or by  any  stock,  securities,
     membership  interest,  partnership  interest  or other  direct or  indirect
     equity  interests in VCR or LVSI or any Subsidiary of VCR or LVSI; (b) such
     Additional Indebtedness shall be subordinated to all Obligations under this
     Agreement and all  Indebtedness  under the Mortgage  Notes  Indenture,  the
     Subordinated Notes Indenture and the Bank Credit Agreement (this Agreement,
     the Bank Credit Agreement and such Indentures,  collectively, the "Superior
     Facilities") on terms reasonably acceptable to the Administrative Agent and

<PAGE>

     no payments in respect thereof may be made or demanded prior to the payment
     in full of all Obligations  (and provided,  further,  that the principal of
     such  Additional  Indebtedness  may not be repaid until all Obligations and
     all Indebtedness with respect to the Superior  Facilities have been paid in
     full and this covenant of Borrowers  shall survive the earlier  termination
     of this Agreement),  other than payment of interest in kind,  provided that
     any  instruments or documents  evidencing such payments in kind contain the
     same terms and  conditions as the  Additional  Indebtedness  (provided that
     such  subordination  shall not prohibit the exchange of any note evidencing
     any such Additional Indebtedness or of the payment of any amounts under any
     such note in whole or in part for  securities  of any  Borrower),  provided
     that  no  Restricted  Junior  Payment  may  be  made  in  respect  of  such
     securities;  (c) prior to incurring any Additional  Indebtedness  copies of
     all  documents  and  instruments  evidencing  such  Indebtedness  shall  be
     delivered to Administrative  Agent and such documents and instruments shall
     (x)  incorporate  the terms set forth in the other  clauses of this proviso
     and  otherwise  be  in  form  and  substance  reasonably   satisfactory  to
     Administrative  Agent,  (y) provide  that the Lenders  shall be third party
     beneficiaries of such documents and instruments, and (z) contain provisions
     prohibiting  any  amendment,  modification  or waiver  thereof  binding  on
     Borrowers or their  Subsidiaries  without the prior written  consent of the
     Administrative  Agent (which consent shall not be  unreasonably  withheld);
     and (d) the  Additional  Indebtedness  shall be  permitted  under the other
     Superior  Facilities and all other  agreements to which the Borrowers are a
     party,  and prior to the incurrence  thereof counsel to the Borrowers shall
     have  delivered  an  opinion to the Lender  Parties  to that  effect  (with
     respect to the Superior  Facilities only) in form and substance  reasonably
     satisfactory  (including  reasonably   satisfactory   assumptions)  to  the
     Administrative Agent on behalf of the Lenders."

     (H) Section  6.4(t) of the  Original  Equipment  Loan  Agreement  is hereby
amended and restated in its entirety to read as follows:

          "(t) transactions contemplated by the Restaurant Leases; and".

     (I) Each of sections 6.5(a)(iv),  6.5(a)(ix) and 6.5(a)(xi) of the Original
Equipment  Loan Agreement is hereby amended and restated in its entirety to read
as follows:

     "[Intentionally omitted.]".

     (J) Section  6.5(a)(vii) of the Original Equipment Loan Agreement is hereby
amended and restated in its entirety to read as follows:

          "(vii) Liens in favor of (I) the Mortgage Note Holders or (II) another
     Person  securing  Indebtedness  advanced by any such  Person and  permitted
     under  subsection  (m) of  section  6.3 to the  extent  that such Liens are
     permitted  under the terms of the Credit Parties  Intercreditor  Agreement,
     the Bank Credit Agreement, and the Mortgage Notes Indenture;".

     (K) Section 6.8 of the Original  Equipment Loan Agreement is hereby amended
and restated in its entirety to read as follows:

          "6.8 Restricted  Junior  Payments.  The Borrowers shall not, and shall
     not permit any of their  Subsidiaries to, directly or indirectly,  declare,
     order,  pay, make or set apart any sinking fund,  defeasance  fund or other
     sum for any Restricted Junior Payment, except:

                    (a) the Borrowers may make regularly  scheduled payments and
               mandatory   prepayments  (not  including  any  payments  upon  an
               acceleration)  of principal  and interest in respect of any Other
               Indebtedness  of the Borrowers in  accordance  with the terms of,
               and only to the extent  required  by the  agreement  pursuant  to
               which such Other  Indebtedness was issued,  provided that (i) any
               such payments shall be subject to the terms of the Credit Parties
               Intercreditor Agreement, the Adelson Intercreditor Agreement, the
               Adelson  Subordination  Agreement,  and  the  Adelson  Completion
               Guaranty, as applicable, (ii) any such payments in respect of any
               Completion  Guaranty Note or any Employee  Repurchase Note may be
               made only to the extent that no Event of Default or Default shall
               then exist and be continuing or would result  therefrom and (iii)
               any such payments in respect of any Employee  Repurchase Note may
               be  made  only to the  extent  that  the  ratio  of  Consolidated
               Adjusted  EBITDA  (without  giving effect to the inclusion of any
               Conforming  Adelson  L/C  pursuant  to the last  sentence  of the
               definition of Consolidated Adjusted EBITDA) to Consolidated Fixed
               Charges  for the  four-Fiscal  Quarter  period  ended on the most
               recent  Quarterly  Date  preceding  such  payment or such shorter
               period  tested  on  such  Quarterly  Date  under  section  6.9(a)
               (determined  on a pro forma basis (as though such  payment on the
               Employee  Repurchase  Note had been made during the period tested
               as of such Quarterly  Date under section  6.9(a)) would have been
               in  compliance  with  the   requirements  of  section  6.9(a)  as
               certified  to the  Administrative  Agent by the  chief  financial
               officer  of  each  of the  Borrowers,  on  behalf  of each of the
               Borrowers, at the time of such payment;

<PAGE>

                    (b) [Intentionally omitted];

                    (c) [Intentionally omitted];

                    (d) [Intentionally omitted];

                    (e) [Intentionally omitted];

                    (f) the  Borrowers  and  their  Subsidiaries  may  redeem or
               purchase  any  equity   interests  in  the   Borrowers  or  their
               Subsidiaries  or any  Indebtedness  to the extent required by any
               Nevada  Gaming  Authority in order to preserve a material  Gaming
               License, provided that, so long as such efforts do not jeopardize
               any material Gaming License,  the Borrowers shall have diligently
               tried to find a third-party  purchaser for such equity  interests
               or Indebtedness and no third-party  purchasers  acceptable to the
               Nevada Gaming  Authority shall have been willing to purchase such
               equity interests or Indebtedness  within a time period acceptable
               to the Nevada Gaming Authority;

                    (g)  for  so  long  as a  Borrower  is a  corporation  under
               Subchapter  S of the IRC  (in the  case  of  LVSI)  or a  limited
               liability  company  (in the case of VCR) or,  in either  case,  a
               substantially  similarly treated  pass-through entity for Federal
               income  tax  purposes  (as  evidenced  by an  opinion  of counsel
               delivered  at  least  annually),  such  Borrower  may  make  cash
               distributions  to  its  shareholders  or  members,   during  each
               Quarterly  Period,  in an  aggregate  amount  not to  exceed  the
               Permitted  Quarterly Tax  Distribution  in respect of the related
               Estimation  Period,  provided that neither  Borrower may make any
               such distribution to pay taxes  attributable to the income of the
               New Mall  Subsidiary or the Phase II Subsidiary,  or any of their
               Subsidiaries,  unless the Borrowers  shall have received from the
               applicable  holding companies of the New Mall Subsidiary or Phase
               II  Subsidiary,  as  applicable,  a cash  distribution  for  such
               purpose  in  respect of the  applicable  Estimation  Period in an
               equal amount;

                    (h) the Borrowers and their  wholly-owned  Subsidiaries  may
               make intercompany payments between such entities and intercompany
               payments from any  Subsidiary  of a Borrower to any  wholly-owned
               Subsidiary of the Borrowers or to a Borrower;

                    (i) the Borrowers may make any  repurchases of capital stock
               of LVSI  which are  deemed to occur  upon the  exercise  of stock
               options to the extent such capital stock  represents a portion of
               the exercise price of such options;

                    (j) the Borrowers may make Permitted Employee Repurchases so
               long as (i) no Event of  Default or  Default  shall  exist and be
               continuing  or would  result  therefrom  and  (ii)  the  ratio of
               Consolidated  Adjusted  EBITDA  (without  giving  effect  to  the
               inclusion  of any  Conforming  Adelson  L/C  pursuant to the last
               sentence of the definition of  Consolidated  Adjusted  EBITDA) to
               Consolidated  Fixed Changes for the  four-Fiscal  Quarter  period
               ended  as of  the  most  recent  Quarterly  Date  prior  to  such
               repurchase  or such  shorter  period  tested on such  immediately
               preceding  Quarterly Date under section  6.9(a)  (determined on a
               pro forma basis as though such Permitted Employee  Repurchase had
               been made  during the  period  tested as of such  Quarterly  Date
               under  section  6.9(a))  would have been in  compliance  with the
               requirements  of section  6.9(a) as certified  to  Administrative
               Agent by the chief financial officer of each of the Borrowers, on
               behalf of each of the Borrowers, at the time of such payment;

                    (k)  the  Borrowers  may  make  payments  on any  Completion
               Guaranty  Loan  (i)  prior to the  Final  Completion  Date,  from
               amounts permitted to be deposited in the Guaranty Deposit Account
               subject to the terms of the Adelson  Completion  Guaranty and the
               Disbursement Agreement, (ii) after the Final Completion Date from
               Liquidated Damages,  and (iii) on the Final Completion Date, from
               amounts  which are returned to the Mall  Construction  Subsidiary
               from funds in the "Mall  Retainage/Punchlist  Account" maintained
               in accordance with the Mall Escrow Agreement, up to the aggregate
               amount  previously  deposited into such Mall  Retainage/Punchlist
               Account from the Guaranty Deposit Account,  provided in each case
               that such payments  shall be permitted only to the extent allowed
               under the Adelson Intercreditor  Agreement and only so long as no
               Event of Default or Default shall then exist and be continuing or
               would result therefrom; and

<PAGE>

                    (l) the Borrowers may repay  Indebtedness  outstanding under
               the Bank Credit Agreement out of the proceeds of any refinancing,
               replacement  or refunding  of the facility  under the Bank Credit
               Agreement with the same or other institutional lenders,  provided
               that  any  variance  between  the  terms  and  conditions  of the
               refinanced  facility  and the  terms and  conditions  of the Bank
               Credit Agreement  immediately  before such refinancing would have
               been permissible  under the terms of section 6.18 as an amendment
               to the Bank Credit Agreement.".

