PROMUS HOTEL CORP, 8-K, 1995-06-15

PROMUS HOTEL CORP
8-K, 1995-06-15

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As filed with the Securities and Exchange Commission on June 15, 1995.
----------------------------------------------------------------------

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 (Date of earliest event reported)
June 14, 1995

PROMUS HOTEL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 1-11463 62-1596939
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)

6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (901) 758-3100

Not Applicable
- ----------------------------------------------------------------------
(Former name or former address, if changed since last report)

<PAGE>

ITEM 5. Other Events.

Promus Hotel Corporation ("PHC") is an indirect wholly-owned
subsidiary of The Promus Companies Incorporated ("Promus"). Promus intends to
distribute (the "Distribution") in the form of a special dividend to all holders
of Promus's outstanding shares of common stock, on a one-for-two basis, all
outstanding shares of common stock, and the associated stockholders' rights, of
PHC. The Distribution will separate Promus's hotel business (the "Hotel
Business") from its casino entertainment business (the "Casino Business").
Prior to the Distribution, Promus will transfer to PHC the stock of certain
subsidiaries principally engaged in the Hotel Business, and consummate certain
other transfers intended to allocate assets and liabilities relating to the
Hotel Business to PHC and assets and liabilities relating to the Casino Business
to Promus. After the Distribution, PHC will operate and develop the Hotel
Business and Promus will operate and develop the Casino Business. In addition,
upon consummation of the Distribution, Promus will change its name to "Harrah's
Entertainment, Inc.".

On May 26, 1995, stockholders of Promus approved the Distribution and
Promus's Board of Directors declared a dividend of shares of common stock of PHC
conditioned upon occurrence of four events prior to June 19, 1995. On June 14,
1995, Promus announced that the four events had occurred and that the conditions
to the dividend had been satisfied.

The Distribution will occur on June 30, 1995. On that date, Embassy
Suites, Inc., a wholly-owned subsidiary of Promus and the sole stockholder of
PHC, will distribute to Promus all of the outstanding shares of common stock of
PHC and the associated stockholders' rights. Substantially concurrently
therewith, Promus will make the Distribution to stockholders of record of
Promus as of June 21, 1995. Each stockholder will receive one share of
common stock of PHC for every two shares of common stock of Promus held by such
stockholder. Fractional shares will be aggregated and, after the Distribution,
sold in the public market and the aggregate net cash proceeds will be
distributed ratably to those stockholders of record otherwise entitled to
fractional interests.

<PAGE>

ITEM 7. Financial Statements and Exhibits

No.
---

10(1) Form of Plan of Reorganization and Distribution Agreement,
dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation. (1)

10(2) Tranche A Credit Agreement, dated as of June 7, 1995, among
Embassy Suites, Inc., as Initial Borrower, Promus Hotels,
Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as
Guarantors, the several lenders from time to time party
thereto, and NationsBank, N.A. (Carolinas), as Agent.

10(3) Tranche B Credit Agreement, dated as of June 7, 1995, among
Embassy Suites, Inc., as Initial Borrower, Promus Hotels,
Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as
Guarantors, the several lenders from time to time party
thereto, and NationsBank, N.A. (Carolinas), as Agent.

10(4) Form of Employee Benefits and Other Employment Matters
Allocation Agreement, dated June __, 1995, between The
Promus Companies Incorporated and Promus Hotel
Corporation. (1)

10(5) Form of Risk Management Allocation Agreement, dated June __,
1995, between The Promus Companies Incorporated and Promus
Hotel Corporation. (1)

10(6) Form of Tax Sharing Agreement, dated June __, 1995, between
The Promus Companies Incorporated and Promus Hotel
Corporation. (1)

10(7) Promus Hotel Corporation Executive Deferred Compensation
Plan.

10(8) Promus Hotel Corporation Deferred Compensation Plan.

10(9) Escrow Agreement, dated as of June 30, 1995, among Promus
Hotel Corporation, Promus Hotels, Inc. and NationsBank.

10(10) Promus Hotel Corporation Savings and Retirement Plan Trust
Agreement, dated as of May 26, 1995, among Promus Hotel
Corporation, and Robert S. Davis, Donald H. Dempsey,
Patricia R. Ferguson, Jeffery M. Jarvis, Kelly R. Jenkins,
Frederick G. Schultz and Mark C. Wells, as trustees.

10(11) Form of Severance Agreement, dated as of June 30, 1995, to
be entered into with Michael D. Rose and Raymond E. Schultz.

10(12) Form of Severance Agreement, dated as of June 30, 1995, to
be entered into with David C. Sullivan, Donald H. Dempsey,
Ralph B. Lake, Thomas L. Keltner and Marc C. Wells.

99(1) Press Release, dated June 14, 1995, announcing the
satisfaction of the final conditions to the Distribution.
FOOTNOTES

(1) Incorporated by reference from the Current Report on Form 8-K of The Promus
Companies Incorporated, filed June 15, 1995, File No. 1-10410.

<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 hereunto duly authorized.

PROMUS HOTEL CORPORATION

JEFFERY M. JARVIS
---------------------------------------
Jeffery M. Jarvis
Vice-President and Controller

Dated: June 15, 1995

<PAGE>

EXHIBIT INDEX

EXHIBIT
NO. Description
------- -----------

10(1) Form of Plan of Reorganization and Distribution Agreement,
dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation. (1)

10(4) Form of Employee Benefits and Other Employment Matters
Allocation Agreement, dated June __, 1995, between The
Promus Companies Incorporated and Promus Hotel
Corporation. (1)

10(5) Form of Risk Management Allocation Agreement, dated June __,
1995, between The Promus Companies Incorporated and Promus
Hotel Corporation. (1)

10(6) Form of Tax Sharing Agreement, dated June __, 1995, between
The Promus Companies Incorporated and Promus Hotel
Corporation. (1)

10(7) Promus Hotel Corporation Executive Deferred Compensation
Plan.

10(8) Promus Hotel Corporation Deferred Compensation Plan.

10(9) Escrow Agreement, dated as of June 30, 1995, among Promus
Hotel Corporation, Promus Hotels, Inc. and NationsBank.

10(11) Form of Severance Agreement, dated as of June 30, 1995, to
be entered into with Michael D. Rose and Raymond E. Schultz.

10(12) Form of Severance Agreement, dated as of June 30, 1995, to
be entered into with certain David C. Sullivan, Donald H.
Dempsey, Ralph B. Lake, Thomas L. Keltner and Marc C. Wells.

99(1) Press Release, dated June 14, 1995, announcing the
satisfaction of the final conditions to the Distribution.
FOOTNOTES

(1) Incorporated by reference from the Current Report on Form 8-K of The Promus
Companies Incorporated, filed June 15, 1995, File No. 1-10410.

Exhibit 10(2)

TRANCHE A
CREDIT AGREEMENT

Dated as of June 7, 1995

among

EMBASSY SUITES, INC.,
as Initial Borrower,

PROMUS HOTELS, INC.,
as the Subsequent Borrower,

CERTAIN SUBSIDIARIES AND RELATED PARTIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,

THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO

AND

NATIONSBANK, N.A. (CAROLINAS),
as Agent

<PAGE>

TABLE OF CONTENTS
-----------------

Page No.
-------

SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Computation of Time Periods . . . . . . . . . . . . . . . 28
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . 28

SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . 28
2.1 Committed Revolving Loans . . . . . . . . . . . . . . . . 28
2.2 Letter of Credit Subfacility . . . . . . . . . . . . . . 31
2.3 Swingline Loan Subfacility. . . . . . . . . . . . . . . . 35
2.4 Competitive Loan Subfacility . . . . . . . . . . . . . . 38

SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . 41
3.1 Default Rate . . . . . . . . . . . . . . . . . . . . . . 41
3.2 Extension and Conversion . . . . . . . . . . . . . . . . 41
3.3 Reductions In Commitments and Prepayments . . . . . . . . 42
3.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . 46
3.6 Inability To Determine Interest Rate . . . . . . . . . . 47
3.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . 47
3.8 Requirements of Law . . . . . . . . . . . . . . . . . . . 48
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 51
3.11 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 52
3.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . 53
3.13 Place and Manner of Payments . . . . . . . . . . . . . . 54
3.14 Indemnification; Nature of Issuing Lender's Duties . . . 55
3.15 Replacement of Lenders . . . . . . . . . . . . . . . . . 56
3.16 Change of Lending Office . . . . . . . . . . . . . . . . 57

SECTION 4 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . 57
4.1 The Guarantee . . . . . . . . . . . . . . . . . . . . . . 57
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . 58
4.3 Reinstatement . . . . . . . . . . . . . . . . . . . . . . 59
4.4 Certain Additional Waivers . . . . . . . . . . . . . . . 59
4.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 59
4.6 Continuing Guarantee . . . . . . . . . . . . . . . . . . 60
4.7 Discharge of Guarantor . . . . . . . . . . . . . . . . . 60

SECTION 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 60
5.1 Conditions to Initial Extensions of Credit . . . . . . . 60
5.2 Conditions to Assignment to Hotel Inc., Release of Embassy
Suites and Promus Co. and Initial Extensions of Credit to Hotel
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.3 Each Extension of Credit . . . . . . . . . . . . . . . . 64

SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 65
6.1 Financial Condition . . . . . . . . . . . . . . . . . . . 65
6.2 No Change; Solvent . . . . . . . . . . . . . . . . . . . 66
6.3 Corporate and Partnership Existence; Compliance with Law 67

<PAGE>

6.4 Corporate and Partnership Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . 67
6.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . 68
6.6 No Material Litigation . . . . . . . . . . . . . . . . . 68
6.7 No Default . . . . . . . . . . . . . . . . . . . . . . . 68
6.8 Ownership of Property; Liens . . . . . . . . . . . . . . 68
6.9 Intellectual Property . . . . . . . . . . . . . . . . . . 68
6.10 No Burdensome Restrictions . . . . . . . . . . . . . . . 69
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.12 Federal Regulations . . . . . . . . . . . . . . . . . . . 69
6.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.14 Investment Company Act; Other Regulations . . . . . . . . 70
6.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 70
6.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . 71
6.17 Environmental Matters . . . . . . . . . . . . . . . . . . 71

SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 73
7.1 Information Covenants. . . . . . . . . . . . . . . . . . 73
7.2 Preservation of Existence and Franchises . . . . . . . . 75
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . 75
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . 75
7.5 Payment of Taxes and Other Indebtedness . . . . . . . . . 75
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 76
7.7 Maintenance of Property . . . . . . . . . . . . . . . . . 76
7.8 Performance of Obligations . . . . . . . . . . . . . . . 76
7.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 76
7.10 Audits/Inspections . . . . . . . . . . . . . . . . . . . 76
7.11 Financial Covenants . . . . . . . . . . . . . . . . . . . 76
7.12 Additional Credit Parties . . . . . . . . . . . . . . . . 77

SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 78
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 78
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.3 Nature of Business . . . . . . . . . . . . . . . . . . . 81
8.4 Consolidation, Merger, Sale or Purchase of Assets . . . . 81
8.5 Investments . . . . . . . . . . . . . . . . . . . . . . . 83
8.6 Prepayments of Indebtedness . . . . . . . . . . . . . . . 84
8.7 Transactions with Affiliates . . . . . . . . . . . . . . 84
8.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 84
8.9 No Dividend Restrictions . . . . . . . . . . . . . . . . 85

SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 85
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . 85
9.2 Acceleration; Remedies . . . . . . . . . . . . . . . . . 88

SECTION 10 AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . 89
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . 89
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . 90
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . 90
10.4 Reliance on Communications . . . . . . . . . . . . . . . 91
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . 91
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . 91
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . 92
10.8 Agent in its Individual Capacity . . . . . . . . . . . . 93
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . 93

<PAGE>

SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 94
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.2 Right of Set-Off . . . . . . . . . . . . . . . . . . . . 95
11.3 Benefit of Agreement . . . . . . . . . . . . . . . . . . 95
11.4 No Waiver; Remedies Cumulative . . . . . . . . . . . . . 99
11.5 Payment of Expenses, etc . . . . . . . . . . . . . . . . 99
11.6 Amendments, Waivers and Consents . . . . . . . . . . . . 100
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 101
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . 102
11.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . 102
11.10 Governing Law; Submission to Jurisdiction; Venue . . . . 102
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . 102
11.12 Entirety . . . . . . . . . . . . . . . . . . . . . . . . 103
11.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . 103
11.14 Knowledge Standard . . . . . . . . . . . . . . . . . . . 103
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . 103
11.16 Agent's and Lender's Covenant . . . . . . . . . . . . . . 104

iii

<PAGE>

TRANCHE A
CREDIT AGREEMENT

THIS TRANCHE A CREDIT AGREEMENT dated as of June 7, 1995 (as amended,
modified and extended from time to time, the "Credit Agreement" and
----------------
sometimes, this "Credit Agreement"), is by and among EMBASSY SUITES, INC.,
----------------
a Delaware corporation as the initial Borrower, and PROMUS HOTELS, INC., a
Delaware corporation, as assignee and subsequent Borrower upon satisfaction
of the conditions set forth in Section 5.2 (the applicable Borrower
hereunder being referred to as the "Borrower"), THE PROMUS COMPANIES
--------
INCORPORATED, a Delaware corporation as an initial guarantor subject to
release upon satisfaction of the conditions set forth in Section 5.2, and
PROMUS HOTEL CORPORATION, a Delaware corporation as a guarantor (such
applicable parent company guarantor hereunder being referred to as the
"Parent Company") and those certain Subsidiaries and related parties
--------------
identified as "Guarantors" on the signature pages hereto and such other
Subsidiaries as may from time to time become a Guarantor hereunder
(together with the applicable Parent Company, the "Guarantors"), the
----------
several lenders identified on the signature pages hereto and such other
lenders as may from time to time become a party hereto (the "Lenders") and
-------
NATIONSBANK, N.A. (CAROLINAS), as agent for the Lenders (in such capacity,
the "Agent").
-----

W I T N E S S E T H

WHEREAS, Embassy Suites, Inc. ("Embassy Suites") and its parent
--------------
company, The Promus Companies Incorporated ("Promus Co."), have proposed a
----------
reorganization of their corporate structure as more particularly described
in the Proxy Statement (the "Reorganization") whereby, among other things,
--------------
(i) certain hotel related assets and liabilities will be transferred to
Promus Hotels, Inc. ("Hotel Inc."), a newly formed and wholly-owned
----------
subsidiary of Promus Hotel Corporation ("Hotel Corp."), a newly formed and
-----------
wholly-owned subsidiary of Embassy Suites, (ii) Embassy Suites will enter
into this Tranche A Credit Agreement and the Tranche B Credit Agreement
(hereafter the Tranche A Credit Agreement and the Tranche B Credit
Agreement may be referred to collectively as the "Hotel Facility") and make
--------------
initial borrowings hereunder and/or thereunder, (iii) Embassy Suites will
assign to Hotel Inc. and Hotel Inc. will assume from Embassy Suites the
Hotel Facility, and Embassy Suites and Promus Co. will be released from
liability as the initial Borrower and an initial guarantor, respectively,
under the Hotel Facility as provided herein and in the Tranche B Credit
Agreement, (iv) Embassy Suites will dividend the stock of Hotel Corp. to
Promus Co. which will dividend such stock to its public shareholders (the
"Distribution");
------------

WHEREAS, Embassy Suites has requested that the Lenders provide a
$350,000,000 Hotel Facility consisting of a

<PAGE>

$300,000,000 five year revolving credit facility under this Tranche A
Credit Agreement and a $50,000,000 364-day revolving credit facility under
the Tranche B Credit Agreement for the purposes hereinafter set forth; and

WHEREAS, the Lenders have agreed to make the requested Hotel Facility
available on the terms and conditions set forth herein and in the Tranche B
Credit Agreement.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

SECTION 1

DEFINITIONS
-----------

1.1 Definitions. As used herein, the following terms shall have the
-----------
meanings herein specified unless the context otherwise requires. Defined
terms herein shall include in the singular number the plural and in the
plural number the singular:

"Additional Credit Party" means each Person that becomes a
-----------------------
Guarantor after the Closing Date by execution of a Joinder Agreement.

"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct
or indirect common control with such Person. A Person shall be deemed
to control an entity if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities or other ownership
interests having ordinary voting power for the election of directors
of such corporation or the members of the managing body of such Person
or (ii) to direct or cause direction of the management and policies of
such corporation or other entity, whether through the ownership of
voting securities, by contract or otherwise.

"Agent" means NationsBank, N.A. (Carolinas) and any successors
-----
and permitted assigns in such capacity.

"Agent's Fee Letter" means the letter agreement dated as of March
------------------
1, 1995 among NationsBank, N.A. (Carolinas), NationsBanc Capital
Markets, Inc., Promus Co. and Embassy Suites, as amended, modified,
supplemented or replaced from time to time.

"Agent's Fees" means such term as defined in Section 3.4(c).
------------

<PAGE>

"Applicable Percentage" means, for any day, the rate per annum
---------------------
set forth below opposite the applicable Level Period then in effect,
it being understood that the Applicable Percentage for (i) Base Rate
Loans shall be the percentage set forth under the column "Base Rate
Margin", (ii) Eurodollar Loans shall be the percentage set forth under
the column "Eurodollar Margin", (iii) the Commitment Fee shall be the
percentage set forth under the column "Commitment Fee" and (iv) the
Letter of Credit Fee shall be the percentage set forth under the
column "Letter of Credit Fee":
Letter of
Level Base Rate Eurodollar Commitment Credit
Period Margin Margin Fee Fee

Level I Period 0% .25% .125% .25%

Level II 0% .30% .15% .30%
Period
Level III 0% .35% .20% .35%
Period

Level IV 0% .50% .25% .50%
Period
Level V Period 0% .6875% .3125% .6875%

In the event the applicable Level Period is determined by reference to
clause (i) of the definitions of "Level I Period", "Level II Period",
"Level III Period", "Level IV Period" and "Level V Period", the
Applicable Percentage shall be adjusted for all purposes as soon as
reasonably practicable, but in no event later than 5 days, after the
date of receipt by the Agent of notice of a change in the applicable
debt rating. In the event the applicable Level Period is determined
by reference to clause (ii) of the definitions of "Level I Period",
"Level II Period", "Level III Period", "Level IV Period" and "Level V
Period", the Applicable Percentage shall be adjusted for all purposes
quarterly as soon as reasonably practicable, but not later than 5
days, after the date of receipt by the Agent of the quarterly
financial information in accordance with the provisions of Section
7.1(b) together with a calculation by the Borrower of the Leverage
Ratio for the period ending on the last day of the most recent fiscal
quarter.

"Assignment and Assumption" means the assignment of the
-------------------------
obligations of Embassy Suites hereunder by Embassy Suites and the
assumption of such obligations by Hotel Inc. pursuant to the terms of
Section 11.3(b).

"Audobon Woods" means such term as defined in the Proxy
-------------
Statement.

"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
---------------
United States Code, as amended, modified, succeeded or replaced from
time to time.

<PAGE>

"Base Rate" means, for any day, the rate per annum (rounded
---------
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
----
any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.

"Base Rate Loan" means any Loan bearing interest at a rate
--------------
determined by reference to the Base Rate.

"Borrower" means, prior to the time of effectiveness of the
--------
Assignment and Assumption, Embassy Suites, and after the time of
effectiveness of the Assignment and Assumption, Hotel Inc.

"Business" means such term as defined in Section 6.17(a).
--------

"Business Day" means a day other than a Saturday, Sunday or other
------------
day on which commercial banks in Charlotte, North Carolina and New
York, New York are authorized or required by law to close, except
------
that, when used in connection with a Eurodollar Loan, such day shall
----
also be a day on which dealings between banks are carried on in U.S.
dollar deposits in London, England and New York, New York.

"Capital Expenditures" means all expenditures for property, plant
--------------------
and equipment which in accordance with GAAP would be so classified on
a Statement of Cash Flows (or Statement of Sources and Uses).

"Capital Lease" means any lease of property, real or personal,
-------------
the obligations with respect to which are required to be capitalized
on a balance sheet of the lessee in accordance with GAAP.

"Closing Date" means the date of the occurrence of the
------------
Distribution, but not in any event later than 90 days after the date
of this Credit Agreement.

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

<PAGE>

"Commitment" means the Revolving Commitment, the LOC Commitment
----------
and the Swingline Commitment, individually or collectively, as
appropriate.

"Commitment Fee" means such term as defined in Section 3.4(a).
--------------

"Commitment Percentage" means the Revolving Commitment Percentage
---------------------
or the LOC Commitment Percentage, as appropriate.

"Committed Revolving Loans" means such term as defined in Section
-------------------------
2.1(a).

"Committed Revolving Note" or "Committed Revolving Notes" means
------------------------ -------------------------
the promissory notes of the Borrower in favor of each of the Lenders
evidencing the Committed Revolving Loans provided pursuant to Section
2.1(e), individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time.

"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, which is under common control with the Borrower within
the meaning of Section 4001(a)(14)(B) of ERISA or is part of a group
which includes the Borrower and which is treated as a single employer
under Section 414(b), (c) or (m) of the Code.

"Competitive Bid" means an offer by a Lender to make a
---------------
Competitive Loan pursuant to the terms of Section 2.4(c).

"Competitive Bid Rate" means, as to any Competitive Bid made by a
--------------------
Lender in accordance with the provisions of Section 2.4, the fixed
rate of interest offered by the Lender making the Competitive Bid.

"Competitive Bid Request" means a request by the Borrower for
-----------------------
Competitive Bids in accordance with the provisions of Section 2.4(b),
a form of which is attached at Schedule 2.4(b)-1.
-----------------

"Competitive Bid Request Fee" means the administrative fee
---------------------------
payable to the Agent, if any, in connection with a Competitive Bid
Request as provided in the Agent's Fee Letter.

"Competitive Loan" means a loan made by a Lender pursuant to the
----------------
provisions of Section 2.4.

"Competitive Loan Lenders" means, at any time, those Lenders
------------------------
which have Competitive Loans outstanding.

"Competitive Loan Maximum Amount" means such term as defined in
-------------------------------
Section 2.4(a).

<PAGE>

"Competitive Loan Note" or "Competitive Loan Notes" means the
--------------------- ----------------------
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Competitive Loans, if any, provided pursuant to Section
2.4(h), individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time.

"Consolidated Adjusted EBITDA" means, for any period, the amount
----------------------------
equal to (i) the sum of Consolidated Net Income for such period plus
----
Consolidated Interest Expense for such period to the extent deducted
in the calculation of Consolidated Net Income plus all provisions for
----
any Federal, state or other income taxes plus depreciation and
----
amortization, in each case for the Parent Company and its Subsidiaries
on a consolidated basis, but excluding in each case the portion of
such components attributable to Joint Ventures, determined in
accordance with GAAP plus (ii) all cash distributions from Joint
----
Ventures received by the Parent Company, the Borrower or any of their
respective Subsidiaries for such period. For the portion of any such
period which is prior to the Closing Date, Consolidated Adjusted
EBITDA shall be calculated with respect to the Hotel Inc. Business.

"Consolidated Fixed Charge Coverage Ratio" means the ratio of
----------------------------------------
Consolidated Net Income Available for Fixed Charges to Consolidated
Fixed Charges.

"Consolidated Fixed Charges" means, for any period, without
--------------------------
duplication, the sum of (i) all Rentals (other than Rentals on
Capitalized Leases) payable during such period, (ii) the cash portion
of Consolidated Interest Expense during such period, (iii) the cash
payment portion of current maturities of Funded Debt, and (iv) all
cash Dividends paid in such period, in each case for the Parent
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP. For the portion of any such period which is
prior to the Closing Date, Consolidated Fixed Charges shall be
calculated with respect to the Hotel Inc. Business.

"Consolidated Funded Debt" means Funded Debt of the Parent
------------------------
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.

"Consolidated Interest Expense" means, for any period, all
-----------------------------
interest expense, including the amortization of debt discount and
premium and the interest component under Capital Leases for the Parent
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP. For the portion of any such period which is
prior to the Closing Date, Consolidated Interest Expense shall be
calculated with respect to the Hotel Inc. Business based

<PAGE>

upon an annualization of actual interest expense for the portion of such
period elapsed since the Closing Date.

"Consolidated Legal Entity Assets" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination, the total assets of such
Person and its Subsidiaries on a consolidated basis as reflected in
the most recent tax return of such Person.

"Consolidated Legal Entity EBITDA" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination, the sum of (i) net
income (excluding for purposes hereof extraordinary gains or losses
and any taxes on such excluded gains and any tax deductions or credits
on account of any such excluded losses), plus (ii) interest expense
----
(including the amortization of debt discount and premium and the
interest component under Capital Leases), plus (iii) Federal, state or
----
other income taxes, plus (iv) depreciation and amortization, in each
----
case for such Person and its Subsidiaries on a consolidated basis as
reflected in the most recent tax return of such Person and for the
period covered by such tax return.

"Consolidated Legal Entity Gross Revenues" means, for any Person
----------------------------------------
and its Subsidiaries as of any date of determination, the gross
revenues of such Person and its Subsidiaries on a consolidated basis
as reflected in the most recent tax return of such Person and for the
period covered by such tax return.

"Consolidated Net Income" means, for any period, the net income
-----------------------
of the Parent Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP, but excluding for purposes hereof
extraordinary gains or losses, and any taxes on such excluded gains
and any tax deductions or credits on account of any such excluded
losses. For the portion of any such period which is prior to the
Closing Date, Consolidated Net Income shall be calculated with respect
to the Hotel Inc. Business.

"Consolidated Net Income Available for Fixed Charges" means, for
---------------------------------------------------
any period, the sum of Consolidated Adjusted EBITDA minus Capital
-----
Expenditures made or incurred (excluding, for purposes hereof, up to
$27,000,000 of Capital Expenditures for Audobon Woods during fiscal
year 1995) plus Rentals, in each case for the Parent Company and its
----
Subsidiaries on a consolidated basis determined in accordance with
GAAP. For the portion of any such period which is prior to the
Closing Date, Consolidated Net Income Available for Fixed Charges
shall be calculated with respect to the Hotel Inc. Business.

"Consolidated Net Worth" means total stockholders' equity for the
----------------------
Parent Company and its Subsidiaries on a consolidated basis as
determined in accordance with GAAP.

<PAGE>

"Contractual Obligation" means, as to any Person, any provision
----------------------
of any material security issued by such Person or of any material
agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

"Credit Date" means (i) the date of each request for Extension of
-----------
Credit pursuant to a Notice of Borrowing or a Notice of Conversion, in
the case of Committed Revolving Loans and Swingline Loans, a notice of
request for issuance or extension of a Letter of Credit in accordance
with the provisions of Section 2.2(a), in the case of Letters of
Credit, and a Competitive Bid Request, in the case of Competitive
Loans, and (ii) the date of any such Extension of Credit relating
thereto.

"Credit Documents" means this Credit Agreement, the Notes, the
----------------
Pledge Agreement, the Assignment and Assumption, any Joinder
Agreements and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto.

"Credit Party" means any of the Borrower and the Guarantors.
------------

"Credit Party Obligations" means, without duplication, all of the
------------------------
obligations of the Borrower and the other Credit Parties to the
Lenders and the Agent, whenever arising, under this Credit Agreement,
the Notes or any of the other Credit Documents to which the Borrower
or any other Credit Party is a party.

"Currency Protection Agreement" shall mean any foreign exchange
-----------------------------
contract, currency swap agreement or other financial agreement or
arrangement designed to protect against fluctuations in currency
values.

"Default" means any event, act or condition which with notice or
-------
lapse of time, or both, would constitute an Event of Default.

"Defaulting Lender" means, at any time, any Lender that, at such
-----------------
time (a) has failed to make a Loan, issue a Letter of Credit or fund a
Participation Interest required pursuant to the term of this Credit
Agreement, (b) has failed to pay to the Agent or any Lender an amount
owed by such Lender pursuant to the terms of this Credit Agreement or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.

"Disqualified Stock" means any capital stock which, by its terms
------------------
(or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
or is mandatorily

<PAGE>

redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part
on, or prior to, or is exchangeable for debt securities of the Parent
Company or any of its Subsidiaries prior to, the first anniversary of
the Termination Date.

"Distribution" means such term as defined in the Recitals hereto.
------------

"Dividends" means any payment, distribution or dividend (other
---------
than a dividend or distribution payable solely in stock of the Person
making such payment, distribution or dividend) on, or any payment on
account of the purchase, redemption or retirement of, or any other
distribution in respect of, any shares of any class of stock or other
ownership interest in a Person (including any such payment or
distribution in cash or in property or obligations).

"Dollars" and "$" means dollars in lawful currency of the United
------- -
States of America.

"Effective Date of Assignment" means such term as defined in
----------------------------
Section 11.3(b).

"Eligible Assignee" means (A) (i) a commercial bank organized
-----------------
under the laws of the United States or any state thereof and (ii) a
commercial bank organized under the laws of any other country, or a
political subdivision thereof, provided that (a) such bank is acting
through a branch or agency located in the United States or (b) such
bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country, in each case (under clauses (i) and (ii)
above) that is reasonably acceptable to the Agent and the Borrower and
(B) any Lender or its parent company or any affiliate of such Lender
which is at least 50% owned by such Lender or its parent company. It
shall be deemed reasonable for the Borrower to refuse to accept as an
"Eligible Assignee" any entity the inclusion of which as a Lender
hereunder would be reasonably likely to increase amounts payable by
the Borrower under Sections 3.5, 3.8, 3.9 or 3.10 or give rise to the
circumstances described in Section 3.6.

"Eligible Participant" means any entity satisfying the
--------------------
requirements set forth in the first sentence of the definition of
"Eligible Assignee" other than the requirement for the Borrower's
approval.

"Embassy Suites" means Embassy Suites, Inc., a Delaware
--------------
corporation and the initial Borrower under this Credit Agreement
subject to release upon satisfaction of the conditions set out in
Section 5.2.

<PAGE>

"Environmental Laws" shall mean any and all lawful and applicable
------------------
Federal, state, local and foreign statutes, laws, regulations,
ordinances, codes, rules, judgments, orders, decrees, permits,
licenses or other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

"Equity Transaction" means (i) the issuance by the Borrower or
------------------
any of its Subsidiaries of new shares of its capital stock, unless
such new shares are being issued in exchange for an ownership interest
in another Person or in exchange for substantially all of the assets
of another Person in connection with an acquisition permitted by
Section 8.4(c), (ii) an issuance by the Borrower or any of its
Subsidiaries of any shares of its capital stock pursuant to the
exercise of options or warrants and (iii) an issuance by the Borrower
or any of its Subsidiaries of any shares of its capital stock pursuant
to the conversion of any debt securities (including without limitation
any Subordinated Debt) to equity.

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

"Eurodollar Loan" means any Loan bearing interest at a rate
---------------
determined by reference to the Eurodollar Rate.

"Eurodollar Rate" means, for the Interest Period for each
---------------
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:

Eurodollar Rate = Interbank Offered Rate
----------------------------------
1 - Eurodollar Reserve Percentage

"Eurodollar Reserve Percentage" means for any Interest Period,
-----------------------------
the average daily percentage (expressed as a decimal) which is in
effect from time to time during such Interest Period under Regulation
D of the Board of Governors of the Federal Reserve System (or any
successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities
as that term is defined in Regulation D (or against any other category
of liabilities

<PAGE>

that includes deposits by reference to which the interest rate of
Eurodollar Loans is determined), whether or not any Lender has any
Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve
requirements without benefits of credits for proration, exceptions or
offsets that may be available from time to time to a Lender. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.

"Event of Default" means such term as defined in Section 9.1.
----------------

"Excluded Taxes" means such term as is defined in Section 3.9(a).
--------------

"Existing Letters of Credit" means those Letters of Credit
--------------------------
outstanding on the Closing Date and identified on Schedule 2.2(a).
---------------

"Extension of Credit" means, as to any Lender, the making of a
-------------------
Loan by such Lender or the issuance of, or participation in, a Letter
of Credit by such Lender.

"Federal Funds Rate" means, for any day, the rate of interest per
------------------
annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
--------
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day and (B) if no such
rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent
on such day on such transactions as determined by the Agent.

"Form 10" means the registration statement on Form 10 filed with
-------
and declared effective by the Securities and Exchange Commission in
respect of the Distribution.

"Former Plan" means any employee benefit plan in respect of which
-----------
the Borrower or a Commonly Controlled Entity has engaged in a
transaction described in Section 4069 or Section 4212(c) of ERISA and
with respect to which transaction the Borrower or Commonly Controlled
Entity, as applicable, has as its principal purpose the evasion of
liability described in such sections.

"Funded Debt" shall mean, with respect to any Person, without
-----------
duplication, (i) all indebtedness of such Person for

<PAGE>

borrowed money, (ii) all purchase money indebtedness of such Person,
including, without limitation, the principal portion of all
obligations of such Person under Capital Leases and (iii) the amount
of any Qualified Stock; provided that, "Funded Debt" shall not include
-------- -----------
indebtedness owing under or in connection with Joint Ventures to the
extent such indebtedness is Non-Recourse Indebtedness. The Funded
Debt of any Person shall include the Funded Debt of any partnership or
joint venture in which such Person is a general partner (except as set
forth in the preceding proviso).

"GAAP" means generally accepted accounting principles in the
----
United States.

"Government Acts" means such term as defined in Section 3.14(a).
---------------

"Governmental Authority" means any Federal, state, local or
----------------------
foreign court or governmental agency, authority, instrumentality or
regulatory body.

"Guarantor" means Promus Co. as an initial Guarantor subject to
---------
release upon satisfaction of the conditions set out in Section 5.2 and
each of the other Persons identified as a "Guarantor" on the signature
pages hereto, and each other Additional Credit Party, together with
their successors and permitted assigns.

"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements
in the ordinary course of business of negotiable instruments for
deposit or collection) guaranteeing or intended to guarantee any
Indebtedness of any other Person in any manner, whether direct or
indirect, and including, without limitation, any obligation, whether
or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including, without limitation,
keep well agreements, maintenance agreements, comfort letters or
similar agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold
harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.

<PAGE>

"Hotel Corp." means Promus Hotel Corporation, a Delaware
-----------
corporation and a Guarantor under this Credit Agreement upon
satisfaction of the conditions set out in Section 5.2.

"Hotel Facility" means such term as defined in the Recitals
--------------
hereto.

"Hotel Inc." means Promus Hotels, Inc., a Delaware corporation
----------
and the subsequent Borrower under this Credit Agreement upon
satisfaction of the conditions set out in Section 5.2.

"Hotel Inc. Assignment and Assumption Agreement" means the
----------------------------------------------
Assignment, Assumption and Release Agreement among Embassy Suites,
Hotel Inc. and the Agent, substantially in the form of Schedule
--------
11.3(b).
-------

"Hotel Inc. Business" means the "Hotel Business" described under
-------------------
the subheading "PHC Business and Properties" under the heading "The
Distribution" in the Proxy Statement.

"Indebtedness" of any Person shall mean, without duplication, (i)
------------
all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily
made, (iii) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by
such Person (other than customary reservations or retentions of title
under agreements with suppliers entered into in the ordinary course of
business), (iv) all obligations, including, without limitation,
intercompany items, of such Person issued or assumed as the deferred
purchase price of Property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business) which
would appear as liabilities on a balance sheet of such Person, (v) all
obligations of such Person under take-or-pay arrangements or under
commodities agreements, (vi) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out
of the proceeds or production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (vii) all Guaranty Obligations of such Person, (viii) the
principal portion of all obligations of such Person under Capital
Leases, (ix) all obligations of such Person in respect of interest
rate protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or exchange
rate or commodity price hedging agreements, (x) the maximum amount of
all letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), and (xi) the
amount of any

<PAGE>

Disqualified Stock. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person
is a general partner (except to the extent any such Indebtedness is
Non-Recourse Indebtedness).

"Insolvency" means with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section
4245(b)(i) of ERISA.

"Insolvent" means pertaining to a condition of Insolvency.
---------

"Interbank Offered Rate" means, with respect to any Eurodollar
----------------------
Loan for the Interest Period applicable thereto, (i) the interest rate
per annum for deposits in Dollars for a maturity most nearly
comparable to such Interest Period which appears on page 3740 or 3750,
as applicable, of the Dow Jones Telerate Screen as of 11:00 A.M.
(Charlotte, North Carolina time) on the day that is two (2) Business
Days prior to the first day of such Interest Period or (ii) if such a
rate does not appear on page 3750 of the Dow Jones Telerate Screen, an
interest rate per annum (rounded to the next 1/1000th of 1%) equal to
the rate at which deposits in Dollars approximately equal in principal
amount to the Eurodollar Loan of the Agent, in its capacity as a
Lender, included in such Eurodollar Loan, and for a maturity
comparable to such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the London
interbank market at approximately 11:00 A.M. (London time) on the date
that is two (2) Business Days prior to the first day of such Interest
Period. If no such offers or quotes are generally available for such
amount, then the Agent shall be entitled to determine the Eurodollar
Rate by estimating in its reasonable judgment the per annum rate (as
described above) that would be applicable if such quote or offers were
generally available.

"Intercompany Indebtedness" means any Indebtedness of the Parent
-------------------------
Company, the Borrower or any of their respective Subsidiaries which is
owing to another of such Persons.

"Interest Payment Date" means (i) as to any Base Rate Loan, the
---------------------
last day of each March, June, September and December, the date of
repayment of principal of such Loan and the Termination Date, (ii) as
to any Eurodollar Loan or any Competitive Loan, the last day of each
Interest Period for such Loan and the Termination Date, and in
addition where the applicable Interest Period is more than 3 months,
then also on the date 3 months from the beginning of the Interest
Period, and each 3 months thereafter. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest Payment
Date shall be deemed to be the next succeeding Business Day, except
------
that in the case of Eurodollar Loans where the next succeeding
----
Business Day

<PAGE>

falls in the next succeeding calendar month, then on the next
preceding Business Day.

"Interest Period" means (i) with respect to any Eurodollar Loan,
---------------
a period of one, two, three or six months' duration, as the Borrower
may elect, commencing in each case on the date of the borrowing
(including extensions and conversions) and (ii) with respect to any
Competitive Loan, a period beginning on the date of borrowing and
ending on the date specified in the respective Competitive Bid whereby
the offer to make such Competitive Loan was extended, which shall be
not less than 7 days nor more than 180 days' duration; provided,
--------
however, (A) if any Interest Period would end on a day which is not a
-------
Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that in the case of Eurodollar Loans,
where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (B) no
Interest Period shall extend beyond the Termination Date, and (C) in
the case of Eurodollar Loans, where an Interest Period begins on a day
for which there is no numerically corresponding day in the calendar
month in which the Interest Period is to end, such Interest Period
shall, subject to clause (A) above, end on the last Business Day of
such calendar month.

"Interest Rate Protection Agreement" means any interest rate swap
----------------------------------
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect against fluctuations in interest
rates.

"Investment", in any Person, shall mean any loan or advance to
----------
such Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of such
Person, or any capital contribution to such Person or any other
similar investment in such Person.

"Issuing Lender" means NationsBank, in its capacity as issuer of
--------------
any Letter of Credit, or such other Lender as to which the Borrower
may request and such Lender may agree.

"Joinder Agreement" means a Joinder Agreement substantially in
-----------------
the form of Schedule 7.12 hereto, executed and delivered by an
-------------
Additional Credit Party in accordance with the provisions of Section
7.12.

"Joint Venture" means any corporation, general or limited
-------------
partnership or limited liability company in which the Parent Company,
the Borrower or any of their respective Subsidiaries is a shareholder,
partner or member which is not a Subsidiary of the Parent Company or
the Borrower.

"Lenders" means each of the Persons identified as a "Lender" on
-------
the signature pages hereto, and each Person

<PAGE>

which may become a Lender by way of assignment in accordance with the
terms hereof, together with their successors and permitted assigns.

"Letter of Credit" means the Existing Letters of Credit and any
----------------
letter of credit issued by the Issuing Lender pursuant to the terms
hereof, as such Letter of Credit may be amended, modified, extended,
renewed or replaced from time to time.

"Letter of Credit Fee" means such term as defined in Section
--------------------
3.4(b).

"Level I Period" means a period during which (i) the Parent
--------------
Company and its consolidated Subsidiaries have an actual or implied
senior unsecured long-term debt rating (without third party credit
enhancement) of "BBB+" or better by S&P or "Baa1" or better by
Moody's, or (ii) the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the most recent fiscal
quarter shall be less than 1.25:1.0.

"Level II Period" means a period during which a Level I Period
---------------
does not exist and (i) the Parent Company and its consolidated
Subsidiaries have an actual or implied senior unsecured long-term debt
rating (without third party credit enhancement) of "BBB" or better by
S&P or "Baa2" or better by Moody's, or (ii) the Leverage Ratio for the
period of four consecutive fiscal quarters ending on the last day of
the most recent fiscal quarter shall be less than 1.75:1.0 but greater
than or equal to 1.25:1.0.

"Level III Period" means a period during which neither a Level I
----------------
Period nor a Level II Period shall exist and (i) the Parent Company
and its consolidated Subsidiaries have an actual or implied senior
unsecured long-term debt rating (without third party credit
enhancement) of "BBB-" or better by S&P or "Baa3" or better by
Moody's, or (ii) the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the most recent fiscal
quarter shall be less than 2.25:1.0 but greater than or equal to
1.75:1.0.

"Level IV Period" means a period during which none of a Level I
---------------
Period, a Level II Period nor a Level III Period shall exist and (i)
the Parent Company and its consolidated Subsidiaries have an actual or
implied senior unsecured long-term debt rating (without third party
credit enhancement) of "BB+" or better by S&P or "Ba1" or better by
Moody's, or (ii) the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the most recent fiscal
quarter shall be less than 2.75:1.0 but greater than or equal to
2.25:1.0.

<PAGE>

"Level V Period" means a period during which none of a Level I
--------------
Period, a Level II Period, a Level III Period nor a Level IV Period
shall exist and (i) the Parent Company and its consolidated
Subsidiaries have an actual or implied senior unsecured long-term debt
rating (without third party credit enhancement) of "BB" or worse by
S&P or "Ba2" or worse by Moody's, or (ii) the Leverage Ratio for the
period of four consecutive fiscal quarters ending on the last day of
the most recent fiscal quarter shall be greater than or equal to
2.75:1.0.

"Leverage Ratio" means, for any period, the ratio of Consolidated
--------------
Funded Debt as of the end of such period to Consolidated Adjusted
EBITDA for such period.

"Lien" means any mortgage, pledge, hypothecation, assignment,
----
deposit arrangement, security interest, encumbrance, lien (statutory
or otherwise), preference, priority or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under the Uniform Commercial Code as adopted and in
effect in the relevant jurisdiction or other similar recording or
notice statute, and any lease in the nature thereof).

"Loan" or "Loans" means a Committed Revolving Loan, a Swingline
---- -----
Loan and/or a Competitive Loan, as appropriate.

"LOC Commitment" means the commitment of the Issuing Lender to
--------------
issue Letters of Credit and with respect to each Lender, the
commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender's LOC Committed Amount as
specified in Schedule 2.1(a), as such amount may be reduced from time
---------------
to time in accordance with the provisions hereof.

"LOC Commitment Percentage" means, for each Lender a fraction
-------------------------
(expressed as a percentage) the numerator of which is the LOC
Commitment of such Lender at such time and the denominator of which is
the LOC Committed Amount at such time, provided that if the LOC
--------
Commitment Percentage of any Lender is to be determined after the LOC
Committed Amount has been terminated, then the LOC Commitment
Percentage of such Lender shall be determined immediately prior (and
without giving effect) to such termination.

"LOC Committed Amount" means, collectively, the aggregate amount
--------------------
of all of the LOC Commitments of the Lenders to issue and participate
in Letters of Credit as referenced in Section 2.2 and, individually,
the amount of each Lender's LOC Commitment as specified in Schedule
--------
2.1(a).
------

<PAGE>

"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.

"LOC Obligations" means, at any time, the sum of (i) the maximum
---------------
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance
with all requirements for drawings referred to in such Letters of
Credit plus (ii) the aggregate amount of all drawings under Letters of
----
Credit honored by the Issuing Lender but not theretofore reimbursed.

"Mandatory Borrowing" means such term as defined in Section
-------------------
2.2(e) and Section 2.3(b)(iii).

"Material Adverse Effect" shall mean a material adverse effect on
-----------------------
(i) the financial condition, operations, business or prospects of the
Parent Company, the Borrower and their Subsidiaries taken as a whole,
(ii) the ability of the Borrower and the Guarantors taken as a whole
to perform any material obligation under the Credit Documents or (iii)
the material rights and remedies of the Agent and the Lenders under
the Credit Documents.

"Material Asset Sale" means the sale, lease or other disposition
-------------------
of an asset (other than non-hotel property or assets sold, leased or
disposed of in the normal course of business) which either (i)
together with all other such sales, leases or other dispositions of
assets in the then current calendar year has a net book value in
excess of ten percent (10%) of the consolidated assets of the Parent
Company and its Subsidiaries at such time, or (ii) together with all
other such sales, leases or other dispositions of assets since the
Closing Date has a net book value in excess of twenty-five percent
(25%) of the consolidated assets of the Parent Company and its
Subsidiaries at such time; provided, however, that leases with a term
-------- -------
of ten (10) years or less or which demise less than 100% of the
subject asset shall not constitute leases of assets for purposes of
this subparagraph. An Investment shall not constitute a "disposition"
for purposes of this definition.

"Material Environmental Amount" means any amount payable by the
-----------------------------
Parent Company, the Borrower or their Subsidiaries not subject to
payment or reimbursement by another Person in respect of or under any
Environmental Law for remedial costs, compliance costs, compensatory
damages,

<PAGE>

punitive damages, fines, penalties or any combination thereof, that
has a Material Adverse Effect.

"Materials of Environmental Concern" means any gasoline or
----------------------------------
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

"Moody's" means Moody's Investors Service, Inc., or any successor
-------
or assignee of the business of such company in the business of rating
securities.

"Multiemployer Plan" means a Plan which is a multiemployer plan
------------------
as defined in Section 4001(a)(3) of ERISA.

"NationsBank" means NationsBank, N.A. (Carolinas) and its
-----------
successors.

"Net Sale Proceeds" means for any Material Asset Sale, the gross
-----------------
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note receivable or otherwise, but only as and
when received) received from such Material Asset Sale, net of
reasonable transaction costs and payments of unassumed liabilities
relating to the asset sold at the time of, or within sixty (60) days
after, the date of such Material Asset Sale and the amount of such
gross cash proceeds required to be used to repay any Indebtedness
(other than Indebtedness owing under the Hotel Facility) which is
secured by the respective assets which were sold.

"Non-Excluded Taxes" means such term as defined in Section
------------------
3.9(a).

"Non-Guarantor Subsidiaries" means such term as defined in
--------------------------
Section 7.12.

"Non-Investment Grade" means debt or equity interests which are
--------------------
not rated by S&P or Moody's or have a rating of less than "BBB-" by
S&P or "Baa3" by Moody's.

"Non-Recourse Indebtedness" means Indebtedness with respect to
-------------------------
which recourse for payment is limited to specific assets encumbered by
a Lien securing such Indebtedness; provided, however, that personal
-------- -------
recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication of cash, waste
and other circumstances customarily excluded from non-recourse
provisions in non-recourse financing of real estate shall not, by
itself, prevent any Indebtedness from being characterized as Non-
Recourse Indebtedness.

<PAGE>

"Note" or "Notes" means the Committed Revolving Notes, the
---- -----
Swingline Note and/or the Competitive Notes, collectively, separately
or individually, as appropriate.

"Notice of Borrowing" means the written notice of borrowing as
-------------------
referenced and defined in Section 2.1(b)(i) or Section 2.3(b)(i), as
appropriate.

"Notice of Conversion/Extension" means the written notice of
------------------------------
extension or conversion as referenced and defined in Section 3.2.

"Obligations" means, collectively, the Loans and LOC Obligations.
-----------

"PBGC" means the Pension Benefit Guaranty Corporation established
----
under ERISA, and any successor thereto.

"Parent Company" means, prior to the time of effectiveness of the
--------------
Assignment and Assumption, Promus Co., and after the time of
effectiveness of the Assignment and Assumption, Hotel Corp.

"Participation Interest" means the purchase by a Lender of a
----------------------
participation interest in Letters of Credit as provided in Section
2.2(c), in Swingline Loans as provided in Section 2.3(b)(iii) or in
Committed Revolving Loans as provided in Section 3.12.

"Permitted Liens" shall mean:
---------------

(i) Liens in favor of the Agent on behalf of the
Lenders hereunder and under the Tranche B Credit Agreement;

(ii) Liens (other than Liens created or imposed by the
PBGC under ERISA) for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as
to which the Property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof);

(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers and
other liens imposed by law or pursuant to customary reservations
or retentions of title arising in the ordinary course of
business, provided that such Liens secure only amounts not yet
--------
due and payable or, if due and payable, are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as
to which the Property subject to

<PAGE>

any such Lien is not yet subject to foreclosure, sale or loss on
account thereof);

(iv) Liens (other than Liens created or imposed by the
PBGC under ERISA) incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, bids,
leases, operating, reciprocal easement or similar agreements,
government contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money);

(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) in respect of which the
Parent Company or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of
which there shall have been secured a subsisting stay of
execution pending such appeal or proceeding;

(vi) easements, rights-of-way, restrictions (including
zoning restrictions and operating, reciprocal easement or similar
agreements), and minor defects or irregularities in title and
other similar charges or encumbrances not, in any material
respect, impairing the use of the encumbered Property for its
intended purposes;

(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases) to the extent permitted
under Section 8.1(c), provided that any such Lien attaches to
--------
such Property concurrently with or within 90 days after the
acquisition thereof;

(viii) leases or subleases granted to others not
interfering in any material respect with the business of the
Borrower or any of its Subsidiaries;

(ix) any interest or title of a lessor (including Liens
and underlying leases to which such lessor or its property may be
subject) under, and Liens arising from Uniform Commercial Code
financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases
permitted by this Credit Agreement;

(x) Liens deemed to exist in connection with
Investments in repurchase agreements permitted under Section 8.5;

(xi) Liens on assets at the time such assets are
acquired in accordance with Section 8.4(a) or

<PAGE>

8.4(c), including continuations or renewals thereof in connection
with the extension, renewal, refunding or refinancing of the
Indebtedness secured thereby; provided that such Liens are not
--------
created in contemplation of such acquisition;

(xii) Liens on assets of any Person at the time such
Person becomes a Subsidiary in accordance with Section 8.4(a) or
8.5, including continuations or renewals thereof in connection
with the extension, renewal, refunding or refinancing of the
Indebtedness secured thereby; provided that such Liens are not
--------
created in contemplation of such Person becoming a Subsidiary;

(xiii) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;

(xiv) Liens existing as of the Closing Date and set
forth on Schedule 8.2, including continuations or renewals
------------
thereof in connection with the extension, renewal, refunding or
refinancing of the Indebtedness secured thereby to the extent
permitted under Section 8.1; provided that no such Lien shall at
--------
any time be extended to or cover any property of the Parent
Company, the Borrower or any of their respective Subsidiaries
other than the property subject thereto on the Closing Date,
except by virtue of an after acquired property provision set
forth in the current documentation of such Liens;

(xv) Liens securing Non-Recourse Indebtedness of any
Specified Subsidiaries permitted pursuant to Section 8.1(k)
hereof so long as such Liens only encumber the hotel properties
owned by the Specified Subsidiary being developed or financed
with such Non-Recourse Indebtedness, including any real property
and furniture, fixtures and equipment related thereto, it being
understood and agreed that such assets of such Specified
Subsidiary also may secure Non-Recourse Indebtedness incurred by
other Subsidiaries or Joint Ventures pursuant to Section 8.1(k);

(xvi) Liens securing any Interest Rate Protection
Agreements or Currency Protection Agreements entered into, in
either case, with a Lender or an Affiliate of a Lender hereunder,
permitted by Section 8.1(d), which obligations may be equally and
ratably secured with the Obligations;

<PAGE>

of such Specified Subsidiary or Joint Venture, it being
understood and agreed that such equity interests in any Specified
Subsidiaries or Joint Ventures also may secure Indebtedness
incurred by other Specified Subsidiaries or Joint Ventures
permitted under Section 8.1; and

(xix) Liens not otherwise permitted hereunder securing
amounts in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding.

"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental
Authority.

"Plan" means any employee benefit plan as defined in Section 3(3)
----
of ERISA which is not a Multiemployer Plan and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined
in Section 3(5) of ERISA.

"Plan Reorganization" means with respect to any Multiemployer
-------------------
Plan, the condition that such plan is in reorganization within the
meaning of Section 4241 of ERISA.

"Pledge Agreement" means the Pledge Agreement substantially in
----------------
the form of Schedule 5.1(a) attached hereto, dated as of the Closing
---------------
Date and executed and delivered by Hotel Corp., Hotel Inc. and certain
other Credit Parties existing after the Assignment and Assumption, in
favor of the Agent, for the benefit of the Lenders, to secure their
obligations under the Credit Documents, as amended, modified,
extended, renewed or replaced from time to time.

"Prime Rate" means the per annum rate of interest established and
----------
announced from time to time by the Agent at its principal office in
Charlotte, North Carolina as its Prime Rate. Any change in the
interest rate resulting from a change in the Prime Rate shall become
effective as of 12:01 a.m. of the Business Day on which each change in
the Prime Rate is announced by the Agent. The Prime Rate is a
reference rate used by the Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.

"Pro Forma Basis" shall mean, with respect to any transaction,
---------------
that such transaction shall be deemed to have occurred as of the first
day of the four fiscal-quarter period ending as of the last day of the
fiscal quarter most recently ended preceding the date of such
transaction with respect to which the Agent has received annual or
quarterly financial information, accompanied by an officer's
certificate, in accordance with the provisions of Section

<PAGE>

7.1. As used herein, "transaction" shall mean any merger or
consolidation as referred to in Section 8.4(a) and 8.4(c).

"Projections" means such term as is defined in Section 6.1(c).
-----------

"Promus Co." means The Promus Companies Incorporated, a Delaware
----------
corporation and an initial Guarantor under this Credit Agreement
subject to release upon satisfaction of the conditions set out in
Section 5.2.

"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.

"Proxy Statement" means the Proxy Statement dated April 25, 1995
---------------
of Promus Co. describing the Distribution and mailed to the
shareholders of Promus Co. for purposes of its May 26, 1995
shareholders meeting.

"Qualified Stock" means any capital stock which, by its terms (or
---------------
by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole
or in part on, or on or after, or is exchangeable for debt securities
of the Parent Company or any of its Subsidiaries on or after, the
first anniversary of the Termination Date.

"Regulation D, G, T, U, or X" means Regulation D, G, T, U or X,
---------------------------
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.

"Rentals" means, as of the date of determination, all fixed
-------
payments (including as such all payments which the lessee is obligated
to make to the lessor on termination of the lease or surrender of the
property) payable by a Person as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts
required to be paid (whether designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross rents.

"Reorganization" means such term as defined in the Recitals.
--------------

"Reorganization Agreement" means the Distribution Agreement
------------------------
between Embassy Suites and Hotel Inc., as more particularly described
in the Proxy Statement.

<PAGE>

"Reorganization Documents" means, collectively, the
------------------------
Reorganization Agreement and the Tax Sharing Agreement, the Trademark
Assignment Agreement and the Employee Benefits Allocation Agreement,
as such terms are defined in the Proxy Statement.

"Reportable Event" means a "reportable event" as defined in
----------------
Section 4043(b) of ERISA with respect to which the notice requirements
to the PBGC have not been waived.

"Required Lenders" means Lenders holding in the aggregate at
----------------
least fifty-one percent (51%) of the Commitments (other than with
respect to the Letters of Credit and Swingline Loans), or if the
aggregate Commitments have been terminated, Lenders in the aggregate
holding at least fifty-one percent (51%) of the principal amount of
Obligations then outstanding (provided that in the case of Swingline
--------
Loans, the amount of each Lender's funded participation interest in
such Swingline Loans shall be considered for purposes hereof as if it
were a direct loan and not a participation interest, and the aggregate
amount of Swingline Loans owing to the Swingline Lender shall be
considered for purposes hereof as reduced by the amount of such funded
participation interests); provided, however, that if any Lender shall
-------- -------
be a Defaulting Lender at such time then there shall be excluded from
the determination of Required Lenders the amount of such Defaulting
Lender's Commitments or Obligations, as appropriate.

"Requirements of Law" means, as to any Person, the certificate of
-------------------
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property or assets.

"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender to make Committed Revolving Loans in an
aggregate principal amount at any time outstanding up to such Lender's
Revolving Committed Amount as specified in Schedule 2.1(a), as such
---------------
amount may be reduced from time to time in accordance with the
provisions hereof.

"Revolving Commitment Percentage" means, for each Lender, a
-------------------------------
fraction (expressed as a percentage) the numerator of which is the
Revolving Commitment of such Lender at such time and the denominator
of which is the Revolving Committed Amount at such time, provided that
--------
if the Revolving Commitment Percentage of any Lender is to be
determined after the Revolving Committed Amount has been terminated,
then the Revolving Commitment Percentage of such Lender shall be
determined immediately prior (and without giving effect) to such
termination.

<PAGE>

"Revolving Committed Amount" means, collectively, the aggregate
--------------------------
amount of all of the Revolving Commitments as referenced in Section
2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a).
---------------

"S&P" means Standard & Poor's Ratings Group, a division of McGraw
---
Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.

"Single Employer Plan" means any Plan which is covered by Title
--------------------
IV of ERISA.

"Solvent" and "Solvency" means with respect to any Person on a
------- --------
particular date, the condition 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 amount of capital.

"Specified Subsidiary" means any Subsidiary of the Borrower so
--------------------
long as such Subsidiary has no material assets other than the hotel
property to be developed and financed with Non-Recourse Indebtedness
incurred pursuant to Section 8.1(k).

"Subject Properties" means such term as defined in Section
------------------
6.17(a).

"Subordinated Debt" means such term as defined in Section 8.6.
-----------------

"Subsidiary" means, as to any Person, (a) any corporation more
----------
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any
class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in
which such Person directly or indirectly through Subsidiaries has more
than 50% of the equity interest at any time and in which such Person

<PAGE>

possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such partnership,
association, joint venture or other entity, whether through the
ownership of equity interests, by contract or otherwise. Unless
otherwise specified, any reference to a Subsidiary is intended as a
reference to a Subsidiary of the Borrower.

"Swingline Commitment" means the commitment of the Swingline
--------------------
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding up to the Swingline Committed Amount, and the
commitment of the Lenders to purchase participation interests in the
Swingline Loans up to such Lender's Revolving Commitment Percentage as
provided in Section 2.3(b)(iii), as such amounts may be reduced from
time to time in accordance with the provisions hereof.

"Swingline Committed Amount" means the amount of the Swingline
--------------------------
Lender's Swingline Commitment as specified in Section 2.3(a).

"Swingline Lender" means NationsBank, in its capacity as such,
----------------
together with its permitted assigns.

"Swingline Loan" means a swingline revolving loan made by the
--------------
Swingline Lender pursuant to the provisions of Section 2.3(a).

"Swingline Note" means the promissory note of the Borrower in
--------------
favor of the Swingline Lender evidencing the Swingline Loans provided
pursuant to Section 2.3(d), as such promissory note may be amended,
modified, supplemented, extended, renewed or replaced from time to
time.

"Termination Date" means such term as defined in Section 2.1(a).
----------------

"Third Party Investment Basket Amount" means such term as defined
------------------------------------
in Section 8.1(1).

"Threshold Requirement" means such term as defined in Section
---------------------
7.12.

"Tranche A Credit Agreement" means this Credit Agreement.
--------------------------

"Tranche B Credit Agreement" means that Tranche B Credit
--------------------------
Agreement dated as of the date hereof among Embassy Suites, Promus
Co., certain subsidiaries as now or hereafter may become a party
thereto, the lenders named therein and party thereto and NationsBank,
N.A. (Carolinas), as Agent, as amended, modified, extended, renewed or
restated from time to time.

"UCP" means such term as defined in Section 2.2(g).
---

<PAGE>

"Underfunding" means an excess of all accrued benefits under a
------------
Plan (based on those assumptions used to fund such Plan), determined
as of the most recent annual valuation date, over the value of the
assets of such Plan allocable to such accrued benefits.

"Wholly Owned Subsidiary" means, as to any Person, any Subsidiary
-----------------------
100% of whose voting stock or other equity interests and control is at
the time owned by such Person directly or indirectly through other
Wholly Owned Subsidiaries.

1.2 Computation of Time Periods. For purposes of computation of
---------------------------
periods of time hereunder, the word "from" means "from and including" and
the words "to" and "until" each mean "to but excluding."

1.3 Accounting Terms. The financial statements to be furnished by
----------------
the Borrower pursuant hereto shall be made and prepared in accordance with
GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Agent); provided, that, except as otherwise specifically
--------
provided herein, all computations determining compliance with Section 7.11
shall utilize accounting principles and policies in conformity with those
used to prepare the historical financial statements delivered to the Agent
on or before the Closing Date.

SECTION 2

CREDIT FACILITIES
-----------------

2.1 Committed Revolving Loans.
-------------------------

(a) Revolving Commitment. Subject to the terms and conditions
--------------------
hereof and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make revolving credit
loans ("Committed Revolving Loans") to the Borrower from time to time
-------------------------
from the Closing Date until the fifth anniversary of the Closing Date,
or such earlier date as the Revolving Commitments shall have been
terminated as provided herein (the "Termination Date") for the
----------------
purposes hereinafter set forth; provided, however, that (i) with
-------- -------
regard to each Lender individually, the sum of such Lender's share of
outstanding Committed Revolving Loans (other than Committed Revolving
Loans made for the purpose of repaying Swingline Loans or Competitive
Loans or reimbursing the Issuing Lender for any amount drawn under any
Letter of Credit but not yet so applied) plus such Lender's LOC
----
Commitment Percentage of LOC Obligations plus such Lender's Revolving
----
Commitment Percentage of Swingline Loans shall not exceed such
Lender's Revolving Committed Amount, and (ii) with regard to the
Lenders collectively, the sum of the aggregate amount of outstanding
Committed

<PAGE>

Revolving Loans (other than Committed Revolving Loans made for the
purpose of repaying Swingline Loans or Competitive Loans or
reimbursing the Issuing Lender for any amount drawn under any Letter
of Credit but not yet so applied) plus the aggregate amount of LOC
----
Obligations plus the aggregate amount of Swingline Loans plus the
---- ----
aggregate amount of Competitive Loans (other than Competitive Loans
made for the purpose of repaying Committed Revolving Loans or
Swingline Loans or reimbursing the Issuing Lender for any amount drawn
under any Letter of Credit but not yet so applied) shall not exceed
THREE HUNDRED MILLION DOLLARS ($300,000,000) (as such aggregate
maximum amount may be reduced from time to time, the "Revolving
---------
Committed Amount"). Committed Revolving Loans may consist of Base
----------------
Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrower may request, and may be prepaid or repaid and reborrowed in
accordance with the provisions hereof; provided, however, that no more
-------- -------
than ten (10) Eurodollar Loans shall be outstanding hereunder at any
time. For purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they
begin on the same date and have the same duration, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period.

(b) Committed Revolving Loan Borrowings.
-----------------------------------

(i) Notice of Borrowing. The Borrower shall request a
-------------------
Committed Revolving Loan borrowing by written notice (or
telephone notice promptly confirmed in writing) to the Agent
not later than 11:00 A.M. (Charlotte, North Carolina time)
on the Business Day of the requested borrowing in the case
of Base Rate Loans, and on the third Business Day prior to
the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Committed Revolving
Loan is requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate principal
amount to be borrowed, and (D) whether the borrowing shall
be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested,
the Interest Period(s) therefor. A form of Notice of
Borrowing (a "Notice of Borrowing") is attached as Schedule
------------------- --------
2.1(b)(i). If the Borrower shall fail to specify in any
---------
such Notice of Borrowing (I) an applicable Interest Period
in the case of a Eurodollar Loan, then such notice shall be
deemed to be a request for an Interest Period of one month,
or (II) the type of Committed Revolving Loan requested, then
such notice shall be deemed to be a request for a Base Rate
Loan hereunder.

<PAGE>

Promptly upon receipt of each Notice of Borrowing, the Agent
shall give notice to each Lender of the contents thereof and each
such Lender's Revolving Commitment Percentage thereof.

(ii) Minimum Amounts. Each Committed Revolving Loan
---------------
borrowing shall be in a minimum aggregate amount of
$5,000,000 and integral multiples of $1,000,000 in excess
thereof (or the remaining available amount of the Revolving
Commitment, if less, provided, however, that no Eurodollar
-------- -------
Loan shall be permitted for a principal amount less than
$5,000,000).

(iii) Advances. Each Lender will make its Revolving
--------
Commitment Percentage of each Committed Revolving Loan
borrowing available to the Agent for the account of the
Borrower at the office of the Agent specified in Schedule
--------
11.1, or at such other office as the Agent may designate in
----
writing, by 10:00 A.M. (Charlotte, North Carolina time) on
the date specified in the applicable Notice of Borrowing in
Dollars (or by 1:00 P.M. (Charlotte, North Carolina time) on
such date if the applicable Notice of Borrowing is received
on the same date) and in funds immediately available to the
Agent. Such borrowing will then be made available to the
Borrower by the Agent by crediting the account of the
Borrower on the books of such office with the aggregate of
the amounts made available to the Agent by the Lenders and
in like funds as received by the Agent.

(c) Repayment. The principal amount of all Committed Revolving
---------
Loans shall be due and payable in full on the Termination Date.

(d) Interest. Subject to the provisions of Section 3.1,
--------
Committed Revolving Loans shall bear interest at a per annum rate
equal to:

(i) Base Rate Loans. During such periods as Committed
---------------
Revolving Loans shall be comprised of Base Rate Loans, the
sum of the Base Rate plus the Applicable Percentage; and
----

(ii) Eurodollar Loans. During such periods as
----------------
Committed Revolving Loans shall be comprised of Eurodollar
Loans, the sum of the Eurodollar Rate plus the Applicable
----
Percentage.

Interest on Committed Revolving Loans shall be payable in arrears on
each Interest Payment Date.

<PAGE>

(e) Committed Revolving Notes. The Committed Revolving Loans
-------------------------
made by each Lender shall be evidenced by a duly executed promissory
note of the Borrower to each Lender substantially in the form of
Schedule 2.1(e).
---------------

2.2 Letter of Credit Subfacility.
----------------------------

(a) Issuance. Subject to the terms and conditions hereof, the
--------
Issuing Lender shall issue, and the Lenders shall participate in,
Letters of Credit for the account of the Borrower, the Parent Company
or any of its Subsidiaries from time to time upon request from the
Closing Date until the Termination Date in a form customarily used by
the Issuing Lender or in such other form reasonably acceptable to the
Issuing Lender and delivered to the Issuing Lender and the Agent;
provided, however, that (i) the aggregate amount of LOC Obligations
-------- -------
shall not at any time exceed TWENTY MILLION DOLLARS ($20,000,000) (the
"LOC Committed Amount") and (ii) the sum of the aggregate amount of
--------------------
Committed Revolving Loans (other than Committed Revolving Loans made
for the purpose of repaying Swingline Loans or Competitive Loans or
reimbursing the Issuing Lender for any amount drawn under any Letter
of Credit but not yet so applied) plus the aggregate amount of LOC
----
Obligations plus the aggregate amount of Swingline Loans plus the
---- ----
aggregate amount of Competitive Loans (other than Competitive Loans
made for the purpose of repaying Committed Revolving Loans or
Swingline Loans or reimbursing the Issuing Lender for any amount drawn
under any Letter of Credit but not yet so applied) shall not at any
time exceed the aggregate Revolving Committed Amount and (iii) any
Letter of Credit shall be issued in the ordinary course of the
business of the Parent Company and its Subsidiaries. Except as
otherwise expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year from the
date of issuance; provided, however, so long as no Default or Event of
-------- -------
Default has occurred and is continuing and subject to the other terms
and conditions to the issuance of Letters of Credit hereunder, the
expiry dates of Letters of Credit may be extended annually on each
anniversary date of their date of issuance for an additional one year
period; provided, further, that no Letter of Credit, as originally
-------- -------
issued or as extended, shall have an expiry date extending beyond the
Termination Date unless, but only to the extent that, the Borrower
------
shall provide cash collateral to the Issuing Lender on the date of
issuance or extension in an amount equal to the maximum amount
available to be drawn under such Letter of Credit. The issuance and
expiry date of each Letter of Credit shall be a Business Day.

(b) Notice and Reports. The request for the issuance of a
------------------
Letter of Credit shall be submitted to the Issuing Lender with a copy
to the Agent at least three (3) Business Days prior to the requested
date of issuance. The Issuing

<PAGE>

Lender will, at least quarterly and more frequently upon request,
provide to the Agent for dissemination to the Lenders a detailed
report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, and expiry date, as well as any payments or expirations which
may have occurred. The Issuing Lender will further provide to the
Agent promptly upon request copies of the Letters of Credit. The
Issuing Lender will provide to the Agent at least weekly, and more
frequently upon request, a summary report of the nature and extent of
LOC Obligations then outstanding.

(c) Participations. Each Lender, upon issuance of a Letter of
--------------
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder and any collateral relating thereto, in
each case in an amount equal to its LOC Commitment Percentage of the
obligations under such Letter of Credit and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due, its LOC Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Lender shall
pay to the Issuing Lender its LOC Commitment Percentage of such
unreimbursed drawing in same day funds on the day of notification by
the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Lender to
so reimburse the Issuing Lender shall be absolute and unconditional
and shall not be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event; provided, however, that a
-------- -------
Lender shall not be obligated to reimburse the Issuing Lender for any
wrongful payment made by such Issuing Bank as a result of acts or
omissions constituting willful misconduct or gross negligence on the
part of the Issuing Lender. Any such reimbursement shall not relieve
or otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender under any Letter of Credit, together with interest as
hereinafter provided.

(d) Reimbursement. In the event of any drawing under any Letter
-------------
of Credit, the Issuing Lender will promptly notify the Borrower and
the Agent. Unless the Borrower shall immediately notify the Issuing
Lender of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested a Committed Revolving Loan
in the amount of the drawing as provided in subsection (e)

<PAGE>

hereof, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrower shall reimburse the Issuing
Lender on the day of drawing under any Letter of Credit (either with
the proceeds of a Committed Revolving Loan obtained hereunder or
otherwise) in same day funds as provided herein. If the Borrower
shall fail to reimburse the Issuing Lender as provided hereinabove,
the unreimbursed amount of such drawing shall bear interest at a per
annum rate equal to the Base Rate plus two percent (2%). The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
set-off, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including, without limitation, any defense based on any failure of the
Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit; provided,
--------
however, that the Borrower shall not be obligated to reimburse the
-------
Issuing Lender for any wrongful payment made by such Issuing Lender
under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Issuing
Lender. The Issuing Lender will promptly notify the other Lenders of
the amount of any unreimbursed drawing and each Lender shall promptly
pay to the Agent for the account of the Issuing Lender in Dollars and
in immediately available funds, the amount of such Lender's LOC
Commitment Percentage of such unreimbursed drawing. Such payment
shall be made on the day such notice is received by such Lender from
the Issuing Lender if such notice is received at or before 2:00 P.M.
(Charlotte, North Carolina time), otherwise such payment shall be made
at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such
Lender does not pay such amount to the Issuing Lender in full
following such request in accordance with the preceding sentence, such
Lender shall, on demand, pay to the Agent for the account of the
Issuing Lender interest on the unpaid amount during the period from
the date of such drawing until such Lender pays such amount to the
Issuing Lender in full at a rate per annum equal to, if paid within
two (2) Business Days of the date of drawing, the Federal Funds Rate
and thereafter at a rate equal to the Base Rate. Each Lender's
obligation to make such payment to the Issuing Lender, and the right
of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance other than
the gross negligence or willful misconduct of the Issuing Lender and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the Obligations hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.

<PAGE>

(e) Repayment with Committed Revolving Loans. On any day on
----------------------------------------
which the Borrower shall have requested, or been deemed to have
requested, a Committed Revolving Loan borrowing to reimburse a drawing
under a Letter of Credit, the Agent shall give notice to the Lenders
that a Committed Revolving Loan has been requested or deemed requested
in connection with a drawing under a Letter of Credit, in which case a
Committed Revolving Loan borrowing comprised solely of Base Rate Loans
(each such borrowing, a "Mandatory Borrowing") shall be immediately
-------------------
made from all Lenders (without giving effect to any termination of the
Commitments pursuant to Section 9.2) pro rata based on each Lender's
--- ----
respective Revolving Commitment Percentage (determined before giving
effect to any termination of the Commitments pursuant to Section 9.2)
and the proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each such Lender
hereby irrevocably agrees to make such Committed Revolving Loans
promptly upon any such request or deemed request on account of each
Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date (or the next Business Day
if such notice is received after 2:00 P.M. (Charlotte, North Carolina
time)) notwithstanding (i) the amount of Mandatory Borrowing may not
---------------
comply with the minimum amount for borrowings of Committed Revolving
Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.3 are then satisfied, (iii) whether a Default
or an Event of Default then exists, (iv) failure of any such request
or deemed request for a Committed Revolving Loan to be made by the
time otherwise required in Section 2.1(b), (v) the date of such
Mandatory Borrowing (provided that such date must be a Business Day
occurring prior to the Termination Date), or (vi) any reduction in the
Revolving Committed Amount after any such Letter of Credit may have
been drawn upon; provided, however, that in the event any such
-------- -------
Mandatory Borrowing should be less than the minimum amount for
borrowings of Committed Revolving Loans otherwise provided in Section
2.1(b)(ii), the Borrower shall pay to the Agent for its own account an
administrative fee of $500. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower),
then each such Lender hereby agrees that it shall forthwith fund (as
of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest in the
outstanding LOC Obligations; provided, further, that in the event any
-------- -------
Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount of
such Lender's unfunded Participation Interest therein shall bear
interest payable to the Issuing Lender upon demand, at the rate equal
to, if

<PAGE>

paid within two (2) Business Days of such date, the Federal Funds
Rate, and thereafter at a rate equal to the Base Rate.

(f) Modification, Extension. The issuance of any supplement,
-----------------------
modification, amendment, renewal, or extension to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.

(g) Uniform Customs and Practices. The Issuing Lender may have
-----------------------------
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which case the UCP
---
may be incorporated therein and deemed in all respects to be a part
thereof.

