FRANCHISE FINANCE CORP OF AMERICA
8-K, 1998-01-09
REAL ESTATE INVESTMENT TRUSTS
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                        Date of Report: December 29, 1997


                    FRANCHISE FINANCE CORPORATION OF AMERICA
       -------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)



    Delaware                      1-13116                       86-0736091
- ---------------                 ------------              ----------------------
(State or other                 (Commission                   (IRS Employer
jurisdiction of                 File Number)              Identification Number)
 incorporation)



             17207 North Perimeter Drive, Scottsdale, AZ      85255
          ------------------------------------------------------------
              (Address of Principal Executive Offices)      (Zip Code)


       Registrant's telephone number, including area code: (602) 585-4500

                                      NONE
                                    --------
          (Former Name or Former Address, if Change Since Last Report)
<PAGE>
Item 5.  Other Events.

         On December 29, 1997, the Registrant  entered into a Second Amended and
Restated Credit  Agreement with  NationsBank of Texas,  N.A., as  Administrative
Agent, and certain lenders named therein (the "Credit Agreement"),  which amends
and restates the Amended and Restated Credit Agreement between the parties dated
as of April 15, 1997. The Credit  Agreement was amended  generally to conform to
the Registrant's asset securitization  transactions and to establish a revolving
line of credit  through  the year 2000.  The amount of credit  available  to the
Registrant  under the Credit  Agreement did not change.  The Credit Agreement is
filed as Exhibit 99.01 hereto.

Item 7.  Financial Statements and Exhibits.

         (c)  Exhibits.

         99.01    Second  Amended  and  Restated  Credit  Agreement  dated as of
                  December  29,  1997 among  Franchise  Finance  Corporation  of
                  America, Certain Lenders and NationsBank of Texas, N.A.
<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   FRANCHISE FINANCE CORPORATION OF
                                   AMERICA (Registrant)



Dated: January 8, 1998             By /s/  John Barravecchia
                                      ---------------------------
                                      John Barraveccia, Executive Vice President
                                      and Chief Financial Officer


Dated: January 8, 1998             By /s/ Catherine F. Long
                                      ---------------------------
                                      Catherine F. Long, Senior Vice President,
                                      Finance and Principal Accounting Officer

================================================================================


                           SECOND AMENDED AND RESTATED
                                CREDIT AGREEMENT


                          Dated as of December 29, 1997

                                      AMONG

                    FRANCHISE FINANCE CORPORATION OF AMERICA,

                                 CERTAIN LENDERS

                                       and

                           NATIONSBANK OF TEXAS, N.A.
                             as Administrative Agent

                                       and

                        BANK OF MONTREAL, Chicago Branch
               COMMERZBANK AKTIENGESELLSCHAFT, Los Angeles Branch
                    THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
                   UNION BANK OF SWITZERLAND (New York Branch)
                                  as Co-Agents


================================================================================
<PAGE>
                                TABLE OF CONTENTS

                             ARTICLE I. DEFINITIONS

     1.1.     Definitions..................................................... 1
              -----------
     1.2.     Accounting and Other Terms......................................23
              --------------------------

                    ARTICLE II. AMOUNTS AND TERMS OF ADVANCES

     2.1.     (a)      Advances Under the Revolving Loan......................23
                       ---------------------------------
              (b)      Bid Rate Loans.........................................24
                       --------------
     2.2.     Making Advances.................................................24
              ---------------
     2.3.     Evidence of Indebtedness........................................28
              ------------------------
     2.4.     Reduction of Commitment.........................................28
              -----------------------
     2.5.     Prepayments.....................................................29
              -----------
     2.6.     Repayment.......................................................30
              ---------
     2.7.     Interest........................................................30
              --------
     2.8.     Default Interest................................................31
              ----------------
     2.9.     Continuation and Conversion Elections...........................31
              -------------------------------------
     2.10.    Fees ...........................................................32
              ----
     2.11.    Funding Losses .................................................33
              --------------
     2.12.    Computations and Manner of Payments ............................33
              -----------------------------------
     2.13.    Yield Protection ...............................................34
              ----------------
     2.14.    Use of Proceeds ................................................37
              ---------------
     2.15.    Extension of Maturity Date......................................37
              --------------------------

                        ARTICLE III. CONDITIONS PRECEDENT

     3.1.     Conditions Precedent to the Initial Advance.....................38
              -------------------------------------------
     3.2.     Conditions Precedent to All Advances............................39
              ------------------------------------

                   ARTICLE IV. REPRESENTATIONS AND WARRANTIES

     4.1.     Organization and Qualification..................................40
              ------------------------------
     4.2.     Due Authorization; Validity.....................................41
              ---------------------------
     4.3.     Conflicting Agreements and Other Matters........................41
              ----------------------------------------
     4.4.     Financial Statements............................................41
              --------------------
     4.5.     Litigation......................................................41
              ----------
     4.6.     Compliance With Laws Regulating the Incurrence of Indebtedness..42
              --------------------------------------------------------------
     4.7.     Authorizations, Title to Properties, and Related Matters........42
              --------------------------------------------------------
     4.8.     Outstanding Debt and Liens......................................42
              --------------------------
<PAGE>
     4.9.     Taxes...........................................................43
              -----
     4.10.    ERISA ..........................................................43
              -----
     4.11.    Environmental Laws .............................................43
              ------------------
     4.12.    Disclosure .....................................................44
              ----------
     4.13.    Investments; Subsidiaries ......................................44
              -------------------------
     4.14.    Certain Fees ...................................................44
              ------------
     4.15.    Intellectual Property ..........................................44
              ---------------------
     4.16.    Investment Company Act .........................................44
              ----------------------
     4.17.    Restricted Payments ............................................45
              -------------------
     4.18.    Status as a Real Estate Investment Trust .......................45
              ----------------------------------------
     4.19.    Common Enterprise ..............................................45
              -----------------
     4.20.    Survival of Representations and Warranties, etc. ...............45
              ------------------------------------------------

                        ARTICLE V. AFFIRMATIVE COVENANTS

     5.1.     Compliance with Laws and Payment of Debt........................46
              ----------------------------------------
     5.2.     Insurance.......................................................46
              ---------
     5.3.     Inspection Rights...............................................46
              -----------------
     5.4.     Records and Books of Account; Changes in GAAP...................46
              ---------------------------------------------
     5.5.     Reporting Requirements..........................................46
              ----------------------
     5.6.     Use of Proceeds.................................................49
              ---------------
     5.7.     Maintenance of Existence and Assets.............................49
              -----------------------------------
     5.8.     Payment of Taxes................................................49
              ----------------
     5.9.     Indemnity.......................................................49
              ---------
     5.10.    Authorizations and Material Agreements .........................50
              --------------------------------------
     5.11.    Intercompany Notes .............................................50
              ------------------
     5.12.    Further Assurances .............................................50
              ------------------
     5.13.    Subsidiaries and Other Obligors ................................51
              -------------------------------
     5.14.    Interest Hedge Agreements ......................................51
              -------------------------

                         ARTICLE VI. NEGATIVE COVENANTS

     6.1.     Financial Covenants.............................................51
              -------------------
     6.2.     Indebtedness....................................................51
              ------------
     6.3.     Contingent Liabilities..........................................52
              ----------------------
     6.4.     Liens...........................................................52
              -----
     6.5.     Prohibition of Fundamental Changes..............................52
              ----------------------------------
     6.6.     Dispositions of Assets..........................................52
              ----------------------
     6.7.     Distributions and Restricted Payments...........................53
              -------------------------------------
     6.8.     Business........................................................53
              --------
     6.9.     Transactions with Affiliates....................................53
              ----------------------------
                                      -2-
<PAGE>
     6.10.    Loans and Investments ..........................................53
              ---------------------
     6.11.    Fiscal Year and Accounting Method ..............................54
              --------------------------------- 
     6.12.    Amendment of Corporate Documents ...............................54
              --------------------------------
     6.13.    Compliance with ERISA ..........................................54
              ---------------------
     6.14.    Subsidiaries and Other Obligors ................................54
              -------------------------------
     6.15.    Amendments to Material Agreements ..............................54
              ---------------------------------
     6.16.    Prohibited Transactions ........................................55
              -----------------------
     6.17.    No New Subsidiaries ............................................55
              -------------------
     6.18.    Asset Securitization Affiliates ................................55
              -------------------------------

                         ARTICLE VII. EVENTS OF DEFAULT

     7.1.     Events of Default...............................................55
              -----------------
     7.2.     Remedies Upon Default...........................................57
              ---------------------
     7.3.     Cumulative Rights...............................................58
              -----------------
     7.4.     Waivers.........................................................58
              -------
     7.5.     Performance by Administrative Agent or any Lender...............58
              -------------------------------------------------
     7.6.     Expenditures....................................................59
              ------------
     7.7.     Control.........................................................59
              -------

                       ARTICLE VIII. Administrative Agent

     8.1.     Authorization and Action........................................59
              ------------------------
     8.2.     Administrative Agent's Reliance, Etc............................59
              ------------------------------------
     8.3.     NationsBank of Texas, N.A. and Affiliates.......................60
              -----------------------------------------
     8.4.     Lender Credit Decision..........................................60
              ----------------------
     8.5.     Indemnification by Lenders......................................60
              --------------------------
     8.6.     Successor Administrative Agent..................................61
              ------------------------------

                            ARTICLE IX. MISCELLANEOUS

     9.1.     Amendments and Waivers..........................................61
              ----------------------
     9.2.     Notices.........................................................62
              -------
     9.3.     Parties in Interest.............................................64
              -------------------
     9.4.     Assignments and Participations..................................64
              ------------------------------
     9.5.     Sharing of Payments.............................................65
              -------------------
     9.6.     Right of Set-off................................................65
              ----------------
     9.7.     Costs, Expenses, and Taxes......................................65
              --------------------------
     9.8.     Rate Provision..................................................68
              --------------
     9.9.     Confidentiality.................................................68
              ---------------
     9.10.    Severability ...................................................69
              ------------
                                      -3-
<PAGE>
     9.11.    Exceptions to Covenants ........................................70
              -----------------------
     9.12.    Counterparts ...................................................70
              ------------
     9.13.    GOVERNING LAW; WAIVER OF JURY TRIAL ............................70
              -----------------------------------
     9.14.    ENTIRE AGREEMENT ...............................................71
              ----------------
                                      -4-
<PAGE>
                         TABLE OF SCHEDULES AND EXHIBITS



                                    SCHEDULES

Schedule 4.1      Organization and Qualification
Schedule 4.5      Litigation
Schedule 4.8      Debt,  Contingent  Liabilities  and Liens of Company  and each
                  Subsidiary Entity in Existence on the Closing Date
Schedule 4.11     Environmental  Liabilities  of Company and each  Subsidiary on
                  the Closing Date
Schedule 4.13     Investments



                                    EXHIBITS


Exhibit A         - Note (Evidencing Revolving Loan)
Exhibit B         - Guaranty Agreement
Exhibit C         - Compliance Certificate
Exhibit D         - Conversion/Continuation Notice
Exhibit E         - Borrowing Notice
Exhibit F         - Assignment and Acceptance
Exhibit G         - Subordination Agreement
Exhibit H         - Confidentiality Agreement
Exhibit I         - Bid Rate Note
                                      -5-
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT


         THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
dated as of December 29, 1997, among FRANCHISE FINANCE CORPORATION OF AMERICA, a
Delaware corporation  ("Company"),  Lenders from time to time party hereto or to
an Assignment and Acceptance, and NATIONSBANK OF TEXAS, N.A., a national banking
association, as Administrative Agent (in such capacity, "Administrative Agent"),
and  BANK OF  MONTREAL,  Chicago  Branch,  COMMERZBANK  AKTIENGESELLSCHAFT,  Los
Angeles  Branch,  THE LONG-TERM  CREDIT BANK OF JAPAN,  LTD.,  and UNION BANK OF
SWITZERLAND  (New York Branch),  as Co-Agents (in such  capacity,  collectively,
"Co-Agents").


                                   BACKGROUND

         Company,  Lenders and Administrative  Agent are parties to that certain
Amended and Restated Credit Agreement, dated as of April 15, 1997 (as heretofore
amended  and in  effect  on the date of this  Agreement,  the  "Existing  Credit
Agreement") providing for loans to be made to Company in the aggregate principal
amount not  exceeding  $350,000,000  at any one time  outstanding.  The  parties
hereto desire to amend and restate the Existing Credit  Agreement as hereinafter
set forth.


                                    AGREEMENT

         NOW, THEREFORE,  for valuable  consideration hereby  acknowledged,  the
parties hereto agree that the Existing Credit  Agreement is amended and restated
in its entirety as follows:


                             ARTICLE I. DEFINITIONS

         1.1. Definitions.  As used in this Agreement,  the following terms have
the respective  meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):

         "Absolute Bid Rate" means an absolute fixed rate of interest per annum.

         "Absolute Bid Rate Loan" means a Bid Rate Loan which bears  interest at
an Absolute Bid Rate.
<PAGE>
         "Accumulated Depreciation" means, as of any date of determination,  the
accumulated depreciation and amortization of prepaid expenses of Company and its
Consolidated  Subsidiaries determined in accordance with GAAP as of such date of
determination.

         "Adjusted  Net  Worth"  means,  as of any  date of  determination,  for
Company and its  Consolidated  Subsidiaries  determined in accordance with GAAP,
the sum of (a) Net Worth, plus (b) Accumulated Depreciation.

         "Adjustment  Date"  means,  for  purposes of the  determination  of the
Applicable Margin and the Commitment Fee, the effective date of any issuance of,
or change in, the Index Debt Rating which results in a change in the  Applicable
Margin and the Commitment Fee.

         "Administrative  Agent"  means  NationsBank  of  Texas,  N.A.,  in  its
capacity as  Administrative  Agent  hereunder,  or any successor  Administrative
Agent appointed pursuant to Section 8.6 hereof.

         "Advance"  means an  advance  made by a Lender to Company  pursuant  to
Section 2.1 hereof.

         "Affiliate" means a Person that directly,  or indirectly through one or
more  intermediaries,  Controls or is Controlled  By or is Under Common  Control
with another Person.

         "Agreement" means this Second Amended and Restated Credit Agreement, as
hereafter amended, modified, or supplemented from time to time.

         "Applicable Law" means (a) in respect of any Person,  all provisions of
Laws  applicable  to such  Person,  and all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a party
and (b) in  respect  of  contracts  made or  performed  in the  State of  Texas,
"Applicable  Law"  shall  also mean the laws of the  United  States of  America,
including,  without  limiting the  foregoing,  12 USC Sections 85 and 86(a),  as
amended  to the date  hereof and as the same may be amended at any time and from
time to time  hereafter,  and any other  statute of the United States of America
now or at any time hereafter  prescribing the maximum rates of interest on loans
and extensions of credit, and the laws of the State of Texas, including, without
limitations,  Art. 1H, if applicable, and if Art. 1H is not applicable, Art. 1D,
and any  other  statute  of the  State  of Texas  now or at any  time  hereafter
prescribing  maximum  rates of  interest  on loans  and  extensions  of  credit,
provided  however,  that pursuant to Article  5069-15.10(b),  Title 79,  Revised
Civil Statutes of Texas, 1925, as amended, Company agrees that the provisions of
Chapter 15, Title 79, Revised Civil Statutes of Texas,  1925, as amended,  shall
not apply to the Advances hereunder.

         "Applicable   Margin"  means  the  following  per  annum   percentages,
applicable in the 
                                      -2-
<PAGE>
following situations:


                      Applicability                         Base Rate      LIBOR
                      -------------                         ---------      -----

         Category 1 - There is no Index  Debt  Rating          0.25        1.50 
         or the Index Debt  Rating is the  following:                           
         below BBB- by S&P or below Baa3 by Moody's                             
                                                                                
         Category  2 - The Index  Debt  Rating is the          0.00        1.00 
         following: BBB- by S&P or Baa3 by Moody's                              
                                                                                
         Category  3 - The Index  Debt  Rating is the          0.00        0.95 
         following: BBB by S&P or Baa2 by Moody's                               
                                                                                
         Category  4 - The Index  Debt  Rating is the          0.00        0.90 
         following: BBB+ by S&P or Baa1 by Moody's                              
                                                                                
         Category  5 - The Index  Debt  Rating is the          0.00        0.80 
         following:  A- or  better  by  S&P  or A3 or                           
         better by Moody's                                                      

The Applicable Margin payable by Company on the Advances  outstanding  hereunder
shall  be  adjusted  on  each  Adjustment  Date  according  to the  most  recent
determination  of the Index Debt  Rating;  provided,  that if (i) there exists a
Default or (ii)  Company  does not have an Index  Debt  Rating,  the  Applicable
Margin shall be (A) 0.25% per annum with  respect to Base Rate  Advances and (B)
1.50% per annum with respect to LIBOR  Advances.  For purposes of the foregoing,
if the Index  Debt  Rating  established  by S&P or Moody's  shall fall  within a
different  category,  the Applicable  Margin shall be determined by reference to
whichever  Index Debt Rating  shall fall  within the  inferior  (or  numerically
lower)  category.  If the rating  system of Moody's or S&P shall change prior to
the Maturity  Date,  Company and Lenders shall  negotiate in good faith to amend
the  references to specific  ratings in this  definition to reflect such changed
rating system.

         "Art.  1D" means Article  5069-1D,  Title 79, Revised Civil Statutes of
Texas, 1925, as amended.

         "Art.  1H" means Article  5069-1H,  Title 79, Revised Civil Statutes of
Texas, as amended.

         "Asset Sale" means any sale or other disposition, or series of sales or
other dispositions (including,  without limitation,  by merger or consolidation,
and whether by operation of law or otherwise), made on or after the Closing Date
by Company or any of its  Subsidiaries  to any Person (other than Company or any
of its Subsidiaries) of (a) all or substantially all of the outstanding  Capital
Stock of any of its Subsidiaries,  (b) all or substantially all of its assets or
the
                                      -3-
<PAGE>
assets of any  division of Company or any of its  Subsidiaries  or (c) any other
asset or assets of Company  or any of its  Subsidiaries,  including  the sale of
notes in connection  with an Asset  Securitization  (but  excluding any Retained
Securities in connection  with such Asset  Securitization);  provided,  however,
that the following shall not be considered an Asset Sale hereunder: (i) the sale
or  other  disposition  by  Company  or any of its  Subsidiaries  of worn out or
obsolete  tools,  property  or  equipment;  (ii)  the  sale of  debt  or  equity
investment  securities  in the  ordinary  course of  business;  and (iii)  sales
resulting  from the  exercise by Tenants  under  Leases with respect to Property
owned by Company and its Subsidiaries as of the Closing Date of purchase options
granted by Company and its Subsidiaries to such Tenants.

         "Asset Sale Proceeds" means cash payments received by Company or any of
its Subsidiaries (including,  without limitation,  any cash payments received by
way of  deferred  payment  of  principal  pursuant  to a note or  receivable  or
otherwise,  but only as and when received) from any Asset Sale (after  repayment
of any Indebtedness due by reason of such Asset Sale or to effect the release of
any Lien on the property or assets  being sold),  in each case net of the amount
of (a) reasonable  brokers',  underwriters'  and advisors' fees and  commissions
payable in connection with such Asset Sale, (b) all Taxes  reasonably  estimated
to be payable as a direct  consequence  of such Asset Sale,  (c) the  reasonable
fees  and  expenses   (including,   without   limitation,   severance  payments)
attributable  to such Asset Sale,  and (d) to the extent not included in clauses
(a)  through  (c),  any amount  required  to be paid to any Person  (other  than
Company  and  any of its  Subsidiaries)  owning  a  beneficial  interest  in the
property or assets sold.  For purposes of this  definition,  Asset Sale Proceeds
shall be deemed to include,  without  limitation,  any award of compensation for
any asset or property or group thereof taken by  condemnation  or eminent domain
and  insurance  proceeds  for the loss of or damage to any asset or  property if
such award or proceeds equals or exceeds $50,000 (per  occurrence) and within 90
days after the receipt  thereof  replacement or repair of such asset or property
has not commenced, except that in the event that at any time such replacement or
repair is abandoned or is otherwise  discontinued or is not diligently  pursued,
the remaining award or proceeds, as the case may be, shall constitute Asset Sale
Proceeds at such time.

         "Asset  Securitization"  means  the  sale,  disposition,   transfer  or
assignment  by  Company  or  any  of  its  Subsidiaries  to  a  special  purpose
corporation,  trust or other entity,  of notes  evidencing  obligations to repay
secured or unsecured loans owned by Company or any such Subsidiary,  which notes
are   subsequently   sold,   transferred  or  assigned  to  one  or  more  Asset
Securitization  Affiliates,   and,  as  a  result  of  such  sale,  transfer  or
assignment,  bonds,  certificates or other  evidences of ownership  representing
interests  in  pools  of  such  loans  are  issued,   either  simultaneously  or
subsequently.

         "Asset  Securitization  Affiliate" means an Affiliate of Company or any
of its Subsidiaries  which owns no assets (other than initial  capitalization of
each Affiliate not to exceed $100,000) and transacts no business other than as a
depositor,  conduit or grantor in an Asset  Securitization,  including,  without
limitation,  any real  estate  mortgage  investment  conduit or special  purpose
corporation,  trust or other  entity  whose  sole  purpose is to effect an Asset
Securitization   or  a  
                                      -4-
<PAGE>
warehousing of loans in anticipation of an Asset Securitization.

         "Assignment and Acceptance" means an assignment and acceptance  entered
into by a Lender and an Eligible Assignee, and accepted by Administrative Agent,
in the  form of  Exhibit  F  hereto,  as each  such  agreement  may be  amended,
modified,  extended,  restated,  renewed,  substituted  or replaced from time to
time.

         "Auditor"  means Arthur  Andersen LLP, or other  independent  certified
public accountants selected by Company and acceptable to Administrative Agent.

         "Authorizations" means all filings,  recordings and registrations with,
and all validations or exemptions, consents and Licenses from, any Tribunal.

         "Authorized  Officer" means the chief executive  officer,  an executive
vice  president  or senior  vice  president  of Company  or any other  executive
officer  of  Company   authorized   by  Company  from  time  to  time  of  which
Administrative Agent has been notified in writing.

         "Bank  Affiliate"  means the  holding  company  of any  Lender,  or any
wholly-owned  direct or indirect  subsidiary of such holding  company or of such
Lender.

         "Base Rate Advance" means an Advance bearing interest at the Base Rate.

         "Base  Rate" means a  fluctuating  rate per annum as shall be in effect
from time to time  equal to the  lesser of (a) the  higher of (i) the sum of the
Applicable Margin plus the rate of interest as then in effect announced publicly
by  NationsBank  of Texas,  N.A. in Dallas,  Texas from time to time as its U.S.
dollar  prime  commercial  lending  rate (such rate may or may not be the lowest
rate of interest  charged by  NationsBank  from time to time) or (ii) the sum of
the  Applicable  Margin,  plus 0.50%,  plus the Federal Funds Rate,  and (b) the
Highest  Lawful  Rate.  The Base Rate shall be  adjusted  automatically  without
notice as of the opening of business on the effective date of each change in the
prime rate or Federal Funds Rate, as applicable, to account for such change.

         "Bid  Rate  Loan"  means  an  Advance  the  interest  rate on  which is
determined by agreement  between Company and Lender making such Advance pursuant
to Section 2.1(b).

         "Bid Rate Note" means each  promissory  note of Company  evidencing Bid
Rate Loans, in substantially the form of Exhibit I hereto, as each such note may
be amended, extended,  restated,  renewed,  substituted or replaced from time to
time.

         "Borrowing"  means a borrowing under the Facility of the same Type made
on the same day.
                                      -5-
<PAGE>
         "Borrowing Notice" has the meaning set forth in Section 2.2(a) hereof.

         "Business Day" means a day on which  commercial  banks are open (a) for
the  transaction of commercial  banking  business in Dallas,  Texas and Phoenix,
Arizona  and (b) with  respect  to any  LIBOR  Advance  for the  transaction  of
international  business  (including  dealings  in Dollar  deposits)  in  London,
England.

         "Capital  Leases" means  capital  leases and  subleases,  as defined in
accordance with GAAP.

         "Capital Stock" means, as to any Person,  the equity  interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person  that is a  corporation  and each class of  partnership  interests
(including,  without limitation,  general,  limited and preference units) in any
Person that is a partnership.

         "Cash  Equivalents"  means  investments  (directly  or  through a money
market fund) in (a)  certificates of deposit and other interest bearing deposits
or accounts with United States  commercial  banks having a combined  capital and
surplus of at least  $300,000,000,  which certificates,  deposits,  and accounts
mature within one year from the date of  investment  and are fully insured as to
principal by the Federal Deposit Insurance  Corporation or any successor agency,
(b)  obligations  issued or  unconditionally  guaranteed  by the  United  States
government,  or issued by an agency  thereof  and  backed by the full  faith and
credit of the United States government, which obligations mature within one year
from the date of  investment,  (c)  direct  obligations  issued  by any state or
political  subdivision of the United  States,  which mature within one year from
the date of  investment  and  have the  highest  rating  obtainable  from S&P or
Moody's on the date of investment, and (d) commercial paper which has one of the
three highest ratings obtainable from S&P or Moody's.

         "Cash Flow From Operations" means, for any period of determination, for
Company and its  Consolidated  Subsidiaries on a consolidated  basis, net income
plus depreciation and  amortization,  all as determined in accordance with GAAP;
provided that there shall not be included in such  calculation  (a) any proceeds
of any  insurance  policy  other than  rental  guaranty  insurance  or  business
interruption  insurance  received by such Person,  (b) any gain or loss which is
classified as "extraordinary" in accordance with GAAP, (c) any capital gains and
taxes on capital gains or (d) any gains or losses from sales of Properties.

         "Change of Control" means (a) a transaction  or series of  transactions
whereby  any Person or group  (within  the  meaning of Section  13(d)(3)  of the
Securities  Exchange  Act of 1934,  as  amended,  and the rules and  regulations
promulgated  thereunder  (the "1934 Act")) shall  acquire  beneficial  ownership
(within the meaning of Rule 13d-3 of the 1934 Act),  directly or indirectly,  of
securities of Company (or other  securities  convertible  into such  securities)
representing  35% of the  combined  voting  power of all  securities  of Company
entitled to vote in 
                                      -6-
<PAGE>
the election of  directors  (for  purposes of this  definition,  a  "Controlling
Person") or (b) at any time a majority of  Company's  directors  are persons who
were not (i) in  office  on the  Closing  Date or (ii)  initially  nominated  by
directors  who were in  office on the  Closing  Date or by  successor  directors
elected or appointed upon the initial nomination of such directors or successors
directors. In connection with clause (a) above, a Person or group shall not be a
"Controlling  Person" if such Person or group holds  voting  power in good faith
and not for the  purpose  of  circumventing  the effect of the  occurrence  of a
Change of  Control  as an agent,  bank,  broker,  nominee,  trustee or holder of
revocable proxies given in response to a solicitation  pursuant to the 1934 Act,
for one or more  beneficial  owners who do not  individually,  or, if they are a
group  acting in concert,  as a group,  have the voting  power  specified in the
previous sentence.

         "Closing Date" means the date of this Agreement.

         "Code" means the Internal  Revenue  Code of 1986,  as amended,  and the
rules and regulations issued thereunder, as from time to time in effect.

         "Commitment Fee" means the fee described in Section 2.10(a) hereof.

         "Commitment"  means, with respect to the Revolving Loan,  $350,000,000,
as such amount may be reduced from time to time in accordance  with the terms of
Section 2.4 hereof.

         "Company" means Franchise  Finance  Corporation of America,  a Delaware
corporation.

         "Compliance  Certificate"  means a certificate of an Authorized Officer
of Company acceptable to Administrative  Agent, in the form of Exhibit C hereto,
(a) certifying  that such individual has no knowledge that a Default or Event of
Default has occurred and is continuing,  or if a Default or Event of Default has
occurred and is continuing,  a statement as to the nature thereof and the action
being taken or proposed to be taken with respect thereto,  and (b) setting forth
detailed calculations with respect to each of the covenants described in Section
6.1 hereof.

         "Confidential  Information"  has the meaning  specified  in Section 9.9
hereof.

         "Confidentiality   Agreement"  means  a  Confidentiality  Agreement  in
substantially  the form of Exhibit H hereto,  as such  agreement may be amended,
modified or supplemented from time to time.

         "Consensual  Lien" means any Lien of the type  described in clauses (g)
and (h) of the definition of Permitted Liens.

         "Consequential  Loss," with respect to (a) Company's  payment of all or
any portion of the then-outstanding principal amount of a LIBOR Advance on a day
other than the last day of the
                                      -7-
<PAGE>
related  Interest  Period,  including,  without  limitation,  payments made as a
result  of  the  acceleration  of  the  maturity  of a  Note,  (b)  (subject  to
Administrative Agent's prior consent), a LIBOR Advance made on a date other than
the date on which the Advance is to be made  according to Section  2.2(a) hereof
or Section 2.9 hereof, or (c) any of the circumstances  specified in Section 2.4
hereof and Section  2.5 hereof on which a  Consequential  Loss may be  incurred,
means any loss, cost or expense incurred by any Lender as a result of the timing
of the  payment or  Advance  or in  liquidating,  redepositing,  redeploying  or
reinvesting  the  principal  amount  so paid or  affected  by the  timing of the
Advance or the  circumstances  described  in Section  2.4 hereof and Section 2.5
hereof,  which  amount shall be the sum of (i) the  interest  that,  but for the
payment or timing of Advance,  such Lender  would have earned in respect of that
principal amount,  reduced,  if such Lender is able to redeposit,  redeploy,  or
reinvest the principal amount, by the interest earned by such Lender as a result
of  redepositing,  redeploying or reinvesting the principal amount plus (ii) any
expense  or  penalty   incurred  by  such  Lender  by  reason  of   liquidating,
redepositing,   redeploying   or   reinvesting   the  principal   amount.   Each
determination  by each  Lender of any  Consequential  Loss is, in the absence of
demonstrable error, conclusive and binding.

         "Consolidated  Subsidiary" means, as to any Person,  each Subsidiary of
such Person  (whether  then  existing or  thereafter  created or  acquired)  the
financial  statements of which are (or should have been)  consolidated  with the
financial statements of such Person in accordance with GAAP.

         "Contingent  Liability"  means,  as  to  any  Person,  any  obligation,
contingent  or  otherwise,  of such Person  guaranteeing  or having the economic
effect of guaranteeing any Indebtedness or obligation of any other Person in any
manner,  whether  directly  or  indirectly,  including  without  limitation  any
obligation  of such  Person,  direct or  indirect,  (a) to  purchase  or pay (or
advance or supply funds for the purchase or payment of) such  Indebtedness or to
purchase  (or to advance or supply  funds for the  purchase of) any security for
the payment of such  Indebtedness,  (b) to purchase Property or services for the
purpose of assuring the owner of such  Indebtedness  of its  payment,  or (c) to
maintain the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as to
enable  the  primary  obligor  to pay any  Indebtedness  or to  comply  with any
agreement  relating to any Indebtedness or obligation,  and shall, in any event,
include any contingent  obligation  under any letter of credit,  application for
any letter of credit or other related documentation.

         "Continue,"   "Continuation"   and   "Continued"   each  refer  to  the
continuation pursuant to Section 2.9 hereof of a LIBOR Advance from one Interest
Period to the next Interest Period.

         "Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect,  of power to direct or cause the  direction of management or
policies  (whether  through  ownership  of voting  securities,  by  contract  or
otherwise);  provided  that,  in any event (a) it shall include any director (or
Person holding the equivalent  position) or executive officer (or Person holding
the equivalent  position) of such Person or of any Affiliate of such Person, (b)
any Person
                                      -8-
<PAGE>
which beneficially owns 5% or more (in number of votes) of the securities having
ordinary  voting power for the election of directors of a  corporation  shall be
conclusively  presumed to control such  corporation,  (c) any general partner of
any partnership shall be conclusively presumed to control such partnership,  (d)
any other Person who is a member of the  immediate  family  (including  parents,
spouse, siblings and children) of any general partner of a partnership,  and any
trust whose  principal  beneficiary is such individual or one or more members of
such  immediate  family and any Person who is  controlled  by any such member or
trust, or is the executor,  administrator  or other personal  representative  of
such Person,  shall be conclusively  presumed to control such Person, and (e) no
Person shall be deemed to be an Affiliate of a  corporation  solely by reason of
his being an officer or director of such corporation.

         "Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common  control with such Person and which,  together  with such
Person,  are treated as a single employer under Section 414(b),  (c), (m) or (o)
of the Code.

         "Conversion or Continuance Notice" has the meaning set forth in Section
2.9(b) hereof.

         "Debt for Borrowed Money" means, as to any Person, at any date, without
duplication,  (a) all  obligations  of such Person for borrowed  money,  (b) all
obligations of such Person  evidenced by bonds,  debentures,  notes,  letters of
credit (or applications for letters of credit) or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services,  except  trade  accounts  payable  arising in the  ordinary  course of
business,  (d) all obligations of such Person secured by a Lien on any assets or
property of any Person and (e) Intercompany Notes.

         "Debtor  Relief  Laws"  means  applicable  bankruptcy,  reorganization,
insolvency, receivership, liquidation, arrangement, conservatorship, moratorium,
or similar Laws, or principles of equity affecting the enforcement of creditors'
rights generally.

         "Default" means any event  specified in Section 7.1 hereof,  whether or
not any  requirement  in  connection  with such  event for the giving of notice,
lapse of time, or happening of any further condition has been satisfied.

         "Distribution"  means, as to any Person, (a) any declaration or payment
of any  distribution or dividend (other than a stock dividend) on, or the making
of any pro rata distribution,  loan,  advance, or investment to or in any holder
(in its  capacity  as a partner,  shareholder  or other  equity  holder) of, any
partnership interest or shares of Capital Stock or other equity interest of such
Person, or (b) any purchase,  redemption, or other acquisition or retirement for
value of any shares of  partnership  interest or Capital  Stock or other  equity
interest of such Person.

         "Dollars"  and "$" means the lawful  currency  of the United  States of
America.
                                      -9-
<PAGE>
         "Eligible Assignee" means (a) any Bank Affiliate, (b) a commercial bank
organized under the laws of the United States, or any state thereof,  and having
total assets in excess of  $500,000,000;  (c) a commercial  bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $500,000,000, provided that such bank is acting
through a branch or agency  located in the country in which it is  organized  or
another country which is a member of the Organization  for Economic  Cooperation
and  Development;  and (d) the central bank of any country  which is a member of
the Organization for Economic Cooperation and Development.

         "Environmental Claim" means any written notice by any Tribunal alleging
potential  liability for damage to the  environment,  or by any Person  alleging
potential liability for personal injury (including sickness,  disease or death),
resulting  from or based upon (a) the presence or release  (including  sudden or
non-sudden,  accidental  or  non-accidental,  leaks or spills) of any  Hazardous
Material at, in or from property,  whether or not owned by Company or any of its
Subsidiaries,  or (b)  circumstances  forming  the  basis of any  violation,  or
alleged violation, of any Environmental Law.

         "Environmental  Laws" means the Comprehensive  Environmental  Response,
Compensation,  and Liability Act (42 U.S.C.  ss. 9601 et seq.)  ("CERCLA"),  the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation  and  Recovery Act (42 U.S.C ss. 6901 et seq.),  the Federal  Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss.  7401 et seq.),  the Toxic  Substances  Control  Act (15 U.S.C.  ss. 2601 et
seq.),  and the  Occupational  Safety and Health Act (29 U.S.C. ss. 651 et seq.)
("OSHA"),  as such laws have been or hereafter  may be amended or  supplemented,
and any and all similar present or future federal, state and local Laws.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.

         "ERISA  Affiliate"  means any Person  that for  purposes of Title IV of
ERISA is a member of the controlled group of Company or any of its Subsidiaries,
or is under common control with Company or any of its  Subsidiaries,  within the
meaning of Section 414(c) of the Code.

         "ERISA  Event"  means (a) a  Reportable  Event,  within the  meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC, (b) the issuance by the  administrator  of any Plan
of a notice of intent to terminate such Plan in a distress  situation,  pursuant
to Section  4041(a)(2)  and  4041(c) of ERISA  (including  any such  notice with
respect to a plan amendment  referred to in Section  4041(e) of ERISA),  (c) the
cessation of operations at a facility in the circumstances  described in Section
4062(e) of ERISA, (d) the withdrawal by Company,  any Subsidiary of Company,  or
an ERISA Affiliate from a
                                      -10-
<PAGE>
Multiple  Employer  Plan  during  a Plan  year for  which  it was a  substantial
employer, as defined in Section 4001(a)(2) of ERISA, (e) the failure by Company,
any  Subsidiary of Company,  or any ERISA  Affiliate to make a payment to a Plan
required under Section 302 of ERISA,  (f) the adoption of an amendment to a Plan
requiring  the  provision  of security to such Plan,  pursuant to Section 307 of
ERISA,  or (g) the  institution  by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA,  or the  occurrence of any event or condition
that constitutes  grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.

         "Event of  Default"  means any of the events  specified  in Section 7.1
hereof,  provided  there  has  been  satisfied  any  requirement  in  connection
therewith  for the giving of notice,  lapse of time, or happening of any further
condition.