     (L) Section 6.9 of the Original  Equipment Loan Agreement is hereby amended
and restated in its entirety to read as follows:

          "6.9 Financial  Covenants.  The Borrowers  shall not breach or fail to
     comply  with  any of the  following  covenants,  each  of  which  shall  be
     calculated in accordance with GAAP consistently applied (and based upon the
     financial statements delivered hereunder):

                    (a) Minimum Fixed Charge Coverage Ratio. Borrowers shall not
               permit  the  ratio of (i)  Consolidated  Adjusted  EBITDA to (ii)
               Consolidated Fixed Charges for any four-Fiscal Quarter period (or
               for any Quarterly  Date prior to September  30, 2000,  the period
               from October 1, 1999 to such date ) ending on any Quarterly  Date
               set forth below to be less than the ratio set forth opposite that
               Fiscal Quarter in the following table:

<TABLE>
<CAPTION>

=============================================   =========================
                                                Minimum
                                                Fixed Charge

Period                                          Coverage Ratio

=============================================   =========================
<S>                                             <C>
Each of the Quarters  ending on December 31,    1.05:1
1999,  March  31,  2000,  June 30,  2000 and
September 30, 2000
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2000,  March  31,  2001,  June 30,  2001 and
September 30, 2001
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2001,  March  31,  2002,  June 30,  2002 and
September 30, 2002
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.05:1
2002 and March 31, 2003
---------------------------------------------   -------------------------
Each of the  Quarters  ending  on  June  30,    1.10:1
2003 and September 30, 2003
---------------------------------------------   -------------------------
Each of the Quarters  ending on December 31,    1.15:1
2003 and thereafter
=============================================   =========================
</TABLE>

                    (b) Maximum  Leverage Ratio.  Borrowers shall not permit the
               ratio (the "Leverage Ratio") of (i) Consolidated Total Debt as of
               such Quarterly Date to (ii) Consolidated  Adjusted EBITDA for the
               four Fiscal Quarter period ending on any Quarterly Date set forth
               below (or for any Quarterly Date prior to September 30, 2000, the
               period  from  October  1, 1999 to such date ) to exceed the ratio
               set forth  opposite that Fiscal  Quarter in the following  table;
               provided that for purposes of calculating  Consolidated  Adjusted
               EBITDA pursuant to this  subsection  6.9(b) for any period ending
               prior to the first  anniversary of the  Completion  Date which is
               less than four  Fiscal  Quarters,  Consolidated  Adjusted  EBITDA
               shall be calculated on an annualized basis:

<PAGE>
<TABLE>
<CAPTION>

===========================================     ============================
                                                Maximum
Period                                          Leverage Ratio
===========================================     ============================
<S>                                             <C>
Each of the  Quarters  ending on  December      4.75:1
31, 1999,  March 31, 2000,  June 30, 2000,
September 30, 2000,  December 31, 2000 and
March 31, 2001

-------------------------------------------     ----------------------------
Each of the  Quarters  ending  on June 30,      4.50:1
2001 and September 30, 2001
-------------------------------------------     ----------------------------
The Quarter ending on December 31, 2001         4.25:1
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on March 31,      4.00:1
2002 and June 30, 2002
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on September      3.75:1
30, 2002 and December 31, 2002
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on March 31,      3.50:1
2003 and June 30, 2003
-------------------------------------------     ----------------------------
Each of the  Quarters  ending on September      3.25:1
30, 2003,  December 31, 2003 and March 31,
2004
-------------------------------------------     ----------------------------
Each of the  Quarters  ending  on June 30,      3.00:1
2004 and thereafter
===========================================     ============================
</TABLE>

                    (c) Minimum  Consolidated  Adjusted EBITDA.  Borrowers shall
               not  permit  Consolidated  Adjusted  EBITDA  for any four  Fiscal
               Quarter  period (or for any Quarterly Date prior to September 30,
               2000, the period from October 1, 1999 to such date) ending on any
               Quarterly  Date set forth  below to be less than the  correlative
               amount  indicated,  provided  that for  purposes  of  calculating
               Consolidated  Adjusted EBITDA pursuant to this subsection  6.9(c)
               for the first,  second,  third and fourth Quarterly Dates, if the
               period  tested is less than one,  two,  three or four full Fiscal
               Quarters,  respectively,  Consolidated  Adjusted  EBITDA shall be
               multiplied  by a fraction of the  numerator  of which is 90, 182,
               273 and 365,  respectively,  and the  denominator of which is the
               number of days elapsed in the relevant test period:

<PAGE>
<TABLE>
<CAPTION>

================================================        ======================
                                                        Minimum
                                                        Consolidated
Period                                                  Adjusted EBITDA
================================================        ======================
<S>                                                     <C>
The Quarter ending on December 31, 1999                  $30,000,000
------------------------------------------------        ----------------------
The Quarter ending on March 31, 2000                     $75,000,000
------------------------------------------------        ----------------------
The Quarter ending on June 30, 2000                     $100,000,000
------------------------------------------------        ----------------------
The Quarter ending on September 30, 2000                $150,000,000
------------------------------------------------        ----------------------
The Quarter ending on December 31, 2000                 $155,000,000
------------------------------------------------        ----------------------
Each of the  Quarters  ending on March 31,              $160,000,000
2001 and June 30, 2001
------------------------------------------------        ----------------------
Each of the Quarters ending on September                $165,000,000
30, 2001 and December 31, 2001
------------------------------------------------        ----------------------
Each of the Quarters ending on March 31,                $170,000,000
2002 and June 30, 2002
------------------------------------------------        ----------------------
Each of the Quarters ending on September                $175,000,000
30, 2002 and December 31, 2002
------------------------------------------------        ----------------------
Each of the Quarters ending on March 31, 2003,          $180,000,000
June 30, 2003 and September 30, 2003
------------------------------------------------        ----------------------
Each of the Quarters ending on December 31,             $185,000,000
2003,  and thereafter
================================================        ======================
</TABLE>

                    (d)  Minimum  Consolidated  Net Worth.  Borrowers  shall not
               permit  Consolidated  Net Worth at any Quarterly  Date to be less
               than  $120,000,000  plus  an  amount  equal  to the sum of 85% of
               Consolidated  Net Income for all periods  from the  Closing  Date
               through such  Quarterly Date (net of all net losses for Borrowers
               and  their  Subsidiaries  on a  consolidated  basis  for the same
               period).

                    (e) Consolidated Capital Expenditures.  Borrowers shall not,
               and  shall  not  permit  their  Subsidiaries  to,  make or  incur
               Consolidated  Capital  Expenditures,  in any four Fiscal  Quarter
               period  indicated  below, in an aggregate amount in excess of the
               corresponding   amount   (the   "Maximum   Consolidated   Capital
               Expenditures  Amount") set forth below  opposite such four Fiscal
               Quarter period;  provided that the Maximum  Consolidated  Capital
               Expenditures  Amount  for  any  four  Fiscal  Quarters  shall  be
               increased  by an  amount  equal  to the  excess,  if any,  of the
               Maximum Consolidated Capital Expenditures Amount for the previous
               four Fiscal Quarter period over the actual amount of Consolidated
               Capital  Expenditures  for  such  previous  four  Fiscal  Quarter
               period:

<PAGE>
<TABLE>
<CAPTION>

====================================== ================================
                                     Maximum

Four Fiscal Quarter                    Consolidated Capital
Period Ending                          Expenditures Amount

====================================== ================================
<S>                                    <C>
December 31, 1999                      $15,000,000
March 31, 2000                         $15,000,000
June 30, 2000                          $15,000,000
September 30, 2000                     $15,000,000
December 31, 2000                      $25,000,000
March 31, 2001                         $25,000,000
June 30, 2001                          $25,000,000
September 30, 2001                     $25,000,000
December 31, 2001                      $25,000,000
March 31, 2002                         $25,000,000
June 30, 2002                          $25,000,000
September 30, 2002                     $25,000,000
December 31, 2002                      $25,000,000
March 31, 2003                         $25,000,000
June 30, 2003                          $25,000,000
September 30, 2003                     $25,000,000
December 31, 2003                      $30,000,000
March 31, 2004                         $30,000,000
June 30, 2004                          $30,000,000
September 30, 2004                     $30,000,000
====================================== ================================
</TABLE>

     (M) Section 6.17 of the Original Equipment Loan Agreement is hereby amended
and restated in its entirety to read as follows:

                    "6.17  Conduct of Business . The  Borrowers  shall not,  and
               shall not  permit  any of their  Subsidiaries  to,  engage in any
               business  other than (a) in the case of LVSI,  the casino gaming,
               hotel,  retail and entertainment mall and resort business and any
               activity  or  business  incidental,  directly  related or similar
               thereto  (including  operating the conference  center and meeting
               facilities),  or any  business or activity  that is a  reasonable
               extension, development or expansion thereof or ancillary thereto,
               including any hotel, entertainment, recreation, convention, trade
               show,  meeting,  retail  sales  or  other  activity  or  business
               designated to promote,  market,  support,  develop,  construct or
               enhance the casino gaming,  hotel,  retail and entertainment mall
               and  resort   business   operated  by  the  Borrowers  and  their
               Subsidiaries,  including without limitation  participating in the
               Joint  Venture  Suppliers  and the ownership of the Mall Manager,
               the  Phase II  Manager  and  VCR,  (b) in the case of VCR and its
               Subsidiaries  (other than those listed in clause (c) below),  (i)
               the development,  construction and operation of the Project, (ii)
               the  casino  gaming,  hotel,  retail and  entertainment  mall and

<PAGE>

               resort  business  (including  operating a  conference  center and
               meeting  facilities)  at the Project and any activity or business
               incidental,  directly related or similar thereto, or any business
               or  activity  that  is a  reasonable  extension,  development  or
               expansion  thereof or  ancillary  thereto,  including  any hotel,
               entertainment,   recreation,  convention,  trade  show,  meeting,
               retail  sales,  or  other  activity  or  business  designated  to
               promote,  market,  support,  develop,  construct  or enhance  the
               casino gaming,  hotel,  retail and entertainment  mall and resort
               business   operated  at  the  Project  by  Borrowers   and  their
               Subsidiaries,  including without limitation  participating in the
               Joint  Venture  Suppliers,  and  (iii)  the  ownership  of equity
               interests in  Subsidiaries,  including the  Intermediate  Holding
               Companies,  and  (c) in the  case  of  the  Intermediate  Holding
               Companies,  the  ownership  of equity  interests  in Mall  Direct
               Holdings  and  Phase  II  Direct  Holdings  and the  delivery  of
               guarantees  in  favor  of  the  lenders  under  the  Bank  Credit
               Agreement  and the  Mortgage  Note Holders and the holders of the
               Subordinate  Notes.  Borrowers  shall  not  permit  the  Excluded
               Subsidiaries specified below to engage in any business other than
               (A) in the case of the Mall  Manager  and the  Phase II  Manager,
               ownership  of  1%  managing  membership  interests  in  the  Mall
               Subsidiary and Mall Direct Holdings, and Phase II Direct Holdings
               and Phase II Subsidiary, respectively, (B) in the case of the New
               Mall  Subsidiary,   ownership  of  the  Mall  and  other  matters
               reasonably  incidental  thereto,  (C) in the case of Mall  Direct
               Holdings  and  Phase II  Direct  Holdings,  ownership  of  equity
               interests  in the Mall  Subsidiary  and the Phase II  Subsidiary,
               respectively,  (D) in the case of the Mall Subsidiary,  ownership
               of equity interests in the New Mall  Subsidiary,  (E) in the case
               of the Mall  Manager,  ownership  of equity  interests in the New
               Mall  Manager  and  (F) in the  case  of the  New  Mall  Manager,
               ownership  of a 1% managing  membership  interest in the New Mall
               Subsidiary."

     (N) Section 6.20 of the Original Equipment Loan Agreement is hereby amended
and restated in its entirety to read as follows:

     "6.20 Certain  Covenants  Applicable to the New Mall  Subsidiary  and Other
Mall Related Companies.

                    (a) Line of Business. The Borrowers shall not permit the New
               Mall  Subsidiary  to engage in any  business  other  than (i) the
               acquisition,   development,   construction,  ownership,  holding,
               management,  marketing  and  operation  of  the  Mall,  (ii)  any
               activity and  business  incidental,  directly  related or similar
               thereto, and (iii) engaging in any business or activity that is a
               reasonable  extension,  development  or  expansion  thereof or is
               ancillary thereto including any retail, restaurant, entertainment
               or other  activity  or  business  designed  to  promote,  market,
               support, develop, construct or enhance the retail, restaurant and
               entertainment   business  of  the  Mall  (including   owning  and
               operating joint ventures to supply  materials or services for the
               construction  or operation of the Mall).  The Borrowers shall not
               permit Mall Direct  Holdings,  Mall Subsidiary or Mall Manager to
               engage in any business or any transaction  except (1) Mall Direct
               Holdings may hold equity interests in Mall  Subsidiary,  (2) Mall
               Subsidiary may hold equity interests in New Mall Subsidiary,  (3)
               Mall Manager may hold a 1% managing  membership  interest in Mall
               Direct  Holdings  and  Mall  Subsidiary  and may  own the  equity
               interests in New Mall Manager and (4) New Mall Manager may hold a
               1% managing membership interest in New Mall Subsidiary.

                    (b)  Restrictions  on  Investments.  The Borrowers shall not
               permit  the New  Mall  Subsidiary  to  purchase  or  acquire  any
               Securities,   loan,  advance,   capital   contribution  or  other
               investment  of any kind  except (i)  advances  to  employees  for
               moving,  entertainment and travel expenses,  drawing accounts and
               similar expenditures in the ordinary course of business, (ii) any
               such  investments in Cash  Equivalents (as defined in section 1.1
               of the Bank  Credit  Agreement)  and similar  liquid  Investments
               permitted under the Financing  Agreements to which it is a party,
               (iii) any  investments  in Joint  Ventures  with third parties to
               develop  and  operate  restaurants  in the  Mall in an  aggregate
               amount  not to exceed  $5,000,000  at any time,  (iv)  other such
               investments  reasonably necessary for the operation,  maintenance
               and improvement of the Mall in an aggregate  amount not to exceed
               $2,500,000 at any time,  (v) loans or advances to employees  made
               in the ordinary  course of business of the New Mall Subsidiary in
               an aggregate  amount not to exceed $500,000 at any time, and (vi)
               stocks, obligations or other Securities received in settlement of
               debts created in the ordinary course of business and owing to the
               New Mall Subsidiary or in satisfaction of judgments.