2.3 Swingline Loan Subfacility.
--------------------------

(a) Swingline Commitment. Subject to the terms and conditions
--------------------
of this Section 2.3 and in reliance upon the representations and
warranties set forth herein, the Swingline Lender, in its individual
capacity, agrees to make certain revolving credit loans to the
Borrower (each a "Swingline Loan" and, collectively, the "Swingline
-------------- ---------
Loans") from time to time from the Closing Date until the Termination
-----
Date for the purposes hereinafter set forth; provided, however, (i)
-------- -------
the aggregate amount of Swingline Loans outstanding at any time shall
not exceed TWENTY MILLION DOLLARS ($20,000,000) (the "Swingline
---------
Committed Amount"), and (ii) the sum of the aggregate amount of
----------------
Committed Revolving Loans (other than Committed Revolving Loans made
for the purpose of repaying Swingline Loans or Competitive Loans or
reimbursing the Issuing Lender for any amount drawn under any Letter
of Credit but not yet so applied) plus the aggregate amount of LOC
----
Obligations plus the aggregate amount of Swingline Loans plus the
---- ----
aggregate amount of Competitive Loans (other than Competitive Loans
made for the purpose of repaying Committed Revolving Loans or
Swingline Loans or reimbursing the Issuing Lender for any amount drawn
under any Letter of Credit but not yet so applied) shall not exceed
the aggregate Revolving Committed Amount. Swingline Loans may be
prepaid or repaid and reborrowed in accordance with the provisions
hereof.

(b) Swingline Loan Borrowings.
-------------------------

(i) Notice of Borrowing and Disbursement. The Borrower
------------------------------------
shall request a Swingline Loan borrowing by written notice (or
telephone notice promptly confirmed in writing) to the Swingline
Lender and the Agent not later than 12:00 Noon (Charlotte, North
Carolina time) on the Business Day of the requested Swingline
Loan borrowing. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Swingline Loan

<PAGE>

borrowing is requested, (B) the date of the requested Swingline
Loan borrowing (which shall be a Business Day) and (C) the
aggregate principal amount of the Swingline Loan borrowing
requested. A form of Notice of Borrowing (a "Notice of
---------
Borrowing") is attached as Schedule 2.1(b)(i). The Swingline
--------- ------------------
Lender will make each Swingline Loan borrowing available to the
Agent for the account of the Borrower at the office of the Agent
specified in Schedule 11.1, or at such other office as the Agent
-------------
may designate in writing, by 1:30 P.M. (Charlotte, North Carolina
time) on the date specified in the applicable Notice of Borrowing
in Dollars and in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the
Agent by crediting the account of the Borrower on the books of
such office with the amount of such borrowing as made available
to the Agent by the Swingline Lender and in like funds as
received by the Agent.

(ii) Minimum Amounts. Each Swingline Loan borrowing shall
---------------
be in a minimum principal amount of $250,000 and integral
multiples of $100,000 in excess thereof.

(iii) Repayment of Swingline Loans. Each Swingline Loan
----------------------------
borrowing shall be due and payable on the earliest of (A) 30 days
from the date of borrowing thereof, (B) the date of the next
Committed Revolving Loan borrowing, if sooner, or (C) the
Termination Date. If, and to the extent, any Swingline Loans
shall be outstanding on the date of any Committed Revolving Loan
borrowing (other than an extension or a conversion of such
Committed Revolving Loan), such Swingline Loans shall first be
repaid from the proceeds of such Committed Revolving Loan
borrowing prior to disbursement to the Borrower. If, and to the
extent, Committed Revolving Loans or Competitive Loans are not
requested prior to the Termination Date or the end of any such 30
day period from the date of any such Swingline Loan borrowing, or
the date of the next extension or conversion of a Committed
Revolving Loan after any such Swingline Loan borrowing, the
Borrower shall be deemed to have requested a Committed Revolving
Loan comprised entirely of Base Rate Loans in the amount of such
Swingline Loan borrowing then outstanding, the proceeds of which
shall be used to repay the Swingline Lender for such Swingline
Loan. In addition, the Swingline Lender may, at any time, in its
sole discretion, by written notice to the Borrower and the Agent,
demand repayment of its Swingline Loans by way of a Committed
Revolving Loan borrowing, in which case the Borrower shall be
deemed to have requested a Committed Revolving Loan borrowing
comprised entirely of Base Rate Loans in the amount of such
Swingline

<PAGE>

Loans; provided, however, that any such demand shall be deemed to
-------- -------
have been given one Business Day prior to the Termination Date
and upon the occurrence of any Event of Default described in
Section 9.1(f) and also upon acceleration of the Obligations
hereunder, whether on account of an Event of Default described in
Section 9.1(f) or any other Event of Default, and the exercise of
remedies in accordance with the provisions of Section 9.2 hereof
(each such Committed Revolving Loan borrowing made on account of
any such deemed request therefor as provided herein being
hereinafter referred to as a "Mandatory Borrowing"). Each Lender
-------------------
hereby irrevocably agrees to make such Committed Revolving Loans
promptly upon any such request or deemed request on account of
each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date (or
the next Business Day if such notice is received after 2:00 P.M.
(Charlotte, North Carolina time)) notwithstanding (I) the amount
---------------
of Mandatory Borrowing may not comply with the minimum amount for
borrowings of Committed Revolving Loans otherwise required
hereunder, (II) whether any conditions specified in Section 5.3
are then satisfied, (III) whether a Default or an Event of
Default then exists, (IV) failure of any such request or deemed
request for Committed Revolving Loan to be made by the time
otherwise required in Section 2.1(b)(i), (V) the date of such
Mandatory Borrowing (provided that such date must be a Business
Day occurring prior to the Termination Date), or (VI) any
reduction in the Revolving Committed Amount or termination of the
Commitments relating thereto immediately prior to such Mandatory
Borrowing or contemporaneous therewith. In the event that any
Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy
Code with respect to the Borrower), then each Lender hereby
agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted
for any payments received from the Borrower on or after such date
and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such Swingline
Loans ratably based upon its respective Revolving Commitment
Percentage (determined before giving effect to any termination of
the Commitments pursuant to Section 9.2), provided that (A) all
--------
interest payable on the Swingline Loans shall be for the account
of the Swingline Lender until the date as of which the respective
participation is purchased, and (B) at the time any purchase of
participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline
Lender

<PAGE>

interest on the principal amount of participation purchased for
each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date
of payment for such participation, at the rate equal to, if paid
within two (2) Business Days of the date of the Mandatory
Borrowing, the Federal Funds Rate, and thereafter at a rate equal
to the Base Rate.

(c) Interest on Swingline Loans. Subject to the provisions of
---------------------------
Section 3.1, Swingline Loans shall bear interest at a per annum rate
equal to the sum of the Base Rate plus the Applicable Percentage.
----
Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.

(d) Swingline Note. The Swingline Loans shall be evidenced by a
--------------
duly executed promissory note of the Borrower to the Swingline Lender
in the original amount of the Swingline Committed Amount and
substantially in the form of Schedule 2.3(d).
---------------

2.4 Competitive Loan Subfacility.
----------------------------

(a) Competitive Loans. Subject to the terms and conditions and
-----------------
relying upon the representations and warranties herein set forth, from
such time as the Borrower shall have attained, and for so long as the
Borrower shall maintain, a senior unsecured long-term debt rating of
"BBB-" or better by S&P or "Baa3" or better by Moody's, the Borrower
may, from time to time from the Closing Date until the Termination
Date, request and each Lender may, in its sole discretion, agree to
make, Competitive Loans to the Borrower; provided, however, (i) the
-------- -------
aggregate amount of Competitive Loans shall not at any time exceed the
lesser of THREE HUNDRED MILLION DOLLARS ($300,000,000) or the
------
Revolving Committed Amount (the "Competitive Loan Maximum Amount"),
-------------------------------
and (ii) the sum of the aggregate amount of Committed Revolving Loans
(other than Committed Revolving Loans made for the purpose of repaying
Swingline Loans or Competitive Loans or reimbursing the Issuing Lender
for any amount drawn under any Letter of Credit but not yet so
applied) plus the aggregate amount of LOC Obligations plus the
---- ----
aggregate amount of Swingline Loans plus the aggregate amount of
----
Competitive Loans (other than Competitive Loans made for the purpose
of repaying Committed Revolving Loans or Swingline Loans or
reimbursing the Issuing Lender for any amount drawn under any Letter
of Credit but not yet so applied) shall not at any time exceed the
aggregate Revolving Committed Amount. Each Competitive Loan shall be
not less than $5,000,000 in the aggregate and integral multiples of
$1,000,000 in excess thereof (or the remaining available portion of
the Competitive Loan Maximum Amount, if less). Competitive Loans may
be repaid and reborrowed in accordance with the provisions hereof.

<PAGE>

(b) Competitive Bid Requests. The Borrower may solicit
------------------------
Competitive Bids by delivery of a Competitive Bid Request
substantially in the form of Schedule 2.4(b)-1 to the Agent by 12:00
-----------------
Noon (Charlotte, North Carolina time) on a Business Day not less than
two (2) nor more than ten (10) Business Days prior to the date of a
requested Competitive Loan borrowing. A Competitive Bid Request shall
specify (i) the date of the requested Competitive Loan borrowing
(which shall be a Business Day), (ii) the amount of the requested
Competitive Loan borrowing and (iii) the applicable Interest Periods
requested and shall be accompanied by payment of the Competitive Bid
Request Fee, if any. The Agent shall promptly notify the Lenders of
its receipt of a Competitive Bid Request and the contents thereof and
invite the Lenders to submit Competitive Bids in response thereto. A
form of such notice is provided in Schedule 2.4(b)-2. No more than
-----------------
three Competitive Bid Requests (e.g., the Borrower may request
Competitive Bids for no more than three different Interest Periods at
a time) shall be submitted at any one time and Competitive Bid
Requests may be made no more frequently than once every ten (10)
Business Days.

(c) Competitive Bid Procedure. Each Lender may, in its sole
-------------------------
discretion, make one or more Competitive Bids to the Borrower in
response to a Competitive Bid Request. Each Competitive Bid must be
received by the Agent not later than 10:00 A.M. (Charlotte, North
Carolina time) on the proposed date of a Competitive Loan borrowing;
provided, however, that should the Agent, in its capacity as a Lender,
-------- -------
desire to submit a Competitive Bid it shall notify the Borrower of its
Competitive Bid and the terms thereof not later than 9:30 A.M.
(Charlotte, North Carolina time) on the proposed date of a Competitive
Loan borrowing. A Lender may offer to make all or part of the
requested Competitive Loan borrowing and may submit multiple
Competitive Bids in response to a Competitive Bid Request. The
Competitive Bid shall specify (i) the particular Competitive Bid
Request as to which the Competitive Bid is submitted, (ii) the minimum
(which shall be not less than $1,000,000 and integral multiples of
$500,000 in excess thereof) and maximum principal amounts of the
requested Competitive Loan or Loans as to which the Lender is willing
to make, and (iii) the applicable interest rate or rates and Interest
Period or Periods therefor. A form of such Competitive Bid is
provided in Schedule 2.4(c). A Competitive Bid submitted by a Lender
---------------
in accordance with the provisions hereof shall be irrevocable (absent
manifest error). The Agent shall promptly notify the Borrower of all
Competitive Bids made and the terms thereof. The Agent shall send a
copy of each of the Competitive Bids to the Borrower for its records
as soon as practicable.

(d) Acceptance of Competitive Bids. The Borrower may, in its
------------------------------
sole and absolute discretion, subject only to the provisions of this
subsection (d), accept or refuse any Competitive Bid offered to it.
To accept a Competitive Bid,

<PAGE>

the Borrower shall give written notification (or telephone notice
promptly confirmed in writing) of its acceptance of any or all such
Competitive Bids to the Agent by 11:00 A.M. (Charlotte, North Carolina
time) on the proposed date of a Competitive Loan advance; provided,
--------
however, (i) the failure by the Borrower to give timely notice of its
-------
acceptance of a Competitive Bid shall be deemed to be a refusal
thereof, (ii) the Borrower may accept Competitive Bids only in
ascending order of rates, (iii) the aggregate amount of Competitive
Bids accepted by the Borrower shall not exceed the principal amount
specified in the Competitive Bid Request, (iv) the Borrower may accept
a portion of a Competitive Bid in the event, and to the extent,
acceptance of the entire amount thereof would cause the Borrower to
exceed the principal amount specified in the Competitive Bid Request,
subject however to the minimum amounts provided herein (and provided
that where two or more such Lenders may submit such a Competitive Bid
at the same such Competitive Bid Rate, then pro rata between or among
such Lenders) and (v) no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of
$1,000,000 and integral multiples of $500,000 in excess thereof,
except that where a portion of a Competitive Bid is accepted in
accordance with the provisions of subsection (iv) hereof, then in a
minimum principal amount of $100,000 and integral multiples thereof
(but not in any event less than the minimum amount specified in the
Competitive Bid), and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive
Bid Rate pursuant to subsection (iv) hereof, the amounts shall be
rounded to integral multiples of $100,000 in a manner which shall be
in the discretion of the Borrower. A notice of acceptance of a
Competitive Bid given by the Borrower in accordance with the
provisions hereof shall be irrevocable. The Agent shall, not later
than 12:00 Noon (Charlotte, North Carolina time) on the proposed date
of a Competitive Loan borrowing, notify each bidding Lender whether or
not its Competitive Bid has been accepted (and if so, in what amount
and at what Competitive Bid Rate), and each successful bidder will
thereupon become bound, subject to the other applicable conditions
hereof, to make the Competitive Loan in respect of which its bid has
been accepted.

(e) Funding of Competitive Loans. Each Lender which is to make
----------------------------
a Competitive Loan shall make its Competitive Loan borrowing available
to the Agent for the account of the Borrower at the office of the
Agent specified in Schedule 11.1, or at such other office as the Agent
-------------
may designate in writing, by 1:00 P.M. (Charlotte, North Carolina
time) on the date specified in the Competitive Bid Request in Dollars
and in funds immediately available to the Agent. Such borrowing will
then be made available to the Borrower by crediting the account of the
Borrower on the books of such office with the aggregate of the amount
made available to

<PAGE>

the Agent by the Competitive Loan Lenders and in like funds as
received by the Agent.

(f) Maturity of Competitive Loans. Each Competitive Loan shall
-----------------------------
mature and be due and payable in full on the last day of the Interest
Period applicable thereto. Unless the Borrower shall give notice to
the Agent otherwise, the Borrower shall be deemed to have requested a
Committed Revolving Loan borrowing in the amount of the maturing
Competitive Loan, the proceeds of which will be used to repay such
Competitive Loan.

(g) Interest on Competitive Loans. Subject to the provisions of
-----------------------------
Section 3.1, Competitive Loans shall bear interest in each case at the
Competitive Bid Rate applicable thereto. Interest on Competitive
Loans shall be payable in arrears on each Interest Payment Date.

(h) Competitive Loan Notes. The Competitive Loans shall be
----------------------
evidenced by a duly executed promissory note of the Borrower to each
Lender in an original principal amount equal to the Competitive Loan
Maximum Amount and substantially in the form of Schedule 2.4(h).
---------------

SECTION 3

OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------

3.1 Default Rate. Overdue principal and, to the extent permitted by
------------
law, overdue interest in respect of each Loan and any other overdue amount
payable hereunder or under the other Credit Documents shall bear interest,
payable on demand, at a per annum rate 2% greater than the rate which would
otherwise be applicable (or if no rate is applicable, whether in respect of
interest, fees or other amounts, then 2% greater than the Base Rate).

3.2 Extension and Conversion. The Borrower shall have the option, on
------------------------
any Business Day, to extend existing Committed Revolving Loans into a
subsequent permissible Interest Period or to convert Committed Revolving
Loans of one type into Committed Revolving Loans of another type; provided,
--------
however, that (i) except as provided in Section 3.7, Eurodollar Loans may
be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base
Rate Loans may be converted into Eurodollar Loans, only if no Default or
Event of Default is in existence on the date of extension or conversion,
(iii) Loans extended as, or converted into, Eurodollar Loans shall be
subject to the terms of the definition of "Interest Period" set forth in
---------------
Section 1.1 and shall be in such minimum amounts as provided in Section
2.1(b)(ii), (iv) no more than ten (10) separate Eurodollar Loans shall be
outstanding hereunder at any one time and (v) any request for extension or
conversion of a Eurodollar Loan which

<PAGE>

shall fail to specify an Interest Period shall be deemed to be a request
for an Interest Period of one month. Swingline Loans and Competitive Loans
may not be extended or converted pursuant to this Section 3.2. Each such
extension or conversion shall be effected by the Borrower by giving a
Notice of Extension/Conversion (or telephone notice promptly confirmed in
writing) to the Agent prior to 11:00 A.M. (Charlotte, North Carolina time)
on the Business Day of, in the case of the conversion of a Eurodollar Loan
into a Base Rate Loan, and on the third Business Day prior to, in the case
of the extension of a Eurodollar Loan as, or conversion of a Base Rate Loan
into, a Eurodollar Loan, the date of the proposed extension or conversion,
specifying the date of the proposed extension or conversion, the Committed
Revolving Loans to be so extended or converted, the types of Committed
Revolving Loans into which such Committed Revolving Loans are to be
converted and, if appropriate, the applicable Interest Periods with respect
thereto. Multiple Eurodollar Loans with Interest Periods ending on the
same date may be combined and extended as one Eurodollar Loan, and a single
Eurodollar Loan may be extended as multiple Eurodollar Loans. Each request
for extension of, or conversion into, Eurodollar Loans, shall constitute a
representation and warranty by the Borrower of the matters specified in
Section 5.3(b), (c), (d) and (e). In the event the Borrower fails to
request extension or conversion of any Eurodollar Loan in accordance with
this Section, or any such conversion or extension is not permitted or
required by this Section, then such Loans shall be automatically converted
into Base Rate Loans at the end of their Interest Period. The Agent shall
give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.

3.3 Reductions In Commitments and Prepayments.
-----------------------------------------

(a) Voluntary Reduction of Commitments. The Borrower may from
----------------------------------
time to time permanently reduce the Revolving Committed Amount, the
LOC Committed Amount and/or the Swingline Committed Amount in whole or
in part (in each such case in a minimum aggregate amount of $5,000,000
and integral multiples of $1,000,000 in excess thereof) upon three (3)
Business Days' prior written notice to the Agent and, in the case of a
reduction of the LOC Committed Amount or the Swingline Committed
Amount, also to the Issuing Lenders or the Swingline Lender, as
appropriate.

<PAGE>

hereunder until such Revolving Committed Amount is reduced to zero and
terminated, and then to the Revolving Committed Amount under the
Tranche B Credit Agreement and (ii) after the Termination Date under
the Tranche B Credit Agreement, first to the Term Loans outstanding
under the Tranche B Credit Agreement, if any, and then to the
Revolving Committed Amount hereunder.

(c) Allocation of Commitment Reductions. A reduction of the
-----------------------------------
Revolving Committed Amount pursuant to clauses (a) or (b) of this
Section 3.3 shall not effect a reduction in the LOC Committed Amount
or the Swingline Committed Amount (unless so elected by the Borrower
in its sole discretion) until the Revolving Committed Amount has been
reduced to an amount equal to the sum of the LOC Committed Amount and
the Swingline Committed Amount and then only in the amounts determined
by the Borrower in its sole discretion. In the event the Revolving
Committed Amount has been reduced to an amount that is less than the
sum of the LOC Committed Amount and the Swingline Committed Amount and
the Borrower fails to direct the application of such deficiency to the
LOC Committed Amount and/or the Swingline Committed Amount, the amount
of such deficiency shall be deemed a reduction first of the Swingline
Committed Amount and then a reduction of the LOC Committed Amount.

(d) Termination of Individual Lender Commitment. In the event
-------------------------------------------
of certain refusals by a Lender to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as provided
in Section 11.6(b), the Borrower shall have the right, upon three (3)
Business Days' prior written notice to the Agent, to terminate the
Commitments of such Lender, so long as (i) all Loans, together with
accrued and unpaid interest, fees and all other amounts owing to such
Lender are repaid and all Letters of Credit issued by such Lender are
replaced or fully collateralized with cash or a letter of credit
concurrently with the effectiveness of such termination and (ii) the
amount of Commitments (including for purposes hereof Commitments
hereunder and under the Tranche B Credit Agreement) terminated
pursuant to this Section 3.3(d), after giving effect to termination of
the Commitments of any such non-consenting Lender, shall not exceed
$70,000,000 in the aggregate. At such time as any such termination
shall become effective in accordance with the terms hereof, such
Lender shall no longer constitute a "Lender" for purposes of this
Agreement, except with respect to indemnifications under this
Agreement which shall survive as to such repaid Lender.

(e) Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) Competitive Loans and Committed
-------- -------
Revolving Loans which are

<PAGE>

Eurodollar Loans may only be prepaid on three Business Days' prior
written notice to the Agent and any prepayment of such Competitive
Loans or Eurodollar Loans will be subject to Section 3.10; and (ii)
each such partial prepayment of Loans shall be (A) in the minimum
principal amount of $5,000,000 and integral multiples of $1,000,000 in
excess thereof for all Competitive Loans and Committed Revolving Loans
and (B) in the minimum principal amount of $250,000 and integral
multiples of $100,000 in excess thereof for Swingline Loans.

(f) Mandatory Prepayments. If at any time (i) the sum of the
---------------------
aggregate amount of outstanding Committed Revolving Loans (other than
Committed Revolving Loans made for the purpose of repaying Swingline
Loans or Competitive Loans or reimbursing the Issuing Lender for any
amount drawn under any Letter of Credit but not yet so applied) plus
----
the aggregate amount of LOC Obligations plus the aggregate amount of
----
Swingline Loans plus the aggregate amount of Competitive Loans (other
----
than Competitive Loans made for the purpose of repaying Committed
Revolving Loans or Swingline Loans or reimbursing the Issuing Lender
for any amount drawn under any Letter of Credit but not yet so
applied) shall exceed the aggregate Revolving Committed Amount, (ii)
the aggregate amount of LOC Obligations shall exceed the aggregate LOC
Committed Amount, (iii) the aggregate amount of Swingline Loans shall
exceed the Swingline Committed Amount, or (iv) the aggregate amount of
Competitive Loans shall exceed the Competitive Loan Maximum Amount,
the Borrower shall immediately make payment on the Loans or in respect
of the LOC Obligations in an amount sufficient to eliminate such
excess. In the case of a mandatory prepayment required on account of
subsection (ii), (iii) or (iv), the amount required to be prepaid
hereunder shall serve to temporarily reduce the Revolving Committed
Amount (for purposes of borrowing availability hereunder, but not for
purposes of computation of fees) by the amount of the payment required
until such time as the situation described in subsection (ii), (iii)
or (iv) shall no longer exist. Payments required to be made hereunder
shall be applied first to Committed Revolving Loans, Swingline Loans
or Competitive Loans, as appropriate, and then to a cash collateral
account in respect of the LOC Obligations, and with respect to the
types of Loans, first to Base Rate Loans and then to Eurodollar Loans
in direct order of their Interest Period maturities. To the extent
that the Borrower is required to make a mandatory prepayment of the
Loans which is required to be applied to Competitive Loans or to
Committed Revolving Loans which are Eurodollar Loans (following the
operation of the immediately preceding sentence) on a date other than
the last day of an Interest Period applicable thereto, at the option
of the Borrower, the Agent shall hold the amount of such prepayment in
an account in the Agent's sole dominion and control. The Agent shall
invest the amounts held by it in such account as

<PAGE>

directed by the Borrower. On the last day of the Interest Period
relating to the next-maturing Competitive Loans or to Committed
Revolving Loans which are Eurodollar Loans, as appropriate, the Agent
shall apply the amounts held by it in such account to the prepayment
of such maturing Loan and the Agent shall notify the Borrower of the
application of such amounts. Upon the direction of the Borrower, the
Agent shall apply any earnings on amounts held in such account to the
payment of accrued interest on such Loans or shall release such
earnings to the Borrower.

(g) Prepayment of Loans of Individual Lender. In the event of
----------------------------------------
certain refusals by a Lender to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Lenders as provided in
Section 11.6(b), the Borrower shall have the right, upon three (3)
Business Days' prior written notice to the Agent, to repay all Loans,
together with accrued and unpaid interest, fees and all other amounts
owing to such Lender, and cause all Letters of Credit issued by such
Lender to be replaced or fully collateralized with cash or a letter of
credit, each in accordance with said Section 11.6(b) so long as (A)
the Commitments of such Lender are terminated concurrently with such
repayment in accordance with, and to the extent permitted under, the
provisions of Section 3.3(d), and (B) the consents required by Section
11.6(b) in connection with such repayment have been obtained.

(h) Notice. The Borrower will provide notice to the Agent of
------
any prepayment by 11:00 A.M. (Charlotte, North Carolina time) on the
day prior to the date of prepayment. Amounts paid on the Loans under
subsection (e) and (f)(i) hereof may be reborrowed in accordance with
the provisions hereof.

3.4 Fees.
----

(b) Letter of Credit Fee. In consideration of the issuance of
--------------------
Letters of Credit hereunder, the Borrower agrees to pay to the Issuing
Lender for the ratable benefit of the Lenders a fee (the "Letter of
---------
Credit Fee") equal to the Applicable Percentage per annum on the
----------
average daily maximum amount available to be drawn under each such
Letter of

<PAGE>

Credit from the date of issuance to the date of expiration. The
Issuing Lender shall promptly pay such Letter of Credit Fee to the
Agent for the benefit of and payment to the Lenders (including the
Issuing Lender). In addition, the Borrower shall pay to the Issuing
Lender, for its own account without sharing by the other Lenders, one-
eighth of one percent (1/8%) per annum thereon. The Letter of Credit
Fees hereunder shall be payable quarterly in arrears on the 15th day
following the end of each calendar quarter and on the Termination
Date.

(c) Administrative Fees. The Borrower agrees to pay to the
-------------------
Agent, for its own account, the administrative and other fees referred
to in the Agent's Fee Letter (the "Agent's Fees").
------------

(d) Competitive Bid Request Fee. The Borrower shall make
---------------------------
payment to the Agent of the applicable Competitive Bid Request Fee, if
any, concurrently with delivery of such Competitive Bid Request
(whether or not any Competitive Bid is offered by a Lender, accepted
by the Borrower or extended by the offering Lender pursuant thereto).

3.5 Capital Adequacy. If, after the date hereof, any Lender has
----------------
determined that the adoption after the date hereof of any applicable law,
rule or regulation regarding capital adequacy, or any change therein after
the date hereof, or any change in the interpretation or administration
thereof after the date hereof by any Governmental Authority, central bank
or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender with any request or directive arising
after the date hereof regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has
or will have the effect of reducing the rate of return on such Lender's or
its parent company's capital or assets as a consequence of its commitments
or obligations hereunder to a level below that which such Lender or its
parent company could have achieved but for such adoption or change (taking
into consideration such Lender's policies with respect to capital
adequacy), then, upon notice from such Lender, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such
Lender and its parent company for such reduction; provided, however, that a
-------- -------
Lender shall not be entitled to avail itself of the benefit of this Section
3.5 to the extent that any such reduction in return was incurred more than
ninety (90) days prior to the time it gives notice to the Borrower of the
relevant circumstances. In determining the additional amount payable under
this Section 3.5, each Lender will act reasonably and in good faith and
will use averaging and attribution methods which are reasonable, provided,
--------
that such Lender's determination of compensation owing under this Section
3.5 shall, absent manifest error, be final and conclusive and binding on
all parties hereto. Each Lender, upon determining that any additional
amounts will be payable pursuant to this Section 3.5, will give prompt
written notice thereof to the

<PAGE>

Borrower, through the Agent, which notice shall show the basis for
calculation of such additional amounts.

3.6 Inability To Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent
manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made
as Base Rate Loans and (y) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Loans
shall be converted to or continued as Base Rate Loans. Until such notice
has been withdrawn by the Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Base
Rate Loans to Eurodollar Loans. This Section 3.6 shall not apply to
Competitive Loans or Swingline Loans.

3.7 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Closing Date
shall make it unlawful for any Lender to make or maintain Eurodollar Loans
as contemplated by this Credit Agreement, (a) such Lender shall promptly
give written notice of such circumstances to the Borrower and the Agent
(which notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert Base Rate Loans to
Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate
Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a
day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to subsection 3.10. Notwithstanding the
foregoing, to the extent a circumstance described above relates to a
Eurodollar Loan then being requested by the Borrower pursuant to a Notice
of Borrowing or a Notice of Conversion, the Borrower shall have the option
to rescind such Notice of Borrowing or Notice of Conversion as to all
Lenders by giving notice (in writing or by telephone confirmed in writing)
to the Agent of such rescission on the date on which the Lender affected by
such circumstances gives notice thereof as described above. This Section
3.7 shall not apply to Competitive Loans or Swingline Loans.

<PAGE>

3.8 Requirements of Law. If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof
applicable to any Lender, or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Closing
Date (or, if later, the date on which such Lender becomes a Lender):

(i) shall subject such Lender to any tax of any kind whatsoever
with respect to any Letter of Credit or any Eurodollar Loans made by
it or its obligation to make Eurodollar Loans, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes) covered by subsection 3.9 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under subsection 3.9(b)) and Excluded Taxes;

(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or

(iii) shall impose on such Lender any other condition (excluding
any tax of any kind) whatsoever;

and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable, provided that, in any such case, the Borrower
--------
may elect to convert the Eurodollar Loans made by such Lender hereunder to
Base Rate Loans by giving the Agent at least one Business Day's notice of
such election, in which case the Borrower shall promptly pay to such
Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 3.10; provided, further, however, that a
-------- ------- -------
Lender shall not be entitled to avail itself of the benefit of this Section
3.8 to the extent that any such additional amounts were incurred more than
ninety (90) days prior to the time it gives notice to the Borrower as
provided in the next sentence. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section, it shall provide prompt notice
thereof to the Borrower, through the Agent, certifying (x) that one of the
events described in this Section has occurred and describing in reasonable
detail the nature of such event, (y) as to the

<PAGE>

increased cost or reduced amount resulting from such event and (z) as to
the additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section submitted by such
Lender, through the Agent, to the Borrower shall be conclusive in the
absence of manifest error. This Section 3.8 shall not apply to Competitive
Loans or Swingline Loans.

3.9 Taxes. (a) Except as provided below in this subsection (a), all
-----
payments made by the Borrower under this Credit Agreement and any Notes
shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding taxes measured by or imposed upon the
overall net income or profits of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes on the overall capital or net worth
of any Lender or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of net income taxes, imposed: (i) by
the jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax and
such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations, or received payment under or enforced, this
Credit Agreement or any Notes (such excluded taxes being herein referred to
as "Excluded Taxes"). If any such non-excluded taxes, levies, imposts,
--------------
duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes")
------------------
are required to be withheld from any amounts payable to the Agent or any
Lender hereunder or under any Notes, the amounts so payable to the Agent or
such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided, however, that
-------- -------
the Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the requirements of
subsection (b) below. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter, the Borrower shall send to
the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or

<PAGE>

other required documentary evidence, the Borrower shall indemnify the Agent
and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Agent or any Lender as a result of any such failure.
The agreements in this subsection (a) shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.

(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:

(X) (i) on or before the date of any payment by the
Borrower under this Credit Agreement or the Notes to such Lender,
deliver to the Borrower and the Agent (A) two duly completed
copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments under this
Credit Agreement and its Notes without deduction or withholding
of any United States federal income taxes and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, certifying that it is entitled to an exemption
from United States backup withholding tax;

(ii) deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the
most recent form previously delivered by it to the Borrower; and

(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent; or

<PAGE>

Borrower and the Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Agent for filing and
completing such forms), and (iii) agree, to the extent legally
entitled to do so, upon reasonable request by the Borrower, to
provide to the Borrower (for the benefit of the Borrower and the
Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption
from withholding with respect to payments under this Credit
Agreement and its Notes;

unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it
and such Lender so advises the Borrower and the Agent. Each Person
that shall become a Lender or a participant pursuant to Section 11.3
shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required
pursuant to this subsection, provided that in the case of a
--------
Participant the obligations of such Participant pursuant to this
subsection (b) shall be determined as if the Participant were a Lender
except that such Participant shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.

(c) If the Borrower pays any additional amount under Section 3.9(a)
to a Lender and such Lender determines that it has received or realized in
connection therewith any refund or any reduction of, or credit against, its
tax liabilities in or with respect to the taxable year in which the
additional amount is paid, such Lender shall pay to the Borrower an amount
that the Lender shall determine is equal to the net benefit, after tax,
which was obtained by the Lender in such taxable year as a consequence of
such refund, reduction or credit.

3.10 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any reasonable loss or expense which such
Lender may sustain or incur (other than through such Lender's gross
negligence or willful misconduct) as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Competitive Loans or Committed Revolving Loans which are Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance
with the provisions of this Credit Agreement, (b) default by the Borrower
in making any prepayment of a Competitive Loan or a Committed Revolving
Loan which is a Eurodollar Loan after the Borrower has given a notice
thereof in accordance with

<PAGE>

the provisions of this Credit Agreement or (c) the making of a prepayment
of Competitive Loans or Committed Revolving Loans which are Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto other than pursuant to Section 3.11(c). Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last
day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced
on the date of such failure) in each case at the applicable rate of
interest for such Competitive Loan or a Committed Revolving Loan which is a
Eurodollar Loan provided for herein (excluding, however, the Applicable
Percentage included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. This
covenant shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder. This Section
3.10 shall not apply to Swingline Loans.

3.11 Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein:

(a) Committed Revolving Loans. Each Committed Revolving Loan
-------------------------
advance (including without limitation each Mandatory Borrowing), each
payment or prepayment of principal of any Committed Revolving Loan,
each payment of interest on the Committed Revolving Loans, each
payment of the Commitment Fee and the Letter of Credit Fee (other than
the portion of the Letter of Credit Fee retained by the Issuing Lender
for its own account), each reduction of the Revolving Committed Amount
or the LOC Committed Amount, and each conversion or continuation of
any Committed Revolving Loan, shall be allocated pro rata among the
relevant Lenders in accordance with the respective applicable
Revolving Committed Amounts (or, if the Commitments of such Lenders
have expired or been terminated, in accordance with the respective
principal amounts of the outstanding Loans and Participation Interests
of such Lenders).

(b) Letters of Credit. Each payment of unreimbursed drawings in
-----------------
respect of LOC Obligations shall be allocated to each Lender entitled
thereto pro rata in accordance with its LOC Commitment Percentage;
provided that, if any Lender shall have failed to pay its applicable
--------
pro rata share of any drawing under any Letter of Credit, then any
amount to which such Lender would otherwise be entitled pursuant to
this subsection (b) shall instead be payable to the Issuing Lender;
provided further, that in the event any amount paid to any Lender
-------- -------
pursuant to this subsection (b) is rescinded or must otherwise be
returned by the Issuing Lender, each

<PAGE>

Lender shall, upon the request of the Issuing Lender, repay to the
Agent for the account of the Issuing Lender the amount so paid to such
Lender, with interest for the period commencing on the date the Lender
receives such request until the date the Issuing Lender receives such
repayment at a rate per annum equal to, during the period to but
excluding the date two (2) Business Days after such request, the
Federal Funds Rate, and thereafter, the Base Rate plus two percent
----
(2%).

(c) Funding. Unless the Agent shall have been notified in
-------
writing by any Lender prior to a Committed Revolving Loan borrowing
that such Lender will not make the amount that would constitute its
Revolving Commitment Percentage of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Agent by the required time on
the borrowing date therefor, such Lender shall pay to the Agent, on
demand, such amount with interest thereon at a rate equal to the
Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If
such Lender's Revolving Commitment Percentage of such borrowing is not
made available to the Agent by such Lender within three Business Days
of such borrowing date, (i) the Agent shall notify the Borrower of the
failure of such Lender to make such amount available to the Agent and
the Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Base Rate Loans hereunder,
on demand, from the Borrower and (ii) the Borrower may, without
waiving any rights it may have against such Lender, borrow a like
amount on an unsecured basis from any commercial bank for a period
ending on the date upon which such Lender does in fact make such
borrowing available, provided that at the time such borrowing is made
--------
and at all times while such amount is outstanding the Borrower would
be permitted to borrow such amount pursuant to Section 2.1 of this
Credit Agreement.

3.12 Sharing of Payments. The Lenders agree among themselves that,
-------------------
in the event that any Lender shall obtain payment in respect of any Loan,
unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant
to a secured claim under Section 506 of Title 11 of the United States Code
or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency
or other similar law or otherwise, or by any other means, in excess of its
pro rata share of such payment

<PAGE>

as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable
shares as provided for in this Credit Agreement. The Lenders further agree
among themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker's lien, counterclaim or
other event as aforesaid shall be rescinded or must otherwise be restored,
each Lender which shall have shared the benefit of such payment shall, by
repurchase of a participation theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable with
respect thereto) to each Lender whose payment shall have been rescinded or
otherwise restored. The Borrower agrees that any Lender so purchasing such
a participation may, to the fullest extent permitted by law, exercise all
rights of payment, including setoff, banker's lien or counterclaim, with
respect to such participation as fully as if such Lender were a holder of
such Loan, LOC Obligation or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit
Agreement, if any Lender or the Agent shall fail to remit to the Agent or
any other Lender an amount payable by such Lender or the Agent to the Agent
or such other Lender pursuant to this Credit Agreement on the date when
such amount is due, such payments shall be made together with interest
thereon for each date from the date such amount is due until the date such
amount is paid to the Agent or such other Lender at a rate per annum equal
to the Federal Funds Rate. If under any applicable bankruptcy, insolvency
or other similar law, any Lender receives a secured claim in lieu of a
setoff to which this Section 3.12 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders under this Section 3.12 to
share in the benefits of any recovery on such secured claim.

3.13 Place and Manner of Payments. Except as otherwise specifically
----------------------------
provided herein, all payments hereunder shall be made to the Agent in
Dollars in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind, at its offices specified in
Schedule 2.1(a) not later than 2:00 P.M. (Charlotte, North Carolina time)
- ---------------
on the date when due. Payments received after such time shall be deemed to
have been received on the next succeeding Business Day. The Agent may (but
shall not be obligated to) debit the amount of any such payment which is
not made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower
shall, at the time it makes any payment under this Credit Agreement,
specify to the Agent the Loans, LOC Obligations, fees or other amounts
payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails so to specify, or if such application would
be inconsistent with the terms hereof, the Agent shall distribute such
payment to the Lenders in the manner set forth in Section

<PAGE>

3.3(f) for mandatory prepayments). The Agent will distribute such payments
to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day (subject to accrual of interest and fees for
the period of such extension), except that in the case of Eurodollar Loans,
if the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans which shall be calculated based
on a year of 365 or 366 days, as appropriate. Interest shall accrue from
and include the date of borrowing, but exclude the date of payment.

3.14 Indemnification; Nature of Issuing Lender's Duties.
--------------------------------------------------

(a) In addition to its other obligations under Section 2.2, the
Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of the Issuing Lender to
honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts
or omissions, herein called "Government Acts").
---------------

(b) As between the Borrower and the Issuing Lender, the Borrower
shall assume all risks of the acts, omissions or misuse of any Letter
of Credit by the beneficiary thereof. The Issuing Lender shall not be
responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (iii) for failure
of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon a Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery
of any

<PAGE>

messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under a Letter of
Credit or of the proceeds thereof; and (vii) for any consequences
arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.

(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Issuing Lender, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in good faith,
shall not put such Issuing Lender under any resulting liability to the
Borrower. It is the intention of the parties that this Credit
Agreement shall be construed and applied to protect and indemnify the
Issuing Lender against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all risks of the acts
or omissions, whether rightful or wrongful, of any present or future
Government Acts. The Issuing Lender shall not, in any way, be liable
for any failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any Government Acts
or any other cause beyond the control of the Issuing Lender.

(d) Nothing in this Section 3.14 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.2(d)
hereof. The obligations of the Borrower under this Section 3.14 shall
survive the termination of this Credit Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Issuing Lender to enforce any
right, power or benefit under this Credit Agreement.

(e) Notwithstanding anything to the contrary contained in this
Section 3.14, the Borrower shall have no obligation to indemnify any
Issuing Lender in respect of any liability incurred by such Issuing
Lender (and the Issuing Lender shall retain all such liability)
arising out of the gross negligence or willful misconduct of the
Issuing Lender.

3.15 Replacement of Lenders. If any Lender either (i) becomes a
----------------------
Defaulting Lender or (ii) delivers a notice to the Borrower pursuant to
Sections 3.5 or 3.8, the Borrower shall have the right, if no Default or
Event of Default then exists, to replace such Lender (the "Replaced
--------
Lender") with one or more Eligible Assignees (collectively, the
- ------
"Replacement Lender"), provided that (A) at the time of any replacement
------------------ --------
pursuant to this Section 3.15, the Replacement Lender shall enter into one
or more assignment agreements substantially in the form of Schedule
--------

<PAGE>

11.3(c) pursuant to, and in accordance with the terms of, Section 11.3(c)
- -------
(and with all fees payable pursuant to said Section 11.3(c) to be paid by
the Replacement Lender) pursuant to which the Replacement Lender shall
acquire all of the rights and obligations of the Replaced Lender hereunder
and, in connection therewith, shall pay to (1) the Replaced Lender in
respect thereof an amount equal to the sum of (a) the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (b) all
unreimbursed drawings under the Letters of Credit that have been funded by
the Replaced Lender, together with all then unpaid interest with respect
thereto at such time and (c) all accrued but theretofore unpaid, fees and
other amounts owing to the Replaced Lender pursuant to Section 3.4 and (2)
each Issuing Lender an amount equal to such Replaced Lender's LOC
Commitment Percentage of any unreimbursed drawings under Letters of Credit
issued by such Issuing Lender to the extent such amount was not heretofore
funded by Replaced Lender, and (B) all obligations of the Borrower owing to
the Replaced Lender (including all obligations, if any, owing pursuant to
Section 3.5 or 3.8, but excluding those obligations specifically described
in clause (A) above in respect of which the assignment purchase price has
been, or is concurrently being paid) shall be paid in full by the Borrower
to such Replaced Lender concurrently with such replacement.

3.16 Change of Lending Office. Each Lender agrees that on the
------------------------
occurrence of any event giving rise to the operation of Sections 3.5, 3.8
or 3.9 with respect to such Lender, it will, if requested by the Borrower,
use reasonable efforts to designate another lending office for any Loans or
Letters of Credit affected by such event, provided that such designation is
--------
made on such terms that such Lender and its lending office suffer no
material economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section.

SECTION 4

GUARANTY
--------

4.1 The Guarantee. Each of the Guarantors hereby jointly and
-------------
severally guarantees to each Lender and the Agent as hereinafter provided
the prompt payment of the Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as mandatory cash
collateralization or otherwise) strictly in accordance with the terms
thereof. The Guarantors hereby further agree that if any of the
Obligations are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as mandatory cash collateralization
or otherwise), the Guarantors will, jointly and severally, promptly pay the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as

<PAGE>

a mandatory prepayment, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.

Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, in the event of a bankruptcy or other
similar insolvency proceeding of a Guarantor, the obligations of each such
Guarantor hereunder shall be limited to an aggregate amount equal to the
largest amount that would not render its Obligations hereunder subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.

4.2 Obligations Unconditional. The obligations of the Guarantors
-------------------------
under Section 4.1 are joint and several, absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of
any other guarantee of or security for any of the Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the
intent of this Section 4.2 that the obligations of the Guarantors hereunder
shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor
hereunder which shall remain absolute and unconditional as described above:

(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Obligations shall be extended, or such performance or compliance
shall be waived;

(ii) any of the acts mentioned in any of the provisions of any of
the Credit Documents or any other agreement or instrument referred to
therein shall be done or omitted;

(iii) the maturity of any of the Obligations shall be
accelerated, or any of the Obligations shall be modified, supplemented
or amended in any respect, or any right under any of the Credit
Documents or any other agreement or instrument referred to therein
shall be waived or any other guarantee of any of the Obligations or
any security therefor shall be released or exchanged in whole or in
part or otherwise dealt with;

(iv) any Lien granted to, or in favor of, the Agent or any Lender
or Lenders as security for any of the Obligations shall fail to attach
or be perfected; or

(v) any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be

<PAGE>

subordinated to the claims of any Person (including, without
limitation, any creditor of any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any
right, power or remedy or proceed against any Person under any of the
Credit Documents or any other agreement or instrument referred to therein,
or against any other Person under any other guarantee of, or security for,
any of the Obligations.

4.3 Reinstatement. The obligations of the Guarantors under this
-------------
Section 4 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect of the
Obligations is rescinded or must be otherwise restored by any holder of any
of the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will
indemnify the Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Agent or such Lender in connection with such
rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.

4.4 Certain Additional Waivers. Without limiting the generality of
--------------------------
the provisions of this Section 4, each Guarantor hereby specifically waives
the benefits of N.C. Gen. Stat. Sec.Sec. 26-7 through 26-9, inclusive. Each of
the Guarantors further agrees that it shall have no right of subrogation,
reimbursement or indemnity, nor any right of recourse to security, if any,
for the Obligations so long as any amounts payable to the Agent or the
Lenders in respect of the Obligations shall remain outstanding and until
all of the Commitments shall have expired or been terminated.

4.5 Remedies. The Guarantors agree that, to the fullest extent
--------
permitted by law, as between the Guarantors, on the one hand, and the Agent
and the Lenders, on the other hand, the Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof (and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 9.2) for purposes of Section 4.1 notwithstanding
any stay, injunction or other prohibition preventing such declaration (or
preventing such Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or
such Obligations being deemed to have become automatically due and
payable), such Obligations (whether or not due and payable by any other
Person) shall forthwith become due and payable by the Guarantors for
purposes of said Section 4.1.

<PAGE>

4.6 Continuing Guarantee. The guarantee in this Section 4 is a
--------------------
continuing guarantee, and shall apply to all Obligations whenever arising.

4.7 Discharge of Guarantor. If all of the stock of any Guarantor or
----------------------
any of its successors in interest under this Section 4 shall be sold or
otherwise disposed of (including by merger or consolidation) in a
transaction not prohibited by this Agreement, or if a Guarantor shall no
longer satisfy the conditions for being a Guarantor under Section 7.12, the
guaranty of such Guarantor or such successor in interest, as the case may
be, hereunder and the pledge of the capital stock or other ownership
interest in such Guarantor or such successor in interest, as the case may
be, pursuant to the Pledge Agreement shall automatically be discharged and
released without any further action by the Agent, any Lender or any other
Person effective as of the date of such transaction or as of the date the
Agent receives evidence reasonably satisfactory to the Agent that such
conditions are not longer satisfied. The Borrower will give prompt notice
to the Agent of any discharge and release pursuant to this Section 4.7.

SECTION 5

CONDITIONS
----------

5.1 Conditions to Initial Extensions of Credit. The obligation of
------------------------------------------
each Lender to make its initial Extensions of Credit to Embassy Suites, as
the initial Borrower, is subject to the satisfaction of the following
conditions on or prior to the Closing Date:

(a) Executed Credit Documents. Receipt by the Agent of executed
-------------------------
counterparts of this Credit Agreement, the Notes and the other Credit
Documents.

(b) Tranche B Credit Agreement. Receipt by the Agent of copies
--------------------------
of the executed Tranche B Credit Agreement, the promissory notes
issued thereunder and the other collateral, security and other
documents relating thereto.

(c) No Default; Representations and Warranties. As of the
------------------------------------------
Closing Date (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein and in the
other Credit Documents shall be true and correct in all material
respects.

(d) Opinion of Counsel. Receipt by the Agent of an opinion, or
------------------
opinions, satisfactory to the Agent, addressed to the Agent and the
Lenders and dated as of the Closing Date, from legal counsel to the
Credit Parties and in form reasonably acceptable to the Agent and the
Credit Parties.

(e) Corporate Documents. Receipt by the Agent of the following:
-------------------

<PAGE>

(i) Charter Documents. Copies of the articles or
-----------------
certificates of incorporation or other charter documents of each
Credit Party certified to be true and complete as of a recent
date by the appropriate Governmental Authority of the state or
other jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Credit Party to be true
and correct as of the Closing Date.

(ii) Bylaws. A copy of the bylaws of each Credit Party
------
certified by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.

(iii) Resolutions. Copies of resolutions of the Board
-----------
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party and the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of such
Credit Party to be true and correct and in force and effect as of
the Closing Date.

(vi) Good Standing. Copies of (a) certificates of good
-------------
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate
Governmental Authorities of the state or other jurisdiction of
incorporation and each other jurisdiction in which the failure to
so qualify and be in good standing would have a Material Adverse
Effect and (b) to the extent available, a certificate indicating
payment of all corporate franchise taxes certified as of a recent
date by the appropriate governmental taxing authorities.

(f) Fees and Expenses. Provided the Borrower has received
-----------------
proper documentation and support therefor, payment by the Borrower of
all fees and expenses owed by it to the Lenders and the Agent,
including, without limitation, payment to the Agent of the fees set
forth in the Agent's Fee Letter.

(g) Distribution. Receipt by the Agent of evidence satisfactory
------------
to the Agent that (i) all conditions precedent to the consummation of
the Distribution have been satisfied and (ii) the Distribution will be
consummated immediately after the making of such initial Extensions of
Credit in the manner contemplated by the Proxy Statement.

(h) Other. Receipt by the Lenders of such other documents,
-----
instruments, agreements or information as reasonably requested by the
Agent or the Required Lenders.

5.2 Conditions to Assignment to Hotel Inc., Release of Embassy Suites
-----------------------------------------------------------------
and Promus Co. and Initial Extensions of Credit to
- ---------------------------------------------------

<PAGE>

Hotel Inc. The obligation of the Lenders to accept the assignment to and
- ----------
the assumption by Hotel Inc. of the rights and obligations of Embassy
Suites under this Credit Agreement and to release Embassy Suites and Promus
Co. of their respective obligations, direct and indirect, present and
future, under this Credit Agreement pursuant to Section 11.3(b) and to make
its initial Extensions of Credit to Hotel Inc. shall be subject to
satisfaction of the following conditions on or prior to the Effective Date
of Assignment:

(a) Assignment and Assumption Agreement. Receipt by the Agent
-----------------------------------
of executed counterparts of the Hotel Inc. Assignment and Assumption
Agreement.

(b) Pledge Agreement and Stock Certificates. Receipt by the
---------------------------------------
Agent of the executed Pledge Agreement and all of the stock
certificates evidencing the stock pledged to the Lenders pursuant to
the Pledge Agreement, along with duly executed undated stock powers
executed in blank attached thereto.

(c) Reorganization Resolution. Receipt by the Agent of (i) a
-------------------------
copy of corporate resolutions of the directors of Promus Co. and
Embassy Suites approving the Reorganization, (ii) copies of the
Reorganization Documents, certified by a secretary or assistant
secretary of Hotel Corp. and (iii) such other information regarding
the structure, tax treatment, existing and projected tax liabilities
and other matters relating to the Reorganization as the Agent may
reasonably request.

(d) Solvency Certificate. Receipt by the Agent of a certificate
--------------------
of the chief financial officer of Embassy Suites as of the Effective
Date of the Assignment stating that, immediately after giving effect
to the Reorganization, the Distribution and Hotel Inc. Assignment and
Assumption Agreement, Embassy Suites is Solvent.

<PAGE>

does not exist any action, suit or proceeding, pending or threatened,
in which there is a reasonable possibility of an adverse decision,
which would materially adversely affect the ability of Hotel Inc. or
any of the Guarantors (including Hotel Corp.) to perform its
obligations under the Credit Documents or the ability of the Lenders
to exercise their rights thereunder; and (v) immediately after giving
effect to the Reorganization, the Distribution and the Hotel Inc.
Assignment and Assumption Agreement, (A) no Default or Event of
Default shall have occurred and be continuing and (B) the
representations and warranties set forth in Section 6 will be true and
correct in all material respects.

(f) NYSE Listing. Receipt by the Agent of evidence satisfactory
------------
to it that the shares of Hotel Corp.'s common stock shall have been
approved for listing on the New York Stock Exchange.

(g) Form 10 Filing. Receipt by the Agent of evidence
--------------
satisfactory to it that the Form 10 shall have been filed with the
Securities and Exchange Commission together with a certification by
the chief financial officer of Embassy Suites that Embassy Suites has
received no stop order regarding the Form 10 from the Securities and
Exchange Commission and that the Form 10 shall have become effective.

(h) Other Documents. Receipt by the Agent of all documents it
---------------
and the Required Lenders may reasonably request relating to the
existence of each of Hotel Corp., Hotel Inc. and the other Guarantors,
the corporate authority for and the validity of Hotel Inc. Assignment
and Assumption Agreement and any other matters relevant thereto, all
in form and substance reasonably satisfactory to the Agent.

(i) Legal Opinions. Receipt by the Agent of legal opinions
--------------
addressed to the Agent and the Lenders from (i) counsel to Embassy
Suites and Promus Co. satisfactory to Agent, dated as of the Effective
Date of Assignment and in a form reasonably acceptable to the Agent,
Promus Co. and Embassy Suites and (ii) counsel to Hotel Corp. and
Hotel Inc. satisfactory to Agent, dated as of the Effective Date of
Assignment and in form reasonably acceptable to the Agent, Promus Co.
and Embassy Suites.

(j) Other Information. Receipt by the Agent of such other
-----------------
documents, agreements or information which may be reasonably requested
by the Agent and the Required Lenders.

The Agent's execution and delivery of the Hotel Inc. Assignment and
Acceptance Agreement shall constitute the agreement of the Agent binding
upon the Lenders that all of the conditions set forth in this Section 5.2
have been either satisfied or waived.

<PAGE>

5.3 Each Extension of Credit. The obligation of each Lender to make
------------------------
any Extension of Credit, including the conversion to or extension of any
Eurodollar Loan (and including the obligation of the Swingline Lender to
make any Swingline Loan) is subject to satisfaction of the following
conditions in addition to (i) with respect to any Extension of Credit to be
made, converted or extended on a date occurring prior to the Effective Date
of Assignment, satisfaction on the Closing Date of the conditions set forth
in Section 5.1 and (ii) with respect to any Extension of Credit to be made,
converted or extended on a date occurring on or after the Effective Date of
Assignment, satisfaction on the Closing Date of the conditions set forth in
Section 5.1 and satisfaction on the Effective Date of Assignment of the
conditions set forth in Section 5.2:

(a) (i) In the case of any Committed Revolving Loan, the Agent
shall have received an appropriate Notice of Borrowing or Notice of
Conversion/Extension; (ii) in the case of any Letter of Credit, the
Issuing Bank and the Agent shall have received an appropriate notice
of request for issuance of a Letter of Credit in accordance with the
provisions of Section 2.2(b), (iii) in the case of any Competitive
Loan, the applicable Competitive Loan Lender shall have received an
appropriate notice of acceptance of its related Competitive Bid; and
(iv) in the case of any Swingline Loan, the Swingline Lender shall
have received an appropriate Notice of Borrowing in accordance with
the provisions of Section 2.3(b)(i);

(b) The representations and warranties set forth in Section 6
hereof and in the Pledge Agreement shall be true and correct in all
material respects as of such date (except for those which expressly
relate to an earlier date);

(c) There shall not have been commenced against the Parent
Company, the Borrower or any Guarantor an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Parent Company, the Borrower
or any Guarantor or for any substantial part of its Property or for
the winding up or liquidation of its affairs, and such involuntary
case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;

(d) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto; and

(e) Since December 31, 1994, there shall not have been a material
adverse change in or event or condition materially adversely affecting
the financial condition, operations, business or prospects of the
hotel business of

<PAGE>

the Parent Company, the Borrower and their Subsidiaries, taken as a
whole.

The delivery of each Notice of Borrowing and each Notice of Conversion
relating to an extension of or conversion into Eurodollar Loans, each
request for the issuance or extension of a Letter of Credit, each request
for a Competitive Bid pursuant to a Competitive Bid Request and each
request for a Swingline Loan pursuant to Section 2.3(b)(i) shall constitute
a representation and warranty by the Borrower of the correctness of the
matters specified in subsections (b), (c), (d) and (e) above.

SECTION 6

REPRESENTATIONS AND WARRANTIES
------------------------------

To induce the Agent and each Lender to make the Extensions of Credit
requested to be made by it on the Closing Date and on each Credit Date
thereafter, the Credit Parties hereby represent and warrant, on the Closing
Date, and on every Credit Date thereafter (except to the extent the
following representations warranties relate to a specific date), to the
Agent and each Lender that:

6.1 Financial Condition. (a) The audited consolidated balance sheet
-------------------
of Promus Co. and its consolidated Subsidiaries as of December 31, 1994 and
the audited consolidated statements of earnings and statements of cash
flows for the year ended December 31, 1994 have heretofore been furnished
to the Agent. Such financial statements (including the notes thereto) (i)
have been audited by Arthur Andersen LLP, (ii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby and (iii) (on the basis disclosed in the footnotes to such
financial statements) present fairly, in all material respects, the
consolidated financial condition, results of operations and cash flows of
Promus Co. and its consolidated Subsidiaries as of such date and for such
periods. The unaudited interim balance sheets of Promus Co. and its
consolidated Subsidiaries as at the end of, and the related unaudited
interim statements of earnings and of cash flows for, each fiscal month and
quarterly period ended after December 31, 1994 and prior to the Closing
Date have heretofore been furnished to the Agent. Such interim financial
statements for each such quarterly period, (i) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby and (ii) (on the basis disclosed in the footnotes to such financial
statements) present fairly, in all material respects, the consolidated
financial condition, results of operations and cash flows of Promus Co. and
its consolidated Subsidiaries as of such date and for such periods subject
to year-end and audit adjustments. During the period from December 31,
1994 to and including the Closing Date, there has been no sale, transfer or
other disposition by Promus Co. or any of its Subsidiaries of any material
part of the business or property of Promus Co. and its

<PAGE>

consolidated Subsidiaries, taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any
capital stock of any other person) material in relation to the consolidated
financial condition of Promus Co. and its consolidated Subsidiaries, taken
as a whole, in each case, which, is not reflected in the foregoing
financial statements or in the notes thereto and has not otherwise been
disclosed in writing to the Lenders on or prior to the Closing Date.

(b) The pro forma balance sheet of Hotel Corp. and its consolidated
--- -----
Subsidiaries set forth in the Proxy Statement (the "Pro Forma Balance
-----------------
Sheet") is the balance sheet of Hotel Corp. and its consolidated
- -----
Subsidiaries as of December 31, 1994 (the "Pro Forma Date"), adjusted to
--------------
give effect (as if such events have occurred on such date) to (i) the
consummation of the Reorganization and Distribution on the Closing Date and
of the Assignment and Assumption, (ii) the Extension of Credit under this
Credit Agreement and/or the Tranche B Credit Agreement to be made on the
Closing Date in an aggregate principal amount of not more than
$225,000,000, and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and
thereby. The Pro Forma Balance Sheet was prepared on the same basis as the
balance sheets included in the financial statements described in the first
sentence of subsection 6.1(a), except as set forth in Schedule 6.1(b).
---------------

(c) On and as of the Closing Date, (i) the financial projections (the
"Projections") prepared by the Parent Company and the Borrower and
-----------
contained in the Confidential Offering Memorandum delivered to the Lenders
by the Agent prior to the Closing Date were prepared based upon the
assumptions concerning various industry trends described therein for the
periods presented, (ii) the Projections were based on good faith
assumptions and estimates, and (iii) although a range of possible different
assumptions and estimates might also be reasonable, the Parent Company and
the Borrower are not aware of any facts that would lead them to believe
that the assumptions and estimates on which the Projections were based are
not reasonable; provided that no assurance can be given that the projected
--------
results will be realized or with respect to the ability of the Parent
Company and the Borrower to achieve the projected results, and while the
Projections are necessarily presented with numerical specificity, the
actual results achieved during the periods presented in all likelihood will
differ from the projected results and such differences may be material.

6.2 No Change; Solvent. Since December 31, 1994, (a) there has been
------------------
no development or event relating to or affecting the Parent Company, the
Borrower or any of their Subsidiaries which has had or would be reasonably
expected to have a Material Adverse Effect and (b) except as permitted
under this Credit Agreement no dividends or other distributions have been
declared, paid or made upon the capital stock of the Borrower nor has any
of the capital stock of the Borrower been redeemed, retired,

<PAGE>

purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries. As of the Closing Date, after giving effect to (i) the
consummation of the Assignment and Assumption, (ii) the making of the
Extensions of Credit under this Credit Agreement and/or the Tranche B
Credit Agreement to be made on the Closing Date in an aggregate principal
amount of not more than $225,000,000 and (iii) the payment of estimated
fees, expenses and financing costs related to the transactions contemplated
hereby and thereby, Hotel Corp., Hotel Inc. and each Guarantor is Solvent.

6.3 Corporate and Partnership Existence; Compliance with Law. Each
--------------------------------------------------------
of the Parent Company, the Borrower and their Subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate or partnership
power and authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the business in
which it is currently engaged, except to the extent that the failure to
have such legal right would not be reasonably expected to have a Material
Adverse Effect, (c) is duly qualified and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing
would not be reasonably expected to have a Material Adverse Effect, and (d)
is in compliance with all Requirements of Law, except to the extent that
the failure to comply therewith would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.

6.4 Corporate and Partnership Power; Authorization; Enforceable
-----------------------------------------------------------
Obligations. The Parent Company, the Borrower and each of the other Credit
- -----------
Parties has the corporate or partnership power and authority, and the legal
right, to make, deliver and perform the Credit Documents to which it is a
party and to borrow and accept Extensions of Credit hereunder or to issue
the guarantee or to pledge stock hereunder, and have taken all necessary
corporate or partnership action to authorize the borrowings or guarantees
and Extensions of Credit or guarantee such borrowings and Extensions of
Credit, as appropriate, on the terms and conditions of this Credit
Agreement and any Notes and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in
respect of, any Governmental Authority or any other Person is required to
be obtained or made by or on behalf of the Borrower or any Guarantor in
connection with the borrowings or guarantees hereunder or with the
execution, delivery, performance, validity or enforceability of the Credit
Documents to which the Borrower is a party, except for consents,
authorizations, notices and filings described in Schedule 6.4, all of which
------------
have been obtained or made or have the status described in such Schedule
--------
6.4. This Credit Agreement has been, and each other Credit Document to
- ---
which it is a party will be,

<PAGE>

duly executed and delivered on behalf of the Borrower and the Guarantors.
This Credit Agreement constitutes, and each other Credit Document to which
it is a party when executed and delivered will constitute, a legal, valid
and binding obligation of the Borrower and the Guarantors enforceable
against them in accordance with its respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

6.5 No Legal Bar. The execution, delivery and performance of the
------------
Credit Documents by the Borrower, the Parent Company and the other Credit
Parties, the borrowings and extensions of credit and the guarantees thereof
hereunder and the use thereof and the pledge of stock in connection
therewith (a) will not violate any Requirement of Law or Contractual
Obligation of the Borrower, the Parent Company or the other Credit Parties
in any respect that would reasonably be expected to have a Material Adverse
Effect and (b) will not result in, or require, the creation or imposition
of any Lien (other than the Liens created by the Pledge Agreement) on any
of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.

6.6 No Material Litigation. No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Borrower, threatened by or against the Parent
Company, the Borrower or any of their Subsidiaries or against any of its or
their respective properties or revenues which would be reasonably expected
to have a Material Adverse Effect.

6.7 No Default. Neither the Parent Company, the Borrower nor any of
----------
their Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which would be reasonably expected
to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.

6.8 Ownership of Property; Liens. Except as would not have a
----------------------------
Material Adverse Effect or as set forth in Schedule 6.8 hereto, the Parent
------------
Company, the Borrower and each of their Subsidiaries has good record and
sufficient title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all
its other property. None of such property is subject to any Lien, except
for Permitted Liens.

6.9 Intellectual Property. The Parent Company, the Borrower and each
---------------------
of their Subsidiaries owns, or has the legal right to use, all United
States trademarks, tradenames, copyrights, service marks, technology, know-
how and processes necessary for each of them to conduct its business as
currently conducted (the "Intellectual Property") except for those the
---------------------

<PAGE>

failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. Except as provided on Schedule
--------
6.9, no claim has been asserted and is pending by any Person challenging or
- ---
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know
of any such claim, and the use of such Intellectual Property by the Parent
Company, the Borrower and their Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that in the
aggregate, would not be reasonably expected to have a Material Adverse
Effect.

6.10 No Burdensome Restrictions. No Requirement of Law of the
--------------------------
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.

6.11 Taxes. The Parent Company, the Borrower and each of their
-----
Subsidiaries that are corporations have filed or caused to be filed all
United States federal income tax returns and all other material tax returns
which, to the knowledge of the Borrower, are required to be filed, and have
paid (a) all taxes shown to be due and payable on said returns and (b) any
assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any (i) taxes, fees
or other charges with respect to which the failure to pay, in the
aggregate, would not have a Material Adverse Effect and (ii) taxes, fees or
other charges the amount or validity of which are currently being contested
and with respect to which reserves in conformity with GAAP have been
provided on the books of the Parent Company, the Borrower or such
Subsidiaries, as the case may be).

6.12 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used in any manner which might cause the Loans or the application of
such proceeds to violate Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.
If requested by any Lender or the Agent, the Parent Company, the Borrower
and the other Credit Parties will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U. The parties hereto acknowledge
that the use of proceeds of the Loans by the Borrower to purchase
$25,000,000 of shares in Felcor Suites Hotels, Inc. or units in Felcor
Suites Hotels Limited Partnership will not cause a violation of said
Regulation U.

6.13 ERISA. During the five year period prior to each date as of
-----
which this representation is made, or deemed made (or, with respect to (vi)
or (viii) below, as of the date such representation is made or deemed
made), none of the following events or conditions, either individually or
in the aggregate, has resulted or is reasonably likely to result in a
liability to the Parent Company, the Borrower or any of their Subsidiaries
which would be reasonably expected to have a Material Adverse

<PAGE>

Effect: (i) a Reportable Event with respect to any Single Employer Plan;
(ii) an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA) with respect to any Single Employer
Plan which has not been waived; (iii) any material noncompliance with the
application of ERISA or the Code with respect to any Plan; (iv) a
termination of a Single Employer Plan (other than a standard termination
pursuant to Section 4041(b) of ERISA); (v) a Lien in favor of the PBGC with
respect to any Single Employer Plan or a Plan pursuant to Section 4068 or
Section 302(f) of ERISA, respectively; (vi) Underfunding with respect to
any Single Employer Plan; (vii) a complete or partial withdrawal from any
Multiemployer Plan by the Parent Company, the Borrower or any Commonly
Controlled Entity; (viii) any liability of the Parent Company, the Borrower
or any Commonly Controlled Entity under ERISA if the Parent Company, the
Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the annual valuation date most closely
preceding the date on which their representation is made or deemed made;
(ix) the Plan Reorganization or Insolvency of any Multiemployer Plan; (x)
the excess of the present value (determined using actuarial and other
assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the aggregate liability of the Parent
Company, the Borrower or any of their Subsidiaries for post-retirement
benefits to be provided to their current and former employees (excluding
benefits provided pursuant to Section 4980B of the Code or Section 601 of
ERISA), under Plans which are welfare benefit plans (as determined in
Section 3(1) of ERISA) over the assets under all such Plans; and (xi) an
event or condition with respect to which the Parent Company, the Borrower
or any Commonly Controlled Entity could incur any liability in respect of a
Former Plan.

6.14 Investment Company Act; Other Regulations. The Borrower is not
-----------------------------------------
an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended. The Borrower is not subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness
as contemplated hereby.

6.15 Subsidiaries. Set forth in Schedule 6.15 is a complete and
------------ -------------
accurate list of all Subsidiaries of the Parent Company and the Borrower
both immediately prior to, and immediately after giving effect to, the
Assignment and Assumption. Information on the attached Schedule includes
jurisdiction of incorporation or organization; the number of shares of each
class of capital stock or other equity interest outstanding; the number and
percentage of outstanding shares of each class owned (directly or
indirectly) by such Person; and the number and effect, if exercised, of all
outstanding options, warrants, rights of conversion or purchase and similar
rights. The outstanding capital stock of all such corporate Subsidiaries
is validly issued, fully paid and non-assessable and is owned by such

<PAGE>

Person, directly or indirectly, free and clear of all Liens other than
Permitted Liens.

6.16 Purpose of Loans. The Extensions of Credit and the proceeds
----------------
therefrom shall be used for working capital and general corporate purposes
(including, without limitation, the support of commercial paper), to
finance the costs and expenses of the Reorganization, including the
repayment of certain indebtedness of Embassy Suites outstanding immediately
prior to the Reorganization, and to finance hotel development and other
investments not prohibited hereunder.

6.17 Environmental Matters. (a) To the knowledge of the Borrower, the
---------------------
facilities and properties owned, leased or operated by the Parent Company,
the Borrower or any of their Subsidiaries (the "Subject Properties") and
------------------
all operations at the Subject Properties are in compliance with all
applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the business operated by the Parent
Company, the Borrower or any of their Subsidiaries (the "Business"), and
--------
there are no conditions relating to the Business or Subject Properties that
would be reasonably likely to give rise to liability under any applicable
Environmental Law, except for any failure so to comply or violation or
condition, or any aggregation thereof, that would not be reasonably likely
to result in the payment of a Material Environmental Amount.

(b) To the knowledge of the Borrower, the Subject Properties do not
contain any Materials of Environmental Concern at, on or under the Subject
Properties in amounts or concentrations that constitute a violation of, or
could reasonably give rise to liability under, Environmental Laws, except
insofar as the presence of any Materials of Environmental Concern is not
reasonably likely to result in the payment of a Material Environmental
Amount.

(c) Neither the Parent Company, the Borrower nor any of their
Subsidiaries has received any written notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation, non-
compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the
Subject Properties or the Business, nor does the Borrower have knowledge
that any such notice will be received or is being threatened, except
insofar as such notice or threatened notice, or any aggregation thereof,
does not involve a matter or matters that is or are reasonably likely to
result in the payment of a Material Environmental Amount.

<PAGE>

Subsidiaries in violation of, or in a manner that would be reasonably
likely to give rise to liability under, any applicable Environmental Law,
except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not reasonably likely to result
in the payment of a Material Environmental Amount.

(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Parent Company, the Borrower or any of their
Subsidiaries is named as a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Parent Company, the Borrower, any of
their Subsidiaries, the Subject Properties or the Business, except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.

(f) To the knowledge of the Borrower, there has been no release or
threat of release of Materials of Environmental Concern at or from the
Subject Properties, or arising from or related to the operations
(including, without limitation, disposal) of the Parent Company, the
Borrower or any of their Subsidiaries in connection with the Subject
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that would be reasonably likely to give rise to
liability under Environmental Laws, except insofar as any such violation or
liability referred to in this paragraph, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental
Amount.

(g) To the knowledge of the Borrower, neither the Parent Company, the
Borrower nor any of their Subsidiaries has voluntarily assumed any
liability of any Person under any Environmental Law that is not subject to
indemnification and is reasonably likely to result in the payment of a
Material Environmental Amount.

Notwithstanding any provision herein to the contrary, all references in
Sections 6.1 through 6.17 to the "Parent Company" shall mean Hotel Corp.,
--------------
all references in this Section 6 to the "Borrower" shall mean Hotel Inc.
--------
and all references in this Section 6 to "Credit Parties" or "Guarantors"
-------------- ----------
shall mean only Hotel Corp. and its Subsidiaries which are included in the
definitions of such terms.

<PAGE>

SECTION 7

AFFIRMATIVE COVENANTS
---------------------

Each Credit Party hereby covenants and agrees that commencing with the
Closing Date and so long as this Credit Agreement is in effect and until
the Obligations, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments hereunder shall have
terminated:

7.1 Information Covenants. The Parent Company and the Borrower will
---------------------
furnish, or cause to be furnished, to the Agent:

(a) Annual Financial Statements. As soon as available, and in
---------------------------
any event within 120 days after the close of each fiscal year of the
Parent Company, a consolidated balance sheet and income statement of
the Parent Company and its consolidated subsidiaries (including the
Borrower), as of the end of such fiscal year, together with related
consolidated statements of operations and retained earnings and of
cash flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
audited by Arthur Anderson LLP or other independent certified public
accountants of recognized national standing reasonably acceptable to
the Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified as to the status of the
Credit Parties as a going concern.

(b) Quarterly Financial Statements. As soon as available, and
------------------------------
in any event within 45 days after the close of each fiscal quarter of
the Parent Company (other than the fourth fiscal quarter, in which
case 120 days after the end thereof) a consolidated balance sheet and
income statement of the Parent Company and its consolidated
subsidiaries (including the Borrower), as of the end of such fiscal
quarter, together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal quarter in
each case setting forth in comparative form consolidated figures for
the corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable form and
detail and reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer, treasurer or controller of
the Parent Company to the effect that such quarterly financial
statements fairly present in all material respects the financial
condition and results of operations of the Parent Company and its
consolidated subsidiaries (including the Borrower), and have been
prepared in accordance with GAAP, subject to changes resulting from
audit and normal year-end audit adjustments.

<PAGE>

(c) Officer's Certificate. At the time of delivery of the
---------------------
financial statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer, treasurer or controller
of the Parent Company substantially in the form of Schedule 7.1(d)
---------------
attached hereto, (i) demonstrating compliance with the financial
covenants contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period and (ii) stating that no Default or
Event of Default exists, or if any Default or Event of Default does
exist, specifying the nature and extent thereof and what action the
Parent Company proposes to take with respect thereto.

(d) Accountant's Report. Within the period for delivery of the
-------------------
annual financial statements provided in Section 7.1(a), a report of
the accountants conducting the annual audit stating that they have
reviewed Section 7.11 and stating further whether, in the course of
their audit, anything came to their attention to cause them to believe
that the Parent Company and its consolidated Subsidiaries were not in
compliance with Section 7.11, in so far as such Section 7.11 relates
to accounting matters, on the date of such statements.

(e) Reports. Promptly upon transmission or receipt thereof, (a)
-------
copies of all registration statements (other than the exhibits thereto
and any registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalent) which the
Parent Company or any of its Subsidiaries shall file with the
Securities and Exchange Commission, or any successor agency, (b)
copies of all financial statements, proxy statements, notices and
reports as the Parent Company, the Borrower or any of their
Subsidiaries shall send to its shareholders or to a holder of any
Indebtedness with a maximum principal amount exceeding $25,000,000
owed by the Parent Company, the Borrower or any of their Subsidiaries
in its capacity as such a holder (other than reports of a routine or
ministerial nature which are not material) and (c) upon the request of
the Agent, all reports and written information to and from the United
States Environmental Protection Agency, or any state or local agency
responsible for enforcement of Environmental Laws (other than reports
of a routine or ministerial nature which are not material).