         "Facility" means the Revolving Loan and the Bid Rate Loans evidenced by
this Agreement and the other Loan Papers.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the  weighted  average of the
rates on  overnight  federal  funds  transactions  with  members of the  Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal Reserve Bank of Dallas, or, if such rate is not so published for any day
which is a Business  Day,  the average of the  quotations  for such date on such
transactions  received by Administrative  Agent from three federal funds brokers
of recognized standing selected by it.

         "Fee  Letters"  means those  certain  letter  agreements  addressed  to
Company  and  acknowledged  by  Company   describing  certain  fees  payable  to
Administrative  Agent and/or  Lenders in connection  with this Agreement and the
credit facility, as such letter agreements may be amended, modified, substituted
or replaced with the consent of Company and Administrative Agent and/or Lenders,
as appropriate.

         "FFCA   Mortgage"   means  FFCA   Mortgage   Corporation,   a  Delaware
corporation.

         "FFCA Mortgage Recapitalization" means the acquisition by (a) Morton H.
Fleischer of 100% of the common  Capital  Stock of FFCA Mortgage and (b) Company
of 100% of the preferred Capital Stock of FFCA Mortgage.

         "Fixed Charge Coverage  Ratio" means, as of any date of  determination,
for Company and its  Consolidated  Subsidiaries  determined in  accordance  with
GAAP,  the ratio of (a) the sum of (i) Cash Flow From  Operations for the twelve
calendar  month period  ending on or most  recently  ended prior to such date of
determination  plus (ii) cash interest  payable on all  Indebtedness  (including
interest  in  respect  of  Capital  Leases)  of  Company  and  its  Consolidated
Subsidiaries  during such period to (b) the sum of (i) cash interest  payable on
all Indebtedness
                                      -11-
<PAGE>
(including  interest  in respect  of  Capitalized  Leases)  of  Company  and its
Consolidated  Subsidiaries  during  such period  plus (ii)  regularly  scheduled
principal   amounts  of  all   Indebtedness  of  Company  and  its  Consolidated
Subsidiaries  (including  the principal  portion of rentals  payable under Lease
Obligations)  payable  during such period,  excluding,  however,  any  regularly
scheduled  principal  payment on  Indebtedness  of Company and its  Consolidated
Subsidiaries  which pays such  Indebtedness in full, but only to the extent that
the amount of such final payment is greater than the scheduled principal payment
immediately  preceding such final payment,  plus (iii) without duplication,  the
principal amounts of all Indebtedness of Company and its Subsidiaries (including
the principal portion of rentals payable under Lease Obligations) required to be
prepaid or purchased during such period.

         "Funded  Mortgages"  means  promissory  notes  secured by duly recorded
first  priority  mortgages,  deeds of  trust,  assignments  of  rents,  security
agreements,  fixture filings and similar instruments  executed by a purchaser or
owner of a Property  in favor of  Company or any  Subsidiary  of  Company,  or a
trustee acting for the benefit of Company or any Subsidiary of Company, relating
to loans made by  Company or any  Subsidiary  of Company to  unaffiliated  third
parties secured by such Property,  the principal  amount of which was or will be
funded from proceeds of Advances or Intercompany Loans.

         "GAAP" means  generally  accepted  accounting  principles  applied on a
consistent  basis.  Application  on a  consistent  basis  shall  mean  that  the
accounting  principles  observed  in a  current  period  are  comparable  in all
material  respects  to those  applied  in a  preceding  period,  except  for new
developments  or statements  promulgated by the Financial  Accounting  Standards
Board.

         "Guaranty"  of a  Person  means  any  agreement  by which  such  Person
assumes, guarantees,  endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise  becomes  liable upon,  the  obligation  of any
other  Person,  or agrees to maintain the net worth or working  capital or other
financial  condition of any other Person,  or otherwise  assures any creditor or
such other Person against loss,  including,  without  limitation,  any agreement
which assures any creditor or such other Person  payment or  performance  of any
obligation,  or any take-or-pay  contract and shall include without  limitation,
the contingent liability of such Person in connection with any application for a
letter  of  credit  (without  duplication  of any  amount  already  included  in
Indebtedness).

         "Guaranty Agreement" means a Guaranty Agreement,  duly executed by each
Guarantor,  in  substantially  the  form  of  Exhibit  B  hereto,  appropriately
completed,  as such  agreement  may be  amended,  modified,  extended,  renewed,
restated, substituted or replaced from time to time.

         "Guarantors"  means each  Subsidiary  of Company and each other  Person
from time to time  guaranteeing  payment of the  Obligations  to  Administrative
Agent and Lenders.

         "Hazardous  Materials" means all materials subject to any Environmental
Law, including,  without limitation,  materials listed in 49 C.F.R. ss. 172.101,
Hazardous Substances, explosive or
                                      -12-
<PAGE>
radioactive  materials,  hazardous or toxic wastes or  substances,  petroleum or
petroleum distillates, asbestos, or material containing asbestos.

         "Hazardous  Substances"  means  hazardous waste as defined in the Clean
Water Act, 33 U.S.C. ' 1251 et seq., the  Comprehensive  Environmental  Response
Compensation  and  Liability  Act as amended  by the  Superfund  Amendments  and
Reauthorization  Act,  42  U.S.C.  ' 9601 et  seq.,  the  Resource  Conservation
Recovery Act, 42 U.S.C.
' 6901 et seq., and the Toxic Substances Control Act, 15 U.S.C. ' 2601 et seq.

         "Highest  Lawful  Rate" means at the  particular  time in question  the
maximum rate of interest which,  under Applicable Law,  Administrative  Agent is
then  permitted  to charge on the  Obligations.  If the maximum rate of interest
which,  under  Applicable  Law,  such  Lender  is  permitted  to  charge  on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall be
automatically  increased or decreased,  as the case may be, from time to time as
of the effective  time of each change in the Highest  Lawful Rate without notice
to Company. For purposes of determining the Highest Lawful Rate under Applicable
Law,  the  applicable  rate  ceiling  shall be (a) the  indicated  rate  ceiling
described in and computed in accordance with the provisions of Section (a)(1) of
Art. 1.04; or (b) provided notice is given as required in Section (h)(1) of Art.
1.04,  either the annualized  ceiling or quarterly  ceiling computed pursuant to
Section (d) of Art. 1.04; provided, however, that at any time the indicated rate
ceiling,  the annualized ceiling or the quarterly ceiling, as applicable,  shall
be less  than  18% per  annum or more  than 24% per  annum,  the  provisions  of
Sections  (b)(1) and (2) of said Art.  l.04 shall  control for  purposes of such
determination, as applicable.

         "Increased  Advance Costs" has the meaning specified in Section 2.13(e)
hereof.

         "Increased  Advance Costs  Retroactive  Effective Date" has the meaning
specified in Section 2.13(e) hereof.

         "Increased Advance Costs Set Date" has the meaning specified in Section
2.13(e) hereof.

         "Indebtedness" means, without duplication,  with respect to any Person,
all obligations of such Person,  determined on a consolidated basis and measured
in  accordance  with GAAP that is required to be classified on the balance sheet
as liabilities,  and in any event shall include  (without  duplication) (a) Debt
for Borrowed Money, (b) Capital Lease obligations, (c) reimbursement obligations
relating to letters of credit, (d) Contingent Liabilities relating to any of the
foregoing, (e) Withdrawal Liability,  (f) indebtedness,  if any, associated with
Interest Hedge Agreements with other Persons,  (g) payments due for the deferred
purchase price of property and services (but  excluding  trade payables that are
less than 90 days old and (h) obligations (contingent or otherwise) to purchase,
retire or redeem any Capital Stock of such Person.

         "Indemnitees" has the meaning ascribed thereto in Section 5.9 hereof.
                                      -13-
<PAGE>
         "Index Debt Rating" means the rating  applicable  to Company's  senior,
unsecured, non-credit enhanced long term indebtedness for borrowed money.

         "Initial Advance" means the initial Advance made in accordance with the
terms  hereof,  which  shall only be after  Company  has  satisfied  each of the
conditions  set  forth  in  Section  3.1 and  Section  3.2  hereof  (or any such
condition shall have been waived by each Lender).

         "Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit  liabilities  within the meaning of Section  4001(a)(18) of
ERISA.

         "Intercompany   Loans"   means  all  loans   made  by  Company  to  its
Subsidiaries.

         "Intercompany  Notes" means all promissory  notes payable to Company by
any Subsidiary of Company evidencing the obligation to repay Intercompany Loans,
as such  notes may be  amended,  modified,  extended,  renewed,  substituted  or
replaced from time to time.

         "Interest Hedge  Agreements"  means any interest rate swap  agreements,
interest  cap  agreements,  interest  rate  collar  agreements,  or any  similar
agreements or arrangements  designed to hedge the risk of variable interest rate
volatility,  or foreign currency hedge, exchange or similar agreements, on terms
and  conditions  reasonably  acceptable to  Administrative  Agent  (evidenced by
Administrative  Agent's consent in writing),  as such agreements or arrangements
may be modified, supplemented, and in effect from time to time.

         "Interest  Period" means the period beginning on the date an Advance is
made or  continued  as or converted  into a LIBOR  Advance and ending one,  two,
three or six  months  thereafter  (as  Company,  in its sole  discretion,  shall
select) provided, however, that:

                  (a) Company may not select any Interest Period that ends after
         any  principal  repayment  date  unless,  after  giving  effect to such
         selection,  the aggregate  principal  amount of LIBOR  Advances  having
         Interest Periods that end on or prior to such principal repayment date,
         shall be at least equal to the  principal  amount of  Advances  due and
         payable on and prior to such date;

                  (b)  whenever  the  last  day of  any  Interest  Period  would
         otherwise  occur on a day other  than a Business  Day,  the last day of
         such Interest  Period shall be extended to occur on the next succeeding
         Business Day, provided, however, that if such extension would cause the
         last  day of such  Interest  Period  to  occur  in the  next  following
         calendar month, the last day of such Interest Period shall occur on the
         next preceding Business Day; and

                  (c) whenever the first day of any Interest  Period occurs on a
         day of an initial
                                      -14-
<PAGE>
         calendar month for which there is no numerically  corresponding  day in
         the calendar  month that  succeeds such initial  calendar  month by the
         number of months equal to the number of months in such Interest Period,
         such  Interest  Period  shall  end on the  last  Business  Day of  such
         succeeding calendar month.

         "Investment"  means any acquisition of all or substantially  all assets
of any Person,  or any direct or indirect purchase or other acquisition of, or a
beneficial  interest in, capital stock or other  securities of any other Person,
or any direct or  indirect  loan,  extension  of  credit,  advance  (other  than
advances to employees  for moving and travel  expenses,  drawing  accounts,  and
similar   expenditures  in  the  ordinary   course  of  business),   or  capital
contribution to or investment in any other Person,  including without limitation
the incurrence or sufferance of Debt or accounts  receivable of any other Person
that are not current  assets or do not arise from sales to that other  Person in
the ordinary course of business.

         "Law" means any  constitution,  statute,  law,  ordinance,  regulation,
rule, order, writ, injunction, or decree of any Tribunal.

         "Lease" means any lease, sublease,  license,  franchise,  concession or
other  agreement,  whether written or oral,  permitting any other Person to use,
occupy or possess any Property.

         "Lease   Obligations"   means  the   obligations  of  Company  and  its
Consolidated  Subsidiaries to pay rent or other amounts under a Capital Lease or
any Operating Lease.

         "Lenders"  means  the  lenders  listed on the  signature  pages of this
Agreement,  and each Eligible  Assignee which hereafter  becomes a party to this
Agreement pursuant to Section 9.4 hereof, for so long as any such Person is owed
any portion of the  Obligations  or  obligated  to make any  Advances  under the
Revolving Loan.

         "Lending  Office"  means,  with respect to each  Lender,  its branch or
affiliate,  (a)  initially,  the  office of such  Lender,  branch  or  affiliate
identified as such on the signature  pages hereof,  and (b)  subsequently,  such
other office of such Lender, branch or affiliate as such Lender may designate in
writing  to  Company  and  Administrative  Agent as the  office  from  which the
Advances of such Lender will be made and maintained and for the account of which
all payments of principal  and interest on the Advances and the  Commitment  Fee
will  thereafter be made.  Lenders may have more than one Lending Office for the
purpose of making Base Rate Advances and LIBOR Advances.

         "LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.

         "LIBOR Bid Rate"  means a rate per annum  equal to the LIBOR Rate Basis
for the term in question plus a margin specified by a Lender.
                                      -15-
<PAGE>
         "LIBOR Bid Rate Loan" means a Bid Rate Loan which bears interest at the
LIBOR Bid Rate.

         "LIBOR Rate" means a simple per annum interest rate equal to the lesser
of (a) the  Highest  Lawful  Rate,  and (b) the sum of the  LIBOR  Rate plus the
Applicable  Margin. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements,  be subject to premiums assessed therefor by
each Lender, which are payable directly to each Lender.

         "LIBOR Rate Basis" means, for any LIBOR Advance for any Interest Period
therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the nearest
1/100th of one percent)  appearing on Telerate Page 3750 (or any successor page)
as the London  interbank  offered rate for deposits in Dollars at  approximately
11:00  a.m.  (London  time)  two  Business  Days  prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason
such rate is not  available,  the term "LIBOR Rate  Basis"  shall mean,  for any
LIBOR  Advance for any Interest  Period  therefor,  the rate per annum  (rounded
upwards, if necessary,  1/100th of one percent) appearing on Reuters Screen LIBO
Page  as  the  London  interbank   offered  rate  for  deposits  in  Dollars  at
approximately  11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on the Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.

         "License" means, as to any Person, any license, permit,  certificate of
need, authorization, orders, certification,  accreditation, franchise, approval,
or grant of rights by any Tribunal or third person  necessary or appropriate for
such Person to own,  maintain,  or operate its business or Property,  unless the
failure to obtain,  retain,  or comply with same would not constitute a Material
Adverse Change.

         "Lien" means any  mortgage,  pledge,  security  interest,  encumbrance,
lien, or charge of any kind,  including without limitation any agreement to give
or not to  give  any of the  foregoing,  any  conditional  sale or  other  title
retention  agreement,  any lease in the  nature  thereof,  and the  filing of or
agreement to give any financing statement or other similar form of public notice
under any Laws  (except  for the filing of a  financing  statement  or notice in
connection with an Operating Lease).

         "Litigation" means any proceeding, claim, lawsuit, arbitration,  and/or
investigation  conducted  or  threatened  by or before any  Tribunal,  including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant  to any  environmental,  occupational,  safety and  health,  antitrust,
unfair competition,  securities,  Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.

         "Loan Papers" means this Agreement;  the Notes; any Interest Rate Hedge
Agreements  executed  between  Company  and any  Lender or Bank  Affiliate;  all
Guaranty Agreements; each
                                      -16-
<PAGE>
Assignment and Acceptance;  all promissory  notes  evidencing any portion of the
Obligations;  and all other documents,  instruments,  agreements or certificates
executed or  delivered  by Company or any of its  Subsidiaries,  as security for
Company's  obligations  hereunder,  in  connection  with the loans to Company or
otherwise;  as each such document shall, with the consent of Lenders pursuant to
the terms  hereof,  be  amended,  revised,  renewed,  extended,  substituted  or
replaced from time to time.

         "Majority  Lenders"  means any  combination  of Lenders having at least
66.67% of the Advances under the Revolving Loan; provided,  however,  that if no
Advances under the Revolving Loan are  outstanding  under this  Agreement,  such
term means any combination of Lenders having a Specified  Percentage equal to at
least 66.67% of the Commitment.

         "Management  Fees"  means  all  fees  from  time  to time  directly  or
indirectly paid or payable by Company or any Subsidiary of Company to any Person
for management services for managing any portion of any Property.

         "Material  Adverse  Change"  or  "Material  Adverse  Effect"  means any
circumstance  or event that (a) can reasonably be expected to cause a Default or
an Event of Default, (b) otherwise can reasonably be expected to (i) be material
and adverse to the continued operation of any Company and its Subsidiaries taken
as a whole, or (ii) be material and adverse to the financial condition, business
operations,  prospects or Properties of Company and its Subsidiaries  taken as a
whole, or (c) in any manner whatsoever does or can reasonably be expected to (i)
materially and adversely affect the validity or  enforceability  of any material
provision of any of the Loan Papers or (ii) materially and adversely  affect the
ability of Company or any Subsidiary of Company to perform its obligations under
the Loan Papers executed by it.

         "Maturity  Date"  means  December  29,  2000,  or  such  later  date as
established  pursuant to Section  2.15  hereof,  or such earlier date all of the
Obligations become due and payable (whether by acceleration, prepayment in full,
scheduled reduction or otherwise).

         "Maximum  Amount"  means the maximum  amount of interest  which,  under
Applicable Law, Administrative Agent or any Lender is permitted to charge on the
Obligations.

         "Moody's" means Moody's Investors Service, Inc.

         "Multiemployer  Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which Company,  any Subsidiary of Company,  or any ERISA
Affiliate  is making or accruing an  obligation  to make  contributions,  or has
within any of the  preceding  five plan years made or accrued an  obligation  to
make  contributions,  such  plan  being  maintained  pursuant  to  one  or  more
collective bargaining agreements.

         "Multiple  Employer  Plan" means a single  employer plan, as defined in
Section  4001(a)(15) of ERISA,  that (a) is maintained for employees of Company,
any Subsidiary
                                      -17-
<PAGE>
of Company,  or any ERISA  Affiliate and at least one Person other than Company,
any Subsidiary of Company, and any ERISA Affiliate, or (b) was so maintained and
in respect of which Company,  any Subsidiary of Company,  or any ERISA Affiliate
could have liability  under Section 4064 or 4069 of ERISA in the event such plan
has been or were to be terminated.

         "Net  Cash  Proceeds"  means  with  respect  to any  offering  or other
disposition  of  Capital  Stock by any  Person,  the  aggregate  amount  of cash
received by such Person in connection  with such  transaction  minus  reasonable
fees, costs and expenses and related Taxes.

         "Net Worth" means, at any time, the shareholders' equity of Company and
its Consolidated Subsidiaries,  determined on a consolidated basis in accordance
with GAAP at such time.

         "Note" means each and "Notes" means all (a) Revolving  Loan Notes,  and
(b) Bid Rate Loan Notes.

         "Obligations"  means all present and future  obligations,  indebtedness
and liabilities,  and all renewals and extensions of all or any part thereof, of
Company and each  Subsidiary  of Company to any Lender or  Administrative  Agent
arising from, by virtue of, or pursuant to this Agreement, any of the other Loan
Papers and any and all renewals and extensions  thereof or any part thereof,  or
future amendments thereto,  all interest accruing on all or any part thereof and
reasonable  attorneys' fees incurred by Lenders and Administrative Agent for the
administration, execution of waivers, amendments and consents, and in connection
with any restructuring,  workouts or in the enforcement or the collection of all
or any part thereof, whether such obligations,  indebtedness and liabilities are
direct,  indirect,  fixed,  contingent,  joint,  several  or joint and  several.
Without  limiting the  generality of the foregoing,  "Obligations"  includes all
amounts which would be owed by Company, each Subsidiary of Company and any other
Person (other than Administrative  Agent or Lenders) to Administrative  Agent or
Lenders under any Loan Paper,  but for the fact that they are  unenforceable  or
not allowable due to the  existence of a bankruptcy,  reorganization  or similar
proceeding  involving  Company,  any  Subsidiary  of Company or any other Person
(including  all such  amounts  which would  become due but for the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding of Company,  any Subsidiary of Company or any other Person under
any Debtor Relief Law).

         "Operating  Leases" means  operating  leases,  as defined in accordance
with GAAP.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.

         "Permitted  Distributions"  means,  for  Company for any fiscal year of
Company,  an amount  not to exceed  95% of Cash  Flow From  Operations  for such
fiscal year, commencing with the 1996 fiscal year of Company.
                                      -18-
<PAGE>
         "Permitted Liens" means

                  (a) those imposed by the Loan Papers;

                  (b)   Liens  in   connection   with   workers'   compensation,
         unemployment  insurance or other  social  security  obligations  (which
         phrase shall not be construed to refer to ERISA);

                  (c) deposits,  pledges or liens to secure the  performance  of
         bids,  tenders,  contracts  (other  than  contracts  for the payment of
         borrowed  money),  leases,  statutory  obligations,   surety,  customs,
         appeal,  performance  and payment bonds and other  obligations  of like
         nature arising in the ordinary course of business;

                  (d)   mechanics',    workmen's,   carriers,    warehousemen's,
         materialmen's,  landlords'  or other like Liens arising in the ordinary
         course of business  with  respect to  obligations  which are not due or
         which are either (i) being  contested in good faith and by  appropriate
         proceedings diligently conducted (including, if applicable, by a Tenant
         of a Property  as  required  under the Lease  relating  thereto or by a
         mortgagor under a Funded  Mortgage as required  thereby) and in respect
         of which adequate  reserves  shall have been  established in accordance
         with GAAP on the books of  Company or of its  Subsidiaries  or (ii) the
         obligation of a Tenant of a Property  under its Lease or of a mortgagor
         under a Funded Mortgage and Company or any of its Subsidiaries has made
         a demand upon such Tenant or  mortgagor to pay amounts owed in order to
         remove  such  Liens;  provided  that if the  Tenant  fails  to pay such
         amounts then Company or its Subsidiary,  as applicable,  shall promptly
         take all necessary action to remove such Liens;

                  (e) Liens for taxes, assessments, fees or governmental charges
         or levies not delinquent or to the extent that payment hereof is either
         (i)  being  contested  in good  faith  and by  appropriate  proceedings
         diligently  conducted  (including,  if  applicable,  by a  Tenant  of a
         Property as required under the Lease relating thereto or by a mortgagor
         under a Funded Mortgage as required  thereby),  and in respect of which
         adequate  reserves shall have been  established in accordance with GAAP
         on the  books of  Company  or any  Subsidiary  of  Company  or (ii) the
         obligation  of a Tenant of  Property  under its Lease or of a mortgagor
         under a Funded Mortgage and Company or any of its Subsidiaries has made
         a demand upon such Tenant or  mortgagor to pay amounts owed in order to
         remove  such  Liens;  provided  that if the  Tenant  fails  to pay such
         amounts then Company or its Subsidiary,  as applicable,  shall promptly
         take all necessary action to remove such Liens;

                  (f) easements, rights of way, restrictions, leases of Property
         to others,  easements  for  installations  of public  utilities,  title
         imperfections  and  restrictions,  zoning  ordinances and other similar
         encumbrances   affecting   Property  which  in  the  aggregate  do  not
         materially  adversely  affect the value of such  Property or materially
         impair its use for
                                      -19-
<PAGE>
         the operation of the business of Company or any Subsidiary of Company.

                  (g)  Liens  on  Property  acquired  by  Company  or any of its
         Subsidiaries in the ordinary course of business,  securing Indebtedness
         of  Company or any of its  Subsidiaries  incurred  or  assumed  for the
         purpose  of  financing  all or  part  of the  cost  of  acquiring  such
         Property;  provided that (i) such Lien attaches  solely to the Property
         so  acquired  in such  transaction,  (ii)  such Lien  attaches  to such
         Property  concurrently  with or  within 30 days  after the  acquisition
         thereof,  (iii) such Property is used in the business of Company or any
         of its  Subsidiaries,  (iv) the amount of Indebtedness  secured by Lien
         shall  not  exceed  100% of the  cost of such  Property,  and (v)  such
         Indebtedness  is  permitted  to be  incurred  hereunder  and  would not
         otherwise result in a Default or Event of Default hereunder; and

                  (h) Liens on the  Property  constituting  Company's  executive
         offices located in Scottsdale,  Arizona,  securing Indebtedness for the
         acquisition, construction or improvement thereof.

         "Person" means an individual,  partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.

         "Plan" means a Single Employer Plan or a Multiple Employer Plan.

         "Prohibited  Transaction" has the meaning specified therefor in Section
4975 of the Code or Section 406 of ERISA.

         "Property" means all types of real, personal, tangible,  intangible, or
mixed property, whether owned in fee simple or leased.

         "Quarterly  Date"  means the last  Business  Day of each  March,  June,
September and December  during the term of this  Agreement,  commencing on March
31, 1998.

         "Ratable"  means,  as to any Lender,  in accordance  with its Specified
Percentage.

         "Real Estate Investment Trust means the  classification for federal tax
purposes as a real estate  investment trust pursuant to Part II, Subchapter M of
Chapter 1 of the Code.

         "Refinancing  Advance"  means  an  Advance  that  is  used  to pay  the
principal amount of an existing Advance (or any performance  thereof) at the end
of its Interest Period and which, after giving effect to such application,  does
not result in an increase in the aggregate amount of outstanding Advances.

         "Regulatory  Change" means any change after the date hereof in federal,
state,  or  foreign  Laws  (including  the  introduction  of any new Law) or the
adoption or making after such date of
                                      -20-
<PAGE>
any interpretations,  directives, or requests of or under any federal, state, or
foreign Laws  (whether or not having the force of Law) by any  Tribunal  charged
with  the  interpretation  or  administration  thereof,  applying  to a class of
financial institutions that includes any Lender.

         "Reportable  Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section,  with respect to a Plan,
excluding,  however,  such events as to which the PBGC by regulation  waived the
requirement  of Section  4043(a) of ERISA that it be notified  within 30 days of
the  occurrence  of such  event,  provided  that a failure  to meet the  minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable  Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.

         "Restricted  Payments"  means (a) any direct or indirect  distribution,
Distribution  or other payment on account of any general or limited  partnership
interest  in (or the  setting  aside of funds  for,  or the  establishment  of a
sinking fund or analogous  fund with respect to), or shares of Capital  Stock or
other  securities of, Company or any Subsidiary of Company;  (b) any payments of
principal  of, or interest  on, or fees  related to, or any other  payments  and
prepayments  with  respect to, or the  establishment  of, or any payment to, any
sinking fund or analogous  fund for the purpose of making any such  payments on,
Indebtedness  of  Company  or any  Subsidiary  of  Company  (including,  without
limitation,  Debt  evidenced  by  the  Intercompany  Notes,  but  excluding  the
Obligations);  (c) any  Management  Fee or any  management,  consulting or other
similar  fees,  or  any  interest  thereon,  payable  by  Company  or any of its
Subsidiaries to any Affiliate of Company;  and (d) any administration fee or any
administration,  consulting  or other  similar  fees,  or any interest  thereon,
payable by Company or any of its  Subsidiaries to any Affiliate of Company or to
any other Person.

         "Retained  Securities" means any class of securities or portion thereof
purchased  or retained by the Company or any  Subsidiary  from any  corporation,
trust or other entity in conjunction with any Asset Securitization.

         "Revolving  Loan" means that certain  Revolving Loan made to Company on
the Closing  Date until the Maturity  Date in  accordance  with  Section  2.1(a)
hereof.

         "Revolving  Loan Extension Fee" means the fee described in Section 2.15
hereof.

         "Revolving Loan Note" means each promissory note of Company  evidencing
the Advances and obligations  owing hereunder to each Lender under the Revolving
Loan, in  substantially  the form of Exhibit A hereto,  as each such note may be
amended, extended, restated, renewed, substituted or replaced from time to time.

         "Rights" means rights, remedies, powers, and privileges.
                                      -21-
<PAGE>
         "S&P" means Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation.

         "Single  Employer  Plan" means a single  employer  plan,  as defined in
Section  4001(a)(15)  of ERISA,  other than a Multiple  Employer  Plan,  that is
maintained for employees of Company or any ERISA Affiliate.

         "Solvent" means, with respect to any Person,  that on such date (a) the
fair value of the  Property of such Person is greater  than the total  amount of
liabilities,  including,  without  limitation,  Contingent  Liabilities  of such
Person,  (b) the present fair salable  value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become  absolute and  matured,  (c) such Person does
not intend to, and does not believe  that it will,  incur  debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature,  and
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a  transaction,  for which such  Person's  Property  would
constitute an unreasonably small capital.

         "Special  Counsel"  means the law firm of  Donohoe,  Jameson & Carroll,
P.C.,  Dallas,  Texas,  special counsel to  Administrative  Agent, or such other
counsel selected by Administrative Agent from time to time.

         "Specified   Percentage"  means,  as  to  any  Lender,  the  percentage
indicated  beside its name on the  signature  pages  hereof,  or as  adjusted or
specified in any Assignment and Acceptance, or amendment to this Agreement.

         "Subordination Agreement" means a subordination agreement substantially
in the form of Exhibit G hereto, as amended,  modified or supplemented from time
to time.

         "Subsidiary" of any Person means

                  (a) any corporation, partnership, joint venture, trust, estate
         or other Person of which (or in which) more than 50% of:

                           (i) the outstanding Capital Stock having voting power
                  to  elect  a  majority  of the  Board  of  Directors  of  such
                  corporation (or other Persons  performing similar functions of
                  such entity,  and  irrespective of whether at the time Capital
                  Stock of any other class or classes of such corporation  shall
                  or  might  have  voting  power  upon  the  occurrence  of  any
                  contingency),

                           (ii) the  interest  in the capital or profits of such
                  partnership or joint venture,

                           (iii)  the  beneficial  interest  of  such  trust  or
                  estate, or
                                      -22-
<PAGE>
                           (iv) the equity interest of such other Person,  is at
                  the time directly or indirectly owned by (A) such Person,  (B)
                  such Person and one or more of its  Subsidiaries or (C) one or
                  more of such Person's Subsidiaries, and

                  (b) any corporation  which is a non-qualified  REIT Subsidiary
         under  the Code of which  more  than  50% of the  non-voting  preferred
         Capital Stock is at the time  directly or indirectly  owned by (i) such
         Person,  (ii) such Person and one or more of its  Subsidiaries or (iii)
         one  or  more  of  such  Person's  Subsidiaries;   provided,   however,
         Subsidiary  does mean and include  FFCA  Mortgage  but does not mean or
         include any Asset Securitization Affiliate.

         "Taxes" means all taxes,  assessments,  imposts, fees, or other charges
at any time imposed by any Laws or Tribunal.

         "Tenants"   means   any  and   all   tenants,   licensees,   occupants,
concessionaires  or other Person or Persons  possessing,  occupying or otherwise
using  or  having a right  to use,  any  space at  Property  of  Company  or its
Subsidiaries  and giving or paying rent or other  consideration,  whether  under
written agreement or otherwise.

         "Total Assets" means, at any time, all assets  (calculated  without any
deduction  for  accumulated   depreciation)  of  Company  and  its  Consolidated
Subsidiaries  determined on a consolidated basis in accordance with GAAP at such
time.

         "Total  Indebtedness"  means,  without  duplication,  with  respect  to
Company  and  its  Consolidated  Subsidiaries,  the sum of all  Indebtedness  of
Company and its Consolidated  Subsidiaries,  excluding Indebtedness evidenced by
the  Intercompany  Notes (which Debt is subject to a  Subordination  Agreement),
calculated on a consolidated basis in accordance with GAAP.

         "Total Secured  Indebtedness"  means, at any time, the aggregate amount
of  Indebtedness  of Company and its  Consolidated  Subsidiaries  determined  in
accordance  with  GAAP on a  consolidated  basis  that is  secured  solely  by a
Consensual Lien.

         "Total Unencumbered Assets" means, at any time, the aggregate amount of
Total  Assets  of  Company  and  its  Consolidated  Subsidiaries  determined  in
accordance  with GAAP on a  consolidated  basis which are not subject to a Lien,
other than  Permitted  Liens of the type described in clauses (a) through (f) of
the definition thereof.

         "Total Unsecured Indebtedness" means, at any time, the aggregate amount
of Indebtedness of Company and its Consolidated Subsidiaries that is not secured
by a Lien,  other than  Permitted  Liens of the type  described  in clauses  (a)
through (f) of the definition thereof.
                                      -23-
<PAGE>
         "Tribunal"   means   any   state,   commonwealth,   federal,   foreign,
territorial,  or other court or  government  or  regulatory  body,  subdivision,
agency,  department,   commission,   board,  bureau,  or  instrumentality  of  a
governmental body.

         "Type" refers to the distribution  between Advances bearing interest at
the Base Rate, LIBOR Rate, Absolute Bid Rate or LIBOR Bid Rate.

         "UCC"  means the  Uniform  Commercial  Code as  adopted in the State of
Texas.

         "Unused Commitment" means, on any date, with respect to each Lender, an
amount equal to the product of such Lender's Specified Percentage  multiplied by
the  Commitment in effect on such date,  minus an amount equal to the sum of (a)
all outstanding  Advances made by such Lender under the Revolving Loan which are
outstanding  on such date and (b) all Bid Rate Loans made by such  Lender  which
are outstanding on such date.

         "Withdrawal  Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.

         1.2.  Accounting  and Other Terms.  All  accounting  terms used in this
Agreement  which  are  not  otherwise  defined  herein  shall  be  construed  in
accordance with GAAP  consistently  applied on a consolidated  basis for Company
and its Consolidated  Subsidiaries,  unless  otherwise  expressly stated herein.
References  herein to one gender  shall be deemed to include all other  genders.
Except where the context otherwise  requires,  all references to time are deemed
to be Dallas, Texas time.


                    ARTICLE II. AMOUNTS AND TERMS OF ADVANCES

         2.1. (a)  Advances  Under the  Revolving  Loan.  Each Lender  severally
agrees,on the terms and subject to the conditions hereinafter set forth, to make
Advances  under the  Revolving  Loan to Company on any  Business  Day during the
period from the Closing Date until the Maturity Date, in an aggregate  principal
amount not to exceed at any time outstanding such Lender's Specified  Percentage
of the Commitment.  Subject to the terms and conditions of this Agreement, until
the Maturity Date, Company may borrow, repay and reborrow the Advances under the
Revolving  Loan.  Notwithstanding  anything  in this  Section  2.1(a) or Section
2.1(b) to the contrary,  at no time shall the sum of (i) the aggregate principal
amount -------------- -------------- of Advances outstanding under the Revolving
Loan and (ii) the  aggregate  principal  amount  of Bid Rate  Loans  outstanding
exceed the Commitment.

         (b) Bid Rate Loans.  Each Lender may, in its sole discretion and on the
terms and conditions set forth in this Agreement, make Bid Rate Loans to Company
from time to time until the Maturity  Date in an aggregate  amount not in excess
of the difference between (x) the product
                                      -24-
<PAGE>
of 50.0%  multiplied  by the  Commitment  minus  (y) the  aggregate  outstanding
principal amount of all Bid Rate Loans; provided,  however, at no time shall the
sum of (i) the aggregate outstanding principal amount of all Bid Rate Loans made
by all  Banks  plus  (ii) the  aggregate  principal  amount  of all  outstanding
Advances  under the  Revolving  Loan exceed the  Commitment.  Each Bid Rate Loan
shall be for a term of not less  than 7 days and not more than six  months.  Bid
Rate Loans may not be prepaid  without the prior  written  consent of the Lender
making  such  Bid Rate  Loan.  Each  Borrowing  of Bid  Rate  Loans  shall be an
aggregate  principal  amount  which  is at  least  $10,000,000  and  which is an
integral  multiple of $1,000,000 in excess thereof,  and each Bid Rate Loan by a
Lender shall be in a principal  amount which is at least $1,000,000 and which is
an integral multiple of $1,000,000 in excess thereof.  Notwithstanding  anything
herein  to the  contrary,  the  aggregate  principal  amount  of Bid Rate  Loans
outstanding  at any time may not exceed  $175,000,000.  No Lender shall have any
obligation  to make Bid Rate Loans,  and  Company  shall have no  obligation  to
accept any offers for Bid Rate Loans.

         2.2. Making Advances

         (a) Each  Borrowing of Advances  under the Revolving Loan shall be made
upon the written notice of Company,  received by Administrative  Agent not later
than (i) 12:00  noon  three  Business  Days  prior to the  proposed  date of the
Borrowing,  in the case of LIBOR  Advances and (ii) not later than 10:00 a.m. on
the date of such Borrowing,  in the case of Base Rate Advances. Each such notice
of a Borrowing (a "Borrowing  Notice") shall be by telecopy,  promptly confirmed
by letter, in substantially the form of Exhibit E hereto specifying therein:

                  (i) the  date of such  proposed  Borrowing,  which  shall be a
         Business Day;

                  (ii) the amount of such  proposed  Borrowing  which,  (A) with
         respect to  Advances  under the  Revolving  Loan,  shall not exceed the
         Commitment  less the sum of Advances  under the Revolving Loan plus Bid
         Rate Loans then  outstanding,  and (B) shall, for the Revolving Loan in
         the case of a Borrowing of LIBOR Advances,  be in an amount of not less
         than $5,000,000 or an integral multiple of $1,000,000 in excess thereof
         and, in the case of a Borrowing of Base Rate Advances,  be in an amount
         of not less than  $1,000,000  or an  integral  multiple  of $500,000 in
         excess thereof;

                  (iii) the Type of  Advances  of which the  Borrowing  is to be
         comprised; and

                  (iv) if the  Borrowing is to be  comprised of LIBOR  Advances,
         the  duration  of  the  initial  Interest  Period  applicable  to  such
         Advances.