<PAGE>

                    (c) Affiliate  Transactions.  The Borrowers shall not permit
               the New Mall Subsidiary to, directly or indirectly, enter into or
               permit to exist any  transaction  (including the purchase,  sale,
               lease  or  exchange  of  any  property  or the  rendering  of any
               service),  with any  holder  of 5% or more of any class of equity
               Securities of the New Mall  Subsidiary  or of either  Borrower or
               with any Affiliate of a Borrower or of the New Mall Subsidiary or
               any such holder,  provided that the New Mall Subsidiary may enter
               into or  permit  to  exist  (i)  transactions  that  are not less
               favorable  to the New Mall  Subsidiary  than  those that might be
               obtained  at the time from  Persons  who are not such a holder or
               Affiliate  if  the   Borrowers   shall  have   delivered  to  the
               Administrative   Agent  (A)  with  respect  to  any   transaction
               involving  an  amount  in  excess  of   $500,000,   an  Officers'
               Certificate  certifying that such transaction  complies with this
               clause (i), and (B) with respect to any transaction  involving an
               amount  in  excess  of  $1,000,000,  a  resolution  adopted  by a
               majority  of the  disinterested  non-employee  directors  of LVSI
               approving   such   transaction   together   with  the   Officers'
               Certificate  referred to in clause (A),  and (C) with  respect to
               any such transaction  involving  aggregate  payments in excess of
               $10,000,000 or that is a loan  transaction  involving a principal
               amount in excess of  $10,000,000,  in addition to the  deliveries
               contemplated  by  clauses  (A)  and  (B),  an  opinion  as to the
               fairness to the New Mall  Subsidiary  from a  financial  point of
               view issued by an Independent  Financial Advisor at the time such
               transaction is entered into,  (ii)  transactions  contemplated or
               permitted by the Sale and Contribution Agreement (as in effect on
               June 14, 2000), the Second Sale and Contribution  Agreement dated
               December  20, 1999 between the Mall  Subsidiary  and the New Mall
               Subsidiary  (as in effect on June 14, 2000),  the Permanent  Mall
               Loan Agreement (as in effect on June 14, 2000), the HVAC Services
               Agreement,  the Services  Agreement,  the Restaurant  Leases, the
               Billboard Master Lease, the Cooperation  Agreement and the Master
               Lease  with  respect to Canyon  Ranch and the  Master  Lease with
               respect  to  Lutece,  dated as of June 1, 1998 and May 20,  1999,
               respectively,  both between Mall Construction Subsidiary and VCR,
               copies of all of which have been delivered to the  Administrative
               Agent, (iii) any guarantees by Sheldon G. Adelson of Indebtedness
               of the New  Mall  Subsidiary,  (iv)  purchases  of  materials  or
               services from a Joint Venture Supplier by the New Mall Subsidiary
               in the ordinary course of business on arm's length terms, (v) any
               employment,  indemnification,  noncompetition or  confidentiality
               agreement  entered  into  by the New  Mall  Subsidiary  with  its
               employees or directors in the ordinary  course of business,  (vi)
               loans or advances to employees of the New Mall Subsidiary, but in
               any event not to exceed $500,000 in the aggregate  outstanding at
               any one  time,  and  (vii)  the  payment  of  reasonable  fees to
               directors of the New Mall  Subsidiary or its managing  member who
               are not employees of the New Mall Subsidiary.

                    (d)  Restricted  Junior  Payments.  The Borrowers  shall not
               permit the New Mall  Subsidiary,  Mall  Subsidiary,  Mall  Direct
               Holdings,  Mall Manager or New Mall Manager (the  "Excluded  Mall
               Subsidiaries")  to  make  any  payments  or   distributions,   or
               otherwise  enter into any  transactions,  which would  constitute
               Restricted Junior Payments described in clauses (i) through (iii)
               inclusive  of  the  definition  of  Restricted   Junior  Payments
               (considered  as if the  reference to Borrower in each such clause
               were a reference  to the  applicable  Excluded  Mall  Subsidiary)
               unless such  payments or  distributions  and the  benefits of all
               such other  transactions  are made or extended (A) exclusively to
               the  Borrowers or their  Subsidiaries  or another  Excluded  Mall
               Subsidiary  (for  further  distribution  to  Borrowers  or  their
               Subsidiaries)  or (B) pro  rata on all  equity  interests  of the
               applicable  Excluded  Mall  Subsidiary  (so  that  the  Borrowers
               receive a portion of such Restricted  Junior Payment equal to the
               direct and indirect  ownership  interest of the Borrowers in such
               Excluded Mall Subsidiary)."

     (O) Section 6.26 of the Original Equipment Loan Agreement is hereby amended
and restated in its entirety to read as follows:

          "6.26 Payments to Sheldon G. Adelson. The Borrowers shall not directly
     or indirectly  make any payment to or for the benefit of Sheldon G. Adelson
     until the Additional Contingent Claims shall be finally determined and paid
     in full except for (i)  payments  made  pursuant to and as permitted by the
     Adelson Subordination  Agreement,  (ii) payments made in respect of Sheldon
     G. Adelson's taxes, salary and as reimbursement for reasonable expenses, in
     each case, if and to the extent  permitted under the Financing  Agreements,
     and  (iii)  payments  made  to  Affiliates  that  are  required  under  the
     Cooperation Agreement or any other arm's-length agreement entered into with
     an  Affiliate,  provided that nothing  contained  herein shall be deemed to
     permit any such payment to or for the benefit of Sheldon G. Adelson if such
     payment  shall be  otherwise  prohibited  or  restricted  under  any  other
     provision of this Agreement (including, without limitation, subsections 6.4
     or 6.8) or any other agreement or document."

<PAGE>

     (P) Section  8.1(k) of the  Original  Equipment  Loan  Agreement  is hereby
amended and restated in its entirety to read as follows:

          "(k) As a result of any sale,  pledge or other  transfer,  either  (a)
     Sheldon G. Adelson and the Related Parties shall cease to beneficially  own
     and  control,  directly  or  indirectly,  at least  70% of the  issued  and
     outstanding shares of capital stock of LVSI entitled (without regard to the
     occurrence of any  contingency)  to vote for the election of members of the
     board of directors of LVSI;  or (b) Sheldon G. Adelson or any Related Party
     (as  applicable,  but  excluding  directors of LVSI or VCR and employees of
     LVSI or VCR who are senior  managers or officers of LVSI,  VCR or Interface
     or any of their  Affiliates)  shall not have  invested  the proceeds of any
     sale or  transfer  of shares of LVSI by Sheldon G.  Adelson or any  Related
     Party (as  applicable)  in the  business of the  Borrowers  (including  any
     Excluded  Subsidiary);  or (c) LVSI  shall  cease to own 100% of the equity
     securities of VCR other than any preferred equity of VCR owned by Interface
     Holding or another  Affiliate of Sheldon G. Adelson;  or (d) the Borrowers,
     taken together, shall cease to own 100% of the equity securities of each of
     their  Subsidiaries,  the Mall Manager and the Phase II Manager; or (e) the
     Mall  Manager and Mall  Holdings  together  shall cease to own 100% of Mall
     Direct Holdings,  and Phase II Holdings and Phase II Manager together shall
     cease to own 100% of Phase II Direct Holdings;  or (f) Mall Direct Holdings
     shall cease to own not less than 99% of the equity  securities  of the Mall
     Subsidiary; or (g) the Mall Subsidiary shall cease to own not less than 80%
     of the equity securities of New Mall Subsidiary;  or (h) Mall Manager shall
     cease  to own not  less  than  100% of the  equity  securities  of New Mall
     Manager; or (i) Phase II Direct Holdings shall cease to own at least 51% of
     the equity  securities  of Phase II  Subsidiary;  or (j) the sole  managing
     member  of  each  of  Mall  Direct  Holdings,  Phase  II  Direct  Holdings,
     Intermediate  Holding  Companies,  Mall  Subsidiary and Phase II Subsidiary
     shall cease to be LVSI,  VCR or (directly  or  indirectly)  a  wholly-owned
     Subsidiary  of LVSI or VCR;  or (k) the sole  managing  member  of New Mall
     Subsidiary  shall  cease to be LVSI,  VCR or,  directly  or  indirectly,  a
     wholly-owned  subsidiary of LVSI or VCR; or (l) any "Change of Control" (as
     defined in either the Mortgage Notes  Indenture or the  Subordinated  Notes
     Indenture) shall occur."

     (Q) Sections 8.1(o),  (p) and (q) of the Original  Equipment Loan Agreement
are hereby amended and restated in its entirety to read as follows:

          "(o) Any event or circumstance  described under section 8.1(f), (g) or
     (h) hereof  shall occur with respect to the New Mall  Subsidiary,  the Mall
     Subsidiary,  the New Mall Manager, the Mall Manager or Mall Direct Holdings
     which would constitute an Event of Default if such Excluded Subsidiary were
     a Subsidiary of Borrowers for purposes of those subsections.

          "(p) The New Mall  Subsidiary  shall be in breach of or  default  with
     respect  to any term of one or more  items of  Indebtedness  or  Contingent
     Obligation  in an individual  principal  amount of $2,500,000 or more or an
     aggregate  principal  amount of $5,000,000 or more, if as a result  thereof
     the holders of such  Indebtedness  or Contingent  Obligation or Obligations
     (or an agent or trustee  acting on their  behalf)  shall have  caused  that
     Indebtedness  or  Contingent  Obligation or  Obligations  to become due and
     payable  prior  to its  stated  maturity  or  the  stated  maturity  of any
     underlying obligation, as the case may be.

          "(q)  Sheldon G.  Adelson  or any of his  Affiliates  (other  than the
     Borrowers and their  wholly-owned  Subsidiaries)  shall acquire or hold any
     Investment  in any  Excluded  Subsidiary  or any Person  which any Excluded
     Subsidiary  controls or in which it holds an  Investment  other than (1) in
     the case of the New Mall  Subsidiary  or the Phase II  Subsidiary,  through
     transactions  expressly permitted under section 6.20 or purchases of public
     debt securities in the secondary market and (2) in the case of the Phase II
     Subsidiary or any of its Subsidiaries,  investments  arising through loans,
     completion  guaranties or other guaranties  substantially  similar to those
     provided in connection  with the  development  of the Project and permitted
     under clause (1) of this section 8.1(q)."

     (R) Section 8.1 of the Original  Equipment Loan Agreement is hereby amended
by adding thereto a new subsection (y) which shall read as follows:

          "(y) Any  Conforming  Adelson  L/C shall cease to be in full force and
     effect at any time prior to twenty-four (24) months from and after the date
     of its delivery to the Administrative  Agent other than following a drawing
     in full by the  Administrative  Agent or, if permitted under the definition
     of Adelson  Conforming  L/C Draw Event,  the  replacement  of such  Adelson
     Conforming L/C with a cash equity  contribution  in Borrowers in the amount
     of the Adelson Conforming L/C.".

     (S) The second  sentence of section  9.2(a) of the Original  Equipment Loan
Agreement is hereby amended and restated in its entirety to read as follows:

<PAGE>

     "Without  limiting the generality of the foregoing,  each Lender authorizes
     the  Administrative  Agent to execute and deliver  (x) an  Agreement  among
     Creditors,  among the Bank Agent, the Mortgage Notes Indenture Trustee, the
     Interim Mall Lender and the Administrative Agent, a copy of which agreement
     has been  furnished to and  approved by such  Lender,  and (y) a Conforming
     Adelson L/C Drawing Agreement among the  Administrative  Agent and the Bank
     Agent, a copy of which agreement has been furnished to and approved by such
     Lender."

     (T) The  definition  of  "Billboard"  set forth in Annex A to the  Original
Equipment  Loan Agreement is hereby amended and restated in its entirety to read
as follows:

     "`Billboard' means H & H of Nevada, LLC."

