U.S. SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

                                      Form 10-Q

          (Mark One)

          [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR (15)d OF THE
               SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended March 31, 1998
                                              --------------
               OR

          [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

               For the transition period              to
                                         ------------    ------------

               Commission file number 001-13957
                                      ---------

                          CAVANAUGHS HOSPITALITY CORPORATION
                ------------------------------------------------------
                (Exact name of registrant as specified in its charter)

                    Washington                               91-1032187    
          -------------------------------               -------------------
          (State or other jurisdiction of                (I.R.S. Employer  
          incorporation or organization)                Identification No.)


                201 W. North River Drive, Suite 100, Spokane, WA 99201
                ------------------------------------------------------
                       (Address of principal executive office)


                                    (509) 459-6100
                 ----------------------------------------------------
                             (Issuer's telephone number)

          Check whether the issuer (1) filed all reports required to be
          filed by Section 13 or 15(d) of the Exchange Act during the past
          12 months (or for such shorter period that the registrant was
          required to file such reports), and (2) has been subject to such
          filing requirements for the past 90 days.  Yes        No   X  
                                                         -----     -----

          As of April 30, 1998, there were 13,046,503 shares of the
          Registrant's common stock outstanding.
          
<PAGE>
                       CAVANAUGHS HOSPITALITY CORPORATION

                                    Form 10-Q
                      For the Quarter Ended March 31, 1998

     INDEX


     Part I - Financial Information


              Item 1 - Financial Statements:

                       - Consolidated Balance Sheets -- December 31, 1997
                         and March 31, 1998

                       - Consolidated Statements of Operations and
                         Comprehensive Loss -- Three Months Ended March 31,
                         1997 and 1998

                       - Consolidated Statements of Cash Flows -- Three
                         Months Ended March 31, 1997 and 1998

                       - Notes to Consolidated Financial Statements


              Item 2 - Management's Discussion and Analysis of Financial
                       Condition and Results of Operations


     PART II - Other Information
     
<PAGE>

     Part I - Financial Information

     ITEM 1.  FINANCIAL STATEMENTS

     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     December 31, 1997 and March 31, 1998
     (in thousands, except share data)


                                                   December 31,  March 31,
                                                   1997          1998
                                                   ------------  ---------
     ASSETS

     Current assets:
       Cash and cash equivalents                     $  4,955    $  8,206
       Accounts receivable                              2,785       2,652
       Inventories                                        427         483
       Prepaid expenses and deposits                    1,100       2,160
                                                     --------    --------
           Total current assets                         9,267      13,501

     Property and equipment, net                      112,234     137,559
     Other assets, net                                  3,616       3,726
                                                     --------    --------
           Total assets                              $125,117    $154,786
                                                     ========    ========

     LIABILITIES AND STOCKHOLDERS' AND 
     PARTNERS' EQUITY

     Current liabilities:
       Payable to affiliate                          $  1,133    $    933
       Note payable to bank                             1,075       3,000
       Accounts payable                                 3,234       3,235
       Accrued payroll and related benefits               983       1,039
       Accrued interest payable                           689         832
       Other accrued expenses                           2,882       4,378
       Long-term debt, due within one year              3,590       1,241
       Capital lease obligations, due within 
         one year                                         502         508
                                                     --------    --------
           Total current liabilities                   14,088      15,166

     Long-term debt, due after one year                94,419     123,253
     Capital lease obligations, due after 
       one year                                         2,139       2,023
     Deferred income taxes                              5,415       5,415
     Minority interest in partnerships                    524         484
                                                     --------    --------
           Total liabilities                          116,585     146,341
                                                     --------    --------
     Commitments and contingencies 
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED BALANCE SHEETS (UNAUDITED), CONTINUED
     December 31, 1997 and March 31, 1998
     (in thousands, except share data)


                                                   December 31,  March 31,
                                                   1997          1998
                                                   ------------  ---------
     Stockholders' and partners' equity:
       Preferred stock - 5,000,000 shares author-
         ized, $0.01 par value, -0- shares issued
         and outstanding                             $     --    $     --
       Common stock - 50,000,000 shares author-
         ized, $0.01 par value; 7,072,025 and
         7,084,253 shares issued and outstanding           71          71
       Partners' deficit                                 (879)          0
       Additional paid-in capital                       3,935       3,056
       Retained earnings                                5,405       5,318
                                                     --------    --------
           Total stockholders' and partners' 
             equity                                     8,532       8,445
                                                     --------    --------
           Total liabilities and stockholders' 
             and partners' equity                    $125,117    $154,786
                                                     ========    ========

     The accompanying notes are an integral part of the consolidated
       financial statements.
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
     (UNAUDITED)
     for the three months ended March 31, 1997 and 1998
     (in thousands, except per share data)


                                                       1997       1998
                                                       --------   --------
     Revenues:
       Hotels and restaurants
         Rooms                                         $  4,391   $  6,884
         Food and beverage                                2,895      4,175
         Other                                              615        782
                                                       --------   --------
             Total hotels and restaurants                 7,901     11,841

       Entertainment, management and services             1,012      1,018
       Rental operations                                  1,618      1,776
                                                       --------   --------
             Total revenues                              10,531     14,635
                                                       --------   --------
     Operating expenses:
       Direct:
         Hotels and restaurants:
           Rooms                                          1,427      2,091
           Food and beverage                              2,446      3,558
           Other                                            226        337
                                                       --------   --------
             Total hotels and restaurants                 4,099      5,986

         Entertainment, management and services             615        697
         Rental operations                                  367        385
                                                       --------   --------
             Total direct expenses                        5,081      7,068
                                                       --------   --------
       Undistributed operating expenses:
         Selling, general and administrative              1,720      1,996
         Property operating costs                         1,245      1,796
         Depreciation and amortization                    1,136      1,338
                                                       --------   --------
             Total undistributed operating expenses       4,101      5,130
                                                       --------   --------
             Total expenses                               9,182     12,198
                                                       --------   --------
     Operating income                                     1,349      2,437

     Other income (expense):
       Interest expense, net of amounts capitalized      (2,355)    (2,679)
       Interest income                                       93         70
       Other income                                         346         --
       Minority interest in partnerships                     49         40
                                                       --------   --------
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
     (UNAUDITED), CONTINUED
     for the three months ended March 31, 1997 and 1998
     (in thousands, except per share data)


                                                       1997       1998
                                                       --------   --------
     Loss before income taxes                          $   (518)  $   (132)
     Income tax benefit                                    (173)       (45)
                                                       --------   --------
     Net loss                                          $   (345)  $    (87)
                                                       ========   ========
     Comprehensive loss                                $   (345)  $    (87)
                                                       ========   ========
     Net loss per share   basic and diluted            $  (0.05)  $  (0.01)
                                                       ========   ========
     Weighted-average shares outstanding                  7,072      7,084
                                                       ========   ========

     The accompanying notes are an integral part of the consolidated
       financial statements.
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
     for the three months ended March 31, 1997 and 1998
     (in thousands)

                                                       1997       1998
                                                       --------   --------
     Operating activities:
       Net loss                                        $   (345)  $    (87)
       Adjustments to reconcile net loss to net
         cash provided by operating activities:
           Depreciation and amortization                  1,136      1,319
           Minority interest in partnerships                (49)       (40)
           Change in:
             Accounts receivable                            543        133
             Inventories                                     11        (56)
             Prepaid expenses and deposits                 (355)    (1,060)
             Accounts payable                               (67)        --
             Accrued payroll and related benefits            56         56
             Accrued interest payable                        57        143
             Other accrued expenses                        (599)     1,497
                                                       --------   --------
               Net cash provided by operating 
                 activities                                 388      1,905
                                                       --------   --------
     Investing activities:
       Additions to property and equipment               (1,897)    (5,664)
       Proceeds from disposition of property and
         equipment                                          703
       Other, net                                          (170)      (249)
                                                       --------   --------
               Net cash used in investing activities     (1,364)    (5,913)
                                                       --------   --------
     Financing activities:
       Distributions to stockholders and partners          (144)        --
       Dividends to stockholders                           (106)        --
       Proceeds from note payable to bank                    34      1,925
       Proceeds from long-term debt                       2,694      6,406
       Repayment of long-term debt                       (1,003)      (744)
       Purchase and retirement of common stock             (163)        --
       Principal payments on capital lease 
         obligations                                       (109)      (128)
       Advances from (payments to) affiliate               (233)      (200)
                                                       --------   --------
         Net cash provided by (used in) financing 
           activities                                       970      7,259
                                                       --------   --------
     Change in cash and cash equivalents:
       Net increase (decrease) in cash and cash 
         equivalents                                         (6)     3,251
       Cash and cash equivalents at beginning of 
         period                                           5,703      4,955
                                                       --------   --------
       Cash and cash equivalents at end of period      $  5,697   $  8,206
                                                       ========   ========
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION
     CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
     and the three months ended March 31, 1997 and 1998
     (in thousands)

                                                       1997       1998
                                                       --------   --------
     Supplemental disclosure of cash flow 
       information:
         Cash paid during period for:
           Interest (net of amount capitalized)        $  2,298   $  2,550
           Income taxes                                     125         --
         Noncash investing and financing activities:
           Issuance of operating partnership units 
             for Lincoln Building                                      880
           Acquisition of property through assumption
             of debt and capital leases                             20,841


     The accompanying notes are an integral part of the consolidated
       financial statements.
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      1.  QUARTERLY INFORMATION:

          The unaudited consolidated financial statements included herein
          have been prepared by Cavanaughs Hospitality Corporation (the
          Company) pursuant to the rules and regulations of the Securities
          and Exchange Commission (SEC).  Certain information and footnote
          disclosures normally included in financial statements prepared in
          accordance with generally accepted accounting principles have
          been condensed or omitted as permitted by such rules and
          regulations.  The balance sheet as of December 31, 1997 has been
          compiled from the audited balance sheet as of such date.  The
          Company believes that the disclosures included herein are
          adequate; however, these consolidated statements should be read
          in conjunction with the financial statements and the notes
          thereto for the period ended December 31, 1997 previously filed
          with the SEC on Form S-1 which was effective in April 1998.

          In the opinion of management, these unaudited consolidated
          financial statements contain all of the adjustments normal and
          recurring in nature, necessary to present fairly the consolidated
          financial position of the Company at March 31, 1998 and the
          consolidated results of operations and cash flows for the three
          months ended March 31, 1998 and 1997.  The results of operations
          for the periods presented may not be indicative of those which
          may be expected for a full year.

      2.  ORGANIZATION:

          At March 31, 1997, the Company controlled and operated (through
          ownership or lease with purchase option agreements) seven hotel
          properties.  At March 31, 1998, the Company controlled and
          operated eleven hotel properties in Seattle, Spokane, Yakima and
          Kennewick, Washington; Post Falls and Idaho Falls, Idaho; and
          Kalispell, Montana under its Cavanaughs(TM) brand.  Additionally,
          the Company provides computerized ticketing for entertainment
          events and arranges Broadway and other entertainment event
          productions.  The Company also leases retail and office space in
          buildings owned by the Company and manages residential and
          commercial properties in Washington, Idaho and Montana.  The
          Company's operations are classified into three divisions:  (1)
          hotels and restaurants, (2) entertainment, management and
          services, and (3) rental operations.

          Prior to January 1, 1998, the financial statements included the
          combined operations of Cavanaughs Hospitality Corporation
          (including its merged and predecessor entities) and G&B: Lincoln
          Building Limited Partnership (Lincoln Building).  On January 1,
          1998, the Company issued common stock and units in the Cavanaughs
     
<PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  ORGANIZATION, CONTINUED:

          Hospitality Operating Partnership (OP Units) to the partners of
          Lincoln Building in exchange for the assets and liabilities of
          Lincoln Building.  Therefore, consolidated financial statements
          of the Company are presented at March 31, 1998. 


      3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

            Earnings Per Share
            ------------------
            In February 1997, Statement of Financial Accounting Standards
            (SFAS) No. 128, "Earnings Per Share," was issued.  SFAS No. 128
            establishes standards for computing and presenting earnings per
            share (EPS) and simplifies the existing standards.  This
            standard replaces the presentation of primary EPS with a
            presentation of basic EPS.  It also requires the dual
            presentation of basic and diluted EPS on the face of the income
            statement for all entities with complex capital structures and
            requires a reconciliation of the numerator and denominator of
            the basic EPS computation to the numerator and denominator of
            the diluted EPS computation.  The Company did not have any
            dilutive securities outstanding for any of the periods
            presented.  Therefore, there are no differences between basic
            and diluted earnings per share.

            New Accounting Pronouncements
            -----------------------------
            In June 1997, SFAS No. 130, "Reporting Comprehensive Income",
            was issued.  This Statement requires that comprehensive income
            be reported in a financial statement that is displayed with the
            same prominence as other financial statements.  This Statement
            does not require a specific format for the financial statement,
            but requires that an enterprise display net income as a
            component of comprehensive income in the financial statements.
            Comprehensive income is defined as the change in equity of a
            business enterprise arising from non-owner sources.  The
            classifications of comprehensive income under current
            accounting standards include foreign currency items, minimum
            pension liability adjustments, and unrealized gains and losses
            on certain investments in debt and equity securities.  The
            implementation of this standard on January 1, 1998 did not have
            a material impact on the presentation of the Company's
            consolidated financial statements.

            In June 1997, the Financial Accounting Standards Board issued
            SFAS No. 131, "Disclosures about Segments for an Enterprise and
            Related Information".  This Statement will change the way
            public companies report information about segments of their 
     
<PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

            New Accounting Pronouncements, Continued
            ----------------------------------------
            business in their annual financial statements and requires them
            to report selected segment information in their quarterly
            reports issued to shareholders.  It also requires entity-wide
            disclosures about the products and services an entity provides,
            and its major customers.  The implementation of SFAS No. 131 on
            January 1, 1998 did not have a material impact on the
            consolidated financial statements.


      4.  INITIAL PUBLIC OFFERING:

          In April 1998, the Company completed an initial public offering
          (Offering) of 5,951,250 shares of common stock.  The proceeds,
          after deducting the underwriting discount and before offering
          expenses, of approximately $83.0 million will be used to repay
          certain debt.  


      5.  1998 ACQUISITIONS:

          In January 1998, the Company entered into a lease with purchase
          option to acquire certain assets of a hotel in Spokane,
          Washington for approximately $11.5 million and acquired certain
          assets of a hotel in Idaho Falls, Idaho for approximately $3.8
          million.  In February 1998, the Company acquired certain assets
          of a hotel in Post Falls, Idaho for approximately $9.5 million. 
          In April 1998, the Company acquired certain assets of a hotel in
          Hillsboro, Oregon for approximately $5.5 million.  Also, in April
          1998, the purchase option on the Spokane, Washington hotel was
          exercised.  All of these acquisitions have been accounted for
          using the purchase method of accounting.  Accordingly, the
          results of operations of these hotels have been included in the
          consolidated statement of operations since their respective dates
          of acquisition.  The excess purchase price of the assets over
          their historical cost bases has been allocated to property and
          equipment and is being depreciated over the estimated useful life
          of the related assets.  Pro forma disclosures reflecting these
          acquisitions have been included in the Company's Form S-1 as
          previously filed with the SEC.
     
<PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      6.  LONG-TERM DEBT AND LINE OF CREDIT:

          The Company used the net proceeds of the initial public offering
          to repay $68.6 million of debt.  Due to the repayment in April
          1998, $2.6 million of short-term debt was reclassified and
          reported as long-term debt at March 31, 1998.  In connection with
          the debt repayment, approximately $725,000 of deferred loan fees
          and prepayment penalties have been charged to operations in April
          1998 and will be presented as an extraordinary item.

          In May 1998, the Company obtained an $80 million revolving
          secured credit facility with a bank.  The credit facility
          requires that the Company maintain certain financial ratios and
          minimum levels of cash flows.  Any outstanding borrowings will
          bear interest based on prime rate or LIBOR.  The credit facility
          matures in five years.  The credit facility requires the payment
          of a 1% fee plus an annual standby fee of 0.25%.


      7.  CONTINGENCIES:

          In 1994, the Company was sued by the contractor who constructed
          one of the Company's hotel properties asserting lack of payment
          of cost overruns.  The Company filed a counter claim for the
          recovery of various damages.  The Company obtained summary
          judgment for most of the claims.  As of March 31, 1998, the
          amount of claims against the Company which have not been
          dismissed or are subject to appeal is $233,000, plus interest.
          The Company's counter claims which have not been dismissed are
          $419,000.  Management believes that the ultimate resolution of
          this matter will not have a material effect on the Company's
          results of operations, financial condition or cash flows.
     
<PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      8.  EARNINGS PER SHARE:

          In accordance with SFAS No. 128, the following table presents a
          reconciliation of the numerators and denominators used in the
          basic and diluted EPS computations (in thousands, except per
          share amounts).

     
<TABLE>
     <CAPTION>
                                                             Weighted-Average
                                               Net Loss      Shares             Per Share
                                               (Numerator)   (Denominator)      Amount
                                               -----------   ----------------   ---------
              <S>                              <C>           <C>                <C>
               March 31, 1998:
                 Net loss per share - basic
                   and diluted:
                     Net loss                    $ (87)
                                                 =====
                     Weighted average shares
                       outstanding                                7,084
                                                                  =====
                     Per share                                                   $(0.01)
                                                                                 ======
               March 31, 1997:
                 Net loss per share - basic 
                   and diluted:
                     Net loss                    $(345)
                                                 =====
                     Weighted average shares 
                       outstanding                                7,072
                                                                  =====
                     Per share                                                   $(0.05)
                                                                                 ======
      </TABLE>

      
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION

 
    Part I - Financial Information



     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS

     General
     -------
     The following discussion and analysis addresses the results of
     operations for the Company for the three months ended March 31, 1997
     and 1998.  The following should be read in conjunction with the
     unaudited Combined Financial Statements and the notes thereto.  In
     addition to historical information, the following Management's
     Discussion and Analysis of Financial Condition and Results of
     Operations contains forward-looking statements that involve risks and
     uncertainties.  The Company's actual results could differ
     significantly from those anticipated in these forward-looking
     statements as a result of certain factors, including those discussed
     in "Risk Factors" and elsewhere in the Prospectus filed originally by
     the Company. 

     The Company's revenues are derived primarily from the Hotels and
     reflect revenue from rooms, food and beverage and other sources,
     including telephone, guest services, banquet room rentals, gift shops
     and other amenities.  Hotel revenues accounted for 80.9% of total
     revenue in the three months ended March 31, 1998 and increased 49.9%
     from $7.9 million in 1997 to $11.8 million in 1998.  This increase was
     primarily the result of the addition of four hotels in the quarter and
     an increase in pro forma revenue per available room (REVPAR) from
     $29.37 in 1997 to $34.42 in 1998.  The balance of the Company's
     revenues are derived from its entertainment, management and services
     and rental operations divisions.  These revenues are generated from
     ticket distribution handling fees, real estate management fees, sales
     commissions and rents.  In the three months ended March 31, 1998,
     entertainment, management and services accounted for 7.0% of total
     revenues and rental operations accounted for 12.1% of total revenues. 
     These two divisions are expected to represent a smaller percent of
     total revenues in the future as the Company continues to pursue its
     hotel growth strategy.

     As is typical in the hospitality industry, REVPAR, average daily rates
     (ADR) and occupancy levels are important performance measures.  The
     Company's operating strategy is focused on enhancing revenue and
     operating margins by increasing REVPAR, ADR, occupancy and operating
     efficiencies of the Hotels.  These performance measures are impacted
     by a variety of factors, including national, regional and local
     economic conditions, degree of competition with other hotels in their
     respective market areas and, in the case of occupancy levels, changes
     in travel patterns.
     
<PAGE>
     The following table sets forth selected items from the combined
     statements of operations as a percent of total revenues and certain
     other selected data:

                                                         Three Months
                                                         Ended March 31,
                                                         ----------------
                                                         1997      1998
                                                         ------    ------
     Revenues:
       Hotels and restaurants                             75.0%     80.9%
       Entertainment, management and services              9.6       7.0
       Rental operations                                  15.4      12.1
                                                         -----     -----
     Total revenues                                      100.0%    100.0%
                                                         =====     =====
     Direct operating expenses                            48.2%     48.3%

     Undistributed operating expenses:
       Selling, general and administrative                16.3      13.6
       Property operating costs                           11.8      12.3
       Depreciation and amortization                      10.8       9.1
                                                         -----     -----
     Total undistributed operating expenses               38.9      35.0

     Operating income                                     12.8      16.7

     Interest expense (net)                               21.5      17.8

     Loss before income taxes                             (4.9)     (0.9)
     Income tax benefit                                   (1.6)     (0.3)
                                                         -----     -----
     Net and comprehensive loss                           (3.3)%    (0.6)%
                                                         =====     =====

                                                         Pro forma  Actual
                                                         ---------  ------
     REVPAR                                               $29.37    $34.42
     ADR                                                  $60.56    $69.85
     Occupancy                                              49.7%     50.1%

     RESULTS OF OPERATIONS
     ---------------------
     COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THREE MONTHS ENDED
     MARCH 31, 1997

     Total revenues increased $4.1 million, or 39.0%, from $10.5 million in
     1997 to $14.6 million in 1998.  This increase is attributed primarily
     to revenue generated from increases in total rooms occupied and REVPAR
     and the addition of four hotels.
     
<PAGE>
     Total hotel and restaurant revenues increased $3.9 million, or 49.9%,
     from $7.9 million in 1997 to $11.8 million in 1998.  ADR increased
     $9.29, or 15.3%, from a pro forma $60.56 in 1997 to $69.85 in 1998. 
     Available room nights increased 48.7% in 1998.  REVPAR increased
     $5.05, or 17.2% from the pro forma $29.37 in 1997 to $34.42 in 1998. 
     The results reflect the addition of Cavanaughs Gateway Hotel,
     Cavanaughs Ridpath Hotel, Cavanaughs on the Falls, and Cavanaughs
     Templin's Resort which  contributed, in part, to this increase in
     revenues.  The pro forma hotel statistics include the four acquired
     properties' performance for the three months ended March 31, 1997.

     Entertainment, management and services revenues increased $6,000, or
     0.6% in 1998.  Management and services revenue increased from the
     addition of new third-party management contracts.

     Rental income increased $0.2 million, or 9.8%, from $1.6 million in
     1997 to $1.8 million in 1998.  This increase is due primarily the
     addition of leased space in the Crescent Court property to The
     Travelers company which commenced occupancy in January 1998.

     Direct operating expenses increased $2.0 million, or 39.1%, from $5.1
     million in 1997 to $7.1 million in 1998, primarily due to the increase
     in the number of hotel guests served and the addition of four hotels.
     This represents an increase in direct operating expenses as a
     percentage of total revenues from 48.2% in 1997 to 48.3% in 1998. 

     Total undistributed operating expenses increased $1.0 million, or
     25.1%, from $4.1 million in 1997 to $5.1 million in 1998.  Total
     undistributed operating expenses include selling, general and
     administrative expenses, which increased 16.0% from $1.7 million in
     1997 to $2.0 million in 1998, and depreciation and amortization, which
     increased 17.8% from $1.1 million in 1997 to $1.3 million in 1998. 
     Total undistributed operating expenses as a percentage of total
     revenues decreased 3.9% from 38.9% in 1997 to 35.0% in 1998.  The
     decrease in undistributed operating expenses as a percentage of total
     revenues is primarily attributed to the increased REVPAR and the
     company controlling sales and administrative expenses.

     Operating income increased $1.1 million, or 80.7%, from $1.3 million
     in 1997 to $2.4 million in 1998.  As a percentage of total revenues,
     operating income increased from 12.8% in 1997 to 16.7% in 1998.  This
     increase is due primarily to an increase in REVPAR, the addition of
     four hotels and improvements in the undistributed operating expense
     margins.

     Interest expense increased $0.3 million, or 13.8%, from $2.4 million
     in 1997 to $2.7 million in 1998.  This increase is primarily related
     to the issuance of additional debt used for funding the acquisition of
     the four hotels and other corporate purposes.  Interest expense is
     initially anticipated to decline as a result of the application of the
     net proceeds of the Offering to repay certain indebtedness, but is
     expected to increase in the future due to the funding of hotel
     acquisitions with additional debt.
     
<PAGE>
     Income tax benefit decreased 74%, from $0.2 million in 1997 to $45,000
     in 1998, due to the decrease in the loss before income taxes.  The
     effective income tax rate for both years was 34%.

     Net loss decreased $258,000, or 74.8%, from $345,000 in 1997 to
     $87,000 in 1998.

     LIQUIDITY AND CAPITAL RESOURCES
     -------------------------------
     The Company's principal sources of liquidity are cash on hand, cash
     generated by operations and borrowings under a $3.0 million working
     capital credit facility.  Cash generated by operations in excess of
     operating expenses is used for capital expenditures and to reduce
     amounts outstanding under the working capital credit facility.  Hotel
     acquisitions, development and expansion have been and will be financed
     through a combination of internally generated cash, borrowing under
     credit facilities, and the issuance of common stock or OP Units.  

     The Company's short-term capital needs include food and beverage
     inventory, payroll and the repayment of interest expense on
     outstanding mortgage indebtedness.  Historically, the Company has met
     these needs through internally generated cash.

     The Company's long-term capital needs include funds for property
     acquisitions, scheduled debt maturities and renovations and other non-
     recurring capital improvements.  The Company anticipates meeting its
     future long-term capital needs through the borrowing of additional
     debt financing secured by the Hotels, unsecured private or public debt
     offerings, additional equity offerings or the issuances of OP Units,
     along with cash generated from internal operations.  In April 1998,
     the Company completed its initial public offering of 5,951,250 shares
     at $15.00.  The proceeds to the Company after deducting the
     underwriter's commission, but before other expenses, was $83.0
     million.  In April, the Company used the proceeds from the offering to
     repay approximately $68.6 million of debt, the balance was used to
     fund the acquisition of the fee interest in the Cavanaughs Ridpath and
     to acquire the Cavanaughs Hillsboro Hotel.  On a pro forma basis as of
     March 31, 1998, after giving effect to the Offering and OP Units
     issued in April 1998, the application of the net proceeds thereof,
     total outstanding indebtedness decreased from $127.0 million on March
     31, 1998 to approximately $57.5 million.

     At March 31, 1998, the Company had $8.2 million in cash and cash
     equivalents, an increase of $3.2 million from $5.0 million on 
     December 31, 1997.  The Company has acquired three hotels during the
     three months ended March 31, 1998 and has expended $26.5 million for
     these acquisitions and capital expenditures.  The Company establishes
     reserves for capital replacement in the amount of 4.0% of the prior
     year's actual gross income to maintain the Hotels at acceptable
     levels.  Acquired hotel properties have a separate capital budget for
     purchase, construction, renovation, and branding costs.  Capital
     expenditures planned for Hotels in 1998 are expected to be
     
<PAGE>
     approximately $3.0 million.  Management believes the consistent
     renovation and upgrading of the Hotels and other properties is
     imperative to its long-term reputation and customer satisfaction.

     To fund its acquisition program and meet its working capital needs,
     the Company has received an $80 million Revolving Credit Facility from
     U.S. Bank which was consummated on May 5, 1998.  During the 12 months
     following the Offering, the Company will have approximately $50.0
     million available to be drawn under the Revolving Credit Facility,
     which amount may be increased to the full amount available thereunder
     with the lender's consent, at an interest rate of 185 basis points
     over LIBOR and declining to 165 basis points after six months if the
     Company maintains certain earnings before interest, taxes,
     depreciation and amortization (EBITDA) to debt ratios.  The Revolving
     Credit Facility has an initial term of five years and an annualized
     fee for the unutilized portion of the facility.  The Company selects
     from four different interest rates when it draws funds:  the lender's
     prime rate or one, three, or six month LIBOR plus the applicable
     margin of 165 to 235 basis points, depending on the ratio of EBITDA to
     total funded debt.  The Revolving Credit Facility has covenants that
     allow for the Company to draw funds based on the trailing 12 months
     performance on a pro forma basis for both acquired and owned
     properties.  The Revolving Credit Facility allows the Company to
     choose which properties are part of the collateral base and,
     therefore, gives the Company the ability to utilize other long-term
     credit facilities that may be more favorable to the Company.  Funds
     from the Revolving Credit Facility may be used for acquisitions,
     renovations, construction and general corporate purposes.  The Company
     believes the structure and availability of funds under the Revolving
     Credit Facility will be sufficient to meet the Company's long-term
     growth plans.

     The Revolving Credit Facility contains various representations,
     warranties, covenants and events of default deemed appropriate for
     financing of a similar size and nature.  Covenants and provisions in
     the definitive agreements governing the Revolving Credit Facility
     include, among other things, limitations on: (i) substantive changes
     in the Company's current business activities, (ii) liquidation,
     dissolution, mergers, consolidations, dispositions of material
     property or assets and acquisitions of property or assets of others,
     (iii) the creation or existence of liens on property or assets, (iv)
     the addition or existence of indebtedness, including guarantees and
     other contingent obligations, (v) loans and advances to others and
     investments in others, redemption of subordinated debt, (vi) amendment
     or modification of certain material documents or of the Articles in a
     manner adverse to the interests of the lenders under the Revolving
     Credit Facility, (vii) payment of dividends or distributions on the
     Company's capital stock, and (viii) maintenance of certain financial
     ratios.  Each of the covenants described above will provide for
     certain ordinary course of business and other exceptions.  If the
     Company breaches any of these covenants and does not obtain a waiver
     of that breach, the breach will constitute an event of default under
     the Revolving Credit Facility.
     
<PAGE>
     As of March 31, 1998, the Company had debt outstanding of $127.0
     million consisting of primarily variable and fixed rate debt secured
     by individual properties.  The Company had a working capital credit
     facility of $3.0 million with $3.0 million drawn as of March 31, 1998.
     In April 1998, the Company completed its initial public offering and
     entered into the $80.0 million Revolving Credit Facility. 

     The Company believes that cash generated by operations will be
     sufficient to fund the Company's operating strategy for the
     foreseeable future, and that any remaining cash generated by
     operations, together with capital available under the Revolving Credit
     Facility (subject to the terms and covenants included therein) and the
     remaining proceeds from the Offering, will be adequate to fund the
     Company's growth strategy in the near term.  Thereafter, the Company
     expects that future capital needs, including property acquisitions,
     will be met through a combination of net cash provided by operations,
     borrowings and additional issuances of Common Stock or OP Units.