<PAGE>

Material Adverse Effect, (ii) the institution of any proceedings
against the Parent Company, the Borrower or any of their Subsidiaries
with respect to, or the receipt of notice by such Person of potential
liability or responsibility for, violation, or alleged violation of
any Environmental Laws, the violation of which would likely have a
Material Adverse Effect, or (iii) any notice or determination
concerning the imposition of any withdrawal liability by a
Multiemployer Plan against the Parent Company, the Borrower or any of
their Subsidiaries or any of their Commonly Controlled Entities, the
determination that a Multiemployer Plan is, or is expected to be, in a
Plan Reorganization or the termination of any Plan in a distress
termination under Section 4041(c) of ERISA.

(g) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of the Parent Company, the Borrower or any of
their Subsidiaries as the Agent or the Required Lenders may reasonably
request.

7.2 Preservation of Existence and Franchises. Each of the Credit
----------------------------------------
Parties will do all things necessary to preserve and keep in full force and
effect its existence, rights, franchises and authority except as permitted
under Section 8.4 or where failure to do so would not reasonably be
expected to have a Material Adverse Effect.

7.3 Books and Records. Each of the Credit Parties will, and will
-----------------
cause their Subsidiaries to, keep complete and accurate books and records
of its transactions in accordance with good accounting practices on the
basis of GAAP (including the establishment and maintenance of appropriate
reserves).

7.4 Compliance with Law. Each of the Credit Parties will, and will
-------------------
cause their Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental
Authorities, applicable to it and its property if noncompliance with any
such law, rule, regulation, order or restriction would have a Material
Adverse Effect.

7.5 Payment of Taxes and Other Indebtedness. Each of the Credit
---------------------------------------
Parties will, and will cause their Subsidiaries that are corporations to,
pay and discharge (i) all material taxes, assessments and governmental
charges or levies imposed upon it, or upon its income or profits, or upon
any of its properties, before a material penalty begins to accrue, (ii) all
lawful claims (including claims for labor, materials and supplies) which,
if unpaid, might give rise to a Lien upon any of its properties, and (iii)
except as prohibited hereunder, all of its other Indebtedness as it shall
become due; provided, however, that there shall be no requirement to pay
any such tax, assessment, charge, levy, claim or Indebtedness which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in

<PAGE>

accordance with GAAP, unless the failure to make any such payment (i) would
give rise to an immediate right to foreclose on a Lien securing such
amounts or (ii) would have a Material Adverse Effect.

7.6 Insurance. Each of the Credit Parties will, and will cause their
---------
Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering
such risks and liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice.

7.7 Maintenance of Property. Each of the Credit Parties will, and
-----------------------
will cause their Subsidiaries to, maintain and preserve its properties and
equipment material to the conduct of its business in good repair, working
order and condition, normal wear and tear excepted, except where failure to
do so would not have a Material Adverse Effect and will make, or cause to
be made, in such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses except where failure to do so
would not have a Material Adverse Effect.

7.8 Performance of Obligations. Each of the Credit Parties will, and
--------------------------
will cause their Subsidiaries to, perform in all material respects all of
its obligations under the terms of all material agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a
party or by which it is bound, except where failure to do so would not have
a Material Adverse Effect.

7.9 Use of Proceeds. The Extensions of Credit and the proceeds
---------------
thereof may be used solely for the purposes provided in Section 6.16.

7.10 Audits/Inspections. Upon reasonable prior notice, with
------------------
reasonable frequency and during normal business hours, each Credit Party
will, and will cause their Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent
accountants, agents, attorneys, and appraisers to visit and inspect their
property, including their books and records, their accounts receivable and
inventory, their facilities and their other business assets, and to make
photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information
provided to the Lenders and to discuss all such matters with the officers
of the Credit Parties and their Subsidiaries.

7.11 Financial Covenants.
-------------------

<PAGE>

(a) Consolidated Net Worth. There shall be maintained at all
----------------------
times determined at the end of each fiscal quarter Consolidated Net
Worth of at least $125,000,000; provided, however, that the minimum
-------- -------
Consolidated Net Worth required hereunder shall be increased by (i) on
the last day of each fiscal quarter to occur after the Closing Date,
an amount equal to 50% of Consolidated Net Income for the fiscal
quarter then ended (or if Consolidated Net Income is a deficit, then
zero), and (ii) immediately upon receipt, 100% of the net proceeds
received by the Borrower or any Subsidiary pursuant to any Equity
Transaction occurring after the Closing Date.

(b) Leverage Ratio. The Leverage Ratio, as determined at the end
--------------
of each fiscal quarter for the four consecutive fiscal quarter period
then ended, shall not at any time exceed:

Period Ending
-------------

Closing Date through the last day
of fiscal year 1995 3.5:1.0

First day of fiscal year 1996 through
last day of fiscal year 1996 3.25:1.0

First day of fiscal year 1997 and
thereafter 3.0:1.0

(c) Consolidated Fixed Charge Coverage Ratio. The Consolidated
----------------------------------------
Fixed Charge Coverage Ratio, as determined at the end of each fiscal
quarter for the four consecutive fiscal quarter period then ended,
shall be not less than:

Period Ending
-------------

Closing Date through the last day
of fiscal year 1996 1.25:1.0

First day of fiscal year 1997 through
the last day of fiscal year 1997 2.0:1.0

First day of fiscal year 1998 and
thereafter 2.5:1.0

7.12 Additional Credit Parties. Where the Wholly Owned Subsidiaries
-------------------------
of the Parent Company or the Borrower (other than a Wholly Owned Subsidiary
formed solely to provide insurance to the Parent Company, its Subsidiaries
and Joint Ventures) which are not Guarantors hereunder (the "Non-Guarantor
-------------
Subsidiaries") shall at any time
- ------------

(i) individually in any instance constitute more than
either (A) 10% of Consolidated Legal Entity Assets of the Parent
Company, the Borrower and their Subsidiaries, or

<PAGE>

(B) 10% of Consolidated Legal Entity Gross Revenues of the Parent
Company, the Borrower and their Subsidiaries, or (C) 10% of
Consolidated Legal Entity EBITDA of the Parent Company, the Borrower
and their Subsidiaries, the Parent Company and the Borrower will
promptly notify the Agent thereof, and promptly cause any such Non-
Guarantor Subsidiary to become a "Guarantor" hereunder by way of
execution of a Joinder Agreement; or

(ii) as a group constitute more than either (i) 25% of
Consolidated Legal Entity Assets of the Parent Company, the Borrower
and their Subsidiaries, or (ii) 25% of Consolidated Legal Entity Gross
Revenues of the Parent Company, the Borrower and their Subsidiaries,
or (iii) 25% of Consolidated Legal Entity EBITDA of the Parent
Company, the Borrower and their Subsidiaries (collectively, the
"Threshold Requirement"), the Parent Company and the Borrower will
---------------------
promptly notify the Agent thereof, and promptly cause one or more of
the Non-Guarantor Subsidiaries to become a "Guarantor" hereunder by
way of execution of a Joinder Agreement, such that immediately after
the joinder of such Subsidiaries as Guarantors hereunder, the
remaining Non-Guarantor Subsidiaries shall not, as a group, exceed the
Threshold Requirement.

The Borrower may at any time, at its option, cause a Non-Guarantor
Subsidiary to execute a Joinder Agreement at which time such Subsidiary
shall become a Guarantor hereunder. The Borrower will cause to be
delivered with any such Joinder Agreement such other documentation as the
Agent may reasonably request, including specifically without limitation,
certified corporate resolutions, other corporate documentation and legal
opinions (covering, among other things, the legality, validity, binding
effect and enforceability of the Joinder Agreement) of or relating to such
Additional Credit Party, all in form and substance reasonably satisfactory
to the Agent. With respect to any Non-Guarantor Subsidiary that becomes a
Guarantor pursuant to this Section 7.12, the Borrower shall promptly cause
all of the capital stock or other ownership interest of such Non-Guarantor
Subsidiary to be pledged to the Agent pursuant to the Pledge Agreement.

SECTION 8

NEGATIVE COVENANTS
------------------

8.1 Indebtedness. Neither the Parent Company or the Borrower will,
------------
nor will they permit any of their Subsidiaries to,

<PAGE>

contract, create, incur, assume or permit to exist any Indebtedness,
except:

(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;

(b) Indebtedness existing as of the Closing Date and disclosed
in the financial statements referenced in Section 6.1(a) or set forth
in Schedule 8.1 (and renewals, refinancings and extensions thereof in
------------
a principal amount not in excess of the amount then outstanding on
terms and conditions no less favorable to such Person than such
existing Indebtedness);

(c) purchase money Indebtedness (including Capital Leases)
hereafter incurred to finance the purchase of fixed assets provided
--------
that (i) the total of all such Indebtedness incurred after the Closing
Date for the Parent Company, the Borrower and their Subsidiaries taken
together shall not exceed an aggregate principal amount of $20,000,000
at any one time outstanding; (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount
in excess of the principal balance outstanding thereon at the time of
such refinancing;

(d) obligations in respect of Interest Rate Protection
Agreements, Currency Protection Agreements and commodity purchase or
option agreements entered into in order to manage existing or
anticipated interest rate, exchange rate or commodity price risks and
not for speculative purposes;

(e) Intercompany Indebtedness; provided that all such
--------
Intercompany Indebtedness owed by any Credit Party to any Subsidiary
of the Borrower or the Parent Company which is not a Credit Party
shall be subordinated in right of payment to the payment in full of
the Obligations pursuant to the terms of an intercompany subordination
agreement reasonably satisfactory to the Agent;

(f) Indebtedness acquired in connection with mergers and
acquisitions permitted under Sections 8.4(a) or 8.4(c) and not
incurred in contemplation of their becoming Subsidiaries (and
renewals, refinancings and extensions thereof in a principal amount
not in excess of the amount then outstanding on terms and conditions
no less favorable to such Person than such existing Indebtedness);

(g) Indebtedness arising under the Tranche B Credit Agreement
and other related agreements and documents issued or delivered
thereunder or pursuant thereto;

(h) accrued expenses and current trade accounts payable incurred
in the ordinary course of business;

<PAGE>

(i) unsecured Indebtedness under performance bonds and
completion guarantees in respect of the construction of any properties
in accordance with the plans or standards as agreed with the obligee
of such guarantee so long as such bonds or guarantees are incurred in
the ordinary course of business;

(j) Indebtedness consisting of (i) reimbursement obligations on
letters of credit (other than Letters of Credit), bankers acceptances
or similar instruments, provided that the aggregate amount thereof at
--------
any one time outstanding shall not exceed $5,000,000 and (ii) surety,
performance or appeal bonds to the extent permitted by Section 8.2;

(k) Non-Recourse Indebtedness of any Specified Subsidiary to
finance the development of hotel properties so long as the aggregate
amount thereof at any time outstanding does not exceed $100,000,000,
it being understood and agreed, however, that (i) a Specified
Subsidiary which has incurred outstanding Non-Recourse Indebtedness
pursuant to this Section 8.1(k) may guaranty the Non-Recourse
Indebtedness incurred pursuant to this Section 8.1(k) by other
Specified Subsidiaries, and (ii) such Non-Recourse Indebtedness may be
guaranteed by the Parent Company, the Borrower and their respective
Subsidiaries to the extent otherwise permitted under this Section 8.1;

(l) Unsecured Guaranty Obligations in relation to Indebtedness
of Specified Subsidiaries, Joint Ventures and parties to management or
franchise agreements with the Borrower or its Subsidiaries or such
Joint Ventures engaged in each case primarily in the hotel business or
other reasonably related business, but only if, and to the extent,
that the sum of (i) the aggregate amount of such Guaranty Obligations
under this subsection (l) incurred after the Closing Date plus (ii)
----
the aggregate amount of cash Investments permitted under Section
8.5(g) made after the Closing Date, shall not at any time exceed
$150,000,000 at any time, provided that the limitation set forth above
--------
shall be (A) increased (or decreased if Consolidated Net Income is
negative) on the first day of each fiscal year of the Parent Company
(commencing with the first day of fiscal year 1996) by 100% of the
Consolidated Net Income for the fiscal year last ended and (B)
decreased from time to time by the aggregate amount of cash Dividends
paid by the Parent Company on and after the Closing Date and prior to
the date of determination (such limitation, as increased and decreased
from time to time, herein referred to as the "Third Party Investment
----------------------
Basket Amount");
-------------

(m) Subordinated Debt with a final maturity beyond the
Termination Date which is subordinated in a manner, and with
subordination language, reasonably acceptable to the Required Lenders;

<PAGE>

(n) commercial paper borrowings of the Borrower supported by the
Hotel Facility in an amount not to exceed $100,000,000 in the
aggregate at any time outstanding;

(o) unsecured Guaranty Obligations of the Parent Company, the
Borrower or any of their respective Subsidiaries in relation to
Indebtedness (other than Non-Recourse Indebtedness) of Subsidiaries of
the Parent Company or the Borrower otherwise permitted under this
Section 8.1;

(p) Indebtedness permitted under Section 3.11(c) of this Credit
Agreement or the Tranche B Credit Agreement; and

(q) Indebtedness not otherwise permitted under this Section 8.1
in an aggregate principal amount not to exceed $25,000,000 at any one
time outstanding.

8.2 Liens. Neither the Parent Company or the Borrower will, nor will
-----
they permit any of their Subsidiaries to, contract, create, incur, assume
or permit to exist any Lien with respect to any of their Property, whether
now owned or after acquired, except for Permitted Liens.

8.3 Nature of Business. Neither the Parent Company, the Borrower nor
------------------
any other Credit Party will substantively alter the character or conduct of
the business conducted by them as of the Closing Date other than to enter
into other reasonably related businesses.

8.4 Consolidation, Merger, Sale or Purchase of Assets. Except in
-------------------------------------------------
relation to the Reorganization and the Distribution, neither the Parent
Company or the Borrower will, nor will they permit any of their
Subsidiaries to:

(a) dissolve, liquidate or wind up its affairs, or enter into
any transaction of merger or consolidation; provided, however, that,
-------- -------
so long as no Default or Event of Default then exists or would be
directly or indirectly caused as a result thereof,

(i) any Credit Party may merge or consolidate with another
Credit Party;

(ii) any Subsidiary of the Borrower or the Parent Company
which is not a Credit Party may merge or consolidate with another
such Subsidiary;

(iii) any Subsidiary of the Parent Company or the Borrower
may merge or consolidate with any other Person provided that
either

(A) such Subsidiary is the surviving corporation,

<PAGE>

(B) such Subsidiary is not the surviving corporation
but the surviving corporation is a Subsidiary of the
Borrower or the Parent Company, or

(C) such Subsidiary is not the surviving corporation
and the surviving corporation is not a Subsidiary of the
Borrower or the Parent Company, but no more than 25% of the
gross consideration received in connection therewith
consists of Non-Investment Grade debt or equity interests,

and subject to the additional conditions, (I) in the case of any
individual transaction (or series of related transactions)
described in subsections (A) or (B) above, where the acquisition
price for such transaction (whether a single transaction or a
series of related transactions) exceeds $75,000,000, then the
Borrower must first demonstrate compliance with the financial
covenants under Section 7.11 on a Pro Forma Basis after giving
effect to such transaction and (II) after giving effect to such
transaction, the Threshold Requirement set forth in Section 7.12
shall not be exceeded; and

(iv) any Subsidiary of the Parent Company or the Borrower
may dissolve, liquidate or wind up its affairs at any time;

(b) sell, transfer or otherwise dispose of any of its Property
(including without limitation pursuant to any sale and leaseback
transaction) except that the following shall be permitted: (i) the
sale of inventory for fair value in the ordinary course of business,
(ii) the sale or disposition of machinery and equipment no longer
useful in the conduct of such Person's business, (iii) transfers of
Property to Credit Parties, (iv) non-cash Investments permitted under
Section 8.5(d) and (e), and (v) sales, transfers and dispositions for
fair value in the reasonable determination of the Borrower, so long as
(A) no Default or Event of Default then exists or would exist after
giving effect thereto and (B) no more than 25% of the gross
consideration received in connection therewith consists of Non-
Investment Grade debt or equity interests. Sales, leases, transfers
and other dispositions constituting Material Asset Sales will be
subject to a mandatory reduction in the Commitments hereunder as
provided in Section 3.3(b).

<PAGE>

consent of the shareholders or other equity owners of the Person which
is the subject thereof against the recommendation of management, the
board of directors or other managing entity of such Person, (iii) the
Person, division, operations or Property which is the subject of the
acquisition is in a reasonably related line of business to that of the
Parent Company and the Borrower, and (iv) the acquisition price for
such transaction (whether a single transaction or a series of related
transactions) shall exceed $75,000,000, the Borrower must first
demonstrate compliance with the financial covenants under Section 7.11
on a Pro Forma Basis after giving effect to such acquisition.

8.5 Investments. The Parent Company and the Borrower will not, and
-----------
will not permit any of their Subsidiaries to, directly or indirectly, make
Investments other than

(a) existing Investments set forth on Schedule 8.5,
------------

(b) Investments in the ordinary course of the hotel business (or
other reasonably related businesses) not otherwise described in
Section 8.5 (specifically excluding for purposes hereof loans and
advances to Subsidiaries which are separately dealt with in this
Section 8.5),

(d) Investments in Wholly-Owned Subsidiaries of the Borrower or
the Parent Company,

(e) non-cash Investments in Subsidiaries which are not Wholly-
Owned Subsidiaries of the Borrower or the Parent Company or Credit
Parties and in Joint Ventures made after the Closing Date, provided
--------
that no such non-cash Investment shall individually (i) involve the
transfer of assets (A) with a book value in excess of 10% of the
Consolidated Legal Entity Assets of the Parent Company and its
Subsidiaries at such time, (B) generating more than 10% of the
Consolidated Legal Entity Gross Revenues of the Parent Company and its
Subsidiaries or (C) generating more than 10% of Consolidated Legal
Entity EBITDA for the Parent Company and its Subsidiaries or (ii)
cause the Subsidiaries and Joint Ventures in which non-cash
Investments have been made pursuant to this clause (e) (including the
subject non-cash Investment) plus all Non-Guarantor Subsidiaries, as a
group, to exceed the Threshold Requirement,

(f) Investments received in connection with a merger or
disposition permitted by Sections 8.4(a) and 8.4(b), and

<PAGE>

the Borrower or its Subsidiaries or such Joint Ventures engaged
primarily in the hotel business or other reasonably related business,
but only if, and to the extent, that the sum of (i) the aggregate
amount of such Investments under this subsection (g) made after the
Closing Date plus (ii) the aggregate amount of Guaranty Obligations
----
permitted under Section 8.1(l) incurred after the Closing Date, shall
not at any time exceed the Third Party Investment Basket Amount.

8.6 Prepayments of Indebtedness. Neither the Parent Company or the
---------------------------
Borrower will, nor will they permit any of their Subsidiaries to,

(a) amend or modify, or permit the amendment or modification of,
any of the subordination provisions of any Subordinated Debt or any
other material term relating to any Subordinated Debt the amendment or
modification of which would be materially adverse to the interests of
the Lenders hereunder as the holders of indebtedness senior thereto,
or

(b) make (or give any notice with respect thereto) any voluntary
or optional payment or prepayment or redemption or acquisition for
value of (including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due) or exchange any Subordinated Debt
permitted pursuant to Section 8.1.

As used herein, "Subordinated Debt" means any Indebtedness of the Parent
-----------------
Company, the Borrower or any of their Subsidiaries for borrowed money which
by its terms is subordinated in right of payment to the indebtedness
hereunder and other amounts owing hereunder or in connection herewith.

8.7 Transactions with Affiliates. Neither the Parent Company or the
----------------------------
Borrower will, nor will they permit any of their Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the
ordinary course of business, with any officer, director, shareholder or
Affiliate of the Parent Company, the Borrower or any of their Subsidiaries
other than on terms and conditions substantially as favorable as would be
obtainable in a comparable arm's-length transaction with a Person other
than an officer, director, shareholder or Affiliate, except that the
restriction contained in this Section 8.7 shall not apply to (i)
Investments permitted under Section 8.5, (ii) transactions and transfers
among and between the Parent Company, the Borrower and their Wholly-Owned
Subsidiaries, (iii) the payment of reasonable compensation and benefits and
reimbursement of reasonable expenses of officers and directors, (iv) the
Reorganization and the Distribution and (v) Dividends permitted hereunder.

8.8 Fiscal Year. Neither the Parent Company nor the Borrower will,
-----------
nor will they permit any of their Subsidiaries to, change its fiscal year.

<PAGE>

8.9 No Dividend Restrictions. No Credit Party shall agree to or
------------------------
permit to exist, any restrictions or limitations on the declaration or
payment of Dividends.

SECTION 9

EVENTS OF DEFAULT
-----------------

9.1 Events of Default. An Event of Default shall exist upon the
-----------------
occurrence of any of the following specified events (each an "Event of
--------
Default"):
- -------

(a) Payment. Any Credit Party shall
-------

(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement
obligations arising from drawings under Letters of Credit,
or in providing cash collateral when due pursuant to Section
9.2(iv), or the payment of any guaranty obligations in
respect thereof;

(ii) default, and such default shall continue for
five (5) or more days, in the payment when due of any
interest on the Loans or the payment of any guaranty
obligations in respect thereof; or

(iii) default, and such default shall continue for five
(5) or more days after notice from the Agent, in the payment when
due of any amounts hereunder or under any of the other Credit
Documents other than as provided in subsections (i) and (ii)
above, or the payment of any guaranty obligations in respect
thereof; or

(b) Representations. Any representation, warranty or
---------------
statement made or deemed to be made by any Credit Party herein,
in any of the other Credit Documents, or in any statement or
certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date
as of which it was deemed to have been made; or

(i) default in the due performance or observance
of any term, covenant or agreement contained in Sections
7.11 or 8.1 through 8.9, inclusive; or

(ii) default in the due performance or observance of
any term, covenant or agreement contained

<PAGE>

in Sections 7.1(g) or 7.10 and such default shall continue
unremedied for a period of at least 5 days; or

(iii) default in the due performance or observance
by it of any term, covenant or agreement (other than those
referred to in subsections (a), (b), (c)(i) or (c)(ii) of
this Section 9.1) contained in this Credit Agreement or any
of the other Credit Documents and such default shall
continue unremedied for a period of at least 30 days after
notice thereof by the Agent; or

(d) Other Credit Documents. Any Credit Document shall fail
----------------------
to be in full force and effect or to give the Agent and/or the
Lenders the material liens, rights, powers and privileges
purported to be created thereby; or

(e) Guaranties. The guaranty given by the Credit Parties
----------
hereunder or by any Additional Credit Party hereafter or any
material provision thereof shall cease to be in full force and
effect, or any guarantor thereunder or any Person acting by or on
behalf of such guarantor shall deny or disaffirm such guarantor's
obligations under such guaranty, or any guarantor shall default
in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any
guaranty; or

(f) Bankruptcy, etc. The Parent Company, the Borrower or
---------------
any other Credit Party shall commence a voluntary case concerning
itself under the Bankruptcy Code; or an involuntary case is
commenced against the Parent Company, the Borrower or any other
Credit Party under the Bankruptcy Code and the petition is not
dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of all or substantially all of the property of
the Parent Company, the Borrower or other Credit Party; or the
Parent Company, the Borrower or any other Credit Party commences
any other proceeding under any reorganization, arrangement,
adjustment of the debt, relief of creditors, dissolution,
insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to the Parent Company, the Borrower
or any other Credit Party; or there is commenced against the
Parent Company, the Borrower or other Credit Party any such
proceeding which remains undismissed for a period of 60 days; or
the Parent Company, the Borrower or any other Credit Party is
adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or
the Parent Company, the Borrower or any other Credit Party
suffers appointment of any custodian or the like

<PAGE>

for it or for any substantial part of its property to continue
unchanged or unstayed for a period of 90 days; or the Parent Company,
the Borrower or any other Credit Party makes a general assignment for
the benefit of creditors; or any corporate action is taken by the
Parent Company, the Borrower or any other Credit Party for the purpose
of effecting any of the foregoing; or

(g) Defaults under Other Agreements. With respect to any
-------------------------------
Indebtedness (other than Non-Recourse Indebtedness and
Indebtedness outstanding under this Credit Agreement) for which
there is recourse against the Parent Company, the Borrower and
their Subsidiaries in excess of $10,000,000 in the aggregate, (i)
the Parent Company, the Borrower or any of their Subsidiaries
shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such
Indebtedness, or (B) default in the observance or performance of
any covenant relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event or condition shall occur or condition exist,
the effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (ii)
any such Indebtedness shall be declared due and payable, or
required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or

(h) Judgments. One or more judgments or decrees shall be
---------
entered against the Parent Company, the Borrower or any of their
Subsidiaries involving a liability of $5,000,000 or more in the
aggregate (to the extent not paid or covered by insurance) and
any such judgments or decrees shall not have been vacated,
discharged, satisfied or stayed or bonded pending appeal within
30 days from the entry thereof; or

(i) ERISA. The Parent Company, the Borrower or any of
-----
their Subsidiaries shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), which has not been waived,
shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan pursuant to Section 4068 or Section 302(f) of
ERISA, respectively, shall arise on the assets of the Parent
Company, the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings
shall commence by the PBGC to have a trustee appointed, or a
trustee shall be appointed by the PBGC, to administer

<PAGE>

or terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is reasonably
likely to result in the termination of such Plan for purposes of Title
IV of ERISA (other than a standard termination pursuant to Section
4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA in a distress termination under Section
4041(c), (v) the Parent Company, the Borrower or any Commonly
Controlled Entity shall, or is reasonably likely to, incur any
liability in connection with a withdrawal by the Parent Company, the
Borrower or any Commonly Controlled Entity from, or the Insolvency or
Reorganization of, a Multiemployer Plan, or (vi) the occurrence or
expected occurrence of any event or condition which results or is
reasonably likely to result in the Parent Company's, the Borrower's or
any Commonly Controlled Entity's becoming responsible for any
liability in respect of a Former Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, would be reasonably expected to
result in liability which could have a Material Adverse Effect;
provided, however, that the fact that a Plan is underfunded shall not
-------- -------
by itself constitute an Event of Default unless and until another
event or condition described in clause (i) through (vi) affecting such
underfunded Plan occurs and has a Material Adverse Effect; or

(j) Change of Control. Either (i) a "person" or a "group"
-----------------
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended) hereafter becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of more than 25% of the then outstanding voting
stock of the Parent Company or (ii) a majority of the Board of
Directors of the Parent Company shall consist of individuals who are
not Continuing Directors; "Continuing Director" means, as of any date
-------------------
of determination, (i) an individual who on the Closing Date or the
date two years prior to the date of determination was a member of the
Parent Company's Board of Directors and (ii) any new director whose
nomination for election by the Parent Company's shareholders was
approved by a vote of a majority of the directors then still in office
who either were directors on the Closing Date or the date two years
prior to such determination date or whose nomination for election was
previously so approved.

9.2 Acceleration; Remedies. Upon the occurrence of an Event of
----------------------
Default, and at any time thereafter unless and until such Event of Default
has been waived by the Required Lenders or cured to the satisfaction of the
Required Lenders (pursuant to the voting procedures in Section 11.6), the
Agent shall, upon the request and direction of the Required Lenders, by
written notice

<PAGE>

to the Borrower take any of the following actions without prejudice to the
rights of the Agent or any Lender to enforce its claims against the Credit
Parties, except as otherwise specifically provided for herein:

(i) Termination of Commitments. Declare the Commitments
--------------------------
terminated whereupon the Commitments shall be immediately
terminated.

(ii) Acceleration of Loans. Declare the unpaid principal of
---------------------
and any accrued interest in respect of all Loans and unreimbursed
drawings in respect of LOC Obligations and any and all other
indebtedness or obligations of any and every kind owing by the
Borrower to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.

(iii) Enforcement of Rights. Enforce any and all rights and
---------------------
interests created and existing under the Credit Documents and all
rights of set-off.

(iv) Cash Collateral. Direct the Credit Parties to pay (and
---------------
the Credit Parties agree that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section 9.1(f),
they will immediately pay) to the Agent additional cash, to be
held by the Agent, for the benefit of the Lenders, in a cash
collateral account as additional security for the LOC Obligations
for subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which
may be drawn under all Letters of Credits then outstanding.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and
all Loans and LOC Obligations, all accrued interest in respect thereof, all
accrued and unpaid fees and other indebtedness or obligations owing to the
Lenders hereunder shall immediately become due and payable without the
giving of any notice or other action by the Agent or the Lenders and the
Credit Parties will be required to pay on the guaranty hereunder and to
deliver cash collateral in respect of the LOC Obligations.

SECTION 10

AGENCY PROVISIONS
-----------------

10.1 Appointment. Each Lender hereby designates and appoints
-----------
NationsBank, N.A. (Carolinas) as administrative agent (in such capacity
hereunder, the "Agent") of such Lender to act as specified herein and the
-----
other Credit Documents, and each such

<PAGE>

Lender hereby authorizes the Agent, as the agent for such Lender, to take
such action on its behalf under the provisions of this Credit Agreement and
the other Credit Documents and to exercise such powers and perform such
duties as are expressly delegated by the terms hereof and of the other
Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
elsewhere herein and in the other Credit Documents, the Agent shall not
have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other
Credit Documents, or shall otherwise exist against the Agent. The
provisions of this Section (other than Section 10.9) are solely for the
benefit of the Agent and the Lenders, and the Borrower and the other Credit
Parties shall not have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this
Credit Agreement and the other Credit Documents, the Agent shall not act
solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any other Credit Party.

10.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
hereunder or under the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.

10.3 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by
it or such Person under or in connection herewith or in connection with any
of the other Credit Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by any of the Credit Parties contained herein or in any of the other
Credit Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in
connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency of any of the other Credit Documents, or for
any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents
or for any representations, warranties, recitals or statements made herein
or therein or made by the Borrower or any Credit Party in any written or
oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection

<PAGE>

herewith or therewith furnished or made by the Agent to the Lenders or by
or on behalf of the Credit Parties to the Agent or any Lender or be
required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained
herein or therein or as to the use of the proceeds of the Loans or of the
existence or possible existence of any Default or Event of Default or to
inspect the properties, books or records of the Credit Parties.

10.4 Reliance on Communications. The Agent shall be entitled to
--------------------------
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any of the other Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care).
The Agent may deem and treat the Lenders as the owner of their respective
interests hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent in
accordance with Section 11.3(b) hereof. The Agent (solely in its capacity
as the Agent) shall be fully justified in failing or refusing to take any
action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or under any of the other
Credit Documents in accordance with a request of the Required Lenders (or
to the extent specifically provided in Section 11.6, all the Lenders) and
such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders (including their successors and assigns).

10.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or a Credit
Party referring to the Credit Document, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders.

<PAGE>

that no act by the Agent or any affiliate thereof hereafter taken,
including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial
and other conditions, prospects and creditworthiness of the Borrower and
made its own decision to make its Loans hereunder and enter into this
Credit Agreement. Each Lender also represents that it will, independently
and without reliance upon the 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 analysis, appraisals and decisions in
taking or not taking action under this Credit Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, assets, property, financial or other conditions, prospects or
creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-
fact or affiliates.

10.7 Indemnification. The Lenders agree to indemnify the Agent in
---------------
its capacity as such (to the extent not reimbursed by the Borrower or
another Credit Party and without limiting the obligation of the Borrower or
another Credit Party to do so), ratably according to their respective
Commitments, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including
without limitation at any time following the payment of the Obligations) be
imposed on, incurred by or asserted against the Agent in its capacities as
such in any way relating to or arising out of this Credit Agreement or the
other Credit Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
--------
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the gross negligence or willful misconduct of the Agent. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of the Agent,
be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against
until such additional indemnity is furnished. The agreements in this
Section shall survive the payment of the Obligations and all other amounts
payable hereunder and under the other Credit Documents.

<PAGE>

10.8 Agent in its Individual Capacity. The Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any other Credit Party as though the Agent
were not Agent hereunder. With respect to the Loans made and all
Obligations owing to it, the Agent shall have the same rights and powers
under this Credit Agreement as any Lender and may exercise the same as
though they were not Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.

10.9 Successor Agent. (a) The Agent may resign from the performance
---------------
of all its functions and duties hereunder at any time by giving fifteen
(15) Business Day's prior written notice to the Borrower and the Lenders.
Such resignation shall take effect upon the appointment of a successor
Agent pursuant to clause (b) or (c) below or as otherwise provided below.

(b) Upon any such notice of resignation, the Borrower shall
appoint a successor Agent hereunder who shall be commercial bank or
trust company reasonably acceptable to the Required Lenders (it being
understood and agreed that any Lender is deemed to be acceptable to
the Required Lenders), provided that if a Default or an Event of
Default exists at the time of such resignation, the Required Lenders
shall appoint such successor Agent.

(c) If a successor Agent shall not have been so appointed within
such fifteen (15) Business Day period, the Agent, with the consent of
the Borrower, shall then appoint a successor Agent who shall serve as
the Agent hereunder until such time, if any, as the Borrower or
Required Lenders, as the case may be, appoint a successor Agent as
provided above.

(d) If no successor Agent has been appointed pursuant to clause
(b) or (c) above by the thirtieth (30th) Business Day after the date
such notice of resignation was given by the Agent, the Agent's
resignation shall become effective and the Lenders shall thereafter
perform all the duties of the Agent hereunder until such time, if any,
as the Required Lenders appoint a successor Agent.

(e) Upon the acceptance of any appointment as Agent hereunder by
a successor, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the resigning Agent (including, without limitation, duties as
Swingline Lender and Issuing Lender), and the resigning Agent shall be
discharged from its duties and obligations as Agent, as appropriate,
under this Credit Agreement and the other Credit Documents and the
provisions of this Section 10.9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under
this Credit Agreement.

<PAGE>

SECTION 11

MISCELLANEOUS
-------------

11.1 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the day following the
day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (iv) the third Business Day following the
day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective parties at the address, in the case
of the Borrower and the Agent, set forth below, and in the case of the
Lenders, set forth on Schedule 11.1, or at such other address as such party
-------------
may specify by written notice to the other parties hereto:

if to the Borrower or Guarantors:

Prior to the Effective Date of Assignment
-----------------------------------------
c/o Embassy Suites, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: William S. McCalmont
Telephone: (901) 762-8861
Telecopy: (901) 762-8695

After the Effective Date of Assignment
--------------------------------------
c/o Promus Hotels, Inc.
850 Ridgelake Boulevard
Memphis, Tennessee 38120
Attn: Carol G. Champion
Telephone: (901) 762-4052
Telecopy: (901) 680-7220

if to the Agent:

NationsBank, N.A. (Carolinas)
Independence Center, 15th Floor
NC1-001-15-04
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9368
Telecopy: (704) 386-9923

<PAGE>

with a copies to:

NationsBank, N.A. (Carolinas)
Corporate Bank
1 NationsBank Plaza
Nashville, Tennessee 37329-1697
Attn: J.E. Ball
Telephone: (615)749-3469
Telecopy: (615)749-4640

Christopher C. Kupec, Esq.
Moore & Van Allen, PLLC
NationsBank Corporate Center
47th Floor
100 North Tryon Street
Charlotte, North Carolina 28202-4003
Telephone: (704) 331-1046
Telecopy: (704) 331-1159

11.2 Right of Set-Off. In addition to any rights now or hereafter
----------------
granted under applicable law or otherwise, and not by way of limitation of
any such rights, upon the occurrence of an Event of Default, each Lender is
authorized at any time and from time to time, without presentment, demand,
protest or other notice of any kind (all of which rights being hereby
expressly waived), to set-off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held
or owing by such Lender (including, without limitation branches, agencies
or affiliates of such Lender which are at least 50% owned by such Lender or
its parent company wherever located) to or for the credit or the account of
the Borrower against obligations and liabilities of the Borrower to such
Lender hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether such Lender shall have made any demand hereunder
and although such obligations, liabilities or claims, or any of them, may
be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even
though such charge is made or entered on the books of such Lender
subsequent thereto. The Borrower hereby agrees that any Person purchasing
a participation in the Loans and Commitments hereunder pursuant to Section
11.3(c) or Section 3.12 may exercise all rights of set-off with respect to
its participation interest as fully as if such Person were a Lender
hereunder.

11.3 Benefit of Agreement.
--------------------

(a) Generally. This Credit Agreement shall be binding upon and
---------
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that, except
--------
for the assignment by Embassy Suites to Hotel Inc. contemplated by
subsection (b) below, the Borrower may not assign or transfer any of
its interests without prior written consent of the Lenders; provided
--------
further that the rights of each Lender to transfer, assign
-------

<PAGE>

or grant participations in its rights and/or obligations hereunder
shall be limited as set forth in this Section 11.3, provided, however,
-------- -------
that nothing herein shall prevent or prohibit any Lender from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank, or (ii)
granting assignments or participations in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any affiliate of
such Lender which is at least fifty percent (50%) owned by such Lender
or its parent company. To the extent required in connection with a
pledge of Loans by any Lender to a Federal Reserve Bank, the Borrower
agrees that, upon request of any such Lender, it will promptly provide
such Lender a promissory note evidencing the repayment obligations of
the Borrower with respect to the principal of and interest on the
Loans of such Lender arising under Section 2.1, 2.2, 2.3 and/or 2.4,
as applicable, such promissory note to be in a form reasonably
satisfactory to the Borrower and the applicable Lender.

(b) Assignment to the Hotel Inc.. At such time as the Agent
----------------------------
shall have determined that each of the conditions set forth in Section
5.2 shall have been satisfied, then, at the request of Embassy Suites
and Hotel Inc., the Agent, on behalf of the Lenders, shall execute and
deliver the Hotel Inc. Assignment and Assumption Agreement. Each
Lender hereby (i) irrevocably authorizes the Agent to execute and
deliver the Hotel Inc. Assignment and Assumption Agreement on behalf
of such Lender on the terms set forth in the immediately preceding
sentence and (ii) acknowledges and agrees that such execution and
delivery by the Agent of the Hotel Inc. Assignment and Assumption
Agreement shall be binding upon and enforceable against such Lender.
Upon execution and delivery by the Agent of the Hotel Inc. Assignment
and Assumption Agreement (i) Hotel Inc. shall succeed to all of the
rights and obligations of Embassy Suites as "Borrower" under this
Credit Agreement, and all references to the "Borrower" in the Credit
Documents henceforth shall be deemed to refer to Hotel Inc. and (ii)
Embassy Suites and Promus Co. shall be released and discharged from
any obligation or liability arising under or relating to this Credit
Agreement, in each case on the terms more fully set forth in the Hotel
Inc. Assignment and Assumption Agreement. The date as of which the
Agent executes and delivers the Hotel Inc. Assignment and Assumption
Agreement shall be referred to herein as the "Effective Date of
-----------------
Assignment."
----------

(c) Assignments by Lenders. Each Lender may assign all or a
----------------------
portion of its rights and obligations hereunder and under the Tranche
B Credit Agreement pursuant to an assignment agreement substantially
in the form of Schedule 11.3(c) to one or more Eligible Assignees,
----------------
provided that any such assignment shall be in a minimum aggregate
--------
amount of $10,000,000 of the Commitments and in integral multiples of

<PAGE>

$1,000,000 above such amount, and that each such assignment shall be
of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations under this Credit Agreement and under
the Tranche B Credit Agreement; provided, however, that the Agent and
-------- -------
its affiliates which are at least 50% owned by the Agent or its parent
company, as a group, shall continue to hold Commitments hereunder and
under the Tranche B Credit Agreement in a minimum aggregate amount of
$20,000,000 at all times. Any assignment hereunder shall be effective
upon delivery to the Agent of written notice of the assignment
together with a transfer fee of $5,000 payable to the Agent for its
own account; provided that no such transfer fee shall be payable in
--------
connection with an assignment by any Lender to its affiliates which
are at least 50% owned by such Lender or its parent company. The
assigning Lender will give prompt notice to the Agent and the Borrower
of any such assignment. Upon the effectiveness of any such assignment
(and after notice to the Borrower as provided herein), the assignee
shall become a "Lender" for all purposes of this Credit Agreement and
the other Credit Documents and, to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. By
executing and delivering an assignment agreement in accordance with
this Section 11.3(c), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (i) such assigning Lender
warrants that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim; (ii)
except as set forth in clause (i) above, such assigning Lender makes
no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument
or document furnished pursuant hereto or thereto or the financial
condition of any Credit Party or the performance or observance by any
Credit Party of any of its obligations under this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such
assignment agreement; (iv) such assignee confirms that it has received
a copy of this Credit Agreement, the other Credit Documents and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such assignment
agreement; (v) such assignee will independently and without reliance
upon the Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem

<PAGE>

appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the Agent
to take such action on its behalf and to exercise such powers under
this Credit Agreement or any other Credit Document as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations
which by the terms of this Credit Agreement and the other Credit
Documents are required to be performed by it as a Lender.

(d) Participations. Each Lender may sell, transfer, grant or
--------------
assign participations in all or any part of such Lender's interests
and obligations hereunder to one or more Eligible Participants;
provided that (i) such selling Lender shall remain a "Lender" for all
--------
purposes under this Credit Agreement and the other Credit Documents
(such selling Lender's obligations under this Credit Agreement
remaining unchanged) and the participant shall not constitute a Lender
hereunder, (ii) no such participant shall have, or be granted, rights
to approve any amendment or waiver relating to this Credit Agreement
or any of the other Credit Documents except with respect to any such
amendment or waiver which would, under the terms of Section 11.8,
require the consent of all of the Lenders, (iii) sub-participations by
the participant (except to an affiliate, parent company or affiliate
of a parent company of the participant) shall be prohibited and (iv)
any such participations shall be in a minimum aggregate amount of
$5,000,000 of the Commitments and in integral multiples of $1,000,000
in excess thereof. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or
under any of the other Credit Documents (the participant's rights
against the selling Lender in respect of such participation to be
those set forth in the participation agreement with such Lender
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.5 and 3.8 on
the same basis as if it were a Lender (limited to the extent that the
selling Lender would be able to receive additional amounts under
Sections 3.5 and 3.8); provided, further, in the event such
-------- -------
participant exercises any rights under Sections 3.5 or 3.8, the
Borrower shall be permitted to exercise its rights pursuant to Section
3.15 with respect to the selling Lender.

(e) Disclosure of Confidential Information. (i) Any Lender may,
--------------------------------------
in connection with any assignment pursuant to paragraph (c) above or a
participation pursuant to paragraph (d) above, disclose to the
assignee or the proposed assignee or the participant or the proposed
participant any information relating to Embassy Suites, Hotel Corp.,
Hotel Inc., any Subsidiary of Embassy Suites or the Hotel Corp., the
Reorganization or the Distribution furnished to such Lender by or on
behalf of Embassy Suites, the Hotel Corp., Hotel

<PAGE>

Inc. or any Subsidiary of Embassy Suites or the Hotel Corp. in
connection with this Credit Agreement, provided that, prior to any
--------
such disclosure each such assignee or proposed assignee or participant
or proposed participant shall execute an agreement containing
substantially the terms of all then existing confidentiality
agreements entered into by the assigning or selling Lender with
respect to the Borrower and its Subsidiaries, in each case whereby
such assignee or proposed assignee or participant or proposed
participant shall agree to preserve the confidentiality of any non-
public, confidential or proprietary information relating to Embassy
Suites, the Hotel Corp., Hotel Inc., any Subsidiary of Embassy Suites
or the Hotel Corp., the Reorganization or the Distribution.

11.4 No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of the Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing
between the Borrower or any Guarantor and the Agent or any Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies
which the Agent or any Lender would otherwise have. No notice to or demand
on the Borrower in any case shall entitle the Borrower or any Guarantor to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Lenders to any other
or further action in any circumstances without notice or demand.

11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
------------------------
reasonable out-of-pocket costs and expenses of the Agent in connection with
the negotiation, preparation, execution and delivery and administration
(but as to administration, only administration of the credit as among the
Agent, the Borrower, the other Credit Parties and the Lenders and not as to
any internal administration within the Agent) of this Credit Agreement and
the other Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and expenses of
Moore & Van Allen, special counsel to the Agent) and any amendment, waiver
or consent relating hereto and thereto requested or required by the
Borrower including, but not limited to, any such amendments, waivers or
consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Borrower under this Credit
Agreement and of the Agent and the Lenders in connection with enforcement
of the Credit Documents and the documents and instruments referred to
therein (including, without limitation, in connection with any such
enforcement, the

<PAGE>

reasonable fees and disbursements of counsel for the Agent and each of the
Lenders) provided, that for the purposes of this Credit Agreement,
--------
"reasonable attorneys' fees" shall be limited by the actual attorneys' fees
incurred by a party without application of N.C. Gen. Stat. Sec. 6-21.2 and
without any presumption that such reasonable attorneys' fees shall be a
fixed percentage of the Commitments; (ii) pay and hold each of the Lenders
harmless from and against any and all present and future stamp, documentary
and mortgage recording taxes and other similar taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against
any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Lender) to pay such
taxes; and (iii) indemnify each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any
and all losses, liabilities, claims, damages or expenses incurred by any of
them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or
not any Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of gross negligence or willful misconduct on the
part of the Person to be indemnified).

11.6 Amendments, Waivers and Consents. (a) Neither this Credit
--------------------------------
Agreement nor any other Credit Document nor any of the terms hereof or
thereof may be amended, changed, waived, discharged or terminated unless
such amendment, change, waiver, discharge or termination is in writing
signed by the Required Lenders, provided that no such amendment, change,
--------
waiver, discharge or termination shall, without the consent of each Lender
adversely affected, (i) extend the Termination Date or reduce the rate or
extend the time of payment of interest or principal (other than as a result
of waiving the applicability of any post-default increase in interest
rates) on any Loan or portion thereof or fees hereunder or reduce the
principal amount thereof, or increase the Commitments of the Lenders over
the amount thereof in effect (it being understood and agreed that a waiver
of any condition for an Extension of Credit, Default or Event of Default or
of a mandatory reduction in the total commitments shall not constitute a
change in the terms of any Commitment of any Lender) or issue or extend
Letters of Credit with expiry dates not permitted by the provisions of
Section 2.2, (ii) release any Guarantor from its guaranty obligations
hereunder except in accordance with the provisions hereof, (iii) amend,
modify or waive any provision of this Section or of subsection (ii) of
Section 3.3(d) (provided that any Lender to be terminated pursuant to
--------
Section 3.3(d) shall not be required to consent to any such amendment,
modification or waiver of

100

<PAGE>

subsection (ii) of Section 3.3(d) necessary to effect such termination),
(v) reduce any percentage specified in, or otherwise modify, the definition
of Required Lenders, (v) release all or substantially all of the collateral
subject to the Pledge Agreement or (vi) consent to the assignment or
transfer by the Borrower (or Guarantor) of any of its rights and
obligations under (or in respect of) this Credit Agreement or other Credit
Documents except as permitted hereunder. No provision of Section 10 may be
amended without the consent of the Agent. No provision affecting the
duties and obligations (and compensation) of the Issuing Lender may be
amended without the consent of the Issuing Lender. Notwithstanding
anything to the contrary contained above, any Letter of Credit may be
modified by the respective Issuing Lender so long as the terms thereof
would be permitted in a newly issued Letter of Credit in accordance with
the terms hereof.

(b) If, in connection with any proposed change, waiver, discharge or
termination of any of the provisions of this Agreement as contemplated by
subclauses (i) through (iv), inclusive, of clause (a) above, the consent of
the Required Lenders is obtained but the consent of one or more of such
other Lenders whose consent is required is not obtained, the Borrower shall
have the right (so long as all non-consenting Lenders whose individual
consent is required are treated as described in either clauses (A) or (B)
below) to either (A) replace each such non-consenting Lender or Lenders
with one or more Replacement Lenders pursuant to Section 3.15 so long as at
the time of such replacement, each such Replacement Lender consents to the
proposed change, waiver, discharge or termination or (B) terminate such
non-consenting Lender's Commitment and repay all outstanding Loans of such
Lender in accordance with Sections 3.3(d) and 3.3(g), provided that, unless
--------
the Commitments terminated and Loans repaid pursuant to the preceding
clause (B) are immediately replaced in full at such time through the
addition of new Lenders or the increase of the Commitments and/or
outstanding Loans of existing Lenders (who in each case must specifically
consent thereto), then in the case of any action pursuant to the preceding
clause (B), the Required Lenders (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that
----------------
in any event the Borrower shall not have the right to replace a Lender,
terminate its Commitment or repay its Loans solely as a result of the
withholding of any required consent by such Lender to any increase in the
Commitment of such Lender.

11.7 Counterparts. This Credit Agreement may be executed in any
------------
number of counterparts, each of which where so executed and delivered shall
be an original, but all of which shall constitute one and the same
instrument. It shall not be necessary in making proof of this Credit
Agreement to produce or account for more than one such counterpart.

11.8 Headings. The headings of the sections and subsections hereof
--------
are provided for convenience only and shall

101

<PAGE>

not in any way affect the meaning or construction of any provision of this
Credit Agreement.

11.9 Survival of Indemnification. All indemnities set forth herein,
---------------------------
including, without limitation, in Sections 3.5, 3.8, 3.9, 3.10, 3.14, 10.7
and 11.5 shall survive the execution and delivery of this Credit Agreement,
and the making of the Loans, the repayment of the Obligations and other
obligations and the termination of the Commitment hereunder.

11.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------

(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA. Any legal action or proceeding with respect
to this Credit Agreement or any other Credit Document may be brought in the
courts of the State of North Carolina in Mecklenburg County, or of the
United States for the Western District of North Carolina, and, by execution
and delivery of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of such courts. Each of the Credit
Parties further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to it at the address set out for notices pursuant to Section 11.1, such
service to become effective 30 days after such mailing. Nothing herein
shall affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise proceed
against the Borrower in any other jurisdiction.

(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.

(c) EACH OF THE AGENTS, EACH OF THE LENDERS AND EACH OF THE CREDIT
PARTIES HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

11.11 Severability. If any provision of any of the Credit Documents
------------
is determined to be illegal, invalid or unenforceable, such provision shall
be fully severable and the remaining provisions shall remain in full force
and effect and shall be

102

<PAGE>

construed without giving effect to the illegal, invalid or unenforceable
provisions.

11.12 Entirety. This Credit Agreement together with the other Credit
--------
Documents represent the entire agreement of the parties hereto and thereto,
and supersede all prior agreements and understandings, oral or written, if
any, including any commitment letters or correspondence relating to the
Credit Documents or the transactions contemplated herein and therein.

11.13 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made by the Borrower herein shall survive
delivery of the Notes and the making of the Loans hereunder.

11.14 Knowledge Standard. As used herein, the phrase "to the
------------------
knowledge of the Borrower" or any similar phrase shall mean the knowledge
of any of the following persons: Raymond E. Schultz, President and Chief
Executive Officer; David C. Sullivan, Executive Vice President and Chief
Operating Officer; Donald H. Dempsey, Senior Vice President and Chief
Financial Officer; Ralph B. Lake, Senior Vice President, General Counsel,
and Secretary; Thomas L. Keltner, Senior Vice President, Development; Carol
G. Champion, Vice President, Treasurer; and Jeffery M. Jarvis, Vice
President and Controller; or any other person succeeding to the
responsibilities of any such individual.

11.15 Confidentiality. Each Lender agrees that it will use its best
---------------
efforts not to disclose without the prior consent of the Borrower (other
than to its employees, auditors or counsel) any information with respect to
the Parent Company, the Borrower or any of their respective Subsidiaries
which is now or in the future furnished pursuant to this Agreement or any
other Credit Document and which is designated by the Parent Company, the
Borrower or any of their respective Subsidiaries as confidential, provided
--------
that any Lender may disclose any such information (a) as has become
generally available to the public, (b) as may be required in any report,
statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Lender
(including bank examiners) or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required in
respect to any summons or subpoena or in connection with any investigation
by a Governmental Authority or litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Lender, and (e) to any
prospective or actual transferee or participant of any rights and interests
hereunder provided such prospective transferee or participant executes an
agreement containing provisions substantially identical to those contained
in this Section.

11.16 Agent's and Lender's Covenant. The Agent and each Lender
-----------------------------
hereby covenants that neither any Extension of Credit nor any part of any
Extension of Credit constitutes assets of an

103

<PAGE>

"employment benefit plan" within the meaning of Section 3(3) of ERISA or a
"plan" within the meaning of Section 4975(e)(1) of the Code.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

104

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Tranche A Credit Agreement to be duly executed and
delivered as of the date first above written.

BORROWER:
- --------
EMBASSY SUITES, INC.,
a Delaware corporation

By____________________________

Title_________________________

GUARANTORS: THE PROMUS COMPANIES INCORPORATED,
- ----------
a Delaware corporation

By____________________________

Title_________________________

PROMUS HOTEL CORPORATION,
a Delaware corporation

By____________________________

Title_________________________

PROMUS HOTELS, INC.,
a Delaware corporation

By____________________________

Title_________________________

HAMPTON INNS, INC.,
a Delaware corporation

By____________________________

Title_________________________

S-1

<PAGE>

EMBASSY EQUITY DEVELOPMENT CORPORATION,
a Delaware corporation

By____________________________

Title_________________________

S-2

<PAGE>

Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche A Credit Agreement

LENDERS:
- -------

NATIONSBANK, N.A. (CAROLINAS),
individually in its capacity as a
Lender and in its capacity as Agent

By_____________________________

Title__________________________

THE BANK OF NEW YORK

By_____________________________

Title__________________________

THE BANK OF NOVA SCOTIA

By_____________________________

Title__________________________

CIBC INC.

By_____________________________

Title__________________________

THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH

By_____________________________

Title__________________________

FIRST UNION NATIONAL BANK OF
NORTH CAROLINA

By_____________________________

Title__________________________

S-3

<PAGE>

Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche A Credit Agreement

LTCB TRUST COMPANY

By_____________________________

Title__________________________

THE NIPPON CREDIT BANK, LTD. -
LOS ANGELES AGENCY

By_____________________________

Title__________________________

SOCIETE GENERALE, SOUTHWEST AGENCY

By_____________________________

Title__________________________

CREDIT LYONNAIS

By_____________________________

Title__________________________

FIRST AMERICAN NATIONAL BANK

By_____________________________

Title__________________________

FIRST NATIONAL BANK OF COMMERCE

By_____________________________

Title__________________________

FIRST TENNESSEE BANK, NATIONAL ASSOCIATION

By_____________________________

Title__________________________

S-4

<PAGE>

Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche A Credit Agreement

THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY

By_____________________________

Title__________________________

THIRD NATIONAL BANK

By_____________________________

Title__________________________

U.S. NATIONAL BANK OF OREGON

By_____________________________

Title__________________________

S-5

<PAGE>
<TABLE>
Schedule 2.1(a)
---------------
Tranche A Credit Agreement
--------------------------
Schedule of Lenders and
-----------------------
Commitments
-----------

<CAPTION>
Revolving Revolving LOC LOC
Committed Commitment Committed Commitment
Lender Amount Percentage Amount Percentage
------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NationsBank, N.A. $30,000,000.00 10.00000000% $2,000,000.00 10.00000000%
(Carolinas)

The Bank of New York $25,714,285.71 8.57142857% $1,714,285.71 8.57142857%

The Bank of Nova $25,714,285.71 8.57142857% $1,714,285.71 8.57142857%
Scotia

CIBC Inc. $25,714,285.71 8.57142857% $1,714,285.71 8.57142857%

The Sumitomo Bank, $25,714,285.71 8.57142857% $1,714,285.71 8.57142857%
Limited, New York
Branch

First Union National $19,285,714.29 6.42857143% $1,285,714.29 6.42857143%
Bank of North
Carolina

LTCB Credit Bank $19,285,714.29 6.42857143% $1,285,714.29 6.42857143%

The Nippon Credit $19,285,714.29 6.42857143% $1,285,714.29 6.42857143%
Bank, Ltd. - Los
Angeles Agency

Societe Generale, $19,285,714.29 6.42857143% $1,285,714.29 6.42857143%
Southwest Agency

Credit Lyonnais $12,857,142.86 4.28571429% $857,142.86 4.28571429%

First American $12,857,142.86 4.28571429% $857,142.86 4.28571429%
National Bank

First National Bank $12,857,142.86 4.28571429% $857,142.86 4.28571429%
of Commerce

First Tennessee Bank $12,857,142.86 4.28571429% $857,142.86 4.28571429%
National Association

The Industrial Bank $12,857,142.86 4.28571429% $857,142.86 4.28571429%
of Japan, Limited,
Atlanta Agency

Third National Bank $12,857,142.86 4.28571429% $857,142.86 4.28571429%

U.S. National Bank $12,857,142.86 4.28571429% $857,142.86 4.28571429%
of Oregon -------------- ----------- ----------- -----------

$300,000,000 100.0000000% $20,000,000.00 100,000,000%
</TABLE>

<PAGE>

Schedule 2.1(b)(i)
------------------

TRANCHE A CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING

NationsBank, N.A. (Carolinas), NationsBank, N.A. (Carolinas),
as Agent for the Lenders as Swingline Lender
101 N. Tryon Street 101 N. Tryon Street
Independence Center, 15th Floor Independence Center, 15th Floor
NC1-001-15-04 NC1-001-15-04
Charlotte, North Carolina 28255 Charlotte, North Carolina 28255
Attn: Agency Services Attn: Agency Services

Ladies and Gentlemen:

The undersigned, EMBASSY SUITES, INC./PROMUS HOTELS, INC. (the
"Borrower"), refers to the Tranche A Credit Agreement dated as of June 7,
--------
1995 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among Embassy Suites, Inc., as initial borrower,
----------------
certain subsidiaries and related parties as guarantors, the Lenders and
NationsBank, N.A. (Carolinas), as Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives notice that it requests
a Committed Revolving Loan borrowing or a Swingline Loan borrowing pursuant
to the provisions of Section 2.1(b) or 2.3(b)(i) of the Credit Agreement,
as appropriate, and in connection herewith sets forth below the terms on
which such borrowing is requested to be made:

(A) Type of Loan Borrowing Requested
_____ Committed Revolving Loan
_____ Swingline Loan

(B) Date of Borrowing
(which is a Business Day) _______________________

(D) Interest rate basis2 _______________________

(E) Interest Period and the
last day thereof3 _______________________

In accordance with the requirements of Section 5.3, the Borrower
hereby reaffirms the representations and warranties set forth in the Credit
Agreement as provided in subsection (ii) of such Section, and confirms that
the matters referenced in subsections (b), (c), (d) and (e) of such
Section, are true and correct.
Very truly yours,

EMBASSY SUITES, INC./PROMUS HOTELS, INC.

By:_____________________________________

Title:__________________________________

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

1 In the case of Committed Revolving Loans, minimum of
$5,000,000 and $1,000,000 increments in excess thereof (or the
remaining available Revolving Committed Amount, if less). In the
case of Swingline Loans, a minimum of $250,000 and $100,000 in
excess thereof (or the remaining available Swingline Committed
Amount, if less).

2 In the case of Committed Revolving Loans, Eurodollar
and Base Rate Loans available. In the case of Swingline Loans,
Base Rate Loans available.

3 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.

<PAGE>
Schedule 2.1(e)
---------------

Form of Tranche A Committed Revolving Note

$_________________ June _, 1995

FOR VALUE RECEIVED, EMBASSY SUITES, INC./PROMUS HOTELS, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
--------
__________________________, its successors and assigns (the "Lender"), at the
------
office of NationsBank, N.A. (Carolinas), as Agent (the "Agent"), at 101 N. Tryon
-----
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Tranche A Credit Agreement dated as of June 7, 1995 among
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
----------------
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Termination Date, in
Dollars and in immediately available funds, the principal amount of
________________________DOLLARS ($____________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Committed Revolving Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance with
Section 2.1(d) of the Credit Agreement.

Overdue principal and, to the extent permitted by law, overdue interest
owing hereunder shall bear interest as provided in Section 3.1 of the Credit
Agreement. Further, in the event the payment of all sums due hereunder is
accelerated under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Lender shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower. In the event this Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition the principal and interest, all costs of collection, including
reasonable attorneys' fees; provided, that for purposes of this note,
--------
"reasonable attorneys' fees" shall be limited to actual attorneys' fees incurred
by a party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the principal amount hereof.

All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on Schedule A attached hereto and incorporated
----------
herein by reference, or on a continuation thereof which shall be attached hereto
and made a part hereof; provided, however, that any failure to endorse such
-------- -------
information (or an error in such endorsement) on such schedule or continuation
thereof shall not in any manner affect the obligation of the Borrower to make
payments of principal and interest in accordance with the terms of this Note.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.

EMBASSY SUITES, INC./
PROMUS HOTELS, INC.

By____________________________

Title_________________________

<PAGE>

<TABLE>
SCHEDULE A TO THE
TRANCHE A COMMITTED REVOLVING NOTE
OF EMBASSY SUITES, INC./PROMUS HOTELS, INC.
DATED JUNE _, 1995
<CAPTION>
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>

</TABLE>

<PAGE>

Schedule 2.2(a)
---------------

Existing Letters of Credit

<PAGE>
Schedule 2.3(d)
---------------

Form of Swingline Note

$20,000,000 June _, 1995

FOR VALUE RECEIVED, PROMUS HOTELS, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A.
--------
(CAROLINAS), its successors and assigns (the "Swingline Lender"), at the office
----------------
of NationsBank, N.A. (Carolinas), as Agent (the "Agent"), at 101 N. Tryon
-----
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Tranche A Credit Agreement dated as of June 7, 195 among
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
----------------
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Termination Date, in
Dollars and in immediately available funds, the principal amount of TWENTY
MILLION DOLLARS ($20,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Swingline Loans made by the Swingline
Lender to the Borrower pursuant to the Credit Agreement, and to pay interest
from the date hereof on the unpaid principal amount hereof, in like money, at
said office, on the dates and at the rates selected in accordance with Section
2.3(c) of the Credit Agreement.

Overdue principal and, to the extent permitted by law, overdue interest
owing hereunder shall bear interest as provided in Section 3.1 of the Credit
Agreement. Further, in the event the payment of all sums due hereunder is
accelerated under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Swingline Lender shall become immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower. In the event this Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition the principal and interest, all costs of collection, including
reasonable attorneys' fees; provided, that for purposes of this note,
--------
"reasonable attorneys' fees" shall be limited by actual attorneys' fees incurred
by a party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the principal amount hereof.

All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on Schedule A attached hereto and incorporated
----------
herein by reference, or on a continuation thereof which shall be attached hereto
and made a part hereof; provided, however, that any failure to endorse such
-------- -------
information on such schedule or continuation thereof shall not in any manner
affect the obligation of the Borrower to make payments of principal and interest
in accordance with the terms of this Note.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.

EMBASSY SUITES, INC./
PROMUS HOTELS, INC.

By____________________________

Title_________________________

<PAGE>

<TABLE>
SCHEDULE A TO THE
SWINGLINE NOTE
OF EMBASSY SUITES, INC./PROMUS HOTELS, INC.
DATED JUNE _, 1995
<CAPTION>
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>

</TABLE>

<PAGE>

Schedule 2.4(b)-1
-----------------

Form of Tranche A Competitive Bid Request

NationsBank, N.A. (Carolinas)
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche A Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among Embassy
----------------
Suites, Inc., as initial borrower, certain subsidiaries and related parties as
guarantors, the Lenders and NationsBank, N.A. (Carolinas), as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives you notice pursuant to Section 2.4(b) of the Credit Agreement it requests
solicitation of Competitive Bids under the Credit Agreement, and in connection
herewith sets forth below the terms on which such Competitive Loan borrowing is
requested to be made:

(A) Date of Competitive Loan Borrowing
(which is a Business Day) __________________

(B) Principal Amount of
Competitive Loan Borrowing4 __________________

In accordance with the requirements of Section 5.3, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (ii) of such Section, and confirms that the matters
referenced in subsections (b), (c), (d) and (e) of such Section, are true and
correct.

Very truly yours,

PROMUS HOTELS, INC.

By:____________________________

Title:_________________________

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

4 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof.

5 Subject to the provisions and definitions of the Credit
Agreement, but generally not less than 7 days nor more
than 180 days.

<PAGE>

Schedule 2.4(b)-2
-----------------

Form of Notice of Tranche A Competitive Bid Request

[Name of Lender]
[Address]

Attention:

Ladies and Gentlemen:

Reference is made to the Tranche A Credit Agreement dated as of June 7,
1995 (as amended, modified, extended or restated from time to time, the "Credit
------
Agreement"), among Embassy Suites, Inc., as initial borrower, (the "Borrower"),
- --------- --------
certain subsidiaries and related parties as guarantors, the Lenders and
NationsBank, N.A. (Carolinas), as Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The Borrower made a Competitive Bid Request on _____________,
19__, pursuant to Section 2.4(b) of the Credit Agreement, and in that connection
you are invited to submit a Competitive Bid by 10:00 A.M. (Charlotte, North
Carolina time) ______________, 19__ [Date of Proposed Competitive Loan
Borrowing] Your Competitive Bid must comply with Section 2.4(c) of the Credit
Agreement and the terms set forth below on which the Competitive Bid Request was
made:

(A) Date of Competitive Loan Borrowing __________________

(B) Principal amount of
Competitive Loan Borrowing __________________

Very truly yours,

NATIONSBANK, N.A. (CAROLINAS), as Agent

By________________________________

Title:____________________________

<PAGE>

Schedule 2.4(c)
---------------

Form of Tranche A Competitive Bid

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

The undersigned, [Name of Lender], refers to the Tranche A Credit Agreement
dated as of June 7, 1995 (as amended, modified, extended or restated from time
to time, the "Credit Agreement"), among Embassy Suites, Inc., as initial
----------------
borrower, (the "Borrower"), certain subsidiaries and related parties, the
--------
Lenders and NationsBank, N.A. (Carolinas), as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The undersigned hereby makes a Competitive Bid
pursuant to Section 2.4(c) of the Credit Agreement, in response to the
Competitive Bid Request made by the Borrower on ________________, 19__, and in
that connection sets forth below the terms on which such Competitive Bid is
made:

(A) Principal Amount6 ____________________

(B) Competitive Bid Rate ____________________

The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.4(e) of
the Credit Agreement.

Very truly yours,

[NAME OF LENDER]

By:______________________________

Title:___________________________

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

6 Acceptance in a minimum principal amount of $1,000,000
and $500,000 increments in excess thereof.

<PAGE>

Schedule 2.4(d)
---------------

Form of Tranche A Competitive Bid Accept/Reject Letter

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

In accordance with Section 2.4(d) of the Credit Agreement, we have received
Competitive Bids in connection with our Competitive Bid Request dated
______________ and in accordance with Section 2.4(d) of the Credit Agreement, we
hereby accept the following bids for maturity on [date]:

Interest
Principal Amount Competitive Bid Rate Paid Lender
- ---------------- -------------------- -------- ------

$ [%]
$ [%]

We hereby reject the following bids:

Interest
Principal Amount Competitive Bid Rate Paid Lender
- ---------------- -------------------- -------- ------

$ [%]
$ [%]

The Competitive Loans accepted as provided above should be deposited in the
general deposit account maintained by the Borrower with NationsBank, N.A.
(Carolinas) on the date hereof in accordance with Section 2.4(e) of the Credit
Agreement.

Very truly yours,

PROMUS HOTELS, INC.

By:_____________________________

Name:________________________

Title:_______________________

<PAGE>

Schedule 2.4(h)
---------------

Form of Tranche A Competitive Loan Note

$300,000,000 June _, 1995

FOR VALUE RECEIVED, PROMUS HOTELS, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of __________________________,
--------
its successors and permitted assigns (the "Lender"), at the office of
------
NationsBank, N.A. (Carolinas), as Agent (the "Agent"), at 101 N. Tryon Street,
-----
Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such
other place or places as the holder hereof may designate), at the times set
forth in the Tranche A Credit Agreement dated as of June 7, 1995 among Embassy
Suites, Inc., as initial borrower, certain subsidiaries and related parties as
guarantors, the Lenders and the Agent (as it may be amended, modified, extended
or restated from time to time, the "Credit Agreement"; all capitalized terms not
----------------
otherwise defined herein shall have the meanings set forth in the Credit
Agreement), but in no event later than the Termination Date, in Dollars and in
immediately available funds, the principal amount of THREE HUNDRED MILLION
DOLLARS ($300,000,000) or, if less than such principal amount, the aggregate
unpaid principal amount of all Competitive Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.4(g) of the
Credit Agreement and in the respective Competitive Bid applicable to each
Competitive Loan borrowing evidenced hereby.

Overdue principal and, to the extent permitted by law, overdue interest
owing hereunder shall bear interest as provided in Section 3.1 of the Credit
Agreement. Further, in the event the payment of all sums due hereunder is
accelerated under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Lender shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower. In the event this Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition the principal and interest, all costs of collection, including
reasonable attorneys' fees; provided, that for purposes of this note,
--------
"reasonable attorneys' fees" shall be limited by actual attorneys' fees incurred
by a party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the principal amount hereof.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.

PROMUS HOTELS, INC.

By____________________________

Title_________________________

<PAGE>

<TABLE>
SCHEDULE A TO THE
TRANCHE A COMPETITIVE LOAN NOTE
OF EMBASSY SUITES, INC./PROMUS HOTELS, INC.
DATED JUNE _, 1995
<CAPTION>
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>

</TABLE>

<PAGE>

Schedule 3.2
------------

Form of Tranche A Notice of Conversion or Extension

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services

Ladies and Gentlemen:

The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche A Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice pursuant to Section 3.2 of the Credit
Agreement that it requests an extension or conversion of one or more
Committed Revolving Loans outstanding under the Credit Agreement, and in
connection herewith sets forth below the terms on which such extension or
conversion is requested to be made:

(A) Date of Extension or Conversion
(which is the last day of the _______________________
the applicable Interest Periods)

(B) Principal Amount of
Extension or Conversion7 _______________________

(D) Interest Period and the
last day thereof9 _______________________

In accordance with the requirements of Section 5.3, except in the case
of extension of or conversion to Base Rate Loans, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit
Agreement as provided in subsection (ii) of such Section, and confirms that
the matters referenced in subsections (b), (c), (d) and (e) of such
Section, are true and correct.

Very truly yours,

PROMUS HOTELS, INC.

By:__________________________________

Title:_______________________________

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

7 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof (or the remaining available Revolving Committed
Amount, if less).

8 Eurodollar and Base Rate Loans available.

9 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.

<PAGE>

Schedule 5.1(a)
---------------

Form of Pledge Agreement

<PAGE>

Schedule 6.15
-------------

Subsidiaries

<PAGE>

Schedule 7.1(d)
---------------

Form of Officer's Compliance Certificate

For the fiscal quarter ended _________________, 19___.

I, ______________________, [Title] of PROMUS HOTELS, INC. (the
"Borrower") hereby certify that, to the best of my knowledge and belief,
--------
with respect to that certain Tranche A Credit Agreement dated as of June 7,
1995 and that certain Tranche B Credit Agreement dated as of June 7, 1995
(each as may be as amended, modified, extended or restated from time to
time, collectively, the "Hotel Facility"; all of the defined terms in the
--------------
Hotel Facility are incorporated herein by reference) among Promus Hotels,
Inc., a wholly-owned subsidiary of Promus Hotel Corporation, as Borrower,
Promus Hotel Corporation, as Guarantor, the Lenders party thereto and
NationsBank, N.A. (Carolinas), as Agent:

a. The company-prepared financial statements which accompany this
certificate are true and correct in all material respects and have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, subject to changes
resulting from normal year-end audit adjustments; and

b. Since ___________ (the date of the last similar certification, or,
if none, the Closing Date) (i) the Credit Parties have kept,
observed, performed and fulfilled each and every agreement binding
on them contained in the Credit Documents and (ii) no Default or
Event of Default has occurred under the Hotel Facility.

Delivered herewith are detailed calculations demonstrating compliance by
the Credit Parties with the financial covenants contained in Section 7.11
of the Hotel Facility as of the end of the fiscal period referred to above.

This ______ day of ___________, 19__.

PROMUS HOTEL CORPORATION

________________________________
Title:

<PAGE>

Attachment to Officer's Certificate
-----------------------------------

Computation of Financial Covenants

<PAGE>

Schedule 7.12
-------------

Form of Joinder Agreement

THIS JOINDER AGREEMENT (the "Agreement"), dated as of
---------
_____________, 19__, is by and between _____________________, a
___________________ (the "Subsidiary"), and NATIONSBANK, N.A.
----------
(CAROLINAS), in its capacity as Agent under that Tranche A Credit
Agreement and that Tranche B Credit Agreement (as amended,
modified, extended or restated from time to time, the "Tranche A
---------
Credit Agreement" and the "Tranche B Credit Agreement",
---------------- --------------------------
respectively, and sometimes hereafter referred to collectively as
the "Credit Agreements"), in each case dated as of June 7, 1995
-----------------
by and among EMBASSY SUITES, INC., as initial borrower, certain
subsidiaries and related parties as guarantors, the Lenders party
thereto and NationsBank, N.A. (Carolinas), as Agent. All of the
defined terms in the Credit Agreements are incorporated herein by
reference.

The Subsidiary is an Additional Credit Party, and,
consequently, the Credit Parties are required by Section 7.12 of
each of respective the Credit Agreements to cause the Subsidiary
to become a "Guarantor".
---------

Accordingly, the Subsidiary hereby agrees as follows with
the Agent, for the benefit of the Lenders:

1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to each of the Credit Agreements and a
"Guarantor" for all purposes of the Credit Agreements, and shall
have all of the obligations of a Guarantor thereunder as if it
had executed the Credit Agreements. The Subsidiary hereby
ratifies, as of the date hereof, and agrees to be bound by, all
of the terms, provisions and conditions contained in each of the
Credit Agreements, including without limitation (i) all of the
representations and warranties set forth in Section 6 of each of
the Credit Agreements as they relate to such Subsidiary, (ii) all
of the affirmative and negative covenants set forth in Sections 7
and 8 of each of the Credit Agreements and (iii) all of the
undertakings and waivers set forth in Section 4 of each of the
Credit Agreements (subject to the limitations set forth therein).
Without limiting the generality of the foregoing terms of this
paragraph 1, the Subsidiary hereby (i) subject to the limitation
set forth in Section 4.1 of each of the Credit Agreements,
jointly and severally together with the other Guarantors,
guarantees to each Lender and the Agent, as provided in Section 4
of each of the Credit Agreements, the prompt payment and
performance of the Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof and (ii)
agrees that if any of the Obligations are not paid or performed
in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the Subsidiary will,
jointly and severally together with the other Guarantors,
promptly pay and perform the same, without any demand or notice
whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as
a mandatory prepayment, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

2. The undersigned Credit Party, being the parent company
of the Subsidiary, joins in the execution of the Joinder
Agreement for purposes of (i) acknowledging, and agreeing to be
bound by the terms of, the Pledge Agreement as a Pledgor
thereunder as if it had been an original party thereto, (ii)
acknowledging, representing and affirming to the Collateral Agent
that the Pledged Securities (as such term is defined in the
Pledge Agreement) hereby delivered to the Collateral Agent and
which are subject to the pledge and security interest under the
Pledge Agreement are as follows:

<PAGE>

Nominal Certificate No. of Percentage
Issuer Owner No. Shares of Total
------ ------- ------- ------ Ownership
---------

and (iii) acknowledging that its notice address and the address
of its chief executive office for purposes of the Pledge
Agreement is c/o Promus Hotels, Inc., 850 Ridgelake Boulevard,
Memphis, Tennessee 38120, Attn: Carol G. Champion, Telephone:
(901) 680-7201, Telecopy: (901) 680-7270.

3. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.

IN WITNESS WHEREOF, the Subsidiary has caused this Joinder
Agreement to be duly executed by its authorized officers, and the
Agent, for the benefit of the Lenders, has caused the same to be
accepted by its authorized officer, as of the day and year first
above written.

[SUBSIDIARY]

By____________________________

Title_________________________

PLEDGOR [PARENT COMPANY]
-------

By____________________________

Title_________________________

Acknowledged and accepted:

NATIONSBANK, N.A. (CAROLINAS),
as Agent

By______________________________

Title___________________________

<PAGE>

Schedule 8.1
------------

Existing Indebtedness

<PAGE>

Schedule 8.2
------------

Existing Liens

<PAGE>

<TABLE>
Schedule 11.1
-------------

Schedule of Addresses

<CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
NationsBank, N.A. NationsBank, N.A. (Carolinas) NationsBank, N.A.
(Carolinas) 101 N. Tryon St. (Carolinas)
Independence Center Corporate Bank
NC1-001-15-04 1 NationsBank Plaza
Charlotte, NC 28255 Nashville, TN 37329-1697
Attn: Agency Services Attn: J.E. Ball
Phone: (704) 386-9368 Phone: (615) 749-3469
Fax: (704) 386-9923 Fax: (615) 749-4640
with a copy to:

Christopher C. Kupec,
Esq.
Moore & Van Allen, PLLC
NationsBank Corporate
Center, Floor 47
100 N. Tryon Street
Charlotte, NC 28202-4003
Phone: (704) 331-1046
Fax: (704) 331-1159

The Bank of New The Bank of New York The Bank of New York
York One Wall Street, 22nd Floor One Wall Street, 22nd Floor
New York, NY 10286 New York, NY 10286
Attn: Greg Batson Attn: Greg Batson
Phone: (212) 635-6898 Phone: (212) 635-6898
Fax: (212) 635-6434 Fax: (212) 635-6434
Credit Lyonnais Credit Lyonnais Cayman Branch Credit Lyonnais Cayman Branch
Cayman Branch 1301 Avenue of the Americas 1301 Avenue of the Americas
18th Floor 18th Floor
New York, NY 10019 New York, New York 10019
Attn: Alex Larrinaga Attn: Mischa Zabotin
Phone: (212) 261-7833 Phone: (212) 261-7872
Fax: (212) 261-7890 Fax: (212) 261-7890

The Sumitomo Bank, The Sumitomo Bank, Limited, New The Sumitomo Bank, Limited, New
Limited, New York York Branch York Branch
Branch 277 Park Avenue 277 Park Avenue
New York, NY 10172 New York, New York 10172
Attn: Christine Bonifacic Attn: Christine Bonifacic
Phone: (212) 224-4138 Phone: (212) 224-4138
Fax: (212) 224-5197 Fax: (212) 224-5197

The Bank of Nova The Bank of Nova Scotia The Bank of Nova Scotia
Scotia 1100 Louisiana 1100 Louisiana
Suite 3000 Suite 3000
Houston, TX 77002 Houston, Texas 77002
Attn: Paul Gonin Attn: Paul Gonin
Phone: (713) 759-3443 Phone: (713) 759-3443
Fax: (713) 752-2425 Fax: (713) 752-2425

<PAGE>
<CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
CIBC Inc. CIBC Inc. CIBC Inc.
300 South Grand Avenue 300 South Grand Avenue
Suite 2700 Suite 2700
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Paul Chakmak Attn: Paul Chakmak
Phone: (213) 617-6226 Phone: (213) 617-6226
Fax: (213) 346-0157 Fax: (213) 346-0157
First Tennessee First Tennessee Bank National First Tennessee Bank National
Bank National Association Association
Association 165 Madison Avenue 165 Madison Avenue
National Department, 9th Floor National Department,
Memphis, TN 38103 9th Floor
Attn: Steve Wade Memphis, TN 38103
Phone: (901) 523-4118 Attn: Steve Wade
Fax: (901) 523-4267 Phone: (901) 523-4118
Fax: (901) 523-4267

First American First American National Bank First American National Bank
National Bank 4894 Poplar Avenue, 2nd Floor 4894 Poplar Avenue, 2nd Floor
Memphis, TN 38117 Memphis, TN 38117
Attn: David May/Beth Vaughn Attn: David May/Beth Vaughn
Phone: (901) 762-5688/762-5671 Phone: (901) 762-5688/762-5671
Fax: (901) 762-5665 Fax: (901) 762-5665
The Industrial Bank The Industrial Bank of Japan, The Industrial Bank of Japan,
of Japan, Limited, Limited, Atlanta Agency Limited, Atlanta Agency
Atlanta Agency 191 Peachtree Street, Suite 3600 191 Peachtree Street, Suite 3600
Atlanta, GA 30303 Atlanta, GA 30303
Attn: Jackie Brunetto Attn: Jackie Brunetto
Phone: (404) 420-3325 Phone: (404) 420-3325
Fax: (404) 524-8509 Fax: (404) 524-8509

LTCB Trust Company LTCB Trust Company The Long Term Credit Bank of
165 Broadway Japan, Limited
New York, NY 10006 45 Peachtree Center Avenue
Attn: Winston Brown Suite 2801
Phone: (212) 335-4854 Atlanta, GA 30303
Fax: (212) 608-3081 Attn: Rebecca Sedlar Silbert
Phone: (404) 659-7210
Fax: (404) 658-9751

The Nippon Credit The Nippon Credit Bank, Ltd. - The Nippon Credit Bank, Ltd. -
Bank, Ltd. - Los Los Angeles Agency Los Angeles Agency
Angeles Agency 550 South Hope Street 550 South Hope Street
Suite 2500 Suite 2500
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Helen Rhee/Jay Schwartz Attn: Helen Rhee/Jay Schwartz
Phone: (213) 243-5723/243-5722 Phone: (213) 243-5723/243-5722
Fax: (213) 243-892-0111 Fax: (213) 243-892-0111

<PAGE>

<CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
Societe Generale, Societe Generale, Southwest Societe Generale, Southwest
Southwest Agency Agency Agency
4800 Trammell Crow Center 1111 Bagby Street
2001 Ross Avenue Suite 2020
Dallas, TX 75201 Houston, TX 77002
Attn: Terry Jones Attn: Paul Cornell/Thierry
Phone: (214) 979-2777 Namuroy
Fax: (214) 979-1104 Phone: (713) 759-6301/759-6313
Fax: (713) 650-0824

with a copy to:
Societe Generale, Southwest
Agency
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Attn: Terry Jones
Phone: (214) 979-2777
Fax: (214) 979-1104
U.S. National Bank U.S. National Bank of Oregon U.S. National Bank of Oregon
of Oregon 555 SW Oak Street 555 SW Oak Street
Suite 400 Suite 400
Portland, Oregon 97204 Portland, Oregon 97204
Attn: Claire C. Jones Attn: Claire C. Jones
Phone: (503) 275-3192 Phone: (503) 275-3192
Fax: (503) 275-5428 Fax: (503) 275-5428

First Union First Union National Bank of First Union National Bank of
National Bank of North Carolina North Carolina
North Carolina One First Union Center One First Union Center
301 South College Street 301 South College Street
Charlotte, NC 28288 Charlotte, NC 28288
Attn: Leo Leitner Attn: Leo Leitner
Phone: (704) 383-5210 Phone: (704) 383-5210
Fax: (704) 374-2802 Fax: (704) 374-2802
First National Bank First National Bank of Commerce First National Bank of Commerce
of Commerce Suite 751 Suite 751
210 Baronne Street 210 Baronne Street
New Orleans, LA 70112 New Orleans, LA 70112
Attn: Louis Ballero Attn: Louis Ballero
Phone: (504) 561-1989 Phone: (504) 561-1989
Fax: (504) 561-1738 Fax: (504) 561-1738

Third National Bank Third National Bank Third National Bank
6000 Poplar 6000 Poplar
Suite 145 Suite 145
Memphis, TN 38119 Memphis, TN 38119
Attn: Carol Yochem/Saul Komisar Attn: Carol Yochem/Saul Komisar
Phone: (901) 766-7561 Phone: (901) 766-7561
Fax: (901) 766-7565 Fax: (901) 766-7565

</TABLE>

<PAGE>

Schedule 11.3(b)
----------------

Form of Hotel Inc. Tranche A Assignment and Assumption Agreement

THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT, dated as of June 7, 1995
(the "Agreement"), among EMBASSY SUITES, INC., a Delaware corporation ("Embassy
--------- -------
Suites"), PROMUS HOTELS, INC., a Delaware corporation (the "Hotel Inc."), THE
- ------ ----------
PROMUS COMPANIES INCORPORATED, a Delaware corporation ("Promus Co.") and
----------
NATIONSBANK, N.A. (CAROLINAS), in its capacity as Agent under the Credit
Agreement hereinafter described.

Embassy Suites and Promus Co. have agreed to transfer to Hotel Inc. certain
hotel related assets and liabilities in contemplation of the Reorganization and
the Distribution. In consideration therefor, the parties hereto agree as
follows:

SECTION 1. Definitions. Terms capitalized but not defined herein shall
-----------
have the meanings assigned thereto in that certain Tranche A Credit Agreement
dated as of June 6, 1995 (the "Credit Agreement") among Embassy Suites, as
----------------
initial borrower, certain subsidiaries and related parties as guarantors, the
Lenders party thereto and the Agent.

SECTION 2. Assignment and Assumption. Effective as of the date hereof,
-------------------------
Embassy Suites hereby irrevocably and unconditionally assigns to Hotel Inc. all
of its rights as "Borrower" under the Credit Agreement. Effective as of the
date hereof, Hotel Inc. hereby irrevocably and unconditionally agrees with the
Agent and the Lenders to be bound by all of the terms and conditions of the
Credit Agreement and to perform all of the obligations and discharge all of the
liabilities of the Borrower existing at or accrued prior to the date hereof or
hereafter arising under the Credit Agreement and (ii) and ratifies, and agrees
to be bound by, (A) the representations and warranties set forth in Section 6 of
the Credit Agreement and (B) all of the affirmative and negative covenants set
forth in Sections 7 and 8 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this Section 2, Hotel Inc. hereby promises
to pay to each Lender the principal balance of, and accrued interest on, each
Loan outstanding (and to pay all other Obligations, including LOC Obligations
and Swingline Loans) at, or advanced on or after, the date hereof.

SECTION 3. Release. The Agent, acting on behalf of the Lenders, hereby
-------
fully and unconditionally releases and forever discharges (i) Embassy Suites as
of the date hereof from any and all liabilities, claims, charges, choses in
actions, causes of action, damages, and other obligations, in each case whether
known or unknown, absolute or contingent, at law or in equity, now existing or
hereafter arising and whether arising under contract, by operation of law or
otherwise (collectively, "Claims") arising under and relating to the Credit
------
Agreement and (ii) Promus Co. from any Claims arising under or relating to its
guaranty obligations relating thereto under or relating to the Credit Agreement.

SECTION 4. References in the Credit Documents. From and after the
----------------------------------
Effective Date of Assignment, (a) Hotel Inc. shall have succeeded Embassy Suites
as the "Borrower" under the Credit Agreement, and all references to the
"Borrower" in the Credit Agreement shall refer to Hotel Inc. and not to Embassy
Suites and (b) all references to the "Credit Agreement" in any Credit Documents
shall refer to the Credit Agreement, as amended and modified by this Agreement.
Except as expressly amended and modified by this Agreement, all of the terms and
provisions of the Credit Agreement shall remain in full force and effect.

SECTION 5. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.

<PAGE>

SECTION 6. WAIVER OF JURY TRIAL. EACH OF THE AGENT, THE LENDERS, EMBASSY
--------------------
SUITES AND HOTEL INC. HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

SECTION 7. Successors and Assignees. Subject to the terms of Section 11.4
------------------------
of the Credit Agreement, this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of Embassy Suites, Hotel Inc.,
the Agent and each of the Lenders.

SECTION 8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.

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

EMBASSY SUITES, INC.

By:___________________________

Title:________________________

PROMUS HOTELS, INC.

By:___________________________

Title:________________________

THE PROMUS COMPANIES INCORPORATED

By:___________________________

Title:________________________

NATIONSBANK, N.A. (CAROLINAS),
as Agent as aforesaid for
the Lenders

By____________________________

Title_________________________

<PAGE>

Schedule 11.3(c)
----------------

Form of Tranche A Assignment and Acceptance

THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into
between ________________ ("Assignor") and ____________________ ("Assignee").
-------- --------

Reference is made to the Tranche A Credit Agreement dated as of June 7,
1995, as amended and modified from time to time thereafter (the "Credit
------
Agreement") among EMBASSY SUITES, INC., as initial borrower, certain
- ---------
subsidiaries and related parties as guarantors, the Lenders party thereto and
NationsBank, N.A. (Carolinas), as Agent. Terms defined in the Credit Agreement
are used herein with the same meanings.

1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
-----------------
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitments of the Assignor on the effective
date of the assignment designated below (the "Effective Date") and the Committed
--------------
Revolving Loans, Swingline Loans and Competitive Loans owing to the Assignor
which are outstanding on the Effective Date, together with unpaid interest
accrued on the assigned Loans to the Effective Date and the amount, if any, set
forth below of the fees accrued to the Effective Date for the account of the
Assignor. Each of the Assignor and the Assignee hereby makes and agrees to be
bound by all the representations, warranties and agreements set forth in Section
11.3(c) of the Credit Agreement, a copy of which has been received by each such
party. From and after the Effective Date (i) the Assignee, if it is not already
a Lender under the Credit Agreement, shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the interests (except
for its right to seek indemnification under the Credit Agreement) assigned by
this Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.

3. Terms of Assignment

(a) Date of Assignment:

(b) Legal Name of Assignor:

(d) Effective Date of Assignment:

(e) Revolving Loan Commitment
Percentage Assigned (expressed
as a percentage of the total
Commitment of the Lenders to
make Committed Revolving Loans and set
forth to at least 8 decimals) %

(f) Revolving Loan Commitment
Percentage of Assignor after
Assignment (set forth to at
least 8 decimals) %

<PAGE>

(g) Total Committed Revolving Loans outstanding
as of Effective Date $_____________

(h) Principal Amount of Committed Revolving
Loans assigned on Effective
Date (the amount set forth
in (g) multiplied by the
percentage set forth in (e)) $_____________

The terms set forth above
are hereby agreed to:

____________________, as Assignor

By:_____________________________________

Title:__________________________________

_____________________, as Assignee

By:_____________________________________

Title:__________________________________

CONSENTED TO:

NATIONSBANK, N.A. (CAROLINAS),
as Agent

By:____________________________________

Title:_________________________________

PROMUS HOTELS, INC.

By:____________________________________

Title:_________________________________

<PAGE>

Schedule 2.2(a)

Existing Letters of Credit
--------------------------

None.

<PAGE>

Schedule 6.1(b)

Special Provisions Regarding Pro Forma Balance Sheets
-----------------------------------------------------

The pro forma adjustments made in the preparation of
the Pro Forma Balance Sheet are as set forth in the Proxy
Statement dated April 25, 1995 of Promus Co. describing the
Distribution and mailed to the shareholders of Promus Co. for
purposes of its May 26, 1995 shareholders meeting.

<PAGE>

Schedule 6.4

Consents, Authorizations, Notices and Filings
---------------------------------------------

None.

<PAGE>

Schedule 6.8

Excluded Assets
---------------

After giving effect to the Reorganization, Distribution
and the Hotel Inc. Assignment and Assumption Agreement, those
certain hotel-related assets of Promus Co. and its Subsidiaries
that will be retained by Promus Co. and its Subsidiaries but
which shall be managed by Hotel Inc. pursuant to that certain
Asset Management Agreement by and between Embassy Suites and
Hotel Inc. to be executed as of June 30, 1995.

<PAGE>

Schedule 6.9

Claims Regarding Intellectual Property
--------------------------------------

None.

<PAGE>

Schedule 8.1

Existing Indebtedness
---------------------

(as of March 31, 1995)

Capital Leases
- --------------

Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $ 1,773,302
Marketing Services Center $ 68,061

Notes
- -----

Embassy - DeBanks Henwood $ 917,641
Hampton - San Francisco land $ 296,724

Guarantees
- ----------

Meadowlands Land Lease $29,356,749
Chicago Lombard $ 500,000
Embassy Pacific Partner LP,
Embassy Atlanta Buckhead Partners LP
and Embassy LaJolla Partners LP $ 4,000,000
Executive Life Guarantee [Not to exceed $8,100,000]

<PAGE>

Schedule 8.2

Existing Liens
--------------

(as of March 31, 1995)

Capital Leases
- --------------

Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $1,773,302
Marketing Services Center $ 68,061

<PAGE>

Schedule 8.5

Existing Investments
--------------------

Name (percent ownership interest)
- ---------------------------------

ATM Hotels Pty Limited (75%)
Barshop-HII Joint Venture (50%)
Embassy Akers Venture (50%)
Embassy Atlanta Buckhead Partners Limited Partnership (5%)
Embassy/GACL Lombard Joint Venture (50%)
Embassy LaJolla Partners Limited Partnership (10%)
Embassy Pacific Partners Limited Partnership (10%)
Embassy/Shaw Parsippany Venture (50%)
Embassy/Shaw Rochester Venture (50%)
Embassy Suites Club No. Two, Inc. (49%)
EPT Atlanta-Perimeter Center Limited Partnership (50%)
EPT Austin Joint Venture (50%)
EPT Bloomington Joint Venture (50%)
EPT Covina Joint Venture (50%)
EPT Crystal City Land Limited Partnership (50%)
EPT Kansas City Joint Venture (50%)
EPT Meadowlands Limited Partnership (50%)
EPT Omaha Joint Venture (50%)
EPT Overland Park Limited Partnership (50%)
EPT Raleigh Limited Partnership (50%)
EPT San Antonio Joint Venture (50%)
ES/PA, L.P. (98%)
E.S. Philadelphia Airport Joint Venture (99.8%)
GOL (Texas) Inc. (49%)
Granada Royale Hometel-Tucson, a limited partnership (50.003%)
Granada Royale Hometel-West, a limited partnership (65%)
Hampton/GHI Associates #1 (20%)
Hampton/GHI Associates #2 (20%)
Hospitality Capital Group (33.3%)
Hospitality Capital Group II (33.3%)
King Street Station Hotel Associates, L.P. (50%)
MHV Joint Venture (50%)
Pacific Market Investment Company Joint Venture (50%)
Riverview/Embassy Joint Venture (50%)
SES/D.C. Venture (25%)

Existing Investments (Notes Receivable)
---------------------------------------

(as of March 31, 1995)

Embassy Suites
- --------------

El Paso $ 133,503
Richmond $ 1,000,000
LaJolla $ 687,970
Santa Clara $ 611,428

<PAGE>

Crystal City $ 638,375
Charleston $ 682,461

Hampton Inn
- -----------

Secaucus $ 50,637
San Antonio - Downtown $ 1,000,000
San Diego $ 57,954

Hampton Inn & Suites
- --------------------

Newport News $ 1,000,000

Homewood Suites
- ---------------

Lane/Raymond/Smith $ 500,000
Santa Fe $ 1,500,000
San Antonio - Downtown $ 1,000,000
Harrisburg $ 939,105
Alexandria $ 529,588

Information Technology $ 750,000
- ----------------------

Marketing Services Center $ 125,725
- ------------------------- -----------

$11,206,746
===========

<PAGE>

<TABLE>
SCHEDULE 6.15
-------------
Subsidiaries

<CAPTION>
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
<S> <C> <C> <C> <C>
Ziwa Insurance Ltd. (to be formed) None

Promus Hotels, Inc.*/ Delaware 100% None
-
Buckleigh, Inc. Delaware 100% 100 (100) None

ATM Hotels Pty Limited Australia 50% 2 (1) None

Compass, Inc. Tennessee 100% 1000 (1000) None

EJP Corporation Delaware 100% 1000 (1000) None

Suite Life, Inc. Delaware 100% 1000 (1000) None

Embassy Development Corporation Delaware 100% 100 (100) None

Embassy Suites De Mexico, S.A., de C.V. Mexico 1% 10,000 (100) None

ES/PA, L.P. [Pennsylvania] 98% [Not Applicable] None

E.S. Philadelphia Airport Joint Venture Pennsylvania 10% [Not Applicable] None

Embassy Equity Development Corporation Delaware 100% 100 (100) None

Embassy Suites De Mexico S.A., de C.V. Mexico 1% 10,000 (100) None

Embassy Syracuse Development Corporation Delaware 100% 100 (100) None

<FN>
- --------------------------------

*/ Indicates Subsidiaries of the Parent Company and the Borrower immediately prior to the Assignment and Assumption.
- -
</TABLE>

<PAGE>

<TABLE> <CAPTION>
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
<S> <C> <C> <C> <C>
Embassy Suites De Mexico, S.A., de C.V. Mexico 1% 10,000 (100) None

Southfield Hotel Management, Inc. Florida 100% 1000 (1000) None

Embassy Memphis Corporation Tennessee 100% 100 (100) None

Embassy Pacific Equity Corporation Delaware 100% 100 (100) None

Embassy Suites Club No. 1, Inc. Kansas 100% 1000 (1000) None

Embassy Suites Club No. Three, Inc. Louisiana 100% 1000 (1000) None

Embassy Suites De Mexico, S.A., De C.V. Mexico 97% 10,000 (9,700) None

Embassy Suites (Isla Verde), Inc. Delaware 100% 1000 (1000) None

Embassy Suites (Puerto Rico), Inc. Delaware 100% 1000 (1000) None

Embassy Vacation Resorts, Inc. Delaware 100% 1000 (1000) None

EPAM Corporation Delaware 100% 100 (100) None

ESI Development, Inc. Tennessee 100% 1000 (1000) None

ESI Mortgage Development Corporation Delaware 100% 1000 (1000) None

ESI Mortgage Development Corporation II Delaware 100% 100 (100) None

E.S. Philadelphia Airport Joint Venture Pennsylvania 90% [Not Applicable] None

GOL Columbia Limited Partnership Maryland 1% [Not Applicable] None

GOL (Heathrow), Inc. Tennessee 100% 1000 (1000) None

</TABLE>

<PAGE>

<TABLE> <CAPTION>
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
<S> <C> <C> <C> <C>
Granada Royale Hometel-West, a limited Arizona 50.003% [Not Applicable] None
partnership

Granada Royale Hometel-Tucson, a limited Arizona 65% [Not Applicable] None
partnership

Hampton Inns, Inc. Delaware 100% 1000 (1000) None

GOL Columbia Limited Partnership Maryland 99% [Not Applicable] None

Old Town Hotel Corporation Delaware 100% 1000 (1000) None

Pacific Hotels, Inc. Tennessee 100% 1000 (1000) None

ATM Hotels Pty Limited Australia 50% 2 (1) None

Promus Hotel Services, Inc. Delaware 100% 1000 (1000) None

Promus Hotels Florida, Inc. Delaware 100% 1000 (1000) None

</TABLE>

Exhibit 10(3)

TRANCHE B
CREDIT AGREEMENT

Dated as of June 7, 1995

among

EMBASSY SUITES, INC.,
as Initial Borrower,

PROMUS HOTELS, INC.,
as the Subsequent Borrower,

CERTAIN SUBSIDIARIES AND RELATED PARTIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,

THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO

AND

NATIONSBANK, N.A. (CAROLINAS),
as Agent

<PAGE>
TABLE OF CONTENTS
-----------------

Page No.
-------

SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . 26
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . 26

SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 Committed Revolving Loans . . . . . . . . . . . . . . . . . . . 26
2.2 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 29
2.3 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 29
2.4 Competitive Loan Subfacility . . . . . . . . . . . . . . . . . 29
2.5 Extension of Termination Date . . . . . . . . . . . . . . . . . 32
2.6 Amortization of Loans Outstanding at the Termination Date . . . 32

SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . . . . 33
3.1 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2 Extension and Conversion . . . . . . . . . . . . . . . . . . . 33
3.3 Reductions In Commitments and Prepayments . . . . . . . . . . . 34
3.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . 37
3.6 Inability To Determine Interest Rate . . . . . . . . . . . . . 38
3.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.8 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . 39
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.11 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . 43
3.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . 44
3.13 Place and Manner of Payments . . . . . . . . . . . . . . . . . 45
3.14 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 46
3.15 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . 46
3.16 Change of Lending Office . . . . . . . . . . . . . . . . . . . 46

SECTION 4 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1 The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . . . . 47
4.3 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.4 Certain Additional Waivers . . . . . . . . . . . . . . . . . . 48
4.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.6 Continuing Guarantee . . . . . . . . . . . . . . . . . . . . . 49
4.7 Discharge of Guarantor . . . . . . . . . . . . . . . . . . . . 49

SECTION 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.1 Conditions to Initial Extensions of Credit . . . . . . . . . . 49
5.2 Conditions to Assignment to Hotel Inc., Release of Embassy Suites
and Promus Co. and Initial Extensions of Credit to Hotel Inc. . 51
5.3 Each Extension of Credit . . . . . . . . . . . . . . . . . . . 53

SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 54
6.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . 54
6.2 No Change; Solvent . . . . . . . . . . . . . . . . . . . . . . 56

<PAGE>
6.3 Corporate and Partnership Existence; Compliance with Law . . . 56
6.4 Corporate and Partnership Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . 57
6.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . 57
6.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 58
6.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . 58
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . 58
6.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.14 Investment Company Act; Other Regulations . . . . . . . . . . . 59
6.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . 60
6.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 60

SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 62
7.1 Information Covenants. . . . . . . . . . . . . . . . . . . . . 62
7.2 Preservation of Existence and Franchises . . . . . . . . . . . 64
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 64
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 64
7.5 Payment of Taxes and Other Indebtedness . . . . . . . . . . . . 64
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.7 Maintenance of Property . . . . . . . . . . . . . . . . . . . . 65
7.8 Performance of Obligations . . . . . . . . . . . . . . . . . . 65
7.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Audits/Inspections . . . . . . . . . . . . . . . . . . . . . . 65
7.11 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . 65
7.12 Additional Credit Parties . . . . . . . . . . . . . . . . . . . 66

SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 67
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.3 Nature of Business . . . . . . . . . . . . . . . . . . . . . . 70
8.4 Consolidation, Merger, Sale or Purchase of Assets . . . . . . . 70
8.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.6 Prepayments of Indebtedness . . . . . . . . . . . . . . . . . . 73
8.7 Transactions with Affiliates . . . . . . . . . . . . . . . . . 73
8.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.9 No Dividend Restrictions . . . . . . . . . . . . . . . . . . . 74

SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 74
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 74
9.2 Acceleration; Remedies . . . . . . . . . . . . . . . . . . . . 77

SECTION 10 AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 78
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 79
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . 79
10.4 Reliance on Communications . . . . . . . . . . . . . . . . . . 79
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 80
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . 80
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 81

<PAGE>
10.8 Agent in its Individual Capacity . . . . . . . . . . . . . . . 81
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 81

SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.2 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . 83
11.3 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . 84
11.4 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . 87
11.5 Payment of Expenses, etc . . . . . . . . . . . . . . . . . . . 88
11.6 Amendments, Waivers and Consents . . . . . . . . . . . . . . . 89
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.10 Governing Law; Submission to Jurisdiction; Venue . . . . . . . 90
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.12 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.14 Knowledge Standard . . . . . . . . . . . . . . . . . . . . . . 91
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 91
11.16 Agent's and Lender's Covenant . . . . . . . . . . . . . . . . . 92

iii

<PAGE>
TRANCHE B
CREDIT AGREEMENT

THIS TRANCHE B CREDIT AGREEMENT dated as of June 7, 1995 (as amended,
modified and extended from time to time, the "Credit Agreement" and sometimes,
----------------
this "Credit Agreement"), is by and among EMBASSY SUITES, INC., a Delaware
----------------
corporation as the initial Borrower, and PROMUS HOTELS, INC., a Delaware
corporation, as assignee and subsequent Borrower upon satisfaction of the
conditions set forth in Section 5.2 (the applicable Borrower hereunder being
referred to as the "Borrower"), THE PROMUS COMPANIES INCORPORATED, a Delaware
--------
corporation as an initial guarantor subject to release upon satisfaction of the
conditions set forth in Section 5.2, and PROMUS HOTEL CORPORATION, a Delaware
corporation as a guarantor (such applicable parent company guarantor hereunder
being referred to as the "Parent Company") and those certain Subsidiaries and
--------------
related parties identified as "Guarantors" on the signature pages hereto and
such other Subsidiaries as may from time to time become a Guarantor hereunder
(together with the applicable Parent Company, the "Guarantors"), the several
----------
lenders identified on the signature pages hereto and such other lenders as may
from time to time become a party hereto (the "Lenders") and NATIONSBANK, N.A.
-------
(CAROLINAS), as agent for the Lenders (in such capacity, the "Agent").
-----

W I T N E S S E T H

WHEREAS, Embassy Suites, Inc. ("Embassy Suites") and its parent company,
--------------
The Promus Companies Incorporated ("Promus Co."), have proposed a reorganization
----------
of their corporate structure as more particularly described in the Proxy
Statement (the "Reorganization") whereby, among other things, (i) certain hotel
--------------
related assets and liabilities will be transferred to Promus Hotels, Inc.
("Hotel Inc."), a newly formed and wholly-owned subsidiary of Promus Hotel
----------
Corporation ("Hotel Corp."), a newly formed and wholly-owned subsidiary of
-----------
Embassy Suites, (ii) Embassy Suites will enter into the Tranche A Credit
Agreement and this Tranche B Credit Agreement (hereafter the Tranche A Credit
Agreement and the Tranche B Credit Agreement may be referred to collectively as
the "Hotel Facility") and make initial borrowings hereunder and/or thereunder,
--------------
(iii) Embassy Suites will assign to Hotel Inc. and Hotel Inc. will assume from
Embassy Suites the Hotel Facility, and Embassy Suites and Promus Co. will be
released from liability as the initial Borrower and an initial guarantor,
respectively, under the Hotel Facility as provided herein and in the Tranche A
Credit Agreement, (iv) Embassy Suites will dividend the stock of Hotel Corp. to
Promus Co. which will dividend such stock to its public shareholders (the
"Distribution");
------------

WHEREAS, Embassy Suites has requested that the Lenders provide a
$350,000,000 Hotel Facility consisting of a

<PAGE>
$300,000,000 five year revolving credit facility under the Tranche A Credit
Agreement and a $50,000,000 364-day revolving credit facility under this Tranche
B Credit Agreement for the purposes hereinafter set forth; and

WHEREAS, the Lenders have agreed to make the requested Hotel Facility
available on the terms and conditions set forth herein and in the Tranche A
Credit Agreement.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

SECTION 1

DEFINITIONS
-----------

1.1 Definitions. As used herein, the following terms shall have the
-----------
meanings herein specified unless the context otherwise requires. Defined terms
herein shall include in the singular number the plural and in the plural number
the singular:

"Additional Credit Party" means each Person that becomes a Guarantor
-----------------------
after the Closing Date by execution of a Joinder Agreement.

"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to
control an entity if such Person possesses, directly or indirectly, the
power (i) to vote 10% or more of the securities or other ownership
interests having ordinary voting power for the election of directors of
such corporation or the members of the managing body of such Person or (ii)
to direct or cause direction of the management and policies of such
corporation or other entity, whether through the ownership of voting
securities, by contract or otherwise.

"Agent" means NationsBank, N.A. (Carolinas) and any successors and
-----
permitted assigns in such capacity.

"Agent's Fee Letter" means the letter agreement dated as of March 1,
------------------
1995 among NationsBank, N.A. (Carolinas), NationsBanc Capital Markets,
Inc., Promus Co. and Embassy Suites, as amended, modified, supplemented or
replaced from time to time.

"Agent's Fees" means such term as defined in Section 3.4(c).
------------

<PAGE>

"Applicable Percentage" means, for any day, the rate per annum set
---------------------
forth below opposite the applicable Level Period then in effect, it being
understood that the Applicable Percentage for (i) Base Rate Loans shall be
the percentage set forth under the column "Base Rate Margin",
(ii) Eurodollar Loans shall be the percentage set forth under the column
"Eurodollar Margin" and (iii) the Commitment Fee shall be the percentage
set forth under the column "Commitment Fee":

Level Base Eurodoll Commitme
Period Rate ar nt
Margin Margin Fee

Level I Period 0% .275% .100%

Level II Period 0% .325% .125%

Level III Period 0% .400% .150%

Level IV Period 0% .550% .200%

Level V Period 0% .6875% .3125%

In the event the applicable Level Period is determined by reference to
clause (i) of the definitions of "Level I Period", "Level II Period",
"Level III Period", "Level IV Period" and "Level V Period", the Applicable
Percentage shall be adjusted for all purposes as soon as reasonably
practicable, but in no event later than 5 days, after the date of receipt
by the Agent of notice of a change in the applicable debt rating. In the
event the applicable Level Period is determined by reference to clause (ii)
of the definitions of "Level I Period", "Level II Period", "Level III
Period", "Level IV Period" and "Level V Period", the Applicable Percentage
shall be adjusted for all purposes quarterly as soon as reasonably
practicable, but not later than 5 days, after the date of receipt by the
Agent of the quarterly financial information in accordance with the
provisions of Section 7.1(b) together with a calculation by the Borrower of
the Leverage Ratio for the period ending on the last day of the most recent
fiscal quarter.

"Assignment and Assumption" means the assignment of the obligations of
-------------------------
Embassy Suites hereunder by Embassy Suites and the assumption of such
obligations by Hotel Inc. pursuant to the terms of Section 11.3(b).

"Audobon Woods" means such term as defined in the Proxy Statement.
-------------

"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
---------------
States Code, as amended, modified, succeeded or replaced from time to time.

"Base Rate" means, for any day, the rate per annum (rounded upwards,
---------
if necessary, to the nearest whole

<PAGE>
multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate
in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on
----
such day. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable
after due inquiry to ascertain the Federal Funds Rate for any reason,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.

"Base Rate Loan" means any Loan bearing interest at a rate determined
--------------
by reference to the Base Rate.

"Borrower" means, prior to the time of effectiveness of the Assignment
--------
and Assumption, Embassy Suites, and after the time of effectiveness of the
Assignment and Assumption, Hotel Inc.

"Business" means such term as defined in Section 6.17(a).
--------

"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Charlotte, North Carolina and New York, New
York are authorized or required by law to close, except that, when used in
------ ----
connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar deposits in London,
England and New York, New York.

"Capital Expenditures" means all expenditures for property, plant and
--------------------
equipment which in accordance with GAAP would be so classified on a
Statement of Cash Flows (or Statement of Sources and Uses).

"Capital Lease" means any lease of property, real or personal, the
-------------
obligations with respect to which are required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.

"Closing Date" means the date of the occurrence of the Distribution,
------------
but not in any event later than 90 days after the date of this Credit
Agreement.

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

"Commitment" means the Revolving Commitment.
----------

<PAGE>

"Commitment Fee" means such term as defined in Section 3.4(a).
--------------

"Commitment Percentage" means the Revolving Commitment Percentage.
---------------------

"Committed Revolving Loans" means such term as defined in Section 2.1.
-------------------------

"Committed Revolving Note" or "Committed Revolving Notes" means the
------------------------ -------------------------
promissory notes of the Borrower in favor of each of the Lenders evidencing
the Committed Revolving Loans provided pursuant to Section 2.1(e),
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, supplemented, extended, renewed or replaced from time
to time.

"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, which is under common control with the Borrower within the
meaning of Section 4001(a)(14)(B) of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414(b), (c) or (m) of the Code.

"Competitive Bid" means an offer by a Lender to make a Competitive
---------------
Loan pursuant to the terms of Section 2.4(c).

"Competitive Bid Rate" means, as to any Competitive Bid made by a
--------------------
Lender in accordance with the provisions of Section 2.4, the fixed rate of
interest offered by the Lender making the Competitive Bid.

"Competitive Bid Request" means a request by the Borrower for
-----------------------
Competitive Bids in accordance with the provisions of Section 2.4(b), a
form of which is attached as Schedule 2.4(b)-1.
-----------------

"Competitive Bid Request Fee" means the administrative fee payable to
---------------------------
the Agent, if any, in connection with a Competitive Bid Request as provided
in the Agent's Fee Letter.

"Competitive Loan" means a loan made by a Lender pursuant to the
----------------
provisions of Section 2.4.

"Competitive Loan Lenders" means, at any time, those Lenders which
------------------------
have Competitive Loans outstanding.

"Competitive Loan Maximum Amount" means such term as defined in
-------------------------------
Section 2.4(a).

<PAGE>
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.

"Consolidated Adjusted EBITDA" means, for any period, the amount equal
----------------------------
to (i) the sum of Consolidated Net Income for such period plus Consolidated
----
Interest Expense for such period to the extent deducted in the calculation
of Consolidated Net Income plus all provisions for any Federal, state or
----
other income taxes plus depreciation and amortization, in each case for the
----
Parent Company and its Subsidiaries on a consolidated basis, but excluding
in each case the portion of such components attributable to Joint Ventures,
determined in accordance with GAAP plus (ii) all cash distributions from
----
Joint Ventures received by the Parent Company, the Borrower or any of their
respective Subsidiaries for such period. For the portion of any such
period which is prior to the Closing Date, Consolidated Adjusted EBITDA
shall be calculated with respect to the Hotel Inc. Business.

"Consolidated Fixed Charge Coverage Ratio" means the ratio of
----------------------------------------
Consolidated Net Income Available for Fixed Charges to Consolidated Fixed
Charges.

"Consolidated Fixed Charges" means, for any period, without
--------------------------
duplication, the sum of (i) all Rentals (other than Rentals on Capitalized
Leases) payable during such period, (ii) the cash portion of Consolidated
Interest Expense during such period, (iii) the cash payment portion of
current maturities of Funded Debt, and (iv) all cash Dividends paid in such
period, in each case for the Parent Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP. For the portion of
any such period which is prior to the Closing Date, Consolidated Fixed
Charges shall be calculated with respect to the Hotel Inc. Business.

"Consolidated Funded Debt" means Funded Debt of the Parent Company and
------------------------
its Subsidiaries on a consolidated basis determined in accordance with
GAAP.

"Consolidated Interest Expense" means, for any period, all interest
-----------------------------
expense, including the amortization of debt discount and premium and the
interest component under Capital Leases for the Parent Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP.
For the portion of any such period which is prior to the Closing Date,
Consolidated Interest Expense shall be calculated with respect to the Hotel
Inc. Business based upon an annualization of actual interest expense for
the portion of such period elapsed since the Closing Date.

"Consolidated Legal Entity Assets" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination,

<PAGE>
the total assets of such Person and its Subsidiaries on a consolidated
basis as reflected in the most recent tax return of such Person.

"Consolidated Legal Entity EBITDA" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination, the sum of (i) net income
(excluding for purposes hereof extraordinary gains or losses and any taxes
on such excluded gains and any tax deductions or credits on account of any
such excluded losses), plus (ii) interest expense (including the
----
amortization of debt discount and premium and the interest component under
Capital Leases), plus (iii) Federal, state or other income taxes, plus (iv)
---- ----
depreciation and amortization, in each case for such Person and its
Subsidiaries on a consolidated basis as reflected in the most recent tax
return of such Person and for the period covered by such tax return.

"Consolidated Legal Entity Gross Revenues" means, for any Person and
----------------------------------------
its Subsidiaries as of any date of determination, the gross revenues of
such Person and its Subsidiaries on a consolidated basis as reflected in
the most recent tax return of such Person and for the period covered by
such tax return.

"Consolidated Net Income" means, for any period, the net income of the
-----------------------
Parent Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP, but excluding for purposes hereof extraordinary gains
or losses, and any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses. For the portion of any
such period which is prior to the Closing Date, Consolidated Net Income
shall be calculated with respect to the Hotel Inc. Business.

"Consolidated Net Income Available for Fixed Charges" means, for any
---------------------------------------------------
period, the sum of Consolidated Adjusted EBITDA minus Capital Expenditures
-----
made or incurred (excluding, for purposes hereof, up to $27,000,000 of
Capital Expenditures for Audobon Woods during fiscal year 1995) plus
----
Rentals, in each case for the Parent Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP. For the portion of
any such period which is prior to the Closing Date, Consolidated Net Income
Available for Fixed Charges shall be calculated with respect to the Hotel
Inc. Business.

"Consolidated Net Worth" means total stockholders' equity for the
----------------------
Parent Company and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP.

"Contractual Obligation" means, as to any Person, any provision of any
----------------------
material security issued by such Person or of any material agreement,
instrument or other undertaking

<PAGE>
to which such Person is a party or by which it or any of its property is
bound.

"Credit Documents" means this Credit Agreement, the Notes, the Pledge
----------------
Agreement, the Assignment and Assumption, any Joinder Agreement and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.

"Credit Party" means any of the Borrower and the Guarantors.
------------

"Credit Party Obligations" means, without duplication, all of the
------------------------
obligations of the Borrower and the other Credit Parties to the Lenders and
the Agent, whenever arising, under this Credit Agreement, the Notes or any
of the other Credit Documents to which the Borrower or any other Credit
Party is a party.

"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.

"Defaulting Lender" means, at any time, any Lender that, at such time
-----------------
(a) has failed to make a Loan or fund a Participation Interest required
pursuant to the term of this Credit Agreement, (b) has failed to pay to the
Agent or any Lender an amount owed by such Lender pursuant to the terms of
this Credit Agreement or (c) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or to a receiver, trustee
or similar official.

"Disapproving Lenders" means such term as defined in Section 2.5.
--------------------

"Disqualified Stock" means any capital stock which, by its terms (or
------------------
by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part
on, or prior to, or is exchangeable for debt securities of the Parent
Company or

<PAGE>
any of its Subsidiaries prior to, the first anniversary of the Termination
Date under the Tranche A Credit Agreement.

"Distribution" means such term as defined in the Recitals hereto.
------------

"Dividends" means any payment, distribution or dividend (other than a
---------
dividend or distribution payable solely in stock of the Person making such
payment, distribution or dividend) on, or any payment on account of the
purchase, redemption or retirement of, or any other distribution in respect
of, any shares of any class of stock or other ownership interest in a
Person (including any such payment or distribution in cash or in property
or obligations).

"Dollars" and "$" means dollars in lawful currency of the United
------- -
States of America.

"Effective Date of Assignment" means such term as defined in Section
----------------------------
11.3(b).

"Eligible Assignee" means (A) (i) a commercial bank organized under
-----------------
the laws of the United States or any state thereof and (ii) a commercial
bank organized under the laws of any other country, or a political
subdivision thereof, provided that (a) such bank is acting through a branch
or agency located in the United States or (b) such bank is organized under
the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country, in
each case (under clauses (i) and (ii) above) that is reasonably acceptable
to the Agent and the Borrower and (B) any Lender or its parent company or
any affiliate of such Lender which is at least 50% owned by such Lender or
its parent company. It shall be deemed reasonable for the Borrower to
refuse to accept as an "Eligible Assignee" any entity the inclusion of
which as a Lender hereunder would be reasonably likely to increase amounts
payable by the Borrower under Sections 3.5, 3.8, 3.9 or 3.10 or give rise
to the circumstances described in Section 3.6.

"Eligible Participant" means any entity satisfying the requirements
--------------------
set forth in the first sentence of the definition of "Eligible Assignee"
other than the requirement for Borrower's approval.

"Embassy Suites" means Embassy Suites, Inc., a Delaware corporation
--------------
and the initial Borrower under this Credit Agreement subject to release
upon satisfaction of the conditions set out in Section 5.2.

<PAGE>
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.

"Equity Transaction" means (i) the issuance by the Borrower or any of
------------------
its Subsidiaries of new shares of its capital stock, unless such new shares
are being issued in exchange for an ownership interest in another Person or
in exchange for substantially all of the assets of another Person in
connection with an acquisition permitted by Section 8.4(c), (ii) an
issuance by the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the exercise of options or warrants and (iii) an
issuance by the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the conversion of any debt securities (including
without limitation any Subordinated Debt) to equity.

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

"Eurodollar Loan" means any Loan bearing interest at a rate determined
---------------
by reference to the Eurodollar Rate.

"Eurodollar Rate" means, for the Interest Period for each Eurodollar
---------------
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:

Eurodollar Rate = Interbank Offered Rate
----------------------------------
1 - Eurodollar Reserve Percentage

"Eurodollar Reserve Percentage" means for any Interest Period, the
-----------------------------
average daily percentage (expressed as a decimal) which is in effect from
time to time during such Interest Period under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as such
regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D
(or against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is determined),
whether or not any Lender has any Eurocurrency liabilities subject to such
reserve requirement at that time. Eurodollar Loans shall be

<PAGE>
deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for proration,
exceptions or offsets that may be available from time to time to a Lender.
The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.

"Event of Default" means such term as defined in Section 9.1.
----------------

"Excluded Taxes" means such term as is defined in Section 3.9(a).
--------------

"Extension of Credit" means, as to any Lender, the making of a Loan by
-------------------
such Lender.

"Federal Funds Rate" means, for any day, the rate of interest per
------------------
annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided that (A) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day and (B) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions as
determined by the Agent.

"Form 10" means the registration statement on Form 10 filed with and
-------
declared effective by the Securities and Exchange Commission in respect of
the Distribution.

"Former Plan" means any employee benefit plan in respect of which the
-----------
Borrower or a Commonly Controlled Entity has engaged in a transaction
described in Section 4069 or Section 4212(c) of ERISA and with respect to
which transaction the Borrower or Commonly Controlled Entity, as
applicable, has as its principal purpose the evasion of liability described
in such sections.

"Funded Debt" shall mean, with respect to any Person, without
-----------
duplication, (i) all indebtedness of such Person for borrowed money, (ii)
all purchase money indebtedness of such Person, including, without
limitation, the principal portion of all obligations of such Person under
Capital Leases and (iii) the amount of any Qualified Stock; provided that,
--------
"Funded Debt" shall not include indebtedness owing under or in connection
-----------
with Joint Ventures to the extent such indebtedness is Non-Recourse
Indebtedness. The Funded Debt of any Person shall include the Funded Debt
of any partnership or joint venture in which such Person is a

<PAGE>
general partner (except as set forth in the preceding proviso).

"GAAP" means generally accepted accounting principles in the United
----
States.

"Governmental Authority" means any Federal, state, local or foreign
----------------------
court or governmental agency, authority, instrumentality or regulatory
body.

"Guarantor" means Promus Co. as an initial Guarantor subject to
---------
release upon satisfaction of the conditions set out in Section 5.2 and each
of the other Persons identified as a "Guarantor" on the signature pages
hereto, and each other Additional Credit Party, together with their
successors and permitted assigns.

"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including,
without limitation, any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including,
without limitation, keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.

"Hotel Corp." means Promus Hotel Corporation, a Delaware corporation
-----------
and a Guarantor under this Credit Agreement upon satisfaction of the
conditions set out in Section 5.2.

"Hotel Facility" means such term as defined in the Recitals hereto.
--------------

"Hotel Inc." means Promus Hotels, Inc., a Delaware corporation and the
----------
subsequent Borrower under this Credit Agreement upon satisfaction of the
conditions set out in Section 5.2.

<PAGE>
"Hotel Inc. Assignment and Assumption Agreement" means the Assignment,
----------------------------------------------
Assumption and Release Agreement among Embassy Suites, Hotel Inc. and the
Agent, substantially in the form of Schedule 11.3(b).
----------------

"Hotel Inc. Business" means the "Hotel Business" described under the
-------------------
subheading "PHC Business and Properties" under the heading "The
Distribution" in the Proxy Statement.

"Indebtedness" of any Person shall mean, without duplication, (i) all
------------
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered
into in the ordinary course of business), (iv) all obligations, including,
without limitation, intercompany items, of such Person issued or assumed as
the deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business)
which would appear as liabilities on a balance sheet of such Person, (v)
all obligations of such Person under take-or-pay arrangements or under
commodities agreements, (vi) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds or
production from, Property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, (vii) all Guaranty
Obligations of such Person, (viii) the principal portion of all obligations
of such Person under Capital Leases, (ix) all obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, (x) the maximum amount
of all letters of credit issued or bankers' acceptances facilities created
for the account of such Person and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), and (xi) the amount of any
Disqualified Stock. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner (except to the extent any such Indebtedness is Non-Recourse
Indebtedness).

"Insolvency" means with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section
4245(b)(i) of ERISA.

"Insolvent" means pertaining to a condition of Insolvency.
---------

<PAGE>
"Interbank Offered Rate" means, with respect to any Eurodollar Loan
----------------------
for the Interest Period applicable thereto, (i) the interest rate per annum
for deposits in Dollars for a maturity most nearly comparable to such
Interest Period which appears on page 3740 or 3750, as applicable, of the
Dow Jones Telerate Screen as of 11:00 A.M. (Charlotte, North Carolina time)
on the day that is two (2) Business Days prior to the first day of such
Interest Period or (ii) if such a rate does not appear on page 3750 of the
Dow Jones Telerate Screen an interest rate per annum (rounded to the next
1/1000th of 1%) equal to the rate at which deposits in Dollars
approximately equal in principal amount to the Eurodollar Loan of the
Agent, in its capacity as a Lender, included in such Eurodollar Loan, and
for a maturity comparable to such Interest Period are offered to the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 A.M. (London time) on the
date that is two (2) Business Days prior to the first day of such Interest
Period. If no such offers or quotes are generally available for such
amount, then the Agent shall be entitled to determine the Eurodollar Rate
by estimating in its reasonable judgment the per annum rate (as described
above) that would be applicable if such quote or offers were generally
available.

"Intercompany Indebtedness" means any Indebtedness of the Parent
-------------------------
Company, the Borrower or any of their respective Subsidiaries which is
owing to another of such Persons.

"Interest Payment Date" means (i) as to any Base Rate Loan, the last
---------------------
day of each March, June, September and December, the date of repayment of
principal of such Loan and the Termination Date, (ii) as to any Eurodollar
Loan or any Competitive Loan, the last day of each Interest Period for such
Loan and the Termination Date or the Term Loan Maturity Date, if applicable
and in addition where the applicable Interest Period is more than 3 months,
then also on the date 3 months from the beginning of the Interest Period,
and each 3 months thereafter. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar
------ ----
Loans where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day.

"Interest Period" means (i) with respect to any Eurodollar Loan, a
---------------
period of one, two, three or six months' duration, as the Borrower may
elect, commencing in each case on the date of the borrowing (including
extensions and conversions) and (ii) with respect to any Competitive Loan,
a period beginning on the date of borrowing and ending on the date
specified in the respective Competitive Bid whereby the offer to make such
Competitive Loan was extended, which

<PAGE>
shall be not less than 7 days nor more than 180 days' duration; provided,
--------
however, (A) if any Interest Period would end on a day which is not a
-------
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that in the case of Eurodollar Loans, where the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (B) no Interest Period shall extend
beyond the Termination Date or if the Borrower has elected to amortize the
payment of the principal balance of Committed Revolving Loans and
Competitive Loans outstanding as of the Termination Date, in accordance
with the provisions of Section 2.6, then no Interest Period may extend
beyond a Term Loan Amortization Date (including the Term Loan Maturity
Date) unless the portion of Term Loans consisting of Base Rate Loans
together with the Eurodollar Loans and Competitive Loans with Interest
Periods expiring prior to or concurrently with the date such Term Loan
Amortization Date is due, is at least equal to the amount of such principal
amortization payment due on such date; and (C) in the case of Eurodollar
Loans, where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall, subject to clause (A) above,
end on the last Business Day of such calendar month.

"Investment", in any Person, shall mean any loan or advance to such
----------
Person, any purchase or other acquisition of any capital stock, warrants,
rights, options, obligations or other securities of such Person, or any
capital contribution to such Person or any other similar investment in such
Person.

"Joinder Agreement" means a Joinder Agreement substantially in the
-----------------
form of Schedule 7.12 hereto, executed and delivered by an Additional
-------------
Credit Party in accordance with the provisions of Section 7.12.

"Joint Venture" means any corporation, general or limited partnership
-------------
or limited liability company in which the Parent Company, the Borrower or
any of their respective Subsidiaries is a shareholder, partner or member
which is not a Subsidiary of the Parent Company or the Borrower.

"Lenders" means each of the Persons identified as a "Lender" on the
-------
signature pages hereto, and each Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.

<PAGE>
"Level I Period" means a period during which (i) the Parent Company
--------------
and its consolidated Subsidiaries have an actual or implied senior
unsecured long-term debt rating (without third party credit enhancement) of
"BBB+" or better by S&P or "Baa1" or better by Moody's, or (ii) the
Leverage Ratio for the period of four consecutive fiscal quarters ending on
the last day of the most recent fiscal quarter shall be less than 1.25:1.0.

"Level II Period" means a period during which a Level I Period does
---------------
not exist and (i) the Parent Company and its consolidated Subsidiaries have
an actual or implied senior unsecured long-term debt rating (without third
party credit enhancement) of "BBB" or better by S&P or "Baa2" or better by
Moody's, or (ii) the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the most recent fiscal quarter
shall be less than 1.75:1.0 but greater than or equal to 1.25:1.0.

"Level III Period" means a period during which neither a Level I
----------------
Period nor a Level II Period shall exist and (i) the Parent Company and its
consolidated Subsidiaries have an actual or implied senior unsecured long-
term debt rating (without third party credit enhancement) of "BBB-" or
better by S&P or "Baa3" or better by Moody's, or (ii) the Leverage Ratio
for the period of four consecutive fiscal quarters ending on the last day
of the most recent fiscal quarter shall be less than 2.25:1.0 but greater
than or equal to 1.75:1.0.

"Level IV Period" means a period during which none of a Level I
---------------
Period, a Level II Period nor a Level III Period shall exist and (i) the
Parent Company and its consolidated Subsidiaries have an actual or implied
senior unsecured long-term debt rating (without third party credit
enhancement) of "BB+" or better by S&P or "Ba1" or better by Moody's, or
(ii) the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the most recent fiscal quarter shall be less than
2.75:1.0 but greater than or equal to 2.25:1.0.

"Level V Period" means a period during which none of a Level I Period,
--------------
a Level II Period, a Level III Period nor a Level IV Period shall exist and
(i) the Parent Company and its consolidated Subsidiaries have an actual or
implied senior unsecured long-term debt rating (without third party credit
enhancement) of "BB" or worse by S&P or "Ba2" or worse by Moody's, or (ii)
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the most recent fiscal quarter shall be greater
than or equal to 2.75:1.0.

"Leverage Ratio" means, for any period, the ratio of Consolidated
--------------
Funded Debt as of the end of such period to Consolidated Adjusted EBITDA
for such period.

<PAGE>
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).

"Loan" or "Loans" means a Committed Revolving Loan and/or a
---- -----
Competitive Loan, as appropriate.

"Material Adverse Effect" shall mean a material adverse effect on (i)
-----------------------
the financial condition, operations, business or prospects of the Parent
Company, the Borrower and their Subsidiaries taken as a whole, (ii) the
ability of the Borrower and the Guarantors taken as a whole to perform any
material obligation under the Credit Documents or (iii) the material rights
and remedies of the Agent and the Lenders under the Credit Documents.

"Material Asset Sale" means the sale, lease or other disposition of an
-------------------
asset (other than non-hotel property or assets sold, leased or disposed of
in the normal course of business) which either (i) together with all other
such sales, leases or other dispositions of assets in the then current
calendar year has a net book value in excess of ten percent (10%) of the
consolidated assets of the Parent Company and its Subsidiaries at such
time, or (ii) together with all other such sales, leases or other
dispositions of assets since the Closing Date has a net book value in
excess of twenty-five percent (25%) of the consolidated assets of the
Parent Company and its Subsidiaries at such time; provided, however, that
-------- -------
leases with a term of ten (10) years or less or which demise less than 100%
of the subject asset shall not constitute leases of assets for purposes of
this subparagraph. An Investment shall not constitute a "disposition" for
purposes of this definition.

"Material Environmental Amount" means any amount payable by the Parent
-----------------------------
Company, the Borrower or their Subsidiaries not subject to payment or
reimbursement by another Person in respect of or under any Environmental
Law for remedial costs, compliance costs, compensatory damages, punitive
damages, fines, penalties or any combination thereof, that has a Material
Adverse Effect.

"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,

<PAGE>
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

"Moody's" means Moody's Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.

"Multiemployer Plan" means a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.

"NationsBank" means NationsBank, N.A. (Carolinas) and its successors.
-----------

"Net Sale Proceeds" means for any Material Asset Sale, the gross cash
-----------------
proceeds (including any cash received by way of deferred payment pursuant
to a promissory note receivable or otherwise, but only as and when
received) received from such Material Asset Sale, net of reasonable
transaction costs and payments of unassumed liabilities relating to the
asset sold at the time of, or within sixty (60) days after, the date of
such Material Asset Sale and the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness
owing under the Hotel Facility) which is secured by the respective assets
which were sold.

"Non-Excluded Taxes" means such term as defined in Section 3.9(a).
------------------

"Non-Guarantor Subsidiaries" means such term as defined in Section
--------------------------
7.12.

"Non-Investment Grade" means debt or equity interests which are not
--------------------
rated by S&P or Moody's or have a rating of less than "BBB-" by S&P or
"Baa3" by Moody's.

"Non-Recourse Indebtedness" means Indebtedness with respect to which
-------------------------
recourse for payment is limited to specific assets encumbered by a Lien
securing such Indebtedness; provided, however, that personal recourse of a
-------- -------
holder of Indebtedness against any obligor with respect thereto for fraud,
misrepresentation, misapplication of cash, waste and other circumstances
customarily excluded from non-recourse provisions in non-recourse financing
of real estate shall not, by itself, prevent any Indebtedness from being
characterized as Non-Recourse Indebtedness.

"Note" or "Notes" means the Committed Revolving Notes and/or the
---- -----
Competitive Notes, collectively, separately or individually, as
appropriate.

"Notice of Borrowing" means the written notice of borrowing as
-------------------
referenced and defined in Section 2.1(b)(i).

<PAGE>
"Notice of Conversion/Extension" means the written notice of extension
------------------------------
or conversion as referenced and defined in Section 3.2.

"Obligations" means the Loans.
-----------

"PBGC" means the Pension Benefit Guaranty Corporation established
----
under ERISA, and any successor thereto.

"Parent Company" means, prior to the time of effectiveness of the
--------------
Assignment and Assumption, Promus Co., and after the time of effectiveness
of the Assignment and Assumption, Hotel Corp.

"Participation Interest" means the purchase by a Lender of a
----------------------
participation interest in Committed Revolving Loans as provided in Section
3.12.

"Permitted Liens" shall mean:
---------------

(i) Liens in favor of the Agent on behalf of the Lenders
hereunder and under the Tranche A Credit Agreement;

(ii) Liens (other than Liens created or imposed by the PBGC
under ERISA) for taxes, assessments or governmental charges or levies
not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);

(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, provided that such
--------
Liens secure only amounts not yet due and payable or, if due and
payable, are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on account
thereof);

(iv) Liens (other than Liens created or imposed by the PBGC
under ERISA) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases,
operating, reciprocal easement or similar agreements, government
contracts, performance and

<PAGE>
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);

(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) in respect of which the Parent
Company or any of its Subsidiaries shall in good faith be prosecuting
an appeal or proceedings for review in respect of which there shall
have been secured a subsisting stay of execution pending such appeal
or proceeding;

(vi) easements, rights-of-way, restrictions (including
zoning restrictions and operating, reciprocal easement or similar
agreements), and minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect,
impairing the use of the encumbered Property for its intended
purposes;

(vii) Liens on Property securing purchase money Indebtedness
(including Capital Leases) to the extent permitted under Section
8.1(c), provided that any such Lien attaches to such Property
--------
concurrently with or within 90 days after the acquisition thereof;

(viii) leases or subleases granted to others not interfering
in any material respect with the business of the Borrower or any of
its Subsidiaries;

(ix) any interest or title of a lessor (including Liens and
underlying leases to which such lessor or its property may be subject)
under, and Liens arising from Uniform Commercial Code financing
statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Credit
Agreement;

(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.5;

(xi) Liens on assets at the time such assets are acquired in
accordance with Section 8.4(a) or 8.4(c), including continuations or
renewals thereof in connection with the extension, renewal, refunding
or refinancing of the Indebtedness

<PAGE>
secured thereby; provided that such Liens are not created in
--------
contemplation of such acquisition;

(xii) Liens on assets of any Person at the time such Person
becomes a Subsidiary in accordance with Section 8.4(a) or 8.5,
including continuations or renewals thereof in connection with the
extension, renewal, refunding or refinancing of the Indebtedness
secured thereby; provided that such Liens are not created in
--------
contemplation of such Person becoming a Subsidiary;

(xiii) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;

(xiv) Liens existing as of the Closing Date and set forth on
Schedule 8.2, including continuations or renewals thereof in
------------
connection with the extension, renewal, refunding or refinancing of
the Indebtedness secured thereby to the extent permitted under Section
8.1; provided that no such Lien shall at any time be extended to or
--------
cover any property of the Parent Company, the Borrower or any of their
respective Subsidiaries other than the property subject thereto on the
Closing Date, except by virtue of an after acquired property provision
set forth in the current documentation of such Liens;

(xv) Liens securing Non-Recourse Indebtedness of any
Specified Subsidiaries permitted pursuant to Section 8.1(k) hereof so
long as such Liens only encumber the hotel properties owned by the
Specified Subsidiary being developed or financed with such Non-
Recourse Indebtedness, including any real property and furniture,
fixtures and equipment related thereto, it being understood and agreed
that such assets of such Specified Subsidiary also may secure Non-
Recourse Indebtedness incurred by other Subsidiaries or Joint Ventures
pursuant to Section 8.1(k);

(xvi) Liens securing any Interest Rate Protection Agreements
or Currency Protection Agreements entered into, in either case, with a
Lender or an Affiliate of a Lender hereunder, permitted by Section
8.1(d), which obligations may be equally and ratably secured with the
Obligations;

(xviii) Liens on the Parent Company's, the Borrower's or any of
their respective Subsidiaries' equity interest in any Specified
Subsidiary or Joint Venture so long as such Liens only secure
Indebtedness of such Specified Subsidiary or Joint Venture, it being
understood and agreed that such equity interests in any Specified
Subsidiaries or Joint Ventures also may secure Indebtedness incurred
by other Specified Subsidiaries or Joint Ventures permitted under
Section 8.1; and

(xix) Liens not otherwise permitted hereunder securing
amounts in an aggregate principal amount not to exceed $10,000,000 at
any one time outstanding.

<PAGE>
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.

"Plan" means any employee benefit plan as defined in Section 3(3) of
----
ERISA which is not a Multiemployer Plan and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.

"Plan Reorganization" means with respect to any Multiemployer Plan,
-------------------
the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.

"Pledge Agreement" means the Pledge Agreement substantially in the
----------------
form of Schedule 5.1(a) attached hereto, dated as of the Closing Date and
---------------
executed and delivered by Hotel Corp., Hotel Inc. and certain other Credit
Parties existing after the Assignment and Assumption, in favor of the
Agent, for the benefit of the Lenders, to secure their obligations under
the Credit Documents, as amended, modified, extended, renewed or replaced
from time to time.

"Prime Rate" means the per annum rate of interest established and
----------
announced from time to time by the Agent at its principal office in
Charlotte, North Carolina as its Prime Rate. Any change in the interest
rate resulting from a change in the Prime Rate shall become effective as of
12:01 a.m. of the Business Day on which each change in the Prime Rate is
announced by the Agent. The Prime Rate is a reference rate used by the
Agent in determining interest rates on certain loans and is not intended to
be the lowest rate of interest charged on any extension of credit to any
debtor.

"Pro Forma Basis" shall mean, with respect to any transaction, that
---------------
such transaction shall be deemed to have occurred as of the first day of
the four fiscal-quarter period ending as of the last day of the fiscal
quarter most recently ended preceding the date of such transaction with
respect to which the Agent has received annual or quarterly financial
information, accompanied by an officer's certificate, in accordance with
the provisions of Section 7.1. As used herein, "transaction" shall mean
any merger or consolidation as referred to in Section 8.4(a) and 8.4(c).

"Projections" means such term as is defined in Section 6.1(c).
-----------

"Promus Co." means The Promus Companies Incorporated, a Delaware
----------
corporation and an initial Guarantor under this Credit Agreement subject to
release upon satisfaction of the conditions set out in Section 5.2.

<PAGE>
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.

"Proxy Statement" means the Proxy Statement dated April 25, 1995 of
---------------
Promus Co. describing the Distribution and mailed to the shareholders of
Promus Co. for purposes of its May 26, 1995 shareholders meeting.

"Qualified Stock" means any capital stock which, by its terms (or by
---------------
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof, in whole or in part on,
or on or after, or is exchangeable for debt securities of the Parent
Company or any of its Subsidiaries on or after, the first anniversary of
the Termination Date under the Tranche A Credit Agreement.

"Regulation D, G, T, U, or X" means Regulation D, G, T, U or X,
---------------------------
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.

"Rentals" means, as of the date of determination, all fixed payments
-------
(including as such all payments which the lessee is obligated to make to
the lessor on termination of the lease or surrender of the property)
payable by a Person as lessee or sublessee under a lease of real or
personal property, but shall be exclusive of any amounts required to be
paid (whether designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross rents.

"Reorganization" means such term as defined in the Recitals.
--------------

"Reorganization Agreement" means the Distribution Agreement between
------------------------
Embassy Suites and Hotel Inc., as more particularly described in the Proxy
Statement.

"Reorganization Documents" means, collectively, the Reorganization
------------------------
Agreement and the Tax Sharing Agreement, the Trademark Assignment Agreement
and the Employee Benefits Allocation Agreement, as such terms are defined
in the Proxy Statement.

"Reportable Event" means a "reportable event" as defined in Section
----------------
4043(b) of ERISA with respect to which the notice requirements to the PBGC
have not been waived.

<PAGE>
"Required Lenders" means Lenders holding in the aggregate at least
----------------
fifty-one percent (51%) of the Commitments, or if the aggregate Commitments
have been terminated, Lenders in the aggregate holding at least fifty-one
(51%) of the principal amount of Obligations then outstanding; provided,
--------
however, that if any Lender shall be a Defaulting Lender at such time then
-------
there shall be excluded from the determination of Required Lenders the
amount of such Defaulting Lender's Commitments or Obligations, as
appropriate.

"Requirements of Law" means, as to any Person, the certificate of
-------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its material property
or assets.

"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender to make Committed Revolving Loans in an aggregate
principal amount at any time outstanding up to such Lender's Revolving
Committed Amount as specified in Schedule 2.1(a), as such amount may be
---------------
reduced from time to time in accordance with the provisions hereof.

"Revolving Commitment Percentage" means, for each Lender, a fraction
-------------------------------
(expressed as a percentage) the numerator of which is the Revolving
Commitment of such Lender at such time and the denominator of which is the
Revolving Committed Amount at such time, provided that if the Revolving
--------
Commitment Percentage of any Lender is to be determined after the Revolving
Committed Amount has been terminated, then the Revolving Commitment
Percentage of such Lender shall be determined immediately prior (and
without giving effect) to such termination.

"Revolving Committed Amount" means (i) prior to the Termination Date,
--------------------------
collectively, the aggregate amount of all of the Revolving Commitments as
referenced in Section 2.1(a) and, individually, the amount of each Lender's
Revolving Commitment as specified in Schedule 2.1(a) and (ii) on or after
---------------
the Termination Date, as provided in Section 2.6(a).

"S&P" means Standard & Poor's Ratings Group, a division of McGraw
---
Hill, Inc., or any successor or assignee of the business of such division
in the business of rating securities.

"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA.

"Solvent" and "Solvency" means with respect to any Person on a
------- --------
particular date, the condition that on such

<PAGE>
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 amount of capital.

"Specified Subsidiary" means any Subsidiary of the Borrower so long as
--------------------
such Subsidiary has no material assets other than the hotel property to be
developed and financed with Non-Recourse Indebtedness incurred pursuant to
Section 8.1(k).

"Subject Properties" means such term as defined in Section 6.17(a).
------------------

"Subordinated Debt" means such term as defined in Section 8.6.
-----------------

"Subsidiary" means, as to any Person, (a) any corporation more than
----------
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than 50% of the equity interest at
any time and in which such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such partnership, association, joint venture or other entity, whether
through the ownership of equity interests, by contract or otherwise.
Unless otherwise specified, any reference to a Subsidiary is intended as a
reference to a Subsidiary of the Borrower.

"Term Loan Amortization Date" means such term as defined in Section
---------------------------
2.6(a).

"Term Loan Maturity Date" means such term as defined in Section
-----------------------
2.6(a).

"Term Loans" means such term as defined in Section 2.6(a).
----------

<PAGE>
"Termination Date" means such term as defined in Section 2.1(a).
----------------

"Third Party Investment Basket Amount" means such term as defined in
------------------------------------
Section 8.1(1).

"Threshold Requirement" means such term as defined in Section 7.12.
---------------------

"Tranche A Credit Agreement" means that Tranche A Credit Agreement
--------------------------
dated as of the date hereof among Embassy Suites, Promus Co., certain
subsidiaries as now or hereafter may become a party thereto, the lenders
named therein and party thereto and NationsBank, N.A. (Carolinas), as
Agent, as amended, modified, extended, renewed or restated from time to
time.

"Tranche B Credit Agreement" means this Credit Agreement.
--------------------------

"Underfunding" means an excess of all accrued benefits under a Plan
------------
(based on those assumptions used to fund such Plan), determined as of the
most recent annual valuation date, over the value of the assets of such
Plan allocable to such accrued benefits.

"Wholly Owned Subsidiary" means, as to any Person, any Subsidiary 100%
-----------------------
of whose voting stock or other equity interests and control is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.

1.2 Computation of Time Periods. For purposes of computation of periods
---------------------------
of time hereunder, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding."

1.3 Accounting Terms. The financial statements to be furnished by the
----------------
Borrower pursuant hereto shall be made and prepared in accordance with GAAP
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Agent); provided, that, except as otherwise specifically provided herein, all
--------
computations determining compliance with Section 7.11 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements delivered to the Agent on or before the Closing Date.

<PAGE>

SECTION 2

CREDIT FACILITIES
-----------------

2.1 Committed Revolving Loans.
-------------------------

(a) Revolving Commitment. Subject to the terms and conditions hereof
--------------------
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make revolving credit loans ("Committed
---------
Revolving Loans") to the Borrower from time to time from the Closing Date
---------------
until the day 364 days after the date hereof, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein (such
date, as extended, if extended from time to time in the sole discretion of
the Lenders as provided herein, hereinafter being referred to as the
"Termination Date") for the purposes hereinafter set forth; provided,
---------------- --------
however, that (i) with regard to each Lender individually, such Lender's
-------
share of outstanding Committed Revolving Loans (other than Committed
Revolving Loans made for the purpose of repaying Competitive Loans but not
yet so applied) shall not exceed such Lender's Revolving Committed Amount,
and (ii) with regard to the Lenders collectively, the sum of the aggregate
amount of outstanding Committed Revolving Loans (other than Committed
Revolving Loans made for the purpose of repaying Competitive Loans but not
yet so applied) plus the aggregate amount of Competitive Loans (other than
----
Competitive Loans made for the purpose of repaying Committed Revolving
Loans but not yet so applied) shall not exceed FIFTY MILLION DOLLARS
($50,000,000) (as such aggregate maximum amount may be reduced from time to
time, the "Revolving Committed Amount"). Committed Revolving Loans may
--------------------------
consist of Base Rate Loans or Eurodollar Loans, or a combination thereof,
as the Borrower may request, and may be repaid, prepaid and reborrowed in
accordance with the provisions hereof; provided, however, that no more than
-------- -------
ten (10) Eurodollar Loans shall be outstanding hereunder at any time. For
purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date and have the same duration, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period.

(b) Committed Revolving Loan Borrowings.
-----------------------------------

<PAGE>
Day prior to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Committed Revolving Loan is
requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed, and
(D) whether the borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar Loans are
requested, the Interest Period(s) therefor. A form of Notice of
Borrowing (a "Notice of Borrowing") is attached as Schedule 2.1(b)(i).
------------------- ------------------
If the Borrower shall fail to specify in any such Notice of Borrowing
(I) an applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Committed Revolving Loan
requested, then such notice shall be deemed to be a request for a Base
Rate Loan hereunder. Promptly upon receipt of each Notice of
Borrowing, the Agent shall give notice to each Lender of the contents
thereof and each such Lender's Revolving Commitment Percentage
thereof.

(ii) Minimum Amounts. Each Committed Revolving Loan
---------------
borrowing shall be in a minimum aggregate amount of $5,000,000
and integral multiples of $1,000,000 in excess thereof (or the
remaining available amount of the Revolving Commitment, if less,
provided, however, no Eurodollar Loan shall be permitted for a
-------- -------
principal amount less than $5,000,000).

(iii) Advances. Each Lender will make its Revolving
--------
Commitment Percentage of each Committed Revolving Loan borrowing
available to the Agent for the account of the Borrower at the
office of the Agent specified in Schedule 11.1, or at such other
-------------
office as the Agent may designate in writing, by 10:00 A.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars (or by 1:00 P.M.
(Charlotte, North Carolina time) on such date if the applicable
Notice of Borrowing is received on the same date) and in funds
immediately available to the Agent. Such borrowing will then be
made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.

<PAGE>
Termination Date except as otherwise provided in Section 2.6.

(d) Interest. Subject to the provisions of Section 3.1, Committed
--------
Revolving Loans shall bear interest at a per annum rate equal to:

(i) Base Rate Loans. During such periods as Committed
---------------
Revolving Loans shall be comprised of Base Rate Loans, the sum of
the Base Rate plus the Applicable Percentage; and
----

(ii) Eurodollar Loans. During such periods as Committed
----------------
Revolving Loans shall be comprised of Eurodollar Loans, the sum
of the Eurodollar Rate plus the Applicable Percentage.
----

Interest on Committed Revolving Loans shall be payable in arrears on each
Interest Payment Date.

(e) Committed Revolving Notes. The Committed Revolving Loans made by
-------------------------
each Lender shall be evidenced by a duly executed promissory note of the
Borrower to each Lender substantially in the form of Schedule 2.1(e).
---------------

2.2 [Intentionally Left Blank].