     (U) The definition of "Billboard  Master Lease" set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Billboard  Master  Lease' means that certain Lease  Agreement  dated
     November 14, 1997 by and between VCR and New Mall Subsidiary,  as successor
     to  Mall  Subsidiary   (the  latter  as  successor  to  Mall   Construction
     Subsidiary) pursuant to which the New Mall Subsidiary, as successor to Mall
     Subsidiary (the latter as successor to Mall  Construction  Subsidiary),  is
     leasing  from  VCR  the  Additional  Billboard  Space  (as  defined  in the
     Cooperation Agreement)."

     (V) The definition of  "Consolidated  Adjusted EBITDA" set forth in Annex A
to the Original  Equipment  Loan Agreement is hereby amended and restated in its
entirety to read as follows:

          "`Consolidated  Adjusted EBITDA' means, for any period, the sum of the
     amounts for such period of (i) Consolidated Net Income,  (ii)  Consolidated
     Interest  Expense,  (iii) provision for taxes based on income to the extent
     deducted in calculating  Consolidated Net Income,  (iv) total  depreciation
     expense,  (v) total  amortization  expense,  and (vi) other  non-cash items
     reducing   Consolidated  Net  Income  (including   without  limitation  any
     reductions to Consolidated  Net Income as a result of minority or preferred
     equity interests in VCR) less other non-cash items increasing  Consolidated
     Net Income,  all of the foregoing as determined on a consolidated basis for
     Borrowers and their  Subsidiaries  in conformity with GAAP. Any cash equity
     contributions  made by Sheldon G. Adelson or any of his  Affiliates  (other
     than one of the  Borrowers) to the Borrowers  and/or the face amount of any
     Conforming  Adelson L/C  delivered  to the  Conforming  Adelson L/C Drawing
     Agent for the  benefit  of the  Lenders  and the Bank  Lenders  during  any
     quarter, in an aggregate amount for such cash equity contributions and face
     amounts of Conforming  Adelson L/Cs not to exceed  $15,000,000 per quarter,
     may at the written  election  of  Borrowers  be  included  in  Consolidated
     Adjusted EBITDA for such quarter for all purposes hereunder,  provided that
     Borrowers may not include such cash equity contributions or the face amount
     of the Conforming Adelson L/C, or any combination  thereof, in Consolidated
     Adjusted  EBITDA (a) if any Conforming  Adelson L/C Draw Event or any Event
     of Default or Default has occurred and is  continuing at the time such cash
     contribution  is  made  or  such  Conforming  Adelson  L/C is  provided  to
     Conforming  Adelson  L/C  Drawing  Agent  or (b) in any  event,  after  two
     consecutive  quarters  unless,  following  any exercise of such election to
     include  any such  cash  equity  contributions  and/or  face  amount of any
     Conforming  Adelson L/C in  Consolidated  Adjusted  EBITDA,  Borrowers have
     thereafter  been in  compliance  with  subsection  6.9(c) on a rolling four
     quarter  basis on any test date  occurring  after  such  election  (without
     giving affect to any previous  cash  contributions  or  Conforming  Adelson
     L/C)."

     (W) The definition of  "Cooperation  Agreement" set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Cooperation   Agreement'   shall  mean  the  Amended  and   Restated
     Reciprocal Easement, Use and Operating Agreement,  dated as of November 14,
     1997 and as amended  December  20, 1999,  by and among LVSI,  VCR, the Mall
     Subsidiary (as replacement for the Mall Construction Subsidiary pursuant to
     such amendment), Phase II Subsidiary and Interface."

     (X) The  definition  of "Excluded  Subsidiary"  set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Excluded  Subsidiary'  means any Person excluded from the definition
     of Subsidiary by virtue of the last sentence of such  definition  set forth
     in  Annex A to this  Agreement  (including,  without  limitation,  New Mall
     Subsidiary,  Mall  Subsidiary,  Phase II Subsidiary,  Mall Direct Holdings,
     Phase II Direct  Holdings,  Mall Manager,  New Mall  Manager,  and Phase II
     Manager)."

     (Y) The  definition  of  "HVAC  Completion"  set  forth  in  Annex A to the
Original  Equipment  Loan Agreement is hereby amended by replacing the reference
to the term "Construction Consultants" with the term "Construction Consultant".

<PAGE>

     (Z) The  definition  of "Mall  Release  Date"  set  forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

     "`Mall Release Date' shall mean November 12, 1999."

     (AA) The  definition  of "Other  Indebtedness"  set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Other  Indebtedness'  shall mean (i)  Indebtedness  evidenced by the
     Mortgage Notes,  (ii)  Indebtedness  evidenced by the  Subordinated  Notes,
     (iii)  [Intentionally  omitted],  (iv)  Indebtedness  evidenced by the Bank
     Credit  Agreement,  (v) Indebtedness in respect of any Completion  Guaranty
     Loan and (vi) Indebtedness evidenced by an Employee Repurchase Note."

     (BB) The definition of "Permanent  Mall Lender" set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Permanent  Mall Lender'  means any lender party from time to time to
     the Permanent  Mall Loan Agreement  including,  but not limited to, Goldman
     Sachs Mortgage Company, The Bank of Nova Scotia and any permitted successor
     or replacement thereto."

     (CC) The definition of "Permitted  Quarterly Tax Distribution" set forth in
Annex A to the Original  Equipment  Loan Agreement is hereby amended by deleting
the reference therein to "or the Substitute Tranche B Loan".

     (DD) The last sentence of the definition of "Proceeds" set forth in Annex A
to the Original  Equipment  Loan Agreement is hereby amended and restated in its
entirety to read as follows:

     "Notwithstanding  the  foregoing,  Proceeds  shall not  include  Liquidated
     Damages or proceeds of insurance for such Liquidated Damages subject to the
     claim of any Project Lender other than a Lender."

     (EE) The definition of "Project Construction  Completion Date" set forth in
Annex A to the Original  Equipment Loan Agreement is hereby amended and restated
in its entirety to read as follows:

     "`Project  Construction  Completion  Date' shall mean  November 12,  1999."

     (FF) Each of the  definitions  of "Puck JV Letter of  Intent",  "Subsection
6.3(n)  Indebtedness" and "Subsection 6.3(o)  Indebtedness" set forth in Annex A
to the Original Equipment Loan Agreement is hereby deleted in its entirety.

     (GG)  The  definition  of  "Quarterly  Date"  set  forth  in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

     "`Quarterly Date' means the last day of each Fiscal Quarter."

     (HH) The  definition of "Scheduled  Equipment"  set forth in Annex A to the
Original Equipment Loan Agreement is hereby amended and restated in its entirety
to read as follows:

          "`Scheduled  Equipment' shall mean all of the furniture,  furnishings,
     and  equipment  listed on Annex B, as  amended  and in effect  from time to
     time."

     (II) The last sentence of the definition of "Subsidiary" set forth in Annex
A to the Original Equipment Loan Agreement is hereby amended and restated in its
entirety to read as follows:

     "Notwithstanding the foregoing, New Mall Subsidiary, Mall Subsidiary, Phase
     II  Subsidiary,  Phase II  Manager,  Phase  II  Direct  Holdings,  New Mall
     Manager,  Mall  Manager  and Mall  Direct  Holdings  and  their  respective
     Subsidiaries shall not constitute  Subsidiaries under this Agreement or any
     other Loan Document,  except for purposes of section 3 (representations and
     warranties) (other than section 3.7) and section 4.1 (as specified therein)
     and for purposes of any definitions as used in section 3 or section 4.1."

     (JJ) Annex A to the Original  Equipment Loan Agreement is hereby amended to
add  each  of the  following  definitions  (in  each  case  in  the  appropriate
alphabetical order):

          "`Additional  Contingent Claims' shall have the meaning ascribed to it
     in section 3.31(a)."

          "`Additional  Indebtedness'  shall have the meaning  ascribed to it in
     section 6.3(q)."

          "`Adelson Subordination  Agreement' shall have the meaning ascribed to
     that term in section 3.33."

<PAGE>

          "`Billboard  Operating  Lease'  shall mean that  certain  Amended  and
     Restated  Restaurant  Lease  dated June 26,  1997 by and  between  New Mall
     Subsidiary,  as successor to Mall  Subsidiary,  and VCR and  Billboard,  as
     successor  to  B.L.  International  of  Nevada,  Inc.  (together  with  all
     assignments, modifications, amendments, riders and addendas thereto)."

          "`Conforming  Adelson  L/C'  shall mean an  unconditional,  direct pay
     letter of credit  which (a) is obtained by Sheldon G. Adelson or one of his
     Affiliates (but not Borrowers or any of their Subsidiaries), (b) either (x)
     has an expiration date of not less than  twenty-four (24) months or (y) has
     an  expiration  date of not less than twelve (12) months with an  automatic
     extension of one twelve (12) month period  unless the issuer of such letter
     of credit  gives the  Drawing  Agent not less than sixty  (60) days'  prior
     written  notice  that it will not  renew  the  letter  of  credit  for such
     successive  term,  (c) either (x) is  irrevocable  or (y) provides that the
     issuer will deliver not less than sixty (60) days prior  written  notice to
     the Drawing Agent of its intention to revoke such letter of credit,  (d) is
     issued by a financial  institution  acceptable  to the Drawing Agent in its
     reasonable  judgment (which acceptance the Drawing Agent may withhold if it
     is not also acceptable to the Bank Agent), and (e) is otherwise in form and
     substance  acceptable  to the  Drawing  Agent in its  reasonable  judgment,
     provided  that any such letter of credit shall only qualify as a Conforming
     Adelson  L/C if it  states  that it may be  drawn  upon  by the  Conforming
     Adelson L/C Drawing Agent and applied in accordance  with the terms of this
     Agreement  and the  Conforming  Adelson  L/C  Drawing  Agreement  upon  the
     occurrence of any Conforming Adelson L/C Draw Event, and provided, further,
     that  no  Borrower  or  Subsidiary   thereof  shall  have  any  obligations
     (contingent or otherwise) in respect of any such letter of credit."

          "`Conforming  Adelson L/C Draw Event" shall mean, during the time that
     the Conforming Adelson L/C remains in full force and effect, the occurrence
     of any of the  following (a) an Event of Default  (which is continuing  and
     has not been  waived)  (i) set forth in  section  8.1(a)  (failure  to make
     payments when due),  (ii) set forth in section 8.1(d)  (default under Other
     Indebtedness or Contingent Obligations),  (iii) set forth in section 8.1(g)
     (involuntary  bankruptcy;  appointment of receiver, etc.) or section 8.1(h)
     (voluntary  bankruptcy,  appointment of receiver,  etc.), (iv) set forth in
     section 8.1(l) (default under or termination of Operative  Documents),  and
     (v)  resulting  from a breach of any of the  covenants set forth in section
     6.9 (financial  covenants);  (b) a draw on the Conforming Adelson L/C by or
     on behalf  of the Bank  Agent;  (c) if such  Conforming  Adelson  L/C has a
     maturity of less than twenty-four  (24) months,  either (x) Drawing Agent's
     receipt of notice from the issuer of the  Conforming  Adelson L/C that such
     issuer  will not renew the  Conforming  Adelson L/C or (y) the date that is
     five days prior to the  expiration  of the  Conforming  Adelson  L/C if the
     Drawing Agent has not received  evidence of the renewal  thereof,  provided
     that the  Drawing  Agent may not draw down on the  Adelson  Conforming  L/C
     under  such  circumstances  if and only if (1) the  failure  to obtain  the
     renewal of such Conforming Adelson L/C was not caused by Sheldon G. Adelson
     or his Affiliates  and Sheldon G. Adelson  and/or his Affiliates  have made
     reasonable  efforts  to obtain  the  renewal  thereof,  and (2)  Sheldon G.
     Adelson or his  Affiliates  substitute  cash equity in the  Borrowers in an
     amount  equal to the face amount of the  Conforming  Adelson L/C in lieu of
     the  Conforming  Adelson  L/C on or  before  the date that is five (5) days
     prior to the  expiration  thereof  (such equity to be  substituted  for the
     withdrawn  Conforming  Adelson  L/C  in  the  calculation  of  Consolidated
     Adjusted  EBITDA);  or (d) the Drawing  Agent's  receipt of notice from the
     issuer of the  Conforming  Adelson L/C that such issuer  intends to revoke,
     terminate or cancel the Conforming Adelson L/C."

          "`Conforming  Adelson L/C Drawing Agent' means the `Drawing  Agent' as
     defined in the Conforming Adelson L/C Drawing Agreement."