     SEASONALITY
     -----------
     The lodging industry is affected by normally recurring seasonal
     patterns.  At most Hotels, demand is higher in the late spring through
     and early fall (May through October) than during the balance of the
     year.  Demand also changes on different days of the week, with Sunday
     generally having the lowest occupancy.  Accordingly, the Company's
     revenue, operating profit and cash flow are lower during the first and
     fourth calendar quarters and higher during the second and third
     calendar quarters.

     INFLATION
     ---------
     The effect of inflation, as measured by fluctuations in the Consumer
     Price Index, has not had a material impact on the Company's revenues
     or net loss during the periods under review.

     YEAR 2000
     ---------
     The Company does not believe that the costs of converting its computer
     systems to address the advent of the year 2000 will be material.

     NEW ACCOUNTING PRONOUNCEMENTS
     -----------------------------
     In June 1997, the Financial Accounting Standards Board (the "FASB")
     issued Statement of Financial Accounting Standards ("SFAS") No. 131,
     Disclosures about Segments for an Enterprise and Related Information
     ("SFAS 131").  This Statement requires public companies to report
     selected segment information in their quarterly and annual reports
     issued to shareholders, and entity wide disclosures about products and
     services and major customers.  The statement was adopted by the
     Company on January 1, 1998.
     
<PAGE>
     In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
     Income.  This Statement requires that comprehensive income be reported
     in a financial statement that is displayed with the same prominence as
     other financial statements.  Comprehensive income is defined as the
     change in equity of a business enterprise arising from non-owner
     sources.  This Statement was adopted by the Company on January 1,
     1998.


 
    Part II - Other Information
     ---------------------------


     ITEM 1.  LEGAL PROCEEDINGS

     In 1994, the Company was sued by the contractor who constructed one of
     the Company's hotel properties asserting lack of payment of cost
     overruns.  The Company filed a counter claim for the recovery of
     various damages.  The Company obtained summary judgment for most of
     the claims.  As of March 31, 1998, the amount of claims against the
     Company which have not been dismissed or are subject to appeal is
     $233,000, plus interest.  The Company's counter claims which have not
     been dismissed are $419,000.  Management believes that the ultimate
     resolution of this matter will not have a material effect on the
     Company's results of operations, financial condition or cash flows.



     ITEMS 2, 3, 4 and 5 of Part II are omitted from this report as they
     are not applicable.



     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits

            10.6  Revolving Credit Facility
            27.1  Financial Data Schedule

       (b)  Reports on Form 8-K

                   No reports on Form 8-K were filed for the three months
                   ended March 31, 1998.
     
<PAGE>
     CAVANAUGHS HOSPITALITY CORPORATION



     SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934,
     this report has been signed below by the following persons on behalf
     of the registrant and in the capacities and on the dates indicated.


                                   CAVANAUGHS HOSPITALITY CORPORATION       
                                   (Registrant)

     Date: May 14, 1998            By:  /s/ Arthur M. Coffey
           ---------------------        -----------------------------------
                                        Arthur M. Coffey, Executive Vice
                                          President and Chief Financial
                                          Officer


<PAGE>





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<MULTIPLIER> 1000
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               MAR-31-1998
<CASH>                                            8206
<SECURITIES>                                         0
<RECEIVABLES>                                     2775
<ALLOWANCES>                                     (123)   
<INVENTORY>                                        483
<CURRENT-ASSETS>                                 13501
<PP&E>                                          175960
<DEPRECIATION>                                 (35626)
<TOTAL-ASSETS>                                  154786
<CURRENT-LIABILITIES>                            15166
<BONDS>                                         125276
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            71
<OTHER-SE>                                        8374
<TOTAL-LIABILITY-AND-EQUITY>                    154756
<SALES>                                          14635
<TOTAL-REVENUES>                                 14635
<CGS>                                             7068
<TOTAL-COSTS>                                    12198
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                2679
<INCOME-PRETAX>                                  (132)
<INCOME-TAX>                                      (45)
<INCOME-CONTINUING>                               (87)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
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<EPS-PRIMARY>                                    (.01)
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</TABLE>





                                                               EXHIBIT 10.6
                                                               ------------

                                CREDIT AGREEMENT

                             Dated as of May 5, 1998
                                      among
                   CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP,
                         U. S. BANK NATIONAL ASSOCIATION
                            as Administrative Agent,
                                       and
                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
     
<PAGE>
     CONTENTS


     ARTICLE I.    DEFINITIONS

                   1.1    Certain Defined Terms
                   1.2    Other Interpretive Provisions
                   1.3    Accounting Principles

     ARTICLE II.THE LOANS

                   2.1    Revolving Line of Credit 
                   2.2    Manner of Borrowing
                   2.3    Agent's Right to Fund
                   2.4    Loan Accounts
                   2.5    Interest Rate Elections
                   2.6    Mandatory Prepayments of Loans
                          (a)  Asset Dispositions
                          (b)  Event of Loss
                          (c)  Debt Issuance
                          (d)  General
                          (e)  Reduction in Commitment
                   2.7    Repayment
                   2.8    Interest
                   2.9    Agency and Underwriting Fees
                   2.10   Commitment Fees
                   2.11   Late Charge
                   2.12   Computation of Interest and Fees
                   2.13   Payments by the Borrower
                   2.14   Sharing of Payments, Etc.
                   2.15   Security
                   2.16   Borrowing Base
                   2.17   No Prepayment Charges

     ARTICLE III.  LETTERS OF CREDIT

                   3.1    Letters of Credit
                   3.2    Manner of Requesting Letters of Credit
                   3.3    Indemnification; Increased Costs
                   3.4    Payment by the Borrower

     ARTICLE IV.   TAXES, YIELD PROTECTION AND ILLEGALITY

                   4.1    Taxes
                   4.2    Illegality
                   4.3    Increased Costs and Reduction of Return
                   4.4    Funding Losses
                   4.5    Inability to Determine Rates
                   4.6    Certificates of Lenders
                   4.7    Survival

     
<PAGE>
     ARTICLE V.    CONDITIONS PRECEDENT

                   5.1    Conditions of Initial Loans
                          (a)  Credit Agreement and Note
                          (b)  Resolutions; Incumbency
                          (c)  Organization Documents; Good Standing
                          (d)  Legal Opinions
                          (e)  Payment of Fees
                          (f)  Collateral Documents
                          (g)  Insurance Policies
                          (h)  Certificate
                          (i)  Compliance Certificate
                          (j)  Initial Public Offering
                          (k)  Notice of Borrowing; Reimbursement Agreement
                          (l)  Guaranty
                          (m)  Other Documents
                          (n)  Payment of Indebtedness
                          (o)  Eligible Real Property
                   5.2    Conditions to Subsequent Loans
                          (a)  Interest Rate Notice
                          (b)  Notice of Borrowing; Reimbursement Agreement
                          (c)  Continuation of Representations and
                                 Warranties
                          (d)  No Existing Default
                          (e)  Satisfaction of Previous Conditions
                          (f)  Further Assurances
                   5.3    Conditions to Become Eligible Real Property

     ARTICLE VI.   REPRESENTATIONS AND WARRANTIES

                   6.1    Existence and Power
                   6.2    Authorization; No Contravention
                   6.3    Governmental Authorization
                   6.4    Binding Effect
                   6.5    Litigation
                   6.6    No Default
                   6.7    ERISA Compliance
                   6.8    Use of Proceeds; Margin Regulations
                   6.9    Title to Properties
                   6.10   Taxes
                   6.11   Financial Condition
                   6.12   Environmental Matters
                   6.13   Collateral Documents
                   6.14   Regulated Entities
                   6.15   No Burdensome Restrictions
                   6.16   Copyrights, Patents, Trademarks and Licenses,
                            Etc.
                   6.17   Subsidiaries
                   6.18   Insurance
                   6.19   Solvency
                   6.20   Full Disclosure
     
<PAGE>
     ARTICLE VII.  AFFIRMATIVE COVENANTS

                   7.1    Financial Statements
                   7.2    Certificates; Other Information
                   7.3    Notices
                   7.4    Preservation of Existence, Etc.
                   7.5    Maintenance of Property
                   7.6    Insurance
                   7.7    Payment of Obligations
                   7.8    Compliance With Laws
                   7.9    Compliance With ERISA
                   7.10   Inspection of Property and Books and Records
                   7.11   Environmental Laws
                   7.12   Use of Proceeds
                   7.13   Appraisals
                   7.14   Further Assurances
                   7.15   Minimum Number of Parcels

     ARTICLE VIII. NEGATIVE COVENANTS

                   8.1    Limitation on Liens
                   8.2    Disposition of Assets
                   8.3    Consolidations and Mergers
                   8.4    Loans and Investments
                   8.5    Limitation on Indebtedness
                   8.6    Transactions With Affiliates
                   8.7    Use of Proceeds
                   8.8    Contingent Obligations
                   8.9    Lease Obligations
                   8.10   Restricted Payments
                   8.11   ERISA
                   8.12   Change in Business
                   8.13   Accounting Changes
                   8.14   Financial Covenants
                          (a)  Funded Debt Ratio
                          (b)  Interest Coverage Ratio
                          (c)  Fixed Charge Coverage Ratio
                          (d)  Capitalization Ratio
                          (e)  Total Assets
                   8.15   Subordinated Debt

     ARTICLE IX.   EVENTS OF DEFAULT

                   9.1    Event of Default
                          (a)  Nonpayment
                          (b)  Representation or Warranty
                          (c)  Specific Defaults
                          (d)  Other Defaults
                          (e)  Cross-Default
                          (f)  Insolvency; Voluntary Proceedings
                          (g)  Involuntary Proceedings
     
<PAGE>
                          (h)  ERISA
                          (i)  Monetary Judgments
                          (j)  Nonmonetary Judgments
                          (k)  Violation of Lock-up Agreement
                          (l)  Adverse Change
                          (m)  Invalidity of Subordination Provisions
                          (n)  Collateral
                   9.2    Remedies
                   9.3    Rights Not Exclusive
                   9.4    Certain Financial Covenant Defaults

     ARTICLE X.    THE AGENT

                   10.1   Appointment and Authorization
                   10.2   Delegation of Duties
                   10.3   Liability of Agent
                   10.4   Reliance by Agent
                   10.5   Notice of Default
                   10.6   Credit Decision
                   10.7   Indemnification of Agent
                   10.8   Agent in Individual Capacity
                   10.9   Successor Agent
                   10.10  Withholding Tax
                   10.11  Collateral Matters

     ARTICLE XI.   LETTER OF CREDIT RISK PARTICIPATIONS

                   11.1   Sale of Risk Participations
                   11.2   Procedure for Purchases
                   11.3   Payment Obligations
                          (c)  Reimbursements to Lenders

     ARTICLE XII.  MISCELLANEOUS

                   12.1   Amendments and Waivers
                   12.2   Notices
                   12.3   No Waiver; Cumulative Remedies
                   12.4   Costs and Expenses
                   12.5   Borrower Indemnification
                   12.6   Marshalling; Payments Set Aside
                   12.7   Successors and Assigns
                   12.8   Assignments, Participations, Etc.
                   12.9   Set-off
                   12.10  Automatic Debits of Fees
                   12.11  Notification of Addresses, Lending Offices, Etc.
                   12.12  Counterparts
                   12.13  Severability
                   12.14  No Third Parties Benefited
                   12.15  Conditions Not Fulfilled
                   12.16  Governing Law and Jurisdiction
                   12.17  Waiver of Jury Trial
                   12.18  Entire Agreement
     
<PAGE>
     SCHEDULES

     Schedule 2.1  Commitments
     Schedule 6.5  Litigation
     Schedule 6.7  ERISA
     Schedule 6.11 Permitted Liabilities
     Schedule 6.12 Environmental Matters
     Schedule 6.17 Subsidiaries and Minority Interests
     Schedule 6.18 Insurance Matters
     Schedule 7.14 Filing Jurisdictions
     Schedule 8.1  Permitted Liens
     Schedule 8.5  Permitted Indebtedness
     Schedule 8.8  Contingent Obligations
     Schedule 12.2 Lending Offices, Addresses for Notices


     EXHIBITS

     Exhibit A     Form of Compliance Certificate
     Exhibit B     Form of Deed of Trust
     Exhibit C     Form of Guaranty
     Exhibit D     Form of Indemnification Agreement
     Exhibit E     Form of Interest Rate Notice
     Exhibit F     Form of Note
     Exhibit G     Form of Security Agreements
     Exhibit H     Form of Legal Opinion of Borrower's Counsel
     Exhibit I     Form of Assignment and Acceptance
     
<PAGE>
     CREDIT AGREEMENT

     This CREDIT AGREEMENT is entered into as of May 5, 1998, among
     CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited
     partnership (the "Borrower"), the several financial institutions from
     time to time party to this Agreement (collectively, the "Lenders";
     individually, a "Lender"), and U. S. BANK NATIONAL ASSOCIATION, as
     administrative agent for the Lenders.

     WHEREAS, the Lenders have agreed to make available to the Borrower a
     secured revolving loan facility upon the terms and conditions set
     forth in this Agreement;

     NOW, THEREFORE, in consideration of the mutual agreements, provisions
     and covenants contained herein, the parties agree as follows:

     ARTICLE I.    DEFINITIONS

     1.1    Certain Defined Terms
            ---------------------
     The following Terms have the following meanings:

     "Acquisition" means any transaction or series of related transactions
     for the purpose of or resulting, directly or indirectly, in (a) the
     acquisition of all or substantially all of the assets of a Person, or
     of any business or division of a Person, (b) the acquisition of in
     excess of 50% of the capital stock, partnership interests, membership
     interests or equity of any Person, or otherwise causing any Person to
     become a Subsidiary, or (c) a merger or consolidation or any other
     combination with another Person (other than a Person that is a
     Subsidiary) provided that the Borrower or the Subsidiary is the
     surviving entity.

     "Adjusted Net Income" means, for any applicable period, the aggregate
     of all amounts which, in accordance with GAAP, would be included as
     net income (or net loss (including any extraordinary losses other than
     extraordinary noncash losses)) on a consolidated statement of income
     of CHC and its Subsidiaries for such period; provided, however, that
     "Adjusted Net Income" shall exclude (a) the effect of any
     extraordinary or other nonrecurring gain outside the ordinary course
     of business, (b) any write-up in the value of any asset (to the extent
     such write-up exceeds any write-down taken in connection with the same
     transaction or event which gave rise to such write-up), and (c) any
     adjustments to net income for minority ownership interests in other
     Persons.

     "Adjusted Tangible Net Worth" means the sum of (a) the total net worth
     of CHC and its Subsidiaries determined in accordance with GAAP, less
     (b) the amount of all intangible assets, plus (c) the Adjustment to
     Book Value.
     
<PAGE>
     "Adjustment to Book Value" means an amount equal to (a) the appraised
     value of all real property (including improvements thereon) owned by
     CHC and its Subsidiaries as of the last day of the applicable period,
     less (b) the net book value of such real property (including
     improvements thereon), less (c) an amount equal to all federal, state
     and local income and gross receipts taxes that would be payable in the
     event that such real property (including improvements thereon) were
     sold during the applicable period, assuming for purposes of such
     calculation that the amount of the gain is an amount equal to the
     amount of clause (a) less the amount of clause (b).  For purposes of
     determining the appraised value of such real property, the most recent
     M.A.I. appraisals of such real property that have been approved by the
     Agent in writing in its reasonable discretion shall be used.  The
     Agent reserves the right, in its discretion or at the request of the
     Required Lenders, to require reappraisals of any real property at the
     Borrower's sole cost, provided that once an appraisal of a parcel of
     real property has been approved by the Agent in writing, the Agent may
     not require a reappraisal of such real property for one year from the
     date of the approved appraisal.  In the event that there is no
     approved appraisal of any parcel of real property, then there shall be
     no Adjustment to Book Value for such parcel of real property.

     "Affiliate" means, as to any Person, any other Person which, directly
     or indirectly, is in control of, is controlled by, or is under common
     control with, such Person.  A Person shall be deemed to control
     another Person if the controlling Person possesses, directly or
     indirectly, the power to direct or cause the direction of the
     management and policies of the other Person, whether through the
     ownership of voting securities, membership interests, by contract, or
     otherwise.

     "Agent" means U. S. Bank in its capacity as administrative agent for
     the Lenders hereunder, and any successor administrative agent arising
     under Section 10.9.

     "Agent-Related Persons" means U. S. Bank and any successor agent
     arising under Section 10.9, together with their respective Affiliates,
     and the officers, directors, employees, agents and attorneys-in-fact
     of such Persons and Affiliates.

     "Agent's Payment Office" means the address for payments set forth on
     Schedule 12.2 in relation to the Agent, or such other address as the
     Agent may from time to time specify.

     "Agreement" means this Credit Agreement.

     "Approved Appraised Value" means the most recent M.A.I. appraised
     value of an Eligible Real Property that (a) was ordered by the Agent,
     (b) has been approved by the Agent in writing in its reasonable
     discretion, and (c) is in compliance with the Financial Institutions
     Reform, Recovery and Enforcement Act.
     
<PAGE>
     "Assignee" has the meaning specified in Section 12.8(a).

     "Attorney Costs" means and includes all fees and disbursements of any
     law firm or other external counsel.

     "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
     U.S.C. Section 101, et seq.).

     "Borrowing" means a borrowing hereunder consisting of Loans of the
     same Type made to the Borrower on the same day by the Lenders under
     Article II, and, other than in the case of Reference Rate Loans,
     having the same Interest Period.

     "Borrowing Base" means an amount equal to 60% of the Collateral Pool
     Value.

     "Business Day" means any day other than a Saturday, Sunday or other
     day on which commercial banks in Seattle, Washington are authorized or
     required by law to close and, if the applicable Business Day relates
     to any LIBOR Rate Loan, means such a day on which dealings are carried
     on in the London interbank market.

     "Capital Adequacy Regulation" means any guideline, request or
     directive of any central bank or other Governmental Authority, or any
     other law, rule or regulation, whether or not having the force of law,
     in each case, regarding capital adequacy of any bank or of any
     corporation controlling a bank.

     "Capitalization Ratio" means, as of the last day of the applicable
     period, the ratio of (a) the Indebtedness of CHC and its Subsidiaries
     to (b) the sum of (i) the Indebtedness of CHC and its Subsidiaries,
     plus (ii) Adjusted Tangible Net Worth.

     "Cash Equivalents" means (i) securities with maturities of one year or
     less from the date of acquisition issued or fully guaranteed or
     insured by the United States Government or any agency thereof,
     (ii) certificates of deposit, eurodollar time deposits, overnight bank
     deposits, bankers' acceptances and repurchase agreements of any Lender
     or any other commercial bank whose unsecured long-term debt
     obligations are rated at least A-1 by Standard & Poor's Ratings
     Service Group, a division of the McGraw Hill Companies, Inc., and any
     successor thereto ("S&P") or A-3 by Moody's Investors Service, Inc.
     having maturities of one year or less from the date of acquisition,
     and (iii) commercial paper rated at least A-1 by S&P or P-1 by Moody's
     Investors Service, Inc., or carrying an equivalent rating by a
     nationally recognized rating agency, if both of the two named rating
     agencies cease publishing ratings of investments.

     "CERCLA" has the meaning specified in the definition of "Environmental
     Laws."

     "CHC" means Cavanaughs Hospitality Corporation, a Washington
     corporation, and its successors.
     
<PAGE>
     "Closing Date" means the date on which all conditions precedent set
     forth in Section 5.1 are satisfied or waived by all Lenders (or, in
     the case of Section 5.1(e), waived by the Person entitled to receive
     such payment).

     "Code" means the Internal Revenue Code of 1986, and regulations
     promulgated thereunder.

     "Collateral" means all property and interests in property and proceeds
     thereof now owned or hereafter acquired by the Borrower, CHC and its
     Subsidiaries in or upon which a lien now or hereafter exists in favor
     of the Lenders, or the Agent on behalf of the Lenders, whether under
     this Agreement or under any other documents executed by any such
     Person and delivered to the Agent or the Lenders.

     "Collateral Documents" means, collectively, (i) the Security
     Agreements, the Deeds of Trust, and all other security agreements,
     mortgages, deeds of trust, patent and trademark assignments, lease
     assignments, guarantees and other similar agreements between the
     Borrower, CHC or any Subsidiary and the Lenders or the Agents for the
     benefit of the Lenders now or hereafter delivered to the Lenders or
     the Agent pursuant to or in connection with the transactions
     contemplated hereby, and all financing statements (or comparable
     documents now or hereafter filed in accordance with the Uniform
     Commercial Code or comparable law) against the Borrower, CHC or any
     Subsidiary as debtor in favor of the Lenders or the Agent for the
     benefit of the Lenders as secured party, and (ii) any amendments,
     supplements, modifications, renewals, replacements, consolidations,
     substitutions and extensions of any of the foregoing.

     "Collateral Pool Value" means the sum of the Approved Appraised Values
     of all Eligible Real Property from time to time.

     "Commitment" means $80,000,000 less the aggregate amount of mandatory
     prepayments made in accordance with Section 2.6.

     "Commitment Fee Percentage" means the percentage determined in
     accordance with the following matrix and based upon the quarterly
     financial statements of the Borrower provided to the Agent in
     accordance with the terms of this Agreement for the preceding fiscal
     quarter; provided, however, that if the Borrower has not delivered its
     financial statements for the previous fiscal quarter as of the date
     that the commitment fee is payable pursuant to Section 2.10, then a
     Commitment Fee Percentage of .30% shall apply:

     Level              Level I     Level II       Level III     Level IV
     -----------------  -------     ----------     ---------     --------
     Funded Debt Ratio  <3.00       >3.00<3.50     >3.50<4.0     >4.0
                                    -              -
     Commitment Fee 
       Percentage       .25%        .25%           .25%          .30%
     > means greater than or equal to
     -

     < means less than
     
<PAGE>
     "Commitment Letter" means that certain letter dated as of November 26,
     1997, between the Agent and the Borrower, together with all amendments
     to the Commitment Letter.

     "Compliance Certificate" means a certificate substantially in the form
     of Exhibit A.

     "Contingent Obligation" means, as to any Person, any direct or
     indirect liability of that Person, whether or not contingent, with or
     without recourse, (a) with respect to any Indebtedness, lease,
     dividend, letter of credit or other obligation (the "primary
     obligation") of another Person (the "primary obligor"), including any
     obligation of that Person (i) to purchase, repurchase or otherwise
     acquire such primary obligations or any security therefor, (ii) to
     advance or provide funds for the payment or discharge of any such
     primary obligation, or to maintain working capital or equity capital
     of the primary obligor or otherwise to maintain the net worth or
     solvency or any balance sheet item, level of income or financial
     condition of the primary obligor, (iii) to purchase property,
     securities or services primarily for the purpose of assuring the owner
     of any such primary obligation of the ability of the primary obligor
     to make payment of such primary obligation, or (iv) otherwise to
     assure or hold harmless the holder of any such primary obligation
     against loss in respect thereof (each, a "Guaranty Obligation");
     (b) with respect to any Surety Instrument issued for the account of
     that Person or as to which that Person is otherwise liable for
     reimbursement of drawings or payments; (c) to purchase any materials,
     supplies or other property from, or to obtain the services of, another
     Person if the relevant contract or other related document or
     obligation requires that payment for such materials, supplies or other
     property, or for such services, shall be made regardless of whether
     delivery of such materials, supplies or other property is ever made or
     tendered, or such services are ever performed or tendered, or (d) in
     respect of any Swap Contract.  The amount of any Contingent Obligation
     shall, in the case of Guaranty Obligations, be deemed equal to the
     stated or determinable amount of the primary obligation in respect of
     which such Guaranty Obligation is made or, if not stated or if
     indeterminable, the maximum reasonably anticipated liability in
     respect thereof, and in the case of other Contingent Obligation, shall
     be equal to the maximum reasonably anticipated liability in respect
     thereof.

     "Contractual Obligation" means, as to any Person, any provision of any
     security issued by such Person or of any agreement, undertaking,
     contract, indenture, mortgage, deed of trust or other instrument,
     document or agreement to which such Person is a party or by which it
     or any of its property is bound.

     "Deed of Trust" means a deed of trust or mortgage executed by the
     Borrower or a Subsidiary in favor the Agent as agent for the Lenders
     pursuant to Section 5.3, in a form approved by the Agent, as well as
     
<PAGE>
     all amendments to the foregoing.  Any Deeds of Trust encumbering real
     property in the State of Washington and executed concurrently with the
     execution of this Agreement shall be substantially in the form of
     Exhibit B.

     "Default" means any event or circumstance which, with the giving of
     notice, the lapse of time, or both, would (if not cured or otherwise
     remedied during such time) constitute an Event of Default.

     "Disposition" means (a) the sale, lease, conveyance or other
     disposition of any property, other than sales or other dispositions
     expressly permitted under Section 8.2(a)(i), (ii), (iii) or (iv), and
     (b) the sale or transfer by the Borrower, CHC or any Subsidiary of the
     Borrower of any equity securities issued by any Subsidiary of the
     Borrower and held by such transferor Person for cash or cash
     equivalents.

     "Dollars," "dollars" and "$" each mean lawful money of the United
     States.

     "EBITDA" means, with respect to the CHC and its Subsidiaries for any
     applicable period, Adjusted Net Income for such period, plus, to the
     extent deducted in determining Adjusted Net Income for such period,
     the aggregate amount of (i) Interest Expense, (ii) federal, state,
     local and foreign income taxes and (iii) depletion, depreciation and
     amortization of tangible and intangible assets.  In the event that the
     Borrower has consummated any Acquisition during the applicable period,
     "EBITDA" shall include the EBITDA from the Person acquired (or the
     portion thereof allocable to the portion of the Person acquired) for
     such period, provided that the Borrower has delivered to the Agent
     documentation deemed adequate by the Agent to verify such EBITDA, as
     well as a Compliance Certificate on a pro forma basis and pro forma
     financial statements on a consolidating basis approved by the Agent. 
     Subject to approval of the Required Lenders confirmed in writing by
     the Agent, any such pro forma Compliance Certificate and pro forma
     financial statements may exclude expenses of the acquired Person that
     will terminate upon completion of the Acquisition.  An example of such
     an expense that may be excluded is the franchise fee under a franchise
     agreement that will be terminated upon completion of the Acquisition.

     "Eligible Assignee" means (a) a commercial bank organized under the
     laws of the United States, or any state thereof; (b) a commercial bank
     organized under the laws of any other country which is a member of the
     Organization for Economic Cooperation and Development (the "OECD"), or
     a political subdivision of any such country, and having a combined
     capital and surplus of at least $100,000,000, provided that such bank
     is acting through a branch or agency located in the country in which
     it is organized or another country which is also a member of the OECD;
     (c) a Person that is primarily engaged in the business of commercial
     banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of
     a Person of which a Lender is a Subsidiary, or (iii) a Person of which
     
<PAGE>
     a Lender is a Subsidiary; or (d) a finance company, insurance company,
     other financial institution or fund, reasonably acceptable to the
     Agent, which has a combined capital and surplus in excess of
     $100,000,000, which is regularly engaged in making, purchasing or
     investing in loans of the Type proposed to be assigned to such
     assignee; provided, however, that no Eligible Assignee shall be an
     Affiliate or competitor of the Borrower, or an Affiliate of such
     competitor.

     "Eligible Real Property" means each parcel of real property and
     related improvements (a) that has been approved by the Agent in
     writing in its sole discretion, (b) the fee title interest of which is
     owned by the Borrower, (c) that is fully developed and improved and
     with respect to which there has been issued a certificate of
     occupancy, (d) in which the Agent, for the benefit of the Lenders,
     holds a first priority Deed of Trust to secure the Obligations,
     (e) with respect to which the Agent has obtained the Collateral
     Documents described in Section 5.3, (f) with respect to which the
     Approved Appraised Value has been established, and (g) that is not
     encumbered by any Liens other than Permitted Liens.

     "Environmental Claims" means all claims, however asserted, by any
     Governmental Authority or other Person alleging potential liability or
     responsibility for violation of any Environmental Law, or for release
     or injury to the environment or threat to public health, personal
     injury (including sickness, disease or death), property damage,
     natural resources damage, or otherwise alleging liability or
     responsibility for damages (punitive or otherwise), cleanup, removal,
     remedial or response costs, restitution, civil or criminal penalties,
     injunctive relief, or other type of relief, resulting from or based
     upon the presence, placement, discharge, emission or release
     (including intentional and unintentional, negligent and non-negligent,
     sudden or non-sudden, accidental or non-accidental, placement, spills,
     leaks, discharges, emissions or releases) of any Hazardous Material
     at, in or from property owned or in the possession or control of the
     Borrower, CHC or any Subsidiary.

     "Environmental Laws" means all federal, state or local laws, statutes,
     common law duties, rules, regulations, ordinances and codes, together
     with all administrative orders, directed duties, requests, licenses,
     authorizations and permits of, and agreements with, any Governmental
     Authorities, in each case relating to environmental, health, safety
     and land use matters; including the Comprehensive Environmental
     Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean
     Air Act, the Federal Water Pollution Control Act of 1972, the Solid
     Waste Disposal Act, the Federal Resource Conservation and Recovery
     Act, the Toxic Substance Control Act, and the Emergency Planning and
     Community Right-to-Know Act.

     "ERISA" means the Employee Retirement Income Security Act of 1974, and
     regulations promulgated thereunder.
     
<PAGE>
     "ERISA Affiliate" means any trade or business (whether or not
     incorporated) under common control with the Borrower within the
     meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
     (o) of the Code for purposes of provisions relating to Section 412 of
     the Code).

     "ERISA Event" means (a) a Reportable Event with respect to a Pension
     Plan; (b) a withdrawal by the Borrower, CHC or any ERISA Affiliate
     from a Pension Plan subject to Section 4063 of ERISA during a plan
     year in which it was a substantial employer (as defined in
     Section 4001(a)(2) of ERISA) or a cessation of operations which is
     treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
     complete or partial withdrawal by the Borrower, CHC or any ERISA
     Affiliate from a Multiemployer Plan or notification that a
     Multiemployer Plan is in reorganization; (d) the filing of a notice of
     intent to terminate, the treatment of a Plan amendment as a
     termination under Section 4041 or 4041A of ERISA, or the commencement
     of proceedings by the PBGC to terminate a Pension Plan or
     Multiemployer Plan; (e) an event or condition which might reasonably
     be expected to constitute grounds under Section 4042 of ERISA for the
     termination of, or the appointment of a trustee to administer, any
     Pension Plan or Multiemployer Plan; or (f) the imposition of any
     liability under Title IV of ERISA, other than PBGC premiums due but
     not delinquent under Section 4007 of ERISA, upon the Borrower, CHC or
     any ERISA Affiliate.