         If the  Borrowing  Notice  fails to specify the duration of the initial
Interest  Period for any Borrowing  comprised of LIBOR  Advances,  such Interest
Period shall be one month.  Administrative Agent shall give prompt notice (which
may be by telecopy or telephonic, to be confirmed by telecopy) of its receipt of
a Borrowing  Notice to each Lender.  Each Lender shall,  before 2:00 p.m. on the
date  of  each  Advance  hereunder  under  the  Revolving  Loan  (other  than  a
                                      -25-
<PAGE>
Refinancing Advance), make available to

                              Administrative Agent
                                NationsBank Plaza
                                 901 Main Street
                                   14th Floor
                               Dallas, Texas 75202
                               Attn. Theresa Belk

such Lender's Specified Percentage of the aggregate Advances under the Revolving
Loan to be made on that day in immediately available funds.

         (b) Unless any applicable condition specified in Article III hereof has
not been satisfied,  Administrative  Agent will make the funds on Advances under
the Revolving  Loan promptly  available to Company (other than with respect to a
Refinancing  Advance) by wiring Norwest Bank Minneapolis,  N.A., ABA #091000019,
Beneficiary  Bank:  Norwest  Bank  Arizona,   Beneficiary  Account:  8711701002,
Beneficiary  Name:  FFCA, or such other account as shall have been  specified by
Company.

         (c) After giving effect to any  Borrowing,  (i) there shall not be more
than ten different  Interest Periods in effect and (ii) the aggregate  principal
of outstanding Advances, shall not exceed the Commitment.

         (d) No Interest  Period for a Borrowing under the Facility shall extend
beyond the Maturity Date.

         (e) Unless a Lender shall have notified  Administrative  Agent prior to
the date of any Advance under the Revolving Loan that it will not make available
its Specified  Percentage of any such Advance,  Administrative  Agent may assume
that such Lender has made the  appropriate  amount  available in accordance with
Section 2.2(a), and Administrative  Agent may, in reliance upon such assumption,
make  available  to  Company a  corresponding  amount.  If and to the extent any
Lender shall not have made such amount available to  Administrative  Agent, such
Lender and Company severally agree to repay to Administrative  Agent immediately
on demand such  corresponding  amount together with interest  thereon,  from the
date such  amount is made  available  to Company  until the date such  amount is
repaid to  Administrative  Agent, at (i) in the case of Company,  the Base Rate,
and (ii) in the case of such Lender,  the Federal Funds Rate.  The obligation of
Company  under  this  Section  2.2(e)  shall not  affect or impair  any right of
Company  against any Lender for such Lender's  breach of its  obligation to fund
Advances under the Revolving Loan.

         (f)  The  failure  by  any  Lender  to  make  available  its  Specified
Percentage of any Advance  under the Revolving  Loan shall not relieve any other
Lender of its obligation,  if any, to make available its Specified Percentage of
any such Advance. In no event, however, shall any
                                      -26-
<PAGE>
such Lender be responsible for the failure of any other Lender to make available
any portion of any  Advance.  No Lender shall be relieved of its  obligation  to
fund  its  Specified   Percentage  of  any  Advance  under  the  Revolving  Loan
notwithstanding  the fact that at any time the aggregate  outstanding  principal
amount of all Bid Rate Loans and Advances  under the Revolving Loan made by such
Lender exceeds its Specified Percentage of the Commitment.

         (g) Company shall indemnify each Lender against any Consequential  Loss
incurred by each Lender as a result of (i) any failure to fulfill,  on or before
the date  specified in the  Borrowing  Notice for an Advance under the Revolving
Loan,  the  conditions  to such  Advance  set  forth  herein  or (ii)  Company's
requesting  that an  Advance  under the  Revolving  Loan not be made on the date
specified in the Borrowing Notice.

         (h) With  respect  to each  Borrowing  consisting  of Bid  Rate  Loans,
Company shall give Administrative Agent and each Lender prior to 10:00 a.m., (i)
in the case of LIBOR Bid Rate Loans,  at least four  Business  Days prior to the
proposed Borrowing and (ii) in the case of Absolute Bid Rate Loans, at least two
Business Days prior to the proposed Borrowing, irrevocable written notice of its
intention to borrow Bid Rate Loans.  Such notice of borrowing  shall specify (i)
the requested  funding  date,  which shall be a Business Day, (ii) the aggregate
amount of the  proposed  Borrowing  of Bid Rate Loans  (which  shall be at least
$10,000,000 and which is an integral  multiple of $1,000,000 in excess thereof),
(iii) the term of the Bid Rate Loans  selected  by Company,  provided  that such
term shall not extend past the  Maturity  Date,  (iv) whether the Bid Rate Loans
requested are Absolute Bid Rate Loans or LIBOR Bid Rate Loans, and (v) any other
terms   applicable   thereto.   Company  shall  pay  a  $1,000   non-refundable,
administrative  fee for the account of  Administrative  Agent for each notice of
proposed  Borrowing  consisting  of Bid Rate  Loans.  Such fee  shall be paid to
Administrative Agent on the date of delivery of Company's notice of intention to
borrow  Bid Rate  Loans,  and shall  not be  refunded  notwithstanding  that the
proposed  Borrowing  is canceled  by Borrower or no Lender  offers to make a Bid
Rate Loan.

                  (i) Each Lender shall, if, in its sole  discretion,  it elects
         to do so,  irrevocably  offer to make  one or more  Bid  Rate  Loans to
         Company  as part of  such  proposed  Borrowing  at a rate or  rates  of
         interest specified by such Lender in its sole discretion, by delivering
         a written quote to  Administrative  Agent before 10:00 a.m.,  (A) three
         Business Days prior to the proposed date of Borrowing, in the case of a
         request for LIBOR Bid Rate Loans, and (B) one Business Day prior to the
         proposed date of  Borrowing,  in the case of a request for Absolute Bid
         Rate  Loans,  setting  forth (A) the  minimum  amount  (which  shall be
         $1,000,000  or an  integral  multiple  in excess  thereof)  and maximum
         amount of each Bid Rate Loan which such Lender would be willing to make
         as part of the  proposed  Borrowing  (which  amounts  may  exceed  such
         Lender's  Specified  Percentage of the  Commitment) and (B) the rate or
         rates of  interest  therefor.  If any  Lender  shall fail to respond to
         Administrative  Agent by such time, such Lender shall be deemed to have
         elected not to make an offer.
                                      -27-
<PAGE>
                  (ii) Not later than 11:00 a.m. (A) three  Business  Days prior
         to the  proposed  date of Borrowing in the case of LIBOR Bid Rate Loans
         and (B) on the date of the  proposed  Borrowing in the case of Absolute
         Bid Rate Loans, Company shall, in turn, either

                           (A)  cancel  such   proposed   Borrowing   by  giving
                  Administrative Agent notice to that effect, or

                           (B)  accept  one or  more of the  offers  made by any
                  Lender or Lenders  pursuant  to clause (i) above,  in its sole
                  discretion,  by giving notice to  Administrative  Agent of the
                  amount of each Bid Rate Loan (which  amount  shall be equal to
                  or greater than the minimum amount,  and equal to or less than
                  the  maximum  amount,  for  which  notification  was  given to
                  Company  by any  Lender  for such Bid Rate  Loan  pursuant  to
                  clause  (i)  above) to be made by each  Lender as part of such
                  Borrowing,  and reject any  remaining  offers  made by Lenders
                  pursuant  to clause (i) above by giving  Administrative  Agent
                  notice to that effect;  provided,  however, that acceptance by
                  Company of offers  may only be made on the basis of  ascending
                  LIBOR Bid Rates and  Absolute  Bid Rates within each term with
                  respect to Lenders whose outstanding Advances do not exceed or
                  would  not  exceed  as a result  of such Bid  Rate  Loans  its
                  Specified   Percentage  of  the  Commitment;   and,  provided,
                  further,  that if offers are made by two or more such  Lenders
                  with the same  LIBOR  Bid  Rates or  Absolute  Bid Rates for a
                  greater  aggregate  principal amount than the amount for which
                  such offers are accepted for the related  term,  the principal
                  amount  of Bid  Rate  Loans  accepted  shall be  allocated  by
                  Company among such Lenders as nearly as possible (in multiples
                  not less  than  $1,000,000)  in  proportion  to the  aggregate
                  principal amount of such offers.

                  (iii)  Administrative Agent shall promptly notify each bidding
         Lender whether or not its Bid Rate Loan has been accepted (which notice
         to those  Lenders whose Bid Rate Loans have been accepted will be given
         within one hour from the time such bid was accepted by Company).  After
         completing the notifications  referred to in the immediately  preceding
         sentence, Administrative Agent shall notify each bidding Lender (A) the
         aggregate  amount  of Bid  Rate  Loans  made in  connection  with  such
         proposed  Borrowing,  (B) each date on which  any Bid Rate  Loan  shall
         mature,  (C) the principal  amount of Bid Rate Loans which shall mature
         on each such date,  (D) the interest  rate for each such Bid Rate Loan,
         (E) the highest and lowest bid submitted by Lenders in connection  with
         each Bid Rate Loan  request  and (F) Lender  making  each such Bid Rate
         Loan.

                  (iv) If Administrative Agent shall at any time elect to submit
         a bid for a Bid Rate Loan in its capacity as a Lender,  it shall submit
         such bid directly to Company one-half hour earlier than the latest time
         at  which  other   Lenders  are   required  to  submit   their  bid  to
         Administrative Agent pursuant to Section 2(h)(i) hereof.
                                      -28-
<PAGE>
                  (v) If Company  accepts  one or more offers made by any Lender
         or Lenders  pursuant to clause (ii)(B)  above,  each such Lender shall,
         unless any applicable condition specified in Article III hereof has not
         been  satisfied,  make the  funds  under  the Bid Rate  Loans  promptly
         available to Company by wiring  Norwest Bank  Minneapolis,  N.A., ABA #
         091000019, Beneficiary Bank: Norwest Bank Arizona, Beneficiary Account:
         8711701002, Beneficiary Name: FFCA, or such other account as shall have
         been specified by Company.

         2.3. Evidence of Indebtedness

         (a) The  obligations  of Company with respect to all Advances (i) under
the  Revolving  Loan made by each Lender shall be evidenced by a Revolving  Loan
Note in the amount of such Lender's Specified Percentage of $350,000,000 (as the
same may be modified pursuant to Section 9.4 hereof), and (ii) in respect of Bid
Rate  Loans made by each  Lender  shall be  evidenced  by a Bid Rate Note in the
principal amount not to exceed $175,000,000.

         (b) Absent demonstrable error, Administrative Agent's and each Lender's
records  shall be conclusive  as to amounts owed  Administrative  Agent and such
Lender under the Notes and this Agreement.

         2.4. Reduction of Commitment

         (a) Voluntary Commitment  Reduction.  Company shall have the right from
time to time upon notice by Company to Administrative  Agent not later than 1:00
p.m., five Business Days in advance,  to reduce the  Commitment,  in whole or in
part;  provided,  however,  that  Company  shall  pay  the  accrued  and  unpaid
Commitment  Fee on the  amount  of  such  reduction,  if any,  and  any  partial
reduction shall be in an aggregate  amount which is not less than $1,000,000 and
an  integral  multiple of  $500,000.  Such  notice  shall  specify the amount of
reduction and the proposed date of such reduction.

         (b) Mandatory Commitment Reduction or Termination.

                  (i) Scheduled Reduction. The Commitment shall be terminated on
         the Maturity Date.

                  (ii) Asset Sales.  On the date of any Asset Sale by Company or
         any  Subsidiary of Company not otherwise  permitted to be made pursuant
         to Section  6.6  hereof,  the  Commitment  shall be  automatically  and
         permanently reduced by an amount equal to the amount by which the Asset
         Sale  Proceeds  of such Asset  Sale  exceeds  the amount not  otherwise
         permitted pursuant to Section 6.6 hereof.
                                      -29-
<PAGE>
         (c) Commitment Reductions, Generally. To the extent that the sum of the
aggregate  outstanding  (i) Advances under the Revolving Loan plus (ii) Bid Rate
Loans  exceed  the  Commitment  after  any  reduction  thereof,   Company  shall
simultaneously  repay on the date of such reduction,  any such excess amount and
all  accrued  interest  thereon,  together  with any  amounts  constituting  any
Consequential Loss. Once reduced or terminated pursuant to this Section 2.4, the
Commitment may not be increased or reinstated.

         2.5. Prepayments

         (a) Optional  Prepayments.  Company may,  upon at least three  Business
Days prior written notice to Administrative  Agent stating the proposed date and
aggregate principal amount of the prepayment,  prepay the outstanding  principal
amount of any Advances in whole or in part,  together  with accrued  interest to
the date of such  prepayment on the principal  amount  prepaid  without  premium
other than any  Consequential  Loss;  provided,  however,  that in the case of a
prepayment  of a Base Rate  Advance,  the notice of  prepayment  may be given by
telephone  by 11:00 a.m.  on the date of  prepayment.  Each  partial  prepayment
shall, in the case of Base Rate Advances, be in an aggregate principal amount of
not less than  $1,000,000  or a larger  integral  multiple of $500,000 in excess
thereof and, in the case of LIBOR Advances,  be in an aggregate principal amount
of not less than  $5,000,000  or a larger  integral  multiple of  $1,000,000  in
excess  thereof.  If any notice of  prepayment is given,  the  principal  amount
stated  therein,  together with accrued  interest on the amount  prepaid and the
amount,  if any,  due  under  Sections  2.11 and 2.13  hereof,  shall be due and
payable on the date specified in such notice.

         (b) Mandatory Prepayments.  On the date of any Asset Sale by Company or
any  Subsidiary  of  Company  in which the Asset Sale  Proceeds  thereof  exceed
$3,000,000,  Company  shall make a mandatory  prepayment  of Advances  under the
Revolving Loan in an amount equal to the amount by which the Asset Sale Proceeds
of such Asset Sale exceeds $3,000,000.  On the date of any Asset Sale of Company
or any  Subsidiary  of Company not  otherwise  permitted to be made  pursuant to
Section 6.6 hereof,  Company shall make a mandatory prepayment of Advances under
the  Revolving  Loan by an amount  equal to the  amount by which the Asset  Sale
Proceeds of such Asset Sale exceeds the amount not otherwise  permitted pursuant
to Section 6.6 hereof.

         (c)  Prepayments,  Generally.  No  prepayments  of  Advances  under the
Revolving  Loan made pursuant to Section 2.5(a) or the first sentence of Section
2.5(b) shall cause the  Commitment  to be reduced.  Any  prepayment  of Advances
under the Revolving Loan pursuant to the second sentence of Section 2.5(b) shall
cause the Commitment to be automatically  and permanently  reduced by the amount
of such required prepayment. Any prepayment of Advances pursuant to this Section
2.5 shall be applied first to Base Rate Advances, if any, then outstanding under
the Facility,  second to LIBOR  Advances for which the date of prepayment is the
last day of the  applicable  Interest  Period,  if any,  outstanding  under  the
Facility  and  third to LIBOR  Advances  with the  shortest  remaining  Interest
Periods outstanding under the Facility.
                                      -30-
<PAGE>
         2.6. Repayment

         (a)  The  Revolving  Loan.  (i)  On  the  date  of a  reduction  of the
Commitment  pursuant  to  Section  2.4  hereof,  to  the  extent  the  aggregate
outstanding  Advances under the Revolving  Loan on the date of reduction  exceed
the  Commitment as reduced,  such excess  amounts shall be  immediately  due and
payable,  which  principal  payment  may not be made by means  of a  Refinancing
Advance  and (ii)  Advances  outstanding  under the  Revolving  Loan are due and
payable in full on the Maturity Date.

         (b) Bid Rate Loans.  Company shall repay Bid Rate Loans at such time as
agreed upon between  Company and each Lender  making Bid Rate Loans  pursuant to
Section 2.2(h).

         (c) Other Obligations.  Except if an earlier date is otherwise provided
in this Agreement,  all Obligations not otherwise due and payable under Sections
2.6(a) and 2.6(b) above shall be due and payable in full on the Maturity Date.

         2.7. Interest. Subject to Section 2.8 below, Company shall pay interest
on the unpaid  principal  amount of each  Advance  from the date of such Advance
until such principal shall be paid in full, at the following rates:

                  (a) Base Rate Advances. Base Rate Advances shall bear interest
         at a rate per  annum  equal to the  lesser  of (i) the Base  Rate as in
         effect  from  time to time and (ii) the  Highest  Lawful  Rate.  If the
         amount of  interest  payable  in respect  of any  interest  computation
         period  is  reduced  to  the  Highest   Lawful  Rate  pursuant  to  the
         immediately  preceding  sentence and the amount of interest  payable in
         respect of any  subsequent  interest  computation  period would be less
         than the Maximum Amount, then the amount of interest payable in respect
         of such subsequent  interest  computation period shall be automatically
         increased  to  Maximum  Amount;  provided  that  at no time  shall  the
         aggregate amount by which interest paid has been increased  pursuant to
         this sentence  exceed the aggregate  amount by which  interest has been
         reduced pursuant to the immediately preceding sentence.

                  (b) LIBOR Advances.  LIBOR Advances shall bear interest at the
         rate per annum  equal to the LIBOR  Rate  applicable  to such  Advance,
         which at no time shall exceed the Highest Lawful Rate.

                  (c) Payment  Dates.  Accrued and unpaid  interest on Base Rate
         Advances  shall be paid quarterly in arrears on each Quarterly Date and
         on the appropriate maturity,  repayment or prepayment date. Accrued and
         unpaid  interest on LIBOR Advances shall be paid on the last day of the
         appropriate  Interest  Period  and on the  date  of any  prepayment  or
         repayment  of such  Advance;  provided,  however,  that if any Interest
         Period for a LIBOR Advance exceeds three months, interest shall also be
         paid on each
                                      -31-
<PAGE>
         date  occurring  during the  Interest  Period  which is the three month
         anniversary date of the first day of the Interest Period.

         (d) Bid Rate Loans.  Bid Rate Loans shall bear interest at the rate per
annum  agreed to by Company  and each Lender  making Bid Rate Loans  pursuant to
Section  2.2(h).  Interest on each Bid Rate Loan shall be computed  and shall be
payable at such times as agreed upon between  Company and each Lender making Bid
Rate Loans pursuant to Section 2.2(h).

         2.8. Default Interest. During the continuation of any Event of Default,
Company shall pay, on demand,  interest (after as well as before judgment to the
extent permitted by Law) on the principal amount of all Advances outstanding and
on all other  Obligations due and unpaid hereunder for each Advance equal to the
lesser of the (a) the Highest  Lawful Rate and (b) the Base Rate (whether or not
in effect) plus 3.00%.

         2.9. Continuation and Conversion Elections

         (a) Company may upon irrevocable written notice to Administrative Agent
and subject to the terms of this Agreement:

                  (i) elect to convert,  on any Business Day, all or any portion
         of outstanding Base Rate Advances (in an aggregate amount not less than
         $5,000,000  or a larger  integral  multiple  of  $1,000,000  in  excess
         thereof) into LIBOR Advances.

                  (ii)  elect  to  convert  at the  end of any  Interest  Period
         therefor, all or any portion of outstanding LIBOR Advances comprised of
         the same Borrowing (in an aggregate  amount not less than $1,000,000 or
         a larger  integral  multiple of $500,000 in excess  thereof)  into Base
         Rate Advances; or

                  (iii) elect to  continue,  at the end of any  Interest  Period
         therefor, any LIBOR Advances;

         provided,  however,  that if the aggregate amount of outstanding  LIBOR
Advances  comprised in the same Borrowing shall have been reduced as a result of
any payment,  prepayment  or  conversion  of part thereof to an amount less than
$1,000,000,  the LIBOR Advances comprised in such Borrowing shall  automatically
convert into Base Rate Advances at the end of each respective Interest Period.

         (b) Company shall deliver a notice of  conversion  or  continuation  (a
"Notice of  Conversion/Continuation"),  in  substantially  the form of Exhibit D
hereto,  to  Administrative  Agent not later than (i) 12:00 noon three  Business
Days prior to the proposed date of conversion or  continuation,  if the Advances
or any portion  thereof are to be converted into or continued as LIBOR Advances;
and (ii) not later  than  10:00  a.m.  on the  proposed  date of  conversion  or
continuation,  if the Advances or any portion  thereof are to be converted  into
Base Rate Advances.
                                      -32-
<PAGE>
         Each such  Notice of  Conversion/Continuation  shall be by  telecopy or
telephone, promptly confirmed in writing, specifying therein:

                  (i) the proposed date of conversion or continuation;

                  (ii) the  aggregate  amount of  Advances  to be  converted  or
         continued;

                  (iii) the nature of the proposed  conversion or  continuation;
         and

                  (iv) the duration of the applicable Interest Period.

         (c) If, upon the expiration of any Interest Period  applicable to LIBOR
Advances,  Company  shall  have  failed  to select a new  Interest  Period to be
applicable  to such LIBOR  Advances  or if an Event of  Default  shall then have
occurred and be  continuing,  Company shall be deemed to have elected to convert
such LIBOR Advances into Base Rate Advances  effective as of the expiration date
of such current Interest Period.

         (d) Upon receipt of a Notice of Conversion/Continuation, Administrative
Agent  shall  promptly   notify  each  Lender   thereof.   All  conversions  and
continuations  shall be made pro rata  among  Lenders  based on their  Specified
Percentage of the respective  outstanding principal amounts of the Advances with
respect to which such notice was given held by each Lender.

         (e)  Notwithstanding  any other provision  contained in this Agreement,
after giving effect to any  conversion or  continuation  of any Advances,  there
shall not be outstanding Advances with more than ten different Interest Periods.

         2.10. Fees. (a) Subject to Section 9.8 hereof, Company agrees to pay to
Administrative  Agent,  for the account of each Lender,  a Commitment Fee on the
average daily amount of each Lender's Unused  Commitment,  from the Closing Date
through the Maturity Date,  payable  quarterly in arrears on each Quarterly Date
occurring  after the Closing  Date,  with the last such payment due and owing on
the  Maturity  Date at the  following  per annum  percentage  applicable  in the
following situations:
                                      -33-
<PAGE>
                        Applicability                                Percentage
                        -------------                                ----------

         Category 1 - There is no Index Debt  Rating                   0.375%
         or the Index Debt Rating is the  following:
         below BBB- by S&P or below Baa3 by Moody's

         Category 2 - The Index  Debt  Rating is the                   0.200%
         following:  BBB-,  BBB  or  BBB+  by S&P or
         Baa3, Baa2 or Baa1 by Moody's

         Category 3 - The Index  Debt  Rating is the                   0.150%
         following:  A- or  better  by  S&P or A3 or
         better by Moody's

The  Commitment  Fee shall be (i) fully earned when due and  nonrefundable  when
paid and (ii)  adjusted on each  Adjustment  Date  according  to the most recent
determination  of the Index Debt Rating.  For purposes of the foregoing,  if the
Index Debt Rating  established  by S&P or Moody's  shall fall within a different
category, the Commitment Fee shall be determined by reference to whichever Index
Debt Rating shall fall within the inferior (or numerically lower) category.

         (b)  Subject  to  Section  9.8  hereof,   Company   agrees  to  pay  to
Administrative   Agent  for  its  own  account  as  administrative   lender  and
underwriter,  and  to  NationsBanc  Montgomery  Securities,  Inc.,  as  arranger
hereunder,  such fees as agreed to in writing among  Company and  Administrative
Agent and NationsBanc Montgomery Securities,  Inc., payable as set forth in that
certain Fee Letter executed among Company,  Administrative Agent and NationsBanc
Montgomery Securities, Inc. in accordance with the terms of the Fee Letter.

         (c)  Subject  to  Section  9.8  hereof,   Company   agrees  to  pay  to
Administrative  Agent,  for the account of certain of Lenders,  such fees as are
agreed to in writing in any such Fee Letters.

         2.11.  Funding  Losses.  If Company  makes any payment or prepayment of
principal with respect to any LIBOR Advance  (including  payments made after any
acceleration  thereof) or converts any Advance  from a LIBOR  Advance on any day
other than the last day of an Interest Period  applicable  thereto or if Company
fails to prepay,  borrow,  convert, or continue any LIBOR Advance after a notice
or  prepayment,  borrowing,  conversion  or  continuation  has been given (or is
deemed to have been given) to  Administrative  Agent,  Company shall pay to each
Lender on demand (subject to Section 9.8 hereof) any Consequential Loss.

         2.12. Computations and Manner of Payments

         (a) Company shall make each payment not later than 1:00 p.m. on the day
when due in immediately  available funds to Administrative Agent, (i) in respect
of the  Revolving  Loan,  for the Ratable  account of Lenders  unless  otherwise
specifically provided herein, and (ii) in respect of the Bid Rate Loans, for the
account of each Lender making Bid Rate Loans, at
                                      -34-
<PAGE>
                              Administrative Agent
                                NationsBank Plaza
                                 901 Main Street
                                   14th Floor
                               Dallas, Texas 75202
                               Attn. Theresa Belk

for the  further  credit to the  account of  Franchise  Finance  Corporation  of
America.  No later than the end of each day when each payment hereunder is made,
Company shall notify Theresa Belk,  telephone  (214)  508-9177,  facsimile (214)
508-2515,  or such other  Person as  Administrative  Agent may from time to time
specify. Notwithstanding anything in this Section 2.16(a) or any other provision
of this  Agreement  or any other  Loan  Paper to the  contrary,  any  payment by
Company in respect of any Advances after  acceleration of the Advances  pursuant
to Section 7.2 or any monies received by Administrative Agent or any Lender as a
result of the exercise of remedies  under any Loan Paper after  acceleration  of
Advances  pursuant to Section 7.2 shall be  distributed  pro rata to each Lender
based on the percentage that the outstanding  Advances owed to such Lender bears
to the aggregate Advances owed to all Lenders.

         (b) Unless Administrative Agent shall have received notice from Company
prior to the date on which any payment is due  hereunder  that  Company will not
make  payment in full,  Administrative  Agent may assume that such payment is so
made on such date and may, in reliance upon such assumption,  make distributions
to Lenders.  If and to the extent  Company  shall not have made such  payment in
full,  each Lender shall repay to  Administrative  Agent forthwith on demand the
applicable  amount  distributed,  together with interest  thereon at the Federal
Funds Rate, from the date of distribution  until the date of repayment.  Company
hereby authorizes each Lender, if and to the extent payment is not made when due
hereunder,  to charge the amount so due against any account of Company with such
Lender.

         (c) Subject to Section 9.8 hereof, interest on Advances, the Commitment
Fee and other amounts due under the Loan Papers shall be calculated on the basis
of actual days elapsed but computed as if each year consisted of 360 days.  Such
computations  shall be made  including  the first day but excluding the last day
occurring in the period for which such  interest,  payment or Commitment  Fee is
payable.  Each determination by Administrative  Agent or a Lender of an interest
rate,  fee or  commission  hereunder  shall be  conclusive  and  binding for all
purposes, absent demonstrable error. All payments under the Loan Papers shall be
made in United  States  dollars,  and  without  setoff,  counterclaim,  or other
defense.

         (d) Reference to any particular index or reference rate for determining
any applicable interest rate under this Agreement is for purposes of calculating
the  interest due and is not intended as and shall not be construed as requiring
any Lender to actually  fund any Advance at any  particular  index or  reference
rate.
                                      -35-
<PAGE>
         2.13. Yield Protection

         (a) If any Lender  determines  that either (i) the adoption,  after the
date hereof,  of any  Applicable  Law, rule,  regulation or guideline  regarding
capital  adequacy and applicable to commercial  banks or financial  institutions
generally or any change therein,  or any change,  after the date hereof,  in the
interpretation  or  administration  thereof  by any  Tribunal,  central  bank or
comparable agency charged with the interpretation or administration  thereof, or
(ii) compliance by any Lender (or Lending Office of any Lender) with any request
or  directive  made after the date  hereof  applicable  to  commercial  banks or
financial  institutions  generally  regarding  capital adequacy  (whether or not
having  the  force of law) of any such  authority,  central  bank or  comparable
agency has the effect of reducing the rate of return on such Lender's capital as
a  consequence  of its  obligations  hereunder  to a level below that which such
Lender could have achieved but for such adoption,  change or compliance  (taking
into  consideration such Lender's policies with respect to capital adequacy (but
excluding  consequences of such Lender's negligence or intentional  disregard of
law or  regulation))  by an  amount  reasonably  deemed  by  such  Lender  to be
material,  then from time to time,  within  fifteen  days  after  demand by such
Lender,  Company shall,  subject to Section 9.8 hereof,  pay to such Lender such
additional amount or amounts as will adequately  compensate such Lender for such
reduction. Each Lender will notify Company of any event occurring after the date
of this  Agreement  which will entitle such Lender to  compensation  pursuant to
this Section 2.13(a) as promptly as practicable after such Lender obtains actual
knowledge of such event;  provided, no Lender shall be liable for its failure or
the failure of any other Lender to provide such  notification.  A certificate of
such Lender claiming  compensation under this Section 2.13(a),  setting forth in
reasonable detail the calculation of the additional amount or amounts to be paid
to it hereunder and certifying  that such claim is consistent with such Lender's
treatment of similar  customers  having  similar  provisions  generally in their
agreements  with such Lender shall be conclusive in the absence of  demonstrable
error.  Each Lender  shall use  reasonable  efforts to mitigate  the effect upon
Company of any such  increased  costs  payable to such Lender under this Section
2.13(a).

         (b) If,  after the date  hereof,  any  Tribunal,  central bank or other
comparable  authority,  at any time imposes,  modifies or deems  applicable  any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal  Reserve  System),  special deposit or similar  requirement  against
assets  of,  deposits  with or for the  amount  of, or credit  extended  by, any
Lender, or imposes on any Lender any other condition  affecting a LIBOR Advance,
the Notes,  or its obligation to make a LIBOR Advance;  and the result of any of
the  foregoing is to increase  the cost to such Lender of making or  maintaining
its LIBOR Advances, or to reduce the amount of any sum received or receivable by
such Lender under this Agreement or under the Notes or reimbursement obligations
by an amount deemed by such Lender to be material,  then, within five days after
demand by such Lender, Company shall, subject to Section 9.8 hereof, pay to such
Lender such additional amount or amounts as will compensate such Lender for such
increased   cost  or  reduction.   Each  Lender  will  (i)  notify  Company  and
Administrative  Agent of any event  occurring  after the date of this  Agreement
that entitles such Lender to compensation  pursuant to this Section 2.13(b),  as
promptly as practicable after such Lender obtains actual
                                      -36-
<PAGE>
knowledge of the event;  provided,  no Lender shall be liable for its failure or
the failure of any other Lender to provide such  notification  and (ii) use good
faith and reasonable  efforts to designate a different  Lending Office for LIBOR
Advances  of such Lender if the  designation  will avoid the need for, or reduce
the  amount  of,  the  compensation  and will not,  in the sole  opinion of such
Lender, be disadvantageous to such Lender. A certificate of such Lender claiming
compensation under this Section 2.13(b),  setting forth in reasonable detail the
computation of the  additional  amount or amounts to be paid to it hereunder and
certifying that such claim is consistent with such Lender's treatment of similar
customers  having similar  provisions  generally in their  agreements  with such
Lender shall be conclusive in the absence of demonstrable  error. If such Lender
demands compensation under this Section 2.13(b),  Company may at any time, on at
least five Business Days' prior notice to such Lender (i) repay in full the then
outstanding  principal amount of LIBOR Advances,  of such Lender,  together with
accrued  interest  thereon,  or (ii)  convert  the LIBOR  Advances  to Base Rate
Advances in accordance with the provisions of this Agreement; provided, however,
that Company  shall be liable for the  Consequential  Loss  arising  pursuant to
those actions.

         (c)  Notwithstanding  any other  provision  of this  Agreement,  if the
introduction of or any change in or in the  interpretation  or administration of
any Law shall make it  unlawful,  or any central  bank or other  Tribunal  shall
assert that it is unlawful, for a Lender to perform its obligations hereunder to
make LIBOR Advances or to continue to fund or maintain LIBOR Advances hereunder,
then, on notice thereof and demand therefor by such Lender to Company,  (i) each
LIBOR  Advance will  automatically,  upon such demand,  convert into a Base Rate
Advance and (ii) the  obligation of such Lender to make, or to convert  Advances
into,   LIBOR   Advances   shall  be  suspended   until  such  Lender   notifies
Administrative  Agent and  Company  that such  Lender  has  determined  that the
circumstances causing such suspension no longer exist.

         (d) Upon the  occurrence  and during the  continuance of any Default or
Event of Default, (i) each LIBOR Advance will automatically,  on the last day of
the then existing Interest Period therefor, convert into a Base Rate Advance and
(ii) the obligation of each Lender to make, or to convert  Advances into,  LIBOR
Advances shall be suspended.

         (e)  Failure on the part of any Lender to demand  compensation  for any
increased  costs,   increased  capital  or  reduction  in  amounts  received  or
receivable  or  reduction  in return on capital  pursuant to this  Section  2.13
(collectively,  "Increased  Advance Costs") with respect to any period shall not
constitute a waiver of any Lender's right to demand compensation with respect to
such period or any other period, subject,  however, to the limitations set forth
in this Section 2.13.  Notwithstanding  the foregoing,  any Lender's  demand for
Increased  Advance  Costs  shall not include any  Increased  Advance  Costs with
respect to any  period  more than two years  prior to the date that such  Lender
gives notice to Company of such  Increased  Advance  Costs unless the  effective
date of the condition  which results in the right to receive  Increased  Advance
Costs is retroactive (the "Increased Advance Costs Retroactive Effective Date").
If any  Increased  Advance  Costs has an  Increased  Advance  Costs  Retroactive
Effective  Date and any Lender demands  compensation  within two years after the
date setting the Increased Advance
                                      -37-
<PAGE>
Costs Retroactive  Effective Date (the "Increased Advance Costs Set Date"), such
Lender shall have the right to receive  such  Increased  Advance  Costs from the
Increased Advance Costs Retroactive  Effective Date. If a Lender does not demand
such Increased  Advance Costs within two years after the Increased Advance Costs
Set Date,  such Lender may not receive  payment of Increased  Advance Costs with
respect to any period more than two years prior to such demand.

         (f) The  obligations  of Company  under this Section 2.13 shall survive
any  termination of this  Agreement,  subject,  however,  to the limitations set
forth in Section 2.13(e) above.

         (g)  Determinations  by Lenders for purposes of this Section 2.13 shall
be conclusive,  absent demonstrable error. Any certificate  delivered to Company
by a Lender pursuant to this Section 2.13 shall include in reasonable detail the
basis for such Lender's demand for additional  compensation  and a certification
that the claim for  compensation is consistent  with such Lender's  treatment of
similar customers having similar  provisions  generally in their agreements with
such Lender.

         (h) If any Lender notifies Administrative Agent that, in its reasonable
determination,  the LIBOR Rate for any  Interest  Period for any LIBOR  Advances
will not  adequately  reflect  the cost to such  Lender of  making,  funding  or
maintaining LIBOR Advances for such Interest Period,  Administrative Agent shall
promptly  so  notify  Company,  whereupon  (i)  each  such  LIBOR  Advance  will
automatically,  on the last day of the then existing  Interest Period  therefor,
convert into a Base Rate Advance and (ii) the obligation of such Lender to make,
or to convert Advances into, LIBOR Advances shall be suspended until such Lender
notifies   Administrative  Agent  that  such  Lender  has  determined  that  the
circumstances  causing such suspension no longer exist and Administrative  Agent
notifies Company of such fact.

         2.14. Use of Proceeds.  The proceeds of the Advances shall be available
(and Company and its Subsidiaries  shall use such proceeds) to (a) refinance all
Indebtedness  of  Company  under the  Existing  Credit  Agreement,  (b)  finance
acquisition  of, and making  loans  secured by,  Property  and (c) use for other
general working capital purposes.

         2.15.  Extension of Maturity  Date.  Company may notify  Administrative
Agent in writing  by no later than  October 1 of each such year of its desire to
extend the Maturity Date for an  additional 12 months.  If such notice is given,
Administrative  Agent,  no later than November 15 of each such year, will notify
Company in writing of Lenders'  decision  whether to extend the  Maturity  Date.
Extensions  of the  Maturity  Date  shall  be at  the  option  and  in the  sole
discretion  of  Lenders,  and the  decision  to extend the  Maturity  Date shall
require the consent of all Lenders.  If either Company or  Administrative  Agent
fail to give notice within the time prescribed above, the Maturity Date shall be
the then present Maturity Date, unless otherwise extended by the parties hereto.
Any  extension of the Maturity  Date pursuant to this Section 2.15 shall not (i)
require any renewal Note unless otherwise requested by Administrative  Agent and
(ii) be effective  until and unless Company shall pay to  Administrative  Agent,
for the account of Lenders in accordance  with their  Specified  Percentages,  a
Revolving Loan Extension Fee based
                                      -38-
<PAGE>
on the amount of the  Commitment and the Index Debt Rating in effect on the date
of  extension  of the  Maturity  Date at the  following  per annum  percentages,
applicable in the following situations:


                        Applicability                                 Percentage
                        -------------                                 ----------

         Category 1 - There is no Index Debt  Rating                    0.200%
         or the Index Debt Rating is the  following:
         below BBB- by S&P or below Baa3 by Moody's

         Category 2 - The Index  Debt  Rating is the                    0.100%
         following: BBB- or better by S&P or Baa3 or
         better by Moody's

For purposes of the  foregoing,  if the Index Debt Rating  established by S&P or
Moody's shall fall within a different category, the Revolving Loan Extension Fee
shall be  determined  by  reference  to  whichever  Index Debt Rating shall fall
within the inferior (or numerically lower) category.