          "`Conforming  Adelson  L/C  Drawing  Agreement'  means the  Conforming
     Adelson  L/C  Drawing  Agreement,  dated as of June 14,  2000,  between the
     Administrative  Agent  and the Bank  Agent,  in  substantially  the form of
     Exhibit E attached  hereto,  pursuant  to which  drawings,  if any,  on the
     Conforming Adelson L/Cs shall be made and the proceeds thereof  distributed
     ratably to the Lenders and the Bank Lenders."

          "`Construction  Consultant's Closing Certificate' shall mean a closing
     certificate in the form of Exhibit B-2 to the Disbursement Agreement."

          "`Construction  Litigation'  shall have the  meaning  assigned to that
     term in section 3.31."

          "`New Mall Manager' means Grand Canal Shops Mall MM Subsidiary,  Inc.,
     a Nevada corporation and a wholly-owned subsidiary of Mall Manager."

          "`New Mall Subsidiary' means Grand Canal Shops Mall Subsidiary, LLC, a
     Delaware limited liability company."

          "`Permanent  Mall Loan  Agreement'  means that certain Loan  Agreement
     dated  as of  December  20,  1999 by and  among  New  Mall  Subsidiary,  as
     borrower, Goldman Sachs Mortgage Company, as Syndication Agent, The Bank of
     Nova  Scotia,  as  Collateral  Agent  and  Administrative  Agent,  and  the
     Permanent Mall Lenders party thereto from time to time."

<PAGE>

          "`Restaurant  Leases'  means,  collectively,  (i)  the  lease  between
     Valentino Las Vegas,  LLC, a Nevada  limited  liability  company,  and VCR,
     dated as of May 15, 1999, (ii) the lease between Positano Las Vegas, LLC, a
     Nevada limited liability company, and New Mall Subsidiary,  as successor in
     interest to Mall  Subsidiary,  dated as of November 4, 1999,  and (iii) the
     lease  between  Carnevale  Coffee  Bar,  LLC,  a Nevada  limited  liability
     company,  and New Mall  Subsidiary,  dated as of April 26, 2000,  copies of
     which have been delivered to the Administrative Agent."

     (KK) The Original  Equipment  Loan  Agreement  is hereby  amended by adding
thereto  as  Exhibit E the Form of  Conforming  Adelson  L/C  Drawing  Agreement
attached hereto as Annex A.

     (LL) The Original  Equipment  Loan  Agreement  is hereby  amended by adding
thereto as Schedule 3.31 the attached Annex B to this Agreement.

     (MM) The Original  Equipment  Loan  Agreement  is hereby  amended by adding
thereto as Schedule 3.32 the attached Annex C to this Agreement.

Section 2.        REPRESENTATIONS AND WARRANTIES OF BORROWERS

     In order to induce  Lenders to enter into this  Agreement,  each of VCR and
LVSI  represents  and warrants to each Lender that the following  statements are
true,  correct and complete as of the date hereof and will be as of the date the
conditions set forth in section 3 are satisfied:

     (A) Each of VCR and LVSI has all  requisite  power and  authority  to enter
into this Agreement and to carry out the  transactions  contemplated  hereby and
perform its obligations hereunder.

     (B) The  execution  and delivery of this  Agreement by VCR and LVSI and the
performance  of their  obligations  hereunder  have been duly  authorized by all
necessary action on the part of VCR and LVSI.

     (C) The  execution  and delivery by VCR and LVSI of this  Agreement and the
performance  by VCR and LVSI of this  Agreement  do not and will not (i) violate
any provision of any law or any  governmental  rule or regulation  applicable to
the  Project or to VCR or LVSI or any of their  Affiliates,  the  organizational
documents of VCR or LVSI or any of their  Affiliates  or any order,  judgment or
decree of any court or other agency of government  binding on VCR or LVSI or any
of their  Affiliates,  (ii) conflict  with,  result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Material Contract
of VCR or LVSI or any of  their  Affiliates,  (iii)  result  in or  require  the
creation or imposition  of any Lien upon any of the  properties or assets of VCR
or LVSI or any of their Affiliates, or (iv) require any approval of stockholders
or any approval or consent of any Person  under any Material  Contract of VCR or
LVSI or any of their Affiliates.

     (D) The  execution  and delivery by VCR and LVSI of this  Agreement and the
performance  by VCR and LVSI of this  Agreement  do not and will not require any
registration  with,  consent or approval  of, or notice to, or other  action to,
with or by, any federal,  state or other  governmental  authority or  regulatory
body.

     (E) This Agreement has been duly executed and delivered by VCR and LVSI and
constitutes  the  legally  valid  and  binding   obligation  of  VCR  and  LVSI,
enforceable  against VCR and LVSI in accordance with its terms, except as may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
relating to or limiting  creditors' rights generally or by equitable  principles
relating to enforceability.

     (F) The  representations  and  warranties  contained  in  section  3 of the
Equipment  Loan  Agreement  are and will be true,  correct  and  complete in all
material respects on and as of the date hereof and on the date the conditions in
section 3 hereof are  satisfied  to the same  extent as though made on and as of
that date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in
all material respects on and as of such earlier date.

Section 3.        CONDITIONS TO EFFECTIVENESS

     Notwithstanding  any of the  provisions  of this  Agreement to the contrary
this  Agreement  shall become  effective only upon  satisfaction  of each of the
following conditions precedent:

     (A)  Execution  and delivery of the Amended and Restated  Credit  Agreement
among the  Borrowers,  the Bank Agent,  the Bank  Lenders and the other  parties
named  therein,  in  substantially  the  form of  Annex D  hereto  (the  "Credit
Agreement Amendment"),  and delivery to Administrative Agent of an executed copy
of such agreement;

     (B) Execution and delivery of the Conforming  Adelson L/C Drawing Agreement
between the Administrative Agent and the Bank Agent;

     (C) Borrowers shall have paid to the Lenders the fee described in section 4
below;

<PAGE>

     (D) Delivery to  Administrative  Agent of an opinion or opinions of counsel
to  the   Borrowers  in  form  and  substance   reasonably   acceptable  to  the
Administrative Agent; and

     (E) The  representations  and  warranties  contained  in  section 2 of this
Agreement are and will be true, correct and complete in all material respects on
and as of the date hereof and on the date the  conditions  in this section 3 are
satisfied in full.

Section 4.        FEE

     Prior to the  effectiveness  of this  Agreement,  Borrowers agree to pay to
each Lender a non-refundable fee of .25% of the outstanding  principal amount of
the Loans.

Section 5.        CONSENT TO CREDIT AGREEMENT AMENDMENT

     Each  of the  Lenders  hereby  consents  to  the  execution,  delivery  and
performance of the Credit Agreement Amendment.

Section 6.        LIMITED WAIVER

     Subject to satisfaction of the conditions  precedent set forth in section 3
and in reliance on the representations and warranties of the Borrowers set forth
in this Agreement,  the Administrative  Agent and Requisite Lenders on behalf of
the  Lenders  hereby (a) waive each of the Events of Default  and  Defaults  set
forth in Annex C hereto (to the  extent,  if any,  they exist) to the extent and
for the period  expressly set forth therein.  The waivers and consents set forth
in this section 6 and Annex C hereto shall be limited in all respects  precisely
as set forth herein and therein and nothing contained herein or therein shall be
deemed to:

               (a)  constitute a waiver of (i)  compliance by the Borrowers with
          respect to any term,  provision  or condition  of the  Equipment  Loan
          Agreement or any other  instrument  or  agreement  referred to herein,
          except as expressly set forth in Annex C, or (ii) any Event of Default
          or Default, except as expressly set forth on Annex C; or

               (b) prejudice any right or remedy that the  Administrative  Agent
          or the  Lenders  have  (except to the extent  such right or remedy was
          based upon a default  that will not exist after  giving  effect to the
          limited  waivers  specified in Annex C hereto)  under or in connection
          with the Equipment Loan Agreement or any other instrument or agreement
          referred to therein or delivered hereunder.

     Except as expressly set forth herein, the terms,  provisions and conditions
of the Equipment  Loan  Agreement and the other Loan  Documents  shall remain in
full  force and  effect  and in all  other  respects  are  hereby  ratified  and
confirmed.

Section 7.        ACKNOWLEDGEMENT REGARDING FEES AND EXPENSES

     Borrowers hereby  acknowledge that all reasonable  costs, fees and expenses
incurred by Administrative  Agent and its counsel with respect to this Agreement
and the documents and transactions  contemplated hereby shall be for the account
of the Borrowers  and hereby agree that all such amounts,  and any other amounts
due and owing to such parties at that time, shall be promptly paid.

Section 8.        GOVERNING LAW

     THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE  WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

Section 9.        COUNTERPARTS; EFFECTIVENESS

     This  Agreement  may be  executed  in any  number  of  counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same  instrument;  signature pages may
be  detached  from  multiple  separate  counterparts  and  attached  to a single
counterpart  so that all  signature  pages are  physically  attached to the same
document.  This Agreement shall become  effective  (subject to section 3 hereof)
upon the execution of a counterpart  hereof by Requisite Lenders and each of the
other  parties  hereto  and  receipt  by  Administrative  Agent  of  written  or
telephonic notification of such execution and authorization of delivery thereof.
Thenceforth,  references herein to the "Equipment Loan Agreement" and references
in the Original Equipment Loan Agreement to "this Agreement," "hereof," "hereto"
and terms of similar  import shall be deemed to refer to the Original  Equipment
Loan Agreement as hereby amended.

<PAGE>

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

<PAGE>

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

                                                LAS VEGAS SANDS, INC.

                                                By: /s/ William P. Weidner
                                                   ---------------------------
                                                     Name:   William P. Weidner
                                                     Title:  President

                                                VENETIAN CASINO RESORT, LLC
                                                By:  Las Vegas Sands, Inc.,
                                                         Managing Member

                                                By: /s/ William P. Weidner
                                                   ---------------------------
                                                   Name:   William P. Weidner
                                                   Title:  President

                                                GENERAL ELECTRIC CAPITAL
                                                CORPORATION, as Administrative
                                                Agent

                                                By: /s/ Timothy S. Shanahan
                                                   ---------------------------
                                                   Name:   Timothy S. Shanahan
                                                   Title:  Vice President

                                                GMAC COMMERCIAL MORTGAGE
                                                CORPORATION, as a Lender

                                                By: /s/ Jon S. Wright
                                                   ---------------------------
                                                   Name:   Jon S. Wright
                                                   Title:  Senior Vice President

                                                GENERAL ELECTRIC CAPITAL
                                                CORPORATION, as a Lender

                                               By: /s/ Timothy S. Shanahan
                                                   ---------------------------
                                                   Name:   Timothy S. Shanahan
                                                   Title:  Vice PresidentPS BUSINESS PARKS, L.P.

                        AMENDMENT TO AGREEMENT OF LIMITED
                             PARTNERSHIP RELATING TO
                      87/8% SERIES Y CUMULATIVE REDEEMABLE
                                 PREFERRED UNITS

     This  Amendment  to the  Agreement  of Limited  Partnership  of PS Business
Parks, L.P., a California limited partnership (the  "Partnership"),  dated as of
the 12th day of July,  2000 (this  "Amendment")  amends the Agreement of Limited
Partnership  of the  Partnership,  dated as of March  17,  1998 by and  among PS
Business Parks,  Inc. (the "General  Partner") and each of the limited  partners
executing a signature page thereto, as amended  (collectively,  the "Partnership
Agreement").  Capitalized terms used herein and not otherwise defined shall have
the  meanings  ascribed  to such  terms in the  Partnership  Agreement.  Section
references  are  (unless  otherwise  specified)  references  to sections in this
Amendment.

     WHEREAS,  pursuant  to Section  4.2(a) of the  Partnership  Agreement,  the
General Partner desires to cause the Partnership to issue  additional Units of a
new  class  and  series,  with  the  designations,   preferences  and  relative,
participating,  optional or other  special  rights,  powers and duties set forth
herein;

     WHEREAS,  pursuant  to Section  4.2(a) of the  Partnership  Agreement,  the
General  Partner,  without the consent of the  Limited  Partners,  may amend the
Partnership  Agreement by executing a written instrument setting forth the terms
of such amendment; and

     WHEREAS,  the General  Partner  desires by this  Amendment  to so amend the
Partnership  Agreement  as of the date first set forth  above to provide for the
designation and issuance of such new class and series of Units.