     "Eurodollar Reserve Percentage" has the meaning specified in the
     definition of "LIBOR Rate."

     "Event of Default" means any of the events or circumstances specified
     in Section 9.1.

     "Event of Loss" means, with respect to any Eligible Real Property, any
     of the following: (a) any loss, destruction or damage of such
     property; (b) any pending or threatened institution of any proceedings
     for the condemnation or seizure of such property or for the exercise
     of any right of eminent domain; or (c) any actual condemnation,
     seizure or taking, by exercise of the power of eminent domain or
     otherwise, of such property, or confiscation of such property or the
     requisition of the use of such property.

     "Exchange Act" means the Securities and Exchange Act of 1934, and
     regulations promulgated thereunder.

     "Federal Funds Rate" means, for any day, the rate set forth in the
     weekly statistical release designated as H.15(519), or any successor
     publication, published by the Federal Reserve Bank of New York on the
     preceding Business Day opposite the caption "Federal Funds
     (Effective)"; or, if for any relevant day such rate is not so
     published on any such preceding Business Day, the rate for such day
     will be the arithmetic mean as determined by the Agent of the rates
     
<PAGE>
     for the last transaction in overnight Federal funds arranged prior to
     9:00 a.m. (New York City time) on that day by each of three leading
     brokers of Federal funds transactions in New York City selected by the
     Agent.

     "Financial Covenants" means the financial covenants set forth in
     Section 8.14.

     "Financial Transaction Liability" means (a) any overdraft on any
     account maintained by the Borrower with Agent, (b) liabilities owing
     by the Borrower to the Agent with respect to bank card services and
     (c) liabilities incurred by the Agent as a result of automated
     clearing house transactions for the account of the Borrower.

     "Fixed Charge Coverage Ratio" means the ratio of (a) for the
     applicable period, the sum of (i) EBITDA less (ii) an amount equal to
     4% of the aggregate of all amounts which, in accordance with GAAP,
     would be included as gross revenue on a consolidated statement of
     income of CHC and its Subsidiaries, to (b) for the applicable period,
     the sum of (i) scheduled payments of principal on Indebtedness of CHC
     and its Subsidiaries (including the portion of payments on capitalized
     leases allocable to principal, but excluding (A) mandatory prepayments
     of the Loans required under Section 2.6, and (B) balloon payments made
     with the proceeds of Indebtedness permitted pursuant to Section 8.5),
     whether or not made, (ii) Interest Expense, (iii) income and gross
     receipts taxes paid in cash or cash equivalents, (iv) dividends and
     distributions paid in cash or cash equivalents (excluding
     distributions of cash made by the Borrower to CHC in an amount
     necessary to allow CHC to pay income and gross receipts taxes on the
     taxable income of the Borrower that is recognized by CHC for tax
     purposes), plus (v) payments made to redeem or otherwise acquire for
     value any partnership units of the Borrower or shares of capital stock
     of CHC or any warrants, rights or options to acquire such partnership
     units or shares.

     "FRB" means the Board of Governors of the Federal Reserve System, and
     any Governmental Authority succeeding to any of its principal
     functions.

     "Funded Debt Ratio" means the ratio of (a) the Indebtedness of CHC and
     its Subsidiaries as of the last day of the applicable period, to (b)
     EBITDA for the applicable period.

     "GAAP" means generally accepted accounting principles set forth from
     time to time in the opinions and pronouncements of the Accounting
     Principles Board and the American Institute of Certified Public
     Accountants and statements and pronouncements of the Financial
     Accounting Standards Board (or agencies with similar functions of
     comparable stature and authority within the U.S. accounting
     profession), which are applicable to the circumstances at the
     applicable time.
     
<PAGE>
     "Governmental Authority" means any nation or government, any state or
     other political subdivision thereof, any central bank (or similar
     monetary or regulatory authority) thereof, any entity exercising
     executive, legislative, judicial, regulatory or administrative
     functions of or pertaining to government, and any corporation or other
     entity owned or controlled, through stock or capital ownership or
     otherwise, by any of the foregoing.

     "Guaranty" means a guaranty executed by CHC and in favor Agent as
     agent for the Lenders pursuant to Section 5.1(l), in substantially the
     form of Exhibit C, together with all amendments thereto.

     "Guaranty Obligation" has the meaning specified in the definition of
     "Contingent Obligation."

     "Hazardous Materials" means all those substances that are regulated
     by, or which may form the basis of liability under, any Environmental
     Law, including all substances identified under any Environmental Law
     as a pollutant, contaminant, hazardous waste, hazardous constituent,
     special waste, hazardous substance, hazardous material, or toxic
     substance, or petroleum or petroleum-derived substance or waste.

     "Indebtedness" of any Person means, without duplication, (a) all
     indebtedness for borrowed money; (b) all obligations issued,
     undertaken or assumed as the deferred purchase price of property or
     services (other than trade payables entered into in the ordinary
     course of business on ordinary terms); (c) all noncontingent
     reimbursement or payment obligations with respect to Surety
     Instruments; (d) all obligations evidenced by notes, bonds, debentures
     or similar instruments, including obligations so evidenced incurred in
     connection with the acquisition of property, assets or businesses;
     (e) all indebtedness created or arising under any conditional sale or
     other title retention agreement, or incurred as financing, in either
     case with respect to property acquired by the Person (even though the
     rights and remedies of the seller or bank under such agreement in the
     event of default are limited to repossession or sale of such
     property); (f) all obligation with respect to capital leases; (g) all
     net obligations with respect to Swap Contracts; (h) all reimbursement
     obligations under outstanding Letters of Credit; (i) all indebtedness
     referred to in clauses (a) through (g) above secured by (or for which
     the holder of such Indebtedness has an existing right, contingent or
     otherwise, to be secured by) any Lien upon or in property (including
     accounts and contracts rights) owned by such Person, even though such
     Person has not assumed or become liable for the payment of such
     Indebtedness; and (j) all Guaranty Obligation in respect of
     indebtedness or obligations of others of the kinds referred to in
     clauses (a) through (g) above.

     "Indemnification Agreement" means an indemnification agreement
     executed by the Borrower in favor Agent as agent for the Lenders
     pursuant to Section 5.3, in substantially the form of Exhibit D,
     together with all amendments thereto.

     "Indemnified Liabilities" has the meaning specified in Section 12.5.
     
<PAGE>
     "Indemnified Person" has the meaning specified in Section 12.5.

     "Independent Auditor" has the meaning specified in Section 7.1(a).

     "Insolvency Proceeding" means (a) any case, action or proceeding
     before any court or other Governmental Authority relating to
     bankruptcy, reorganization, insolvency, liquidation, receivership,
     dissolution, winding-up or relief of debtors, or (b) any general
     assignment for the benefit of creditors, composition, marshalling of
     assets for creditors, or other, similar arrangement in respect of its
     creditors generally or any substantial portion of its creditors;
     undertaken under U.S. Federal, state or foreign law, including the
     Bankruptcy Code.

     "Interest Coverage Ratio" means the ratio of (a) EBITDA for the
     applicable period, to (b) Interest Expense for the applicable period.

     "Interest Expense" means, for any applicable period, the aggregate
     consolidated interest expense (both cash and non-cash and determined
     without regard to original issue discount) of CHC and its Subsidiaries
     for such period, as determined in accordance with GAAP, including, to
     the extent allocable to interest expense in accordance with GAAP,
     (a) all other fees paid or owed with respect to the issuance or
     maintenance of Contingent Obligations (including letters of credit of
     CHC and its Subsidiaries), (b) net costs or benefit under Swap
     Contracts of CHC and its Subsidiaries and (c) the portion of any
     payments made in respect of obligation in respect of capitalized
     leases of CHC and its Subsidiaries allocable to interest expense.

     "Interest Margin" means the number of basis points per annum
     determined in accordance with the following matrix and based upon the
     quarterly financial statements of the Borrower provided to the Agent
     in accordance with the terms of this Agreement for the preceding
     fiscal quarter.  Adjustments shall be made 45 days after the end of
     each fiscal quarter (when quarterly financial statements are required
     to be delivered to the Agent); provided, however, that if the Borrower
     has not delivered its financial statements for the previous fiscal
     quarter within 45 days of the end of such fiscal quarter, then the
     Interest Margin in effect for the previous fiscal quarter shall
     continue to apply unless the Agent exercises its right to impose
     interest at the default rate as provided for in this Agreement:

     Level              Level I     Level II       Level III     Level IV
     -----------------  -------     ----------     ---------     --------
     Funded Debt Ratio  < 3.00      >3.00<3.50     >3.50<4.0     >4.0
                                    -              -             -

     Reference Margin   0           0              25            37.5

     LIBOR Margin       165         185            210           235

     > means greater than or equal to
     -

     < means less than
     
<PAGE>
     The margins set forth above shall apply unless there exists an Event
     of Default, in which case the Agent may elect to impose the default
     rate as provided for in this Agreement.  Notwithstanding the
     foregoing, the Interest Margin for the first six months following the
     date of the initial advance of a Loan to the Borrower, shall be the
     higher of (a) the Interest Margin applicable in accordance with the
     matrix set forth above or (b) the Interest Margin applicable under
     Level II of the matrix set forth above.

     "Interest Payment Date" means, as to any Loan other than a Reference
     Rate Loan, the last day of each Interest Period applicable to such
     Loan and, as to any Reference Rate Loan, the last Business Day of each
     calendar quarter and each date such Loan is converted into another
     Type of Loan; provided, however, that if any Interest Period for a
     LIBOR Rate Loan exceeds three months, the date that falls three months
     after the beginning of such Interest Period and after each Interest
     Payment Date thereafter is also an Interest Payment Date.

     "Interest Period" means, as to any LIBOR Rate Loan, the period
     commencing on the Interest Rate Election Date on which the Loan is
     made, converted into or continued as a LIBOR Rate Loan, and ending on
     the date one, two, three or six months thereafter as selected by the
     Borrower in its Interest Rate Notice; provided that:

     (a)  if any Interest Period would otherwise end on a day that is not a
          Business Day, that Interest Period shall be extended to the
          following Business Day unless, in the case of a LIBOR Rate Loan,
          the result of such extension would be to carry such Interest
          Period into another calendar month, in which event such Interest
          Period shall end on the preceding Business Day;

     (b)  any Interest Period pertaining to a LIBOR Rate Loan that begins
          on the last Business Day of a calendar month (or on a day for
          which there is no numerically corresponding day in the calendar
          month at the end of such Interest Period) shall end on the last
          Business Day of the calendar month at the end of such Interest
          Period; and

     (c)  no Interest Period shall extend beyond the Maturity Date.

     "Interest Rate Election Date" means any date as of which, under
     Section 2.5, the Borrower (a) obtains Loans, (b) converts Loans of one
     Type to another Type, or (c) continues as Loans of the same Type, but
     with a new Interest Period, Loans having Interest Periods expiring on
     such date.

     "Interest Rate Notice" means a notice in substantially the form of
     Exhibit E.

     "IRS" means the Internal Revenue Service, and any Governmental
     Authority succeeding to any of its principal functions under the Code.
     
<PAGE>
     "Lender" has the meaning specified in the introductory clause hereto.

     "Lending Office" means, as to any Lender, the office or offices of
     such Lender specified as its "Lending Office" or "Domestic Lending
     Office" or "LIBOR Lending Office," as the case may be, on
     Schedule 12.2, or such other office or offices as the Lender may from
     time to time notify the Borrower and the Agent.

     "Letter of Credit" means a stand-by letter of credit issued by the
     Agent pursuant to Section 3.2 hereof for the account of the Borrower.

     "Letter of Credit Usage" means as of any date of determination, the
     sum of (a) the aggregate face amount of all outstanding unmatured
     Letters of Credit, plus (b) the aggregate amount of all payments made
     by Agent under Letters of Credit and not yet reimbursed by the
     Borrower pursuant to Section 3.4 hereof.

     "LIBOR Rate" means, for any Interest Period, with respect to LIBOR
     Rate Loans comprising part of the same Borrowing, the rate of interest
     per annum (rounded upward to the next 1/16th of 1%) determined by the
     Agent as follows:

     LIBOR Rate =                LIBOR
                  ------------------------------------
                  1.00 - Eurodollar Reserve Percentage
     Where,

          "Eurodollar Reserve Percentage" means for any day for any
          Interest Period the maximum reserve percentage (expressed as a
          decimal, rounded upward to the next 1/100th of 1%) in effect on
          such day (whether or not applicable to any Lender) under
          regulations issued from time to time by the FRB for determining
          the maximum reserve requirement (including any emergency,
          supplemental or other marginal reserve requirement) with respect
          to Eurocurrency funding (currently referred to as "Eurocurrency
          liabilities"); and

          "LIBOR" means the average offered rate for deposits in United
          States Dollars (rounded upwards, if necessary, to the nearest
          1/16 of 1%) for delivery of such deposits on the first day of an
          Interest Period of a LIBOR Rate Loan, for the number of days
          comprised therein, which appears on the Reuters Screen LIBO Page
          as of 11:00 a.m., London time (or such other time as of which
          such rate appears) on the day that is two Business Days preceding
          the first day of the Interest Period or the rate for such
          deposits determined by the Agent at such time based on such other
          published service of general application as shall be selected by
          the Agent for such purpose; provided, that in lieu of determining
          the rate in the foregoing manner, the Agent may determine the
          rate based on rates offered to the Agent for deposits in United
          States Dollars (rounded upwards, if necessary, to the nearest
          1/16 of 1%) in the interbank eurodollar market at such time for
          delivery on the first day of the Interest Period for the number
          of days comprised therein.
     
<PAGE>
          The LIBOR Rate shall be adjusted automatically as to all LIBOR
          Rate Loans then outstanding as of the effective date of any
          change in the Eurodollar Reserve Percentage.

     "LIBOR Rate Loan" means a Loan that bears interest based on the LIBOR
     Rate.

     "Lien" means any security interest, mortgage, deed of trust, pledge,
     hypothecation, assignment, charge or deposit arrangement, encumbrance,
     lien (statutory or other) or preferential arrangement of any kind or
     nature whatsoever in respect of any property (including those created
     by, arising under or evidenced by any conditional sale or other title
     retention agreement, the interest of a lessor under a capital lease,
     any financing lease having substantially the same economic effect as
     any of the foregoing, or the filing of any financing statement naming
     the owner of the asset to which such lien relates as debtor, under the
     Uniform Commercial Code or any comparable law) and any contingent or
     other agreement to provide any of the foregoing, but not including the
     interest of a lessor under an operating lease.

     "Loan" means an extension of credit by a Lender to the Borrower under
     Article II, and may be a Reference Rate Loan or a LIBOR Rate Loan
     (each, a "Type" of Loan).

     "Loan Documents" means this Agreement, the Note, the Collateral
     Documents, the Guaranty, the Reimbursement Agreements, the Commitment
     Letter and all other documents delivered to the Agent or any Lender in
     connection herewith.

     "Margin Stock" means "margin stock" as such term is defined in
     Regulation G, T, U or X of the FRB.

     "Material Adverse Effect" means (a) a material adverse change in, or a
     material adverse effect upon, the operations, business, properties,
     condition (financial or otherwise) or prospects of the Borrower or the
     Borrower, CHC and its Subsidiaries taken as a whole; (b) a material
     impairment of the ability of the Borrower, CHC or any Subsidiary to
     perform under any Loan Document and to avoid any Event of Default; or
     (c) a material adverse effect upon (i) the legality, validity, binding
     effect or enforceability against the Borrower, CHC or any Subsidiary
     of any Loan Document, or (ii) the perfection or priority of any lien
     granted under any of the Collateral Documents.

     "Maturity Date" means the earlier of (i) May 5, 2003 and (ii) the date
     the Obligations are accelerated pursuant to Section 9.2 hereof.

     "Multiemployer Plan" means a "multiemployer plan," within the meaning
     of Section 4001(a)(3) of ERISA, to which the Borrower, CHC or any
     ERISA Affiliate makes, is making, or is obligated to make
     contributions or, during the preceding three calendar years, has made,
     or been obligated to make, contributions.
     
<PAGE>
     "Net Issuance Proceeds" means, as to any issuance of debt by any
     Person, cash proceeds and non-cash proceeds received or receivable by
     such Person in connection therewith, net of reasonable out-of-pocket
     costs and expenses paid or incurred in connection therewith in favor
     of any Person not an Affiliate of such Person.

     "Net Proceeds" means, as to any Disposition by a Person, proceeds in
     cash, checks or other cash equivalent financial instruments as and
     when received by such Person, net of:  (a) the direct costs relating
     to such Disposition excluding amounts payable to such Person or any
     Affiliate of such Person, (b) sale, use or other transaction taxes
     paid or payable by such Person as a direct result thereof, and (c) the
     amount required to be applied to repay principal, interest and
     prepayment premiums and penalties on Indebtedness secured by a lien on
     the asset which is the subject of such Disposition to the extent such
     Lien is permitted hereunder.  "Net Proceeds" shall also include
     proceeds paid on account of any Event of Loss, net of (x) all money
     actually applied to repair or reconstruct the damaged property or
     property affected by the condemnation or taking, (y) all of the costs
     and expenses reasonably incurred in connection with the collection of
     such proceeds, award or other payments, and (z) any amounts retained
     by or paid to parties having superior rights to such proceeds, awards
     or other payments.  Notwithstanding the foregoing, "Net Proceeds" of a
     Disposition described in Section 8.2(a)(v) shall be an amount equal to
     the amount calculated in accordance with Section 8.2(a)(v)(A).

     "Nonrecourse Indebtedness" means Indebtedness with respect to which
     there is no recourse to any of the assets of the Borrower, CHC or any
     Subsidiary other than the assets encumbered by a Permitted Lien, with
     customary exceptions to the nonrecourse nature of such Indebtedness
     approved by the Agent in writing, which approval shall not be
     unreasonably withheld.

     "Note" means a promissory note executed by the Borrower and payable to
     the Agent for the benefit of the Lenders pursuant to Section 2.4, in
     substantially the form of Exhibit F, together with all renewals and
     amendments thereto.

     "Notice of Borrowing" means a written or oral request for a Loan from
     the Borrower delivered to the Agent in the manner, at the time, and
     containing the information required by the terms of Section 2.2
     hereof.

     "Obligation" means all advances, debts, liabilities, obligation,
     covenants and duties arising under any Loan, Letter of Credit or Loan
     Document owing by the Borrower, CHC or any Subsidiary to any Lender,
     the Agent, or any Indemnified Person, whether direct or indirect
     (including those acquired by assignment), absolute or contingent, due
     or to become due, now existing or hereafter arising.
     
<PAGE>
     "Organization Documents" means (a) for any limited partnership, the
     limited partnership agreement, the certificate of formation, and all
     applicable resolutions of the board of directors (or any committee
     thereof) of such limited partnership and (b) for any corporation, the
     certificate or articles of incorporation, the bylaws, any certificate
     of determination or instrument relating to the rights of preferred
     shareholders of such corporation, any shareholder rights or similar
     agreement, and all applicable resolutions of the board of directors
     (or any committee thereof) of such corporation.

     "Other Taxes" means any present or future stamp or documentary taxes
     or any other excise or property taxes, charges or similar levies which
     arise from any payment made hereunder or from the execution, delivery
     or registration of, or otherwise with respect to, this Agreement or
     any other Loan Documents.

     "Participant" has the meaning specified in Section 12.8(d).

     "PBGC" means the Pension Benefit Guaranty Corporation, or any
     Governmental Authority succeeding to any of its principal functions
     under ERISA.

     "Pension Plan" means a pension plan (as defined in Section 3(2) of
     ERISA) subject to Title IV of ERISA which the Borrower sponsors,
     maintains, or to which it makes, is making, or is obligated to make
     contributions, or in the case of a multiple employer plan (as
     described in Section 4064(a) of ERISA) has made contributions at any
     time during the immediately preceding five (5) plan years.

     "Permitted Liens" has the meaning specified in Section 8.1.

     "Person" means an individual, partnership, corporation, limited
     liability company, limited liability partnership, business trust,
     joint stock company, trust, unincorporated association, joint venture
     or Governmental Authority.

     "Plan" means an employee benefit plan (as defined in Section 3(3) of
     ERISA) which the Borrower sponsors or maintains or to which the
     Borrower makes, is making, or is obligated to make contributions and
     includes any Pension Plan.

     "Reference Rate" means, for any day, the rate of interest in effect
     for such day as publicly announced from time to time by U. S. Bank, as
     its "reference lending rate."  The "reference lending rate" shall mean
     the rate announced by U. S. Bank from time to time as its reference
     lending rate for commercial loans within the United States (but is not
     intended to be the lowest rate of interest charged by U. S. Bank in
     connection with extensions of credit to debtors or any classification
     of debtors).  Any change in the reference rate announced by U. S. Bank
     shall take effect at the opening of business on the day specified in
     the public announcement of such change.
     
<PAGE>
     "Reference Rate Loan" means a Loan that bears interest based on the
     Reference Rate.

     "Pro Rata Share" means, as to any Lender at any time, the percentage
     interest (expressed as a decimal, rounded to the ninth decimal place)
     at such time of such Lender in the combined Commitments of all
     Lenders.

     "Reimbursement Agreement" has the meaning specified in Section 3.2(c).

     "Reportable Event" means, any of the events set forth in
     Section 4043(b) of ERISA or the regulations thereunder, other than any
     such event for which the 30-day notice requirement under ERISA has
     been waived in regulations issued by the PBGC.

     "Required Lenders" means at any time Lenders then holding in excess of
     66 2/3% of the then aggregate unpaid principal amount of the Loans,
     or, if no such principal amount is then outstanding, Lenders then
     having Pro Rata Shares greater than 66 2/3% of the Commitments.

     "Requirement of Law" means, as to any Person, any law (statutory or
     common), treaty, rule or regulation or determination of an arbitrator
     or of a Governmental Authority, in each case applicable to or binding
     upon the Person or any of its property or to which the Person or any
     of its property is subject.

     "Responsible Officer" means the chief executive officer or the
     president of the Borrower, or any other officer having substantially
     the same authority and responsibility; or, with respect to compliance
     with financial covenants, the chief financial officer or the treasurer
     of the Borrower, or any other officer having substantially the same
     authority and responsibility.

     "SEC" means the Securities and Exchange Commission, or any
     Governmental Authority succeeding to any of its principal functions.

     "Security Agreements" means the security agreements executed by the
     Borrower and CHC and in favor Agent as agent for the Lenders pursuant
     to Section 5.1(f), in substantially the form of Exhibit G, together
     with all amendments thereto.

     "Solvent" means, as to any Person at any time, that (a) the fair value
     of the property of such Person is greater than the amount of such
     Person's liabilities (including disputed, contingent and unliquidated
     liabilities) as such value is established and liabilities evaluated
     for purposes of Section 101(31) of the Bankruptcy Code and, in the
     alternative, for purposes of the Washington Uniform Fraudulent
     Transfer Act; (b) the present fair saleable value of the property 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 is able to realize upon its
     
<PAGE>
     property and pay its debts and other liabilities (including disputed,
     contingent and unliquidated liabilities) as they mature in the normal
     course of business; (d) 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 (e) 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 unreasonably small capital.

     "Subordinated Debt" shall mean Indebtedness of the Borrower or CHC
     which is subordinated to the Obligations of the Borrower, CHC and the
     Subsidiaries hereunder in right of payment, exercise of remedies or
     both, on terms and conditions agreed to in writing by the Agent and
     the Required Lenders.

     "Subsidiary" of a Person means any corporation, association,
     partnership, limited liability company, limited liability partnership,
     joint venture or other business entity of which more than 50% of the
     voting stock membership interests or other equity interests (in the
     case of Persons other than corporations), is owned or controlled
     directly or indirectly by the Person, or one or more of the
     Subsidiaries of the Person, or a combination thereof.  Unless the
     context otherwise clearly requires, references herein to a
     "Subsidiary" refer to a Subsidiary of the Borrower.

     "Surety Instruments" means all letters of credit (including standby
     and commercial), banker's acceptances, bank guaranties, surety bonds
     and similar instruments.

     "Swap Contract" means any agreement (including any master agreement
     and any agreement, whether or not in writing, relating to any single
     transaction) that is an interest rate swap agreement, basis swap,
     forward rate agreement, commodity swap, commodity option, equity or
     equity index swap or option, bond option, interest rate option,
     forward foreign exchange agreement, rate cap, collar or floor
     agreement, currency swap agreement, cross-currency rate swap
     agreement, currency option or any other, similar agreement (including
     any option to enter into any of the foregoing).

     "Taxes" means any and all present or future taxes, levies, imposts,
     deductions, charges or withholdings, and all liabilities with respect
     thereto, excluding, in the case of each Lender and the Agent, such
     taxes (including income taxes or franchise taxes) as are imposed on or
     measured by each Lender's net income by the jurisdiction (or any
     political subdivision thereof) under the laws of which such Lender or
     the Agent, as the case may be, is organized or maintains a lending
     office.

     "Title Insurance Policy" means an American Land Title Association
     extended coverage mortgagee's policy of title insurance (1992 form)
     insuring the validity and first priority (subject only to exceptions
     agreed to in writing by the Agent) of the lien of the applicable Deed
     
<PAGE>
     of Trust against the real property described therein, in an amount
     equal to or greater than 60% of the Approved Appraised Value, and with
     such endorsements as the Agent deems necessary in its sole discretion,
     issued by a title insurance company reasonably acceptable to the
     Agent, dated as of the date of the recording of such Deed of Trust,
     and in a form acceptable to the Agent.

     "Type" has the meaning specified in the definition of "Loan."

     "UCC" means the Uniform Commercial Code as in effect in the State of
     Washington.

     "Unfunded Pension Liability" means the excess of a Plan's benefit
     liabilities under Section 4001(a)(16) of ERISA, over the current value
     of that Plan's assets, determined in accordance with the assumptions
     used for funding the Pension Plan pursuant to Section 412 of the Code
     for the applicable plan year.

     "United States" and "U.S." each means the United States of America.

     "U. S. Bank" means U. S. Bank National Association, a  national
     banking association.

     1.2    Other Interpretive Provisions
            -----------------------------
     (a)    The meanings of defined terms are equally applicable to the
            singular and plural forms of the defined terms.

     (b)    The words "hereof," "herein," "hereunder" and similar words
            refer to this Agreement as a whole and not to any particular
            provision of this Agreement; and subsection, Section,
            Schedule and Exhibit references are to this Agreement unless
            otherwise specified.

     (c)    (i)   The term "documents" includes any and all instruments,
                  documents, agreements, certificates, indentures, notices
                  and other writings, however evidenced.

            (ii)  The term "including" is not limiting and means "including
                  without limitation."

            (iii) In the computation of periods of time from a specified
                  date to a later specified date, the word "from" means
                  "from and including"; the words "to" and "until" each
                  mean "to but excluding," and the word "through" means "to
                  and including."

            (iv)  The term "property" includes any kind of property or
                  asset, real, personal or mixed, tangible or intangible.
     
<PAGE>
     (d)    Unless otherwise expressly provided herein, (i) references to
            agreements (including this Agreement) and other contractual
            instruments shall be deemed to include all subsequent
            amendments and other modifications thereto, but only to the
            extent such amendments and other modifications are not
            prohibited by the terms of any Loan Document, and
            (ii) references to any statute or regulation are to be
            construed as including all statutory and regulatory provisions
            consolidating, amending, replacing, supplementing or
            interpreting the statute or regulation.

     (e)    The captions and headings of this Agreement are for convenience
            of reference only and shall not affect the interpretation of
            this Agreement.

     (f)    This Agreement and other Loan Documents may use several
            different limitations, tests or measurements to regulate the
            same or similar matters.  All such limitations, tests and
            measurements are cumulative and shall each be performed in
            accordance with their terms.

     (g)    This Agreement and the other Loan Documents are the result of
            negotiations among and have been reviewed by counsel to the
            Agent, the Borrower, CHC and the other parties, and are the
            products of all parties.  Accordingly, they shall not be
            construed against the Lenders or the Agent merely because of
            the Agent's or Lenders' involvement in their preparation.

     (h)    Each reference hereunder to Subsidiaries is effective at such
            time and to the extent that the Borrower has existing
            Subsidiaries (as defined herein).

     1.3    Accounting Principles
            ---------------------
     (a)    Unless the context otherwise clearly requires, all accounting
            terms not expressly defined herein shall be construed, and all
            financial computations required under this Agreement shall be
            made, in accordance with GAAP, consistently applied.

     (b)    References herein to "fiscal year" and "fiscal quarter" refer
            to such fiscal periods of the Borrower or CHC (as the case may
            be).

     (c)    In the event that GAAP changes during the term of this
            Agreement such that the Financial Covenants contained in
            Section 8.14 would then be calculated in a different manner or
            with different components or with components that are
            calculated differently, (i) the parties hereto agree to enter
            into negotiations with respect to amendments to this Agreement
            to conform those covenants as criteria for evaluating CHC's and
            its Subsidiaries' financial condition to substantially the same
            criteria as were effective prior to such change in GAAP, and
            (ii) the Borrower and CHC shall be deemed to be in compliance
     
<PAGE>
            with the affected Financial Covenants contained in Section 8.14
            during the 60 days following any change in GAAP if and to the
            extent that the Borrower would have been in compliance
            therewith under GAAP as in effect immediately before such
            change; provided, however, that this paragraph shall not be
            deemed to require the Borrower, the Agent or the Lenders to
            agree to modify any provision of this Agreement or any of the
            other Loan Documents to reflect any such change to GAAP and,
            if, after such 60 days, the parties, in their sole discretion,
            fail to reach agreement on such modifications, the terms of
            this Agreement will remain unchanged and the compliance by the
            Borrower and CHC with the Financial Covenants contained in
            Section 8.14 will be calculated in accordance with GAAP as in
            effect immediately before such change.

     ARTICLE II.  THE LOANS

     2.1    Revolving Line of Credit
            ------------------------
     (a)    Subject to the terms and conditions of this Agreement, each
            Lender hereby severally agrees to make loans (each such loan, a
            "Loan") to the Borrower from time to time on Business Days
            prior to the Maturity Date in amounts equal to such Lender's
            Pro Rata Share of each requested loan, provided that, after
            giving effect to any requested loan the aggregate of all Loans
            from such Lender will not exceed at any one time outstanding
            (a) such Lender's Pro Rata Share of the Commitment less (b) its
            Pro Rata Share of the Letter of Credit Usage.  The Loans
            described in this Section 2.1 constitute a revolving credit and
            within the amount and time specified, the Borrower may pay,
            prepay and reborrow.  The amount of each Lender's Pro Rata
            Share of the Commitment is set forth in Schedule 2.1.