                        ARTICLE III. CONDITIONS PRECEDENT

         3.1.  Conditions  Precedent to the Initial Advance.  The obligations of
each Lender under this  Agreement and the  obligation of each Lender to make the
Initial Advance shall be subject to the following  conditions  precedent that on
the Closing Date:

         (a) All terms,  conditions and  documentation  in connection  with this
amendment and restatement shall be acceptable to Lenders.

         (b)  The  making  of  the  Commitment  shall  not  contravene  any  Law
applicable to Administrative Agent or any Lender.

         (c) Each Lender shall have  received a  Certificate  from an Authorized
Officer  stating  that no  material  adverse  change  in the  business,  assets,
prospects,  or  financial  condition of Company and its  Subsidiaries  since the
December 31, 1996 financial statements provided to Lenders. Administrative Agent
shall have received financial  information regarding Company and each Subsidiary
of Company requested by it.

         (d) Each Lender shall have received an executed copy of this  Agreement
and its  respective  Notes,  duly  completed  and  correct.  Lenders  shall have
received copies of the Fee Letters signed by Company, as applicable. Each of the
following  shall  have  been  delivered  to  Administrative  Agent on  behalf of
Lenders,  in form and substance  satisfactory to Administrative  Agent,  Special
Counsel and each Lender. The Guaranty Agreement executed by each Guarantor and a
Subordination Agreement executed by each payee of an Intercompany Note.

         (e) Company shall have delivered to Administrative Agent a Certificate,
dated the
                                      -39-
<PAGE>
Closing  Date,  executed by an  Authorized  Officer,  certifying  that,  to such
Authorized Officer's knowledge,  (i) no Default or Event of Default has occurred
and is continuing,  (ii) the representations and warranties set forth in Article
IV hereof are true and correct in all material  respects,  and (iii) Company and
each Subsidiary of Company has complied with all agreements and conditions to be
complied with by it in all material respects under the Loan Papers by such date.

         (f)  Company  and  each   Guarantor   shall  have  each   delivered  to
Administrative Agent on behalf of Lenders a Secretary's  Certificate,  dated the
Closing  Date,  certifying  (i) that  attached  copies  of the  certificates  of
organization certified by the Secretary of States of the appropriate states, and
bylaws are true and complete,  and in full force and effect,  without  amendment
except as shown, and (ii) that a copy of the resolutions  authorizing  execution
and delivery of this Agreement and any Loan Papers, as appropriate, are true and
complete,  and that such  resolutions  are in full force and  effect,  were duly
adopted,  have not been  amended,  modified,  or  revoked,  and  constitute  all
resolutions adopted with respect to this loan transaction.  Administrative Agent
and Lenders may conclusively rely on the certificate  delivered pursuant to this
subsection until they receive notice in writing to the contrary.

         (g) Administrative  Agent shall have received an opinion or opinions of
counsel to Company and its Subsidiaries,  dated the Closing Date,  acceptable to
Lenders and otherwise in form and substance  satisfactory to Lenders and Special
Counsel, with respect to this loan transaction and otherwise, including, without
limitation,  opinions  (i) to the valid and binding  nature of the Loan  Papers,
(ii) to the power, authorization and corporate matters of each such Person taken
in connection with the transactions  contemplated by the Loan Papers, (iii) that
the  execution,  delivery and  performance  by Company and the  Subsidiaries  of
Company of the  respective  Loan  Papers  does not  violate  any of the terms of
Company's or any such Subsidiary's agreements, and (iv) to such other matters as
are reasonably requested by Special Counsel.

         (h) Simultaneously with the receipt of proceeds of the Initial Advance,
all  Indebtedness  under the Existing  Credit  Agreement  shall be paid in full,
whereupon the Existing Credit Agreement shall automatically  terminate and be of
no further force or effect.

         (i)  Administrative  Agent shall have  received,  on behalf of Lenders,
each of the  following,  in form and substance  satisfactory  to  Administrative
Agent and Special Counsel:

                  (i)  evidence  that  all   proceedings   of  Company  and  its
         Subsidiaries taken in connection with the transactions  contemplated by
         this Agreement  shall be reasonably  satisfactory in form and substance
         to Lenders and Special  Counsel;  and each Lender  shall have  received
         copies of all  documents  or other  evidence  which  Lenders or Special
         Counsel  may  reasonably  request  in  connection  with this  facility,
         including without  limitation the resolutions of the Board of Directors
         of Company and each Subsidiary, and the requisite authorizations of all
         other  Persons  necessary to authorize  the  transactions  contemplated
         herein, certified to be true and correct by an Authorized Officer;
                                      -40-
<PAGE>
                  (ii)  payment  of all  fees,  costs and  expenses  (including,
         without limitation, attorneys' fees of Special Counsel and the fees set
         forth in the Fee Letter due to be paid through the Closing Date); and

                  (iii) a Compliance Certificate computed after giving effect to
         the Initial Advance.

         (j) All corporate  proceedings of Company and its Subsidiaries taken in
connection  with  the  transactions   contemplated  hereby,  and  all  documents
incidental thereto,  shall be satisfactory in form and substance to each Lender.
Administrative Agent and each Lender shall have received copies of all documents
or other  evidence  that it may  reasonably  request  in  connection  with  such
transactions.

         3.2.  Conditions  Precedent to All  Advances.  The  obligation  of each
Lender to make each Advance  (including the Initial Advance) shall be subject to
the  further  conditions  precedent  that on the  date of such  Advance  (a) the
following  statements  shall be true (and the delivery of each Borrowing  Notice
under Section  2.2(a),  each  Application  and each  Conversion or  Continuation
Notice  under  Section  2.9(b),  or the  failure  to  deliver  a  Conversion  or
Continuation  Notice under Section 2.9(b) shall constitute a representation that
on the disbursement date (except as to representations  and warranties which (i)
refer to a specific  date,  (ii) have been  modified by  transactions  permitted
pursuant  to  this  Agreement  or any  other  Loan  Paper  or  (iii)  have  been
specifically waived by Administrative Agent, to the extent permitted pursuant to
Section 9.1) are true:

                  (i) The representations and warranties contained in Article IV
         hereof are true and  correct on such date,  as though made on and as of
         such date;

                  (ii) No event has occurred and is continuing,  or would result
         from such Advance  (including the intended  application of the proceeds
         of such Advance),  that does or could  constitute a Default or Event of
         Default; and

                  (iii) There shall have  occurred no Material  Adverse  Change,
         and the making of such Advance, shall not cause or result in a Material
         Adverse Change; and

                  (iv) After giving effect to each such  Advance,  the aggregate
         outstanding Advances do not exceed the Commitment;

and  (b)  Administrative  Agent  shall  have  received,  in form  and  substance
acceptable to it, such other approvals, documents,  certificates,  opinions, and
information as it may deem necessary or appropriate.
                                      -41-
<PAGE>
                   ARTICLE IV. REPRESENTATIONS AND WARRANTIES

         Company  represents  and  warrants  that  the  following  are  true and
correct:

         4.1.   Organization  and   Qualification.   Company  and  each  of  its
Subsidiaries is a corporation  duly  organized,  validly  existing,  and in good
standing under the Laws of its state of  incorporation.  Company and each of its
Subsidiaries is qualified to do business in all  jurisdictions  where the nature
of its  business or  Properties  require  such  qualification,  except where the
failure  to so  qualify  could not  reasonably  be  expected  to have a Material
Adverse  Effect.  Set forth on Schedule  4.1  attached  hereto is a complete and
accurate listing with respect to Company and each of its  Subsidiaries,  showing
(a) the jurisdiction of its  organization and its mailing address,  which is the
principal  place of business  and  executive  offices of each  unless  otherwise
indicated,  (b) the classes of Capital  Stock and shares of Capital Stock issued
and  outstanding  in Company  and each of its  Subsidiaries,  and the numbers or
amounts of Capital Stock  authorized and  outstanding of Company and each of its
Subsidiaries,  and (c) each record and beneficial  owner of outstanding  Capital
Stock on the date hereof,  indicating the ownership  percentage  (provided that,
with  Administrative  Agent's  consent,  Schedule  4.1 need only set forth  each
record and  beneficial  owner of 1% or more of Capital Stock of Company based on
the most  current  records of Company  prior to the Closing  Date).  All Capital
Stock of Company and each of its  Subsidiaries  is validly issued and fully paid
and has been issued in compliance  with all  requirements  of Applicable Law. No
share of Capital Stock of Company or any Subsidiary of Company is subject to any
Lien, including any restrictions on hypothecation or transfer.

         4.2. Due Authorization; Validity. The board of directors of Company and
each  Subsidiary of Company have duly  authorized the execution,  delivery,  and
performance of the Loan Papers to be executed by Company and each  Subsidiary of
Company,  as appropriate.  Company and each Subsidiary of Company has full legal
right,  power,  and  authority to execute,  deliver,  and perform under the Loan
Papers to be executed and delivered by it. The Loan Papers constitute the legal,
valid,  and binding  obligations of Company and each  Subsidiary of Company,  as
appropriate,   enforceable  in  accordance  with  their  terms  (subject  as  to
enforcement of remedies to any applicable Debtor Relief Laws).

         4.3.  Conflicting  Agreements  and  Other  Matters.  The  execution  or
delivery of any Loan Papers, and performance thereunder, does not conflict with,
or result in a breach of the terms, conditions,  or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any
Lien  (other  than in favor of  Administrative  Agent)  upon any  Properties  of
Company or any Subsidiary of Company under, or require any consent, approval, or
other action by, notice to, or filing with, any Tribunal or Person  pursuant to,
the  certificate  of  incorporation  or bylaws of Company or any  Subsidiary  of
Company, any award of any arbitrator,  or any agreement,  instrument,  or Law to
which  Company or any  Subsidiary  of  Company,  or any of their  Properties  is
subject.

         4.4. Financial Statements.  The financial statements of Company and its
Consolidated
                                      -42-
<PAGE>
Subsidiaries,  dated September 30, 1997 and delivered to  Administrative  Agent,
fairly  present its financial  condition and the results of operations as of the
dates and for the periods  shown,  all in accordance  with GAAP.  Such financial
statements reflect all material liabilities,  direct and contingent,  of Company
and  its  Consolidated  Subsidiaries  that  are  required  to  be  disclosed  in
accordance with GAAP. As of the date of such financial statements, there were no
Contingent Liabilities, liabilities for Taxes, forward or long-term commitments,
or unrealized or anticipated  losses from any unfavorable  commitments  that are
substantial in amount and that are not reflected on such financial statements or
otherwise  disclosed in writing to  Administrative  Agent.  Since  September 30,
1997, there has been no Material Adverse Change.  Company and each Subsidiary of
Company is Solvent. The projections of Company dated December 19, 1996 delivered
to Administrative Agent were prepared in good faith and management believes them
to be  based  on  reasonable  assumptions  (each of  which  are  stated  in such
statement) and to provide reasonable estimations of future performance as of the
dates and for the periods shown for Company and its Subsidiaries, subject to the
uncertainty and approximation inherent in any projections. Company's fiscal year
ends on December 31.

         4.5.  Litigation.  As of the  Closing  Date,  Schedule  4.5  lists  all
Litigation  that is pending,  and to Company's  best  knowledge,  threatened  by
written  demand  against  Company  or any of its  Subsidiaries  or any of  their
Properties or assets on the Closing Date in which an adverse  determination with
respect thereto could reasonably be expected to result in an uninsured liability
of Company or any of its Subsidiaries in excess of $500,000. Except as set forth
on Schedule 4.5, there is no pending or, to Company's best knowledge, threatened
Litigation against Company, any Subsidiary of Company or any of their respective
Properties  that could  reasonably  be expected to result in a Material  Adverse
Change.

         4.6. Compliance With Laws Regulating the Incurrence of Indebtedness. No
proceeds  of any Advance  will be used  directly  or  indirectly  to acquire any
security  in any  transaction  which is  subject  to  Sections  13 and 14 of the
Securities  Exchange  Act of  1934,  as  amended.  Company  is  not,  nor is any
Subsidiary  of  Company,  engaged in the  business of  extending  credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U issued  by the Board of  Governors  of the  Federal  Reserve  System),  and no
proceeds of any Advance will be used to purchase or carry any margin stock or to
extend  credit to others for the purpose of  purchasing  or carrying  any margin
stock.  Following  Company's  intended use of the proceeds of each Advance,  not
more  than 25% of the value of the  assets of  Company  will be  "margin  stock"
within the meaning of Regulation  U. Company is not subject to regulation  under
the Public  Utility  Holding  Company Act of 1935,  the Federal  Power Act,  the
Investment  Company  Act of 1940,  the  Interstate  Commerce  Act (as any of the
preceding  acts have been  amended),  or any  other  Law that the  incurring  of
Indebtedness  by  Company  would  violate,  including  without  limitation  Laws
relating to common or contract carriers or the sale of electricity,  gas, steam,
water, or other public utility services.

         4.7.  Authorizations,  Title to Properties and Related Matters. Company
and each Subsidiary of Company possess all material Authorizations necessary and
appropriate to own and
                                      -43-
<PAGE>
operate  their  businesses  and are not in  violation  thereof  in any  material
respect.  All such Authorizations are in full force and effect, and no event has
occurred  that  permits,  or after  notice or lapse of time  could  permit,  the
revocation,  termination  or  material  and  adverse  modification  of any  such
Authorization,  except  those which in the  aggregate  could not  reasonably  be
expected to cause a Material  Adverse  Change.  Company and each  Subsidiary  of
Company has requisite corporate power (as applicable) and legal right to own and
operate its Property and to conduct its business. Each has good and indefeasible
title (fee or leasehold,  as applicable) to its Property,  subject to no Lien of
any kind,  except  Permitted Liens and first Liens for the benefit of Company or
any Subsidiary of Company.  Neither  Company nor any Subsidiary of Company is in
violation of its respective certificates or articles of incorporation or bylaws.
Neither  Company nor any  Subsidiary  of Company is in  violation of any Law, or
material  agreement  or  instrument  binding  on or  affecting  it or any of its
Properties, the effect of which could reasonably be expected to cause a Material
Adverse  Change.  No  business or  Properties  of Company or any  Subsidiary  of
Company is affected by any drought,  storm,  earthquake,  embargo, act of God or
public  enemy,  or other  casualty,  the  effect of which  could  reasonably  be
expected to cause a Material Adverse Change.

         4.8.  Outstanding Debt and Liens.  Company and its Subsidiaries have no
outstanding  Debt,  Contingent  Liabilities or Liens,  except  Permitted  Liens,
except as shown on Schedule 4.8 hereto.  No breach,  default or event of default
exists  under any  document,  instrument  or agreement  evidencing  or otherwise
relating  to any  Indebtedness  of  Company  or any  of  its  Subsidiaries.  All
Intercompany Notes are subject to a Subordination Agreement.

         4.9.  Taxes.  Company  and each  Subsidiary  of  Company  has filed all
federal,  state, and other Tax returns (or extensions related thereto) which are
required to be filed,  and has paid all Taxes as shown on said returns,  as well
as all other Taxes, to the extent due and payable,  except to the extent payment
is contested in good faith and for which adequate reserves have been established
therefor  in  accordance  with GAAP.  All Tax  liabilities  of Company  and each
Subsidiary  of Company  are  adequately  provided  for on its  books,  including
interest and penalties,  and adequate reserves have been established therefor in
accordance  with GAAP.  No income Tax  liability  of a material  nature has been
asserted by taxing authorities for Taxes in excess of those already paid, and no
taxing  authority  has  notified  Company  or any  Subsidiary  of Company of any
deficiency in any Tax return.

         4.10.  ERISA.  Each Plan of Company and each  Subsidiary of Company has
satisfied the minimum funding standards under all Laws applicable  thereto,  and
no Plan has an accumulated funding deficiency  thereunder.  Company has not, and
neither has  Subsidiary of Company  incurred any material  liability to the PBGC
with respect to any Plan.  No ERISA Event has occurred  with respect to any Plan
for which an  Insufficiency  in excess  of  $100,000  exists on the date of such
occurrence.  Neither  Company nor any ERISA  Affiliate has  participated  in any
non-exempt  Prohibited  Transaction  with  respect to any Plan or trust  created
thereunder.  Neither Company nor any ERISA Affiliate has incurred any Withdrawal
Liability to any Multiemployer Plan that has not been satisfied.
                                      -44-
<PAGE>
Neither  Company nor any ERISA  Affiliate  has been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA.

         4.11.  Environmental  Laws.  Company  and  Subsidiary  of  Company  has
obtained all material  environmental,  health and safety Authorizations required
under  all  applicable  Environmental  Laws to  carry on its  business  as being
conducted,  except  where the  failure to obtain such  Authorizations  could not
reasonably be expected to have a Material  Adverse Effect.  On the Closing Date,
there are no  environmental  liabilities of Company or any Subsidiary of Company
(with respect to any fee owned Properties) which could reasonably be expected to
have a Material  Adverse Effect,  except as disclosed and described in detail on
Schedule 4.11 hereto.  Each of such  Authorizations  is in full force and effect
and Company and each  Subsidiary of Company is in compliance  with the terms and
conditions  thereof,  and is also in  compliance  with  all  other  limitations,
restrictions,  conditions, standards, prohibitions,  requirements,  obligations,
schedules and timetables contained in any applicable Environmental Law or in any
regulation,  code, plan, order, decree, judgment,  injunction,  notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
the  failure  to have such  Authorizations  or comply  with any of the terms and
conditions  thereof could not reasonably be expected to have a Material  Adverse
Effect.  In  addition,  no written  notice,  notification,  demand,  request for
information,  citation,  summons or order has been issued,  no written complaint
has been filed, no penalty has been assessed and no  investigation  or review is
pending or, to the best  knowledge  of Company,  or any  Subsidiary  of Company,
threatened,  by any Tribunal or other entity with respect to any alleged failure
by Company or any  Subsidiary  of Company to have any  environmental,  health or
safety  Authorization  required  under  any  applicable   Environmental  Law  in
connection  with the  conduct of the  business of Company or any  Subsidiary  of
Company  or with  respect  to any  generation,  treatment,  storage,  recycling,
transportation,  discharge,  disposal or release of any  Hazardous  Materials by
Company or any  Subsidiary of Company,  the effect of which could  reasonably be
expected  to  have  a  Material  Adverse  Effect.  There  are  no  environmental
liabilities  of Company or any  Subsidiary of Company which could  reasonably be
expected to cause a Material  Adverse  Change.  Mortgagors  in respect of Funded
Mortgages  and  Tenants  under  Leases are  contractually  (i)  prohibited  from
generating  or  producing  Hazardous  Materials  at or in  connection  with  the
Properties  of Company  and its  Subsidiaries  and  disposing  of any  Hazardous
Materials on or to any Property of Company or any Subsidiary of Company,  except
in compliance with applicable  Environmental  Laws or (ii) obligated to maintain
and occupy the Properties of Company and its Subsidiaries in compliance with all
applicable Laws.

         4.12.  Disclosure.  Neither  Company nor any  Subsidiary of Company has
made a material  misstatement  of fact, or failed to disclose any fact necessary
to make the facts disclosed not misleading,  in light of the circumstances under
which they were made, to Administrative Agent or any Lender during the course of
application  for and  negotiation  of any Loan Papers or otherwise in connection
with any  Advances.  There is no fact  known to  Company  or any  Subsidiary  of
Company that materially  adversely affects any of Company's or any Subsidiary of
Company's  Properties or business,  or that could  constitute a Material Adverse
Change, and that has not been set forth in the Loan Papers or in other documents
furnished to Administrative Agent.
                                      -45-
<PAGE>
         4.13. Investments;  Subsidiaries.  Company and its Subsidiaries have no
Investments  except as  described  on Schedule  4.13 hereto and as  permitted by
Section 6.10 hereof. Schedule 4.13 is a complete and accurate listing of Company
and  each  Subsidiary  of  Company,  showing  (a)  its  complete  name,  (b) its
jurisdiction of organization,  (c) its capital structure, and (d) its street and
mailing address, which is its principal place of business and executive office.

         4.14. Certain Fees. No broker's, finder's,  management fee or other fee
or  commission  will be  payable  by  Company  with  respect  to the  making  of
Commitment or Advances hereunder (other than to Administrative Agent and Lenders
hereunder),  or the offering,  issuance or sale of the Capital Stock of Company.
Company and each  Subsidiary  of Company  hereby  agrees to  indemnify  and hold
harmless  Administrative  Agent and each  Lender  from and  against  any claims,
demand,  liability,  proceedings,  costs or expenses asserted with respect to or
arising in connection with any such fees or commissions.

         4.15. Intellectual Property. Company and each Subsidiary of Company has
obtained  all  patents,  trademarks,  service-marks,  trade  names,  copyrights,
licenses and other rights, free from material restrictions,  which are necessary
for the operation of their respective  businesses as presently  conducted and as
proposed to be conducted.

         4.16.   Investment   Company  Act.  Neither  Company  nor  any  of  its
Subsidiaries  is an  "investment  company",  "promoter",  "principal  under"  or
"controlled  by" an "investment  company",  within the meaning of the Investment
Company Act of 1940,  as  amended.  The making of the  Advances by Lenders,  the
application   of  the  proceeds  and  repayment   thereof  by  Company  and  the
consummation  of the  transactions  contemplated  by the  Loan  Papers  will not
violate any such Act or any rule,  regulation or order thereunder  issued by the
Securities and Exchange Commission.

         4.17. Restricted Payments.  Neither Company nor any of its Subsidiaries
has made any Restricted  Payment during the period from and including  September
30, 1997 through and including the Closing Date.

         4.18. Status as a Real Estate Investment Trust. Company (i) has elected
to be treated as and is qualified as a Real Estate  Investment  Trust,  (ii) has
not revoked its election to be a Real Estate  Investment  Trust,  (iii) for each
taxable year, has satisfied the  requirements  of Section  856(c)(4) of the Code
and (iv) for its  current  "tax  year" (as  defined  in the Code) is and for all
prior tax years subsequent to its election as a Real Estate Investment Trust has
been entitled to a dividends  paid  deduction  which meets the  requirements  of
Section 857 of the Code.

         4.19.  Common  Enterprise.  Company and its Subsidiaries are engaged in
the  businesses  set forth in  Section  6.8  hereof.  These  operations  require
financing on a basis such that the credit
                                      -46-
<PAGE>
supplied can be made available to Company and its Subsidiaries,  as required for
the continued successful operation of the Company and its Subsidiaries, taken as
a whole. Company and each of its Subsidiaries expects to derive benefit (and the
Board of Directors of Company and each Subsidiary of Company has determined that
such  Subsidiary  may  reasonably  be expected to derive  benefit),  directly or
indirectly,  from the credit extended by Lenders hereunder, both in its separate
capacity  and as a  member  of the  group of  companies,  since  the  successful
operation and condition of the Company and each of its Subsidiaries is dependent
ont he continued successful performance of the function of the group as a whole.

         4.20.   Survival  of   Representations   and   Warranties,   etc.   All
representations  and warranties  made under this Agreement shall be deemed to be
made at and as of the  Closing  Date and at and as of the date of each  Advance,
and each  shall  be true  and  correct  when  made,  except  to the  extent  (a)
previously  fulfilled in  accordance  with the terms  hereof,  (b)  subsequently
inapplicable,  or (c) previously waived in writing by  Administrative  Agent and
Lenders with respect to any particular factual circumstance. The representations
and  warranties  made under this  Agreement  shall be deemed  applicable to each
Subsidiary as of the formation or acquisition  of such  Subsidiary and at and as
of each date the  representations  and  warranties  are remade  pursuant to this
provision.  All  representations  and warranties made under this Agreement shall
survive,  and not be waived by, the execution hereof by Administrative Agent and
Lenders,  any investigation or inquiry by Administrative Agent or any Lender, or
by the making of any Advance under this Agreement.


                        ARTICLE V. AFFIRMATIVE COVENANTS

         So  long  as  the  Commitment,  any  Advance  or  any  portion  of  the
Obligations is outstanding, or Company or any of its Subsidiaries owes any other
amount hereunder or under any other Loan Paper:

         5.1 Compliance with Laws and Payment of Debt.  Company shall, and shall
cause each Subsidiary of Company to, comply with all Applicable Laws,  including
without  limitation  compliance with ERISA and all applicable  federal and state
securities Laws. Company shall, and shall cause each of its Subsidiaries to, pay
its Indebtedness as and when due (or within any applicable grace period).

         5.2.  Insurance.   Company  (a)  shall  cause,  and  shall  cause  each
Subsidiary  of Company to cause,  the Tenants  under  Leases and the  Mortgagors
under Funded  Mortgages to keep the  Properties of Company and its  Subsidiaries
adequately insured at all times by reputable insurers to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as what is  customary  with  companies  similarly  situated  and in the  same or
similar  businesses,  (b) shall,  and shall cause each Subsidiary of Company to,
maintain  in  full  force  and  effect  public  liability  (including  liability
insurance  for  all  vehicles  and  other   insurable   Property)  and  worker's
compensation insurance, in amounts customary for such similar companies to cover
                                      -47-
<PAGE>
normal risks, by insurers  satisfactory to Administrative Agent, and (c) Company
shall,  and shall cause each  Subsidiary of Company to, maintain other insurance
as may be required  by Law or  reasonably  requested  by  Administrative  Agent.
Company  shall from time to time shall  deliver to  Administrative  Agent,  upon
demand, evidence of the maintenance of such insurance.

         5.3. Inspection Rights.  Company shall, and shall cause each Subsidiary
of Company to, permit Administrative Agent or any Lender, upon reasonable notice
(provided that no advance notice is required after the occurrence and during the
continuance of an Event of Default), to examine and make copies of and abstracts
from their records and books of account,  to visit and inspect their  Properties
and to  discuss  their  affairs,  finances,  and  accounts  with  any  of  their
directors,    officers,    employees,    accountants,    attorneys   and   other
representatives,  all as  Administrative  Agent  or any  Lender  may  reasonably
request.

         5.4. Records and Books of Account;  Changes in GAAP. Company shall, and
shall  cause each of its  Subsidiaries  to keep  adequate  records  and books of
account in  conformity  with GAAP.  Company  shall make such  valuations  of its
assets as may be required by the terms of Section 856(c)(5) of the Code. Company
shall not, nor shall Company permit any of its Subsidiaries to change its Fiscal
Year, nor change its method of financial  accounting  except in accordance  with
GAAP.  In  connection  with any such change after the date  hereof,  Company and
Lenders shall  negotiate in good faith to make  appropriate  alterations  to the
covenants set forth in Section 6.1 hereof, reflecting such change.

         5.5. Reporting  Requirements.  Company shall furnish to each Lender and
Administrative Agent:

         (a) As soon as available  and in any event within 45 days after the end
of Company's  fiscal  quarters,  consolidated  balance sheets of Company and its
Consolidated  Subsidiaries  as of the  end of  such  quarter,  and  consolidated
statements  of income,  and  consolidated  statements of changes in cash flow of
Company  and its  Consolidated  Subsidiaries  for the portion of the fiscal year
ending with such quarter,  setting forth, in comparative  form,  figures for the
corresponding periods in the previous fiscal year, all in reasonable detail, and
certified by an  Authorized  Officer as prepared in  accordance  with GAAP,  and
fairly  presenting the financial  condition and results of operations of Company
and  its   Consolidated   Subsidiaries   (subject  to  normal,   year-end  audit
adjustments);

         (b) As soon as available  and in any event within 90 days after the end
of each fiscal year, consolidated balance sheets of Company and its Consolidated
Subsidiaries as of the end of such fiscal year, and  consolidated  statements of
income and changes in cash flow of Company and its Consolidated Subsidiaries for
such fiscal year, all in reasonable  detail,  prepared in accordance  with GAAP,
and  accompanied by an unqualified  opinion of the Auditor,  which opinion shall
state that such financial statements were prepared in accordance with GAAP, that
the examination by the Auditor in connection with such financial  statements was
made in accordance with generally  accepted  auditing  standards,  and that such
financial statements present
                                      -48-
<PAGE>
fairly the  financial  condition  and results of  operations  of Company and its
Consolidated Subsidiaries;

         (c) Promptly upon receipt  thereof,  copies of all material  reports or
letters  submitted to Company or any Subsidiary of Company by the Auditor or any
other  accountants  in connection  with any annual,  interim,  or special audit,
including  without  limitation  the comment  letter  submitted to  management in
connection with any such audit;

         (d) Together with each set of financial  statements  delivered pursuant
to  subsections  (a) and (b) above,  a  Compliance  Certificate  executed  by an
Authorized  Officer,  which such  Compliance  Certificate  must (i) certify that
there has occurred no Default or Event of Default,  (ii) compute the  Applicable
Margin,  (iii) set forth the detailed  calculations with respect to the Sections
6.1(a),  (b),  (c),  (d),  (e),  6.3,  6.6 and 6.7 hereof and (iv)  certify that
Company continues to qualify as a Real Estate Investment Trust under the Code;

         (e) As soon as available  and in any event not later than 30 days after
the beginning of each fiscal year of Company,  the annual  operating  budgets of
Company and its Subsidiaries for such fiscal year;

         (f) Promptly upon knowledge by Company of the occurrence of any Default
or Event of Default,  a notice from an  Authorized  Officer,  setting  forth the
details of such  Default or Event of  Default,  and the  action  being  taken or
proposed to be taken with respect thereto;

         (g) As soon  possible and in any event within five  Business Days after
knowledge  thereof  by  Company  or  any  of  its  Subsidiaries,  notice  of any
Litigation  pending or threatened by written demand against Company,  any of its
Subsidiaries or any of their respective Property which, if determined adversely,
could  reasonably be expected to result in a judgment,  penalties,  or uninsured
liability  or damages in excess of  $1,000,000  together  with a statement of an
Authorized Officer describing the allegations of such Litigation, and the action
being taken or proposed to be taken with respect thereto;

         (h) Promptly following notice or knowledge thereof by Company or any of
its Subsidiaries,  notice of any actual or threatened (which threat is evidenced
in writing)  loss or  termination  of any  Authorization  of Company or any such
Subsidiary  which if lost or terminated  could  reasonably be expected to have a
Material  Adverse  Effect,  together with a statement of an  Authorized  Officer
describing the circumstances surrounding the same, and the action being taken or
proposed to be taken with respect thereto;

         (i) Promptly after filing or receipt thereof, copies of all reports and
notices that Company or any of its Subsidiaries (i) files or receives in respect
of any Plan with or from the Internal Revenue  Service,  the PBGC, or the United
States Department of Labor, or (ii) furnishes to or receives from any holders of
any Indebtedness or Contingent Liability,  if in either case, any information or
dispute  referred to therein  either  causes a Default or Event of  Default,  or
could
                                      -49-
<PAGE>
reasonably be expected to cause or result in a Default or an Event of Default;

         (j) Within 120 days after the close of each fiscal year, a statement of
the  Insufficiencies  of each  Plan  (but  only if the  aggregate  amount of all
Insufficiencies  for all Plans  exceeds  $100,000),  certified  as correct by an
actuary enrolled under ERISA;

         (k) As soon as possible and in any event  within 10 days after  Company
or any of its  Subsidiaries  knows that any  Reportable  Event has occurred with
respect to any Plan, a statement,  signed by an Authorized  Officer,  describing
said Reportable Event and the action which the such Person proposes to take with
respect thereto;

         (l) Promptly upon their becoming available,  copies of all registration
statements  and regularly  provided  reports,  if any, filed by Company with the
Securities  and Exchange  Commission  (of any  governmental  agency  substituted
therefor) or any national securities exchange;

         (m) Promptly upon the mailing  thereof to the  shareholders  of Company
generally,  copies of all financial statements,  reports and proxy statements so
mailed;

         (n) As soon as possible and in any event within 5 days after  Company's
knowledge thereof, written notice of any change in the Index Debt Rating; and

         (o) From time to time, such other  information  regarding the business,
affairs or  financial  condition  of Company or any of its  Subsidiaries  as any
Lender may reasonably request,  including  consolidating financial statements of
Company and its  Consolidated  Subsidiaries  pursuant to subsections (a) and (b)
above.

         5.6. Use of Proceeds.  The proceeds of the Advances  shall be available
(and Company and its Subsidiaries  shall use such proceeds) to (a) refinance all
Indebtedness  of  Company  under the  Existing  Credit  Agreement,  (b)  finance
acquisitions  of, and making  loans  secured by,  Property and (c) use for other
general  working  capital  purposes;  provided  that no  Lender  shall  have any
responsibility  as to use by  Company  or any of its  Subsidiaries  of any  such
proceeds.

         5.7. Maintenance of Existence and Assets. Except as provided by Section
6.7 of this  Agreement,  Company  shall  maintain,  and shall  cause each of its
Subsidiaries to maintain,  its corporate existence,  authority to do business in
the  jurisdictions  in which it is necessary  for Company or such  Subsidiary of
Company to do so, and all  Authorizations  necessary for the operation of any of
their  businesses.   Company  shall  maintain,  and  shall  cause  each  of  its
Subsidiaries  to  maintain,  the assets  necessary  for use in their  respective
businesses  in good  repair,  working  order  and  condition,  and make all such
repairs,  renewals and  replacements  thereof as may be  reasonably  required by
Company and its Subsidiaries.

         5.8.  Payment  of  Taxes.  Company  will  and  will  cause  each of its
Subsidiaries to,
                                      -50-
<PAGE>
promptly pay and  discharge  all lawful Taxes imposed upon it or upon its income
or profit or upon any Property belonging to it, unless such Tax shall not at the
time be due and payable, or if the validity thereof shall currently be contested
on a timely basis in good faith by  appropriate  proceedings  (provided that the
enforcement of any Liens arising out of any such  nonpayment  shall be stayed or
bonded during the  proceedings)  and adequate  reserves with respect to such Tax
shall have been established in accordance with GAAP.

         5.9. Indemnity

         (a) Company  agrees to defend,  protect,  indemnify  and hold  harmless
Administrative Agent and each Lender, each of their respective  Affiliates,  and
each of their  respective  (including  such  Affiliates')  officers,  directors,
employees, agents, attorneys,  shareholders and consultants (including,  without
limitation,  those  retained in connection  with the  satisfaction  or attempted
satisfaction of any of the conditions set forth herein) of each of the foregoing
(collectively,   "Indemnitees")  from  and  against  any  and  all  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  expenses and disbursements of any kind or nature whatsoever  (including,
without  limitation,  the reasonable fees and  disbursements of counsel for such
Indemnitees in connection  with any  investigative,  administrative  or judicial
proceeding,  whether or not such Indemnitees shall be designated a party thereto
or such proceeding  shall have actually been  instituted),  imposed on, incurred
by,  or  asserted  against  such  Indemnitees   (whether  direct,   indirect  or
consequential  and  whether  based on any  federal,  state,  or  local  laws and
regulations,  under common law or at equitable  cause,  or on contract,  tort or
otherwise),  arising  from  or  connected  with  the  past,  present  or  future
operations of Company,  any  Subsidiary of Company,  any Affiliate of Company or
any  predecessors  in  interest,  or the past,  present or future  environmental
condition of property of Company,  any  Subsidiary of Company,  any Affiliate of
Company or any predecessors in interest, in each case relating to or arising out
of this Agreement,  the Loan Papers, or any act, event or transaction or alleged
act,  event or transaction  relating or attendant  thereto and the management of
the Advances by Administrative Agent, expressly including in connection with, or
as a  result,  in  whole or in  part,  of the  ordinary  or mere  negligence  of
Administrative  Agent or any Lender,  or the use or intended use of the proceeds
of the  Advances  hereunder,  or in  connection  with any  investigation  of any
potential  matter  covered  hereby,  but excluding any claim or liability to the
extent it arises as the result of the gross negligence or willful  misconduct of
any  Indemnitee,  as  finally  judicially  determined  by a court  of  competent
jurisdiction (collectively, "Indemnified Matters").

         (b) In addition,  Company shall periodically,  upon request,  reimburse
each Indemnitee for its reasonable  legal and other actual  reasonable  expenses
(including the cost of any investigation and preparation) incurred in connection
with any Indemnified Matter. If for any reason the foregoing  indemnification is
unavailable to any Indemnitee or  insufficient  to hold any Indemnitee  harmless
with respect to Indemnified Matters, then Company shall contribute to the amount
paid or payable by such Indemnitee as a result of
                                      -51-
<PAGE>
such loss,  claim,  damage or liability in such  proportion as is appropriate to
reflect not only the  relative  benefits  received by Company and the holders of
the Capital  Stock of Company on the one hand and such  Indemnitee  on the other
hand but also the relative fault of Company and such Indemnitee,  as well as any
other  relevant  equitable  considerations.  The  reimbursement,  indemnity  and
contribution  obligations  under  this  Section  shall  be in  addition  to  any
liability which Company may otherwise have, shall extend upon the same terms and
conditions  to each  Indemnitee,  and  shall be  binding  upon and  inure to the
benefit  of any  successors,  assigns,  heirs and  personal  representatives  of
Company,   Administrative   Agent,  Lenders  and  all  other  Indemnitees.   The
obligations of Company under this Section 5.9 shall survive (i) the execution of
this  Agreement and (ii) any  termination  of this  Agreement and payment of the
Obligations.

         5.10. Authorizations and Material Agreements.  Company shall, and shall
cause its Subsidiaries to, obtain,  maintain and comply in all material respects
with all Authorizations and agreements  necessary or appropriate for any of them
to own, maintain, or operate any of their businesses or Properties.