     NOW, THEREFORE, the Partnership Agreement is hereby amended by establishing
and fixing the rights,  limitations and preferences of a new class and series of
Units as follows:

     Section 1.  Definitions.  Capitalized  terms not otherwise  defined  herein
shall have their  respective  meanings set forth in the  Partnership  Agreement.
Capitalized  terms that are used in this  Amendment  shall have the meanings set
forth below:

     (a) "Liquidation  Preference" means, with respect to the Series Y Preferred
Units,  $25.00 per Series Y Preferred  Unit,  plus the amount of any accumulated
and  unpaid  Priority   Return   with   respect   to   such   unit,   whether or
<PAGE>
not declared,  minus any distributions in excess of the Priority Return that has
accrued with respect to such Series Y Preferred Units to the date of payment.

     (b)  "Parity  Preferred  Units"  means any  class or series of  Partnership
Interests of the Partnership now or hereafter authorized,  issued or outstanding
and expressly  designated by the Partnership to rank in parity with the Series Y
Preferred  Units (as  hereinafter  defined)  with respect to  distributions  and
rights upon voluntary or involuntary  liquidation,  winding-up or dissolution of
the Partnership,  including the 9 1/4% Series A Cumulative  Redeemable Preferred
Units,  the 8 7/8% Series B Cumulative  Redeemable  Preferred  Units, the 8 1/4%
Series  C  Cumulative  Redeemable  Preferred  Units  and  the  8 7/8%  Series  X
Cumulative Redeemable Preferred Units.  Notwithstanding the differing allocation
rights  set  forth  in  Section  4 below  that  apply to the  Series  A, B and C
Preferred  Units  (as  compared  to the  Series X and Y  Preferred  Units),  for
purposes  of this  Amendment  those  Series A, B and C  Preferred  Units and any
future  series of  preferred  units that rank in parity  with those  series also
shall be  considered  Parity  Preferred  Units to the  Series X and Y  Preferred
Units.

     (c)  "Priority  Return"  means an  amount  equal to 87/8%  per annum of the
Liquidation  Preference per Series Y Preferred  Unit,  commencing on the date of
issuance of such Series Y Preferred  Unit,  determined on the basis of a 365-day
year (and actual days for any period)  cumulative to the extent not  distributed
on any Series Y Preferred Unit Distribution Payment Date.

     (d) "PTP"  means a  "publicly  traded  partnership"  within the  meaning of
Section 7704 of the Code.

     Section 2.  Designation  and  Number.  Pursuant  to  Section  4.2(a) of the
Partnership  Agreement,  a  series  of  Partnership  Units  in  the  Partnership
designated as the "87/8% Series Y Cumulative  Redeemable  Preferred  Units" (the
"Series Y  Preferred  Units")  is  hereby  established.  The  number of Series Y
Preferred Units shall be 480,000.  The Holders of Series Y Preferred Units shall
not have any  Percentage  Interest  (as such term is defined in the  Partnership
Agreement) in the Partnership.

     Section 3.  Distributions.  (a)  Payment of  Distributions.  Subject to the
rights of holders of Parity Preferred Units as to the payment of  distributions,
pursuant  to  Section  5.1 of the  Partnership  Agreement,  holders  of Series Y
Preferred  Units shall be entitled to receive,  when,  as and if declared by the
Partnership  acting  through the General  Partner,  the  Priority  Return.  Such
distributions  shall be  cumulative,  shall  accrue  from the  original  date of
issuance of the Series Y Preferred Units and, notwithstanding Section 5.1 of the
Partnership  Agreement,  will be payable (i)  quarterly  in arrears on March 31,
June 30,  September 30 and December 31 of each year  commencing on September 30,
2000, and (ii) in the event of a redemption of Series Y Preferred  Units (each a
"Series Y  Preferred  Unit  Distribution  Payment  Date").  If any date on which
distributions  are to be made on the Series Y Preferred  Units is not a Business
Day (as defined  herein),  then payment of the  distribution  to be made on such
date will be made on the Business Day  immediately  preceding such date with the
same  force and effect as if made on such  date.  Distributions  on the Series Y
Preferred  Units will be made to the holders of record of the Series Y Preferred
Units on the relevant record dates to be fixed by the Partnership acting through
the General  Partner,  which record dates shall in no event exceed  fifteen (15)
Business Days prior to the relevant Series Y Preferred Unit Distribution Payment
Date (the "Series Y Preferred Unit Partnership Record Date").

     (b) Prohibition on  Distribution.  No  distributions  on Series Y Preferred
Units  shall be  authorized  by the  General  Partner  or paid or set  apart for
payment by the  Partnership  at any such time as the terms and provisions of any
agreement of the  Partnership  or the General  Partner,  including any agreement
relating to their indebtedness, prohibits such authorization, payment or setting
apart for payment or provides that such authorization,  payment or setting apart
for payment would constitute a breach thereof or a default thereunder, or to the
extent that such  authorization  or payment shall be restricted or prohibited by
law.

     (c) Distributions Cumulative. Distributions on the Series Y Preferred Units
will accrue  whether or not the terms and  provisions  of any  agreement  of the
Partnership,  including any agreement  relating to its  indebtedness at any time
prohibit the current  payment of  distributions,  whether or not the Partnership
<PAGE>
has earnings,  whether or not there are funds legally  available for the payment
of such  distributions  and whether or not such  distributions  are  authorized.
Accrued but unpaid distributions on the Series Y Preferred Units will accumulate
as of the Series Y Preferred Unit Distribution  Payment Date on which they first
become payable.  Distributions  on account of arrears for any past  distribution
periods may be declared  and paid at any time,  without  reference  to a regular
Series Y Preferred  Unit  Distribution  Payment Date to holders of record of the
Series Y  Preferred  Units on the record  date fixed by the  Partnership  acting
through the General  Partner  which date shall not exceed  fifteen (15) Business
Days prior to the payment date.  Accumulated and unpaid  distributions  will not
bear interest.

     (d) Priority as to  Distributions.  Subject to the provisions of Article 13
     of the Partnership Agreement:

     (i)  So  long  as  any  Series  Y  Preferred  Units  are  outstanding,   no
     distribution of cash or other property shall be authorized,  declared, paid
     or set  apart  for  payment  on or with  respect  to any class or series of
     Partnership  Interest  ranking junior as to the payment of distributions or
     rights  upon  a  voluntary  or  involuntary  liquidation,   dissolution  or
     winding-up   of  the   Partnership   to  the  Series  Y   Preferred   Units
     (collectively, "Junior Units"), nor shall any cash or other property be set
     aside for or applied to the purchase,  redemption or other  acquisition for
     consideration  of any Series Y Preferred  Units, any Parity Preferred Units
     or any Junior Units, unless, in each case, all distributions accumulated on
     all Series Y  Preferred  Units and all  classes  and series of  outstanding
     Parity Preferred Units have been paid in full. The foregoing sentence shall
     not prohibit (x)  distributions  payable  solely in Junior  Units,  (y) the
     conversion  of Junior  Units or Parity  Preferred  Units  into  Partnership
     Interests  ranking  junior  to the  Series  Y  Preferred  Units  or (z) the
     redemption of  Partnership  Interests  corresponding  to Series Y Preferred
     Stock,  Parity  Preferred  Stock or  Junior  Stock to be  purchased  by the
     General Partner pursuant to the Articles of  Incorporation  with respect to
     the General Partner's common stock and comparable Articles of Incorporation
     provisions  with respect to other classes or series of capital stock of the
     General Partner to preserve the General  Partner's  status as a real estate
     investment  trust,  provided  that such  redemption  shall be upon the same
     terms  as  the   corresponding   purchase   pursuant  to  the  Articles  of
     Incorporation.

     (ii)  So  long as  distributions  have  not  been  paid  in full  (or a sum
     sufficient for such full payment is not irrevocably  deposited in trust for
     payment) upon the Series Y Preferred  Units, all  distributions  authorized
     and  declared on the Series Y Preferred  Units and all classes or series of
     outstanding Parity Preferred Units shall be authorized and declared so that
     the amount of distributions  authorized and declared per Series Y Preferred
     Unit and such other  classes or series of Parity  Preferred  Units shall in
     all cases bear to each other the same ratio that accrued  distributions per
     Series  Y  Preferred  Unit and such  other  classes  or  series  of  Parity
     Preferred  Units  (which shall not include any  accumulation  in respect of
     unpaid distributions for prior distribution periods if such class or series
     of Parity Preferred Units do not have cumulative  distribution rights) bear
     to each other.

     (e) No Further  Rights.  Holders of Series Y  Preferred  Units shall not be
entitled  to any  distributions,  whether  payable in cash,  other  property  or
otherwise in excess of the full cumulative distributions described herein.

     Section 4. Allocations.  Section 6.1(a)(ii) of the Partnership Agreement is
amended to read, in its entirety, as follows:

     "(ii)(A)  Notwithstanding  anything  to  the  contrary  contained  in  this
     Agreement,  in any  taxable  year:  (1) the  holders  of  Series A, B and C
     Preferred Units shall first be allocated an amount of gross income equal to
     the Priority  Return  distributed to such holders in such taxable year, and
     (2)  subject  to any  prior  allocation  of  Profit  pursuant  to the  loss
     chargeback set forth in Section  6.1(a)(ii)(B) below, the holders of Series
     X and Y Preferred  Units shall then be  allocated an amount of Profit equal
     to the Priority  Return  distributed to such holders either in such taxable
     year or in prior taxable years to the extent that such  distributions  have
     not previously  been matched with an allocation of Profit  pursuant to this
     Section 6.1(a)(ii)(A)(2).
<PAGE>
     (B) After the Capital  Account  balances of all Partners other than holders
     of any series of Preferred  Units have been reduced to zero,  Losses of the
     Partnership  that  otherwise  would be  allocated  so as to  cause  deficit
     Capital Account balances for those other Partners shall be allocated to the
     holders of the Series A, B, C, X and Y Preferred Units in proportion to the
     positive  balances of their Capital  Accounts  until those Capital  Account
     balances  have been reduced to zero.  If Losses have been  allocated to the
     holders  of the Series A, B, C, X and Y  Preferred  Units  pursuant  to the
     preceding  sentence,  the first  subsequent  Profits  shall be allocated to
     those preferred  partners so as to recoup, in reverse order, the effects of
     the loss allocations.

     (C) Upon  liquidation of the  Partnership or the interest of the holders of
     Series A, B, C, X or Y  Preferred  Units in the  Partnership:  (1) items of
     gross income or deduction shall first be allocated to the holders of Series
     A, B and C Preferred Units in a manner such that, immediately prior to such
     liquidation,  the Capital Account  balances of such holders shall equal the
     amount  of their  Liquidation  Preferences,  and (2) an amount of Profit or
     Loss shall then be  allocated  to the  holders of Series X and Y  Preferred
     Units in a manner such that,  immediately  prior to such  liquidation,  the
     Capital  Account  balances of such holders  shall equal the amount of their
     Liquidation Preferences."

     Section 5. Optional Redemption. (a) Right of Optional Redemption. Except as
otherwise  provided in this  Amendment,  the Series Y Preferred Units may not be
redeemed prior to the fifth (5th)  anniversary of the issuance date. On or after
such date, the Partnership shall have the right to redeem the Series Y Preferred
Units,  in whole (and not in part),  at any time, upon not less than 10 nor more
than 60 days written notice,  at a redemption  price,  payable in cash, equal to
the Liquidation  Preference  (the "Series   Redemption  Price").  The Redemption
Right  given to Limited  Partners in Section  8.6 of the  Partnership  Agreement
shall not be  available  to the holders of the Series Y Preferred  Units and all
references  to Limited  Partners in said Section 8.6 (and related  provisions of
the Partnership  Agreement)  shall not include holders of the Series Y Preferred
Units.  The Series Y Redemption Price will not be payable out of proceeds from a
loan  obtained  by the  Partnership  solely  for the  purpose of payment of said
Series Y Redemption Price.