     (b)    Upon not fewer than ten days' prior written notice to the
            Agent, the Borrower may elect to reduce the amount of the
            Commitment; provided, however that any such reduction in the
            Commitment shall be permanent.  

     2.2    Manner of Borrowing
            -------------------
     For each requested Loan, the Borrower shall give the Agent a Notice of
     Borrowing specifying the date of a requested borrowing and the amount
     thereof.  Borrower may give a written or oral Notice of Borrowing on
     the same day it wishes any Reference Rate Loan to be made if said
     Notice of Borrowing is received by Agent no later than 10:00 a.m.
     (Seattle time) on the date of the requested borrowing.  If the
     Borrower shall elect to have interest accrue on a Loan at a rate
     indexed to the LIBOR Rate by giving an Interest Rate Notice in respect
     of such borrowing, the Notice of Borrowing shall be given prior to
     10:00 a.m. (Seattle time) on a Business Day at least three Business
     Days prior to the requested date of borrowing.  Requests for
     
<PAGE>
     borrowing, or confirmations thereof, received after the designated
     hour will be deemed received on the next succeeding Business Day. 
     Each such Notice of Borrowing shall be irrevocable and shall be deemed
     to constitute a representation and warranty by Borrower that as of the
     date of such notice the statements set forth in Article VI are true
     and correct in all material respects and that no Default or Event of
     Default has occurred and is continuing.  On receipt of a Notice of
     Borrowing, the Agent shall promptly notify each Lender by telephone,
     telex or facsimile of the date of the requested borrowing and the
     amount thereof.  Each Lender shall before 12:00 noon (Seattle time) on
     the date of the requested borrowing, pay such Lender's Pro Rata Share
     of the aggregate principal amount of the requested borrowing in
     immediately available funds to the Agent at 1420 Fifth Avenue,
     Seattle, Washington 98101.  Upon fulfillment to the Agent's
     satisfaction of the applicable conditions set forth in Article V, and
     after receipt by the Agent of such funds, the Agent will either
     (a) promptly make such funds available to the Borrower at a general
     checking account maintained by the Borrower at the Agent, or at such
     other place as may be designated by the Borrower in a writing
     delivered to the Agent; (b) if requested by the Borrower in writing to
     do so, will apply such funds against the Borrower's obligations to
     make payments of interest accruing under this Agreement, the Note or
     any other Loan Document; or (c) at the Agent's election, apply such
     proceeds to the satisfaction of Borrower's obligations arising under
     Section 3.4.

     2.3    Agent's Right to Fund
            ---------------------
     Unless the Agent shall have received notice from a Lender prior to
     12:00 noon (Seattle time) on the date of any requested borrowing that
     such Lender will not make available to the Agent its Pro Rata Share of
     the requested Borrowing, the Agent may assume that such Lender has
     made such funds available to the Agent on the date such Loan is to be
     made in accordance with Section 2.2 hereof and the Agent may, in
     reliance upon such assumption, make available to the Borrower on such
     date a corresponding amount.  If and to the extent that such Lender
     shall not have so made such portion available to the Agent, the
     Borrower and such Lender, jointly and severally, agree to pay to the
     Agent forthwith on demand such corresponding amount, together with
     interest thereon for each day from the date such amount is made
     available to the Borrower until the date such amount is repaid to the
     Agent, at (a) in the case of the Borrower, the interest rate
     applicable to such Loan and (b) in the case of such Lender, the
     Federal Funds Rate.  Any such repayment by the Borrower shall be
     without prejudice to any rights it may have against a Lender that has
     failed to make available its funds for any requested borrowing.  The
     failure of any Lender to make available its Pro Rata Share of a
     requested Borrowing shall not relieve any other Lender of any
     obligation hereunder to make available its Pro Rata Share of a
     requested Borrowing, but no Lender shall be responsible for the
     failure of any other Lender to make available such Lender's Pro Rata
     Share of a requested Borrowing.
     
<PAGE>
     2.4    Loan Accounts
            -------------
     The Loan made by each Lender shall be evidenced by the Note and one or
     more loan accounts or records maintained by such Lender in the
     ordinary course of business.  The loan accounts or records maintained
     by the Agent and each Lender shall be conclusive absent manifest error
     of the amount of the Loans made by the Lenders to the Borrower and the
     interest and payments thereon.  Any failure so to record or any error
     in doing so shall not, however, limit or otherwise affect the
     obligation of the Borrower hereunder to pay any amount owing with
     respect to the Loans.

     2.5    Interest Rate Elections
            -----------------------
     (a)    The Borrower may, upon irrevocable written notice to the Agent
            in accordance with Section 2.5(b):

            (i)   elect, as of any Business Day, in the case of new LIBOR
                  Rate Loans or any Reference Rate Loans, or as of the last
                  day of the applicable Interest Period, in the case of any
                  existing LIBOR Rate Loans, to make or convert any such
                  Loans (or any part thereof (A) in the case of a
                  conversion to a LIBOR Rate Loan, in an amount not less
                  than $1,000,000, or that is in an integral multiple of
                  $100,000 in excess thereof or (B) in the case of a
                  conversion to a Reference Rate Loan, in an amount not
                  less than $250,000) into Loans of any other Type; or

            (ii)  elect, as of the last day of the applicable Interest
                  Period, to continue any Loans having Interest Periods
                  expiring on such day (or any part thereof in an amount
                  not less than $1,000,000, or that is in an integral
                  multiple of $100,000 in excess thereof).

     (b)    The Borrower shall deliver an Interest Rate Notice to be
            received by the Agent not later than 10:00 p.m. (Seattle time)
            at least (i) three Business Days in advance of the Interest
            Rate Election Date, if the Loans are to be made, converted into
            or continued as LIBOR Rate Loans; and (ii) one Business Day in
            advance of the Interest Rate Election Date, if the Loans are to
            be converted into Reference Rate Loans, specifying:

            (A)   the proposed Interest Rate Election Date;

            (B)   the aggregate amount of Loans to be made, converted or
                  renewed;

            (C)   the Type of Loans resulting from the proposed making,
                  conversion or continuation; and

            (D)   other than in the case of Reference Rate Loans, the
                  duration of the requested Interest Period.
     
<PAGE>
     (c)    If the Borrower does not specify an interest rate election in
            any Notice of Borrowing, the Loans made pursuant to such Notice
            of Borrowing shall constitute Reference Rate Loans.

     (d)    If upon the expiration of any Interest Period applicable to
            LIBOR Rate Loans, the Borrower has failed to timely select a
            new Interest Period to be applicable to such LIBOR Rate Loans,
            or if any Default or Event of Default then exists, the Borrower
            shall be deemed to have elected to convert such LIBOR Rate
            Loans into Reference Rate Loans effective as of the expiration
            date of such Interest Period.

     (e)    the Agent will promptly notify each Lender of its receipt of an
            Interest Rate Notice, or, if no timely notice is provided by
            the Borrower, the Agent will promptly notify each Lender of the
            details of any automatic conversion.  All conversions and
            continuations shall be made ratably according to the respective
            outstanding principal amounts of the Loans with respect to
            which the notice was given held by each Lender.

     (f)    Unless the Required Lenders otherwise agree, during the
            existence of a Default or Event of Default, the Borrower may
            not elect to have a Loan made, converted into or continued as a
            LIBOR Rate Loan.

     (g)    There may not be more than six different Interest Periods in
            effect at any time.

     2.6    Mandatory Prepayments of Loans
            ------------------------------
     (a)    ASSET DISPOSITIONS
            If the Borrower, CHC or any Subsidiary shall at any time or
            from time to time make or agree to make a Disposition then
            (i) the Borrower shall promptly notify the Agent of such
            proposed Disposition (including the amount of the estimated Net
            Proceeds to be received by the Borrower, CHC or such Subsidiary
            in respect thereof) and (ii) concurrently with receipt by the
            Borrower, CHC or the Subsidiary of the Net Proceeds of such
            Disposition, the Borrower shall prepay the Loans in an
            aggregate amount equal to the amount of such Net Proceeds;
            provided, however, that no such prepayment shall be required to
            the extent, in each case, such Net Proceeds are from the
            Disposition of personal property and are to be used within 90
            days of receipt thereof to purchase replacement assets;
            provided further, that such prepayment shall be required only
            if (i) such Net Proceeds exceed $500,000 or (ii) the aggregate
            of all Net Proceeds theretofore received by the Borrower during
            the preceding 12 months and not reinvested or used to make a
            prepayment hereunder exceeds $500,000.
     
<PAGE>
     (b)    EVENT OF LOSS
            If the Borrower, CHC or any Subsidiary shall at any time or
            from time to time suffer an Event of Loss, then (i) the
            Borrower shall promptly notify the Agent of such Event of Loss
            (including the amount of the estimated Net Proceeds to be
            received by the Borrower, CHC or such Subsidiary in respect
            thereof) and (ii) promptly upon, and in no event later than two
            (2) Business Days after, receipt by the Borrower, CHC or the
            Subsidiary of the Net Proceeds of such Event of Loss, the
            Borrower shall either (i) prepay the Loans in an aggregate
            amount equal to the amount of such Net Proceeds or (ii) deposit
            an aggregate amount equal to the amount of such Net Proceeds
            into an interest bearing blocked account maintained with the
            Agent pending release for usage by the Borrower in a manner,
            and during the time, specified in the proviso below; provided,
            however, that no such prepayment shall be required to the
            extent, in each case, such Net Proceeds are used within 90 days
            of receipt thereof to repair, replace or restore the assets, if
            any, relating to such Event of Loss.

     (c)    DEBT ISSUANCE
            If the Borrower or CHC shall incur additional Indebtedness
            after the date of this Agreement (other than Indebtedness
            permitted under Section 8.5, the Borrower shall promptly notify
            the Agent of the estimated Net Issuance Proceeds of such
            issuance or incurrence to be received by the Borrower in
            respect thereof.  Promptly upon, and in no event later than
            three days after, receipt by the Borrower of Net Issuance
            Proceeds of such issuance or incurrence, the Borrower shall
            prepay the Loans in an aggregate amount equal to the amount of
            such Net Issuance Proceeds.

     (d)    GENERAL
            Any prepayments pursuant to this Section 2.6 shall be applied
            first to any Reference Rate Loans then outstanding and then to
            LIBOR Rate Loans with the shortest Interest Periods remaining;
            provided, however, that if the amount of Reference Rate Loans
            then outstanding is not sufficient to satisfy the entire
            prepayment requirement, the Borrower may, at its option, place
            any amounts which it would otherwise be required to use to
            prepay LIBOR Rate Loans on a day other than the last day of the
            Interest Period therefor in an interest-bearing account pledged
            to the Agent for the benefit of the Lenders until the end of
            such Interest Period at which time such pledged amounts will be
            applied to prepay such LIBOR Rate Loans.  The Borrower shall
            pay, together with each prepayment under this Section 2.6,
            accrued interest on the amount prepaid and any amounts required
            pursuant to Section 4.4.

     (e)    REDUCTION IN COMMITMENT
            Concurrently with the making of each mandatory prepayment
            pursuant to this Section 2.6, the amount of the Commitment
            shall be automatically and permanently reduced by an amount
            equal to the amount of the mandatory prepayment, and each
            Lender's Commitment shall be reduced proportionately based upon
            each Lender's Pro Rata Share.
     
<PAGE>
     2.7    Repayment
            ---------
     (a)    The Borrower shall repay to the Lenders from time to time such
            amounts of principal as may be necessary to ensure that at all
            times the sum of the then outstanding principal balance of all
            Loans and the Letter of Credit Usage is equal to or less than
            the lesser of (i) the amount of the then applicable Commitment
            or (ii) the Borrowing Base.

     (b)    The Borrower shall repay the Loans in full, together with all
            accrued and unpaid interest thereon, on the Maturity Date.

     2.8    Interest
            --------
     (a)    Each Loan shall bear interest on the outstanding principal
            amount thereof from the Closing Date at a rate per annum equal
            to the LIBOR Rate or the Reference Rate, as the case may be
            (and subject to the Borrower's right to convert to other Types
            of Loans under Section 2.5), plus the Interest Margin.

     (b)    Interest on each Loan shall be paid in arrears on each Interest
            Payment Date.  Interest shall also be paid on the date of any
            prepayment of Loans under Section 2.6 for the portion of the
            Loans so prepaid and upon payment (including prepayment) in
            full thereof and, during the existence of any Event of Default,
            interest shall be paid on demand of the Agent at the request or
            with the consent of the Required Lenders.

     (c)    Notwithstanding subsection (a) of this Section, while any Event
            of Default exists or after acceleration, the Borrower shall pay
            interest (after as well as before entry of judgment thereon to
            the extent permitted by law) on the principal amount of all
            outstanding Loans, at a rate per annum which is determined by
            adding 2% per annum to the Interest Margin then in effect for
            such Loans.

     (d)    Anything herein to the contrary notwithstanding, the
            obligations of the Borrower to any Lender hereunder shall be
            subject to the limitation that payments of interest and late
            charges shall not be required, for any period for which
            interest is computed hereunder, to the extent (but only to the
            extent) that contracting for or receiving such payment by such
            Lender would be contrary to the provisions of any law
            applicable to such Lender limiting the highest rate of interest
            that may be lawfully contracted for, charged or received by
            such Lender, and in such event the Borrower shall pay such
            Lender interest at the highest rate permitted by applicable
            law.
     
<PAGE>
     2.9    Agency and Underwriting Fees
            ----------------------------
     The Borrower shall pay agency fees and underwriting fees to the Agent
     as required by the Commitment Letter.

     2.10   Commitment Fees
            ---------------
     On the last day of each fiscal quarter during the term of the Loans,
     and on the date that the Loans are repaid in full and the Commitments
     are terminated upon the election of the Borrower pursuant to Section
     2.1(c) or as otherwise provided in this Agreement, Borrower shall pay
     to the Agent for the ratable benefit of the Lenders commitment fees an
     the amount equal to Commitment Fee Percentage per annum of the sum of
     (i) the average unused portion of the Commitment during each period,
     to be calculated based upon the amount of the Commitment during such
     period, less (ii) the sum of the then outstanding principal balance of
     all Loans and the Letter of Credit Usage during such period.  The fee
     paid pursuant to this Section 2.10 shall be deemed fully earned when
     due and non-refundable when paid without regard to any voluntary or
     involuntary prepayment of the Loans (or any portion thereof), the
     failure to satisfy the conditions of lending or the termination of any
     Commitment.

     2.11   Late Charge
            -----------
     If any payment of principal or interest required under any of the
     Loans is five  days or more past due, the Borrower will be charged,
     for the ratable benefit of the Lenders, a late charge of 5% of the
     delinquent payment or $5, whichever is greater, for each such late
     payment.  The five-day period provided for herein shall not be
     construed as a waiver of any Default or Event of Default resulting
     from any late payment under any of the Loans.

     2.12   Computation of Interest and Fees
            --------------------------------
     (a)    All computations of interest and commitment fees shall be made
            on the basis of a year of 360 days and actual days elapsed. 
            Interest and commitment fees shall accrue during each period
            during which interest or commitment fees are computed from the
            first day thereof to the last day thereof.

     (b)    Each determination of an interest rate by the Agent shall be
            conclusive and binding on the Borrower and the Lenders in the
            absence of manifest error.  The Agent will, at the request of
            the Borrower or any Lender, deliver to the Borrower or the
            Lender, as the case may be, a statement showing the quotations
            used by the Agent in determining any interest rate and the
            resulting interest rate.
     
<PAGE>
     2.13   Payments by the Borrower
            ------------------------
     (a)    All payments to be made by the Borrower shall be made without
            set-off, recoupment or counterclaim.  Except as otherwise
            expressly provided herein, all payments by the Borrower shall
            be made to the Agent for the account of the Lenders at the
            Agent's Payment Office, and shall be made in dollars and in
            immediately available funds, no later than 10:00 p.m. (Seattle
            time) on the date specified herein.  The Agent will promptly
            distribute to each Lender its Pro Rata Share (or other
            applicable share so expressly provided herein) of such payment
            in like funds as received.  Any payment received by the Agent
            later than 10:00 p.m. (Seattle time) shall be deemed to have
            been received on the following Business Day and any applicable
            interest or fee shall continue to accrue.

     (b)    Subject to the provisions set forth in the definition of
            "Interest Period" herein, whenever any payment is due on a day
            other than a Business Day, such payment shall be made on the
            following Business Day, and such extension of time shall in
            such case be included in the computation of interest or fees,
            as the case may be.

     (c)    Unless the Agent receives notice from the Borrower prior to the
            date on which any payment is due to the Lenders that the
            Borrower will not make such payment in full as and when
            required, the Agent may assume that the Borrower has made such
            payment in full to the Agent on such date in immediately
            available funds and the Agent may (but shall not be so
            required), in reliance upon such assumption, distribute to each
            Lender on such due date an amount equal to the amount then due
            such Lender.  If and to the extent the Borrower has not made
            such payment in full to the Agent, each Lender shall repay to
            the Agent on demand such amount distributed to such Lender,
            together with interest thereon at this Federal Funds Rate for
            each day from the date such amount is distributed to such
            Lender until the date repaid.

     (d)    Any payment made by the Borrower hereunder shall be applied
            first, against any Financial Transaction Liability of the
            Borrower owing to the Agent; second, against fees, expenses and
            indemnities due hereunder or under any other Loan Document;
            third, against interest due on matured obligations in respect
            of any Letter of Credit, if any; fourth, against interest due
            on amounts in default on any Loan, if any; fifth, against
            interest due on any Loan; sixth, against matured obligations in
            respect of any Letter of Credit, if any; seventh, against Loan
            principal amounts in default; and eighth, against Loan
            principal.
     
<PAGE>
     2.14   Sharing of Payments, Etc.
            -------------------------
     If, other than as expressly provided elsewhere herein, any Lender
     shall obtain on account of the Loans made by it any payment (whether
     voluntary, involuntary, through this exercise of any right of set-off,
     or otherwise) in excess of its Pro Rata Share, such Lender shall
     immediately (a) notify the Agent of such fact, and (b) purchase from
     the other Lenders such participations in the Loans made by them as
     shall be necessary to cause such purchasing Lender to share the excess
     payment pro rata with each of them; provided, however, that if all or
     any portion of such excess payment is thereafter recovered from the
     purchasing Lender, such purchase shall to that extent be rescinded and
     each other Lender shall repay to the purchasing Lender the purchase
     price paid therefor, together with an amount equal to such paying
     Lender's ratable share (according to the proportion of (a) the amount
     of such paying Lender's required repayment to (b) the total amount so
     recovered from the purchasing Lender) of any interest or other amount
     paid or payable by the purchasing Lender in respect of the total
     amount so recovered.  The Borrower agrees that any Lender so
     purchasing a participation from another Lender may, to the fullest
     extent permitted by law, exercise all its rights of payment (including
     the right of set-off, but subject to Section 12.9) with respect to
     such participation as fully as if such Lender were the direct creditor
     of the Borrower in the amount of such participation.  The Agent will
     keep records (which shall be conclusive and binding in the absence of
     manifest error) of participations purchased under this Section and
     will in each case notify the Lenders following any such purchases or
     repayments.

     2.15   Security
            --------
     All Obligations of the Borrower, CHC and the Subsidiaries under this
     Agreement, the Note and all other Loan Documents shall be secured in
     accordance with the Collateral Documents.

     2.16   Borrowing Base
            --------------
     (a)    The sum of (i) the outstanding balance of principal of the
            Loans, plus (ii) the Letter of Credit Usage shall at no time
            exceed an amount equal to the Borrowing Base.

     (b)    The Borrower shall submit to U. S. Bank a calculation of the
            Borrowing Base (i) within 45 days of the end of each fiscal
            quarter of the Borrower as of the last day of such fiscal
            quarter and (ii) with each Notice of Borrowing for Loans in
            excess of $4,000,000 in the aggregate or request for the
            issuance of a Letter of Credit in a face amount in excess of
            $4,000,000.

     (c)    If at any time the sum of (i) the outstanding balance of
            principal of the Loans, plus (ii) the Letter of Credit Usage
            shall exceed the Borrowing Base, the Borrower shall repay such
            outstanding portion of the Loans in an amount equal to such
            excess within one Business Day.  The Borrower's failure to do
            so shall constitute an Event of Default.
     
<PAGE>
     2.17   No Prepayment Charges
            ---------------------
     Except as provided in Section 4.4, the Borrower may pay or prepay any
     Loan without charge.

     ARTICLE III. LETTERS OF CREDIT

     3.1    Letters of Credit
            -----------------
     Upon the Borrower's request prior to the Maturity Date, the Agent
     shall issue one or more standby letters of credit for the Borrower's
     account in accordance with the terms and conditions of this Section 3.

     3.2    Manner of Requesting Letters of Credit
            --------------------------------------
     (a)    From time to time prior to the Maturity Date, the Borrower may
            request that the Agent issue standby letters of credit for the
            Borrower's account or extend or renew any existing Letters of
            Credit.  Each such request will be made by delivering a written
            request for the issuance, extension or renewal of such a letter
            of credit to the Agent not later than 12:00 noon (Seattle time)
            one Business Day prior to the date a new letter of credit is to
            be issued or an existing Letter of Credit is to be extended or
            renewed.  Each such request shall be deemed to constitute a
            representation and warranty by the Borrower that as of the date
            of such request, the representations and warranties set forth
            in Article V are true and correct and that no Default or Event
            of Default has occurred and is continuing.  Each such request
            shall specify the face amount of the requested letter of
            credit, the proposed date of expiration for such letter of
            credit, the name of the intended beneficiary thereof, and
            whether such letter of credit is an extension or renewal of a
            Letter of Credit.

     (b)    Each letter of credit requested hereunder (i) shall be in a
            face amount such that after issuance of such letter of credit,
            the Letter of Credit Usage does not exceed $5,000,000;
            (ii) shall be in a face amount such that after issuance of such
            letter of credit, the sum of the Letter of Credit Usage and the
            then outstanding principal balance of the Loans does not exceed
            an amount equal to the Commitment; and (iii) shall have an
            expiration date not later than the Maturity Date.

     (c)    At the request of the Agent, the Borrower shall execute a
            letter of credit application and reimbursement agreement
            ("Reimbursement Agreement"), in the standard form then used by
            the Agent, in respect of each letter of credit requested
            hereunder.

     (d)    Subject to the satisfaction of the conditions precedent set
            forth in Section 4 and the Borrower's compliance with the terms
            of this Section 3.2, the Agent shall issue and deliver the
     
<PAGE>
            requested letter of credit to the Borrower or to the Borrower's
            designated beneficiary at such address as the Borrower may
            specify.  New Letters of Credit and extensions or renewals of
            any existing Letters of Credit shall contain terms and
            conditions customarily included in the Agent's letters of
            credit and shall otherwise be in a form acceptable to the
            Agent.

     (e)    For each Letter of Credit issued by the Agent hereunder, the
            Borrower shall pay on the date such Letter of Credit is issued
            (i) to the Agent for the ratable benefit of the Lenders, a
            letter of credit fee in a per annum amount equal to the number
            of basis points of the face amount of the Letter of Credit
            equal to the LIBOR Margin as of the date of the issuance of the
            Letter of Credit and (ii) to the Agent for its own account an
            administrative fee equal to ten basis points of the face amount
            of the Letter of Credit.

     (f)    In the event of any conflict between the terms of any
            Reimbursement Agreement and the terms of this Agreement, the
            terms of this Agreement shall control.

     3.3    Indemnification; Increased Costs
            --------------------------------
     (a)    The Borrower agrees to indemnify the Agent on demand for any
            and all costs, expenses, or damages incurred by the Agent,
            directly or indirectly, arising out of the issuance of any
            Letter of Credit, including, without limitation, any costs of
            maintaining reserves in respect thereof and any premium rates
            imposed by the Federal Deposit Insurance Corporation in
            connection therewith.  A certificate as to such costs, expenses
            or damages submitted to the Borrower by the Agent shall be
            final, conclusive and binding, absent manifest error.

     (b)    If at any time after the date hereof the introduction of or any
            change in applicable law, rule, or regulation or in the
            interpretation or the administration thereof by any Government
            Authority charged with the interpretation or administration
            thereof, or compliance by the Agent with any requests directed
            by any such Government Authority (whether or not having the
            force of law) shall, with respect to any Letter of Credit,
            subject the Agent to any Tax or impose, modify or deem
            applicable any reserve, special deposit or similar requirements
            against assets of, deposits with or for the account of, credit
            extended by the Agent or shall impose on the Agent any other
            conditions affecting the Letters of Credit and the result of
            any of the foregoing is to increase the cost to the Agent of
            issuing a Letter of Credit or to reduce the amount of any sum
            received or receivable by the Agent hereunder with respect to
            the Letters of Credit, then, upon demand by the Agent, the
            Borrower shall pay to the Agent such additional amount or
     
<PAGE>
            amounts as will compensate the Agent for such increased cost or
            reduction.  A certificate submitted to the Borrower by the
            Agent setting forth the basis for the determination of such
            additional amount or amounts shall be final, conclusive and
            binding, absent manifest error.

     (c)    The Borrower agrees to indemnify and hold the Agent harmless
            from and against any and all (i) Taxes and other fees payable
            in connection with Letters of Credit or the provisions of this
            Agreement relating thereto, and (ii) any and all actions,
            claims, damages, losses, liabilities, fines, penalties, costs
            and expenses of every nature, including reasonable attorneys'
            fees, suffered or incurred by the Agent otherwise arising out
            of or relating to this Article III, or any Letter of Credit;
            provided, however, said indemnification shall not apply to the
            extent that any such action, claim, damage, loss, liability,
            fine, penalty, cost or expense arises solely out of or is based
            solely upon the Agent's willful misconduct or gross negligence.

     3.4    Payment by the Borrower
            -----------------------
     The Borrower agrees to fully reimburse the Agent for all amounts paid
     under any Letter of Credit together with interest thereon at the rate
     applicable to Reference Rate Loans from the date such payment is made
     until the date the Agent notifies the Borrower that such payment was
     made.  Such reimbursement shall be made in immediately available funds
     to Agent at 1420 Fifth Avenue, Seattle, Washington 98101 not later
     than 12:00 noon (Seattle time) on the date the Borrower is first
     notified by the Agent that payment has been made under the Letter of
     Credit; provided, that, if the Agent so elects pursuant to the terms
     of Section 9.2, following the occurrence of an Event of Default, the
     face amount of each Letter of Credit shall become immediately due and
     payable.  If the Borrower should default in its obligations to
     reimburse the Agent or to make any other payment required hereunder,
     (i) interest shall accrue on the unpaid amount thereof at the rate
     applicable to Reference Rate Loans during the existence of an Event of
     Default from the date such amount becomes due and payable until
     payment in full by the Borrower; and (ii) the Agent, in its sole
     discretion, may deem such default to constitute a Notice of Borrowing
     for the amount of the unreimbursed obligation together with accrued
     interest thereon, and, subject to the terms and conditions hereof, may
     advance a Loan to the Borrower and immediately apply the proceeds
     thereof in satisfaction of the Borrower's obligations under this
     Section 3.4.  Interest on unpaid amounts shall be calculated on the
     basis of a year of 360 days and actual days elapsed.
     
<PAGE>
     ARTICLE IV.  TAXES, YIELD PROTECTION AND ILLEGALITY

     4.1    Taxes
            -----
     (a)    Any and all payments by the Borrower to each Lender or the
            Agent under this Agreement and any other Loan Document shall be
            made free and clear of, and without deduction or withholding
            for any Taxes.  In addition, the Borrower shall pay all Other
            Taxes.

     (b)    The Borrower agrees to indemnify and hold harmless each Lender
            and the Agent for the full amount of Taxes or Other Taxes
            (including any Taxes or Other Taxes imposed by any jurisdiction
            on amounts payable under this Section) paid by the Lender or
            the Agent and any liability (including penalties, interest,
            additions to tax and expenses) arising therefrom or with
            respect thereto, whether or not such Taxes or Other Taxes were
            correctly or legally asserted.  Payment under this
            indemnification shall be made within 30 days after the date the
            Lender or the Agent makes written demand therefor.

     (c)    If the Borrower shall be required by law to deduct or withhold
            any Taxes or Other Taxes from or in respect of any sum payable
            hereunder to any Lender or the Agent, then:

            (i)   the sum payable shall be increased as necessary so that
                  after making all required deductions and withholdings
                  (including deductions and withholdings applicable to
                  additional sums payable under this Section) such Lender
                  or the Agent, as the case may be, receives an amount
                  equal to the sum it would have received had no such
                  deductions or withholdings been made;

            (ii)  the Borrower shall make such deductions and withholdings;

            (iii) the Borrower shall pay the full amount deducted or
                  withheld to the relevant taxing authority or other
                  authority in accordance with applicable law; and

            (iv)  the Borrower shall also pay to each Lender or the Agent
                  for the account of such Lender, at the time interest is
                  paid, all additional amounts which the respective Lender
                  specified as necessary to preserve the after-tax yield
                  the Lender would have received if such Taxes or Other
                  Taxes had not been imposed.

     (d)    Within 30 days after the date of any payment by the Borrower of
            Taxes or Other Taxes, the Borrower shall furnish the Agent the
            original or a certified copy of a receipt evidencing payment
            thereof, or other evidence of payment satisfactory to the
            Agent.
     
<PAGE>
     (e)    If the Borrower is required to pay additional amounts to any
            Lender or the Agent pursuant to subsection (c) of this Section,
            then such Lender shall use reasonable efforts (consistent with
            legal and regulatory restrictions) to change the jurisdiction
            of its Lending Office so as to eliminate any such additional
            payment by the Borrower which may thereafter accrue, if such
            change in the judgment of such Lender is not otherwise
            disadvantageous to such Lender.

     4.2    Illegality
            ----------
     (a)    If any Lender determines that the introduction of any
            Requirement of Law, or any change in any Requirement of Law, or
            in the interpretation or administration of any Requirement of
            Law, has made it unlawful, or that any central bank or other
            Governmental Authority has asserted that it is unlawful, for
            any Lender or its applicable Lending Office to make LIBOR Rate
            Loans, then, on notice thereof by the Lender to the Borrower
            through the Agent, any obligation of that Lender to make LIBOR
            Rate Loans shall be suspended until the Lender notifies the
            Agent and the Borrower that the circumstances giving rive to
            such determination no longer exist.