2.3 [Intentionally Left Blank].

2.4 Competitive Loan Subfacility.
----------------------------

(a) Competitive Loans. Subject to the terms and conditions and
-----------------
relying upon the representations and warranties herein set forth, from such
time as the Borrower shall have attained, and for so long as the Borrower
shall maintain, a senior unsecured long-term debt rating of "BBB-" or
better by S&P or "Baa3" or better by Moody's, the Borrower may, from time
to time from the Closing Date until the Termination Date, request and each
Lender may, in its sole discretion, agree to make, Competitive Loans to the
Borrower; provided, however, (i) the aggregate amount of Competitive Loans
-------- -------
shall not at any time exceed the lesser of FIFTY MILLION DOLLARS
------
($50,000,000) or the Revolving Committed Amount (the "Competitive Loan
----------------
Maximum Amount"), and (ii) the sum of the aggregate amount of Committed
--------------
Revolving Loans (other than Committed Revolving Loans made for the purpose
of repaying Competitive Loans but not yet so applied) plus the aggregate
----
amount of Competitive Loans (other than Competitive Loans made for the
purpose of repaying Committed Revolving Loans but not yet so applied) shall
not at any time exceed the aggregate Revolving Committed Amount. Each
Competitive Loan shall be not less than $5,000,000 in the aggregate and
integral multiples of $1,000,000 in excess thereof (or the remaining
available portion of the Competitive Loan Maximum Amount, if less).

<PAGE>
Competitive Loans may be repaid and reborrowed in accordance with the
provisions hereof.

(b) Competitive Bid Requests. The Borrower may solicit Competitive
------------------------
Bids by delivery of a Competitive Bid Request substantially in the form of
Schedule 2.4(b)-1 to the Agent by 12:00 Noon (Charlotte, North Carolina
-----------------
time) on a Business Day not less than two (2) nor more than ten (10)
Business Days prior to the date of a requested Competitive Loan borrowing.
A Competitive Bid Request shall specify (i) the date of the requested
Competitive Loan borrowing (which shall be a Business Day), (ii) the amount
of the requested Competitive Loan borrowing and (iii) the applicable
Interest Periods requested and shall be accompanied by payment of the
Competitive Bid Request Fee, if any. The Agent shall promptly notify the
Lenders of its receipt of a Competitive Bid Request and the contents
thereof and invite the Lenders to submit Competitive Bids in response
thereto. A form of such notice is provided in Schedule 2.4(b)-2. No more
-----------------
than three Competitive Bid Requests (e.g., the Borrower may request
Competitive Bids for no more than three different Interest Periods at a
time) shall be submitted at any one time and Competitive Bid Requests may
be made no more frequently than once every ten (10) Business Days.

(c) Competitive Bid Procedure. Each Lender may, in its sole
-------------------------
discretion, make one or more Competitive Bids to the Borrower in response
to a Competitive Bid Request. Each Competitive Bid must be received by the
Agent not later than 10:00 A.M. (Charlotte, North Carolina time) on the
proposed date of a Competitive Loan borrowing; provided, however, that
-------- -------
should the Agent, in its capacity as a Lender, desire to submit a
Competitive Bid it shall notify the Borrower of its Competitive Bid and the
terms thereof not later than 9:30 A.M. (Charlotte, North Carolina time) on
the proposed date of a Competitive Loan borrowing. A Lender may offer to
make all or part of the requested Competitive Loan borrowing and may submit
multiple Competitive Bids in response to a Competitive Bid Request. The
Competitive Bid shall specify (i) the particular Competitive Bid Request as
to which the Competitive Bid is submitted, (ii) the minimum (which shall be
not less than $1,000,000 and integral multiples of $500,000 in excess
thereof) and maximum principal amounts of the requested Competitive Loan or
Loans as to which the Lender is willing to make, and (iii) the applicable
interest rate or rates and Interest Period or Periods therefor. A form of
such Competitive Bid is provided in Schedule 2.4(c). A Competitive Bid
---------------
submitted by a Lender in accordance with the provisions hereof shall be
irrevocable (absent manifest error). The Agent shall promptly notify the
Borrower of all Competitive Bids made and the terms thereof. The Agent
shall send a copy of each of the Competitive Bids to the Borrower for its
records as soon as practicable.

<PAGE>
(d) Acceptance of Competitive Bids. The Borrower may, in its sole
------------------------------
and absolute discretion, subject only to the provisions of this subsection
(d), accept or refuse any Competitive Bid offered to it. To accept a
Competitive Bid, the Borrower shall give written notification (or telephone
notice promptly confirmed in writing) of its acceptance of any or all such
Competitive Bids to the Agent by 11:00 A.M. (Charlotte, North Carolina
time) on the proposed date of a Competitive Loan advance; provided,
--------
however, (i) the failure by the Borrower to give timely notice of its
-------
acceptance of a Competitive Bid shall be deemed to be a refusal thereof,
(ii) the Borrower may accept Competitive Bids only in ascending order of
rates, (iii) the aggregate amount of Competitive Bids accepted by the
Borrower shall not exceed the principal amount specified in the Competitive
Bid Request, (iv) the Borrower may accept a portion of a Competitive Bid in
the event, and to the extent, acceptance of the entire amount thereof would
cause the Borrower to exceed the principal amount specified in the
Competitive Bid Request, subject however to the minimum amounts provided
herein (and provided that where two or more such Lenders may submit such a
Competitive Bid at the same such Competitive Bid Rate, then pro rata
between or among such Lenders) and (v) no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal
amount of $1,000,000 and integral multiples of $500,000 in excess thereof,
except that where a portion of a Competitive Bid is accepted in accordance
with the provisions of subsection (iv) hereof, then in a minimum principal
amount of $100,000 and integral multiples thereof (but not in any event
less than the minimum amount specified in the Competitive Bid), and in
calculating the pro rata allocation of acceptances of portions of multiple
bids at a particular Competitive Bid Rate pursuant to subsection (iv)
hereof, the amounts shall be rounded to integral multiples of $100,000 in a
manner which shall be in the discretion of the Borrower. A notice of
acceptance of a Competitive Bid given by the Borrower in accordance with
the provisions hereof shall be irrevocable. The Agent shall, not later
than 12:00 Noon (Charlotte, North Carolina time) on the proposed date of a
Competitive Loan borrowing, notify each bidding Lender whether or not its
Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate), and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted.

(e) Funding of Competitive Loans. Each Lender which is to make a
----------------------------
Competitive Loan shall make its Competitive Loan borrowing available to the
Agent for the account of the Borrower at the office of the Agent specified
in Schedule 11.1, or at such other office as the Agent may designate in
-------------
writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the Competitive Bid Request in Dollars and in funds
immediately available to the Agent. Such

<PAGE>
borrowing will then be made available to the Borrower by crediting the
account of the Borrower on the books of such office with the aggregate of
the amount made available to the Agent by the Competitive Loan Lenders and
in like funds as received by the Agent.

(f) Maturity of Competitive Loans. Each Competitive Loan shall
-----------------------------
mature and be due and payable in full on the last day of the Interest
Period applicable thereto. Unless the Borrower shall give notice to the
Agent otherwise, the Borrower shall be deemed to have requested a Committed
Revolving Loan borrowing in the amount of the maturing Competitive Loan,
the proceeds of which will be used to repay such Competitive Loan.

(g) Interest on Competitive Loans. Subject to the provisions of
-----------------------------
Section 3.1, Competitive Loans shall bear interest in each case at the
Competitive Bid Rate applicable thereto. Interest on Competitive Loans
shall be payable in arrears on each Interest Payment Date.

(h) Competitive Loan Notes. The Competitive Loans shall be evidenced
----------------------
by a duly executed promissory note of the Borrower to each Lender in an
original principal amount equal to the Competitive Loan Maximum Amount and
substantially in the form of Schedule 2.4(h).
---------------

2.5 Extension of Termination Date. The Borrower may, within 90 days prior
-----------------------------
to the Termination Date, by notice to the Agent, make written request of the
Lenders to extend the Termination Date for an additional period of 364 days.
The Agent will give prompt notice to each of the Lenders of its receipt of any
such request for extension of the Termination Date. Each Lender shall make a
determination not later than 30 days prior to the then applicable Termination
Date as to whether or not it will agree to extend the Termination Date as
requested; provided, however, that failure by any Lender to make a timely
-------- -------
response to the Borrower's request for extension of the Termination Date shall
be deemed to constitute a refusal by the Lender to extend the Termination Date.
If, in response to a request for an extension of the Termination Date, one or
more Lenders shall fail to agree to the requested extension (the "Disapproving
------------
Lenders"), then the Borrower may, at its own expense with the assistance of the
- -------
Agent, make arrangements for a Replacement Lender in accordance with Section
3.15 to acquire, in whole or in part, the Obligations and Commitments of the
Disapproving Lenders.

2.6 Amortization of Loans Outstanding at the Termination Date.
---------------------------------------------------------

(a) Election to Amortize. The Borrower shall have the option to pay all
--------------------
or a portion of the outstanding principal balance of the Committed Revolving
Loans and Competitive Loans outstanding as of the Termination Date in eight (8)
equal consecutive quarterly installments on the last day of each March,

<PAGE>
June, September and December commencing with the first of such dates to occur
after the Termination Date (each such date referred to herein as a "Term Loan
---------
Amortization Date" and the last such date referred to herein as the "Term Loan
- ----------------- ---------
Maturity Date"). The Borrower may exercise such option by giving written notice
- -------------
to the Agent at least fifteen (15) days prior to the Termination Date. If the
Agent does not receive such notification within the time period specified in the
preceding sentence, the principal amount of all Committed Revolving Loans and
Competitive Loans shall be due and payable on the Termination Date. All
Committed Revolving Loans and Competitive Loans remaining outstanding after the
Termination Date in accordance with the terms of this Section 2.6 shall be
referred to collectively as the "Term Loans". The Term Loans may be comprised
----------
of Base Rate Loans, Eurodollar Loans and Competitive Loans as the Borrower may
elect in accordance with the provisions hereof. Amounts repaid or prepaid on
the Term Loans may not be reborrowed by the Borrower. For purposes of this
Credit Agreement, where the Borrower shall elect to amortize amounts outstanding
under the Committed Revolving Loans and the Competitive Loans in accordance
herewith, then on and after the Termination Date, references herein to the
"Revolving Committed Amount" shall mean the aggregate principal amount of the
--------------------------
Term Loans as of the Termination Date less all payments made or required to be
----
made with respect to the Term Loans hereunder, whether scheduled amortization
payment, voluntary or optional prepayment, mandatory prepayment or otherwise.

(b) Interest on Term Loans. It is the intention of the parties hereto
----------------------
that the Term Loans bear interest on the same terms as apply to Committed
Revolving Loans and Competitive Loans prior to the Termination Date. In
furtherance thereof, the parties hereto agree that upon and after the occurrence
of the Termination Date and the Borrower's election to amortize the payment of
the outstanding principal balance of the Term Loans, the Borrower shall continue
to have all of the same rights as it had prior to the Termination Date to (i)
obtain Committed Revolving Loans under Section 2.1, (ii) obtain Competitive
Loans under Section 2.4 and (iii) extend and/or convert Committed Revolving
Loans under Section 3.2, in each case subject to the limitations of Section 2.6
(a).

SECTION 3

OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------

3.1 Default Rate. Overdue principal and, to the extent permitted by law,
------------
overdue interest in respect of each Loan and any other overdue amount payable
hereunder or under the other Credit Documents shall bear interest, payable on
demand, at a per annum rate 2% greater than the rate which would otherwise be
applicable (or if no rate is applicable, whether in respect of interest, fees or
other amounts, then 2% greater than the Base Rate).

<PAGE>
3.2 Extension and Conversion. The Borrower shall have the option, on any
------------------------
Business Day, to extend existing Committed Revolving Loans into a subsequent
permissible Interest Period or to convert Committed Revolving Loans of one type
into Committed Revolving Loans of another type; provided, however, that (i)
--------
except as provided in Section 3.7, Eurodollar Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be converted into
Eurodollar Loans, only if no Default or Event of Default is in existence on the
date of extension or conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of "Interest
--------
Period" set forth in Section 1.1 and shall be in such minimum amounts as
- ------
provided in Section 2.1(b)(ii), (iv) no more than ten (10) separate Eurodollar
Loans shall be outstanding hereunder at any one time and (v) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Competitive Loans may not be extended or converted pursuant to this
Section 3.2. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion (or telephone notice
promptly confirmed in writing) to the Agent prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of, in the case of the conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the extension of a Eurodollar Loan as, or conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or conversion, the
Committed Revolving Loans to be so extended or converted, the types of Committed
Revolving Loans into which such Committed Revolving Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto.
Multiple Eurodollar Loans with Interest Periods ending on the same date may be
combined and extended as one Eurodollar Loan, and a single Eurodollar Loan may
be extended as multiple Eurodollar Loans. Each request for extension of, or
conversion into, Eurodollar Loans, shall constitute a representation and
warranty by the Borrower of the matters specified in Section 5.3(b), (c), (d)
and (e). In the event the Borrower fails to request extension or conversion of
any Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Loans shall be
automatically converted into Base Rate Loans at the end of their Interest
Period. The Agent shall give each Lender notice as promptly as practicable of
any such proposed extension or conversion affecting any Loan.

3.3 Reductions In Commitments and Prepayments.
-----------------------------------------

(a) Voluntary Reduction of Commitments. The Borrower may from time
----------------------------------
to time permanently reduce the Revolving Committed Amount in whole or in
part (in each such case in a minimum aggregate amount of $5,000,000 and
integral

<PAGE>
multiples of $1,000,000 in excess thereof) upon three (3) Business Days'
prior written notice to the Agent.

(b) Mandatory Reduction of Commitments. On each date after the
----------------------------------
Closing Date upon which the Parent Company, the Borrower or any of their
respective Wholly Owned Subsidiaries receives proceeds from any Material
Asset Sale, the Revolving Committed Amount shall be reduced by an amount
equal to 100% of the Net Sale Proceeds thereof. Notwithstanding anything
contained herein to the contrary, reductions on account of Material Asset
Sales shall be applied (i) prior to the Termination Date, first to the
Revolving Committed Amount under the Tranche A Credit Agreement until such
Revolving Committed Amount is reduced to zero and terminated, and then to
the Revolving Committed Amount hereunder and (ii) after the Termination
Date, first to the Term Loans outstanding hereunder, if any, to Base Rate
Loans, Eurodollar Loans and Competitive Loans as the Borrower may specify,
or if the Borrower shall fail to specify then in the order provided in
Section 3.3(f), with any such payments being also applied to (and serving
to reduce) principal amortization payments due under Section 2.6(a) in
direct order of installment maturity, and then to the Revolving Committed
Amount under the Tranche A Credit Agreement.

(d) Termination of Individual Lender Commitment. In the event of
-------------------------------------------
certain refusals by a Lender to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which
have been approved by the Required Lenders as provided in Section 11.6(b),
the Borrower shall have the right, upon three (3) Business Days' prior
written notice to the Agent, to terminate the Commitments of such Lender,
so long as (i) all Loans, together with accrued and unpaid interest, fees
and all other amounts owing to such Lender are repaid, and (ii) the amount
of Commitments (including for purposes hereof Commitments hereunder and
under the Tranche A Credit Agreement) terminated pursuant to this Section
3.3(d), after giving effect to termination of the Commitments of any such
non-consenting Lender, shall not exceed $70,000,000 in the aggregate. At
such time as any such termination shall become effective in accordance with
the terms hereof, such Lender shall no longer constitute a "Lender" for
purposes of this Agreement, except with respect to indemnifications under
this Agreement which shall survive as to such repaid Lender.

<PAGE>
prior written notice to the Agent and any prepayment of such Competitive
Loans or Eurodollar Loans will be subject to Section 3.10; and (ii) each
such partial prepayment of Loans shall be in the minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof for
all Competitive Loans and Committed Revolving Loans.

(f) Mandatory Prepayments. If at any time (i) the sum of the
---------------------
aggregate amount of outstanding Committed Revolving Loans (other than
Committed Revolving Loans made for the purpose of repaying Competitive
Loans but not yet so applied) plus the aggregate amount of Competitive
----
Loans (other than Competitive Loans made for the purpose of repaying
Committed Revolving Loans but not yet so applied) shall exceed the
aggregate Revolving Committed Amount; or (ii) the aggregate amount of
Competitive Loans shall exceed the Competitive Loan Maximum Amount, the
Borrower shall immediately make payment on the Loans in an amount
sufficient to eliminate such excess. In the case of a mandatory prepayment
required on account of subsection (ii) above, the amount required to be
prepaid hereunder shall serve to temporarily reduce the Revolving Committed
Amount (for purposes of borrowing availability hereunder, but not for
purposes of computation of fees) by the amount of the payment required
until such time as the situation described in subsection (ii) above shall
no longer exist. Payments required to be made hereunder shall be applied
to Committed Revolving Loans or Competitive Loans, as appropriate, and with
respect to the types of Loans, first to Base Rate Loans and then to
Eurodollar Loans in direct order of their Interest Period maturities. To
the extent that the Borrower is required to make a mandatory prepayment of
the Loans which is required to be applied to Competitive Loans or to
Committed Revolving Loans which are Eurodollar Loans (following the
operation of the immediately preceding sentence) on a date other than the
last day of an Interest Period applicable thereto, at the option of the
Borrower, the Agent shall hold the amount of such prepayment in an account
in the Agent's sole dominion and control. The Agent shall invest the
amounts held by it in such account as directed by the Borrower. On the
last day of the Interest Period relating to the next-maturing Competitive
Loans or to Committed Revolving Loans which are Eurodollar Loans, as
appropriate, the Agent shall apply the amounts held by it in such account
to the prepayment of such maturing Loan and the Agent shall notify the
Borrower of the application of such amounts. Upon the direction of the
Borrower, the Agent shall apply any earnings on amounts held in such
account to the payment of accrued interest on such Loans or shall release
such earnings to the Borrower.

<PAGE>
Required Lenders as provided in Section 11.6(b), the Borrower shall have
the right, upon three (3) Business Days' prior written notice to the Agent,
to repay all Loans, together with accrued and unpaid interest, fees and all
other amounts owing to such Lender, each in accordance with said Section
11.6(b) so long as (A) the Commitments of such Lender are terminated
concurrently with such repayment in accordance with, and to the extent
permitted under, the provisions of Section 3.3(d), and (B) the consents
required by Section 11.6(b) in connection with such repayment have been
obtained.

(h) Notice. The Borrower will provide notice to the Agent of any
------
prepayment by 11:00 A.M. (Charlotte, North Carolina time) on the day prior
to the date of prepayment. Amounts paid on the Loans under subsection (e)
and (f)(i) hereof may be reborrowed in accordance with the provisions
hereof.

3.4 Fees.
----

(a) Commitment Fee. In consideration of the Commitments by the
--------------
Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee (the "Commitment Fee") equal to the
--------------
Applicable Percentage per annum on (i) prior to the Termination Date, the
aggregate Revolving Committed Amount in effect from time to time for the
applicable period and (ii) after the Termination Date, the Term Loans
outstanding from time to time during the applicable period. The Commitment
Fee shall accrue from the date hereof and shall be payable quarterly in
arrears on the 15th day following the end of each calendar quarter and on
the Termination Date or, if the Borrower has elected to amortize payment of
the principal balance of Committed Revolving Loans and Competitive Loans
outstanding as of the Termination Date in accordance with the provisions of
Section 2.6(a), then the Term Loan Maturity Date, as appropriate.

(b) [Intentionally Left Blank].

(c) Administrative Fees. The Borrower agrees to pay to the Agent,
-------------------
for its own account, the administrative and other fees referred to in the
Agent's Fee Letter (the "Agent's Fees").
------------

(d) Competitive Bid Request Fee. The Borrower shall make payment to
---------------------------
the Agent of the applicable Competitive Bid Request Fee, if any,
concurrently with delivery of such Competitive Bid Request (whether or not
any Competitive Bid is offered by a Lender, accepted by the Borrower or
extended by the offering Lender pursuant thereto).

3.5 Capital Adequacy. If, after the date hereof, any Lender has
----------------
determined that the adoption after the date hereof of

<PAGE>
any applicable law, rule or regulation regarding capital adequacy, or any change
therein after the date hereof, or any change in the interpretation or
administration thereof after the date hereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any request or
directive arising after the date hereof regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or will have the effect of reducing the rate of return on such
Lender's or its parent company's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender or
its parent company could have achieved but for such adoption or change (taking
into consideration such Lender's policies with respect to capital adequacy),
then, upon notice from such Lender, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender and its parent
company for such reduction; provided, however, that a Lender shall not be
-------- -------
entitled to avail itself of the benefit of this Section 3.5 to the extent that
any such reduction in return was incurred more than ninety (90) days prior to
the time it gives notice to the Borrower of the relevant circumstances. In
determining the additional amount payable under this Section 3.5, each Lender
will act reasonably and in good faith and will use averaging and attribution
methods which are reasonable, provided, that such Lender's determination of
--------
compensation owing under this Section 3.5 shall, absent manifest error, be final
and conclusive and binding on all parties hereto. Each Lender, upon determining
that any additional amounts will be payable pursuant to this Section 3.5, will
give prompt written notice thereof to the Borrower, through the Agent, which
notice shall show the basis for calculation of such additional amounts.

3.6 Inability To Determine Interest Rate. If prior to the first day of
------------------------------------
any Interest Period, the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower absent manifest error) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans and (y) any Loans that were to
have been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans. Until
such notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to convert
Base Rate Loans to Eurodollar Loans. This Section 3.6 shall not apply to
Competitive Loans.

3.7 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring

<PAGE>
after the Closing Date shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender shall
promptly give written notice of such circumstances to the Borrower and the Agent
(which notice shall be withdrawn whenever such circumstances no longer exist),
(b) the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Lender to make or maintain Eurodollar Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Loan is requested and
(c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to subsection 3.10. Notwithstanding the foregoing, to
the extent a circumstance described above relates to a Eurodollar Loan then
being requested by the Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion, the Borrower shall have the option to rescind such Notice of
Borrowing or Notice of Conversion as to all Lenders by giving notice (in writing
or by telephone confirmed in writing) to the Agent of such rescission on the
date on which the Lender affected by such circumstances gives notice thereof as
described above. This Section 3.7 shall not apply to Competitive Loans.

3.8 Requirements of Law. If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):

(i) shall subject such Lender to any tax of any kind whatsoever with
respect to any Eurodollar Loans made by it or its obligation to make
Eurodollar Loans, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
subsection 3.9 (including Non-Excluded Taxes imposed solely by reason of
any failure of such Lender to comply with its obligations under subsection
3.9(b)) and Excluded Taxes;

(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or

<PAGE>
(iii) shall impose on such Lender any other condition (excluding any
tax of any kind) whatsoever;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable, provided that, in any such case, the Borrower may elect to convert
--------
the Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving
the Agent at least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.10; provided,
--------
further, however, that a Lender shall not be entitled to avail itself of the
- ------- -------
benefit of this Section 3.8 to the extent that any such additional amounts were
incurred more than ninety (90) days prior to the time it gives notice to the
Borrower as provided in the next sentence. If any Lender becomes entitled to
claim any additional amounts pursuant to this Section, it shall provide prompt
notice thereof to the Borrower, through the Agent, certifying (x) that one of
the events described in this Section has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender, through the Agent, to the Borrower shall be conclusive
in the absence of manifest error. This Section 3.8 shall not apply to
Competitive Loans.

<PAGE>
the jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Notes (such excluded taxes being
herein referred to as "Excluded Taxes"). If any such non-excluded taxes,
--------------
levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
----
Excluded Taxes") are required to be withheld from any amounts payable to the
- --------------
Agent or any Lender hereunder or under any Notes, the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the Borrower shall
-------- -------
be entitled to deduct and withhold any Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of subsection (b) below.
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send to the Agent for its own account or
for the account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become payable
by the Agent or any Lender as a result of any such failure. The agreements in
this subsection (a) shall survive the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.

(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:

(X)(i) on or before the date of any payment by the Borrower
under this Credit Agreement or the Notes to such Lender, deliver to
the Borrower and the Agent (A) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and its Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;

<PAGE>
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and

(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or

(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, (i)
represent to the Borrower (for the benefit of the Borrower and
the Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Code, (ii) agree to furnish to the Borrower
on or before the date of any payment by the Borrower, with a copy
to the Agent (A) a certificate substantially in the form of
Schedule 3.9 hereto (any such certificate a "U.S. Tax Compliance
------------ -------------------
Certificate") and (B) two accurate and complete original signed
-----------
copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Lender's legal entitlement at
the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the
Code with respect to payments to be made under this Credit
Agreement and its Notes (and to deliver to the Borrower and the
Agent two further copies of such form on or before the date it
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by
the Borrower or the Agent for filing and completing such forms),
and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower
(for the benefit of the Borrower and the Agent) such other forms
as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and its Notes;

unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent. Each Person that shall
become a Lender or a participant pursuant to Section 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the
forms, certifications and statements required pursuant to this subsection,
provided that in the case of a Participant the obligations of such
--------
Participant pursuant to this subsection (b) shall be

<PAGE>
determined as if the Participant were a Lender except that such Participant
shall furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.

(c) If the Borrower pays any additional amount under Section 3.9(a) to a
Lender and such Lender determines that it has received or realized in connection
therewith any refund or any reduction of, or credit against, its tax liabilities
in or with respect to the taxable year in which the additional amount is paid,
such Lender shall pay to the Borrower an amount that the Lender shall determine
is equal to the net benefit, after tax, which was obtained by the Lender in such
taxable year as a consequence of such refund, reduction or credit.

3.10 Indemnity. The Borrower agrees to indemnify each Lender and to hold
---------
each Lender harmless from any reasonable loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Competitive Loans or Committed
Revolving Loans which are Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Competitive Loan or a
Committed Revolving Loan which is a Eurodollar Loan after the Borrower has given
a notice thereof in accordance with the provisions of this Credit Agreement or
(c) the making of a prepayment of Competitive Loans or Committed Revolving Loans
which are Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto other than pursuant to Section 3.11(c). Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Competitive
Loan or a Committed Revolving Loan which is a Eurodollar Loan provided for
herein (excluding, however, the Applicable Percentage included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Credit Agreement
and the payment of the Loans and all other amounts payable hereunder.

3.11 Pro Rata Treatment. Except to the extent otherwise provided herein:
------------------

(a) Committed Revolving Loans. Each Committed Revolving Loan
-------------------------
advance, each payment or prepayment of

<PAGE>
principal of any Committed Revolving Loan, each payment of interest on the
Committed Revolving Loans, each payment of the Commitment Fee, each
reduction of the Revolving Committed Amount, and each conversion or
continuation of any Committed Revolving Loan, shall be allocated pro rata
among the relevant Lenders in accordance with the respective applicable
Revolving Committed Amounts (or, if the Commitments of such Lenders have
expired or been terminated, in accordance with the respective principal
amounts of the outstanding Loans and Participation Interests of such
Lenders).

(b) [Intentionally Left Blank].

(c) Funding. Unless the Agent shall have been notified in writing by
-------
any Lender prior to a Committed Revolving Loan borrowing that such Lender
will not make the amount that would constitute its Revolving Commitment
Percentage of such borrowing available to the Agent, the Agent may assume
that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the Agent
by the required time on the borrowing date therefor, such Lender shall pay
to the Agent, on demand, such amount with interest thereon at a rate equal
to the Federal Funds Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's Revolving Commitment Percentage of such borrowing is not made
available to the Agent by such Lender within three Business Days of such
borrowing date, (i) the Agent shall notify the Borrower of the failure of
such Lender to make such amount available to the Agent and the Agent shall
also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower and (ii) the Borrower may, without waiving any rights it may have
against such Lender, borrow a like amount on an unsecured basis from any
commercial bank for a period ending on the date upon which such Lender does
in fact make such borrowing available, provided that at the time such
--------
borrowing is made and at all times while such amount is outstanding the
Borrower would be permitted to borrow such amount pursuant to Section 2.1
of this Credit Agreement.

3.12 Sharing of Payments. The Lenders agree among themselves that, in the
-------------------
event that any Lender shall obtain payment in respect of any Loan or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of,

<PAGE>
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall promptly purchase from the other Lenders a participation in
such Loans and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Agent shall fail to remit to the Agent or any other Lender
an amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.12 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.12 to share in the benefits of any recovery on such secured claim.

3.13 Place and Manner of Payments. Except as otherwise specifically
----------------------------
provided herein, all payments hereunder shall be made to the Agent in Dollars in
immediately available funds, without offset, deduction, counterclaim or
withholding of any kind, at its offices specified in Schedule 2.1(a) not later
---------------
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Agent may (but shall not be obligated to) debit
the amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrower maintained with the Agent (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Agent the Loans, fees or other amounts payable
by the Borrower hereunder to which such payment is to be applied (and in the
event that it fails so to

<PAGE>
specify, or if such application would be inconsistent with the terms hereof, the
Agent shall distribute such payment to the Lenders in the manner set forth in
Section 3.3(f) for mandatory prepayments). The Agent will distribute such
payments to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as received
prior to the end of such Business Day and otherwise the Agent will distribute
such payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would cause the
payment to be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day. Except as expressly
provided otherwise herein, all computations of interest and fees shall be made
on the basis of actual number of days elapsed over a year of 360 days, except
with respect to computation of interest on Base Rate Loans which shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude the date of payment.

3.14 [Intentionally Left Blank].

3.15 Replacement of Lenders. If any Lender either (i) becomes a Defaulting
----------------------
Lender, (ii) a Disapproving Lender or (iii) delivers a notice to the Borrower
pursuant to Sections 3.5 or 3.8, the Borrower shall have the right, if no
Default or Event of Default then exists, to replace such Lender (the "Replaced
--------
Lender") with one or more Eligible Assignees (collectively, the "Replacement
- ------
Lender"), provided that (A) at the time of any replacement pursuant to this
--------
Section 3.15, the Replacement Lender shall enter into one or more assignment
agreements substantially in the form of Schedule 11.3(c) pursuant to, and in
----------------
accordance with the terms of, Section 11.3(c) (and with all fees payable
pursuant to said Section 11.3(c) to be paid by the Replacement Lender) pursuant
to which the Replacement Lender shall acquire all of the rights and obligations
of the Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (a) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (b) all accrued but theretofore unpaid, fees and other amounts owing
to the Replaced Lender pursuant to Section 3.4, and (B) all obligations of the
Borrower owing to the Replaced Lender (including all obligations, if any, owing
pursuant to Section 3.5 or 3.8, but excluding those obligations specifically
described in clause (A) above in respect of which the assignment purchase price
has been, or is concurrently being paid) shall be paid in full by the Borrower
to such Replaced Lender concurrently with such replacement.

3.16 Change of Lending Office. Each Lender agrees that on the occurrence
------------------------
of any event giving rise to the operation of

<PAGE>
Sections 3.5, 3.8 or 3.9 with respect to such Lender, it will, if requested by
the Borrower, use reasonable efforts to designate another lending office for any
Loans affected by such event, provided that such designation is made on such
--------
terms that such Lender and its lending office suffer no material economic, legal
or regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section.

SECTION 4

GUARANTY
--------

4.1 The Guarantee. Each of the Guarantors hereby jointly and severally
-------------
guarantees to each Lender and the Agent as hereinafter provided the prompt
payment of the Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, in the event of a bankruptcy or other similar
insolvency proceeding of a Guarantor, the obligations of each such Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its Obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.

4.2 Obligations Unconditional. The obligations of the Guarantors under
-------------------------
Section 4.1 are joint and several, absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of any of the
Credit Documents, or any other agreement or instrument referred to therein, or
any substitution, release or exchange of any other guarantee of or security for
any of the Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of the Guarantors
hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall

<PAGE>
not alter or impair the liability of any Guarantor hereunder which shall remain
absolute and unconditional as described above:

(i) at any time or from time to time, without notice to any Guarantor,
the time for any performance of or compliance with any of the Obligations
shall be extended, or such performance or compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of any of the
Credit Documents or any other agreement or instrument referred to therein
shall be done or omitted;

(iii) the maturity of any of the Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under any of the Credit Documents or any other
agreement or instrument referred to therein shall be waived or any other
guarantee of any of the Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;

(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Obligations shall fail to attach or be
perfected; or

(v) any of the Obligations shall be determined to be void or voidable
(including, without limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents
or any other agreement or instrument referred to therein, or against any other
Person under any other guarantee of, or security for, any of the Obligations.

4.3 Reinstatement. The obligations of the Guarantors under this Section 4
-------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Obligations is rescinded
or must be otherwise restored by any holder of any of the Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise, and
each Guarantor agrees that it will indemnify the Agent and each Lender on demand
for all reasonable costs and expenses (including, without limitation, reasonable
fees and expenses of counsel) incurred by the Agent or such Lender in connection
with such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.

<PAGE>
4.4 Certain Additional Waivers. Without limiting the generality of the
--------------------------
provisions of this Section 4, each Guarantor hereby specifically waives the
benefits of N.C. Gen. Stat. Sec.Sec. 26-7 through 26-9, inclusive. Each of the
Guarantors further agrees that it shall have no right of subrogation,
reimbursement or indemnity, nor any right of recourse to security, if any, for
the Obligations so long as any amounts payable to the Agent or the Lenders in
respect of the Obligations shall remain outstanding and until all of the
Commitments shall have expired or been terminated.

4.5 Remedies. The Guarantors agree that, to the fullest extent permitted
--------
by law, as between the Guarantors, on the one hand, and the Agent and the
Lenders, on the other hand, the Obligations may be declared to be forthwith due
and payable as provided in Section 9.2 hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 9.2) for purposes of Section 4.1 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Obligations
from becoming automatically due and payable) as against any other Person and
that, in the event of such declaration (or such Obligations being deemed to have
become automatically due and payable), such Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of said Section 4.1.

4.6 Continuing Guarantee. The guarantee in this Section 4 is a continuing
--------------------
guarantee, and shall apply to all Obligations whenever arising.

4.7 Discharge of Guarantor. If all of the stock of any Guarantor or any
----------------------
of its successors in interest under this Section 4 shall be sold or otherwise
disposed of (including by merger or consolidation) in a transaction not
prohibited by this Agreement, or if a Guarantor shall no longer satisfy the
conditions for being a Guarantor under Section 7.12, the guaranty of such
Guarantor or such successor in interest, as the case may be, hereunder and the
pledge of the capital stock or other ownership interest in such Guarantor or
such successor in interest, as the case may be, pursuant to the Pledge Agreement
shall automatically be discharged and released without any further action by the
Agent, any Lender or any other Person effective as of the date of such
transaction or as of the date the Agent receives evidence reasonably
satisfactory to the Agent that such conditions are not longer satisfied. The
Borrower will give prompt notice to the Agent of any discharge and release
pursuant to this Section 4.7.

SECTION 5

CONDITIONS
----------

5.1 Conditions to Initial Extensions of Credit. The obligation of each
------------------------------------------
Lender to make its initial Extensions of

<PAGE>
Credit to Embassy Suites, as the initial Borrower, is subject to the
satisfaction of the following conditions on or prior to the Closing Date:

(a) Executed Credit Documents. Receipt by the Agent of executed
-------------------------
counterparts of this Credit Agreement, the Notes and the other Credit
Documents.

(b) Tranche A Credit Agreement. Receipt by the Agent of copies of
--------------------------
the executed Tranche A Credit Agreement, the promissory notes issued
thereunder and the other collateral, security and other documents relating
thereto.

(c) No Default; Representations and Warranties. As of the Closing
------------------------------------------
Date (i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects.

(d) Opinion of Counsel. Receipt by the Agent of an opinion, or
------------------
opinions, satisfactory to the Agent, addressed to the Agent and the Lenders
and dated as of the Closing Date, from legal counsel to the Credit Parties
and in form reasonably acceptable to the Agent and the Credit Parties.

(e) Corporate Documents. Receipt by the Agent of the following:
-------------------

(i) Charter Documents. Copies of the articles or
-----------------
certificates of incorporation or other charter documents of each
Credit Party certified to be true and complete as of a recent date by
the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Closing Date.

(ii) Bylaws. A copy of the bylaws of each Credit Party
------
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Closing Date.

(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party and the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.

<PAGE>
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect and (b) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.

(f) Fees and Expenses. Provided the Borrower has received proper
-----------------
documentation and support therefor, payment by the Borrower of all fees and
expenses owed by it to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Agent's Fee
Letter.

(g) Distribution. Receipt by the Agent of evidence satisfactory to
------------
the Agent that (i) all conditions precedent to the consummation of the
Distribution have been satisfied and (ii) the Distribution will be
consummated immediately after the making of such initial Extensions of
Credit in the manner contemplated by the Proxy Statement.

(h) Other. Receipt by the Lenders of such other documents,
-----
instruments, agreements or information as reasonably requested by the Agent
or the Required Lenders.

5.2 Conditions to Assignment to Hotel Inc., Release of Embassy Suites and
---------------------------------------------------------------------
Promus Co. and Initial Extensions of Credit to Hotel Inc. The obligation of the
- ---------------------------------------------------------
Lenders to accept the assignment to and the assumption by Hotel Inc. of the
rights and obligations of Embassy Suites under this Credit Agreement and to
release Embassy Suites and Promus Co. of their respective obligations, direct
and indirect, present and future, under this Credit Agreement pursuant to
Section 11.3(b) and to make its initial Extensions of Credit to Hotel Inc. shall
be subject to satisfaction of the following conditions on or prior to the
Effective Date of Assignment:

(a) Assignment and Assumption Agreement. Receipt by the Agent of
-----------------------------------
executed counterparts of the Hotel Inc. Assignment and Assumption
Agreement.

(b) Pledge Agreement and Stock Certificates. Receipt by the Agent of
---------------------------------------
the executed Pledge Agreement and all of the stock certificates evidencing
the stock pledged to the Lenders pursuant to the Pledge Agreement, along
with duly executed undated stock powers executed in blank attached thereto.

(c) Reorganization Resolution. Receipt by the Agent of (i) a copy of
-------------------------
corporate resolutions of the directors of Promus Co. and Embassy Suites
approving the Reorganization, (ii) copies of the Reorganization Documents,
certified by a secretary or assistant secretary of Hotel Corp. and (iii)
such other information regarding the structure, tax

<PAGE>
treatment, existing and projected tax liabilities and other matters
relating to the Reorganization as the Agent may reasonably request.

(d) Solvency Certificate. Receipt by the Agent of a certificate of
--------------------
the chief financial officer of Embassy Suites as of the Effective Date of
the Assignment stating that, immediately after giving effect to the
Reorganization, the Distribution and Hotel Inc. Assignment and Assumption
Agreement, Embassy Suites is Solvent.

(e) Reorganization. The Agent shall have received a certificate
--------------
executed by the chief financial officer of Hotel Corp. as of the Effective
Date of Assignment stating that (i) the terms of the Reorganization and the
final corporate organization and structure of Hotel Corp. and Hotel Inc.
are consistent in all material respects with the Proxy Statement; (ii) the
transactions described in clause (i) of the first recital hereof have been
consummated in a manner consistent in all material respects with the terms
of the Proxy Statement on or before the execution of the Hotel Inc.
Assignment and Assumption Agreement; (iii) no material adverse change has
occurred since December 31, 1994, with respect to the combined financial
condition of the Hotel Inc. Businesses; (iv) there does not exist any
order, decree, judgment, ruling or injunction which restrains the
consummation of the Reorganization or the Distribution in the manner
contemplated by the Proxy Statement, and there does not exist any action,
suit or proceeding, pending or threatened, in which there is a reasonable
possibility of an adverse decision, which would materially adversely affect
the ability of Hotel Inc. or any of the Guarantors (including Hotel Corp.)
to perform its obligations under the Credit Documents or the ability of the
Lenders to exercise their rights thereunder; and (v) immediately after
giving effect to the Reorganization, the Distribution and the Hotel Inc.
Assignment and Assumption Agreement, (A) no Default or Event of Default
shall have occurred and be continuing and (B) the representations and
warranties set forth in Section 6 will be true and correct in all material
respects.

(f) NYSE Listing. Receipt by the Agent of evidence satisfactory to
------------
it that the shares of Hotel Corp.'s common stock shall have been approved
for listing on the New York Stock Exchange.

(g) Form 10 Filing. Receipt by the Agent of evidence satisfactory to
--------------
it that the Form 10 shall have been filed with the Securities and Exchange
Commission together with a certification by the chief financial officer of
Embassy Suites that Embassy Suites has received no stop order regarding the
Form 10 from the Securities and Exchange Commission and that the Form 10
shall have become effective.

<PAGE>
(h) Other Documents. Receipt by the Agent of all documents it and
---------------
the Required Lenders may reasonably request relating to the existence of
each of Hotel Corp., Hotel Inc. and the other Guarantors, the corporate
authority for and the validity of Hotel Inc. Assignment and Assumption
Agreement and any other matters relevant thereto, all in form and substance
reasonably satisfactory to the Agent.

(i) Legal Opinions. Receipt by the Agent of legal opinions addressed
--------------
to the Agent and the Lenders from (i) counsel to Embassy Suites and Promus
Co. satisfactory to Agent, dated as of the Effective Date of Assignment and
in a form reasonably acceptable to the Agent, Promus Co. and Embassy Suites
and (ii) counsel to Hotel Corp. and Hotel Inc. satisfactory to Agent, dated
as of the Effective Date of Assignment and in form reasonably acceptable to
the Agent, Promus Co. and Embassy Suites.

(j) Other Information. Receipt by the Agent of such other documents,
-----------------
agreements or information which may be reasonably requested by the Agent
and the Required Lenders.

The Agent's execution and delivery of the Hotel Inc. Assignment and
Acceptance Agreement shall constitute the agreement of the Agent binding upon
the Lenders that all of the conditions set forth in this Section 5.2 have been
either satisfied or waived.

5.3 Each Extension of Credit. The obligation of each Lender to make any
------------------------
Extension of Credit, including the conversion to or extension of any Eurodollar
Loan is subject to satisfaction of the following conditions in addition to (i)
with respect to any Extension of Credit to be made, converted or extended on a
date occurring prior to the Effective Date of Assignment, satisfaction on the
Closing Date of the conditions set forth in Section 5.1 and (ii) with respect to
any Extension of Credit to be made, converted or extended on a date occurring on
or after the Effective Date of Assignment, satisfaction on the Closing Date of
the conditions set forth in Section 5.1 and satisfaction on the Effective Date
of Assignment of the conditions set forth in Section 5.2:

(a) (i) In the case of any Committed Revolving Loan, the Agent shall
have received an appropriate Notice of Borrowing or Notice of Conversion;
and (ii) in the case of any Competitive Loan, the applicable Competitive
Loan Lender shall have received an appropriate notice of acceptance of its
related Competitive Bid;

(b) The representations and warranties set forth in Section 6 hereof
and in the Pledge Agreement shall be true and correct in all material
respects as of such date (except for those which expressly relate to an
earlier date);

<PAGE>
(c) There shall not have been commenced against the Parent Company,
the Borrower or any Guarantor an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
any case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Parent Company, the Borrower or any Guarantor or for any
substantial part of its Property or for the winding up or liquidation of
its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded;

(d) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto; and

(e) Since December 31, 1994, there shall not have been a material
adverse change in or event or condition materially adversely affecting the
financial condition, operations, business or prospects of the hotel
business of the Parent Company, the Borrower and their Subsidiaries, taken
as a whole.

The delivery of each Notice of Borrowing and each Notice of Conversion relating
to an extension of or conversion into Eurodollar Loans and each request for a
Competitive Bid pursuant to a Competitive Bid Request shall constitute a
representation and warranty by the Borrower of the correctness of the matters
specified in subsections (b), (c), (d) and (e) above.

SECTION 6

REPRESENTATIONS AND WARRANTIES
------------------------------

To induce the Agent and each Lender to make the Extensions of Credit
requested to be made by it on the Closing Date and on each Credit Date
thereafter, the Credit Parties hereby represent and warrant, on the Closing
Date, and on every Credit Date thereafter (except to the extent the following
representations warranties relate to a specific date), to the Agent and each
Lender that:

6.1 Financial Condition. (a) The audited consolidated balance sheet of
-------------------
Promus Co. and its consolidated Subsidiaries as of December 31, 1994 and the
audited consolidated statements of earnings and statements of cash flows for the
year ended December 31, 1994 have heretofore been furnished to the Agent. Such
financial statements (including the notes thereto) (i) have been audited by
Arthur Andersen LLP, (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby and (iii) (on the
basis disclosed in the footnotes to such financial statements) present fairly,
in all material respects, the consolidated financial condition, results

<PAGE>
of operations and cash flows of Promus Co. and its consolidated Subsidiaries as
of such date and for such periods. The unaudited interim balance sheets of
Promus Co. and its consolidated Subsidiaries as at the end of, and the related
unaudited interim statements of earnings and of cash flows for, each fiscal
month and quarterly period ended after December 31, 1994 and prior to the
Closing Date have heretofore been furnished to the Agent. Such interim
financial statements for each such quarterly period, (i) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
and (ii) (on the basis disclosed in the footnotes to such financial statements)
present fairly, in all material respects, the consolidated financial condition,
results of operations and cash flows of Promus Co. and its consolidated
Subsidiaries as of such date and for such periods subject to year-end and audit
adjustments. During the period from December 31, 1994 to and including the
Closing Date, there has been no sale, transfer or other disposition by Promus
Co. or any of its Subsidiaries of any material part of the business or property
of Promus Co. and its consolidated Subsidiaries, taken as a whole, and no
purchase or other acquisition by any of them of any business or property
(including any capital stock of any other person) material in relation to the
consolidated financial condition of Promus Co. and its consolidated
Subsidiaries, taken as a whole, in each case, which, is not reflected in the
foregoing financial statements or in the notes thereto and has not otherwise
been disclosed in writing to the Lenders on or prior to the Closing Date.

(b) The pro forma balance sheet of Hotel Corp. and its consolidated
--- -----
Subsidiaries set forth in the Proxy Statement (the "Pro Forma Balance Sheet") is
-----------------------
the balance sheet of Hotel Corp. and its consolidated Subsidiaries as of
December 31, 1994 (the "Pro Forma Date"), adjusted to give effect (as if such
--------------
events have occurred on such date) to (i) the consummation of the Reorganization
and Distribution on the Closing Date and of the Assignment and Assumption, (ii)
the Extension of Credit under the Tranche A Credit Agreement and/or this
Agreement to be made on the Closing Date in an aggregate principal amount of not
more than $225,000,000, and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and thereby.
The Pro Forma Balance Sheet was prepared on the same basis as the balance sheets
included in the financial statements described in the first sentence of
subsection 6.1(a), except as set forth in Schedule 6.1(b).
---------------

(c) On and as of the Closing Date, (i) the financial projections (the
"Projections") prepared by the Parent Company and the Borrower and contained in
-----------
the Confidential Offering Memorandum delivered to the Lenders by the Agent prior
to the Closing Date were prepared based upon the assumptions concerning various
industry trends described therein for the periods presented, (ii) the
Projections were based on good faith assumptions and estimates, and (iii)
although a range of possible different assumptions and estimates might also be
reasonable, the

<PAGE>
Parent Company and the Borrower are not aware of any facts that would lead them
to believe that the assumptions and estimates on which the Projections were
based are not reasonable; provided that no assurance can be given that the
--------
projected results will be realized or with respect to the ability of the Parent
Company and the Borrower to achieve the projected results, and while the
Projections are necessarily presented with numerical specificity, the actual
results achieved during the periods presented in all likelihood will differ from
the projected results and such differences may be material.

6.2 No Change; Solvent. Since December 31, 1994, (a) there has been no
------------------
development or event relating to or affecting the Parent Company, the Borrower
or any of their Subsidiaries which has had or would be reasonably expected to
have a Material Adverse Effect and (b) except as permitted under this Credit
Agreement no dividends or other distributions have been declared, paid or made
upon the capital stock of the Borrower nor has any of the capital stock of the
Borrower been redeemed, retired, purchased or otherwise acquired for value by
the Borrower or any of its Subsidiaries. As of the Closing Date, after giving
effect to (i) the consummation of the Assignment and Assumption, (ii) the making
of the Extensions of Credit under the Tranche A Credit Agreement and/or this
Agreement to be made on the Closing Date in an aggregate principal amount of not
more than $225,000,000 and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and thereby,
Hotel Corp., Hotel Inc. and each Guarantor is Solvent.

6.3 Corporate and Partnership Existence; Compliance with Law. Each of the
--------------------------------------------------------
Parent Company, the Borrower and their Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or partnership power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, except
to the extent that the failure to have such legal right would not be reasonably
expected to have a Material Adverse Effect, (c) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.

<PAGE>
guarantee or to pledge stock hereunder, and have taken all necessary corporate
or partnership action to authorize the borrowings and Extensions of Credit or
guarantee such borrowings and Extensions of Credit, as appropriate, on the terms
and conditions of this Credit Agreement and any Notes and to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of the Borrower or any Guarantor
in connection with the borrowings or guarantees hereunder or with the execution,
delivery, performance, validity or enforceability of the Credit Documents to
which the Borrower is a party, except for (i) consents, authorizations, notices
and filings described in Schedule 6.4, all of which have been obtained or made
------------
or have the status described in such Schedule 6.4. This Credit Agreement has
------------
been, and each other Credit Document to which it is a party will be, duly
executed and delivered on behalf of the Borrower and the Guarantors. This
Credit Agreement constitutes, and each other Credit Document to which it is a
party when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower and the Guarantors enforceable against them in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

6.5 No Legal Bar. The execution, delivery and performance of the Credit
------------
Documents by the Borrower, the Parent Company and the other Credit Parties, the
borrowings and extensions of credit and the guarantees thereof hereunder and the
use thereof and the pledge of stock in connection therewith (a) will not violate
any Requirement of Law or Contractual Obligation of the Borrower, the Parent
Company or the other Credit Parties in any respect that would reasonably be
expected to have a Material Adverse Effect and (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created by
the Pledge Agreement) on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.

6.6 No Material Litigation. No litigation, investigation or proceeding of
----------------------
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Parent Company, the
Borrower or any of their Subsidiaries or against any of its or their respective
properties or revenues which would be reasonably expected to have a Material
Adverse Effect.

6.7 No Default. Neither the Parent Company, the Borrower nor any of their
----------
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would

<PAGE>
be reasonably expected to have a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.

6.8 Ownership of Property; Liens. Except as would not have a Material
----------------------------
Adverse Effect or as set forth in Schedule 6.8 hereto, the Parent Company, the
------------
Borrower and each of their Subsidiaries has good record and sufficient title in
fee simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property. None of
such property is subject to any Lien, except for Permitted Liens.

6.9 Intellectual Property. The Parent Company, the Borrower and each of
---------------------
their Subsidiaries owns, or has the legal right to use, all United States
trademarks, tradenames, copyrights, service marks, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted (the "Intellectual Property") except for those the failure to own or
---------------------
have such legal right to use would not be reasonably expected to have a Material
Adverse Effect. Except as provided on Schedule 6.9, no claim has been asserted
------------
and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any such claim, and the use of such
Intellectual Property by the Parent Company, the Borrower and their Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.

6.10 No Burdensome Restrictions. No Requirement of Law of the Borrower or
--------------------------
any of its Subsidiaries would be reasonably expected to have a Material Adverse
Effect.

6.11 Taxes. The Parent Company, the Borrower and each of their
-----
Subsidiaries that are corporations have filed or caused to be filed all United
States federal income tax returns and all other material tax returns which, to
the knowledge of the Borrower, are required to be filed, and have paid (a) all
taxes shown to be due and payable on said returns and (b) any assessments of
which it has received notice made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any (i) taxes, fees or other charges with
respect to which the failure to pay, in the aggregate, would not have a Material
Adverse Effect and (ii) taxes, fees or other charges the amount or validity of
which are currently being contested and with respect to which reserves in
conformity with GAAP have been provided on the books of the Parent Company, the
Borrower or such Subsidiaries, as the case may be).

6.12 Federal Regulations. No part of the proceeds of any Loans will be
-------------------
used in any manner which might cause the Loans or the application of such
proceeds to violate Regulation U of the Board of Governors of the Federal
Reserve System as now and from

<PAGE>
time to time hereafter in effect. If requested by any Lender or the Agent, the
Parent Company, the Borrower and the other Credit Parties will furnish to the
Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U. The parties
hereto acknowledge that the use of proceeds of the Loans by the Borrower to
purchase $25,000,000 of shares in Felcor Suites Hotels, Inc. or units in Felcor
Suites Hotels Limited Partnership will not cause a violation of said Regulation
U.

6.13 ERISA. During the five year period prior to each date as of which
-----
this representation is made, or deemed made (or, with respect to (vi) or (viii)
below, as of the date such representation is made or deemed made), none of the
following events or conditions, either individually or in the aggregate, has
resulted or is reasonably likely to result in a liability to the Parent Company,
the Borrower or any of their Subsidiaries which would be reasonably expected to
have a Material Adverse Effect: (i) a Reportable Event with respect to any
Single Employer Plan; (ii) an "accumulated funding deficiency" (within the
meaning of Section 412 of the Code or Section 302 of ERISA) with respect to any
Single Employer Plan which has not been waived; (iii) any material noncompliance
with the application of ERISA or the Code with respect to any Plan; (iv) a
termination of a Single Employer Plan (other than a standard termination
pursuant to Section 4041(b) of ERISA); (v) a Lien in favor of the PBGC with
respect to any Single Employer Plan or a Plan pursuant to Section 4068 or
Section 302(f) of ERISA, respectively; (vi) Underfunding with respect to any
Single Employer Plan; (vii) a complete or partial withdrawal from any
Multiemployer Plan by the Parent Company, the Borrower or any Commonly
Controlled Entity; (viii) any liability of the Parent Company, the Borrower or
any Commonly Controlled Entity under ERISA if the Parent Company, the Borrower
or any such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the annual valuation date most closely preceding the
date on which their representation is made or deemed made; (ix) the Plan
Reorganization or Insolvency of any Multiemployer Plan; (x) the excess of the
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the aggregate liability of the Parent Company, the Borrower or any of their
Subsidiaries for post-retirement benefits to be provided to their current and
former employees (excluding benefits provided pursuant to Section 4980B of the
Code or Section 601 of ERISA), under Plans which are welfare benefit plans (as
determined in Section 3(1) of ERISA) over the assets under all such Plans; and
(xi) an event or condition with respect to which the Parent Company, the
Borrower or any Commonly Controlled Entity could incur any liability in respect
of a Former Plan.

6.14 Investment Company Act; Other Regulations. The Borrower is not an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is

<PAGE>
not subject to regulation under any Federal or State statute or regulation which
limits its ability to incur Indebtedness as contemplated hereby.

6.15 Subsidiaries. Set forth in Schedule 6.15 is a complete and accurate
------------ -------------
list of all Subsidiaries of the Parent Company and the Borrower both immediately
prior to, and immediately after giving effect to, the Assignment and Assumption.
Information on the attached Schedule includes jurisdiction of incorporation or
organization; the number of shares of each class of capital stock or other
equity interest outstanding; the number and percentage of outstanding shares of
each class owned (directly or indirectly) by such Person; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and similar rights. The outstanding capital stock of all such
corporate Subsidiaries is validly issued, fully paid and non-assessable and is
owned by such Person, directly or indirectly, free and clear of all Liens other
than Permitted Liens.

6.16 Purpose of Loans. The Extensions of Credit and the proceeds therefrom
----------------
shall be used for working capital and general corporate purposes (including,
without limitation, the support of commercial paper), to finance the costs and
expenses of the Reorganization, including the repayment of certain indebtedness
of Embassy Suites outstanding immediately prior to the Reorganization, and to
finance hotel development and other investments not prohibited hereunder.

6.17 Environmental Matters. (a) To the knowledge of the Borrower, the
---------------------
facilities and properties owned, leased or operated by the Parent Company, the
Borrower or any of their Subsidiaries (the "Subject Properties") and all
------------------
operations at the Subject Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the business operated by the Parent Company, the Borrower or any of
their Subsidiaries (the "Business"), and there are no conditions relating to the
--------
Business or Subject Properties that would be reasonably likely to give rise to
liability under any applicable Environmental Law, except for any failure so to
comply or violation or condition, or any aggregation thereof, that would not be
reasonably likely to result in the payment of a Material Environmental Amount.

(b) To the knowledge of the Borrower, the Subject Properties do not
contain any Materials of Environmental Concern at, on or under the Subject
Properties in amounts or concentrations that constitute a violation of, or could
reasonably give rise to liability under, Environmental Laws, except insofar as
the presence of any Materials of Environmental Concern is not reasonably likely
to result in the payment of a Material Environmental Amount.

(c) Neither the Parent Company, the Borrower nor any of their Subsidiaries
has received any written notice of, or inquiry

<PAGE>
from any Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Subject
Properties or the Business, nor does the Borrower have knowledge that any such
notice will be received or is being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the payment of a Material
Environmental Amount.

(d) The Borrower has not, nor to the knowledge of the Borrower have any
other Persons, transported or disposed of Materials of Environmental Concern
from the Subject Properties, or generated, treated, stored or disposed of at, on
or under any of the Subject Properties or any other location, in each case by or
on behalf of the Parent Company, the Borrower or any of their Subsidiaries in
violation of, or in a manner that would be reasonably likely to give rise to
liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.

(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Parent Company, the Borrower or any of their
Subsidiaries is named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Parent Company, the Borrower, any of their Subsidiaries, the
Subject Properties or the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.

(f) To the knowledge of the Borrower, there has been no release or threat
of release of Materials of Environmental Concern at or from the Subject
Properties, or arising from or related to the operations (including, without
limitation, disposal) of the Parent Company, the Borrower or any of their
Subsidiaries in connection with the Subject Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that
would be reasonably likely to give rise to liability under Environmental Laws,
except insofar as any such violation or liability referred to in this paragraph,
or any aggregation thereof, is not reasonably likely to result in the payment of
a Material Environmental Amount.

(g) To the knowledge of the Borrower, neither the Parent Company, the
Borrower nor any of their Subsidiaries has voluntarily assumed any liability of
any Person under any Environmental Law that is not subject to indemnification
and is

<PAGE>
reasonably likely to result in the payment of a Material Environmental Amount.

Notwithstanding any provision herein to the contrary, all references in Sections
6.1 through 6.17 to the "Parent Company" shall mean Hotel Corp., all references
--------------
in this Section 6 to the "Borrower" shall mean Hotel Inc. and all references in
--------
this Section 6 to "Credit Parties" or "Guarantors" shall mean only Hotel Corp.
-------------- ----------
and its Subsidiaries which are included in the definitions of such terms.

SECTION 7

AFFIRMATIVE COVENANTS
---------------------

Each Credit Party hereby covenants and agrees that commencing with the
Closing Date and so long as this Credit Agreement is in effect and until the
Obligations, together with interest, fees and other obligations hereunder, have
been paid in full and the Commitments hereunder shall have terminated:

7.1 Information Covenants. The Parent Company and the Borrower will
---------------------
furnish, or cause to be furnished, to the Agent:

(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 120 days after the close of each fiscal year of the Parent
Company, a consolidated balance sheet and income statement of the Parent
Company and its consolidated subsidiaries (including the Borrower), as of
the end of such fiscal year, together with related consolidated statements
of operations and retained earnings and of cash flows for such fiscal year,
setting forth in comparative form consolidated figures for the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and audited by Arthur Anderson LLP or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not be
limited as to the scope of the audit or qualified as to the status of the
Credit Parties as a going concern.

(b) Quarterly Financial Statements. As soon as available, and in any
------------------------------
event within 45 days after the close of each fiscal quarter of the Parent
Company (other than the fourth fiscal quarter, in which case 120 days after
the end thereof) a consolidated balance sheet and income statement of the
Parent Company and its consolidated subsidiaries (including the Borrower),
as of the end of such fiscal quarter, together with related consolidated
statements of operations and retained earnings and of cash flows for such
fiscal quarter in each case setting forth in comparative

<PAGE>
form consolidated figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the chief financial officer, treasurer or
controller of the Parent Company to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition and results of operations of the Parent Company and its
consolidated subsidiaries (including the Borrower), and have been prepared
in accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.

(c) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer, treasurer or controller of the Parent
Company substantially in the form of Schedule 7.1(d) attached hereto, (i)
---------------
demonstrating compliance with the financial covenants contained in Section
7.11 by calculation thereof as of the end of each such fiscal period and
(ii) stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent thereof
and what action the Parent Company proposes to take with respect thereto.

(d) Accountant's Report. Within the period for delivery of the
-------------------
annual financial statements provided in Section 7.1(a), a report of the
accountants conducting the annual audit stating that they have reviewed
Section 7.11 and stating further whether, in the course of their audit,
anything came to their attention to cause them to believe that the Parent
Company and its consolidated Subsidiaries were not in compliance with
Section 7.11, in so far as such Section 7.11 relates to accounting matters,
on the date of such statements.

(e) Reports. Promptly upon transmission or receipt thereof, (a)
-------
copies of all registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalent) which the Parent Company or
any of its Subsidiaries shall file with the Securities and Exchange
Commission, or any successor agency, (b) copies of all financial
statements, proxy statements, notices and reports as the Parent Company,
the Borrower or any of their Subsidiaries shall send to its shareholders or
to a holder of any Indebtedness with a maximum principal amount exceeding
$25,000,000 owed by the Parent Company, the Borrower or any of their
Subsidiaries in its capacity as such a holder (other than reports of a
routine or ministerial nature which are not material) and (c) upon the
request of the Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for enforcement of

<PAGE>
Environmental Laws (other than reports of a routine or ministerial nature
which are not material).

(f) Notices. Upon the Borrower obtaining knowledge thereof, the
-------
Borrower will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following (i) the pendency or commencement of any litigation,
arbitration or governmental proceeding against the Parent Company, the
Borrower or any of their Subsidiaries which is reasonably likely to have a
Material Adverse Effect, (ii) the institution of any proceedings against
the Parent Company, the Borrower or any of their Subsidiaries with respect
to, or the receipt of notice by such Person of potential liability or
responsibility for, violation, or alleged violation of any Environmental
Laws, the violation of which would likely have a Material Adverse Effect,
or (iii) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against the Parent Company,
the Borrower or any of their Subsidiaries or any of their Commonly
Controlled Entities, the determination that a Multiemployer Plan is, or is
expected to be, in a Plan Reorganization or the termination of any Plan in
a distress termination under Section 4041(c) of ERISA.

(g) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of the Parent Company, the Borrower or any of their
Subsidiaries as the Agent or the Required Lenders may reasonably request.

7.2 Preservation of Existence and Franchises. Each of the Credit Parties
----------------------------------------
will do all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority except as permitted under Section
8.4 or where failure to do so would not reasonably be expected to have a
Material Adverse Effect.

7.3 Books and Records. Each of the Credit Parties will, and will cause
-----------------
their Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).

7.4 Compliance with Law. Each of the Credit Parties will, and will cause
-------------------
their Subsidiaries to, comply with all laws, rules, regulations and orders, and
all applicable restrictions imposed by all Governmental Authorities, applicable
to it and its property if noncompliance with any such law, rule, regulation,
order or restriction would have a Material Adverse Effect.

<PAGE>
7.5 Payment of Taxes and Other Indebtedness. Each of the Credit Parties
---------------------------------------
will, and will cause their Subsidiaries that are corporations to, pay and
discharge (i) all material taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before a material penalty begins to accrue, (ii) all lawful claims (including
claims for labor, materials and supplies) which, if unpaid, might give rise to a
Lien upon any of its properties, and (iii) except as prohibited hereunder, all
of its other Indebtedness as it shall become due; provided, however, that there
shall be no requirement to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) would give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) would have
a Material Adverse Effect.

7.6 Insurance. Each of the Credit Parties will, and will cause their
---------
Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice.

7.7 Maintenance of Property. Each of the Credit Parties will, and will
-----------------------
cause their Subsidiaries to, maintain and preserve its properties and equipment
material to the conduct of its business in good repair, working order and
condition, normal wear and tear excepted, except where failure to do so would
not have a Material Adverse Effect and will make, or cause to be made, in such
properties and equipment from time to time all repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto as may be needed or
proper, to the extent and in the manner customary for companies in similar
businesses except where failure to do so would not have a Material Adverse
Effect.

7.8 Performance of Obligations. Each of the Credit Parties will, and will
--------------------------
cause their Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a party or by which
it is bound, except where failure to do so would not have a Material Adverse
Effect.

7.9 Use of Proceeds. The Extensions of Credit and the proceeds thereof
---------------
may be used solely for the purposes provided in Section 6.16.

7.10 Audits/Inspections. Upon reasonable prior notice, with reasonable
------------------
frequency and during normal business hours, each Credit Party will, and will
cause their Subsidiaries to, permit

<PAGE>
representatives appointed by the Agent, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
their property, including their books and records, their accounts receivable and
inventory, their facilities and their other business assets, and to make
photocopies or photographs thereof and to write down and record any information
such representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders and
to discuss all such matters with the officers of the Credit Parties and their
Subsidiaries.

7.11 Financial Covenants.
-------------------

(a) Consolidated Net Worth. There shall be maintained at all times
----------------------
determined at the end of each fiscal quarter Consolidated Net Worth of at
least $125,000,000; provided, however, that the minimum Consolidated Net
-------- -------
Worth required hereunder shall be increased by (i) on the last day of each
fiscal quarter to occur after the Closing Date, an amount equal to 50% of
Consolidated Net Income for the fiscal quarter then ended (or if
Consolidated Net Income is a deficit, then zero), and (ii) immediately upon
receipt, 100% of the net proceeds received by the Borrower or any
Subsidiary pursuant to any Equity Transaction occurring after the Closing
Date.

(b) Leverage Ratio. The Leverage Ratio, as determined at the end of
--------------
each fiscal quarter for the four consecutive fiscal quarter period then
ended, shall not at any time exceed:

Period Ending
-------------

Closing Date through the last day
of fiscal year 1995 3.5:1.0

First day of fiscal year 1996 through
last day of fiscal year 1996 3.25:1.0

First day of fiscal year 1997 and
thereafter 3.0:1.0

(c) Consolidated Fixed Charge Coverage Ratio. The Consolidated Fixed
----------------------------------------
Charge Coverage Ratio, as determined at the end of each fiscal quarter for
the four consecutive fiscal quarter period then ended, shall be not less
than:

Period Ending
-------------

Closing Date through the last day
of fiscal year 1996 1.25:1.0

First day of fiscal year 1997 through
the last day of fiscal year 1997 2.0:1.0

<PAGE>
First day of fiscal year 1998 and
thereafter 2.5:1.0

7.12 Additional Credit Parties. Where the Wholly Owned Subsidiaries of the
-------------------------
Parent Company or the Borrower (other than a Wholly Owned Subsidiary formed
solely to provide insurance to the Parent Company, its Subsidiaries and Joint
Ventures) which are not Guarantors hereunder (the "Non-Guarantor Subsidiaries")
--------------------------
shall at any time

(i) individually in any instance constitute more than either (A)
10% of Consolidated Legal Entity Assets of the Parent Company, the Borrower
and their Subsidiaries, or (B) 10% of Consolidated Legal Entity Gross
Revenues of the Parent Company, the Borrower and their Subsidiaries, or (C)
10% of Consolidated Legal Entity EBITDA of the Parent Company, the Borrower
and their Subsidiaries, the Parent Company and the Borrower will promptly
notify the Agent thereof, and promptly cause any such Non-Guarantor
Subsidiary to become a "Guarantor" hereunder by way of execution of a
Joinder Agreement; or

(ii) as a group constitute more than either (i) 25% of
Consolidated Legal Entity Assets of the Parent Company, the Borrower and
their Subsidiaries, or (ii) 25% of Consolidated Legal Entity Gross Revenues
of the Parent Company, the Borrower and their Subsidiaries, or (iii) 25% of
Consolidated Legal Entity EBITDA of the Parent Company, the Borrower and
their Subsidiaries (collectively, the "Threshold Requirement"), the Parent
---------------------
Company and the Borrower will promptly notify the Agent thereof, and
promptly cause one or more of the Non-Guarantor Subsidiaries to become a
"Guarantor" hereunder by way of execution of a Joinder Agreement, such that
immediately after the joinder of such Subsidiaries as Guarantors hereunder,
the remaining Non-Guarantor Subsidiaries shall not, as a group, exceed the
Threshold Requirement.

The Borrower may at any time, at its option, cause a Non-Guarantor Subsidiary to
execute a Joinder Agreement at which time such Subsidiary shall become a
Guarantor hereunder. The Borrower will cause to be delivered with any such
Joinder Agreement such other documentation as the Agent may reasonably request,
including specifically without limitation, certified corporate resolutions,
other corporate documentation and legal opinions (covering, among other things,
the legality, validity, binding effect and enforceability of the Joinder
Agreement) of or relating to such Additional Credit Party, all in form and
substance reasonably satisfactory to the Agent. With respect to any Non-
Guarantor Subsidiary that becomes a Guarantor pursuant to this Section 7.12, the
Borrower shall promptly cause all of the capital stock or other ownership
interest of such Non-Guarantor Subsidiary to be pledged to the Agent pursuant to
the Pledge Agreement.

<PAGE>

SECTION 8

NEGATIVE COVENANTS
------------------

Each Credit Party hereby covenants and agrees that commencing with the
Closing Date and so long as this Credit Agreement is in effect and until the
Obligations, together with interest, fees and other obligations hereunder, have
been paid in full and the Commitments hereunder shall have terminated:

8.1 Indebtedness. Neither the Parent Company or the Borrower will, nor
------------
will they permit any of their Subsidiaries to, contract, create, incur, assume
or permit to exist any Indebtedness, except:

(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;

(b) Indebtedness existing as of the Closing Date and disclosed in the
financial statements referenced in Section 6.1(a) or set forth in Schedule
--------
8.1 (and renewals, refinancings and extensions thereof in a principal
---
amount not in excess of the amount then outstanding on terms and conditions
no less favorable to such Person than such existing Indebtedness);

(c) purchase money Indebtedness (including Capital Leases) hereafter
incurred to finance the purchase of fixed assets provided that (i) the
--------
total of all such Indebtedness incurred after the Closing Date for the
Parent Company, the Borrower and their Subsidiaries taken together shall
not exceed an aggregate principal amount of $20,000,000 at any one time
outstanding; (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;

(d) obligations in respect of Interest Rate Protection Agreements,
Currency Protection Agreements and commodity purchase or option agreements
entered into in order to manage existing or anticipated interest rate,
exchange rate or commodity price risks and not for speculative purposes;

(e) Intercompany Indebtedness; provided that all such Intercompany
--------
Indebtedness owed by any Credit Party to any Subsidiary of the Borrower or
the Parent Company which is not a Credit Party shall be subordinated in
right of payment to the payment in full of the Obligations pursuant to the
terms of an intercompany subordination agreement reasonably satisfactory to
the Agent;

(f) Indebtedness acquired in connection with mergers and acquisitions
permitted under Sections 8.4(a) or 8.4(c) and not incurred in contemplation
of their becoming

<PAGE>

Subsidiaries (and renewals, refinancings and extensions thereof in a
principal amount not in excess of the amount then outstanding on terms and
conditions no less favorable to such Person than such existing
Indebtedness);

(g) Indebtedness arising under the Tranche A Credit Agreement and
other related agreements and documents issued or delivered thereunder or
pursuant thereto;

(h) accrued expenses and current trade accounts payable incurred in
the ordinary course of business;

(i) unsecured Indebtedness under performance bonds and completion
guarantees in respect of the construction of any properties in accordance
with the plans or standards as agreed with the obligee of such guarantee so
long as such bonds or guarantees are incurred in the ordinary course of
business;

(j) Indebtedness consisting of (i) reimbursement obligations on
letters of credit (other than Letters of Credit under the Tranche A Credit
Agreement), bankers acceptances or similar instruments, provided that the
--------
aggregate amount thereof at any one time outstanding shall not exceed
$5,000,000 and (ii) surety, performance or appeal bonds to the extent
permitted by Section 8.2;

(k) Non-Recourse Indebtedness of any Specified Subsidiary to finance
the development of hotel properties so long as the aggregate amount thereof
at any time outstanding does not exceed $100,000,000, it being understood
and agreed, however, that (i) a Specified Subsidiary which has incurred
outstanding Non-Recourse Indebtedness pursuant to this Section 8.1(k) may
guaranty the Non-Recourse Indebtedness incurred pursuant to this Section
8.1(k) by other Specified Subsidiaries, and (ii) such Non-Recourse
Indebtedness may be guaranteed by the Parent Company, the Borrower and
their respective Subsidiaries to the extent otherwise permitted under this
Section 8.1;

<PAGE>

by 100% of the Consolidated Net Income for the fiscal year last ended and
(B) decreased from time to time by the aggregate amount of cash Dividends
paid by the Parent Company on and after the Closing Date and prior to the
date of determination (such limitation, as increased and decreased from
time to time, herein referred to as the "Third Party Investment Basket
-----------------------------
Amount");
------

(m) Subordinated Debt with a final maturity beyond the Termination
Date under the Tranche A Credit Agreement which is subordinated in a
manner, and with subordination language, reasonably acceptable to the
Required Lenders;

(n) commercial paper borrowings of the Borrower supported by the
Hotel Facility in an amount not to exceed $100,000,000 in the aggregate at
any time outstanding;

(o) unsecured Guaranty Obligations of the Parent Company, the
Borrower or any of their respective Subsidiaries in relation to
Indebtedness (other than Non-Recourse Indebtedness) of Subsidiaries of the
Parent Company or the Borrower otherwise permitted under this Section 8.1;

(p) Indebtedness permitted under Section 3.11(c) of this Agreement or
the Tranche A Credit Agreement; and

(q) Indebtedness not otherwise permitted under this Section 8.1 in an
aggregate principal amount not to exceed $25,000,000 at any one time
outstanding.

8.2 Liens. Neither the Parent Company or the Borrower will, nor will they
-----
permit any of their Subsidiaries to, contract, create, incur, assume or permit
to exist any Lien with respect to any of their Property, whether now owned or
after acquired, except for Permitted Liens.

8.3 Nature of Business. Neither the Parent Company, the Borrower nor any
------------------
other Credit Party will substantively alter the character or conduct of the
business conducted by them as of the Closing Date other than to enter into other
reasonably related businesses.