     (b) Procedures for Redemption.  (i) Notice of redemption will be (A) faxed,
and (B) mailed by the Partnership,  by certified mail, postage prepaid, not less
than 10 nor more than 60 days prior to the  redemption  date,  addressed  to the
respective holders of record of the Series Y Preferred Units at their respective
addresses as they appear on the records of the  Partnership.  No failure to give
or defect in such notice shall affect the  validity of the  proceedings  for the
redemption of any Series Y Preferred  Units except as to the holder to whom such
notice was defective or not given.  In addition to any  information  required by
law each such notice shall state:  (m) the  redemption  date, (n) the Redemption
Price, (o) the aggregate number of Series Y Preferred Units to be redeemed,  (p)
as provided in Section 5(b)(ii) below, the place or places where evidence of the
surrender of such Series Y Preferred Units shall be delivered for payment of the
Redemption  Price, (q) that  distributions on the Series Y Preferred Units to be
redeemed will cease to accumulate on such  redemption  date and (r) that payment
of the  Redemption  Price  will be made upon  presentation  of  evidence  of the
surrender  of such  Series Y  Preferred  Units as set forth in Section  5(b)(ii)
below.

     (ii) If the Partnership gives a notice of redemption in respect of Series Y
     Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New
     York City time, on the redemption  date, the Partnership  will deliver into
     escrow with an escrow agent  acceptable to the  Partnership and the holders
     of the Series Y Preferred Units (the "Escrow  Agent") the Redemption  Price
     and an  executed  Redemption  Agreement,  in the form  attached  hereto  as
     Exhibit A (the "Redemption  Agreement"),  and an Amendment to the Agreement
     of Limited  Partnership  evidencing  the  Redemption,  in the form attached
     hereto as Exhibit B. The  holders of the  Series Y  Preferred  Units  shall
     also, by 12:00 noon,  New York City time, on the redemption  date,  deliver
     into escrow with the Escrow Agent an executed  Redemption  Agreement and an
     executed Amendment to the Agreement of Limited  Partnership  evidencing the
     Redemption.  Upon  delivery  of all of the  above-described  items  by both
     parties,  Escrow Agent shall release the Redemption Price to the holders of
     the Series Y Preferred Units and the  fully-executed  Redemption  Agreement
<PAGE>
     and Amendment to Agreement of Limited  Partnership to both parties.  On and
     after the date of redemption, distributions will cease to accumulate on the
     Series Y Preferred  Units  called for  redemption,  unless the  Partnership
     defaults in the payment thereof. If any date fixed for redemption of Series
     Y Preferred  Units is not a Business  Day,  then payment of the  Redemption
     Price payable on such date will be made on the next  succeeding day that is
     a Business Day (and without any interest or other payment in respect of any
     such delay)  except that,  if such  Business Day falls in the next calendar
     year, such payment will be made on the immediately  preceding Business Day,
     in each case with the same  force and  effect as if made on such date fixed
     for redemption.  If payment of the Redemption Price is improperly  withheld
     or refused and not paid by the Partnership,  distributions on such Series Y
     Preferred  Units will continue to accumulate  from the original  redemption
     date to the date of payment,  in which case the actual payment date will be
     considered the date fixed for  redemption  for purposes of calculating  the
     applicable Redemption Price.

     Section 6. Voting  Rights.  (a) General.  Holders of the Series Y Preferred
Units  will not have any  voting  rights  or  right  to  consent  to any  matter
requiring the consent or approval of the Limited  Partners,  except as set forth
in Section 14.1 of the Partnership  Agreement and in this Section 6. (Solely for
purposes of Section 14.1 of the Partnership  Agreement,  each Series Y Preferred
Unit shall be treated as one Partnership Unit.)

     (b) Certain Voting Rights.  So long as any Series Y Preferred  Units remain
outstanding,  the Partnership  shall not,  without the  affirmative  vote of the
holders of at least a majority of the Series Y Preferred  Units  outstanding  at
the time:  (i) authorize or create,  or increase the authorized or issued amount
of, any class or series of Partnership  Interests ranking senior to the Series Y
Preferred  Units  with  respect  to  payment  of  distributions  or rights  upon
liquidation,  dissolution or winding-up or reclassify any Partnership  Interests
into  any  such  Partnership  Interest,  or  create,   authorize  or  issue  any
obligations or security convertible into or evidencing the right to purchase any
such Partnership Interests (for this purpose, partnership interests that rank in
parity  with  the  Series  A, B and C  Preferred  Units  or  other  series  with
equivalent  parity,  shall not be  treated  as  ranking  senior to, and shall be
treated as in parity  with,  the Series Y Preferred  Units and any other  series
that rank in parity  with the  Series Y  Preferred  Units);  (ii)  designate  or
create,  or increase the  authorized or issued  amount of, any Parity  Preferred
Units or reclassify  any authorized  Partnership  Interests into any such Parity
Preferred  Units,  or create,  authorize  or issue any  obligations  or security
convertible  into or evidencing the right to purchase any such shares,  but only
to the extent  such Parity  Preferred  Units are issued to an  Affiliate  of the
Partnership  on terms that differ from the terms of any Parity  Preferred  Units
issued to the public or  non-Affiliates of the Partnership (for purposes of this
Section 6(b)(ii),  an issuance to the General Partner shall not be treated as an
issuance to an Affiliate of the  Partnership  to the extent the issuance of such
Partnership  Interests was to allow the General  Partner to issue  corresponding
preferred stock to persons who are not Affiliates); or (iii) either (A) exchange
shares, consolidate, merge into or with, or convey, transfer or lease its assets
substantially  as an entirety to, any  corporation or other entity or (B) amend,
alter or repeal the provisions of the Partnership Agreement,  whether by merger,
consolidation  or otherwise,  that would  adversely  affect the powers,  special
rights, preferences,  privileges or voting power of the Series Y Preferred Units
or the holders thereof;  provided,  however, that with respect to the occurrence
of a share  exchange,  merger,  consolidation  or a sale or  lease of all of the
Partnership's  assets  as an  entirety,  so long as (1) the  Partnership  is the
surviving  entity and the Series Y Preferred Units remain  outstanding  with the
terms thereof unchanged, or (2) the resulting, surviving or transferee entity is
a partnership,  limited liability company or other pass-through entity organized
under the laws of any state and  substitutes  the Series Y  Preferred  Units for
other interests in such entity having substantially the same terms and rights as
the Series Y Preferred Units,  including with respect to  distributions,  voting
rights  and  rights  upon  liquidation,  dissolution  or  winding-up,  then  the
occurrence  of any such  event  shall  not be deemed to  adversely  affect  such
rights,  privileges  or voting  powers of the  holders of the Series Y Preferred
Units;  and provided,  further,  that any increase in the amount of  Partnership
Interests  or the  creation  or  issuance  of  any  other  class  or  series  of
Partnership Interests, in each case ranking (y) junior to the Series Y Preferred
Units with respect to payment of  distributions  or the  distribution  of assets
upon liquidation,  dissolution or winding-up, or (z) on a parity to the Series Y
Preferred Units with respect to payment of  distributions or the distribution of
assets  upon  liquidation,   dissolution  or  winding-up,  to  the  extent  such
Partnership  Interests  are not issued to an  Affiliate of the  Partnership  (an
issuance  to the  General  Partner  shall not be  treated as an  issuance  to an
Affiliate  of the  Partnership  to the extent the  issuance of such  Partnership
Interests  was to allow the  General  Partner to issue  corresponding  preferred
<PAGE>
stock to persons who are not Affiliates of the Partnership)  such issuance shall
not be deemed to adversely affect such rights, preferences, privileges or voting
powers. Notwithstanding anything to the contrary contained in this Section 6, if
holders  of a  majority  of the  Series Y  Preferred  Units do not  approve of a
proposed action by the Partnership  described in clause (iii) of the immediately
preceding sentence which, in the reasonable judgment of the Partnership, results
in the holders of Series Y Preferred Units having  substantially  the same terms
and  rights  as  the  Series  Y  Preferred  Units,  including  with  respect  to
distributions,  voting  rights  and  rights  upon  liquidation,  dissolution  or
winding-up, and the holders of a majority of the Series Y Preferred Units do not
affirmatively  vote in favor of such proposed  action,  then the Partnership may
proceed  with such  proposed  action and the sole  remedy of the  holders of the
Series Y Preferred Units shall be the acceleration of the exchange date relating
to the Series Y Preferred Units, as set forth in Section 8 of this Amendment. In
the  event  of  any  conflict  between  the  provisions  of  Section  4.2 of the
Partnership  Agreement and the  provisions of this Section 6, the  provisions of
this Section 6 shall control.

     Section 7.  Transfer  Restrictions.  (a) The  holders of Series Y Preferred
Units shall be subject to all of the provisions of Section 11 of the Partnership
Agreement  as modified by this  Section 7. Subject to the consent of the General
Partner,  which shall not be  unreasonably  withheld  or  delayed,  the Series Y
Preferred Units may be transferred to a maximum of five (5) persons.  At no time
shall the number of holders of the Series Y Preferred Units exceed five.

     (b) Notwithstanding anything to the contrary in Section 7(a), if any holder
of Series Y Preferred Units  concludes  based upon results or projected  results
that there  exists (in the  reasonable  judgment of such holder) an imminent and
substantial  risk that such holder's  interest in the Partnership  represents or
will  represent  more than 20% of the total profits or capital  interests in the
Partnership  for  a  taxable  year   (determined  in  accordance  with  Treasury
Regulations Section 1.731-2), then such holder shall be permitted to transfer so
much of its Series Y Preferred Units as may be appropriate to alleviate the risk
of not satisfying such 20% limit.

     Section 8. Exchange Rights.  (a) Right to Exchange.  (i) Series Y Preferred
Units  will be  exchangeable  in whole (and not in part) at any time on or after
the tenth  (10th)  anniversary  of the date of  issuance,  at the  option of the
Partnership  or a majority  of the  holders  thereof  (acting  as a whole),  for
authorized  but  previously   unissued  shares  of  87/8%  Series  Y  Cumulative
Redeemable  Preferred  Stock of the  General  Partner  (the  "Series Y Preferred
Stock") at an  exchange  rate of one share of Series Y  Preferred  Stock for one
Series Y Preferred Unit, subject to adjustment as described below (the "Series Y
Exchange  Price");  provided  that the  Series Y  Preferred  Units  will  become
exchangeable  at any  time,  in whole  (and not in  part),  at the  option  of a
majority  of the  holders of Series Y  Preferred  Units  (acting as a whole) for
Series Y Preferred  Stock if (x) at any time full  distributions  shall not have
been timely made on any Series Y  Preferred  Unit with  respect to six (6) prior
quarterly distribution periods, whether or not consecutive;  provided,  however,
that a distribution  in respect of Series Y Preferred  Units shall be considered
timely made if made within two (2) Business Days after the  applicable  Series Y
Preferred  Units  Distribution  Payment Date if at the time of such late payment
there shall not be any prior quarterly  distribution periods in respect of which
full distributions were not timely made, (y) upon receipt by a holder or holders
of Series Y  Preferred  Units of (1) notice from the  General  Partner  that the
General  Partner or a Subsidiary  of the General  Partner has taken the position
that the  Partnership  is,  or upon the  occurrence  of a  defined  event in the
immediate  future  will  be, a PTP and (2) an  opinion  rendered  by an  outside
nationally  recognized  independent counsel familiar with such matters addressed
to a holder or holders of Series Y Preferred  Units,  that the Partnership is or
likely is, or upon the  occurrence of a defined  event in the  immediate  future
will be or likely  will be a PTP,  or (z) the  holders of the Series Y Preferred
Units hold or will hold 20% or more of the profits and capital  interests of the
Partnership,  provided  further  that,  in the case of clause (z),  the Series Y
Preferred Units will be exchangeable  only to the extent necessary to reduce the
holdings of the holders of the Series Y Preferred  Units to less than 20% of the
capital and profits interests of the Partnership.

     In  addition  to and not in  limitation  of the  foregoing,  the  Series  Y
Preferred Units may be exchanged for Series Y Preferred Stock, in whole (and not
in part),  at the option of the  holders of a majority of the Series Y Preferred
Units (acting as a whole) prior to the tenth (10th)  anniversary of the issuance
<PAGE>
date and  after  the  third  anniversary  thereof  if such  holder  of  Series Y
Preferred Units shall deliver to the General Partner either (i) a private letter
ruling  addressed to such holder of Series Y Preferred  Units or (ii) an opinion
of independent counsel reasonably acceptable to the General Partner based on the
enactment of temporary or final  Treasury  Regulations  or the  publication of a
Revenue  Ruling in either  case to the effect  that an  exchange of the Series Y
Preferred  Units at such  earlier  time would not cause the  Series Y  Preferred
Units to be  considered  "stock and  securities"  within the  meaning of section
351(e) of the  Internal  Revenue  Code of 1986,  as  amended  (the  "Code")  for
purposes of determining  whether the holder of such Series Y Preferred  Units is
an  "investment  company"  under  section  721(b) of the Code if an  exchange is
permitted at such earlier date.