     (b)    If a Lender determines that it is unlawful to maintain any
            LIBOR Rate Loan, the Borrower shall, upon its receipt of notice
            of such fact and demand from such Lender (with a copy to the
            Agent), prepay in full such LIBOR Rate Loans of that Lender
            then outstanding, together with interest accrued thereon and
            amounts required under Section 4.4, either on the last day of
            the Interest Period thereof, if the Lender may lawfully
            continue to maintain such LIBOR Rate Loans to such day, or
            immediately, if the Lender may not lawfully continue to
            maintain such LIBOR Rate Loan.  If the Borrower is required to
            so prepay any LIBOR Rate Loan, then concurrently with such
            prepayment, the Borrower shall borrow from the affected Lender,
            in this amount of such repayment, a Reference Rate Loan.

     (c)    If the obligation of any Lender to make or maintain LIBOR Rate
            Loans has been so terminated or suspended, the Borrower may
            elect, by giving notice to the Lender through the Agent that
            all Loans which would otherwise be made by the Lender as LIBOR
            Rate Loans shall be instead Reference Rate Loans.

     (d)    Before giving any notice to the Agent under this Section, the
            affected Lender shall designate a different Lending Office with
            respect to its LIBOR Rate Loans if such designation will avoid
            the need for giving such notice or making such demand and will
            not, in the judgment of the Lender, be illegal or otherwise
            disadvantageous to the Lender.
     
<PAGE>
     4.3    Increased Costs and Reduction of Return
            ---------------------------------------
     (a)    If any Lender determines that, due to either (i) the
            introduction of or any change in or in the interpretation of
            any law or regulation or (ii) the compliance by that Lender
            with any guideline or request from any central bank or other
            Governmental Authority (whether or not having the force of
            law), there shall be any increase in the cost to such Lender of
            agreeing to make or making, funding or maintaining any LIBOR
            Rate Loans, then the Borrower shall be liable for, and shall
            from time to time, upon demand (with a copy of such demand to
            be sent to the Agent), pay to the Agent for the account of such
            Lender, additional amounts as are sufficient to compensate such
            Lender for such increased costs.

     (b)    If any Lender shall have determined that (i) the introduction
            of any Capital Adequacy Regulation, (ii) any change in any
            Capital Adequacy Regulation, (iii) any change in the
            interpretation or administration of any Capital Adequacy
            Regulation by any central bank or other Governmental Authority
            charged with the interpretation or administration thereof, or
            (iv) compliance by the Lender (or its Lending Office) or any
            corporation controlling the Lender with any Capital Adequacy
            Regulation, affects or would affect the amount of capital
            required or expected to be maintained by the Lender or any
            corporation controlling the Lender and (taking into
            consideration such Lender's or such corporation's policies with
            respect to capital adequacy and such Lender's desired return on
            capital) determines that the amount of such capital is
            increased as a consequence of its Commitment, loans, credits or
            obligations under this Agreement, then, upon demand of such
            Lender to the Borrower through the Agent, the Borrower shall
            pay to the Lender, from time to time as specified by the
            Lender, additional amounts sufficient to compensate the Lender
            for such increase.

     4.4    Funding Losses
            --------------
     The Borrower shall reimburse each Lender and hold each Lender harmless
     from any loss or expense which the Lender may sustain or incur as a
     consequence of:

     (a)    the failure of the Borrower to make on a timely basis any
            payment of principal of any LIBOR Rate Loan;

     (b)    the failure of the Borrower to borrow the Loans as requested in
            a Borrowing Notice, or to continue or convert a Loan after the
            Borrower has given (or is deemed to have given) an Interest
            Rate Notice;

     (c)    the prepayment (including pursuant to Section 2.6) or other
            payment (including after acceleration thereof) of a LIBOR Rate
            Loan on a day that is not the last day of the relevant Interest
            Period; or
     
<PAGE>
     (d)    the automatic conversion under Section 2.5 of any LIBOR Rate
            Loan to a Reference Rate Loan on a day that is not the last day
            of the relevant Interest Period;

     including any such loss or expense arising from the liquidation or
     reemployment of funds obtained by it to maintain its LIBOR Rate Loans
     or from fees payable to terminate the deposits from which such funds
     were obtained.  For purposes of calculating amounts payable by the
     Borrower to the Lenders under this Section and under Section 4.3(a),
     each LIBOR Rate Loan made by a Lender (and each related reserve,
     special deposit or similar requirement) shall be conclusively deemed
     to have been funded at the LIBOR used in determining the LIBOR Rate
     for such LIBOR Rate Loan by a matching deposit or other borrowing in
     the interbank eurodollar market for a comparable amount and for a
     comparable period, whether or not such LIBOR Rate Loan is in fact so
     funded.

     4.5    Inability to Determine Rates
            ----------------------------
     If the Agent determines that for any reason adequate and reasonable
     means do not exist for determining the LIBOR Rate for any requested
     Interest Period with respect to a proposed LIBOR Rate Loan, or that
     the LIBOR Rate applicable pursuant to Section 2.8(a)  for any
     requested Interest Period with respect to a proposed LIBOR Rate Loan
     does not adequately and fairly reflect the cost to any Lender of
     funding such Loan, the Agent will promptly so notify the Borrower and
     each Lender.  Thereafter, the obligation of the Lenders to make or
     maintain LIBOR Rate Loans hereunder shall be suspended until the Agent
     revokes such notice in writing.  Upon receipt of such notice, the
     Borrower may revoke any Interest Rate Notice then submitted by it.  If
     the Borrower does not revoke such Notice, the Lenders shall make,
     convert or continue the Loans, as proposed by the Borrower, in the
     amount specified in the applicable notice submitted by the Borrower,
     but such Loans shall be made, converted or continued as Reference Rate
     Loans instead of LIBOR Rate Loans.

     4.6    Certificates of Lenders
            -----------------------
     Any Lender claiming reimbursement or compensation under this
     Article IV shall deliver to the Borrower (with a copy to the Agent) a
     certificate setting forth in reasonable detail the amount payable to
     the Lender hereunder and such certificate shall be conclusive and
     binding on the Borrower in the absence of manifest error.

     4.7    Survival
            --------
     The agreements and obligations of the Borrower in this Article IV
     shall survive this payment of all other Obligations.
     
<PAGE>
     ARTICLE V.   CONDITIONS PRECEDENT

     5.1    Conditions of Initial Loans
            ---------------------------
     This obligation of each Lender to make the initial advance to the
     Borrower under the Loans hereunder or the obligation of the Agent to
     issue the first Letter of Credit is subject to the condition that the
     Agent has received on or before the Closing Date all of the following,
     in form and substance satisfactory to the Agent and each Lender, and
     with sufficient copies for each Lender:

     (a)    CREDIT AGREEMENT AND NOTE

            This Agreement and the Note duly executed by each party
            thereto;

     (b)    RESOLUTIONS; INCUMBENCY

            (i)   Copies of the resolutions of the board of directors or
                  other governing body of the Borrower, CHC and each
                  Subsidiary that may become party to a Loan Document
                  authorizing the transactions contemplated hereby,
                  certified as of the Closing Date by the Secretary or an
                  Assistant Secretary of such Person; and

            (ii)  A certificate of the Secretary or Assistant Secretary of
                  the Borrower, CHC and each Subsidiary that may become
                  party to a Loan Document certifying the names and true
                  signatures of the officers of the Borrower, CHC or such
                  Subsidiary authorized to execute, deliver and perform, as
                  applicable, this Agreement, and all other Loan Documents
                  to be delivered by it hereunder;

     (c)  ORGANIZATION DOCUMENTS; GOOD STANDING

            Each of the following documents:

            (i)   the Organization Documents of the Borrower, CHC and each
                  Subsidiary party to any Loan Document as in effect on the
                  Closing Date, certified by the Secretary or Assistant
                  Secretary of the Borrower, CHC or such Subsidiary as of
                  the Closing Date; and

            (ii)  a good standing certificate for the Borrower, CHC and
                  each Subsidiary party to any Loan Document from the
                  Secretary of State (or similar, applicable Governmental
                  Authority) of its state of organization and each state
                  where the Borrower, CHC or such Subsidiary is qualified
                  to do business as a foreign entity as of a recent date;
     
<PAGE>
     (d)    LEGAL OPINIONS

            An opinion of counsel to the Borrower and CHC and each
            Subsidiary party to any Loan Document as in effect on the
            Closing Date, addressed to the Agent and the Lenders,
            substantially in the form of Exhibit H;

     (e)    PAYMENT OF FEES

            Evidence of payment by the Borrower of all accrued and unpaid
            fees, costs and expenses to the extent then due and payable on
            the Closing Date, together with Attorney Costs of U. S. Bank to
            the extent invoiced prior to or on the Closing Date; including
            any such costs, fees and expenses arising under or referenced
            in Sections 2.9 and 12.4;

     (f)    COLLATERAL DOCUMENTS

            The Collateral Documents, executed by the Borrower, CHC and
            each Subsidiary, in appropriate form for recording, where
            necessary, together with:

            (i)   acknowledgment copies of all UCC-1 financing statements
                  filed, registered or recorded to perfect the security
                  interests of the Agent for the benefit of the Lenders, or
                  other evidence satisfactory to the Agent that there has
                  been filed, registered or recorded all financing
                  statements and other filings, registrations and
                  recordings necessary and advisable to perfect the Liens
                  of the Agent for the benefit of the Lenders in accordance
                  with applicable law;

            (ii)  written advice relating to such lien and judgment
                  searches as the Agent shall have requested, and such
                  termination statements or other documents as may be
                  necessary to confirm that the Collateral is subject to no
                  other Liens in favor of any Persons (other than Permitted
                  Liens);

            (iii) funds sufficient to pay any filing or recording tax or
                  fee in connection with any and all UCC-1 financing
                  statements;

            (iv)  such consents, estoppels, subordination agreements and
                  other documents and instruments executed by landlords,
                  tenants, franchisors, licensors and other Persons party
                  to material contracts relating to any Collateral as to
                  which the Agent shall be granted a Lien for the benefit
                  of the Lenders, as requested by the Agent or any Lender; 
     
<PAGE>
            (v)   evidence that all other actions necessary or, in the
                  opinion of the Agent or the Lenders, desirable, to
                  perfect and protect the first priority security interest
                  created by the Collateral Documents and to enhance the
                  Agent's ability to preserve and protect its interests in
                  and access to the Collateral, have been taken;

     (g)    INSURANCE POLICIES

            Standard lenders' payable endorsements and insurance
            certificates with respect to the insurance policies or other
            instruments or documents evidencing insurance coverage on the
            properties of the Borrower in accordance with Section 7.6;

     (h)  CERTIFICATE

            A certificate signed by a Responsible Officer, dated as of the
            Closing Date, stating that:

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

            (ii)  no Default or Event of Default exists or would result
                  from making the requested Loans or the issuance of the
                  requested Letter of Credit; and

            (iii) there has occurred since December 31, 1997, no event or
                  circumstance that has resulted or could reasonably be
                  expected to result in a Material Adverse Effect; 

     (i)    COMPLIANCE CERTIFICATE

            A Compliance Certificate signed by a Responsible Officer, dated
            as of the Closing Date;

     (j)    INITIAL PUBLIC OFFERING

            Evidence acceptable to the Agent that the CHC (i) has completed
            its initial public offering of common stock and (ii) has
            received and transferred to the Borrower the net proceeds from
            such initial public offering;

     (k)    NOTICE OF BORROWING; REIMBURSEMENT AGREEMENT

            A Notice of Borrowing (in the case of requested Loans) or a
            request for a Letter of Credit and a Reimbursement Agreement
            (in the case of a requested Letter of Credit) executed by the
            Borrower, and in each such case calculating the Borrowing Base;
     
<PAGE>
     (l)    GUARANTY

            The Guaranty duly executed by CHC;

     (m)    OTHER DOCUMENTS

            Such other approvals, opinions, documents or materials as the
            Agent or any Lender may request;

     (n)    PAYMENT OF INDEBTEDNESS

            (i)   Except for (A) the Commitment of U. S. Bank set forth in
                  this Agreement and (B) any outstanding capital or
                  operating leases from U. S. Bank to the Borrower or CHC,
                  payment in full of all Indebtedness of the Borrower and
                  CHC to U. S. Bank and cancellation of any outstanding
                  commitments to advance additional Indebtedness to the
                  Borrower or CHC; and

            (ii)  Evidence that all other Indebtedness not permitted by
                  Section 8.5 has been paid in full; and

     (o)    ELIGIBLE REAL PROPERTY

            All Collateral Documents for not fewer than four parcels of
            Eligible Real Property.

     5.2    Conditions to Subsequent Loans
            ------------------------------
     The obligation of each Lender to make Loans to the Borrower, the Agent
     to issue a Letter of Credit, or the Lenders to continue or convert any
     Loan under Section 2.5 after the initial Loans have been advanced or
     the initial issuance of a Letter of Credit hereunder is subject to the
     satisfaction of the following conditions precedent on the applicable
     date:

     (a)    INTEREST RATE NOTICE

            In the case of a conversion of a Loan into another Type of Loan
            or the continuation of an interest rate election as of the end
            of an Interest Period, the Agent shall have received an
            Interest Rate Notice executed by the Borrower;

     (b)    NOTICE OF BORROWING; REIMBURSEMENT AGREEMENT

            The Agent shall have received, duly executed by the Borrower, a
            Notice of Borrowing (in the case of requested Loans) or a
            request for a Letter of Credit and a Reimbursement Agreement
            (in the case of a requested Letter of Credit), in each such
            case calculating the Borrowing Base;
     
<PAGE>
     (c)    CONTINUATION OF REPRESENTATIONS AND WARRANTIES

            The representation and warranties in Article VI shall be true
            and correct on and as of each such Interest Rate Election Date,
            date of Notice of Borrowing or request for a Letter of Credit
            with the same effect as if made on and as of such date (except
            to the extent such representations and warranties solely and
            expressly refer to an earlier date, in which case they shall be
            true and correct as of such earlier date);

     (d)    NO EXISTING DEFAULT

            No Default or Event of Default shall exist or shall result from
            such continuation, conversion, making of Loans or issuance of a
            Letter of Credit;

     (e)    SATISFACTION OF PREVIOUS CONDITIONS

            The conditions set forth in Section 5.1 shall have been
            previously satisfied or waived by the Agent in writing;

     (f)    FURTHER ASSURANCES

            To the extent not previously delivered, all other documents,
            agreements and instruments from or with respect to the Borrower
            or any other Person that may be called for hereunder shall be
            duly executed and delivered to the Agent, including but not
            limited to all documents, agreements and instruments deemed
            necessary by the Agent to perfect a security interest for the
            benefit of the Lenders in collateral acquired after the date of
            this Agreement that is intended to be encumbered pursuant to
            the Collateral Documents.  For the purposes of this Agreement,
            the waiver of delivery of any document, agreement, or
            instrument from or with respect to the Borrower or any other
            Person does not constitute a continuing waiver with respect to
            the obligation to fulfill the conditions precedent set forth in
            this Section 5.2 except as otherwise specifically provided.

            Each Interest Rate Notice, Notice of Borrowing or request for a
            Letter of Credit (as the case may be) submitted by the Borrower
            hereunder shall constitute a representation and warranty by the
            Borrower hereunder, as of the date of each such notice and as
            of each Interest Rate Election Date, as applicable, that the
            conditions in this Section 5.2 are satisfied.

     5.3    Conditions to Become Eligible Real Property
            -------------------------------------------
     The Borrower may elect that a parcel of real property owned by the
     Borrower or a Subsidiary shall become Eligible Real Property subject
     to (a) making a written request of the Agent therefor, (b) meeting the
     conditions set forth in the definition of "Eligible Real Property,"
     and (c) the condition that the Agent has received all of the following
     
<PAGE>
     with respect to such parcel of real property, in form and substance
     satisfactory to the Agent and each Lender, and with sufficient copies
     for each Lender:

            (i)   a Deed of Trust encumbering the parcel of real property,
                  duly executed by the Borrower or Subsidiary that owns the
                  parcel of real property;

            (ii)  acknowledgment copies of all UCC-1 financing statements
                  filed, registered or recorded to perfect the security
                  interests of the Agent for the benefit of the Lenders, or
                  other evidence satisfactory to the Agent that there has
                  been filed, registered or recorded all financing
                  statements and other filings, registrations and
                  recordings necessary and advisable to perfect the Liens
                  of the Agent for the benefit of the Lenders in accordance
                  with applicable law;

            (iii) written advice relating to such lien and judgment
                  searches as the Agent shall have requested, and such
                  termination statements or other documents as may be
                  necessary to confirm that the Collateral is subject to no
                  other Liens in favor of any Persons (other than Permitted
                  Liens);

            (iv)  funds from the Borrower sufficient to pay or reimburse
                  the Agent for all out-of-pocket costs and expenses
                  connected with the parcel of real property becoming
                  Eligible Real Property, including, without limitation,
                  appraisal fees, inspection fees, fees for environmental
                  and other third party inspections and reports, fees for
                  the Title Insurance Policy to issue with respect to such
                  parcel of real property, escrow fees (if any), any filing
                  or recording tax or fee in connection with the Deed of
                  Trust and all UCC-1 financing statements;

            (v)   such consents, estoppels, subordination agreements and
                  other documents and instruments executed by landlords,
                  tenants, franchisors, licensors and other Persons party
                  to material contracts relating to the parcel of real
                  property as to which the Agent shall be granted a Lien
                  for the benefit of the Lenders, as requested by the Agent
                  or any Lender; 

            (vi)  evidence that all other actions necessary or, in the
                  opinion of the Agent or the Lenders, desirable, to
                  perfect and protect the first priority security interest
                  created by the Collateral Documents in the parcel of real
                  property and to enhance the Agent's ability to preserve
                  and protect its interests in and access to such
                  Collateral, have been taken;

            (vii) a Title Insurance Policy insuring the Deed of Trust;
     
<PAGE>
            (viii)a flood hazard determination in a form approved by the
                  Agent for the parcel of real property encumbered by a
                  Deed of Trust;

            (ix)  (A) if requested by the Agent, an environmental checklist
                  in a form designated by the Agent and approved by the
                  Agent in writing after completion by the Borrower or
                  Subsidiary (as the case may be), (B) an environmental
                  site assessment approved by the Agent in writing
                  performed by an engineer approved by the Agent, (E) if
                  requested by the Agent, an American with Disabilities Act
                  questionnaire, (D) an Indemnification Agreement duly
                  executed by the Borrower and Subsidiary (if the parcel of
                  real property is owned by a Subsidiary), and (E) if the
                  parcel of real property is being acquired with the
                  proceeds of Loans, a designation agreement executed by
                  the Borrower in a form approved by the Agent;

            (x)   lenders' payable endorsements and insurance certificates
                  with respect to the insurance policies related to such
                  parcel of real property or other instruments or documents
                  evidencing insurance coverage on the properties of the
                  Borrower in accordance with Section 7.6 and the Deed of
                  Trust;

            (xi)  to the extent not previously delivered, copies of the
                  resolutions of the board of directors of the Borrower or
                  Subsidiary (as the case may be) authorizing the execution
                  and delivery to the Agent of the Collateral Documents
                  with respect to such parcel real property;

            (xii) to the extent not previously delivered, a certificate of
                  the Secretary or Assistant Secretary of the Borrower or
                  Subsidiary (as the case may be) certifying the names and
                  true signatures of the officers of the Borrower or
                  Subsidiary authorized to execute, deliver and perform, as
                  applicable, the Collateral Documents with respect to such
                  real property;

            (xiii)to the extent not previously delivered, the Organization
                  Documents of the Borrower or Subsidiary (as the case may
                  be), certified by the Secretary or Assistant Secretary of
                  the Borrower or Subsidiary (as the case may be);

            (xiv) to the extent not previously delivered, a good standing
                  certificate of the Borrower or Subsidiary (as the case
                  may be) from the Secretary of State (or similar,
                  applicable Governmental Authority) of its state of
                  organization and each state where the Borrower or
                  Subsidiary (as the case may be) is qualified to do
                  business as a foreign entity as of a recent date; and
     
<PAGE>
            (xv)  to the extent not previously delivered with respect to
                  the Collateral Documents in question and such other
                  matters as the Agent may reasonably request, an opinion
                  of counsel to the Borrower or Subsidiary (as the case may
                  be) and addressed to the Agent and the Lenders, in a form
                  acceptable to the Agent.

     ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Agent and each Lender
     that:

     6.1    Existence and Power
            -------------------
     The Borrower, CHC and each of its Subsidiaries:

     (a)    is a limited partnership or corporation, duly organized,
            validly existing and in good standing under the laws of the
            jurisdiction of its organization;

     (b)    has the power and authority and all governmental licenses,
            authorizations, consents and approvals to own its assets, carry
            on its business and to execute, deliver and perform its
            obligation under the Loan Documents;

     (c)    is duly qualified as a foreign entity and is licensed 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 or license; and

     (d)    is in compliance with all Requirements of Law; except, in each
            case referred to in clause (c) or clause (d), to the extent
            that the failure to do so could not reasonably be expected to
            have a Material Adverse Effect.

     6.2    Authorization; No Contravention
            -------------------------------
     The execution, delivery and performance by the Borrower, CHC and its
     Subsidiaries of this Agreement and each other Loan Document to which
     such Person is party, have been duly authorized by all necessary
     action, and do not and will not:

     (a)    contravene the terms of any of that Person's Organization
            Documents;

     (b)    conflict with or result in any breach or contravention of, or
            the creation of any Lien under, any document evidencing any
            Contractual Obligation to which such Person is a party or any
            order, injunction, writ or decree of any Governmental Authority
            to which such Person or its property is subject; or

     (c)    violate any Requirement of Law.
     
<PAGE>
     6.3    Governmental Authorization
            --------------------------
     No approval, consent, exemption, authorization, or other action by, or
     notice to, or filing with, any Governmental Authority (except for
     recordings or filings in connection with the Liens granted to the
     Agent under the Collateral Documents) is necessary or required in
     connection with the execution, delivery or performance by, or
     enforcement against, the Borrower, CHC or any of its Subsidiaries of
     the Agreement or any other Loan Document.

     6.4    Binding Effect
            --------------
     This Agreement and each other Loan Document to which the Borrower, CHC
     or any of their Subsidiaries is a party constitute the legal, valid
     and binding obligations of the Borrower, CHC and any of their
     Subsidiaries to the extent it is a party thereto, enforceable against
     such Person in accordance with their respective terms, except as
     enforceability may be limited by applicable bankruptcy, insolvency, or
     similar laws affecting the enforcement of creditors' rights generally
     or by equitable principles relating to enforceability.

     6.5    Litigation
            ----------
     Except as specifically disclosed in Schedule 6.5, there are no
     actions, suits proceedings, claims or disputes pending, or to the best
     knowledge of the Borrower, threatened or contemplated, at law, in
     equity, in arbitration or before any Governmental Authority, against
     the Borrower, CHC or its Subsidiaries or any of their respective
     properties which:

     (a)    purport to affect or pertain to this Agreement or any other
            Loan Document, or any of the transactions contemplated hereby
            or thereby; or

     (b)    if determined adversely to the Borrower, CHC or its
            Subsidiaries, would reasonably be expected to have a Material
            Adverse Effect.

     No injunction, writ, temporary restraining order or any order of any
     nature has been issued by any court or other Governmental Authority
     purporting to enjoin or restrain the execution, delivery or
     performance of this Agreement or any other Loan Document, or directing
     that the transactions provided for herein or therein not be
     consummated as herein or therein provided.

     6.6    No Default
            ----------
     No Default or Event of Default exists or would result from the
     incurring of any Obligation by the Borrower, CHC or any Subsidiary or
     from the grant or perfection of the Liens of the Agent and the Lenders
     on the Collateral.  As of the Closing Date, neither the Borrower, CHC
     nor any Subsidiary is in default under or with respect to any
     
<PAGE>
     Contractual Obligation in any respect which, individually or together
     with all such defaults, could reasonably be expected to have a
     Material Adverse Effect, or that would, if such default had occurred
     after the Closing Date, create an Event of Default under
     Section 9.1(e).

     6.7    ERISA Compliance
            ----------------
     Except as specifically disclosed in Schedule 6.7:

     (a)    Each Plan is in compliance in all material respects with the
            applicable provisions of ERISA, the Code and other federal or
            state law.  Each Plan which is intended to qualify under
            Section 401(a) of the Code has received a favorable
            determination letter from the IRS and to the best knowledge of
            the Borrower, nothing has occurred which would cause the loss
            of such qualification.  The Borrower, CHC and each ERISA
            Affiliate have made all required contributions to any Plan
            subject to Section 412 of the Code, and no application for a
            funding waiver or an extension of any amortization period
            pursuant to Section 412 of the Code has been made with respect
            to any Plan.

     (b)    There are no pending or, to the best knowledge of the Borrower,
            threatened claims, actions or lawsuits, or action by any
            Governmental Authority, with respect to any Plan which has
            resulted or could reasonably be expected to result in a
            Material Adverse Effect.  There has been no prohibited
            transaction or violation of the fiduciary responsibility rules
            with respect to any Plan which has resulted or could reasonably
            be expected to result in a Material Adverse Effect.

     (c)    (i) No ERISA Event has occurred or is reasonably expected to
            occur; (ii) no Pension Plan has any Unfunded Pension Liability;
            (iii) neither the Borrower, CHC  nor any ERISA Affiliate has
            incurred, or reasonably expects to incur, any liability under
            Title IV of ERISA with respect to any Pension Plan (other than
            premiums due and not delinquent under Section 4007 of ERISA);
            (iv) neither the Borrower, CHC nor any ERISA Affiliate has
            incurred, or reasonably expects to incur, any liability (and no
            event has occurred which, with the giving of notice under
            Section 4219 of ERISA, would result in such liability) under
            Section 4201 or 4243 of ERISA with respect to a Multiemployer
            Plan; and (v) neither the Borrower nor any ERISA Affiliate has
            engaged in a transaction that could be subject to Section 4069
            or 4212(c) of ERISA.

     6.8    Use of Proceeds; Margin Regulations
            -----------------------------------
     The proceeds of the Loans are to be used solely for the purposes set
     forth in and permitted by Section 7.12 and Section 8.7.  Neither the
     Borrower, CHC nor any Subsidiary is generally engaged in the business
     of purchasing or selling Margin Stock or extending credit for the
     purpose of purchasing or carrying Margin Stock.
     
<PAGE>
     6.9    Title to Properties
            -------------------
     The Borrower, CHC and each Subsidiary have good record and marketable
     title in fee simple to, or valid leasehold interests in, all real
     property necessary or used in the ordinary conduct of their respective
     businesses, except for such defects in title as could not,
     individually or in the aggregate, have a Material Adverse Effect.  As
     of this Closing Date, the property of the Borrower, CHC and its
     Subsidiaries is subject to no Liens, other than Permitted Liens.

     6.10   Taxes
            -----
     The Borrower, CHC and its Subsidiaries have filed all Federal and
     other material tax returns and reports required to be filed, and have
     paid all Federal and other material taxes, assessments, fees and other
     governmental charges levied or imposed upon them or their properties,
     income or assets otherwise due and payable, except those which are
     being contested in good faith by appropriate proceedings and for which
     adequate reserves have been provided in accordance with GAAP.  There
     is no proposed tax assessment against the Borrower, CHC or any
     Subsidiary that would, if made, have a Material Adverse Effect.

     6.11   Financial Condition
            -------------------
     (a)    The audited consolidated financial statements of CHC and its
            Subsidiaries dated December 31, 1997, and the related
            consolidated statements of income or operations, shareholders'
            equity and cash flows for the fiscal quarter ended on that
            date:

            (i)   were prepared in accordance with GAAP consistently
                  applied throughout the period covered thereby, except as
                  otherwise expressly noted therein, subject to ordinary,
                  good faith year end audit adjustments;

            (ii)  fairly present the financial condition of the CHC and its
                  Subsidiaries as of the date thereof and results of
                  operations for the period covered thereby; and

            (iii) except as specifically disclosed in Schedule 6.11, show
                  all material indebtedness and other liabilities, direct
                  or contingent, of the Borrower, CHC and their
                  consolidated Subsidiaries as of the date thereof,
                  including liabilities for taxes, material commitments and
                  Contingent Obligations.

     (b)    Since December 31, 1997, there has been no Material Adverse
            Effect.
     
<PAGE>
     6.12   Environmental Matters
            ---------------------
     (a)    Except as specifically disclosed in Schedule 6.12, the on-going
            operations of the Borrower, CHC and each of its Subsidiaries
            comply in all respects with all Environmental Laws, except such
            noncompliance which would not (if enforced in accordance with
            applicable law) result in liability in excess of $500,000 in
            the aggregate.

     (b)    Except as specifically disclosed in Schedule 6.12, the
            Borrower, CHC and each of their Subsidiaries have obtained all
            licenses, permits, authorizations and registrations required
            under any Environmental Law ("Environmental Permits") and
            necessary for their respective ordinary course operations, all
            such Environmental Permits are in good standing, and the
            Borrower, CHC and each of their Subsidiaries are in compliance
            with all material terms and conditions of such Environmental
            Permits.

     (c)    Except as specifically disclosed in Schedule 6.12, none of the
            Borrower, CHC any of their Subsidiaries or any of their
            respective present property or operations, is subject to any
            outstanding written order from or agreement with any
            Governmental Authority, nor subject to any judicial or docketed
            administrative proceeding, respecting any Environmental Law,
            Environmental Claim or Hazardous Material.

     (d)    Except as specifically disclosed in Schedule 6.12, there are no
            Hazardous Materials or other conditions or circumstances
            existing with respect to any property of the Borrower, CHC or
            any Subsidiary, or arising from operations prior to the Closing
            Date, of the Borrower, CHC or any of their Subsidiaries that
            would reasonably be expected to give rive to Environmental
            Claims with a potential liability of the Borrower, CHC and
            their Subsidiaries in excess of $500,000 in the aggregate for
            any such condition, circumstance or property.  In addition,
            (i) neither the Borrower, CHC nor any Subsidiary has any
            underground storage tanks (x) that are not properly registered
            or permitted under applicable Environmental Laws, or (y) that
            are leaking or disposing of Hazardous Materials off-site, and
            (ii) the Borrower, CHC and their Subsidiaries have notified all
            of their employees of the existence, if any, of any health
            hazard arising from the conditions of their employment and have
            met all notification requirements under Title III of CERCLA and
            all other Environmental Laws.