         5.11. Intercompany Notes. Any portion of any Advance under the Facility
which is loaned by Company to any  Subsidiary  of Company  shall be evidenced by
Intercompany Notes in form and substance acceptable to Administrative Agent, and
there  shall be no  prohibition  on the  ability  of the  Company  to  pledge to
Administrative  Agent  each such  Intercompany  Note.  Company  shall  cause all
Intercompany Notes to be subject to a Subordination Agreement.

         5.12. Further  Assurances.  Company and each Subsidiary of Company will
execute all such  additional  agreements and take any and all such other action,
as  Administrative  Agent may, from time to time, deem  reasonably  necessary or
proper in  connection  with the  obligations  of Company and each  Subsidiary of
Company under any of the Loan Papers.

         5.13. Subsidiaries and Other Obligors.  Company shall cause each of its
Subsidiaries to comply with each provision of this Article V.

         5.14.  Interest  Hedge  Agreements.  Company shall maintain an Interest
Hedge  Agreement or Agreements  such that,  after giving effect to such Interest
Hedge Agreements,  at least 50% of the aggregate Indebtedness of the Company and
its Subsidiaries outstanding at any time is subject to a fixed interest rate per
annum for a term of at least two years.


                         ARTICLE VI. NEGATIVE COVENANTS

         So  long  as  the  Commitment,  any  Advance  or  any  portion  of  the
Obligations is outstanding, or Company or any of its Subsidiaries owes any other
amount hereunder or under any other Loan Paper:
                                      -52-
<PAGE>
         6.1.  Financial  Covenants.  Company and its Consolidated  Subsidiaries
shall comply with the following covenants:

         (a) Minimum Net Worth.  At all times during the term hereof,  Net Worth
shall not be less than the sum of (i) $425,000,000, plus (ii) an amount equal to
75% of the aggregate Net Cash Proceeds  received by Company and its Consolidated
Subsidiaries after the Closing Date from the offering, sale or other disposition
of Capital Stock of Company or any  Subsidiary of Company,  plus (iii) an amount
equal  to the net  worth  of any  Person  that  becomes  a  direct  or  indirect
Subsidiary  of Company or is merged  into or  consolidated  with  Company or any
Subsidiary of Company or  substantially  all of the assets of which are acquired
by Company or any  Subsidiary  of Company to the extent the purchase  price paid
therefor is paid in Capital Stock of Company or any of its Subsidiaries.

         (b) Total  Indebtedness  to Adjusted Net Worth. At all times during the
term hereof,  the ratio of Total Indebtedness to Adjusted Net Worth shall not be
greater than 0.90 to 1.

         (c) Fixed Charge  Coverage  Ratio. At all times during the term hereof,
the Fixed Charge Coverage Ratio shall not be less than 2.0 to 1.

         (d) Maximum  Total Secured  Indebtedness.  At all times during the term
hereof, the aggregate amount of Total Secured  Indebtedness shall not exceed 10%
of Total Assets.

         (e) Total Unencumbered Assets to Total Unsecured  Indebtedness.  At all
times during the term hereof,  the ratio of Total  Unencumbered  Assets to Total
Unsecured Indebtedness shall not be less than 1.75 to 1.

         6.2.  Indebtedness.  Company shall not, and shall not permit any of its
Subsidiaries  to, create,  incur,  assume,  become or be liable in any manner in
respect of, or suffer to exist, any Indebtedness,  except (a) Indebtedness under
the Loan Papers,  (b) Indebtedness in existence on the date hereof,  as shown on
Schedule 4.8 hereto,  (c)  Indebtedness  of a  Subsidiary  of Company to Company
evidenced  by  Intercompany  Notes  evidencing  loans made by  Company  with the
proceeds of Advances, and (d) other Indebtedness,  provided that (i) immediately
prior  thereto  and after the  occurrence  thereof  there shall be no Default or
Event of Default and (ii) the covenants,  terms and  provisions  with respect to
such  Indebtedness  are no more restrictive than the terms of this Agreement and
the other Loan Papers.

         6.3.  Contingent  Liabilities.  Company shall not, and shall not permit
any of its Subsidiaries to, create,  incur,  assume,  become or be liable in any
manner in respect of, or suffer to exist, any Contingent Liabilities, except (a)
Contingent  Liabilities  under or relating to the Loan  Papers,  (b)  Contingent
Liabilities  in existence on the Closing  Date, as shown on Schedule 4.8 hereto,
(c)  Contingent   Liabilities  resulting  from  the  endorsement  of  negotiable
instruments  for collection in the ordinary  course of business,  (d) Contingent
Liabilities in respect
                                      -53-
<PAGE>
of Interest  Hedge  Agreements  of Company or any of its  Subsidiaries,  and (e)
other  Contingent  Liabilities not to exceed  $5,000,000 in aggregate  principal
amount.

         6.4.  Liens.  Company  shall  not,  and  shall  not  permit  any of its
Subsidiaries  to, create or suffer to exist any Lien upon any of its Properties,
except  Permitted  Liens.  In case any  Property  shall be  subject to a Lien in
violation of this Section  6.4, the Company or its  Subsidiary,  as the case may
be, shall  immediately make or cause to be made provision whereby the Notes will
be secured  equally  and  ratably  with all other  obligations  secured  thereby
pursuant to such  agreements  and  instruments  as shall be approved by Majority
Lenders,  and in such case the Notes shall have the benefit,  to the full extent
that, and with such priority as, Lenders may be entitled under  Applicable  Law,
of an equitable  Lien on such  Property  securing the Notes.  Such  violation of
Section 6.4 shall constitute an Event of Default hereunder,  whether or not such
provision is made pursuant to the immediately preceding sentence.

         6.5. Prohibition of Fundamental Changes. Company will not, and will not
cause or permit any of its  Subsidiaries to, enter into any transaction of sale,
transfer,  merger or  consolidation  or  amalgamation,  except  for sales in the
ordinary course of business, or liquidate, wind up or dissolve itself, or suffer
any liquidation or dissolution, except (a) for the liquidation or dissolution of
any  Subsidiary  and (b) a Subsidiary of Company may merge into, or  consolidate
with,  Company  (provided  Company is the  survivor)  or another  Subsidiary  of
Company.  Company will not, and will not cause or permit any of its Subsidiaries
to,  acquire any business or assets from,  or capital stock of, or be a party to
any acquisition of, any Person except for purchases of assets to be sold or used
in the  ordinary  course of business.  Except with respect to the FFCA  Mortgage
Recapitalization,  Company will not  transfer any of the issued and  outstanding
Capital Stock of any Subsidiary which is a qualified REIT Subsidiary  within the
meaning of Section  865(i) of the Code and will not permit the  issuance  of any
additional shares of such Capital Stock if the issuance thereof would cause such
Subsidiary to fail to be characterized as a qualified REIT Subsidiary.

         6.6.  Dispositions  of Assets.  Company shall not, and shall not permit
any of its Subsidiaries to, sell,  lease,  assign,  or otherwise  dispose of any
assets of Company or any of its  Subsidiaries  in an Asset  Sale,  or  otherwise
consummate any Asset Sale, except so long as there exists no Default or Event of
Default, and no Default or Event of Default would be caused thereby, Company and
its  Subsidiaries  may  consummate  Asset  Sales  for  fair  market  value in an
aggregate  amount not to exceed  during any  period of four  consecutive  fiscal
quarters 25% of Total Assets (calculated as an amount equal to the result of (a)
the sum of Total Assets as of the first day of each fiscal  quarter  during such
four quarter period (b) divided by four),  provided that the Asset Sale Proceeds
in excess of  $3,000,000  of each Asset Sale are  applied as provided in Section
2.5(b) hereof; provided that,  notwithstanding  anything herein to the contrary,
Company  will not  dispose  of any  assets at any time in an amount  that  could
impair or jeopardize the status of Company as a Real Estate Investment Trust. On
the day of any Asset  Sale by  Company  or its  Subsidiaries  in which the Asset
Sales   Proceeds   thereof   exceed   $3,000,000,   Company   shall  deliver  to
Administrative Agent a certificate of an Authorized Officer certifying as to the
amount
                                      -54-
<PAGE>
of gross  proceeds  thereof and costs and expenses  payable  thereof  which were
deducted in determining the Asset Sale Proceeds.

         6.7.  Distributions  and  Restricted  Payments.  Company shall not, and
shall not permit any Subsidiary to, make any Restricted  Payments,  except that,
notwithstanding  the  immediately  preceding  subsection,  Company  may  (a) pay
Permitted  Distributions  unless a Default  or Event of Default  shall  exist or
would be caused thereby,  in which case Company may only pay such  Distributions
as may be required to maintain the status of Company as a Real Estate Investment
Trust under the Code and (b)  establish a stock  option plan for  employees  and
directors of Company and, provided no Default or Event of Default shall exist or
would be caused thereby, Company may repurchase Capital Stock of Company for the
purpose of matching  employee  stock  purchases  in  connection  with  Company's
retirement plans.

         6.8.  Business.  Company  shall  not,  and shall not  permit any of its
Subsidiaries  to,  engage  to any  substantial  extent  in any  line or lines of
business  activity  other  than the lines of  business  activity  engaged  in by
Company and its Subsidiaries as of the Closing Date.

         6.9.  Transactions  with  Affiliates.  Company shall not, and shall not
permit any of its  Subsidiaries to, enter into or be party to a transaction with
any Affiliate, including, but not limited to, (a) dispositions of such assets in
an Affiliate,  (b) a loan or advance to an Affiliate,  unless such Investment is
evidenced by an Intercompany Note, and (c) mergers into, consolidations with, or
purchases or  acquisitions  of assets from,  any Affiliate;  provided,  (i) that
Company may enter into such  transactions if the value of the  consideration for
all such  transactions  (other than Asset  Securitizations)  entered  into after
April 15, 1997 does not exceed  $10,000,000  in aggregate  amount;  (ii) that an
Affiliate who is an individual  may serve as a director,  officer or employee of
Company,  and (iii) that Company and its  Subsidiaries  may (A) enter into Asset
Securitizations   with   Asset   Securitization   Affiliates,   subject  to  the
restrictions  in  Section  6.6  hereof and the  requirements  of Section  2.5(b)
hereof, and (B) purchase or acquire Retained Securities.

         6.10.  Loans and  Investments.  Company shall not, and shall not permit
any of its  Subsidiaries  to,  make  any  Investment  to,  or make  or have  any
Investment in, any Person,  or make any commitment to make any such  Investment,
or make any acquisition,  except (a) Investments  existing on the date hereof as
shown  on  Schedule  4.13  hereto,  (b)  Investments  in Cash  Equivalents,  (c)
Investments  in travel  advances in the ordinary  course of business to officers
and employees,  (d) Investments in accounts  receivable  arising in the ordinary
course of business and (e)  Investments in Subsidiaries of Company in compliance
with Section 6.17 hereof.

         6.11. Fiscal Year and Accounting  Method.  Company shall not, and shall
not  permit any of its  Subsidiaries  to,  change  its fiscal  year or method of
accounting, except as may be required by GAAP.

         6.12.  Amendment of Corporate  Documents.  Company  shall not amend its
articles of
                                      -55-
<PAGE>
organization  or bylaws and Company shall not permit any of its  Subsidiaries to
amend its  articles of  organization,  bylaws or  partnership  agreement  in any
manner  which  could  reasonably  be expected  to be  materially  adverse to the
interests of the Lenders.

         6.13.  Compliance  with ERISA.  Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, or permit any member of such
Person's  Controlled Group to directly or indirectly,  (a) terminate any Plan so
as to result in any material (in the opinion of Administrative  Agent) liability
to Company, any Subsidiary of Company or any member of its Controlled Group, (b)
permit to exist any ERISA Event, or any other event or condition, which presents
the risk of any material (in the opinion of  Administrative  Agent) liability of
Company,  any Subsidiary of Company or any member of its Controlled  Group,  (c)
make a complete or partial  withdrawal  (within  the meaning of Section  4201 of
ERISA)  from any  Multiemployer  Plan so as to  result in any  material  (in the
opinion of Administrative Agent) liability to Company, any Subsidiary of Company
or any member of its Controlled Group, (d) enter into any new Plan or modify any
existing  Plan so as to  increase  its  obligations  thereunder  (except  in the
ordinary course of business consistent with past practice) which could result in
any material (in the opinion of Administrative  Agent) liability to Company, any
Subsidiary of Company or any member of its Controlled  Group,  or (e) permit the
present value of all benefit liabilities, as defined in Title IV of ERISA, under
each  Plan of  Company  and each  Subsidiary  of  Company  or any  member of its
Controlled  Group  (using the  actuarial  assumptions  utilized by the PBGC upon
termination  of a Plan) to materially (in the opinion of  Administrative  Agent)
exceed the fair  market  value of Plan assets  allocable  to such  benefits  all
determined as of the most recent valuation date for each such Plan.

         6.14. Subsidiaries and Other Obligors.  Company shall not permit any of
its Subsidiaries to violate any provision of this Article VI.

         6.15.  Amendments to Material Agreements.  Company shall not, nor shall
Company permit any of its  Subsidiaries to, amend or change any Loan Paper other
than with the prior written  consent of Lenders  pursuant to Section 9.1 hereof,
nor shall Company or any of its Subsidiaries change or amend (or take any action
or fail to take any  action  the result of which is an  effective  amendment  or
change),  or accept any waiver or consent with respect to, any Intercompany Note
other than with the prior  written  consent of Lenders  pursuant  to Section 9,1
hereof.

         6.16. Prohibited Transactions.  Company shall not, and shall not permit
any  Subsidiary  to, sell or otherwise  transfer  any Property in a  transaction
which  constitutes  a  prohibited  transaction  within  the  meaning  of Section
857(b)(6) of the Code if such prohibited transaction would cause Company or such
Subsidiary  to fail to satisfy  any of the  requirements  of Section  856 of the
Code.

         6.17. No New Subsidiaries.  Company shall not, and shall not permit any
of  its  Subsidiaries  to,  acquire,   incorporate  or  otherwise  organize  any
Subsidiary which was not in
                                      -56-
<PAGE>
existence  on the Closing  Date unless such  Subsidiary  (a) executes a Guaranty
Agreement,  a Subordination  Agreement and an Intercompany Note and (b) delivers
to  Administrative  Agent (i) the  executed  Guaranty  Agreement,  Subordination
Agreement and an Officer's  Certificate  containing  Articles of  Incorporation,
Bylaws,  corporate  resolutions,  and  incumbency  of officers,  all in form and
substance reasonably  satisfactory to Administrative  Agent, and (ii) an opinion
of  legal  counsel  of  such   Subsidiary  in  form  and  substance   reasonably
satisfactory to Administrative Agent.

         6.18.  Asset  Securitization  Affiliates.  Company  will not permit any
Asset  Securitization  Affiliate to conduct any active  trade or business  other
than  directly  in  respect of an Asset  Securitization.  Without  limiting  the
generality of the foregoing,  Company shall not permit any Asset  Securitization
Affiliate to directly or  indirectly,  other than in  conjunction  with an Asset
Securitization, (a) incur, assume, guaranty or otherwise create or become liable
in respect of any Indebtedness,  (b) make, or permit to remain  outstanding,  an
Investment  in any  Person,  (c)  create or suffer to be created or exist a Lien
upon any part of its property or upon any income,  revenues,  issues and profits
thereof,  (d) sell,  transfer,  exchange or otherwise dispose of any part of its
property,  (e) create,  organize or  establish  any Person,  including,  without
limitation,  any  Subsidiary,  or (f)  maintain,  contribute  to or  assume  any
liability with respect to any Person.


                         ARTICLE VII. EVENTS OF DEFAULT

         7.1.  Events of Default.  Any one or more of the following  shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:

         (a) Company  shall fail to pay any (i)  principal  under any Loan Paper
when due or (ii) any  interest,  fees,  or other  amounts  under any Loan  Paper
within two Business Days when due;

         (b) Any  representation  or warranty  made or deemed made by Company or
any Subsidiary of Company (or any of its officers or  representatives)  under or
in  connection  with any Loan  Papers  shall  prove to have  been  incorrect  or
misleading in any material respect when made or deemed made;

         (c)  Company  or any  Subsidiary  of  Company  shall fail to perform or
observe any term or  condition  contained  in Article V (other than Section 5.12
hereof) and such failure shall not be remedied within fifteen days after written
notice thereof shall have been given to Company by Administrative Agent;

         (d)  Company  or any  Subsidiary  of  Company  shall fail to perform or
observe Section 5.12 hereof or any term or covenant contained in Article VI;
                                      -57-
<PAGE>
         (e)  Company  or any  Subsidiary  of  Company  shall fail to perform or
observe any other term or covenant contained in any Loan Paper, other than those
described in Sections  7.1(a),  (b), (c) and (d), and such failure  shall not be
remedied  within fifteen days after written notice thereof shall have been given
to Company by Administrative Agent;

         (f) Any material provision of any Loan Paper shall, for any reason, not
be valid and binding on Company or any Subsidiary of Company,  or not be in full
force and  effect,  or shall be declared  to be null and void;  the  validity or
enforceability of any Loan Paper shall be contested by Company or any Subsidiary
of Company;  Company or any  Subsidiary of Company shall deny that it has any or
further liability or obligation under its respective Loan Papers;

         (g) Any of the following shall occur:  (i) Company or any Subsidiary of
Company  shall make an  assignment  for the benefit of creditors or be unable to
pay its debts  generally as they become due;  (ii) Company or any  Subsidiary of
Company  shall  petition  or  apply to any  Tribunal  for the  appointment  of a
trustee,  receiver,  or  liquidator  of it,  or of any  substantial  part of its
assets, or shall commence any proceedings  relating to Company or any Subsidiary
of Company  under any Debtor  Relief Law,  whether now or  hereafter  in effect;
(iii) any such petition or application  shall be filed, or any such  proceedings
shall be commenced,  against Company or any Subsidiary of Company,  or an order,
judgment or decree shall be entered  appointing any such trustee,  receiver,  or
liquidator,  or approving the petition in any such  proceedings;  (iv) any final
order,  judgment,  or decree shall be entered in any proceedings against Company
or any  Subsidiary of Company  decreeing its  dissolution;  (v) any final order,
judgment,  or decree shall be entered in any proceedings  against Company or any
Subsidiary of Company decreeing its split-up which requires the divestiture of a
substantial  part of its assets;  or (vi) Company or any  Subsidiary  of Company
shall  petition  or apply to any  Tribunal  for the  appointment  of a  trustee,
receiver,  or liquidator  of it, or of any  substantial  part of its assets,  or
shall commence any proceedings  relating to Company or any Subsidiary of Company
under any Debtor Relief Law, whether now or hereafter in effect;

         (h)  Company  or any  Subsidiary  of  Company  shall  fail  to pay  any
Indebtedness  or  Contingent  Liability in an aggregate  amount of $1,000,000 or
more when due (whether by scheduled maturity, required prepayment, acceleration,
demand,  or  otherwise),  and such failure shall  continue  after the applicable
grace period, if any, specified in the agreement or instrument  relating to such
Indebtedness  or Contingent  Liability;  or Company or any Subsidiary of Company
shall fail to perform or observe any term or covenant contained in any agreement
or instrument  relating to any such Indebtedness or Contingent  Liability,  when
required to be performed or observed,  and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument,  and
can result in  acceleration  of the maturity of such  Indebtedness or Contingent
Liability; or any such Indebtedness or Contingent Liability shall be declared to
be due and  payable,  or  required  to be  prepaid  (other  than by a  regularly
scheduled required prepayment), prior to the stated maturity thereof;

         (i)  Company  or  any  Subsidiary  of  Company  shall  have  any  final
judgment(s)
                                      -58-
<PAGE>
outstanding against it for the payment of $500,000 or more, and such judgment(s)
shall remain unstayed, in effect, and unpaid for a period of 60 days;

         (j) A Change of Control shall occur;

         (k) Company,  any Subsidiary of Company,  or any ERISA  Affiliate shall
have committed a failure described in Section 302(f)(l) of ERISA, and the amount
determined  under  Section  302(f)(3)  of  ERISA is  equal  to or  greater  than
$100,000;

         (l) Company,  any  Subsidiary,  or any ERISA  Affiliate shall have been
notified  by  the  sponsor  of  a  Multiemployer  Plan  that  such  Plan  is  in
reorganization or is being terminated,  within the meaning of Title IV of ERISA,
if as a result thereof the aggregate annual  contributions to all  Multiemployer
Plans in  reorganization  or being  terminated  is  increased  over the  amounts
contributed  to such Plans for the  preceding  Plan year by an amount  exceeding
$50,000;

         (m) Company or any  Subsidiary of Company  shall be required  under any
Environmental  Law to implement any remedial,  neutralization,  or stabilization
process or  program,  the cost of which  could  constitute  a  Material  Adverse
Change; or

         (n) Company shall fail or cause to qualify,  or be unable to certify to
Lenders its continuing  status,  as a Real Estate  Investment  Trust pursuant to
Sections  856  through  860 of the  Code;  or any  Subsidiary  (other  than FFCA
Mortgage)  which is a qualified  REIT  subsidiary  within the meaning of Section
856(i) of the Code shall fail to qualify as a qualified REIT  subsidiary  within
the meaning of Section 856(i) of the Code.

         7.2. Remedies Upon Default. If an Event of Default described in Section
7.1(g) shall occur,  the  Commitment  shall be  immediately  terminated  and the
aggregate  unpaid  principal  balance of and accrued  interest  on all  Advances
shall,  to the extent  permitted by  applicable  Law,  thereupon  become due and
payable  concurrently  therewith,  without any action by Administrative Agent or
any Lender,  and without  diligence,  presentment,  demand,  protest,  notice of
protest or intent to  accelerate,  or notice of any other kind, all of which are
hereby  expressly  waived.  Subject to the foregoing  sentence,  if any Event of
Default shall occur and be continuing,  Administrative Agent may at its election
(provided  (i)  Administrative  Agent  has sent  notice  to all  Lenders  of its
intention to do any one ore more of the  following and within five Business Days
of such notice Majority  Lenders have not notified  Administrative  Agent not to
take such  action or (ii)  Administrative  Agent in good faith  determines  that
immediate action is necessary to be taken to protect the Rights of the Lenders),
and  shall at the  discretion  of  Majority  Lenders,  do any one or more of the
following:

         (a) Declare the entire unpaid balance of all Advances  immediately  due
and  payable,   whereupon  it  shall  be  due  and  payable  without  diligence,
presentment,  demand,  protest,  notice of protest or intent to  accelerate,  or
notice of any other kind (except notices specifically provided for under Section
7.1), all of which are hereby  expressly  waived (except to the extent waiver of
the foregoing is not permitted by applicable Law);
                                      -59-
<PAGE>
         (b) Terminate the Commitment;

         (c) Reduce any claim of Administrative Agent and Lenders to judgment;

         (d)  Exercise  any  Rights  afforded  under  any Loan  Papers,  by Law,
including but not limited to the UCC, at equity, or otherwise.

         7.3.  Cumulative Rights.  All Rights available to Administrative  Agent
and Lenders  under the Loan Papers shall be cumulative of and in addition to all
other Rights granted  thereto at Law or in equity,  whether or not amounts owing
thereunder shall be due and payable,  and whether or not Administrative Agent or
any Lender  shall have  instituted  any suit for  collection  or other action in
connection with the Loan Papers.  Nothing  contained herein or in any other Loan
Papers shall limit the Right of any Lender to collect its Note upon acceleration
of the Obligations pursuant to the terms of this Agreement.

         7.4. Waivers.  The acceptance by Administrative  Agent or any Lender at
any time and from time to time of partial  payment of any amount owing under any
Loan  Papers  shall  not be deemed  to be a waiver  of any  Default  or Event of
Default then existing.  No waiver by  Administrative  Agent or any Lender of any
Default  or Event of  Default  shall be deemed to be a waiver of any  Default or
Event of  Default  other  than such  Default  or Event of  Default.  No delay or
omission by Administrative Agent or any Lender in exercising any Right under the
Loan Papers shall  impair such Right or be  construed as a waiver  thereof or an
acquiescence therein, nor shall any single or partial exercise of any such Right
preclude other or further exercise  thereof,  or the exercise of any other Right
under the Loan Papers or otherwise.

         7.5.  Performance  by  Administrative  Agent or any Lender.  Should any
covenant  of  Company  or any  Subsidiary  of Company  fail to be  performed  in
accordance with the terms of the Loan Papers,  Administrative  Agent may, at its
option, perform or attempt to perform such covenant on behalf of Company or such
Subsidiary.  Notwithstanding  the  foregoing,  it is expressly  understood  that
neither  Administrative  Agent nor any Lender assumes,  and shall not ever have,
except by express written consent of  Administrative  Agent or such Lender,  (a)
any liability or  responsibility  for the performance of any duties or covenants
of Company or any  Subsidiary of Company or (b) any implied or fiduciary  duties
whatsoever to Company or any Subsidiary of Company.

         7.6.  Expenditures.  Company shall reimburse  Administrative  Agent and
each Lender for any reasonable  sums spent by it in connection with the exercise
of any Right provided herein. Such sums shall bear interest at the lesser of (a)
the Base Rate in effect from time to time,  plus 3.0% and (b) the Highest Lawful
Rate, from the date spent until the date of repayment by Company.
                                      -60-
<PAGE>
         7.7.  Control.  None of the covenants or other provisions  contained in
this Agreement  shall, or shall be deemed to, give  Administrative  Agent or any
Lender any Rights to exercise  control  over the affairs  and/or  management  of
Company or any Subsidiary of Company, the power of Administrative Agent and each
Lender being  limited to the Rights to exercise  the  remedies  provided in this
Article.


                       ARTICLE VIII. Administrative Agent

         8.1.   Authorization  and  Action.  Each  Lender  hereby  appoints  and
authorizes  Administrative  Agent to take such action as Administrative Agent on
its behalf and to exercise  such powers under this  Agreement and the other Loan
Papers as are delegated to Administrative Agent by the terms of the Loan Papers,
together  with  such  powers as are  reasonably  incidental  thereto.  As to any
matters not expressly  provided for by this  Agreement and the other Loan Papers
(including  without   limitation   enforcement  or  collection  of  the  Notes),
Administrative  Agent shall not be required to exercise any  discretion  or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Majority  Lenders (or all Lenders,  if required  under  Section  9.1),  and such
instructions  shall  be  binding  upon  all  Lenders;  provided,  however,  that
Administrative  Agent  shall not be required  to take any action  which  exposes
Administrative  Agent to  personal  liability  or which is  contrary to any Loan
Papers or applicable Law.  Administrative Agent agrees to distribute promptly to
each Lender copies of any notices,  requests and other information received from
Company  pursuant  to the terms of this  Agreement,  and to  distribute  to each
applicable Lender in like funds all amounts delivered to Administrative Agent by
Company for the Ratable or individual account of any Lender,  with such funds to
be  distributed  on the date of receipt by  Administrative  Agent  provided such
funds are received by the time prescribed in Section 2.12(a), or the immediately
following Business Day if such funds are received after such time (any funds not
so  distributed  by   Administrative   Agent  shall  bear  interest  payable  by
Administrative  Agent at a rate per annum equal to the Federal Funds Rate to but
not including the date of receipt by such Lender).

         8.2.  Administrative  Agent's  Reliance,  Etc.  Neither  Administrative
Agent, nor any of its directors,  officers,  agents,  employees,  Affiliates, or
representatives  shall be liable for any action  taken or omitted to be taken by
it or them under or in connection  with this  Agreement or any other Loan Paper,
except  for its or their own gross  negligence  or willful  misconduct.  Without
limitation of the  generality  of the  foregoing,  Administrative  Agent (a) may
treat the payee of any Note as the holder  thereof  until  Administrative  Agent
receives  written  notice of the  assignment or transfer  thereof signed by such
payee and in form  satisfactory to  Administrative  Agent;  (b) may consult with
legal  counsel  (including  counsel  for  Company  or any of its  Subsidiaries),
independent public accountants,  and other experts selected by it, and shall not
be liable  for any  action  taken or  omitted to be taken in good faith by it in
accordance with the advice of such counsel,  accountants,  or experts; (c) makes
no warranty or  representation to any Lender and shall not be responsible to any
Lender for any statements, warranties, or
                                      -61-
<PAGE>
representations  made in or in connection  with this Agreement or any other Loan
Papers;  (d)  shall  not have  any duty to  ascertain  or to  inquire  as to the
performance or observance of any of the terms,  covenants, or conditions of this
Agreement or any other Loan Papers on the part of Company or its Subsidiaries or
to inspect  the  Property  (including  the books and  records) of Company or its
Subsidiaries;  (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability,  genuineness,  sufficiency, or value of this
Agreement,  any other Loan Papers, or any other instrument or document furnished
pursuant  hereto;  and (f) shall incur no liability  under or in respect of this
Agreement  or any  other  Loan  Papers  by  acting  upon  any  notice,  consent,
certificate,  or other  instrument  or writing  believed by it to be genuine and
signed or sent by the proper party or parties.

         8.3.  NationsBank of Texas,  N.A. and  Affiliates.  With respect to its
Commitment,  its Advances,  and any Loan Papers,  NationsBank of Texas, N.A. has
the same Rights  under this  Agreement  as any other Lender and may exercise the
same as though it were not Administrative Agent.  NationsBank of Texas, N.A. and
its  Affiliates may accept  deposits  from,  lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Company or any
Subsidiary of Company, any Affiliate thereof, and any Person who may do business
therewith,  all as if NationsBank of Texas, N.A. were not  Administrative  Agent
and without any duty to account therefor to any Lender.

         8.4.  Lender Credit  Decision.  Each Lender  acknowledges  that it has,
independently  and  without  reliance  upon  Administrative  Agent or any  other
Lender, and based on the financial  statements referred to in Section 4.4 hereof
and such other documents and information as it has deemed appropriate,  made its
own credit analysis and decision to enter into this Agreement.  Each Lender also
acknowledges   that  it  will,   independently   and   without   reliance   upon
Administrative  Agent  or any  other  Lender  and  based on such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking  action under this  Agreement  and the
other Loan Papers.

         8.5. Indemnification by Lenders. Lenders shall indemnify Administrative
Agent, pro rata, from and against any and all liabilities,  obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or  nature  whatsoever  which may be  imposed  on,  incurred  by, or
asserted against  Administrative  Agent in any way relating to or arising out of
any  Loan  Papers  or any  action  taken  or  omitted  by  Administrative  Agent
thereunder,  including  mere or ordinary  negligence  of  Administrative  Agent;
provided,  however,  that no Lender  shall be  liable  for any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses, or disbursements  resulting from Administrative  Agent's gross
negligence or willful misconduct.  Without limitation of the foregoing,  Lenders
shall reimburse  Administrative  Agent,  pro rata,  promptly upon demand for any
out-of-pocket  expenses  (including  reasonable  attorneys'  fees)  incurred  by
Administrative  Agent in connection with the preparation,  execution,  delivery,
administration,   modification,   amendment,  or  enforcement  (whether  through
negotiation, legal proceedings or otherwise) of, or legal and
                                      -62-
<PAGE>
other advice in respect of rights or  responsibilities  under,  the Loan Papers.
The indemnity provided in this Section 8.5 shall survive the termination of this
Agreement.

         8.6. Successor Administrative Agent. Administrative Agent may resign at
any time by giving  written  notice  thereof to Lenders and Company,  and may be
removed at any time with  cause by the  Majority  Lenders  or  without  cause by
action of all Lenders  (other  than  Administrative  Agent,  if it is a Lender);
provided, however, so long as (a) NationsBank of Texas, N.A. is a Lender and (b)
no Default or Event of Default has occurred and is  continuing,  NationsBank  of
Texas, N.A. shall not have the right to resign as Administrative Agent. Upon any
such  resignation,  Majority  Lenders shall have the right,  with the consent of
Company  (which  consent  shall  not be  unreasonably  withheld),  to  appoint a
successor  Administrative Agent. If no successor Administrative Agent shall have
been so appointed and shall have accepted  such  appointment  within thirty days
after the retiring Administrative Agent's giving of notice of resignation,  then
the retiring Administrative Agent may, on behalf of Lenders, with the consent of
Company (which consent shall not be unreasonably withheld),  appoint a successor
Administrative  Agent, which shall be a commercial bank organized under the Laws
of the United  States of America or of any State  thereof  and having a combined
capital  and  surplus  of at  least  $250,000,000.  Upon the  acceptance  of any
appointment  as  Administrative  Agent  hereunder by a successor  Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the Rights and duties of the retiring  Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations under the Loan Papers,  provided that (a) if the retiring or removed
Administrative  Agent is unable to appoint a successor  Administrative Agent and
(b) a  Default  or Event of  Default  shall  have  occurred  and be  continuing,
Administrative  Agent shall, after the expiration of a sixty day period from the
date  of  notice,  be  relieved  of  all  obligations  as  Administrative  Agent
hereunder.  Notwithstanding  any Administrative  Agent's  resignation or removal
hereunder, the provisions of this Article shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
                                      -63-
<PAGE>
                            ARTICLE IX. MISCELLANEOUS

         9.1. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Papers, nor consent to any departure by Company
or any Subsidiary of Company therefrom, shall be effective unless the same shall
be in writing  and signed by  Administrative  Agent with the consent of Majority
Lenders,  and then any such  waiver or consent  shall be  effective  only in the
specific  instance  and for the  specific  purpose  for which  given;  provided,
however,  that no amendment,  waiver, or consent shall (and the result of action
or failure to take  action  shall  not)  unless in writing  and signed by all of
Lenders and  Administrative  Agent, (a) increase the Commitment,  (b) reduce any
principal,  interest,  fees, or other  amounts  payable  hereunder,  or waive or
result in the waiver of any Event of Default  under Section  7.1(a),  (c) extend
the  Maturity  Date or  otherwise  postpone  any date  fixed for any  payment of
principal,  interest,  fees, or other amounts payable hereunder, (d) release any
Guaranties securing the Obligations, other than releases contemplated hereby and
by the Loan Papers,  (e) change the  definition  of Specified  Percentage or the
number of Lenders required to take any action hereunder,  (f) amend this Section
9.1, or (g) release or amend any Subordination Agreement. No amendment,  waiver,
or consent shall affect the Rights or duties of  Administrative  Agent under any
Loan  Papers,  unless it is in  writing  and signed by  Administrative  Agent in
addition to the requisite number of Lenders.

         9.2. Notices

         (a) Manner of Delivery.  All notices communications and other materials
to be given or  delivered  under the Loan  Papers  shall,  except in those cases
where giving notice by telephone is expressly  permitted,  be given or delivered
in writing.  All written notices,  communications and materials shall be sent by
registered or certified mail,  postage  prepaid,  return receipt  requested,  by
telecopier,  or delivered  by hand.  In the event of a  discrepancy  between any
telephonic   notice  and  any  written   confirmation   thereof,   such  written
confirmation  shall  be  deemed  the  effective  notice  except  to  the  extent
Administrative  Agent,  any  Lender or  Company  has acted in  reliance  on such
telephonic notice.

         (b) Addresses. All notices, communications and materials to be given or
delivered  pursuant  to this  Agreement  shall  be  given  or  delivered  at the
following  respective  addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
                                      -64-
<PAGE>
         If to Company:

                Franchise Finance Corporation of America
                The Perimeter Center
                17207 North Perimeter Drive
                Scottsdale, Arizona 85255
                Telephone No.:    (602) 585-4500
                Facsimile No.     (602) 585-2225

                Attention:  John R. Barravecchia
                            Executive Vice President and Chief Financial Officer

         With a copy to:

                Franchise Finance Corporation of America
                The Perimeter Center
                17207 North Perimeter Drive
                Scottsdale, Arizona 85255
                Telephone No.:    (602) 585-4500
                Facsimile No.     (602) 585-2225

                Attention:  Dennis L. Ruben, Esq.
                            Executive Vice President and General Counsel

         If to Administrative Agent:

                NationsBank of Texas, N.A.
                901 Main Street, 67th Floor
                Dallas, Texas  75202
                Telephone No.:    (214) 508-3363
                Facsimile No.:    (214) 508-0980

                Attention:  Kimberley A. Knop
                            Vice President

         (c) If to any  Lender,  to its address  set forth  below  opposite  its
signature or on any Assignment and Acceptance or amendment to this Agreement; or
at such other address or,  telecopier or telephone number or to the attention of
such other  individual  or  department  as the party to which  such  information
pertains  may  hereafter  specify  for the  purpose  in a  notice  to the  other
specifically captioned "Notice of Change of Address".

         (d)  Effectiveness.  Each notice,  communication and any material to be
given or 
                                      -65-
<PAGE>
delivered to any party pursuant to this  Agreement  shall be effective or deemed
delivered or furnished  (i) if sent by mail, on the fifth day after such notice,
communication or material is deposited in the mail, addressed as above provided,
(ii) if sent by  telecopier,  when such  notice,  communication  or  material is
transmitted  to the  appropriate  number  determined  as above  provided in this
Section 9.2 and the appropriate  receipt is received or otherwise  acknowledged,
(iii) if sent by hand delivery or overnight courier, when left at the address of
the addressee addressed as above provided, and (iv) if given by telephone,  when
communicated to the individual or any member of the department  specified as the
individual  or  department  to  whose  attention  notices,   communications  and
materials  are to be given or  delivered  except  that  notices  of a change  of
address,  telecopier  or telephone  number or  individual or department to whose
attention  notices,  communications  and  materials are to be given or delivered
shall not be  effective  until  received;  provided,  however,  that  notices to
Administrative  Agent  pursuant to Article II shall be effective  when received.
Company  agrees that  Administrative  Agent shall have no duty or  obligation to
verify or otherwise confirm telephonic notices given pursuant to Article II, and
agrees to indemnify and hold harmless  Administrative  Agent and Lenders for any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments, suits, claims, costs, and expenses resulting, directly or indirectly,
from acting upon any such notice.