     In  addition  to and not in  limitation  of the  foregoing,  the  Series  Y
Preferred  Units may be  exchanged  in whole  (and not in part)  (regardless  of
whether  held by Salomon  Smith  Barney Tax  Advantaged  Exchange  Fund III, LLC
("Subscriber")  at the  option of the  holders  of a  majority  of the  Series Y
Preferred  Units  (acting as a whole) for Series Y Preferred  Stock (but only if
the  exchange  in whole  may be  accomplished  consistently  with the  ownership
limitations  set forth  under  the  Article  IV of the  Charter  of the  General
Partner,  taking  into  account  exceptions  thereto)  if at any  time  (i)  the
Partnership or the General  Partner breach any of the covenants set forth in the
Tax  Representations  Certificate  delivered  in  connection  with  the  Private
Placement Purchase Agreement, dated as of July 12th, 2000, among Subscriber, the
Partnership and the General Partner, (ii) the Partnership  reasonably determines
that the  assets  and income of the  Partnership  for a taxable  year after 2000
would not  satisfy  the income and assets  tests of Section  856 of the Code for
such taxable year if the Partnership were a real estate  investment trust within
the  meaning  of the  Code,  (iii)  under  the  circumstances  described  in the
penultimate  sentence of Section  6(b), or (iv) any holder of Series Y Preferred
Units shall deliver to the Partnership and the Company an opinion of independent
counsel  reasonably  acceptable to the Company to the effect that,  based on the
assets  and  income  of the  Partnership  for a taxable  year  after  2000,  the
Partnership  would not satisfy the income and assets tests of Section 856 of the
Code for such  taxable  year if the  Partnership  were a real estate  investment
trust  within the meaning of the Code,  and that in the case of each of (ii) and
(iv),  such failure would create a meaningful risk that a holder of the Series Y
Preferred Units would fail to maintain qualification as a real estate investment
trust.

     (ii) Notwithstanding anything to the contrary set forth in Section 8(a)(i),
if an Exchange Notice (as hereinafter defined) has been delivered to the General
Partner,  then the General Partner may, at its option,  elect to redeem or cause
the  Partnership to redeem all (but not a portion) of the  outstanding  Series Y
Preferred  Units for cash in an amount equal to the  Liquidation  Preference per
Series Y Preferred  Unit. The General  Partner may exercise its option to redeem
the Series Y  Preferred  Units for cash  pursuant  to this  Section  8(a)(ii) by
giving each holder of record of Series Y Preferred  Units notice of its election
to redeem for cash,  within five (5) Business Days after receipt of the Exchange
Notice, by (m) fax, and (n) registered mail, postage paid at the address of each
holder as it may  appear  on the  records  of the  Partnership  stating  (A) the
redemption  date,  which  shall be no later than sixty (60) days  following  the
receipt of the  Exchange  Notice,  (B) the  redemption  price,  (C) the place or
places where the Series Y Preferred  Units are to be surrendered  for payment of
the redemption  price,  (D) that  distributions  on the Series Y Preferred Units
will cease to accrue on such redemption date, (E) that payment of the redemption
price will be made upon  presentation  and  surrender  of the Series Y Preferred
Units and (F) the aggregate number of Series Y Preferred Units to be redeemed.

     (iii) If an  exchange  of Series Y  Preferred  Units  pursuant  to  Section
8(a)(i)  would  violate the  provisions  on ownership  limitation of the General
Partner  set forth in Article  IV of the  Charter of the  General  Partner  with
respect to the Series Y Preferred  Stock the General  Partner shall give written
notice thereof to each holder of record of Series Y Preferred Units, within five
(5) Business Days following  receipt of the Exchange Notice, by (m) fax, and (n)
registered mail,  postage prepaid,  at the address of each such holder set forth
in the  records  of the  Partnership.  In such  event,  each  holder of Series Y
Preferred  Units shall be entitled to exchange,  pursuant to the  provisions  of
Section  8(b) a number of Series Y Preferred  Units which would  comply with the
provisions on the ownership  limitation of the General Partner set forth in such
Article IV of the  Charter of the  General  Partner  and any Series Y  Preferred
Units not so exchanged (the "Excess Units") shall be redeemed by the Partnership
for cash in an amount equal to the Liquidation Preference. The written notice of
the  General  Partner  shall  state (A) the number of Excess  Units held by such
<PAGE>
holder, (B) the redemption price of the Excess Units, (C) the date on which such
Excess  Units  shall be  redeemed,  which date shall be no later than sixty (60)
days following the receipt of the Exchange Notice, (D) the place or places where
such Excess Units are to be surrendered for payment of the Redemption Price, (E)
that  distributions on the Excess Units will cease to accrue on such redemption,
date,  and  (F)  that  payment  of  the  redemption  price  will  be  made  upon
presentation  and surrender of such Excess Units. If an exchange would result in
Excess Units, as a condition to such exchange,  each holder of such units agrees
to provide  representations  and covenants  reasonably  requested by the General
Partner  relating to (1) the widely held nature of the interests in such holder,
sufficient to assure the General Partner that the holder's ownership of stock of
the General  Partner  (without  regard to the limits  described  above) will not
cause any Person (as such term is defined in the  Articles of  Incorporation  of
the General Partner) to own stock of the General Partner in an amount that would
cause such Person not to comply with the provisions of the ownership  limitation
of the  General  Partner  set  forth  in  such  Article  IV of the  Articles  of
Incorporation of the General  Partner;  and (2) to the extent such holder can so
represent  and  covenant  without  obtaining  information  from its owners,  the
holder's ownership of tenants of the Partnership and its affiliates.

     Notwithstanding  provision of this  Agreement to the contrary,  no Series Y
Limited  Partner  shall be  entitled to effect an exchange of Series Y Preferred
Units for Series Y  Preferred  Stock to the extent  that  ownership  or right to
acquire  such  shares  would  cause the  Partner or any other  Person or, in the
opinion of counsel selected by the General Partner, may cause the Partner or any
other Person to violate the  restrictions  on ownership and transfer of Series Y
Preferred  Stock set forth in the Articles of  Incorporation.  To the extent any
such  attempted  exchange for Series Y Preferred  Stock would be in violation of
the  previous  sentence,  it shall be void ab initio  and such  Series Y Limited
Partner  shall not  acquire  any  rights or  economic  interest  in the Series Y
Preferred Stock otherwise issuable upon such exchange.

     (iv) The  redemption  of Series Y  Preferred  Units  described  in  Section
8(a)(ii)  and (iii) shall be subject to the  provisions  of Section  5(b)(i) and
Section 5(b)(ii);  provided,  however,  that the term "redemption price" in such
Section shall be read to mean the Liquidation  Preference per Series Y Preferred
Unit being redeemed.

     (b) Procedure for Exchange. (i) Any exchange shall be exercised pursuant to
a notice of exchange (the "Exchange Notice") delivered to the General Partner by
the  holder  who is  exercising  such  exchange  right,  by (a)  fax  and (b) by
certified mail postage prepaid.  The exchange of Series Y Preferred Units may be
effected  after the fifth (5th)  Business Day  following  receipt by the General
Partner of the Exchange Notice by delivering  certificates if any,  representing
such Series Y Preferred  Units to be exchanged  together  with,  if  applicable,
written  notice of exchange and a proper  assignment  of such Series Y Preferred
Units  to the  office  of the  General  Partner  maintained  for  such  purpose.
Currently,  such  office is c/o PS Business  Parks,  Inc.,  701 Western  Avenue,
Glendale,  California 91201, Attention:  Jack E. Corrigan. Each exchange will be
deemed to have been effected  immediately  prior to the close of business on the
date on which such Series Y Preferred  Units to be exchanged  (together with all
required  documentation)  shall have been surrendered and notice shall have been
received by the General  Partner as aforesaid and the Exchange  Price shall have
been paid. Any Series Y Preferred  Stock issued pursuant to this Section 8 shall
be delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of pledge, lien, encumbrance or restriction other than those
provided in the Charter,  the Bylaws of the General Partner,  the Securities Act
of 1933, as amended and relevant state securities or blue sky laws.

     (ii) In the event of an exchange of Series Y Preferred  Units for shares of
Series Y Preferred  Stock,  an amount  equal to the accrued and unpaid  Priority
Return,  whether  or not  declared,  to the  date of  exchange  on any  Series Y
Preferred  Units  tendered  for  exchange  shall (a) accrue on the shares of the
Series Y Preferred Stock into which such Series Y Preferred Units are exchanged,
and (b) continue to accrue on such Series Y Preferred Units,  which shall remain
outstanding  following such exchange,  with the General Partner as the holder of
such Series Y Preferred  Units.  Notwithstanding  anything to the  contrary  set
forth herein,  in no event shall a holder of a Series Y Preferred  Unit that was
validly  exchanged into Series Y Preferred Stock pursuant to this section (other
than the General  Partner now holding such Series Y Preferred  Unit),  receive a
<PAGE>
distribution from the Partnership,  if such holder, after exchange,  is entitled
to receive a distribution  from the General Partner with respect to the share of
Series Y Preferred Stock for which such Series Y Preferred Unit was exchanged or
redeemed.

     (iii)  Fractional  shares of Series Y Preferred  Stock are not to be issued
upon  exchange  but,  in lieu  thereof,  the  General  Partner  will  pay a cash
adjustment  based upon the fair market value of the Series Y Preferred  Stock on
the day prior to the exchange  date as  determined in good faith by the Board of
Directors of the General Partner.

     (c)  Adjustment  of Exchange  Price.  (i) The Exchange  Price is subject to
adjustment upon certain events,  including,  (a) subdivisions,  combinations and
reclassification  of the Series Y Preferred Stock, and (b)  distributions to all
holders of Series Y Preferred  Stock of evidences of indebtedness of the General
Partner  or  assets   (including   securities,   but  excluding   dividends  and
distributions  paid in cash out of  equity  applicable  to  Series  Y  Preferred
Stock).

     (ii) In case  the  General  Partner  shall  be a party  to any  transaction
(including,  without  limitation,  a  merger,  consolidation,   statutory  share
exchange,  tender offer for all or  substantially  all of the General  Partner's
capital  stock  or sale of all or  substantially  all of the  General  Partner's
assets),  in each case as a result of which the Series Y Preferred Stock will be
converted into the right to receive shares of capital stock, other securities or
other  property  (including  cash or any  combination  thereof),  each  Series Y
Preferred  Unit will  thereafter  be  exchangeable  into the kind and  amount of
shares of capital stock and other securities and property receivable  (including
cash or any combination  thereof) upon the consummation of such transaction by a
holder of that number of shares of Series Y Preferred Stock or fraction  thereof
into which one Series Y Preferred  Unit was  exchangeable  immediately  prior to
such  transaction.  The  General  Partner  may not  become  a party  to any such
transaction  unless the terms thereof are consistent with the foregoing.  In the
event of a conflict  between the  provisions  of this  Section  8(c)(ii) and any
provision of the Partnership Agreement,  the provisions of this Section 8(c)(ii)
shall control.

     Section  9. No  Conversion  Rights.  Except as set forth in  Section 8, the
holders of the  Series Y  Preferred  Units  shall not have any rights to convert
such units into  shares of any other  class or series of stock or into any other
securities of, or interest in, the Partnership.

     Section 10. No Sinking Fund. No sinking fund shall be  established  for the
retirement or redemption of Series Y Preferred Units.

     Section 11.  Exhibit A to Partnership  Agreement.  In order to duly reflect
the  issuance  of  the  Series  Y  Preferred  Units  provided  for  herein,  the
Partnership Agreement is hereby further amended pursuant to Section 12.3 thereof
by deleting Exhibit A thereto and replacing Exhibit A attached hereto therefor.

     Section 12. Inconsistent  Provisions.  Nothing to the contrary contained in
the Partnership Agreement shall limit any of the rights or obligations set forth
in this Amendment.

     IN WITNESS  WHEREOF this  Amendment  has been executed as of the date first
above written.

                             PS BUSINESS PARKS, INC.

                             By:      /s/ Jack Corrigan
                                      ------------------------------------------
                                      Jack Corrigan
                                      Vice President and Chief Financial Officer

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