8.4 Consolidation, Merger, Sale or Purchase of Assets. Except in relation
-------------------------------------------------
to the Reorganization and the Distribution, neither the Parent Company or the
Borrower will, nor will they permit any of their Subsidiaries to:

(a) dissolve, liquidate or wind up its affairs, or enter into any
transaction of merger or consolidation; provided, however, that, so long as
-------- -------
no Default or Event of Default then exists or would be directly or
indirectly caused as a result thereof,

(i) any Credit Party may merge or consolidate with another Credit
Party;

<PAGE>

(ii) any Subsidiary of the Borrower or the Parent Company which
is not a Credit Party may merge or consolidate with another such
Subsidiary;

(iii) any Subsidiary of the Parent Company or the Borrower may
merge or consolidate with any other Person provided that either

(A) such Subsidiary is the surviving corporation,

(B) such Subsidiary is not the surviving corporation but
the surviving corporation is a Subsidiary of the Borrower or the
Parent Company, or

(C) such Subsidiary is not the surviving corporation and
the surviving corporation is not a Subsidiary of the Borrower or
the Parent Company, but no more than 25% of the gross
consideration received in connection therewith consists of Non-
Investment Grade debt or equity interests,

and subject to the additional conditions, (I) in the case of any
individual transaction (or series of related transactions) described
in subsections (A) or (B) above, where the acquisition price for such
transaction (whether a single transaction or a series of related
transactions) exceeds $75,000,000, then the Borrower must first
demonstrate compliance with the financial covenants under Section 7.11
on a Pro Forma Basis after giving effect to such transaction and (II)
after giving effect to such transaction, the Threshold Requirement set
forth in Section 7.12 shall not be exceeded; and

(iv) any Subsidiary of the Parent Company or the Borrower may
dissolve, liquidate or wind up its affairs at any time;

(b) sell, transfer or otherwise dispose of any of its Property
(including without limitation pursuant to any sale and leaseback
transaction) except that the following shall be permitted: (i) the sale of
inventory for fair value in the ordinary course of business, (ii) the sale
or disposition of machinery and equipment no longer useful in the conduct
of such Person's business, (iii) transfers of Property to Credit Parties,
(iv) non-cash Investments permitted under Section 8.5(d) and (e), and (v)
sales, transfers and dispositions for fair value in the reasonable
determination of the Borrower, so long as (A) no Default or Event of
Default then exists or would exist after giving effect thereto and (B) no
more than 25% of the gross consideration received in connection therewith
consists of Non-Investment Grade debt or equity interests. Sales,

<PAGE>

leases, transfers and other dispositions constituting Material Asset Sales
will be subject to a mandatory reduction in the Commitments hereunder as
provided in Section 3.3(b).

(c) purchase or otherwise acquire (in a single transaction or a
series of related transactions) all or substantially all of the Property of
any other Person except where (i) no Default or Event of Default then
exists or would exist after giving effect thereto, (ii) the purchase or
acquisition does not require the solicitation of the consent of the
shareholders or other equity owners of the Person which is the subject
thereof against the recommendation of management, the board of directors or
other managing entity of such Person, (iii) the Person, division,
operations or Property which is the subject of the acquisition is in a
reasonably related line of business to that of the Parent Company and the
Borrower, and (iv) the acquisition price for such transaction (whether a
single transaction or a series of related transactions) shall exceed
$75,000,000, the Borrower must first demonstrate compliance with the
financial covenants under Section 7.11 on a Pro Forma Basis after giving
effect to such acquisition.

8.5 Investments. The Parent Company and the Borrower will not, and will
-----------
not permit any of their Subsidiaries to, directly or indirectly, make
Investments other than

(a) existing Investments set forth on Schedule 8.5,
------------

(b) Investments in the ordinary course of the hotel business (or other
reasonably related businesses) not otherwise described in Section 8.5
(specifically excluding for purposes hereof loans and advances to
Subsidiaries which are separately dealt with in this Section 8.5),

(d) Investments in Wholly-Owned Subsidiaries of the Borrower or the
Parent Company,

(e) non-cash Investments in Subsidiaries which are not Wholly-Owned
Subsidiaries of the Borrower or the Parent Company or Credit Parties and in
Joint Ventures made after the Closing Date, provided that no such non-cash
--------
Investment shall individually (i) involve the transfer of assets (A) with a
book value in excess of 10% of the Consolidated Legal Entity Assets of the
Parent Company and its Subsidiaries at such time, (B) generating more than
10% of the Consolidated Legal Entity Gross Revenues of the Parent Company
and its Subsidiaries or (C) generating more than 10% of Consolidated Legal
Entity EBITDA for the Parent Company and its Subsidiaries or (ii) cause the
Subsidiaries and Joint Ventures in which non-cash Investments have been
made

<PAGE>

pursuant to this clause (e) (including the subject non-cash Investment)
plus all Non-Guarantor Subsidiaries, as a group, to exceed the Threshold
Requirement,

(f) Investments received in connection with a merger or disposition
permitted by Sections 8.4(a) and 8.4(b), and

(g) cash Investments in Subsidiaries of the Parent Company or the
Borrower which are not Wholly-Owned Subsidiaries of the Parent Company or
the Borrower, Joint Ventures, parties to management or franchise agreements
with the Borrower or its Subsidiaries or such Joint Ventures engaged
primarily in the hotel business or other reasonably related business, but
only if, and to the extent, that the sum of (i) the aggregate amount of
such Investments under this subsection (g) made after the Closing Date plus
----
(ii) the aggregate amount of Guaranty Obligations permitted under Section
8.1(l) incurred after the Closing Date, shall not at any time exceed the
Third Party Investment Basket Amount.

8.6 Prepayments of Indebtedness. Neither the Parent Company or the
---------------------------
Borrower will, nor will they permit any of their Subsidiaries to,

(a) amend or modify, or permit the amendment or modification of, any
of the subordination provisions of any Subordinated Debt or any other
material term relating to any Subordinated Debt the amendment or
modification of which would be materially adverse to the interests of the
Lenders hereunder as the holders of indebtedness senior thereto, or

(b) make (or give any notice with respect thereto) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including without limitation, by way of depositing money or securities
with the trustee with respect thereto before due for the purpose of paying
when due) or exchange any Subordinated Debt permitted pursuant to Section
8.1.

As used herein, "Subordinated Debt" means any Indebtedness of the Parent
-----------------
Company, the Borrower or any of their Subsidiaries for borrowed money which by
its terms is subordinated in right of payment to the indebtedness hereunder and
other amounts owing hereunder or in connection herewith.

<PAGE>

not apply to (i) Investments permitted under Section 8.5, (ii) transactions and
transfers among and between the Parent Company, the Borrower and their Wholly-
Owned Subsidiaries, (iii) the payment of reasonable compensation and benefits
and reimbursement of reasonable expenses of officers and directors, (iv) the
Reorganization and the Distribution and (v) Dividends permitted hereunder.

8.8 Fiscal Year. Neither the Parent Company nor the Borrower will, nor
-----------
will they permit any of their Subsidiaries to, change its fiscal year.

8.9 No Dividend Restrictions. No Credit Party shall agree to or permit to
------------------------
exist, any restrictions or limitations on the declaration or payment of
Dividends.

SECTION 9

EVENTS OF DEFAULT
-----------------

9.1 Events of Default. An Event of Default shall exist upon the
-----------------
occurrence of any of the following specified events (each an "Event of
--------
Default"):
- -------

(a) Payment. Any Credit Party shall
-------

(i) default in the payment when due of any principal
of any of the Loans, or the payment of any guaranty obligations
in respect thereof;

(ii) default, and such default shall continue for five
(5) or more days, in the payment when due of any interest on the
Loans or the payment of any guaranty obligations in respect
thereof; or

(iii) default, and such default shall continue for five (5)
or more days after notice from the Agent, in the payment when due of
any amounts hereunder or under any of the other Credit Documents other
than as provided in subsections (i) and (ii) above, or the payment of
any guaranty obligations in respect thereof; or

(b) Representations. Any representation, warranty or statement
---------------
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove
untrue in any material respect on the date as of which it was deemed
to have been made; or

<PAGE>

(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.11 or 8.1
through 8.9, inclusive; or

(ii) default in the due performance or observance of any
term, covenant or agreement contained in Sections 7.1(g) or 7.10 and
such default shall continue unremedied for a period of at least 5
days; or

(iii) default in the due performance or observance by it
of any term, covenant or agreement (other than those referred to
in subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1)
contained in this Credit Agreement or any of the other Credit
Documents and such default shall continue unremedied for a period
of at least 30 days after notice thereof by the Agent; or

(d) Other Credit Documents. Any Credit Document shall fail to
----------------------
be in full force and effect or to give the Agent and/or the Lenders
the material liens, rights, powers and privileges purported to be
created thereby; or

(e) Guaranties. The guaranty given by the Credit Parties
----------
hereunder or by any Additional Credit Party hereafter or any material
provision thereof shall cease to be in full force and effect, or any
guarantor thereunder or any Person acting by or on behalf of such
guarantor shall deny or disaffirm such guarantor's obligations under
such guaranty, or any guarantor shall default in the due performance
or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any guaranty; or

(f) Bankruptcy, etc. The Parent Company, the Borrower or any
---------------
other Credit Party shall commence a voluntary case concerning itself
under the Bankruptcy Code; or an involuntary case is commenced against
the Parent Company, the Borrower or any other Credit Party under the
Bankruptcy Code and the petition is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of all or
substantially all of the property of the Parent Company, the Borrower
or other Credit Party; or the Parent Company, the Borrower or any
other Credit Party commences any other proceeding under any reorgani-
zation, arrangement, adjustment of the debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now
or hereafter in effect relating to the Parent Company, the Borrower or
any

<PAGE>

other Credit Party; or there is commenced against the Parent Company,
the Borrower or other Credit Party any such proceeding which remains
undismissed for a period of 60 days; or the Parent Company, the Borrower
or any other Credit Party is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or the Parent Company, the Borrower or any other Credit Party
suffers appointment of any custodian or the like for it or for any
substantial part of its property to continue unchanged or unstayed for a
period of 90 days; or the Parent Company, the Borrower or any other Credit
Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Parent Company, the Borrower or any other
Credit Party for the purpose of effecting any of the foregoing; or

(g) Defaults under Other Agreements. With respect to any
-------------------------------
Indebtedness (other than Non-Recourse Indebtedness and Indebtedness
outstanding under this Credit Agreement) for which there is recourse
against the Parent Company, the Borrower and their Subsidiaries in
excess of $10,000,000 in the aggregate, (i) the Parent Company, the
Borrower or any of their Subsidiaries shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (B) default in the observance or
performance of any covenant relating to such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior
to the stated maturity thereof; or

(h) Judgments. One or more judgments or decrees shall be
---------
entered against the Parent Company, the Borrower or any of their
Subsidiaries involving a liability of $5,000,000 or more in the
aggregate (to the extent not paid or covered by insurance) and any
such judgments or decrees shall not have been vacated, discharged,
satisfied or stayed or bonded pending appeal within 30 days from the
entry thereof; or

(i) ERISA. The Parent Company, the Borrower or any of their
-----
Subsidiaries shall engage in any "prohibited transaction" (as defined

<PAGE>

in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which has not been waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan pursuant to Section 4068 or Section
302(f) of ERISA, respectively, shall arise on the assets of the Parent
Company, the Borrower or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence by the
PBGC to have a trustee appointed, or a trustee shall be appointed by the
PBGC, to administer or terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee
is reasonably likely to result in the termination of such Plan for purposes
of Title IV of ERISA (other than a standard termination pursuant to Section
4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA in a distress termination under Section
4041(c), (v) the Parent Company, the Borrower or any Commonly Controlled
Entity shall, or is reasonably likely to, incur any liability in connection
with a withdrawal by the Parent Company, the Borrower or any Commonly
Controlled Entity from, or the Insolvency or Reorganization of, a
Multiemployer Plan, or (vi) the occurrence or expected occurrence of any
event or condition which results or is reasonably likely to result in the
Parent Company's, the Borrower's or any Commonly Controlled Entity's
becoming responsible for any liability in respect of a Former Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, would be
reasonably expected to result in liability which could have a Material
Adverse Effect; provided, however, that the fact that a Plan is underfunded
-------- -------
shall not by itself constitute an Event of Default unless and until another
event or condition described in clause (i) through (vi) affecting such
underfunded Plan occurs and has a Material Adverse Effect; or

(j) Change of Control. Either (i) a "person" or a "group" (within
-----------------
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended) hereafter becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
more than 25% of the then outstanding voting stock of the Parent Company or
(ii) a majority of the Board of Directors of the Parent Company shall
consist of individuals who are not Continuing Directors; "Continuing
----------
Director" means, as of any date of determination, (i) an individual who on
--------
the Closing Date or the

<PAGE>

date two years prior to the date of determination was a member of the
Parent Company's Board of Directors and (ii) any new director whose
nomination for election by the Parent Company's shareholders was approved
by a vote of a majority of the directors then still in office who either
were directors on the Closing Date or the date two years prior to such
determination date or whose nomination for election was previously so
approved.

9.2 Acceleration; Remedies. Upon the occurrence of an Event of Default,
----------------------
and at any time thereafter unless and until such Event of Default has been
waived by the Required Lenders or cured to the satisfaction of the Required
Lenders (pursuant to the voting procedures in Section 11.6), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower take any of the following actions without prejudice to the rights of
the Agent or any Lender to enforce its claims against the Credit Parties, except
as otherwise specifically provided for herein:

(i) Termination of Commitments. Declare the Commitments
--------------------------
terminated whereupon the Commitments shall be immediately terminated.

(ii) Acceleration of Loans. Declare the unpaid principal of and
---------------------
any accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the
Borrower to any of the Lenders hereunder to be due whereupon the same
shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower.

(iii) Enforcement of Rights. Enforce any and all rights and
---------------------
interests created and existing under the Credit Documents and all
rights of set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Agent or the Lenders.

SECTION 10

AGENCY PROVISIONS
-----------------

10.1 Appointment. Each Lender hereby designates and appoints NationsBank,
-----------
N.A. (Carolinas) as administrative agent (in such capacity hereunder, the
"Agent") of such Lender to act as specified herein and the other Credit
-----
Documents, and each such Lender hereby authorizes the Agent, as the agent for
such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein

<PAGE>

and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section (other than Section 10.9) are
solely for the benefit of the Agent and the Lenders, and the Borrower and the
other Credit Parties shall not have any rights as a third party beneficiary of
the provisions hereof. In performing its functions and duties under this Credit
Agreement and the other Credit Documents, the Agent shall act solely as agent of
the Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower or any
other Credit Party.

10.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
hereunder or under the other Credit Documents by or through agents or attorneys-
in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

10.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
----------------------
directors, employees, agents, attorneys-in-fact or affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any of the Credit
Parties contained herein or in any of the other Credit Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection herewith or in connection with
the other Credit Documents, or enforceability or sufficiency of any of the other
Credit Documents, or for any failure of the Borrower to perform its obligations
hereunder or thereunder. The Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the Credit
Parties to the Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence

<PAGE>

or possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties.

10.4 Reliance on Communications. The Agent shall be entitled to rely, and
--------------------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower or any of the other Credit Parties,
independent accountants and other experts selected by the Agent with reasonable
care). The Agent may deem and treat the Lenders as the owner of their
respective interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Agent
in accordance with Section 11.3(b) hereof. The Agent (solely in its capacity as
the Agent) shall be fully justified in failing or refusing to take any action
under this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).

10.5 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.

10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent or any affiliate thereof
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it

<PAGE>

has deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the 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 analysis, appraisals
and decisions in taking or not taking action under this Credit Agreement, and to
make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.

10.7 Indemnification. The Lenders agree to indemnify the Agent in its
---------------
capacity as such (to the extent not reimbursed by the Borrower or another Credit
Party and without limiting the obligation of the Borrower or another Credit
Party to do so), ratably according to their respective Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Agent in its capacities as such in any way relating to or arising
out of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
--------
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the payment of the Obligations and all other amounts payable hereunder
and under the other Credit Documents.

10.8 Agent in its Individual Capacity. The Agent and its affiliates may
--------------------------------
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower or any other Credit Party as though the Agent were not Agent
hereunder. With respect to the Loans made and all Obligations owing to it, the

<PAGE>

Agent shall have the same rights and powers under this Credit Agreement as any
Lender and may exercise the same as though they were not Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.

10.9 Successor Agent. (a) The Agent may resign from the performance of
---------------
all its functions and duties hereunder at any time by giving fifteen (15)
Business Day's prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor Agent pursuant
to clause (b) or (c) below or as otherwise provided below.

(b) Upon any such notice of resignation, the Borrower shall appoint a
successor Agent hereunder who shall be commercial bank or trust company
reasonably acceptable to the Required Lenders (it being understood and
agreed that any Lender is deemed to be acceptable to the Required Lenders),
provided that if a Default or an Event of Default exists at the time of
such resignation, the Required Lenders shall appoint such successor Agent.

(c) If a successor Agent shall not have been so appointed within such
fifteen (15) Business Day period, the Agent, with the consent of the
Borrower, shall then appoint a successor Agent who shall serve as the Agent
hereunder until such time, if any, as the Borrower or Required Lenders, as
the case may be, appoint a successor Agent as provided above.

(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the thirtieth (30th) Business Day after the date such
notice of resignation was given by the Agent, the Agent's resignation shall
become effective and the Lenders shall thereafter perform all the duties of
the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Agent.

(e) Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent, and the resigning Agent shall be discharged from its duties and
obligations as Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Credit Agreement.

SECTION 11

MISCELLANEOUS
-------------

11.1 Notices. Except as otherwise expressly provided herein, all notices
-------
and other communications shall have been duly

<PAGE>

given and shall be effective (i) when delivered, (ii) when transmitted via
telecopy (or other facsimile device) to the number set out below, (iii) the day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service, or (iv) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective parties at the address, in the case of
the Borrower and the Agent, set forth below, and in the case of the Lenders, set
forth on Schedule 11.1, or at such other address as such party may specify by
-------------
written notice to the other parties hereto:

if to the Borrower or Guarantors:

if to the Agent:

<PAGE>

with a copies to:

NationsBank, N.A. (Carolinas)
Corporate Bank
1 NationsBank Plaza
Nashville, Tennessee 37329-1697
Attn: J.E. Ball
Telephone: (615)749-3469
Telecopy: (615)749-4640

11.2 Right of Set-Off. In addition to any rights now or hereafter granted
----------------
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default, each Lender is authorized at
any time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived), to set-
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Lender (including,
without limitation branches, agencies or affiliates of such Lender which are at
least 50% owned by such Lender or its parent company wherever located) to or for
the credit or the account of the Borrower against obligations and liabilities of
the Borrower to such Lender hereunder, under the Notes, the other Credit
Documents or otherwise, irrespective of whether such Lender shall have made any
demand hereunder and although such obligations, liabilities or claims, or any of
them, may be contingent or unmatured, and any such set-off shall be deemed to
have been made immediately upon the occurrence of an Event of Default even
though such charge is made or entered on the books of such Lender subsequent
thereto. The Borrower hereby agrees that any Person purchasing a participation
in the Loans and Commitments hereunder pursuant to Section 11.3(c) or Section
3.12 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.

11.3 Benefit of Agreement.
--------------------

(a) Generally. This Credit Agreement shall be binding upon and inure
---------
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that, except for the assignment by
--------
Embassy Suites to Hotel Inc. contemplated by subsection (b) below, the
Borrower may not assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of each
-------- -------
Lender to transfer, assign

<PAGE>

or grant participations in its rights and/or obligations hereunder shall be
limited as set forth in this Section 11.3, provided, however, that nothing
-------- -------
herein shall prevent or prohibit any Lender from (i) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank, or (ii) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its
parent company and/or to any affiliate of such Lender which is at least
fifty percent (50%) owned by such Lender or its parent company. To the
extent required in connection with a pledge of Loans by any Lender to a
Federal Reserve Bank, the Borrower agrees that, upon request of any such
Lender, it will promptly provide such Lender a promissory note evidencing
the repayment obligations of the Borrower with respect to the principal of
and interest on the Loans of such Lender arising under Section 2.1 and/or
2.4, as applicable, such promissory note to be in a form reasonably
satisfactory to the Borrower and the applicable Lender.

(b) Assignment to the Hotel Inc.. At such time as the Agent shall
----------------------------
have determined that each of the conditions set forth in Section 5.2 shall
have been satisfied, then, at the request of Embassy Suites and Hotel Inc.,
the Agent, on behalf of the Lenders, shall execute and deliver the Hotel
Inc. Assignment and Assumption Agreement. Each Lender hereby (i)
irrevocably authorizes the Agent to execute and deliver the Hotel Inc.
Assignment and Assumption Agreement on behalf of such Lender on the terms
set forth in the immediately preceding sentence and (ii) acknowledges and
agrees that such execution and delivery by the Agent of the Hotel Inc.
Assignment and Assumption Agreement shall be binding upon and enforceable
against such Lender. Upon execution and delivery by the Agent of the Hotel
Inc. Assignment and Assumption Agreement (i) Hotel Inc. shall succeed to
all of the rights and obligations of Embassy Suites as "Borrower" under
this Credit Agreement, and all references to the "Borrower" in the Credit
Documents henceforth shall be deemed to refer to Hotel Inc. and (ii)
Embassy Suites and Promus Co. shall be released and discharged from any
obligation or liability arising under or relating to this Credit Agreement,
in each case on the terms more fully set forth in the Hotel Inc. Assignment
and Assumption Agreement. The date as of which the Agent executes and
delivers the Hotel Inc. Assignment and Assumption Agreement shall be
referred to herein as the "Effective Date of Assignment."
----------------------------

(c) Assignments by Lenders. Each Lender may assign all or a portion
----------------------
of its rights and obligations hereunder and under the Tranche A Credit
Agreement pursuant to an assignment agreement substantially in the form of
Schedule 11.3(c) to one or more Eligible Assignees, provided that any such
---------------- --------
assignment shall be in a minimum aggregate amount of $10,000,000 of the
Commitments and in integral multiples of

<PAGE>
$1,000,000 above such amount, and that each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Credit Agreement and under the Tranche A
Credit Agreement; provided, however, that the Agent and its affiliates
-------- -------
which are at least 50% owned by the Agent or its parent company, as a
group, shall continue to hold Commitments hereunder and under the Tranche A
Credit Agreement in a minimum aggregate amount of $20,000,000 at all times.
Any assignment hereunder shall be effective upon delivery to the Agent of
written notice of the assignment together with a transfer fee of $5,000
payable to the Agent for its own account; provided that no such transfer
--------
fee shall be payable in connection with an assignment by any Lender to its
affiliates which are at least 50% owned by such Lender or its parent
company. The assigning Lender will give prompt notice to the Agent and the
Borrower of any such assignment. Upon the effectiveness of any such
assignment (and after notice to the Borrower as provided herein), the
assignee shall become a "Lender" for all purposes of this Credit Agreement
and the other Credit Documents and, to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. By executing
and delivering an assignment agreement in accordance with this Section
11.3(c), the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim; (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any of
the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of
its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee
confirms that it has received a copy of this Credit Agreement, the other
Credit Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem

<PAGE>
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the Agent to
take such action on its behalf and to exercise such powers under this
Credit Agreement or any other Credit Document as are delegated to the Agent
by the terms hereof or thereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Credit Agreement and the other Credit Documents are required to be
performed by it as a Lender.

(d) Participations. Each Lender may sell, transfer, grant or assign
--------------
participations in all or any part of such Lender's interests and
obligations hereunder to one or more Eligible Participants; provided that
--------
(i) such selling Lender shall remain a "Lender" for all purposes under this
Credit Agreement and the other Credit Documents (such selling Lender's
obligations under this Credit Agreement remaining unchanged) and the
participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or any of the other Credit
Documents except with respect to any such amendment or waiver which would,
under the terms of Section 11.8, require the consent of all of the Lenders,
(iii) sub-participations by the participant (except to an affiliate, parent
company or affiliate of a parent company of the participant) shall be
prohibited and (iv) any such participations shall be in a minimum aggregate
amount of $5,000,000 of the Commitments and in integral multiples of
$1,000,000 in excess thereof. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or under
any of the other Credit Documents (the participant's rights against the
selling Lender in respect of such participation to be those set forth in
the participation agreement with such Lender creating such participation)
and all amounts payable by the Borrower hereunder shall be determined as if
such Lender had not sold such participation, provided, however, that such
participant shall be entitled to receive additional amounts under Sections
3.5 and 3.8 on the same basis as if it were a Lender (limited to the extent
that the selling Lender would be able to receive additional amounts under
Sections 3.5 and 3.8); provided, further, in the event such participant
-------- -------
exercises any rights under Sections 3.5 or 3.8, the Borrower shall be
permitted to exercise its rights pursuant to Section 3.15 with respect to
the selling Lender.

(e) Disclosure of Confidential Information. Any Lender may, in
--------------------------------------
connection with any assignment pursuant to paragraph (c) above or a
participation pursuant to paragraph (d) above, disclose to the assignee or
the proposed assignee or the participant or the proposed participant any
information relating to Embassy Suites, Hotel Corp., Hotel

<PAGE>
Inc., any Subsidiary of Embassy Suites or the Hotel Corp., the
Reorganization or the Distribution furnished to such Lender by or on behalf
of Embassy Suites, the Hotel Corp., Hotel Inc. or any Subsidiary of Embassy
Suites or the Hotel Corp. in connection with this Credit Agreement,
provided that, prior to any such disclosure each such assignee or proposed
--------
assignee or participant or proposed participant shall execute an agreement
containing substantially the terms of all then existing confidentiality
agreements entered into by the assigning or selling Lender with respect to
the Borrower and its Subsidiaries, in each case whereby such assignee or
proposed assignee or participant or proposed participant shall agree to
preserve the confidentiality of any non-public, confidential or proprietary
information relating to Embassy Suites, the Hotel Corp., Hotel Inc., any
Subsidiary of Embassy Suites or the Hotel Corp., the Reorganization or the
Distribution.

11.4 No Waiver; Remedies Cumulative. No failure or delay on the part of
------------------------------
the Agent or any Lender in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Borrower or
any Guarantor and the Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower or any Guarantor to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Agent or the Lenders to any other or further action in any circumstances without
notice or demand.

11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
------------------------
reasonable out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery and administration (but as to
administration, only administration of the credit as among the Agent, the
Borrower, the other Credit Parties and the Lenders and not as to any internal
administration within the Agent) of this Credit Agreement and the other Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and expenses of Moore & Van Allen,
special counsel to the Agent) and any amendment, waiver or consent relating
hereto and thereto requested or required by the Borrower including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Borrower under this Credit Agreement and of the Agent and the Lenders in
connection with enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, in connection
with any such enforcement, the

<PAGE>
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders) provided, that for the purposes of this Credit Agreement, "reasonable
--------
attorneys' fees" shall be limited by the actual attorneys' fees incurred by a
party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the Commitments; (ii) pay and hold each of the Lenders harmless from and against
any and all present and future stamp, documentary and mortgage recording taxes
and other similar taxes with respect to the foregoing matters and save each of
the Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and (iii) indemnify each Lender, its officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not any Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of gross negligence or willful misconduct on the part
of the Person to be indemnified).

11.6 Amendments, Waivers and Consents. (a) Neither this Credit Agreement
--------------------------------
nor any other Credit Document nor any of the terms hereof or thereof may be
amended, changed, waived, discharged or terminated unless such amendment,
change, waiver, discharge or termination is in writing signed by the Required
Lenders, provided that no such amendment, change, waiver, discharge or
--------
termination shall, without the consent of each Lender adversely affected, (i)
extend the Termination Date or reduce the rate or extend the time of payment of
interest or principal (other than as a result of waiving the applicability of
any post-default increase in interest rates) on any Loan or portion thereof or
fees hereunder or reduce the principal amount thereof, or increase the
Commitments of the Lenders over the amount thereof in effect (it being
understood and agreed that a waiver of any condition for an Extension of Credit,
Default or Event of Default or of a mandatory reduction in the total commitments
shall not constitute a change in the terms of any Commitment of any Lender),
(ii) release any Guarantor from its guaranty obligations hereunder except in
accordance with the provisions hereof, (iii) amend, modify or waive any
provision of this Section or of subsection (ii) of Section 3.3(d) (provided that
--------
any Lender to be terminated pursuant to Section 3.3(d) shall not be required to
consent to any such amendment, modification or waiver of subsection (ii) of
Section 3.3(d) necessary to effect such termination), (iv) reduce any percentage
specified in, or

<PAGE>
otherwise modify, the definition of Required Lenders, (v) release all or
substantially all of the collateral subject to the Pledge Agreement or (vi)
consent to the assignment or transfer by the Borrower (or Guarantor) of any of
its rights and obligations under (or in respect of) this Credit Agreement except
as permitted hereunder. No provision of Section 10 may be amended without the
consent of the Agent.

(b) If, in connection with any proposed change, waiver, discharge or
termination of any of the provisions of this Agreement as contemplated by
subclauses (i) through (v), inclusive, of clause (a) above, the consent of the
Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, the Borrower shall have the
right (so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clauses (A) or (B) below) to either
(A) replace each such non-consenting Lender or Lenders with one or more
Replacement Lenders pursuant to Section 3.15 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Lender's
Commitment and repay all outstanding Loans of such Lender in accordance with
Sections 3.3(d) and 3.3(g), provided that, unless the Commitments terminated and
--------
Loans repaid pursuant to the preceding clause (B) are immediately replaced in
full at such time through the addition of new Lenders or the increase of the
Commitments and/or outstanding Loans of existing Lenders (who in each case must
specifically consent thereto), then in the case of any action pursuant to the
preceding clause (B), the Required Lenders (determined before giving effect to
the proposed action) shall specifically consent thereto, provided further, that
----------------
in any event the Borrower shall not have the right to replace a Lender,
terminate its Commitment or repay its Loans solely as a result of the
withholding of any required consent by such Lender to any increase in the
Commitment of such Lender.

11.7 Counterparts. This Credit Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Credit Agreement to produce or
account for more than one such counterpart.

11.8 Headings. The headings of the sections and subsections hereof are
--------
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.

11.9 Survival of Indemnification. All indemnities set forth herein,
---------------------------
including, without limitation, in Sections 3.5, 3.8, 3.9, 3.10, 10.7 and 11.5
shall survive the execution and delivery of this Credit Agreement, and the
making of the Loans, the repayment of the Obligations and other obligations and
the termination of the Commitment hereunder.

<PAGE>
11.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------

(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the Western District
of North Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of such courts.
Each of the Credit Parties further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 11.1, such
service to become effective 30 days after such mailing. Nothing herein shall
affect the right of the Agent to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed against the
Borrower in any other jurisdiction.

(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.

(c) EACH OF THE AGENTS, EACH OF THE LENDERS AND EACH OF THE CREDIT PARTIES
HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

11.11 Severability. If any provision of any of the Credit Documents is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

11.12 Entirety. This Credit Agreement together with the other Credit
--------
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.

<PAGE>

11.13 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the Borrower herein shall survive delivery of the Notes and
the making of the Loans hereunder.

11.14 Knowledge Standard. As used herein, the phrase "to the knowledge of
------------------
the Borrower" or any similar phrase shall mean the knowledge of any of the
following persons: Raymond E. Schultz, President and Chief Executive Officer;
David C. Sullivan, Executive Vice President and Chief Operating Officer; Donald
H. Dempsey, Senior Vice President and Chief Financial Officer; Ralph B. Lake,
Senior Vice President, General Counsel, and Secretary; Thomas L. Keltner, Senior
Vice President, Development; Carol G. Champion, Vice President, Treasurer; and
Jeffery M. Jarvis, Vice President and Controller; or any other person succeeding
to the responsibilities of any such individual.

11.15 Confidentiality. Each Lender agrees that it will use its best
---------------
efforts not to disclose without the prior consent of the Borrower (other than to
its employees, auditors or counsel) any information with respect to the Parent
Company, the Borrower or any of their respective Subsidiaries which is now or in
the future furnished pursuant to this Agreement or any other Credit Document and
which is designated by the Parent Company, the Borrower or any of their
respective Subsidiaries as confidential, provided that any Lender may disclose
--------
any such information (a) as has become generally available to the public, (b) as
may be required in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender (including bank examiners) or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar organi-
zations (whether in the United States or elsewhere) or their successors, (c) as
may be required in respect to any summons or subpoena or in connection with any
investigation by a Governmental Authority or litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Lender, and (e) to
any prospective or actual transferee or participant of any rights and interests
hereunder provided such prospective transferee or participant executes an
agreement containing provisions substantially identical to those contained in
this Section.

11.16 Agent's and Lender's Covenant. The Agent and each Lender hereby
-----------------------------
covenants that neither any Extension of Credit nor any part of any Extension of
Credit constitutes assets of an "employment benefit plan" within the meaning of
Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Code.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Tranche B Credit Agreement to be duly executed and delivered as of the date
first above written.

BORROWER:
- --------
EMBASSY SUITES, INC.,
a Delaware corporation

By____________________________

Title_________________________

GUARANTORS: THE PROMUS COMPANIES INCORPORATED,
- ----------
a Delaware corporation

By____________________________

Title_________________________

PROMUS HOTEL CORPORATION,
a Delaware corporation

By____________________________

Title_________________________

PROMUS HOTELS, INC.,
a Delaware corporation

By____________________________

Title_________________________

HAMPTON INNS, INC.,
a Delaware corporation

By____________________________

Title_________________________

EMBASSY EQUITY DEVELOPMENT CORPORATION,
a Delaware corporation

By____________________________

Title_________________________

S-1

<PAGE>

Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche B Credit Agreement

LENDERS:
- -------

NATIONSBANK, N.A. (CAROLINAS),
individually in its capacity as a
Lender and in its capacity as Agent

By_____________________________

Title__________________________

THE BANK OF NEW YORK

By_____________________________

Title__________________________

THE BANK OF NOVA SCOTIA

By_____________________________

Title__________________________

CIBC INC.

By_____________________________

Title__________________________

THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH

By_____________________________

Title__________________________

FIRST UNION NATIONAL BANK OF
NORTH CAROLINA

By_____________________________

Title__________________________

S-2

<PAGE>

Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche B Credit Agreement

LTCB TRUST COMPANY

By_____________________________

Title__________________________

THE NIPPON CREDIT BANK, LTD. -
LOS ANGELES AGENCY

By_____________________________

Title__________________________

SOCIETE GENERALE, SOUTHWEST AGENCY

By_____________________________

Title__________________________

CREDIT LYONNAIS

By_____________________________

Title__________________________

FIRST AMERICAN NATIONAL BANK

By_____________________________

Title__________________________

FIRST NATIONAL BANK OF COMMERCE

By_____________________________

Title__________________________

FIRST TENNESSEE BANK NATIONAL ASSOCIATION

By_____________________________

Title__________________________

THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY

By_____________________________

Title__________________________

THIRD NATIONAL BANK

By_____________________________

Title__________________________

U.S. NATIONAL BANK OF OREGON

By_____________________________

Title__________________________

S-3

<PAGE>

Schedule 2.1(a)
---------------
Schedule of Lenders and
-----------------------
Commitments
-----------

Revolving Revolving
Committed Commitment
Lender Amount Percentage
------ --------- ----------

NationsBank, N.A. $5,000,000.00 10.00000000%
(Carolinas)

The Bank of New York $4,285,714.29 8.57142857%

The Bank of Nova Scotia $4,285,714.29 8.57142857%
CIBC Inc. $4,285,714.29 8.57142857%

The Sumitomo Bank, $4,285,714.29 8.57142857%
Limited, New York
Branch

First Union National $3,214,285.71 6.42857143%
Bank of North Carolina

LTCB Trust Company $3,214,285.71 6.42857143%

The Nippon Credit Bank, $3,214,285.71 6.42857143%
Ltd. - Los Angeles
Agency

Societe Generale, $3,214,285.71 6.42857143%
Southwest Agency

Credit Lyonnais $2,142,857.14 4.28571429%

First American National $2,142,857.14 4.28571429%
Bank

First National Bank of $2,142,857.14 4.28571429%
Commerce

First Tennessee Bank $2,142,857.14 4.28571429%
National Association

The Industrial Bank of $2,142,857.14 4.28571429%
Japan, Limited, Atlanta
Agency

Third National Bank $2,142,857.14 4.28571429%

U.S. National Bank of $2,142,857.14 4.28571429%
Oregon ------------- -----------
$50,000,000.00 100.00000000%

<PAGE>

Schedule 2.1(b)(i)
------------------

TRANCHE B CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

The undersigned, EMBASSY SUITES, INC./PROMUS HOTELS, INC. (the "Borrower"),
--------
refers to the Tranche B Credit Agreement dated as of June 7, 1995 (as amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice that it requests a Committed Revolving Loan borrowing pursuant to
the provisions of Section 2.1(b) of the Credit Agreement and in connection
herewith sets forth below the terms on which such borrowing is requested to be
made:

(A) Date of Borrowing
(which is a Business Day) _______________________

(B) Principal Amount of
Borrowing1 _______________________

(D) Interest Period and the
last day thereof3 _______________________

In accordance with the requirements of Section 5.3, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (ii) of such Section, and confirms that the matters
referenced in subsections (b), (c), (d) and (e) of such Section, are true and
correct.
Very truly yours,

EMBASSY SUITES, INC./PROMUS HOTELS, INC.

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

--------------------
1 In the case of Committed Revolving Loans, minimum of
$5,000,000 and $1,000,000 increments in excess thereof (or the
remaining available Revolving Committed Amount, if less).

2 In the case of Committed Revolving Loans, Eurodollar
and Base Rate Loans available.

3 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.

<PAGE>
Schedule 2.1(e)
---------------

Form of Tranche B Committed Revolving Note

$_________________ June __, 1995

FOR VALUE RECEIVED, EMBASSY SUITES, INC./PROMUS HOTELS, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
--------
__________________________, its successors and assigns (the "Lender"), at the
------
office of NationsBank, N.A. (Carolinas), as Agent (the "Agent"), at 101 N. Tryon
-----
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Tranche B Credit Agreement dated as of June 7, 1995 among
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
----------------
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Termination Date or, if
applicable, the Term Loan Maturity Date, in Dollars and in immediately available
funds, the principal amount of ________________________DOLLARS ($____________)
or, if less than such principal amount, the aggregate unpaid principal amount of
all Committed Revolving Loans made by the Lender to the Borrower pursuant to the
Credit Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates selected in accordance with Section 2.1(d) of the Credit Agreement.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.

EMBASSY SUITES, INC./
PROMUS HOTELS, INC.

By____________________________

Title_________________________

<PAGE>

SCHEDULE A TO THE
TRANCHE B COMMITTED REVOLVING NOTE
OF EMBASSY SUITES, INC./PROMUS HOTELS, INC.
DATED JUNE __, 1995

Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- --------- --------

<PAGE>
Schedule 2.4(b)-1
-----------------

Form of Tranche B Competitive Bid Request

NationsBank, N.A. (Carolinas)
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche B Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 2.4(b) of the
Credit Agreement it requests solicitation of Competitive Bids under the
Credit Agreement, and in connection herewith sets forth below the terms on
which such Competitive Loan borrowing is requested to be made:

(A) Date of Competitive Loan Borrowing
(which is a Business Day) __________________

(B) Principal Amount of
Competitive Loan Borrowing4 __________________

Very truly yours,

PROMUS HOTELS, INC.

By:____________________________

Title:_________________________

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

4 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof.

5 Subject to the provisions and definitions of the Credit
Agreement, but generally not less than 7 days nor more
than 180 days.

<PAGE>

Schedule 2.4(b)-2
-----------------

Form of Notice of Tranche B Competitive Bid Request

[Name of Lender]
[Address]

Attention:

Ladies and Gentlemen:

Reference is made to the Tranche B Credit Agreement dated as of June
7, 1995 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among Embassy Suites, Inc., as initial borrower, (the
----------------
"Borrower"), certain subsidiaries and related parties as guarantors, the
--------
Lenders and NationsBank, N.A. (Carolinas), as Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The Borrower made a
Competitive Bid Request on _____________, 19__, pursuant to Section 2.4(b)
of the Credit Agreement, and in that connection you are invited to submit a
Competitive Bid by 10:00 A.M. (Charlotte, North Carolina time)
______________, 19__ [Date of Proposed Competitive Loan Borrowing] Your
Competitive Bid must comply with Section 2.4(c) of the Credit Agreement and
the terms set forth below on which the Competitive Bid Request was made:

(A) Date of Competitive Loan Borrowing __________________

(B) Principal amount of
Competitive Loan Borrowing __________________

Very truly yours,

NATIONSBANK, N.A. (CAROLINAS), as Agent

By________________________________

Title:____________________________

<PAGE>
Schedule 2.4(c)
---------------

Form of Tranche B Competitive Bid

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

The undersigned, [Name of Lender], refers to the Tranche B Credit
Agreement dated as of June 7, 1995 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among Embassy Suites,
----------------
Inc., as initial borrower, (the "Borrower"), certain subsidiaries and
--------
related parties, the Lenders and NationsBank, N.A. (Carolinas), as Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.4(c) of
the Credit Agreement, in response to the Competitive Bid Request made by
the Borrower on ________________, 19__, and in that connection sets forth
below the terms on which such Competitive Bid is made:

(A) Principal Amount6 ____________________

(B) Competitive Bid Rate ____________________

The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with
Section 2.4(e) of the Credit Agreement.

Very truly yours,

[NAME OF LENDER]

By:______________________________
Title:___________________________

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

6 Acceptance in a minimum principal amount of $1,000,000
and $500,000 increments in excess thereof.

<PAGE>
Schedule 2.4(d)
---------------

Form of Tranche B Competitive Bid Accept/Reject Letter

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services

Ladies and Gentlemen:

In accordance with Section 2.4(d) of the Credit Agreement, we have
received Competitive Bids in connection with our Competitive Bid Request
dated ______________ and in accordance with Section 2.4(d) of the Credit
Agreement, we hereby accept the following bids for maturity on [date]:

Interest
Principal Amount Competitive Bid Rate Paid Lender
---------------- -------------------- -------- ------

$ [%]
$ [%]

We hereby reject the following bids:

Interest
Principal Amount Competitive Bid Rate Paid Lender
---------------- -------------------- -------- ------

$ [%]
$ [%]

The Competitive Loans accepted as provided above should be deposited
in the general deposit account maintained by the Borrower with NationsBank,
N.A. (Carolinas) on the date hereof in accordance with Section 2.4(e) of
the Credit Agreement.

Very truly yours,

PROMUS HOTELS, INC.

By:_____________________________

Name:________________________

Title:_______________________

<PAGE>
Schedule 2.4(h)
---------------

Form of Tranche B Competitive Loan Note

$50,000,000 June __, 1995

FOR VALUE RECEIVED, PROMUS HOTELS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of
--------
__________________________, its successors and permitted assigns (the
"Lender"), at the office of NationsBank, N.A. (Carolinas), as Agent (the
------
"Agent"), at 101 N. Tryon Street, Independence Center, NC1-001-15-04,
-----
Charlotte, North Carolina 28255 (or at such other place or places as the
holder hereof may designate), at the times set forth in the Tranche B
Credit Agreement dated as of June 7, 1995 among Embassy Suites, Inc., as
initial borrower, certain subsidiaries and related parties as guarantors,
the Lenders and the Agent (as it may be amended, modified, extended or
restated from time to time, the "Credit Agreement"; all capitalized terms
----------------
not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date or, if
applicable, the Term Loan Maturity Date, in Dollars and in immediately
available funds, the principal amount of FIFTY MILLION DOLLARS
($50,000,000) or, if less than such principal amount, the aggregate unpaid
principal amount of all Competitive Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section
2.4(g) of the Credit Agreement and in the respective Competitive Bid
applicable to each Competitive Loan borrowing evidenced hereby.

Overdue principal and, to the extent permitted by law, overdue
interest owing hereunder shall bear interest as provided in Section 3.1 of
the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Borrower. In the event
this Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition the principal and interest, all costs
of collection, including reasonable attorneys' fees; provided, that for
--------
purposes of this note, "reasonable attorneys' fees" shall be limited by
actual attorneys' fees incurred by a party without application of N.C. Gen.
Stat. Sec. 6-21.2 and without any presumption that such reasonable
attorneys' fees shall be a fixed percentage of the principal amount hereof.

All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on Schedule A attached
----------
hereto and incorporated herein by reference, or on a continuation thereof
which shall be attached hereto and made a part hereof; provided, however,
-------- -------
that any failure to endorse such information (or an error in such
endorsement) on such schedule or continuation thereof shall not in any
manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.

PROMUS HOTELS, INC.

By____________________________

Title_________________________

<PAGE>

SCHEDULE A TO THE
TRANCHE B COMPETITIVE LOAN NOTE
OF PROMUS HOTELS, INC.
DATED JUNE __, 1995

Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- -------- --------

<PAGE>
Schedule 3.2
------------

Form of Notice of Tranche B Conversion or Extension

NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services

Ladies and Gentlemen:

The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche B Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice pursuant to Section 3.2 of the Credit
Agreement that it requests an extension or conversion of one or more
Committed Revolving Loans outstanding under the Credit Agreement, and in
connection herewith sets forth below the terms on which such extension or
conversion is requested to be made:

(A) Date of Extension or Conversion
(which is the last day of the _______________________
the applicable Interest Periods)

(B) Principal Amount of
Extension or Conversion7 _______________________

(D) Interest Period and the
last day thereof9 _______________________

Very truly yours,

PROMUS HOTELS, INC.

By:__________________________________
Title:_______________________________

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

7 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof (or the remaining available Revolving Committed
Amount, if less).

8 Eurodollar and Base Rate Loans available.

9 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.

<PAGE>

Schedule 5.1(a)
---------------

Form of Pledge Agreement

<PAGE>

Schedule 6.15
-------------

Subsidiaries

<PAGE>

Schedule 7.1(d)
---------------

Form of Officer's Compliance Certificate

For the fiscal quarter ended _________________, 19___.

This ______ day of ___________, 19__.

PROMUS HOTEL CORPORATION

________________________________
Title:

<PAGE>

Attachment to Officer's Certificate
-----------------------------------

Computation of Financial Covenants

<PAGE>
Schedule 7.12
-------------

Form of Joinder Agreement

THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 19__,
---------
is by and between _____________________, a ___________________ (the
"Subsidiary"), and NATIONSBANK, N.A. (CAROLINAS), in its capacity as Agent under
----------
that Tranche A Credit Agreement and that Tranche B Credit Agreement (as amended,
modified, extended or restated from time to time, the "Tranche A Credit
----------------
Agreement" and the "Tranche B Credit Agreement", respectively, and sometimes
- --------- --------------------------
hereafter referred to collectively as the "Credit Agreements"), in each case
-----------------
dated as of June 7, 1995 by and among EMBASSY SUITES, INC., as initial borrower,
certain subsidiaries and related parties as guarantors, the Lenders party
thereto and NationsBank, N.A. (Carolinas), as Agent. All of the defined terms
in the Credit Agreements are incorporated herein by reference.

The Subsidiary is an Additional Credit Party, and, consequently, the Credit
Parties are required by Section 7.12 of each of respective the Credit Agreements
to cause the Subsidiary to become a "Guarantor".
---------

Accordingly, the Subsidiary hereby agrees as follows with the Agent, for
the benefit of the Lenders:

1. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to each
of the Credit Agreements and a "Guarantor" for all purposes of the Credit
Agreements, and shall have all of the obligations of a Guarantor thereunder as
if it had executed the Credit Agreements. The Subsidiary hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in each of the Credit Agreements, including without
limitation (i) all of the representations and warranties set forth in Section 6
of each of the Credit Agreements as they relate to such Subsidiary, (ii) all of
the affirmative and negative covenants set forth in Sections 7 and 8 of each of
the Credit Agreements and (iii) all of the undertakings and waivers set forth in
Section 4 of each of the Credit Agreements (subject to the limitations set forth
therein). Without limiting the generality of the foregoing terms of this
paragraph 1, the Subsidiary hereby (i) subject to the limitation set forth in
Section 4.1 of each of the Credit Agreements, jointly and severally together
with the other Guarantors, guarantees to each Lender and the Agent, as provided
in Section 4 of each of the Credit Agreements, the prompt payment and
performance of the Obligations in full when due (whether at stated maturity, as
a mandatory prepayment, by acceleration or otherwise) strictly in accordance
with the terms thereof and (ii) agrees that if any of the Obligations are not
paid or performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the Subsidiary will, jointly and
severally together with the other Guarantors, promptly pay and perform the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.

2. The undersigned Credit Party, being the parent company of the
Subsidiary, joins in the execution of the Joinder Agreement for purposes of (i)
acknowledging, and agreeing to be bound by the terms of, the Pledge Agreement as
a Pledgor thereunder as if it had been an original party thereto, (ii)
acknowledging, representing and affirming to the Collateral Agent that the
Pledged Securities (as such term is defined in the Pledge Agreement) hereby
delivered to the Collateral Agent and which are subject to the pledge and
security interest under the Pledge Agreement are as follows:

<PAGE>

Nominal Certificate No. of Percentage
Issuer Owner No. Shares of Total
------ ------- -------- ------ Ownership
---------

and (iii) acknowledging that its notice address and the address of its chief
executive office for purposes of the Pledge Agreement is c/o Promus Hotels,
Inc., 850 Ridgelake Boulevard, Memphis, Tennessee 38120, Attn: Carol G.
Champion, Telephone: (901) 680-7201, Telecopy: (901) 680-7270.

3. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.

IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be
duly executed by its authorized officers, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

[SUBSIDIARY]

By____________________________

Title_________________________

PLEDGOR [PARENT COMPANY]
- -------

By____________________________

Title_________________________

Acknowledged and accepted:

NATIONSBANK, N.A. (CAROLINAS),
as Agent

By______________________________

Title___________________________

<PAGE>

Schedule 8.1
------------

Existing Indebtedness

<PAGE>
Schedule 8.2
------------

Existing Liens

<PAGE>

Schedule 11.1
-------------

Schedule of Addresses

<TABLE><CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
NationsBank, N.A. NationsBank, N.A. (Carolinas) NationsBank, N.A.
(Carolinas) 101 N. Tryon St. (Carolinas)
Independence Center Corporate Bank
NC1-001-15-04 1 NationsBank Plaza
Charlotte, NC 28255 Nashville, TN 37329-1697
Attn: Agency Services Attn: J.E. Ball
Phone: (704) 386-9368 Phone: (615) 749-3469
Fax: (704) 386-9923 Fax: (615) 749-4640
with a copy to:

Christopher C. Kupec,
Esq.
Moore & Van Allen, PLLC
NationsBank Corporate
Center, Floor 47
100 N. Tryon Street
Charlotte, NC 28202-4003
Phone: (704) 331-1046
Fax: (704) 331-1159

Credit Lyonnais Credit Lyonnais Cayman Branch Credit Lyonnais Cayman Branch
Cayman Branch 1301 Avenue of the Americas 1301 Avenue of the Americas
18th Floor 18th Floor
New York, NY 10019 New York, New York 10019
Attn: Alex Larrinaga Attn: Mischa Zabofin
Phone: (212) 261-7833 Phone: (212) 261-7872
Fax: (212) 261-7890 Fax: (212) 261-7890

The Sumitomo Bank, The Sumitomo Bank, Limited, New The Sumitomo Bank, Limited,
Limited, New York York Branch New York Branch
Branch 277 Park Avenue 277 Park Avenue
New York, NY 10172 New York, New York 10172
Attn: Christine Bonifacic Attn: Christine Bonifacic
Phone: (212) 224-4138 Phone: (212) 224-4129
Fax: (212) 224-5197 Fax: (212) 224-5188

CIBC Inc. CIBC Inc. CIBC Inc.
300 South Grand Avenue 300 South Grand Avenue
Suite 2700 Suite 2700
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Paul Chakmak Attn: Paul Chakmak
Phone: (213) 617-6226 Phone: (213) 617-6226
Fax: (213) 346-0157 Fax: (213) 346-0157

</TABLE>

<PAGE>
<TABLE><CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
First Tennessee First Tennessee Bank National First Tennessee Bank National
Bank National Association Association
Association 165 Madison Avenue 165 Madison Avenue
National Department, 9th Floor National Department,
Memphis, TN 38103 9th Floor
Attn: Steve Wade Memphis, TN 38103
Phone: (901) 523-4118 Attn: Steve Wade
Fax: (901) 523-4267 Phone: (901) 523-4118
Fax: (901) 523-4267

The Industrial Bank The Industrial Bank of Japan, The Industrial Bank of
of Japan, Limited, Limited, Atlanta Agency Japan, Limited, Atlanta Agency
Atlanta Agency 191 Peachtree Street, Suite 3600 191 Peachtree Street, Suite 3600
Atlanta, GA 30303 Atlanta, GA 30303
Attn: Jackie Brunetto Attn: Jackie Brunetto
Phone: (404) 420-3325 Phone: (404) 420-3325
Fax: (404) 524-8509 Fax: (404) 524-8509

LTCB Trust Company LTCB Trust Company The Long-Term Credit Bank
165 Broadway of Japan, Limited
New York, NY 10006 45 Peachtree Center Avenue
Attn: Winston Brown Suite 2801
Phone: (212) 335-4854 Atlanta, GA 30303
Fax: (212) 608-3081 Attn: Rebecca Sedlar
Silbert
Phone: (404) 659-7210
Fax: (404) 658-9751

The Nippon Credit The Nippon Credit Bank, Ltd. - The Nippon Credit Bank,
Bank, Ltd. - Los Los Angeles Agency Ltd. - Los Angeles Agency
Angeles Agency 550 South Hope Street Suite 2500 550 South Hope Street Suite 2500
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Helen Rhee/Jay Schwartz Attn: Helen Rhee/Jay Schwartz
Phone: (213) 243-5723/243-5722 Phone: (213) 243-5723/243-5722
Fax: (213) 243-892-0111 Fax: (213) 243-892-0111

</TABLE>
2

<PAGE>
<TABLE><CAPTION>
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
<S> <C> <C>
Societe Generale, Societe Generale, Southwest Societe Generale, Southwest
Southwest Agency Agency Agency
4800 Trammell Crow Center 1111 Bagby Street
2001 Ross Avenue Suite 2020
Dallas, TX 75201 Houston, TX 77002
Attn: Terry Jones Attn: Paul Cornell/Thierry Namuroy
Phone: (214) 979-2777 Phone: (713) 759-6301/759-6313
Fax: (214) 979-1104 Fax: (713) 650-0824

with a copy to:
Societe Generale, Southwest
Agency
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Attn: Terry Jones
Phone: (214) 979-2777
Fax: (214) 979-1104
U.S. National Bank U.S. National Bank of Oregon U.S. National Bank of
of Oregon 555 SW Oak Street Oregon
Suite 400 555 SW Oak Street
Portland, Oregon 97204 Suite 400
Attn: Claire C. Jones Portland, Oregon 97204
Phone: (503) 275-3192 Attn: Claire C. Jones
Fax: (503) 275-5428 Phone: (503) 275-3192
Fax: (503) 275-5428

First Union First Union National Bank of First Union National Bank
National Bank of North Carolina of North Carolina
North Carolina One First Union Center One First Union Center
301 South College Street 301 South College Street
Charlotte, NC 28288 Charlotte, NC 28288
Attn: Leo Leitner Attn: Leo Leitner
Phone: (704) 383-5210 Phone: (704) 383-5210
Fax: (704) 374-2802 Fax: (704) 374-2802

First National Bank First National Bank of Commerce First National Bank of
of Commerce Suite 751 Commerce
210 Baronne Street Suite 751
New Orleans, LA 70112 210 Baronne Street
Attn: Louis Ballero New Orleans, LA 70112
Phone: (504) 561-1989 Attn: Louis Ballero
Fax: (504) 561-1738 Phone: (504) 561-1989
Fax: (504) 561-1738

Third National Bank Third National Bank Third National Bank
6000 Poplar 6000 Poplar
Suite 145 Suite 145
Memphis, TN 38119 Memphis, TN 38119
Attn: Carol Yochem/Saul Komisar Attn: Carol Yochem/Saul
Phone: (901) 766-7561 Komisar
Fax: (901) 766-7565 Phone: (901) 766-7561
Fax: (901) 766-7565

</TABLE>
3

<PAGE>

Schedule 11.3(b)
----------------

Form of Hotel Inc. Tranche B Assignment and Assumption Agreement

THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT, dated as of June __,
1995 (the "Agreement"), among EMBASSY SUITES, INC., a Delaware corporation
---------
("Embassy Suites"), PROMUS HOTELS, INC., a Delaware corporation (the "Hotel
-------------- -----
Inc."), THE PROMUS COMPANIES INCORPORATED, a Delaware corporation ("Promus Co.")
- ---- ----------
and NATIONSBANK, N.A. (CAROLINAS), in its capacity as Agent under the Credit
Agreement hereinafter described.

SECTION 1. Definitions. Terms capitalized but not defined herein shall
-----------
have the meanings assigned thereto in that certain Tranche B Credit Agreement
dated as of June 6, 1995 (the "Credit Agreement") among Embassy Suites, as
----------------
initial borrower, certain subsidiaries and related parties as guarantors, the
Lenders party thereto and the Agent.

<PAGE>

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

EMBASSY SUITES, INC.

By:___________________________

Title:________________________

PROMUS HOTELS, INC.

By:___________________________

Title:________________________

THE PROMUS COMPANIES INCORPORATED

By:___________________________

Title:________________________

NATIONSBANK, N.A. (CAROLINAS),
as Agent as aforesaid for
the Lenders

By____________________________

Title_________________________

<PAGE>

Schedule 11.3(c)
----------------

Form of Tranche B Assignment and Acceptance

THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into
between ________________ ("Assignor") and ____________________ ("Assignee").
-------- --------

Reference is made to the Tranche B Credit Agreement dated as of June 6,
1995, as amended and modified from time to time thereafter (the "Credit
------
Agreement") among EMBASSY SUITES, INC., as initial borrower, certain
- ---------
subsidiaries and related parties as guarantors, the Lenders party thereto and
NationsBank, N.A. (Carolinas), as Agent. Terms defined in the Credit Agreement
are used herein with the same meanings.

1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
-----------------
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitments of the Assignor on the effective
date of the assignment designated below (the "Effective Date") and the Committed
--------------
Revolving Loans and Competitive Loans owing to the Assignor which are
outstanding on the Effective Date, together with unpaid interest accrued on the
assigned Loans to the Effective Date and the amount, if any, set forth below of
the fees accrued to the Effective Date for the account of the Assignor. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 11.3(c) of the
Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (i) the Assignee, if it is not already a Lender
under the Credit Agreement, shall be a party to and be bound by the provisions
of the Credit Agreement and, to the extent of the interests assigned by this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the interests (except
for its right to seek indemnification under the Credit Agreement) assigned by
this Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.

3. Terms of Assignment

(a) Date of Assignment:

(b) Legal Name of Assignor:

(d) Effective Date of Assignment:

(e) Revolving Loan Commitment
Percentage Assigned (expressed
as a percentage of the total
Commitment of the Lenders to
make Committed Revolving Loans and set
forth to at least 8 decimals) %

(f) Revolving Loan Commitment
Percentage of Assignor after
Assignment (set forth to at
least 8 decimals) %

(g) Total Committed Revolving Loans outstanding
as of Effective Date $_____________

<PAGE>

(h) Principal Amount of Committed Revolving
Loans assigned on Effective
Date (the amount set forth
in (g) multiplied by the
percentage set forth in (e)) $_____________

The terms set forth above
are hereby agreed to:

____________________, as Assignor

By:_____________________________________

Title:__________________________________

_____________________, as Assignee

By:_____________________________________

Title:__________________________________

CONSENTED TO:

NATIONSBANK, N.A. (CAROLINAS),
as Agent

By:____________________________________

Title:_________________________________

PROMUS HOTELS, INC.

By:____________________________________

Title:_________________________________

<PAGE>

Schedule 2.2(a)

Existing Letters of Credit
--------------------------

None.

<PAGE>

Schedule 6.1(b)

Special Provisions Regarding Pro Forma Balance Sheets
-----------------------------------------------------

<PAGE>

Schedule 6.4

Consents, Authorizations, Notices and Filings
---------------------------------------------

None.

<PAGE>

Schedule 6.8

Excluded Assets
---------------

<PAGE>

Schedule 6.9

Claims Regarding Intellectual Property
--------------------------------------

None.

<PAGE>

Schedule 8.1

Existing Indebtedness
---------------------

(as of March 31, 1995)

Capital Leases
- --------------

Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $ 1,773,302
Marketing Services Center $ 68,061

Notes
- -----

Embassy - DeBanks Henwood $ 917,641
Hampton - San Francisco land $ 296,724

Guarantees
- ----------

<PAGE>

Schedule 8.2

Existing Liens
--------------

(as of March 31, 1995)

Capital Leases
- --------------

Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $1,773,302
Marketing Services Center $ 68,061

<PAGE>

Schedule 8.5

Existing Investments
--------------------

Name (percent ownership interest)
- ---------------------------------

Existing Investments (Notes Receivable)
---------------------------------------

(as of March 31, 1995)

Embassy Suites
- --------------

El Paso $ 133,503
Richmond $ 1,000,000
LaJolla $ 687,970
Santa Clara $ 611,428

<PAGE>

Crystal City $ 638,375
Charleston $ 682,461

Hampton Inn
- -----------

Secaucus $ 50,637
San Antonio - Downtown $ 1,000,000
San Diego $ 57,954

Hampton Inn & Suites
- --------------------

Newport News $ 1,000,000

Homewood Suites
- ---------------

Lane/Raymond/Smith $ 500,000
Santa Fe $ 1,500,000
San Antonio - Downtown $ 1,000,000
Harrisburg $ 939,105
Alexandria $ 529,588

Information Technology $ 750,000
- ----------------------

Marketing Services Center $ 125,725
- ------------------------- -----------

$11,206,746
===========

<PAGE>

<TABLE>
SCHEDULE 6.15
-------------
Subsidiaries

Promus Hotels, Inc.*/ Delaware 100% None
-
Buckleigh, Inc. Delaware 100% 100 (100) None

ATM Hotels Pty Limited Australia 50% 2 (1) None

Compass, Inc. Tennessee 100% 1000 (1000) None

EJP Corporation Delaware 100% 1000 (1000) None

Suite Life, Inc. Delaware 100% 1000 (1000) None

Embassy Development Corporation Delaware 100% 100 (100) None

Embassy Suites De Mexico, S.A., de C.V. Mexico 1% 10,000 (100) None

ES/PA, L.P. [Pennsylvania] 98% [Not Applicable] None

E.S. Philadelphia Airport Joint Venture Pennsylvania 10% [Not Applicable] None

Embassy Equity Development Corporation Delaware 100% 100 (100) None

Embassy Suites De Mexico S.A., de C.V. Mexico 1% 10,000 (100) None

Embassy Syracuse Development Corporation Delaware 100% 100 (100) None

<FN>
- --------------------------------

*/ Indicates Subsidiaries of the Parent Company and the Borrower immediately prior to the Assignment and Assumption.
- -
</TABLE>

<PAGE>

Southfield Hotel Management, Inc. Florida 100% 1000 (1000) None

Embassy Memphis Corporation Tennessee 100% 100 (100) None

Embassy Pacific Equity Corporation Delaware 100% 100 (100) None

Embassy Suites Club No. 1, Inc. Kansas 100% 1000 (1000) None

Embassy Suites Club No. Three, Inc. Louisiana 100% 1000 (1000) None

Embassy Suites De Mexico, S.A., De C.V. Mexico 97% 10,000 (9,700) None

Embassy Suites (Isla Verde), Inc. Delaware 100% 1000 (1000) None

Embassy Suites (Puerto Rico), Inc. Delaware 100% 1000 (1000) None

Embassy Vacation Resorts, Inc. Delaware 100% 1000 (1000) None

EPAM Corporation Delaware 100% 100 (100) None

ESI Development, Inc. Tennessee 100% 1000 (1000) None

ESI Mortgage Development Corporation Delaware 100% 1000 (1000) None

ESI Mortgage Development Corporation II Delaware 100% 100 (100) None

E.S. Philadelphia Airport Joint Venture Pennsylvania 90% [Not Applicable] None

GOL Columbia Limited Partnership Maryland 1% [Not Applicable] None

GOL (Heathrow), Inc. Tennessee 100% 1000 (1000) None

</TABLE>

<PAGE>

<TABLE> <CAPTION>
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
<S> <C> <C> <C> <C>
Granada Royale Hometel-West, a limited Arizona 50.003% [Not Applicable] None
partnership

Granada Royale Hometel-Tucson, a limited Arizona 65% [Not Applicable] None
partnership

Hampton Inns, Inc. Delaware 100% 1000 (1000) None

GOL Columbia Limited Partnership Maryland 99% [Not Applicable] None

Old Town Hotel Corporation Delaware 100% 1000 (1000) None

Pacific Hotels, Inc. Tennessee 100% 1000 (1000) None

ATM Hotels Pty Limited Australia 50% 2 (1) None

Promus Hotel Services, Inc. Delaware 100% 1000 (1000) None

Promus Hotels Florida, Inc. Delaware 100% 1000 (1000) None

</TABLE>

Exhibit 10(7)

PROMUS HOTEL CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

<PAGE>

TABLE OF CONTENTS

PAGE
----

ARTICLE I - PURPOSE 1

ARTICLE II - DEFINITIONS 1

2.1 Account 1
2.2 Beneficiary 1
2.3 Board 1
2.4 Change of Control 1
2.5 Committee 3
2.6 Compensation 3
2.7 Deferral Commitment 3
2.8 Deferral Period 3
2.9 Determination Date 3
2.10 Employer 3
2.11 Employment 4
2.12 Hardship 4
2.13 Interest 4
2.14 Participant 5
2.15 Participation Agreement 5
2.16 Plan Benefit 5
2.17 Retirement 5
2.18 Total and Permanent Disability 5

Article III - PARTICIPATION AND DEFERRAL COMMITMENTS 6

3.1 Eligibility and Participation 6
3.2 Form of Deferral; Maximum and Minimum Deferral 7
3.3 Modification of Deferred Commitment 7

ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS 8

4.1 Elective Deferred Compensation 8
4.2 Types of Account 8
4.3 Matching Contributions 8
4.4 Vesting of Accounts 8
4.5 Determination of Accounts 9
4.6 Statement of Accounts 9

ARTICLE V - PLAN BENEFITS 9

5.1 Pre-Termination Withdrawals 9
5.2 Retirement Benefit 10
5.3 Termination Benefit 10
5.4 Death Benefit 10
5.5 Disability Benefits 11
5.6 Hardship Distributions 11
5.7 Form of Benefit Payment 12
5.8 Withholding; Payroll Taxes 12
5.9 Commencement of Payments 12

<PAGE>

TABLE OF CONTENTS
(Continued)

PAGE
----

5.10 Full Payment of Benefits 13
5.11 Payment to Guardian 13
5.12 Spin-Off Transactions 13

ARTICLE VI - BENEFICIARY DESIGNATION 14

6.1 Beneficiary Designation 14
6.2 Amendments 14
6.3 No Beneficiary Designation 15
6.4 Effect of Payment 15

ARTICLE VII - ADMINISTRATION 15

7.1 Committee; Duties 15
7.2 Agents 15
7.3 Binding Effect of Decisions 15
7.4 Indemnity of Committee 15

ARTICLE VIII - CLAIMS PROCEDURE 16

8.1 Claim 16
8.2 Denial of Claim 16

ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN 17

9.1 Amendment 17
9.2 Employer's Right to Terminate Future Deferrals 17

ARTICLE X - MISCELLANEOUS 17

10.1 Unfunded Plan 17
10.2 Unsecured General Creditor 18
10.3 Nonassignability 18
10.4 Not a Contract of Employment 18
10.5 Protective Provisions 18
10.6 Terms 19
10.7 Captions 19
10.8 Governing Law 19
10.9 Validity 19
10.10 Notice 19
10.11 Successors 19

<PAGE>

PROMUS HOTEL CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I

PURPOSE

The purpose of this Executive Deferred Compensation Plan
(hereinafter referred to as the "Plan") is to provide supplemental funds
for retirement or death for certain Directors and key management employees
(and their beneficiaries) of Promus Hotel Corporation (hereinafter referred
to as "Promus") and certain of its subsidiaries which elect to participate
in the Plan. It is intended that the Plan will aid in retaining and
attracting Directors and employees of exceptional ability by providing such
individuals with these benefits. This plan shall be effective as of the
later of June 30, 1995 or the date of the distribution of a dividend of
common stock in Promus to the shareholders of the Promus Companies
Incorporated.

ARTICLE II

DEFINITIONS

For the purposes of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly indicates
otherwise:

2.1 Account. "Account" means the Retirement Account and the
-------
Termination Account maintained by the Employer with respect to each
Participant's deferred compensation pursuant to Article IV, including
accounts transferred from The Promus Companies Incorporated Executive
Deferred Compensation Plan (The "Promus Predecessor Plan"). The existence
of these accounts shall not require any segregation of assets.

2.2 Beneficiary. "Beneficiary" means the person, persons or
-----------
entity designated by the Participant, or as provided in Article VI, to
receive any Plan benefits payable after the Participant's death.

2.3 Board. "Board" means the Board of Directors of Promus or
-----
the Human Resources Committee (or its successor committee) of such Board of
Directors or any other Committee designated by the Board of Directors of
Promus.

2.4 Change of Control. A "Change of Control" shall be deemed
-----------------
to have occurred, subject to subparagraph (iv) hereof, if any of the events
in subparagraphs (i), (ii) or (iii) occur:

<PAGE>

(i) Any "person" (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than an employee benefit plan of Promus, or a
trustee or other fiduciary holding securities under an employee
benefit plan of Promus, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 25% or more of Promus's then outstanding voting securities carrying
the right to vote in elections of persons to the Board of Directors,
regardless of comparative voting power of such voting securities, and
regardless of whether or not the Board of Directors shall have
approved such Change in Control; or

(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors and any new director (other than a director designated by
a person who shall have entered into an agreement with Promus to
effect a transaction described in subparagraphs (i) or (iii) of this
paragraph) whose election by the Board of Directors or nomination for
election by Promus's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or

(iii) The holders of securities of Promus entitled to vote
thereon approve the following:

(A) A merger or consolidation of Promus with any
other corporation regardless of which entity is the surviving
company, other than a merger or consolidation which would result
in the voting securities of Promus carrying the right to vote in
elections of persons to the Board of Directors outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of Promus's then
outstanding voting securities carrying the right to vote in
elections of persons to the Board of Directors, or such
securities of such surviving entity outstanding immediately after
such merger or consolidation, or

(B) A plan of complete liquidation of Promus or an
agreement for the sale or disposition by Promus of all or
substantially all of Promus's assets.

(iv) Notwithstanding the definition of a "Change in
Control" of Promus as set forth in this paragraph 2.4, the Human
Resources Committee of the Board of Directors (the "Committee") shall
have full and final authority, which

<PAGE>

shall be exercised in its discretion, to determine conclusively
whether a Change in Control of Promus has occurred, and the date of
the occurrence of such Change in Control and any incidental matters
relating thereto, with respect to a transaction or series of
transactions which have resulted or will result in a substantial
portion of the assets or business of Promus (as determined immediately
prior to the transaction or series of transactions by the Committee in
its sole discretion which determination shall be final and conclusive)
being held by a corporation at least 80% of whose voting securities
are held, immediately following such transaction or series of
transactions, by holders of the voting securities of Promus
(determined immediately prior to such transaction or series of
transactions). The Committee may exercise such discretionary
authority without regard to whether one or more of the transactions in
such series of transactions would otherwise constitute a Change in
Control of Promus under the definition set forth in this paragraph
2.4.

2.5 Committee. "Committee" means the Deferred Compensation
---------
Committee appointed to administer the Plan pursuant to Article VII.

2.6 Compensation. "Compensation" means the base salary and
------------
bonus or director's fees paid to the Participant by the Employer during the
calendar year, before reduction for amounts deferred pursuant to this Plan
or any other plan. Compensation does not include expense reimbursements, or
any form of non-cash compensation and benefits.

2.7 Deferral Commitment. "Deferral Commitment" means a Salary
-------------------
Deferral Commitment, a Bonus Deferral Commitment, or a Fee Deferral
Commitment made by the Participant pursuant to Article III and for which a
Participation Agreement has been filed. A Deferral Commitment shall
include any deferral commitment made by a Participant for 1995 under the
Promus Predecessor Plan.

2.8 Deferral Period. "Deferral Period" means the single
---------------
calendar year for which the Participant has made a Deferral Commitment.
The initial Deferral Period shall commence as soon as administratively
feasible after the effective date of this Plan.

2.9 Determination Date. "Determination Date" means the last
------------------
day of each calendar month.

2.10 Employer. "Employer" means Promus, and directly or
--------
indirectly affiliated or subsidiary corporations, any other affiliate
designated by the Board, or any successors to the businesses thereof.

<PAGE>

2.11 Employment. "Employment," in the case of an employee,
----------
means the period of time that a Participant is on the Employer's payroll.
A leave of absence approved by the Committee shall not be deemed a
termination of Employment. A Participant who enters salary continuation
status shall not be deemed to have terminated Employment. In the case of a
director, Employment means the active service on the Board by the
Participant.

2.12 Hardship. "Hardship" means the immediate and heavy
--------
financial need of the Participant as determined by the Committee.
Financial needs shall be limited to the following situations:

(a) Financial obligations incurred by the Participant
because of sickness, accident, death, disability, or other medical
need in the Participant's immediate family which the Participant is
not able to pay out of liquid assets or current cash flow.

(b) Financial requirements to purchase necessary shelter
and related necessities for the Participant and the Participant's
immediate family which the Participant is unable to purchase out of
liquid assets or current cash flow or otherwise reasonably finance.

(c) Financial requirements for education for the
Participant or a member of the Participant's immediate family which
the Participant is unable to pay out of liquid assets or current cash
flow.

For purposes of this definition, the term "immediate family"
means wife, husband, child, father, mother, or a related dependent residing
with the Participant.

2.13 Interest.
--------

(a) Termination Account Interest. The interest rate
----------------------------
applicable to a Termination Account on each monthly Determination Date
shall be the greater of one-twelfth (1/12) of the rate approved by the
Board prior to January 1 of each plan year or one-twelfth (1/12) of
the rate announced by Citibank, N.A. as its prime rate at the
beginning of each calendar quarter during the plan year. The rate to
be approved by the Board shall be submitted by Company management to
the Board for review and approval prior to January 1 of each plan
year. If the Citibank Prime rate is no longer available, the
Committee shall select a substantially similar index.

(b) Retirement Account Interest. The effective annual
---------------------------
yield applicable to a Retirement Account shall be determined prior to
January 1 of each year and be effective for the calendar year
following the date it is determined. Such rate shall be submitted by
Company management for

<PAGE>

review and approval by the Board prior to January 1 each year. The
annual yield under this paragraph 2.13(b) for each plan year shall not
be less than one hundred fifty percent (150%) of the annual average of
the Moody's Average Corporate Bond Yield for such year as published by
Moody's Investors Service, Inc. (or any successor hereto) or, if such
index is no long published, a substantially similar index selected by
the Committee; provided, however, that for Participants who are
entitled to the Retirement Account Interest who retire or terminate
active service during 1995, such rate will be locked-in at the
retirement rate approved for 1995 until such Participants' Account is
fully distributed.