     6.13   Collateral Documents
            --------------------
     (a)    The provisions of each of the Collateral Documents are
            effective to create in favor of the Agent for the benefit of
            the Lenders, a legal, valid and enforceable security interest
            in all right, title and interest of the Borrower, CHC and their
     
<PAGE>
            Subsidiaries in the collateral described therein; and Deeds of
            Trust have been delivered to the Agent for recording in the
            real estate records of the county in which the real property to
            be encumbered thereby is located; and financing statements have
            been delivered to the Agent for filing in the offices in all of
            the jurisdictions listed in the schedule to the Security
            Agreements and executed Patent Assignments, Trademarks
            Assignments and Copyright Assignments have been delivered to
            the Agent for filing in the U.S. Patent and Trademark Office
            and the U.S. Copyright Office and upon the filing of such
            assignments and such financing statements in such offices, the
            Agent, for the benefit of the Lenders, will have a perfected
            first priority security interest in the Collateral.

     (b)    All representations and warranties of the Borrower, CHC and any
            of their Subsidiaries party thereto contained in the Collateral
            Documents are true and correct.

     6.14   Regulated Entities
            ------------------
     None of the Borrower, CHC, any Person controlling the Borrower or CHC,
     or any Subsidiary, is an "Investment Company" within the meaning of
     the Investment Company Act of 1940.  The Borrower is not subject to
     regulation under the Public Utility Holding Company Act of 1935, the
     Federal Power Act, the Interstate Commerce Act, any state public
     utilities code, or any other Federal or state statute or regulation
     limiting its ability to incur Indebtedness.

     6.15   No Burdensome Restrictions
            --------------------------
     Neither the Borrower, CHC nor any Subsidiary is a party to or bound by
     any Contractual Obligation, or subject to any restriction in any
     Organization Document, or any Requirement of Law, which could
     reasonably be expected to have a Material Adverse Effect.

     6.16   Copyrights, Patents, Trademarks and Licenses, Etc.
            --------------------------------------------------
     The Borrower, CHC and their Subsidiaries own or are licensed or
     otherwise have the right to use all of the patents, trademarks,
     service marks, trade names, copyrights, contractual franchises,
     authorizations and other rights that are reasonably necessary for the
     operation of their respective businesses, without conflict with the
     rights of any other Person.  To the best knowledge of the Borrower, no
     slogan or other advertising device, product, process, method,
     substance, part or other material now employed, or now contemplated to
     be employed, by the Borrower, CHC or any Subsidiary infringes upon any
     rights held by any other Person.  Except as specifically disclosed in
     Schedule 6.5, no claim or litigation regarding any of the foregoing is
     pending or threatened, and no patent, invention, device, application,
     principle or any statute, law, rule, regulation, standard or code is
     pending or, to the knowledge of the Borrower, proposed, which, in
     either case, could reasonably be expected to have a Material Adverse
     Effect.
     
<PAGE>
     6.17   Subsidiaries
            ------------
     The Borrower and CHC have no Subsidiaries other than those
     specifically disclosed in part (a) of Schedule 6.17 hereto and have no
     equity investments in any other corporation or entity other than those
     specifically disclosed in part (b) of Schedule 6.17.

     6.18   Insurance
            ---------
     Except as specifically disclosed in Schedule 6.18, the properties of
     the Borrower, CHC and their Subsidiaries are insured with financially
     sound and reputable insurance companies not Affiliates of the
     Borrower, in such amounts, with such deductibles and covering such
     risks as are customarily carried by companies engaged in similar
     businesses, including business interruption insurance for a period of
     not less than 12 months, and owning similar properties in localities
     where the Borrower, CHC or such Subsidiary operates.

     6.19   Solvency
            --------
     The Borrower, CHC and each of their Subsidiaries are Solvent.

     6.20   Full Disclosure
            ---------------
     None of the representations or warranties made by the Borrower, CHC or
     any Subsidiary in the Loan Documents as of the date such
     representations and warranties are made or deemed made, and none of
     the statements contained in any exhibit, report, statement or
     certificate furnished by or on behalf of the Borrower, CHC or any
     Subsidiary in connection with the Loan Documents (including the
     offering and disclosure materials delivered by or on behalf of the
     Borrower to the Lenders prior to the Closing Date), contains any
     untrue statement of a material fact or omits any material fact
     required to be stated therein or necessary to make the statements made
     therein, in light of the circumstances under which they are made, not
     misleading as of the time when made or delivered.

     ARTICLE VII. AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment to make Loans or issue
     Letters of Credit hereunder, or any Loan, Letter of Credit or other
     Obligation shall remain unpaid or unsatisfied, unless the Required
     Lenders waive compliance in writing:

     7.1    Financial Statements
            --------------------
     The Borrower shall deliver to the Agent, in form and detail
     satisfactory to the Agent and the Required Lenders, with sufficient
     copies for each Lender:
     
<PAGE>
     (a)    as soon as available, but not later than 90 days after the end
            of each fiscal year, a copy of the audited consolidated balance
            sheet of the Borrower, CHC and their Subsidiaries as at the end
            of such year and the related consolidated statements of income
            or operations, shareholders' equity and cash flows for such
            year, setting forth in each case in comparative form the
            figures for the previous fiscal year, and accompanied by the
            opinion of Coopers & Lybrand L.L.P. or another nationally
            recognized independent public accounting firm ("Independent
            Auditor") which report shall state that such consolidated
            financial statements present fairly the financial position for
            the periods indicated in conformity with GAAP applied on a
            basis consistent with prior years.  Such opinion shall not be
            qualified or limited because of a restricted or limited
            examination by the Independent Auditor of any material portion
            of the Borrower's, CHC's or any Subsidiary's records;

     (b)    as soon as available, but not later than 45 days after the end
            of each of the first three fiscal quarters of each fiscal year
            a copy of the unaudited consolidated balance sheet of the
            Borrower, CHC and their Subsidiaries as of the end of such
            quarter and the related consolidated statements of income,
            shareholders' equity and cash flows for the period commencing
            on the first day and ending on the last day of such quarter,
            and certified by a Responsible Officer as fairly presenting, in
            accordance with GAAP (subject to ordinary, good faith year-end
            audit adjustments), the financial position and the results of
            operations of the Borrower, CHC and the Subsidiaries;

     (c)    as soon as available, but not later than 45 days after the end
            of each fiscal quarter of each fiscal year, a copy of the
            unaudited consolidating balance sheets of the Borrower, CHC and
            their Subsidiaries, and the related consolidating statements of
            income, shareholders' equity and cash flows for such quarter,
            all certified by a Responsible Officer as having been developed
            and used in connection with the preparation of the financial
            statement referred to in Section 7.1(b);

     (d)    as soon as available, but not later than 45 days after the end
            of each fiscal quarter of each fiscal year, a copy of the
            unaudited operating statements for each parcel of Eligible Real
            Property as of the end of such quarter for such quarter and for
            the four quarters then ended, in such form and detail as
            reasonably designated by the Agent, and certified by a
            Responsible Officer as fairly presenting, in accordance with
            GAAP (subject to ordinary, good faith year-end audit
            adjustments), the financial results of operations for each such
            parcel of real property.
     
<PAGE>
     7.2    Certificates; Other Information
            -------------------------------
     The Borrower shall furnish to the Agent, with sufficient copies for
     each Lender:

     (a)    concurrently with the delivery of the financial statements
            referred to in Section 7.1(a), a certificate of the Independent
            Auditor stating that in making the examination necessary
            therefor no knowledge was obtained of any Default or Event of
            Default, except as specified in such certificate;

     (b)    concurrently with the delivery of the financial statements
            referred to in Sections 7.1(a) and (b), a Compliance
            Certificate executed by a Responsible Officer;

     (c)    promptly, copies of all financial statements and reports that
            the Borrower or CHC sends to its shareholders, and copies of
            all financial statements and regular, periodical or special
            reports (including Forms 10-K, 10-Q and 8-K) that the Borrower,
            CHC or any Subsidiary may make to, or file with, the SEC; and

     (d)    promptly, such additional information regarding the business,
            financial, partnership or corporate affairs of the Borrower,
            CHC or any Subsidiary as the Agent, at the request of any
            Lender, may from time to time reasonably request.

     7.3    Notices
            -------
     The Borrower shall promptly notify the Agent and each Lender:

     (a)    of the occurrence of any Default or Event of Default, and of
            the occurrence or existence of any event or circumstance that
            foreseeably will become a Default or Event of Default;

     (b)    of (i) any breach or nonperformance of, or any default under,
            any Contractual Obligation of the Borrower, CHC or any of their
            Subsidiaries which could result in a Material Adverse Effect;
            and (ii) any dispute, litigation, investigation, proceeding or
            suspension which may exist at any time between the Borrower,
            CHC or any of their Subsidiaries and any Governmental Authority
            and which, if adversely determined, could result in a Material
            Adverse Effect;

     (c)    of the commencement of, or any material development in, any
            litigation or proceeding affecting the Borrower, CHC or any
            Subsidiary (i) in which the amount of damages claimed is
            $2,000,000 (or its equivalent in another currency or
            currencies) or more if any potential loss is not fully covered
            by insurance, (ii) in which the amount of damages claimed is
            $10,000,000 (or its equivalent in another currency or
            currencies) or more if any potential loss is fully covered by
     
<PAGE>
            insurance, (iii) in which injunctive or similar relief is
            sought and which, if adversely determined, would reasonably be
            expected to have a Material Adverse Effect, or (iv) in which
            the relief sought is an injunction or other stay of the
            performance of this Agreement or any Loan Document;

     (d)    upon, but in no event later than ten days after, becoming aware
            of (i) any and all enforcement, cleanup, removal or other
            governmental or regulatory actions instituted, completed or
            threatened against the Borrower, CHC or any Subsidiary or any
            of their respective properties pursuant to any applicable
            Environmental Laws, (ii) all other Environmental Claims, and
            (iii) any environmental or similar condition on any real
            property adjoining or in the vicinity of the property of the
            Borrower, CHC or any Subsidiary that could reasonably be
            anticipated to cause such property or any part thereof to be
            subject to any restrictions on the ownership, occupancy,
            transferability or use of such property under any Environmental
            Laws;

     (e)    of any other litigation or proceeding affecting the Borrower,
            CHC or any of their Subsidiaries which the Borrower would be
            required to report to the SEC pursuant to the Exchange Act,
            within four days after reporting the same to the SEC;

     (f)    of any of the following events affecting the Borrower or CHC,
            together with a copy of any notice with respect to such event
            that may be required to be filed with a Governmental Authority
            and any notice delivered by a Governmental Authority to the
            Borrower with respect to such event:

            (i)   an ERISA Event;

            (ii)  if any of the representations and warranties in
                  Section 6.7 ceases to be true and correct;

            (iii) the adoption of any new Pension Plan or other Plan
                  subject to Section 412 of the Code;

            (iv)  the adoption of any amendment to a Pension Plan or other
                  Plan subject to Section 412 of the Code, if such
                  amendment results in a material increase in contributions
                  or Unfunded Pension Liability; or

            (v)   the commencement of contributions to any Pension Plan or
                  other Plan subject to Section 412 of the Code; and

     (g)    of any material change in accounting policies or financial
            reporting practices by the Borrower, CHC or any of its
            consolidated Subsidiaries.
     
<PAGE>
     Each notice under this Section shall be accompanied by a written
     statement by a Responsible Officer setting forth details of the
     occurrence referred to therein, and stating what action the Borrower,
     CHC or any affected Subsidiary proposes to take with respect thereto
     and at what time.  Each notice under Section 7.3(a) shall describe
     with particularity any and all clauses or provisions of this Agreement
     or other Loan Document that have been (or foreseeably will be)
     breached or violated.

     7.4    Preservation of Existence, Etc.
            -------------------------------
     The Borrower shall, and shall cause CHC and each of their Subsidiaries
     to:

     (a)    preserve and maintain in full force and effect its legal
            existence and good standing under the laws of its state or
            jurisdiction of organization;

     (b)    preserve and maintain in full force and effect all governmental
            rights, privileges, qualifications, permits, licenses and
            franchises necessary or desirable in the normal conduct of its
            business except in connection with transactions permitted by
            Section 8.3 and sales of assets permitted by Section 8.2;

     (c)    use reasonable efforts, in the ordinary course of business, to
            preserve its business organization and goodwill; and

     (d)    preserve or renew all of its registered patents, trademarks,
            trade names and service marks, the nonpreservation of which
            could reasonably be expected to have a Material Adverse Effect.

     7.5    Maintenance of Property
            -----------------------
     The Borrower shall maintain, and shall cause CHC and each of their
     Subsidiaries to maintain, and preserve all their property which is
     used or useful in its business in good working order and condition,
     ordinary wear and tear excepted and make all necessary repairs thereto
     and renewals and replacements thereof except where the failure to do
     so could not reasonably be expected to have a Material Adverse Effect,
     except as permitted by Section 8.2.

     7.6    Insurance
            ---------
     In addition to insurance requirements set forth in the Collateral
     Documents, the Borrower shall maintain, and shall cause CHC and each
     of their Subsidiaries to maintain, with financially sound and
     reputable independent insurers, insurance with respect to its
     properties and business against loss or damage of the kinds
     customarily insured against by Persons engaged in the same or similar
     business, of such types and in such amounts as are customarily carried
     under similar circumstances by such other Persons including workers'
     
<PAGE>
     compensation insurance, public liability and property and casualty
     insurance which amount shall not be reduced by the Borrower in the
     absence of 30 days' prior notice to the Agent.  All such insurance
     shall name the Agent as loss payee/mortgagee and as additional
     insured, for the benefit of the Lenders, as their interests may
     appear.  Upon request of the Agent or any Lender, the Borrower shall
     furnish the Agent, with sufficient copies for each Lender, at
     reasonable intervals (but not more than once per calendar year) a
     certificate of a Responsible Officer of the Borrower (and, if
     requested by the Agent, any insurance broker of the Borrower) setting
     forth the nature and extent of all insurance maintained by the
     Borrower, CHC and their Subsidiaries in accordance with this Section
     or any Collateral Documents (and which, in the case of a certificate
     of a broker, were placed through such broker).

     7.7    Payment of Obligations
            ----------------------
     The Borrower shall, and shall cause CHC and each of their Subsidiaries
     to, pay and discharge as the same shall become due and payable, all
     their respective obligations and liabilities, including:
     (a)    all tax liabilities, assessments and governmental charges or
            levies upon it or its properties or assets, unless the same are
            being contested in good faith by appropriate proceedings and
            adequate reserves in accordance with GAAP are being maintained
            by the Borrower, CHC or such Subsidiary;

     (b)    all lawful claims which, if unpaid, would by law become a Lien
            upon its property; and

     (c)    all Indebtedness, as and when due and payable, but subject to
            any subordination provisions contained in any instrument or
            agreement evidencing such Indebtedness.

     7.8    Compliance With Laws
            --------------------
     The Borrower shall comply, and shall cause CHC and each of their
     Subsidiaries to comply, in all material respects with all Requirements
     of Law of any Governmental Authority having jurisdiction over it or
     its business (including the Federal Fair Labor Standards Act), except
     such as may be contested in good faith or as to which a bona fide
     dispute may exist.

     7.9    Compliance With ERISA
            ----------------------
     The Borrower shall, and shall cause CHC and each of their ERISA
     Affiliates to:  (a) maintain each Plan in compliance in all material
     respects with the applicable provisions of ERISA, the Code and other
     federal or state law; (b) cause each Plan which is qualified under
     Section 401(a) of the Code to maintain such qualification; and
     (c) make all required contributions to any Plan subject to Section 412
     of the Code.
     
<PAGE>
     7.10   Inspection of Property and Books and Records
            --------------------------------------------
     The Borrower shall maintain and shall cause CHC and each of their
     Subsidiaries to maintain proper books of record and account, in which
     full, true and correct entries in conformity with GAAP consistently
     applied shall be made of all financial transactions and matters
     involving the assets and business of the Borrower, CHC and such
     Subsidiary.  The Borrower shall permit, and shall cause CHC and each
     Subsidiary to permit, representatives and independent contractors of
     the Agent to visit and inspect any of their respective properties, to
     examine their respective limited partnership or corporate, financial
     and operating records, and make copies thereof or abstracts therefrom,
     and to discuss their respective affairs, finances and accounts with
     their respective directors, officers, and independent public
     accountants, all at the expense of the Borrower and at such reasonable
     times during normal business hours, upon reasonable advance notice to
     the Borrower; provided, however, when an Event of Default exists the
     Agent or any Lender may do any of the foregoing at the expense of the
     Borrower at any time during normal business hours and without advance
     notice.

     7.11   Environmental Laws
            ------------------
     (a)    The Borrower shall, and shall cause CHC and each of their
            Subsidiaries to, conduct their operations and keep and maintain
            its property in compliance with all Environmental Laws.

     (b)    Upon the written request of the Agent or any Lender, the
            Borrower shall submit and cause CHC and each of their
            Subsidiaries to submit, to the Agent with sufficient copies for
            each Lender, at the Borrower's sole cost and expense, at
            reasonable intervals, a report providing an update of the
            status of any environmental, health or safety compliance,
            hazard or liability issue identified in any notice or report
            required pursuant to Section 7.3(d), that could, individually
            or in the aggregate, result in liability in excess of $500,000.

     7.12   Use of Proceeds
            ---------------
     The Borrower shall use the proceeds of the Loans for working capital,
     Acquisitions permitted hereunder, funding operations, and other
     general partnership purposes not in contravention of any Requirement
     of Law or of any Loan Document.

     7.13   Appraisals
            ----------
     (a)    Prior to a parcel of real property becoming Eligible Real
            Property, there shall be established for such parcel of  real
            property the Approved Appraisal Value based upon an appraisal
            thereof performed at the Borrower's sole cost.
     
<PAGE>
     (b)    In the event that a parcel of real property has constituted
            Eligible Real Property for in excess of 18 months, the Agent
            may, in its discretion or at the request of the Required
            Lenders, have such parcel of real property reappraised, and
            upon the Agent's written approval of such reappraisal, the
            reappraised value shall constitute the Approved Appraised Value
            for such parcel of real property.  Except as provided in
            Section 7.13(c), the cost of any such reappraisal shall be
            borne by the Lenders based upon each Lender's Pro Rata Share.

     (c)    Upon the occurrence and during the continuation of any Event of 
            Default, the Agent may, in its discretion or at the request of
            the Required Lenders, have any one or more parcels of Eligible
            Real Property reappraised, and upon the Agent's written
            approval of any such reappraisal, the reappraised value shall
            constitute the Approved Appraised Value for any such parcel of
            Eligible Real Property.  The Borrower shall reimburse the Agent
            for the cost of any such reappraisal performed pursuant to this
            subsection upon demand.

     (d)    The Borrower shall cooperate with the Agent and its designated
            appraisers in connection with all appraisals and reappraisals
            of real property performed pursuant to this Agreement.

     7.14   Further Assurances
            ------------------
     (a)    The Borrower shall ensure that all written information,
            exhibits and reports furnished to the Agent or the Lenders do
            not and will not contain any untrue statement of a material
            fact and do not and will not omit to state any material fact or
            any fact necessary to make the statements contained therein not
            misleading in light of the circumstances in which made, and
            will promptly disclose to the Agent and the Lenders and correct
            any defect or error that may be discovered therein or in any
            Loan Document or in the execution, acknowledgment or
            recordation thereof.

     (b)    Promptly upon request by the Agent or the Required Lenders, the
            Borrower shall (and shall cause CHC and any of their
            Subsidiaries to) do, execute, acknowledge, deliver, record, re-
            record, file, re-file, register and re-register, any and all
            such further acts, deeds, conveyances, security agreements,
            mortgages, assignments, estoppel certificates, financing
            statements and continuations thereof, termination statements,
            notices of assignment, transfers, certificates, assurances and
            other instruments the Agent or such Lenders, as the case may
            be, may reasonably require from time to time in order (i) to
            carry out more effectively the purposes of this Agreement or
            any other Loan Document, (ii) to subject to the Liens created
            by any of the Collateral Documents any of the properties,
            rights or interests covered by any of the Collateral Documents,
     
<PAGE>
            (iii) to perfect and maintain the validity, effectiveness and
            priority of any of the Collateral Documents and the Liens
            intended to be created thereby, and (iv) to better assure,
            convey, grant, assign, transfer, preserve, protect and confirm
            to the Agent and Lenders the rights granted or now or hereafter
            intended to be granted to the Lenders under any Loan Document
            or under any other document executed in connection therewith.

     (c)    Within 20 days of the Closing Date, the Borrower shall deliver
            to the Agent, lien search results evidencing the filing of
            Financing Statements (as defined in the Security Agreements) in
            the jurisdictions listed in Schedule 7.14 hereto, naming the
            Borrower and CHC as "debtor" and the Agent as "secured party"
            and confirming that no other financing statements have been
            filed with respect to the Collateral in such jurisdictions
            (other than Permitted Liens).

     (d)    Promptly upon any Person becoming after the date hereof a
            Subsidiary of the Borrower, the Borrower: 

            (i)   shall cause such Subsidiary to execute and deliver to the
                  Agent a guaranty of all of the Obligations in form and
                  substance reasonably acceptable to the Required Lenders
                  and the Agent; 

            (ii)  shall cause such Subsidiary to execute and deliver to the
                  Agent a security agreement granting a security interest
                  in all of such Subsidiary's assets in favor of the Agent
                  for the benefit of the Lenders as security for the
                  Obligations (including the obligations of such Subsidiary
                  under the guaranty referred to in clause (i) above), in
                  form and substance reasonably acceptable to the Required
                  Lenders and the Agent and shall cause to be delivered to
                  the Agent with respect to such Subsidiary the documents
                  referred to in Section 5.1, mutatis mutandis, together
                  with such opinions in form and substance and from counsel
                  reasonably satisfactory to the Agent, as the Agent may
                  require; and

            (iii) shall cause such Person that is the Borrower or an
                  Affiliate of the Borrower that is the direct owner of any
                  shares of capital stock (or other evidence of beneficial
                  ownership) of such Subsidiary to execute and deliver to
                  the Agent a pledge agreement pledging in favor of the
                  Agent for the benefit of the Lenders as security for the
                  Obligations, all of such capital stock, in form and
                  substance reasonably acceptable to the Required Lenders
                  and the Agent, and shall cause to be delivered to the
                  Agent certificates evidencing all of the issued and
                  outstanding shares of capital stock (or other evidence of
                  beneficial ownership) of such Subsidiary, together with
     
<PAGE>
                  undated stock powers (or similar instruments of transfer)
                  owned by such Persons duly executed in blank and
                  appropriately completed Uniform Commercial Code financing
                  statements, if applicable, with respect thereto (or, if
                  any such shares of capital stock (or other evidence of
                  beneficial ownership) are not represented by
                  certificates, confirmation and evidence satisfactory to
                  the Agent that the security interest in such shares (or
                  other such evidence) has been transferred and/or
                  registered in accordance with the laws of the applicable
                  jurisdictions so as to create a valid first-priority
                  perfected security interest therein for the benefit of
                  the Agent and the Lenders) and together with such
                  opinions in form and substance and from counsel
                  reasonably satisfactory to the Agent, as the Agent may
                  reasonably require;

     provided, that in the case of an Acquisition where the Borrower, CHC
     and their Affiliates acquire less than 100% of the common shares or
     other common voting equity interests of a Person, the Borrower shall
     be required to provide the security agreement and guaranty provided
     for in clauses (i) and (ii) above only if consented to by a majority
     of the holders (other than the Borrower, CHC and their Affiliates) of
     the common shares or other common voting equity interests of such
     Person; provided, further, that the Borrower shall be required to make
     a diligent and good faith request for such consent from such holders;
     provided, further, if all of the common shares or other common voting
     equity interests of such Person are subsequently acquired by the
     Borrower, CHC and their Affiliates, such Person shall promptly comply
     with clauses (i) and (ii) above.

     7.15   Minimum Number of Parcels
            -------------------------
     At all times that there are any Loans outstanding or there exists any
     outstanding Letter of Credit, there shall be not fewer than four
     parcels of Eligible Real Property.

     ARTICLE VIII.  NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment to make Loans or issue
     Letters of Credit hereunder, or any Loan, Letter of Credit or other
     Obligation shall remain unpaid or unsatisfied, unless the Required
     Lenders waive compliance in writing:

     8.1    Limitation on Liens
            -------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, directly or indirectly, make, create, incur, assume or
     suffer to exist any Lien upon or with respect to any part of its
     property (including, without limitation, the partnership units of the
     Borrower owned by CHC), whether now owned or hereafter acquired, other
     than the following ("Permitted Liens"):
     
<PAGE>
     (a)    any Lien (other than a Lien on the Collateral) existing on
            property of the Borrower, CHC or any Subsidiary on the Closing
            Date and set forth in Schedule 8.1 securing Indebtedness
            outstanding on such date;

     (b)    any Lien created under any Loan Document;

     (c)    Liens for taxes, fees, assessments or other governmental
            charges which are not delinquent or remain payable without
            penalty, or to the extent that nonpayment thereof is permitted
            by Section 7.7, provided that no notice of lien has been filed
            or recorded under the Code;

     (d)    carriers', warehousemen's, mechanics', landlords',
            materialmen's, repairmen's or other similar Liens arising in
            the ordinary course of business which are not delinquent or
            remain payable without penalty or which are being contested in
            good faith and by appropriate proceedings, which proceedings
            have the effect of preventing the forfeiture or sale of the
            property subject thereto;

     (e)    Liens (other than any Lien imposed by ERISA and other than on
            the Collateral) consisting of pledges or deposits required in
            the ordinary course of business in connection with workers'
            compensation, unemployment insurance and other social security
            legislation;

     (f)    Liens (other than Liens on the Collateral) on the property of
            the Borrower, CHC or their Subsidiary securing (i) the
            nondelinquent performance of bids, trade contracts (other than
            for borrowed money), leases, statutory obligations,
            (ii) contingent obligations of a like nature; in each case,
            incurred in the ordinary course of business, provided all such
            Liens in the aggregate would not (even if enforced) cause a
            Material Adverse Effect;

     (g)    Liens (other than Liens on the Collateral) consisting of
            judgment or judicial attachment liens, provided that the
            enforcement of such Liens is effectively stayed and all such
            liens in the aggregate at any time outstanding for the
            Borrower, CHC and their Subsidiaries do not exceed $1,000,000;

     (h)    easements, rights-of-way, restrictions and other similar
            encumbrances incurred in the ordinary course of business which,
            in the aggregate, are not substantial in amount, and which do
            not in any case materially detract from the value of the
            property subject thereto or interfere with the ordinary conduct
            of the businesses of the Borrower, CHC and their Subsidiaries;
            provided that any such easements, rights-of-way, restrictions
            and other similar encumbrances related to Eligible Real
            Property shall be subject to the Agent's prior written
            approval;
     
<PAGE>
     (i)    Liens on assets of Persons that become Subsidiaries after the
            date of this Agreement, provided, however, that such Liens
            existed at the time the respective Persons became Subsidiaries
            and were not created in anticipation thereof;

     (j)    purchase money security interests in equipment acquired or held
            by the Borrower, CHC or their Subsidiaries in the ordinary
            course of business, securing Indebtedness incurred or assumed
            for the purpose of financing all or any part of the cost of
            acquiring such equipment; provided that (i) any such Lien
            attaches to such property concurrently with or within 20 days
            after the acquisition thereof and (ii) such Lien attaches
            solely to the property so acquired in such transaction;

     (k)    Liens securing obligations in respect of capital leases on
            assets subject to such leases, provided that such capital
            leases are otherwise permitted hereunder;

     (l)    Liens arising solely by virtue of any statutory or common law
            provision relating to banker's liens, rights of set-off or
            similar rights and remedies as to deposit accounts or other
            funds maintained with a creditor depository institution;
            provided that (i) such deposit account is not a dedicated cash
            collateral account and is not subject to restrictions against
            access by the Borrower in excess of those set forth by
            regulations promulgated by the FRB, and (ii) such deposit
            account is not intended by the Borrower, CHC or any Subsidiary
            to provide collateral to the depository institution; and

     (m)    Liens on real property used primarily in the hospitality
            business and acquired by the Borrower, CHC or any Subsidiary
            after the Closing Date that is not encumbered by any Deed of
            Trust; provided that (i) any such Lien attaches to such real
            property concurrently with or within 20 days after the
            acquisition thereof or such Lien is to secure Indebtedness the
            proceeds of which are used to refinance acquisition
            Indebtedness with respect to such real property, and (ii) such
            Lien attaches solely to such real property and personal
            property located on such real property, as well as proceeds
            thereof.

     (n)    Liens on real property that (i) was acquired by the Borrower,
            CHC or any Subsidiary before the Closing Date, (ii) was not
            encumbered by any mortgage, deed of trust or similar instrument
            as of the Closing Date or the date such Lien attaches, or with
            respect to which any such encumbrance that existed on the
            Closing Date is removed or satisfied through the use of
            proceeds of the Loans or the initial public offering of the
            common stock of CHC, and (iii) is not encumbered by any Deed of
            Trust; provided that (iv) any such Lien is approved by the
            Required Lenders, (v) such Lien attaches solely to such real
     
<PAGE>
     property and personal property located on such real property, as well
     as proceeds thereof, and (vi) the Net Issuance Proceeds from the
     Indebtedness incurred in connection with any such Liens are applied to
     the Loans in accordance with Section 2.6.