         9.3.  Parties in Interest.  All covenants and  agreements  contained in
this  Agreement and all other Loan Papers shall bind and inure to the benefit of
the  respective  successors and assigns of the parties  hereto.  Each Lender may
from time to time assign or transfer its interests hereunder pursuant to Section
9.4 hereof. Neither Company nor any Subsidiary of Company may assign or transfer
its Rights or obligations under any Loan Paper without the prior written consent
of Administrative Agent.
                                      -66-
<PAGE>
         9.4. Assignments and Participations

         (a) Subject to the following sentence,  each Lender (an "Assignor") may
assign its Rights and  obligations  as a Lender  under the Loan Papers to one or
more Eligible Assignees pursuant to an Assignment and Acceptance, so long as (i)
each  assignment  shall be of a constant,  and not a varying  percentage  of all
Rights and obligations thereunder,  (ii) each Assignor shall obtain in each case
the prior written  consent of  Administrative  Agent and Company,  which consent
shall not be unreasonably withheld (provided, however,  notwithstanding anything
herein to the  contrary,  no consent of Company is required  for any  assignment
during any time that an Event of Default has occurred and is continuing),  (iii)
each Assignor shall in each case pay a $3,500  processing fee to  Administrative
Agent, (iv) no such assignment is for an amount less than  $10,000,000,  and (v)
so long as no  Default  or Event of  Default  has  occurred  and is  continuing,
NationsBank  of Texas,  N.A.  shall retain an amount of the  Commitment not less
than the lesser of (A) 10% of the  Commitment  or (B)  $40,000,000.  Within five
Business Days after Administrative Agent receives notice of any such assignment,
Company shall execute and deliver to  Administrative  Agent, in exchange for the
Notes  issued  to  Assignor,  new Notes to the  order of such  Assignor  and its
assignee  in amounts  equal to their  respective  Specified  Percentages  of the
Commitment, if the Commitment is outstanding.  Such new Notes shall be dated the
effective date of the  assignment.  It is specifically  acknowledged  and agreed
that on and after the effective date of each assignment, the assignee shall be a
party  hereto and shall have the Rights and  obligations  of a Lender  under the
Loan Papers.

         (b) Each Lender may sell  participations  to one or more Persons in all
or any of its Rights and obligations under the Loan Papers;  provided,  however,
that (i) such Lender's obligations under the Loan Papers shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such  obligations,  (iii) such Lender shall remain the holder
of its Notes for all purposes of the Loan Papers,  (iv) the participant shall be
granted  the Right to vote on or  consent  to only those  matters  described  in
Sections  9.1(a),  (b),  (c) and (d),  and (v)  Company and each  Subsidiary  of
Company,  Administrative  Agent, and other Lenders shall continue to deal solely
and  directly  with such Lender in  connection  with its Rights and  obligations
under the Loan Papers.

         (c) Any Lender may, in connection with any assignment or participation,
or  proposed   assignment  or   participation,   disclose  to  the  assignee  or
participant,  or proposed assignee or participant,  any information  relating to
Company or any Subsidiary of Company furnished to such Lender by or on behalf of
Company  or  any  Subsidiary  of  Company,   provided  such  Person  executes  a
Confidentiality Agreement.

         (d)  Notwithstanding  any other  provision set forth in this Agreement,
each Lender may at any time create a security  interest in all or any portion of
its Rights under this Agreement  (including,  without  limitation,  the Advances
owing to it and the Note or Notes  held by it) in favor of any  Federal  Reserve
Bank in  accordance  with  Regulation A of the Board of Governors of the Federal
Reserve System.
                                      -67-
<PAGE>
         9.5.  Sharing of  Payments.  If any  Lender  shall  obtain any  payment
(whether voluntary,  involuntary,  through the exercise of any Right of set-off,
or  otherwise)  on  account of its  Advances  in excess of its pro rata share of
payments made by Company, such Lender shall forthwith purchase participations in
Advances  made by the other  Lenders as shall be  necessary  to share the excess
payment  pro rata  with  each of them;  provided,  however,  that if any of such
excess payment is thereafter  recovered from the purchasing Lender, its purchase
from each Lender  shall be  rescinded  and each Lender  shall repay the purchase
price to the  extent  of such  recovery  together  with a pro rata  share of any
interest or other amount paid or payable by the purchasing  Lender in respect of
the total amount so  recovered.  Company  agrees that any Lender so purchasing a
participation  from  another  Lender  pursuant  to this  Section 9.5 may, to the
fullest extent permitted by Law,  exercise all its Rights of payment  (including
the Right of set-off)  with  respect to such  participation  as fully as if such
Lender were the direct creditor of Company in the amount of such participation.

         9.6. Right of Set-off.  Upon the occurrence and during the  continuance
of any Event of Default,  each Lender is hereby  authorized at any time and from
time to time, to the fullest  extent  permitted by Law, to set-off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness at any time owing by such Lender to or for
the credit or the account of Company  against any and all of the  obligations of
Company  now or  hereafter  existing  under  this  Agreement  and the other Loan
Papers,  whether or not  Administrative  Agent or any Lender shall have made any
demand  under  this  Agreement  or the  other  Loan  Papers,  and  even  if such
obligations  are unmatured.  Each Lender shall promptly notify Company after any
such  set-off  and  application,  provided  that the failure to give such notice
shall not affect the  validity of such  set-off and  application.  The Rights of
each Lender under this  Section 9.6 are in addition to other Rights  (including,
without limitation, other Rights of set-off) which such Lender may have.

         9.7. Costs, Expenses, and Taxes

         (a)  Company  agrees  to pay on  demand  (i) all  reasonable  costs and
expenses of  Administrative  Agent and its  Affiliates  in  connection  with the
preparation and negotiation of all Loan Papers, including without limitation the
reasonable  fees  and  out-of-pocket   expenses  of  Special  Counsel,  and  the
reasonable  costs and expenses of  Administrative  Agent and its  Affiliates  in
connection  with the  syndication  of the  Commitment  and (ii)  all  costs  and
expenses (including  reasonable  attorneys' fees and expenses) of Administrative
Agent  and  each  Lender  in  connection  with  administration,  interpretation,
modification,  amendment,  waiver,  or  release  of  any  Loan  Papers  and  any
restructuring,  work-out, or collection of any portion of the Obligations or the
enforcement of any Loan Papers.

         (b) In addition,  Company shall pay any and all stamp,  debt, and other
Taxes  payable  or  determined  to be  payable in  connection  with any  payment
hereunder (other than Taxes on the overall net income of Administrative Agent or
any Lender or franchise Taxes or Taxes on capital
                                      -68-
<PAGE>
or capital receipts of  Administrative  Agent or any Lender),  or the execution,
delivery,  or recordation of any Loan Papers, and agrees to save  Administrative
Agent and each Lender  harmless  from and against any and all  liabilities  with
respect to, or  resulting  from any delay in paying or omission to pay any Taxes
in  accordance  with this Section 9.7,  including  any  penalty,  interest,  and
expenses relating thereto.  All payments by Company or any Subsidiary of Company
under any Loan Papers shall be made free and clear of and without  deduction for
any  present or future  Taxes  (other  than Taxes on the  overall  net income of
Administrative  Agent or any  Lender of any nature  now or  hereafter  existing,
levied, or withheld,  or franchise Taxes or Taxes on capital or capital receipts
of Administrative Agent or any Lender),  including all interest,  penalties,  or
similar  liabilities  relating  thereto.  If Company shall be required by Law to
deduct or to  withhold  any  Taxes  from or in  respect  of any  amount  payable
hereunder,  (i) the amount so payable shall be increased to the extent necessary
so that, after making all required deductions and withholdings  (including Taxes
on  amounts  payable to  Administrative  Agent or any  Lender  pursuant  to this
sentence),  Administrative  Agent or any Lender  receives an amount equal to the
sum it would have  received had no such  deductions or  withholdings  been made,
(ii) Company shall make such deductions or withholdings, and (iii) Company shall
pay the full amount  deducted or withheld to the  relevant  taxing  authority in
accordance with applicable Law.  Without  prejudice to the survival of any other
agreement  of Company  hereunder,  the  agreements  and  obligations  of Company
contained in this  Section 9.7 shall  survive the  execution of this  Agreement,
termination of the  Commitment,  repayment of the  Obligations,  satisfaction of
each  agreement  securing or assuring the  Obligations  and  termination of this
Agreement and each other Loan Paper.

         (c) Within 30 days after the date of any payment of Taxes, Company will
furnish to  Administrative  Agent the original or a certified  copy of a receipt
evidencing  payment  thereof.  If no Taxes are payable in respect of any payment
hereunder,  Company will furnish to Administrative Agent a certificate from each
appropriate   taxing  authority,   or  an  opinion  of  counsel   acceptable  to
Administrative Agent, in either case stating that such payment is exempt from or
not subject to Taxes,  provided,  however, that such certificate or opinion need
only be given if: (i) Company makes any payment from any account located outside
the United  States,  or (ii) the payment is made by a payor that is not a United
States  Person.  For purposes of this Section 9.7 the terms "United  States" and
"United  States Person" shall have the meanings set forth in Section 7701 of the
Code.

         (d) Each  Lender  which is not a United  States  Person (as  defined in
Section 7701 of the Code) hereby agrees that:

                  (i) it shall,  no later than the Closing Date (or, in the case
         of a Lender which becomes a party hereto  pursuant to Section 9.4 after
         the  Closing  Date,  the date upon  which such  Lender  becomes a party
         hereto) deliver to Company through Administrative Agent, with a copy to
         Administrative Agent:

                  (A)      if any lending office is located in the United States
                           of America,  two (2)  
                                      -69-
<PAGE>
                           accurate  and complete  signed  originals of Internal
                           Revenue  Service Form 4224 or any  successor  thereto
                           ("Form 4224"),

                  (B)      if any lending  office is located  outside the United
                           States of  America,  two (2)  accurate  and  complete
                           signed  originals  of Internal  Revenue  Service Form
                           1001 or any successor thereto ("Form 1001").

         in each case  indicating  that such  Lender is on the date of  delivery
         thereof  entitled to receive  payments of principal,  interest and fees
         for the account of such lending  office or lending  offices  under this
         Agreement free from withholding of United States Federal income tax;

                  (ii) if at any time such Lender  changes its lending office or
         lending  offices or selects an additional  lending office it shall,  at
         the same time or reasonably  promptly thereafter but only to the extent
         the forms previously delivered by it hereunder are no longer effective,
         deliver  to  Company  through  Administrative  Agent,  with a  copy  to
         Administrative Agent, in replacement for the forms previously delivered
         by it hereunder:

                  (A)      if such  changed  or  additional  lending  office  is
                           located  in the  United  States of  America,  two (2)
                           accurate and complete signed  originals of Form 4224;
                           or

                  (B)      otherwise,  two  (2)  accurate  and  complete  signed
                           originals of Form 1001,

         in each case  indicating  that such  Lender is on the date of  delivery
         thereof  entitled to receive  payments of principal,  interest and fees
         for the account of such changed or additional lending office under this
         Agreement free from withholding of United States Federal income tax;

                  (iii) it shall, before or promptly after the occurrence of any
         event  (including the passing of time but excluding any event mentioned
         in clause (ii)  above)  requiring a change in the most recent Form 4224
         or Form 1001 previously delivered by such Lender and if the delivery of
         the same be lawful,  deliver to Company  through  Administrative  Agent
         with a copy to  Administrative  Agent,  two (2)  accurate  and complete
         original signed copies of Form 4224 or Form 1001 in replacement for the
         forms previously delivered by such Lender;

                  (iv) it shall,  promptly  upon the  request of Company to that
         effect, deliver to Company such other forms or similar documentation as
         may be required from time to time by any applicable law,  treaty,  rule
         or  regulation  in order to  establish  such  Lender's  tax  status for
         withholding purposes; and

                  (v) it shall  notify  Company  within 30 days  after any event
         (including  an  
                                      -70-
<PAGE>
         amendment to, or a change in any applicable law or regulation or in the
         written  interpretation  thereof  by any  regulatory  authority  or any
         judicial  authority,  or by  ruling  applicable  to such  Lender of any
         governmental    authority   charged   with   the    interpretation   or
         administration  of any law) shall occur that  results in such Lender no
         longer being  capable of receiving  payments  without any  deduction or
         withholding of United States federal income tax.

         9.8. Rate  Provision.  It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall Company or any other Person be obligated to
pay any amount in excess of the Maximum Amount. If  Administrative  Agent or any
Lender ever receives,  collects or applies,  as interest,  any such excess, such
amount which would be excessive  interest shall be deemed a partial repayment of
principal and treated  hereunder as such;  and if principal is paid in full, any
remaining excess shall be paid to Company or the other Person entitled  thereto.
In determining  whether or not the interest paid or payable,  under any specific
contingency,  exceeds the Maximum Amount,  Company,  each Subsidiary of Company,
Administrative  Agent and each Lender  shall,  to the maximum  extent  permitted
under Applicable Law, (a)  characterize any nonprincipal  payment as an expense,
fee or premium rather than as interest,  (b) exclude  voluntary  prepayments and
the effect  thereof,  and (c)  amortize,  prorate,  allocate and spread in equal
parts, the total amount of interest  throughout the entire  contemplated term of
the Obligations so that the interest rate is uniform  throughout the entire term
of the  Obligations;  provided that if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence  thereof exceeds the Maximum Amount,
Administrative  Agent or Lenders,  as  appropriate,  shall refund to Company the
amount of such  excess or credit the  amount of such  excess  against  the total
principal amount owing, and, in such event, neither Administrative Agent nor any
Lender shall be subject to any  penalties  provided by any Laws for  contracting
for,  charging  or  receiving  interest in excess of the  Maximum  Amount.  This
Section 9.8 shall  control  every other  provision of all  agreements  among the
parties to the Loan Papers  pertaining to the  transactions  contemplated  by or
contained in the Loan Papers.

         9.9.  Confidentiality.  Each Lender and Administrative Agent agrees (on
behalf of itself and each of its Affiliates,  directors, officers, employees and
representatives) to (a) keep confidential any non-public information supplied to
it by Company pursuant to this Agreement which is identified by Company as being
confidential  at the time the same is  delivered  to Lenders  or  Administrative
Agent,  including,  without  limitation,  written  information  and  information
transferred  visually  or  electronically,  together  with all notes,  analyses,
compilations,  studies or other  documents that contain all or a portion of such
information   (collectively,   "Confidential   Information")  and  (b)  use  the
Confidential  Information  solely in  connection  with the Loan  Papers  and the
evaluation of Company and its  Subsidiaries,  provided that nothing herein shall
limit the disclosure of any Confidential  Information (a) to the extent required
by Law or  judicial  process,  (b) to counsel  for any Lender or  Administrative
Agent,  (c) to bank  examiners,  auditors or accountants  of any Lender,  (d) to
Administrative Agent or any other Lender, (e) in connection
                                      -71-
<PAGE>
with any  Litigation  to which any one or more of Lenders is a party,  provided,
further, that, unless specifically  prohibited by applicable Law or court order,
each Lender shall,  prior to disclosure  thereof,  give prompt  notification  to
Company of any request for disclosure of any such non-public  information (i) by
any governmental  agency or representative  thereof (other than any such request
in connection with an examination of such Lender's  financial  condition by such
governmental  agency) or (ii) pursuant to legal process,  or (f) to any assignee
or participant (or prospective assignee or participant) so long as such assignee
or   participant   (or   prospective   assignee  or   participant)   executes  a
Confidentiality  Agreement.  With respect to any disclosure of any  Confidential
Information set forth in subclause (i) or (ii) of clause (e) above,  each Lender
agrees,  to the extent not prohibited by applicable  law or court order,  to (a)
cooperate  with  Company so that  Company may seek a  protective  order or other
appropriate remedy and (b) use its best efforts to obtain an order or reasonable
assurance  that  confidential  treatment  will  be  afforded  such  Confidential
Information.  At the  earlier of such time as (a) a Person is no longer a Lender
or participant  under this  Agreement,  or (b) all Advances under this Agreement
are paid in full and the  Commitment  is  terminated,  upon  written  request by
Company and subject to any  restrictions  or regulations of any Tribunal  having
supervisory  authority over Lenders,  such Lender or participant shall return to
Company the Confidential  Information  which is in tangible form,  including any
copies  which such Lender or  participant  or any Persons to whom such Lender or
participant  transmitted  the  Confidential  Information may have made, and such
Lender or  participant  or such Person will  destroy  all  abstracts,  summaries
thereof or references thereto in such Lender's or participant's or such Person's
documents,  and after written request by Company, shall promptly provide Company
reasonable  assurance in writing that such Lender or  participant or such Person
have complied with this paragraph.  Each Lender  acknowledges that Company is in
the business of financing commercial real estate,  equipment and enterprises and
from time to time such Lender and Company may be in direct competition with each
other for business.  This Agreement does not constitute a license for any Lender
to use, employ or exploit the Confidential  Information to gain any advantage in
the marketplace against Company;  it being expressly  understood and agreed that
any use,  employment  or  exploitation  of the  Confidential  Information  for a
purpose not expressly permitted herein is strictly prohibited.

         9.10.  Severability.  If any provision of any Loan Papers is held to be
illegal,  invalid, or unenforceable under present or future Laws during the term
thereof,  such provision shall be fully  severable,  the appropriate  Loan Paper
shall be construed and enforced as if such illegal,  invalid,  or  unenforceable
provision  had never  comprised a part  thereof,  and the  remaining  provisions
thereof  shall  remain in full force and effect and shall not be affected by the
illegal,  invalid,  or  unenforceable  provision or by its severance  therefrom.
Furthermore,  in lieu of such illegal, invalid, or unenforceable provision there
shall be added  automatically  as a part of such Loan Paper a legal,  valid, and
enforceable  provision  as  similar  in  terms  to  the  illegal,   invalid,  or
unenforceable provision as may be possible.

         9.11.  Exceptions  to  Covenants.   Neither  Company  nor  any  of  its
Subsidiaries  shall be deemed to be  permitted  to take any action or to fail to
take any action that is  permitted  as an  exception to any covenant in any Loan
Papers, or that is within the permissible limits of any
                                      -72-
<PAGE>
covenant,  if such action or omission  would  result in a violation of any other
covenant in any Loan Papers.

         9.12.  Counterparts.  This  Agreement  and the other Loan Papers may be
executed  in any  number of  counterparts,  all of which  taken  together  shall
constitute one and the same  instrument.  In making proof of any such agreement,
it shall not be necessary to produce or account for any  counterpart  other than
one signed by the party against which enforcement is sought.

         9.13. GOVERNING LAW; WAIVER OF JURY TRIAL

         (a) THIS  AGREEMENT  AND ALL OTHER  LOAN  PAPERS  SHALL BE DEEMED TO BE
CONTRACTS MADE AND  PERFORMABLE IN DALLAS,  TEXAS,  AND SHALL BE GOVERNED BY AND
CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS  (WITHOUT  GIVING
EFFECT TO CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA.  WITHOUT EXCLUDING
ANY OTHER  JURISDICTION,  COMPANY  AGREES THAT THE STATE AND  FEDERAL  COURTS OF
TEXAS LOCATED IN DALLAS,  TEXAS,  WILL HAVE  JURISDICTION  OVER  PROCEEDINGS  IN
CONNECTION  HEREWITH.  TO THE MAXIMUM  EXTENT  PERMITTED BY LAW,  COMPANY HEREBY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY  DISPUTE  (WHETHER A
CLAIM IN TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS
AGREEMENT,  THE OTHER LOAN PAPERS,  OR ANY RELATED MATTERS,  AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

         (b) COMPANY  HEREBY WAIVES  PERSONAL  SERVICE OF ANY LEGAL PROCESS UPON
IT.  COMPANY  AGREES THAT  SERVICE OF PROCESS MAY BE MADE UPON IT BY  REGISTERED
MAIL (RETURN RECEIPT  REQUESTED)  DIRECTED TO COMPANY AT ITS ADDRESS  DESIGNATED
FOR  NOTICE  UNDER  THIS  AGREEMENT  AND  SERVICE  SO MADE SHALL BE DEEMED TO BE
COMPLETED  FIVE DAYS AFTER  DEPOSIT IN THE UNITED  STATES MAIL.  NOTHING IN THIS
SECTION  9.13 SHALL  AFFECT THE RIGHT OF  ADMINISTRATIVE  AGENT OR ANY LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
                                      -73-
<PAGE>
         9.14.  ENTIRE  AGREEMENT.  THIS  AGREEMENT  AND THE OTHER  LOAN  PAPERS
REPRESENT THE FINAL AGREEMENT  BETWEEN THE PARTIES  REGARDING THE SUBJECT MATTER
HEREIN  AND  THEREIN  AND  MAY  NOT  BE   CONTRADICTED  BY  EVIDENCE  OF  PRIOR,
CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENT  OF THE  PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


================================================================================
                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
================================================================================
<PAGE>
         IN WITNESS  WHEREOF,  this Credit  Agreement is executed as of the date
first set forth above.

COMPANY:
                                       FRANCHISE FINANCE CORPORATION OF AMERICA



                                       By:      /s/ Dennis L. Ruben
                                                --------------------------------
                                                Dennis L. Ruben
                                                Executive Vice President
                                                and General Counsel


LENDERS:
                                       NATIONSBANK OF TEXAS, N.A., individually
                                       and as Administrative Agent

Specified Percentage:
         12.85714286%

                                       By:      /s/ Frank M. Johnson
                                                --------------------------------
                                                Frank M. Johnson
                                                Senior Vice President


Address:
901 Main, 67th Floor
Dallas, Texas  75202

Facsimile:        (214) 508-0980

Attention:        Frank M. Johnson

Telephone:        (214) 508-3091
                                      -75-
<PAGE>
                                       BANK OF MONTREAL, CHICAGO BRANCH,   
                                       individually and as Co-Agent
Specified Percentage:
         11.42857143%

                                       By:      /s/ Jeffrey G. Hoppen
                                                --------------------------------
                                                Name:  Jeffrey G. Hoppen
                                                Title: Director
Address:
Corporate Banking, 12th Floor
115 South LaSalle Street
Chicago, Illinois 60603

Facsimile:        (312) 750-4352

Attention:        Cathy Sahagian

Telephone:        (312) 750-5905
                                      -76-
<PAGE>
                                     COMMERZBANK AKTIENGESELLSCHAFT, 
                                     LOS ANGELES BRANCH, individually and as Co-
                                     Agent
Specified Percentage:
         11.42857143%

                                     By:      /s/ John Korthuis
                                              ----------------------------------
                                              Name:  John Korthuis
                                              Title: Vice President



                                     By:      /s/ Belinda E. Bernabe
                                              ----------------------------------
                                              Name:  Belinda E. Bernabe
                                              Title: Assistant Treasurer
Address:
660 Figueroa Street, Suite 1450
Los Angeles, California 90017

Facsimile:        (213) 623-0039

Attention:        Steven F. Larsen

Telephone:        (213) 623-8223
                                      -77-
<PAGE>
                                       THE LONG-TERM CREDIT BANK OF JAPAN,  
                                       LTD., individually and as Co-Agent
Specified Percentage:
         11.42857143%

                                       By:      /s/ T. Morgan Edward II
                                                --------------------------------
                                                Name:  T. Morgan Edward II
                                                Title: Deputy General Manager



                                       By:      /s/ Bryan Read
                                                --------------------------------
                                                Name:  Bryan Read
                                                Title: Vice President
Address:
350 South Grand Avenue, Suite 3000
Los Angeles, California 90071

Facsimile:        (213) 622-6908

Attention:        Bryan Read

Telephone:        (213) 689-6314
                                      -78-
<PAGE>
                                      UNION BANK OF SWITZERLAND (NEW 
                                      YORK BRANCH), individually and as Co-Agent
Specified Percentage:
         11.42857143%

                                      By:      /s/ Howard Margolis
                                               ---------------------------------
                                               Name:  Howard Margolis
                                               Title: Assistant Vice President



                                      By:      /s/ Joseph M. Bassil
                                               ---------------------------------
                                               Name:  Joseph M. Bassil
                                               Title: Director
Address:

299 Park Avenue
New York, New York 10171-0026

Facsimile:        (212) 821-4138

Attention:        Howard Margolis

Telephone:        (212) 821-3615
                                      -79-
<PAGE>
                                        COOPERATIEVE CENTRALE RAIFFEISEN-
                                        BOERENLEENBANK B.A., "RABOBANK 
                                        NEDERLAND", NEW YORK BRANCH

Specified Percentage:
         7.7142857%

                                        By:      /s/ Dana W. Hemenway
                                                 -------------------------------
                                                 Name:  Dana W. Hemenway
                                                 Title: Vice President



                                        By:      /s/ Ian Reece
                                                 -------------------------------
                                                 Name:  Ian Reece
                                                 Title: Senior Credit Officer
Address:
245 Park Avenue, 36th Floor
New York, New York 10167

Facsimile:        (212) 916-7880

Attention:        Marla J. Lerner

Telephone:        (212) 916-3743
                                      -80-
<PAGE>
                                        AMSOUTH BANK (f/k/a AMSOUTH BANK OF 
                                        ALABAMA)
Specified Percentage:
         7.14285714%

                                        By:      /s/ John S. Meriwether, Jr.
                                                 -------------------------------
                                                 Name:  John S. Meriwether, Jr.
                                                 Title: Senior Vice President
Address:
AmSouth Sonat Tower
1900 Fifth Avenue, 9th Floor
Birmingham, Alabama 35203

Facsimile:        (205) 326-4075

Attention:        John S. Meriwether

Telephone:        (205) 326-4071
                                      -81-
<PAGE>
                                        DRESDNER BANK AG, NEW YORK BRANCH 
                                        AND GRAND CAYMAN BRANCH
Specified Percentage:
         7.14285714%

                                        By:      /s/ Christopher E. Sarisky
                                                 -------------------------------
                                                 Name:  Christopher E. Sarisky
                                                 Title: Assistant Treasurer



                                        By:      /s/ Colleen Madden
                                                 -------------------------------
                                                 Name:  Colleen Madden
                                                 Title: Vice President
Address:
333 South Grand Ave., Suite 1700
Los Angeles, California 90017

Facsimile:        (213) 473-5450

Attention:        Vito Wiacek

Telephone:        (213) 489-5422
                                      -82-
<PAGE>
                                        BANK HAPOALIM, B.M., SAN FRANCISCO 
                                        BRANCH
Specified Percentage:
         5.71428571%

                                        By:      /s/ Daniel Deal
                                                 -------------------------------
                                                 Name:  Daniel Deal
                                                 Title: Assistant Vice President



                                        By:      /s/ John Rice
                                                 -------------------------------
                                                 Name:  John Rice
                                                 Title: Vice President & Senior 
                                                        Lending Officer
Address:
250 Montgomery Street, Suite 700
San Francisco, California 94104

Facsimile:        (415) 989-9948

Attention:        Bruce E. Wetter

Telephone:        (415) 989-9940
                                      -83-
<PAGE>
                                       THE INDUSTRIAL BANK OF JAPAN, 
                                       LIMITED, LOS ANGELES AGENCY
Specified Percentage:
         5.71428571%

                                       By:  /s/ Shuji Ueno
                                            ------------------------------------
                                            Name:  Shuji Ueno
                                            Title: Senior Vice President &  
                                                   Senior Deputy General Manager
Address:
350 South Grand Avenue, Suite 1500
Los Angeles, California 90071

Facsimile:        (213) 488-9840

Attention:        Hiroshi Maekawa

Telephone:        (213) 628-7241
                                      -84-
<PAGE>
                                        FIRST UNION NATIONAL BANK
Specified Percentage:
         4.28571429%

                                        By:   /s/ John A. Schissel
                                              ----------------------------------
                                              Name:  John A. Schissel
                                              Title: Vice President
Address:
One First Union Center, NC 01 66
Charlotte, North Carolina 28288-0166

Facsimile:        (704) 383-6205

Attention:        John Schissel

Telephone:        (704) 383-1967
                                      -85-
<PAGE>
                                        NORWEST BANK ARIZONA, NATIONAL 
                                        ASSOCIATION
Specified Percentage:
         3.71428571%

                                        By:  /s/ Jaclyn Noel
                                             -----------------------------------
                                             Name:  Jaclyn Noel
                                             Title: Assistant Vice President
Address:
3300 Central Avenue
Mail Station 9004
Phoenix, Arizona 85012

Facsimile:        (602) 263-5855

Attention:        J. Daniel McKirgan

Telephone:        (602) 248-1265
                                      -86-
<PAGE>
                                    EXHIBIT A


                                 PROMISSORY NOTE

$__________                       Dallas, Texas                        _________
 


         FOR VALUE RECEIVED,  the undersigned,  FRANCHISE FINANCE CORPORATION OF
AMERICA,  a Delaware  corporation  ("Borrower"),  HEREBY  PROMISES TO PAY to the
order of _______________  ("Lender") ______________ , payable at such times, and
in such  amounts,  as are  specified  in the  Credit  Agreement  as  hereinafter
defined.  The books and  records of  Administrative  Agent  shall be prima facie
evidence of all sums due Lender.

         Borrower promises to pay interest on the unpaid principal amount of the
Advances from the date made until such principal amount is paid in full, at such
interest  rates,  and  payable at such  times,  as are  specified  in the Credit
Agreement.

         Both  principal  and interest are payable in lawful money of the United
States of America to  Administrative  Agent (as defined in the Credit Agreement)
(for the account of Lender) at its principal banking house at NationsBank Plaza,
901 Main  Street,  Dallas,  Texas 75202,  or such other place as  Administrative
Agent may direct, in immediately available funds.

         This  Note  is  one of  the  Notes  evidencing  Obligations  under  the
Revolving  Loans  referred to in, and is entitled to the benefits of, the Second
Amended and Restated  Credit  Agreement  dated as of December  29,  1997,  among
Borrower, NationsBank of Texas, N.A., as Administrative Agent, Bank of Montreal,
Chicago  Branch,  Commerzbank   Aktiengesellschaft,   Los  Angeles  Branch,  The
Long-Term  Credit Bank of Japan,  Ltd. and Union Bank of  Switzerland  (New York
Branch),  as  Co-Agents,  Lender and certain other lenders (as from time to time
amended,  modified  or  supplemented,   the  "Credit  Agreement").   The  Credit
Agreement,  among other things,  contains  provisions  for  acceleration  of the
maturity  hereof  upon the  happening  of an Event of Default (as defined in the
Credit  Agreement) and also for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified.

         Borrower  and  each  guarantor,  surety  and  endorser  waives  demand,
presentment,  notice of dishonor,  protest and diligence in collecting  sums due
hereunder;  agrees to application  of any debt of Lender to the payment  hereof;
agrees that  extensions and renewals  without limit as to number,  acceptance of
any  number of  partial  payments,  releases  of any party  liable  hereon,  and
releases or  substitutions  of collateral,  before or after maturity,  shall not
release or  discharge  its  obligation  under  this  Note;  and agrees to pay in
addition to all other sums due hereunder reasonable attorney's fees if this Note
is placed in the  hands of an  attorney  for  collection  or if it is  collected
through bankruptcy or other judicial proceeding. Borrower agrees that during the
full term hereof the maximum lawful interest rate for this Note determined under
Texas law shall be the  weekly  ceiling  as  specified  in  Article  5069-1D  of
V.A.T.S.  Further,  to the extent that any other lawful rate ceiling exceeds the
<PAGE>
rate ceiling so determined, then the higher rate ceiling shall apply. Chapter 15
of the Texas Credit Code does not apply to this Note.

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

                                        FRANCHISE FINANCE CORPORATION
                                        OF AMERICA, a Delaware corporation



                                        By:  ___________________________________
                                             John R. Barravecchia
                                             Executive Vice President and
                                             Chief Financial Officer
                                      -2-
<PAGE>
                                    EXHIBIT B

                               GUARANTY AGREEMENT
                               ------------------


         THIS GUARANTY  AGREEMENT (this  "Guaranty"),  dated as of December ___,
1997 (this  "Guaranty"),  is made by FFCA  Acquisition  Corporation,  a Delaware
corporation, FFCA Institutional Advisors, Inc., a Delaware corporation, and FFCA
Mortgage Corporation, a Delaware corporation  (collectively,  the "Guarantors"),
of the  obligations  of Franchise  Finance  Corporation  of America,  a Delaware
corporation  ("Company"),  under the Credit Agreement  (defined below) among the
Company,  NationsBank of Texas,  N.A. as Administrative  Agent  ("Administrative
Agent"), Bank of Montreal, Chicago Branch, Commerzbank  Aktiengesellschaft,  Los
Angeles  Branch,  The  Long-Term  Credit Bank of Japan,  Ltd.  and Union Bank of
Switzerland  (New York  Branch),  as Co-Agents,  and the lenders  parties to the
Credit Agreement (singly, a "Lender" and collectively, the "Lenders").


                                   BACKGROUND
                                   ----------

         1. The  Company,  the  Administrative  Agent,  the  Co-Agents,  and the
Lenders have entered into a Second Amended and Restated Credit Agreement,  dated
as of December ___, 1997 (said Second Amended and Restated Credit Agreement,  as
it may hereafter be amended or otherwise  modified from time to time,  being the
"Credit Agreement"). The capitalized terms not otherwise defined herein have the
meanings specified in the Credit Agreement.

         2. Pursuant to the Credit  Agreement,  the Company may,  subject to the
terms of the  Credit  Agreement  and the other  Loan  Papers,  request  that the
Lenders make Advances.

         3. It is a condition precedent to the obligation of the Lenders to make
such Advances that each Guarantor guarantee repayment thereof upon the terms and
conditions set forth herein.

         4. Each of the  Guarantors  is a  Subsidiary  of the  Company,  and the
Company and each of the Guarantors are members of the same consolidated group of
companies and are engaged in related businesses.

         5. The Board of Directors of each Guarantor has determined that (i) the
execution,   delivery,  and  performance  of  this  Guaranty  is  necessary  and
convenient  to the  conduct,  promotion,  and  attainment  of  each  Guarantor's
business and (ii) the Advances may  reasonably be expected to benefit,  directly
or indirectly, each Guarantor.

         6. The Guarantors desire to induce the Lenders to make such Advances.

         NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders
                                      -1-
<PAGE>
to make Advances  under the Credit  Agreement,  the  Guarantors  hereby agree as
follows:

         1. Guaranty.

                  (a)   Each   Guarantor,    jointly   and   severally,   hereby
         unconditionally  guarantees  the  full and  punctual  payment  of,  and
         promises to pay,  when due,  whether at stated  maturity,  by mandatory
         prepayment,  by acceleration or otherwise, the Obligations,  and agrees
         to pay any and all reasonable  expenses  (including  reasonable counsel
         fees and expenses)  incurred in enforcement or collection of all or any
         part thereof,  whether such  obligations,  indebtedness and liabilities
         are direct, indirect,  fixed,  contingent,  joint, several or joint and
         several, and any rights under this Guaranty.

                  (b)  Anything  contained  in  this  Guaranty  to the  contrary
         notwithstanding,  the obligations of each Guarantor  hereunder shall be
         limited to a maximum  aggregate amount equal to the largest amount that
         would not render its  obligations  hereunder  subject to avoidance as a
         fraudulent  transfer or conveyance under Section 548 of title 11 of the
         United States Code or any applicable provisions of comparable state law
         (collectively,  the  "Fraudulent  Transfer  Laws"),  in each case after
         giving effect to all other liabilities of such Guarantor, contingent or
         otherwise,  that  are  relevant  under  the  Fraudulent  Transfer  Laws
         (specifically excluding,  however, any liabilities of such Guarantor in
         respect of intercompany indebtedness to the Company or other Affiliates
         of the Company to the extent that such indebtedness would be discharged
         in an amount equal to the amount paid by such Guarantor  hereunder) and
         treating as assets,  subject to Paragraph 4(a) hereof, to the value (as
         determined under the applicable  provisions of the Fraudulent  Transfer
         Laws) of any rights to  subrogation or  contribution  of such Guarantor
         pursuant to (i) Applicable  Law or (ii) any agreement  providing for an
         equitable  allocation  among such Guarantor and other Affiliates of the
         Company of obligations arising under guaranties by such parties.