2.14 Participant. "Participant" means any individual who is
-----------
participating or has participated in this Plan as provided in Article III
or has participated in the Promus Predecessor Plan and whose account in the
Promus Predecessor Plan (in whole or in part) has been transferred to this
Plan.

2.15 Participation Agreement. "Participation Agreement" means
-----------------------
the agreement filed by the Participant prior to the beginning of the
Deferral Period. A new Participation Agreement shall be filed by the
Participant for each Deferral Period.

2.16 Plan Benefit. "Plan Benefit" means the benefit payable to
------------
the Participant as calculated in Article V.

2.17 Retirement. "Retirement" means termination of Employment
----------
with the Employer on or after the earlier of the date the Participant
attains age fifty five (55) with ten (10) years of credited service or on
or after the date the Participant attains age sixty (60). For purposes of
this definition, years of credited service will be credited in accordance
with the provisions of The Promus Hotel Corporation Savings and Retirement
Plan. The Board reserves the right to provide different retirement
requirements for different participants.

2.18 Total and Permanent Disability. "Total and Permanent
------------------------------
Disability" means that due to sickness or accidental bodily injury the
Participant:

(a) is completely unable to perform any and every duty
pertaining to his occupation with the Employer, and

(b) after a twenty-four (24) month period of disability,
is completely unable to engage in any and every gainful occupation for
which he is reasonably fitted by education, training and experience.

For purposes of this Plan, the Committee shall determine whether
or not a condition renders the Participant to

<PAGE>

be Totally and Permanently Disabled based on evidence satisfactory to the
Committee. Such determination by the Committee shall be final and binding.

ARTICLE III

PARTICIPATION AND DEFERRAL COMMITMENTS

3.1 Eligibility and Participation.
-----------------------------

(a) Eligibility. Eligibility to participate in the Plan
-----------
is limited to those employees of the Employer who are:

(i) in Job Grades 1-12 (or equivalent grades) or in
other Job Grades which may be declared eligible by the Board's Human
Resources Committee, and

(ii) designated as a Participant by the Chief
Executive Officer of Promus.

Non-employee Directors of the Board whose accounts have been transferred to
the Plan from the Promus Predecessor Plan are also Participants except that
no non-employee Directors may make further deferrals into the Plan after
June 30, 1995.

(b) Participation. An eligible employee may elect to
-------------
participate in the Plan with respect to any Deferral Period by filing a
Participation Agreement with the Committee by December 15 of the calendar
year immediately preceding the Deferral Period. In the event that an
individual first becomes eligible to Participate during a calendar year, a
Participation Agreement must be filed no later than thirty (30) days
following notification of the individual by the Committee of his
eligibility to Participate, and such Participation Agreement shall be
effective only with regard to Compensation earned and payable following the
filing of the Participation Agreement with the Committee. Employees whose
accounts are transferred to this Plan from the Promus Predecessor Plan are
also Participants and their deferred elections for 1995 will carry over for
the remainder of 1995 under this Plan.

(c) Unless an exception is specifically made by the
Committee, in its sole discretion, and except for the purpose described in
paragraph 5.4(b) below, a Participant shall not be permitted to defer under
this Plan amounts payable to the Participant after (i) the Participant's
death; or (ii) if a Participant is placed on salary continuation during a
Deferral Period, the earlier of the date the Participant ceases to receive
a continuation of salary or the commencement of a new Deferral Period; or
(iii) the Employer has terminated future deferrals pursuant to paragraph
9.2 of this Plan.

<PAGE>

(d) Deferrals into the Plan will not be allowed after
1995.

3.2 Form of Deferral; Maximum and Minimum Deferral. The
----------------------------------------------
Participant may elect in the Participation Agreement any of the following
Deferral Commitments:

(a) Salary and Bonus Commitment. During the Deferral
---------------------------
Period following the calendar year in which the Participation
Agreement is filed, the Participant may elect to defer, except as
provided in (b) below, (1) up to twenty-five percent (25%) of base
salary payable during the Deferral Period, and (2) up to one hundred
per cent (100%) of bonus (fifty percent (50%) of bonus for Job Grades
9-12 or equivalent grades) payable during the Deferral Period;
provided, however, that commencing with the 1991 Deferral Period with
-------- -------
respect to bonus deferrals, all participants will be limited to
deferring a maximum of 50% of bonus.

(b) Savings and Retirement Plan Exception. In addition
-------------------------------------
to the deferral permitted under (a) above, any Participant that
participates at the maximum before-tax percentage allowed by the
Employer's Savings and Retirement Plan maintained by the Employer
shall be deemed to have elected to defer under this Plan that portion
of eligible Savings and Retirement Plan earnings which the Participant
elected to defer under the Savings and Retirement Plan, up to six
percent (6%) (or such other maximum before-tax percentage allowed by
the Savings and Retirement Plan), which could not be deferred on a
before-tax basis under the Savings and Retirement Plan due to any law
or regulation as determined by the Committee, but excluding any amount
which was actually deferred into the Savings and Retirement Plan but
distributed back to the employee in a following Plan year.

(c) Limitation on Deferrals. Notwithstanding anything
-----------------------
herein: (i) an employee who has five (5) years of active deferrals of
salary and/or bonus into this Plan including deferrals under the
Predecessor Promus Plan or the Holiday Corporation plan which was the
predecessor to the Predecessor Promus Plan (the "Predecessor Holiday
Plan") shall not be permitted to defer any further bonus into this
Plan, and (ii) a director on the Board of Directors of Promus shall
not be permitted to defer any further director's fees into this Plan.

3.3 Modification of Deferred Commitment. A Deferral
-----------------------------------
Commitment shall be irrevocable except that the Committee may reduce the
amount to be deferred or waive the remainder of the Deferral Commitment
upon a finding, based upon uniform standards established by the Committee,
that the Participant has suffered a Hardship or that a bona fide mistake
occurred in filling out a form or responding to instructions.

<PAGE>

ARTICLE IV

DEFERRED COMPENSATION ACCOUNTS

4.1 Elective Deferred Compensation. The amount of
------------------------------
Compensation that the Participant elects to defer shall be withheld and
credited to the Participant's Account as the Compensation becomes payable.
Any withholding of taxes or other amounts with respect to deferred
Compensation which is required by state, federal or local law may be
withheld from the Participant's non-deferred Compensation.

4.2 Types of Account. For record-keeping purposes only, a
----------------
Retirement Account and a Termination Account shall be maintained for each
Participant. The amount of Compensation elected to be deferred shall be
credited to both the Retirement Account and the Termination Account.

4.3 Matching Contributions.
----------------------

(a) Eligibility. Matching contributions shall be
-----------
credited to Participants in this Plan who are eligible to participate
in the Employer's Savings and Retirement Plan and elect to make a
Basic Contribution equal to the maximum rate at which a Participant
may elect before-tax contributions under the Employer's Savings and
Retirement Plan and such before-tax contribution is limited due to any
law or regulation.

(b) Amount. The Employer shall credit to each employee
------
Participant's Account a matching contribution for each calendar year
equal to one hundred percent (100%) of the Participant's Compensation
elected to be deferred under this Plan for the year, such Compensation
being limited for purposes of this calculation to a maximum of six
percent (6%) of the Participant's eligible Savings and Retirement Plan
earnings (which shall not include bonus amounts or board fees). The
matching contribution amount shall be offset by the actual matching
contribution allocated to the Participant for the year under the
Employer's Savings and Retirement Plan.

(c) Time of Credit. The Employer matching contribution
--------------
shall be credited to a Participant's Account as of the last day of the
calendar year or the date the Participant's employment ends, if
earlier.

4.4 Vesting of Accounts. Each Participant shall be vested in
-------------------
the amounts credited to such Participant's Account and earnings thereon as
follows:

(a) Amounts Deferred. A Participant shall be one hundred
----------------
percent (100%) vested at all times in the amount of Compensation
elected to be deferred under this Plan.

<PAGE>

(b) Employer Matching Contributions. A Participant who
-------------------------------
terminates Employment for reasons other than Retirement, Total and
Permanent Disability or Death shall be vested in the Employer matching
contributions made for any particular year in accordance with the
vesting provisions in the Employer's Savings and Retirement Plan and
as it may be amended from time to time.

(c) Retirement, Disability or Death. A Participant shall
-------------------------------
be one hundred percent (100%) vested in all amounts at Retirement, or
upon Total and Permanent Disability or Death.

4.5 Determination of Accounts. Each Participant's Retirement
-------------------------
Account and Termination Account as of each Determination Date shall consist
of the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's elective deferred Compensation
credited, matching contributions and Interest earned, minus the amount of
any distributions made since the immediately preceding Determination Date.
Interest earned shall be calculated as of each Determination Date based
upon the average daily balance of the account since the preceding
Determination Date. Interest earned on the Retirement Account shall be
calculated so as to achieve the annual yield provided by paragraph 2.13(b).

4.6 Statement of Accounts. The Committee shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each
calendar year and at such other time as determined by the Committee, a
statement setting forth the balance to the credit of each Account
maintained for the Participant.

ARTICLE V

PLAN BENEFITS

5.1 Pre-Termination Withdrawals.
---------------------------

(a) Amount. At the time the Participation Agreement is
------
filed, the Participant may elect to receive fifty percent (50%) of the
Deferral Commitment during each of the 8th, 9th, 10th, and 11th years
after the year during which the Participation Agreement is filed. The
total Pre-Termination Withdrawal shall be limited to the Termination
Account balance at the time of the withdrawal.

(b) Remaining Account Balance. The amount of the
-------------------------
withdrawal shall reduce the Retirement Account and Termination Account
balances. Any remaining Account balances shall continue to be
credited with Interest in accordance with paragraph 4.5. Any amounts
remaining in the

<PAGE>

Retirement Account or Termination Account after all PreTermination
Withdrawals shall be paid in accordance with this Article V.

5.2 Retirement Benefit. The Employer shall pay a Plan Benefit
------------------
equal to the amount of the Participant's Retirement Account to each
Participant who terminates Employment:

(a) by reason of Retirement,

(b) by reason of Total and Permanent Disability,

(d) while participating as a director and terminates from
Employment on the Employer's Board due to:

(i) not being re-elected as a director,

(ii) Total and Permanent Disability, or

(iii) termination within a twenty-four (24) month
period after a Change of Control.

A non-employee director whose account in the Promus Predecessor
Plan (in whole or in part) was transferred to the Plan from the Promus
Predecessor Plan will be entitled to the Retirement Account benefit upon
resigning, retiring or otherwise terminating Board service.

5.3 Termination Benefit. The Employer shall pay a Plan
-------------------
Benefit equal to the amount of the Participant's Termination Account to
each Participant who terminates Employment for all reasons other than those
for which a Retirement Benefit or Death Benefit shall be paid.

5.4 Death Benefit. Upon the death of the Participant, the
-------------
Employer shall pay to the Participant's Beneficiary an amount determined as
follows:

(a) If the Participant dies prior to termination of
Employment with the Employer, the amount payable under this paragraph
shall be in lieu of any other benefit payment under this Plan and
shall equal:

(i) the Participant's Retirement Account Balance,
plus;

(ii) if the Participant died during active Employment
(or if such participant's death occurs after active employment
has ceased by reason of a sickness or injury which thereafter
results in the participant's

<PAGE>

death), three (3) times the sum of all amounts deferred by the
Participant under this Plan (not including interest or earnings
thereon) until the date of death.

(b) For purposes of calculating the Death Benefit under
paragraph 5.4(a):

(i) "amounts deferred" shall include salary, bonus,
and any other Compensation that the Participant may be permitted
to defer hereunder which the Participant shall have elected in
writing to defer under this Plan from inception of the Plan
(including the Predecessor Promus Plan) to the date of death
including any deferred bonus or other deferred Compensation
hereunder which would be payable to the Participant or to the
Participant's estate or beneficiary after the Participant's
death, except that "amounts deferred" shall not include any
salary elected to be deferred under this Plan but not yet payable
at the time of the Participant's death.

(ii) the Participant's Retirement Account Balance
shall not include any Compensation which is not payable on the
day before the Participant's death even if such amounts become
payable on or after the Participant's death and even if the
Participant had elected in writing to defer such amounts under
this Plan.

(c) If the Participant dies after termination of
Employment with the Employer, the amount payable shall be equal to the
remaining unpaid balance of the Participant's appropriate Account.

5.5 Disability Benefits. If the Participant terminates
-------------------
Employment by reason of Total and Permanent Disability, the amount payable
shall equal the Retirement Account balance.

5.6 Hardship Distributions. Upon a finding that the
----------------------
Participant has suffered a Hardship, the Committee may, in its sole
discretion, allow distributions from the Participant's Account prior to the
time otherwise specified for payment of benefits under the Plan. The
amount of such distribution shall be limited to the amount reasonably
necessary to meet the Participant's requirements during the Hardship. The
amount of such distribution shall reduce the Termination Account balance
and Retirement Account balance.

5.7 Form of Benefit Payment. The Plan Death Benefit payable
-----------------------
under paragraph 5.4(a)(ii) of this Plan shall be paid within 90 days of
death in a lump sum with no interest accruing from the date of death until
the date of payment. The Plan Retirement Benefit, Death Benefit payable
under paragraph

<PAGE>

5.4(a)(i) or 5.4(c), Disability Benefits, and Termination Benefit shall be
paid in one of the following forms as elected by the Participant in the
Participation Agreement:

(a) Installments. Equal monthly installments of the
------------
Account and Interest amortized over a period of time elected by the
Participant not to exceed 15 years unless a longer period up to 20
years for an individual Participant is or has been authorized by the
Board including prior authorization by The Promus Companies
Incorporated. Interest shall be credited to the remaining portion of
the Account Balance in accordance with paragraph 4.5. If the
Participant is receiving the Retirement Account, Interest shall be
equal to an amount in accordance with paragraph 2.12(b). If the
Participant is receiving the Termination Account, Interest shall be
equal to an amount in accordance with paragraph 2.13(a); and/or

(b) A lump sum payment.

(d) If the Participant fails to elect the form of benefit
payment, the benefits shall be paid in accordance with 5.7(a) over a
period of fifteen (15) years. However, the Committee may, in its sole
discretion, provide for an alternate form of benefit payment to the
Participant, if payment is made pursuant to paragraph 5.2(c) or
5.2(d)(3).

(e) If a Plan Death Benefit is payable in installments
under paragraph 5.4(a)(i), the Committee may, in its sole discretion,
determine that payment of the Death Benefit shall be accelerated and
paid in a lump sum to the Beneficiary.

5.8 Withholding; Payroll Taxes. The Employer shall withhold
--------------------------
from payments made hereunder any taxes required to be withheld from the
Participant's wages for the federal or any state or local government.

5.9 Commencement of Payments. Payment shall commence at the
------------------------
discretion of the Committee, but not later than sixty (60) days after the
end of the month in which the Participant Retires, dies, becomes Totally
and Permanently Disabled or otherwise terminates Employment with the
Employer and is entitled to payment pursuant to his or her Participation
Agreement (unless a later commencement date not later than age 60 is or has
been authorized by the Board for an individual Participant including prior
authorization by The Promus Companies Incorporated). For purposes of this
paragraph 5.9, termination of Employment shall include when a Participant
is no longer entitled to any payments of salary or salary continuation.

<PAGE>

5.10 Full Payment of Benefits. Notwithstanding any other
------------------------
provision of this Plan, all benefits shall be paid no later than the date
of the Participant attains age eighty five (85).

5.11 Payment to Guardian. If a Plan benefit is payable to
-------------------
minor or a person declared incompetent or to a person incapable of handling
the disposition of property, the Committee may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor or incompetent person. The Committee may require
proof of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution
shall completely discharge the Committee and the Employer from all
liability with respect to such benefit.

5.12 Spin-Off Transactions. Notwithstanding anything in the
---------------------
Plan to the contrary, in the event of any business of Promus or its
subsidiaries is spun-off and a Participant becomes an employee or director
of the company owning the spun-off business (the "Spin-Off Company") which
adopts a deferred compensation plan that is substantially the same as the
Plan, then the Human Resources Committee of the Board of Directors of
Promus in its discretion may determine as follows prior to the spin-off:

(a) any director-Participant who resigns as a director
the Company and who, within 90 days, commences service as a director
of the Spin-Off Company will not be treated as having terminated
service or employment as a director for purposes of paying Plan
benefits, and his or her entire Account balance and all obligations
associated therewith will be transferred to the corresponding Plan of
the Spin-Off Company;

(b) a transfer of employment of a Participant to the
Spin-Off Company in connection with the spin-off will not be
considered a termination of employment for purposes of paying Plan
benefits or of forfeiting matching contributions and interest thereon;

(c) a transferred Participant's Account balance as of the
effective date of the spin-off and all obligations related thereto
will be transferred to the corresponding plan of the Spin-Off Company;

(d) any Participant who will immediately after the
effective date of the spin-off continue to be employed by Promus (or a
subsidiary thereof) and will also be employed by the Spin-Off Company
(or a subsidiary thereof) will have the right to designate in writing
(to be signed prior to the effective date of the spin-off) a
percentage (from zero to 100%) of his or her Account Balance as of
such effective date that will be transferred to the Spin-Off Company
(such percentage being applied to the balances

<PAGE>

attributable to each year of deferral) which transfer will include the
transfer of all obligations associated therewith. (To the extent such
designation is not made, the Participant's Account will remain in the
Plan pursuant to its terms.); and

(e) Any employee or director transferring to the Spin-Off
Company will receive credit for and will be vested in the Retirement
Account Interest Rate under the Plan and under the Spin-Off Company's
corresponding plan if such Rate is earned or otherwise vested or
credited under the Plan on or prior to the effective date of the spin-
off;

(f) Except to the extent related to that portion of a
Participant's Account balance that is retained in the Plan pursuant to
the above Section 5.12(e), no benefits will be payable under the Plan
to a Participant whose Account balance (or portion thereof) is
transferred to the Spin-Off Company.

ARTICLE VI

BENEFICIARY DESIGNATION

6.1 Beneficiary Designation. Each Participant shall have the
-----------------------
right, at any time, to designate any person or persons as his Beneficiary
or Beneficiaries (both principal as contingent) to whom payment under this
Plan shall be paid in the event of his death prior to complete distribution
to the Participant of the benefits due him under the Plan. Each
beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
the Participant's lifetime. If the Participant's Compensation is community
property, any Beneficiary Designation shall be valid or effective only as
permitted under applicable law.

6.2 Amendments. Any Beneficiary designation may be changed by
----------
the Participant without the consent of any designated Beneficiary by the
filing of a new Beneficiary Designation with the Committee. The filing of
a new Beneficiary Designation form will cancel all Beneficiary Designations
previously filed.

6.3 No Beneficiary Designation. If any Participant fails to
--------------------------
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant dies before the Participant or before
complete distribution of the Participant's benefits, the Committee, in its
discretion, may direct the Employer to distribute such Participant's
benefits (or the balance thereof) to either:

(a) The surviving spouse;

<PAGE>

(b) The Participant's children, except that if any of the
children predecease the Participant but leave issue surviving, then
such issue shall take by right of representation the share the parent
would have taken if living;

6.4 Effect of Payment. The payment to the Beneficiary shall
-----------------
completely discharge the Employer's obligations under this Plan.

ARTICLE VII

ADMINISTRATION

7.1 Committee; Duties. This Plan shall be administered by the
-----------------
Employer's Deferred Compensation Committee, which shall consist of not less
than three (3) individuals selected by the Chief Executive Officer of
Promus. Members of the Committee may be the Participants under this Plan.

7.2 Agents. The Committee shall appoint an individual to be
------
the Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to the
Employer.

7.3 Binding Effect of Decisions. The decision or action of
---------------------------
the Committee in respect of any question arising out of or in connection
with the administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.

7.4 Indemnity of Committee. The Employer shall indemnify and
----------------------
hold harmless the members of the Committee or any agents or employees of
the Employer against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by the Committee, Committee
member, or such agent or employee of the Employer.

ARTICLE VIII

CLAIMS PROCEDURE

8.1 Claim. Any Participant, former Participant, Beneficiary,
-----
or legal representative thereof, may file a claim for benefits under the
Plan by submitting to the Committee a

<PAGE>

written statement describing the nature of the claim and requesting a
determination of its validity under the terms of the Plan. The Committee
shall issue a ruling and written notice with respect to the claim within 30
days after such claim is received. If the claim is wholly or partially
denied, written notice shall be furnished to the claimant, which notice
shall set forth in a manner calculated to be understood by the claimant;

(a) the specific reason or reasons for denial;

(b) specific reference to pertinent Plan provisions on
which the denial is based;

(c) a description of any additional materials or
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and

(d) an explanation of the claims review procedures.

8.2 Denial of Claim. Any Participant, former Participant, or
---------------
Beneficiary (or their authorized representatives) whose claim for benefits
has been denied, may appeal such denial be resubmitting to the Committee a
written statement requesting a further review of the decision within sixty
(60) days of the date the claimant receives notice of such denial. The
statement shall set forth the reasons supporting the claim, the reasons
such claim should not have been denied, and any other issues or comments
which the claimant deems appropriate with respect to the claim. The
Committee shall, if requested, make copies of the Plan documents available
for examination by the claimant. The Committee shall issue a ruling and
written notice within sixty (60) days after the date the claim is
resubmitted. Such written notice shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant,
with specific references to the pertinent Plan provisions on which the
decision is based. The Committee's decision of the appeal may be reviewed
by the Board, which shall have the right to overrule the Committee.

<PAGE>

ARTICLE IX

AMENDMENT AND TERMINATION OF PLAN

9.1 Amendment.
---------

(a) The Board may at any time amend the Plan in whole or
in part, and may impose different requirements for different
Participants, provided, however, that (i) no amendment shall be
effective to decrease or restrict the amount accrued to that date on
any Account maintained pursuant to any existing Deferral Commitment
under the Plan; and (ii) on amounts that have been deferred up to the
date of amendment, no amendment shall be effective to reduce the
minimum interest credited or to be credited to Termination Accounts
until their payment date or reduce the minimum interest credited or to
be credited to Retirement Accounts until their payment date as
provided in paragraph 2.13, without the consent of all Participants
(or a Beneficiary in case a Participant is then deceased) who may be
affected by such change; and (iii) no amendment shall be effective to
alter the form of payment as elected by a Participant in any
Participation Agreement.

(b) The Committee may make administrative amendments to
the Plan including but not limited to amendments to clarify the Plan
language and to simplify and implement various administrative
procedures, including matters relating to the calculation of death
benefits and payments to Beneficiaries, which the Committee determines
are consistent with the purpose and intent of the Plan.

9.2 Employer's Right to Terminate Future Deferrals. The Board
----------------------------------------------
may at any time terminate further deferrals into the Plan, by any person
and may reject additional Participants in the Plan, if, in its sole
judgment, such termination would be in the best interest of the Employer.
Benefits from deferrals up to the point of termination of further deferrals
shall be paid in the form elected by the Participant in his or her
Participation Agreement and otherwise in accordance with this Plan,
including crediting of interest, until all payments are complete.

ARTICLE X

MISCELLANEOUS

10.1 Unfunded Plan. This Plan is an unfunded plan maintained
-------------
primarily to provide Deferred Compensation benefits for a select group of
management employees or highly compensated employees. This Plan is not
intended to create an investment contract, but to provide tax planning
opportunities and retirement benefits to eligible individuals who have
elected to participate in the Plan. Eligible individuals are select
members

<PAGE>

of management who, by virtue of their position with the Employer, are
uniquely informed as to the Employer's operations and have the ability to
materially affect the Employer's profitability and operations.

10.2 Unsecured General Creditor. The Participants and their
--------------------------
Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, interest, or claims in any property or assets of the
Employer, nor shall they be Beneficiaries of, or have any rights, claims,
or interests in any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by the Employer
("Policies"). Such Policies or other assets of the Employer shall not be
held as collateral security for the fulfilling of the obligations of the
Employer under this Plan. The Policies shall be the general, unpledged,
unrestricted assets of the Employer, and the Employer may transfer, assign,
sell, or use such policies without restriction. The Employer's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of
the Employer to pay money in the future. No Employer shall have any
obligation under this Plan with respect to individuals other than that of
the Employer's employees or directors or Beneficiaries thereof.

10.3 Nonassignability. Neither the Participant nor any other
----------------
person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage, or otherwise encumber, transfer, hypothecate, or
convey in advance of actual receipt the amounts, if any, payable hereunder,
or any part thereof, which are, and all rights to which are, expressly
declared to be unassignable and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony, or separate
maintenance owed by the Participant or any other person, nor be
transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.

10.4 Not a Contract of Employment. The terms and conditions of
----------------------------
this Plan shall not be deemed to constitute a contract of employment
between the Employer and the Participant, and the Participant (or his
Beneficiary) shall have no rights against the Employer except as may
otherwise be specifically provided herein. Moreover, nothing in this Plan
shall be deemed to give the Participant the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discipline or discharge the Participant at any time.

10.5 Protective Provisions. The Participant will cooperate
---------------------
with the Employer by furnishing any and all information requested by the
Employer, in order to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Employer may deem necessary and
taking such other action as may be requested by the Employer.
Notwithstanding the other provisions of this Plan, no death benefits in
excess of the

<PAGE>

Retirement Account balance shall be paid if during the first two (2) years
of participation (including participation under the Promus Predecessor
Plan) death occurs as a result of suicide. The Committee shall have sole
discretion to determine whether death occurs as a result of suicide.

10.6 Terms. Whenever any words are used herein in the
-----
masculine, they shall be construed as though they were used in the feminine
in all cases where they would so apply; and wherever any words are used
herein in the singular or in the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be, in all
cases where they would so apply.

10.7 Captions. The captions of the articles, sections, and
--------
paragraphs of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.

10.8 Governing Law. The provisions of this Plan shall be
-------------
construed and interpreted according to the laws of the State of Tennessee.

10.9 Validity. In case any provision of this Plan shall be
--------
held illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.

10.10 Notice. Any notice or filing required or permitted to be
------
given to the Committee under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to any member of
the Committee, the Chief Executive Officer of the Employer, or the
Employer's Statutory Agent. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.

10.11 Successors. The provisions of this Plan shall bind and
----------
inure to the benefit of the Employer and its successors and assigns. The
term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise acquire all or substantially all of the business and assets of
the Employer, and successors of any such corporation or other business
entity.

<PAGE>

IN WITNESS WHEREOF, and pursuant to resolution of the Board of
Directors of the respective undersigned corporations, such corporations
have caused this instrument to be executed by its duly authorized officers
effective as of June 30, 1995.

PROMUS HOTEL CORPORATION

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

--------------------------------------------------
Title

Attest:
--------------------------------------------------

--------------------------------------------------
Title

Exhibit 10(8)

PROMUS HOTEL CORPORATION

DEFERRED COMPENSATION PLAN

This is an unfunded deferred compensation plan (referred to as the

"Plan" or "DCP") for a select group of management or highly compensated

employees ("Employees") of subsidiaries and affiliates of Promus Hotel

Corporation ("Hotel"). The Plan is an amended continuation of the "DCP"

offered by The Promus Companies Incorporated ("Promus"). This Plan will

become effective the later of June 30, 1995, or the distribution date of

the stock dividend for the spin-off of Hotel from Promus. The terms and

provisions of the Plan are as follows:

1. Eligibility.
-----------

1.1 Only key Employees and members of the Board of Directors of Hotel

who are not employees ("Directors") are eligible to participate. Key

employees are generally those in grades 23 or higher. The "Company" or

"participating Company" in this Plan refers to Hotel or to any subsidiary

or affiliate of Hotel, as the case may be, whose Employees or former

employees are Participants in the Plan. For Directors who are Participants

in the Plan, references to the "Company" or "participating Company" refers

to Hotel. Each respective corporation shall, as the participating Company,

have the obligation under the Plan to effectuate the deferrals of its

Participants, to make distributions to its Participants, and to otherwise

perform the Company's obligations to its Participants. References to

<PAGE>

"Participants" in the Plan refers to a participating Company's actively

participating Employees and Directors and also refers, where the context

requires, to its former Employees and former Directors and beneficiaries of

Employees and Directors who are receiving or entitled to receive benefits

under the Plan.

2. Election of Amount of Deferred Compensation.
-------------------------------------------

2.1 Prior to a Year of Deferral, a Participant may elect to defer up

to 12% of BASE SALARY and 100% of any CASH BONUS under the Company's annual
-- ---

bonus plan which would otherwise be payable to the Employee in the Year of

Deferral. CASH BONUS refers to annual bonuses paid in March and does not

include bonuses or incentive payments made at other times. A Director may

defer up to 100% of his or her Director's cash fees during the Year of

Deferral. The Company may permit new Directors or new Employees to

participate for the remainder of a Year of Deferral by electing to

participate prior to their commencement of service or employment or prior

to receipt of their first payment of compensation. Amounts deferred are

referred to as "Deferred Compensation." The amounts deferred under this

Plan are not included as eligible earnings under the Hotel Savings and

Retirement Plan (the "S&RP"). If an Employee is placed on salary

continuation, deferrals under this Agreement will continue until the

earlier of (a) the end of the Year of Deferral or (b) the end of the salary
- ----------

continuation period, unless otherwise agreed by the Company.

<PAGE>

2.2 Savings and Retirement Plan Exception. In addition to the
-------------------------------------

deferrals permitted under 2.1 above, any Participant who participates at

the maximum before-tax percentage allowed by the S&RP shall be deemed to

have elected to defer under this Plan that portion of eligible S&RP

earnings which the Participant elected to defer under the S&RP, up to six

percent (6%) (or such other maximum before-tax percentage allowed by the

S&RP for the Participant), which could not be deferred on a before-tax

basis under the S&RP, by reason of DCP deferrals, under any law or

regulation as determined by Hotel, but excluding any amount which was

actually deferred into the S&RP but distributed back to the Participant in

a following Plan year as an excess deferral.

2.3 Matching Contributions.
----------------------

(a) Eligibility. Matching contributions shall be credited to
-----------

Participants in this Plan who are eligible to participate in the

S&RP and elect to make a Basic Contribution (before-tax) equal to

the maximum rate at which a Participant may elect before-tax

contributions under the S&RP and such before-tax contribution is

limited, by reason of DCP deferrals, under any law or regulation

as determined by Hotel.

(b) Amount. The Employer shall credit to each employee Participant's
------

Account a matching contribution for each calendar year equal to

one hundred percent (100%) of the Participant's compensation

elected to be deferred under this Plan for the year, such

compensation being limited for purposes of this calculation to a

maximum of six percent (6%) of the Participant's eligible S&RP

earnings (which shall not include bonus

<PAGE>

amounts or board fees). The matching contribution amount shall

be offset by the actual matching contribution allocated to the

Participant for the year under the S&RP.

credited to a Participant's Account as of the last day of the

calendar year or the date the Participant's employment ends, if

earlier. Such amount shall commence accruing interest when it is

credited to the account.

2.4 Vesting of Accounts. Each Participant shall be vested in the
-------------------

amounts credited to such Participant's Account and earnings thereon as

follows:

(a) Amounts Deferred. A Participant shall be one hundred percent
----------------

(100%) vested at all times in the amount of salary, bonus and

board fees deferred under this Plan.

(b) Employer Matching Contribution. An Employee who leaves
------------------------------

employment for reasons other than Retirement (as defined in the

S&RP), Total and Permanent Disability (as defined in the S&RP) or

death shall be vested in the Employer matching contributions and

interest thereon made for any particular year in accordance with

the vesting provisions in the S&RP as it may be amended from time

to time. Matching amounts and earnings thereon that are not

vested

<PAGE>

upon leaving employment shall be forfeited. The term "Deferred

Compensation" in this Plan shall include vested matching amounts

and interest thereon for distribution purposes.

hundred percent (100%) vested in the matching amounts at

Retirement (as defined in the S&RP), or upon Total and Permanent

Disability (as defined in the S&RP) or death.

3. Deferred Compensation Account.
-----------------------------

3.1 The Company shall establish a bookkeeping account (the "Account")

to evidence the Company's liability to the Employee or Director for each

Year of Deferral. The Account shall be credited at the end of each

accounting period month with an amount equal to the portion of Deferred

Compensation payable during that month and with accrued interest.

3.2 Interest on Deferrals. Interest on the Account shall accrue and
---------------------

be credited to the Account at the end of each calendar year in an amount

equal to the Average Balance times the Average Prime Rate where:

"Average Balance" equals the sum of the Account balances on each day

during the year, divided by the number of days in the year; and

"Average Prime Rate" equals the sum of the rates announced by

Citibank, N.A. as its prime rate on the first business day of each calendar

quarter during the year, divided by four.

<PAGE>

3.3 The Company will notify each Participant quarterly of the value

of his or her Account.

3.4 For periods shorter than a year, interest shall be calculated in

a similar manner using the Average Balance during the short period and the

Average Prime Rate applicable during the previous plan year.

4. Unfunded Plan.
-------------

4.1 The Company or Hotel is not required to earmark any assets for

payment of, or make any investment with respect to, the Account. Any

assets allocated to pay the Account will at all times remain the

unrestricted assets of the Company, subject to the claims of its general

creditors, and will at all times be available for the Company's use for

whatever purpose it desires. The Company shall have, in general, the power

to do and perform any and all acts with respect to any such assets in the

same manner and to the same extent as an individual might or could do with

respect to his or her own property. Without limiting the generality of the

foregoing, the Company may invest in any and all types of property, whether

real or personal, without regard to its location, including stock,

securities, and property of the Company and any business entity

controlling, controlled by or under common control with the Company. No

enumeration of specific powers herein made shall be construed as a

limitation upon the foregoing general power, nor shall any of the powers

herein conferred upon the Company be exhausted by the use thereof, but each

shall be continuing.

<PAGE>

Title to and beneficial ownership of any assets, whether cash or

investments, which the Company may earmark to pay the Account, shall at all

times remain in the Company, and the Participant shall have no property

interest whatsoever in any assets or investments of the Company. The

Company's obligations under the Plan are unsecured and unfunded, and no

assurances are given with respect to the Company's or Hotel's present or

future financial condition.

5. Distributions from Deferred Compensation Account.
------------------------------------------------

5.1 Lump Sum or Annual Distributions. (a) Lump sums and annual
-------------------------------

installments for deferral elections made before January 1, 1995 (including

deferrals for the year 1995) under the Promus Deferred Compensation Plan by

Employees and Directors of Hotel who were at the time Employees or

Directors of Promus or its affiliates will be governed by the deferral

agreements signed for those years. The Company has assumed the obligations

under such deferral agreements. For deferrals of compensation payable to

Directors after June 30, 1995 and to Employees in plan years 1996 and

thereafter, a Participant may elect (a) a lump sum to be paid upon leaving

employment/service or upon a specified date but not later than leaving

employment/service, or (b) annual installments of two to ten years.

<PAGE>

(b) Payments of an Account will be paid or will start within 30 days

after the elected date(s). The amount of any annual distribution from the

Account shall be the balance of the Account on the date of distribution

divided by the number of remaining years (including the annual distribution

being made) over which distribution is to be made. In the case of a lump

sum distribution or payment of an installment, the payment will include

interest accrued on the Account since the end of the preceding interest

accrual date until the date that the payment is calculated, computed on a

per annum basis at the Average Prime Rate for the previous plan year. At

the time of each annual distribution, the Company will provide the

Participant with a valuation of the Account showing the amount remaining in

the Account after the distribution.

5.2 Withholding Taxes. Under current law, Federal income taxes are
-----------------

not withheld on Deferred Compensation when deferred. However, FICA (social

security taxes) will be withheld from an Employee's Deferred Compensation

if an Employee's maximum FICA withholding has not been reached. The

Company will endeavor to take applicable FICA from other nondeferred

compensation that is payable to the Employee at the same time that the

deferral occurs but, if necessary, the amount of deferred salary and/or

deferred bonus may be subject to reduction by reason of the FICA taxes. In

addition, if any other law requires withholding on Deferred Compensation,

the Company will apply this withholding to Deferred Compensation.

<PAGE>

5.3 Election of Commencement of Distribution. The Participant shall
----------------------------------------

be required to elect the method and timing of distributions at the time a

Participation Agreement is signed. The available distribution options will

be determined by the Company and will be set forth in the Participation

Agreement.

5.4 Leaving Employment or Service. Leaving employment will be deemed
-----------------------------

to occur upon discontinuation or removal from the payroll; upon death; or

upon disability if a licensed physician selected by or satisfactory to the

Company certifies to the Company that, because of such disability, the

Employee is not able to perform the duties of his or her position and will

be unable to do so for a period of at least 12 months. For Directors,

leaving service means resignation from the Board of Directors of Hotel or

termination of active service on the Hotel Board of Directors. If the

Employee enters an authorized leave of absence (such as temporary sick

leave), this shall not be deemed ceasing to be an employee. If and when

the Employee commences salary continuation, then he or she shall be deemed

to have ceased to be an employee, for distribution purposes, at the end of

the salary continuation period unless otherwise agreed by Hotel, with the

first payment to be made within 30 days after leaving employment. The

foregoing definition of leaving employment shall not necessarily have

application to any other situation or benefit plan.

5.5 Date of Payment(s). If the Participant elects a lump sum
------------------

distribution, the entire value of the Account on the date of distribution

shall be paid to the

<PAGE>

Participant within 30 days after the date elected by the Participant for

the payment from the Account. If distribution is to be made over a period

of years, the first payment will be made within 30 days of the date elected

by the Participant for the commencement of payments from the Account (i.e.,

the first payment will be made not later than 30 days after the date of

leaving employment or service), and each successive annual payment will be

made on or about the anniversary of the first payment. The Company may in

its discretion accelerate any annual payment in a taxable year to an

earlier date in the same taxable year. The Company may withhold applicable

taxes as determined by the Company from any payment.

5.6 Selection of and Payment to Beneficiary. The Participant will be
---------------------------------------

given the opportunity to designate a Primary Beneficiary and an Alternate

Beneficiary in case of the Participant's death. Such designation will be

effective when a signed beneficiary designation is submitted to the Company

or Hotel. Such designation will remain in effect until changed by the

Participant by submitting a new signed designation to the Company or Hotel.

If the Participant dies prior to distribution of the entire Account,

payment of the Account shall be made to the Primary Beneficiary, or, in the

event the Primary Beneficiary has predeceased the Participant, to the

Alternate Beneficiary. If the Participant qualifies for a distribution

because of disability or termination of employment/service and thereafter

dies before the payment of any distribution is made by the Company,

<PAGE>

then the payment or payments will be made to the Primary Beneficiary or

Alternate Beneficiary, if applicable, if the Company's payroll department

has been notified of the death before the payment is released.

Payments to a Beneficiary shall be in the manner elected in the

deferral agreement signed by the Participant provided that the Company in
--------

its sole discretion may at any time, at its own election or upon receipt of

a written request from the Beneficiary, convert annual installments to a

lump sum payment of the entire account. The Company has no obligation to

convert installments to a lump sum if requested by a Beneficiary. However,

such a change in distribution will be given consideration following a

written request. Upon payment of a lump sum to the Beneficiary with

respect to any deferral agreement, all obligations of the Company under the

deferral agreement shall be terminated.

A Participant may change a Beneficiary(ies) at any time by submitting

written notice of the new Beneficiary(ies) to the Company or Hotel. If the

Participant dies and has not designated a Beneficiary, or if all named

Beneficiaries have predeceased him or her, payment from the Account shall

be made to the Participant's estate in which case the estate shall be

deemed the Beneficiary hereunder.

5.7 Irrevocable Elections. A Participant's elections are irrevocable
---------------------

by the Participant and, subject to paragraph 9 "Termination by Company"

hereof, cannot be amended, except amendments may be made by the Company in

the case of

<PAGE>

mistake or in case of a Participant's financial hardship as determined by

the Company in its sole discretion.

5.8 Spin-off Transactions. Notwithstanding anything in the Plan to
---------------------

contrary, in the event any business of Hotel or its subsidiaries is spun-

off and a Participant becomes an employee or director of the company owning

the spun-off business (the "Spin-Off Company") which adopts a deferred

compensation plan that is substantially the same as the Plan, then the

Human Resources Committee of the Board of Directors of Hotel may in its

discretion determine as follows prior to such spin-off:

(a) any director-Participant who resigns as a director of Hotel and

who, within 90 days, commences service as a director of the Spin-

Off Company will not be treated as having terminated service as a

director for purposes of paying Plan benefits, and his or her

entire Account balance and all obligations associated therewith

will be transferred to the corresponding Plan of the Spin-Off

Company;

(b) a transfer of employment of a Participant to the Spin-Off Company

will not be considered a termination of employment for purposes

of paying Plan benefits or of forfeiting matching contributions

and interest thereon;

date of the spin-off and all obligations related thereto will be

transferred to the corresponding plan of the Spin-Off Company;

and

<PAGE>

(d) any Participant who will immediately after the effective date of

the spin-off be employed by Hotel (or a subsidiary thereof) and

also by the Spin-Off Company (or a subsidiary thereof) will have

the right to designate in writing (to be signed prior to the

effective date of the spin-off) a percentage (from zero to 100%)

of his or her Account balance that will be transferred to the

Spin-Off Company (such percentage being applied to the balances

attributable to each year of deferral) which will include the

transfer of all obligations associated therewith. (To the extent

such designation is not made, the Account Balance will remain in

the Plan pursuant to its terms); and

(e) Except to the extent related to that portion of a Participant's

Account balance that is retained in the Plan pursuant to the

above Section 5.8(d), no benefits will be payable under the Plan

to a Participant whose Account balance (or portion thereof) is

transferred to the Spin-Off Company.

6. Correction of Errors.
--------------------

6.1 In the event deferrals are not made or excessive deferrals are

made due to a mistake or error including payroll errors, then the Company

or Hotel will have discretion to correct the error in such manner as it

deems appropriate. If the Participant does not object within 30 days of

the occurrence of any mistake or

<PAGE>

error regarding deferrals, then the Company or Hotel in its discretion may

decide that the deferral mistake shall not be corrected or the Company or

Hotel may elect to take such action as it deems necessary to correct or

partially correct the mistake or error. The Company or Hotel may elect not

to pay interest on amounts contributed to correct a nondeferral mistake or

error if the Participant had not objected to the nondeferral within 30 days

of the occurrence of the mistake or error.

7. Restriction Against Transfers and Assignments.
---------------------------------------------

7.1 Neither the Participant nor any Beneficiary shall have any right

to commute, sell, assign, transfer, pledge, hypothecate or otherwise convey

or encumber any right to receive any payment hereunder, and all such

payments and all rights thereto are expressly declared to be non-assignable

and non-transferable. The Account shall not be subject to the claims of

the Participant's or a Beneficiary's creditors and the Company or Hotel

shall not be obligated to disburse any funds from the Account to any

creditor of the Participant or of a beneficiary.

8. Deferral Agreement Not An Employment Agreement.
----------------------------------------------

8.1 A deferral agreement does not constitute a contract for continued

employment of an Employee by the Company or Hotel. The Company or Hotel

<PAGE>

reserves the same rights to modify the Employee's compensation and to

terminate the Employee's employment with the Company or Hotel which it had

prior to the execution of a deferral agreement.

9. Administration.
--------------

9.1 Committee; Duties. This Plan may be administered by a Committee,
-----------------

which shall consist of not less than three (3) individuals selected by the

Chief Executive Officer of Hotel or his designee. Members of the Committee

may be Participants under this Plan. Hotel, the Committee and its agents

have discretionary authority to decide all questions arising under the Plan

including questions as to eligibility, correction of errors, and

interpretation of the Plan and deferral agreements.

9.2 Agents. The Committee may appoint an individual to be the
------

Committee's agent with respect to the day-to-day administration of the

Plan. In addition, the Committee may, from time to time, employ other

agents and delegate to them such administrative duties as it sees fit, and

may from time to time consult with counsel who may be counsel to the

Company.

9.3 Binding Effect of Decisions. The decision or action of the
---------------------------

Committee in respect of any question arising out of or in connection with

the administration, interpretation and application of the Plan and the

rules and regulations promulgated hereunder shall be final and conclusive

and binding upon all persons having any interest in the Plan.

<PAGE>

9.4 Indemnity of Committee. The Company and Hotel shall indemnify
----------------------

and hold harmless the members of the Committee or any agents or employees

of the Company or Hotel against any and all claims, loss, damage, expense,

or liability arising from any action or failure to act with respect to this

Plan, except in the case of willful misconduct by the Committee, Committee

member, or such agent or employee of the Company or Hotel.

10. Claims Procedure.
----------------

10.1 Claim. Any Participant or legal representative thereof may file
-----

a claim for benefits under the Plan by submitting to the Committee a

written statement describing the nature of the claim and requesting a

determination of its validity under the terms of the Plan. The Committee

shall issue a ruling and written notice with respect to the claim within 30

days after such claim is received. If the claim is wholly or partially

denied, written notice shall be furnished to the claimant, which notice

shall set forth in a manner calculated to be understood by the claimant;

(a) the specific reason or reasons for denial;

(b) specific reference to pertinent Plan provisions on which the

denial is based;

necessary for the claimant to perfect the claim and an

explanation of why such material or information is necessary; and

<PAGE>

(d) an explanation of the claims review procedures.

10.2 Denial of Claim. Any Participant or legal representative
---------------

thereof whose claim for benefits has been denied, may appeal such denial by

resubmitting to the Committee a written statement requesting a further

review of the decision within sixty (60) days of the date the claimant

receives notice of such denial. The statement shall set forth the reasons

supporting the claim, the reasons such claim should not have been denied,

and any other issues or comments which the claimant deems appropriate with

respect to the claim. The Committee shall, if requested, make copies of

the Plan documents available for examination by the claimant. The

Committee shall issue a ruling and written notice within sixty (60) days

after the date the claim is resubmitted. Such written notice shall include

specific reasons for the decision, written in a manner calculated to be

understood by the claimant, with specific references to the pertinent Plan

provisions on which the decision is based. Such decision shall be

conclusive and binding on the Participant.

11. Amendment; Termination of Further Deferrals.
--------------------------------------------

11.1 Hotel may at any time amend the Plan in whole or in part, and

may provide or agree to different requirements for different Participants,

provided, however, that (i) no amendment shall be effective to decrease or

restrict the amount accrued to that date on any Account maintained pursuant

to any existing

<PAGE>

deferral under the Plan; (ii) on amounts that have been deferred up to the

date of amendment, no amendment shall be effective to reduce the interest

credited or to be credited as provided in paragraph 3 of this Plan, and

(iii) no amendment shall be effective to accelerate the payment of any

Account relating to deferrals during 1992 and thereafter except Hotel

retains the right to cause acceleration of payment to a Beneficiary

pursuant to Section 5.7.

11.2 Right to Terminate Future Deferrals. The Company or Hotel may
-----------------------------------

for any new calendar year terminate further deferrals into the Plan by any

person or persons for that year and/or may reject additional Participants

in the Plan, if, in its sole judgment, such termination or rejection would

be in the best interest of the Company or Hotel. Benefits from deferrals

up to the point of termination of further deferrals shall be paid in the

form elected by the Participant in his or her Participation Agreement or

otherwise in accordance with this Plan, including crediting of interest,

until all payments are complete.

12. Miscellaneous.
-------------

12.1 Delivery of Notice. Any notice to a Participant may be given
------------------

either by delivery to the Participant or by deposit in the United States

Mail, postage prepaid, addressed to his or her last-known address. Any

notice to the Company or Hotel hereunder may be given either by delivery,

in person or by deposit in the United States Mail, postage prepaid,

addressed to Promus Hotel Corporation, 6800 Poplar Avenue, Memphis,

Tennessee 38138, Attn: Corporate Secretary.

<PAGE>

12.2 Governing Law. This Agreement shall be governed by the laws of
-------------

Tennessee.

12.3 Immunity. So long as they act in good faith, the Company's and
--------

Hotel's officers, directors, agents, or employees may act pursuant to this

Agreement without any liability to a Participant or any other person.

12.4 Payment To Guardian. If a Plan benefit is payable to minor or a
-------------------

person declared incompetent or to a person incapable of handling the

disposition of property, the Company may direct payment of such Plan

benefit to the guardian, legal representative or person having the care and

custody of such minor or incompetent person. The Company may require proof

of incompetency, minority, incapacity or guardianship as it may deem

appropriate prior to distribution of the Plan benefit. Such distribution

shall completely discharge the Company from all liability with respect to

such benefit.

12.5 Captions. The captions of the articles, sections and paragraphs
--------

of this Plan are for convenience only and shall not control the meaning or

construction of any of its provisions unless the context clearly requires

such control.

12.6 Validity. In case any provision of this Plan shall be held
--------

illegal or invalid for any reason, said illegality or invalidity shall not

affect the remaining parts hereof, but this Plan shall be construed and

enforced as if such illegal and invalid provision had never been inserted

herein.

<PAGE>

13. Successors and Assigns.
----------------------

A participating Company may assign its rights and obligations under

any deferral agreement to any company or person that acquires all or

substantially all of the stock or assets of the Company or that is a

successor to the Company by merger. Hotel may assign its rights and

obligations under this Plan to any successor to Hotel.

PROMUS HOTEL CORPORATION

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

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

Attest:
-------------------------------------

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

Dated as of May 26, 1995

Exhibit 10(9)

ESCROW AGREEMENT
----------------

ESCROW AGREEMENT, effective on the later of June 30, 1995 or the

date of the distribution of the dividend shares in Promus Hotel Corporation

to the shareholders of The Promus Companies Incorporated (the Spin-Off

Date), by and between Promus Hotel Corporation, a Delaware corporation (the

"Company"), the subsidiaries of the Company listed on the execution page of

this Agreement ("Subsidiaries"), and NationsBank, formerly Sovran Bank,

(the "Escrow Agent").

WHEREAS, the Company and certain Subsidiaries are, or may become,

obligated under various employee plans and agreements to pay certain

compensation which has been or may be deferred by their employees, certain

other compensation which would be payable upon a change in control of the

Company and certain supplemental retirement benefits to employees at such

times as such compensation and benefits become payable; and

WHEREAS, the aforesaid obligations of the Company and

Subsidiaries are not funded or otherwise secured and the Company and

Subsidiaries desire to assure the future payment of said deferred

compensation and certain other compensation and retirement benefits for

certain of its employees ("Participants") notwithstanding, except as herein

specifically provided, any event that may occur in the future, including a

dispute between the Company and an employee, a change in the Company's

management or policies or a change in control of the Company; and

WHEREAS, for purposes of assuring payments of said deferred

compensation and certain other compensation and retirement benefits, the

Company and the Subsidiaries which are obligated for such payments desire

to deposit in an escrow account, subject only to the claims of the

Company's creditors and, to the extent of funds contributed to the Escrow

Fund by a

<PAGE>

Subsidiary, creditors of such Subsidiary obligated for such payments, as

the case may be, amounts sufficient to fund such payments as they become

payable; and

WHEREAS, this Escrow Agreement shall be treated as if it were a

grantor trust under the Internal Revenue Code and, accordingly, it is

intended and expressly recognized that the income, deduction, and credits

associated with the assets transferred to the Escrow Agent shall be passed

through to the Company and shall be included in computing the Company's

taxable income.

NOW, THEREFORE, in consideration of the mutual agreements

contained herein and for other good and valuable consideration, the parties

hereto agree as follows:

ARTICLE I

THE PLANS
---------

SECTION 1.1 Plans and Agreements. The following Company
--------------------

employee plans and agreements ("Plans") shall be subject to this Agreement:

(a) Executive Deferred Compensation Plan effective as of the

later of June 30, 1995 or the Spin-Off Date, as the same may be

amended from time to time, including, without limitation, agreements

of Participants relating to deferrals under such plan ("EDCP").

(b) Deferred Compensation Plan effective as of the later of June

30, 1995 or the Spin-Off Date, as the same may be amended from time to

time, including, without limitation, individual Deferred Compensation

Agreements of Participants relating to the deferral of salary or bonus

("DCP").

to time, relating to the retirement of any Participant.

<PAGE>

(d) Severance Agreements, as the same may be amended from time

to time, effective as of the later of June 30, 1995 or the Spin-Off

Date between the Company and the Participants.

SECTION 1.2 Participants. The Participants are:
------------

Employees
---------

Champion, Carol G. Ralph B. Lake
Dempsey, Donald H. Rose, Michael
Halpern, M. Ronald Schultz, Raymond E.
Jarvis, Jeffery M. Sullivan, David C.
Keltner, Thomas L. Wells, Mark C.

Outside Directors
-----------------

Ellis, U. Bertram Jr. Peternell, Ben C.
Fields, Debra J. Roth, Michael I.
Hart, Christopher W. Stein, Jay
Neel, C. Warren Terry, Ronald

The Company may add Participants upon written notice to the Escrow

Agent. For purposes of this Agreement, the beneficiary of any Participant

who dies shall be deemed a Participant under this Agreement to the extent

such beneficiary is entitled to then accrued benefits under the Plans.

ARTICLE II

ESCROW AND ESCROW FUND
----------------------

SECTION 2.1 Escrow.
------

(a) The Escrow Agent holds (i) the sum of $10.00 in cash, and

(ii) life insurance policies described on Exhibit A attached hereto

("Life Insurance Policies"). In addition, the Company is delivering

to the Escrow Agent concurrently herewith a summary, attached hereto

as Exhibit B, of all of the benefits available under the Plans

described in Section 1.01 hereof and a schedule, attached hereto as

Exhibit C, of the

<PAGE>

current Participants and the amounts credited or payable to each

Participant under each Plan as of the date hereof. The Company shall

also deliver to the Escrow Agent concurrently herewith, as Exhibit D,

copies of the Plans as in effect on the date hereof and the election

forms and agreements that identify the date(s) when the benefits are

to commence and the method in which they are to be paid. Each year

thereafter the Company will update these reports so that the Escrow

Agent has an account and record at all times of the benefits to be

paid and when they are to be paid.

(b) In addition to the foregoing, the Company shall make

payments or contributions to the Escrow Agent equal in value to any

additional amount which is determined at the end of each calendar

year, or at more frequent times as may be determined by the Company,

by an actuary or certified public accountant selected by the Company

to be necessary or sufficient to provide for or otherwise assure the

payment of benefits then accrued, payable, or to be payable under the

Plans based on deferrals up to that point in time (and also including

severance payments then payable into escrow under any Severance

Agreement of a Participant), which payment or contribution may be cash

and/or property including life insurance policies (which shall then be

included under the defined term "Life Insurance Policies" hereunder)

and shall be made as promptly as practicable after the end of each

calendar year or such other more frequent times as determined by the

Company.

Each such payment or contribution by the Company pursuant hereto

shall be accompanied by a schedule of the individual Participants,

including any new Participants, for whose accounts such payment is

being made, which sets forth both the estimated liability with respect

to each such Participant in respect of each Plan.

<PAGE>

into escrow additional monies to pay premiums on specific Life

Insurance Policies designated by the Company and to pay interest on

any policy loans which interest is incurred and payable during the

first seven years of any such policy. Upon the occurrence of such

deposit, the Escrow Fund shall be deemed enlarged so that the Escrow

Fund will thereafter be maintained at a level to pay accrued benefits

to the Participants under the Plans based on deferrals to that point

in time and also to pay premiums on the designated policies and to pay

interest on such policy loans.

(d) If at any time or from time to time a certified public

accountant or actuary selected by the Company (which actuary may be a

representative of Management Compensation Group) determines that the

then present value of the Escrow Fund (including, but not limited to,

the cash surrender value of any Life Insurance Policies and any

proceeds from Life Insurance Policies), using an annual discount rate

equal to the Company's then current long-term annual borrowing rate,

is larger than necessary to pay benefits then accrued, payable, or to

be payable under the Plans based on deferrals up to that point in

time, and to pay policy premiums and make interest payments on policy

loans if the Company shall have made a deposit under Section 2.01(c),

then the Escrow Agent shall forthwith transfer, deliver, and assign to

the Company such funds or property (including, but not limited to, any

proceeds from Life Insurance Policies or Life Insurance Policies

themselves) as may be specified in a written instruction to the Escrow

Agent from the Company so that the Escrow Fund is not overfunded.

Said written instruction shall be in the form of a letter signed by

the Controller or Assistant Controller of the Company and shall be

accompanied by an affidavit of the Controller or Assistant

<PAGE>

Controller which shall state to the effect that, based on the opinion

of the aforesaid actuary or certified public accountant selected by

the Company, after the delivery of such funds or property to the

Company, the Escrow Fund will not be underfunded or overfunded (i) for

purposes of paying accrued benefits under the Plans (assuming that

payment of such benefits were to commence as of the date of the letter

or within 10 days thereof) to Participants when such benefits become

due and payable based on deferrals up to the end of the month prior to

the date of said written instruction and (ii) for purposes of Section

2.01(c) if the Company shall have made a deposit under Section

2.01(c). Upon receipt of the foregoing written instruction, the

Escrow Agent shall forthwith deliver, transfer, and assign to the

Company the funds and/or property (including but not limited to any

Life Insurance Policies together with all incidents of ownership

relating thereto) specified in the written instruction.

(e) Any actuary or certified public accountant that provides an

opinion or advice in connection with this Agreement shall have

discretion to use such assumptions as he or she deems reasonably

appropriate in providing any opinions or advice. In addition, any

such opinion or advice may be based upon reasonable estimates or may

use estimated numbers or projections which are deemed reasonable.

Notwithstanding the foregoing, such actuary or accountant shall

assume, for EDCP liabilities, that all EDCP Participants (other than

those who have already terminated and are receiving the Termination

Rate) will be entitled to an interest rate of not less than the

minimum Retirement Interest Rate specified in the EDCP with respect to

their account balances until paid. Any such accountant or actuary

shall have no liability to the Company, the Escrow Agent, or any

Participant or beneficiary if such assumptions, projections, or

<PAGE>

estimates are subsequently held erroneous (other than by reason of

fraud or intentional miscalculation).

SECTION 2.2 Escrow Fund.
-----------

(a) As used herein, the term "Escrow Fund" shall mean (i) the

cash and Life Insurance Policies held by the Escrow Agent as described

in Section 2.01(a) hereof plus all amounts delivered hereafter

pursuant to Sections 2.01(b) and 2.01(c) hereof, in whatever form held

or invested as provided herein, (ii) subject to Section 2.02(b) below,

any income or earnings derived from amounts delivered to the Escrow

Agent pursuant to Sections 2.01(a), 2.01(b), and 2.01(c), and (iii)

the Life Insurance Policies delivered to the Escrow Agent including,

but not limited to, the cash surrender value thereof and any and all

proceeds derived from such policies. Subject to the provisions of

Section 2.01, the Escrow Fund shall be held, invested and reinvested

by the Escrow Agent only in accordance with this Section 2.02. The

Escrow Agent shall use the Escrow Fund to pay benefits and amounts

payable to the Participants under the Plans when due if and to the

extent that such benefits are not paid by the Company. For this

purpose, the Escrow Agent shall, to the extent necessary to pay unpaid

benefits, cancel any or all of the Life Insurance Policies and obtain

and use the cash surrender value thereof to pay such benefits,

provided, however, the Escrow Agent shall first give the Company 10

business days prior written notice specifying which policy or policies

will be cancelled. Such policies shall then not be cancelled if the

Controller or Assistant Controller of the Company or any Vice

President of the Company informs the Escrow Agent during the 10-day

notice period that such benefits have been paid. The Escrow Agent

shall use its good faith efforts to invest or reinvest from time to

time all, or such part, of any cash

<PAGE>

in the Escrow Fund as it believes prudent under the circumstances

(taking into account, among other things, anticipated cash

requirements for the potential payment of amounts due under the Plans

as provided in Section 3.01 hereof and any other amounts payable under

this Agreement) in either one or a combination of the following

investments:

(i) investments in direct obligations of the United States

of America or agencies of the United States of America or

obligations unconditionally and fully guaranteed as to principal

and interest by the United States of America, in each case

maturing within one year or less from the date of acquisition; or

(ii) investments in negotiable certificates of deposit

issued by a commercial bank organized and existing under the laws

of the United States of America or any state thereof having a

combined capital and surplus of at least $500 million;

(iii) investments in guaranteed funding agreements of

insurance companies having total assets in excess of $2 billion,

provided such investments shall have withdrawal provisions
--------

appropriate for paying benefits to Participants when due and

other payments required under this Agreement; or

(iv) investments in money market funds, including, but not

necessarily limited to, the money market fund maintained by the

Escrow Agent, provided, however, that the Escrow Agent shall not
-------- -------

be liable for any failure to maximize the income earned on that

portion of the Escrow Fund as is from time to time invested or

reinvested as set forth above, nor for any loss of income due to

liquidation of any investment which the Escrow Agent, in its sole

discretion,

<PAGE>

believes necessary to make any payments or to reimburse expenses

under the terms of this Agreement.

The Escrow Agent shall be named as the owner and beneficiary

of the Life Insurance Policies and, subject to Section 2.02(a),

shall have the right to cancel such policies and receive the cash

surrender value, and shall further have the right to borrow

against cash policies. If any policy is reassigned back to the

Company, the Company shall then be the owner and beneficiary

thereof. If the Company makes a deposit under Section 2.01(c)

for the purpose of paying premiums and interest on policy loans

with respect to any specified Life Insurance Policies in escrow,

then the Escrow Agent shall pay the premiums due on such policies

as may be necessary or appropriate to keep the policies in force.

If the Escrow Agent borrows against such policies, it will engage

in such borrowing and will pay interest on loans in a manner that

assures that interest payable on policy loans will be deductible

by the Company for Federal income tax purposes to the extent that

such interest would otherwise be deductible to the Company under

the law in effect at such time if the Company was the owner and

beneficiary of such policies. If the Company makes a deposit

under Section 2.01(c), the Escrow Agent may borrow from the Life

Insurance Policies to pay premiums so long as the interest on

such loans is deductible by the Company for Federal income tax

purposes. The Escrow Agent shall inform the Company of the need

to borrow on such policies (without limiting the Company's right

to direct such borrowings) and the Company shall advise the

Escrow Agent as to whether the interest to be paid on such loans

will be deductible.

<PAGE>

(b) Except as hereinafter provided, all net interest and other

net income credited on the investments of the Escrow Fund, to the

extent not necessary to provide for any payments or expenses required

or contemplated by this Agreement, shall be the property of the

Company and shall not constitute a part of the Escrow Fund. Such net

interest and other net income credited as of the end of any calendar

quarter shall be paid over to the Company by the Escrow Agent as

promptly as practicable, or, at the option of the Company exercisable

by delivering written notice to the Escrow Agent, shall be contributed

to the Escrow Fund and applied towards the Company's obligation,

pursuant to Section 2.01(b) hereof, to deliver further amounts to the

Escrow Fund. Notwithstanding anything herein to the contrary, the

Company's Chief Executive Officer and Chief Financial Officer,

jointly, shall have authority to direct the Escrow Agent in writing,

from time to time, to borrow from any Life Insurance Policies in the

Escrow Fund and use the funds received from such borrowing to purchase

other life insurance policies, including variable insurance or annuity

contracts, as may be directed in writing by the Company's Chief

Executive Officer and Chief Financial Officer, jointly, which other

insurance policies shall be assets of the Escrow Fund subject to the

terms and provisions of the Escrow Agreement, as amended. The Escrow

Agent shall act only as an administrative agent in carrying out

directed investment transactions in accordance with this paragraph and

shall not be responsible for the investment decision. If a directed

investment transaction violates any duty to diversify, to maintain

liquidity or to meet any other investment standard or other

requirement under this Escrow Agreement or applicable law, the entire

responsibility shall rest upon the Company. The Escrow Agent

<PAGE>

shall be fully protected in acting upon or complying with any

restrictions or directions provided in accordance with this paragraph.

expenses (including, as provided in Section 4.01(g) hereof, any

expenses of the Escrow Agent) charged against, the Escrow Fund shall

be for the account of the Company and the Company shall be obligated

to promptly reimburse the Escrow Fund for any loss in principal amount

of, or expense charged against, the Escrow Fund.

ARTICLE III

RELEASE OF ESCROW FUND
----------------------

SECTION 3.1 Deliveries to Participants. The Escrow Agent
--------------------------

shall hold the Escrow Fund in its possession under the provisions of this

Agreement until authorized to deliver the Escrow Fund or any specified

portion thereof as follows:

(a) If the Company does not make any payments under the Plans

when due, the Escrow Agent shall deliver to individual Participants

from the Escrow Fund the amounts that are payable to the Participants,

at such times as such amounts become payable in accordance with the

terms of the Plans. The Escrow Agent is authorized to comply with

such terms as may be reasonably explained by the Company in writing.

The Company will inform the Escrow Agent in writing from time to time

as to the timing and amounts of payments due under the Plans. If the

Company does not instruct the Escrow Agent as to amounts of payments

due under the Plans or if the Escrow Agent reasonably deems such

instructions to be erroneous or improper, then the Escrow Agent is

authorized to take such steps as it deems necessary to determine the

correct amounts

<PAGE>

and payments including, but not limited to, obtaining such information

from Management Compensation Group of Portland, Oregon.

(b) In the event a Participant reasonably believes that he or

she has not received timely payment of any amount or benefit payable

to such participant from the Escrow Fund in respect of a Plan, the

Participant shall be entitled to deliver to the Escrow Agent written

notice (the "Participant's Notice") setting forth payment instructions

for the amount or benefit the Participant believes is due under a

Plan. The Escrow Agent shall deliver a copy of the Participant's

Notice to the Company within ten business days of receipt thereof. If

the Company does not deliver written notice to the Escrow Agent

objecting to the payment instructions contained in the Participant's

Notice within ten business days of receipt thereof from the Escrow

Agent, the Escrow Agent shall make the payment set forth in the

Participant's Notice. If it is necessary to cancel any Life Insurance

Policies for this purpose, the Escrow Agent shall follow the 10-day

notice procedure set forth in Section 2.02(a) hereof regarding the

cancellation of Life Insurance Policies. If the Company delivers

timely written notice to the Escrow Agent objecting to the payment to

the Participant requested in the Participant's Notice, which notice

shall be delivered by the Escrow Agent to the Participant within five

business days of receipt thereof, the Escrow Agent shall be obligated

to make the payment or provide the benefit set forth in the

Participant's Notice (unless the Company objects on the grounds that

the payment has already been made in which event the procedures at the

end of this Section 3.01(b) shall apply) upon receipt from the

Participant of a written undertaking, in the form attached hereto as

Exhibit E, to indemnify and hold harmless the Escrow Agent and the

Company from and against all losses or claims which may

<PAGE>

result from any incorrect payment or benefit which is made to the

Participant pursuant to the Participant's Notice. If the Company

objects on the grounds that the requested payment has already been

made, the Escrow Agent shall not make the payment upon confirming that

the payment has already been made. If the Escrow Agent does not,

after due inquiry and investigation, confirm that such payment or

payments have been made, then the Escrow Agent shall make the

requested payment or payments.

time makes payments under the Plans which payments the Escrow Fund is

intended to protect, the Escrow Agent shall upon request of the

Company, using the Escrow Fund, promptly reimburse the Company for any

such payment, together with interest as provided below. The Company

may specify that such reimbursement and interest payment shall be in

the form of the cash surrender value of Life Insurance Policies and in

that instance the Escrow Agent shall assign, transfer, and deliver to

the Company Life Insurance Policies designated by the Company as

representing not less than such value. Such reimbursement and

interest payment shall be made within 60 business days after a written

notice is delivered by an officer of the Company to the Escrow Agent

setting forth the specific amounts paid by the Company or the

Subsidiary and specifying who received such payments and the date

thereof. Said reimbursement amount shall bear interest, at the rate

specified in Section 2.01(d) hereof, from the date the Company or the

Subsidiary made such payment.

SECTION 3.2 Claims of Company Creditors in Event of Bankruptcy
--------------------------------------------------

or Insolvency. It is the intent of the parties hereto that the Escrow Fund
- -------------

is and shall remain at all times subject to the claims of the general

creditors of the Company (and of any applicable

<PAGE>

Subsidiary to the extent of funds contributed to the Escrow Fund by such

Subsidiary) in the event of bankruptcy or insolvency of the Company or any

applicable Subsidiary. Accordingly, the Company or the Subsidiaries shall

not create a security interest in the Escrow Fund in favor of the

Participants or any creditor. The Company's Board of Directors or Chief

Executive Officer shall provide the Escrow Agent with written notice of the

Company's or any applicable Subsidiary's bankruptcy or insolvency. In the

case of bankruptcy, such notice is to be accompanied by a certified copy of

the petition commencing the bankruptcy proceeding under the Bankruptcy

Code, 11 U.S.C. 11 et seq. When so notified, the Escrow Agent will suspend
-- ----

any further payment from the Escrow Fund to any Participants to whom the

bankrupt entity is obligated under the Plans, and will hold the Escrow Fund

for the benefit of the Company's general creditors (or the general

creditors of any applicable Subsidiary to the extent of funds contributed

to the Escrow Fund by such Subsidiary) only as directed by a court of

competent jurisdiction. The Company or a Subsidiary will be considered

insolvent if the sum of its debt is greater than all its property at a fair

market valuation.

ARTICLE IV

ESCROW AGENT
------------

SECTION 4.1 Escrow Agent.
------------

(a) The duties and responsibilities of the Escrow Agent shall be

limited to those expressly set forth in this Agreement, and no implied

covenants or obligations shall be read into this Agreement against the

Escrow Agent.

(b) If, pursuant to Section 3.02 hereof or otherwise, all or any

part of the Escrow Fund is at any time attached, garnished, or levied

upon by any court order, or in case the payment, assignment, transfer,

conveyance or delivery of any such property

<PAGE>

shall be stayed or enjoined by any court order, or in case any order,

writ, judgment or decree shall be made or entered by a court affecting

such property or any part thereof, then and in any of such events the

Escrow Agent is authorized, in its sole discretion, to rely upon and

comply with any such order, writ, judgment or decree, and it shall not

be liable to the Company or any Participant by reason of such

compliance even though such order, writ, judgment or decree

subsequently may be reversed, modified, annulled, set aside or

vacated.

accounts as may be necessary for the proper administration of the

Escrow Fund, including, without limitation, as provided in Section

2.01 hereof, and shall render to the Company, on or prior to each

January 31 following the date of this Agreement until the termination

of this Agreement (and on the date of such termination), an accounting

with respect to the Escrow Fund as of the end of the then most recent

calendar year (and as of the date of such termination).

(d) The Escrow Agent shall not be liable for any act taken or

omitted to be taken hereunder if taken or omitted to be taken by it in

good faith. The Escrow Agent shall also be fully protected in relying

upon any notice given hereunder which it in good faith believes to be

genuine and executed and delivered in accordance with this Agreement.

(e) The Escrow Agent may consult with legal counsel to be

selected by it, and the Escrow Agent shall not be liable for any

action taken or suffered by it in accordance with the advice of such

counsel.

<PAGE>

(f) The Escrow Agent shall be reimbursed by the Company for its

reasonable expenses incurred in connection with the performance of its

duties hereunder and shall be paid reasonable fees for the performance

of such duties in the manner provided by paragraph (g) of this Section

4.01.

(g) The Company agrees to indemnify and hold harmless the Escrow

Agent from and against any and all damages, losses, claims or expenses

as incurred (including expenses of investigation and fees and

disbursements of counsel to the Escrow Agent) arising out of or in

connection with the performance by the Escrow Agent of its duties

hereunder. Any amount payable to the Escrow Agent under paragraph (f)

of this Section 4.01 or this paragraph (g) shall be paid by the

Company promptly upon notice by the Escrow Agent to the Company. If

such payment is not made within 60 days of the Company's receipt of

such notice, then the Escrow Agent may pay such fees from the Escrow

Fund. If it is necessary to use the cash surrender value of any Life

Insurance Policies for this purpose, the Escrow Agent shall use the

10-day notice procedure set forth in Section 2.02(a) hereof prior to

cancellation of any policy. In the event payment is made hereunder to

the Escrow Agent from the Escrow Fund, the Escrow Agent shall promptly

notify the Company in writing of the amount of such payment. The

Company agrees that, upon receipt of such notice, it will deliver to

the Escrow Fund an amount of money or property equal to any payments

made from the Escrow Fund to the Escrow Agent pursuant to paragraph

(f) of this Section 4.01 or this paragraph (g). The failure of the

Company to transfer any such amount shall not in any way impair the

Escrow Agent's right to indemnification, reimbursement and payment

pursuant to paragraph (f) of this Section 4.01 or this paragraph (g).

<PAGE>

(h) Notwithstanding any other provisions of the Agreement, the

Escrow Agent shall not be required to pay any benefits, premiums on

insurance policies or expenses from funds other than the Escrow Fund.

If there are not sufficient funds in the Escrow Fund to meet any one

or more of the foregoing obligations that are due, then the Escrow

Agent shall notify the Company of the amount needed to meet such

obligations. Upon receipt of the funds from the Company, and not

before then, the Escrow Agent shall pay for such obligations.

SECTION 4.2 Successor Escrow Agent. The Escrow Agent may
----------------------

resign and be discharged from its duties hereunder at any time by giving

notice in writing of such resignation to the Company and each Participant

specifying a date (not less than 30 days after the giving of such notice)

when such resignation shall take effect. Promptly after such notice, the

Company and Participants having at least 50 percent of all amounts then

accounted for in the Escrow Fund with respect to their accounts shall

appoint a successor Escrow Agent, such successor Escrow Agent to become

Escrow Agent hereunder upon the resignation date specified in such notice.

If the Company and the Participants are unable to so agree upon a successor

Escrow Agent within 30 days after such notice, the Escrow Agent shall be

entitled, at the expense of the Company, to petition the United States

District Court for the Western District of Tennessee or any of the courts

of the State of Tennessee having jurisdiction to appoint its successor.

The Escrow Agent shall continue to serve until its successor accepts the

escrow and receives the Escrow Fund. The Company and Participants having

at least 50 percent of all amounts then accounted for in the Escrow Fund

with respect to their accounts may agree at any time to substitute a new

Escrow Agent by giving fifteen days' notice thereof to the Escrow Agent

then acting. The Escrow Agent and any successor thereto appointed

hereunder shall be

<PAGE>

a bank or trust company located in the United States having a combined

capital and surplus of at least $500 million. Upon the appointment of a

successor, the Escrow Agent shall transfer the Escrow funds to the

successor and be relieved of any further liability to the Company,

Participants or any other parties that may otherwise have a claim against

any of the plans described in Section 1.01 hereof.

ARTICLE V

TERMINATION, AMENDMENT AND WAIVER
---------------------------------

SECTION 5.1 Termination. This Agreement shall be terminated
-----------

upon the earliest of the four following events: (i) the exhaustion of the

Escrow Fund; (ii) the final payment of all amounts payable to the

Participants pursuant to the Plans; (iii) upon the vote of a majority of

the directors of the Company then in office, but only with the written

consent of Participants having at least 50 percent of all amounts then

accounted for in the Escrow Fund with respect to their accounts, or (iv) 50

years from the date hereof. Promptly upon termination of this Agreement,

any remaining portion of the Escrow Fund shall be assigned, transferred,

and delivered to the Company.