     8.2    Disposition of Assets
            ---------------------
     (a)    The Borrower shall not, and shall not suffer or permit CHC or
            any Subsidiary to, directly or indirectly, sell, assign, lease,
            convey, transfer or otherwise dispose of any property
            (including accounts and notes receivable, with or without
            recourse) or enter into any agreement to do any of the
            foregoing, except that so long as there exists no Default or
            Event of Default and so long as the proposed disposition would
            not cause the occurrence of a Default or an Event of Default
            there shall be permitted:

            (i)   dispositions of inventory or used, worn-out or surplus
                  equipment all in the ordinary course of business;

            (ii)  the sale of equipment to the extent that such equipment
                  is exchanged for credit against the purchase price of
                  similar replacement equipment, or the proceeds of such
                  sale are reasonably promptly applied, consistent with
                  Section 2.6, to the purchase price of such replacement
                  equipment;

            (iii) the sale of assets (whether in one or a series of related
                  transactions) for cash at a price equal to or greater
                  than the fair market value of such assets, provided that
                  the aggregate purchase price does not exceed $8,000,000
                  during any 12-month period;

            (iv)  the sale of assets (whether in one or a series of related
                  transactions) for cash at a price equal to or greater
                  than the fair market value of such assets and in excess
                  of $8,000,000 during any 12-month period, provided that
                  prior to the completion of any such sale (A) the Borrower
                  shall have delivered to the Agent evidence deemed
                  sufficient by the Required Lenders reflecting that had
                  such assets, together with all EBITDA generated by such
                  assets and Indebtedness that is to be repaid in
                  connection with such sale, been excluded from the
                  financial statements of CHC for the four fiscal quarters
                  immediately preceding the scheduled closing date of the
                  proposed sale, there would have been compliance with each
                  of the financial covenants set forth in Section 8.14, and
                  (B) the Required Lenders shall have reviewed and approved
                  such evidence and the Agent shall have so advised the
                  Borrower in writing;
     
<PAGE>
          (v)     the sale of assets (whether in one or a series of related
                  transactions) for cash at a price equal to or greater
                  than the fair market value of such assets and in excess
                  of $8,000,000 during any 12-month with respect to which
                  the requirements set forth in Section 8.2(a)(iv) are not
                  satisfied, provided that (A) prior to or concurrently
                  with the completion of any such sale, the Borrower shall
                  repay the Loans and permanently reduce the Commitment by
                  an amount that would result in the pro forma compliance
                  with each of the financial covenants set forth in Section
                  8.14 as recalculated in accordance with the provisions of
                  Section 8.2(a)(iv) for the four fiscal quarters
                  immediately preceding the scheduled closing date of the
                  proposed sale, (B) prior to the completion of any such
                  sale, the Borrower shall have delivered to the Agent
                  evidence deemed sufficient by the Required Lenders
                  reflecting such pro forma compliance, and (C) prior to
                  the completion of any such sale, the Required Lenders
                  shall have reviewed and approved such evidence and the
                  Agent shall have so advised the Borrower in writing; and

          (vi)    dispositions not otherwise permitted hereunder which are
                  made for fair market value; provided, that (A) the
                  aggregate sales price from such disposition shall be paid
                  in cash, and (B) Net Proceeds thereof are applied as set
                  forth in Section 2.6 hereof.

     (b)    Notwithstanding the provisions of Section 8.2(a) to the
            contrary, the Borrower shall not, and shall not suffer or
            permit CHC or any Subsidiary to, directly or indirectly, sell,
            assign, lease, convey, transfer or otherwise dispose of
            (whether in one or a series of related transactions) any
            property (including accounts and notes receivable, with or
            without recourse) or enter into any agreement to do any of the
            foregoing for an aggregate purchase price in excess of
            $35,000,000 during any 12-month period.

     8.3    Consolidations and Mergers
            --------------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, merge, consolidate with or into, or convey, transfer,
     lease or otherwise dispose of (whether in one transaction or in a
     series of transactions) all or substantially all of its assets
     (whether now owned or hereafter acquired) to or in favor of any
     Person, except:

     (a)    any Subsidiary may merge with the Borrower or CHC, provided
            that the Borrower or CHC (as the case may be) shall be the
            continuing or surviving entity, or with any one or more
            Subsidiaries, provided that if any transaction shall be between
            a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
            Subsidiary shall be the continuing or surviving entity; and
     
<PAGE>
     (b)    any Subsidiary may sell all or substantially all of its assets
            (upon voluntary liquidation or otherwise) to the Borrower or
            another Wholly-Owned Subsidiary.

     8.4    Loans and Investments
            ---------------------
     The Borrower shall not purchase or acquire, or suffer or permit CHC or
     any Subsidiary to purchase or acquire, or make any commitment
     therefor, any capital stock, equity interest, or any obligations or
     other securities of, or any interest in, any Person, or make or commit
     to make any Acquisitions, or make or commit to make any advance, loan,
     extension of credit or capital contribution to or any other investment
     in, any Person including any Affiliate of the Borrower, except for:

     (a)    investments in Cash Equivalents;

     (b)    extensions of credit in the nature of accounts receivable or
            notes receivable arising from the sale or lease of goods or
            services in the ordinary course of business;

     (c)    extensions of credit by the Borrower to any of its Wholly-Owned
            Subsidiaries or by any of its Wholly-Owned Subsidiaries to
            another of its Wholly-Owned Subsidiaries;

     (d)    investments made in connection with and constituting part of
            the consideration paid for Acquisitions to the extent the same
            are not prohibited under Section 8.7, provided that no
            Acquisition shall be consummated by the Borrower, CHC or any
            Subsidiary unless the Borrower has demonstrated to the
            reasonable satisfaction of the Required Lenders with pro forma
            financial statements prepared to reflect such Acquisition that
            the Borrower will be in compliance with the Financial
            Covenants.

     8.5    Limitation on Indebtedness
            --------------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, create, incur, assume, suffer to exist, or otherwise
     become or remain directly or indirectly liable with respect to, any
     Indebtedness, except:

     (a)    Indebtedness incurred pursuant to this Agreement;

     (b)    Indebtedness consisting of Contingent Obligations permitted
            pursuant to Section 8.8;

     (c)    Indebtedness existing on the Closing Date and set forth in
            Schedule 8.5 and any refinance of such Indebtedness in an
            amount not to exceed the outstanding principal balance thereof
            as of the Closing Date; provided that if any such Indebtedness
            is Nonrecourse Indebtedness that is secured by assets not used
            primarily in the hospitality business, then any Indebtedness to
            refinance such Indebtedness shall be Nonrecourse Indebtedness;
     
<PAGE>
     (d)    Indebtedness consisting of Subordinated Debt incurred after the
            Closing Date;

     (e)    Nonrecourse Indebtedness incurred after the Closing Date;

     (f)    Indebtedness secured by a Lien permitted under Section 8.1(j)
            or (m); and

     (g)    Indebtedness incurred in connection with leases permitted
            pursuant to Section 8.9(a).

     8.6    Transactions With Affiliates
            ----------------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, enter into any transaction with any Affiliate of the
     Borrower, except upon fair and reasonable terms no less favorable to
     the Borrower, CHC or such Subsidiary than would obtain in a comparable
     arm's-length transaction with a Person not an Affiliate of the
     Borrower, CHC or such Subsidiary. 

     8.7    Use of Proceeds
            ---------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, use any portion of the Loan proceeds, directly or
     indirectly, (a) to purchase or carry Margin Stock, (b) to purchase or
     redeem any stock, partnership units or other equity interest of the
     Borrower or CHC, (c) to repay or otherwise refinance indebtedness of
     the Borrower or others incurred to purchase or carry Margin Stock,
     (d) to extend credit for the purchase of purchasing or carrying any
     Margin Stock, (e) to acquire any security in any transaction that is
     subject to Section 13 or 14 of the Exchange Act, (f) to finance or
     refinance any Acquisition in an amount in excess of $25,000,000, (g)
     to finance or refinance Acquisitions in an aggregate amount in excess
     of $50,000,000 in any 12-month period except as otherwise approved in
     writing by Lenders holding 51% or more of the then aggregate unpaid
     principal amount of the Loans, or, if no such principal amount is then
     outstanding, Lenders then having Pro Rata Shares equal to or greater
     than 51% of the Commitments, or (h) to finance or refinance the
     acquisition of any interest in real property that is not used
     primarily in the hospitality business or the acquisition of any Person
     whose primary business is not the hospitality business except as
     otherwise approved by the Required Lenders and confirmed in writing by
     the Agent.

     8.8    Contingent Obligations
            ----------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, create, incur, assume or suffer to exist any Contingent
     Obligations except:  

     (a)    endorsements for collection or deposit in the ordinary course
            of business; 
     
<PAGE>
     (b)    Swap Contracts entered into in the ordinary course of business
            as bona fide hedging transactions; and

     (c)    Contingent Obligations of the Borrower, CHC and their
            Subsidiaries existing as of the Closing Date and listed in
            Schedule 8.8.

     8.9    Lease Obligations
            -----------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, create or suffer to exist any obligations for the
     payment of rent for any property under lease or agreement to lease,
     except for: 

     (a)    capital leases of the Borrower, CHC and of the Subsidiaries to
            finance the acquisition of equipment; and

     (b)    operating leases entered into by the Borrower, CHC or any
            Subsidiary in the ordinary course of business.

     8.10   Restricted Payments
            -------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, declare or make any dividend payment or other
     distribution of assets, properties, cash, rights, obligations or
     securities on account of any shares of any class of its capital stock
     or partnership units (as the case may be), or purchase, redeem or
     otherwise acquire for value any shares of its capital stock or
     partnership units (as the case may be) or any warrants, rights or
     options to acquire such shares or partnership units, now or hereafter
     outstanding; except that (a) CHC or the Borrower may declare and make
     dividend payments or other distributions payable solely in its common
     stock or partnership units (as the case may be), (b) the Borrower may
     make distributions to its partners in an amount necessary to allow CHC
     to pay income and gross receipts taxes on the taxable income of the
     Borrower that is recognized by its partners for tax purposes, provided
     that (i) at the time of making the distribution there exists no Event
     of Default and (ii) after giving effect to any proposed distribution,
     there would not exist any Event of Default, (c) CHC and the Borrower
     may pay dividends and distributions to their shareholders or partners
     (as the case may be) or purchase or redeem shares of capital stock or
     partnership units (as the case may be), provided that (i) at the time
     of making the dividend, distribution, purchase or redemption payment
     there exists no Event of Default, (ii) after giving effect to the
     proposed payment, there would not exist an Event of Default, (iii) as
     of the end of the fiscal quarter of CHC immediately prior to the date
     of the proposed payment for the four fiscal quarters then ended, the
     Funded Debt Ratio was less than 3.50:1.00, and (iv) after giving
     effect to the proposed payment, the Capitalization Ratio would not
     exceed 0.50:1.00, and (d) CHC may issue stock to partners of the
     Borrower in exchange for partnership units of the Borrower.
     
<PAGE>
     8.11   ERISA
            -----
     The Borrower shall not, and shall not suffer or permit any ERISA
     Affiliate of the Borrower or CHC to:  (a) engage in a prohibited
     transaction or violation of the fiduciary responsibility rules with
     respect to any Plan which has resulted or could reasonably be expected
     to result in liability of the Borrower in an aggregate amount in
     excess of $500,000; or (b) engage in a transaction that could be
     subject to Section 4069 or 4212(c) of ERISA.  

     8.12   Change in Business
            ------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, engage in any material line of business substantially
     different from those lines of business carried on by the Borrower, CHC
     and their Subsidiaries on the date hereof.  

     8.13   Accounting Changes
            ------------------
     The Borrower shall not, and shall not suffer or permit CHC or any
     Subsidiary to, make any significant change in accounting treatment or
     reporting practices, except as required by GAAP, or change the fiscal
     year of the Borrower, CHC or of any Subsidiary. 

     8.14   Financial Covenants
            -------------------
     (a)    FUNDED DEBT RATIO

            As of the end of each fiscal quarter for the four fiscal
            quarters then ended, the Funded Debt Ratio shall not exceed (i)
            4.50:1.00 for each fiscal quarter ending after the date of this
            Agreement through March 31, 2000, (ii) 4.25:1.00 for each
            fiscal quarter ending on June 30, 2000 through March 31, 2001,
            and (iii) 4.00:1.00 for each fiscal quarter ending thereafter.

     (b)    INTEREST COVERAGE RATIO

            As of the end of each fiscal quarter for the four fiscal
            quarters then ended, the Interest Coverage Ratio shall not be
            less than (i) 2.00:1.00 for each fiscal quarter ending after
            the date this Agreement through December 31, 1998, and (ii)
            2.25:1.00 for each fiscal quarter ending thereafter.

     (c)    FIXED CHARGE COVERAGE RATIO

            As of the end of each fiscal quarter for the four fiscal
            quarters then ended, the Fixed Charge Coverage Ratio shall not
            be less than 1.75:1.00.

     (d)    CAPITALIZATION RATIO

            As of the end of each fiscal quarter, the Capitalization Ratio
            shall not exceed 0.50:1.00.
     
<PAGE>
     (e)    TOTAL ASSETS

            As of the end of each fiscal quarter, the aggregate amount of
            gross assets reflected on the CHC's balance sheet attributable
            to Persons other than the Borrower shall not exceed 10% of the
            aggregate amount of gross assets reflected on the CHC's balance
            sheet.

     8.15   SUBORDINATED DEBT

            Not, and not permit CHC or any of their Subsidiaries to make
            any payment (whether of principal, interest or otherwise) on
            any Subordinated Debt on any day other than the stated,
            scheduled date for such payment set forth in the documents and
            instruments evidencing such Subordinated Debt or in
            contravention or violation of the subordination provisions
            thereof.

     ARTICLE IX.  EVENTS OF DEFAULT

     9.1    Event of Default
            ----------------
     Any of the following shall constitute an "Event of Default":  

     (a)    NONPAYMENT

            The Borrower fails to pay, (i) when and as required to be paid
            herein, any amount of principal of any Loan, or (ii) within
            five days after the same becomes due, any interest, fee or any
            other amount payable hereunder or under any other Loan
            Document; or

     (b)    REPRESENTATION OR WARRANTY

            Any representation or warranty by the Borrower, CHC or any
            Subsidiary made or deemed made herein, in any other Loan
            Document, or which is contained in any certificate, document or
            financial or other statement by the Borrower, CHC or any
            Subsidiary, or any Responsible Officer, furnished at any time
            under this Agreement, or in or under any other Loan Document,
            is incorrect in any material respect on or as of the date made
            or deemed made; or

     (c)    SPECIFIC DEFAULTS

            The Borrower fails to perform or observe any term, covenant or
            agreement contained in any of Section 7.3, 7.6 or 7.9 or in
            Article VIII other than Sections 8.6 and 8.13, or the Borrower
            fails to perform or observe any term, covenant or agreement
            contained in Section 7.1 or 7.2 within five days after written
            notice is given to the Borrower by the Agent or any Lender; or
     
<PAGE>
     (d)    OTHER DEFAULTS

            The Borrower, CHC or any Subsidiary party thereto fails to
            perform or observe any other term or covenant contained in this
            Agreement or any other Loan Document, and such default shall
            continue unremedied for a period of 30 days after the
            occurrence of such default; or

     (e)    CROSS-DEFAULT

            The Borrower, CHC or any Subsidiary (i) fails to make any
            payment in respect of any Indebtedness or Contingent Obligation
            having an aggregate principal amount (including undrawn,
            committed or available amounts and including amounts owing to
            all creditors under any combined or syndicated credit
            arrangement) of more than $1,000,000 when due (whether by
            scheduled maturity, required prepayment, acceleration, demand
            or otherwise) and such failure continues after the applicable
            grace or notice period, if any, specified in the relevant
            document on the date of such failure; or (ii) fails to perform
            or observe any other condition or covenant, or any other event
            shall occur or condition exist, under any agreement or
            instrument relating to any such Indebtedness or Contingent
            Obligation, and such failure continues after the applicable
            grace or notice period, if any, specified in the relevant
            document on the date of such failure, if the effect of such
            failure, event or condition is to cause, or to permit the
            holder or holders of such Indebtedness or beneficiary or
            beneficiaries of such Indebtedness (or a trustee or agent on
            behalf of such holder or holders or beneficiary or
            beneficiaries) to cause such Indebtedness to be declared to be
            due and payable prior to its stated maturity, or such
            Contingent Obligation to become payable or cash collateral in
            respect thereof to be demanded; or 

     (f)    INSOLVENCY; VOLUNTARY PROCEEDINGS

            The Borrower, CHC or any Subsidiary (i) ceases or fails to be
            solvent, or generally fails to pay, or admits in writing its
            inability to pay, its debts as they become due, subject to
            applicable grace periods, if any, whether at stated maturity or
            otherwise; (ii) voluntarily ceases to conduct its business in
            the ordinary course; (iii) commences any Insolvency Proceeding
            with respect to itself; or (iv) takes any action to effectuate
            or authorize any of the foregoing; or

     (g)    INVOLUNTARY PROCEEDINGS

            (i) Any involuntary Insolvency Proceeding is commenced or filed
            against the Borrower, CHC or any Subsidiary, or any writ,
            judgment, warrant of attachment, execution or similar process,
     
<PAGE>
            is issued or levied against a substantial part of the
            Borrower's, CHC's or any Subsidiary's properties, and any such
            proceeding or petition shall not be dismissed, or such writ,
            judgment, warrant of attachment, execution or similar process
            shall not be released, vacated or fully bonded within 60 days
            after commencement, filing or levy; (ii) the Borrower, CHC or
            any Subsidiary admits the material allegations of a petition
            against it in any Insolvency Proceeding, or an order for relief
            (or similar order under non-U.S. law) is ordered in any
            Insolvency Proceeding; or (iii) the Borrower, CHC or any
            Subsidiary acquiesces in the appointment of a receiver,
            trustee, custodian, conservator, liquidator, mortgagee in
            possession (or agent therefor), or other similar Person for
            itself or a substantial portion of its property or business; or

     (h)    ERISA

            (i) An ERISA Event shall occur with respect to a Pension Plan
            or Multiemployer Plan which has resulted or could reasonably be
            expected to result in liability of the Borrower under Title IV
            of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in
            an aggregate amount in excess of $500,000; or (ii) the
            aggregate amount of Unfunded Pension Liability among all
            Pension Plans at any time exceeds $500,000; or (iii) the
            Borrower, CHC or any ERISA Affiliate shall fail to pay when
            due, after the expiration of any applicable grace period, any
            installment payment with respect to its withdrawal liability
            under Section 4201 of ERISA under a Multiemployer Plan in an
            aggregate amount in excess of $500,000; or

     (i)    MONETARY JUDGMENTS

            One or more noninterlocutory judgments, noninterlocutory
            orders, decrees or arbitration awards is entered against the
            Borrower, CHC or any Subsidiary involving in the aggregate a
            liability (i) (to the extent not covered by independent third-
            party insurance as to which the insurer does not dispute
            coverage) as to any single or related series of transactions,
            incidents or conditions, of $2,000,000 or more, or (ii) as to
            any single or related series of transactions, incidents or
            conditions, of $10,000,000 or more (whether or not covered by
            third-party insurance as to which the insurer does not dispute
            coverage), and the same shall remain unpaid or unvacated and
            unstayed pending appeal for a period of ten days after the
            entry thereof; or

     (j)    NONMONETARY JUDGMENTS

            Any nonmonetary judgment, order or decree is entered against
            the Borrower, CHC or any Subsidiary which does or would
            reasonably be expected to have a Material Adverse Effect, and
     
<PAGE>
            there shall be any period of ten consecutive days during which
            a stay of enforcement of such judgment or order, by reason of a
            pending appeal or otherwise, shall not be in effect; or 

     (k)    VIOLATION OF LOCK-UP AGREEMENT

            There occurs any breach by the Borrower under that certain
            Lock-up Agreement dated April 2, 1998, and executed by CHC; or

     (l)    ADVERSE CHANGE

            There occurs a Material Adverse Effect; or

     (m)    INVALIDITY OF SUBORDINATION PROVISIONS

            The subordination provisions of any agreement or instrument
            governing any Subordinated Debt is for any reason revoked or
            invalidated, or otherwise cease to be in full force and effect,
            any Person contests in any manner the validity or
            enforceability thereof or denies that it has any further
            liability or obligation thereunder, or the Indebtedness
            hereunder is for any reason subordinated or does not have the
            priority contemplated by this Agreement or such subordination
            provisions; or

     (n)    COLLATERAL

            (i)   Any provision of any Collateral Document shall for any
                  reason cease to be valid and binding on or enforceable
                  against the Borrower, CHC or any Subsidiary party thereto
                  or the Borrower, CHC or any Subsidiary shall so state in
                  writing or bring an action to limit its obligations or
                  liabilities thereunder; or and

            (ii)  any Collateral Document shall for any reason (other than
                  pursuant to the terms thereof) cease to create a valid
                  security interest in the Collateral purported to be
                  covered thereby or such security interest shall for any
                  reason cease to be a perfected and first priority
                  security interest subject only to Permitted Liens.

     9.2    Remedies
            --------
     If any Event of Default occurs, the Agent shall, at the request of, or
     may, with the consent of, the Required Lenders, 

     (a)    declare the commitment of each Lender to make Loans to be
            terminated, whereupon such commitments shall be terminated; 
     
<PAGE>
     (b)    declare the unpaid principal amount of all outstanding Loans,
            all interest accrued and unpaid thereon, and all other amounts
            owing or payable hereunder or under any other Loan Document to
            be immediately due and payable, without presentment, demand,
            protest or other notice of any kind, all of which are hereby
            expressly waived by the Borrower;

     (c)    if any Letter of Credit is outstanding, declare an amount equal
            to the Letter of Credit Usage immediately due and payable
            whereupon the same shall become immediately due and payable,
            without presentment, demand, protest or other notice of any
            kind, all of which are hereby expressly waived by the Borrower;
            and

     (d)    exercise on behalf of itself and the Lenders all rights and
            remedies available to it and the Lenders under the Loan
            Documents or applicable law; 

     provided, however, that upon the occurrence of any event specified in
     subsection (f) or (g) of Section 9.1 (in the case of clause (i) of
     subsection (g) upon the expiration of the 60-day period mentioned
     therein), the obligation of each Lender to make Loans and the
     obligation of the Agent and each Lender to issue Letters of Credit
     shall automatically terminate and the unpaid principal amount of all
     outstanding Loans and an amount equal to the Letter of Credit Usage,
     together with all interest and other amounts as aforesaid shall
     automatically become due and payable without further act of the Agent
     or any Lender.  Amounts paid or received hereunder in respect of
     issued and outstanding Letters of Credit which exceed amounts paid by
     Agent under such Letters of Credit shall be held (and applied) as cash
     collateral to secure the performance of all obligations of the
     Borrower owing to the Agent in respect of Letters of Credits.

     9.3    Rights Not Exclusive
            --------------------
     The rights provided for in this Agreement and the other Loan Documents
     are cumulative and are not exclusive of any other rights, powers,
     privileges or remedies provided by law or in equity, or under any
     other instrument, document or agreement now existing or hereafter
     arising. 

     9.4    Certain Financial Covenant Defaults
            -----------------------------------
     In the event that, after taking into account any extraordinary charge
     to earnings taken or to be taken as of the end of any fiscal period of
     CHC (a "Charge"), and if solely by virtue of such Charge, there would
     exist an Event of Default due to the breach of any provision of
     Section 8.14 as of such fiscal period end date, such Event of Default
     shall be deemed to arise upon the earlier of (a) the date after such
     fiscal period and date on which CHC announces publicly that it will
     take, is taking or has taken such Charge (including an announcement in
     
<PAGE>
     the form of a statement in a report filed with the SEC) or, if such
     announcement is made prior to such fiscal period end date, the date
     that is such fiscal period end date, and (b) the date the Borrower or
     CHC delivers to the Agent its audited annual or unaudited quarterly
     financial statements in respect of such fiscal period reflecting such
     Charge as taken.

     ARTICLE X.   THE AGENT

     10.1   Appointment and Authorization
            -----------------------------
     Each Lender hereby irrevocably (subject to Section 10.9) appoints,
     designates and authorizes the Agent to take such action on its behalf
     under the provisions of this Agreement and each other Loan Document
     and to exercise such powers and perform such duties as are expressly
     delegated to it by the terms of this Agreement or any other Loan
     Document, together with such powers as are reasonably incidental
     thereto.  Notwithstanding any provision to the contrary contained
     elsewhere in this Agreement or in any other Loan Document, the Agent
     shall not have any duties or responsibilities, except those expressly
     set forth herein, nor shall the Agent have or be deemed to have any
     fiduciary relationship with any Lender, and no implied covenants,
     functions, responsibilities, duties, obligations or liabilities shall
     be read into this Agreement or any other Loan Document or otherwise
     exist against the Agent. 

     10.2   Delegation of Duties
            --------------------
     The Agent may execute any of its duties under this Agreement or any
     other Loan Document by or through agents, employees 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 agent or attorney-in-fact that it
     selects with reasonable care. 

     10.3   Liability of Agent
            ------------------
     None of the Agent-Related Persons shall (i) be liable for any action
     taken or omitted to be taken by any of them under or in connection
     with this Agreement or any other Loan Document or the transactions
     contemplated hereby (except for its own gross negligence or willful
     misconduct), or (ii) be responsible in any manner to any of the
     Lenders for any recital, statement, representation or warranty made by
     the Borrower, CHC or any Subsidiary or Affiliate of the Borrower, or
     any officer thereof, contained in this Agreement or in any other Loan
     Document, or in any certificate, report, statement or other document
     referred to or provided for in, or received by the Agent under or in
     connection with, this Agreement or any other Loan Document, or for the
     value of or title to any Collateral, or the validity, effectiveness,
     genuineness, enforceability or sufficiency of this Agreement or any
     other Loan Document, or for any failure of the Borrower or any other
     
<PAGE>
     party to any Loan Document to perform its obligations hereunder or
     thereunder.  No Agent-Related Person shall be under any obligation to
     any Lender to ascertain or to inquire as to the observance or
     performance of any of the agreements contained in, or conditions of,
     this Agreement or any other Loan Document, or to inspect the
     properties, books or records of the Borrower, CHC or any of the
     Borrower's Subsidiaries or Affiliates. 

     10.4   Reliance by Agent
            -----------------
     (a)    The Agent shall be entitled to rely, and shall be fully
            protected in relying, upon any writing, resolution, notice,
            consent, certificate, affidavit, letter, telegram, facsimile,
            telex or telephone message, statement 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
            counsel to the Borrower), independent accountants and other
            experts selected by the Agent.  The Agent shall be fully
            justified in failing or refusing to take any action under this
            Agreement or any other Loan Document unless it shall first
            receive such advice or concurrence of the Required Lenders as
            it deems appropriate and, if it so requests, 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, under this Agreement or any other Loan
            Document in accordance with a request or consent of the
            Required Lenders and such request and any action taken or
            failure to act pursuant thereto shall be binding upon all of
            the Lenders.  

     (b)    For purposes of determining compliance with the conditions
            specified in Section 5.1, each Lender that has executed this
            Agreement shall be deemed to have consented to, approved or
            accepted or to be satisfied with, each document or other matter
            either sent by the Agent to such Lender for consent, approval,
            acceptance or satisfaction, or required thereunder to be
            consented to or approved by or acceptable or satisfactory to
            the Lender.  

     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, except with respect to
     defaults in the payment of principal, interest and fees required to be
     paid to the Agent for the account of the Lenders, unless the Agent
     shall have received written notice from a Lender or the Borrower
     referring to this Agreement, describing such Default or Event of
     Default and stating that such notice is a "notice of default."  The
     
<PAGE>
     Agent will notify the Lenders of its receipt of any such notice.  The
     Agent shall take such action with respect to such Default or Event of
     Default as may be requested by the Required Lenders in accordance with
     Article IX; provided, however, that unless and until the Agent has
     received any such request, the Agent may (but shall not be obligated
     to) take such action, or refrain from taking such action, with respect
     to such Default or Event of Default as it shall deem advisable or in
     the best interest of the Lenders. 

     10.6   Credit Decision
            ---------------
     Each Lender acknowledges that none of the Agent-Related Persons has
     made any representation or warranty to it, and that no act by the
     Agent hereinafter taken, including any review of the affairs of the
     Borrower, CHC and their Subsidiaries, shall be deemed to constitute
     any representation or warranty by any Agent-Related Person to any
     Lender.  Each Lender represents to the Agent that it has,
     independently and without reliance upon any Agent-Related Person and
     based on such documents and information as it has deemed appropriate,
     made its own appraisal of and investigation into the business,
     prospects, operations, property, financial and other condition and
     creditworthiness of the Borrower, CHC and their Subsidiaries, the
     value of and title to any Collateral, and all applicable bank
     regulatory laws relating to the transactions contemplated hereby, and
     made its own decision to enter into this Agreement and to extend
     credit to the Borrower hereunder.  Each Lender also represents that it
     will, independently and without reliance upon any Agent-Related Person
     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
     Agreement and the other Loan Documents, and to make such
     investigations as it deems necessary to inform itself as to the
     business, prospects, operations, property, financial and other
     condition and creditworthiness of the Borrower, CHC and their
     Subsidiaries.  Except for notices, reports and other documents
     expressly herein required to be furnished to the Lenders by the Agent,
     the Agent shall not have any duty or responsibility to provide any
     Lender with any credit or other information concerning the business,
     prospects, operations, property, financial and other condition or
     creditworthiness of the Borrower, CHC or their Subsidiaries which may
     come into the possession of any of the Agent-Related Persons. 

     10.7   Indemnification of Agent
            ------------------------
     Whether or not the transactions contemplated hereby are consummated,
     the Lenders shall indemnify upon demand the Agent-Related Persons (to
     the extent not reimbursed by or on behalf of the Borrower and without
     limiting the obligation of the Borrower to do so), in proportion to
     each Lender's Pro Rata Share, from and against any and all Indemnified
     Liabilities; provided, however, that no Lender shall be liable for the
     payment to the Agent-Related Persons of any portion of such
     
<PAGE>
     Indemnified Liabilities resulting solely from such Person's gross
     negligence or willful misconduct.  Without limitation of the
     foregoing, each Lender shall reimburse the Agent upon demand for its
     ratable share of any costs or out-of-pocket expenses (including
     Attorney Costs) incurred by the Agent in connection with the
     preparation, execution, delivery, administration, modification,
     amendment or enforcement (whether through negotiations, legal
     proceedings or otherwise) of, or legal advice in respect of rights or
     responsibilities under, this Agreement, any other Loan Document, or
     any document contemplated by or referred to herein, to the extent that
     the Agent is not reimbursed for such expenses by or on behalf of the
     Borrower.  The undertaking in this Section shall survive the payment
     of all Obligations hereunder and the resignation or replacement of the
     Agent.

     10.8   Agent in Individual Capacity
            ----------------------------
     U. S. Bank and its Affiliates may make loans to, issue letters of
     credit for the account of, accept deposits from, acquire equity
     interests in and generally engage in any kind of banking, trust,
     financial advisory, underwriting or other business with the Borrower,
     CHC and their Subsidiaries and Affiliates as though U. S. Bank were
     not the Agent hereunder and without notice to or consent of the
     Lenders.  The Lenders acknowledge that, pursuant to such activities,
     U. S. Bank or its Affiliates may receive information regarding the
     Borrower or its Affiliates (including information that may be subject
     to confidentiality obligations in favor of the Borrower, CHC or such
     Subsidiary) and acknowledge that the Agent shall be under no
     obligation to provide such information to them.  With respect to its
     Loans, U. S. Bank shall have the same rights and powers under this
     Agreement as any other Lender and may exercise the same as though it
     were not the Agent, and the terms "Lender" and "Lenders" include U. S.
     Bank in its individual capacity. 