         2. Guaranty  Absolute.  The Guarantors  guarantee that the  Obligations
will be paid strictly in accordance with the terms of the Credit Agreement,  the
Notes, and the other Loan Papers,  regardless of any Applicable Law,  regulation
or order now or hereafter in effect in any  jurisdiction  affecting  any of such
terms or the rights of the  Lender  with  respect  thereto;  provided,  however,
nothing  contained in this  Guaranty  shall  require the  Guarantors to make any
payment under this Guaranty in violation of any  Applicable  Law,  regulation or
order now or  hereafter  in effect.  The  obligations  and  liabilities  of each
Guarantor  hereunder are independent of the obligations of the Company under the
Credit  Agreement and any Applicable  Law. The liability of each Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:

                  (a) the taking or accepting of any other  security or guaranty
         for  any  or  all  of  the  Obligations,  including  any  reduction  or
         termination of the Commitment;

                  (b) any increase,  reduction or payment in full at any time or
         from time to time of any part of the Obligations;
                                      -2-
<PAGE>
                  (c) any  lack of  validity  or  enforceability  of the  Credit
         Agreement,  the Notes,  or any other Loan Paper or other  agreement  or
         instrument   relating  thereto,   including  but  not  limited  by  the
         unenforceability of all or any part of the Obligations by reason of the
         fact that (i) the Obligations, and/or the interest paid or payable with
         respect  thereto,  exceeds the amount permitted by Applicable Law, (ii)
         the act of creating  the  Obligations,  or any part  thereof,  is ultra
         vires,  (iii)  the  officers  creating  same  acted in  excess of their
         authority, or (iv) for any other reason;

                  (d) any lack of  corporate  power of the  Company or any other
         Person  at  any  time  liable  for  the  payment  of  any or all of the
         Obligations;

                  (e)  any  Debtor  Relief  Laws  involving  the  Company,   any
         Guarantor or any other Person obligated on any of the Obligations;

                  (f) any renewal, compromise,  extension, acceleration or other
         change in the time, manner or place of payment of, or in any other term
         of,  all  or  any  of  the  Obligations;  any  adjustment,  indulgence,
         forbearance,  or compromise  that may be granted or given by any Lender
         or the  Administrative  Agent to the  Company,  any  Guarantor,  or any
         Person  at  any  time  liable  for  the  payment  of  any or all of the
         Obligations; or any other modification,  amendment, or waiver of or any
         consent to departure from the Credit Agreement, the Notes, or any other
         Loan Paper and other agreement or instrument  relating  thereto without
         notification  of any Guarantor  (the right to such  notification  being
         herein specifically waived by Guarantors);

                  (g)   any   exchange,   release,   sale,   subordination,   or
         non-perfection  of any  collateral  or  Lien  therein  or any  lack  of
         validity  or  enforceability   or  change  in  priority,   destruction,
         reduction,  or loss or  impairment  of value of any  collateral or Lien
         therein;

                  (h) any  release  or  amendment  or  waiver of or  consent  to
         departure from any other guaranty for all or any of the Obligations;

                  (i) the failure by any Lender or the  Administrative  Agent to
         make any demand upon or to bring any legal,  equitable, or other action
         against the Company or any other Person (including  without  limitation
         any other  Guarantor),  or the  failure  or delay by any  Lender or the
         Administrative  Agent  to, or the  manner  in which  any  Lender or the
         Administrative  Agent  shall,  proceed to exhaust  rights  against  any
         direct or indirect security for the Obligations;

                  (j) the  existence of any claim,  defense,  set-off,  or other
         rights which the Company or any  Guarantor may have at any time against
         the  Company,  the  Lenders,  or any  Guarantor,  or any other  Person,
         whether in connection  with this Guaranty,  the other Loan Papers,  the
         transactions contemplated thereby, or any other transaction;
                                      -3-
<PAGE>
                  (k) any failure of any Lender or the  Administrative  Agent to
         notify any  Guarantor of any renewal,  extension,  or assignment of the
         Obligations or any part thereof, or the release of any security,  or of
         any other action  taken or refrained  from being taken by any Lender or
         the Administrative  Agent, it being understood that the Lenders and the
         Administrative  Agent shall not be required to give any  Guarantor  any
         notice of any kind under any  circumstances  whatsoever with respect to
         or in connection with the Obligations;

                  (l)  any  payment  by  the  Company  to  the  Lenders  or  the
         Administrative  Agent is held to  constitute  a  preference  under  any
         Debtor  Relief  Law or if for  any  other  reason  the  Lenders  or the
         Administrative  Agent is  required  to refund  such  payment or pay the
         amount thereof to another Person; or

                  (m) any other circumstance which might otherwise  constitute a
         defense  available to, or a discharge of, the Company,  any  Guarantor,
         any  other  guarantor  or  other  Person  liable  on  the  Obligations,
         including without limitation any defense by reason of any disability or
         other  defense  of  the  Company,  or  the  cessation  from  any  cause
         whatsoever  of the  liability  of the  Company,  or any claim  that the
         Guarantors'  obligations  hereunder  exceed or are more burdensome than
         those of the Company.

This Guaranty shall  continue to be effective or be reinstated,  as the case may
be, if at any time any payment of any of the  Obligations  is  rescinded or must
otherwise  be  returned by any Lender or any other  Person upon the  insolvency,
bankruptcy or reorganization of the Company, any Guarantor or otherwise,  all as
though such payment had not been made.

         3.  Waiver.  To the extent  not  prohibited  by  Applicable  Law,  each
Guarantor  hereby waives:  (a) promptness,  protests,  diligence,  presentments,
acceptance,  performance,  demands for performance,  notices of  nonperformance,
notices of protests, notices of dishonor, notices of acceptance of this Guaranty
and of the existence,  creation or incurrence of new or additional indebtedness,
and any of the  events  described  in Section 2 and of any other  occurrence  or
matter with respect to any of the Obligations, this Guaranty or any of the other
Loan Papers;  (b) any requirement  that the  Administrative  Agent or any Lender
protect,  secure,  perfect,  or  insure  any Lien or  security  interest  or any
property  subject  thereto or exhaust  any right or take any action  against the
Company or any other Person or any  collateral or pursue any other remedy in the
Administrative Agent's or any Lender's power whatsoever; (c) any right to assert
against the  Administrative  Agent or any Lender as a  counterclaim,  set-off or
cross-claim,  any  counterclaim,  set-off or claim which it may now or hereafter
have  against the Company or other  Person  liable on the  Obligations;  (d) any
right to seek or enforce  any remedy or right that the  Administrative  Agent or
any Lender now has or may  hereafter  have  against  the  Company (to the extent
permitted by Applicable  Law); (e) any right to participate in any collateral or
any right benefiting the  Administrative  Agent or the Lenders in respect of the
Obligations;  and (f) any right by which it might be entitled to require suit on
an accrued right of action in respect of any of the  Obligations or require suit
against the Company or any other  Person,  whether  arising  pursuant to Section
34.02 of the Texas Business and Commerce Code, as amended, Section 17.001 of the
Texas Civil Practice and Remedies  Code, as amended,  Rule 31 of the Texas Rules
of Civil Procedure, as amended, or otherwise.
                                      -4-
<PAGE>
         4.  Subrogation  and  Subordination.  Notwithstanding  any reference to
subrogation contained herein to the contrary,  each Guarantor hereby irrevocably
waives any claim or other rights which it may have or hereafter  acquire against
the Company that arise from the existence,  payment,  performance or enforcement
of  such  Guarantor's  obligations  under  this  Guaranty,   including,  without
limitation, any right of subrogation, reimbursement,  exoneration, contribution,
indemnification,  any right to  participate in any claim or remedy of any Lender
against  the  Company or any  collateral  which any Lender now has or  hereafter
acquires,  whether or not such claim, remedy or right arises in equity, or under
contract,  statutes or common law,  including without  limitation,  the right to
take or receive  from the  Company,  directly  or  indirectly,  in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other  rights.  If any amount  shall be paid to any  Guarantor  in
violation of the preceding sentence and the Obligations shall not have been paid
in full, such amount shall be deemed to have been paid to such Guarantor for the
benefit  of,  and held in trust  for the  benefit  of,  the  Lenders,  and shall
forthwith  be paid to the  Administrative  Agent to be credited and applied upon
the Obligations,  whether matured or unmatured,  in accordance with the terms of
the Credit  Agreement.  Each Guarantor  acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by the Credit
Agreement and that the waiver set forth in this Paragraph 4 is knowingly made in
contemplation of such benefits.

         5. Representations and Warranties. Each Guarantor hereby represents and
warrants that all representations and warranties as they apply to such Guarantor
only set forth in Article IV of the  Credit  Agreement  (each of which is hereby
incorporated by reference) is true and correct.

         6. Covenants.  Each Guarantor hereby expressly assumes,  confirms,  and
agrees to perform,  observe,  and be bound by all  conditions  and covenants set
forth in the Credit  Agreement,  to the extent applicable to it, as if it were a
signatory  thereto.  Each Guarantor  further covenants and agrees (a) punctually
and properly to perform all of such  Guarantor's  covenants and duties under any
other Loan Papers;  (b) from time to time promptly to furnish the Administrative
Agent  with any  information  or  writings  which the  Administrative  Agent may
reasonably  request  concerning  this  Guaranty;  and (c) promptly to notify the
Administrative  Agent  of  any  claim,  action,  or  proceeding  affecting  this
Guaranty.

         7.  Amendments,  Etc. No amendment  or waiver of any  provision of this
Guaranty nor consent to any  departure by any Guarantor  therefrom  shall in any
event be effective unless the same shall be in writing and signed by the Lenders
as  required  pursuant  to Section  9.1 of the Credit  Agreement,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

         8.  Addresses  for  Notices.  Unless  otherwise  provided  herein,  all
notices,  requests,  consents  and  demands  shall be in  writing  and  shall be
delivered by hand or overnight courier
                                      -5-
<PAGE>
service, mailed or sent by telecopy to the respective addresses specified herein
and to the attention of the individuals listed thereunder,  or, as to any party,
to such other  addresses  as may be  designated  by it in written  notice to all
other parties.  All notices,  requests,  consents and demands hereunder shall be
deemed  to have  been  given  on the date of  receipt  if  delivered  by hand or
overnight  courier service or sent by telecopy,  or if mailed,  effective on the
earlier  of actual  receipt or three (3) days after  being  mailed by  certified
mail, return receipt requested, postage prepaid, addressed as aforesaid.

         9. No Waiver;  Remedies.  No failure on the part of the  Administrative
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
or under any of the other Loan Papers  shall  operate as a waiver  thereof;  nor
shall any single or partial  exercise of any right hereunder or under any of the
other Loan Papers preclude any other or further exercise thereof or the exercise
of any other  right.  Neither the  Administrative  Agent nor any Lender shall be
required  to (a)  prosecute  collection  or seek to  enforce  or  resort  to any
remedies  against  the  Company  or  any  other  Person  liable  on  any  of the
Obligations,  (b) join the  Company  or any  other  Person  liable on any of the
Obligations  in any action in which  Lender  prosecutes  collection  or seeks to
enforce or resort to any remedies  against the Company or other Person liable on
any of the  Obligations,  or (c) seek to enforce or resort to any remedies  with
respect to any Liens  granted to (or  benefiting,  directly or  indirectly)  the
Administrative  Agent or any Lender by the Company or any other Person liable on
any of the Obligations.  Neither the  Administrative  Agent nor any Lender shall
have any  obligation  to  protect,  secure  or  insure  any of the  Liens or the
properties  or interests in  properties  subject  thereto.  The remedies  herein
provided are cumulative and not exclusive of any remedies provided by Applicable
Law.

         10. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from time
to time,  to the fullest  extent  permitted by Law, to set off and apply any and
all deposits (general or special,  time or demand,  provisional or final) at any
time held and other  indebtedness at any time owing by such Lender to or for the
credit or the account of any Guarantor against any and all of the obligations of
any Guarantor now or hereafter  existing  under this Guaranty,  irrespective  of
whether or not such Lender shall have made any demand under this Guaranty.  Each
Lender  agrees  promptly to notify  such  Guarantor  after any such  set-off and
application,  provided that the failure to give such notice shall not affect the
validity of such set-off and  application.  The rights of each Lender under this
Section 10 are in  addition to other  rights and  remedies  (including,  without
limitation, other rights of set-off) which such Lender may have.

         11.  Continuing  Guaranty;  Transfer  of  Notes.  This  Guaranty  is an
irrevocable  continuing  guaranty  of payment and shall (a) remain in full force
and effect until  termination of the Commitment and final payment in full (after
the Maturity Date) of the  Obligations  and all other amounts payable under this
Guaranty,  (b) be binding upon each Guarantor,  its successors and assigns,  and
(c)  inure  to  the  benefit  of and be  enforceable  by  each  Lender  and  its
successors,  transferees  and assigns.  Without  limiting the  generality of the
foregoing  clause  (c),  to the extent  permitted  by Section  9.4 of the Credit
Agreement, each Lender may assign or otherwise transfer its
                                      -6-
<PAGE>
rights under the Credit Agreement,  the Notes or any of the other Loan Papers or
any interest therein to any other Person,  and such other Person shall thereupon
become vested with all the rights or any interest  therein,  as appropriate,  in
respect thereof granted to the Lender herein or otherwise.

         12. Information.  Each Guarantor  acknowledges and agrees that it shall
have the sole  responsibility  for obtaining  from the Company such  information
concerning  the  Company's  financial  condition or business  operations as such
Guarantor may require,  and that neither the Administrative Agent nor any Lender
has any duty at any time to disclose to any Guarantor any  information  relating
to the business operations or financial conditions of the Company.

         13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA.
WITHOUT EXCLUDING ANY OTHER  JURISDICTION,  EACH GUARANTOR AGREES THAT THE STATE
AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,  TEXAS,  SHALL HAVE  JURISDICTION
OVER PROCEEDINGS IN CONNECTION HEREWITH.

         14. WAIVER OF JURY TRIAL. EACH GUARANTOR, THE ADMINISTRATIVE AGENT, AND
THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY,  IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE  MAXIMUM  EXTENT  PERMITTED  BY LAW,  ALL  RIGHT  TO TRIAL BY JURY IN ANY
ACTION,  PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS  AGREEMENT OR ANY
OF THE LOAN PAPERS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THE CREDIT AGREEMENT.

         15. Ratable  Benefit.  This Guaranty is for the ratable  benefit of the
Lenders, each of which shall share any proceeds of this Guaranty pursuant to the
terms of the Credit Agreement.

         16. Guarantor Insolvency.  Should any Guarantor become insolvent,  fail
to pay its debts generally as they become due,  voluntarily seek, consent to, or
acquiesce  in the  benefits of any Debtor  Relief Law or become a party to or be
made the subject of any proceeding  provided for by any Debtor Relief Law (other
than as a creditor or claimant) that could suspend or otherwise adversely affect
the  rights of any Lender  granted  hereunder,  then,  the  obligations  of such
Guarantor  under this  Guaranty  shall be, as between  such  Guarantor  and such
Lender, a fully-matured,  due, and payable  obligation of such Guarantor to such
Lender  (without  regard to whether there is a Default or Event of Default under
the Credit  Agreement  or whether  any part of the  Obligations  is then due and
owing by the Company to such Lender),  payable in full by such Guarantor to such
Lender upon demand,  which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
                                       -7-
<PAGE>
         17.  ENTIRE  AGREEMENT.  THIS  GUARANTY,  TOGETHER  WITH THE OTHER LOAN
PAPERS,  REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES  REGARDING THE SUBJECT
MATTER  HEREIN AND  THEREIN  AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS  OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.



================================================================================
                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
================================================================================
                                      -8-
<PAGE>
         IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.

                                             FFCA ACQUISITION CORPORATION
Address for each Guarantor:

c/o Franchise Finance Corporation 
  of America
The Perimeter Center
17207 North Perimeter Drive                  By:________________________________
Scottsdale, Arizona 85255                    John R. Barravecchia
Telephone No.:    (602) 585-4500             Executive Vice President and
Facsimile No.:    (602) 585-2225             Chief Financial Officer

Attention: John R. Barravecchia
           Executive Vice President and
           Chief Financial Officer
                                             FFCA INSTITUTIONAL ADVISORS, INC.
with a copy to:

Franchise Finance Corporation of America
The Perimeter Center                         By:________________________________
17207 North Perimeter Drive                  John R. Barravecchia
Scottsdale, Arizona 85255                    Executive Vice President and
Telephone No.:    (602) 585-4500             Chief Financial Officer
Facsimile No.     (602) 585-2225

Attention: Dennis L. Ruben, Esq.
           Executive Vice President
           and General Counsel
                                             FFCA MORTGAGE CORPORATION

Address for Administrative Agent:

NationsBank of Texas, N.A.                   By:________________________________
901 Main Street, 67th Floor                  John R. Barravecchia
Dallas, Texas  75202                         Executive Vice President and
Telephone No.:    (214) 508-3091             Chief Financial Officer
Facsimile No.:    (214) 508-0980

Attention: Frank M. Johnson
           Senior Vice President
                                      -9-
<PAGE>
                                    EXHIBIT C

                        QUARTERLY COMPLIANCE CERTIFICATE


     The undersigned  hereby certifies that he/she is a duly elected  Authorized
Officer of Franchise  Finance  Corporation  of America,  a Delaware  corporation
("Borrower"),  and that he/she is  authorized  to execute  this  Certificate  on
behalf of Borrower in connection  with that certain  Second Amended and Restated
Credit  Agreement  dated as of December ___, 1997  ("Credit  Agreement"),  among
Borrower,  NationsBank of Texas, N.A., individually and as Administrative Agent,
Bank of Montreal,  Chicago Branch, Commerzbank  Aktiengesellschaft,  Los Angeles
Branch,  The Long-Term Credit Bank of Japan,  Ltd. and Union Bank of Switzerland
(New York Branch), as Co-Agents, and each Lender a party thereto. All terms used
but not  defined  herein  shall  have  the  meanings  set  forth  in the  Credit
Agreement.  This Certificate is submitted  concurrently with quarterly financial
statements of Borrower for the period ended ____________,  ____. The undersigned
hereby further certifies to the following as of the date set forth below:

     1.  The  representations  and  warranties  of  Borrower  under  the  Credit
Agreement  are true and  complete  in all  material  respects,  before and after
giving effect to any Advances.

     2. No event has occurred which constitutes a Default or Event of Default.

     3. Company continues to qualify as a Real Estate Investment Trust under the
Code.

     4. The following calculations are true, accurate and complete, and are made
in accordance with the terms and provisions of the Credit Agreement:

1.   Applicable Margin.
     -----------------

     The Index Debt Rating is ______________. The Applicable Margin with respect
     to Base Rate  Advances is _____%.  The  Applicable  Margin with  respect to
     LIBOR Advances is _____%.

2.   Section 6.1(a).  Minimum Net Worth.
                      -----------------

     (a) Minimum Net Worth

          (i) $425,000,000                             $425,000,000

          (ii) 75% of  aggregate  Net Cash  Proceeds   $___________
     received  by  Borrower  and  its   Consolidated
     Subsidiaries after April 15, 1997,  disposition
     of Capital Stock

          (iii)  amount  equal  to Net  Worth of any   $___________
     Person  acquired (via asset or stock  purchase)
     by  Borrower  or any  Subsidiary  to the extent
     purchase  price is paid for in Capital Stock of
     Borrower or such Subsidiary
<PAGE>
          (iv)  Minimum  Net  Worth  [(i)  +  (ii) +                 $__________
     (iii)]

     (b) Actual Net Worth  (determined in accordance                 $__________
with GAAP)

3.    Section  6.1(b).  Total  Indebtedness to Adjusted
                        -------------------------------
      Net Worth Ratio.
      ---------------

     (a) Maximum Ratio                                               0.90 to 1

     (b) Actual Ratio

          (i)    Indebtedness    of   Company    and
     Consolidated Subsidiaries

               a. Debt for Borrowed Money              $___________

               b. Capital Lease obligations            $___________

               c. Reimbursement obligations relating   $___________
          to letters of credit

               d. Contingent Liabilities relating to   $___________
          (a), (b) and (c) above

               e. Withdrawal Liability                 $___________
         
               f.   indebtedness   associated   with   $___________
          Interest Hedge Agreements

               g.  payments  due  for  the  deferred   $___________
          purchase  price of property  and  services
          (excluding  trade  payables  less  than 90
          days old)

               h.    obligations    (contingent   or   $___________
          otherwise  to  purchase,  retire or redeem
          any Capital Stock)

               i.  [a. + b. + c. + d. + e. + f. + g.                 $__________
          + h.]

          (ii)     Indebtedness     evidenced     by                 $__________
     Intercompany  Notes and which is  subject  to a
     Subordination Agreement

          (iii) Total Indebtedness [(i) - (ii)]                      $__________

          (iv) Adjusted Net Worth

               a.  Actual Net Worth  (determined  in   $___________
          accordance with GAAP)

               b.      Accumulated      Depreciation   $___________
          (determined in accordance with GAAP)
                                       -2-
<PAGE>
               c. Adjusted Net Worth [a. + b.]                       $__________
         
          (v) Total  Indebtedness  to  Adjusted  Net                 ______ to 1
     Worth [(iii)/(iv)]

4.   Section 6.1(c). Fixed Charge Coverage Ratio.  
                     ---------------------------

     (a) Minimum Ratio                                               2.0 to 1

     (b) Actual Ratio

          (i) Cash Flow From  Operations for twelve-   $___________
     calendar   month  period   ending  on  or  most
     recently ended prior to date of determination

          (ii)   cash   interest   payable   on  all   $___________
     Indebtedness (including interest on Capitalized
     Leases)

          (iii) [(i) + (ii)]                                         $__________
         
          (iv)   cash   interest   payable   on  all   $___________
     Indebtedness (including interest on Capitalized
     Leases)

          (v) regularly  scheduled principal amounts   $___________
     on Indebtedness  (including rentals under Lease
     Obligations  but  excluding  any payment  which
     pays  Indebtedness  in full to the extent  such
     payment  exceeds  the   immediately   preceding
     scheduled principal payment)

          (vi) principal amounts of all Indebtedness   $___________
     (including under Lease Obligations) required to
     be prepaid or purchased during such period

          (vii) [(iv) + (v) + (vi)]                                  $__________
                                      -3-
<PAGE>
          (viii)   Fixed   Charge   Coverage   Ratio                 ______ to 1
     [(iii)/(vii)]

5.   Section 6.1(d). Maximum Total Secured Indebtedness.
                     ----------------------------------

     (a) Maximum Total Secured  Indebtedness (10% of                 $__________
Total Assets)

     (b)   Actual   Total    Secured    Indebtedness

          Indebtedness    of   Borrower    and   its                 $__________
     Consolidated Subsidiaries (from Section 3(b)(i)
     above that is secured by a Consensual Lien)

6.   Section 6.1(e). Ratio of Total Unencumbered Assets to Total
                     -------------------------------------------
     Unsecured Indebtedness.  
     ----------------------

     (a) Minimum Ratio                                               1.75 to 1
         
     (b) Actual Ratio

          (i) Total  Assets  not  subject  to a Lien   $___________
     other  than  Liens  of the  type  described  in
     clause (a)  through  (f) of the  definition  of
     Permitted Liens
         
          (ii) Aggregate  amount of  Indebtedness of   $___________
     Company and its Consolidated  Subsidiaries that
     is not  secured  by a Lien  other than Liens of
     the type described in clause (a) through (f) of
     the   definition   of  Permitted   Liens  (iii)
     [(i)/(ii)]

7.   Section 6.3. Contingent Liabilities.
                  ----------------------

     (a) Maximum                                                     $5,000,000

     (b) Actual                                                      $__________

8.   Section 6.6. Disposition of Assets.
                  ---------------------

     (a) Maximum during any four consecutive  fiscal
quarters

          (i)  Total  Assets  as of the first day of   $___________
     preceding  four  consecutive   fiscal  quarters
     divided by four

          (ii) 25% times 8(a)(i) above                 $___________

     (b) Actual                                                      $__________

9.   Section 6.7. Permitted Distributions.
                  -----------------------

     (a) Maximum
                                      -4-
<PAGE>

          (i)  Cash  Flow  From   Operations   (from   $___________
     Section 4(b)(i) above)

          (ii) 95% times 9(a)(i) above                 $___________

     (b) Actual                                                      $__________
                                      -5-
<PAGE>
         IN WITNESS  WHEREOF,  I have executed this  Certificate as of the _____
day of _____________, 19___.

                                               FRANCHISE FINANCE CORPORATION
                                               OF AMERICA



                                               By: _____________________________
                                                   Name:________________________
                                                   Title:_______________________
                                      -6-
<PAGE>
                                    EXHIBIT D

                          CONVERSION/CONTINUANCE NOTICE


                                     [Date]



NationsBank of Texas, N.A.
Administrative Agent
NationsBank Plaza
901 Main Street, 13th Floor
Dallas, Texas  75202

Attention:   Marie Lancaster

Ladies and Gentlemen:

         The  undersigned  refers to the  Second  Amended  and  Restated  Credit
Agreement  dated as of December  ___,  1997 (the "Credit  Agreement",  the terms
defined therein being used herein as therein  defined) among  Franchise  Finance
Corporation of America, NationsBank of Texas, N.A., as Administrative Agent, and
Bank of Montreal,  Chicago Branch, Commerzbank  Aktiengesellschaft,  Los Angeles
Branch,  The Long-Term Credit Bank of Japan,  Ltd. and Union Bank of Switzerland
(New York Branch), as Co-Agents, and each Lender party thereto, and hereby gives
you notice pursuant to Section 2.9 of the Credit  Agreement that the undersigned
hereby requests Borrowing[s] [a  continuation/conversion of an existing Advance]
[continuations/conversions of existing Advances] under the Credit Agreement, and
in that  connection  sets forth  below the  information  relating to [each] such
Advance as required by Section 2.9 of the Credit Agreement:


                  (i) The principal  amount of existing  [LIBOR  Advances] [Base
         Rate Advances] to be [converted] [continued] is $__________.

                  (ii) The Business Day of such  [continuation]  [conversion] is
         _____________, 199_.

                  (iii) The Type of Advance[s]  comprising  such  [continuation]
         [conversion]  of  Revolving  Loans is [are] [Base Rate  Advance [to the
         extent of an aggregate  amount of $ ]] [LIBOR Advance [to the extent of
         an aggregate amount of $________________]].

                  (iv) The Type of  Advance[s]  comprising  such  [continuation]
         [conversion]  of Term Loans is [are] [Base Rate  Advance [to the extent
         of an aggregate  amount of $_______]]  [LIBOR Advance [to the extent of
         an aggregate amount of $__________________]].
<PAGE>
                  (v) The initial Interest Period for each LIBOR Advance made as
         part of such [continuation] [conversion] is months.


                  The undersigned hereby certifies that the following statements
are true on the date hereof,  and will be true on the date of the [continuation]
[conversion],  before and after giving effect thereto and to the  application of
the proceeds therefrom:

                  (A) the conditions  precedent  specified in Article III of the
         Credit Agreement have been satisfied with respect to the [continuation]
         [conversion]   and  will   remain   satisfied   on  the  date  of  such
         [continuation] [conversion];

                  (B) the representations and warranties specified in Article IV
         of the Credit  Agreement are true and correct in all material  respects
         as though made on and as of such date; and

                  (C) no event has  occurred and is  continuing  or would result
         from such [continuation]  [conversion],  which constitutes a Default or
         Event of Default.


                                             Very truly yours,

                                             FRANCHISE FINANCE CORPORATION
                                             OF AMERICA, a Delaware corporation



                                             By:  ______________________________
                                                  Name:_________________________
                                                  Title:________________________
                                      -2-
<PAGE>
                                    EXHIBIT E

                                BORROWING NOTICE


                                     [Date]



NationsBank of Texas, N.A.,
Administrative Agent
NationsBank Plaza
901 Main Street, 13th Floor
Dallas, Texas  75202

Attention:    Marie Lancaster

Ladies and Gentlemen:

         The  undersigned  refers to the  Second  Amended  and  Restated  Credit
Agreement  dated as of December  ___,  1997 (the "Credit  Agreement",  the terms
defined therein being used herein as therein  defined) among  Franchise  Finance
Corporation of America,  NationsBank of Texas,  N.A., as  Administrative  Agent,
Bank of Montreal,  Chicago Branch, Commerzbank  Aktiengesellschaft,  Los Angeles
Branch,  The Long-Term Credit Bank of Japan,  Ltd. and Union Bank of Switzerland
(New York Branch),  as Co-Agents,  and each Lender,  and hereby gives you notice
pursuant  to Section 2.2 of the Credit  Agreement  that the  undersigned  hereby
requests  Borrowing[s]  under the Credit Agreement,  and in that connection sets
forth  below the  information  relating  to [each]  such  Advance  (a  "Proposed
Borrowing") as required by Section 2.2 of the Credit Agreement:

                  Proposed Borrowing:

                  (i)  The   Business   Day  of  such   Proposed   Borrowing  is
         ______________, 19___.

                  (ii) The Type of Advance[s] comprising such Proposed Borrowing
         of  Revolving  Loans  is  [are]  [Base  Advance  [to the  extent  of an
         aggregate  amount of $ ]] [LIBOR Advance [to the extent of an aggregate
         amount of $________________]].

                  (iii)  The  Type  of  Advance[s]   comprising   such  Proposed
         Borrowing  of Term Loans is [are]  [Base  Advance  [to the extent of an
         aggregate  amount of  $_______]]  [LIBOR  Advance  [to the extent of an
         aggregate amount of $__________________]].

                  (iv)  The  aggregate  amount  of such  Proposed  Borrowing  is
         $_______ .

                  [(v) The initial  Interest  Period for each LIBOR Advance made
         as part of such Proposed Borrowing is months.]
<PAGE>
         The undersigned hereby certifies that the following statements are true
on the date  hereof,  and will be true on the  date of the  Proposed  Borrowing,
before and after giving effect  thereto and to the  application  of the proceeds
therefrom:

                  (A) the conditions  precedent  specified in Article III of the
         Credit  Agreement  have been  satisfied  with  respect to the  Proposed
         Borrowing  and  will  remain  satisfied  on the  date of such  Proposed
         Borrowing;

                  (B) the representations and warranties specified in Article IV
         of the Credit  Agreement are true and correct in all material  respects
         as though made on and as of such date; and

                  (C) no event has  occurred and is  continuing  or would result
         from such Proposed  Borrowing,  which constitutes a Default or Event of
         Default.

                                            Very truly yours,

                                            FRANCHISE FINANCE CORPORATION
                                            OF AMERICA, a Delaware corporation



                                            By:  _______________________________
                                                 Name:__________________________
                                                 Title:_________________________
                                      -2-
<PAGE>
                                    EXHIBIT F

                       ASSIGNMENT AND ACCEPTANCE AGREEMENT


         THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT  ("Assignment and Acceptance")
is dated ________________,  _____, among  ________________________  ("Assignor")
and  _____________________  ("Assignee")  and  NationsBank  of Texas,  N.A.,  as
Administrative Agent ("Administrative Agent").


                                   BACKGROUND.

         A.  Reference  is  made  to the  Second  Amended  and  Restated  Credit
Agreement  dated as of December  ___,  1997 (as it may  hereafter  be amended or
otherwise  modified  from  time  to  time,  being  referred  to as  the  "Credit
Agreement") among Franchise Finance Corporation of America (the "Company"),  the
financial institutions parties thereto as Lenders thereunder,  Bank of Montreal,
Chicago  Branch,  Commerzbank   Aktiengesellschaft,   Los  Angeles  Branch,  The
Long-Term  Credit Bank of Japan,  Ltd. and Union Bank of  Switzerland  (New York
Branch),  as Co-Agents,  and  Administrative  Agent for Lenders under the Credit
Agreement.  Unless  otherwise  defined,  terms are used herein as defined in the
Credit Agreement.

         B.  This  Assignment  and  Acceptance  is made  with  reference  to the
following facts:

                  (i)  Assignor  is a Lender  under and as defined in the Credit
         Agreement and, as such,  presently holds a percentage of the rights and
         obligations of Lenders under the Credit Agreement.

                  (ii)  As  of  the  date  hereof,  the  Commitment  is $ ,  and
         Assignor's Specified Percentage is ___%.

                  (iii) On the terms and  conditions  set forth below,  Assignor
         desires  to sell and  assign  to  Assignee,  and  Assignee  desires  to
         purchase and assume from Assignor,  as of the Transfer Date (as defined
         below), a portion of Assignor's  Specified Percentage of the Commitment
         equal to ______% [express as a percentage of Commitment] (the "Assigned
         Percentage").


                                   AGREEMENT.

         NOW, THEREFORE, Assignor and Assignee hereby agree as follows:

         1. Assignor hereby sells and assigns to Assignee, without recourse and,
except as provided in paragraph 2 of this  Assignment  and  Acceptance,  without
representation  and  warranty,  
<PAGE>
and Assignee hereby purchases and assumes from Assignor,  Assignor's  rights and
obligations under the Credit Agreement, to the extent of the Assigned Percentage
(including without limitation,  (a) the Assigned Percentage of the Commitment as
in effect as of the Transfer  Date and (b) _____% of each of the Advances  owing
to Assignor on the Transfer Date).

         2.  Assignor  (a)  represents  and  warrants  that it is the  legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no  representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties  or  representations  made  in  or  in  connection  with  the  Credit
Agreement,  any other Loan Paper or any other  instrument or document  furnished
pursuant  thereto,  or  with  respect  to  the  execution,  legality,  validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other Loan Paper or any other instrument or document  furnished pursuant thereto
or any collateral;  and (c) makes no  representation  or warranty and assumes no
responsibility  with  respect to the  financial  condition of the Company or any
Person the  performance or observance by the Company or any Person of any of its
obligations under the Loan Papers or any other instrument or document  furnished
pursuant thereto.

         3.  Assignee  (a)  confirms  that it has  received a copy of the Credit
Agreement,  together  with  copies  of  the  most  recent  financial  statements
delivered to Assignor pursuant to Section 5.5 of the Credit Agreement,  and such
other  documents and  information  as it has deemed  appropriate to make its own
credit analysis and decision to enter into this  Assignment and Acceptance;  (b)
agrees that it will,  independently and without reliance upon the Administrative
Agent,  Assignor or any other Lender and based on such documents and information
as it shall  deem  appropriate  at the  time,  continue  to make its own  credit
decisions  in taking or not taking  action  under the Credit  Agreement  and the
other Loan Papers; (c) appoints and authorizes the Administrative  Agent to take
such action as agent on its behalf and to exercise  such powers under the Credit
Agreement and the other Loan Papers as are delegated to the Administrative Agent
by the terms  thereof,  together with such powers as are  reasonably  incidental
thereto;  (d) agrees that it will perform in accordance  with their terms all of
the  obligations  which by the terms of the Credit  Agreement and the other Loan
Papers are  required to be performed by it as a Lender;  (e)  specifies,  as its
address for notice and Lending Office,  the office set forth beneath its name on
the signature pages hereof; (f) confirms that it is an Eligible  Assignee[;  and
(g) attaches the forms prescribed by the IRS certifying as to Assignee's  status
for purposes of determining  exemption from United States withholding taxes with
respect to all payments to be made to Assignee under the Credit  Agreement,  the
other Loan Papers and this  Assignment or Acceptance or such other  documents as
are  necessary to indicate that all such payments are subject to taxes at a rate
reduced by applicable treaty].

         4. The effective date for this Assignment and Acceptance (the "Transfer
Date")  shall be the date  following  execution  by the parties  hereto on which
Assignor  receives  from Assignee an amount in same day funds equal to _____% of
the  aggregate  principal  amount of  Advances  owing to  Assignor on such date,
together with the $3,500 processing fee required under Section 9.4 of the Credit
Agreement,  and Administrative  Agent and the Company receive notice thereof and
an executed copy of this Assignment and Acceptance. The Company acknowledges its
obligations
                                      -2-
<PAGE>
under the  Credit  Agreement,  and  agrees,  within  five  Business  Days  after
receiving an executed  copy of this  Assignment  and  Acceptance  to execute and
deliver to Administrative  Agent, in exchange for the Note originally  delivered
to Assignor, new Notes to the order of Assignor and Assignee in amounts equal to
their respective Specified Percentages of the Commitment.

         5. As of the Transfer Date, (a) Assignee shall be a party to the Credit
Agreement and, to the extent provided in this  Assignment and  Acceptance,  have
the rights and  obligations of a Lender  thereunder,  (b) Assignor shall, to the
extent provided in this Assignment and Acceptance,  relinquish its rights and be
released from its obligations  under the Credit Agreement and other Loan Papers,
and (c) Assignor's  Specified  Percentage  shall be %, and Assignee's  Specified
Percentage shall be ________%.

         6. From and after the Transfer  Date,  Administrative  Agent shall make
all payments  under the Credit  Agreement  in respect of the  interest  assigned
hereby (including,  without limitation, all payments of principal,  interest and
fees with  respect  thereto) to Assignee.  Assignor and Assignee  shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Transfer Date directly between themselves.

         7. This  Assignment and Acceptance  shall be governed by, and construed
in  accordance  with,  the laws of the  state of  Texas,  without  reference  to
principles of conflict of laws.