SECTION 5.2 Amendment and Waiver. This Agreement may not be
--------------------

amended except by an instrument in writing signed on behalf of the parties

hereto together with the written consent of Participants having at least 50

percent of all amounts then accounted for in the Escrow Fund with respect

to their accounts. The parties hereto, together with the consent of

Participants having at least 50 percent of all amounts then accounted for

in the Escrow Fund with respect to their accounts, may at any time waive

compliance with any of the agreements or conditions herein. Any agreement

on the part of a party hereto or a Participant to any such waiver shall be

valid if set forth in an instrument in writing signed on behalf of such

party or

<PAGE>

Participant. Notwithstanding the foregoing, any such amendment or waiver

may be made by written agreement of the parties hereto without obtaining

the consent of the Participants if such amendment or waiver does not

adversely affect the rights of the Participants hereunder. No such

amendment or waiver relating to this Agreement may be made with respect to

a particular Participant unless said Participant has agreed in writing to

such amendment or waiver.

ARTICLE VI

GENERAL PROVISIONS
------------------

SECTION 6.1 Further Assurances. The Company shall, at any
------------------

time and from time to time, upon the reasonable request of the Escrow

Agent, execute and deliver such further instruments and do such further

acts as may be necessary or proper to effectuate the purposes of this

Agreement.

SECTION 6.2 Certain Provisions Relating to this Agreement.
---------------------------------------------

(a) This Agreement sets forth the entire understanding of the

parties with respect to the subject matter hereof and supersedes any

and all prior agreements, arrangements and understandings relating

thereto. This Agreement shall be binding upon and inure to the

benefit of the parties and their respective successors and legal

representatives.

(b) This Agreement shall be governed by and construed in

accordance with the laws of the State of Tennessee, other than and

without reference to any provisions of such laws regarding choice of

laws or conflict of laws.

application thereof to any person or circumstances shall be determined

by a court of proper jurisdiction to be invalid or unenforceable to

any extent, the remainder of this Agreement, or the

<PAGE>

application of such provision to persons or circumstances other than

those as to which it is held invalid or unenforceable, shall not be

affected thereby, and each provision of this Agreement shall be valid

and enforced to the fullest extent permitted by law.

(d) Notwithstanding any of the provisions of this Agreement,

this Agreement shall not create on behalf of a Participant or any

beneficiary of a Participant any preferred right or secured interest

in any asset held under this Agreement; and a Participant and any

beneficiary of a Participant shall at all times be a general,

unsecured creditor of the Company and of any applicable Subsidiary,

subject to such rights and preferences as may otherwise exist under

applicable law.

SECTION 6.3 Notices. Any notice, demand or waiver required or
-------

permitted hereunder shall be in writing and shall be given personally or by

prepaid registered or certified mail, return receipt requested, or by

Federal Express, addressed as follows:

If to the Company: Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, TN 38138
ATTN: Secretary

If to the Escrow Agent: NationsBank Trust Department
1 NationsBank Plaza
Nashville, Tennessee 37239-1697

If to a Participant, to the last given address of such Participant.

A notice shall be deemed received upon the date of delivery if

given personally or, if given by mail, upon the receipt thereof.

SECTION 6.4 Third Party Beneficiaries. Each present
-------------------------

Participant or future Participant, and each beneficiary of a Participant in

case of the death of a Participant, is an intended third party beneficiary

under this Agreement, and shall be entitled to enforce all terms and

provisions hereof with the same force and effect as if such person had been

a party hereto.

<PAGE>

SECTION 6.5 Non-Assignment. Participants and their
--------------

beneficiaries may not assign, pledge, encumber, or otherwise transfer any

of their rights hereunder and no creditor of any Participant or of any

beneficiary of a Participant shall have any claim or right to the funds

under this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as

of the date first written above.

PROMUS HOTELS, INC. PROMUS HOTEL CORPORATION

BY: BY:
------------------------- -----------------------------------
TITLE: TITLE:
---------------------- --------------------------------

NATIONSBANK (formerly Sovran Bank)

BY:
-------------------------
TITLE:
----------------------

______________________

<PAGE>

EXHIBIT E
---------

Indemnity Agreement
-------------------

The undersigned, ____________________________, in consideration

of receiving certain disputed benefit payments pursuant to an Escrow

Agreement dated ________________, 1995, between Promus Hotel Corporation

(the "Company") and __________________ _________________ ("Escrow Agent")

hereby agrees to indemnify and hold harmless the Company and the Escrow

Agent from and against any and all losses, damages, expenses, or claims

which may result from any incorrect payment or incorrect benefit which is

made to the undersigned pursuant to a notice delivered by the undersigned

to the Escrow Agent.

Dated: _______________________ _________________________________
Participant

Exhibit 10(10)

PROMUS HOTEL CORPORATION
------------------------

SAVINGS AND RETIREMENT PLAN
---------------------------

TRUST AGREEMENT
---------------

THIS TRUST AGREEMENT made and entered into at Memphis, Tennessee, as

of May 26, 1995, by and between Promus Hotel Corporation, a corporation

duly organized and existing under the laws of the State of Delaware having

its principal place of business in Memphis, Tennessee, and Robert S. Davis,

Donald H. Dempsey, Patricia R. Ferguson, Jeffery M. Jarvis, Kelly R.

Jenkins, Frederick G. Schultz and Mark C. Wells, Memphis, Tennessee, acting

in their fiduciary capacities as co-trustees (hereinafter referred to as

the "Trustees");

RECITALS
--------

A. DEFINITIONS. Wherever used herein, the following terms shall
-----------

(unless the context clearly requires otherwise) have the following

meanings:

1. "Corporation" shall mean Promus Hotel Corporation.

2. "Employer" shall mean any company which has adopted or hereafter

adopts the Plan (as hereafter defined), including, but not limited to, the

Corporation and those affiliates of the Corporation participating in the

Plan.

3. "ERISA" shall mean the Employment Retirement Income Security Act

of 1974, as amended from time to time.

4. "Fund" shall mean the trust assets held by the Trustees pursuant

to the terms of this Agreement and the Plan.

<PAGE>

5. "Plan" shall mean the Promus Hotel Corporation Savings and

Retirement Plan as amended from time to time.

6. "Trust" shall mean the trust established by this Agreement.

B. BACKGROUND
----------

1. The Corporation adopted and established the Plan. The Plan will

commence on the effective date of the spin-off of the Corporation from The

Promus Companies Incorporated scheduled for June 30, 1995. Said Plan

provides for contributions by the Corporation to be held in trust, invested

and paid out by the Trustees to Participants and their Beneficiaries or

representatives for the accomplishment of the purposes of the Plan. The

Corporation desires to provide a trust pursuant to the Plan which is

intended to qualify under Sections 401 and 501 of the Internal Revenue

Code, and regulations issued thereunder, as a tax-exempt trust, and to

comply with the requirements of ERISA.

NOW, THEREFORE, in consideration of the premises and the covenants

herein contained, the Corporation and the Trustees agree as follows:

SECTION I

Trust and Fund
--------------

1.1 The Trust created by this agreement shall hereafter be known as

the "Promus Hotel Corporation Savings and Retirement Trust" or "Trust" and

shall continue without interruption to be part of the Plan, which Plan is

intended to continue to be qualified under Section 401(a) of the Internal

Revenue Code.

<PAGE>

1.2 The definitions set forth in Section 2 and elsewhere in the Plan

are incorporated herein by reference, and terms not otherwise defined

herein shall have the same meanings given them in said Plan.

1.3 This Trust Agreement, as hereafter modified or amended, shall

constitute the Trust Agreement referred to in paragraph 2.51 of the Plan.

SECTION 2

Plan
----

2.1 The Corporation shall deliver to the Trustees a copy of the Plan

and each amendment thereto for convenience of reference, but the rights,

powers, titles, duties, discretion and immunities of the Trustees shall be

governed solely by this Trust Agreement.

SECTION 3

Administration
--------------

3.1 A majority of the Trustees then serving shall constitute a quorum

for the transaction of business, provided prior notice of the meeting has

been given to all Trustees then serving. All actions taken by the Trustees

shall be by vote of a majority of those present at a meeting of the

Trustees at which a quorum is present, or without a meeting by a written

instrument signed by all Trustees then serving.

3.2 The Trustees shall administer their duties under the Plan and

with respect to the Fund in accordance with the provisions of the Plan and

this Agreement, except to the extent their responsibilities have been

properly delegated

<PAGE>

pursuant to the provisions of the Plan and this Agreement and except to the

extent the Corporation and its delegees have been given administrative

responsibilities under the Plan. No Trustee shall participate in making or

implementing any decision of the Trustees with respect to the personal

pecuniary interest of such Trustee or the interests of such Trustee's

beneficiaries.

3.3 The Trustees shall have complete authority to determine the

existence of rights and interests in the Fund of all persons having or

claiming any rights under the Plan.

SECTION 4

Contributions
-------------

4.1 The Trustees shall be accountable for all contributions received

by them but shall have no duty to require any contributions to be made to

them, or to determine that the amounts received comply with the Plan, or to

determine that the fund is adequate to provide the benefits payable

pursuant to the Plan. The Trustees shall be responsible for the

maintenance of records which will clearly reflect each payment received

from each employer.

SECTION 5

Payments from the Fund
----------------------

5.1 Benefit payments to Participants and Beneficiaries under the Plan

shall be made from the Fund by the Trustees in such manner, at such times

and in such amounts as shall be provided by the Plan. The Trustees shall

have no responsibility to see to the application of payments so made.

<PAGE>

5.2 The Trustees shall be reimbursed for any expenses incurred by

them that are reasonably necessary and incident to the administration of

the Plan and the Trust. The Trustees shall be paid such reasonable

compensation for their services as shall be agreed upon from time to time

by the Corporation and the Trustees. To the extent the Employer does not

pay such expenses and compensation, they shall be paid from the Fund. The

Employer or the Corporation may advance or temporarily pay such expenses

and compensation which the Fund will repay upon request of the Employer or

Corporation.

5.3 The Trustees are authorized, but not required, to withhold from

distribution to any payee such sums as may reasonably be necessary to cover

federal and state taxes which are, or may be, assessed with regard to the

amount distributable to such payee and for which the Trustees or the Fund

may be liable. Upon discharge or settlement of such tax liability, the

Trustees shall pay or cause to be paid any remaining balance of the sums so

withheld to such payee or to his estate. Prior to making any payment or

distribution hereunder, the Trustees may require such releases or other

documents from any lawful taxing authority, and may require such indemnity

from any payee or distributee, as the Trustees shall reasonably deem

necessary for their protection or for the protection of the Fund.

5.4 Subject to the proviso at the end of this Section 5.4, no one

other than Participants and their Beneficiaries shall have any interest in

the Fund and the following restrictions shall apply to distributions: (a)

Distributions payable from the Fund shall not be subject in any manner to

anticipation, alienation, sale,

<PAGE>

transfer, assignment, pledge, encumbrance, charge, garnishment, execution,

or levy of any kind, either voluntary or involuntary, including liability

for alimony or other payments for property settlement or support of a

spouse or former spouse or any other relative of the Employee prior to

actually being received by the person entitled to the benefit under the

terms of the Plan, excluding transfer by death or mental incompetency. (b)

Any attempt to anticipate, alienate, sell, transfer, assign, pledge,

encumber, charge or otherwise dispose of any right to benefits payable

under the Plan shall be void. (c) The Fund shall not be in any manner

liable for, or subject to, the debts, contracts, liabilities, engagements

or torts of any person entitled to benefits hereunder. (d) None of the

Plan benefits or Trust assets shall be considered an asset of the Employee

in event of his divorce, insolvency or bankruptcy. PROVIDED, HOWEVER, the

restrictions of this Section 5.4 shall have no application to (1)

distributions under a qualified domestic relations order that meets the

requirements of ERISA Section 206(d) (which may be a lump sum distribution

of vested amounts irrespective of the age of the Employee or the alternate

payee), (2) circumstances in which an Employee has obtained a loan from the

plan secured by his vested account balance in which case the Employee's

vested balance shall be subject to offset and attachment by the Trust and

the Plan upon default in the loan, or (3) to the extent permitted by

applicable law, Federal tax liens or levies pursuant to Federal law.

<PAGE>

5.5 The fees payable by the Employer for actuarial, legal, accounting

or other necessary and proper services relating to the administration of

the Plan and Trust (including fees for the Trustees) shall be paid by the

Employer if the Employer elects to pay them. If the Employer does not

elect to pay such fees and expenses (or advances them temporarily) or if

they are not so paid, they shall be payable or reimbursed by the Trustees

out of the Fund, and until paid shall constitute a first and prior charge

and lien against the Fund. The Trustees may also on their own volition

employ, for purposes of managing or administering the Fund, accountants,

attorneys, actuaries, consultants, advisers, and any other persons, firms,

or corporations as the Trustees may designate and may pay from the Fund the

reasonable fees, expenses, and compensation of such parties. The Trustees

may also contract or make reasonable arrangements with the Corporation, an

Employer or other parties in interest for office space, or legal,

accounting or other services necessary for the establishment or operation

of the Trust, if no more than reasonable compensation is paid therefor.

SECTION 6

Management of the Fund
----------------------

6.1 The Trustees may employ an Investment Manager or Managers to

manage the Fund or any part thereof or to advise the Trustees. "Investment

Manager" shall mean a person who is registered as an investment adviser

under the Investment Advisers Act of 1940, a bank as defined in such Act,

or an insurance

<PAGE>

company which is qualified to manage the assets of employee benefit plans

under the laws of more than one state, or any other entity or person

permitted by applicable law to be an Investment Manager for the Fund. No

person shall be employed as Investment Manager unless he has first

acknowledged in writing that he is a fiduciary with respect to the Plan,

and unless the extent of his authority and responsibility with respect to

the management of the Fund has been identified by written agreement with

the Trustees. Such authority and responsibility may extend to the making,

acquisition, retention, sale or other disposition of Fund investments to

the same extent that the Trustees are authorized and empowered so to do

under the terms of this Agreement. If an Investment Manager is employed

pursuant to this Section, the Trustees shall not have any discretionary

authority or responsibility with respect to Fund investments to the extent

that such authority and responsibility has been given to the Investment

Manager, but rather shall act upon and pursuant to the direction of the

Investment Manager. The Trustees may change Investment Managers at any

time, as the Trustees deem appropriate, and the Trustees may choose to

manage the Fund, or any part of the Fund, without employing an Investment

Manager. The Trustees may also appoint an investment adviser.

6.2 The Trustees, whether acting pursuant to the direction or advice

of a duly appointed Investment Manager or investment adviser, or upon their

own

<PAGE>

discretion with respect to Fund investments not subject to such direction,

shall, except as otherwise restricted by law and the provisions hereof and

the Plan, be authorized and empowered:

(a) to invest the assets of the Trust in such securities and

properties as they may determine;

(b) to invest assets of the Trust in any corporate master notes

maintained by any of the Trustees or an Investment Manager;

deem to be in the best interest of the trust;

(d) to sell, exchange, convey, transfer or otherwise dispose of any

property held by them, by private contract or at public auction;

(e) with respect to any stock or other securities owned by them:

(1) to exercise or refrain from exercising any voting rights

associated therewith;

(2) to give general or special proxies or powers of attorney

with or without power of substitution;

(3) to exercise any conversion privileges, subscription rights

or other options and to make any payments incidental

thereto;

(4) to consent to or respond to or otherwise participate in

corporate reorganizations, recapitalizations, tender offers,

mergers or consolidations, and to delegate discretionary

powers and to pay any assessments or charges in connection

therewith;

<PAGE>

(5) to deposit such stock or other securities in any voting

trust or protective committee or like committee or trustee

or with the depositories designated thereby;

(f) to make, execute, acknowledge and deliver any and all documents

of transfer and conveyance and any and all other instruments that

may be necessary or appropriate to carry out the powers herein

granted;

(g) to register any investment of the Fund in their own name or in

the name of a nominee or nominees and to hold any investment in

bearer form, provided that the books and records of the Trustees

shall at all times show that all such investments are part of the

Fund;

(h) to employ suitable agents, accountants, advisers, consultants,

and counsel, and to pay their reasonable expenses and

compensation;

(i) to borrow money from time to time for the purposes of the Trust

on such terms and conditions as may be deemed to be advisable,

and for any sum so borrowed to issue their promissory note as

Trustees and to secure the repayment thereof by pledging all or

any part of the Fund; and

(j) to exercise all of the powers of an owner with respect to any

stock or other securities or property.

The Trustees shall not be restricted with respect to the forms of property

which may be held or acquired by the Trustees, other than by the

restrictions set forth

<PAGE>

herein or in the Plan or by applicable law. Subject to the limitations

contained in Section 407 of ERISA and other limitations expressed herein

and in the Plan, the Trustees may invest assets of the Trust in any common

or preferred stock, securities or other obligations of the Employer.

Without limiting the generality of any other provision hereof, it is

expressly provided that the Trust assets may be invested in a pooled fund

maintained by any of the Trustees or any Investment Manager.

6.3 Cash received under any of the provisions hereof may be deposited

by the Trustees in accounts with such banking institutions as may be

selected by the Trustees, including a banking division of any Trustee,

under such provisions with respect to interest as may be permitted by law.

For the purposes of this Section 6.3, the word "accounts" shall be

construed to mean not only demand deposit accounts, but also savings

accounts and time deposit accounts without regard to whether the amount on

deposit is evidenced by a statement, passbook or certificate.

6.4 The Trustees shall comply with ERISA and with any funding policy

established in writing by the Employer, but the Trustees shall be solely

responsible for the selection and retention or disposal of the investments

to comply with such funding policy.

<PAGE>

SECTION 7

Powers of Trustees
------------------

7.1 Subject only to the provisions of Section 5 and 6 of this

Agreement, the Trustees are further authorized and empowered;

(a) to hold, manage, improve, repair and control all real and

personal property at any time forming part of the Fund; to sell,

convey, transfer, exchange, partition, lease for any term, even

extending beyond the duration of this Trust, and otherwise

dispose of the same from time to time in such manner, for such

consideration and upon such terms and conditions as the Trustees

shall determine;

(b) to employ such agents, accountants, advisers, consultants, and

counsel as may be reasonably necessary in managing and protecting

the Fund and to pay them reasonable compensation; to settle,

compromise or abandon all claims, questions or demands in favor

of or against the Fund; to charge any premium on bonds purchased

above par value to the principal of the Fund and to charge fees

and expenses of investments against the principal of the Fund

without amortization, regardless of any law relating thereto;

Tennessee Code Annotated, the provisions thereof being hereby

adopted by reference specifically and as fully and in the same

manner as if they

<PAGE>

were set out herein verbatim, and to exercise all the further

rights, powers, options and privileges granted, provided for, or

vested in trustees generally under the laws of the State of

Tennessee as amended from time to time, it being intended that,

except as herein otherwise provided, the powers herein conferred

upon the Trustee shall not be construed as in limitation of any

authority conferred by law, but shall be construed as in addition

thereto;

(d) to vote upon any stocks, bonds or other securities, except that

the Trustees shall not vote stock to which any Participant is

entitled to direct the vote under Plan Section 6.4(d) except

pursuant to confidential written instructions from such

Participants; to give general or special proxies or powers of

attorney with or without power of substitution; to exercise any

conversion privileges, subscription rights or other options, and

to make any payments incidental thereto; to consent to or

otherwise participate in corporation reorganizations or other

changes affecting corporate securities and to delegate

discretionary powers to pay any assessments or charges in

connection therewith; and generally to exercise any of the powers

of an owner with respect to stocks, bonds, securities or other

property held in the Trust Funds. The Trustee shall maintain the

strict confidentiality of any instructions received from

Participants pursuant to Plan Section 6.4(d); and

<PAGE>

(e) in addition to the powers enumerated herein, to do all other acts

which, in their judgment, are necessary or desirable for the

proper administration of the Fund.

7.2 The Trustees shall be fully protected in taking any action in

reliance upon a certified copy of a resolution of the Board of Directors of

the Employer or any other committee or body authorized to act on behalf of

the Corporation regarding the Plan which the Trustees in good faith believe

to be genuine, if this instrument provides that such action is within the

scope of the authority of such Board, committee or other body.

7.3 The Trustees may consult with legal counsel, who may be counsel

for the Employer or the Corporation, regarding any of their duties or

obligations hereunder, and shall be fully protected in acting or refraining

from acting in accordance with the advice of such counsel.

7.4 The Trustees shall incur no personal liability for any act done

or omitted to be done in good faith in the administration of the Trust

other than as may otherwise be required by law. To the maximum extent

allowed by law and to the extent otherwise not indemnified, the Corporation

shall indemnify each Trustee (and former Trustee) against any and all

claims, losses, damages, expenses, including counsel fees, incurred by any

such person on account of such person's action, or failure to act, in

connection with the Plan, including, in the case of amounts paid in

settlement, only such amounts as are paid with the Corporation's approval.

<PAGE>

7.5 If at any time the Fund shall consist in whole or in part of

assets located in a jurisdiction in which the Trustees are not authorized

to act, the Trustees may appoint a corporation in such jurisdiction as

ancillary trustee and may confer upon such ancillary trustee power to act

solely with reference to such assets, and such ancillary trustee shall

remit all net income from or proceeds from the sale of such assets to the

Trustees. The Trustees may pay such ancillary trustee reasonable

compensation and may absolve it from any requirement that it make

accounting to any court or furnish bond or other security.

7.6 The Trustees shall not be required to receive any order or

consent of any court as a prerequisite to taking any action hereunder, or

to file any court return or report or make accounting to any court.

7.7 Subject to applicable provisions of the Plan regarding treatment

of contributions conditioned upon initial Internal Revenue Service

qualification of the Plan, the Trustees and the Employer shall discharge

their respective duties under the Plan solely in the interest of

Participants and their Beneficiaries and for the exclusive purpose of

providing Plan benefits and defraying the reasonable expenses of

administering the Plan and Trust.

7.8 In discharging their duties, the Trustees shall:

(a) act with care, skill, prudence and diligence that a prudent man

acting in a like capacity and familiar with such matters would

use in similar circumstances in the conduct of an enterprise of

like character and with like aims;

<PAGE>

(b) to the extent the Trustees have the discretionary authority and

responsibility for Trust investments, diversify investments so as

to minimize the risk of large losses, unless under the

circumstances it is clearly prudent not to do so; and

the Plan insofar as such documents and instruments are consistent

with the provisions of ERISA.

7.9 The Trustees shall not cause the Plan to engage in any

transaction if they know or should know that such transaction constitutes,

directly or indirectly, a prohibited transaction under ERISA.

7.10 The Trustees shall not:

(a) deal with the assets of the Trust in their own interest or for

their own account;

(b) in their individual capacity or in any other capacity, act in any

transaction involving the Plan or in behalf of a party, where

there interests of the Trustees or such party are adverse to the

interest of the Plan, the Participants or Beneficiaries; or

dealing with the Plan in connection with a transaction involving

the Plan, the Trust or the Fund; provided, however, that nothing
-------- -------

in this section shall be construed to preclude the Trustees from

receiving reasonable

<PAGE>

compensation for services rendered or reimbursement of expenses

properly and actually incurred in the performance of their duties

under the Plan and Trust.

7.11 Except as authorized by regulations issued by the Secretary of

Labor, the Trustee shall not maintain the indicia of ownership of any

assets of the Fund outside the jurisdiction of the District Courts of the

United States.

7.12 Nothing in this Section shall be construed to preclude a

transaction which is otherwise prohibited hereunder or under ERISA, if the

Trustees, or any other interested party or parties, have first secured from

the Secretary of Labor an exemption with respect to such transaction.

7.13 The Trustees or the Corporation may purchase insurance to insure

themselves, the Fund, or other fiduciaries against liability or losses

occurring by reason of an act or omission of any fiduciary, provided that

such insurance if purchased by the Plan shall permit recourse by the

insurer against the fiduciary in the case of a breach of fiduciary duty.

SECTION 8

Accounts of the Trustees
------------------------

8.1 The Trustees shall maintain accurate and detailed records and

accounts of all transactions hereunder, which shall be available at all

reasonable times for inspection or audit by any person or persons

designated by the Employer.

<PAGE>

8.2 The Trustees, at the direction of the Employer, shall submit to

the auditors of the Employer and to the Enrolled Actuary for the Plan such

valuations, reports or other information as such persons may reasonably

require.

8.3 The accounting year of the Trust shall be the calendar year.

Within ninety days after the close of each accounting year and at such

other times as may be required by law, the Trustees shall file or caused to

be filed with the Employer a written accounting setting forth all

transactions effected by them subsequent to the end of the period covered

by their latest previous accounting, and listing the assets of the Fund at

the close of the period covered by such accounting.

8.4 Upon the earlier of the receipt by the Trustees of the Employer's

written approval of any such accounting or the expiration of ninety days

after delivery of any such accounting to the Employer, such accounting, as

originally stated or as theretofore adjusted pursuant to agreement between

the Employer and the Trustees, shall be deemed to be approved by the

Employer except as to matters, if any covered by written objections

theretofore delivered to the Trustees by the Employer which the Trustees

have not explained or adjusted in a manner satisfactory to the Employer.

The Trustees shall be released and discharged as to all items, matters and

things set forth in such accounting which are not covered by such written

objections as if such accounting had been settled and allowed by a decree

of a court having jurisdiction regarding such accounting and the Trustees,

the Employer and all persons having or claiming to have any interest in the

Fund.

<PAGE>

The Trustees, nevertheless, shall have the right to have its accounts

settled by judicial proceedings if they so elect, in which event the

Corporation and the Trustees shall be the only necessary parties to such

proceeding.

SECTION 9

Resignation, Removal and Succession of Trustees
-----------------------------------------------

9.1 At any time, the Board of Directors of the Corporation or other

committee or body authorized to act for the Corporation regarding the Plan,

by duly adopted resolution, may remove any of the Trustees and appoint

additional or successor Trustees. Any such removal shall become effective

when a copy of said resolution certified by an officer of the Corporation

(and, if no other trustee is then serving, an acceptance of the trust

signed by the successor Trustee so appointed) is delivered to the Trustee

to be removed. Appointments of additional or successor Trustees shall

otherwise become effective when the newly-appointed Trustee accepts such

appointment in writing or upon the Trustee's attendance at a Trustees'

meeting.

9.2 Any Trustee may resign by delivering to the Corporation a written

resignation and such resignation shall become effective on the date of such

resignation. If the resigning Trustee is the only Trustee then serving,

such resignation shall not be effective until the Corporation appoints a

successor Trustee by resolution of its Board of Directors or its Executive

Committee and delivers to the resigning Trustee copies of said resolution

certified by any officer of the

<PAGE>

Corporation and an acceptance of the Trust signed by the successor Trustee

so appointed. If any Trustee terminates employment with any Employer, such

person shall be deemed to have resigned as Trustee on the effective date of

his termination unless he or she advises the other Trustees in writing that

he or she does not wish to resign.

9.3 All of the provisions set forth herein with respect to the

Trustees shall relate to each additional or successor Trustee with the same

force and effect as if such additional or successor Trustee had been named

herein as a Trustee.

9.4 If the removed or resigning Trustee is the only Trustee then

serving, he shall transfer and deliver the Fund to such successor Trustee

appointed to replace him. No successor Trustee shall be liable for the

acts or omissions of any prior Trustee or be obliged to examine the

accounts, records or acts of any prior Trustee or Trustees.

9.5 In the event that any corporate Trustee hereunder shall be

converted into, shall merge or consolidate with, or shall sell or transfer

substantially all its assets and business to another corporation, the

corporation resulting from such conversion, merger or consolidation, or the

corporation to which such sale or transfer shall be made, shall thereupon

become and be a Trustee under this Agreement with the same effect as though

originally so named.

<PAGE>

SECTION 10

Termination
-----------

10.1 The Trust created by this Agreement is intended to be permanent

unless otherwise prohibited by law, and in such event, it shall last only

so long as one day short of the maximum time permitted by the statutes and

laws of the State of Tennessee. The Trust may, however, be terminated at

any time by any Employer insofar as it relates to such Employer, in

accordance with and as provided in the Plan pursuant to resolution or

decision of the Board of Directors or other governing authority of such

terminating Employer, by giving notice in writing to the Trustees, which

notice shall recite the date upon which the termination shall be effective.

After receipt of such notice the Trustees shall continue to hold, invest,

administer, liquidate, and distribute the assets of the Fund attributable

to such terminating Employer pursuant to the provisions of this Trust

Agreement. The Trust shall terminate as to an Employer only when no assets

of the Trust attributable to the terminating Employer remain in the

possession of the Trustee.

10.2 In no event shall any assets be returned to the Corporation or

any Employer except:

(a) contributions made in error by reason of a mistake in fact,

provided that any such refund is made within one year of the date

such contribution was made;

<PAGE>

(b) contributions made conditioned upon the contribution being

allowed as a deduction for federal income tax purposes and such

deduction is disallowed, provided the disallowed portion is

returned within one year of the date of disallowance;

and such qualification is denied, provided such contribution is

returned within one year of the date of denial; or

(d) upon termination of the Plan or complete discontinuance of

contributions thereto, any unallocated Company contributions or

forfeiture being held in suspense because of the limitation of

Section 415 of the Code.

SECTION 11

Amendments
----------

11.1 The Corporation shall have the right at any time to amend this

Trust Agreement, in whole or in part, without the Consent of the Trustees

or any employer except that the Corporation may not:

(a) amend this Trust Agreement (with or without such consent) at any

time prior to the satisfaction of all liabilities under the Plan

with respect to Employees of the Employer and their

beneficiaries, to permit any part of the Fund to be used for, or

diverted to, purposes other than for the exclusive benefit of

Employees of the Employer or their beneficiaries; or

<PAGE>

(b) amend this Trust Agreement to increase the duties or liabilities

of the Trustees without their written consent.

11.2 Each amendment to this Trust Agreement shall be effective upon

delivery of a copy of such amendment to the Trustees by the Corporation.

11.3 Upon delivery to any Employer of an amendment hereto duly

authorized and adopted by the Corporation, the Trust shall be thereby

amended as to such Employer.

SECTION 12

Governing Law and Legal Actions
-------------------------------

12.1 The Trust and Fund shall have a situs in, and this instrument and

the Trust shall be construed, enforced and administered according to the

laws of, the State of Tennessee.

12.2 All provisions of this Trust Agreement shall be fully severable,

and if any provision hereof is held illegal or invalid for any reason, said

illegality or invalidity shall not affect the remaining provisions of this

Trust Agreement, and the Trust Agreement shall be construed and enforced as

if said illegal or invalid provision had never been inserted herein.

12.3 The Corporation shall have the authority to enforce this Trust

Agreement on behalf of any and all persons having or claiming any interest

in the Fund. In any action or proceeding affecting the Fund or the

administration thereof, or for instructions to the Trustees, the

Corporation and the Trustees shall be the

<PAGE>

only necessary parties, and no Employees or former Employees of the

Employer, their beneficiaries, or any other person having or claiming to

have an interest in the Fund, shall be entitled to any notice or process in

connection with such action or proceedings. Any judgment that may be

entered in such action or proceeding shall be binding on all persons having

or claiming to have any interest in the Fund.

SECTION 13

Adoption by Other Organizations
-------------------------------

13.1 Any corporation or other organization, now in existence or

hereafter formed or acquired, which is not already as of the date hereof an

Employer under this Plan and Trust and that is affiliated with the

Corporation may, with the approval of the Corporation's Chief Executive

Officer, adopt the Trust hereby created and the plan of which it is a part,

for all or any classification of persons in its employment and thereby,

from and after the specified effective date, become an "Employer" as

defined in the Plan. Such adoption shall be effectuated by and evidenced

by resolution or decision by the adopting organization and by approval of

the Corporation's Chief Executive Officer. The adoption resolution or

decision may contain such specific changes and variations in the Plan and

Trust terms and provisions as may be acceptable to the Corporation and the

Trustees. The adoption resolution or decision shall become, as to such

adopting organization and its Employees, a part of this Trust and related

Plan, as then or thereafter amended. It shall not be necessary for the

adopting organization to sign or execute the

<PAGE>

original or then amended Plan and Trust documents or any other instrument.

The effective date of the Plan and Trust for any such adopting organization

shall be that stated in the resolution or decision of adoption, and from

and after such effective date such adopting organization shall assume all

the obligations of an individual employer entity hereunder and under the

Plan. The administrative powers and control of the Corporation provided in

the Plan and this Trust Agreement, including the sole right of amendment

and of appointment and removal of the Trustees and their successors, shall

not be diminished by reason of the participation of any such adopting

organization in the Plan and Trust. Any participating employer may

withdraw from the Plan and Trust at any time without affecting other

Employers not so withdrawing, by complying with the withdrawal provisions

of the Plan and this Trust Agreement. The Corporation may, in its absolute

discretion, terminate an adopting Employer's participation at any time when

in its judgment such adopting employer fails or refuses to discharge its

obligations under the Plan.

13.2 The merger or consolidation with, or transfer of assets and

liabilities from or to, any other qualified plan shall be permitted only if

the Corporation approves such transaction and if the benefit each

participant, former participant, or beneficiary of the Plan and the other

plan would receive, if either the Plan or the other plan terminated

immediately after such merger, consolidation or transfer, would be at least

as great as the benefit they each would have received had the Plan or the

other plan been terminated immediately before any such transaction.

<PAGE>

13.3 The Corporation may require any other participating Employer to

pay its proportionate share of all expenses incurred in the administration

of the Plan and Trust.

SECTION 14

Trustee Actions During Tender Offer
-----------------------------------

14.1 In the event of any transaction involving one or more offers to

purchase Stock which is evidenced by the filing of a Statement on Schedule

14D-1 with the Securities and Exchange Commission ("SEC") or any other

similar transaction (such transaction referred to herein as a "Tender

Offer" and the date of filing with the SEC referred to herein as the

"Filing Date"), paragraphs (a) through (j) shall apply.

(a) Notwithstanding anything in the Plan to the contrary, after the

Filing Date,

(i) no option to receive cash instead of Stock under any of the

Plan's distribution provisions shall be honored unless the

Trustees otherwise direct, and the Stock portion of any

distribution shall be limited to amounts of Stock credited,

on or before the Filing Date, to the Accounts of the

Participant in question; and

(ii) no Participant election to invest additional amounts in

Investment Fund III shall be honored after the Filing Date.

The

<PAGE>

portion of any Account which otherwise would have been

invested in Investment Fund III shall instead be invested in

Investment Fund I.

(b) The Corporation shall promptly, and at its own expense, engage

the services of an Outside Independent Plan Administrator

("OIPA") experienced in administration of like plans. The OIPA

shall, on a standby basis, perform those functions (and only

those functions) which are set forth in paragraphs (c) and (g)

and which are necessary to preserve the strict confidentiality of

(i) the identity of Participants delivering instructions to the

Trustees and (ii) any other information which would reveal to the

Corporation or, if the Trustees are Employees of the Corporation,

the Trustees, whether or not (A) Stock representing the

proportionate share of Investment Fund III of a Participant's

Accounts (excluding Account 10) and (B) Stock allocated to a

Participant's Account 10 (collectively referred to as his

"Company Shares") has or has not ben tendered.

instructions from each Participant, as to whether his

Company shares should be tendered pursuant to the Tender

Offer.

(ii) The Trustees shall distribute to each such Participant,

copies of all relevant material filed with the SEC with

respect to the Tender Offer. The Trustees shall have the

power to require that

<PAGE>

payment for such distributions of materials be made in

advance and in any event, the Trustees shall be entitled to

reimbursement out of the Trust Fund for its reasonable out-

of-pocket expenses for services rendered in the performance

of its responsibilities and duties described in this Section

14.1 (including any expenses not reimbursed by the filing

party).

(iii) The identify of each Participant and the number of his

Shares shall be determined from the list of

Participants delivered to the Trustees or, if an OIPA

has previously been appointed under this Section and if

the Trustees do not have such information because of

the confidentiality rules contained herein, by that

OIPA.

(iv) Any Stock in the Exempt Loan Suspense Account or any Stock

which is forfeited and unreallocated shall be tendered or

not tendered in the same proportions as Stock is tendered or

not tendered pursuant to Subsection (c)(i).

(d) Each Participant, shall be entitled to instruct the Trustee, with

respect to his Company Shares, either

(i) to tender all (but not less than all) such Company Shares,

(ii) not to tender any such Company Shares, and the Trustee shall

follow such instructions.

<PAGE>

(e) The Trustee shall make such follow-up efforts, through additional

mailings, bulletins to be posted in areas where notices to

Participants are normally posted and otherwise, as it finds to be

reasonable under the time constraints and other circumstances at

hand, to assure that materials referred to in Paragraph (c) have

been received by Participants, and obtain instructions from

Participants who have not otherwise responded to the Trustees

request for instructions. The Company shall provide full

cooperation to the Trustees in this regard.

(f) If, after the Trustee has made the follow-up effort set out in

Paragraph (e), a Participant does not respond to the Trustees

request for instructions, the nonresponding Participant shall be

deemed to have made the election set out in Paragraph (d)(ii).

(g) If some but less than all of the Participants' Company Shares are

tendered and sold or exchanged by the Trustees, the OIPA shall

thereafter perform all functions with respect to all Accounts as

constituted on or after the Filing Date. Records and

administration for all contributions after the Filing Date shall

be maintained by the Trustees unless that duty has also been

delegated to the OIPA.

(h) At such time as events (e.g., termination of the Plan or
----

placement of all Plan assets in investments other than Stock)

occur which obviate

<PAGE>

the need for the OIPA in order to preserve confidentiality, the

services of the OIPA shall be terminated and, to the extent

necessary to preserve confidentiality, its records relating to

the Plan destroyed.

(i) The proceeds of the sale of any Stock from Investment Fund III

sold by the Trustees pursuant to an instruction from a

Participant in accordance with Paragraph (d)(i) herein, shall be

invested in the other investment funds (other than the ESOP fund)

in the same proportions as such Participant's Accounts are

invested in such funds as of the Filing Date; provided, however,

that if such Participant's Accounts are not invested in any of

such funds as of the Filing Date, the sale proceeds shall be

invested in Investment Fund VI. The proceeds of the sale of any

Stock from Investment Fund V including unallocated Stock held in

the Exempt Loan Suspense Account shall be reinvested as the Plan

Administrator directs.

14.2 Except as provided in Section 14.1(g), the Trustees functions

under Section 14.1 are and shall be solely custodial and ministerial. The

Trustee shall have no powers or duties with respect to a Tender Offer

except as expressly set forth in Section 14.1 and specifically shall have

no power or duty

(a) to manage or to control the assets of the Plan in connection with

any Tender Offer,

(b) to evaluate any Tender Offer,

<PAGE>

of a Tender Offer,

(d) to tender or vote any Stock held under the Plan, except as

instructed by Participants, or

(e) to monitor or police the activities of the tendering entity or

the Corporation in promoting or resisting any Tender Offer;

provided, however, that if the Trustees become aware of any such

activity which reasonably appears to the Trustees to be coercive

or misleading in any material way to Participants, the Trustees

shall promptly demand that the offending party take appropriate

corrective action. The Trustees shall, in the event of refusal

or failure of such party to take such corrective action as the

Trustees reasonably find appropriate, communicate with

Participants as to the matter.

SECTION 15

Miscellaneous
-------------

15.1 No person dealing with the Trustees in the administration of the

Plan and Trust shall be required or entitled to see to the application of

any money paid or property delivered to the Trustees, or to determine

whether or not the Trustees are acting pursuant to authority granted to

them hereunder or to authorizations or directions herein required. The

certificate of the Trustees that they are acting in accordance with this

Trust Agreement shall protect any person relying thereon.

<PAGE>

The Trustees shall have full authority to delegate to one or more persons

the duties and responsibilities of the Trustees hereunder to the extent not

prohibited by applicable law.

15.2 The Trust is hereby designated as constituting a part of the Plan

intended to continue to qualify and to be tax exempt under applicable

sections of the Internal Revenue Code of 1986, as amended from time to

time, and to comply with ERISA. The Trustees may conclusively assume that

this Trust is so qualified, is exempt from federal income taxes and is in

compliance with ERISA.

15.3 Neither the creation of this Trust nor anything contained in this

Trust Agreement shall be construed as giving any person entitled to

benefits hereunder or any Employee of an Employer any equity or other

interest in the assets, business, or affairs of the Employer.

15.4 It shall be impossible by operation of this Trust, by natural

termination thereof, by power of revocation or amendment, by the happening

of any contingency, by collateral arrangement, or by any other means, prior

to the satisfaction of any and all liability under the Plan with respect to

the Participants and Beneficiaries, for any part of the Fund and the income

therefrom to be used for or inverted to purposes other than for the

exclusive benefit of the Participants and Beneficiaries. The term

"liability" as used in this Section includes both fixed and contingent

obligations to the Participants and Beneficiaries.

<PAGE>

15.5 The Trustees shall be under no obligation to see to the

separation of the Fund between the individual Employers other than to

record separately the contributions from the respective Employers made with

respect to the Plan and the benefits paid under the Plan to the

Participants and Beneficiaries attributable to the respective Employers.

15.6 All provisions of this Agreement shall apply separately to each

of the Employers, provided however, that an individual Employer may, by

resolution of its Board of Directors, or other governing body, appoint

another Employer as its agent for all dealings with the Trustees and the

Trustees are hereby authorized to recognize such appointment.

15.7 In the event of an Employer's liquidation, bankruptcy, insolvency

or sale, or of its consolidation or merger to or with another organization,

the assets of the Fund attributable to such employer shall be treated as

follows:

(a) if the Plan is terminated insofar as such Employer is concerned,

the assets of the Fund attributable to such Employer and its

Employees shall be held or distributed as provided in Section 10

of this Agreement; or

(b) if a successor or surviving organization assumes the duties and

responsibilities of an Employer under the Plan and this Trust,

the Trust with respect to the Employees of the Employer and their

beneficiaries shall continue on behalf of the successor or

surviving organization; or

<PAGE>

Plan and Trust for the continuation of the benefits of the

Employees of an Employer and their beneficiaries, then with the

consent of the Corporation the Trust assets held in behalf of

such Employees and the beneficiaries may be transferred to the

Trustees thereof. If such assets are not so transferred, they

shall be distributed to Participants and their beneficiaries

according to the provisions of the Plan.

15.8 No bond, surety or security shall be required of the Trustees

except as may be required by law or by the Corporation, in which case the

Corporation shall pay the premium therefor.

SECTION 16

Execution
---------

16.1 This Agreement may be executed in any number of counterparts,

each of which shall be considered an original, and no other counterpart

need be produced.

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the

foregoing instrument creating the Trust, Promus Hotel Corporation as the

Corporation, and Robert S. Davis, Donald H. Dempsey, Patricia R. Ferguson,

Jeffery M. Jarvis, Kelly R. Jenkins, Frederick G. Schultz and Mark C. Wells

<PAGE>

Trustees, have executed or caused these presents to be duly executed by

proper officer thereunto authorized on the date and year first written

above.

PROMUS HOTEL CORPORATION

By: _________________________________
Vice President

THE TRUSTEES OF PROMUS HOTEL
CORPORATION SAVINGS AND
RETIREMENT PLAN

By: _________________________________
Robert S. Davis

By: _________________________________
Donald H. Dempsey

By: _________________________________
Patricia R. Ferguson

By: _________________________________
Jeffery M. Jarvis

By: _________________________________
Kelly R. Jenkins

By: _________________________________
Frederick G. Schultz

By: _________________________________
Mark C. Wells

Exhibit 10(11)

PROMUS HOTEL CORPORATION

, 1995
------------

- --------------------
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, TN 38138

Re: Severance Agreement
-------------------

Dear :
---------------

Promus Hotel Corporation (the "Company") considers it essential to the
best interest of its stockholders to foster the continuous employment of
key management personnel. In this connection, the Board of Directors of
the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members
of the Company's management, including yourself, to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company,
although no such change is now contemplated.

In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Subsection 2(b) hereof, the
Company agrees that you shall receive the severance benefits set forth in
this letter agreement ("this Agreement") in the event your employment with
the Company terminates subsequent to a "Change in Control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.

1. Term of Agreement. This Agreement shall commence on
-----------------
________________, 1995 and shall continue in effect through December 31,
19___; provided, however, that commencing on January 1, 19___ and each
-----------------
January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice that it does not wish
to extend this Agreement; provided, further, if a Change in Control of the
-----------------
Company shall have occurred during the original or extended term of this
Agreement, this Agreement shall automatically continue in effect for a
period of twenty-four months beyond the month in which such Change in
Control occurred.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 2

2. Change in Control.
-----------------

(a) No benefit shall be payable to you hereunder unless there shall
have been a Change in Control of the Company, as set forth below. For
purposes of this Agreement, a "Change in Control of the Company" shall be
deemed to have occurred, subject to subparagraph (iv) hereof, if any of the
events in subparagraphs (i), (ii) or (iii) occur:

(i) Any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than an employee benefit plan of the Company,
or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 25% or more of the Company's then outstanding voting securities
carrying the right to vote in elections of persons to the Board,
regardless of comparative voting power of such voting securities, and
regardless of whether or not the Board shall have approved such Change
in Control; or

(ii) During any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this Subsection) whose election
by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or

(iii) The holders of securities of the Company entitled to vote
thereon approve the following:

(A) A merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company,
other than a merger or consolidation which would result in the
voting securities of the Company carrying the right to vote in
elections of persons to the Board outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 80% of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to
the Board, or

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 3

such securities of such surviving entity outstanding immediately
after such merger or consolidation, or

(B) A plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

(iv) Notwithstanding the definition of a "Change in Control" of
the Company as set forth in this Section 2(a), the Human Resources
Committee of the Board (the "Committee") shall have full and final
authority, which shall be exercised in its discretion, to determine
conclusively whether a Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control and any
incidental matters relating thereto, with respect to a transaction or
series of transactions which have resulted or will result in a
substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of
transactions by the Committee in its sole discretion which
determination shall be final and conclusive) being held by a
corporation at least 80% of whose voting securities are held,
immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (determined
immediately prior to such transaction or series of transactions). The
Committee may exercise such discretionary authority without regard to
whether one or more of the transactions in such series of transactions
would otherwise constitute a Change in Control of the Company under
the definition set forth in this Section 2(a).

(b) For purposes of this Agreement, a "Potential Change in Control of
the Company" shall be deemed to have occurred if the following occur:

(i) The Company enters into an agreement or letter of intent,
the consummation of which would result in the occurrence of a Change
in Control of the Company;

(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;

(iii) Any person, other than an employee benefit plan of the
Company, or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the Company's then

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 4

outstanding voting securities carrying the right to vote in elections
of persons to the Board increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by such person
on the date hereof; or

(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.

You agree that, subject to the terms and conditions of this Agreement, in
the event of a Potential Change in Control of the Company, you will remain
in the employ of the Company (or the subsidiary thereof by which you are
employed at the date such Potential Change in Control occurs) until the
earliest of (x) a date which is six months from the occurrence of such
Potential Change in Control of the Company, (y) the termination by you of
your employment by reasons of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (z) the occurrence of a
Change in Control of the Company.

(a) Disability; Retirement. If, as a result of your incapacity due
----------------------
to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six consecutive
months, and within thirty days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement" shall mean
termination at age 65 (or later) with ten years of service or retirement in
accordance with any retirement contract between the Company and you.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 5

you have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of failure to substantially perform
your duties or of misconduct in accordance with the first sentence of this
Subsection, and of continuing such failure to substantially perform your
duties or misconduct as aforesaid after notice from the Board, and
specifying the particulars thereof in detail.

(c) Voluntary Resignation. After a Change in Control of the Company
---------------------
and for purposes of receiving the benefits provided in Subsection 4(c)
hereof, you shall be entitled to terminate your employment by voluntary
resignation given at any time during the two years following the occurrence
of a Change in Control of the Company hereunder. Such resignation shall
not be deemed a breach of any employment contract between you and the
Company.

(d) Notice of Termination. Any purported termination of your
---------------------
employment by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 6
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.

(e) Date of Termination, Etc. "Date of Termination" shall mean:
------------------------

(i) If your employment is terminated for Disability, thirty
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty day period), and

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 6

Subsection (c) above shall not be less than fifteen nor more than
sixty days, respectively, from the date such Notice of Termination is
given);

provided that if within fifteen days after any Notice of Termination is
- --------
given, or, if later, prior to the Date of Termination (as determined
without regard to this provision), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties,
by a binding arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
----------------
by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation,
bonus, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.

4. Compensation Upon Termination or During Disability Following a
--------------------------------------------------------------
Change of Control. Following a Change in Control of the Company, as
- -----------------
defined in Subsection 2(a), upon termination of your employment or during a
period of Disability, you shall be entitled to the following benefits:

(a) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in
effect at the commencement of any such period, together with all
compensation payable to you under the Company's Bonus Plan, Restricted
Stock Plan, and other incentive compensation plans during such period,
until this Agreement is terminated pursuant to Section 3(a) hereof.
Thereafter, or in the event your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined
under the Company's retirement, insurance and other compensation programs
then in effect in accordance with the terms of such programs, subject to
Subsection 4(e) hereof.

(b) If your employment shall be terminated by the Company for Cause,
the

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 7

Company shall pay you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company shall have no
further obligations to you under this Agreement.

(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you by
voluntary resignation, then you shall be entitled to the benefits provided
below:

(i) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation or benefit plan of the Company, at the time
such payments are due;

(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you a lump sum severance payment (the "Severance
Payment") equal to 2.99 times the average of the Annual Compensation
(as defined below) which was payable to you by the Company (including
for periods prior to the commencement date of your employment with the
Company, The Promus Companies Incorporated or its affiliates, and for
periods prior to February 7, 1990, Holiday Corporation or its
affiliates), or any corporation affiliated with the Company within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), for the five calendar years preceding the
calendar year in which the Change in Control occurred. Such average
shall be determined in accordance with proposed, temporary or final
regulations promulgated under Section 280G(d) of the Code, or, in the
absence of such regulations, if you were not employed by the Company
(including for this purpose The Promus Companies Incorporated or its
affiliates for periods prior to the commencement date of your
employment with the Company and Holiday Corporation or its affiliates
for the period prior to February 7, 1990) or its affiliates during the
entire five calendar years preceding the calendar year in which the
Change in Control occurred, then such average shall be the average of
your Annual Compensation for the complete calendar years (if any) and
partial calendar year (if any) during which you were so employed
provided that the amount for any such partial calendar year shall be
--------
an annualized amount based on the amount of Annual Compensation paid
to you during the partial calendar year. If you were not employed by
the Company or its affiliates, or, for periods prior to the
commencement date of your employment with the Company, The Promus
Companies Incorporated or its affiliates, or, for periods prior to
February 7, 1990,

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 8

Holiday Corporation or its affiliates during such preceding calendar
year, then such average shall be an annualized amount based on the
amount of Annual Compensation paid to you during the calendar year in
which the Change of Control occurred. Annual Compensation is your
base salary and your annual bonus under the Annual Management Bonus
Plan of the Company that was payable to you by the Company or any of
its affiliates (including for this purpose base salary and bonus
payable to you by The Promus Companies Incorporated or its affiliates
for periods prior to the commencement date of your employment with the
Company and Holiday Corporation or its affiliates for periods prior to
February 7, 1990) that was payable to you during a calendar year
determined without any reduction for any deferrals of such salary or
such bonus under any deferred compensation plan (qualified or
unqualified) and without any reduction for any salary reductions used
for making contributions to any group insurance plan of the Company
(including for this purpose The Promus Companies Incorporated or its
affiliates for periods prior to the commencement date of your
employment with the Company and Holiday Corporation or its affiliates
for periods prior to February 7, 1990) or its affiliates.

(iii) The Company shall also pay to you the amounts of any
compensation or awards payable to you or due to you in respect of any
period preceding the Date of Termination under any incentive
compensation plan of the Company (including, without limitation, the
Company's Restricted Stock Plan and Stock Option Plan (the "Option
Plan") and under any agreements with you in connection therewith, and
shall make any other payments and take any other actions provided for
in such plans and agreements.

(iv) In lieu of shares of common stock of the Company ("Company
Shares") issuable upon exercise of outstanding options, if any
("Options") granted to you under the Option Plan (which Options shall
be cancelled upon the making of the payment referred to below), you
shall receive an amount in cash equal to the product of (y) the excess
of, the higher of the closing price of Company Shares as reported on
the New York Stock Exchange on or nearest the Date of Termination (or,
if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in Company Shares is highest)
or the highest per share price for Company Shares actually paid in
connection with any change in control of the Company, over the per
share exercise price of each Option held by you (whether or not then
fully exercisable), times (z) the number of Company Shares covered by
each such option.

(v) The Company shall also pay to you all legal fees and
expenses incurred

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 9

by you as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder).

(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the
Severance Payments will be subject to the tax (the "Excise Tax")
imposed by section 4999 of the Code, the Company shall pay to you at
the time specified in paragraph (vii), below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by you,
after deduction of any Excise Tax on the Severance Payments and any
federal (and state and local) income tax and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount
of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock
granted to you in 1990 in connection with the merger of Holiday
Corporation with and into a subsidiary of Bass plc and which were
issued in substitution of shares of Holiday Corporation restricted
stock granted to you on or after November 11, 1986 in connection with
the 1987 recapitalization of Holiday Corporation (the "Excluded
Severance Payments"). For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of
such Excise Tax the following will apply:

(A) Any other payments or benefits received or to be
received by you in connection with a Change in Control of the
Company or your termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person) shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless
in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to you such other payments or
benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4) of the Code in excess of
the base amount within the meaning of section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax;

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 10

(B) The amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (y) the total amount of the Severance Payments or (z) the
amount of excess parachute payments within the meaning of section
280G(b)(1) (after applying clause (A), above); and

(C) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
independent auditors in accordance with proposed, temporary or
final regulations under Sections 280G(d)(3) and (4) of the Code
or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the Date of Termination,
net of the maximum reduction in Federal income taxes which could
be obtained from deduction of such state and local taxes. In the
event that the amount of Excise Tax attributable to Severance
Payments other than the Excluded Severance Payments is
subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment,
you shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined the portion of
the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax
and Federal (and state and local) income tax imposed on the
Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or a Federal (and state and local)
income tax deduction) plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax attributable to Severance
Payments other than the Excluded Severance Payments is determined
to exceed the amount taken into account hereunder at the time of
the termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.

(vii) The payments provided for in paragraphs (ii), (iii), (iv)
and (vi) above,

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 11

shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such
-------- -------
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you
payable on the fifth day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of
the Code).

(d) If your employment shall be terminated (y) by the Company other
than for Cause, Retirement or Disability or (z) by you voluntarily, then
for a twenty-four month period after such termination, the Company shall
arrange to provide you with life, disability, accident and health insurance
benefits substantially similar to those which you are receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(d) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four month period
following your termination, and any such benefits actually received by you
shall be reported to the Company.

(e) In the event a Change in Control of the Company occurs after you
and the Company have entered into any retirement agreement including an
agreement providing for early retirement, then the present value, computed
using a discount rate of 8% per annum, of the total amount of all unpaid
deferred payments as payable to you in accordance with the payment schedule
that you elected when the deferral was agreed to and using the plan
interest rate applicable to your situation, or other payments payable or to
become payable to you or your estate or beneficiary under such retirement
agreement (other than payments payable pursuant to a plan qualified under
section 401(a) of the Internal Revenue Code) including, without limitation,
any unpaid deferred payments under the Company's Executive Deferred
Compensation Plan and the Company's other deferred compensation plans shall
be paid to you (or your estate or beneficiary if applicable) in cash within
five business days after the occurrence of the Change in Control of the
Company. If you and the Company or its affiliates have executed a
retirement agreement and if the Change in Control of the Company occurs
before the effective date of your retirement, then you shall receive the
Severance Payment payable under Subsection 4(c)(ii) herein in addition to
the present value of your unpaid deferred retirement payments and other
payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any beneficiary

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 12

are entitled under such retirement agreement shall continue in effect
notwithstanding the Change in Control of the Company. This Subsection 4(e)
shall survive your retirement.

(f) Notwithstanding that a Change in Control shall not have yet
occurred, if you so elect, by written notice to the Company given at any
time after the date hereof and prior to the time such amounts are otherwise
payable to you:

(i) The Company shall deposit with an escrow agent, pursuant to
an escrow agreement between the Company and such escrow agent, a sum
of money, or other property permitted by such escrow agreement,
sufficient in the opinion of the Company's management to fund payment
of the following amounts to you, as such amounts become payable:

(A) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under the Company's Executive
Deferred Compensation Plan and under any agreements related
thereto in existence at the time of your election to make the
deposit into escrow.

(B) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate by reason of your deferral of
payments payable to you prior to the date of your election to
make the deposit into escrow under any other deferred
compensation agreements between you and the Company in existence
at the time of your election to make the deposit into escrow,
including but not limited to deferred compensation agreements
relating to the deferral of salary or bonuses.

(C) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under any agreement relating to
your retirement from the Company (including payments described
under Subsection 4(e) above) which agreement is in existence at
the time of your election to make the deposit into escrow, other
than amounts payable by a plan qualified under Section 401(a) of
the Code.

(D) Subject to the approval of the Committee, amounts then
due and payable to you, but not yet paid, under any other benefit
plan or incentive compensation plan of the Company (whether such
amounts are stock or cash) other than amounts payable to you
under a plan qualified under section 401(a) of the Code.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 13

(ii) Upon the occurrence of a Potential Change of Control, the
Company shall deposit with an escrow agent (which shall be the same
escrow agent, if one exists, acting pursuant to clause (i) of this
subsection 4(f)), pursuant to an escrow agreement between the Company
and such escrow agent, a sum of money, or other property permitted by
such escrow agreement, sufficient in the opinion of Company management
to fund the payment to you of the amounts specified in Subsection 4(c)
of this Agreement.

(iii) It is intended that any amounts deposited in escrow
pursuant to the provisions of clause (i) or (ii) of this Subsection
4(f), be subject to the claims of the Company's creditors, as set
forth in the form of such escrow agreement.

(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Company, or otherwise (except
as specifically provided in this Section 4).

(h) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under any benefit plan of the Company in which you participate to the
extent such benefits are not paid under this Agreement.

5. Successors; Binding Agreement.
-----------------------------

(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment voluntarily
following a Change in Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 14

(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.

6. Notice. For the purpose of this Agreement, notices and all other
------
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to
the Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

7. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law. The
obligations of the Company under Section 4 shall survive the expiration of
the term of this Agreement.

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

9. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 15

10. Arbitration. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration
in Memphis, Tennessee in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that you shall be entitled to seek specific performance of your right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

11. Similar Provisions in Other Agreement. The Severance Payment
-------------------------------------
under this Agreement supersedes and replaces any other severance payment to
which you may be entitled under any previous agreement between you and the
Company (including for this purpose The Promus Companies Incorporated or
its affiliates) or its affiliates.

<PAGE>

[Name of Executive]
, 1995
- ------ ---
Page 16

If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our binding agreement on this subject.

Very truly yours,

PROMUS HOTEL CORPORATION

BY:
-----------------------------------------------

Agreed to as of this day
------
of , 1995.
-----

- -----------------------------------------------
[Name of Executive]

Exhibit 10(12)

PROMUS HOTEL CORPORATION

___________, 1995

_____________________
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138

Re: Severance Agreement
-------------------

Dear _________________:

1. Term of Agreement. This Agreement shall commence on ,
----------------- -----------
1995 and shall continue in effect through December 31, 19 ; provided,
--- ---------
however, that commencing on January 1, 19 and each January 1 thereafter,
- ------- ---
the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year,
the Company shall have given notice that it does not wish to extend this
Agreement; provided, further, if a Change in Control of the Company shall
-----------------
have occurred during the original or extended term of this Agreement, this
Agreement shall automatically

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 2

continue in effect for a period of twenty-four months beyond the month in
which such Change in Control occurred.

2. Change in Control.
-----------------

(iii) The holders of securities of the Company entitled to
vote thereon approve the following:
(A) A merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company,
other than a merger or consolidation which would result in the
voting securities of the Company carrying the right to vote in
elections of persons to the Board outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 80% of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to
the Board, or

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 3

such securities of such surviving entity outstanding immediately
after such merger or consolidation, or

(B) A plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

(b) For purposes of this Agreement, a "Potential Change in Control of
the Company" shall be deemed to have occurred if the following occur:

(i) The Company enters into an agreement or letter of intent,
the consummation of which would result in the occurrence of a Change
in Control of the Company;

(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 4

Board increases his beneficial ownership of such securities by 5% or
more over the percentage so owned by such person on the date hereof;
or

(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.

You agree that, subject to the terms and conditions of this Agreement,
in the event of a Potential Change in Control of the Company, you will
remain in the employ of the Company (or the subsidiary thereof by which you
are employed at the date such Potential Change in Control occurs) until the
earliest of (x) a date which is six months from the occurrence of such
Potential Change in Control of the Company, (y) the termination by you of
your employment by reasons of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (z) the occurrence of a
Change in Control of the Company.

(c) Good Reason. For purposes of this Agreement, "Good Reason" shall
-----------
mean, without your express written consent, the occurrence after a Change
in Control of the Company of any of the following circumstances unless, in
the case of paragraphs (i), (v), (vi), (vii) or (viii), such circumstances
are fully corrected prior to the Date of Termination specified in the
Notice of Termination, as defined in Subsections 3(e) and 3(d),
respectively, given in respect thereof:

(i) The assignment to you of any duties inconsistent with your
status as an executive officer of the Company or a substantial adverse
alteration in the nature or status of your responsibilities from those
in effect immediately prior to the Change in Control of the Company;

(ii) A reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all executives of the Company and all executives of any person in
control of the Company;

(iii) The relocation of the Company's principal executive
offices where you are working immediately prior to the Change in
Control of the Company to a location more than 50 miles from the
location of such offices immediately prior to the Change in Control of
the Company or the Company's requiring you to be based anywhere other
than the location of the Company's principal executive offices where
you were working immediately prior to the Change in Control of the
Company except for required travel on the Company's business to an
extent substantially consistent with your present business travel
obligations;

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 5

(iv) The failure by the Company, without your consent, to pay to
you any portion of your current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all
executives of the Company and all executives of any person in control
of the Company, or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company, within thirty days of the date such compensation is due;

(v) The failure by the Company to continue in effect any
compensation plan in which you are participating immediately prior to
the Change in Control of the Company which is material to your total
compensation, including but not limited to, the Company's Bonus Plan,
Executive Deferred Compensation Plan, Restricted Stock Plan, or any
substitute plans adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of your participation relative to other participants, as existed
immediately prior to the Change in Control of the Company;

(vi) The failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of
the Company's pension, savings and retirement plan, life insurance,
medical, health and accident, or disability plans in which you were
participating at the time of the Change in Control of the Company, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control of
the Company, or the failure by the Company to provide you with the
number of paid vacation days to which you are entitled on the basis of
years of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in Control
of the Company;

(vii) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or

(viii) Any purported termination of your employment by the
Company which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection 3(d) hereof and the
requirements of Subsection 3(b) above; for purposes of this Agreement,
no such purported termination shall be effective.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 6

Your right to terminate your employment pursuant to this Agreement for
Good Reason shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good
Reason hereunder.

3. Termination Following Change in Control. If any of the events
---------------------------------------
described in Subsection 2(a) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided
in Subsection 4(c) hereof upon the subsequent termination of your
employment if such termination is (y) by the Company other than for Cause,
Retirement or Disability, or (z) by you for Good Reason.
(a) Disability; Retirement. If, as a result of your incapacity due
----------------------
to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six consecutive
months, and within thirty days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement" shall mean
termination at age 65 (or later) with ten years of service or retirement in
accordance with any retirement contract between the Company and you.

(b) Cause. Termination by the Company of your employment for "Cause"
-----
shall mean termination upon your engaging in willful and continued
misconduct, or your willful and continued failure to substantially perform
your duties with the Company (other than due to physical or mental
illness), if such failure or misconduct is materially damaging or
materially detrimental to the business and operations of the Company,
provided that you shall have received written notice of such failure or
- --------
misconduct and shall have continued to engage in such failure or misconduct
after 30 days following receipt of such notice from the Board, which notice
specifically identifies the manner in which the Board believes that you
have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of failure to substantially perform
your duties or of misconduct in accordance with the first sentence of this
Subsection, and of continuing such failure to substantially perform your
duties or misconduct as aforesaid after notice from the Board, and
specifying the particulars thereof in detail.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 7

(c) Voluntary Resignation. After a Change in Control of the Company
---------------------
and for purposes of receiving the benefits provided in Subsection 4(c)
hereof, you shall be entitled to terminate your employment by voluntary
resignation given at any time during the two years following the occurrence
of a Change in Control of the Company hereunder, provided such resignation
--------
is by you for Good Reason. Such resignation shall not be deemed a breach
of any employment contract between you and the Company.

(e) Date of Termination, Etc. "Date of Termination" shall mean:
------------------------

(i) If your employment is terminated for Disability, thirty days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such
thirty day period), and

(ii) If your employment is terminated pursuant to Subsection (b)
or (c) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (b) above shall not be less than
thirty days, and in the case of a termination pursuant to Subsection
(c) above shall not be less than fifteen nor more than sixty days,
respectively, from the date such Notice of Termination is given);

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 8

compensation, bonus, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.

(b) If your employment shall be terminated by the Company for Cause,
the Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.

(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you for
Good Reason, then you shall be entitled to the benefits provided below:

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 9

Company (including for periods prior to the commencement date of your
employment with the Company, The Promus Companies Incorporated or its
affiliates, and, for periods prior to February 7, 1990, provided that
your employment with The Promus Companies Incorporated or its affiliates
commenced on or about February 7, 1990 and you were employed by Holiday
Corporation or its affiliates immediately prior to your commencement of
employment with The Promus Companies Incorporated or its affiliates,
Holiday Corporation or its affiliates) or any corporation affiliated with
the Company within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"), for the five calendar years
preceding the calendar year in which the Change in Control occurred.
Such average shall be determined in accordance with proposed,
temporary or final regulations promulgated under Section 280G(d) of
the Code, or, in the absence of such regulations, if you were not
employed by the Company or its affiliates (including as the "Company"
for this purpose The Promus Companies Incorporated or its affiliates
for periods prior to the commencement date of your employment with the
Company, and, provided that your employment with The Promus Companies
Incorporated or its affiliates commenced on or about February 7, 1990
and you were employed by Holiday Corporation or its affiliates
immediately prior to your commencement of employment with The Promus
Companies Incorporated or its affiliates, Holiday Corporation or its
affiliates for periods prior to February 7, 1990) during the entire
five calendar years preceding the calendar year in which the Change in
Control occurred, then such average shall be an average of your Annual
Compensation for the complete calendar years (if any) and partial
calendar year (if any) during which you were so employed provided that
--------
the amount for any such partial calendar year shall be an annualized
amount based on the amount of Annual Compensation paid to you during
the partial calendar year. If you were not employed by the Company or
its affiliates, The Promus Companies Incorporated or its affiliates or
Holiday Corporation or its affiliates during such preceding calendar
year, then such average shall be an annualized amount based on the
amount of Annual Compensation paid to you during the calendar year in
which the Change of Control occurred. Annual Compensation is your
base salary and your annual bonus under the Annual Management Bonus
Plan of the Company that was payable to you by the Company or any of
its affiliates (including for this purpose base salary and bonus
payable to you by The Promus Companies Incorporated or its affiliates
for periods prior to the commencement date of your employment with the
Company, and, provided that your employment with The Promus Companies
Incorporated or its affiliates commenced on or about February 7, 1990
and you were employed by Holiday Corporation or its affiliates
immediately prior to your commencement of employment with The Promus
Companies Incorporated or its affiliates, Holiday Corporation or its
affiliates for periods prior to February 7, 1990) that was payable to
you during a calendar year determined without any reduction for any
deferrals of such salary or such bonus

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 10

under any deferred compensation plan (qualified or unqualified) and
without any reduction for any salary reductions used for making
contributions to any group insurance plan of the Company or its
affiliates (including as the "Company" for this purpose The Promus
Companies Incorporated or its affiliates for periods prior to the
commencement date of your employment with the Company, and, provided
that your employment with The Promus Companies Incorporated or its
affiliates commenced on or about February 7, 1990 and you were
employed by Holiday Corporation or its affiliates immediately prior to
your commencement of employment with The Promus Companies Incorporated
or its affiliates, Holiday Corporation or its affiliates for periods
prior to February 7, 1990).

(v) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Code to any payment or benefit provided
hereunder).

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 11

(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the
Severance Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to you at
the time specified in paragraph (vii), below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by you,
after deduction of any Excise Tax on the Severance Payments and any
federal (and state and local) income tax and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount
of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock
granted to you in 1990 in connection with the merger of Holiday
Corporation with and into a subsidiary of Bass plc and which were
issued in substitution of shares of Holiday Corporation restricted
stock granted to you on or after November 11, 1986 in connection with
the 1987 recapitalization of Holiday Corporation (the "Excluded
Severance Payments"). For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of
such Excise Tax the following will apply:

(A) Any other payments or benefits received or to be
received by you in connection with a Change in Control of the
Company or your termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless
in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to you such other payments or
benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax;

(B) The amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (y) the total amount of the Severance Payments or (z) the
amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (A), above); and

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 12

(C) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
independent auditors in accordance with proposed, temporary or
final regulations under Sections 280G(d)(3) and (4) of the Code
or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the Date of Termination,
net of the maximum reduction in Federal income taxes which could
be obtained from deduction of such state and local taxes. In the
event that the amount of Excise Tax attributable to Severance
Payments other than the Excluded Severance Payment is
subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment,
you shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined the portion of
the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax
and Federal (and state and local) income tax imposed on the
Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or a Federal (and state and local)
income tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax attributable to Severance
Payments other than the Excluded Severance Payment is determined
to exceed the amount taken into account hereunder at the time of
the termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.

(vii) The payments provided for in paragraphs (ii), (iii),
(iv) and (vi) above, shall be made not later than the fifth day
following the Date of Termination, provided, however, that if the
-------- -------
amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 13

amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to you payable on the fifth day after
demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).

(d) If your employment shall be terminated (y) by the Company other
than for Cause, Retirement or Disability or (z) by you voluntarily for Good
Reason, then for a twenty-four month period after such termination, the
Company shall arrange to provide you with life, disability, accident and
health insurance benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection 4(d) shall be
reduced to the extent comparable benefits are actually received by you
during the twenty-four month period following your termination, and any
such benefits actually received by you shall be reported to the Company.

(e) In the event a Change in Control of the Company occurs after you
and the Company have entered into any retirement agreement including an
agreement providing for early retirement, then the present value, computed
using a discount rate of 8% per annum, of the total amount of all unpaid
deferred payments as payable to you in accordance with the payment schedule
that you elected when the deferral was agreed to and using the plan
interest rate applicable to your situation, or other payments payable or to
become payable to you or your estate or beneficiary under such retirement
agreement (other than payments payable pursuant to a plan qualified under
Section 401(a) of the Internal Revenue Code) including, without limitation,
any unpaid deferred payments under the Company's Executive Deferred
Compensation Plan and the Company's other deferred compensation plans shall
be paid to you (or your estate or beneficiary if applicable) in cash within
five business days after the occurrence of the Change in Control of the
Company. If you and the Company or its affiliates have executed a
retirement agreement and if the Change in Control of the Company occurs
before the effective date of your retirement, then you shall receive the
Severance Payment payable under Subsection 4(c)(ii) herein in addition to
the present value of your unpaid deferred retirement payments and other
payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any beneficiary are entitled under such
retirement agreement shall continue in effect notwithstanding the Change in
Control of the Company. This Subsection 4(e) shall survive your
retirement.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 14

Company's management to fund payment of the following amounts to you,
as such amounts become payable:

(ii) Upon the occurrence of a Potential Change of Control, the
Company shall deposit with an escrow agent (which shall be the same
escrow agent, if one exists, acting pursuant to clause (i) of this
Subsection 4(f)), pursuant to an escrow agreement between the Company
and such escrow agent, a sum of money, or other property permitted by
such escrow agreement, sufficient in the opinion of Company management
to fund the payment to you of the amounts specified in Subsection 4(c)
of this Agreement.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 15

5. Successors; Binding Agreement.
-----------------------------

(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment voluntarily for Good
Reason following a Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 16

Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

<PAGE>

[Name of Executive]
, 1995
- ------- ---
Page 17

Very truly yours,

PROMUS HOTEL CORPORATION

BY:_________________________
Name:
Title:

Agreed to as of this _____ day
of , 1995.
-------------------------

____________________________
[Name of Executive]

Exhibit 99(1)

Ralph Berry, The Promus Companies
(901) 762-8629

PROMUS ANNOUNCES THE SATISFACTION OF
------------------------------------
CONDITION TO SPIN-OFF HOTEL BUSINESS
------------------------------------

MEMPHIS, June 14, 1995 -- The Promus Companies Incorporated
(NYSE:PRI) today announced the satisfaction of the final
conditions to the spin-off of its wholly-owned subsidiary, Promus
Hotel Corporation (NYSE:PRH).

On May 26, 1995, stockholders of Promus approved the spin-
off and Promus' Board of Directors declared a dividend of shares
of Promus Hotel conditioned upon the occurrence of certain events
prior to June 19, 1995. The Executive Committee of Promus' Board
has determined that all necessary events have occurred and that
the conditions to the dividend have been satisfied: First, the
gaming regulatory authorities of the State on New Jersey approved
the spin-off on May 31, 1995. Second, the holders of a majority
of the outstanding aggregate principal amount of each of the 10
7/8 percent Senior Subordinated Notes due 2002 and the 8 3/4
percent Senior Subordinated Notes due 2000 of Embassy Suites,
Inc. consented to certain indenture amendments to permit the
spin-off. Third, on June 7, 1995, Promus, Embassy and Promus
Hotel entered into Credit Agreement with NationsBank, N.A.
(Carolinas) and NationsBanc Capital Market, Inc. to provide
Promus Hotel with financing of up to $350 millon. Fourth, all
other material third party consents have been received.

Stockholders will receive one share of the new hotel company
for each two shares of The Promus Companies owned on June 21,
1995, the record date for the dividend, The Promus Hotel shares
will be distributed on June 30, 1995, and, on that date The
Promus Companies will change its name it Harrah's Entertainment,
Inc. (NYSE:HET). It is currently anticipated that the Promus
Hotel common stock and the Harrah's Entertainment common stock
(ex-distribution) will each begin trading on a "when-issued"
basis on the New York Stock Exchange on or before June 19, 1995.