     10.9   Successor Agent
            ---------------
     The Agent may, and at the request of the Required Lenders shall,
     resign as Agent upon 30 days' notice to the Lenders.  If the Agent
     resigns under this Agreement, the Required Lenders shall appoint from
     among the Lenders a successor agent for the Lenders which successor
     agent shall, if no Default or Event of Default then exists, be
     approved by the Borrower.  If no successor agent is appointed prior to
     the effective date of the resignation of the Agent, the Agent may
     appoint, after consulting with the Lenders and the Borrower, a
     successor agent from among the Lenders.  Upon the acceptance of its
     appointment as successor agent hereunder, such successor agent shall
     succeed to all the rights, powers and duties of the retiring Agent and
     the term "Agent" shall mean such successor agent and the retiring
     Agent's appointment, powers and duties as Agent shall be terminated. 
     After any retiring Agent's resignation hereunder as Agent, the
     provisions of this Article X and Sections 12.4 and 12.5 shall inure to
     
<PAGE>
     its benefit as to any actions taken or omitted to be taken by it while
     it was Agent under this Agreement.  If no successor agent has accepted
     appointment as Agent by the date which is 30 days following a retiring
     Agent's notice of resignation, the retiring Agent's resignation shall
     nevertheless thereupon become effective and the Lenders shall perform
     all of the duties of the Agent hereunder until such time, if any, as
     the Required Lenders appoint a successor agent as provided for above. 


     10.10  Withholding Tax
            ---------------
     (a)    If any Lender is a "foreign corporation, partnership or trust"
            within the meaning of the Code and such Lender claims exemption
            from, or a reduction of, U.S. withholding tax under
            Sections 1441 or 1442 of the Code, such Lender agrees with and
            in favor of the Agent, to deliver to the Agent:  

            (i)   if such Lender claims an exemption from, or a reduction
                  of, withholding tax under a United States tax treaty,
                  properly completed IRS Forms 1001 and W-8 before the
                  payment of any interest in the first calendar year and
                  before the payment of any interest in each third
                  succeeding calendar year during which interest may be
                  paid under this Agreement; 

            (ii)  if such Lender claims that interest paid under this
                  Agreement is exempt from United States withholding tax
                  because it is effectively connected with a United States
                  trade or business of such Lender, two properly completed
                  and executed copies of IRS Form 4224 before the payment
                  of any interest is due in the first taxable year of such
                  Lender and in each succeeding taxable year of such Lender
                  during which interest may be paid under this Agreement,
                  and IRS Form W-9; and

            (iii) such other form or forms as may be required under the
                  Code or other laws of the United States as a condition to
                  exemption from, or reduction of, United States
                  withholding tax. 

            Such Lender agrees to promptly notify the Agent of any change
            in circumstances which would modify or render invalid any
            claimed exemption or reduction.

     (b)    If any Lender claims exemption from, or reduction of,
            withholding tax under a United States tax treaty by providing
            IRS Form 1001 and such Lender sells, assigns, grants a
            participation in, or otherwise transfers all or part of the
            Obligations of the Borrower to such Lender, such Lender agrees
            to notify the Agent of the percentage amount in which it is no
            longer the beneficial owner of Obligations of the Borrower to
            such Lender.  To the extent of such percentage amount, the
            Agent will treat such Lender's IRS Form 1001 as no longer
            valid.  
     
<PAGE>
     (c)  If any Lender claiming exemption from United States withholding
          tax by filing IRS Form 4224 with the Agent sells, assigns, grants
          a participation in, or otherwise transfers all or part of the
          Obligations of the Borrower to such a Lender, such Lender agrees
          to undertake sole responsibility for complying with the
          withholding tax requirements imposed by Sections 1441 and 1442 of
          the Code.  

     (d)  If any Lender is entitled to a reduction in the applicable
          withholding tax, the Agent may withhold from any interest payment
          to such Lender an amount equivalent to the applicable withholding
          tax after taking into account such reduction.  If the forms or
          other documentation required by subsection (a) of this Section
          are not delivered to the Agent, then the Agent may withhold from
          any interest payment to such Lender not providing such forms or
          other documentation an amount equivalent to the applicable
          withholding tax. 

     (e)    If the IRS or any other Governmental Authority of the United
            States or other jurisdiction asserts a claim that the Agent did
            not properly withhold tax from amounts paid to or for the
            account of any Lender (because the appropriate form was not
            delivered, was not properly executed, or because such Lender
            failed to notify the Agent of a change in circumstances which
            rendered the exemption from, or reduction of, withholding tax
            ineffective, or for any other reason) such Lender shall
            indemnify the Agent fully for all amounts paid, directly or
            indirectly, by the Agent as tax or otherwise, including
            penalties and interest, and including any taxes imposed by any
            jurisdiction on the amounts payable to the Agent under this
            Section, together with all costs and expenses (including
            Attorney Costs).  The obligation of the Lenders under this
            subsection shall survive the payment of all Obligations and the
            resignation or replacement to the Agent.

     10.11  Collateral Matters
            ------------------
     (a)    The Agent is authorized on behalf of all the Lenders, without
            the necessity of any notice to or further consent from the
            Lenders, from time to time to take any action with respect to
            any Collateral or the Collateral Documents which may be
            necessary to perfect and maintain perfected the security
            interest in and Liens upon the Collateral granted pursuant to
            the Collateral Documents. 

     (b)    The Lenders irrevocably authorize the Agent, at its option and
            in its discretion, to release any Lien granted to or held by
            the Agent upon any Collateral (i) upon termination of the
            Commitments and payment in full of all Loans and all other
            Obligations known to the Agent and payable under this Agreement
            or any other Loan Document; (ii) constituting property sold or
     
<PAGE>
            to be sold or disposed of as part of or in connection with any
            disposition not prohibited hereunder; (iii) constituting
            property in which the Borrower, CHC or any Subsidiary owned no
            interest at the time the Lien was granted or at any time
            thereafter; (iv) constituting property leased to the Borrower,
            CHC or any Subsidiary under a lease which has expired or been
            terminated in a transaction not prohibited under this Agreement
            or is about to expire and which has not been, and is not
            intended by the Borrower, CHC or such Subsidiary to be, renewed
            or extended; (v) consisting of an instrument evidencing
            Indebtedness or other debt instrument, if the indebtedness
            evidenced thereby has been paid in full; or (vi) if approved,
            authorized or ratified in writing by the Required Lenders or
            all the Lenders, as the case may be, as provided in Section
            12.1(f).  Upon request by the Agent at any time, the Lenders
            will confirm in writing the Agent's authority to release
            particular types or items of Collateral pursuant to this
            Section 10.11(b).  

     ARTICLE XI.  LETTER OF CREDIT RISK PARTICIPATIONS

     11.1   Sale of Risk Participations
            ---------------------------
     The Agent agrees to sell to the Lenders, and upon issuance of any
     Letter of Credit hereunder each Lender shall be deemed to have
     unconditionally and irrevocably purchased from the Agent, an undivided
     risk participation in such Letter of Credit in proportion to such
     Lender's Pro Rata Share.

     11.2   Procedure for Purchases
            -----------------------
     Via telephone or facsimile, the Agent will promptly advise each Lender
     of each Letter of Credit issued hereunder.  The Agent shall not have
     any duty to ascertain or to inquire as to the accuracy of the
     information furnished by the Borrower, or accuracy of the
     representations and warranties made by the Borrower in any request for
     the issuance of such Letter of Credit nor shall the Agent have any
     duty to confirm that all conditions precedent to the issuance of such
     Letter of Credit have been fully satisfied.

     11.3   Payment Obligations
            -------------------
     (a)    In the event Borrower fails to pay any amount due under
            Section 3.4 by 12:00 noon (Seattle time) on the date the Agent
            shall make demand for payment thereof, the Lenders shall each,
            upon receipt of notice from Agent of such failure, pay to the
            Agent their Pro Rata Share of such amount; provided, however,
            if the Borrower pays a portion but less than all of the amount
            due under Section 3.4, the Lenders shall each pay Agent only
            their respective Pro Rata Shares of the difference between the
            amount due under Section 3.4 and the amount paid by Borrower on
     
<PAGE>
            account thereof.  Each and every payment to be made by the
            Lenders to the Agent under this Section 11.3(a) shall be made
            by federal wire transfer in immediately available funds.  If
            any Lender receives notice from Agent by 1:30 p.m. (Seattle
            time) on any Business Day of its obligation to make payments
            under this subsection, then such Lender shall make such payment
            no later than 2:00 p.m. (Seattle time) on the day such notice
            is received.  If any Lender receives such notice after 1:30
            p.m. (Seattle time) on any Business Day, then such Lender shall
            make such payment by no later than 1:00 p.m. (Seattle time) on
            the next succeeding Business Day.  If any Lender fails to make
            such payment by the date and time required, its obligation
            shall bear interest from and including the date when such
            payment was due until paid at the per annum rate equal to the
            Federal Funds Rate.

     (b)    The Agent shall promptly remit to the Lenders, via federal wire
            transfer of funds, the Lenders' respective Pro Rata Share of
            any amounts (other than fees and expense reimbursements)
            received from or for the account of the Borrower in respect of
            any Letter of Credit; provided, however, the Agent shall not
            remit to any Lender any amounts received from or for the
            account of the Borrower in respect of a Letter of Credit
            unless, prior to Agent's receipt of such funds, such Lender has
            paid its Pro Rata Share of such amounts pursuant to
            Section 11.3(a).  In the event Agent is required to refund any
            amount which is paid to it or received by it from or for the
            account of the Borrower, then Lenders, to the extent they shall
            have previously received their share of such amount, agree to
            repay to Agent their respective Pro Rata Share of such amount.

     (c)    Reimbursements to Lenders
            -------------------------
            Borrower agrees to reimburse any Lender for amounts paid by
            such Lender to Agent pursuant to Section 11.3(a).  Any amounts
            received from or for the account of Borrower by any Lender in
            respect of the aforesaid reimbursement obligation shall reduce
            Borrower's payment obligation to Agent under Section 3.4.  Any
            amounts received from or for the account of Borrower by Agent
            in satisfaction of its obligations under Section 3.4 shall
            reduce pro tanto Borrower's reimbursement obligation to Lenders
            under this Section 11.3(c).

     ARTICLE XII. MISCELLANEOUS

     12.1   Amendments and Waivers
            ----------------------
     No amendment or waiver of any provision of this Agreement or any other
     Loan Document, and no consent with respect to any departure by the
     Borrower, CHC or any applicable Subsidiary therefrom, shall be
     effective unless the same shall be in writing and signed by the
     
<PAGE>
     Required Lenders (or by the Agent at the written request of the
     Required Lenders) and the Borrower and acknowledged by the Agent, and
     then any such waiver or consent shall be effective only in the
     specific instance and for the specific purpose for which given;
     provided, however, that no such waiver, amendment, or consent shall,
     unless in writing and signed by all the Lenders and the Borrower and
     acknowledged by the Agent, do any of the following: 

     (a)    increase or extend the Commitment of any Lender (or reinstate
            any Commitment terminated pursuant to Section 9.2), unless such
            Lender has consented thereto in writing;

     (b)    postpone or delay any date fixed by this Agreement or any other
            Loan Document for any payment (including without limit
            mandatory prepayments) of principal, interest, fees or other
            amounts due to the Lenders (or any of them) hereunder or under
            any other Loan Document; 

     (c)    reduce the principal of, or the rate of interest specified
            herein on any Loan, or (subject to clause (ii) below) any fees
            or other amounts payable hereunder or under any other Loan
            Document; 

     (d)    change the percentage of the Commitments or of the aggregate
            unpaid principal amount of the Loans which is required for the
            Lenders or any of them to take any action hereunder; or

     (e)    amend the definition of "Required Lenders," this Section, or
            Section 2.14, or any provision herein providing for consent or
            other action by all Lenders; or

     (f)    release any material portion of the Collateral except as
            otherwise may be provided herein or in the Collateral Documents
            or except where the consent of the Required Lenders only is
            specifically provided for; 

     and, provided further, that (i) no amendment, waiver or consent shall,
     unless in writing and signed by the Agent in addition to the Required
     Lenders or all the Lenders, as the case may be, affect the rights or
     duties of the Agent under this Agreement or any other Loan Document,
     and (ii) the Commitment Letter may be amended, or rights or privileges
     thereunder waived, in a writing executed by the parties thereto. 

     12.2   Notices
            -------
     (a)    All notices, requests and other communications shall be in
            writing (including, unless the context expressly otherwise
            provides, by facsimile transmission, provided that any matter
            transmitted by the Borrower by facsimile (i) shall be
            immediately confirmed by a telephone call to the recipient at
            the number specified on Schedule 12.2, and (ii) shall be
     
<PAGE>
            followed promptly by delivery of a hard copy original thereof)
            and mailed, faxed or delivered, to the address or facsimile
            number specified for notices on Schedule 12.2; or, as directed
            to the Borrower or the Agent, to such other address as shall be
            designated by such party in a written notice to the other
            parties, and as directed to any other party, at such other
            address as shall be designated by such party in a written
            notice to the Borrower and the Agent. 

     (b)    All such notices, requests and communications shall, when
            transmitted by overnight delivery, or faxed, be effective when
            delivered by overnight (next-day) delivery, or transmitted in
            legible form by facsimile machine, respectively, or if mailed,
            upon the third Business Day after the date deposited into the
            U.S. mail, or if delivered, upon delivery; except that notices
            pursuant to Article II or X shall not be effective until
            actually received by the Agent.

     (c)    Any agreement of the Agent and the Lenders herein to receive
            certain notices by telephone or facsimile is solely for the
            convenience and at the request of the Borrower.  The Agent and
            the Lenders shall be entitled to rely on the authority of any
            Person purporting to be a Person authorized by the Borrower to
            give such notice and the Agent and the Lenders shall not have
            any liability to the Borrower or other Person on account of any
            action taken or not taken by the Agent or the Lenders in
            reliance upon such telephonic or facsimile notice.  The
            obligation of the Borrower to repay the Loans shall not be
            affected in any way or to any extent by any failure by the
            Agent and the Lenders to receive written confirmation of any
            telephonic or facsimile notice or the receipt by the Agent and
            the Lenders of a confirmation which is at variance with the
            terms understood by the Agent and the Lenders to be contained
            in the telephonic or facsimile notice. 

     12.3   No Waiver; Cumulative Remedies
            ------------------------------
     No failure to exercise and no delay in exercising, on the part of the
     Agent or any Lender, any right, remedy, power or privilege hereunder,
     shall operate as a waiver thereof; nor shall any single or partial
     exercise of any right, remedy, power or privilege hereunder preclude
     any other or further exercise thereof or the exercise of any other
     right, remedy, power or privilege. 

     12.4   Costs and Expenses
            ------------------
     The Borrower shall:

     (a)    whether or not the transactions contemplated hereby are
            consummated, pay or reimburse U. S. Bank (including in its
            capacity as Agent) within five Business days after demand
            (subject to Section 5.1(e)) for all costs and expenses incurred
     
<PAGE>
            by U. S. Bank (including in its capacity as Agent) in
            connection with the development, preparation, delivery,
            administration and execution of, and any amendment, supplement,
            waiver or modification to (in each case, whether or not
            consummated), this Agreement, any Loan Document and any other
            documents prepared in connection herewith or therewith, and the
            consummation of the transactions contemplated hereby and
            thereby, and the grant of Liens on any Collateral after the
            date of this Agreement, including reasonable Attorneys Cost
            incurred by U. S. Bank (including in its capacity as Agent)
            with respect to the foregoing; provided that the Borrower shall
            not be required to reimburse U. S. Bank for such costs and
            expenses (including Attorneys Costs, but excluding the costs
            and expenses described in Section 12.4(b)) incurred through the
            date of this Agreement in excess of $55,000; and

     (b)    whether or not the transactions contemplated hereby are
            consummated, and whether incurred or demand for payment is made
            prior to, concurrently with or after the date of this
            Agreement, pay or reimburse U. S. Bank (including in its
            capacity as Agent) within five Business days after demand
            (subject to Section 5.1(e)) for all costs and expenses incurred
            by U. S. Bank (including in its capacity as Agent) in
            connection with any Collateral or proposed Collateral,
            including, without limitation, appraisal fees (including the
            allocated cost of internal appraisal services), inspection
            fees, fees for environmental and other third party inspections
            and reports, fees for the Title Insurance Policies, escrow
            fees, any filing or recording tax or fee, lien search fees, and

     (c)    pay or reimburse the Agent and each Lender within five Business
            Days after demand (subject to Section 5.1(e)) for all costs and
            expenses (including Attorney Costs) incurred by them in
            connection with the enforcement, attempted enforcement, or
            preservation of any rights or remedies under this Agreement or
            any other Loan Document during the existence of an Event of
            Default or after acceleration of the Loans (including in
            connection with any "workout" or restructuring regarding the
            Loans, and including in any Insolvency Proceeding or appellate
            proceeding).

     12.5   Borrower Indemnification
            ------------------------
     (a)    Whether or not the transactions contemplated hereby are
            consummated, the Borrower shall indemnify, defend and hold the
            Agent-Related Persons, and each Lender and each of its
            respective officers, directors, employees, counsel, agents and
            attorneys-in-fact (each, an "Indemnified Person") harmless from
            and against any and all liabilities, obligations, losses,
            damages, penalties, actions, judgments, suits, costs, charges,
            expenses and disbursements (including Attorney Costs) of any
     
<PAGE>
            kind or nature whatsoever which may at any time (including at
            any time following repayment of the Loans and the termination,
            resignation or replacement of the Agent or replacement of any
            Lender) be imposed on, incurred by or asserted against any such
            Person in any way relating to or arising out of this Agreement
            or any document contemplated by or referred to herein, or the
            transactions contemplated hereby, or any action taken or
            omitted by any such Person under or in connection with any of
            the foregoing, including with respect to any investigation,
            litigation or proceeding (including any Insolvency Proceeding
            or appellate proceeding) related to or arising out of this
            Agreement or the Loans or the use of the proceeds thereof,
            whether or not any Indemnified Person is a party thereto (all
            the foregoing, collectively, the "Indemnified Liabilities");
            provided, that the Borrower shall have no obligation hereunder
            to any Indemnified Person with respect to Indemnified
            Liabilities resulting solely from the gross negligence or
            willful misconduct of such Indemnified Person.  The agreements
            and obligations set forth in this Section shall survive payment
            of all other Obligations.  

     (b)    At the election of any Indemnified Person, the Borrower shall
            defend such Indemnified Person using legal counsel satisfactory
            to such Indemnified Person in such Person's sole discretion, at
            the sole cost and expense of the Borrower.  All amounts owing
            under this Section shall be paid within 30 days after demand. 

     12.6   Marshalling; Payments Set Aside
            -------------------------------
     Neither the Agent nor the Lenders shall be under any obligation to
     marshall any assets in favor of the Borrower or any other Person or
     against or in payment of any or all of the Obligations.  To the extent
     that the Borrower makes a payment to the Agent or the Lenders, or the
     Agent or the Lenders exercise their right of set-off, and such payment
     or the proceeds of such set-off or any part thereof are subsequently
     invalidated, declared to be fraudulent or preferential, set aside or
     required (including pursuant to any settlement entered into by the
     Agent or such Lender in its discretion) to be repaid to a trustee,
     receiver or any other party, in connection with any Insolvency
     Proceeding or otherwise, then (a) to the extent of such recovery the
     obligation or part thereof originally intended to be satisfied shall
     be revived and continued in full force and effect as if such payment
     had not been made or such set-off had not occurred, and (b) each
     Lender severally agrees to pay to the Agent upon demand its Pro Rata
     Share of any amount so recovered from or repaid by the Agent. 

     12.7   Successors and Assigns
            ----------------------
     The provisions of this Agreement shall be binding upon and inure to
     the benefit of the parties hereto and their respective successors and
     assigns, except that the Borrower may not assign or transfer any of
     its rights or obligations under this Agreement without the prior
     written consent of the Agent and each Lender. 
     
<PAGE>
     12.8   Assignments, Participations, Etc.
            ---------------------------------
     (a)    Any Lender may, with the written consent of the Agent and the
            Borrower which shall not be unreasonably withheld, conditioned
            or delayed, at any time assign and delegate to one or more
            Eligible Assignees (provided that no written consent of the
            Agent shall be required in connection with any assignment and
            delegation by a Lender to an Eligible Assignee that is an
            Affiliate of such Lender) (each an "Assignee") all, or any
            ratable part of all, of the Loans, the Commitments and the
            other rights and obligations of such Lender hereunder, in a
            minimum amount of the lesser of $5,000,000 or the entire amount
            of the Commitment of such Lender; provided, however, that the
            Borrower and the Agent may continue to deal solely and directly
            with such Lender in connection with the interest so assigned to
            an Assignee until (i) written notice of such assignment,
            together with payment instructions, addresses and related
            information with respect to the Assignee, shall have been given
            to the Borrower and the Agent by such Lender and the Assignee;
            (ii) such Lender and its Assignee shall have delivered to the
            Borrower and the Agent an Assignment and Acceptance in the form
            of Exhibit I ("Assignment and Acceptance"); and (iii) the
            assignor Lender or Assignee has paid to the Agent a processing
            fee in the amount of $3,500.

     (b)    Subject to the conditions set forth in Section 12.8(a), from
            and after the date that the Agent notifies the assignor Lender
            that it has received (and provided its consent with respect to)
            an executed Assignment and Acceptance, (i) the Assignee
            thereunder shall be a party hereto and, to the extent that
            rights and obligations hereunder have been assigned to it
            pursuant to such Assignment and Acceptance, shall have the
            rights and obligations of a Lender under the Loan Documents,
            and (ii) the assignor Lender shall, to the extent that rights
            and obligations hereunder and under the other Loan Documents
            have been assigned by it pursuant to such Assignment and
            Acceptance, relinquish its rights and be released from its
            obligations under the Loan Documents.  

     (c)    Immediately upon each Assignee's making its processing fee
            payment under the Assignment and Acceptance, this Agreement
            shall be deemed to be amended to the extent, but only to the
            extent, necessary to reflect the addition of the Assignee and
            the resulting adjustment of the Commitments arising therefrom. 
            The Commitment allocated to each Assignee shall reduce such
            Commitments of the assigning Lender pro tanto.  

     (d)    Any Lender may at any time sell to one or more commercial banks
            or other Persons not Affiliates of the Borrower (a
            "Participant") participating interests in any Loans, the
            Commitment of that Lender and the other interests of that
     
<PAGE>
            Lender (the "originating Lender") hereunder and under the other
            Loan Documents; provided, however, that (i) the originating
            Lender's obligations under this Agreement shall remain
            unchanged, (ii) the originating Lender shall remain solely
            responsible for the performance of such obligations, (iii) the
            Borrower and the Agent shall continue to deal solely and
            directly with the originating Lender in connection with the
            originating Lender's rights and obligations under this
            Agreement and the other Loan Documents, and (iv) no Lender
            shall transfer or grant any participating interest under which
            the Participant has rights to approve any amendment to, or any
            consent or waiver with respect to, this Agreement or any other
            Loan Document, except to the extent such amendment, consent or
            waiver would require unanimous consent of the Lenders as
            described in the first proviso to Section 12.1.  In the case of
            any such participation, the Participant shall be entitled to
            the benefit of Sections 4.1, 4.3 and 12.5 as though it were
            also a Lender hereunder, and if amounts outstanding under this
            Agreement are due and unpaid, or shall have been declared or
            shall have become due and payable upon the occurrence of an
            Event of Default, each Participant shall be deemed to have the
            right of set-off in respect of its participating interest in
            amounts owing under this Agreement to the same extent as if the
            amount of its participating interest were owing directly to it
            as a Lender under this Agreement. 

     (e)    Notwithstanding any other provision in this Agreement, any
            Lender may at any time create a security interest in, or
            pledge, all or any portion of its rights under and interest in
            this Agreement held by it in favor of any Federal Reserve Bank
            in accordance with Regulation A of the FRB or U.S. Treasury
            Regulation 31 C.F.R. Section 203.14, and such Federal Reserve
            Bank may enforce such pledge or security interest in any manner
            permitted under applicable law.

     (f)    The Borrower agrees to actively assist and cooperate with
            U. S. Bank in the initial syndication of the Loans, including
            assistance in the preparation and review of information and
            participation in one or more meetings with prospective lenders.

     12.9   Set-off
            -------
     In addition to any rights and remedies of the Lenders provided by law,
     if an Event of Default exists or the Loans have been accelerated, each
     Lender is authorized at any time and from time to time, without prior
     notice to the Borrower, any such notice being waived by the Borrower
     to the fullest extent permitted by law, to set off and apply any and
     all deposits (general or special, time or demand, provisional or
     final) at any time held by, and other indebtedness at any time owing
     by, such Lender to or for the credit or the account of the Borrower
     against any and all Obligations owing to such Lender, now or hereafter
     
<PAGE>
     existing, irrespective of whether or not the Agent or such Lender
     shall have made demand under this Agreement or any Loan Document and
     although such Obligations may be contingent or unmatured.  Each Lender
     agrees promptly to notify the Borrower and the Agent after any such
     set-off and application made by such Lender; provided, however, that
     the failure to give such notice shall not affect the validity of such
     set-off and application.  

     12.10  Automatic Debits of Fees
            ------------------------
     With respect to any agency fee, underwriting fee or other fee, or any
     other cost or expense (including Attorney Costs) due and payable to
     the Agent under the Loan Documents, the Borrower hereby irrevocably
     authorizes U. S. Bank to debit any deposit account of the Borrower
     with U. S. Bank in an amount such that the aggregate amount debited
     from all such deposit accounts does not exceed such fee or other cost
     or expense.  If there are insufficient funds in such deposit accounts
     to cover the amount of the fee or other cost or expense then due, such
     debits will be reversed (in whole or in part, in U. S. Bank's sole
     discretion) and such amount not debited shall be deemed to be unpaid. 
     No such debit under this Section shall be deemed a set-off.  

     12.11  Notification of Addresses, Lending Offices, Etc.
            ------------------------------------------------
     Each Lender shall notify the Agent in writing of any changes in the
     address to which notices to the Lender should be directed, of
     addresses of any Lending Office, of payment instructions in respect of
     all payments to be made to it hereunder and of such other
     administrative information as the Agent shall reasonably request.  

     12.12  Counterparts
            ------------
     This Agreement may be executed in any number of separate counterparts,
     each of which, when so executed, shall be deemed an original, and all
     of said counterparts taken together shall be deemed to constitute but
     one and the same instrument.  

     12.13  Severability
            ------------
     The illegality or unenforceability of any provision of this Agreement
     or any instrument or agreement required hereunder shall not in any way
     affect or impair the legality or enforceability of the remaining
     provisions of this Agreement or any instrument or agreement required
     hereunder. 

     12.14  No Third Parties Benefited
            --------------------------
     This Agreement is made and entered into for the sole protection and
     legal benefit of the Borrower, the Lenders, the Agent and the Agent-
     Related Persons, and their permitted successors and assigns, and no
     other Person shall be direct or indirect legal beneficiary of, or have
     any direct or indirect cause of action or claim in connection with,
     this Agreement or any of the other Loan Documents. 
     
<PAGE>
     12.15  Conditions Not Fulfilled
            ------------------------
     If any requested loan is not borrowed, or any requested letter of
     credit is not issued owing to nonfulfillment of any condition
     precedent specified in Article V or, in the case of letters of credit,
     any additional conditions specified in Article III, no party hereto
     shall be responsible to any other party for any damage or loss by
     reason thereof, except that the Borrower shall in any event be liable
     to pay the fees, Taxes, and expenses for which it is obligated
     hereunder.  If for any other reason the Commitment of any Lender is
     not borrowed or any requested letter of credit is not issued, neither
     the Agent nor any Lender (other than the Lender failing to make its
     Loan as required hereunder) shall be responsible to the Borrower for
     any damage or loss by reason thereof, nor shall any other Lender or
     the Borrower be excused from their performance hereunder.

     12.16  Governing Law and Jurisdiction
            ------------------------------
     (a)    THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED
            IN ACCORDANCE WITH, THE LAW OF THE STATE OF WASHINGTON;
            PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
            ARISING UNDER FEDERAL LAW.  DEEDS OF TRUST SHALL BE GOVERNED BY
            THE LAW OF THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED
            THEREBY IS LOCATED.

     (b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
            OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
            STATE OF WASHINGTON OR OF THE UNITED STATES FOR THE WESTERN
            DISTRICT OF WASHINGTON, AND BY EXECUTION AND DELIVERY OF THIS
            AGREEMENT, EACH OF THE BORROWER, THE AGENT AND THE LENDERS
            CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
            NONEXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH OF THE
            BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY
            OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
            BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
            OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING
            IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
            DOCUMENT RELATED HERETO.  THE BORROWER, THE AGENT AND THE
            LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
            OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
            PERMITTED BY WASHINGTON LAW.  

     12.17  Waiver of Jury Trial
            --------------------
     THE BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE
     RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
     OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
     DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
     ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
     THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
     PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
     
<PAGE>
     CLAIMS, OR OTHERWISE.  THE BORROWER, THE LENDERS AND THE AGENT EACH
     AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
     TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES
     FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
     BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
     PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
     OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
     PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY
     SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
     AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     12.18  Entire Agreement
            ----------------
     This Agreement, together with the other Loan Documents, embodies the
     entire agreement and understanding among the Borrower, the Lenders and
     the Agent, and supersedes all prior to contemporaneous agreements and
     understandings of such Persons, verbal or written, relating to the
     subject matter hereof and thereof. 

     
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
     be duly executed and delivered by their proper and duly authorized
     officers as of the day and year first above written.

                        CAVANAUGHS HOSPITALITY LIMITED PARTNERSHIP 

                        By:  Cavanaughs Hospitality Corporation,   
                               General Partner


                        By:  _________________________________________

                        Title:  ______________________________________



                        U. S. BANK NATIONAL ASSOCIATION, as Agent 

                        By:  _________________________________________

                        Title:  ______________________________________



                        U. S. BANK NATIONAL ASSOCIATION, as a Lender 


                        By:  _________________________________________

                        Title:  ______________________________________


<PAGE>