                                     ASSIGNOR:


                                     ___________________________________________


                                     By:  ______________________________________
                                          Name:_________________________________
                                          Title:________________________________
                                      -3-
<PAGE>
Address:                                ASSIGNEE:

_________________________               ________________________________________
_________________________
_________________________
Attn:_________________________          By:   __________________________________
                                              Name:_____________________________
Telephone No.:   (   ) ___-____               Title:____________________________
Telecopier No.:  (   ) ___-____

LIBOR Lending Office:

_________________________
_________________________
_________________________
Attn:_________________________
Telephone No.:   (   ) ___-____
Telecopier No.:  (   ) ___-____


                                        ADMINISTRATIVE AGENT

                                        NATIONSBANK OF TEXAS, N.A.,
                                        Administrative Agent



                                        By:  ___________________________________
                                             Name:______________________________
                                             Title:_____________________________


Accepted and approved this _____ 
day of ___________, 199___:

FRANCHISE FINANCE CORPORATION OF AMERICA



By:   ___________________________________
      Name:______________________________
      Title:_____________________________
                                      -4-
<PAGE>
                                    EXHIBIT G

                             SUBORDINATION AGREEMENT
                             -----------------------


         SUBORDINATION AGREEMENT,  dated as of  ____________________,  _____ (as
amended,   supplemented,   or  otherwise   modified  from  time  to  time,  this
"Agreement")  made by , a (the "Company") and Franchise  Finance  Corporation of
America, a Delaware corporation (the "Subordinated Creditor") for the benefit of
the Lenders (each a "Lender") party to the Credit  Agreement (as defined below),
the Co-Agents as described in the Credit  Agreement,  and  NationsBank of Texas,
N.A., as the Administrative  Agent (the  "Administrative  Agent") for itself and
the Lenders.


                                   BACKGROUND:
                                   -----------

         (1) The  Lenders,  the  Co-Agents,  and the  Administrative  Agent have
entered into a Second Amended and Restated Credit Agreement dated as of December
____,  1997,  with the  Subordinated  Creditor  (as  amended,  supplemented,  or
otherwise modified from time to time, the "Credit Agreement").  Unless otherwise
defined  herein,  defined terms used herein shall have the meanings  ascribed to
them in the Credit Agreement.

         (2) The Company is or may be indebted to the  Subordinated  Creditor in
the principal  amount of  $350,000,000  or such lesser amount as shall equal the
aggregate  unpaid  principal  amount of Intercompany  Loans made by Subordinated
Creditor to the Company  evidenced by the promissory  note of even date herewith
in such principal amount (as the same may hereafter be amended, supplemented, or
otherwise  modified  from  time  to  time,  the  "Debt  Agreement").   All  such
obligations of the Company now or hereafter  existing under the Debt  Agreement,
whether  for  principal,  interest  (including,  without  limitation,   interest
accruing  after the filing of a petition  initiating  any Proceeding (as defined
below),  whether or not such interest  accrues after the filing of such petition
for  purposes  of the  Bankruptcy  Code of 1978,  11  U.S.C.  '101 et seq.  (the
"Bankruptcy Code") or is an allowed claim in such Proceeding), fees, expenses or
otherwise are hereinafter  referred to as  "Subordinated  Debt". For purposes of
this  Agreement,  "Proceeding"  means any bankruptcy,  insolvency,  arrangement,
reorganization,  receivership,  relief or other similar case or proceeding under
any federal or state  bankruptcy or similar law or an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of a Person.

         (3) It is a  condition  precedent  to the  making  of  Advances  by the
Lenders under the Credit  Agreement  that the  Subordinated  Creditor shall have
executed and delivered this Agreement.

         NOW, THEREFORE,  in consideration of the premises,  the Company and the
Subordinated Creditor hereby agree as follows:

         SECTION 1. Agreement to Subordinate.  Each of the Subordinated Creditor
and the 
<PAGE>
Company agrees that the  Subordinated  Debt is and shall be subordinate,  to the
extent and in the manner  hereinafter set forth, to the prior payment in full of
all  obligations  of the  Company  now or  hereafter  existing  under the Credit
Agreement and the other Loan Papers, whether for principal, interest (including,
without  limitation,  interest,  as  provided in the Notes,  accruing  after the
filing of a petition  initiating  any  Proceeding,  whether or not such interest
accrues after the filing of such petition for purposes of the Bankruptcy Code or
is an allowed  claim in such  Proceeding),  fees,  expenses or  otherwise  (such
obligations  and all  Obligations,  as defined in the  Credit  Agreement,  being
herein  collectively  called  the  "Obligations").  For  the  purposes  of  this
Agreement,  the Obligations  shall not be deemed to have been paid in full until
(a) all maturity  dates therefor  shall have elapsed,  (b) the Commitment  shall
have been  terminated,  and (c) the  Lenders  shall have  received  indefeasible
payment  of the  Obligations  in full in cash  (such  date  that the  conditions
described  in (a),  (b),  and (c)  herein  are  satisfied  shall be the  "Credit
Agreement Termination Date").

         SECTION  2.  Events  of   Subordination.   (a)  In  the  event  of  any
dissolution, winding up, liquidation, arrangement,  reorganization,  adjustment,
protection,  relief or  composition  of the  Company  or any  Subsidiary  of the
Company or any of their respective debts,  whether voluntary or involuntary,  in
any Proceeding of the Company or any Subsidiary of the Company or otherwise, the
Lenders shall be entitled to receive indefeasible payment in full in cash of the
Obligations before the Subordinated  Creditor is entitled to receive any payment
of all or any of the  Subordinated  Debt, and any payment or distribution of any
kind (whether in cash,  property or securities)  that otherwise would be payable
or  deliverable  upon or  with  respect  to the  Subordinated  Debt in any  such
Proceeding  (including  any  payment  that may be payable by reason of any other
indebtedness of the Company being  subordinated  to payment of the  Subordinated
Debt) shall, subject to the following sentence, be paid or delivered directly to
the Administrative  Agent for the account of the Lenders for application (in the
case of  cash)  to,  or as  collateral  (in the  case of  non-cash  property  or
securities)  for,  the  payment  or  prepayment  of the  Obligations  until  the
Obligations  shall  have been paid  indefeasibly  in full in cash and the Credit
Agreement Termination Date to have occurred.

         (b) Upon the occurrence of a Default or Event of Default and during the
continuance  thereof,  no payment  (including any payment that may be payable by
reason of any other indebtedness of the Company being subordinated to payment of
the  Subordinated  Debt)  shall be made by the  Company for or on account of any
Subordinated Debt, and the Subordinated  Creditor shall not take or receive from
the Company or any Subsidiary of the Company, directly or indirectly, in cash or
other  property  or by  set-off  or in  any  other  manner,  including,  without
limitation,  from  or by way of  collateral,  any  payment  of all or any of the
Subordinated  Debt,  unless  and  until  the  Obligations  shall  have been paid
indefeasibly  in full in cash  and the  Credit  Agreement  Termination  Date has
occurred.

         (c)  During  the  continuance  of a Default  or Event of  Default,  the
Lenders  shall be entitled  to receive  payment in full of all amounts due or to
become due on or in respect of all Obligations before the Subordinated  Creditor
is entitled to receive any payment  (including  any payment which may be payable
by  reason  of the  payment  of any  other  indebtedness  of the  Company  being
subordinated to the payment of the Subordinated  Debt) by the Company on account
of the Subordinated Debt.
                                      -2-
<PAGE>
         SECTION 3. In Furtherance of Subordination.  The Subordinated  Creditor
agrees as follows:

         (a)  All  payments  or  distributions  upon  or  with  respect  to  the
Subordinated  Debt which are received by the Subordinated  Creditor  contrary to
the provisions of this  Agreement  shall be received in trust for the benefit of
the  Lenders,  shall be  segregated  from other funds and  property  held by the
Subordinated  Creditor  and shall be forthwith  paid over to the  Administrative
Agent for the account of the  Lenders in the same form as so received  (with any
necessary  endorsement)  to be  applied  (in the  case of cash)  to,  or held as
collateral (in the case of non-cash  property or securities) for, the payment or
prepayment  of the  Obligations  in  accordance  with the  terms  of the  Credit
Agreement.

         (b) The  Subordinated  Creditor  hereby waives and agrees not to assert
against  Administrative  Agent or any  Lender any rights  which a  guarantor  or
surety with  respect to any  indebtedness  of the  Company or any obligor  could
exercise.  The  Subordinated  Creditor shall not assert,  enforce,  or otherwise
exercise  (a)  any  right  of  subrogation  to any of the  rights  or  Liens  of
Administrative  Agent or any Lender or any other  Person  against the Company or
any of its  Subsidiaries  or  any  other  obligor  on  all  or any  part  of the
Obligations or any collateral or other  security,  or (b) any right of recourse,
reimbursement,  contribution,  indemnification,  or similar  right  against  the
Company or any of its  Subsidiaries  or any other  obligor on all or any part of
the Obligations or any collateral or any security, and the Subordinated Creditor
hereby  waives any and all of the  foregoing  rights and the benefit of, and any
right  to   participate   in,  any   collateral  or  other   security  given  to
Administrative  Agent or any Lender or any other Person to secure payment of the
Obligations,  however any such Rights arise, whether hereunder or any other Loan
Paper or by operation of Law until after the Credit  Agreement  Termination Date
has occurred.

         (c)   The   Subordinated    Creditor   hereby   irrevocably    appoints
Administrative Agent, the Subordinated  Creditor's  attorney-in-fact,  with full
authority in the place and stead of the Subordinated Creditor and in the name of
the Subordinated  Creditor or otherwise to, after the occurrence of a Default or
Event of Default and during the continuance thereof, (a) file any claims, proofs
of claim,  or other  instruments of similar  character  necessary to enforce the
obligations of the Company and its Subsidiaries with respect to the Subordinated
Debt and (b) collect and receive any and all payments or distributions which may
be payable or deliverable  upon or with respect to the  Subordinated  Debt. Such
power of attorney is coupled with an interest and is irrevocable  prior to final
indefeasible payment in full of the Obligations.

         (d) The  Administrative  Agent is hereby  authorized to demand specific
performance  of this  Agreement,  whether or not the Company shall have complied
with  any of the  provisions  hereof  applicable  to it,  at any  time  when the
Subordinated  Creditor shall have failed to comply with any of the provisions of
this Agreement  applicable to it. The Subordinated  Creditor hereby  irrevocably
waives any  defense  based on the  adequacy  of a remedy at law,  which might be
asserted as a bar to such remedy of specific performance.
                                      -3-
<PAGE>
         (e) No assets or  Properties of the Company or its  Subsidiaries  shall
secure the Subordinated  Debt,  except to the extent of Liens which are assigned
to the Administrative Agent on behalf of the Lenders.

         SECTION 4.  Remedies of the  Subordinated  Creditor.  The  Subordinated
Creditor  agrees  that,  so long as the  Obligations  shall  not have  been paid
indefeasibly  in full in cash  and the  Credit  Agreement  Termination  Date has
occurred,  the Subordinated  Creditor will not take, sue for, ask or demand from
the Company or its Subsidiaries, payment of all or any of the Subordinated Debt,
or  exercise  any  remedy  against  the  Company or its  Subsidiaries  available
contractually,  by law or otherwise,  or commence in its capacity as a creditor,
or join with any creditor in commencing,  or directly or indirectly cause in its
capacity as creditor to the Company or its  Subsidiaries to commence,  or assist
the Company or its  Subsidiaries  in  commencing,  any  Proceeding  or any other
remedy against the Company or its Subsidiaries.

         SECTION 5. Agreements in Respect of Subordinated Debt.

         (a) The Subordinated Creditor will not:

                  (i) Sell, assign, pledge, encumber or otherwise dispose of any
         of the Subordinated Debt; or

                  (ii) Permit any of the terms of any of the  Subordinated  Debt
         to be changed  or amended  (or issue any  consent,  waiver or  approval
         which has the effect of  resulting in any change or  amendment)  in any
         manner which could  reasonably be expected to be materially  adverse to
         the interests of the Lenders.

         (b)  The   Subordinated   Creditor   shall   immediately   notify   the
Administrative  Agent of the  occurrence  of any  breach  or  default  under the
Subordinated Debt beyond any grace period provided with respect thereto.

         SECTION 6.  Agreement by the Company.  The Company  agrees that it will
not make any payment of any of the Subordinated  Debt (or take any other action)
in contravention of the provisions of this Agreement.

         SECTION 7. Obligations Hereunder Not Affected. All rights and interests
of the Administrative  Agent and the Lenders  hereunder,  and all agreements and
obligations of the  Subordinated  Creditor and the Company under this Agreement,
shall remain in full force and effect irrespective of:

                  (i) any  lack of  validity  or  enforceability  of the  Credit
         Agreement,  the  Notes,  the Loan  Papers  or any  other  agreement  or
         instrument relating thereto;
                                      -4-
<PAGE>
                  (ii) any change in the time, manner or place of payment of, or
         in any  other  term of,  all or any of the  Obligations,  or any  other
         amendment or waiver of or any consent to any departure  from the Credit
         Agreement, the Loan Papers or the Notes, including, without limitation,
         any  increase  in the  Obligations  resulting  from  the  extension  of
         additional credit to the Company or otherwise;

                  (iii) any taking, release or amendment or waiver of or consent
         to departure from any guaranty, for all or any of the Obligations; or

                  (iv) any change, restructuring or termination of the corporate
         structure or existence of the Company or its Subsidiaries.

This Agreement shall continue to be effective or be reinstated,  as the case may
be, if at any time any payment of any of the  Obligations  is  rescinded or must
otherwise  be  returned  by the  Administrative  Agent  or any  Lender  upon the
insolvency,  bankruptcy or  reorganization  of the Company or otherwise,  all as
though such payment had not been made.

         SECTION 8. Waiver.  Each of the  Subordinated  Creditor and the Company
hereby waives promptness,  diligence,  notice of acceptance and any other notice
with respect to any of the  Obligations  and this Agreement and any  requirement
that the  Administrative  Agent or any Lender or  exhaust  any right or take any
action against the Company, its Subsidiaries or any other Person or entity.

         SECTION 9.  Representations and Warranties.  The Subordinated  Creditor
and the Company each hereby represent and warrant as follows:

         (a) The Subordinated Debt now outstanding,  true and complete copies of
instruments  evidencing which have been furnished to the  Administrative  Agent,
has been duly authorized,  issued and delivered by the Company,  and constitutes
the legal, valid and binding obligation of the Company,  enforceable against the
Company in accordance with its terms.  There exists no default in respect of the
Subordinated Debt.

         (b) The Subordinated  Creditor has,  independently and without reliance
upon the  Administrative  Agent or any  Lender and based on such  documents  and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this Agreement.

         SECTION 10. Amendments to this Agreement. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Subordinated
Creditor or the Company  herefrom,  shall in any event be  effective  unless the
same shall be in writing  and signed as provided  in the Credit  Agreement,  and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
                                      -5-
<PAGE>
         SECTION 11. Expenses. Each of the Subordinated Creditor and the Company
agrees,  jointly and severally,  upon demand to pay to the Administrative  Agent
the  amount of any and all  reasonable  out-of-pocket  expenses,  including  the
reasonable fees and expenses of its counsel and of any experts or agents,  which
the Administrative  Agent or any Lender may incur in connection with the (a) the
administration of this Agreement,  (b) the exercise or enforcement of any of the
rights of the  Administrative  Agent or the Lenders hereunder or (c) the failure
by the Subordinated Creditor to perform or observe any of the provisions hereof.

         SECTION 12. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including  telecopier,  telegraphic,
telex or cable  communication)  and mailed,  telecopied,  telegraphed,  telexed,
cabled or  delivered  to it, if to the  Subordinated  Creditor,  at its  address
specified in the Credit  Agreement,  and if to the  Administrative  Agent or any
Lender, at its address  specified in the Credit Agreement,  or as to each party,
at such other address as shall be  designated by such party in a written  notice
to each other  party.  All such  notices and other  communications  shall,  when
mailed, telecopied,  telegraphed, telexed or cabled, be effective as provided in
the Credit Agreement.

         SECTION  13.  No  Waiver;  Remedies.  No  failure  on the  part  of the
Administrative Agent or any Lender to exercise, and no delay in exercising,  any
right  hereunder  shall  operate  as a waiver  thereof;  nor shall any single or
partial  exercise of any right hereunder  preclude any other or further exercise
thereof or the exercise of any other right.  The  remedies  herein  provided are
cumulative and not exclusive of any remedies provided by Law.

         SECTION  14.  Continuing   Agreement;   Assignments  Under  the  Credit
Agreement. This Agreement is a continuing agreement and shall (a) remain in full
force  and  effect  until  the  indefeasible  payment  in  full  in  cash of the
Obligations  and until the  Commitment has  terminated,  (b) be binding upon the
Subordinated  Creditor  and its  successors  and  assigns,  and (c) inure to the
benefit of, and be enforceable  by, the  Administrative  Agent,  the Lenders and
their respective permitted successors, transferees and assigns. Without limiting
the  generality of the foregoing  clause (c), any Lender may assign or otherwise
transfer  all or any  portion  of  its  rights  and  obligations  under,  and in
accordance with the terms of, the Credit Agreement to any other Person, and such
other  Person  shall  thereupon  become  vested  with all the  rights in respect
thereof  granted to such Lender herein or otherwise.  Notwithstanding  any other
provision of this Agreement, this Agreement shall continue to be effective or be
reinstated,  as the  case  may be,  if at any  time  any  payment  of any of the
Obligations  is  rescinded or must  otherwise be returned by the  Administrative
Agent or any Lender upon the  insolvency,  bankruptcy or  reorganization  of the
Company or its  Subsidiaries  or  otherwise,  all as though such payment had not
been made.  In any such  event,  all  payments  and  distributions  upon or with
respect to the  Subordinated  Debt which have been  theretofore  received by the
Subordinated  Creditor  shall be deemed to have been  received  in trust for the
benefit of the Lenders,  shall be segregated  from other funds and property held
by  the  Subordinated   Creditor  and  shall  be  forthwith  paid  over  to  the
Administrative  Agent  for the  account  of the  Lenders  in the same form as so
received  (with any necessary  indorsement)  to be applied (in the case of cash)
to, or held as collateral (in the case of non-cash  property or securities) for,
the payment or prepayment of the Obligations in accordance with the terms of the
Credit Agreement.
                                      -6-
<PAGE>
         SECTION 15. GOVERNING LAW. (a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS
RELATED HERETO SHALL BE DEEMED  CONTRACTS MADE UNDER THE LAWS OF TEXAS AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF TEXAS,
EXCEPT TO THE EXTENT FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND  INTERPRETATION  OF ALL OR ANY PART OF THIS  AGREEMENT  AND ALL LOAN PAPERS.
WITHOUT EXCLUDING ANY OTHER JURISDICTION,  THE SUBORDINATED CREDITOR AGREES THAT
THE  COURTS OF TEXAS  WILL HAVE  JURISDICTION  OVER  PROCEEDINGS  IN  CONNECTION
HEREWITH.

         (b) THE COMPANY  HEREBY  WAIVES  PERSONAL  SERVICE OF ANY LEGAL PROCESS
UPON IT. IN  ADDITION,  THE COMPANY  AGREES THAT  SERVICE OF PROCESS MAY BE MADE
UPON IT BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE COMPANY AT
ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED  UPON RECEIPT BY THE COMPANY.  NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE  AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

         SECTION 16. WAIVER OF JURY TRIAL.  TO THE MAXIMUM  EXTENT  PERMITTED BY
LAW, THE PARTIES  HERETO HEREBY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT,  CONTRACT,  EQUITY,  OR OTHERWISE)
ARISING  UNDER OR  RELATING TO THIS  AGREEMENT,  THE OTHER LOAN  PAPERS,  OR ANY
RELATED MATTERS,  AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.

         SECTION 17. ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN PAPERS
RELATED HERETO REPRESENT THE FINAL AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
                                      -7-
<PAGE>
         SECTION 18. Counterparts.  This Agreement may be executed in any number
of  counterparts,  all of which taken together shall constitute one and the same
instrument.  In making proof of any such agreement, it shall not be necessary to
produce  or  account  for any  counterpart  other  than one  signed by the party
against which enforcement is sought.


================================================================================
                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
================================================================================
                                      -8-
<PAGE>
         IN WITNESS  WHEREOF,  each party hereto has caused this Agreement to be
duly executed and delivered by its officer  thereunto duly  authorized as of the
date first above written.

                                        FRANCHISE FINANCE CORPORATION
                                        OF AMERICA



                                        By:  ___________________________________
                                             John R. Barravecchia
                                             Executive Vice President and
                                             Chief Financial Officer


                                        (THE COMPANY)



                                        By:  ___________________________________
                                             Name:______________________________
                                             Title:_____________________________
                                      -9-
<PAGE>
__________, 199__
Page 1
                                    EXHIBIT H

                       [Form of Confidentiality Agreement]

                            CONFIDENTIALITY AGREEMENT

                                                                          [Date]


[Insert Name and Address
of Prospective Participant
or Assignee]

         Re:      Second  Amended  and  Restated  Credit  Agreement  dated as of
                  December ___, 1997,  among  Franchise  Finance  Corporation of
                  America  ("FFCA"),  the lenders named therein (the "Lenders"),
                  NationsBank of Texas, N.A., as Administrative  Agent, and Bank
                  of Montreal, Chicago Branch,  Commerzbank  Aktiengesellschaft,
                  Los Angeles Branch,  The Long-Term Credit Bank of Japan, Ltd.,
                  and Union Bank of Switzerland (New York Branch), as Co-Agents.

Dear ______________:

         As a Lender under the  above-referenced  Credit  Agreement (the "Credit
Agreement"),  we have  agreed  with FFCA  pursuant  to Section 9.9 of the Credit
Agreement  to  use  reasonable  precautions  to  keep  confidential,  except  as
otherwise  provided therein,  all non-public  information  identified by FFCA as
being  confidential  at the time the same is  delivered  to us  pursuant  to the
Credit  Agreement,   including,  without  limitation,  written  information  and
information  transferred  visually or  electronically,  together with all notes,
analyses, compilations, studies or other documents that contain all or a portion
of such information (collectively, "Confidential Information").

         As provided in said Section 9.9, we are  permitted to provide you, as a
prospective   [participant]   [assignee  Lender],   with  certain   Confidential
Information  subject to the  execution  and delivery by you,  prior to receiving
Confidential  Information,  of a  Confidentiality  Agreement  in this  form.  No
Confidential  Information will be made available to you until your execution and
return to us of this Confidentiality Agreement.

         Accordingly, in consideration of the foregoing, you agree (on behalf of
yourself and each of your affiliates, directors, officers, employees, agents and
representatives)  that (A) the Confidential  Information will not be used by you
except in connection with the proposed  [participation]  [assignment]  mentioned
above and (B) you shall keep all Confidential Information confidential,
<PAGE>
__________, 199__
Page 2

provided  that nothing  herein shall limit the  disclosure  of any  Confidential
Information (i) to the extent required by statute,  rule, regulation or judicial
process,  (ii) to your counsel or to counsel for any of the other Lenders or the
Administrative  Agent,  (iii) to your bank  examiners,  auditors or accountants,
(iv) to the Administrative Agent or any other Lender, (v) in connection with any
litigation to which you or any one or more of the Lenders are a party; provided,
further, that, unless specifically  prohibited by applicable law or court order,
you agree, prior to disclosure  thereof,  to give prompt notification to FFCA of
any  request  for  disclosure  of  any  Confidential   Information  (x)  by  any
governmental  agency or  representative  thereof (other than any such request in
connection with an examination of your financial  condition by such governmental
agency) or (y) pursuant to legal process.  With respect to any disclosure of any
Confidential  Information set forth in subclause (x) or (y) of clause (v) above,
you agree, to the extent not prohibited by applicable law or court order, to (i)
cooperate  with  FFCA  so  that  FFCA  may  seek a  protective  order  or  other
appropriate  remedy  and  (ii)  use its  best  efforts  to  obtain  an  order or
reasonable   assurance  that  confidential   treatment  will  be  afforded  such
information.

         At the  earlier  of such  time as (i) you are no  longer a  Lender,  an
assignee or  participant  under the Credit  Agreement,  or (ii) all Advances (as
defined in the Credit Agreement) under the Credit Agreement are paid in full and
the Commitment (as defined in the Credit Agreement) is terminated,  upon written
request by FFCA and subject to any  restrictions  or regulations of any Tribunal
having supervisory authority over you, you shall return to FFCA the Confidential
Information  which is in tangible  form,  including  any copies which you or any
persons to whom you transmitted the Confidential  Information may have made, and
you and they will destroy all abstracts, summaries thereof or references thereto
in your and their  documents,  and after written request by FFCA, shall promptly
provide  FFCA  reasonable  assurance  in writing  that you have  destroyed  such
documents.

         It is acknowledged that FFCA is in the business of financing commercial
real estate, equipment and enterprises and from time to time you and FFCA may be
in  direct  competition  with  each  other for  business.  This  Confidentiality
Agreement  does not  constitute a license for you to use,  employ or exploit the
Confidential  Information to gain any advantage in the marketplace against FFCA;
it  being  expressly   understood  and  agreed  that  any  use,   employment  or
exploitation  of  the  Confidential  Information  for a  purpose  not  expressly
permitted herein is strictly prohibited.

         This Confidentiality Agreement contains the entire understanding of the
parties to this Confidentiality  Agreement with respect to the matters addressed
in this Confidentiality Agreement and may be amended, modified,  supplemented or
altered  only by a writing  duly  executed by you and us which is  consented  in
writing to by FFCA and any prior agreements or  understandings,  whether oral or
written, are entirely superseded by this Confidentiality Agreement.

         The   covenants,   conditions   and   agreements   contained   in  this
Confidentiality  Agreement  shall  bind you and use and inure to the  benefit of
you, us and FFCA and their respective parent corporations, affiliated companies,
subsidiaries, officers, employees, partners, agents and successors and assigns.
<PAGE>
______________, 199__
Page 3

         Would you please indicate your agreement to the foregoing by signing at
the place provided below the enclosed copy of this Confidentiality Agreement.


                                         Very truly yours,



                                         _______________________________________
                                         By:____________________________________
                                         Title:_________________________________


THE FOREGOING IS AGREED TO AS
OF THE DATE OF THIS LETTER.

_____________________________



By:__________________________
Title:_______________________
<PAGE>
                                    EXHIBIT I

                                  BID RATE NOTE

$175,000,000                      Dallas, Texas               December ___, 1997


         FOR VALUE RECEIVED,  the undersigned,  FRANCHISE FINANCE CORPORATION OF
AMERICA,  a Delaware  corporation  ("Borrower"),  HEREBY  PROMISES TO PAY to the
order  of  ___________________________________  ("Lender")  the  lesser  of  ONE
HUNDRED SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($175,000,000.00) and the unpaid
principal  amount of the Bid Rate  Loans (as  defined  in the  Credit  Agreement
hereinafter  defined)  made  by  Lender  to  Borrower,  pursuant  to the  Credit
Agreement,  payable  at such  times,  and in such  amounts,  as are agreed to by
Lender and  Borrower  pursuant to Section  2.2(h) of the Credit  Agreement.  The
books and records of  Administrative  Agent shall be prima facie evidence of all
sums due Lender.

         Borrower promises to pay interest on the unpaid principal amount of the
Bid Rate Loans from the date made until such  principal  amount is paid in full,
at such interest  rates,  and payable at such times,  as are agreed to by Lender
and Borrower pursuant to Section 2.2(h) of the Credit Agreement.

         Both  principal  and interest are payable in lawful money of the United
States of America to  Administrative  Agent (as defined in the Credit Agreement)
(for the account of Lender) at its principal banking house at NationsBank Plaza,
901 Main  Street,  Dallas,  Texas 75202,  or such other place as  Administrative
Agent may direct, in immediately available funds.

         This Bid Rate  Note is one of the Bid Rate  Notes  evidencing  Bid Rate
Loans referred to in, and is entitled to the benefits of, the Second Amended and
Restated  Credit  Agreement  dated as of December  ___,  1997,  among  Borrower,
NationsBank of Texas,  N.A., as Administrative  Agent,  Lender and certain other
lenders (as from time to time  amended,  modified or  supplemented,  the "Credit
Agreement").  The Credit Agreement,  among other things, contains provisions for
acceleration  of the maturity  hereof upon the  happening of an Event of Default
(as  defined in the Credit  Agreement)  and also for  prepayments  on account of
principal  hereof  prior to the  maturity  hereof upon the terms and  conditions
therein specified.

         Borrower  and  each  guarantor,  surety  and  endorser  waives  demand,
presentment,  notice of dishonor,  protest and diligence in collecting  sums due
hereunder;  agrees to application  of any debt of Lender to the payment  hereof;
agrees that  extensions and renewals  without limit as to number,  acceptance of
any  number of  partial  payments,  releases  of any party  liable  hereon,  and
releases or  substitutions  of collateral,  before or after maturity,  shall not
release or discharge its obligation  under this Bid Rate Note; and agrees to pay
in addition to all other sums due hereunder  reasonable  attorney's fees if this
Bid Rate Note is placed in the hands of an attorney for  collection  or if it is
collected through bankruptcy or other judicial proceeding.  Borrower agrees that
during the full term hereof the maximum  lawful  interest rate for this Bid Rate
Note  determined  under Texas law shall be the weekly  ceiling as  specified  in
Article  5069-1D of V.A.T.S.  Further,  to the extent that 
<PAGE>
any other lawful rate ceiling  exceeds the rate ceiling so determined,  then the
higher rate ceiling  shall  apply.  Chapter 15 of the Texas Credit Code does not
apply to this Bid Rate Note.

         This Bid Rate Note shall be governed  by and  construed  in  accordance
with the laws of the State of Texas.

                                       FRANCHISE FINANCE CORPORATION
                                       OF AMERICA, a Delaware corporation



                                       By:   ___________________________________
                                             John R. Barravecchia
                                             Executive Vice President and
                                             Chief Financial Officer
                                      -2-
<PAGE>
                                  Schedule 4.1
                         ORGANIZATION AND QUALIFICATION

Franchise Finance Corporation of America (FFCA)
A Delaware Corporation
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The Corporation  has authorized  200,000,000  shares of common stock,  par value
$.01 per share issued and outstanding 41,787,542* shares as of December 26, 1997


FFCA Acquisition Corporation
A Delaware Corporation and wholly-owned subsidiary of FFCA
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized 100 shares of common stock,  par value $.01 per
share issued and outstanding 100 shares


FFCA Institutional Advisors, Inc.
A Delaware Corporation and wholly-owned subsidiary of FFCA
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized 100 shares of common stock,  par value $.01 per
share issued and outstanding 100 shares


FFCA Secured Assets Corporation
A Delaware Corporation and wholly-owned subsidiary of FFCA
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized 100 shares of common stock,  par value $.01 per
share issued and outstanding 100 shares



*As of the date of the latest available 13F filings, the following  shareholders
held 1% or more of the outstanding common stock of FFCA:

European Investors Inc.                     1,377,100
Morton H. Fleischer                         1,208,469
Travelers Group Inc.                        1,115,746
Mellon Bank Corporation                     1,048,942
Smith Barney Inc.                             956,160
Vanguard Group                                690,800
Robert W. Halliday                            429,600
<PAGE>
FFCA Secured Lending Corporation
A Delaware Corporation and wholly-owned subsidiary of FFCA
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized 100 shares of common stock,  par value $.01 per
share issued and outstanding 100 shares


FFCA Residual Interest Corporation
A Delaware Corporation and wholly-owned subsidiary of FFCA
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized 100 shares of common stock,  par value $.01 per
share issued and outstanding 100 shares


FFCA Mortgage Corporation
A Delaware  Corporation;  all of the common stock (representing 5% of the equity
securities of the  corporation)  is owned by Morton H.  Fleischer and all of the
non-voting  preferred stock  (representing  95% of the equity  securities of the
corporation) is owned by FFCA. It is anticipated that FFCA Mortgage  Corporation
will file for dissolution  effective December 31, 1997. 
17207 N. Perimeter Drive
Scottsdale, AZ 85255

The  Corporation  has authorized  100 shares of common stock,  par value $10 per
share,  issued and outstanding 100 shares; and also has authorized 100 shares of
preferred stock, par value $10 per share, issued and outstanding 100 shares.
<PAGE>
                                  SCHEDULE 4.5


         1. On September  28, 1989, a complaint  was filed in the United  States
District  Court  for  the  Eastern  District  of  New  York,   captioned  C.D.S.
Diversified,  Inc. ("CDS"), Claude Shipman and Roland Davis v. Franchise Finance
Corporation  of America,  Ticor  Title  Insurance  Company  and United  Guaranty
Insurance  Company,  Civil Action No. CV-89 2887 (the "CDS Complaint").  The CDS
Complaint  alleges,   among  other  things,  that  FFCA  misrepresented  to  the
Plaintiffs  the  purpose of both a rent  guaranty  insurance  policy with United
Guaranty  Commercial  Insurance  Company  and an $80,000  letter of credit.  The
Plaintiffs  further allege that FFCA breached a lease agreement between FFCA (in
reality,  FFCA's  predecessor in interest,  FFCA/IIP 1985 Property  Company) and
CDS,  and that FFCA  fraudulently  presented  the letter of credit for  payment.
Finally,  the Plaintiffs allege that FFCA wrongfully converted $36,000 which had
been placed in escrow with Ticor Title  Insurance  Company.  The Plaintiffs seek
compensatory  damages from FFCA on their various causes of action in the amounts
of $1,500,000,  $36,000, $80,000 and $35,000, respectively, and punitive damages
in the amount of  $1,000,000.  Both parties filed motions for summary  judgment,
which were denied by the Court.  All pretrial  discovery has been  completed and
the parties are awaiting the setting of a trial date by the Court.

         2. On December 12, 1991, a complaint  was filed in the Circuit Court of
Knox County,  Tennessee,  captioned Interstate Franchise Management Corporation,
Tennessee Valley Investments, Inc., and John W. Pirkle v. FFCA/IIP 1986 Property
Company and William E. Fort.  The  complaint  alleges that a former  employee of
FFCA's  predecessor  in interest,  FFCA/IIP  1986  Property  Company ("IIP 86"),
William E. Fort and other  officers of IIP 86  misrepresented  to the Plaintiffs
that  C.  Randy  Lance  ("Lance")  and  his  related   entities  were  extremely
trustworthy, creditworthy and had sufficient net worth to acquire the restaurant
business owned by the Plaintiffs.  Plaintiffs contend that, as a result of those
misrepresentations,  they entered into an agreement with Lance and an affiliated
entity  for the  management  and  acquisition  of  Plaintiffs'  businesses.  The
complaint alleges that Lance and his affiliated  entity  mismanaged  Plaintiffs'
businesses and were  financially  unable to consummate the acquisition  thereof,
causing Plaintiffs to lose their businesses and sustain  compensatory damages in
the amount of  $3,000,000.  Based upon its  inquiry,  IIP 86  believes  that the
allegations  contained in the complaint are without merit.  Plaintiffs  have not
actively  prosecuted this case since the filing date.  However,  FFCA intends to
vigorously  defend this action and assert  counterclaims  against the Plaintiffs
resulting from breach of two lease agreements and guaranties.
<PAGE>
                                  Schedule 4.8
                DEBT, CONTINGENT LIABILITIES AND LIENS OF COMPANY
          AND EACH SUBSIDIARY ENTITY IN EXISTENCE ON DECEMBER 26, 1997

         FRANCHISE FINANCE CORPORATION OF AMERICA
         Capital Leases Payable                            $         28,469
         Acquisition Loan Facility                         $    266,000,000
         Senior Notes Payable ($200,000,000 less
                  unamortized discount of $811,276)        $    199,188,724
         Medium Term Notes                                 $    110,150,000
         Mortgage Payable to Affiliate                     $      8,500,000

         FFCA also  executed on  December  31,  1996 an  unconditional  guaranty
whereby  FFCA  guarantees  to  NationsBank  the payment of all  obligations  and
liabilities of FFCA Mortgage  Corporation  arising from  transactions  under its
derivative agreements with NationsBank

         FFCA INSTITUTIONAL ADVISORS, INC.
         None

         FFCA ACQUISITION CORPORATION
         Intercompany note payable to parent company FFCA
         (eliminates in consolidation)                     $    417,587,420

         FFCA RESIDUAL INTEREST CORPORATION
         None

         FFCA SECURED ASSETS CORPORATION
         None

         FFCA SECURED LENDING CORPORATION
         None

         FFCA MORTGAGE CORPORATION
         Secured note payable to FFCA                      $     46,062,580
<PAGE>
                                  Schedule 4.11


                            Environmental Liabilities



                                      NONE
<PAGE>
                                  Schedule 4.13
                                   INVESTMENTS


FRANCHISE FINANCE CORPORATION OF AMERICA
Investment in FFCA Institutional Advisors, Inc.                      $3,237,655
         (100 shares of common stock, par value $.01 per share)
Investment in FFCA Acquisition Corporation                           $100
         (100 shares of common stock, par value $.01 per share)
Investment in FFCA Residual Interest Corporation                     $100
         (100 shares of common stock, par value $.01 per share)
Investment in FFCA Secured Assets Corporation                        $100
         (100 shares of common stock, par value $.01 per share)
Investment in FFCA Secured Lending Corporation                       $100
         (100 shares of common stock, par value $.01 per share)
Investment in FFCA Mortgage Corporation                              $311,964
         (100 shares of nonvoting preferred stock, par value $10 per share)

FFCA INSTITUTIONAL ADVISORS, INC.
Investment in FFCA Co-Investment Limited Partnership                 $250,782
         (.98% general partnership interest)

FFCA ACQUISITION CORPORATION
None

FFCA RESIDUAL INTEREST CORPORATION
Secured Franchise Loan Pass-Through Certificates, Series 1996-C1     $28,703,761
Secured Franchise Loan Pass-Through Certificates, Series 1997-1      $26,688,327

FFCA SECURED ASSETS CORPORATION
None

FFCA SECURED LENDING CORPORATION
None

FFCA MORTGAGE CORPORATION
None


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